UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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





For the
quarterly period ended: March
31, 2010





or





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





For the
transition period from
                to





Commission
File Number: 000-03125





MEDCLEAN
TECHNOLOGIES, INC.


(Exact
Name of registrant as specified in its charter)





Delaware
            
            21-0661726(State
      or other Jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      Number)





3
Trowbridge Drive


Bethel,
Connecticut 06801


(Address
of principal executive offices)





(203)
798-1080


(Registrant’s
telephone number, including area code)





















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





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o   No
o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act:





o
            Large
      Accelerated Filer
            
            o
            Accelerated
      Filero
            Non-Accelerated
      Filer
            
            þ
            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 o   No
þ





As
of May 17, 2010, there were 701,774,623 shares outstanding of the
registrant’s common stock.









TABLE OF CONTENTS








PagePART
      I—FINANCIAL INFORMATIONItem
      1. Financial Statements
            3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
            4Item
      3. Quantitative and Qualitative disclosures about Market
    Risk
            6Item
      4. Controls and Procedures
            6PART
      II—OTHER INFORMATIONItem
      1. Legal Proceedings
            7Item1A.
      Risk Factors
            7Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            7Item
      3. Defaults Upon Senior Securities
            7Item
      4. (Removed and Reserved)
            7Item
      5. Other Information
            7Item
      6. Exhibits
            7Signatures
            8




2




PART
I—FINANCIAL INFORMATION





Item
1. Financial Statements





INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS





PAGECONDENSED
      CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER
      31, 2009
            F-1UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED
      MARCH 31, 2010 AND 2009
            F-2UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
      MARCH 31, 2010 AND 2009
            F-3NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            F-4




3




MEDCLEAN
      TECHNOLOGIES, INC.CONDENSED
      CONSOLIDATED BALANCE SHEETS




March
      31,
            
            
            December
      31,2010
            
            
            2009(unaudited)ASSETSCurrent
      assetsCash
            
            $
            464,872
            
            
            $
            534,425Accounts
      receivable, net of $15,589 allowance
            
            
            175,913
            
            
            
            144,117Revenues
      in excess of billings
            
            
            7,679
            
            
            
            7,679Inventory
            
            
            793,686
            
            
            
            815,634Prepaid
      expenses
            
            
            115,912
            
            
            
            32,646Total
      current assets:
            
            
            1,558,062
            
            
            
            1,534,501Property,
      plant and equipment, net
            
            
            194,631
            
            
            
            212,801Other
      assetsDeposits
            
            
            32,808
            
            
            
            32,808Total
      assets
            
            $
            1,785,501
            
            
            
            1,780,110LIABILITIES
      AND STOCKHOLDERS' (DEFICIT) EQUITYCurrent
      liabilitiesAccounts
      payable and accrued liabilities
            
            $
            429,283
            
            
            $
            253,742Payroll
      liabilities
            
            
            426,478
            
            
            
            401,408Deferred
      revenue
            
            
            155,057
            
            
            
            236,500Advances
      received
            
            
            275,000
            
            
            
            -Billings
      in excess of revenue
            
            
            618,673
            
            
            
            657,673Notes
      payable
            
            
            217,572
            
            
            
            214,647Total
      current liabilities:
            
            
            2,122,063
            
            
            
            1,763,970Stockholders'
      (deficit) equityPreferred
      stock, $0.0001 par value, 60,000,000 shares authorized, none issued
      outstandingCommon
      stock, $0.0001 par value; 3,500,000,000 shares authorized; 698,914,623 and
      675,478,445 shares issued and outstanding as of March 31, 2010 and
      December 31, 2009, respectively
            
            
            69,891
            
            
            
            67,548Additional
      paid in capital
            
            
            26,641,965
            
            
            
            25,411,906Accumulated
      deficit
            
            
            (27,048,418
            )
            
            
            (25,463,314
            )Total
      stockholders' (deficit) equity:
            
            
            (336,562
            )
            
            
            16,140Total
      liabilities and stockholders' (deficit) equity
            
            $
            1,785,501
            
            
            $
            1,780,110






See the
accompanying notes to these unaudited condensed consolidated financial
statements


F-1




MEDCLEAN
      TECHNOLOGIES, INC.CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)




Three
      months ended March 31,2010
            
            
            2009RevenuesSales
      and service revenues
            
            $
            268,867
            
            
            $
            417,428Cost
      of sales
            
            
            165,453
            
            
            
            273,072Gross
      profit
            
            
            103,414
            
            
            
            144,356Operating
      expensesSalaries
      and wages
            
            
            1,192,309
            
            
            
            1,114,246General
      and administrative expenses
            
            
            471,165
            
            
            
            443,134Depreciation
            
            
            22,353
            
            
            
            23,110Total
      operating expenses
            
            
            1,685,827
            
            
            
            1,580,490Loss
      from operations
            
            
            (1,582,413
            )
            
            
            (1,436,134
            )Other
      income and expensesInterest
      and other income
            
            
            234
            
            
            
            906Interest
      expense
            
            
            (2,925
            )
            
            
            (448,497
            )Net
      Loss before income taxes
            
            
            (1,585,104
            )
            
            
            (1,883,725
            )Provision
      for income taxes (benefit)
            
            
            -
            
            
            
            -Net
      Loss
            
            $
            (1,585,104
            )
            
            $
            (1,883,725
            )Loss
      per common share, basic and fully diluted
            
            $
            (0.00
            )
            
            $
            (0.00
            )Weighted
      average common shares outstanding, basic and fully diluted
            
            
            683,811,787
            
            
            
