Essex Rental Corp. - FORM 10-K/A

Attached files

file	filename
EX-23.1 - Essex Rental Corp.	v221207_ex23-1.htm
EX-32.1 - Essex Rental Corp.	v221207_ex32-1.htm
EX-31.1 - Essex Rental Corp.	v221207_ex31-1.htm
EX-31.2 - Essex Rental Corp.	v221207_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

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

For the Fiscal Year Ended DECEMBER 31, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT F 1934

For the transition period from __________ to ___________

Commission File Number: 000-52459

Essex Rental Corp.

(Exact Name of Registrant as specified in its Charter)

Delaware		20-5415048
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1110 Lake Cook Road, Suite 220 Buffalo Grove, Illinois		60089
(Address of Principal Executive Offices)		(Zip code)

(847) 215-6500

(Registrant’s telephone number, including area code)

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

Common Shares, $.0001 par value per share		The NASDAQ Capital Market
(Title of each class)		(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

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

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

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. þ Yes ¨ No

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act): Large Accelerated Filer ¨ Accelerated Filer þ Non-Accelerated Filer ¨ Smaller Reporting Company ¨

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

The aggregate market value of the voting and non-voting common equity of the Registrant held by non-affiliates as of June 30, 2010 was $57,077,031.

The number of shares of outstanding common stock of the Registrant as of March 10, 2011 was 24,428,092.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Definitive Proxy Statement with respect to the 2011 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on April 29, 2011 are incorporated by reference into Part III of this Annual Report on Form 10-K.

FORM 10-K/A REPORT INDEX

10-K/A Part and Item No.		Page No.
PART I
Item 1	Business	2
Item 1A	Risk Factors	16
Item 1B	Unresolved Staff Comments	23
Item 2	Properties	23
Item 3	Legal Proceedings	25
Item 4	Reserved	25

PART II
Item 5	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
Item 6	Selected Financial Data	28
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	50
Item 8	Financial Statements and Supplementary Data	51
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	51
Item 9A	Controls and Procedures	51
Item 9B	Other Information	52

PART III
Item 10	Directors, Executive Officers and Corporate Governance of the Registrant	53
Item 11	Executive Compensation	53
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	53
Item 13	Certain Relationships and Related Transactions	53
Item 14	Principal Accountant Fees and Services	53

PART IV
Item 15	Exhibits and Financial Statement Schedules	54

EXPLANATORY NOTE – 2010 RESTATEMENT

This Amendment No. 1 to Form 10-K (“Amendment No. 1”) is being filed by Essex Rental Corp. (the “Company”) to amend and restate its Annual Report on Form 10-K for the year ended December 31, 2010 filed with the United States Securities and Exchange Commission (“SEC”) on March 16, 2011 (the “Initial Form 10-K”). For purposes of this Annual Report on Form 10-K/A, and in accordance with Rule 12b-15 under the Securities Exchange Act of 1934 (Exchange Act), Items 1A, 6, 7, 8 and 9A of our Initial Form 10-K have been amended and restated in their entirety. Pursuant to the rules of the SEC, Item 15 has also been amended and restated in its entirety to include currently dated certifications of the Company’s principal executive officer and principal financial officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Other than the Items outlined above, there are no changes to the Initial Form 10-K. However, for the convenience of the reader, this Amendment No. 1 sets forth those items in the Initial Form 10-K that are not being amended and restated in their entirety. Except as otherwise specifically noted, all information contained herein is as of December 31, 2010 and does not reflect any events or changes that have occurred subsequent to that date. We are not required to and we have not updated any forward-looking statements previously included in the Initial Form 10-K filed on March 16, 2011. Our previously issued consolidated financial statements included in the Initial Form 10-K should no longer be relied upon.

This Amendment No. 1 is required due to material misstatements within the financial statements in the Initial Form 10-K related to the Company’s estimate of future state income tax rates and related valuation reserves. The Company’s estimate of future state income tax rates did not properly include the impact of the acquisition of substantially all of the assets of Coast Crane Company on November 24, 2010 on future state apportionment calculations for the Company on a consolidated basis. As a result, the Company understated net state deferred tax liabilities by approximately $2.8 million at December 31, 2010 and overstated income tax benefit by approximately the same amount in 2010. The Company’s 2010 Financial Statements also understated the Company’s net deferred tax liabilities at December 31, 2010 as a result of the overstatement in its reserve against state net operating losses (“NOLs”) by approximately $1.0 million. As a result the Company overstated net state deferred tax liabilities by approximately $1.0 million at December 31, 2010 and understated income tax benefit by the same amount in 2010. The favorable benefit of sources of future income was understated and the associated benefit underestimated in the evaluation of whether the state NOLs would be utilized prior to expiration.

We have restated:

Our consolidated balance sheet as of December 31, 2010 by increasing amounts reported in net deferred tax liabilities and increasing the amount reported in accumulated deficit both by $1.8 million; and

Our consolidated statement of operations for the year ended December 31, 2010 by decreasing the benefit for income taxes by $1.8 million.

As a result of this restatement, amounts in our consolidated statements of cash flows and stockholders’ equity for the year ended December 31, 2010 have also been corrected. Our total cash flows from operations for the year ended December 31, 2010 remains unchanged. A summary of the effects of this restatement to our financial statements included within this Amendment to our Annual Report on Form 10-K/A is presented in note 3 in the accompanying notes to consolidated financial statements.

In summary, the net loss after increasing the Company’s provision for income taxes, increased from the $(0.59) per share originally disclosed for both basic and fully-diluted loss per share to $(0.71) for both basic and fully-diluted loss per share for the year ended December 31, 2010.

This Amendment No. 1 includes changes in “Item 9A - Controls and Procedures” and reflects management’s restated assessment of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2010. This restatement of management’s assessment regarding disclosure controls and procedures results from a material weakness in our internal control over financial reporting relating to the above described restatements. The information required in this restatement was previously omitted and should have been recorded in our Initial Form 10-K. The Company has implemented certain changes in our internal controls as of the date of this report to address this material weakness, and believes such weakness has been remediated. There can be no assurance that our remedial efforts will be effective nor can there be any assurances that the Company will not incur losses due to internal or external acts intended to defraud, misappropriate assets, or circumvent applicable law or our system of internal controls. See “Item 9A - Controls and Procedures.”

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this Annual Report on Form 10-K/A are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent and belief or current expectations of Essex Rental Corp. and its management team and may be identified by the use of words like "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "will", "should", "seek", the negative of these terms or other comparable terminology. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from Essex’s expectations include, without limitation, the continued ability of Essex to successfully execute its business plan, the possibility of a change in demand for the products and services that Essex provides (through its subsidiaries, Essex Crane Rental Corp., Coast Crane Company and Coast Crane Ltd.), intense competition which may require us to lower prices or offer more favorable terms of sale, our reliance on third party suppliers, our indebtedness which could limit our operational and financial flexibility, global economic factors including interest rates, general economic conditions, geopolitical events and regulatory changes, our dependence on our management team and key personnel, as well as other relevant risks. The factors listed here are not exhaustive. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Forward-looking statements are not guarantees of future performance, results or events. Certain of such risks and uncertainties are discussed below under Item 1A – Risk Factors. Essex assumes no obligation to update or supplement forward-looking information in this Annual Report whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results or financial conditions, or otherwise.

PART I

As used in this Annual Report, references to “the Company” or “Essex” or to “we,” “us” or “our” refer to Essex Rental Corp., together with its consolidated subsidiaries, Essex Holdings, LLC, Essex Crane Rental Corp., Essex Finance Corp., Coast Crane Company and Coast Crane Ltd., unless the context otherwise requires.

Item 1.

Business

Background

Essex Rental Corp. (formerly Hyde Park Acquisition Corp.) was incorporated in Delaware on August 21, 2006 as a blank check company whose objective was to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. On March 13, 2007, we closed our initial public offering of 11,250,000 units. Each unit that was offered had a price of $8.00 and consisted of one share of our common stock and one warrant. Each warrant entitled the holders to purchase one share of our common stock at a price of $5.00. On March 15, 2007, we consummated the sale of an additional 1,687,500 units which were subject to an over-allotment option granted to EarlyBirdCapital, Inc., the representatives of the underwriters for our initial public offering. We also sold to EarlyBirdCapital, Inc., for $100, as additional compensation an option to purchase up to a total of 600,000 units at $8.80 per unit. Laurence S. Levy, chairman of our board of directors, Edward Levy, a member of our board of directors, and Isaac Kier, one of our stockholders, owned a total of 2,812,500 shares of our common stock prior to our initial public offering. These initial stockholders also purchased a total of 1,500,000 warrants from us at $1.00 per warrant in a private placement completed concurrently with our initial public offering. The total proceeds from our initial public offering (including from our private placement of warrants and exercise of the underwriters’ over-allotment option) were $105,000,000. Upon the closing of the offering, including the over-allotment option and the private placement of warrants, and after deducting the underwriting discounts and commissions and offering expenses, the total net proceeds from the offering were approximately $99,923,651.

All activity from August 21, 2006 (inception) through March 13, 2007 related to Essex Rental Corp’s formation and initial public offering. From March 13, 2007 through October 31, 2008, our activities were limited to identifying prospective target businesses to acquire and completing a business combination.

On October 31, 2008, we acquired Essex Crane Rental Corp., which we refer to as Essex Crane, through the acquisition of substantially all of the ownership interests of Essex Crane’s parent company, Essex Holdings, LLC, which we refer to as Holdings, and as a result, we are no longer in the development stage.

Essex Crane is a leading provider of lattice-boom crawler crane and attachment rental services and possesses one of the largest fleets of such equipment in the United States (US). For more information regarding the acquisition of Holdings and Essex Crane, see note 1 to our consolidated financial statements. From October 31, 2008 until November 24, 2010, we conducted substantially all of our operations through Essex Crane.

In 2009, the Company formed a new subsidiary, Essex Finance Corp., to facilitate the acquisition of rental equipment.

In November 2010, we formed CC Bidding Corp (“CCBC”), a Delaware corporation and an indirectly wholly-owned subsidiary of Essex Rental Corp., to facilitate the acquisition (the “Coast Acquisition”) of substantially all of the assets, and the assumption of certain liabilities, of Coast Crane Company, a Delaware corporation (“Coast Liquidating Co.”), a leading provider of specialty lifting solutions and crane rental services on the West Coast of the United States. We completed the Coast Acquisition on November 24, 2010 as the successful bidder in a bankruptcy proceeding. The assets acquired included all of the outstanding shares of capital stock of Coast Crane Ltd., a British Columbia corporation, through which Coast Liquidating Co. conducted its operations in Canada. Following the closing of the Coast Acquisition, CCBC changed its name to “Coast Crane Company”. References to “Coast Crane” in this Annual Report mean Coast Crane Company, a Delaware corporation, formerly known as CC Bidding Corp. For more information regarding the Coast Acquisition, see note 1 to our consolidated financial statements.

We conduct substantially all of our operations through Essex Crane and Coast Crane.

Business Combinations

Acquisition of Holdings and Its Subsidiary Essex Crane

On October 31, 2008, we acquired Essex Crane through the acquisition of substantially all of the ownership of Holdings. The purchase agreement provided for a gross purchase price of $210.0 million, less the amount of Essex Crane’s indebtedness outstanding as of the closing (which was refinanced as of the closing date with a credit facility made available to Essex Crane as of the closing date), the $5.0 million stated value of the membership interests in Holdings not acquired in the acquisition and the amount of certain other liabilities of Essex Crane as of the closing of the acquisition. The purchase price was subject to adjustment at and after the closing based on Essex Crane’s working capital as of the closing date and crane purchases and sales by Essex Crane prior to the closing date. The adjusted purchase price of the Holdings acquisition was $215.5 million, (including the amount of Essex’s indebtedness outstanding under Essex Crane’s credit facility immediately prior to the closing). For additional information regarding the gross purchase price paid in the acquisition of Essex Crane, including related transaction expenses, see note 1 to our consolidated financial statements.

The acquisition, excluding transaction costs was financed with approximately $80.6 million of cash from the proceeds of the Company’s initial public offering, the $5.0 million stated value of the membership interests in Holdings not acquired in the acquisition and approximately $129.9 million of assumption of Essex Crane’s indebtedness outstanding as of the closing (which was refinanced as of the closing date with a credit facility made available to Essex Crane as of the closing date). In addition, as was required under the Company’s certificate of incorporation, shortly after completion of the acquisition approximately $18.7 million of the proceeds of the Company’s initial public offering was paid to shareholders who voted against the acquisition of Essex Crane and exercised their conversion rights.

The ownership interests in Holdings that were not acquired by the Company in the acquisition were retained by the management members of Holdings, including Ronald Schad, our Chief Executive Officer, and Martin Kroll, our Chief Financial Officer, and are referred to throughout this annual report on Form 10-K/A as the “Retained Interests”.

The Retained Interests are exchangeable at the option of the holder for an aggregate of 632,911 shares of our common stock. The Retained Interests do not carry any voting rights and are entitled to distributions from Holdings only if the Company pays a dividend to its stockholders, in which case a distribution on account of the Retained Interests will be made on an “as exchanged” basis. We have granted certain registration rights to the holders of the Retained Interests with respect to the shares of our common stock issuable upon exchange of the Retained Interests. For additional information on our acquisition of Essex Crane and related transactions, see Note 1 to the Company’s consolidated financial statements.

Acquisition of the Assets of Coast Crane Company and Subsidiary

On November 24, 2010, through CCBC, we acquired substantially all of the assets and assumed certain liabilities of Coast Liquidating Co., which consisted of all of the assets used in the operation of its specialty lifting solutions and crane rental services business including all of the outstanding shares of capital stock of Coast Crane Ltd., a British Columbia corporation, through which Coast Liquidating Co. conducted its operations in Canada.

The purchase agreement provided for a gross purchase price of $103.2 million which included net cash payments of $82.5 million and the assumption of certain liabilities of Coast Crane and its subsidiary as of the closing of the acquisition. For additional information regarding the gross purchase price paid for the acquisition of Coast Crane, including related transaction expenses, see note 1 to our consolidated financial statements.

The Coast Acquisition was financed with $14.2 million of proceeds from the issuance of 3.3 million shares of common stock, cash of $20.3 million, primarily funded by Essex Crane’s revolving credit facility, proceeds of $49.6 million from a new revolving credit facility and the assumption of certain liabilities and indebtedness outstanding of Coast Crane and its subsidiary as of the closing date of approximately $20.7 million.

Business

Overview

Through our subsidiaries, Essex Crane and Coast Crane, we are one of North America's largest providers of cranes (including lattice-boom crawler cranes, truck cranes and rough terrain cranes, tower cranes, and other lifting equipment) used in a wide array of construction projects. In addition, we provide product support including installation, maintenance, repair, and parts and services for equipment provided and other equipment used by our construction industry customers. With a fleet of over 1,000 cranes and other construction equipment and customer service and support, we supply a wide variety of innovative lifting solutions for construction projects related to power generation, petro-chemical, refineries, water treatment and purification, bridges, highways, hospitals, shipbuilding, offshore oil fabrication and industrial plants, and commercial and residential construction. Both Essex Crane and Coast Crane rent their equipment “bare,” meaning without supplying an operator and, in exchange for a fee, make arrangements for the transportation and delivery of equipment. Once the crane is delivered and erected on the customer’s site, inspected and determined to be operating properly by the customer’s crane operator and management, the majority of the maintenance and repair costs are the responsibility of the customer while the equipment is on rent. This business model allows Essex to minimize its headcount and operating costs including reduced liability related to operator error and provides the customer with a more flexible situation where they control the crane and the operator’s work schedule.

Through a network of seventeen main service centers, other smaller service locations and several remote storage yards, complemented by a geographically dispersed highly skilled staff of sales and maintenance service professionals, we serve a variety of customers engaged in construction and maintenance projects related to power plants, refineries, bridge and road, alternative energy, water treatment and purification, hospitals, shipbuilding and other infrastructure and commercial construction. We have significantly diversified the end-markets that we serve in recent years, including through the Coast Acquisition, to avoid over-exposure to any one sector of the construction market.

Although Essex Crane and Coast Crane experience overlap in the customers and projects that they serve, they are distinct from one another in the equipment comprising their fleets.

Essex Crane

Essex Crane is a leading provider of lattice-boom crawler crane and attachment rental services and possesses one of the largest fleets of such equipment in the United States. Over approximately 50 years of operation, since its founding in 1960, Essex Crane has steadily grown from a small, family-owned crane rental company to a private equity owned professionally managed company that today is a public company and one of the leading players in its industry offering lattice boom crawler rental services to a variety of customers, industries and regions mainly throughout the United States and Canada.

Essex Crane’s fleet size currently stands at more than 350 lattice-boom crawler cranes and various types of attachments which are made available to clients depending on their lifting requirements, such as weight, pick and carry aspects, reach and angle of reach. The fleet’s combination of crawler cranes and attachments is diverse by lift capacity and capability, allowing Essex Crane to meet the crawler crane requirements of its engineering and construction firm customer base.

Essex Crane uses its significant investment in modern enterprise resource planning (“ERP”) systems and business process methods to help its management assimilate information more quickly than others in our industry, and to provide management with real time visibility of the factors that must be effectively managed to achieve Essex’s goals. Management intends to implement similar systems within Coast Crane during 2011. Essex’s end-markets are characterized by major construction projects often times with long lead times. Management believes that these longer lead times, coupled with most contracts having rental periods of between 4 and 18 months for lifting equipment with heavier capacities, provide them more visibility over future project pipelines and revenues.

Coast Crane

Coast Crane is a market leader for innovative lifting solutions throughout Western North America, Alaska, Hawaii, Guam and the South Pacific. Through Coast Crane, we provide both used and new tower cranes, boom trucks, rough terrain cranes and other lifting equipment to customers in the infrastructure, energy, crane rigger/operator, and municipal, commercial and industrial construction sectors. Coast Crane’s operations are headquartered in Seattle, Washington and its products are rented and sold through a regional network including 13 branch locations. According to the industry publication American Cranes and Transport, Coast Crane is one of the largest crane service providers within its core rental equipment categories.

In addition to providing crane rental services, Coast Crane is a leading crane distributor of self-erecting tower cranes, rough terrain cranes, boom trucks and all terrain cranes in its West Coast territories. Coast Crane enjoys strong working partnerships with leading crane and lifting manufacturers in the U.S. Coast Crane has exclusive distribution relationships with such manufacturers for certain territories on the West Coast. Coast Crane provides after-sale spare parts and services to customers to whom it sells equipment as well as to customers who purchase equipment from other sources.

Products and Services

Our principal products and services are described below.

Equipment Rentals We offer for rent crawler crane and attachments, rough terrain cranes, boom trucks, tower cranes, and other construction related rental equipment. Most attachments are rented separately and increase either the lifting capacity or the reach capabilities of the base crawler cranes and tower cranes. Crawler cranes are long-lived assets with actual lives of up to 50 years or more when properly maintained. The weighted-average age of our crawler crane fleet was approximately 14 years at December 31, 2010 and 2009.

Used Rental Equipment Sales We routinely sell used rental equipment and invest in new equipment in order to manage the mix, composition and size of our fleet. We also sell used equipment in response to customer demand for this equipment. The rate at which we replace used equipment with new equipment depends on a number of factors, including changing general economic conditions, growth opportunities and the need to adjust fleet mix to meet customer requirements and demand.

Retail Equipment and Parts Sales We routinely sell new equipment, used equipment and parts to customers in the construction industry. The types of equipment sold are consistent with the types of equipment used in the Company’s rental fleets and include crawler cranes, tower crane, rough terrain cranes, boom trucks and other lifting equipment. Parts sold are used by customers in similar types of lifting equipment and other heavy machinery.

Transportation Service and Other Revenue We also offer transportation and repair and maintenance services. Our target customers for these ancillary services are our current rental customers, customers that own their own equipment and those who purchase new and used equipment from us.

We generate revenue from a number of sources as follows:

Equipment rentals – We rent our fleet of over 1,000 cranes and attachments and other lifting equipment to a variety of engineering and construction customers under contracts, most of which have rental periods of between 4 and 18 months. Boom trucks and other smaller equipment may be rented as frequently as daily. The contracts typically provide for an agreed rental rate and a specified rental period. The revenue from crane and attachment rentals is primarily driven by rental rates (which are typically higher for the more expensive cranes with heavier lifting capacities than less expensive cranes with lower lifting capacities) charged to its customers and its fleet utilization rate. Rental revenue is recognized as earned in accordance with the terms of the relevant rental agreement on a pro rata daily basis;

Retail equipment sales – We offer a variety of construction equipment products and the related parts for sale including tower cranes, boom trucks, rough terrain cranes and other lifting equipment used in the construction industry. The revenue from equipment and parts sales is primarily driven by the level of construction activity in a particular geographic region. Equipment sales revenue is recognized at the time ownership transfers, which is generally based on delivery and/or inspection of the equipment. Parts sales revenue is recognized at the time of purchase.

Used rental equipment sales revenue – In the ordinary course of business, we sell used cranes and attachments and other lifting equipment over time to optimize the combination of crane models and lifting capacities available in our fleet as we perceive market demands and opportunities. On average, we have historically achieved sale prices for equipment in excess of the appraised value. This is due to the long useful life of the crane and attachment fleet, the conditions prevailing in the secondary market and the high content of engineered high-strength steel included in these fleet assets. Used rental equipment sales are recognized upon acceptance by the customer or the execution of a definitive sales agreement stipulating the date of transferring the risk of ownership. The gain on sale of rental equipment realized by the Predecessor will not be indicative of near term future results in light of our recent acquisitions of Essex Crane and Coast Crane since the rental equipment has been adjusted to fair value as of the closing date, thereby reducing near-term future gain on sale;

Transportation services revenue – Transportation services revenue is derived from the management of the logistics process by which our rental equipment is transported to and from customers’ construction sites, including the contracting of third party trucking for such transportation. Transportation revenue is earned under equipment rental agreements on a gross basis representing both the third-party provider’s fee for transportation and our fee for managing these transportation services and they are matched with the associated costs, and related costs for amounts paid to third party providers. The key drivers of transportation revenue are crane and attachment and other lifting equipment utilization rates and average contract lengths. Shorter average contract durations and high utilization rates generally result in higher requirements for transportation of equipment and resulting revenue. The distance that equipment has to move between different jobsites and the type of equipment being moved (number of truckloads) are also major drivers of transportation revenue and associated costs. Transportation revenue is recognized upon completion of the transportation of equipment; and

Equipment repair and maintenance services revenue – While crawler cranes or attachments, tower cranes, rough terrain cranes, boom trucks or other equipment are on rent, much of the repair and maintenance work is paid for by the customer. We perform a portion of the repair and maintenance work and recognize revenue for such services to the extent they are the customer’s responsibility. This category of revenue also includes providing certain services while erecting the equipment during initial assembly or disassembly of the equipment at the end of the rental. In addition, we offer repair and maintenance services to any party that owns their own equipment and requests repair and maintenance services at one of our Coast Crane service center locations. Key drivers for repair and maintenance revenue are the utilization rates for cranes and attachments as well as jobsite operating conditions and the general construction activity in a given geographic region. Repair and maintenance revenue is recognized as such services are performed.

In summary, 60.3% of total revenue for the year ended December 31, 2010 was generated through equipment rentals, 3.0% through retail equipment sales, 10.2% through used rental equipment sales, 2.9% through retail part sales, 11.5% through transportation services and 12.1% through repair and maintenance services.

US Crane and Lifting Equipment Rental Industry

According to the Rental Equipment Register and the American Rental Association, the US equipment rental sector has grown from a minor industry in 1982 to an industry generating over $30.0 billion in annual revenues in 2008. Driving this growth has been an increase in crane and attachment penetration rates with engineering and construction firms, the result of a fundamental shift in contractor preferences to rent versus purchasing equipment based on the following factors:

focus on core construction services businesses rather than equipment ownership;

access to broader pool of equipment through rental; and

an efficient use of capital as rental equipment has minimal equipment downtime compared to owned equipment, which reduces servicing and storage costs between projects.

The following table summarizes descriptions of the types of equipment that we offer for rent:

Equipment Type

	Crawler cranes	Other cranes (all terrain, rough terrain, tower and boom truck)	Small equipment (e.g., aerial work platforms, forklifts, etc.)
Economic life	50 plus years with proper maintenance due to higher strength steel percentage content	15-30 years due to higher relative machinery percentage content	Often 10 years or less

Typical Projects	Large infrastructure components requiring heavy lifts: bridges, power plants, municipal infrastructure	Range from residential condominium to large infrastructure	Range from single house builds to large construction projects

End markets	Primarily large infrastructure and industrial	Residential construction to large infrastructure	Residential construction to large infrastructure

Residual value	High	Medium	Medium to low

Within the US heavy lifting crane rental (including crawler cranes, rough terrain cranes and tower cranes) sector operators either provide cranes “bare” or “manned.” Bare rental involves the provision of cranes without an operator, the crane being operated by an employee of the customer. Bare rental is suited to construction firms with adequately trained staff to operate the heavy machinery. Manned rental involves the provision of an operator with the crawler crane and is often suited to customers unable or unwilling to provide an operator of their own and is often more common with customers who perform shorter duration work. Manned rental involves the maintenance of adequate staffing levels to ensure equipment can be rented as required. We operate a bare rental model, because we believe bare rental offers an opportunity for higher returns on invested capital primarily due to decreased liability exposure and a more efficient operating platform and business model. Bare rental allows us to operate the business with significantly less human resources and costs associated with those resources than if we were to operate a manned operation. The primary disadvantage of renting cranes on a bare basis is that we forego a portion of the rental market associated with construction firms that prefer to rent equipment manned.

Operations

Essex Crane is a national provider of crawler crane and attachment rentals with more than 350 crawler cranes and attachments in its fleet. Essex Crane’s revenue is driven through a range of activities including:

· crawler crane and attachment rental;

· repair and maintenance services;

· equipment transportation services; and

· used equipment sales.

Coast Crane is a provider of specialty lifting solutions and crane and attachment rentals and sales in Western North America, Hawaii, Alaska, Guam, and the South Pacific with in excess of 650 pieces of equipment in its fleet.

Coast Crane’s revenue is driven through a range of activities including:

· rough terrain, tower crane, boom truck and other construction equipment rentals;

· repair and maintenance services;

· equipment transportation services; and

· new and used equipment and part sales.

Crane and attachment rentals. We maintain one of the largest fleets of cranes and attachments and other lifting equipment in North America. Rental revenue generated from the rental of equipment was $25.0 million in 2010 or approximately 60.3% of total revenue. Equipment is rented to customers under contract, with an average length of seven months (contracts range from 4-18 months in general), which specifies a constant monthly rate for each piece of equipment over the period of the contract. In 2010, Essex Crane’s average monthly crane rental rate was $16,391 and crane utilization was 37.5% on “days” basis (or 41.2% if calculated using the “hits” method). Utilization on a “days” method increased to 44.7% for the three months ended December 31, 2010 from 30.0% for the three months ended March 31, 2010. For a discussion of the “days” and “hits” methods of measuring crane utilization, see “Fleet Overview” below.

Once we and a potential customer communicate regarding the customer’s need for an equipment rental, we confirm that an appropriate piece of equipment is available. We then prepare and deliver a written rental quote to the customer. The customer reviews the quote and, if acceptable, places an order.

Essex Crane’s on-line, real time information system provides visibility of the entire crawler crane rental fleet for the sales team including the cranes’ lease information and expected availability. All sales team quote and order activity is also available on the same information system and viewable by appropriate sales, operations, and management personnel.

Upon a review of the order including a check of the customer’s credit and continued equipment availability, an order confirmation and a rental agreement are sent to the customer. Once a signed rental agreement and other required documentation (including insurance certificates) are received, the order is authorized for shipment to the customer. Our operations team sees both the quote and order activity and responds appropriately to confirm the readiness of the required crane for shipment to the new rental, but does not begin shipping it until the lease is authorized. Once the crane is delivered to the customer’s site, our representative inspects the crane with the customer and an inspection report is signed verifying that the crane was correctly delivered in accordance with the lease agreement. The rental period for the equipment usually begins when the first major item for the crane begins transport to the customer and the rental ends when the last major item of the crane is returned to our designated location.

Retail equipment sales. Coast Crane and its Canadian subsidiary, Coast Crane Ltd. sell various new and used cranes and other equipment. Revenue from such new equipment sales totaled $1.2 million for the 5 week post-acquisition period in 2010 or approximately 2.9% of total revenue.

Used rental equipment sales. Given the size of our crane and equipment fleet and the various types of cranes and equipment, we sell pieces of used equipment both domestically and internationally to construction or, although infrequently, other rental companies. Sales of used rental equipment are discretionary and based on a variety of factors including, but not limited to, a piece of equipment’s orderly liquidation value, age, rental yield, perceived demand in the marketplace and impact of a sale on our rental businesses and cash flow. Revenue from such used rental equipment sales totaled $4.3 million in 2010 or approximately 10.2% of total revenue.

Retail parts sales. Coast Crane and its Canadian subsidiary, Coast Crane Ltd. sell various crane and other equipment parts. Revenue from such retail part sales totaled $1.2 million for the 5 week post-acquisition period in 2010 or approximately 2.8% of total revenue.

Equipment transportation services. We do not have an in-house fleet of vehicles to transport our cranes, attachments and other equipment to and from project sites and instead out-sources transportation to third party providers. We charge a fee for arranging transportation services from its nearest storage yard with the required equipment to the construction location. Revenue from such equipment transportation services totaled $4.8 million in 2010 or approximately 11.5% of total revenue.

Repair and maintenance services. Our contracts have provisions that provide for the customer to assume responsibility to operate and maintain the equipment to manufacturer’s specifications throughout the contract period. We may provide maintenance and repair services to customers during the contract rental period and will invoice the customer for any work carried out (to the extent such work is the customer’s responsibility). We also provide repair and maintenance services to owners of construction equipment. Revenue from such repair and maintenance services totaled $5.0 million in 2010 or approximately 12.1% of total revenue. While a piece of equipment is not rented, we are responsible for ensuring that its equipment is compliant with all manufacturers’ specifications and other regulations.

Fleet Overview

Essex Crane’s fleet consists of over 350 lattice boom crawler cranes and attachments manufactured solely by Manitowoc and Liebherr. Coast Crane’s fleet consists of over 650 cranes and other construction equipment. Tower cranes, rough terrain cranes and boom trucks comprise approximately 90% of the total value of Coast Crane’s rental equipment fleet. The fleet’s crawler cranes vary in age of equipment and have a maximum lifting capacity ranging from 100 to 440 tons. As of December 31, 2010, the average lifting capacity of Essex Crane’s fleet was approximately 255 tons and average age was 14 years (weighted based on orderly liquidation value). The Company owns all of its crawler cranes and attachments and does not lease any of these items from third parties.

Essex Crane’s management has employed a strategy of increasing the average lifting capacity of the crawler crane fleet by selling lower capacity models and investing in higher capacity models. This has resulted in average lifting capacity growing from approximately 177 tons in 2003 to approximately 255 tons as of December 31, 2010. Attachments are rented by customers to enhance the lifting capacity and reach of cranes. While Essex Crane’s cranes have lifting capacities up to 440 tons, its attachments increase the capacity up to a total of 660 tons. Management has employed this strategy as it believes larger cranes are more applicable to larger construction projects, are less readily substitutable with other equipment, receive above average utilization rates and provide attractive rental rate returns. While this strategy has resulted in a shrinking of the total number of cranes in the fleet since 2003, average rental rate and utilization grew significantly over the same period through December 31, 2008. Due to the global economic downturn that began affecting the Company’s business in 2009 and 2010, utilization rates were affected and have been reduced to rates consistent with those experienced in the 2003 downturn. In contrast, average rental rates have remained comparatively higher than in 2003 due to our enhanced fleet mix.

Historically, Essex Crane measured equipment utilization using what was referred to as the “hits” method. Under this method, equipment on rent for any period of time within a month counted as a utilization hit. This meant that if a piece of equipment were on rent for one day in a month it would be treated the same in the utilization statistic as a piece of equipment on rent for all 30 days in a month. Essex Crane's management believes that the “hits” utilization measurement has a less direct correlation with equipment rental revenue.

Upon implementation of Essex Crane’s ERP System in 2002, Essex Crane began to measure utilization using the method referred to as the “days” method. Essex's management believes that this method, while it may reflect lower utilization rates than the “hits” method, is the most accurate method for measuring equipment utilization and correlates the most closely with rental revenue. Under this method, a real time report is generated from the ERP system for each piece of equipment on rent in a period. The report includes the number of days each piece of equipment was on rent on a particular lease at the base monthly rental rate. The total number of days on rent of all pieces of equipment provides the numerator for determining utilization. The denominator is all equipment rental assets owned times the number of days in the month. The “days” method is the utilization measurement currently used by Essex, and Essex anticipates that the “days” method will be the primary basis for future disclosure of utilization rates for Essex’s cranes and attachments.

The following table outlines utilization rates (calculated using the “days” and “hits” methods) and average monthly rental rates for the crawler crane fleet for the years ended December 31, 2008, 2009 and 2010:

											Avg.
			Avg. Crane						Avg.		Attachment
	Avg. Crane		Utilization Rate						Attachment		Utilization Rate
Year	Rental Rate		Days			Hits			Rental Rate		Days			Hits
2008	$	21,382		72.5	%		77.0	%	$	16,051		42.0	%		44.2	%
2009	$	21,081		43.6	%		48.2	%	$	18,776		18.0	%		20.2	%
2010	$	16,391		37.5	%		41.3	%	$	13,114		16.9	%		18.1	%

Lattice boom crawler cranes have long useful economic lives, often up to 50 years or more. This is longer than other types of cranes and equipment in the lifting market space. Our management believes this is due to the relatively high value of the crane’s structural steel (including its boom) as it relates to the total value of the crane. These structural steel items are complex fabrications with high replacement value made from high tensile strength steel. When properly maintained, these components retain their value over the life of the crane with minimal maintenance costs.

The following table outlines utilization rates (calculated using the “days” method) for the Coast Crane rental fleet assets for the month of December 2010:

Rough terrain cranes	60.4	%
Boom trucks	50.8	%
Tower cranes	32.0	%
Forklifts and other equipment	42.2	%

At the conclusion of each rental, the rented equipment is thoroughly inspected in accordance with requirements set by the original equipment manufacturer and Occupational Safety and Health Administration (OSHA). If maintenance or repairs are required, they are scheduled and completed prior to the next rental. At the start of the next rental, another inspection is made to ensure that the equipment is in a rent ready condition and compliant with the inspection requirements. We have extensive capabilities to perform major repair and reconditioning of the cranes and attachments. This type of activity is done on an as-needed basis to ensure that the equipment provides a high level of availability (uptime) when on rent.

We maintain a direct relationship with Manitowoc, Liebherr, Tadano, Mantis, Little Giant, Manitex and Lull, our principal suppliers, and have developed strong long-term relationships with them.

