--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            -------------------------

                                   FORM 10-QSB
                            -------------------------


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2006

                          COMMISSION FILE NO.: 0-50469



                            GS CLEANTECH CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


Delaware                                                            59-3764931
--------------------------------------------------------------------------------
(State of other jurisdiction of                                  (IRS Employer
incorporation or organization)                               Identification No.)


One Penn Plaza, Suite 1612, New York, New York                          10119
--------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)


                                 (212) 994-5374
--------------------------------------------------------------------------------
               (Registrant's telephone number including area code)





Check mark  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter  period that the registrant as required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes X No __.



The number of  outstanding  shares of common  stock as of November  15, 2006 was
249,828,213.



Transitional Small Business Disclosure Format:  Yes       No  X
                                                   ---       ---





<PAGE>



                            GS CLEANTECH CORPORATION
                         QUARTERLY REPORT ON FORM 10QSB
                 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2006
<TABLE>

                                TABLE OF CONTENTS

<CAPTION>

                                                                                                           Page No
Part I            Financial Information
<S>               <C>                                                                                           <C>
Item 1.           Financial Statements (unaudited)...............................................................3
                  Consolidated Balance Sheet - September 30, 2006 (unaudited)....................................4
                  Consolidated Statements of Operations - for the Nine Months
                    Ended September 30, 2006 (unaudited) and 2005 (unaudited)....................................6
                  Consolidated Statements of Cash Flows - for the Nine Months
                    Ended September 30, 2006 (unaudited) and 2005 (unaudited)................................... 7
                  Notes to Consolidated Financial Statements.....................................................9
Item 2.           Management's Discussion and Analysis or Plan of Operation.....................................25
Item 3.           Controls and Procedures.......................................................................32

Part II           Other Information
Item 1.           Legal Proceedings.............................................................................33
Item 2.           Changes in Securities.........................................................................33
Item 3.           Defaults Upon Senior Securities...............................................................33
Item 4.           Submission of Matters to a Vote of Security Holders...........................................33
Item 5.           Other Information ............................................................................33
Item 6.           Exhibits and Reports on Form 8K...............................................................33

Signatures                                                                                                      34
</TABLE>



<PAGE>


                         PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED FOR SEPTEMBER 30, 2006)


<PAGE>

<TABLE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                         SEPTEMBER 30, 2006 (UNAUDITED)
<CAPTION>

ASSETS:                                                                 9/30/06
                                                                     -------------
Current assets:
<S>                                                                  <C>
   Cash ..........................................................   $    756,659
   Loans receivable-affiliate ....................................        182,140
   Accounts receivable, net ......................................      3,243,765
   Unbilled Revenue ..............................................        266,848
   Costs and earnings in excess of billings, current .............         61,184
   Prepaid expenses and other current assets .....................        277,106
   Inventory .....................................................      1,776,735
                                                                     ------------
           Total current assets ..................................      6,564,437

Property and equipment, net ......................................      1,556,698

Other Assets:
   Deposits ......................................................        135,063
   Costs and earnings in excess of billings, non current .........        223,569
   Permits, net ..................................................        181,046
   Property held for sale ........................................         59,298
   Deferred financing costs, net .................................        379,167
   Assets of discontinued operations .............................         99,300
   Investments in unconsolidated subsidiaries, at cost ...........      1,500,295
   Goodwill ......................................................      4,271,630
                                                                     ------------
       Total other assets ........................................      6,849,368
                                                                     ------------

TOTAL ASSETS .....................................................   $ 14,970,503
                                                                     ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Short term borrowings .........................................   $     16,975
   Short term borrowings - due to parent .........................      1,142,757
   Interest payable - due to parent ..............................        144,079
   Accounts payable ..............................................      3,208,246
   Accrued expenses ..............................................      1,795,445
   Current maturities of long-term debt ..........................        167,465
   Current obligations of capital lease ..........................         24,038
   Notes payable to non affiliated parties .......................        335,475
   Billings in excess of earnings ................................          1,949
   Deferred revenue ..............................................        125,000
   Line of credit ................................................      1,196,972
   Current portion of convertible debentures, net of discount ....      1,800,171
   Current convertible debentures - due to parent ................        606,364
   Liability for derivative instruments ..........................      6,222,632
   Federal/State income tax payable ..............................         90,000
   Liabilities of discontinued operations ........................        742,628
                                                                     ------------
       Total current liabilities .................................     17,620,196

Long-term debt, net of current maturities ........................        296,997
Accrued expenses, non current ....................................        114,462
Deferred revenue, non current ....................................        336,798
Notes payable to non affiliated parties ..........................        111,679
Convertible debentures, net of current portion and net of discount        733,333
                                                                     ------------
       Total long term liabilities: ..............................      1,593,269
                                                                     ------------
       Total liabilities: ........................................     19,213,465

Minority interest in consolidated subsidiary .....................        775,000

Stockholders' equity:
   Convertible preferred stock, $0.001 par value:
     Series A: 1,254,244 shares issued and outstanding ...........          1,255
     Series B: 438,650 shares issued and outstanding .............            439
Series D: 1,000,000 shares issued and outstanding ................         (1,000)
   Common stock, $0.001 par value, 250,000,000 authorized;
   249,828,213 issued and 249,828,213 outstanding ................        249,829
</TABLE>

<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                         SEPTEMBER 30, 2006 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                         9/30/06
                                                                     -------------

<S>                                                                    <C>
   Additional paid-in capital                                          52,518,621
   Accumulated deficit                                                (57,789,106)
                                                                      ------------
       Total stockholders' equity                                      (5,017,962)
                                                                      ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $ 14,970,503
                                                                      ============

            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>


<PAGE>

<TABLE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)
<CAPTION>

                                                     For the three months ending        For the nine months ending
                                                 ------------------------------------------------------------------
                                                     9/30/06           9/30/05          9/30/06          9/30/05
                                                 ------------------------------------------------------------------

<S>                                               <C>              <C>              <C>              <C>
Revenues: .....................................   $   4,529,556    $  13,551,586    $  12,858,880    $   4,513,793
   Cost of revenues ...........................       3,153,066        3,133,073        9,443,593        8,855,589
                                                  -------------    -------------    -------------    -------------
Gross profit ..................................       1,376,490        1,380,720        4,107,993        4,003,291

Operating expenses:
  Selling expenses ............................         284,149          254,554          920,816          764,340
  Stock based compensation ....................            --               --          2,249,401             --
  Research and development ....................          21,012             --             55,957             --
  General and administrative ..................       1,635,103          902,267        3,885,280        2,602,763
                                                  -------------    -------------    -------------    -------------
Total operating expenses ......................       1,940,264        1,156,821        7,111,454        3,367,103

Operating (loss) income .......................        (563,774)         223,899       (3,003,461)         636,188

Other income (expense):
  Miscellaneous income ........................           2,140              545           10,913           16,336
  Gain on forgiveness of interest expense .....            --               --            125,484           17,711
  Gain (Loss) on equipment disposal ...........             500            6,259          (40,302)           6,290
  Amortization of deferred financing costs ....            --            (75,833)            --            (37,917)
  Change in value of derivative instruments ...       2,663,344             --          3,109,018             --
  Amortization of debt discount ...............      (1,487,978)            --         (5,323,704)            --
  Interest expense - due to parent ............         (52,978)            --           (126,973)            --
  Write down of investment ....................        (436,667)            --           (436,667)            --
  Interest expense ............................        (197,843)        (207,045)        (524,859)        (627,685)
                                                  -------------    -------------    -------------    -------------
    Total other income (expense), net .........         452,601         (200,241)      (3,282,923)        (587,348)

Income/Loss before provision for income taxes .        (111,173)          23,658       (6,286,384)          48,840
Provision for income tax, net .................           6,884             (598)        (121,193)         (14,444)
                                                  -------------    -------------    -------------    -------------
Income/Loss from continuing operations ........   $    (118,057)   $      23,060    $  (6,407,577)   $      34,396
                                                  =============    =============    =============    =============

Discontinued operations:
 Income (loss) from discontinued operations ...   $     (34,707)   $  (3,110,913)   $     (75,541)   $  (3,289,477)
   Gain on disposal, discontinued operations ..            --             34,469            3,041             --
                                                  -------------    -------------    -------------    -------------

Total discontinued operations .................         (34,707)      (3,110,913)         (41,072)      (3,286,436)
                                                  -------------    -------------    -------------    -------------

Net Income/Loss ...............................   $    (152,764)   $  (3,087,853)   $  (6,448,649)   $  (3,252,040)

Preferred Dividends ...........................            --               --      $    (681,594)            --

Net income/loss attributable to shareholders ..   $    (152,764)   $  (3,087,853)   $  (7,130,243)   $  (3,252,040)

Basic loss attributable to common shareholders,
continuing operations .........................   $       (0.00)   $       (0.00)   $       (0.03)   $       (0.02)
Basic loss attributable to common shareholders,
discontinued operations .......................   $       (0.00)   $       (0.07)   $       (0.03)   $       (0.10)
Basic loss attributable to common shareholders,
net ...........................................   $       (0.00)   $       (0.07)   $       (0.03)   $       (0.08)
Weighted average shares of common stock
outstanding basic and dilutive ................     230,103,087       47,094,043      230,103,087       41,429,503