            561,542,968


See the
accompanying notes to these unaudited condensed consolidated financial
statements
  F-2
 MEDCLEAN
      TECHNOLOGIES, INC.CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)
  Three
      months ended March 31,2010
                  
                  
                  2009Cash
      flows from operating activities:Net
      loss
                  
                  $
                  (1,585,104
                  )
                  
                  $
                  (1,883,725
                  )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
                  
                  
                  23,739
                  
                  
                  
                  23,110Fair
      value of common stock, options and warrants issued for services
      rendered
                  
                  
                  1,139,290
                  
                  
                  
                  1,049,536(Increase)
      decrease in:Accounts
      receivable
                  
                  
                  (31,796
                  )
                  
                  
                  (73,970
                  )Inventory
                  
                  
                  21,948
                  
                  
                  
                  (218,317
                  )Prepaid
      expenses
                  
                  
                  (83,266
                  )
                  
                  
                  (98,156
                  )Increase
      (decrease) in:Accounts
      payable
                  
                  
                  178,466
                  
                  
                  
                  (308,086
                  )Payroll
      liabilities
                  
                  
                  25,070
                  
                  
                  
                  (49,617
                  )Deferred
      revenue
                  
                  
                  (81,443
                  )
                  
                  
                  86,588Billings
      in excess of revenue
                  
                  
                  (39,000
                  )
                  
                  
                  386,428Deposits
      payable
                  
                  
                  -
                  
                  
                  
                  (386,428
                  )Net
      cash used in operating activities
                  
                  
                  (432,096
                  )
                  
                  
                  (1,472,637
                  )Cash
      flows from investing activities:Purchase
      of equipment
                  
                  
                  (5,569
                  )
                  
                  
                  (23,309
                  )Net
      cash used in investing activities
                  
                  
                  (5,569
                  )
                  
                  
                  (23,309
                  )Cash
      flows from financing activities:Proceeds
      from exercise of warrants
                  
                  
                  93,112
                  
                  
                  
                  -Proceeds
      from lender advances
                  
                  
                  275,000
                  
                  
                  
                  -Net
      cash provided by financing activities
                  
                  
                  368,112
                  
                  
                  
                  -(Decrease)
      increase in cash and cash equivalents
                  
                  
                  (69,553
                  )
                  
                  
                  (1,495,946
                  )Cash
      and cash equivalents, beginning of period
                  
                  
                  534,425
                  
                  
                  
                  1,922,401Cash
      and cash equivalents, end of period
                  
                  $
                  464,872
                  
                  
                  $
                  426,455Supplemental
      disclosures of cash flow information:Cash
      paid during the period for:Interest
                  
                  $
                  -
                  
                  
                  $
                  588Taxes
                  
                  $
                  -
                  
                  
                  $
                  -






See the
accompanying notes to these condensed consolidated financial
statements


F-3




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





A summary
of the significant accounting policies applied in the presentation of the
accompanying financial statements are as follows:





General





The
accompanying unaudited condensed consolidated financial statements of MedClean
Technologies, Inc. and subsidiaries, (“MedClean” or the “Company” or “MCLN”),
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.





In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included.  Accordingly, the results from operations for the
three-month period ended March 31, 2010, are not necessarily indicative of the
results that may be expected for the year ending December 31,
2010.  The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated December 31, 2009 financial
statements and footnotes thereto included in the Company's Form 10-K filed with
the SEC on March 3, 2010.





The
consolidated financial statements as December 31, 2009 have been derived from
the audited consolidated financial statements at that date but do not include
all disclosures required by the accounting principles generally accepted in the
United States of America.





Business and Basis of
Presentation





On
January 2, 2009, the Company merged its wholly owned subsidiary, Aduromed
Corporation into Aduromed Industries Inc. and changed its corporate name from
Aduromed Industries, Inc. to MedClean Technologies, Inc.





MedClean
is in the business of providing solutions for managing medical waste on site
including designing, selling, installing and servicing on site (i.e. “in-situ”) turnkey systems to
treat regulated medical waste. The Company provides these systems to hospitals
and other medical facilities as efficient, safe, cost effective and legally
compliant solutions to incineration, off site hauling of untreated waste and
other alternative treatment technologies and methodologies. The MedClean Series
System is offered in three configurations: Containerized System, Mobile System
and the Fixed System (our traditional fixed installation).





Accounts
Receivable




The
Company assesses the realization of its receivables by performing ongoing credit
evaluations of its customers’ financial
condition. Through these evaluations, the Company may become aware of a
situation where a customer may not be able to meet its financial obligations due
to deterioration of its financial viability, credit ratings or bankruptcy. The
Company’s reserve requirements are based on the best facts available to the
Company and are reevaluated and adjusted as additional information is received.
The Company’s reserves are also based on amounts determined by using percentages
applied to certain aged receivable categories. These percentages are determined
by a variety of factors including, but not limited to, current economic trends,
historical payment and bad debt write-off experience. Allowance for doubtful
accounts for accounts and notes receivable was $15,589 as of March 31, 2010 and
December 31, 2009.





F-4




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Revenue
recognition





The
Company recognizes revenues upon completion of the system installation and
customer acceptance.  Clients will be invoiced upon the following
milestones, contract signing, delivery of components, and the completion and
acceptance of installation and start-up.





Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance. Selling, general and administrative costs are
charged to expense as incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job performance, job conditions, and estimated profitability may result in
revisions to costs and income, which are recognized in the period in which the
revisions are determined. Changes in estimated job profitability resulting from
job performance, job conditions, contract penalty provisions, claims, change
orders, and settlements, are accounted for as changes in estimates in the
current period.