Sales and Marketing

Over its operating history, Essex has expanded its infrastructure of service centers and storage yards to key geographical locations across the United States in order to serve customers in a timely and efficient manner. Essex significantly expanded its reach into the Western and Northwestern United States, Alaska, Hawaii and Guam with the Coast Acquisition. Essex currently operates approximately 20 service centers and storage yards giving it the ability to service customers throughout North America. Essex employs a sales and marketing team across the country, each of whom covers a specific geographic region and reports directly to a senior management executive. Rather than segmenting the fleet by geography or salesperson, the fleet is allocated based upon factors such as rental financial return, customer mix and project mix. As such, each salesperson is highly incentivized to optimize fleet’s financial returns and sales mix.

We market our business to potential customers through advertising, promotion, membership in construction trade associations and attendance at various meetings and trade shows. In addition Essex Crane’s and Coast Crane’s web sites are designed with the goal of being very useful to engineers and designers who determine how a construction project will be built, as well as equipment and project managers who are responsible for the selection of the cranes that will be used to complete the project. Essex’s management believes that Essex Crane’s and Coast Crane’s web sites accomplish this goal by providing more comprehensive information regarding our equipment and the capacities and specifications of that equipment than may be readily available from other sources.

Essex Crane’s and Coast Crane’s sales teams use their extensive relationships with customers and potential users of cranes and other construction equipment to identify potential rental opportunities. This, combined with Essex Crane’s and Coast Crane’s reputations and brand value, contributes significantly to their sales activity.

In recent years, Essex Crane has enhanced this traditional method of lead generation with two lead-generation sales systems. The lead generation systems used by Essex Crane to collect information regarding construction activity from a variety of public records, including building permits. This information is then electronically sorted and filtered, using Essex Crane’s input to focus on jobs that most likely will require a large lattice boom crawler crane. This output is sent directly to the regional sales manager on the Essex Crane sales team who is responsible for the geographic area in which the project will be built. Essex Crane’s management believes that these methods provide a high degree of market visibility and awareness to Essex Crane’s sales team and management. Essex intends to incorporate these lead generation sales systems at Coast Crane during 2011.

Essex Crane operates a customized rental information management system through which detailed operational and financial information is available on a real time basis. The system is also used to maintain a detailed database of quoting activity for projects on which crawler crane equipment will be required. Management and sales personnel use this information to closely monitor business activity by piece of equipment, looking at customer trends and proactively responding to changes in the heavy lift marketplace. Essex Crane believes that its disciplined fleet management process, with its focus on project duration and lead time, as well as customer demand, enables Essex Crane to maximize utilization and rental rates. Essex also intends to incorporate its customized rental information management system at Coast Crane during 2011.

Customers and end markets

We serve a variety of customers throughout North America, many of which are large engineering and construction firms focused on large infrastructure and infrastructure-related projects that require significant lifting capacity and high mechanical reliability. For the year ended December 31, 2010, Essex Crane generated approximately 27%, 22%, 16% and 16% of total revenue from the transportation, industrial/marine, petrochemical, and levee construction end markets, respectively. Because of the scale and duration of these projects, rental agreement periods for equipment with heavier lifting capacities range from 4-18 months and average approximately 7 months. This provides us with better future revenue visibility and project lead generation times than our competitors. Our revenue generation model has been significantly expanded to lower lifting capacity cranes and other construction equipment that is commonly rented for shorter periods of time and generally serve residential and smaller commercial construction projects. We generated approximately $0.5 million and $3.0 million of our total revenue from foreign countries for the years ended December 31, 2010 and 2009.

Our end-markets incorporate construction and repair and maintenance projects in the following key sub-sectors:

industrial /marine – offshore facilities, marine facilities and other industrial facilities;

power – power plants, cogeneration power and wind power;

Transportation and infrastructure – airports, port facilities, bridges, roads, levees and canals;

petrochemicals – offshore platforms, refineries, petrochemical plants and pipelines;

sewer and water – sewers, treatment plants and pumping plants; and

general building - sports arenas, hospitals, commercial and residential.

Many of the market sectors we serve have been adversely affected by the weakening economy and difficult commercial credit environment. Management believes that, in the long-term, our strong niche market position and improvements in our fleet due to investment in new cranes combined with the diversification in our overall fleet of rental equipment and the addition of new lines of business, such as retail equipment and spare parts sales achieved by the Coast Acquisition will provide opportunities for future growth. Management bases such belief on the assumption that, in the long-term, there will be improvements in our customers’ ability to obtain financing, including credit, for infrastructure projects. We cannot assure you that our customers’ access to financing for infrastructure projects, including credit, will improve.

After experiencing increasing revenues from 2004 through 2008, 2009 and 2010 results were significantly lower and negatively impacted by uncertainty in the end markets in which Essex Crane’s customers operate caused by declining economic conditions and available credit. Total revenues for the years ended December 31, 2010 and 2009 were $41.5 and $52.1 million, respectively; a significant decline from the pro forma revenues of $85.9 million for the year ended December 31, 2008. As of December 31, 2010, Essex Crane’s estimated 12 month backlog stood at approximately $12.0 million. In light of the recent completion of the Coast Acquisition, and the fact that Coast Crane’s predecessor had been operating in bankruptcy for two months prior to the Coast Acquisition, we have not estimated a 12 month backlog for our operations through Coast Crane.

Strategy

Our management anticipates that the following longer-term market trends will increase demand for cranes, attachments and other construction equipment in the future and over longer periods:

increased levels of infrastructure spending, including the construction of major bridges, airports and water treatment facilities;

increased demand for electric power will require construction of additional power plants, potentially including nuclear power plants;

continued higher energy costs will increase construction activity to improve and expand efficiencies and capacities at refineries, offshore production suppliers, and petrochemical facilities;

increased environmental awareness will increase demand for construction of alternative energy sources such as wind and solar power, and clean air requirements including SO2 scrubbers and ash precipitators;

continued tendency for contractors to rent lattice boom crawler cranes, rough terrain cranes, tower cranes and boom trucks rather than own their own equipment; and

modular construction methods, including pre-fabrication, which generally require greater use of cranes, will continue to increase because of potential cost savings and site efficiencies.

Increase market share and pursue profitable growth opportunities. Through our fleet size, geographically dispersed service centers and storage yards, which allow us to provide equipment for projects throughout the United States and, to a lesser extent, Canada, Mexico, Guam and the South Pacific and track record of customer service, we intend to take advantage of these trends in order to maximize the opportunities for profitable growth within the North American crane and construction equipment rental market by:

optimizing fleet allocation across geographic regions, customers and end-markets to maximize utilization and rental rates;

focusing on superior customer service and providing a superior fleet of cranes and attachments as compared to our competitors;

leveraging our leading fleet size and composition across the country to increase our customer base and share of its existing customer base’s spending in the sector;

expanding our rental products by offering other crane types that can be rented “bare”;

increase our opportunities to engage with customers through distribution sales of new and used cranes and parts and service;

continuing to align incentives for local sales people and managers with both profit and growth targets;

pursuing additional selected acquisitions of other smaller, more regionally focused crane rental fleets or companies complementary to existing operations;

expanding used equipment sales by positioning used cranes for refurbishment and re-sale; and

establishing and maintaining existing relationships with international market players and crane manufacturers for future equipment purchase and sale opportunities.

Further drive profitability, cash flow and return on capital. Our management believes there are significant opportunities to further increase the profitability of our operations by:

continuing to re-position the fleet by selling older, lighter tonnage cranes and purchasing newer, heavier lifting capacity cranes that command higher margins and are in greater demand due to their ability to service large infrastructure-related projects;

actively managing the quality, reliability and availability of our fleet and offering superior customer service in order to support a competitive pricing strategy;

evaluating each new potential rental contract opportunity based on strict return guidelines and allocating its fleet accordingly;

using our size and national market presence to achieve economies of scale in capital investment; and

leveraging our extensive customer relationships at Essex Crane and Coast Crane to aid in the rental of equipment and selling of new and used equipment.

Competition

The heavy lift equipment rental industry is highly fragmented throughout North America, with a variety of smaller companies, many of which are family-owned, operating on a regional or local scale. Companies that have a national focus generally provide heavy lift rental services across a spectrum of crane types such as all-terrain, truck and tower cranes as well as crawlers. With a fleet of over 1,000 cranes and other construction equipment and unparalleled customer service and support, Essex supplies a wide variety of innovative lifting solutions for construction projects related to power generation, petro-chemical, refineries, water treatment and purification, bridges, highways, hospitals, shipbuilding, offshore oil fabrication and industrial plants, and commercial and residential construction. Our fleet of equipment is one of the largest fleets in North America, which allows us to develop greater expertise in comparison to our competitors, but still allows for economies of scale advantages with regard to purchasing power and allocation of rental equipment resources to the market. Our principal competitors include ALL Erection & Crane Rental, Bigge Crane and Rigging, Co., Lampson International, Maxim Crane Works, M.D., Morrow Equipment Rental and AmQuip Crane Corp. Some of these competitors operate nationally and others are regional.

We believe that there are six key factors differentiating us from our competitors:

heavy lifting equipment focus – We are primarily focused on heavy lift mobile and tower cranes dedicated to infrastructure and other large construction projects. Other companies also focus on other crane types with lower lift capacities and smaller types of construction rental equipment. Although the Company acquired some smaller types of construction rental equipment (such as personnel carriers and other lift equipment) in conjunction with the acquisition of Coast Crane’s assets, these smaller types of construction rental equipment account for less than 5% of the total fleet value;

national capabilities – some competitors offer national service capabilities, however most are regional players. Our management believes that a national presence provides the ability to fully service engineering and construction firms with a similar national footprint;

“bare” rental – We do not rent our equipment with an operator. While some other rental companies also rent equipment bare, generally equipment is rented with an operator. Renting equipment on a bare rental basis minimizes liability for the Company, provides a more efficient operating platform and business model;

our distribution business at Coast Crane provides the opportunity to provide product support for contractor owned cranes, which may lead to the opportunity to either sell or rent them additional cranes in the future;

outsourced transport – unlike many of our competitors, we do not operate an in-house transport department. In management’s view, this allows us to focus on core competencies and removes the need for capital investment in truck fleets and associated infrastructure; and

publicly traded company listed on the NASDAQ Capital Market with access to public capital to fund our growth.

Competition in the heavy lift equipment rental segment is strong and is defined by equipment availability, reliability, service and price. Our management believes that our extensive crane and attachment fleet, national presence and sales force, client relationships and equipment allocation and management systems provide us with a good scale and competitive positioning within the industry relative to our peers.

Risk of Loss and Insurance

The operation of lattice boom crawler cranes, tower cranes and rough terrain cranes includes risks such as a mechanical and structural failures, physical damage, property damage, operator overload or error, equipment loss, or business interruptions. We primarily rent our cranes and attachments on a “bare” lease and seldom supply the operator or perform the routine scheduled maintenance on the equipment. We require the lessee to supply a primary insurance policy covering the loss of the equipment and general liability for claims initiated by an accident, storm, fire or theft for most rental agreements. We also require that Essex be named as an additional insured and the loss payee on the lessee’s insurance policy. Our lease agreement also requires the lessee to indemnify us for any injury, damage and business interruption caused by the crane or the attachment while it is being leased. We maintain secondary insurance coverage for any claim not covered by the lessee’s insurance, however, we cannot guarantee that our insurance or the insurance of our customers will cover all claims or risks or that any specific claim will be paid by an insurer.

Government Regulation

Federal, state and local authorities subject our facilities and operations to requirements relating to environmental protection, occupational safety and health and many other subjects. These requirements, which can be expected to change and expand in the future, impose significant capital and operating costs on our business.

The environmental laws and regulations govern, among other things, the discharge of substances into the air, water and land, the handling, storage, use and disposal of hazardous materials and wastes and the cleanup of properties affected by pollutants. Environmental laws also impose obligations and liability for the investigation and cleanup of properties affected by hazardous substance spills or releases. We can be subject to liability for the disposal of substances which we generate and for substances disposed of on property which we own or operate, even if such disposal occurred before our ownership or occupancy. Accordingly, we may become liable, either contractually or by operation of law, for investigation, remediation and monitoring costs even if the contaminated property is not presently owned or operated by us, or if the contamination was caused by third parties during or prior to our ownership or operation of the property. In addition, because environmental laws frequently impose joint and several liability on all responsible parties, we may be held liable for more than our proportionate share of environmental investigation and cleanup costs. Contamination and exposure to hazardous substances can also result in claims for damages, including personal injury, property damage, and natural resources damage claims. Some of our properties contain, or previously contained, above-ground or underground storage tanks and/or oil-water separators. Given the nature of our operations (which involve the use and disposal of petroleum products, solvents and other hazardous substances for fueling and maintaining our cranes, attachments, equipment and vehicles) and the historical operations at some of our properties, we may incur material costs associated with soil or groundwater contamination. Under environmental and safety laws, we may be liable for, among other things, (i) the costs of investigating and remediating contamination at our sites as well as sites to which we sent hazardous wastes for disposal or treatment regardless of fault and (ii) fines and penalties for non-compliance. We incur ongoing expenses associated with the performance of appropriate investigation and remediation activities at certain of our locations.

Our operations are also subject to federal, state and local laws and regulations pertaining to occupational safety and health, most notably standards promulgated by OSHA. We are subject to various OSHA regulations that primarily deal with maintaining a safe work-place environment. OSHA regulations require us, among other things, to maintain documentation of work-related injuries, illnesses and fatalities and files for recordable events, complete workers compensation loss reports and review the status of outstanding worker compensation claims, and complete certain annual filings and postings. We may be involved from time to time in administrative and judicial proceedings and investigation with these governmental agencies, including inspections and audits by the applicable agencies related to our compliance with these requirements. During 2010 and 2009, we did not incur material expenses related to environmental investigations or remediation activities, and management does not expect to incur such expenses in the near term. There can be no assurance, however, that we will not incur such expenditures in the future.

Climate Change

To the extent that climate change does occur, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage or a decrease in demand for rental equipment located in or potentially rented in these areas affected by these conditions. Should the impact of climate change be material in nature, including destruction of our rental equipment assets or property, plant and equipment, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected.

In addition, developments in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our rental equipment without a corresponding increase in revenue.

Customers

Our customer base is highly diversified and ranges from Fortune 500 companies to small businesses. Our largest customer accounted for less than 10% of our revenues in 2010 and our top 5 customers accounted for less than 21% of our revenues in 2010. Historically, Essex Crane has typically retained over 40% of our customer base year-over-year while adding new customers as we attempt to grow the business.

Our customer base varies by branch and is determined by several factors, including the equipment mix and marketing focus of the particular branch as well as the business composition of the local economy. Our customers include:

•

construction companies that use equipment for constructing and renovating commercial buildings, warehouses, industrial and manufacturing plants, office parks, airports, residential developments and other facilities;

•

industrial companies—such as manufacturers, refineries, chemical companies, paper mills, railroads, ship builders, off-shore fabricators and utilities, including wind farms - that use equipment for plant maintenance, upgrades, expansion and construction;

•

municipalities that require equipment for a variety of purposes; and

•

contractors performing repair and maintenance to major renovation projects for owners of commercial and industrial facilities, such as power companies.

Suppliers

Our strategic approach with respect to our suppliers is to maintain the minimum number of suppliers per category of equipment that can satisfy our anticipated volume, location and business requirements. This approach is designed to ensure the terms we negotiate are competitive and that there is sufficient product available to meet anticipated customer demand. We utilize a comprehensive selection process to determine our equipment vendors. We consider product capabilities and industry position, product liability history and financial strength.

We have been making ongoing efforts to consolidate our vendor base in order to further increase our purchasing power. We estimate that our largest supplier accounted for approximately 31.0% of our 2010 total purchases, including equipment for rental, and that our 2 largest suppliers accounted for approximately 35.4% of such purchases. We believe we have sufficient alternative sources of supply available for each of our equipment categories.

Seasonality

Although our business is not significantly impacted by seasonality, the demand for our rental equipment tends to be lower during the winter months. The level of equipment rental activities are directly related to commercial and industrial construction and maintenance activities. Therefore, equipment rental performance will be correlated to the levels of current construction activities. The severity of weather conditions can have a temporary impact on the level of construction activities.

Employees

As of December 31, 2010, we had 276 employees, 6 of which are senior management. Approximately 6 of our staff are affiliated with trade unions. Neither Essex Crane nor Coast Crane has in the past 12 years experienced any work stoppage as a result of issues with labor or with unions and believes that this fact is a testament to our relationship with our employees. To our knowledge there is no current campaign by any union to organize additional employees of Essex Crane or Coast Crane.

Availability of Information

The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the “Exchange Act”). The Company therefore files periodic reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). Such reports may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549, or by calling the SEC at (800) SEC-0330. In addition, the SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information. Financial and other information can also be accessed on the Investor Relations section of the Company’s website at http://www.essexcrane.com. The Company makes available through its website, free of charge, copies of its annual report on Form 10-K/A, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Also posted on Essex Crane’s website are the Company’s corporate governance documents, the charters of the Audit Committee, Nominating Committee and Compensation Committee. The reference to our website is textual in reference only, and information on the Company’s website is not incorporated into this Form 10-K/A or the Company’s other securities filings and is not a part of them.

Item 1A.

Risk Factors

Our business may be adversely affected by changing economic conditions beyond our control, including decreases in construction or industrial activities.

The crane rental and distribution industry’s revenue is closely tied to conditions in the end markets in which our customers operate and more broadly to general economic conditions. Our products are used primarily in infrastructure-related projects and other construction projects in a variety of industries (including the power, transportation infrastructure, petrochemical, municipal construction and industrial and marine industries). Consequently, the economic downturn, and particularly the weakness in our end markets may lead to a significant decrease in demand for our equipment or depress equipment rental and utilization rates and the sales prices for equipment we sell. During periods of expansion in Essex Crane’s and Coast Crane’s respective end markets, Essex Crane and Coast Crane generally have benefited from increased demand for their products. Conversely, during recessionary periods in Essex Crane’s and Coast Crane’s end markets, they have been adversely affected by reduced demand for their products. Weakness in Essex Crane’s or Coast Crane’s end markets, such as a decline in non-residential construction, infrastructure projects or industrial activity, may in the future lead to a decrease in the demand for our equipment or the rental rates or prices we can charge. Factors that may cause weakness in our end markets include but are not limited to:

slowdowns in construction in the geographic regions in which we operate;

reductions in residential and commercial building construction;

reductions in corporate spending for plants, factories and other facilities; and

reductions in government spending on highways and other infrastructure projects.

Future declines in construction, infrastructure projects and industrial activity could adversely affect our operating results by decreasing revenues and profit margins. Continued weakness or further deterioration in the construction and industrial sectors caused by these or other factors could have a material adverse effect on our financial position, results of operations and cash flows in the future and may also have a material adverse effect on residual values realized on the disposition of our rental fleet. Declines in our order backlog should be considered as an indication of a decline in the strength of the non-residential construction markets.

Fluctuations in the stock market, as well as general economic and market conditions, may impact the market price of our securities.

The market price of our securities have been and may be subject to significant fluctuations in response to general economic changes and other factors including, but not limited to:

variations in our quarterly operating results or results that vary from investor expectations;

changes in the strategy and actions taken by our competitors, including pricing changes;

securities analysts’ elections to not cover our common stock, or, if analysts do elect to cover our common stock, changes in financial estimates by analysts, or a downgrade of our common stock or of our sector by analysts;

announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

loss of a large supplier;

investor perceptions of us and the equipment rental and distribution industry;

our ability to successfully integrate acquisitions and consolidations; and

national or regional catastrophes or circumstances and natural disasters, hostilities and acts of terrorism.

Broad market and industry factors may materially reduce the market price of our securities, regardless of our operating performance. In addition, the stock market in recent years has experienced price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of companies. These fluctuations, as well as general economic and market conditions, including to those listed above and others, may affect the market price of our securities.

We are dependent upon key personnel whose loss may adversely impact our business and our results of operations.

We depend on the expertise, experience and continued services of our senior management employees, especially Ronald Schad, our President and Chief Executive Officer, and Martin Kroll, our Chief Financial Officer and Senior Vice President, as well as senior management employees of our operating subsidiaries. Mr. Schad has acquired specialized knowledge and skills with respect to Essex Rental Corp. and its subsidiaries’ operations and most decisions concerning the business of Essex Rental Corp. are made or significantly influenced by him. The loss of any of the foregoing individuals or other senior management employees, without a proper succession plan, or an inability to attract or retain other key individuals, could materially adversely affect us. We seek to compensate and incentivize our key executives, as well as other employees, through competitive salaries and bonus plans, but there can be no assurance that these programs will allow us to retain key employees or hire new key employees. As a result, if Messrs. Schad, Kroll, or other senior executives of our operating subsidiaries were to leave, we could face substantial difficulty in hiring qualified successors and could experience a loss in productivity while any such successors obtain the necessary training and experience. In connection with the acquisition of Essex Crane, we entered into three-year employment agreements with each of Messrs. Schad, Kroll, Erwin and O’Rourke. However, these contracts expire in October 2011. As of the date of this filing, we have not entered into employment agreements with any other members of senior management.

Our dependence on a small number of crane manufacturers poses a significant risk to our business and prospects.

Essex Crane’s crane fleet has historically been comprised of only Manitowoc and Liebherr crawler cranes. Similarly, Coast Crane’s fleet of cranes available for rent has been comprised primarily of cranes provided by Manitowoc subsidiaries, including Potain, Grove and National. In addition, Coast Crane serves as a distributor of Tadano, Manitex, Broderson and JLG lifting equipment. Coast Crane’s crane and equipment distribution business depends upon its exclusive dealer partnerships with leading crane and equipment manufacturing companies and many of such relationships can typically be terminated on short notice. Given Essex Crane’s reliance on two manufacturers for its entire fleet of crawler cranes and Coast Crane’s reliance on a limited number of manufacturers for a majority of its rental fleet and distribution activities, and limited alternative sources of cranes, if any of these manufacturers were unable to meet expected manufacturing timeframes due to, for example, natural disasters or labor strikes, we may experience a significant increase in lead times to acquire new equipment or may be unable to acquire such equipment at all. Any inability to acquire the model types or quantities of new equipment on a timely basis to replace older, less utilized equipment could adversely impact our future financial condition or results of operations.

In addition, Essex Crane has developed strong relationships with Manitowoc and Liebherr and Coast Crane has developed strong relationships with its strategic partners. There can be no assurance that Essex Crane or Coast Crane will be able to maintain their relationships with these suppliers. Termination of Essex Crane’s or Coast Crane’s relationship with these suppliers could materially and adversely affect our business, financial condition or results of operations if such termination resulted in Essex Crane or Coast Crane being unable to obtain adequate rental and sales equipment from other sources in a timely manner or at all.

The cost of new equipment we use in our rental fleet may increase, which may cause us to spend significantly more for replacement equipment, and in some cases we may not be able to procure equipment at all due to supplier constraints.

Our business model is capital intensive and requires significant continual investment in new cranes and equipment to meet customer demand. As a result, our financial condition and results of operations may be significantly impacted by a material change in the pricing of new cranes and equipment that we acquire. Such changes may be driven by a number of factors which include, but are not limited to:

steel prices – due to the high tensile steel component of the cranes, significant changes in the price of steel can materially change the cost of acquiring a crane;

global demand – the market for crawler cranes is global and significant growth in overseas demand for cranes could materially increase the cost of new cranes regardless of US economic conditions;

inflation – overall inflationary conditions in the US may impact the operating costs of one of our key suppliers and therefore impact crane or other lifting equipment for customers such as Essex Crane and Coast Crane; and

currency fluctuations – as one of Essex Crane’s principal suppliers is based in Europe, devaluation of the US dollar (as compared to the Euro) may materially increase the cost of acquiring cranes and attachments; conversely, inflation of the value of the US dollar may adversely affect Essex Crane’s revenues from international sales of used cranes and attachments and adversely affect Coast Crane’s revenues from sales of new and used cranes, spare parts and related equipment to the extent that inflation allows foreign suppliers to offer competing products on more attractive terms.

While we can manage the size and aging of our fleet generally over time, eventually we must replace older equipment in our fleet with newer models. We would be adversely impacted if we were unable to procure cranes to allow us to replace our older and, in the case of Essex Crane, smaller capacity crawler cranes over time as anticipated.

If we are unable to obtain additional capital as required, we may be unable to fund the capital outlays required for the success of our business, including those relating to purchasing equipment and to acquiring new rental locations.

Although we intend to market each of Essex Crane and Coast Crane under separate trade names for the foreseeable future, our ability to compete, sustain our growth and expand our operations through new locations largely depends on access to capital. If the cash we generate from the operations of Essex Crane and Coast Crane, together with cash on hand and cash that we may borrow under their respective credit facilities, or short-term debt obtained by either Essex, Essex Finance or Coast Crane is not sufficient to implement our growth strategy and meet our capital needs, we will require additional financing. However, we may not succeed in obtaining additional financing on terms that are satisfactory to us or at all. In addition, our ability to obtain additional financing collateralized by the assets of Essex Crane and Coast Crane and our ability to obtain additional financing on a secured or unsecured basis are restricted by Essex Crane’s and Coast Crane’s respective credit facilities. If we are unable to obtain sufficient additional capital in the future, we may be unable to fund the capital outlays required for the success of our business, including those relating to purchasing crane attachments and other lifting equipment and to new service locations or storage yards. Furthermore, any additional indebtedness that we do incur may make us more vulnerable to economic downturns and may limit our ability to withstand competitive pressures.

If we are successful in our efforts to expand our operations, through new locations, acquisitions or additional equipment, such expansion may result in risks and costs associated with business start-up and integration.

The opening of new service locations or storage yards or the completion of any future acquisitions of other equipment rental companies may result in significant start-up or transaction expenses and risks associated with entering new markets in which we have limited or no experience. New service locations and storage yards require significant up-front capital expenditures and may require a significant investment of our management’s time to successfully commence operations. New locations may also require a significant amount of time to provide an adequate return on capital invested, if any. In addition, in the event that Essex Crane or Coast Crane were to acquire different types of cranes, attachments or other lifting equipment than those they currently rent, or different classes of rental equipment, there can be no assurance that our customers would choose to rent such items from us or would do so at such rates or on such terms, that would be acceptable to us.

Our ability to realize the expected benefits from the Coast Crane acquisition or any future acquisitions of other equipment rental companies depends in large part on our ability to integrate and consolidate the new operations with our existing operations in a timely and effective manner and to otherwise implement our business plan for the combined business. In addition, we may fail or be unable to discover certain liabilities of any acquired business, including liabilities relating to noncompliance with environmental and occupational health and safety laws and regulations. Any significant diversion of management’s attention from our existing operations, the loss of key employees or customers of any acquired business, or any major difficulties encountered in opening new locations or integrating new operations, including, but not limited to those arising from inconsistencies in controls, procedures or company policies, could have an adverse effect on our business, financial condition or results of operations.

The crane rental, distribution and repair service industries are competitive.

The crane rental and distribution industries are highly fragmented. The crane rental industry is served by companies who focus almost exclusively on crane and lifting equipment rental. Essex Crane and Coast Crane compete directly with regional, and local crane rental companies and a limited number of national crane rental companies (including ALL Erection & Crane, Lampson International, Morrow Equipment Rental, Amquip Crane Corp., Maxim Crane Works and Biggie Crane). There can be no assurance that we will not encounter increased competition from existing competitors or new market entrants (including a newly-formed competitor created by consolidating several existing regional competitors) that may be significantly larger and have greater financial and marketing resources.

Our management believes that rental rates, fleet availability and size and quality are the primary competitive factors in the crane rental industry. Our management also believes that price, equipment mix and the quality and availability of post-sale repair and spare part services are the primary competitive factors in the crane distribution industry. From time to time, we or our competitors may attempt to compete aggressively by lowering rental rates or prices or offering more favorable rental or sale terms. Competitive pressures could adversely affect our revenues and operating results by decreasing our market share or depressing the rental rates or sale prices for our equipment. To the extent we lower rental rates or sale prices, offer different rental or sale terms or increase our fleet in order to retain or increase market share, our operating margins would be adversely impacted.

Our status as a public company may be a competitive disadvantage.

We are and will continue to be subject to the disclosure and reporting requirements of applicable US securities laws and rules promulgated by The NASDAQ Stock Market. Many of our principal competitors are not subject to these disclosure and reporting requirements or the NASDAQ rules. As a result, we may be required to disclose certain information and expend funds on disclosure and financial and other controls that may put us at a competitive disadvantage to our principal competitors.

We may encounter substantial competition in our efforts to expand our operations.

An element of our growth strategy is to continue to expand by opening new service centers and equipment storage yards. The success of our growth strategy depends in part on identifying sites for new locations at attractive prices. Zoning restrictions may in the future prevent us from being able to open new service centers or storage yards at sites we have identified. We may also encounter substantial competition in our efforts to acquire other crane rental companies, which may limit the number of acquisition opportunities and lead to higher acquisition costs.

The crane rental industry has inherent operational risks that may not be adequately covered by our insurance.

We may not be adequately insured against all risks and there can be no assurance that our insurers will pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement crane in the event of a loss. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. Our insurance policies will also contain deductibles, limitations and exclusions which, although management believes are standard in the heavy lift crane rental industry, may nevertheless increase our costs. Moreover, certain accidents or other occurrences may result in intangible damages (such as damage to our reputation) for which insurance may not provide an adequate remedy.

We may not be able to renew our insurance coverage on terms favorable to us that could lead to increased costs in the event of future claims.

When our current insurance policies expire, we may be unable to renew such coverage upon terms acceptable to us, if at all. If we are able to renew our coverage we expect that the premium rates and deductibles may increase as a result of general rate increases for this type of insurance as well as Essex Crane’s and Coast Crane’s historical claims experience and that of our competitors in the industry. If we cannot obtain insurance coverage, it could adversely affect our business by increasing our costs with respect to any claims. Additionally, existing or future claims may exceed the level of our present insurance, and our insurance may not continue to be available on economically reasonable or desirable terms, if at all.

We may not be able to generate sufficient cash flows to meet our debt service obligations.

Our ability to make payments on our indebtedness will depend on our ability to generate cash from future operations. As of December 31, 2010, Essex Crane has a revolving credit facility which provides for an aggregate borrowing capacity of $190.0 million of which $158.3 million was outstanding, Coast Crane has a revolving credit facility which provides for an aggregate borrowing capacity of $75.0 million, of which $53.9 million was outstanding and Coast Crane Ltd. has a revolving credit facility which provides for an aggregate borrowing capacity of $5.0 million, of which $2.8 million was outstanding. Each facility is secured by a first priority lien on all of the applicable borrower’s assets and, in the event of default; the lenders generally would be entitled to seize the collateral. We also have approximately $8.6 million of other term debt, $4.9 million of which is unsecured while the remaining amount is secured by specific equipment.

In the event of a prolonged economic downturn, our business may not generate sufficient cash flow from operations or from other sources to enable it to repay its indebtedness and to fund its other liquidity needs, including capital expenditure requirements and may not be able to refinance any of its indebtedness on commercially reasonable terms, or at all. If we cannot service or refinance our indebtedness, we may have to take actions such as asset divestitures, seeking additional equity or reducing or delaying capital expenditures, any of which could have an adverse effect on our operations. Additionally, we may not be able to effect such actions, if necessary, on commercially reasonable terms, or at all.

In the event we or any of our subsidiaries incur further debt obligations in relation to acquisitions, or for any other purpose, the exposure to the risks outlined above will increase accordingly.

Decreases in the appraised value of our rental fleet and other assets securing our revolving credit facilities may result in an inability to meet our financial obligations.

The amounts available for borrowing under our revolving credit facilities are determined based on the value of assets securing those obligations, including rental equipment, company vehicles, parts and equipment inventories and accounts receivables. The value of rental equipment and company vehicles are determined based on the opinion of an independent appraisal firm engaged by the respective financial institutions. A decline in the appraised value of these assets would directly impact our liquidity and as a result, we may not be able to meet our financial obligations.

Our revolving credit facilities contain restrictive covenants that will limit our corporate activities.

The revolving credit facilities of Essex Crane and Coast Crane impose operating and financial restrictions that will limit, among other things, their ability to:

create additional liens on their assets;

make investments and capital expenditures above a certain threshold;

incur additional indebtedness;

engage in mergers or acquisitions;

pay dividends or redeem outstanding capital stock;

sell any of their respective cranes or any other assets outside the ordinary course of business; and

change their respective businesses.

Essex Crane and Coast Crane will need to seek permission from their respective lenders in order for Essex Crane or Coast Crane, as applicable, to engage in some corporate actions. Essex Crane’s and Coast Crane’s lender’s interests may be different from those of Essex Crane or Coast Crane, and no assurance can be given that Essex Crane or Coast Crane will be able to obtain their lender’s permission when needed. This may prevent Essex Crane or Coast Crane from taking certain actions that are in their best interests.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed.

We have identified a material weakness in our internal control over financial reporting which pertains to controls relating to the process of accounting for state income taxes. See “Item 9A—Controls and Procedures—Management’s Report on Internal Control Over Financial Reporting.” As of the date of this annual report on Form 10-K, we have implemented remedial measures related to the identified material weakness. The requirements of Section 404 of the Sarbanes-Oxley Act are ongoing and also apply to future years. We expect that our internal control over financial reporting will continue to evolve as our business develops. Although we are committed to continue to improve our internal control processes and we will continue to diligently and vigorously review our internal control over financial reporting in order to ensure compliance with the Section 404 requirements, any control system, regardless of how well designed, operated and evaluated, can provide only reasonable, not absolute, assurance that its objectives will be met. Therefore, we cannot be certain that in the future additional material weaknesses or significant deficiencies will not exist or otherwise be discovered. If our efforts to remediate the weakness identified are not successful or if other deficiencies occur, these weaknesses or deficiencies could result in misstatements of our results of operations, additional restatements of our consolidated financial statements, a decline in our stock price and investor confidence, or other material effects on our business, reputation, results of operations, financial condition or liquidity.

We are subject to numerous environmental laws and regulations that may result in us incurring unanticipated liabilities, which could have an adverse effect on our operating performance.

Federal, state and local authorities subject our facilities and operations to requirements relating to environmental protection. These requirements can be expected to change and expand in the future, and may impose significant capital and operating costs on our business.