            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>

<PAGE>

<TABLE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
                       AND SEPTEMBER 30, 2005 (UNAUDITED)
<CAPTION>
                                                                           9/30/06       9/30/05
                                                                       ----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                     <C>            <C>
Net loss ............................................................   $(6,448,649)   $(3,252,041)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
   Depreciation and amortization ....................................       170,586        126,334
   Write down of long term investment ...............................       436,667           --
    Bad debt recovery ...............................................        53,674         63,282
    Stock-based compensation ........................................     2,249,401        158,026
   Settlement of debt ...............................................      (166,667)          --
   Change in net assets of discontinued operations ..................      (583,080)     2,690,847
   Loss on disposal of fixed assets .................................        40,302        (14,386)
    Gain on forgiveness of debt .....................................      (125,485)       (67,197)
   Amortization of deferred finance costs ...........................       (75,833)          --
   Amortization of BCF - related party ..............................        15,124           --
   Change in fair value of derivative instruments ...................    (3,109,018)          --
   Accretion of debt discounts ......................................     5,323,704           --

   Changes in assets and liabilities,
     (Increase) in accounts receivable ..............................      (530,562)      (655,378)
     Decrease in excess of billings .................................        (1,074)       (43,357)
     Increase (decrease) in unbilled revenue ........................       293,228       (124,292)
     (Increase) decrease in inventories .............................    (1,776,735)           244
     Decrease (increase) in prepaid expenses and other current assets          (118)        83,712
     Increase in billings in excess of earnings .....................         1,949         63,461
        Increase in accounts payable ................................       367,421        209,081
     Decrease in deferred revenue ...................................       (86,368)       (41,048)
     Increase in deferred taxes .....................................        90,000           --
     Increase (decrease) in other liabilities .......................      (234,490)        58,562
        Decrease in accrued expenses ................................      (422,233)      (126,111)
                                                                        -----------    -----------
       Net cash used in operating activities ........................    (4,518,256)      (870,261)
                                                                        -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES

   Deposits .........................................................        (3,438)       (89,063)
   Permits ..........................................................          --          (16,500)
    Restricted cash released from restrictions ......................        29,254           --
   Loans to affiliates ..............................................      (182,140)          --
     Additions to and acquisition of property, plant and equipment ..      (198,991)      (123,675)
                                                                        -----------    -----------
       Net cash used in investing activities ........................      (355,315)      (229,238)
                                                                        -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds from convertible debenture, net of financing costs ......     4,597,870        417,707
    Repayment of convertible debentures .............................       (78,000)          --
   Proceeds from convertible debenture - due to parent ..............       606,364        280,195
    Net proceeds from short term borrowings - related party .........       512,892         53,784
    Repayment of short-term borrowings ..............................        (5,436)      (259,356)
   Proceeds from notes payable - non affiliated parties .............       186,012          1,909
   Repayment of long-term debt, net .................................      (172,348)      (191,395)
Repayment of term
financing ...........................................................      (100,000)          --
   Proceeds from issuance of common stock ...........................          --          (75,000)
   Investment in subsidiary .........................................      (261,327)          --
   Purchase of treasury stock .......................................          --         (340,624)
     Conversion of minority interest ................................       (50,000)          --
   Collection of stock subscription receivable ......................          --          175,000
                                                                        -----------    -----------
       Net cash (used in) provided by financing activities ..........     5,236,027         62,220
(Decrease) Increase in cash .........................................       362,458     (1,037,279)
Cash at beginning of period .........................................       394,201      1,096,327
                                                                        -----------    -----------
Cash at end of period ...............................................   $   756,659    $    59,048
                                                                        ===========    ===========
</TABLE>

<PAGE>
<TABLE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
                 AND SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)
<CAPTION>

                                                                              9/30/06        9/30/05
                                                                           -----------------------------
Supplemental Disclosure of cash flow information
<S>                                                                           <C>          <C>
Cash paid during the period for Interest ..................................   $  524,858   $   55,770

Supplemental disclosure of non-cash investing and financing activities:
   Payment of Laurus financing/accrued interest with
     proceeds of Cornell Capital financing ................................    2,193,047         --
   Deferred financing costs paid with proceeds of Cornell Capital financing      455,000         --
    Convertible debentures conversions into common stock ..................    1,310,900         --
    Other long-term debt conversions into common stock ....................    2,110,000         --
    Payables settled in stock .............................................       33,580      174,369
    Vehicles purchased via financing ......................................       71,145         --

Acquisition/investment of business through following:
    Issuance of common stock ..............................................         --         75,000
    Incurrence of term financing ..........................................         --        128,000
   Incurrence of convertible debentures (Laurus Master Fund) ..............         --        408,750


            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>



<PAGE>



     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1        BASIS OF PRESENTATION

The consolidated interim financial statements included herein have been prepared
by GS CleanTech Corp.  ("GS CleanTech" or "the Company"),  pursuant to the rules
and  regulations  of the  Securities  and  Exchange  Commission  with  regard to
Regulation S-B and, in the opinion of management, include all adjustments which,
except  as  described  elsewhere  herein,  are  of a  normal  recurring  nature,
necessary  for a  fair  presentation  of  the  financial  position,  results  of
operations,  and cash flows for the periods  presented.  The results for interim
periods  are not  necessarily  indicative  of results for the entire  year.  The
financial  statements  presented  herein should be read in  connection  with the
financial  statements included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 2005.

2        GOING CONCERN

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of $6,448,649 for the nine months ended  September 30, 2006. As of September 30,
2006 the Company had $756,659 in cash, and current liabilities  exceeded current
assets by $11,055,759  including $3,620,857 in derivative liability  instruments
(net).  These matters  raise  substantial  doubt about the Company's  ability to
continue as a going concern.

Management's  plans  include  raising  additional  proceeds from debt and equity
transactions  to fund  operations  and to increase  revenue and cut  expenses to
reduce the loss from  operations.  There can be no assurances  that GS CleanTech
will be able to eliminate  both its working  capital  deficit and its  operating
losses.  The  accompanying  financial  statements do not contain any adjustments
which may be required as a result of this uncertainty.

3        SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

For the period ended September 30, 2006, the accompanying consolidated financial
statements   include  all   accounts  of  GS  CleanTech   Corporation   and  its
subsidiaries:

o    GS  EnviroServices - owns 100% of the environmental  services  divisions of
     Jones   Environmental   Services,   NE,   Enviro-Safe   Corporation,    and
     EnviroSciences of Delaware.

o    GS Industrial Design - owns 100% of the process engineering division.

o    GS  CleanTech  Ventures - owns 70% of General  Ultrasonics,  10% of Ovation
     Products Corp, and 3% of General Hydrogen Corp.  Ovation Products Corp. and
     General Hydrogen Corp. were integrated into GS CleanTech Ventures using the
     Cost Method of accounting  (see cost method  accounting for  unconsolidated
     subsidiaries below).

All  significant  inter company  balances and  transactions  were  eliminated in
consolidation.  The financial statements for the period ended September 30, 2006
have  been  consolidated  to  include  the  accounts  of GS  Industrial  Design,
EnviroSciences of Delaware, and GS CleanTech Ventures beginning January 2006. In
addition, the financial statements for the period ended September 2005 have been
consolidated to include the accounts of EnviroSciences of Delaware as of January
of 2005.

COST METHOD OF ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES

The Company's subsidiary GS CleanTech accounts for its 10% investment in Ovation
Products  Corp.  (Ovation)  and its 3%  investment  in  General  Hydrogen  Corp.
(General  Hydrogen)  under the cost method.  Application of this method requires
the Company to periodically review this investment in order to determine whether
to  maintain  the  current  carrying  value or to  write  off some or all of the
investment.  While the Company uses some objective  measurements  in its review,
the review  process  involves a number of judgments on the part of the Company's
management. These judgments include assessments of the likelihood of Ovation and
General Hydrogen to obtain additional  financing,  to achieve future milestones,
make sales and to compete  effectively in its markets. In making these judgments
the Company must also  attempt to  anticipate  trends in  Ovation's  and General
Hydrogen's  respective industry as well as in the general economy.  There can be
no guarantee that the Company will be accurate in its assessments and judgments.
To the extent that the Company is not correct in its conclusion it may decide to
write down all or part of the investment.
<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3        SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

The Company  recognizes  revenue  when  persuasive  evidence  of an  arrangement
exists, delivery has occurred or services have been rendered, the price is fixed
or determinable, and collection is reasonably assured.

The Company  provides  environmental  services that involve  transportation  and
disposal of industrial waste.  Revenues for the  transportation  and disposal of
waste using the Company as the transporter  that is disposed of at a third party
location  are  recognized  when the waste is  delivered  to the third  party for
processing  and  disposal.  Revenues  for the  transportation  and  disposal  of
industrial  waste  using a third  party  transporter  that is disposed of at the
third party  location  are  recognized  when the waste is delivered to the third
party location for processing and disposal.  Revenues for the transportation and
disposal of industrial  waste that is disposed of at the  Company's  facility is
recognized  when the Company has  received  the waste at its facility due to the
fact that the customer has no additional recourse and no additional services are
provided to the customer after the waste is received.