The
Company provides a one year warranty on the systems it installs. The Company
also obtains a one year warranty on the system components from the component
manufacturer, thereby mitigating potential warranty costs. Accordingly, the
Company has accrued no reserve for warranty. On the installed base after the
warranty term has expired, the Company offers a maintenance agreement of one or
more years to the customer. The Customer is billed for, and pays for the
maintenance agreement in advance. Revenues from such maintenance agreements are
recognized ratably over the lives of the maintenance agreements, with the excess
of the amount collected over the amount recognized as deferred revenue. At March
31, 2010 and December 31, 2009 the Company had $155,057 and $236,500 in deferred
revenue from maintenance agreements.





Revenues
from the sale of our mobile unit, accessories, repairs and replacement parts are
recognized when shipped to the customer in accordance with a valid contract or
order agreement. The contract or order agreement specifies delivery terms and
pricing, and is considered to reasonably assure collection from the
customer.





Revenues
and cost from multi-year rental contracts on our mobile unit will be recognized
ratably over the life of the rental contract.





Cash and Cash
Equivalents





The
Company considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.





The
Company maintains cash deposits with financial institutions, which from time to
time may exceed federally insured limits.  The Company has not
experienced any losses and believes it is not exposed to any significant credit
risk from cash. At March 31, 2010 and December 31, 2009, the Company has cash
balances on deposit in one account with a financial institution in excess of the
federally insured limits.





Estimates





The
preparation of the accompanying financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting periods. Actual results could differ from those
estimates.





Reclassification





Certain
reclassifications have been made to prior periods’ data to conform to the
current year’s presentation. These reclassifications had no effect on reported
income or losses.





F-5




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Segment
information





Accounting
Standards Codification (“ASC”) establishes standards for reporting information
regarding operating segments in annual financial statements and requires
selected information for those segments to be presented in interim financial
reports issued to stockholders. ASC also establishes standards for related
disclosures about products and services and geographic areas. Operating segments
are identified as components of an enterprise about which separate discrete
financial information is available for evaluation by the chief operating
decision maker, or decision-making group, in making decisions how to allocate
resources and assess performance. The Company applies the management approach to
the identification of our reportable operating segment as provided in accordance
with ASC. The information disclosed herein materially represents all of the
financial information related to the Company’s principal operating
segment.




Control by principal
stockholders





The
directors, executive officers, participants and their affiliates or related
parties, own beneficially and in the aggregate, the majority of the voting power
of the outstanding shares of the common stock of the Company. Accordingly, the
directors, executive officers and their affiliates, if they voted their shares
uniformly, would have the ability to control the approval of most corporate
actions, including increasing the authorized capital stock of the Company and
the dissolution, merger or sale of the Company's assets.





Dependence on principal
customer





For 2010
and going forward, the Company does not anticipate that the loss of any one
customer will have a significant adverse impact on our business.





Fair
Values





In the
first quarter of fiscal year 2008, the Company adopted Accounting Standards
Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC
820-10”).  ASC 820-10 defines fair value, establishes a framework for
measuring fair value, and enhances fair value measurement disclosure. ASC 820-10
delays, until the first quarter of fiscal year 2009, the effective date for ASC
820-10 for all non-financial assets and non-financial liabilities, except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). The adoption of ASC 820-10 did not have a
material impact on the Company’s financial position or operations. Refer to
Footnote 7 for further discussion regarding fair valuation.





Stock based
compensation





Effective
for the year beginning January 1, 2006, the Company has adopted ASC subtopic
718-10, which requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income statement based on
their fair values.  Pro-forma disclosure is no longer an alternative.
This statement does not change the accounting guidance for share based payment
transactions with parties other than employees provided in ASC
718-10.





As more
fully described in Note 6 below, the Company granted equity based compensation
over the years to employees of the Company under its equity
plans.  The Company granted non-qualified stock options to purchase
22,500,000 and -0- shares of common stock during the three-month period ended
March 31, 2010 and 2009, respectively, to employees and directors of the
Company.





F-6




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Fair Value of Financial
Instruments





ASC
subtopic 825-10 requires disclosure of the fair value of certain financial
instruments. The carrying value of cash and cash equivalents, accounts payable
and short-term borrowings, as reflected in the balance sheets, approximate fair
value because of the short-term maturity of these instruments.





Derivative
Liability





On April
1, 2010, subsequent to these financial statements, the Company issued a $600,000
Convertible Promissory Note that matures April 1, 2013. The Promissory Note bear
a onetime interest charge at a rate of 6% and will be convertible into Company’s
common stock at any time at a conversion rate of 70% of the lowest closing price
in the 20 trading days previous to the conversion.





Therefore,
in accordance with Accounting Standards Codification subtopic 815-40,
Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC 815-40”), on April 1, 2010,the Company will be
required to bifurcate the fair value of any identified embedded derivatives from
the host contract and mark to market each reporting period. In addition,
previously classified equity instruments such as non employee warrants and
options will be required to be reclassified outside of equity and mark to market
to fair value each reporting period.