Environmental laws and regulations govern, among other things, the discharge of substances into the air, water and land, the handling, storage, use and disposal of hazardous materials and wastes and the cleanup of properties affected by pollutants. If either Essex Crane or Coast Crane violates environmental laws or regulations, it may be required to implement corrective actions and could be subject to civil or criminal fines or penalties. There can be no assurance that Essex Crane and/or Coast Crane will not have to make significant capital expenditures in the future in order to remain in compliance with applicable laws and regulations or that Essex Crane and/or Coast Crane will comply with applicable environmental laws at all times. Such violations or liability could have an adverse effect on our business, financial condition and results of operations. Environmental laws also impose obligations and liability for the investigation and cleanup of properties affected by hazardous substance spills or releases. Essex Crane or Coast Crane can be subject to liability for the disposal of substances which it generates and for substances disposed of on property which it owns or operates, even if such disposal occurred before its ownership or occupancy. Accordingly, Essex Crane or Coast Crane may become liable, either contractually or by operation of law, for investigation, remediation and monitoring costs even if the contaminated property is not presently owned or operated by Essex Crane or Coast Crane, or if the contamination was caused by third parties during or prior to Essex Crane’s or Coast Crane’s ownership or operation of the property. In addition, because environmental laws frequently impose joint and several liability on all responsible parties, Essex Crane or Coast Crane may be held liable for more than its proportionate share of environmental investigation and cleanup costs. Contamination and exposure to hazardous substances can also result in claims for damages, including personal injury, property damage, and natural resources damage claims. Some of the properties of Essex Crane and Coast Crane contain, or previously contained, above-ground or underground storage tanks and/or oil-water separators. Given the nature of the operations of Essex Crane and Coast Crane (which involve the use and disposal of petroleum products, solvents and other hazardous substances for fueling and maintaining its cranes, attachments and vehicles) and the historical operations at some of its properties, Essex Crane and/or Coast Crane may incur material costs associated with soil or groundwater contamination. Future events, such as changes in existing laws or policies or their enforcement, or the discovery of currently unknown contamination, may give rise to remediation liabilities or other claims that may be material.

Environmental requirements may become stricter or be interpreted and applied more strictly in the future. In addition, Essex Crane or Coast Crane may be required to indemnify other parties for adverse environmental conditions that are now unknown to us. These future changes or interpretations, or the indemnification for such adverse environmental conditions, could result in environmental compliance or remediation costs not anticipated by us, which could have a material adverse effect on our business, financial condition or results of operations.

We are subject to numerous occupational health and safety laws and regulations that may result in us incurring unanticipated liabilities, which could have an adverse effect on our operating performance.

Our operations are subject to federal, state and local laws and regulations pertaining to occupational safety and health, most notably standards promulgated by the Occupational, Safety and Health Administration, or OSHA. Essex Crane and Coast Crane are subject to various OSHA regulations that primarily deal with maintaining a safe work-place environment. OSHA regulations require Essex Crane and Coast Crane, among other things, to maintain documentation of work-related injuries, illnesses and fatalities and files for recordable events, complete workers compensation loss reports and review the status of outstanding worker compensation claims, and complete certain annual filings and postings. Essex Crane or Coast Crane may be involved from time to time in administrative and judicial proceedings and investigation with these governmental agencies, including inspections and audits by the applicable agencies related to its compliance with these requirements.

To date, compliance by Essex Crane and Coast Crane with these and other applicable safety regulations has not had a material effect on our results of operations or financial condition. However, the failure of either Essex Crane or Coast Crane to comply with these and other applicable requirements in the future could result in fines and penalties to Essex Crane or Coast Crane and require us to undertake certain remedial actions or be subject to a suspension of business, which, if significant, could materially adversely affect our business or results of operations. Moreover, the involvement by either Essex Crane or Coast Crane in any audits and investigations or other proceedings could result in substantial financial cost to us and divert our management’s attention. Several recent highly-publicized accidents involving cranes (none of which involved cranes or attachments provided by Essex Crane or Coast Crane) could result in more stringent enforcement of work-place safety regulations, especially with respect to companies which rent older cranes and attachments. Additionally, future events, such as changes in existing laws and regulations, new laws or regulations or the discovery of conditions not currently known to us, may give rise to additional compliance or remedial costs that could be material.

Safety requirements may become stricter or be interpreted and applied more strictly in the future. These future changes or interpretations could have a material adverse effect on our business, financial condition or results of operations.

There are a substantial number of shares of our common stock available for resale in the future that may cause a decrease in the market price of our common stock.

In connection with our acquisition of Essex Crane, Holdings issued its Class A Membership Interests to members of Essex Crane’s senior management. Such membership interests may be exchanged for up to an aggregate of 632,911 shares of our common stock, subject to certain adjustments. We have granted registration rights to Essex Crane’s senior management with respect to the shares of our common stock issuable upon exchange of the Retained Interests, which entitle Essex Crane’s senior management to file a registration statement with respect to such shares under certain circumstances. We also granted registration rights with respect to 3,294,700 shares of our common stock held by Kirtland Capital Company III LLC and Kirtland Capital Partners III LP.

In addition, warrants to purchase an aggregate of 13,295,781 shares of our common stock issued to our initial stockholders, purchasers in our initial public offering and EarlyBirdCapital, Inc. (excluding 1,741,719 shares of our common stock that would have been issuable upon exercise of warrants repurchased by us between November 1, 2008 and December 31, 2009) became exercisable upon the closing of the acquisition of Essex Crane. All of our common stock issuable upon exercise of the warrants was available for resale upon exercise. Lastly, 2,812,500 shares of our common stock purchased by our initial stockholders prior to our initial public offering were released from escrow in November 2009 and are eligible for resale in the public market subject to compliance with applicable law. Our initial stockholders are entitled to demand that we register the resale of their shares of common stock at any time after the date on which their shares are released from escrow. As of December 31, 2010, there were 4,059,556 warrants outstanding that had an expiration date of March 4, 2011. Prior to expiration, the Company received proceeds of approximately $19.8 million for the exercise of 3,955,603 warrants. 103,953 warrants expired worthless on March 4, 2011.

On November 24, 2010, we completed a private placement of 3,300,000 shares of our common stock to six accredited investors and used the proceeds to satisfy a portion of the purchase price for the Coast Crane acquisition. On November 29, 2010, we issued 90,000 warrants to a group of related investors in a private transaction associated with the exercise of assumed debt into the unsecured promissory notes. Such warrants have an exercise price of $0.01 per share, subject to adjustment. If the unsecured promissory notes are repaid in full on or before May 29, 2011, the number of warrants will be reduced to 30,000. The issuance of these shares and warrants resulted in dilution to our existing stockholders.

The presence of this additional number of shares of common stock eligible for trading in the public market may have an adverse effect on the market price of our common stock. In addition, upon exercise of options and warrants to purchase our common stock, the equity interests of our stockholders, as a percentage of the total number of the outstanding shares of common stock, and the net book value of the shares of our common stock will be significantly diluted.

We may issue shares of our common stock and preferred stock to raise additional capital, including to complete a future business combination, which would reduce the equity interest of our stockholders.

Our amended and restated certificate of incorporation authorizes the issuance of up to 40,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per share. We currently have 12,639,736 authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of shares upon full exercise of our outstanding warrants (net of repurchases), employee stock options and unit purchase options, and the number of shares issuable upon exchange of the Retained Interests) and all of the 1,000,000 shares of preferred stock available for issuance. Although we currently have no other commitments to issue any additional shares of our common or preferred stock, we may in the future determine to issue additional shares of our common or preferred stock to raise additional capital for a variety of purposes, including to complete a future acquisition. The issuance of additional shares of our common stock or preferred stock may significantly reduce the equity interest of stockholders and may adversely affect prevailing market prices for our common stock.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Essex Crane leases its headquarters at 1110 Lake Cook Road, Suite 220, Buffalo Grove, Illinois 60089, which consists of 6,680 square feet of office space. Also, Essex Crane currently owns the following properties:

A service center located at 2039 Fulton Springs Road, Alabaster, Shelby County, Alabama 35007. Land area totals 400,752 square feet and building area totals 28,575 feet.

A satellite service center located at 14133 Weld County Road 9.5 Longmont, Weld County, Colorado. The land area of the property totals 409,900 square feet and building area totals 16,000 square feet.

A service center located at 5315 Causeway Boulevard Tampa, Hillsborough County, Florida 33619. Gross land area totals 204,732 square feet and building area totals 18,604 square feet.

A service center located at 303 Peach Lane Arcola, Fort Bend County, Texas 77583. Gross land area totals 710,681 square feet and building area totals 36,342 square feet.

In addition, Essex Crane leases the following properties throughout the United States:

A satellite service center comprising 33,500 square feet of outside storage space located at 6048 193rd Avenue SW, Rochester, WA 98579.

A satellite service center comprising 74,476 square feet of outside storage space located at 1072 Harrisburg Pike, Carlisle, PA 17103.

A service Center comprising 6,000 square feet of warehouse space and approximately three acres of outside storage space located at 15060 Ceres Avenue Fontana, CA 92335.

Essex Crane also has agreements which allow it to store equipment at two additional storage yards located strategically in the United States.

Coast Crane leases the following properties:

A service center comprising 30,000 square feet of space located at 1601 N.E. Columbia Blvd., Portland, Oregon ;

A service center comprising 10,000 square feet of space located at 4680 W. Capital Ave., West Sacramento, CA 95691;

A storage yard comprising 53,260 square feet of space located at 4300 W. Capital Ave., West Sacramento, CA 95691;

A service center comprising 18,500 square feet of space located at 19062 San Jose Ave., City of Industry, CA 91748;

A service center comprising 14,935 square feet of space located at 14951 Catalina St., San Leandro, CA 94577;

A service center comprising 9,450 square feet of space located at 6615 Rosedale Highway, Bakersfield, CA 93308;

A service center comprising 16,232 square feet of space located at 8250 5th Avenue South, Seattle, WA 98108;

A storage yard comprising 2,500 square feet of space located at 500 South Sullivan Avenue, Seattle, WA 98108;

A service center comprising 9,862 square feet of space located at 114 St. Paul Avenue, Tacoma, WA 98421;

A service center comprising 10,050 square feet of space located at 3920 E. Boone Avenue, Spokane, WA 99202;

A service center comprising 8,000 square feet of space located at 525 S Oregon Avenue, Pasco, WA 99301;

A service center comprising 11,408 square feet of space located at 8900 King Street, Anchorage, AK 99515;

A service center comprising 5,720 square feet of space located at 12570 Slaughterhouse Canyon Road, Lakeside, CA 92040;

A service center comprising 4,000 square feet of space located at 422 East Emporia Street, Ontario, CA 91761;

A service center comprising 8,500 square feet of space located at 91-505 Awakumoku Place, Kapolei, HI 96707; and

A service center comprising 9,934 square feet of space located at 9538 195th Street, Surrey, BC V4N 4E5, Canada.

Our growth strategy includes the establishment of service and storage centers across the United States, with a particular emphasis on new facilities in areas of the United States which our management from time to time believes present growth opportunities for our business. Our management currently believes that growth opportunities exist in the Northeast and Mid-Atlantic regions and intends to investigate potential additional facilities in those regions. We have not identified specific locations for any such new facilities.

We also maintain shared offices at 500 Fifth Avenue, 50th Floor, New York, New York 10110 pursuant to an agreement with ProChannel Management LLC, an affiliate of Laurence S. Levy, Chairman of our Board of Directors. Such office is primarily used by our corporate Secretary, Carol Zelinski, and Laurence S. Levy and Edward Levy, each of whom serves on our Board of Directors.

We consider our current facilities adequate for our current operations.

ITEM 3.

LEGAL PROCEEDINGS

From time to time, the Company is party to various legal actions in the normal course of our business. Management believes that the Company is not party to any litigation that, if adversely determined, would have a material adverse effect on our business, financial condition, result of operations or cash flows.

ITEM 4.

RESERVED

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Effective January 13, 2010, our common stock commenced trading, and is currently traded, on the NASDAQ Capital Market under the symbol ESSX. Effective January 13, 2010 until the expiration of certain of our warrants on March 4, 2011, our units and warrants were traded on the NASDAQ Capital Market under the symbols ESSXU and ESSXW, respectively. Our warrants and units ceased trading upon the expiration of certain of our warrants. The following table sets forth the high and low sale prices for the units, common stock and warrants for each quarterly period within the two most recent fiscal years.

	Units				Common Stock				Warrants
	High		Low		High		Low		High		Low

Year ended December 31, 2010
First Quarter	$	8.00	$	5.96	$	7.25	$	5.00	$	1.85	$	0.70
Second Quarter		7.01		5.95		7.65		5.44		2.95		1.45
Third Quarter (1)		n/a		n/a		6.00		4.19		1.85		0.04
Fourth Quarter		5.41		5.41		5.71		4.35		0.53		0.10
Year ended December 31, 2009
First Quarter	$	3.81	$	3.80	$	4.50	$	3.00	$	1.05	$	0.32
Second Quarter		6.60		3.80		6.60		3.65		1.61		0.51
Third Quarter		5.00		5.00		6.30		5.00		1.39		0.90
Fourth Quarter		5.00		5.00		6.20		5.00		1.10		0.45

(1)

Note that for the third quarter of 2010 there were no trades in our warrants and therefore the high and low are not applicable.

As of March 3, 2011, there were approximately 136 holders of record of our common stock, nine holders of record of warrants and one holder of record of our Units.

Dividend Policy

We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends in the near future. The payment of cash dividends in the future will be contingent upon our revenues, earnings, if any, capital requirements and general financial condition. In addition, we are a holding company and conduct all of our operations through Essex Crane and Coast Crane. As a result, we rely on dividends and distributions to us from our subsidiaries, Essex Crane, Coast Crane and Holdings. Essex Crane’s and Coast Crane’s existing credit facilities limit Essex Crane’s, Coast Crane’s and Holdings’ ability to declare and pay dividends or make distributions on account of their capital stock and membership interests, and any debt instruments that the Company or its subsidiaries may enter into in the future may limit our subsidiaries’ ability to pay dividends to us and our ability to pay dividends to our stockholders. Payment of dividends is within the discretion of our board of directors. It is the present intention of our board of directors to retain all earnings for liquidity management (through debt reduction), dilution management (through continued warrant and common stock repurchases), to invest in additional rental equipment and use in business operations. Accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future on our common stock.

Recent Sales of Unregistered Securities and Use of Proceeds

On October 29, 2010, we entered into subscription agreements providing for the sale of an aggregate of 3,300,000 shares of our common stock at a price of $4.30 per share, or $14,190,000 in the aggregate, in a private offering (the “Private Placement”). The closing of the Private Placement and issuance of shares of common stock pursuant to the subscriptions occurred upon the closing of the Coast Acquisition on November 24, 2010. The proceeds of the Private Placement were used to fund the cash portion of the purchase price in the Coast Acquisition.

Essex paid a fee of $638,550, plus expenses, to CJS Securities for placement agent services rendered to Essex in connection with the Private Placement.

The securities issued in the Private Placement were offered and sold without registration under the Securities Act of 1933, as amended (the “Act”), in reliance on the exemption from registration provided in Section 4(2) of the Act, based in part on representations made to the Company by each investor in the Private Placement that such investor is an accredited investor and the fact that no general solicitation was involved in the Private Placement.

Purchases of Equity Securities by the Issuer

There were no purchases of equity securities by the Company during the fourth quarter of 2010.

Equity Compensation Plans

For information regarding equity compensation plans, see Item 12 of this annual report on Form 10-K/A.

Item 6.

Selected Financial Data

The following table sets forth selected consolidated financial data of the Company as of and for the years ended December 31, 2010, 2009, 2008, 2007 and 2006. The following table also sets forth selected consolidated financial data of the Predecessor as of and for the ten month period ended October 31, 2008 and as of and for the years ended December 31, 2007 and 2006.

The information in the following table should be read together with the Company’s consolidated financial statements and accompanying notes as of December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008, the Predecessor’s audited consolidated financial statements and accompanying notes as of and for the ten month period ended October 31, 2008 and for the year ended December 31, 2007 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included under Item 7 of this report. These historical results are not necessarily indicative of the results to be expected in the future.

																Essex Holdings, LLC (Predecessor)
																For the Ten
	Essex Rental Corp. (Successor)															Months Ended			For the Years Ended
	For the Years Ended December 31,															October 31,			December 31,
	2010			2009			2008			2007			2006			2008			2007			2006
	(Restated)
Operations Summary

Total revenue	$	41,531,460		$	52,084,392		$	14,872,789		$	-		$	-		$	70,978,557		$	78,122,079		$	63,515,355
Cost of revenues		35,403,917			32,900,942			7,055,992			-			-			29,545,082			38,757,886			33,438,156

Gross profit		6,127,543			19,183,450			7,816,797			-			-			41,433,475			39,364,193			30,077,199

Selling, general, administrative and other expenses		13,919,489			11,329,156			4,185,375			456,661			1,550			13,762,884			9,244,998			8,860,953
Goodwill impairment		-			-			23,895,733			-			-						-			-

Income (loss ) from operations		(7,791,946	)		7,854,294			(20,264,311	)		(456,661	)		(1,550	)		27,670,591			30,119,195			21,216,246

Interest and Other Income		72,278			643			1,405,637			2,543,781			1,148			-			-			-
Interest Expense (1)		(7,209,449	)		(6,681,740	)		(1,124,398	)								(8,190,438	)		(14,961,069	)		(11,429,235	)

Income (loss ) before taxes		(14,931,588	)		1,173,197			(19,983,072	)		2,087,120			(402	)		19,480,153			15,158,126			9,787,011
Net income (loss)	$	(11,408,486	)	$	1,195,806		$	(11,917,121	)	$	1,699,120		$	(402	)	$	11,417,074		$	11,216,856		$	9,283,424

Weighted average shares outstanding
Basic		16,102,339			14,110,789			13,517,010			13,224,144			2,812,500
Diluted		16,102,339			15,805,191			13,517,010			13,224,144			2,812,500

Earnings (loss) per share
Basic	$	(0.71	)	$	0.08		$	(0.88	)	$	0.13		$	(0.00	)
Diluted	$	(0.71	)	$	0.08		$	(0.88	)	$	0.13		$	(0.00	)

Other Operating Data

Depreciation	$	12,723,951		$	11,210,472		$	1,809,623		$	-		$	-		$	6,908,980		$	8,034,011		$	7,758,332
Other depreciation and amortization	$	954,602		$	781,751		$	139,943		$	-		$	-		$	110,019		$	133,124		$	128,687

Year-end Financial Position

Cash held in trust fund	$	-		$	-		$	-		$	100,927,634		$	-		$	-		$	-		$	-
Rental equipment, net		330,378,792			260,767,678			255,692,116			-			-			133,172,649			124,950,463			121,081,185
Total assets		383,046,958			286,463,157			289,998,510			102,569,184			169,441			169,397,016			149,081,546			141,454,333

Current liabilities		15,454,192			15,146,529			13,883,446			2,526,315			144,843			16,966,002			12,586,433			9,793,667
Short-term debt obligations		783,243			5,170,614			-			-			-			-			-			-
Other long-term debt obligations		7,921,531			-			-			-			-			-			-			15,528,133
Revolving credit facilities		214,959,971			131,919,701			137,377,921			-			-			129,895,169			129,862,723			78,370,611
Total liabilities		304,736,667			212,325,126			217,952,753			2,526,315			144,843			160,690,875			151,989,341			105,613,724

Common stock, subject to conversion		-			-			-			19,932,029			-			-			-			-
Paid in capital (Members' equity)		101,052,367			84,589,119			84,383,579			78,410,547			24,719			40,270,000			40,270,000			40,270,000
Total stockholders' equity	$	78,310,291		$	74,138,031		$	72,045,757		$	80,110,840		$	24,598		$	(8,706,141	)	$	(2,907,795	)	$	35,840,609

(1) Includes the impact of undesignated interest rate swaps.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ESSEX RENTAL CORP. AND ESSEX HOLDINGS LLC (PREDECESSOR)

The following discussion has been restated to reflect the restatement of the consolidated balance sheet and consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2010 and should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K/A. The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties (see discussion of “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K/A). Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those factors set forth under Item 1A—Risk Factors of this Annual Report on Form 10-K/A.

Restatement of Financial Statements

We have restated:

Our consolidated statement of operations for the year ended December 31, 2010 by decreasing the benefit for income taxes by $1.8 million.

Overview

History

Essex Rental was formed on August 21, 2006 as Hyde Park Acquisition Corp. to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating company. Essex Rental consummated its initial public offering on March 13, 2007. All activity from August 21, 2006 (inception) through March 13, 2007 relates to Essex Rental Corp’s (formerly Hyde Park Acquisition Corp.) formation and initial public offering. From March 13, 2007 through October 31, 2008, the Company’s activities were limited to identifying prospective target businesses to acquire and complete a business combination. On October 31, 2008, the Company consummated the acquisition of Holdings and its wholly-owned subsidiary, Essex Crane, and, as a result, is no longer in the development stage. In August 2009, the Company formed a new subsidiary, Essex Finance Corp., to facilitate the acquisition of rental equipment. In November 2010, the Company acquired substantially all of the assets of Coast Crane Company, a Delaware corporation (“Coast Crane”) through a newly formed subsidiary CC Bidding Corp. The assets acquired in the acquisition of Coast Crane consisted of all of the assets used in the operation of its specialty lifting solutions and crane rental services business, including cranes and related heavy lifting machinery and equipment and spare parts, inventory, accounts receivable, rights under executory contracts, other tangible and intangible assets and all of the outstanding shares of capital stock of Coast Crane Ltd., a British Columbia corporation, through which Coast Crane conducted its operations in Canada.

For more information regarding our acquisition of Holdings and Essex Crane as well as Coast Crane Company, see note 1 to our consolidated financial statements.

Business

Essex Crane is a leading provider of lattice-boom crawler crane and attachment rental services and possesses one of the largest fleets of such equipment in the United States. Over approximately 50 years of operation, since its founding in 1960, Essex Crane has steadily grown from a small, family-owned crane rental company to a private equity owned professionally managed company that today is a public company and one of the leading players in the industry offering lattice boom crawler rental services to a variety of customers, industries and regions mainly throughout the United States and Canada.

Over the past several years, we have been focused on reinvesting capital into our rental fleet. Specifically, we have sold lower lifting capacity cranes for better utilized heavier lifting capacity cranes. During the years ended December 31, 2010, 2009 and 2008, the Company invested approximately $2.7 million, $19.8 million and $20.8 million, respectively into new cranes and attachments for our rental fleet.

These investment decisions contributed greatly to the repositioning our fleet to maximize its utilization rates and average rental rates. Although we believe the repositioning of the fleet has maximized utilization rates and average rental rates, the economic downturn has significantly adversely impacted our business activity levels. During the periods reported:

utilization rates of crawler cranes decreased to 37.5% (or 41.3%, if calculated using the “hits” method) in 2010 from 72.5% (or 77.0%, if calculated using the “hits” method) in 2008 on a pro forma basis;

average crawler crane rental rates decreased to $16,391 in 2010 from $21,382 in 2008 on a pro forma basis, and average attachment rental rates decreased to $13,114 in 2010 from $16,051 in 2008 on a pro forma basis; and

utilization rates of crawler crane attachments decreased to 16.9% (or 18.1% if calculated using the “hits” method) in 2010 from 42.0% (or 44.2% if calculated using the “hits” method) in 2008 on a pro forma basis.

Coast Crane’s predecessor was founded in 1970 and the Coast Crane business has grown to become a market leader for innovative lifting solutions throughout Western North America, Alaska, Hawaii, Guam and the South Pacific. Coast Crane provides both new and used and new equipment including rough terrain cranes, boom trucks, tower cranes and other lifting equipment. Products are rented and sold through a regional network including 13 branch locations.

The impact of the economic downturn is also reflected in the Company’s operating results and cash flow. During the period from December 31, 2008 through December 31, 2010:

revenue decreased by 51.6% to $41.5 million in 2010, of which $5.4 million was related to the operations of Coast Crane in the post-acquisition period, from $85.9 million in 2008 on a pro forma basis and equipment rental revenue decreased by 59.5% to $25.0 million in 2010 from $61.8 million in 2008 on a pro forma basis;

cost of revenues decreased by 8.0% to $35.4 million (of which $4.9 million was related to the operations of Coast Crane in the post-acquisition period) in 2010 from $38.4 million in 2008 on a pro forma basis but increased as a percentage of total revenue to 85.1% from 44.8%;

selling, general, administrative and other expenses decreased by 25.7% or $4.8 million to $13.9 million in 2010 from $18.7 million in 2008 on a pro forma basis primarily due to consulting and environmental expenses incurred in 2008 associated with the acquisition of Holdings that year. As a percentage of total revenue these costs increased to 37.6% from 21.8%;

Results of Operations

Year ended December 31, 2010 compared to years ended December 31, 2009 and 2008

The Company had a net loss of $11.4 million for the year ended December 31, 2010. Total revenue, cost of revenues and gross profit were $41.5 million, $35.4 million and $6.1 million, respectively, for the year ended December 31, 2010. Selling, general, administrative and other expenses of $13.9 million was composed primarily of salaries, payroll taxes benefits, sales and marketing, insurance, professional fees, rent, travel, depreciation and amortization expenses. Interest expense related to borrowings under our revolving credit facilities and other debt obligations was $7.4 million for the year ended December 31, 2010. The Company had an income tax benefit of $3.5 million for the year ended December 31, 2010 related to loss before income taxes of $14.9 million.

The Company had a net income of $1.2 million for the year ended December 31, 2009. Total revenue, cost of revenues and gross profit were $52.1 million, $32.9 million and $19.2 million, respectively, for the year ended December 31, 2009. Selling, general, administrative and other expenses of $11.3 million was composed primarily of salaries, payroll taxes benefits, sales and marketing, insurance, professional fees, rent, travel, depreciation and amortization expenses. Interest expense related to borrowings under Essex Crane’s revolving credit facility was $6.7 million for the year ended December 31, 2009. The Company had an income tax benefit of $23,000 for the year ended December 31, 2009 related to income before income taxes of $1.2 million.

Essex Rental had a net loss of $11.9 million for the year ended December 31, 2008, including an after-tax charge related to goodwill impairment of approximately $14.8 million ($23.9 million gross). Absent that item, net income would have been approximately $2.9 million. Essex Rental’s financial results for the year ended 2008 included the operations of Essex Crane for the two month post acquisition period. Total revenue, cost of revenues and gross profit were $14.9 million, $7.1 million and $7.8 million, respectively. Selling general, administrative and other expenses of $4.2 million was composed primarily of salaries, payroll taxes benefits, sales and marketing, insurance, professional fees, rent and travel expenses and included $1.2 million of acquisition related transaction costs. Interest income from cash held in trust was $1.4 million while interest expense related to borrowings under Essex Crane’s revolving credit facility was $1.1 million for the year ended December 31, 2008. Essex Rental had a tax benefit of $8.1 million for the year ended December 31, 2008 primarily related to the net loss before income taxes of $20.0 million.

Year ended December 31, 2010 compared to year ended December 31, 2009

	Year Ended December 31,
	2010			2009
	(Restated)

Revenue	$	41,531,460		$	52,084,392
Cost of revenues		35,403,917			32,900,942
Gross profit		6,127,543			19,183,450
Selling, general, administrative and other operating expenses		13,919,489			11,329,156
Income from operations		(7,791,946	)		7,854,294
Other income (expense), net		(7,139,642	)		(6,681,097	)
Income (loss) before income taxes		(14,931,588	)		1,173,197
Provision (benefit) for income taxes		(3,523,102	)		(22,609	)
Net (loss) income	$	(11,408,486	)	$	1,195,806

For the year ended December 31, 2010, we had net loss of $11.4 million compared to a net income of $1.2 million for the year ended December 31, 2009. The $12.6 million decrease in net income was primarily due to a $10.6 million decrease in revenue, a $2.5 million increase in cost of revenues, an increase in selling, general, administrative and other operating expenses of $2.6 million partially as a result of $1.2 million of acquisition related transaction costs incurred in 2010, and $0.5 million higher interest expense primarily associated with the additional debt entered into and assumed in the Coast Crane acquisition. The decrease in gross profit, increase on selling, general and administrative costs and increase in interest expense were offset by an increase in the provision benefit for income taxes of $3.5 million.

	Year Ended December 31,
	2010		2009
REVENUE
Equipment rentals	$	25,049,779	$	34,556,696
New equipment sales		1,238,722	$	-
Used rental equipment sales		4,255,761		6,478,197
Retail part sales		1,184,042		-
Transportation		4,766,328		4,909,346
Equipment repairs and maintenance		5,036,828		6,140,153
Total revenue	$	41,531,460	$	52,084,392

Revenue for the year ended December 31, 2010 was $41.5 million, a 20.3% decrease compared to revenue of $52.1 million for the year ended December 31, 2009. Revenue was comprised of the following components:

Equipment rentals revenue, which represented 60.3% of total revenue, was $25.0 million for the year ended December 31, 2010, a 27.5% decrease from $34.6 million for the year ended December 31, 2009. This decrease was first driven by a decrease in crane utilization to 37.5% under the “days” method (or 41.3% if calculated using the “hits” method) for the year ended December 31, 2010 from 43.6% under the “days” method (or 48.2% if calculated using the “hits” method) for the year ended December 31, 2009. The decrease in utilization was a result of excess market supply of rental equipment compared to the demand brought on by the weakened economy and a difficult commercial credit environment. Second, the Company also experienced the associated decrease in the average crane rental rate of 22.2% to $16,391 (per crane per rental month) for the year ended December 31, 2010 relative to $21,081 for the year ended December 31, 2009. The decrease in the average rental rate is due to the expiration of rental agreements executed at higher rental rates in the prior years. Additionally, utilization on a “days” method increased to 44.7% for the three months ended December 31, 2010 from 30.0% for the three months ended March 31, 2010. We expect the average rental rates will continue to improve in 2011 as utilization rates continue to recover.

New equipment sales revenue, which represented 3.0% of total revenue, was $1.2 million for the year ended December 31, 2010 and relates to new equipment sales by our Coast Crane subsidiary acquired in November 2010.

Used rental equipment sales revenue, which represented 10.2% of total revenue, was $4.3 million for the year ended December 31, 2010, a 34.3% decrease from $6.5 million for the year ended December 31, 2009. These used equipment sales have presented Essex Crane with opportunities to further enhance its combination of cranes and attachments by providing an additional cash flow source for purchasing additional new rental equipment. Five lower lifting capacity crawler cranes and attachments were sold for the year ended December 31, 2010 which was a decrease from thirteen for the year ended December 31, 2009. In both periods the market presented opportunities to sell a number of the lower utilization units which have lower rental rates, and Essex Crane reinvested the proceeds of such sales into a smaller number of larger cranes and attachments which yield higher utilization rates and higher relative rental rates on the capital costs and enable Essex Crane to improve the strategic position of its rental fleet for the future. The average lifting capacity of five cranes sold was 197 tons and 158 tons for the years ended December 31, 2010 and 2009, respectively, compared to 440 tons and 256 tons for cranes purchased during the same periods, respectively. Cranes sold during the year ended December 31, 2010 were sold at an average price in excess of 120% of Orderly Liquidation Value (“OLV”). OLV is determined for collateral measurement purposes by an independent appraiser on behalf of the lead lender for the Company’s asset based revolving credit facility;

Retail part sales revenue, which represented 2.9% of total revenue, was $1.2 million for the year ended December 31, 2010 and relates to retail part sales from our Coast Crane subsidiary acquired in November 2010.

Transportation revenue, which represented 11.5% of total revenues was $4.8 million for the year ended December 31, 2010, a 2.9% decrease from $4.9 million for the year ended December 31, 2009. This decrease is primarily a result of lower average crane rental utilization and was impacted by the combination of cranes and attachments rented and the specific distances that equipment had to move for various rentals; and

Equipment repairs and maintenance revenue (including rigging and other services), which represented 12.1% of total revenue, was $5.0 million for the year ended December 31, 2010, an 18.0% decrease from $6.1 million for the year ended December 31, 2009. This decrease is attributed to a lower demand for repairs, maintenance and other services resulting from lower average crane rental utilization.

	Year Ended December 31,
	2010		2009
COST OF REVENUES

Salaries, payroll taxes and benefits	$	5,905,279	$	6,006,715
Depreciation expense (a)		12,723,951		11,210,472
Cost of new equipment sold		994,119		-
Book value of equipment sold		3,551,891		5,584,784
Cost of retail parts sold		775,338		-
Transportation		4,236,326		3,743,595
Equipment repairs and maintenance		5,833,945		4,873,005
Yard operating expenses		1,383,068		1,482,371
Total cost of revenues	$	35,403,917	$	32,900,942

Cost of revenues for the year ended December 31, 2010 was $35.4 million, a 7.6% increase from $32.9 million for the year ended December 31, 2009. Cost of revenues was 85.2% of total revenue for the year ended December 31, 2010, relative to 63.3% for the year ended December 31, 2009. The increase in cost of revenues resulted primarily from the items described below.

Salary, payroll tax and benefit expenses decreased 1.7% to $5.9 million for the year ended December 31, 2010 from $6.0 million for the year ended December 31, 2009. The decrease was a direct result of a 10% salary reduction on certain operations managers which was implemented midway through 2009, reduced hours, lower overtime, some headcount reduction and reduced bonus expense. These decreases in salary, payroll tax and benefit expenses were partially offset by $0.5 million of expenses incurred in the operations of Coast Crane during the post-acquisition period.

Depreciation expense related to rental equipment increased 13.5% to $12.7 million for the year ended December 31, 2010 compared to $11.2 million for the year ended December 31, 2009. $1.1 million of the increase in depreciation expense is related to the Coast Crane equipment acquired in November 2010.

Cost of new equipment sold was $1.0 million for the year ended December 31, 2010 and relates to new equipment cost of sales by our Coast Crane subsidiary acquired in November 2010.

Net book value of rental equipment sold decreased 36.4% to $3.6 million for the year ended December 31, 2010, from $5.6 million for the year ended December 31, 2009. The decrease in net book value of equipment sold was primarily from a decrease in the number of cranes sold.

Cost of retail parts sold was $0.8 million for the year ended December 31, 2010 and relates to cost of retail parts sold by our Coast Crane subsidiary in the post-acquisition operations of 2010.

Transportation expenses increased 13.2% to $4.2 million for the year ended December 31, 2010, from $3.7 million for the year ended December 31, 2009. Approximately $0.1 million of the increase was related to costs incurred from the post-acquisition operations of Coast Crane in 2010. The remaining difference in transportation expenses incurred is due to differences in the combination of cranes and attachments rented and the specific distances that equipment had to move for various rentals.

Equipment repairs and maintenance expenses increased 19.7% to $5.8 million for the year ended December 31, 2010, from $4.9 million for the year ended December 31, 2009. Approximately $1.0 million of the increase was related to cost incurred from the post-acquisition operations of Coast Crane in 2010.

Yard operating expense decreased by 6.7% to $1.4 million for the year ended December 31, 2010, from $1.5 million for the year ended December 31, 2009. The slight decrease was primarily related to lower average crane rental utilization.

Essex Crane’s gain on the sale of used rental equipment was $0.7 million (16.5% margin, calculated by dividing the gain on the sale divided by the revenue from such sale) for the year ended December 31, 2010 compared to $0.9 million (13.8% margin) for the year ended December 31, 2009. The lower level of gains on sales was due to due to the lower level of used rental equipment sales in the current period.