The  Company  also  provides  environmental  services  and  process  engineering
services on fixed  priced  contracts.  Revenue  from fixed  priced  contracts is
recognized on the percentage of completion method, measured by the percentage of
actual  costs  incurred  to the  estimated  costs to  complete.  Changes  in job
performance  and job conditions may affect total  estimated  costs and result in
revisions to costs and  revenues  that affect  future  periods.  Provisions  for
estimated  losses on uncompleted  contracts are made in the period in which such
losses are determined.

The asset,  "costs and estimated  earnings in excess of billings on  uncompleted
contracts,"  represents  revenues  recognized in excess of amounts  billed.  The
liability,  "billings in excess of costs and estimated  earnings on  uncompleted
contracts," represents billings in excess of revenues recognized.

The liability  "deferred  revenue"  represents amounts invoiced to customers for
deposits and partial  payments on orders or projects not complete for  delivery.
The  revenue,  along with the project  costs,  is  recognized  upon  delivery or
completion of the project for the customer.

INVENTORIES

Due to the long lead times to obtain some components, GS Industrial Design, Inc.
maintains an inventory of centrifuges and related parts.  Inventories are stated
at the lower of cost or market,  with cost  being  determined  by the  first-in,
first-out (FIFO) method.

LONG-LIVED ASSETS

The Company  assesses the  valuation of components of its property and equipment
and other long-lived  assets whenever events or  circumstances  dictate that the
carrying  value might not be  recoverable.  The Company bases its  evaluation on
indicators such as the nature of the assets,  the future economic benefit of the
assets, any historical or future  profitability  measurements and other external
market conditions or factors that may be present.  If such factors indicate that
the  carrying  amount  of an asset or asset  group may not be  recoverable,  the
Company  determines  whether impairment has occurred by analyzing an estimate of
undiscounted  future cash flows at the lowest level for which  identifiable cash
flows exist.  If the estimate of  undiscounted  cash flows during the  estimated
useful  life of the  asset is less than the  carrying  value of the  asset,  the
Company  recognizes a loss for the difference  between the carrying value of the
asset and its estimated fair value,  generally  measured by the present value of
the estimated cash flows.

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company reviews its Goodwill  annually at December 31 each year for possible
impairment and more  frequently if events or changes in  circumstances  indicate
Goodwill might be impaired.  The fair value of the Company's  reporting units is
analyzed using a discounted  cash flow valuation  approach.  The discounted cash
flow calculation is made utilizing various  assumptions and estimates  regarding
future revenues and expenses, cash flow and discount rates. The assumptions used
are  sometimes  significantly  different  than  historical  results  due  to the
Company's

<PAGE>


     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3        SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

current  business  initiatives.  If the Company fails to achieve results in line
with the assumptions used,  intangible  assets may be impaired.  At December 31,
2005 the Company had only one  reporting  unit but has made certain  acquisition
during 2006 resulting in additional  reporting  units.  Significant  assumptions
used in the Company's annual impairment analysis for the year ended December 31,
2005 include a discount rate of 19% and a long-term  growth rate of 5%. Possible
impairment may exist if the fair value  computed using the discounted  cash flow
valuation  approach  is lower than the  carrying  amount of the  reporting  unit
(including goodwill).  Further analysis would be required if possible impairment
exists by comparing the implied fair value of the reporting  unit,  which is the
excess of the fair value of the  reporting  unit over  amounts  assigned  to the
reporting units assets and liabilities,  to the carrying amount of goodwill.  If
the carrying  amount of the reporting  unit goodwill is greater than the implied
fair value,  an impairment  loss equal to the  difference  would be recorded and
goodwill would be written down.

4        STOCKHOLDERS EQUITY

The Company  accounts for stock,  stock  options and stock  warrants  issued for
services  and  compensation  by  employees  under  the fair  value  method.  For
non-employees, the fair market value of the Company's stock on the date of stock
issuance or option/grant  is used. The Company  determined the fair market value
of the warrants/options  issued under the Black-Scholes Pricing Model. Effective
January 1, 2006,  the Company  adopted the  provisions of Statement of Financial
Accounting  Standards  (SFAS)  123R,   SHARE-BASED  PAYMENT,  which  establishes
accounting for equity  instruments  exchanged for employee  services.  Under the
provisions  of SFAS  123(R),  share-based  compensation  cost is measured at the
grant  date,  based on the fair  value of the  award,  and is  recognized  as an
expense over the  employee's  requisite  service  period  (generally the vesting
period of the equity grant). Prior to January 1, 2006, the Company accounted for
share-based  compensation to employees in accordance with Accounting  Principles
Board (APB)  Opinion  No. 25,  ACCOUNTING  FOR STOCK  ISSUED TO  EMPLOYEES,  and
related  interpretations.  The Company also followed the disclosure requirements
of SFAS 123,  ACCOUNTING FOR  STOCK-BASED  COMPENSATION.  The Company elected to
adopt the modified prospective transition method as provided by SFAS 123(R) and,
accordingly,  financial statement amounts for the prior periods presented in the
Form 10-QSB have not been restated to reflect the fair value method of expensing
share-based compensation.

In  2003,  the  Company's   shareholders   approved  the  Company's  2003  Stock
Option/Stock  Issuance  Plan (the  "Plan").  The Plan  consists of two  separate
equity programs:  (i) the Discretionary  Option Grant Program and (ii) the Stock
Issuance  Program.  An  aggregate  of  5,322,652  shares  of Common  Stock  were
initially  reserved for  issuance  over the term of the Plan.  In addition,  the
number  of  shares  of  Common  Stock  reserved  for  issuance  under  the  Plan
automatically  increases on the first trading day of January each calendar year,
by an amount equal to eight percent (8%) of the total number of shares of Common
Stock outstanding on the last trading day in December of the preceding  calendar
year.  Shares subject to any outstanding  options under the Plan which expire or
otherwise terminate prior to exercise will be available for subsequent issuance.
However,  any shares subject to stock  appreciation  rights  exercised under the
Plan will not be  available  for  reissuance.  Should the  exercise  price of an
option  under the Plan be paid with shares of Common  Stock or should  shares of
Common Stock  otherwise  issuable under the Plan be withheld in  satisfaction of
the  withholding  taxes incurred in connection with the exercise of an option or
the  vesting of a stock  issuance  under the Plan,  then the number of shares of
Common Stock  available for issuance  under the Plan will be reduced only by the
gross number of shares for which the option is exercised or which vest under the
stock issuance and not by the net number of shares of Common Stock issued to the
holder of such option or stock issuance.  The Company's  officers and employees,
non-employee Board members and independent  consultants in the Company's service
or  the  service  of  the  Company's   subsidiaries  (whether  now  existing  or
subsequently  established)  are eligible to  participate  in the Plan.  The fair
market value per share of Common Stock on any relevant  date under the Plan will
be deemed to be equal to the closing  bid price per share on that date.  Options
granted under the Plan may be either  incentive  stock options which satisfy the
requirements  of  Section  422 of the  Internal  Revenue  Code or  non-statutory
options which are not intended to meet such requirements.


<PAGE>




     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4        STOCKHOLDERS EQUITY (CONTINUED)

SUPPLEMENTAL DISCLOSURE FOR STOCK-BASED COMPENSATION

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 123R "Share  Based  Payment."  This  statement is a revision to SFAS 123 and
supersedes  Accounting  Principles  Board (APB) Opinion No. 25,  "Accounting for
Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash
Flows".  This statement requires a public entity to expense the cost of employee
services received in exchange for an award of equity instruments. This statement
also  provides  guidance  on valuing  and  expensing  these  awards,  as well as
disclosure  requirements  of  these  equity  arrangements.   This  statement  is
effective as of the  beginning of the first interim or annual  reporting  period
that  begins  after  December  15,  2005.  The  revised  SFAS No. 123 may have a
material effect on the Company's  results of operations but not on the Company's
financial position.

On March 31, 2006, the Company issued 40,000,000 stock options as part the stock
based employee  compensation plan,  including  10,000,000 stock options to Kevin
Kreisler,  the Company's  Chief Executive  Officer.  Activity under the Plan and
issuances of options and/or warrants for the quarter ended September 30, 2006 is
as follows:

                                 Number of Shares  Weighted  Average
                                                      Exercise Price
                                  ----------------------------------

Outstanding at December 31, 2004      9,700,427    $    0.47
   Granted at fair value ........          --            --
   Forfeited ....................          --            --
   Exercised ....................          --            --
                                    -----------    ----------
Outstanding at December 31, 2005      9,700,427    $    0.47
   Granted at fair value ........    40,000,000         0.04
   Forfeited ....................       (22,943)         --
   Exercised ....................          --            --
                                    -----------    ----------
Outstanding at September 30, 2006    49,700,427    $    0.12

STOCK ISSUANCES

During the third quarter of 2006 there were no common stock issuances.