Inventory





The
Company maintains an inventory, which consists primarily of component parts,
spare parts and disposable goods.  The average cost method is utilized
in valuing the inventory, and is stated at the lower of cost or
market.  The following table summarizes these assets as of March 31,
2010 and December 31, 2009:





March
      31, 2010
            
            
            December
      31, 2009Component
      & spare parts
            
            $
            759,243
            
            
            $
            767,325Consumables
            
            
            34,443
            
            
            
            30,980Advance
      payments
            
            
            
            
            
            
            17,329Total
      inventory
            
            $
            793,686
            
            
            $
            815,634





Property, plant and
equipment





The
Company has property, plant and equipment that consist of automobiles, computers
and related accessories, and office furniture.  The depreciation is
calculated using the straight line method over the life of the
property.  All property has a useful life of 3 to 10
years.  The following table summarizes these assets as of March 31,
2010 and December 31, 2009:





March
      31, 2010
            
            
            December
      31, 2009Office
      Furniture
            
            $
            170,094
            
            
            $
            164,525Computers
      and Accessories
            
            
            208,802
            
            
            
            208,801Leasehold
      Improvements
            
            
            135,380
            
            
            
            135,380514,276
            
            
            
            508,706Accumulated
      Depreciation
            
            
            319,645
            
            
            
            295,905$
            194,631
            
            
            $
            212,801





During
the three-month periods ended March 31, 2010 and 2009, depreciation expense
charged to operations was $23,739 and $23,110, respectively, of which $1,386 and
$0 was included as part of cost of sales, respectively




F-7




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




Earnings (loss) per common
share





The net
earnings (loss) per common share are computed by dividing the net loss for the
period by the weighted average number of shares outstanding for the period.
Outstanding warrants and options for the three-month  periods ending
March 31, 2010 and 2009 amounting to 666,162,460 and 49,201,769 respectively
were not included in the calculation for net loss per common share because it
would be antidilutive or exceeded the average market price of the Company’s
common stock for period.





The
numerator and denominator used in the basic and diluted earnings (loss) per
share of common stock computations are presented in the following
table:





For the quarter ended March 31,2010
            
            
            2009NUMERATOR
      FOR BASIC AND DILUTED EPS (LPS)Net
      loss per statement of operations
            
            $
            (1,585,104
            )
            
            $
            (1,883,725
            )DENOMINATOR
      FOR BASIC AND DILUTED EPS (LPS)Weighted
      average shares of common stock outstanding
            
            
            683,811,787
            
            
            
            561,542,968Basic
      and diluted EPS (LPS)
            
            $
            (0.00
            )
            
            $
            (0.00
            )





Recent accounting
pronouncements




In
February 2010 the FASB issued Update No. 2010-09 “Subsequent Events (Topic 855)”
(“2010-09”). 2010-09 clarifies the interaction of Accounting Standards
Codification 855 “Subsequent Events” (“Topic 855”) with guidance issued by the
Securities and Exchange Commission (the “SEC”) as well as the intended breadth
of the reissuance disclosure provision related to subsequent events found in
paragraph 855-10-50-4 in Topic 855. This update is effective for annual or
interim periods ending after June 15, 2010. Management is currently evaluating
whether these changes will have any material impact on its financial position,
results of operations or cash flows.




In
February 2010 the FASB issued Update No. 2010-08 “Technical Corrections to
Various Topics” (“2010-08”). 2010-08 represents technical corrections to SEC
paragraphs within various sections of the Codification. Management is currently
evaluating whether these changes will have any material impact on its financial
position, results of operations or cash flows.




In
January 2010 the FASB issued Update No. 2010-06 “Fair Value Measurements and
Disclosures—Improving Disclosures about Fair Value Measurements” (“2010-06”).
2010-06 requires new disclosures regarding significant transfers between Level 1
and Level 2 fair value measurements, and disclosures regarding purchases, sales,
issuances and settlements, on a gross basis, for Level 3 fair value
measurements. 2010-06 also calls for further disaggregation of all assets and
liabilities based on line items shown in the statement of financial position.
This amendment is effective for fiscal years beginning after December 15, 2010
and interim periods within those fiscal years. The Company is currently
evaluating whether adoption of this standard will have a material impact on its
financial position, results of operations or cash flows.






In
January 2010 the FASB issued Update No. 2010-05 “Compensation—Stock
Compensation—Escrowed Share Arrangements and Presumption of Compensation”
(“2010-05”). 2010-05 re-asserts that the Staff of the Securities Exchange
Commission (the “SEC Staff”) has stated the presumption that for certain
shareholders escrowed share represent a compensatory arrangement. 2010-05
further clarifies the criteria required to be met to establish a position
different from the SEC Staff’s position. The Company does not believe this
pronouncement will have any material impact on its financial position, results
of operations or cash flows.




F-8




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)







In
January 2010 the FASB issued Update No. 2010-04 “Accounting for Various
Topics—Technical Corrections to SEC Paragraphs” (“2010-04”). 2010-04 represents
technical corrections to SEC paragraphs within various sections of the
Codification. Management is currently evaluating whether these changes will have
any material impact on its financial position, results of operations or cash
flows.




In
January 2010 the FASB issued Update No. 2010-02 “Accounting and Reporting for
Decreases in Ownership of a Subsidiary—a Scope Clarification” (“2010-02”) an
update of ASC 810 “Consolidation.” 2010-02 clarifies the scope of ASC 810 with
respect to decreases in ownership in a subsidiary to those of a subsidiary or
group of assets that are a business or nonprofit, a subsidiary that is
transferred to an equity method investee or joint venture, and an exchange of a
group of assets that constitutes a business or nonprofit activity to a
non-controlling interest including an equity method investee or a joint venture.
Management, does not expect adoption of this standard to have any material
impact on its financial position, results of operations or operating cash flows.
Management does not intend to decrease its ownership in any of its wholly-owned
subsidiaries.




In
January 2010 the FASB issued Update No. 2010-01 “Accounting for Distributions to
Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging
Issues Task Force” (“2010-03”) an update of ASC 505 “Equity.” 2010-03 clarifies
the treatment of stock distributions as dividends to shareholders and their
affect on the computation of earnings per shares. Management does not expect
adoption of this standard to have any material impact on its financial position,
results of operations or operating cash flows.