	Year Ended December 31,
	2010		2009
SELLING, GENERAL, ADMINISTRATIVE
AND OTHER OPERATING EXPENSES

Selling, general and administrative	$	12,964,887	$	10,547,405
Non-rental depreciation and amortization		954,602		781,751
Total selling, general, administrative and other operating expenses	$	13,919,489	$	11,329,156

Total Selling, general, administrative and other operating expenses for the year ended December 31, 2010 was $13.9 million, a $2.6 million or 22.7% increase from $11.3 million for the year ended December 31, 2009.

Total selling, general, administrative and other expenses increased due to costs associated with the post-acquisition operations of Coast Crane, approximately $1.2 million of acquisition related transaction expenses incurred an 2010 and in increase in legal and professional fees. Other components of administrative expenses include: salaries, payroll taxes and benefits, insurance and selling and marketing expenses.

	Year Ended December 31,
	2010			2009
OTHER INCOME (EXPENSES), NET

Other income (expense)	$	72,278		$	643
Interest expense		(7,368,904	)		(6,681,740	)
Foreign exchange loss		(2,471	)		-
Interest rate swap		159,455			-
Total other income (expenses), net	$	(7,139,642	)	$	(6,681,097	)

Interest expense of $7.4 million for the year ended December 31, 2010 increased by $0.7 million or 10.6% from $6.7 million primarily due to an increase in the balance of debt outstanding as a result of the Coast Crane acquisition in November 2010.

Income tax benefit was approximately $3.5 million for the year ended December 31, 2010, compared to a $23,000 tax benefit for the year ended December 31, 2009. The higher income tax benefit for the year ended December 31, 2010 is primarily due to a loss before income taxes of $14.9 million. The effective tax rates were 23.6% and (1.9%) for the year ended December 31, 2010 and 2009, respectively. The Company’s effective rate for the year ended December 31, 2010 was lower than the statutory tax rate primarily due to state and local taxes. The decrease in the effective tax rate related to the increase in state deferred tax rates at Essex Crane as a result of the acquisition of Coast Crane and an additional state NOL valuation allowance, which were partially offset by the reduction in unrecognized benefit associated with the effective settlement of uncertain tax positions. The Essex Crane state deferred tax rates increased due to an increase in apportionment into higher tax rate states which Coast Crane operates due to unitary filing requirements. The effective rate was lower than the statutory federal tax rate for the year ended December 31, 2009 due to 2008 tax return to provision differences, an increase in uncertain tax positions and state and local taxes including a change in estimate of $0.6 million associated with the Company’s state income tax apportionments and rates.

Essex had 276 full-time employees as at December 31, 2010 compared to 111 full-time employees at December 31, 2009. The increase in the number of employees is due to the acquisition of Coast Crane in November 2010.

Year ended December 31, 2009 compared to unaudited pro-forma year ended December 31, 2008 operating results

As previously discussed, we acquired Holdings and its operating subsidiary Essex Crane on October 31, 2008. As a result, our consolidated operating results only include Essex Crane’s results of operations since the acquisition date. The following financial information provides a comparison of the Company’s results of operations for the year ended December 31, 2009 to the unaudited pro forma results of operations for the year ended December 31, 2008 as if we had acquired Holdings (and Essex Crane) on January 1, 2008. Management believes that such pro forma comparison provides a more meaningful comparison of our business’s results of operations for the year ended December 31, 2008. The following unaudited pro forma operating results of our business are not intended to be, and not indicative of, the consolidated results of operations of the Company that would have been reported had the acquisition of Holdings (and Essex Crane) been completed as of the dates presented, and are not necessarily indicative of the results to be expected going forward. The unaudited pro forma financial information should be read in conjunction with our historical financial statements and the historical financial statements of Holdings included elsewhere in this annual report on Form 10-K/A.

				Unaudited
	Successor			Pro Forma
	Year Ended December 31,
	2009			2008
Revenue	$	52,084,392		$	85,851,346
Cost of revenues		32,900,942			38,444,438
Gross profit		19,183,450			47,406,908
Selling, general, administrative
and other operating expenses		11,329,156			18,693,621
Goodwill impairment		-			23,895,733
Income from operations		7,854,294			4,817,554
Other income (expense), net		(6,681,097	)		(9,524,943	)
Income (loss) before income taxes		1,173,197			(4,707,389	)
Provision (benefit) for income taxes		(22,609	)		(1,068,388	)
Net income (loss)	$	1,195,806		$	(3,639,001	)

For the year ended December 31, 2009, we had net income of $1.2 million compared to a pro forma net loss of $3.6 million for the year ended December 31, 2008. The $4.8 million increase in net income was primarily due to a $23.9 million ($14.8 million net of tax) goodwill impairment charge recorded in 2008, a decrease in selling, general, administrative and other operating expenses of $7.4 million as a result of $6.2 million of transaction costs not eligible for capitalization incurred in 2008 and $2.8 million lower interest expense associated with lower market interest rates on our debt. The decrease in expenses were offset by a decrease in revenues of $33.8 million (39.3%) and gross profit of $28.2 million (59.5%), respectively, resulting primarily from lower equipment rental revenue of $27.3 million and lower transportation revenue of $3.3 million.

			Unuadited
	Successor		Pro Forma
	Year Ended December 31,
	2009		2008
REVENUE
Equipment rentals	$	34,556,696	$	61,823,678
Used rental equipment sales		6,478,197		8,439,805
Transportation		4,909,346		8,163,171
Equipment repairs and maintenance		6,140,153		7,424,692
Total revenue	$	52,084,392	$	85,851,346

Revenue for the year ended December 31, 2009 was $52.1 million, a 39.3% decrease compared to pro forma revenue of $85.9 million for the year ended December 31, 2008. Revenue and pro forma revenue were comprised of the following components:

Equipment rentals revenue, which represented 66.4% of total revenue, was $34.6 million for the year ended December 31, 2009, a 44.1% decrease from $61.8 million on a pro forma basis for the year ended December 31, 2008. This decrease was primarily driven by a decrease in crane utilization to 43.6% under the “days” method (or 48.2% if calculated using the “hits” method) for the year ended December 31, 2009 from 72.5% under the “days” method (or 77.0% if calculated using the “hits” method) on a pro forma basis for the year ended December 31, 2008. The decrease in utilization was a result of excess market supply of rental equipment compared to the demand brought on by the weakening economy and a difficult commercial credit environment. The Company also experienced a decrease in the average crane rental rate of 1.4% to $21,081 (per crane per rental month) for the year ended December 31, 2009 relative to $21,382 on a pro forma basis for the year ended December 31, 2008. The slight decrease in the average rental rate is due to the expiration of rental agreements executed at higher rental rates in the prior year and new agreements being entered into at lower average rental rates. As more rental agreements expire, we expect the average rental rates will continue to decline further in 2010 until utilization rates recover.

Used rental equipment sales revenue, which represented 12.4% of total revenue, was $6.5 million for the year ended December 31, 2009, a 23.2% decrease from pro forma used rental equipment sales revenue of $8.4 million for the year ended December 31, 2008. These used equipment sales have presented Essex with opportunities to further enhance its combination of cranes and attachments by providing an additional cash flow source for purchasing additional new rental equipment. Thirteen lower lifting capacity cranes and attachments were sold for the year ended December 31, 2009 which was a decrease from twenty two for the year ended December 31, 2008. In both periods the market presented opportunities to sell a number of the lower utilization units which have lower rental rates, and Essex reinvested the proceeds of such sales into a smaller number of larger cranes and attachments which yield higher utilization rates and higher relative rental rates on the capital costs and enable Essex to improve the strategic position of its rental fleet for the future. The average lifting capacity of cranes sold was 158 tons and 153 tons for the years ended December 31, 2009 and 2008, respectively, compared 256 tons and 295 tons for cranes purchased during the same periods, respectively. Cranes sold during the year ended December 31, 2009 were sold at an average price in excess of 120% of Orderly Liquidation Value (“OLV”). OLV is determined for collateral measurement purposes by an independent appraiser on behalf of the lead lender for the Company’s asset based revolving credit facility;

Transportation revenue, which represented 9.4% of total revenues was $4.9 million for the year ended December 31, 2009, a 39.9% decrease from pro forma transportation revenue of $8.2 million for the year ended December 31, 2008. This decrease is primarily a result of lower crane rental utilization and was impacted by the combination of cranes and attachments rented and the specific distances that equipment had to move for various rentals; and

Equipment repairs and maintenance revenue (including rigging and other services), which represented 11.8% of total revenue, was $6.1 million for the year ended December 31, 2009, a 17.3% decrease from pro forma repair and maintenance revenue of $7.4 million for the year ended December 31, 2008. This decrease is attributed to a lower demand for repairs, maintenance and other services resulting from lower crane rental utilization.

			Unaudited
	Successor		Pro Forma
	Year Ended December 31,
	2009		2008
COST OF REVENUES

Salaries, payroll taxes and benefits	$	6,006,715	$	8,041,998
Depreciation expense (a)		11,210,472		10,561,967
Book value of equipment sold		5,584,784		4,625,783
Transportation		3,743,595		6,727,663
Equipment repairs and maintenance		4,873,005		6,647,754
Yard operating expenses		1,482,371		1,839,273
Total cost of revenues	$	32,900,942	$	38,444,438

(a)

A pro forma adjustment to depreciation expense of $1.8 million is reflected for the year ended December 31, 2008 based on the fair value purchase price allocation to the rental equipment which was significantly in excess of the historical carrying amount of Holdings, thereby increasing depreciation expense.

Cost of revenues for the year ended December 31, 2009 was $32.9 million, a 14.4% decrease from the pro forma cost of revenues of $38.4 million for the year ended December 31, 2008. Cost of revenues was 63.3% of total revenue for the year ended December 31, 2009, relative to 44.8% for the year ended December 31, 2008. The decrease in cost of revenues resulted from decreases in salaries, payroll taxes and benefits, transportation expenses and equipment repairs and maintenance partially offset by increases in depreciation expense and in the net book value of equipment sold as described below.

Salary, payroll tax and benefit expenses decreased 25.3% to $6.0 million for the year ended December 31, 2009 from $8.0 million on a pro forma basis for the year ended December 31, 2008. The decrease was a direct result of a 10% salary reduction on certain operations managers, reduced hours, lower overtime, some headcount reduction and reduced bonus expense.

Depreciation expense related to rental equipment increased 6.1% to $11.2 million for the year ended December 31, 2009 compared to $10.6 million on a pro forma basis for the year ended December 31, 2008. The increase in depreciation expense is primarily related to equipment purchased during 2009.

Net book value of rental equipment sold increased 20.7% to $5.6 million for the year ended December 31, 2009, from $4.6 million on a pro forma basis for the year ended December 31, 2008. The increase in net book value of equipment sold was driven by a higher relative asset basis for the sales occurring after the fair value acquisition accounting resulting in a step-up in basis to fair market value recorded on October 31, 2008 partially offset by a decrease in the number of cranes sold.

Transportation expenses decreased 44.4% to $3.7 million for the year ended December 31, 2009, from $6.7 million for the year ended December 31, 2008. The decrease was related primarily to lower crane rental utilization.

Equipment repairs and maintenance expenses decreased 26.7% to $4.9 million for the year ended December 31, 2009, from $6.6 million for the year ended December 31, 2008. The decrease was primarily related to lower crane rental utilization and also related to improved cost productivity and lower parts expense.

Yard operating expense decreased by 19.4% to $1.5 million for the year ended December 31, 2009, from $1.8 million for the year ended December 31, 2008. The decrease was primarily related to lower crane rental utilization.

Our gain on the sale of used rental equipment was $0.9 million (13.8% margin, calculated by dividing the gain on the sale divided by the revenue from such sale) for the year ended December 31, 2009 compared to a pro forma gain of $3.8 million (45.2% margin) for the year ended December 31, 2008. The lower level of gains on sales was due to the increase in book value of equipment driven by a higher relative asset basis resulting from the fair value acquisition accounting recorded on October 31, 2008 and also due to the lower levels of used equipment sales in the current period. The pro forma gain on sale of equipment included in these pro forma financial results for the year ended December 31, 2008, presented consistently with that used in the Company’s Definitive Proxy Statement, filed with the SEC on October 8, 2008, will not be indicative of future results since the rental equipment was adjusted to fair value as of the closing date of the acquisition, thereby reducing potential future gains on sale.

			Unaudited
	Successor		Pro Forma
	Year Ended December 31,
	2009		2008
SELLING, GENERAL, ADMINISTRATIVE AND OTHER OPERATING EXPENSES

Selling, general and administrative	$	10,547,405	$	17,698,297
Goodwill impairment		-		23,895,733
Non-rental depreciation and amortization (a)		781,751		995,324
Total selling, general, administrative and other operating expenses	$	11,329,156	$	42,589,354

(a)

A pro forma adjustment to non-rental depreciation amortization expense of $0.9 million was recorded for the year ended December 31, 2008 for the amortization of the customer list and trademark acquired in the Holdings acquisition.

Total Selling, general, administrative and other operating expenses for the year ended December 31, 2009 was $11.3 million, a $31.3 million or 73.4% decrease from $42.6 million on a pro forma basis for the year ended December 31, 2008. Total selling, general, administrative and other expenses decreased primarily due to the $23.9 million goodwill impairment charge recorded in 2008 as well as $6.2 million of transaction related expenses not eligible for capitalization incurred in 2008, partially offset by higher operating costs associated with being a public company including fees related to the Company’s board of directors, audit, legal, insurance and investor relations. Selling, general, administrative and other operating expenses also decreased due to a compensation expense decrease of $1.4 million primarily due to a reduction in bonus expense and the temporary salary reduction program pursuant to which our chief executive officer, members of our executive management and other key managers receiving salaries elected to reduce the amount of their salaries paid in cash in exchange for fully vested common shares that are temporarily restricted from sale valued at approximately 42% of the reduced cash compensation. Other components of administrative expenses include: salaries, payroll taxes and benefits, insurance and selling and marketing expenses.

				Unaudited
	Successor			Pro Forma
	Year Ended December 31,
	2009			2008
OTHER INCOME (EXPENSES), NET

Other income (expense)	$	643		$	-
Interest expense		(6,681,740	)		(9,524,943	)
Total other income (expenses), net	$	(6,681,097	)	$	(9,524,943	)

Interest expense of $6.7 million for the year ended December 31, 2009 decreased by $2.8 million or 29.9% from $9.5 million on a pro forma basis primarily due to lower market interest rates on the Company’s debt and a decrease in the balance of debt outstanding.

Income tax benefit was approximately $23,000 for the year ended December 31, 2009, compared to a $1.1 million pro forma tax benefit for the year ended December 31, 2008. The lower income tax benefit for the year ended December 31, 2009 is primarily due to an increase of income before income taxes of $5.9 million. The effective tax rates were (1.9%) and 22.7% for the year ended December 31, 2009 and 2008, respectively. The effective rate was lower than the statutory federal tax rate for the year ended December 31, 2009 due to 2008 tax return to provision differences, an increase in uncertain tax positions and state and local taxes including a change in estimate of $0.6 million associated with the Company’s state income tax apportionments and rates. The effective tax rate was lower than the statutory federal tax rate for the year ended December 31, 2008 due to state and local taxes.

We had 111 full-time employees as at December 31, 2009 compared to 129 full-time employees at December 31, 2008.

Liquidity and Capital Resources

The Company has typically had substantial liquidity from its operating cash flows despite the significant downturn in the construction industry. However, the Company had negative net cash flows from operations for the year ended December 31, 2010 due primarily to a net loss of $9.6 million and a decrease in accounts payable and accrued expenses. Combined cash flows provided by operating activities of the Successor and Predecessor for all three years presented were approximately $36.9 million. As of December 31, 2010, the Company had total debt obligations outstanding of approximately $223.5 million and had an additional $39.7 million available on our revolving credit facilities. We believe the Essex Crane and Coast Crane credit facilities will provide sufficient liquidity through October 2013 and November 2014, respectively. We believe that the sources of cash from operations and the revolving credit facility should adequately fund the investment needs of the business for the foreseeable future.

Our Essex Crane subsidiary has a $100.0 million interest rate swap agreement in place that locks this portion of its debt based upon LIBOR of 2.71% plus 225 basis points. Our Coast Crane subsidiary has three interest rate swap agreements in place with an aggregate notional amount of $21.0 million that locks this portion of its debt based upon a fixed rate of 5.62%. Management believes this cost of interest is more than sufficient to cover the rental revenue it generates since rental rates are established as a percentage of the values of the underlying equipment. The weighted average interest rate on all debt obligations outstanding as of December 31, 2010 including the impact of the interest rate swaps was 4.83%

Cash Flow from Operating Activities

The Company’s cash used in operating activities for the year ended December 31, 2010 was $5.4 million. This was primarily the result of net loss of $11.4 million, which, when adjusted for non-cash expense items, such as depreciation and amortization of $14.2 million, gains on the sale of rental equipment of $0.7 million, deferred income taxes of $1.6 million, change in fair value of interest rate swap of $0.2 million and stock-based compensation expense of $1.2 million, provided positive cash flows of approximately $1.5 million. The cash flows from operating activities were also decreased by a $8.5 million reduction in accounts payable and accrued expenses and a $1.0 increase in prepaid expenses and other assets, offset by a $1.4 million increase in unearned rental revenue, a $0.2 million decrease in retail equipment inventory, a $0.3 million decrease in receivables and a $0.6 million decrease in spare parts inventory. Much of the cash used by operating activities related to the change in accounts payable and accrued expenses is due to liabilities assumed by the Company in conjunction with the Coast Acquisition.

The Company’s cash provided by operating activities for the year ended December 31, 2009 was $15.1 million. This was primarily the result of net income of $1.2 million, which, when adjusted for non-cash expense items, such as depreciation and amortization of $12.5 million, gains on the sale of rental equipment of $0.9 million, deferred income taxes of $0.1 million and stock-based compensation expense of $0.6 million, provided positive cash flows of approximately $13.4 million. The cash flows from operating activities were also increased by a $5.9 million reduction in receivables and reduced by a $0.3 million increase in spare parts inventory, a $2.5 million decrease in accounts payable and accrued expenses and a $1.4 million decrease in unearned rental revenue.

The Company’s cash used in operating activities for the year ended December 31, 2008 was $0.7 million. This is primarily the result of a net loss of $11.9 million, which, when adjusted for non-cash expense items, such as goodwill impairment of $23.9 million, depreciation and amortization of $2.0 million, deferred income taxes of $9.9 million, stock-based compensation expense of $0.1 million, and gains on the sale of rental equipment of $0.3 million, provided positive cash flows of approximately $3.9 million for the two month post-acquisition period. The cash flows from operating activities were also reduced by $1.7 million of interest earned from the trust fund, an increase in receivables of $1.5 million, a decrease of $0.4 million in accounts payable and accrued expenses, and a $0.4 million increase in unearned rental revenue.

The Predecessor’s cash provided by operating activities for the ten months ended October 31, 2008, the date Holdings was acquired, was approximately $27.7 million. This was primarily the result of net income of $11.4 million, which when adjusted for non-cash expense items such as depreciation and amortization, gains on sales of rental equipment, deferred income taxes, stock-based compensation expense and the change in fair value of the interest rate swap, provided positive cash flows of approximately $23.1 million. The cash flows from operating activities were also increased by a $1.1 million decrease in accounts receivable, a $4.0 million increase in accounts payable and accrued expenses and a $0.4 million increase in unearned rental revenue. These increases were partially offset by decreases in operating cash flows as a result of a $0.8 million increase in prepaid expenses and other assets and a $0.1 million increase in spare parts inventory.

Cash Flow from Investing Activities

For the year ended December 31, 2010, cash used in investing activities was approximately $28.7 million. This was primarily the result of net cash payments of $31.8 million for the purchase of Coast Crane, purchases of rental equipment of $0.2 million (excluding the $2.6 million of rental equipment purchases made directly through short-term obligations) and purchases of property and equipment of $1.0 million. These investing activity uses of cash were partially offset by $4.3 million in proceeds received for the sale of rental equipment.

For the year ended December 31, 2009, cash used in investing activities was approximately $11.8 million. This was primarily the result of purchases of rental equipment of $17.2 million, purchases of property and equipment of $1.0 million and an increase in accounts receivables related to the sale of rental equipment of $0.1 million. These investing activity uses of cash were partially offset by $6.5 million in proceeds received for the sale of rental equipment.

For the year ended December 31, 2008, cash provided by investing activities was approximately $23.7 million. This is primarily the result of the use of all the cash held in the Trust Fund ($102.6 million), the majority of which was used to fund the acquisition of Holdings, and since the acquisition of Holdings on October 31, 2008, the purchase of $2.8 million rental equipment and $0.2 million in property and equipment, partially offset by proceeds from the sale of rental equipment of $1.7 million.

The Predecessor’s cash used in investing activities for the ten months ended October 31, 2008, the date Holdings was acquired, was approximately $23.5 million. This was primarily the result of $18.0 million in purchases in rental equipment, $3.0 million in purchases of property and equipment and a $9.9 million purchase of Hyde Park common stock. These investing uses of cash were partially offset by a $0.7 million decrease in accounts receivables from rental equipment sales and proceeds from the sale of rental equipment of $6.7 million.

Cash flow from financing activities

Cash provided by financing activities was approximately $37.4 million for the year ended December 31, 2010. This is primarily due to net proceeds from the issuance of common stock of $13.6 million, proceeds from the exercise of warrants of $2.4 million and a net increase in total debt obligations of $22.9 million. Total borrowings for the year under the short-term debt obligations and revolving credit facilities were $74.6 million and total payments on the revolving credit facilities were $43.9 million. The Company also used $0.9 million to repurchase warrants. The proceeds from the issuance of common stock and net borrowings for the year were primarily used to fund the Coast Acquisition. In conjunction with the Coast Acquisition, the Company also assumed total additional indebtedness of approximately $61.4 million.

Cash used in financing activities was approximately $3.3 million for the year ended December 31, 2009. This is primarily due to a net decrease in total debt obligations of $2.9 million. Total borrowings for the year under the short-term debt obligations and revolving credit facility were $60.7 million and total payments on the revolving credit facility were $63.6 million. The Company also used $0.4 million to repurchase warrants.

Cash used in financing activities was approximately $24.0 million for the year ended December 31, 2008. This is primarily due to $18.7 million in payments made to reacquire and retire common stock for those parties that did not vote in favor of the business combination and $1.8 million paid for the repurchase of common stock and warrants. Since the October 31, 2008 acquisition of Holdings, total borrowings under the revolving credit facility were $12.2 million and total payments were $14.9 million. The Company also paid $0.8 million of deferred financing costs in connection with amending the revolving credit facility assumed in the acquisition of Holdings.

The Predecessor’s cash used in financing activities for the ten months ended October 31, 2008, the date Holdings was acquired, was approximately $3.5 million. Total borrowings and payments during the ten months under the Predecessor’s revolving credit facility were $78.0 million. The Company also paid $0.2 million of deferred financing costs and $3.3 million to terminate an interest rate swap.

Revolving Credit Facilities

The following information discusses significant events during the year ended December 31, 2010 and 2009 that relate to the revolving credit facility assumed in the acquisition of Holdings and the new credit facility entered into to finance the acquisition of Coast Crane. Also see note 8 to the consolidated financial statements for further information related to our credit facilities.

Essex Crane Revolving Credit Facility

In conjunction with the acquisition of Holdings on October 31, 2008, Essex Crane amended its asset-based senior secured revolving line of credit facility, which permits it to borrow up to $190.0 million. . Essex Crane may borrow up to an amount equal to the sum of 85% of eligible net receivables and 75% of the net orderly liquidation value of eligible rental equipment. The revolving credit facility is scheduled to mature in October 2013 and is collateralized by a first security interest in substantially all of Essex Crane’s assets.

The maximum amount that could be borrowed under the Essex Crane revolving credit facility, net of letters of credit, interest rate swaps and other reserves was approximately $186.0 million at December 31, 2010, which was limited by the eligible borrowing base. The Company’s available borrowing under the revolving credit facility was $27.7 million at December 31, 2010. As of December 31, 2010 and for the year then ended, the Company was in compliance with its covenants and other provisions of the revolving line of credit facility. Some of the financial covenants including a fixed charge coverage ratio and rental equipment utilization ratio do not become active unless the available borrowing falls below the $20.0 million threshold. The Company’s available borrowing base of approximately $27.7 million comfortably exceeded the threshold at December 31, 2010. Additionally, the Company had $5.8 million of collateral in excess of the $190.0 million limit as of December 31, 2010. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on the Company’s liquidity and operations.

Coast Crane Revolving Credit Facility

In conjunction with the acquisition of Coast Crane on November 24, 2010, our Coast Crane subsidiary entered into a secured revolving credit facility, which permits it to borrow up to $75 million. Coast Crane may borrow, repay and reborrow up to an amount equal to the sum of (a) 85% of eligible net receivables, (b) the lesser of 50% of eligible inventory and $5 million and (c) the lesser of 95% of the lesser of (x) the net orderly liquidation value and (y) the invoice cost , of eligible new equipment inventory and $15 million and (d) 85% of net orderly liquidation value of eligible other equipment net of reserves established by the lender and the liquidity reserve. The revolving credit facility is scheduled to mature in November 2014 and is collateralized by a first security interest in substantially all of the Coast Crane’s assets.

The maximum amount that could be borrowed under the Coast Crane revolving credit facility, net of letters of credit and other reserves was approximately $65.9 million at December 31, 2010, which was limited by the eligible borrowing base. The Company’s available borrowing under the revolving credit facility is $12.0 million at December 31, 2010. As of December 31, 2010 and for the year then ended, the Company was in compliance with its covenants and other provisions of the revolving line of credit facility. Some of the financial covenants including a fixed charge coverage ratio, commencing the first quarter of 2011, do not become active unless the available borrowing falls below the $8.0 million threshold. The Company’s available borrowing base of approximately $12.0 million well exceeded the threshold at December 31, 2010. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on the Company’s liquidity and operations.

Our management believes that cash generated from operations, together with amounts available under the revolving credit facilities, will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for the foreseeable future. Also, substantially all of our rental equipment and all its other assets are subject to liens under its revolving credit facilities. None of such assets may be available to satisfy the claims of its general creditors. Our future financial and operating performance, ability to service or refinance its debt and ability to comply with covenants and restrictions contained in its debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond its control.

Coast Crane Canadian Revolving Credit Facility

Under a Canadian Credit Facility assumed in conjunction with the acquisition of Coast Crane Ltd’s assets, the Company may borrow up to $5.0 million depending upon the availability of its borrowing base collateral, consisting of eligible trade receivables, inventories, property and equipment, and other assets located in Canada. As of December 31, 2010, there was no additional availability under the Canadian Credit Facility.

Other Long-term Debt Obligations

The Company acquired amortizing purchase money security interest debt of $3.8 million in November 2010 in conjunction with the Coast Acquisition, the collateral for which relates seven pieces of equipment acquired from Coast Crane. The remaining balance at December 31, 2010 was $3.8 million. Monthly principal and interest payments are required through the various maturity dates ranging from September 2015 to February 2016.

Short-term Debt Obligations

Essex Finance entered into two short-term debt obligations of $2,554,637 and $2,615,977 with a vendor related to the acquisition of two cranes and related attachments during the year ended December 31, 2009, which matured on October 20, 2010 and November 20, 2010 respectively, and were paid in full in September 2010. The Company also entered into a new short-term debt obligation for $2,560,847 in 2010 which was subsequently paid in full later in September 2010. These short-term obligations were interest free for six months and then accrued interest at 3.0% for an additional six months and are collateralized by the respective cranes and attachments purchased. On the six month anniversary of the origination of each obligation, a 10% principal payment was due and paid.

Capitalized Expenditures

The Company’s capitalization criteria is to capitalize costs in the period they are incurred related to projects with total costs in excess of $20,000 when the projects extend the useful lives or enhance the crane’s capabilities. These capital projects are depreciated using the straight line method over an estimated useful life of 7 years. Individual rental equipment items and property, plant and equipment items purchased with costs in excess of $5,000 are also capitalized and are depreciated over the useful life of the respective item purchased.

The following table provides quantitative information regarding the amount and types of costs capitalized during 2010 and 2009:

	For the years Ended December 31,
	2010		2009		2008

Purchases of rental equipment	$	2,632,831	$	19,588,468	$	2,782,879
Deposits made to purchase rental equipment		-		5,513		-
Costs to prepare cranes for sale		170,036		191,909		12,127
Purchases of property, plant & equipment		54,844		195,676		158,721
Capitalized crane repair costs		755,461		443,149		-
Capitalized internally developed software costs		201,880		372,543		-

Total capitalized expenditures	$	3,815,052	$	20,797,258	$	2,953,727

During the years ended December 31, 2010 and 2009, Essex expensed repair and maintenance costs of approximately $5.8 million and $4.9 million, respectively. The Company expects to capitalize costs of approximately $28.6 million during the year ended December 31, 2011. Approximately $26.5 million of the total is for the purchase of rental equipment, a portion of which will be funded from proceeds from the sales of older and lighter lifting rental equipment.

Off Balance Sheet Arrangements

Options and warrants issued in conjunction with our initial public offering and to members of Essex Crane’s senior management are equity linked derivatives and accordingly represent off-balance sheet arrangements. The options and warrants meet the scope exception within the applicable accounting guidance and are accordingly not accounted for as derivatives, but instead are accounted for as equity. In addition, the Company has operating leases that are not accounted for on the balance sheet.

Contractual Obligations

The following table summarizes the Company’s contractual obligations for the next five years and thereafter as of December 31, 2010:

	Payments Due by Period
Contractual Obligations	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total

Revolving Credit Facilities
Principal		-		161,050,945		53,909,026		-	$	214,959,971
Interest (a)		10,711,497		18,202,797		2,633,905		-		31,548,199

Other debt obligations
Principal		783,243		6,505,097		1,398,134		18,300		8,704,774
Interest		614,332		1,144,779		48,215		327		1,807,653

Operating Leases:
Minimum lease payments		2,415,129		3,019,080		888,965		-		6,323,174

Other long-term liabilities:
Capital lease obligations, including interest		7,692		3,205		-		-		10,897

Total	$	14,531,893	$	189,925,903	$	58,878,245	$	18,627	$	263,354,668

(a) Amounts include interest expected to be incurred on the Company's revolving credit facility based on the amount outstanding as of December 31, 2010. The weighted average interest rate as of December 31, 2010 of 4.83%, which includes the impact of the Company's interest rate swaps, is assumed to be in effect through the maturity date of the revolving credit facilities.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations for the purposes of this document are based upon our audited consolidated audited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results, however, may materially differ from the calculated estimates and this difference would be reported in its current operations.

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles. Our significant accounting policies are presented in note 2 to our 2010 audited financial statements, and the following summaries should be read in conjunction with the audited financial statements and the related notes thereto. While all accounting policies affect the financial statements, certain accounting policies may be viewed as critical to us. Critical accounting policies are those that are both most important to the portrayal of the financial statements and results of operations and that require our management’s most subjective or complex judgments or estimates. Our management believes the policies that fall within this category are policies related to revenue recognition, rental equipment, impairment of goodwill and long-lived assets, derivative financial instruments and income taxes.

Revenue Recognition

The Company recognizes revenue, including multiple element arrangements, in accordance with the provisions of applicable accounting guidance. We generate revenue from the rental of cranes and related equipment and other services such as crane and equipment transportation and repairs and maintenance. In many instances, the Company provides some of the above services under the terms of a single customer Equipment Rental Agreement. The Company also generates revenue from the retail sale of equipment and spare parts.

Revenue arrangements with multiple elements are divided into separate units of accounting based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. The Company is able to establish vendor specific objective evidence of selling price related to rental revenues after analysis of rental agreements absent any additional services offered by the Company. The Company uses the estimated selling price for allocation of consideration to transportation services based on the costs associated with providing such services in addition to other supply and demand factors within specific sub-markets. The estimated selling prices of the individual deliverables are not materially different than the terms of the Equipment Rental Agreements.

Revenue from equipment rentals are billed monthly in advance and recognized as earned, on a straight line basis over the rental period specified in the associated equipment rental agreement. Rental contract terms span several months or longer. Because the term of the contracts can extend across financial reporting periods, when rentals are billed in advance, we defer recognition of revenue and record unearned rental revenue at the end of reporting periods so that rental revenue is included in the appropriate period. Repair service revenue is recognized when the service is provided. Transportation revenue from rental equipment delivery service is recognized for the drop off of rental equipment on the delivery date and is recognized for pick-up when the equipment is returned to the Essex Crane service center, storage yard or next customer location. New and used rental equipment and part sales are recognized upon acceptance by the customer and the execution of a definitive sales agreement stipulating the date risk ownership is transferred.

These policies are directly related to our cash flow and earnings. There are estimates required in recording certain repair and maintenance revenues and also in recording any allowances for doubtful accounts. The estimates have historically been accurate in all material respects and we do not anticipate any material changes to our current estimates in these areas.

Useful Lives of Rental Equipment

Essex’s primary assets consist of its lattice-boom crawler cranes and attachments, rough terrain cranes, tower cranes, boom trucks and other equipment within its fleet, which are recorded at cost less accumulated depreciation. In conjunction with the acquisitions of Essex Crane and Coast Crane, Essex recorded all of its crane and attachment and other construction equipment fleet values at fair value. Essex depreciates the existing fleet over periods between 5 and 30 years on a straight line basis such that additions of new cranes to the fleet are depreciated over a 30 year time period while used cranes acquired will be amortized over a period of 7 to 25 years. Essex’s management reviews the value of its crane fleet annually in conjunction with its lenders.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts and credit memos. The allowance for doubtful accounts is the Company’s best estimate of the amount of credit losses in accounts receivable and is included in selling, general and administrative expenses in the consolidated statements of operations. The Company periodically reviews the allowance for doubtful accounts and balances are written off against the allowance when management believes it is probable the receivable will not be recovered. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease our allowance.

Business Combinations

Acquisition of Holdings and Essex Crane

On October 31, 2008, we acquired Essex Crane through the acquisition of substantially all of the ownership of Holdings. The purchase agreement provided for a gross purchase price of $210.0 million, less the amount of Essex Crane’s indebtedness outstanding as of the closing (which was refinanced as of the closing date with a credit facility made available to Essex Crane as of the closing date), the $5.0 million stated value of the membership interests in Holdings not acquired in the acquisition and the amount of certain other liabilities of Essex Crane as of the closing of the acquisition. The purchase price was subject to adjustment at and after the closing date based on Essex Crane’s working capital as of the closing date and crane purchases and sales by Essex Crane prior to the closing date. The adjusted purchase price of the Holdings acquisition was $215.5 million, (including the amount of Essex’s indebtedness outstanding under Essex Crane’s credit facility immediately prior to the closing). For additional information regarding the gross purchase price paid in the acquisition of Essex Crane, including related transaction expenses, see note 1 to our consolidated financial statements.