INCREASE IN AUTHORIZED

On March 24, 2006, the Company's Board of Directors approved an amendment to the
Company's  Certificate  of  Incorporation.  On March 24,  2006,  the holder of a
majority of the voting  power of the  outstanding  voting stock gave its written
consent to the amendment.  The amendment will be filed and will become effective
approximately twenty days after the Company's Information Statement is mailed to
the shareholders.  The effect of the amendment will be to increase the number of
authorized  shares of common  stock,  $0.001  par  value,  from  250,000,000  to
500,000,000.

5        RELATED PARTY TRANSACTIONS

CONVERTIBLE DEBENTURES ISSUED TO GREENSHIFT

During the three months ended September 30, 2006, the Company received  $286,611
from Greenshift leaving a balance at September 30, 2006 of $1,749,121  including
convertible  debentures  issued to  GreenShift in the amount of $606,363 in 2005
and 2006.  Interest  in the  amount of  $144,079  was  accrued  at a rate of 8%.
GreenShift  is an 80%  shareholder  of GS CleanTech  and is  controlled by Kevin
Kreisler, Chairman and Chief Executive Officer of GS CleanTech.

During 2005,  the Company's  subsidiary  ESI entered into a Management  Services
Agreement with GreenShift Corporation, its parent, under which GreenShift agreed
to provide management  assistance,  financial support,  and business development
services.  The agreement is for a term of five years and provides for GreenShift
to receive $150,000 per year. As of September 30, 2006 the remaining balance due
of $269,980 was converted into a convertible debenture.

<PAGE>


     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5        RELATED PARTY TRANSACTIONS (CONTINUED)

TRANSACTIONS WITH FORMER ESI STOCK HOLDERS AND FORMER EMPLOYEES

As part of the acquisition of the Company's subsidiary ESI, the Company acquired
Northvale Properties, Inc. ("Northvale") owned a building and land in Northvale,
New Jersey,  which has environmental  contamination.  Northvale was owned by ESI
stockholders and former employees.

The Northvale property was sold in 2001 for $1.8 million,  of which $1.5 million
was paid at closing and applied to the amount owed to ESI. The $300,000  balance
due from the  buyer of the  property  was paid in  August  2002  ($200,000)  and
October 2002  ($100,000) as final payment for all remaining  remediation  costs.
The property may be eligible  for the  Brownfields  rebate from the State of New
Jersey.  The  purchaser of the property has assigned the rights to these rebates
to the Company if in fact the property is eligible for the rebates.  However the
amount and timing of any such  rebates  will depend on the  ultimate  use of the
property.  Revenues  recognized  related to Northvale  project for  professional
services  for nine months ended  September  30, 2006 and 2005 were $ 259,794 and
$333,165 respectively.

GREENSHIFT TRANSFER OF SHARES OF COMMON STOCK

During the nine months ended  September 30, 2006,  Greenshift  Corporation  (the
parent  company)   transferred  588,235  shares  of  its  common  stock  to  the
Corporation  the  Company's  subsidiary  ESI with a cost basis of  $30,000.  The
Company realized a gain on the sale of these  marketable  securities of $105,645
and is included in additional paid in capital.

GREENSHIFT CONVERSION OF PREFERRED STOCK TO COMMON STOCK

On February 10, 2006 GreenShift Corporation converted 1,609,590 shares of Series
A Preferred Stock and Series B Preferred Stock into 63,633,322  shares of common
stock.

ISSUANCE OF SERIES D PREFERRED STOCK TO GREENSHIFT

On March 24, 2006 GS  CleanTech  issued  1,000,000  shares of Series D Preferred
Stock to  GreenShift  Corporation.  In  consideration  of the  Series D  shares,
GreenShift  Corporation  surrendered  750,000 shares of GS CleanTech's  Series C
Preferred Stock and 63,633,322 shares of GS CleanTech common stock.

On July 1, 2006, GS CleanTech acquired from its majority shareholder, GreenShift
Corporation,  100% of the outstanding  capital stock of GS EnviroServices,  Inc.
(f/k/a GreenWorks  Corporation) and 100% of the outstanding  capital stock of GS
CleanTech Ventures,  Inc. In exchange for the shares in GS EnviroServices and GS
CleanTech Ventures, GS CleanTech assumed GreenShift's  obligations under certain
debentures in the principal  amount of $1,900,000.  GS CleanTech has also agreed
to amend the Series D Preferred  Stock now held by  GreenShift  to increase  the
portion of GS CleanTech's  equity represented by the Series D shares from 70% to
80%.

TRANSACTIONS WITH FAMILY MEMBERS OF KEVIN KREISLER

In February 2006, Serenity Capital, LLC, purchased from GCS Investments $500,000
in  convertible  debt issued by GS CleanTech.  During the period ended March 31,
2006,  Serenity  effected  conversions   totaling  $100,000,   corresponding  to
5,000,000 shares of the Company's  common stock.  During the second quarter 2006
Serenity  effected  additional  conversions  totaling  $100,000  into a total of
5,000,000  shares of the Company's  common stock.  Serenity is owned by a family
member of the Company's chairman.

In February 2006, Cyrus Capital, LLC, purchased from GCS Investments $500,000 in
convertible  debt  issued by GS Clean  Tech.  During the period  ended March 31,
2006, Cyrus effected conversions totaling $280,000,  corresponding to 14,000,000
shares of the  Company's  common  stock.  During the second  quarter  2006 Cyrus
effected  additional  conversions  totaling  $120,000  into a total of 6,000,000
shares of the Company's  common stock.  Cyrus is owned by a family member of the
Company's chairman.

OTHER RELATED PARTY TRANSACTIONS

During the nine months ended September 2006, Candent Corporation loaned $250,000
to General Ultrasonics. The president of Candent is the wife of the Company's
chairman. All of the issued and outstanding capital stock of Candent is held in
trust for the benefit of its president.
<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6        FINANCING ARRANGEMENTS

The  following  is a  summary  of the  Company's  financing  arrangements  as of
September 30, 2006:

Short-term borrowings
   Vendor composition plans .............................   $    16,975
   Short term loans - due to parent .....................     1,142,757
                                                            -----------
     Total short term borrowings ........................   $ 1,159,732

Current maturities of long-term debt:
   Note payable - due to non affiliated parties .........       335,475
   Line of credit .......................................     1,196,972
    Vehicle loans and other current obligations .........       167,465
                                                            -----------
      Total current maturities of long-term debt ........   $ 1,669,912

Current portion of convertible debentures:
   Cornell Capital convertible debenture (April 21, 2006)   $ 2,102,147
   Cornell Capital convertible debenture (July 1, 2006) .     1,900,000
   Convertible debenture - related party ................       606,363
   Convertible debenture - Serenity Capital, LLC ........       300,000
   Convertible debenture - Cyrus Capital, LLC ...........       100,000
      Total Note Discounts ..............................    (2,601,976)
                                                            -----------
       Total current portion of convertible debentures ..   $ 2,406,534

Long-term debt:
   Vehicle loan, net of current .........................       296,997
   Notes payable - due to non-affiliated parties ........       111,679
                                                            -----------
      Total long-term debt ..............................       408,676

Convertible debentures, non-current
   Cornell Capital convertible debenture (April 13, 2006)     4,400,000
   Note Discount ........................................    (3,666,667)
                                                            -----------
     Total convertible debentures, non-current ..........   $   733,333

The following chart is presented to assist the reader in analyzing the Company's
ability to fulfill its fixed debt service  requirements  (net of note discounts)
of as of September 30, 2006 and the Company's ability to meet such obligations:

Year                                                          Amount
----                                                          -------
2006 - 2007                                              $   7,852,369
2007 - 2008                                                    225,339
2008 - 2009                                                  4,503,223
2009 - 2010                                                     75,368
2010 - 2011                                                     20,529
                                                         -------------
Total minimum payments due under current
  and long-term obligations                              $  12,676,828
                                                         =============

SHORT TERM BORROWINGS

During the three months ended September 30, 2006, the Company received  $286,611
from Greenshift leaving a balance at September 30, 2006 of $1,749,121  including
convertible  debentures  issued to  GreenShift in the amount of $606,363 in 2005
and 2006.  Interest  in the  amount of  $144,079  was  accrued  at a rate of 8%.
GreenShift  is an 80%  shareholder  of GS CleanTech  and is  controlled by Kevin
Kreisler, Chairman and Chief Executive Officer of GS CleanTech.


During 2005,  the Company's  subsidiary  ESI entered into a Management  Services
Agreement with GreenShift Corporation, its parent, under which GreenShift agreed
to provide management  assistance,  financial support,  and business development
services.  The agreement is for a term of five years and provides for GreenShift
to receive $150,000 per year. As of September 30, 2006 the remaining balance due
of $269,980 was converted into a convertible debenture.

TERM FINANCING

The Company had certain term  financing  totaling  $100,000 as of December 2005.
$50,000 was paid in the first  quarter of 2006 and the remainder was paid in the
third quarter 2006.