NOTE
2 - GOING CONCERN MATTERS





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates the realization
of assets and satisfaction of liabilities and commitments in the normal course
of business. The Company has incurred substantial recurring losses, which raises
substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





The
Company has available cash and cash equivalents of approximately
$464,872 at March 31, 2010 which it intends to utilize for working capital
purposes and to continue developing its business. To supplement its cash
resources, the Company has been pursuing a number of alternative financing
arrangements with various investment entities. We are currently looking to
secure additional working capital to provide the necessary funds for us to
execute our business plan through various sources, including bank facilities,
bridge loans and equity offerings. However, we continue to incur significant
operating losses and the resultant reduction of our cash position.  We
cannot assure that we will be able to obtain additional funding, and the lack
thereof would have a material adverse impact on our business. Moreover, any
equity funding could be substantially dilutive to existing stockholders. The
aforementioned factors raise substantial doubt about our ability to continue as
a going concern. In the event the Company is unable to continue as a going
concern it may pursue a number of different options, including, but not limited
to, filing for protection under the federal bankruptcy code.




F-9




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
3 – CONTRACTS IN PROCESS





The
Company entered into construction type contracts to furnish and install its
systems in hospitals. There were four outstanding contracts at March 31, 2010
and December 31, 2009.  The following table summarizes these
outstanding contracts:




Contract
            
            Revenue
            
            
            Amounts
            
            
            Revenues in
            
            
            Billings in excessAmount
            
            Recognized
            
            
            Billed
            
            
            excess of Billings
            
            
            of RevenuesOutstanding
      contracts at March 31, 2010:1,327,930
            
            
            949,221
            
            
            
            1,327,930
            
            
            
            -
            
            
            
            378,709231,257
            
            
            29,347
            
            
            
            21,668
            
            
            
            7,679
            
            
            
            -287,029
            
            
            163,939
            
            
            
            215,271
            
            
            
            -
            
            
            
            51,332282,948
            
            
            -
            
            
            
            188,632
            
            
            
            -
            
            
            
            188,632$
            2,129,164
            
            
            1,142,507
            (1)
            
            $
            1,753,501
            
            
            $
            7,679
            
            
            $
            618,673Outstanding
      contracts at December 31, 2009:$
            1,327,930
            
            $
            949,221
            
            
            $
            1,327,930
            
            
            $
            -
            
            
            $
            378,709231,257
            
            
            29,347
            
            
            
            21,668
            
            
            
            7,679
            
            
            
            -287,029
            
            
            163,939
            
            
            
            215,271
            
            
            
            -
            
            
            
            51,332282,948
            
            
            -
            
            
            
            188,632
            
            
            
            -
            
            
            
            188,63278,000
            
            
            -
            
            
            
            39,000
            
            
            
            -
            
            
            
            39,000$
            2,207,164
            
            $
            1,142,507
            
            
            $
            1,792,501
            
            
            $
            7,679
            
            
            $
            657,673





(1)
            Revenue
      recognized in prior years on outstanding
  contracts.





NOTE
4 – NOTE PAYABLE





The
Company’s outstanding unsecured note bears a 12% interest rate and matured on
December 15, 2003. Both parties have entered a verbal agreement to extend the
maturity date on this note indefinitely. No accrued interest has been paid on
this note to date. As of March 31, 2010 and December 31, 2009 the balance due
was $217,572 and $214,647 respectively.





NOTE
5 –ADVANCES





On March
31, 2010, the Company received advance partial proceeds from a convertible
promissory note executed April 1, 2010.  See subsequent events
footnote below.





NOTE
6 – CAPITAL STOCK





The
Company is authorized to issue 3,500,000,000 shares of common stock, with a
$0.0001 par value per share as of April 22, 2009 as approved by the majority of
the Company stockholders. Prior to the April 22, 2009 share increase, the
Company was authorized to issue 1,400,000,000 shares of common stock with a
$0.0001 par value per share. In addition, the Company is authorized to issue
60,000,000 shares of preferred stock with a $0.0001 par value per
share.





As of
March 31, 2010 and December 31, 2009, the Company has 698,914,623 and
675,478,445 shares of common stock and no preferred stock issued and
outstanding, respectively.





During
the three month period ended March 31, 2010, the Company issued an aggregate of
6,200,000 shares of its common stock in exchange for services
rendered.  The valuations of common stock issued for services were
based on the value of the services rendered, which did not differ materially
from the fair value of the common stock during the period the services were
rendered.




F-10




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
7 – WARRANTS AND OPTIONS





Warrants




The
following table summarizes the changes in warrants outstanding and related
prices for the shares of the Company’s common stock at March 31,
2010:




Exercise Price
            
            Number
              Outstanding
            
            
            Warrants
              Outstanding
              Weighted
              Average
              Remaining
              Contractual Life
              (years)
            
            
            Weighted
              Average
              Exercise price
            
            
            Number
              Exercisable
            
            
            Warrants
              Exercisable
              Weighted
              Average
              Exercise Price$
            
            
            0.0040
            
            
            28,000,000
            
            
            
            3.33
            
            
            $
            0.0040
            
            
            
            28,000,000
            
            
            $
            0.00400.0075
            
            
            78,971,031
            
            
            
            3.34
            
            
            
            0.0075
            
            
            
            78,971,031
            
            
            
            0.00750.0250
            
            
            28,000,000
            
            
            
            3.34
            
            
            
            0.0250
            
            
            
            28,000,000
            
            
            
            0.02500.0900
            
            
            600,000
            
            
            
            296
            
            
            
            0.0900
            
            
            
            600,000
            
            
            
            0.09000.2400
            
            
            100,000
            
            
            
            2.24
            
            
            
            0.2400
            
            
            
            100,000
            
            
            