The acquisition, excluding transaction costs was financed with approximately $80.6 million of cash from the proceeds of the Company’s initial public offering, the $5.0 million stated value of the membership interests in Holdings not acquired in the acquisition and approximately $129.9 million of assumption of Essex Crane’s indebtedness outstanding as of the closing (which was assumed and credit agreement amended as of the closing date). In addition, as was required under the Company’s certificate of incorporation, shortly after completion of the acquisition approximately $18.7 million of the proceeds of the Company’s initial public offering was paid to shareholders who voted against the acquisition of Essex Crane and exercised their conversion rights.

The Retained Interests are exchangeable at the option of the holder for an aggregate of 632,911 shares of our common stock. The Retained Interests do not carry any voting rights and are entitled to distributions from Holdings only if the Company pays a dividend to its stockholders, in which case a distribution on account of the Retained Interests will be made on an “as exchanged” basis. Holders of the Retained Interests have agreed, subject to certain exceptions, not to sell their Retained Interests in Holdings or their shares of our common stock issuable upon exchange of such Retained Interests, before October 31, 2010. We have granted certain registration rights to the holders of the Retained Interests with respect to the shares of our common stock issuable upon exchange of the Retained Interests. For additional information on our acquisition of Essex Crane and related transactions, see Note 1 to the Company’s consolidated financial statements.

Purchase Price in the Acquisition

The purchase price of the Holdings acquisition was negotiated during the fourth quarter of 2007 and the first quarter of 2008 and was agreed upon on March 6, 2008, the date the purchase agreement was signed. The Company based its purchase price negotiations on its estimates of the enterprise value of Holdings, which in turn were based on Holdings’ historical and projected revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”), which were provided by the sellers. The Company’s management and financial advisor determined that the purchase price was fair to the Company from a financial point of view using three methodologies:

an analysis of expected discounted future cash flows, wherein the advisor applied a discount rate of 14.1% to six years of forecasted EBITDA to compute the fair value of Essex Crane’s discounted future cash flows;

an analysis of comparable public companies, wherein the advisor utilized the median EBITDA and EBIT multiple of eight publicly traded companies that the advisor and Management believed were comparable to Essex Crane; and

an analysis of comparable transactions, wherein the advisor utilized the median EBITDA and EBIT multiple from 14 transactions the advisor and Management believed were comparable to the Holdings acquisition.

For additional information regarding the assumptions used to negotiate the purchase price and the analysis performed by our financial advisor, please see the sections of Essex’s Definitive Proxy Statement, filed with the Commission on October 8, 2008, entitled “THE ACQUISITION PROPOSAL – Background of the Acquisition” (beginning on page 43) and “THE ACQUISITION PROPOSAL – Fairness Opinion” (beginning on Page 49).

The Company’s management continued to believe that the negotiated purchase price was fair as of the October 31, 2008 closing date given the financial results of Holdings through September 30, 2008, which were consistent with the projections evaluated by the Company’s management (and the financial advisor that provided a fairness opinion) when originally analyzing the enterprise value of Holdings and negotiating the purchase price.

Under the terms of its initial public offering, the Company’s initial business combination was required to be with a business whose fair market value was at least equal to 80% of the Company’s net assets on the acquisition date. The fairness opinion obtained by the Company’s board of directors in connection with the acquisition included an opinion that the fair market value of Holdings satisfied the “80% test”, based on the maximum net asset value of the Company, which the financial advisor determined to be approximately $155.0 million based on the Company’s book value as of September 30, 2007 of approximately $79.8 million and approximately $75.2 million in contingent capital representing the aggregate exercise price of the Company’s outstanding warrants that would become exercisable following the closing of a business combination, which had not significantly changed as of the acquisition date. The purchase price excluding transaction costs (the fair market value of the acquired company) of $215.5 million was well in excess of $124.0 million (80% of $155.0 million, the maximum value of the acquiring company).

Goodwill Impairment – Subsequent to Essex Crane Acquisition in 2008

Goodwill of $23,895,733 was recorded associated with the acquisition of Holdings on October 31, 2008 for the excess of the purchase price over the fair value of identifiable assets acquired, net of liabilities assumed. The goodwill was subsequently determined to be impaired as of December 31, 2008 upon review of information up until the date the financial statements were issued and was written off in full.

As required by applicable accounting guidance, the Company was required to consider various triggering events that could indicate that its fair value had fallen below its book value as of December 31, 2008 which could result in the recognition of an impairment loss. Management determined that the 35.3% decline in its stock price from $6.95 on October 31, 2008, the date of the acquisition, to $4.50 at December 31, 2008 was a triggering event that required further analysis. The decline in stock price resulted in the Company’s market capitalization being less than the book value of equity for the month of December 2008, which management considered an extended period of time. As such, the Company engaged an experienced and qualified third party to assist Management in performing a valuation of goodwill using management’s assumptions discussed below.

The Company, as required by applicable accounting guidance, considered all financial information available through February 2009 in refining its assumptions used to perform the valuation including its declining revenues, gross margin, a declining backlog and other financial information in determining its forecast of future revenues, gross margin, EBITDA and EBIT. These forecast assumptions were significantly worse than those utilized in determining the purchase price in March 2008 (which management also considered appropriate as of the October 31, 2008 acquisition date) due to the rapidly declining economy and the credit crisis during November and December 2008 which continued into the first quarter of 2009 at which time it began negatively affecting our business. In addition to reduced forecast assumptions, there was also a decline in other market based measures, including the EBITDA median multiple of comparable public companies, which were brought on by the rapidly declining economy and credit crisis. A valuation of the Company was prepared for goodwill impairment analysis purposes using the following methodologies:

an analysis of expected discounted future cash flows, wherein a discount rate of 13.0% was applied to five years of forecasted future cash flows to compute the fair value of Essex’s discounted future cash flows; and

an analysis of EBITDA multiples calculated using an estimated enterprise value based on financial information for comparable public companies, wherein an EBITDA multiplier was used for seven publicly traded companies that the advisor and Management believed were comparable to Essex.

The average EBITDA estimates for the comparable five year period used in the discounted cash flow valuation for the goodwill impairment evaluation were 14.1% lower than those used for the fairness opinion. Also, the EBITDA multiple derived from the estimated enterprise value of comparable public companies used for the goodwill impairment evaluation decreased approximately 43.7% from the acquisition date value used in the fairness opinion.

Based on the results of the valuation performed, and in conjunction with the significant decreases in the metrics used in the valuation, the fair value of the equity of the Company’s single reporting unit was estimated at approximately $49.7 million, compared to book value of equity of approximately $86.9 million. As a result, the Company performed a step 2 impairment analysis. Since the book value of equity exceeded its fair value by more than the amount of the goodwill recorded at December 31, 2008, all of the goodwill was deemed to be impaired resulting in a loss of approximately $23.9 million recognized in the Company’s statement of operations for the year ended December 31, 2008.

Acquisition of Coast Crane’s Assets

On November 12, 2010, the United States Bankruptcy Court for the Western District of Washington approved an Asset Purchase Agreement (the "Coast Crane Purchase Agreement") between CC Bidding, an indirect wholly-owned subsidiary of the Company, and Coast Crane, a Delaware corporation pursuant to which CC Bidding agreed to purchase substantially all of the assets including the tradename, and also 100% of the outstanding shares of capital stock of Coast Crane Ltd., and assume certain liabilities, of Coast Crane (the “Coast Crane Acquisition”). Coast Crane, a leading provider of specialty lifting solutions and crane rental services on the West Coast of the United States, filed a voluntary petition for relief under the United States Bankruptcy Code on September 22, 2010 (Case Number 10-21229). The Coast Acquisition was completed on November 24, 2010.

The primary reasons for the Company’s acquisition of Coast Crane’s assets are as follows:

Broaden the Company’s product offerings to encourage customers to utilize the Company’s expanded product offerings for their heavy lifting construction equipment needs with an ability to leverage customer relationships between the operating subsidiaries while providing for cross selling opportunities;

Extend the Company’s geographic footprint to the Western and Northwestern U.S., Alaska, Hawaii, Guam and the South Pacific;

Provide new revenue streams from the distribution of new and used equipment and diversifying revenue streams from a larger mix of equipment allowing for more consistent earnings through economic cycles; and

Providing an opportunity for the Company to obtain a significant pool of rental equipment assets in one transaction as well as a highly trained workforce with significant construction equipment expertise. It would have taken significantly longer and would have been more expensive had the Company built this platform from the ground up.

The components of the total consideration transferred of $103.2 million, which includes settlement of certain liabilities in accordance with the bankruptcy proceedings, by CC Bidding for the purchase of Coast Crane’s assets is as follows:

Cash consideration:

Cash from proceeds of common share issuance	$	14,190,000
Cash from Essex Rental Corp.		20,310,000
Cash from proceeds from new revolving credit facility		49,551,816

Total cash transferred at close		84,051,816
Plus: transaction expenses paid outside of close		1,160,501
Less: transaction expenses		(2,735,917	)

Total cash consideration		82,476,400

Liabilities assumed:

Unsecured promissory note		5,227,000
Canadian revolving credit facility		2,743,160
Purchase money security interest debt		3,831,433
Interest rate swap agreements		1,600,650
Trade payables		5,835,000
Accrued benefits and employee compensation		1,494,058

Total liabilities assumed per the Purchase Agreement		20,731,301

Total consideration transferred	$	103,207,701

The allocation of total consideration transferred to the assets acquired and liabilities assumed is as follows:

Assets acquired:

Cash and cash equivalents	$	1,128,636
Accounts receivable		7,939,653
Other receivables		706,656
Equipment inventory		5,561,692
Retail spare parts		2,477,685
Prepaid expenses and other assets		1,729,032
Rental equipment		81,761,249
Property and equipment		2,433,624
Loan acquisition costs assumed		40,670
Identifiable intangible assets		2,100,000
Goodwill		1,796,126

Total assets acquired		107,675,023

Liabilities assumed:

Other accounts payable		2,132,635
Accrued taxes		356,104
Accrued other expenses		226,251
Unearned revenue and customer deposits		1,378,160
Deferred tax liabilities		377,692

Total other liabilities assumed		4,470,842

Foreign currency exchange impact		3,520

Net assets acquired	$	103,207,701

The methodology in allocating the total consideration transferred to acquire the assets of Coast Crane of $103.2 million, to the assets acquired and liabilities assumed is described below as follows:

The book value of other current assets, accounts payable and accrued liabilities were determined to approximate their fair value due to their short term nature;

Certain amounts related to income taxes remain subject to adjustment and will be finalized during the measurement period;

Accounts receivables were recorded at their estimated fair values based on expected collectability. The gross contractual receivables of accounts and other receivables as of the date of acquisition were approximately $9.0 million. Managements best estimate of the gross accounts receivable not expected to be collected is $1.1 million;

An experienced and qualified third party assisted in the valuation of the Company’s rental equipment and property and equipment using the cost and market approaches based in part on assumptions provided by management;

An experienced and qualified third party assisted in the valuation of intangible assets including customer relationship intangible and trademark and spare parts inventory using the income approach based in part on assumptions provided by management; and

The remaining excess purchase price paid over the net assets acquired was recorded as goodwill all of which will be deductible for tax purposes. Goodwill includes the value of the assembled workforce and synergies created through the Coast Acquisition.

The following table contains the amounts of revenues and earnings of CC Bidding included in the accompanying consolidated statement of operations for the year ended December 31, 2010:

	For the Period
	November 24, 2010 to
	December 31, 2010

Total revenues	$	5,403,551
Gross profit		519,701
Loss from operations		(959,550	)
Net loss		(810,314	)

Income Taxes

The Company uses an asset and liability approach, as required by the applicable accounting guidance for financial accounting and reporting of income taxes. Deferred tax assets and liabilities are computed using tax rates expected to apply to taxable income in the years in which those assets and liabilities are expected to be realized. The effect on net deferred tax assets and liabilities resulting from a change in tax rates is recognized as income or expense in the period that the change in tax rates is enacted.

Management makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of certain tax credits and in the calculation of the deferred income tax expense or benefit associated with certain deferred tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to Essex Rental’s tax provision in a subsequent period.

The Company follows the applicable accounting guidance related to the accounting for uncertainty in income taxes. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company files income tax returns in the United States federal jurisdiction and in most state jurisdictions. The Company is subject to U.S. federal or state income tax examinations for years 2007 through 2010 and Coast Crane Ltd is subject to Canadian income tax examinations for the tax years 2005 through 2010.

Essex’ management makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of certain tax credits and in the calculation of the deferred income tax expense or benefit associated with certain deferred tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to Essex’s tax provision in a subsequent period.

At December 31, 2010, the Company had unused U.S. federal net operating loss carry-forwards totaling approximately $64.9 million that begin expiring in 2021. At December 31, 2010, the Company also had unused state net operating loss carry-forwards totaling approximately $32.0 million that expire between 2011 and 2030.

The Company’s initial Form 10-K reflected net deferred tax liabilities of $56.9 million and benefit from income taxes of $5.4 million, based on estimates of the Company’s effective state income tax rate and related valuation reserves. However, the Company’s estimate of future state income tax rates did not properly include the impact of the acquisition of substantially all of the assets of Coast Crane on November 24, 2010 on future state apportionment calculations for the Company on a consolidated basis. As a result, the Company understated net state deferred tax liabilities by approximately $2.8 million at December 31, 2010 and overstated income tax benefit by approximately the same amount in 2010. The Company’s 2010 Financial Statements also understated the Company’s net deferred tax liabilities at December 31, 2010 as a result of the overstatement in its reserve against state net operating losses (“NOLs”) by approximately $1.0 million. As a result the Company overstated net state deferred tax liabilities by approximately $1.0 million at December 31, 2010 and understated income tax benefit by the same amount in 2010. The favorable benefit of sources of future income was understated and the associated benefit underestimated in the evaluation of whether the state NOLs would be utilized prior to expiration. The net impact of the restatement for the year ended December 31, 2010 was a $1.8 million increase in the Company’s deferred state tax liabilities at December 31, 2010 and an increase in tax expense and accordingly, net loss by the same amount for 2010 and has been reflected in this Amendment No.1 to Form 10-K for the year ended December 31, 2010.

Impairment of long-lived assets

Long lived assets are recorded at the lower of amortized cost or fair value. Losses related to long-lived assets are recorded where indicators of impairment are present and the estimated undiscounted cash flows to be generated by the asset (rental and associated revenues less related operating expenses plus any terminal value) are less than the assets’ carrying value. If the carrying value of the assets will not be recoverable, as determined by the undiscounted cash flows, the carrying value of the assets is reduced to fair value. Essex, under the terms of its credit agreement, engages an independent third party to help management appraise the value of the crane and attachment fleet on at least an annual basis. We consider a number of factors including value in use for crane and attachment rental, secondary market values and possible values in alternate use.

Derivative Financial Instruments

Essex uses derivative financial instruments for the purpose of hedging the risks associated with interest rate fluctuations on its revolving credit facility with the objective of converting a targeted amount of its floating rate debt to a fixed rate. The Company does not enter into derivative transactions for speculative purposes, and therefore holds no derivative instruments for trading purposes.

Essex believes that the use of derivatives in the form of interest rate swaps is an important tool to manage its balance sheet liabilities and interest rate risk, while protecting its associated rental margins. The Company sets its equipment rental rates based in part as a percentage of the investment cost of the equipment and then uses the interest rate swap to lock in the associated interest costs of a period of time.

Recently Issued and Adopted Accounting Pronouncements

Please refer to note 2 within our note to consolidated financial statements for a description of recently issued and adopted accounting pronouncements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our earnings are affected by changes in interest rates due to the fact that interest on our revolving credit facilities is calculated based upon either LIBOR or Prime Rate plus an applicable margin as of December 31, 2010 for which we have an interest rate swaps to effectively fix the interest rate at 4.96% on $100.0 million of the $158.3 million of outstanding borrowings under Essex Crane’s senior secured credit facility and three undesignated interest rate swaps to effectively fix the interest rate at 5.62% on $21.0 million of the $53.9 million of outstanding borrowings under Coast Crane’s senior secured credit facility. The weighted average interest rate in effect on all of the Company’s borrowings at December 31, 2010 was 3.58% excluding the impact of the interest rate swaps and 4.83% taking into consideration the swaps. A 1.0% increase in the effective interest rate on our total outstanding borrowings (including our short-term debt obligations) not effectively fixed as a result of the interest rate swap at December 31, 2010 would increase our interest expense by approximately $2.2 million on an annualized basis.

Derivatives are used for hedging purposes rather than speculation. The Company does not enter into financial instruments for trading purposes. See also note 9 to the notes to consolidated financial statements for additional discussion of derivative instruments.

The fair values of the Company’s financial instruments (including such items in the financial statement captions as cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate their carrying values based on their nature and terms.

The fair value of the Company’s total debt outstanding as of December 31, 2010 was $223.7 million, excluding the impact of our interest rate swaps. If market rates of interest increased 50 basis points due to a change in the applicable margin rate of interest (a 12.5% increase from the Company’s current margin) the estimated fair value of the Company’s total debt obligations would be approximately $222.2 million. If market rates of interest decreased 50 basis points due to a change in the applicable margin rate of interest (a 12.5% decrease from the Company’s current margin) the estimated fair value of the Company’s total debt obligations would be approximately $222.9 million.

The Company’s interest rate swaps had a liability fair value of approximately $5.3 million as of December 31, 2010. If market rates of interest permanently increased by 50 basis points, the fair value of the Company’s interest rate swap would result in a $4.2 million liability. If market rates of interest permanently decreased by 50 basis points, the fair value of the Company’s interest rate swap would be a $6.2 million liability.

These amounts were determined by considering the impact of hypothetical interest rates on the Company’s financial instruments. Theses analyses do not consider the effects of the changes in the overall economy that could exist in such an environment. Further, in the event of changes of such magnitude, management would likely take actions to further mitigate its exposure to the changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company’s financial structure or results.

The Company cannot predict the effect of adverse changes in interest rates on its debt and derivative instruments and, therefore, the Company cannot predict its exposure to market risk. Consequently, further results may differ materially from the estimated adverse changes discussed above.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and supplementary data of Essex Rental Corp. required by this Item are described in Item 15 of this Annual Report on Form 10-K/A and are presented beginning on page F-1.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934) as of December 31, 2010 in connection with the filing of the Initial Form 10-K.

In connection with the restatement of our financial statements for the year ended December 31, 2010, our management re-evaluated the effectiveness of our disclosure controls and procedures. Based on that re-evaluation, our management has concluded that due to the material weakness in internal control over financial reporting described below our disclosure controls and procedures were not effective as of December 31, 2010.

Management’s Report on Internal Control over Financial Reporting

Essex Rental Corp.’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

Because of their inherent limitations, systems of internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness, as of December 31, 2010, of the Company’s internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). This evaluation excluded our operations acquired through the acquisition of substantially all of the assets of Coast Crane Company and Subsidiary by CC Acquisition Holding Corp. and Subsidiaries. The acquired operations accounted for 27% and 13% of our total assets and revenues, respectively, as reported in our consolidated financial statements as of and for the year ended December 31, 2010. In accordance with SEC guidance regarding the reporting of internal control over financial reporting in connection with a material acquisition, management may omit an assessment of an acquired business’ internal control over financial reporting from management’s assessment of internal control over financial reporting for a period not to exceed one year. Management did not assess the effectiveness of internal control over financial reporting of CC Acquisition Holding Corp. and Subsidiaries because of the timing of the Coast Acquisition, which was completed on November 24, 2010.

Based on such evaluation, management initially concluded and disclosed in the Initial Form 10-K that the Company’s internal control over financial reporting was effective as of December 31, 2010. However, as a result of the error in the estimate of the provision for state income taxes related issues described in note 3 to our consolidated financial statements, our management determined that a material weakness in our internal control over financial reporting existed as of December 31, 2010 and, therefore, concluded that our internal control over financial reporting was not effective as of December 31, 2010.

A “material weakness” in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

Although management believes that the Company’s controls in the area of accounting for income taxes related to state taxes were, and are, appropriately designed, management has concluded that the deficiency in their operational effectiveness constitutes a material weakness in internal control over financial reporting in this area.

As a result of this amended report of management on internal control over financial reporting, Grant Thornton LLP, the Company’s independent registered public accounting firm, which also audited the Company’s consolidated financial statements included in this Form 10-K/A, has issued an updated attestation report on the Company’s internal control over financial reporting, which is provided on page F-2 of this Amendment No. 1.

Remediation of Material Weakness in Internal Control Over Financial Reporting.

The Company has implemented certain changes in our internal controls as of the date of this report to address the material weakness. Specifically, in addition to the two levels of review currently performed by the third party accounting firm prior to Management’s review, the Company has added a concurring partner level of review to be performed by the third-party accounting firm and management believes that this additional control will remediate the material weakness discussed above.

Changes in Internal Control over Financial Reporting

There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the fourth quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT

The information required by this Item is incorporated by reference to the applicable information in our Proxy Statement related to the 2011 Annual Meeting of Stockholders (the “2011 Proxy Statement”), which will be filed with the SEC on or before April 30, 2011.

ITEM 11.

EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the applicable information in the 2011 Proxy Statement, which will be filed with the SEC on or before April 30, 2011.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plans

The following table provides certain information, as of December 31, 2010, about our common stock that may be issued upon the exercise of options, warrants and rights, as well as the issuance of shares granted to employees, consultants or members of our Board of Directors, under our existing equity compensation plan, the Hyde Park Acquisition Corp. 2008 Long-Term Incentive Plan.

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans

Equity compensation plans approved by stockholders (1)		1,050,969	$	5.40		482,832

Equity plans not approved by stockholders		-		-		-

Total		1,050,969	$	5.40		482,832

(1) During the year ended December 31, 2010, the Company issued 23,522 shares to certain employees as compensation under the Company’s 2008 Long Term Incentive Plan.

The additional information required by this Item is incorporated by reference to the applicable information in the 2011 Proxy Statement, which will be filed with the SEC on or before April 30, 2011.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the applicable information in the 2011 Proxy Statement, which will be filed with the SEC on or before April 30, 2011.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated by reference to the applicable information in the 2011 Proxy Statement, which will be filed with the SEC on or before April 30, 2011.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of this report

(1) Consolidated financial statements:

Successor and Predecessor Company Financial Statements

Reports of Independent Registered Public Accounting Firms

Essex Rental Corp. Consolidated Balance Sheets—December 31, 2010 and 2009

Essex Holdings, LLC and Subsidiary Consolidated Balance Sheet—October 31, 2008

Essex Rental Corp. Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008

Essex Holdings, LLC and Subsidiary Consolidated Statements of Operations for the ten months ended October 31, 2008

Essex Rental Corp. Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010, 2009 and 2008

Essex Holdings, LLC and Subsidiary Essex Rental Corp. Consolidated Statements of Stockholders’ Equity for the ten months ended October 31, 2008

Essex Rental Corp. Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008

Essex Holdings, LLC and Subsidiary Essex Rental Corp. Consolidated Statements of Cash Flows for the ten months ended October 31, 2008

Notes to consolidated financial statements

(3) Exhibits: The exhibits to this report are listed in the exhibit index below.

(b) Description of Exhibits

Exhibit No.		Description

2.1		Purchase Agreement, dated as of March 6, 2008, among Hyde Park Acquisition Corp., Essex Holdings LLC, KCP Services LLC, and the Members of Essex Holdings LLC signatory thereto. (1)

2.2		Amendment No. 1 to Purchase Agreement, dated May 9, 2008, among Hyde Park Acquisition Corp., Essex Holdings LLC, KCP Services LLC and the Members of Holdings signatory thereto. (1)

2.3		Amendment No. 2 to Purchase Agreement, dated August 14, 2008, among Hyde Park Acquisition Corp., Essex Holdings LLC, KCP Services LLC and the Members of Holdings signatory thereto. (1)

2.4		Asset Purchase Agreement, dated as of November 24, 2010, between CC Bidding Corp. and Coast Crane Company (6)

3.1		Amended and Restated Certificate of Incorporation. (4)

3.2		Amended and Restated Bylaws of the Corporation, effective as of September 28, 2007. (2)

4.1		Specimen Unit Certificate. (3)

4.2		Specimen Common Stock Certificate. (3)

4.3		Specimen Warrant Certificate. (3)

4.4		Form of Unit Purchase Option to be granted to Representative. (3)

4.5		Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant. (3)

4.6		Form of Warrant Agreement between Essex Rental Corp. and the holders of certain indebtedness of CC Liquidating Company (formerly Coast Crane Company), (7)

10.1		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Laurence S. Levy. (3)

10.2		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Edward Levy. (3)

10.3		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Isaac Kier. (3)

10.4		Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant. (3)

10.5		Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders. (3)

10.6		Form of Letter Agreement between ProChannel Management LLC and Registrant regarding administrative support. (3)

10.7		Form of Promissory Note, dated as of August 21, 2006, issued to each of Laurence S. Levy, Edward Levy and Isaac Kier. (3)

10.8		Form of Registration Rights Agreement among the Registrant and the Initial Stockholders. (3)

10.9		Form of Subscription Agreement among the Registrant, Graubard Miller and each of Laurence S. Levy, Edward Levy and Isaac Kier. (3)

10.10		Lock-up Agreement, dated October 31, 2008, between Registrant and Ronald Schad. (4)

10.11		Lock-up Agreement, dated October 31, 2008, between Registrant and Martin Kroll. (4)

10.12		Lock-up Agreement, dated October 31, 2008, between Registrant and William O’Rourke. (4)

10.13		Lock-up Agreement, dated October 31, 2008, between Registrant and William Erwin. (4)

10.14		Escrow Agreement, dated October 31, 2008, among Registrant, KCP Services LLC and Key Bank National Association. (4)

10.15		Compliance Agreement, dated October 31, 2008, among Registrant, Essex Holdings LLC, KCP Services LLC, Essex Crane Rental Corp. and the members of Essex Holdings LLC. (4)

10.16		Employment Agreement, dated October 31, 2008, among Registrant, Essex Crane Rental Corp. and Ronald Schad. (4)

10.17		Employment Agreement, dated October 31, 2008, among Registrant, Essex Crane Rental Corp. and Martin Kroll. (4)

10.18		Employment Agreement, dated October 31, 2008, among Registrant, Essex Crane Rental Corp. and William O’Rourke. (4)
		.
10.19		Employment Agreement, dated October 31, 2008, among Registrant, Essex Crane Rental Corp. and William Erwin. (4)

10.20		Amended and Restated Limited Liability Company Agreement of Essex Holdings LLC, dated October 31, 2008, among Registrant, Ronald Schad, Martin Kroll, William O’Rourke and William Erwin. (4)

10.21		Registration Rights Agreement, dated October 31, 2008, among Registrant, Ronald Schad, Martin Kroll, William O’Rourke and William Erwin. (4)

10.22		Second Amended and Restated Loan and Security Agreement, dated March 6, 2008, among Essex Crane Rental Corp., Essex Holdings LLC, Textron Financial Corporation, National City Business Credit, Inc., Sovereign Bank, Wachovia Capital Finance Corporation (Central), Wachovia Capital Markets, LLC and the Financial Institutions named therein. (1)

10.23		Hyde Park Acquisition Corp. 2008 Long Term Incentive Plan (1)

10.24		Form of Subscription Agreement, dated October 29, 2010, between Essex Rental Corp. and each of Calm Waters Partnership, Matthew Campbell, Daeg Partners, LP, Equitable Holding Corp. and KC Gamma Opportunity Fund, LP (together with T. Rowe Price Small-Cap Value Fund, the “Private Placement Investors”). (7)

10.25		Subscription Agreement, dated October 29, 2010, between Essex Rental Corp. and T. Rowe Price Small-Cap Value Fund. (7)

10.26		Form of Registration Rights Agreement, dated November 24, 2010, between Essex Rental Corp. and each Private Placement Investor. (7)

10.27		Credit Agreement, dated November 24, 2010, by and among CC Bidding Corp., CC Acquisition Holding Corp., the other persons party thereto that are designated as Credit Parties therein, General Electric Capital Corporation, for itself as Lender, Swingline Lender and as Agent for all Lenders and other financial institutions party thereto, as Lenders. (7)

10.28		Agreement, dated November 5, 2010, between Essex Rental Corp. and the holders of certain indebtedness of CC Liquidating Company (formerly Coast Crane Company). (7)

10.29		Asset Purchase Agreement, dated as of November 1, 2010, between CC Bidding Corp. and Coast Crane Company. (6)

10.30		Form of Promissory Notes issued to the holders of certain indebtedness of CC Liquidating Company (formerly Coast Crane Company) in the aggregate principal amount of $5,227,000. (7)

10.31		Registration Rights Agreement, dated December 22, 2010, amount Essex Rental Corp., Kirtland Capital Company III LLC and Kirtland Capital Partners III L.P. (7)

16		Letter from McGladrey & Pullen, LLP to the Securities and Exchange Commission, dated December 16, 2008. (5)

21		Subsidiaries of Registrant (7)

23.1		Consent of Grant Thornton LLP (*)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*)

(1) Incorporated by reference to the Registrant Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on October 8, 2008, regarding the Special Meeting of the Registrant’s Stockholders held on October 31, 2008.

(2) Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 28, 2007.

(3) Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (SEC File 333-138452).

(4) Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 6, 2008.

(5) Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2008.

(6) Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 17, 2010.

(7) Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on March 16, 2011.

(*) Filed herewith.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Essex Rental Corp.

We have audited the accompanying consolidated balance sheets of Essex Rental Corp. (a Delaware corporation) and Subsidiaries (collectively, the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2010. We have also audited the consolidated statements of operations, members’ equity, and cash flows of Essex Holdings, LLC and Subsidiary (the “Predecessor”) for the period from January 1, 2008 through October 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, and the consolidated results of the Predecessor’s operations and its cash flows for the period from January 1, 2008 through October 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 3 the previously issued financial statements as of and for the year ended December 31, 2010, were restated for the correction of an error.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Essex Rental Corp.’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 16, 2011 (except for the matters discussed in the 4th paragraph of Management’s Report on Internal Control over Financial Reporting as to which the date is May 6, 2011) expressed an adverse opinion.

/s/ GRANT THONTON LLP

Chicago, Illinois

March 16, 2011 (except for Note 3 as to which the date is May 6, 2011)

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Essex Rental Corp.

We have audited Essex Rental Corp. (a Delaware corporation) and Subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Essex Rental Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on Essex Rental Corp.’s internal control over financial reporting based on our audit. Our audit of, and opinion on, Essex Rental Corp.’s internal control over financial reporting does not include internal control over financial reporting of CC Acquisition Holding Corp. and Subsidiaries, a wholly owned subsidiary, whose financial statements reflect total assets and revenues constituting 27 and 13 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2010. As indicated in Management’s Report, CC Acquisition Holding Corp. and Subsidiaries was acquired during 2010 and therefore, management’s assertion on the effectiveness of Essex Rental Corp.’s internal control over financial reporting excluded internal control over financial reporting of CC Acquisition Holding Corp. and Subsidiaries.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management identified a material weaknesses in internal control relating to their process and procedures used to estimate the provision for state income taxes. This material weakness resulted in the restatement of the annual financial statements for the year ended December 31, 2010.

In our opinion, because of the effect of the material weakness described above, on the achievement of the objectives of the control criteria, Essex Rental Corp. has not maintained effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of Essex Rental Corp. and Subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2010 and the consolidated statements of operations, members’ equity, and cash flows of Essex Holdings, LLC and Subsidiary (the “Predecessor”) for the period from January 1, 2008 through October 31, 2008 and our report dated March 16, 2011 (except for Note 3 as to which the date is May 6, 2011) expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

Chicago, Illinois

March 16, 2011 (except for the matters discussed in the 4th paragraph of Management’s Report on Internal Control over Financial Reporting as to which the date is May 6, 2011)

F-2

ESSEX RENTAL CORP.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2010			2009
	(Restated)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	3,474,314		$	199,508
Accounts receivable, net of allowances		12,801,772			4,973,995
Other receivables		4,223,435			3,791,845
Deferred tax assets		2,402,709			1,724,621
Inventory
Equipment inventory		5,386,074			-
Retail spare parts, net		1,882,003			-
Prepaid expenses and other assets		3,069,976			410,198
TOTAL CURRENT ASSETS		33,240,283			11,100,167

Rental equipment, net		330,378,792			260,767,678
Property and equipment, net		8,727,456			6,981,660
Spare parts inventory, net		3,540,360			3,556,236
Identifiable finite lived intangibles, net		3,143,063			2,160,239
Goodwill		1,796,126			-
Loan acquisition costs, net		2,220,878			1,897,177

TOTAL ASSETS	$	383,046,958		$	286,463,157

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,810,672		$	1,790,683
Accrued employee compensation and benefits		1,482,747			679,078
Accrued taxes		4,504,765			5,663,263
Accrued interest		436,947			303,186
Accrued other expenses		1,836,246			739,639
Unearned rental revenue and customer deposits		3,592,854			793,797
Short-term debt obligations		783,243			5,170,614
Current portion of capital lease obligation		6,718			6,269
TOTAL CURRENT LIABILITIES		15,454,192			15,146,529

LONG-TERM LIABILITIES
Revolving credit facilities		214,959,971			131,919,701
Promissory notes		4,938,611			-
Other long-term debt obligations		2,982,920			-
Deferred tax liabilities		61,124,038			62,935,535
Interest rate swaps		5,266,586			2,306,294
Capital lease obligation		10,349			17,067
TOTAL LONG-TERM LIABILITIES		289,282,475			197,178,597

TOTAL LIABILITIES		304,736,667			212,325,126

STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, Authorized 1,000,000 shares, none issued		-			-
Common stock, $.0001 par value, Authorized 40,000,000 shares;
issued and outstanding 20,472,489 shares at December 31, 2010
and 14,124,563 shares at December 31, 2009		2,047			1,412
Paid in capital		101,052,367			84,589,119
Accumulated deficit		(20,431,083	)		(9,022,597	)
Accumulated other comprehensive loss, net of tax		(2,313,040	)		(1,429,903	)
TOTAL STOCKHOLDERS' EQUITY		78,310,291			74,138,031

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	383,046,958		$	286,463,157

The accompanying notes are an integral part of these financial statements.