<PAGE>


     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6        FINANCING ARRANGEMENTS (continued)

NOTES PAYABLE

Notes payable to non-affiliated parties includes a loan of $125,000, which bears
interest  of 3%  commencing  January 1, 2004.  The note  requires  repayment  of
principal and interest monthly commencing June 2005 through February 2008 with a
final  principal  payment  of  $78,538  in  March  2008.  The  balance  on  this
note-payable  as of  September  30, 2006 is  115,016.  Interest in the amount of
$2,019 has been recognized for the nine months ended September 30, 2006.

In 2003,  $225,000 of financing and $15,000 of accrued interest were provided by
an additional  party. A promissory  note was issued  bearing  interest at 6% and
requiring  repayment of $100,000 on or before September 30, 2004. The balance of
principal  and interest  payable were payable on or before  September  30, 2005.
Subsequent to the payment of the $100,000 due September 30, 2004, there remained
a balance due of $140,000.  In December  2004, the  note-holder  agreed to waive
interest from January 2004 forward.  In December 2005, the note-holder agreed to
the  remaining  balance  due  ($131,420)  could be paid in  consecutive  monthly
payments of $ 5,476 from January 2006 through  December,  2007.  As of September
30, 2006, the balance on this note payable was 82,137.

During the nine months ended September 2006, Candent Corporation loaned $250,000
to General  Ultrasonics.  The  president of Candent is the wife of the Company's
chairman.  All of the issued and outstanding capital stock of Candent is held in
trust for the benefit of its president.

LINE OF CREDIT AND OTHER DEBT FINANCINGS

The Company has a credit line of $1,350,000  which bears  interest at the bank's
base  rate  plus  three-quarters  of one  percent.  The line is  secured  by all
corporate assets of the Company's subsidiary f/k/a Enviro-Sciences of New Jersey
(ESI) and was subject to renewal on January 16, 2004.  The line  remains  orally
extended  since  January  2004. As of September 30, 2006 there is a balance of $
1,196,972 drawn on the credit line.

The business loan  agreement  document  underlying the credit line agreement has
the following required financial covenants, none of which is met as of September
30, 2006.

         Tangible Net Worth - Minimum of $ 1,000,000
         Net Worth Ratio - Minimum Ratio of 1.75 to 1
         Working Capital - Minimum Ratio of $ 100,000
         Current Ratio - Minimum Ratio of 1.25 to 1
         Income - Minimum $ 250,000
         Cash Flow Requirement - Minimum of $ 350,000
         Fixed Charge Ratio - Minimum Ratio of 2 to 1
         Other Ratio - Cash flow to Current maturity of LT Debt of 1.25 to 1

TRANSACTIONS INVOLVING CONVERTIBLE DEBENTURES ISSUED TO GCS INVESTMENTS

In February 2006,  Serenity Capital,  LLC,  purchased  $500,000 in debt from GCS
Investments. The conversion feature on the debenture due to Serenity is variable
based on trailing  market  prices and  contains an embedded  derivative.  A note
discount of $500,000 and a derivative  liability of $1,672,000  were recorded at
the  assumption  date.  During  the first and  second  quarter's  2006  Serenity
effected  conversions totaling $200,000 into a total of 10,000,000 shares of the
Company's  common stock.  As of September 30, 2006, the principal  amount due on
the  debenture was  $300,000.  In the third  quarter 2006 interest  expense from
accretion of the debt  discount was $68,182 and gain on the fair market value of
the derivative  liability was $732,540.  As of September 30, 2006 the derivative
liability for  debenture due to Serenity was $368,160.  Interest is accrued at a
rate of 5% on the  principal  balance.  As of  September  30,  2006,  $7,875  of
interest is accrued on this  debenture.  Serenity is owned by a family member of
the Company's chairman.

In  February  2006,  Cyrus  Capital,  LLC,  purchased  $500,000 in debt from GCS
Investments.  The  conversion  feature on the debenture due to Cyrus is variable
based on trailing  market  prices and  contains an embedded  derivative.  A note
discount of $500,000 and a derivative  liability of $1,672,000  were recorded at
the assumption date. During the first and second quarter of 2006, Cyrus effected
conversions totaling $400,000 into a total of 20,000,000 shares of the Company's
common stock.  As of September 30, 2006,  principal  amount due on the debenture
was $100,000.  In the third quarter 2006 interest  expense from accretion of the
debt discount was $22,727 and gain on the fair market

<PAGE>

GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES NOTES TO
                 CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6        FINANCING ARRANGEMENTS (CONTINUED)

value of the  derivative  liability was  $224,180.  As of September 30, 2006 the
derivative  liability for the  debenture due to Cyrus was $122,720.  Interest is
accrued at a rate of 5% on the  principal  balance.  As of  September  30, 2006,
$3,394 of  interest  is  accrued on this  debenture.  Cyrus is owned by a family
member of the Company's chairman. TRANSACTIONS WITH CORNELL CAPITAL PARTNERS

On April 13, 2006,  GS CleanTech  entered into a Securities  Purchase  Agreement
with Cornell Capital  Partners,  LP, under which Cornell purchased a Convertible
Debenture in the amount of $4,400,000.  The Debenture was issued as of April 13,
2006. Cornell paid the $4,400,000  purchase price on April 19, 2006. The Company
paid $440,000 in deferred  finance costs and $15,000 in structuring fees as part
of this transaction. The conversion price of the Debenture shall be equal to the
lesser of $0.10 per share or 90% of the  volume  weighted  average  price of the
Company's  common  stock for the  thirty  days  preceding  conversion,  with the
conversion  price  reduced,  at the holders  option,  to the price for which the
Company  issues  common  stock or  convertible  instruments  to any other party.
Cornell will be entitled to convert the Debenture on the basis of the conversion
price into GS CleanTech common stock,  provided that Cornell cannot convert into
shares  that  would  cause  Cornell  to own more  than  4.99% of GS  CleanTech's
outstanding  common  stock.  The  Debenture  will bear interest at 5% per annum.
Accrued  interest and the principal  amount will be payable on April 1, 2009. GS
CleanTech's  obligations  under the  Debenture are secured by a pledge of all of
its assets,  subject to Cornell's agreement to subordinate its security interest
to any line of credit that GS CleanTech  obtains from a bank or other  financial
institution.  The proceeds of the  Debenture may only be used by GS CleanTech to
support the deployment by GS CleanTech's wholly owned subsidiary,  GS Industrial
Design,  Inc.  ("GSID"),  of its various  technologies,  specifically  including
GSID's Corn Oil Extraction and CO2 BioReactor  technologies.  The Company agreed
to issue to Cornell a five year Warrant to purchase  7,500,000  common shares at
$0.10 per share,  a five year  Warrant to purchase  7,500,000  common  shares at
$0.15 per share,  a five year Warrant to purchase  15,000,000  common  shares at
$0.20 per share,  a five year Warrant to purchase  20,000,000  common  shares at
$0.25 per share. The Company may redeem the debentures at any time for an amount
equal to 120% of the outstanding principal and accrued interest.  The conversion
feature on this debenture due to Cornell Capital  Partners,  LP (dated April 13,
2006) is  variable  based on  trailing  market  prices and  contains an embedded
derivative.  A  note  discount  of  $4,400,000  and a  derivative  liability  of
$14,958,108  were  recorded at the  assumption  date. In the third quarter ended
September  30, 2006,  interest  expense from  accretion of the debt discount was
$366,667  and gain on the fair  market  value of the  derivative  liability  was
$560,560.  As of September 30, 2006 the derivative  liability for debentures due
to Cornell Capital Partners, LP was $3,429,360 and interest of $102,055 has been
accrued.

On April 21, 2006 Cornell  Capital  Partners,  LP purchased  from Laurus  Master
Fund,  Ltd. the Secured  Minimum  Borrowing  Note and the Revolving Note that GS
CleanTech  issued to Laurus on March 31, 2004.  The  aggregate  debt,  including
accrued interest and penalties, was $2,193,047. Subsequently GS CleanTech agreed
with Cornell  Capital  Partners to amend the Revolving  Note such that its terms
are now identical to the Secured Minimum Borrowing Note. The debenture will bear
interest at a rate of the prime  lending rate plus 5%. GS CleanTech  also agreed
to modify the conversion  feature of the two Notes. The Notes, as modified,  may
be converted by Cornell Capital  Partners into common stock at a conversion rate
equal to the lesser of (a) $0.10 per share or (b) 90% of the lowest VWAP for the
thirty  trading  days  preceding  conversion.  The  conversion  feature  on this
debenture due to Cornell Capital Partners, LP (dated April 13, 2006) is variable
and  contains an  embedded  derivative.  A note  discount  of  $2,193,047  and a
derivative liability of $18,444,715 were recorded at the assumption date. On May
2, 2006,  Cornell Capital Partners,  LP effected  conversions  totaling $90,900,
corresponding  to  3,000,000  shares of the  Company's  common  stock.  Interest
expense from  accretion  of the debt  discount was $490,308 and gain on the fair
market value of the derivative  liability was  $16,699,597 for the quarter ended
June 30, 2006. In the third quarter ended September 30, 2006,  interest  expense
from  accretion  of the debt  discount  was $525,534 and gain on the fair market
value of the  derivative  liability was  $673,444.  As of September 30, 2006 the
derivative  liability for debentures  due to Cornell  Capital  Partners,  LP was
$1,071,674 and interest of $124,214 has been accrued.