            0.24000.3788
            
            
            2,204,386
            
            
            
            0.81
            
            
            
            0.3788
            
            
            
            2,204,386
            
            
            
            0.37880.5571
            
            
            1,436,000
            
            
            
            0.33
            
            
            
            0.5571
            
            
            
            1,436,000
            
            
            
            0.5571Total
            
            
            139,311,417
            
            
            
            3.27
            
            
            $
            0.0172
            
            
            
            139,311,417
            
            
            $
            0.0172





Transactions
involving the Company’s warrant issuance are summarized as follows:




Number of
              Shares
            
            
            Weighted
              Average
              Price Per
              ShareOutstanding
      at December 31, 2008
            
            
            414,576,110
            
            
            $
            0.0265Granted
            
            
            167,419,113Exercised
            
            
            (90,260,439
            )Canceled
      or expired
            
            
            (334,838,226
            )Outstanding
      at December 31, 2009
            
            
            156,896,558
            
            
            
            0.0212Granted
            
            
            -Exercised
            
            
            (17,585,141
            )
            
            
            (0.0064
            )Canceled
      or expired
            
            
            -Outstanding
      at March 31, 2010
            
            
            139,311,417
            
            
            $
            0.0172




During
the three month period ended March 31, 2010, the Company issued an aggregate of
16,741,475 shares of common stock in exchange for the exercise of 17,585,138
warrants.  The exercise prices ranged from $0.004 to $0.0075 resulting
in proceeds of $93.112. 5,433,966 warrants were exercised on a cashless
basis.





F-11




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





Stock
options





The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company’s common stock
issued to employees and directors of the Company at March 31, 2010:





Options Outstanding
            
            
            
            Options ExercisableExercise Prices
            
            
            Number
              Outstanding
            
            Weighted Average
              Remaining
              Contractual Life
              (Years)
            
            Weighted
              Average
              Exercise Price
            
            Number
              Exercisable
            
            Weighted
              Average
              Exercise Price$
            0.00400
            
            
            
            542,743,584
            
            4.13
            
            $
            0.00400
            
            532,230,251
            
            $
            0.00400.000844
            
            
            
            80,883,534
            
            5.61
            
            $
            0.00844
            
            26,961,178
            
            
            0.008440.028
            
            
            
            22,500,000
            
            4.79
            
            
            0.028
            
            22,500,000
            
            
            0.028Total
            
            
            
            646,127,118
            
            4.34
            
            $
            0.00539
            
            581,691,429
            
            $
            0.00513




Transactions
involving stock options issued to employees are summarized as
follows:




Weighted
              AverageNumber of
            
            
            PriceShares
            
            
            Per ShareOutstanding
      at December 31, 2008:
            
            
            78,358,950
            
            
            $
            0.072Granted
            
            
            551,883,534
            
            
            
            0.00467Exercised
            
            
            —Canceled
      or expired
            
            
            (5,515,666
            )Outstanding
      at December 31, 2009:
            
            
            624,726,818
            
            
            $
            0.004Granted
            
            
            22,500,000
            
            
            
            0.028Exercised
            
            
            (494,700
            )
            
            
            (0.004
            )Canceled
      or expired
            
            
            (605,000
            )
            
            
            (0.004
            )Outstanding
      at March 31, 2010:
            
            
            646,127,118
            
            
            $
            0.00539





On
January 14, 2010, the Company granted options to purchase 22,500,000 shares of
the Company’s common stock to directors. The option grants as approved by the
Compensation Committee were fully vested when issued and the exercise price is
$0.028 per share for five years.





The fair
value for these awards was estimated using the Black-Scholes option pricing
model with the following weighted average assumptions, assuming no expected
dividends:




Expected
      life (years)
            
            
            5Expected
      volatility
            
            
            363.22
            %Risk-free
      interest rate
            
            
            2.51
            %Dividend
      yield
            
            
            —
            %




The
aggregate fair value of vesting options of $1,021,110 was charged to current
period operations.





NOTE
8 — FAIR VALUE





ASC
825-10 defines fair value as the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value
measurements for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most advantageous market in
which it would transact and considers assumptions that market
participants




F-12




MEDCLEAN
TECHNOLOGIES, INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





would use
when pricing the asset or liability, such as inherent risk, transfer
restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value
hierarchy that requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 825-10
establishes three levels of inputs that may be used to measure fair
value:





Level 1 -
Quoted prices in active markets for identical assets or
liabilities.





Level 2 -
Observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which all significant inputs are observable or can be derived principally from
or corroborated by observable market data for substantially the full term of the
assets or liabilities.





Level 3 -
Unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities.




To the
extent that valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value requires more
judgment. In certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, for disclosure
purposes, the level in the fair value hierarchy within which the fair value
measurement is disclosed is determined based on the lowest level input that is
significant to the fair value measurement.





Items
recorded or measured at fair value on a recurring basis in the accompanying
consolidated financial statements consisted of the following items as of
March 31, 2010:





March
      31, 2010CarryingFinancial instruments
            
            Amount
            
            
            Fair ValueCash
      and cash equivalents
            
            $
            464,872
            
            
            $
            464,872Accounts
      receivable, net
            
            
            175,913
            
            
            
            175,913Accounts
      payable and accrued liabilities
            
            
            429,283
            
            
            
            429,283$
            1,070,068
            
            
            $
            1,070,068





For cash
and cash equivalents, accounts receivable, and accounts payable, the carrying
amount approximates fair value because of the relative short maturity of those
instruments.