F-3

ESSEX RENTAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Essex Rental Corp.									Essex Holdings LLC
	(Successor)									(Predecessor)
										For the Ten
										Months Ended
	For the Years Ended December 31,									October 31,
	2010			2009			2008			2008
	(Restated)
REVENUE

Equipment rentals	$	25,049,779		$	34,556,696		$	10,522,092		$	51,301,586
Retail equipment sales		1,238,722			-			-			-
Used rental equipment sales		4,255,761			6,478,197			1,730,771			6,709,034
Retail parts sales		1,184,042			-			-			-
Transportation		4,766,328			4,909,346			1,233,873			6,929,298
Equipment repairs and maintenance		5,036,828			6,140,153			1,386,053			6,038,639

TOTAL REVENUE		41,531,460			52,084,392			14,872,789			70,978,557

COST OF REVENUES
Salaries, payroll taxes and benefits		5,905,279			6,006,715			1,311,175			6,730,823
Depreciation		12,723,951			11,210,472			1,809,623			6,908,980
Retail equipment sales		994,119			-			-			-
Used rental equipment sales		3,551,891			5,584,784			1,439,677			3,186,106
Retail parts sales		775,338			-			-			-
Transportation		4,236,326			3,743,595			952,861			5,774,802
Equipment repairs and maintenance		5,833,945			4,873,005			1,236,482			5,411,272
Yard operating expenses		1,383,068			1,482,371			306,174			1,533,099

TOTAL COST OF REVENUES		35,403,917			32,900,942			7,055,992			29,545,082

GROSS PROFIT		6,127,543			19,183,450			7,816,797			41,433,475

Selling, general and administrative expenses		12,964,887			10,547,405			4,045,432			13,652,865
Goodwill impairment		-			-			23,895,733			-
Other depreciation and amortization		954,602			781,751			139,943			110,019

INCOME (LOSS) FROM OPERATIONS		(7,791,946	)		7,854,294			(20,264,311	)		27,670,591

OTHER INCOME (EXPENSES)
Other income		72,278			643			1,405,637			-
Interest expense		(7,368,904	)		(6,681,740	)		(1,124,398	)		(7,666,179	)
Exchange losses		(2,471	)		-			-			-
Interest rate swap		159,455			-			-			(524,259	)
TOTAL OTHER INCOME (EXPENSES)		(7,139,642	)		(6,681,097	)		281,239			(8,190,438	)

INCOME (LOSS) BEFORE INCOME TAXES		(14,931,588	)		1,173,197			(19,983,072	)		19,480,153
								-
PROVISION (BENEFIT) FOR INCOME TAXES		(3,523,102	)		(22,609	)		(8,065,951	)		8,063,079

NET INCOME (LOSS)	$	(11,408,486	)	$	1,195,806		$	(11,917,121	)	$	11,417,074

Weighted average shares outstanding:
Basic		16,102,339			14,110,789			13,517,010
Diluted		16,102,339			15,805,191			13,517,010

Earnings (loss) per share:
Basic	$	(0.71	)	$	0.08		$	(0.88	)
Diluted	$	(0.71	)	$	0.08		$	(0.88	)

The accompanying notes are an integral part of these financial statements.

F-4

ESSEX RENTAL CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Essex Rental Corp.
	(Successor)
										Accumulated			Accumulated
							Additional			(Deficit)			Other			Total			Comprehensive
	Common Stock						Paid-In			Retained			Comprehensive			Stockholders'			Income
	Shares			Amount			Capital			Earnings			Loss			Equity			(Loss)

Balance - January 1, 2008		15,750,000			1,575			78,410,547			1,698,718			-			80,110,840

Reclassification of proceeds for 2,586,206 shares subject to possible redemption plus deferred interest		-			-			20,497,091			-			-			20,497,091

Repurchase of shares from dissenting shareholders		(2,357,736	)		(236	)		(18,704,479	)		-			-			(18,704,715	)

Effective conversion of retained interest in Essex Holdings into common stock of Essex Rental		632,911			63			4,999,937			-			-			5,000,000

Issuance of common stock in exchange for transaction related services		132,911			13			923,721			-			-			923,734

Repurchases and retirement of common stock		(63,500	)		(6	)		(291,939	)		-			-			(291,945	)

Repurchases and retirement of 1,418,519 warrants		-			-			(1,506,380	)		-			-			(1,506,380	)

Common stock issued to employees as compensation		12,300			1			39,359			-			-			39,360

Stock based compensation for stock options granted to executive management		-			-			15,722			-			-			15,722

Change in fair value of interest rate swap, net of tax of $1,303,784		-			-			-			-			(2,120,829	)		(2,120,829	)		(2,120,829	)

Net loss for the year ended December 31, 2008		-			-			-			(11,917,121	)		-			(11,917,121	)		(11,917,121	)

Balance - December 31, 2008		14,106,886		$	1,410		$	84,383,579		$	(10,218,403	)	$	(2,120,829	)	$	72,045,757		$	(14,037,950	)

Repurchases and retirement of 323,200 warrants		-			-			(378,896	)		-			-			(378,896	)

Common stock issued to employees and director		17,677			2			106,213			-			-			106,215

Stock based compensation for stock options granted to executive management		-			-			478,223			-			-			478,223

Change in fair value of interest rate swap, net of tax of $427,393		-			-			-			-			690,926			690,926			690,926

Net income for the year ended December 31, 2009		-			-			-			1,195,806			-			1,195,806			1,195,806

Balance - December 31, 2009		14,124,563		$	1,412		$	84,589,119		$	(9,022,597	)	$	(1,429,903	)	$	74,138,031		$	1,886,732

The accompanying notes are an integral part of these financial statements.

F-5

ESSEX RENTAL CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

	Essex Rental Corp.
	(Successor)
								Accumulated			Accumulated
					Additional			(Deficit)			Other			Total			Comprehensive
	Common Stock				Paid-In			Retained			Comprehensive			Stockholders'			Income
	Shares		Amount		Capital			Earnings			Loss			Equity			(Loss)

Balance - December 31, 2009		14,124,563	$	1,412	$	84,589,119		$	(9,022,597	)	$	(1,429,903	)	$	74,138,031

Repurchases and retirement of 519,905 warrants		-		-		(853,516	)		-			-			(853,516	)

Exercise of warrants for common stock		473,646		47		2,368,219			-			-			2,368,266

Common stock issued - cashless warrant tender offer		2,547,558		255		(255	)		-			-			-

Common stock issued to employees as compensation		23,522		2		133,505			-			-			133,507

Common stock issued for professional services		3,200		1		15,521			-			-			15,522

Common stock issued in private placement transaction		3,300,000		330		14,189,670			-			-			14,190,000

Equity issuance costs		-		-		(773,601	)		-			-			(773,601	)

Stock based compensation for stock options granted to executive management		-		-		1,087,305			-			-			1,087,305

Fair value of detachable warrants issued in conjunction with unsecured promissory notes		-		-		296,400			-			-			296,400

Change in fair value of interest rate swap, net of tax of $626,987 (Restated)		-		-		-			-			(892,110	)		(892,110	)		(892,110	)

Foreign currency translation adjustments		-		-		-			-			8,973			8,973			8,973

Net loss for the year ended December 31, 2010 (Restated)		-		-		-			(11,408,486	)		-			(11,408,486	)		(11,408,486	)

Balance - December 31, 2010 (Restated)		20,472,489	$	2,047	$	101,052,367		$	(20,431,083	)	$	(2,313,040	)	$	78,310,291		$	(12,291,623	)

The accompanying notes are an integral part of these financial statements.

F-6

ESSEX HOLDINGS, LLC

STATEMENT OF MEMBERS’ EQUITY (Deficit)

	Essex Holdings, LLC
	(Predecessor)
								Total
	Members'		Paid in		Accumulated			Members'
	Contributions		Capital		Deficit			Equity (Deficit)

Balance - January 1, 2008		40,270,000		34,740		(43,212,535	)		(2,907,795	)

Share based compensation		-		196,862		-			196,862

Net income		-		-		11,417,074			11,417,074

Balance - October 31, 2008	$	40,270,000	$	231,602	$	(31,795,461	)	$	8,706,141

The accompanying notes are an integral part of these financial statements.

F-7

ESSEX RENTAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Essex Rental Corp.									Essex Holdings LLC
	(Successor)									(Predecessor)
										For the Ten
										Months Ended
	For the Years Ended December 31,									October 31,
	2010			2009			2008			2008
	(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(11,408,486	)	$	1,195,806		$	(11,917,121	)	$	11,417,074
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization of tangible assets		13,157,670			11,331,394			1,828,233			7,018,999
Amortization of loan acquisition costs
and other intangibles		1,035,601			1,155,744			203,314			353,300
Amortization of promissory notes discount		8,011			-			-			-
Gain on sale of rental equipment		(703,870	)		(893,413	)		(291,094	)		(3,522,928	)
Deferred income taxes		(1,600,049	)		73,418			(9,854,835	)		7,103,541
Goodwill impairment		-			-			23,895,733			-
Share based compensation expense		1,220,812			584,438			55,082			196,862
Professional fees paid through issuance of common shares		15,522			-			-			-
Change in fair value of interest rate swap		(159,455	)		-			-			524,259
Changes in operating assets and liabilities:
Accounts receivable, net		111,877			6,376,566			(649,257	)		1,106,901
Other receivables		168,023			(517,030	)		(860,233	)		-
Interest earned in trust fund		-			-			(1,709,916	)		-
Prepaid expenses and other assets		(974,695	)		30,681			(107,620	)		(757,641	)
Increase in deferred interest		-			-			(243,405	)		-
Retail equipment inventory		182,879			-			-			-
Spare parts inventory		611,559			(279,378	)		(212,829	)		(95,904	)
Accounts payable and accrued expenses		(8,516,276	)		(2,530,691	)		(416,317	)		3,963,504
Unearned rental revenue		1,420,897			(1,383,109	)		(396,270	)		416,065

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES		(5,429,980	)		15,144,426			(676,535	)		27,724,032

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Hyde Park common stock		-			-			-			(9,957,441	)
Acquisition of business, net of cash acquired		(31,795,947	)		-			(77,711,958	)		-
Net sales of securities held in trust fund		-			-			102,637,550			-
Purchases of rental equipment		(242,020	)		(17,164,399	)		(2,795,006	)		(18,041,380	)
Purchases of property and equipment		(1,016,762	)		(988,949	)		(158,721	)		(2,972,681	)
Accounts receivable from rental equipment sales		107,042			(107,042	)		-			739,256
Proceeds from sale of rental equipment		4,255,761			6,478,197			1,730,771			6,709,034

NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES		(28,691,926	)		(11,782,193	)		23,702,636			(23,523,212	)

The accompanying notes are an integral part of these financial statements.

F-8

ESSEX RENTAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	Essex Rental Corp.									Essex Holdings LLC
	(Successor)									(Predecessor)
										For the Ten
										Months Ended
	For the Years Ended December 31,									October 31,
	2010			2009			2008			2008
	(Restated)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term debt obligation	$	-		$	2,554,637		$	-		$	-
Proceeds from revolving credit facility		74,600,102			58,100,748			12,234,529			78,030,836
Payments on revolving credit facility		(43,925,681	)		(63,558,968	)		(14,845,371	)		(77,998,390	)
Payments on short-term debt obligations		(7,796,731	)		-			-			-
Payments on capital lease obligation		(7,692	)		(4,595	)		-			-
Payments to reacquire common stock
subject to repurchase		-			-			(18,704,715	)		-
Proceeds from the issuance of common stock		14,190,000			-			-			-
Payment of equity issuance costs		(644,219	)		-			-			-
Payments to repurchase common stock		-			-			(291,945	)		-
Proceeds from the exercise of warrants		2,368,266			-			-			-
Payments to repurchase warrants		(853,516	)		(378,896	)		(1,506,380	)		-
Payments for debt issuance costs		(558,339	)		(14,651	)		(825,020	)		(270,000	)
Payment to terminate interest rate swap		-			-			-			(3,280,000	)

NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES		37,372,190			(3,301,725	)		(23,938,902	)		(3,517,554	)

Effect of exchange rate changes in cash		24,522			-			-			-

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS		3,274,806			60,508			(912,801	)		683,266

CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD		199,508			139,000			1,051,801			8,394

CASH AND CASH EQUIVALENTS,
END OF PERIOD	$	3,474,314		$	199,508		$	139,000		$	691,660

SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING / FINANCING ACTIVITIES
Equity issuance fee in accrued expenses	$	129,382		$	-		$	-		$	-
Debt issuance costs in accrued expenses	$	238,375		$	-		$	-		$	-
Promissory notes and common stock warrants
exchanged for assumed debt	$	5,227,000		$	-		$	-		$	-
Portion of Coast Crane debt paid-off with proceeds
from new Coast Crane revolving credit facility	$	49,551,516		$	-		$	-		$	-
Assumption of other long-term debt obligations	$	3,831,433		$	-		$	-		$	-
Revolving credit facility assumed	$	2,743,160		$	-		$	-		$	-
Equipment obtained through capital lease	$	1,423		$	27,931		$	-		$	-
Equipment purchased directly through
short-term debt obligation	$	2,560,847		$	2,615,977		$	-		$	-
Issuance of stock related to acquisition of business	$	-		$	-		$	5,923,734		$	-
Unrealized (gain) loss on designated
derivative instruments, net of tax	$	892,110		$	(690,926	)	$	2,120,829		$	-

SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest, swaps and debt issuance costs	$	6,864,814		$	6,338,956		$	1,426,770		$	11,078,750
Cash paid for income taxes	$	23,344		$	(122,435	)	$	718,135		$	825,144

The accompanying notes are an integral part of these financial statements.

F-9

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Business and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Essex Rental Corp. (“Essex Rental”), formerly known as Hyde Park Acquisition Corp. ("Hyde Park"), and its wholly owned subsidiaries Essex Holdings, LLC ("Holdings"), Essex Crane Rental Corp. ("Essex Crane"), Essex Finance Corp. (“Essex Finance”), CC Acquisition Holding Corp. (“CC Acquisition”), CC Bidding Corp. (“CC Bidding”) and Coast Crane Ltd. (“Coast Crane Ltd.”), (collectively the "Company" or "Successor"). All significant intercompany accounts and transactions have been eliminated in consolidation.

All activity from August 21, 2006 (inception) through March 13, 2007 relates to Essex Rental Corp’s formation and initial public offering described below. From March 13, 2007 through October 31, 2008, the Company’s activities were limited to identifying prospective target businesses to acquire and completing a business combination. On October 31, 2008, Essex Rental Corp. consummated the acquisition of Essex Holdings LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Essex Crane Rental Corp., a Delaware corporation, which is described below, and as a result is no longer in the development stage.

On November 24, 2010, CC Bidding, a Delaware corporation and an indirectly wholly-owned subsidiary of the Company completed the acquisition (the “Coast Acquisition”) of substantially all of the assets of Coast Crane Company, a Delaware corporation (“Coast Crane”). The assets acquired in the Coast Acquisition consisted of all of the assets used by Coast Crane in the operation of its specialty lifting solutions and crane rental services business, including cranes and related heavy lifting machinery and equipment and spare parts, inventory, accounts receivable, rights under executory contracts, other tangible and intangible assets and all of the outstanding shares of capital stock of Coast Crane Ltd., a British Columbia corporation, through which Coast Crane conducted its operations in Canada. Following the completion of the Coast Acquisition, CC Bidding changed its name to “Coast Crane Company” and filed trademark and tradename protection with the United States and state governments.

The Company, through its subsidiaries, Essex Crane and Coast Crane, is engaged primarily in renting lattice boom crawler cranes and attachments, tower cranes and attachments, rough terrain cranes, boom trucks and other related heavy lifting machinery and equipment to the construction industry mainly throughout the United States of America including Hawaii and Alaska, Guam and Canada for use in building and maintaining power plants, refineries, bridge and road construction, alternative energy, water treatment facilities and other industrial, commercial and infrastructure related projects. The Company, through its subsidiary Coast Crane, is also engaged in servicing and distributing heavy lifting machinery and other construction related equipment and parts.

The accompanying financial statements of the Company include all adjustments (consisting of normal recurring adjustments) which management considers necessary for the fair presentation of the Company’s operating results, financial position and cash flows as of and for all periods presented.

Essex Holdings, LLC - Predecessor

Essex Holdings, LLC filed a certificate of formation in Delaware on May 4, 2000. The consolidated financial statements include the accounts of Essex Holdings, LLC and its wholly owned subsidiary, Essex Crane Rental Corp. (collectively the “Predecessor”). Essex Holdings, LLC is a holding company whose only activity related to its investment in Essex Crane Rental Corp. All significant intercompany accounts and transactions have been eliminated in consolidation.

Acquisition of Predecessor

In accordance with the purchase agreement (the “Purchase Agreement”) entered into on March 6, 2008, and subsequently amended on May 9, 2008 and August 14, 2008, among the Company, Essex Crane, the members of Holdings and KCP Services LLC (the “Seller Representative”), on October 31, 2008 the Company acquired Holdings through the acquisition of all of the membership interests of Holdings other than membership interests which were retained by members of Holding’s senior management, each of whom owned membership interests of Holdings prior to the completion of the acquisition, and whom the Company sometimes refer to collectively as the management members of Holdings or Essex Crane’s senior management.

F-10

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The ownership interests in the Predecessor that were retained by the management members (the “Retained Interests”), which consist of 632,911 Class A Units of Holdings, the parent company of Essex Crane and a subsidiary of Essex Rental, have been treated as effectively converted as they are only exchangeable for an aggregate of 632,911 shares of the Company’s common stock, entitle the holder to receive distributions on an “as exchanged” basis if Essex pays a dividend to its common stockholders, are not transferable (subject to limited exceptions for estate planning purposes) and the Retained Interests are not mandatorily redeemable. As provided in the Amended and Restated Limited Liability Company Agreement of Holdings, dated October 31, 2008, among the Company and the management members of Holdings, the Retained Interests do not carry any voting rights but are entitled to distributions from Holdings if the Company pays a dividend to its common stockholders, in which case a distribution on account of the Retained Interests will be made on an “as exchanged” basis. Holders of the Retained Interests have agreed, subject to certain exceptions, not to sell their Retained Interests in Holdings or their shares of Essex Rental’s common stock issuable upon exchange of such Retained Interests, for a period of two years following completion of the acquisition. The Company has granted certain registration rights to the existing members of Holdings with respect to the shares of the Company’s common stock issuable upon exchange of the Retained Interests pursuant to a Registration Rights Agreement entered into by the Company and the holders of the Retained Interests contemporaneously with the closing of the acquisition of Essex.

The fair value of the Retained Interests accepted by Essex Crane’s officers in lieu of cash was based on the enterprise value for Essex Holdings ascribed by the total purchase price paid in the Essex acquisition. The number of shares of the Company’s common stock into which the Retained Interests could be converted was based on the estimated per share cash in trust as of the acquisition closing date and approximated the per share common stock price on the acquisition agreement date.

Essex Rental paid a gross purchase price of $225,268,657 excluding liabilities except assumed debt of which $73,146,539 was paid in cash to sellers; $7,492,225 funded the General Escrow Agreement and Compliance Escrow Agreement and $8,810,990 was paid for transaction and other costs of the acquisition. Also, the purchase price included the fair value of the Retained Interests of existing management of $5,000,000. Lastly, the purchase price included common stock with a fair value (based on the closing price of Essex Rental Corp. stock on the acquisition date) of $923,734 for transaction related services and assumed debt of $129,895,169.

The Company used $82,118,675 of the proceeds of its initial public offering held in its trust account as of the closing date, as well as $9,298,594 advanced under the Essex Crane amended credit facility, to pay the net purchase price in the acquisition.

The purchase price paid by Essex Rental consisted of the following:

Cash paid to Sellers	$	73,146,539
Cash paid into escrow		7,492,225
Cash paid for seller transaction and other costs		3,763,346
Cash paid for buyer transaction costs		5,047,644

Total cash paid		89,449,754
Essex Rental common stock issued for transaction costs (132,911 shares) (1)		923,734
Reservation of 632,911 shares of Essex Rental common stock for
sellers' conversion of Retained Interest in Holdings (2)		5,000,000
Essex Crane debt assumed at closing		129,895,169
Total purchase price paid for net assets acquired	$	225,268,657

(1)

The common stock was valued at $6.95 per share, which approximates the quoted market price of the common stock on the date the acquisition closed.

(2)

The common stock was valued at $7.90 per share, which approximates the quoted market price of the common stock at the time the acquisition was agreed.

F-11

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of the assets acquired and liabilities assumed arising from the acquisition on October 31, 2008 were as follows:

Assets Acquired:

Cash	$	1,191,660
Accounts receivable		10,701,304
Other current assets		4,964,670
Rental equipment		256,086,550
Property and equipment		8,095,892
Spare parts inventory		3,064,029
Goodwill		23,895,733
Other intangible assets		3,640,000
Other assets		2,429,403
Total Assets Acquired		314,069,241

Liabilities Assumed:

Accounts payable and accrued liabilities		13,848,973
Deferred tax liabilities		74,951,611
Total Liabilities Assumed		88,800,584
Net Assets Acquired	$	225,268,657

The methodology in allocating the final adjusted purchase price of Holdings of $225.3 million, including related includable transaction expenses, to the assets acquired and liabilities assumed is described below as follows:

The book value of cash, accounts receivable, other current assets, accounts payable and accrued liabilities were determined to approximate their fair value due to their short term nature;

An experienced and qualified third party assisted in the valuation of the Company’s rental equipment and property and equipment based in part on assumptions provided by management;

An experienced and qualified third party assisted in the valuation of intangible assets including customer relationship intangible and trademark based in part on assumptions provided by management; and

The remaining excess purchase price paid over the net assets acquired, which included transaction costs incurred, was recorded as goodwill.

Pro Forma Information (Unaudited)

The following table contains unaudited pro forma consolidated income information of the Company for the year ended December 31, 2008 as if the acquisition of Holdings had occurred as of January 1, 2008. The pro forma adjustments recorded associated with the fair value of assets acquired relate to additional depreciation expense resulting from the increase in fair value of rental equipment and property and equipment and additional interest expense associated with the debt incurred to finance the acquisition:

F-12

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Year Ended
	December 31,
	2008

Total revenues	$	85,851,346
Gross profit		47,406,908
Income from operations		4,817,554
Net loss		(3,639,001	)
Basis and diluted net loss per common share	$	(0.26	)

The above unaudited pro forma information includes a $23.9 million impairment charge for the write-off of goodwill and is presented for illustrative purposes only and is not intended to be, and may not be indicative of the results of operations that would have actually occurred had the acquisition of Holdings occurred as presented. Also, future results may vary significantly from the results reflected in such pro forma information.

Acquisition of Coast Crane’s Assets

On November 12, 2010, the United States Bankruptcy Court for the Western District of Washington approved an Asset Purchase Agreement (the "Coast Crane Purchase Agreement") between CC Bidding, an indirect wholly-owned subsidiary of the Company, and Coast Crane, a Delaware corporation pursuant to which CC Bidding agreed to purchase substantially all of the assets, including 100% of the outstanding shares of capital stock of Coast Crane Ltd., and assume certain liabilities, of Coast Crane (the “Coast Crane Acquisition”). Coast Crane, a leading provider of specialty lifting solutions and crane rental services on the West Coast of the United States, filed a voluntary petition for relief under the United States Bankruptcy Code on September 22, 2010 (Case Number 10-21229). The Coast Acquisition was completed on November 24, 2010. Subsequent to the Coast Acquisition, the Company filed trademark and tradename protection with the United States and state governments

The primary reasons for the Company’s acquisition of Coast Crane’s assets are as follows:

Extend the Company’s geographic footprint to the Western and Northwestern U.S., Alaska, Hawaii, Guam and the South Pacific;

F-13

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash consideration:

Cash from proceeds of common share issuance	$	14,190,000
Cash from Essex Rental Corp.		20,310,000
Cash from proceeds from new revolving credit facility		49,551,816

Total cash transferred at close		84,051,816
Plus: transaction expenses paid outside of close		1,160,501
Less: transaction expenses		(2,735,917	)

Total cash consideration		82,476,400

Liabilities assumed:

Unsecured promissory note		5,227,000
Canadian revolving credit facility		2,743,160
Purchase money security interest debt		3,831,433
Interest rate swap agreements		1,600,650
Trade payables		5,835,000
Accrued benefits and employee compensation		1,494,058

Total liabilities assumed per the Purchase Agreement		20,731,301

Total consideration transferred	$	103,207,701

The allocation of total consideration transferred to the assets acquired and liabilities assumed is as follows:

Assets acquired:

Cash and cash equivalents	$	1,128,636
Accounts receivable		7,939,653
Other receivables		706,656
Equipment inventory		5,561,692
Retail spare parts		2,477,685
Prepaid expenses and other assets		1,729,032
Rental equipment		81,761,249
Property and equipment		2,433,624
Loan acquisition costs assumed		40,670
Identifiable intangible assets		2,100,000
Goodwill		1,796,126

Total assets acquired		107,675,023

Liabilities assumed:

Other accounts payable		2,132,635
Accrued taxes		356,104
Accrued other expenses		226,251
Unearned revenue and customer deposits		1,378,160
Deferred tax liabilities		377,692

Total other liabilities assumed		4,470,842

Foreign currency exchange impact		3,520

Net assets acquired	$	103,207,701

The methodology in allocating the total consideration transferred to acquire the assets of Coast Crane of $103.2 million, to the assets acquired and liabilities assumed is described below as follows:

F-14

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The book value of other current assets, accounts payable and accrued liabilities were determined to approximate their fair value due to their short term nature;

Certain amounts related to income taxes remain subject to adjustment and will be finalized during the measurement period;

Accounts receivables were recorded at their estimated fair values based on expected collectability. The gross contractual receivables of accounts and other receivables as of the date of acquisition were approximately $9.0 million. Management’s best estimate of the gross accounts receivable not expected to be collected is $1.1 million;

Management estimated the fair value of new and used equipment inventory based on recent sales prices, values of similar rental equipment assets and published market values;

An experienced and qualified third party assisted in the valuation of the Company’s rental equipment and titled vehicles included in property and equipment using the cost and market approaches based in part on assumptions provided by management;

The following table contains the amounts of revenues and earnings of CC Bidding included in the accompanying consolidated statement of operations for the year ended December 31, 2010:

	For the Period
	November 24, 2010 to
	December 31, 2010

Total revenues	$	5,403,551
Gross profit		519,701
Loss from operations		(959,550	)
Net loss		(810,314	)

Pro Forma Information (Unaudited)

The following table contains unaudited pro forma consolidated income information of the Company for the years ended December 31, 2010 and 2009 as if the acquisition of Coast Crane had occurred as of the beginning of each reporting period. The pro forma adjustments recorded associated with the fair value of assets acquired relate to additional depreciation expense resulting from the increase in fair value of rental equipment and property and equipment and additional interest expense associated with the debt incurred to finance the acquisition:

F-15

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Year Ended December 31,
	2010			2009

Total revenues	$	108,462,689		$	170,396,760
Gross profit		15,273,316			36,238,357
Income (loss) from operations		(15,089,819	)		4,926,509
Net loss		(18,466,728	)		(7,886,905	)
Basis and diluted net loss per common share	$	(0.97	)	$	(0.45	)

Initial Public Offering

On March 13, 2007, Essex Rental sold 11,250,000 units (“Units”) in the Initial Public Offering (“Offering”) at $8.00 per Unit. On March 15, 2007, the Company consummated the sale of an additional 1,687,500 Units which were subject to the underwriter’s over-allotment option. Each Unit consists of one share of the Company’s common stock, $.0001 par value, and one Redeemable Common Stock Purchase Warrant (“Warrants”). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00 commencing on the later of the completion of a business combination or March 5, 2008 and expiring March 4, 2011. The Warrants will be redeemable, at the Company’s option, with the prior consent of Early Bird Capital, Inc., the representative of the underwriters in the Offering (“Representative”), at a price of $0.01 per Warrant upon 30 days’ notice after the Warrants became exercisable, only in the event that the last sale price of the common stock is at least $11.00 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company redeems the Warrants as described above, management will have the option to require any holder that wishes to exercise his Warrant to do so on a “cashless basis.” In such event, the holder would pay the exercise price by surrendering his Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to holders of Warrants. In accordance with the warrant agreement relating to the Warrants sold and issued in the Offering, the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration is not effective at the time of exercise, the holder of such Warrant shall not be entitled to exercise such Warrant and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle the warrant exercise. Consequently, the Warrants may expire unexercised and unredeemed.

Essex Rental paid the underwriters in the Offering an underwriting discount of 5.5% of the gross proceeds of the Offering and a non-accountable expense allowance of 0.5% of the gross proceeds of the Offering. However, the underwriters agreed that 1.5% of the underwriting discount would be deferred and would not be paid unless and until the Company consummated a business combination. Accordingly, $1,552,500 was reflected as deferred underwriting fees at December 31, 2007 in the accompanying balance sheets. In connection with the Offering, the Company also issued an option (“Option”), for $100, to the Representative to purchase 600,000 Units at an exercise price of $8.80 per Unit. The Company accounted for the fair value of the Option, inclusive of the receipt of the $100 cash payment, as an expense of the Offering resulting in a charge directly to stockholders’ equity. The Company estimated that the fair value of the Option was approximately $2,019,940 ($3.3549 per Unit) using a Black-Scholes option-pricing model.

The fair value of the Option granted to the Representative was estimated as of the date of grant using the following assumptions: (1) expected volatility of 43.78%, (2) risk-free interest rate of 4.67% and (3) expected life of 5 years. The Option may be exercised for cash or on a “cashless” basis, at the holder's option, such that the holder may use the appreciated value of the Option (the difference between the exercise prices of the Option and the underlying Warrants and the market price of the Units and underlying securities) to exercise the option without the payment of any cash.

F-16

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company will have no obligation to net cash settle the exercise of the Option or the Warrants underlying the Option. The holder of the Option will not be entitled to exercise the Option or the Warrants underlying the Option unless a registration statement covering the securities underlying the Option is effective or an exemption from registration is available. If the holder is unable to exercise the Option or underlying Warrants, the Option or Warrants, as applicable, will expire worthless.

Trust Fund and Common Stock Subject to Possible Redemption

Approximately $99.7 million of the Offering proceeds was deposited in an interest-bearing trust account ("Trust Fund") until the earlier of (i) the consummation of a business combination or (ii) liquidation of the Company (the Company's Certificate of Incorporation provided for mandatory liquidation of the Company in the event that the Company did not consummate a business combination within 24 months from the date of the consummation of the Offering. Under the agreement governing the Trust Fund, the proceeds were permitted to be invested only in specified United States government securities or in specified money market funds. Additionally, up to an aggregate of $1.5 million of interest earned on the Trust Fund was permitted to be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. At December 31, 2007, cash held in the Trust Fund was approximately $100.9 million. Upon closing of the Transaction, the balance in the Trust Fund, approximately $83.9 million, became available to fund the acquisition of Holdings.

The Company, after signing the Stock Purchase Agreement to acquire Holdings, was required to submit the transaction for stockholder approval. In the event that stockholders owning 20% or more of the shares sold in the Offering voted against the transaction and exercised their redemption rights, the Transaction would not be consummated. The transaction was submitted to the vote of stockholders in October 2008, and was approved. However, stockholders voting against the transaction requested the redemption of 2,357,736 shares of the Company's common stock for $18.7 million, representing the dissenting stockholders' pro rata share of the Trust Fund.

Private Placement Transactions

Essex Rental’s directors and certain special advisors and their members purchased 1,500,000 Warrants (‘‘Insider Warrants’’) at $1.00 per Warrant (for an aggregate purchase price of $1,500,000) privately from the Company. These purchases took place simultaneously with the consummation of the Offering in 2007. All of the proceeds received from these purchases were placed in the Trust Account. The Insider Warrants are identical to the Warrants underlying the Units sold in the Offering except that if the Company calls the Warrants for redemption, the Insider Warrants may be exercisable, at the Initial Stockholders’ option, on a “cashless basis” so long as such securities are held by such Initial Stockholders or their affiliates.

In connection with the bid for Coast Crane’s assets, Essex entered into subscription agreements providing for the sale of an aggregate of 3,300,000 shares of common stock, par value $0.0001 per share, at a price of $4.30 per share, or $14,190,000 in the aggregate, in a private offering. The closing of the private offering and the issuance of shares of common stock pursuant to the subscriptions was contingent upon the Company being the successful bidder for and consummating the acquisition of, the assets of Coast Crane. The proceeds of the offering were used to fund part of the cash portion of the purchase price for Coast Crane's assets.

2.	Significant Accounting Policies

The Company’s significant accounting policies described in this note are the same for the Successor and Predecessor except as specifically noted otherwise.

F-17

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Use of Estimates

The preparation of these financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could materially differ from those estimates. Significant estimates include the allowance for doubtful accounts and credit memos, spare parts inventory obsolescence reserve, useful lives for rental equipment and property and equipment, deferred income taxes, personal property tax accrual, loss contingencies and the fair value of interest rate swaps and other financial instruments.

Revenue Recognition

Cash and Cash Equivalents

The Company considers all demand deposits, money market accounts and investments in certificates of deposit with a maturity of three months or less at the date of purchase to be cash equivalents.

Shipping and Handling Costs and Taxes Collectible from Customers

The Company classifies shipping and handling amounts billed to customers as revenues and the corresponding expenses are included in cost of revenues in the consolidated statements of operations. The Company accounts for taxes due from customers on a net basis and as such, these amounts are excluded from revenues in the consolidated statements of operations.

F-18

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoice price net of an estimate of allowance for doubtful accounts and reserves for credit memos, and generally do not bear interest.

The allowance for doubtful accounts is the Company’s best estimate of the amount of credit losses in accounts receivable and is included in selling, general and administrative expenses in the consolidated statements of operations. The Company periodically reviews the allowance for doubtful accounts and balances are written off against the allowance when management believes it is probable the receivable will not be recovered. The Company’s allowance for doubtful accounts and credit memos was approximately $1,742,000 and $1,545,000 as of December 31, 2010 and 2009, respectively. Bad debt expense was approximately $496,000 and $600,000 for the years ended December 31, 2010 and 2009, respectively. The Company’s bad debt expense was $160,000 for the year ended December 31, 2008, which represents Essex Crane for the two month post-acquisition period. For the ten month period ended October 31, 2008, the Predecessor’s bad debt expense was $680,000.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company may maintain deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Another financial instrument account that potentially subjects the Company to a significant concentration of credit risk primarily relates to accounts receivable. Concentrations of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company’s customer base.

No single customer represented more than 10% of total revenue or outstanding receivables for any of the periods presented.

The Company controls credit risk through credit approvals, credit limits and other monitoring procedures. The Company also manages credit risk through bonding requirements on its customers and/or liens on projects that the rental equipment is used to complete.

Inventory

Inventory is stated at the lower of cost or market. Spare parts inventory is used to service rental equipment and is sold on a retail basis. Spare parts inventory used to support the crawler crane rental fleet is classified as a non-current asset as it is primarily used to support rental equipment repair operations. Spare parts inventory used to service rental equipment is recorded as repairs and maintenance expense in the period the parts were issued to a repair project, or, usage is reclassified as additional cost of the rental equipment if the repair project meets certain capitalization criteria as discussed below. Equipment inventory is accounted for using the specific-identification method and retail parts and spare parts inventory are accounted for using the average cost method.