On July 1, 2006, GS CleanTech assumed from GreenShift  Corporation,  100% of the
outstanding   capital  stock  of  GS  EnviroServices,   Inc.  (f/k/a  GreenWorks
Corporation) and 100% of the outstanding capital stock of GS CleanTech Ventures,
Inc. GS EnviroServices,  Inc. which owns an environmental  engineering  business
called  Enviro-Sciences (of Delaware)  Corporation.  GS CleanTech Ventures holds
equity stakes in General Hydrogen Corporation,  General Ultrasonics Corporation,
Ovation Products Corporation, and Aerogel Composite, Inc. In

<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6        FINANCING ARRANGEMENTS (CONTINUED)

exchange  for the shares in GS  EnviroServices  and GS  CleanTech  Ventures,  GS
CleanTech assumed  GreenShift's  obligation of a Securities  Purchase  Agreement
with Cornell  Capital  Partners,  LP in the principal  amount of $1,900,000.  GS
CleanTech  has also  agreed to amend the  Series D  Preferred  Stock now held by
GreenShift to increase the portion of GS CleanTech's  equity  represented by the
Series  D shares  from 70% to 80%.  GS  CleanTech  also  agreed  to  assume  the
conversion  feature of the Notes.  The Note, as assumed is  convertible  into GS
CleanTech's  common stock at the lesser of $0.10 per share or the average of the
three lowest closing market prices of GS CleanTech's common stock for the thirty
days  preceding  conversion  provided that the  shareholder  may not convert any
portion of its debentures  where such conversion  would bring the shareholder to
greater than 4.95% of GS CleanTech's outstanding common stock, in which case the
relevant  number of conversion  shares are held in escrow by the Company pending
compliance  with this  limitation.  The  Debenture  will bear interest at 5% per
annum.  Accrued  interest and the  principal  amount will be payable on April 1,
2008. The conversion  feature on this debenture due to Cornell Capital Partners,
LP (dated April 17, 2006) is variable  and  contains an embedded  derivative.  A
note  discount of  $1,471,740  and a  derivative  liability of  $1,471,740  were
recorded at the  assumption  date.  Interest  expense from accretion of the debt
discount  was  $228,784  and gain on the  fair  market  value of the  derivative
liability was $300,010 was recorded for the quarter ended September 30, 2006. As
of September 30, 2006 the derivative  liability for the debenture due to Cornell
Capital Partners, LP was $1,171,730 and interest of $23,750 has been accrued.

RELATED PARTY CONVERTIBLE NOTE

During 2005, GS CleanTech  borrowed $280,196 from GreenShift  Corporation in the
form  of a  convertible  promissory  note at a rate  of 8%.  The  note is due on
September 30, 2006.  Based on the terms of the conversion  option,  the debt was
determined to contain a beneficial conversion feature, recorded as a discount on
the debt of $20,165,  amortizable  over the term of the debt. A total of $20,165
has been  recorded  based on the  amortization  of the  discount in 2006.  As of
September 30, 2006 the debt discount has been  amortized in full.  GreenShift is
an 80% shareholder of GS CleanTech and is controlled by Kevin Kreisler, Chairman
and Chief Executive Officer of GS CleanTech.

CONVERTIBLE PROMISSORY NOTE - BERGER

In May  2005,  GS  CleanTech  acquired  the  assets  of  NCES.  As  part of this
acquisition, GS CleanTech assumed a convertible promissory note in the amount of
$128,000  payable to Robert Berger.  This note was due and payable  November 10,
2005.  The payee may elect at any time to convert any or all of the  outstanding
principal  into  common  stock  equal to the amount due  divided by the  average
closing  price of such common stock for the (30) day prior period to the date of
the exercise of this conversion. In November 2005, the Company made a payment of
$50,000  reducing  this note to $78,000.  During the three months ended June 30,
2006, a $58,160 reduction of this note was effected by agreement with Mr. Berger
in exchange for services  performed  on his behalf.  The $19,839  balance of the
note is in default and is immediately due and payable. Based on the terms of the
note, it was determined  that the conversion  option was an embedded  derivative
conversion  feature.  Accordingly,  the company  recognized a liability for this
derivative conversion feature of $52,800,  recorded as a debt discount which was
fully  amortized  over the term of this short term debt in 2005.  The derivative
liability  was marked to fair value at June 30, 2006  resulting in an accounting
gain of $23,043  for the change in fair value of the  derivative  liability.  On
September  11,  2006  the  Company  paid  the  remaining  balance  due  on  this
convertible debenture.

<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7        OPERATING LEASE COMMITMENTS

As part of the  acquisition  of Company's  subsidiary  ESI, the Company  assumed
leases on certain office space and equipment  under  operating  leases.  In June
2004,  ESI began  discussions  with the  managing  agents  for the Mt  Arlington
headquarters space regarding the need to reduce the office rent expense in light
of the reduced revenue base and reduced  staffing.  In July, a revised lease was
signed  effective  August 1, 2004  through  the end of the  original  lease term
wherein ESI reduced the space it occupied and received a corresponding reduction
in the office rent charged.

In April, 2006, the Company renegotiated its lease for office space at the Mount
Arlington office,  which supersedes the former lease starting April 1, 2006. The
revised  lease  extends the term  through  April 30,  2010.  The  following is a
schedule of future minimum rental payments on office space  (exclusive of common
area charges) required under this new operating lease:

         April 1, 2006 - December 31, 2006                 $  85,082
         January 1, 2007 - December 31, 2007               $ 116,395
         January 1, 2008 - December 31, 2008               $ 120,191
         January 1, 2009 - April 30, 2010                  $  41,750

Rent  expense of $ 81,210 and $ 68,188 was  recorded by the Company for the nine
months ended September 30, 2006 and 2005  respectively.  In addition to the base
rent,  the Company  also pays for  utilities  and for its share of  increases in
operating costs over a base period.

The  following  is a schedule of future  minimum  rental  payments on  operating
leases on office  equipment that have initial or  non-cancelable  lease terms in
excess of one year as of September 30, 2006:

          January   2007 - December 31, 2007            16,926

The  Company has been in  negotiations  with one lessor to  terminate  the lease
agreement  signed by ESI and return all equipment in exchange for a payment of a
reduced settlement amount  significantly less then the remaining stream of lease
payments due. The full remaining  lease payments due,  including all payments in
arrears,  would  have been  approximately  $  107,000.  The  Company  signed and
executed an agreement  in January 2006 wherein the Company  would pay 2 payments
of $ 10,500 in  February  and March 2006  (said  payments  having  been made) as
settlement of all past and future charges associated with this lease.

The Company is also in  negotiations  with another  lessor to terminate  several
lease  agreements for office  equipment.  All of the equipment  under leases has
been returned to the lessor, in some cases prior to the expiration of the agreed
lease period.  Approximately  $ 30,000 is due on all operating  leases with this
lessor  thru the end of their  respective  terms.  The  Company  is  seeking  to
negotiate a lower  settlement  amount but has  recorded  the full $ 30,000 under
current liabilities.

Further,  the Company is in negotiations with this lessor to terminate a capital
lease which has an  expiration  date of December  2006.  Again,  the Company has
returned the equipment and is attempting to negotiate a settlement  amount.  The
payments due under the full lease agreement  including those in arrears would be
approximately  $25,000.  The liability reflected under Capital leases payable as
of 9/30/2006  includes  approximately $ 24,000 (current & non-current)  for this
lease based on the normal amortization of lease payments.  An additional $ 5,000
has been accrued to cover the maximum payments due if no concession is received.

8    RETIREMENT PLAN

As part of the acquisition  the Company's  subsidiary ESI, the Company assumed a
deferred  compensation  plan  (401(k)  plan) from ESI-NJ  under  which  eligible
employees are permitted to elect the amount of their salary  deferrals,  subject
to certain statutory limitations. Currently, the Company's subsidiary provides a
10% match on all eligible employee deferrals and at its option, may add a profit
share match. The gross 401(k) matching  contribution  expense (before reductions
from  forfeitures) for nine months ended September 30, 2006 and 2005 was $ 5,887
and $5,389 respectively.

<PAGE>


     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9        UNCOMPLETED PROJECTS
<TABLE>
<CAPTION>

Costs and billings on uncompleted projects as of September 30, 2006 are
summarized as follows:

<S>                                                                              <C>
 Costs incurred on uncompleted projects ......................................   $ 2,147,743
 Estimated earnings ( losses ) ...............................................      (613,783)
                                                                                 -----------

 Less:  Billings to date .....................................................     1,249,207
                                                                                 -----------

          Totals .............................................................   $   284,753
                                                                                 ===========
Included in the accompanying balance sheets under the following captions:

 Costs and estimated  earnings  (losses) in excess of billings on  uncompleted   $   284,753
 projects
                                                                                 -----------

 Net .........................................................................   $   284,753
                                                                                 ===========
</TABLE>


10       DEFERRED REVENUES

The total  deferred  revenues  at  September  30, 2006 were  $461,798,  of which
$125,000  is shown as a current  liability  based on  management's  estimate  of
progress that will be made in the next twelve months.