The
Company adopted the provisions of ASC 825-10 prospectively effective as of the
beginning of Fiscal 2008.  For financial assets and liabilities
included within the scope of ASC 825-10, the Company was required to adopt the
provisions of ASC 825-10 prospectively as of the beginning of Fiscal
2009.  The adoption of ASC 825-10 did not have a material impact on
our consolidated financial position or results of operations.





NOTE
9 – SUBSEQUENT EVENTS





Subsequent
events have been evaluated through May 14, 2010, a date that the financial
statements were issued.





On April
1, 2010, subsequent to these financial statements, the Company issued a $600,000
Convertible Promissory Note that matures April 1, 2013. The Promissory Note bear
a onetime interest charge at a rate of 6% and will be convertible into Company’s
common stock at any time at a conversion rate of 70% of the lowest closing price
in the 20 trading days previous to the conversion in exchange for $275,000 cash
and a promissory note of $325,000 (net of payment of $275,000) bearing a onetime
interest charge of 6.66%, due three years from date of issuance (April 1,
2013).





F-13




MEDCLEAN TECHNOLOGIES,
INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





NOTE
9 – SUBSEQUENT EVENTS (continued)





As a
result of this transaction, the Company is required, effective April 1, 2010 to
bifurcate the identified embedded derivative at the date of inception and mark
to market each reporting period.  On April 1, 2010, subsequent to
these financial statements, the Company recorded a noncash charge to operations
of $271,283 representing the excess of derivative liabilities of $871,283 and
the net face value of the promissory note of $600,000.





F-14




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





Forward
Looking Statements





This
quarterly report on Form 10-Q and other reports filed by the Company from time
to time with the United States Securities and Exchange Commission (the “SEC”)
contain or may contain forward-looking statements (collectively the “Filings”)
and information that are based upon beliefs of, and information currently
available to, the Company’s management as well as estimates and assumptions made
by Company’s management. Readers are cautioned not to place undue reliance on
these forward-looking statements, which are only predictions and speak only as
of the date hereof. When used in the filings, the words “anticipate”, “believe”,
“estimate”, “expect”, “future”, “intend”, “plan”, or the negative of these terms
and similar expressions as they relate to the Company or the Company’s
management identify forward-looking statements. Such statements reflect the
current view of the Company with respect to future events and are subject to
risks, uncertainties, assumptions, and other factors, including the risks
contained in the “Risk Factors” section of the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2009 filed with the SEC, relating to
the Company’s industry, the Company’s operations and results of operations, and
any businesses that the Company may acquire. Should one or more of these risks
or uncertainties materialize, or should the underlying assumptions prove
incorrect, actual results may differ significantly from those anticipated,
believed, estimated, expected, intended, or planned.





Although
the Company believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance, or achievements. Except as required by applicable law,
including the securities laws of the United States, the Company does not intend
to update any of the forward-looking statements to conform these statements to
actual results.




Our
financial statements are prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”). These accounting principles
require us to make certain estimates, judgments and assumptions. We believe that
the estimates, judgments and assumptions upon which we rely are reasonable based
upon information available to us at the time that these estimates, judgments and
assumptions are made. These estimates, judgments and assumptions can affect the
reported amounts of assets and liabilities as of the date of the financial
statements as well as the reported amounts of revenues and expenses during the
periods presented. Our financial statements would be affected to the extent
there are material differences between these estimates and actual results. In
many cases, the accounting treatment of a particular transaction is specifically
dictated by GAAP and does not require management’s judgment in its application.
There are also areas in which management’s judgment in selecting any available
alternative would not produce a materially different result.  The
following discussion should be read in conjunction with our consolidated
financial statements and notes thereto appearing elsewhere in this
report.





Results
of Operations





Three
Months Ended March 31, 2010 Compared to Three Months Ended March 31,
2009





Net
Revenue





Total
revenue for the quarter ended March 31, 2010 was $268,867 compared with $417,428
for the same period in 2009, a decrease of $148,561 or 35.6%.





Revenues
derived from the sale of consumables, component parts, service billings and
amortization of maintenance contracts decreased by $148,561 or 35.6% in the
current quarter to $268,867. We did not have revenues during the quarters ended
March 31, 2010 and 2009 attributable to contract revenues.





4




Gross
Profit




The gross
profit for the three months ended March 31, 2010, was $103,414 (38.5% of total
revenue) compared with a gross profit of $144,356 (34.6% of total revenue) for
the same three month period of 2009.





In this
period, our gross profit margins increased from 34.6% to 38.5%, or a 11.3%
increase.   By carefully managing the business we have been able
to ensure that we are invoicing for all services preformed and therefore, we
have been able to increase our total gross profit from the comparable period,
last year.





The
components of costs of revenues for products include direct materials,
depreciation, shipping and rigging costs and contract labor primarily used to
install, repair and maintain our equipment.




Operating
Expenses




Total
operating expenses for the three months ended March 31, 2010, was $1,685,827
compared with $1,580,490 for the same three month period in 2009, an increase of
$105,337. In the three months ended March 31, 2010, we recognized non-cash
equity based compensation to service providers and employees of $1,078,532 as
compared to $604,552 recorded as equity based compensation for the three months
ended March 31, 2009.




Interest
and Other Income





Interest
and other income for the three month period ended March 31, 2010, was $234
compared to $906 for the same period in 2009.





Interest
expense





Interest
expense and amortization for the three month period ended March 31, 2010, was
$2,925 compared with $448,497 in the same three month period of 2009. In the
three months ended March 31, 2009, we recognized non-cash amortization expense
amounting to $444,984, compared to $-0- in the same three month period of 2010.




Net
Income (loss)




Net loss
for the three month period ended March 31, 2010, was $1,585,104, compared to
$1,883,725 for the same period in 2009.