The carrying value of the spare parts inventory is reduced by a reserve representing management’s estimate for obsolete and slow moving items. This obsolescence reserve is an estimate based upon the Company’s analysis by type of inventory, usage and market conditions at the consolidated balance sheet dates. The obsolescence reserve was approximately $279,000 and $189,000 as of December 31, 2010 and 2009, respectively.

F-19

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Rental Equipment

Rental equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the equipment, which range from 5 to 30 years. In excess of 95% of the assets have a useful life greater than 15 years. Projects with costs in excess of $20,000 for equipment improvements that extend the useful lives or enhance a crane’s capabilities are capitalized in the period they are incurred and depreciated using the straight line method over an estimated useful life of 7 years. Individual rental equipment items purchased with costs in excess of $5,000 are also capitalized and are depreciated over the useful lives of the respective item purchased. During the years ended December 31, 2010 and 2009, the Company capitalized rental equipment maintenance expenditures of approximately $0.8 million and $0.4 million, respectively. During the year ended December 31, 2008, which represents the two month post-acquisition period, the Company did not capitalize rental equipment maintenance expenditures.

Gains and losses on retirements and disposals of rental equipment are included in income from operations. Ordinary repair and maintenance costs are included in cost of revenues in the consolidated statements of operations.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the assets’ estimated useful lives, which are as follows:

Buildings		30 years
Building improvements		10 years
Office equipment and improvements		3 to 7 years
Automobiles, trucks, trailers and yard equipment		4 to 5 years
Information systems equipment and software		3 years
Machinery, furniture and fixtures		4 to 7 years

Expenditures for betterments and renewals in excess of $5,000 that extend the useful lives or enhance the assets’ capabilities are capitalized and are depreciated on the straight line basis over the remaining lives of the assets. Gains and losses on retirements and disposals of property and equipment are included in the consolidated statements of operations. The Company capitalized property, plant and equipment expenditures, excluding capitalized software costs, of approximately $0.8 million and $0.6 million during the years ended December 31, 2010 and 2009, respectively.

External costs incurred by the Company to develop computer software for internal use are capitalized in accordance with applicable accounting guidance. The Company capitalized $0.2 million and $0.4 million for the years ended December 31, 2010 and 2009, respectively. Capitalized software development costs include software license fees, consulting fees and certain internal payroll costs and are amortized on a straight line basis over their useful lives. During 2010, the Company placed approximately $0.8 million of capitalized costs in service associated with the development of a new Enterprise Resource Planning system (“ERP system”). The ERP system implementation was completed early in 2010 and is being amortized on a straight line basis over its 3 year useful life beginning in the first quarter of 2010. The Predecessor’s cumulative capitalized software was $926,619 and accumulated amortization was $897,432 at October 31, 2008. For the ten months ended October 31, 2008, the Predecessor’s amortization expense was $15,680.

F-20

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loan Acquisition Costs

Loan acquisition costs include underwriting, legal and other direct costs incurred in connection with the issuance of the Company’s debt. These costs are capitalized and amortized using the straight line method over the remaining period of the debt, which is not materially different from the effective interest method, and included in interest expense.

Goodwill and Other Intangible Assets

Coast Crane Acquisition Intangibles

The Company used the purchase method of accounting for its acquisition of Coast Crane’s assets. The acquisition resulted in an allocation of purchase price to goodwill and other intangible assets. The cost of the Coast Acquisition was first allocated to identifiable assets based on estimated fair values. The excess of the purchase price over the fair value of identifiable assets acquired in the amount of $1,796,126 was recorded as goodwill.

Identifiable finite lived intangible assets consist of customer relationships and trademarks obtained in the acquisition of Coast Crane’s assets. The customer relationship intangible and trademark assets are both being amortized on a straight-line basis over their estimated useful lives of 7 years and 5 years, respectively.

Holdings Acquisition Intangibles

The Company used the purchase method of accounting for its acquisition of Holdings. The acquisition resulted in an allocation of purchase price to goodwill and other intangible assets. The cost of Holdings was first allocated to identifiable assets based on estimated fair values. The excess of the purchase price over the fair value of identifiable assets acquired in the amount of $23,895,733 was recorded as goodwill.

During the fourth quarter of 2008, the Company determined that the weakening economy and the global credit crisis resulted in a reduction in the Company’s market capitalization (share price) below its total shareholders’ equity value, which was an indication that its goodwill may be impaired. As a result, the Company performed an assessment of goodwill of its Essex Crane subsidiary as of December 31, 2008 with the assistance of a third-party valuation specialist. The impairment was the result of a significant decline in the Company’s stock price (market capitalization), the weakening of the economy and credit crisis and the likely potential impact on the Company’s future cash flows. Based on the analysis, the Company recorded a gross non-cash impairment charge of $23,895,733 at December 31, 2008 which is included in the Company’s statement of operations for the year ended December 31, 2008. After recording this impairment charge, the Company had no remaining goodwill at December 31, 2008.

Included in identifiable finite lived intangible assets are customer relationships and trademarks obtained in the acquisition of Holdings. The customer relationship intangible and trademark assets are both being amortized on a straight-line basis over their estimated useful lives of 5 years.

Long-lived Assets

Long lived assets are recorded at the lower of amortized cost or fair value. As part of an ongoing review of the valuation of long-lived assets and finite-lived intangibles, the Company assesses the carrying value of these assets if such facts and circumstances suggest that they may be impaired. If this review indicates the carrying value of these assets may not be recoverable, as determined by an undiscounted cash flow analysis over the remaining future life, the carrying value would be reduced to its estimated fair value. The Company determined that there was no impairment of its long-lived assets as of December 31, 2010, 2009 and 2008.

Derivative Financial Instruments and Hedging Activities

The Company uses derivative financial instruments for the purpose of hedging the risks associated with interest rate fluctuations on its revolving credit facility with the objective of converting a targeted amount of its floating rate debt to a fixed rate. The Company has not entered into derivative transactions for speculative purposes, and therefore holds no derivative instruments for trading purposes.

F-21

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking each hedge transaction. All derivative instruments are carried at fair value on the balance sheet in accordance with applicable accounting guidance.

Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either a freestanding asset or liability, with a corresponding offset recorded in accumulated other comprehensive income within stockholders’ equity, net of tax. Amounts are reclassified from accumulated other comprehensive income to the consolidated income statement in the period or periods the hedged transaction affects earnings.

Derivative gains and losses under cash flow hedges not effective in hedging the change in fair value or expected cash flows of the hedged item are recognized immediately within the statement of operations. At the hedge’s inception and at least quarterly thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in fair values or cash flows of the hedged items and whether they are expected to be highly effective in the future. If it is determined a derivative instrument has not been or will not continue to be highly effective as a hedge, hedge accounting is discontinued. No hedge ineffectiveness was recognized within the statement of operations during the years ended December 31, 2010, 2009 or 2008.

The Company assumed three interest rate swaps with a combined notional amount of $21.0 million in conjunction with its purchase of Coast Crane’s assets and did not contemporaneously document the hedge designation on the date of assumption in order to qualify for hedge accounting treatment for economic reasons and the forecasted inherent hedge ineffectiveness that would have resulted from the differences in terms of the assumed swaps and the new revolving credit facility. As such, the derivative financial instruments assumed have been recorded at fair value in the accompanying consolidated balance sheets in long-term liabilities with changes in the underlying fair value reported as a component of other income (expenses) in the Company’s consolidated statements of operations.

The Predecessor did not contemporaneously document the hedge designation on the date of inception in order to quality for hedge accounting treatment. As such, the derivative financial instruments of the Predecessor have been recorded at fair value in the accompanying consolidated balance sheets in long-term liabilities with changes in the underlying fair value reported as a component of other income (expenses) in the Company’s consolidated statements of operations.

Income Taxes

The Company uses an asset and liability approach for financial accounting and reporting of income taxes. Deferred tax assets and liabilities are computed using tax rates expected to apply to taxable income in the years in which those assets and liabilities are expected to be realized. The effect on deferred tax assets and liabilities resulting from a change in tax rates is recognized as income or expense in the period that the change in tax rates is enacted.

Management makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of certain tax credits and in the calculation of the deferred income tax expense or benefit associated with certain deferred tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to the Company’s tax provision in a subsequent period.

Management assesses the likelihood that it will be able to recover its deferred tax assets. If recovery is not likely, the Company will increase its provision for income taxes by recording a valuation allowance against the deferred tax assets that are unlikely to be recovered. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

F-22

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock based compensation

Stock based compensation is accounted for in accordance with generally accepted accounting principles, which results in compensation expense being recorded over the requisite service or vesting period based on the fair value of the share based compensation at the date of grant.

Segment Reporting

The Company has determined that although it has several distinct revenue streams including equipment rental and transportation, equipment sales, and repairs and maintenance, it has only one reportable segment. This determination was based upon how management allocates its resources and assesses performance. Management is currently in the process of evaluating the impact of the acquisition of Coast Crane related to financial reporting and may determine that there is more than one reporting segment in the future.

Foreign Currency Translation

The functional currency of the Company’s Canadian subsidiary is the Canadian dollar. Assets and liabilities of the foreign subsidiary are translated into U.S. dollars at year-end exchange rates, and revenue and expenses are translated at average rates prevailing during the year. Gains or losses from these translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

Reclassifications

The Company changed its presentation of revenues and related costs associated with insurance recoveries for repair of damage to equipment from accidents or natural disasters while on rent within the Consolidated Statements of Operations to report these revenues and cost of revenues gross within continuing operations to better reflect the nature of the transactions and the fact that the Company is generally reimbursed by its clients for damages incurred for all periods presented and reflecting the terms within the rental agreements within the normal course of business. It had previously been presented on a net basis within Other Income (Expense).

The following table provides a summary of the reclassifications made in each period:

F-23

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Successor		Predecessor
			For the Ten
	Year Ended		Months Ended
	December 31,		October 31,
	2008		2008

Equipment repairs and maintenance
revenue previously reported	$	999,950	$	5,901,901
Reclassification of insurance recovery revenue		386,103		136,738

Equipment repairs and maintenance revenue	$	1,386,053	$	6,038,639

Equipment repairs and maintenance cost of
revenues previously reported	$	850,379	$	5,330,053
Reclassification of insurance recovery expenses		386,103		81,219

Equipment repairs and maintenance cost of revenues	$	1,236,482	$	5,411,272

Other income - net, insurance recoveries	$	-	$	55,519
Reclassification to income from operations		-		(55,519	)

Other income - net, insurance recoveries	$	-	$	-

Recently Issued and Adopted Accounting Pronouncements

In January 2010, the FASB issued authoritative guidance that expands the required disclosures about fair value measurements. This guidance provides for new disclosures requiring the Company to (i) disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers and (ii) present separately information about purchases, sales, issuances and settlements in the reconciliation of Level 3 fair value measurements. This guidance also provides clarification of existing disclosures requiring the Company to (i) determine each class of assets and liabilities based on the nature and risks of the investments rather than by major security type and (ii) for each class of assets and liabilities, disclose the valuation techniques and inputs used to measure fair value for both Level 2 and Level 3 fair value measurements. This guidance was effective on January 1, 2010, except for the presentation of purchases, sales, issuances and settlements in the reconciliation of Level 3 fair value measurements, which is effective on January 1, 2011. This guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued a standard with amendments to the accounting guidance related to subsequent events. The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. This standard is effective for interim or annual financial periods ending after June 15, 2010 and the Company adopted this new standard during the quarter ended June 30, 2010 which did not have a material effect on the Company’s consolidated financial statements.

3.	Restatement

On May 4, 2010, the Company’s Audit Committee of the Board of Directors approved Management's recommendation to restate its previously issued consolidated financial statements as of and for the year ended December 31, 2010 and that they could no longer be relied upon as a result of an oversight in the estimate of statutory deferred tax liabilities and the related valuation allowances from the Company’s consolidated financial statements issued for the year ended December 31, 2010.

F-24

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

This restatement is required due to an oversight in the calculated estimate of the Coast Acquisition’s impact on the Company’s consolidated effective state tax rate and related valuation allowances, which required an adjustment of the recorded deferred tax liabilities and benefit from income taxes included in the Company’s consolidated financial statements as of and for the year ended December 31, 2010. The correction of the error in accounting for state income tax rates included in this Form 10-K/A resulted from the impact of the acquisition of our Coast Crane subsidiary on state apportionment calculations for the consolidated and an overstatement of the reserve against State Net Operating Losses (NOLs). After review of the facts and circumstances, the Company’s Audit Committee determined that the change in estimate should have occurred during the three month period ended December 31, 2010. Net loss per share, after decreasing the benefit from income taxes, increased from the $(0.59) per share originally disclosed to $(0.71) per share as restated, for both basic diluted loss per share for the year ended December 31, 2010.

The Company has restated its consolidated balance sheet as of December 31, 2010 and its consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2010. In addition, notes 3, 11, 12 and 18 to the consolidated financial statements have been restated to reflect the change in the deferred tax liabilities related to state taxes. Additionally, the unaudited quarterly financial data for the quarters in 2010 have been restated to reflect the change in deferred tax liabilities related to state taxes.

F-25

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The effects of the restatement for deferred tax liabilities related to state taxes on the consolidated balance sheet as of December 31, 2010 are as follows:

	As of December 31, 2010
	As Previously
	Reported			Adjustments			As Restated

Deferred tax assets	$	2,328,678		$	74,031		$	2,402,709
Total current assets		33,166,252			74,031			33,240,283
Total assets		382,972,927			74,031			383,046,958

Deferred tax liabilities		59,264,909			1,859,129			61,124,038
Total long-term liabilities		287,423,346			1,859,129			289,282,475
Total liabilities		302,877,538			1,859,129			304,736,667

Accumulated deficit		(18,596,255	)		(1,834,828	)		(20,431,083	)
Accumulated other comprehensive loss, net of tax		(2,362,770	)		49,730			(2,313,040	)
Total stockholders' equity		80,095,389			(1,785,098	)		78,310,291

Total liabilities and stockholders' equity	$	382,972,927		$	74,031		$	383,046,958

The effects of the restatement for deferred tax liabilities related to state taxes on the consolidated statement of operations for the year ended December 31, 2010 are as follows:

	For the Year Ended December 31, 2010
	As Previously
	Reported			Adjustments			As Restated

Loss before income taxes	$	(14,931,588	)	$	-		$	(14,931,588	)

Benefit from income taxes		(5,357,930	)		1,834,828			(3,523,102	)

Net loss	$	(9,573,658	)	$	(1,834,828	)	$	(11,408,486	)

Weighted average shares outstanding:
Basic		16,102,339			-			16,102,339
Diluted		16,102,339			-			16,102,339

Earnings (loss) per share:
Basic	$	(0.59	)				$	(0.71	)
Diluted	$	(0.59	)				$	(0.71	)

F-26

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The effects of the restatement for deferred tax liabilities related to state taxes on the consolidated statement of stockholders’ equity for the year ended December 31, 2010 are as follows:

	For the Year Ended December 31, 2010
	As Previously
	Reported			Adjustments			As Restated

Accumulated Deficit

Net loss for the year ended December 31, 2010	$	(9,573,658	)	$	(1,834,828	)	$	(11,408,486	)

Balance - December 31, 2010	$	(18,596,255	)	$	(1,834,828	)	$	(20,431,083	)

Accumulated Other Comprehensive Loss

Change in fair value of interest rate swap, net of tax of $626,987	$	(941,840	)	$	49,730		$	(892,110	)

Balance - December 31, 2010	$	(2,362,770	)	$	49,730		$	(2,313,040	)

Total Stockholders' Equity

Change in fair value of interest rate swap, net of tax of $626,987	$	(941,840	)	$	49,730		$	(892,110	)

Net loss for the year ended December 31, 2010	$	(9,573,658	)	$	(1,834,828	)	$	(11,408,486	)

Balance - December 31, 2010	$	80,095,389		$	(1,785,098	)	$	78,310,291

Comprehensive Income (Loss)

Change in fair value of interest rate swap, net of tax of $626,987	$	(941,840	)	$	49,730		$	(892,110	)

Net loss for the year ended December 31, 2010	$	(9,573,658	)	$	(1,834,828	)	$	(11,408,486	)

Balance - December 31, 2010	$	(10,506,525	)	$	(1,785,098	)	$	(12,291,623	)

The effect of the restatement for deferred tax liabilities related to state taxes on the consolidated statement of cash flows for the year ended December 31, 2010 are as follows:

	For the Year Ended December 31, 2010
	As Previously
	Reported			Adjustments			As Restated

Net loss	$	(9,573,658	)	$	(1,834,828	)	$	(11,408,486	)

Adjustments to reconcile net income to net cash Deferred income taxes		(3,434,877	)		1,834,828			(1,600,049	)

Net cash used in operating activities	$	(5,429,980	)	$	-		$	(5,429,980	)

F-27

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.	Rental Equipment

Rental equipment consists of the following:

	Year Ended December 31,
	2010			2009

Rental Equipment	$	354,601,219		$	273,199,851
Less: accumulated depreciation		(24,222,427	)		(12,432,173	)

Rental Equipment, net	$	330,378,792		$	260,767,678

Essex Rental’s depreciation expense related to rental equipment was $12,227,301 and $10,821,685 for the years ended December 31, 2010 and 2009, respectively and is included in cost of revenues in the accompanying consolidated statements of operations. Essex Rental’s depreciation expense related to rental equipment was $1,749,762 for the year ended December 31, 2008, which represents Essex Crane for the two month post-acquisition period, and is included in cost of revenues in the accompanying consolidated statements of operations.

For the ten months ended October 31, 2008, the Predecessor’s depreciation expense related to rental equipment was $6,635,454.

Rental periods on rental equipment commonly extend beyond the minimum rental period required by each respective rental agreement due to construction delays, project scope increases or other project related issues. Future contractual minimum rental revenues as required by executed rental agreements as of December 31, 2010 are as follows:

2011	$	4,884,000
2012		333,000

Total minimum rental revenue	$	5,217,000

F-28

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.	Property and Equipment

Property and equipment consists of the following:

	Year Ended December 31,
	2010			2009

Land	$	2,575,000		$	2,575,000
Buildings and improvements		2,557,695			2,075,000
Automobiles, trucks, trailers and yard equipment		2,771,967			985,650
Information Systems equipment and software		816,444			29,187
Office equipment		321,049			97,461
Machinery, furniture and fixtures		662,927			666,077
Construction in progress		441,659			1,141,464

Total property and equipment		10,146,741			7,569,839

Less: accumulated depreciation		(1,419,285	)		(588,179	)

Property and equipment, net	$	8,727,456		$	6,981,660

The amount of costs incurred and capitalized for projects not yet completed at December 31, 2010 and 2009 were $0.4 million and $1.1 million, respectively, and include funds deposited with rental equipment manufacturers to secure the acquisition of assets of $0.3 million as of December 31, 2009. Essex Rental’s depreciation expense related to property and equipment was $930,369 and $509,709 for the years ended December 31, 2010 and 2009, respectively. Essex Rental’s depreciation and amortization expense related to property and equipment was $78,470 for the year ended December 31, 2008, which represents Essex Crane for the two month post-acquisition period. The Predecessor’s depreciation expense related to property and equipment for the ten months ended October 31, 2008 was $383,545.

Depreciation expense related to automobiles, trucks, trailers, yard equipment and machinery has been included in cost of revenues in the accompanying consolidated statements of operations as it is directly related to revenue generation while the remaining categories are included in other operating expenses.

6.	Loan Acquisition Costs

On November 24, 2010, the Company assumed Coast Crane Ltd.’s Canadian revolving credit facility and related loan acquisition costs of $40,670. The Company is amortizing these loan acquisition costs over the remaining life of the credit facility, which matures in May 2012. The Company also incurred $664,274 of loan acquisition costs related to the new Coast Crane revolving credit facility and $132,440 in November 2010 related to the $5.2 million unsecured promissory note. Loan costs associated with the new Coast Crane revolving credit facility are being amortized over the four year term of the new revolving credit facility. Loan costs associated with the unsecured promissory notes are being amortized over the three year term of the unsecured promissory note.

Loan acquisition costs consist of the following:

	Year Ended December 31,
	2010			2009

Gross carrying amount	$	3,312,525		$	2,474,073
Less: accumulated amortization		(1,091,647	)		(576,896	)

Loan costs, net	$	2,220,878		$	1,897,177

The Company’s loan acquisition costs amortized to interest expense for the years ended December 31, 2010 and 2009 were $514,719 and $494,915, respectively. The Company’s loan acquisition costs amortized to interest expense for the year ended December 31, 2008 was $81,981, which represents Essex Crane for the two month post-acquisition period.

F-29

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Predecessor’s loan acquisition costs amortized to interest expense for the ten months ended October 31, 2008 was $353,300.

Estimated future amortization expense related to loan acquisitions costs at December 31, 2010 are as follows for the years ending December 31:

2010	$	732,782
2011		714,417
2012		621,451
2013		152,228

Total	$	2,220,878

F-30

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.	Intangible Assets

Goodwill of $1,796,126 was recorded associated with the acquisition of Coast Crane’s assets on November 24, 2010 for the excess of the total consideration transferred over the fair value of identifiable assets acquired, net of liabilities assumed.

In addition, a customer relationship intangible and trademark intangible were recorded at fair value associated with the acquisition of Coast Crane’s assets and Holdings. The fair value of the customer relationship intangible and trademark intangible related to the acquisition of Coast Crane’s assets were $1.5 million and $0.6 million, respectively. The following table presents the gross carrying amount, accumulated amortization and net carrying amount of the Company’s other identifiable finite lived intangible assets at December 31, 2010:

	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Other identifiable intangible assets:

Essex Crane customer relationship intangible	$	1,159,352	$	(632,904	)	$	526,448
Essex Crane trademark		1,186,756		(647,046	)		539,710
Coast Crane customer relationship intangible		1,500,000		(13,095	)		1,486,905
Coast Crane trademark		600,000		(10,000	)		590,000
	$	4,446,108	$	(1,303,045	)	$	3,143,063

The following table presents the gross carrying amount, accumulated amortization and net carrying amount of the Company’s other identifiable intangible assets at December 31, 2009:

	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Other identifiable intangible assets:

Essex Crane customer relationship intangible	$	1,455,032	$	(386,783	)	$	1,068,249
Essex Crane trademark		1,487,369		(395,379	)		1,091,990
	$	2,942,401	$	(782,162	)	$	2,160,239

The gross carrying amount of the Essex Crane customer relationship intangible was reduced by $295,680 and $344,968 for the years ended December 31, 2010 and 2009, respectively as a result of the recognition of the tax benefit related to excess tax deductible goodwill. The gross carrying amount of the Essex Crane trademark intangible was reduced by $300,613 and $352,631, for the years ended December 31, 2010 and 2009, respectively as a result of the recognition of the tax benefit related to excess tax deductible goodwill.

The Company’s amortization expense associated with other intangible assets was $520,883, $660,829 and $121,333 for the years ended December 31, 2010, 2009 and 2008, respectively.

F-31

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The expected amortization of the Company’s identifiable finite lived intangible assets is as follows:

2011	$	997,622
2012		997,622
2013		927,813
2014		578,767
2015 and thereafter		944,284

	$	4,446,108

8.	Revolving Credit Facilities and Other Debt Obligations

The Company’s revolving credit facilities and other debt obligations consist of the following:

	Principal Outstanding at				Weighted
	December 31,				Average Interest			Maturity
	2010		2009		as of 12/31/2010 (1)			Date Ranges
Essex Crane revolving credit facility	$	158,300,090	$	131,919,701		2.67	%	Oct-13
Coast Crane revolving credit facility		53,909,026		-		5.33	%	Nov-14
Canadian revolving credit facility		2,750,855		-		6.89	%	May-12
Promissory notes		4,938,611		-		11.90	%	Dec-13
Purchase money security interest debt		2,982,920		-		3.57	%	Sep-15 - Feb-16
Short-term debt obligations		783,243		5,170,614		N/A		within 1 year

Total debt obligations outstanding	$	223,664,745	$	137,090,315

(1) Weighted average interest rates exclude the impact of the Company's interest rate swaps.

Aggregate payments of principal on debt obligations outstanding as of December 31, 2010 for each of the next five years and thereafter based on contractual installment payment terms and maturities are as follows:

2011	$	783,243
2012		3,534,098
2013		164,021,944
2014		54,692,269
2015 and therafter		633,191

	$	223,664,745

Essex Crane Revolving Credit Facility

In conjunction with the acquisition of Holdings on October 31, 2008, Essex Crane amended its senior secured revolving line of credit facility (“revolving credit facility”), which permits it to borrow up to $190.0 million. Essex Crane may borrow up to an amount equal to the sum of 85% of eligible net receivables and 75% of the net orderly liquidation value of eligible rental equipment. The revolving credit facility is collateralized by a first security interest in substantially all of Essex Crane’s assets.

Borrowings under the Essex Crane revolving credit facility accrue interest at the borrower’s option of either (a) the bank’s prime rate (3.25% at December 31, 2010) plus an applicable margin or (b) a Eurodollar rate based on the rate the bank offers deposits of U.S. Dollars in the London interbank market (“LIBOR”) (0.26% at December 31, 2010) plus an applicable margin. The Company is also required to pay a monthly commitment fee with respect to the undrawn commitments under the revolving credit facility. At December 31, 2010 the applicable prime rate margin, euro-dollar LIBOR margin, and unused line commitment fee were 0.25%, 2.25% and 0.25%, respectively. See Note 9 Derivatives and Hedging Activities – Interest Rate Swap Agreement for additional detail.

F-32

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The maximum amount that could be borrowed under the revolving credit facility, net of letters of credit, interest rate swaps and other reserves was approximately $186.0 million as of December 31, 2010. The Company’s available borrowing under the revolving credit facility is approximately $27.7 million as of December 31, 2010. In addition, as of December 31, 2010, there was $5.8 million of available formulaed collateral in excess of the maximum amount of $190.0 million.

As of December 31, 2010 and for the year then ended, the Company was in compliance with its covenants and other provisions of the Essex Crane revolving line of credit facility. Some of the financial covenants including a fixed charge coverage ratio and rental equipment utilization ratio do not become active unless the available borrowing falls below the $20.0 million threshold. The Company’s available borrowing base of approximately $27.7 million well exceeded the threshold at December 31, 2010. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on the Company’s liquidity and operations.

Coast Crane Revolving Credit Facility

On November 24, 2010, CC Bidding and CC Acquisition Holding, the direct parent of CC Bidding, entered into a new revolving credit facility in conjunction with the acquisition of Coast Crane’s assets. The Credit Agreement provides for a revolving loan and letter of credit facility in the maximum aggregate principal amount of $75.0 million with a $2.0 million aggregate principal sublimit for letters of credit. CC Bidding may borrow, repay and reborrow under the Facility. CC Bidding’s ability to borrow under the Facility is subject to, among other things, a borrowing base calculated based on the sum of (a) 85% of eligible accounts, (b) the lesser of 50% of eligible spare parts inventory and $5.0 million, (c) the lesser of 95% of the lesser of (x) the net orderly liquidation value and (y) the invoice cost, of eligible new equipment inventory and $15.0 million and (d) 85% of the net orderly liquidation value of eligible other equipment, less reserves established by the lenders and the liquidity reserve.

Interest accrues on the outstanding revolving loans under the revolving credit facility at either a per annum rate equal to (a) LIBOR plus 3.75%, with a 1.50% LIBOR floor or (b) the Base rate plus 2.75%, at CC Bidding’s election. CC Bidding will be obligated to pay a letter of credit fee on the outstanding letter of credit accommodations based on a per annum rate of 3.75% per annum. Interest on the revolving loans and fees on the letter of credit accommodations will be payable monthly in arrears. CC Bidding will also be obligated to pay an unused line fee on the amount by which the maximum credit under the revolving credit facility exceeds the aggregate amount of revolving loans and letter of credit accommodations based on a per annum rate of 0.50%. At December 31, 2010 the applicable LIBOR rate, Base rate, and unused line commitment fee were 1.50%, 3.25% and 0.50%, respectively.

The maximum amount that could be borrowed under the Coast Crane revolving credit facility, net of reserves was approximately $65.9 million as of December 31, 2010. The Company’s available borrowing under the Coast Crane revolving credit facility is approximately $12.0 million as of December 31, 2010.

Proceeds of the first borrowing under the Credit Agreement in the amount of $49,551,816 were used to pay part of the cash portion of the purchase price, costs, expenses and fees payable in connection with the Coast Acquisition and the negotiation and entry into the Coast Crane revolving credit facility.

As of December 31, 2010 and for the year then ended, the Company was in compliance with its covenants and other provisions of the Coast Crane revolving line of credit facility. Some of the financial covenants including a fixed charge coverage ratio, commencing with the first quarter ending March 31, 2011, do not become active unless the available borrowing falls below the $8.0 million threshold. The Company’s available borrowing base of approximately $12.0 million well exceeded the threshold at December 31, 2010. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on the Company’s liquidity and operations.

F-33

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Canadian Revolving Credit Facility

In conjunction with the acquisition of Coast Crane’s assets, including all of the outstanding shares of capital stock of Coast Crane Ltd., the Company assumed the obligations under a Canadian revolving credit facility (the “Canadian Credit Facility”). The principal balance assumed as of the date of the Coast Acquisition was $2,743,160. Under the Canadian Credit Facility, the Company may borrow up to $5.0 million depending upon the availability of its borrowing base collateral, consisting of eligible trade receivables, inventories, property and equipment, and other assets located in Canada. As of December 31, 2010, there was no additional availability under the Canadian Credit Facility.

Interest accrues on the outstanding revolving loans under the Canadian Credit Facility at either a per annum rate equal to (a) CDOR plus 5.60% or (b) or Canadian Prime rate plus 4.25%, at Coast Crane Ltd.’s election. Interest on the revolving loans are payable monthly in arrears. CC Bidding will also be obligated to pay an unused line fee on the amount by which the maximum credit under the Facility exceeds the aggregate amount of revolving loans based on a per annum rate of 0.25%. At December 31, 2010 the applicable CDOR rate and unused line commitment fee were 1.29% and 0.25%, respectively. The revolving credit facility is collateralized by a first security interest in substantially all of Coast Ltd’s assets.

Unsecured Promissory Notes

In November 2010, the Company entered into an agreement with the holders of certain Coast Crane indebtedness pursuant to which such holders agreed, in consideration of the assumption of such indebtedness by the Company, to exchange such indebtedness for one or more promissory notes issued by the Company in the aggregate principal amount of $5,227,000. As additional consideration under the agreement, the Company agreed to issue to the holders of such indebtedness warrants entitling the holder thereof to purchase up to 90,000 shares of Essex common stock at an exercise price of $0.01 per share, and to reimburse such holders for certain legal fees incurred in connection with the transaction. In the event that the promissory notes are paid in full by the Company on or prior to the six month anniversary of the date of issuance (May 29, 2011), the number of warrants exercisable by the unsecured promissory note holders will be decreased to 30,000 warrants.

In accordance with accounting guidance related to debt issued with conversion or other options, the fair value of the detachable warrants of $296,400 is recorded as a discount to the principal balance outstanding with an offset to additional paid-in capital and will be amortized using the effective interest method, which is not materially different than on a straight-line basis over the three year life of the notes as additional interest expense. The unamortized balance of this discount as of December 31, 2010 was $288,389.

Interest accrues on the outstanding promissory notes at a per annum rate of 10% and is payable annually in arrears.

Purchase Money Security Interest Debt

The purchase money security interest debt consists of the financing of seven pieces of equipment. These amortizing debt obligations were assumed by the Company in conjunction with the purchase of Coast Crane’s assets. Interest accrues on the outstanding loans at LIBOR plus 3.25% and is payable monthly in arrears. As the loans are amortizing, approximately $0.8 million of the total $3.8 million in principal payments are due prior to December 31, 2011 and as such, this amount is classified as a current liability in the accompanying consolidated balance sheets as of December 31, 2010.

F-34

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Short-term Debt Obligations

Essex Finance entered into two short-term debt obligations with a vendor related to the acquisition of two cranes and related attachments during the year ended December 31, 2009. The outstanding balance on the short-term debt obligations was $5.2 million as of December 31, 2009. Essex Finance entered into a third short-term obligation for $2.6 million with similar terms as the previous two obligations during the three months ended March 31, 2010. These short-term obligations are interest free for six months and then accrue interest at 3.0% for an additional six months and are collateralized by the respective cranes and attachments purchased. On the six month anniversary of the origination of each obligation, a principal payment of 10% is due. On the one year anniversary of the origination of each obligation, the remaining unpaid principal balance is due.

The remaining outstanding principal balances of all three short-term debt obligations of approximately $7.2 million in aggregate were paid in full by the Company in 2010 using proceeds from drawing on the Essex Crane revolving credit facility.

9. Derivatives and Hedging Activities – Interest Rate Swap Agreement

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. As of December 31, 2010 and 2009, the Company had four and one interest rate swaps outstanding, respectively, which involves receipt of variable-rate amounts from counterparties in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amounts.

Essex Crane Interest Rate Swap

In November 2008, the Company entered into an interest rate swap agreement with the lead lender of its Essex Crane revolving credit facility to hedge its exposure to interest rate fluctuations. The swap agreement has a notional principal amount of $100.0 million and matures in November 2012. Under the agreement, the Company pays a 2.71% fixed interest rate plus the applicable margin under the revolving credit facility (or a total interest rate of 4.96%). This interest rate swap is designated as a cash flow hedge.

The swap agreement established a fixed rate of interest for the Company and requires the Company or the bank to pay a settlement amount depending upon the difference between the 30 day floating LIBOR rate and the swap fixed rate of 2.71%. The differential to be paid or received under the swap agreement has been accrued and paid as interest rates changed and such amounts were included in interest expense for the respective period. Interest payment dates for the revolving loan were dependent upon the interest rate options selected by the Company. Interest rates on the revolving credit facility were determined based on Wachovia’s prime rate or LIBOR rate, plus a margin depending on certain criteria in the agreement. As of December 31, 2010, the Company had effectively fixed through 2012, from a cash flow perspective, the interest rate on approximately 63% of Essex Crane’s credit facility. As of December 31, 2010, the interest rate on the effectively fixed portion of the credit facility was 4.96% and the interest rate on the portion of the credit facility not effectively fixed by interest rate swap contracts was 2.94%.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. There was no hedge ineffectiveness recognized during the years ended December 31, 2010, 2009 or 2008.

F-35

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2010, the change in net unrealized loss on the derivative designated as a cash flow hedge reported as a component of other accumulated comprehensive income was a decrease of $1,519,097 ($892,110 net of tax). Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the twelve month period ending December 31, 2011, the Company estimates that an additional $2.3 million will be reclassified as an increase to interest expense.