Deferred  revenues at  September  30, 2006  include  $202,000  for a fixed price
project, and $259,794 for the remediation of the Northvale property.

11       PROPERTY HELD FOR SALE

The Company's subsidiary ESI purchased an industrial property in Cleveland, Ohio
from its major customer for $59,298.  The site requires remediation costs before
the property can be sold.  Management  estimates  the  remediation  liability to
approximate  the cost of the property.  As such, a remediation  liability in the
amount of $59,298 has been  recorded and is included in accrued  expenses on the
balance sheet in the accompanying financial statements.

12        CAPITAL LEASES

The Company assumed certain capital leases entered into by Company's  subsidiary
ESI having lease  expirations  in various  years  through  2006.  The assets and
liabilities  under capital leases are recorded at the lower of the present value
of minimum  lease  payments or the fair values of the asset at the  inception of
the lease.  The assets are amortized over the lower of their related lease terms
or their  estimated  productive  lives.  One capital lease has not matured as of
September 30, 2006 and as noted previously in Note 7 under Operating Leases, the
leased equipment has been returned and negotiations are in progress to terminate
the lease based on a reduced  payment of past and future lease payments due. The
asset  has been  fully  amortized  through  expense  based on the  return of the
equipment.

13       MEDICAL BENEFITS PROGRAM

The Company's  subsidiary ESI  self-insures a portion of their employee  medical
benefits.  The Company's exposure is limited on both an individual  employee and
aggregate basis.  Employees  contribute a portion of the insurance costs and the
program is administered by a third party.  Expenses for the company's portion of
claims plus  insurance  premiums for the nine month periods ended  September 30,
2006  and  2005  were  $169,284  and  $170,427  net of  amounts  contributed  by
employees.

Accrued  employee  benefits of $41,417 at September 30, 2006,  has been recorded
for the cost of the "tail" for the semi  self-insured  plan.  This  "tail"  only
becomes payable when the current plan is terminated. Management has no immediate
plans to terminate  the plan and  therefore  the  liability has been recorded as
non-current.

<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

14       SEGMENT INFORMATION

GS CleanTech currently operates three business segments:  Environmental Services
and Process Engineering.  Summarized financial information about each segment is
as follows:
<TABLE>
<CAPTION>

                                      -------------- --------------- --------------- --------------- ---------------
                                        Corporate      Environmental      Process        Technology        Total
                                                         Services       Engineering     Development
                                     -------------- --------------- --------------- --------------- ---------------
For the three months ended  9/30/2006:

Revenue
<S>                                      <C>             <C>               <C>            <C>            <C>
2006                                             --      $4,264,547        $265,008              --      $4,529,555
2005                                             --       4,513,793              --              --       4,513,793

Operating Income
2006                                      (202,236)         423,841       (569,819)       (215,561)       (563,774)
2005                                      (248,985)         472,884              --              --         223,899

For the nine months ended 9/30/2006:

Revenue
2006                                             --      13,094,262         457,324              --      13,551,586
2005                                             --      12,858,880              --              --      12,858,880

Operating Income
2006                                    (2,181,565)         839,240     (1,246,919)       (414,217)     (3,003,461)
2005                                      (286,971)         923,157              --              --         636.188

Total Assets
2006                                      4,477,360       5,750,924       2,840,382       2,001,135      15,069,801
2005                                      4,728,124       5,766,805              --              --      10,494,929
</TABLE>


15       ACQUISITIONS

GS CleanTech follows SFAS No. 141, "Business Combinations." Under this standard,
business  acquisitions  are accounted for under the purchase method and goodwill
represents the excess of the purchase price of a business  acquisition  over the
fair market  value of the net assets  acquired at the date of  acquisition.  The
statement also requires the recognition of acquired intangible assets apart from
goodwill if it arises from contractual and other legal rights.  If an intangible
does not arise from contractual or other legal rights, it shall be recognized as
an asset apart from goodwill only if it is capable of being separated or divided
from the acquired entity and sold, transferred,  licensed, rented, or exchanged.
For transfers of assets under common  control,  the Company  follows APB Opinion
16, "Business Combinations".

GS INDUSTRIAL DESIGN, INC.

On January 22,  2006,  GS  CleanTech  acquired  100% of the stock of  GreenShift
Industrial  Design  Corporation  and  Tornado  Trash  Corporation  ("TTC")  from
GreenShift  Corporation  ("GreenShift")  in return for 10% of the fully  diluted
stock in GS CleanTech.  GreenShift Corporation previously held approximately 70%
of the fully diluted  capital stock of GS CleanTech  Corporation  at the time of
this  transaction,  and due to the transfer of assets  between  companies  under
common control these  transfers  were recorded at cost for accounting  purposes.
GreenShift  Industrial Design Corporation was subsequently renamed GS Industrial
Design, Inc. ("GSID").

GSID is an early stage company that focuses on the  engineering and marketing of
clean technologies and processes that enhance manufacturing efficiencies improve
resource  utilization and minimize waste.  GSID's mission is to use its array of
clean  technologies and applied  engineering  expertise that reduce waste at the
source  and make it easier  for  people  and  businesses  to  recycle  and reuse
resources.

Tornado  Trash  Corporation  ("TTC") is a development  stage  company  formed to
deploy commercial  applications of GIDC's innovative green technologies with the
specific goal of minimizing and eliminating the practice of landfill disposal by
converting trash into valuable metals,  chemicals,  plastics,  fuels and energy.
TTC plans to focus on  centralized  applications  of its  technologies  at,  for
example,  landfills and transfer stations, and decentralized applications of its
technologies  in new green  appliances  positioned to residential and commercial
consumers.

<PAGE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

15       ACQUISITIONS (CONTINUED)

GS ENVIROSERVICES AND GS CLEANTECH VENTURES

On  July  1,  2006,  GS  CleanTech   Corporation   acquired  from  its  majority
shareholder, GreenShift Corporation, 100% of the outstanding capital stock of GS
EnviroServices,  Inc. (f/k/a GreenWorks Corporation) and 100% of the outstanding
capital stock of GS CleanTech Ventures, Inc.

GS  EnviroServices,  Inc.  owns an  environmental  engineering  business  called
Enviro-Sciences  (of Delaware)  Corporation.  GS CleanTech Ventures holds equity
stakes in General Hydrogen Corporation, General Ultrasonics Corporation, Ovation
Products Corporation, and Aerogel Composite, Inc.

In exchange for the shares in GS EnviroServices  and GS CleanTech  Ventures,  GS
CleanTech  assumed  GreenShift's  obligations  under  certain  debentures in the
principal amount of $1,900,000. GS CleanTech has also agreed to amend the Series
D  Preferred  Stock  now  held by  GreenShift  to  increase  the  portion  of GS
CleanTech's equity represented by the Series D shares from 70% to 80%.

The consolidated  financial  statements  include the financial  statements of GS
EnviroServices,  Inc. and GS CleanTech Ventures, Inc. Due to the fact that these
entities were acquired from  GreenShift  Corporation,  a related  party,  the of
these entities are included from January 1, 2005.

16       SUBSEQUENT EVENTS

GUARANTY AGREEMENT

On October 31, 2006 GS CleanTech guaranteed the following obligations:

o    14-month Term Note in the principal amount of $6,000,000  issued by NextGen
     Acquisition, Inc., to Stillwater Asset-Based Fund, LP;

o    3-year Secured Convertible Debenture in the principal amount of $13,000,000
     issued by GS AgriFuels Corporation to Cornell Capital Partners, LP.

GS CleanTech's  guaranty was secured by a pledge of its assets.  The proceeds of
the financing  transactions  were used to fund the  acquisition  by GS AgriFuels
Corporation of NextGen Fuels,  Inc., a current customer of GS Energy's  Warnecke
Design manufacturing subsidiary.

GS AgriFuels Corporation is a subsidiary of GreenShift  Corporation,  which owns
80% of the equity in GS CleanTech Corporation.  NextGen Acquisition,  Inc., is a
subsidiary of GS AgriFuels Corporation.

17         DISCONTINUED OPERATIONS

During 2003, ESI discontinued the operations of its construction  division.  The
decision to dispose of this component was based on significant  losses  incurred
and a desire for a greater focus on its  consulting  division.  Net sales of the
construction division for the nine-months ended September 30, 2006 and 2005 were
$ 211,506 and $283,008  respectively  resulting in losses from  operations  of $
68,488 in 2006 and $ 23,157 in 2005.