Liquidity
and Capital Resources





The
Company’s cash on hand and working capital as of March 31, 2010, and December
31, 2009, are as follows:




March
      31,
            
            
            December
      31,2010
            
            
            2009Cash
      on hand
            
            $
            464,872
            
            
            $
            534,425Working
      capital (deficit)
            
            $
            (564,001
            )
            
            $
            (229,469
            )




The
Company purchased $5,569 in new fixed assets during the three month period ended
March 31, 2010. Under current conditions, the Company anticipates purchasing
approximately $15,000 in additional fixed assets in 2010.


Net cash
used in operating activities totaled $432,096 for the three months ended March
31, 2010.





Our
accounts receivable balance may have dramatic swings from one period to
another depending upon the timing and the amount of milestone billings
included in the balance at the end of any accounting period. There are
three milestone billings representing a percentage of the contract value
for each installment and our payment terms are





5




“upon
receipt.” Receivable balances are typically paid within 15 days of the
invoice date. Billings for maintenance contracts and consumables are due
within 45 days and are more numerous but much smaller in value
than milestone billings. We review our outstanding receivable balances on
a regular basis to ensure that the allowance for bad debt is adequate.
  Due to the varying nature in the timing and amounts of the receivable
balances as noted above, the change in the allowance for doubtful account
will not necessarily correlate with the increase or decrease in the
accounts receivable balance. The accounts receivable balance as of March 31,
2010, was $175,913 net of an allowance of $15,589, a decrease of $31,796 from
year ended December 31, 2009.





Our
inventory balance may have dramatic swings from one period to another
depending upon the expected installation date of our MedClean systems and our
accounts payable balances can have similar swings depending on payment
terms and any volume purchases or discounts we may take advantage of from
time to time. During the three months ended March 31, 2010, the Company
decreased its inventory on hand by $21,948 to $793,686.





To
supplement its cash resources, the Company has been pursuing a number of
alternative financing arrangements with various investment entities. We are
currently looking to secure additional working capital to provide the necessary
funds for us to execute our business plan through various sources, including
bank facilities, bridge loans and equity offerings. However, we continue to
incur significant operating losses and the resultant reduction of our cash
position.  We cannot assure that we will be able to obtain additional
funding, and the lack thereof would have a material adverse impact on our
business.  Moreover, any equity funding could be substantially
dilutive to existing stockholders. The aforementioned factors raise substantial
doubt about our ability to continue as a going concern. In the event the Company
is unable to continue as a going concern it may pursue a number of different
options, including, but not limited to, filing for protection under the federal
bankruptcy code.





Item
3. Quantitative and Qualitative Disclosures about Market Risk.





We do not
hold any derivative instruments and do not engage in any hedging
activities.





Item
4. Controls and Procedures





(a) Evaluation of Disclosure Controls
and Procedures.Our Chief Executive Officer and Chief Financial Officer
evaluated the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report. Based on that evaluation, our Chief
Executive and Chief Financial Officer concluded that our disclosure controls and
procedures as of the end of the period covered by this report were effective
such that the information required to be disclosed by us in reports filed under
the Exchange Act is (i) recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms
and (ii) accumulated and communicated to our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding
disclosure. A controls system cannot provide absolute assurance, however, that
the objectives of the controls system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.





Our Chief
Executive Officer and Chief Financial Officer are responsible for
establishing and maintaining adequate internal control over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act). Our 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 accounting
principles generally accepted in the United States.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations.  Smaller reporting companies employ fewer individuals and find
it difficult to properly segregate duties.  Often, one or two individuals
control every aspect of the Company's operation and are in a position to
override any system of internal control.  Additionally, smaller reporting
companies tend to utilize general accounting software packages that lack a
rigorous set of software controls.




6




Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of the
Company's internal control over financial reporting as of March 31,
2010. In making this assessment, our Chief Executive Officer
and


Chief
Financial Officer used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework.  Based on this evaluation, Our Chief Executive
Officer and Chief Financial Officer concluded that, as of March 31, 2010, our
internal control over financial reporting was effective.




(b) Changes in Internal Control over
Financial Reporting.There were no changes in our internal control
over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, during our most recently completed fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.





PART
II—OTHER INFORMATION





Item
1. Legal Proceedings.





We are
currently not involved in any litigation that we believe could have a material
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our companies or our subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.





Item
1A. Risk Factors.





There
have been no material changes from the risk factors previously disclosed in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009
filed with the SEC on March 3, 20010.





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





There
were no unregistered sales of the Company’s equity securities during the quarter
ended March 31, 2010 that were not otherwise disclosed on a Form
8-K.





Item
3. Defaults upon Senior Securities.





There has
been no default in the payment of principal, interest, sinking or purchase fund
installment, or any other material default not cured within 30 days, with
respect to any indebtedness of the Company.





Item
4. (Removed and Reserved).





Item
5. Other Information.





None.





Item
6. Exhibits.





Exhibit
      No.
            
            Description31.1*
            
            Certification
      by the Principal Executive Officer of Registrant pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule
      15d-14(a)).31.2*
            
            Certification
      by the Principal Financial Officer of Registrant pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule
      15d-14(a)).32.1*
            
            Certification
      by the Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2*
            
            Certification
      by the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.


* Filed
herewith




7




SIGNATURES





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





MEDCLEAN
      TECHNOLOGIES, INC.Date:
      May 17, 2010
            By:
      /s/ David
      LakyName:
      David LakyTitle:
      Chief Executive Officer and Principal Executive OfficerDate:
      May 17, 2010
            By:
      /s/ Cheryl K.
      SadowskiName:
      Cheryl K. SadowskiTitle:
      Chief Financial Officer and Principal Financial Officer





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