Coast Crane Interest Rate Swaps

The Company assumed three interest rate swaps in conjunction with the acquisition of Coast Crane’s assets. The assumed interest rate swaps have a notional amount of $7.0 million each and expire on May 18, 2012. Under the agreements, the Company pays fixed interest of 5.62% and receives three-month LIBOR. The Company did not contemporaneously document the hedge designation on the date of assumption in order to quality for hedge accounting treatment due to economic reasons and the projected inherent hedge ineffectiveness. The changes in fair values of the assumed swaps for the year ended December 31, 2010 was an unrealized gain of approximately $159,455 and was reported as a component of other income (expenses) in its consolidated statement of operations.

The weighted average interest rate of the Company’s total debt outstanding, including the impact of the interest rate swaps was 4.83% at December 31, 2010. The impact of the interest rate swaps resulted in an increase in interest expense of approximately $2.6 million for the year ended December 31, 2010. The weighted average interest rate of the revolving credit facility, including the impact of the interest rate swaps was 4.37% at December 31, 2009. The impact of the interest rate swap resulted in an increase in interest expense of approximately $2.4 million for the year ended December 31, 2009. The weighted average interest rates of the revolving credit facility, including the impact of the interest rate swaps, was approximately 4.53% at December 31, 2008. The impact of the interest rate swap resulted in an increase in interest expense of approximately $123,000 for the year ended December 31, 2008.

The table below presents the fair value of the Company’s derivative financial instruments as adjusted for the risk of non-performance as well as their classification on the Balance Sheet as of December 31, 2010 and 2009:

Disclosure of Fair Value of Liability Derivatives

		Fair Value as of
	Balance Sheet	December 31,
	Location	2010		2009
Derivative designated as hedging instrument

Interest Rate Swap	Long-term liabilities	$	3,825,391	$	2,306,294

Undesignated economic derivatives

Interest Rate Swaps	Lont-term liabilities		1,441,195		-

Total fair value of liability derivatives		$	5,266,586	$	2,306,294

F-36

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below present the effect of the Company’s derivative financial instruments on the Income Statement for the years ended December 31, 2010, 2009 and 2008. These amounts are presented as other comprehensive income (“OCI”).

Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)			Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

For the Year Ended December 31, 2010
Interest Rate Swap	$	(3,995,774	)	Interest expense	$	(2,476,677	)	Other income / (expense)	$	-

For the Year Ended December 31, 2009
Interest Rate Swap	$	(1,281,650	)	Interest expense	$	(2,399,969	)	Other income / (expense)	$	-

For the Year Ended December 31, 2008
Interest Rate Swap	$	(3,548,092	)	Interest expense	$	(123,479	)	Other income / (expense)	$	-

Credit-risk-related Contingent Features

The Company’s operating subsidiaries Essex Crane and Coast Crane separately have agreements with each of their derivative counterparties that contain a provision where if the Company’s subsidiaries default on any of their indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company’s subsidiaries could also be declared in default on their derivative obligations.

As of December 31, 2010, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was approximately ($5.3 million). As of December 31, 2010, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at December 31, 2010, it would have been required to settle its obligations under the agreements at their termination value of approximately ($5.5 million).

Predecessor Interest Rate Swap Agreement

In September 2007, the Predecessor entered into an interest rate swap agreement with its lead lender to hedge its exposure to interest rate fluctuations. The initial notional principal amount was $120.0 million through March 2009, at which time the notional principal amount was reduced to $100.0 million for the remaining period though the original March 2010 maturity date. Under the agreement, the Predecessor paid a 5% fixed interest rate. The Predecessor subsequently terminated the swap agreement on September 22, 2008, which resulted in the payment of a settlement amount of $3,280,000.

F-37

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The swap agreements established a fixed rate of interest for the Predecessor and required the Predecessor or the bank to pay a settlement amount depending upon the difference between the 30 day floating LIBOR rate and the swap fixed rate. The differential to be paid or received under the swap agreements has been accrued and paid as interest rates changed and such amounts were included in interest expense for the respective period. Interest payment dates for the revolving loan was dependent upon the interest rate options selected by the Predecessor. Interest rates on the revolving credit facility are determined based on either Wachovia’s prime rate or Eurodollar LIBOR rate, plus a margin depending on certain criteria in the agreement.

The Predecessor did not contemporaneously document the hedge designation on the date of inception in order to quality for hedge accounting treatment. The changes in fair value of the Predecessor’s swap for the year ended December 31, 2008 was an unrealized loss of ($524,259) and was reported as a component of other income (expenses) in its consolidated statement of operations.

10. Fair Value

The FASB issued a statement on Fair Value Measurements which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis and clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Observable inputs such as quoted prices in active markets:

Level 2- Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s interest rate swaps are recorded at fair value on a recurring basis and had a liability fair value of approximately $5.3 million and $2.3 million at December 31, 2010 and 2009, respectively. The fair value of the interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based the expectation of future interest rates derived from observed market interest rate curves. In addition, to comply with the provisions of applicable accounting guidance related to fair value measurements, the Company's valuations also consider the impact of both its own and the respective counterparty’s non-performance risk. In adjusting the fair value of its derivative contract for the effect of non-performance risk, the Company has considered any applicable credit enhancements.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2010 and 2009, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position and has determined that the credit valuation adjustment is not significant to the overall valuation. As a result, the Company classifies its derivative valuations in Level 2 of the fair value hierarchy.

The detachable warrants issued to the holders of the unsecured promissory notes were valued using the Black-Scholes pricing model. The model is sensitive to changes in assumptions which can materially affect the fair value estimate. The Company’s method of estimating expected volatility was based on the volatility of its outstanding shares of common stock. The expected dividend yield was estimated based on the Company’s expected dividend rate over the term of the warrants. The expected term of the warrants was based on management’s estimate, and the risk-free interest rate is based on U.S. Treasuries with a term approximating the expected life of the warrants. The expected volatility, dividend, term and risk free interest rate used to value the warrants granted in 2010 were 60.0%, 0.0%, 3 years and 0.81%, respectively. The Company classifies the fair value of the detachable warrants in Level 2 of the fair value hierarchy.

F-38

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair values of the Company’s financial instruments, other than the interest rate swap and debt obligations, including cash and cash equivalents approximate their carrying values. The Company bases its fair values on listed market prices or third party quotes when available. If not available, then the Company bases its estimates on instruments with similar terms and maturities.

11. Earnings per Share

The following tables set forth the computation of basic and diluted earnings per share:

	For the Years Ended December 31,
	2010			2009		2008
	(Restated)

Net income (loss)	$	(11,408,486	)	$	1,195,806	$	(11,917,121	)

Weighted average shares outstanding:
Basic		16,102,339			14,110,789		13,517,010
Effect of dilutive securities:
Warrants		-			1,694,402		-
Options		-			-		-
Diluted		16,102,339			15,805,191		13,517,010

Basic earnings (loss) per share	$	(0.71	)	$	0.08	$	(0.88	)
Diluted earnings (loss) per share	$	(0.71	)	$	0.08	$	(0.88	)

Basic earnings per share ("EPS") is computed by dividing the net income by the weighted average number of common shares outstanding during the period. Included in weighted average number of shares outstanding for the years ended December 31, 2010, 2009 and 2008 is 632,911 shares of common stock for the effective conversion of the retained interest in Holdings into common stock of the Company. Diluted EPS adjusts basic EPS for the effects of Warrants, Units and Options; only in the periods in which such effect is dilutive.

As part of the initial public offering in March 2007, the Company issued an Underwriter Purchase Option (“UPO”) to purchase 600,000 Units at an exercise price of $8.80 per unit. Each unit consists of one share of the Company’s common stock and one warrant. Each warrant entitles the holder to purchase from the Company one share of common stock.

The UPO Units that could be converted into 1,200,000 weighted average common shares for the years ended December 31, 2010, 2009 and 2008 were outstanding but were not included in the computation of diluted earnings per share because the effects would be anti-dilutive. Options that could be converted into 949,781 and 565,000 weighted average common shares for the years ended December 31, 2010 and 2009, respectively were not included in the computation of diluted earnings per share because the effects would be anti-dilutive. Calculated on a weighted average basis on the number of days outstanding, warrants that could be converted into 8,089,049 weighted average common shares for the year ended December 31, 2010 were outstanding but were not included in the computation of diluted earnings per share because the effects would be anti-dilutive. The weighted average amount for the year ended December 31, 2010 includes a large number of warrants that were converted to common stock in connection with the Company’s offer to permit the Company’s warrant holders to tender their warrants for exercise, on a cashless basis. Pursuant to the offer, approximately 7.6 million warrants were converted into shares of common stock as of June 29, 2010 (the expiration date of the offer) and therefore these warrants were outstanding for a significant portion of the year ended December 31, 2010 and accordingly increased the weighted average shares outstanding.

As of December 31, 2010, there were 4,149,556 Warrants, 1,050,969 Stock Options, and the UPO for 600,000 Units (as described above) outstanding, which are exercisable at weighted average exercise prices of $4.89, $5.40, and $8.80, respectively.

F-39

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Income Taxes

Income tax (benefit) expense consists of the following:

	Essex Rental									Predecessor
										Ten Months
										Ended
	Year Ended December 31,									October 31,
	2010			2009			2008			2008
	(Restated)
Current income taxes:
Federal	$	(456,892	)	$	457,409		$	210,512		$	723,942
State and local		(48,030	)		144,160			144,727			235,596
Foreign		(23,939	)		-			-			-

Deferred income taxes:
Federal		(5,716,344	)		(107,781	)		(7,805,827	)		6,867,955
State and local		2,721,055			(516,397	)		(615,363	)		235,586
Foreign		1,048			-			-			-

Total income tax (benefit) expense	$	(3,523,102	)	$	(22,609	)	$	(8,065,951	)	$	8,063,079

The Company’s current income tax expense for 2010 primarily relates to a decrease in unrecognized tax benefits associated with the settlement of uncertain tax positions partially offset by the amortization of the Company’s excess tax goodwill. The Company’s deferred income tax benefit for 2010 is primarily relates to the reduction in deferred tax liability for rental equipment and property and equipment and an increase in net operating loss.

The Company’s current income tax expense for 2009 relates to 2008 tax return to provision differences, an increase in uncertain tax positions and state and local taxes. The Company’s deferred income tax benefit for 2009 related primarily to amortization of the Company’s tax deductible goodwill and a change in estimate associated with the Company’s state income tax apportionments and rates. The Company’s current income tax expense for 2008 relates to Federal alternative minimum tax and state and local taxes while the deferred income tax benefit relates primarily to the Company’s recognition of goodwill impairment.

The Predecessor’s current income tax expense for the ten months ended October 31, 2008 relates primarily to Federal alternative minimum tax, state taxes and amounts recorded related to uncertain tax positions. The Predecessor’s deferred income tax expense for the ten months ended October 31, 2008 primarily relates to the utilization of the net operating losses and the change in deferred tax liability for rental equipment and property and equipment.

F-40

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table is reconciliation between the federal statutory tax rate and the Company’s actual effective tax rate:

	Successor									Predecessor
										Ten Months
										Ended
	For the Years Ended December 31,									October 31,
	2010			2009			2008			2008
	(Restated)

Federal statutory rate		35.0	%		35.0	%		(35.0	)%		35.0	%
State and local taxes		0.9	%		(40.7	)%		(2.6	)%		1.9	%
Change in state deferred tax rates resulting from Coast Acquisition		(18.4	)%		-	%		-	%		-	%
Change in state valuation allowance		(0.9	)%		4.7	%		(0.5	)%		-	%
Dividend income not taxable		-	%		-	%		(2.3	)%		-	%
Non-deductible transaction costs		-	%		-	%		-	%		2.1	%
Uncertain tax positions		7.1	%		4.7	%		-	%		2.1	%
Meals, entertainment and other		(0.1	)%		(5.6	)%		0.0	%		0.3	%
Effective income tax rate		23.6	%		(1.9	)%		(40.4	)%		41.4	%

The Company’s effective rate for the year ended December 31, 2010 was lower than the statutory tax rate primarily due to state and local taxes. The decrease in the effective tax rate related to the increase in state deferred tax rates at Essex Crane as a result of the acquisition of Coast Crane and an additional state NOL valuation allowance, which were partially offset by the reduction in unrecognized benefit associated with the effective settlement of uncertain tax positions. The Essex Crane state deferred tax rates increased due to an increase in apportionment into higher tax rate states which Coast Crane operates due to unitary filing requirements.

The Company’s effective rate for the year ended December 31, 2009 was lower than the statutory tax rate primarily due to state and local taxes. The Company’s state deferred tax assets and liabilities were adjusted in 2009 associated with a change in estimate associated with its state income tax apportionments and rates resulting in a net state tax benefit. The Company’s effective rate for the year ended December 31, 2008 differed from the statutory tax rate primarily due to state and local taxes and dividend income that is not taxable.

The Predecessor’s effective tax rate for the ten months ended October 31, 2008 was higher than the federal statutory tax rate primarily due to state and local income taxes, non-deductible transaction costs and amounts recorded for uncertain tax positions.

F-41

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:

	For the Year Ended December 31,
	2010			2009
	(Restated)
Deferred tax assets:
Accounts receivable	$	954,691		$	778,856
Accrued expenses		1,338,293			945,765
Goodwill and other intangibles		6,164,279			6,643,801
Inventory		176,442			-
Net operating loss carry-forwards		24,138,062			20,092,357
Tax credits and other		1,969,783			2,140,133
		34,741,550			30,600,912
Valuation allowance		(195,838	)		(68,567	)
Total deferred tax assets, net		34,545,712			30,532,345

Deferred tax liabilities:
Rental equipment and property and equipment and other		(93,267,041	)		(91,743,259	)

Total deferred tax liabilities		(93,267,041	)		(91,743,259	)

Net deferred tax liabilities	$	(58,721,329	)	$	(61,210,914	)

	For the Years Ended December 31,
	2010			2009
	(Restated)
Amounts included in the consolidated balance sheets:
Current deferred tax assets	$	2,402,709		$	1,724,621
Long-term deferred tax liabilities		(61,124,038	)		(62,935,535	)

Net deferred tax liabilities	$	(58,721,329	)	$	(61,210,914	)

The Company establishes a valuation allowance when it is more likely than not that it will not be able to realize the benefit of the deferred tax assets, or when future deductibility is uncertain. Periodically, the valuation allowance is reviewed and adjusted based on management’s assessment of realizable deferred tax assets. The Company increased its valuation allowance related to state net operating loss carry-forwards (NOLs) by $0.1 million during the year ended December 31, 2010 as management determined that it is more likely than not a significant portion of state NOLs will expire before utilized.

At December 31, 2010, the Company had unused Federal net operating loss carry-forwards totaling approximately $64.9 million and begin to expire in 2021. At December 31, 2010, the Company also had unused state net operating loss carry-forwards totaling approximately $32.0 million that expire between 2011 and 2030.

The Company also has remaining unrecorded excess tax goodwill of approximately $4.3 million at December 31, 2010 associated with the acquisition of Holdings and excess tax goodwill of $0.8 million associated with the acquisition of Coast Crane. The excess tax goodwill related to Holdings is amortized over the remaining five year term as a reduction to the balance in other identifiable intangibles until its balance is reduced to zero and then as a benefit to the income tax provision. The excess tax goodwill related to Coast Crane is being amortized over the remaining fourteen year term.

F-42

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company had approximately $0.1 million and $1.2 million of unrecognized tax benefits, net of federal income tax benefit, at December 31, 2010 and 2009, respectively, all of which will impact the Company’s effective tax rate if recognized. The decrease in unrecognized benefits in 2010 was the result of the favorable settlement of an IRS examination. None of the remaining unrecognized tax benefits at December 31, 2010 are expected to reverse in 2011.

A reconciliation of the approximate beginning and ending amounts of gross unrecognized tax benefits is as follows:

	Year Ended December 31,
	2010			2009

Balance at beginning of year	$	1,200,000		$	1,100,000

Increase for changes to tax positions in prior years, net		-			100,000

Decrease for settlement of prior uncertain tax positions		(1,100,000	)		-

Balance at end of year	$	100,000		$	1,200,000

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. To the extent interest is not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. The Company had no accrual for interest or penalties for the years ended December 31, 2010, 2009 and 2008 as the Company has significant net operating loss carry-forwards which would be reduced if any payment were due under audit. The Predecessor had no accrual for interest or penalties for the ten months ended October 31, 2008.

The Company is generally subject to federal and state examination for the years 2007 through 2010.

13. Stock Based Compensation

The Company may issue up to 1,575,000 shares of common stock pursuant to its 2008 Long-term Incentive Plan to employees, non-employee directors and consultants of the Corporation. Options to purchase shares of common stock are granted at its market price on the grant date and expire ten years from issuance.

The Company issued 23,522 and 16,377 shares of common stock under the Hyde Park Acquisition Corp. 2008 Long-term Incentive Plan during the years ended December 31, 2010 and 2009, respectively to certain employees as compensation. The weighted average grant price of the shares issued was $5.59 and $6.16 per share for the years ended December 31, 2010 and 2009, respectively. The aggregate grant date fair value of approximately $0.1 million for the years ended December 31, 2010 and 2009, respectively were recorded as compensation within selling, general and administrative expenses and salaries, payroll taxes and benefits with an offset recorded in additional paid in capital. These shares, which amount to 42% of the amount of reduced cash salaries, were issued as part of a temporary salary reduction program pursuant to which our chief executive officer, members of executive management and other key managers receiving salaries elected to reduce the amount of their salaries paid in cash by 30 percent, 20 percent and 10 percent, respectively. The shares issued pursuant to the salary reduction program vested immediately upon grant and are restricted from sale for a period of two years from the date of grant. The voluntary temporary salary reduction program commenced in May 2009 and was terminated in November 2010.

On March 18, 2010, the Company granted to certain key members of management options to purchase 485,969 shares of common stock at $6.45 per share. The weighted-average grant date fair value per share of options granted was $3.76 resulting in a grant date fair value of $1,827,243. The stock options vest one-third annually beginning on January 1, 2011, and as such, none were vested as of December 31, 2010. Such options will expire and no longer be exercisable after March 18, 2020.

F-43

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On December 18, 2008, the Company granted to certain key members of management options to purchase 565,000 shares of common stock at $4.50 per share. The weighted-average grant date fair value per share of options granted was $2.54 resulting in a grant date fair value of $1,434,671. The stock options vest one-third annually beginning in December 2009, and as such, 376,677 and 188,333 of these options were vested and exercisable as of December 31, 2010 and 2009, respectively. Such options will expire and no longer be exercisable after December 18, 2018. No options were exercised, forfeited or expired during the year ended December 31, 2010. The weighted average exercise price, remaining contractual term, and the total intrinsic value of vested and exercisable options as of December 31, 2010 were $4.50, 8 years and $0.4 million, respectively.

The fair values of the stock options granted are estimated at the date of grant using the Black-Scholes option pricing model. The model is sensitive to changes in assumptions which can materially affect the fair value estimate. The Company’s method of estimating expected volatility was based on the volatility of its peers since the Successor had only had operations for a short time as of the date of grant. The expected dividend yield was estimated based on the Company’s expected dividend rate over the term of the options. The expected term of the options was based on management’s estimate, and the risk-free interest rate is based on U.S. Treasuries with a term approximating the expected life of the options. The expected volatility, dividend, term and risk free interest rate used to value the stock options granted in 2010 were 61.0%, 0.0%, 6 years and 2.79%, respectively. The expected volatility, dividend, term and risk free interest rate used to value the stock options granted in 2008 were 61.0%, 0.0%, 6 years and 1.43%, respectively.

The Company recorded $1,087,305, $478,223 and $15,722 of non-cash compensation expense associated with stock options in selling, general and administrative expenses for the years ended December 31, 2010, 2009 and 2008, respectively. The 2008 amount represents Essex Crane for the two month post-acquisition period with the offset recorded in additional paid in capital. There was approximately $1.7 million and $0.9 million of total unrecognized compensation cost as of December 31, 2010 and 2009, respectively related to non-vested stock option awards. The remaining cost is expected to be recognized ratably over the years ended December 31, 2011 and 2012. Based on the Company’s closing common stock price of $5.50 at December 31, 2010, 565,000 of the options outstanding were in the money resulting in an aggregate intrinsic value of approximately $0.6 million.

Predecessor Executive Profits Interest

The Essex Holdings, LLC Operating Agreement permitted the Company to grant up to a 10% profits interest (“Management Profits Shares”) to key members of executive management. The Management Profits Shares were granted at fair value which was equal to fair value of the Predecessor Company’s profits interest on the grant date. The Management Profit Shares have a pro-rata interest in the company’s profits in excess of the fair value of the Predecessor Company on the grant date of the awards. The minimum equity threshold above which the Management Profit Shares share in value of the Company is $30.0 million for the awards granted in 2007 and zero for the awards granted prior to 2004. The minimum threshold amounts have been adjusted to account for the $50.0 million cash distribution paid in 2007.

At various dates between May 2000 and May 2003, the Predecessor awarded an aggregate profits interest of 8.5% to key members of executive management which were deemed to have a fair value of zero on the grant date.

In April 2007, the Predecessor awarded an aggregate additional profits interest of 1.5% to key members of executive management which were deemed to have an aggregate fair value of $232,000 on the grant date which was expensed ratably over the vesting period. The fair value of the profits interest was determined based on the estimated fair value of the Predecessor on the grant date. In addition to the annual vesting provisions, these profits interest awards also vest in full upon a change in control as defined as a direct or indirect sale, lease, transfer or other disposition other than by way of merger or consolidations of substantially all of the assets of the Predecessor.

F-44

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The awards vested 20% annually on the anniversary of the grant date provided that the individual remains in continuous employment as of such dates. Management Profit Shares had been granted for 10.0% of profits interest in the Predecessor at October 31, 2008. The remaining unvested portion of the Management Profit Shares interest vested on October 31, 2008 in conjunction with the acquisition of Holdings by Essex Rental.

The compensation expense recognized by the Predecessor was $196,861 for the ten months ended October 31, 2008 and reflects compensation expense for all estimated share-based awards granted through October 31, 2008 based on the grant-date fair value.

14. Common Stock and Warrants

In May 2010, our Board of Directors approved an offer allowing warrant holders to tender their warrants for exercise on a cashless basis by exchanging their warrants for shares of the Company’s common stock. The offer was approved in accordance with the recommendation of a committee comprised of the independent members of the Board who do not own warrants. In June 2010, the Board of Directors extended and amended the offer. Under the terms of the amended offer, the Board temporarily modified the terms of the Company’s outstanding warrants, to provide warrant holders with the opportunity to exercise their warrants on a cashless basis by exchanging three warrants for one share of the Company’s common stock. The number of properly tendered warrants that would be accepted by the Company in the offer was limited to 8,000,000 warrants. The amended offer expired on June 29, 2010. Pursuant to the offer, a total of 7,642,674 warrants were tendered for cashless exercise. Included in the tendered warrants were 936,840 warrants tendered by our officers and directors. In accordance with the offer, our officers and directors participated in the offer to the same extent as other warrant holders, which was at a participation rate of 65.3%. As a result of the exercise of warrants, 2,547,558 shares of common stock were issued.

In October 2008, our Board of Directors authorized a stock and warrant repurchase program, under which the Company may purchase, from time to time, in open market transactions at prevailing prices or through privately negotiated transactions as conditions permit, up to $12.0 million of the Company’s outstanding common stock and warrants. Repurchases of our common stock and warrants are funded with cash flows of the business.

The Company repurchased 519,905 warrants to acquire common stock for approximately $0.9 million during the year ended December 31, 2010. The Company repurchased 323,200 warrants to acquire common stock for $0.4 million during the year ended December 31, 2009. The Company purchased 1,418,519 warrants to acquire common stock for $1.5 million during the year ended December 31, 2008. The Company repurchased 63,500 shares of common stock for $0.3 million during the year ended December 31, 2008. There was approximately $9.0 million remaining available for future common stock and warrant purchases at December 31, 2010. In May 2010, the Company suspended its share and warrant repurchase program in conjunction with the cashless exercise warrant offer.

On October 29, 2010, the Company entered into subscription agreements providing for the sale of an aggregate of 3,300,000 shares of the Company’s common stock, par value $0.0001 per share, at a price of $4.30 per share, or $14,190,000 in the aggregate, in a private offering (the “Private Placement”). The closing of the Private Placement and issuance of shares of common stock pursuant to the subscriptions was contingent upon CC Bidding being the successful bidder for, and consummating the acquisition of, the assets of Coast Crane. The proceeds of the offering were used to fund part of the cash portion of the purchase price for Coast Crane's assets. The shares were issued as of the closing date of the Coast Crane Acquisition on November 24, 2010.

The Company incurred issuance costs of $638,550 for placement agent services and incurred legal fees of $135,052 for legal services rendered to the Company in connection with the Private Placement.

In November 2010, in conjunction with the issuance of the unsecured promissory notes, the Company issued 90,000 warrants entitling the holders to purchase from the Company one share of common stock at an exercise price of $0.01, which expire on December 31, 2013. If the Company’s unsecured promissory notes are repaid in full on or before May 29, 2011, the number of warrants will be reduced to 30,000. The fair value of the warrants on the issuance date was $0.3 million. See Note 8 for further discussion.

F-45

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company issued 473,646 shares of common stock upon the exercise of warrants in exchange for cash proceeds of approximately $2.4 million during the year ended December 31, 2010. The Company issued 3,200 shares of common stock during the year ended December 31, 2010 for professional services related to the Company’s common shares being listed on the NASDAQ Capital Market. The Company issued 1,300 shares of common stock during the year ended December 31, 2009 for director services.

15. Commitments, Contingencies and Related Party Transactions

The Company leases real estate and office equipment under operating leases which continue through 2015. The Company’s rent expense under non-cancelable operating leases totaled $564,799 and $394,963 for the years ended December 31, 2010 and 2009, respectively. The Company’s rent expense under non-cancelable operating leases totaled $59,459 for the year ended December 31, 2008, which represents Essex Crane Rental for the two month post-acquisition period.

The Predecessor’s rental expense under non-cancelable operating leases was $325,133 for the ten months ended October 31, 2008.

Future minimum lease payments for the Company’s non-cancellable operating leases at December 31, 2010 including the operating leases for the Coast Crane facilities as a consequence of the Coast Acquisition are as follows:

2011	$	2,415,129
2012		1,735,869
2013		1,283,211
2014		589,219
2015		299,746

Total	$	6,323,174

The Company occupies office space provided by ProChannel Management LLC, an affiliate of Laurence S. Levy, our chairman of the board. Such affiliate has agreed that it will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has agreed to pay such entity $7,500 per month for such services with the terms of such arrangement being reconsidered from time to time. The Company’s statements of operations for the years ended December 31, 2010, 2009 and 2008 include $90,000 of expense related to this agreement.

In November 2010, the Company entered into an agreement with the holders of certain Coast Crane indebtedness pursuant to which such holders agreed, in consideration of the assumption of such indebtedness by the Company, to exchange such indebtedness of $5.2 million for unsecured promissory notes issued by the Company in the aggregate principal amount of $5.2 million plus the receipt of up to 90,000 warrants to purchase Essex common stock at $0.01 per share. If the unsecured promissory notes are repaid in full on or before May 29, 2011, the number of warrants will be reduced to 30,000. The unsecured promissory notes mature in December 2013. The holders of the unsecured promissory notes are related parties to the Company as they own a significant amount of the Company’s outstanding shares of common stock. Management services were provided to Essex Crane Rental Corp. by the general partner of one of the members of Essex Holdings, LLC through October 31, 2008. Under terms of an agreement, the Predecessor was required to pay management fees. The Predecessor was charged and paid $416,667 for management fees for the ten months ended October 31, 2008. These costs are included in selling, general and administrative expenses in the Predecessor’s accompanying consolidated statements of operations.

Holders of the Company’s UPO, are entitled to registration rights pursuant to an agreement with Essex Rental. The holders of the majority of these options and/or the underlying Units and/or underlying shares of common stock are entitled to make one demand that Essex Rental register such securities. The holders of the majority of these securities can elect to exercise these registration rights at any time until the fifth anniversary of the effective date of Essex Rental’s initial public offering. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed by Essex Rental until the seventh anniversary of the effectiveness of its initial public offering.

F-46

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Early Bird Capital, Inc. was engaged by the Company to act as the Company’s non-exclusive investment banker in connection with a proposed business combination. For assisting the Company in structuring and negotiating the terms of a business combination, the Company agreed to pay Early Bird Capital, Inc. a cash transaction fee equal to 1% of the total consideration paid in connection with the Business Combination, with a maximum fee to be paid of $900,000. The Company paid the $900,000 in fees and issued the securities to the underwriters in the Offering as described in Note 1.

The Company maintains reserves for personal property taxes. These reserves are based on a variety of factors including: duration of rental in each county jurisdiction, tax rates, rental contract terms, customer filings, tax-exempt nature of projects or jurisdictions, statutes of limitations and potential related penalties and interest. Additionally, most customer rental contracts contain a provision that provides that personal property taxes are an obligation to be borne by the lessee. Where provided in the rental contract, management will invoice the customer for any personal property taxes paid by the Company. An estimated receivable has been provided in connection with this liability, net of an estimated allowance. This customer receivable has been presented as other receivables in current assets while the property tax reserve has been included in accrued taxes.

Management estimated the gross personal property taxes liability and related contractual customer receivable of the Company to be approximately $4.2 million and $3.2 million respectively, at December 31, 2010. Management estimated the gross personal property taxes liability and related contractual customer receivable of the Company to be approximately $4.9 million and $3.7 million respectively, at December 31, 2009.

A portion of the sale proceeds of Holdings in the amount of $7,392,000 was placed into a general escrow and compliance escrow of which, $1.0 million was related to a working capital escrow and $492,255 was for environmental remediation projects in process at the time the acquisition transaction closed. The remaining funds were related to other transaction related items estimated at the time of close. As of December 31, 2009, the Company had received approximately $0.6 million from the escrow as reimbursement for environmental remediation projects and the remaining funds were released from escrow to the seller in accordance with the terms of the escrow agreement.

The Predecessor had established a reserve of $55,986 at October 31, 2008 for the estimated costs of environmental remediation. No reserve remained as of December 31, 2008 as all items had been remediated and no further payments were pending.

The Company is subject to a number of claims and proceedings that generally arise in the normal conduct of business. The Company believes that any liabilities ultimately resulting from these claims will not, individually or in the aggregate, have a material adverse effect on our financial position, results of operations or cash flows.

16. 401(k) Profit Sharing Plan and Medical Benefits

The Successor and Predecessor have a defined contribution plan under Section 401(k) of the Internal Revenue Code available to all eligible employees. The plan requires the Company to 100% match the first 3% of a participant’s contributions and 50% match the next 2% of a participant’s contributions thereby totaling a maximum matching 4% if an employee contributes 5% of their compensation. These contributions vest immediately upon contribution. Company 401(k) contributions were $173,820 and $172,244 for the years ended December 31, 2010 and 2009, respectively. Company 401(k) contributions were $38,152 for the year ended December 31, 2008, which represents Essex Crane Rental for the two month post-acquisition period. Predecessor contributions were $156,036 for the ten months ended October 31, 2008.

The Company provides medical benefits to its employees and their dependants and is self-insured for Essex Crane employees for annual individual claims of up to $70,000 at which time a stop loss insurance policy covers any excess.

F-47

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Concentrations

A substantial portion of purchases of rental equipment, new equipment and majority of spare parts come from two vendors. The loss of either of these vendors is not expected to have a material negative impact on operations as there are other manufacturers and sources from which the Company may acquire rental equipment and spare parts, if necessary.

18. Summarized Quarterly Financial Data (Unaudited)

The Company was in the development stage in pursuit of a business combination for the ten months ended October 31, 2008, the date when it acquired Holdings. From that date forward, the Company has been engaged primarily in renting lattice boom crawler cranes and attachments to the construction industry. Since November 24, 2010, the date the Company acquired the assets of Coast Crane, it has also been engaged in renting, servicing and distributing heavy lifting equipment and other construction related equipment and parts.

The following is a summary of our unaudited quarterly financial results of operations for the years ended December 31, 2010 and 2009:

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
										(Restated)
2010

Total revenues	$	8,307,309		$	9,046,146		$	8,751,474		$	15,426,531
Gross profit		1,191,242			1,154,310			1,479,471			2,302,520
Loss from operations		(1,500,541	)		(1,694,400	)		(1,459,712	)		(3,137,293	)
Loss before provision for income taxes		(3,120,157	)		(3,349,640	)		(3,184,543	)		(5,277,248	)
Net loss		(1,987,739	)		(2,228,525	)		(2,205,193	)		(4,987,029	)
Basic net loss per share (1)	$	(0.14	)	$	(0.15	)	$	(0.13	)	$	(0.27	)
Diluted net loss per share (1)	$	(0.14	)	$	(0.15	)	$	(0.13	)	$	(0.27	)

F-48

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	First		Second		Third			Fourth
	Quarter		Quarter		Quarter			Quarter
2009

Total revenues	$	17,348,147	$	14,533,243	$	11,114,888		$	9,088,114
Gross profit		8,311,240		5,381,071		3,270,371			2,220,768
Income from operations		4,995,132		2,453,422		201,482			204,258
Income (loss) before provision for income taxes		3,315,446		779,305		(1,472,027	)		(1,449,527	)
Net income (loss)		2,050,023		472,081		(707,529	)		(618,769	)
Basic net income (loss) per share (1)	$	0.15	$	0.03	$	(0.05	)	$	(0.04	)
Diluted net income (loss) per share (1)	$	0.15	$	0.03	$	(0.05	)	$	(0.04	)

(1) Because of the method used in calculating per share data, the summation of quarterly per share data may not necessarily total to the per share data computed for the entire year.

F-49

ESSEX RENTAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Subsequent Events

The Company has evaluated subsequent events through the date of this filing. Subsequent to December 31, 2010, the Company:

Issued 166,943 restricted shares of common stock to certain employees having a grant date fair value of approximately $0.9 million;

Issued 423,750 stock options to senior management having a grant date fair value of approximately $1.4 million; and

Received proceeds of $19.8 million from the exercise of warrants and issued 3,955,603 shares of common stock. Upon expiration of the warrants on March 4, 2011, 103,953 unexercised warrants expired worthless.

F-50

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		ESSEX RENTAL CORP

Date:	May 6, 2011	By:	/s/ Ronald Schad

			Ronald Schad, Chief Executive Officer

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signatures	Title	Date

/s/ Laurence S. Levy	Chairman	May 6, 2011
Laurence S. Levy

/s/ Edward Levy	Director	May 6, 2011
Edward Levy

/s/ Daniel H. Blumenthal	Director	May 6, 2011
Daniel H. Blumenthal

/s/ John G. Nestor	Director	May 6, 2011
John G. Nestor

/s/ Ronald Schad	Chief Executive Officer (Principal	May 6, 2011
Ronald Schad	Executive Officer) and Director

/s/ Martin Kroll	Chief Financial Officer (Principal	May 6, 2011
Martin Kroll	Financial Officer and Principal
	Accounting Officer)

Attached files

Stock widget

Investing forum

Essex Rental Corp. Reports

Also read