On October 24, 2005,  the Company's  Board of Directors  adopted a plan to close
the former Paterson,  New Jersey recycling  facility  operated by American Metal
Recovery  Corporation  ("AMRC").  The plan included the  discontinuation  of the
operations of MRTC during 2005, as well. The decision to terminate operations at
the Paterson  facility was made due to overall economic  factors,  in particular
the decreasing volume of inorganic, metal bearing wastes suitable for recycling.
AMRC has ceased  accepting  waste and has removed all  hazardous  waste from the
facility.  AMRC has disposed of all of the equipment and cleaned the facility as
required by regulation and surrendered the premises on December 31, 2005.

<PAGE>


     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

17       DISCONTINUED OPERATIONS (CONTINUED)

The results of the construction division and recycling businesses are recorded
as discontinued operations, of which the components are as follows:
<TABLE>
<CAPTION>

                                                               Sept  30, 2006  Sept 30, 2005
                                                               -----------------------------
<S>                                                             <C>            <C>
Net revenues ................................................   $   211,859    $ 1,535,821
Cost of revenues ............................................       286,543      1,554,255
                                                                -----------    -----------
           Gross profit .....................................       (74,684)       (18,434)

Selling expense .............................................          --           69,617
General and administrative expense ..........................        (1,929)       310,667
                                                                -----------    -----------
           Total ............................................   $    (1,929)   $   380,284

Loss from operations ........................................       (72,755)      (398,718)

Interest expense ............................................   $      (249)   $   (23,298)
Other income and expenses ...................................          --       (2,865,960)
                                                                -----------    -----------
           Total ............................................          (249)    (2,889,258)

Loss before provision for income taxes ......................   $   (73,004)   $(3,287,976)

Total provision for tax .....................................        (2,538)         1,501
                                                                -----------    -----------
           Net loss from discontinued operations ............   $   (75,541)   $(3,289,477)
                  Gain on disposal of discontinued operations        34,469          3,041
                                                                -----------    -----------
                   Total - discontinued operations ..........   $   (41,072)   $(3,286,436)
</TABLE>


The results presented above for 2006 and 2005 include the operating activity for
the  construction  and recycling  operations for the 9 month period.  Assets and
liabilities of the  construction  and recycling  businesses were reported as net
assets  and  net  liabilities  (current  and  net of  current)  of  discontinued
operations  at  September  30,  2006.  Assets and  liabilities  of  discontinued
operations as of September 30, 2006 are as follows:

Assets of discontinued operations:

 Accounts Receivable, net ..........................   $ 81,671
     Cost and earnings in excess of billings .......      9,320
     Machinery & equipment, net ....................        809
     Deposits ......................................      7,500
                                                       --------
          Total assets of discontinued operations ..   $ 99,300

Current liabilities of discontinued operations:
     Accounts payable ..............................   $496,453
     Accrued and other liabilities .................    246,175
                                                       --------
Total current liabilities of discontinued operations   $742,268

18       CONTINGENCIES

LEGAL PROCEEDINGS

The Company is party to the matter  entitled  Kerns  Manufacturing  Corp. v. KBF
Pollution Management Inc. The action was filed in the Supreme Court of the State
of New York,  August 14,  2003.  The verified  complaint  seeks  performance  of
certain agreements between the plaintiffs and the Company,  plus attorney's fees
and costs. The matter is ongoing and counsel is therefore unable to evaluate the
probability of an  unfavorable  outcome or range of potential loss at this time.
This matter relates to the Company's  2003  acquisition of Vulcan Waste Systems,
Inc.  from Kerns  Manufacturing  Corp.  and the breach by Kerns of the terms and
conditions of the relevant acquisition agreement. The Company incurred a loss in
December 31, 2003 on its write-off of $1,890,000 of idle equipment

<PAGE>
     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

18       CONTINGENCIES (CONTINUED)

connected  to this  transaction.  1,350,000  shares of  restricted  common stock
related to the Vulcan acquisition remain outstanding which shares the Company is
seeking to have  cancelled.  The Company is  currently  pursuing the reversal of
this acquisition and seeking the return of the common stock issued.

The Company  received a federal grand jury subpoena from the Middle  District of
Pennsylvania  requiring  the  production  of  original  records in regards to an
incident  that  occurred  in February  of 2004,  where a tanker  truck of liquid
wastes,  shipped from the Company's New Jersey  recycling  facility by a private
carrier to a destination in Pennsylvania,  overheated on the highway, causing no
injuries,  but requiring  emergency  response  services,  including  redirecting
traffic.  The Company cooperated fully in the  investigation.  On July 27, 2006,
the Company was  notified  that the U.S.  Department  of Justice has  officially
declined further investigation or prosecution of this case.


The Company is subject to a number of complaints from the New Jersey  Department
of  Environmental  Protection  ("NJDEP")  related to past operations at Paterson
from  1999 to  2004.  The  final  penalty  from  the New  Jersey  Department  of
Environmental  Protection was settled at $272,000. As of September 30, 2006, the
Company has a reserve $213,270 to cover the balance of assessed  penalties.  The
Company may not have the funds available to settle the case,  which could impact
continuing operations.

The Company's  subsidiary ESI is the subject of several lawsuits,  none of which
the Company has assumed  responsibility  for. It is, however,  possible that the
Company may, in certain cases, be found to be responsible and may be required to
make settlements with the Plaintiffs.

The Company was a defendant in a lawsuit where a vendor was seeking  damages for
non-payment in the amount of $251,291. This obligation was paid by the end-user,
a customer  of the  Company.  The  Company  has  reached a  settlement  with the
end-user. This amount is included in the $659,487 settlement discussed below.

     The Company is a defendant in a lawsuit  where a vendor is seeking  payment
for  trucking  services in the amount of $56,591.  A judgment  has been  entered
against The Company in this matter.  Satisfaction of this obligation is expected
to be paid by the end-user in August 2006 pursuant to the  settlement  agreement
reached with the end user.  This amount is included in the  $659,487  settlement
discussed below.

The  Company  and a  customer  have  outstanding  claims  against  each other in
connection with  remediation  services,  which were provided by The Company.  No
action was filed and both parties  executed a settlement  in May of 2006 whereby
the customer  will make payments  directly to the Company's  third party vendors
for  services  provided  on  the  customer's  sites.  The  amount  agreed  to is
approximately $665,000,  which has been offset against accounts payable. The two
lawsuits  referenced above of $251,291 and $56,591  respectively are included in
the $665,000.  In  conjunction  with the write off of the accounts  payables the
Company  has also  written  off over  $4,000,000  of current  assets  consisting
accounts receivables and unbilled earned revenues.

The  Company is a  defendant  in an action that a customer  filed  claiming  The
Company was negligent in its failure to recognize asbestos  contamination in its
Phase I Environmental  report and is seeking damages of $650,000.  The Company's
insurance  carrier is vigorously  defending the matter and the amount appears to
be within policy limits. Additionally,  the Company has accrued $25,000 which is
the maximum amount for which the Company would be responsible.

The Company  was a  defendant  in this  litigation  where a third party  claimed
injuries at a Company job site. The suit claimed the injuries were the result of
The Company's  staff's  negligence.  A settlement was reached with The Company's
insurance carrier within The Company's policy limits and thus The Company had no
exposure to the claim.

The Company is a defendant in this litigation  where the plaintiff is seeking to
recover a bankruptcy  preference  payment in the amount of $16,875.  The Company
believes it will be required to pay this amount and  therefore  we have  accrued
this in our financial statements.

The Company is a plaintiff in this action where it seeks to recover $225,000 for
services  performed.  The customer  filed a  counter-claim  for certain  alleged
damages,  which  was  dismissed  with  prejudice.  A  trial  date  has yet to be
determined.  The Company believes there is a reasonable  likelihood that it will
be  successful  in this  litigation  for the  collection  of the final  contract
payment plus accrued interest earned in the trust accounts.

<PAGE>


     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

18       CONTINGENCIES (CONTINUED)

The Company is involved in several other complaints with vendors.  Total damages
the vendors are seeking payment for is included in accounts payable.  Management
does  not  believe  there  will be any  additional  expenses  related  to  these
complaints.

OTHER CONTINGENCIES

The  Company  is  subject  to various  regulatory  requirements,  including  the
procurement of requisite licenses and permits at its facilities.  These licenses
and permits without which the Company's  operations would be adversely  affected
are subject to periodic renewal. The Company anticipates that, once a license or
permit is issued  with  respect to a  facility,  the  license or permit  will be
renewed at the end of its term if the  facility's  operations  are in compliance
with the applicable regulatory requirements.

Under the Company's  insurance  programs,  coverage is obtained for catastrophic
exposures, as well as those risks required to be insured by law or contract. The
deductible   per   occurrence   for   environmental   impairments   is  $25,000.
Environmental  liability  insurance is carried with policy  limits of $3,000,000
per occurrence and $6,000,000 aggregate.

Viridis  Capital,  LLC, an affiliate of Kevin  Kreisler,  assumed a $75,000 debt
payable to Lakeland Bank and assigned this debt to GreenShift, another affiliate
of Kevin  Kreisler.  Lakeland  Bank has not  released  the  Company of this debt
obligation.

The Company  has failed to comply with  certain  registration  requirements  for
stock issued to certain debt holders.

AMENDMENT TO ARTICLES OF INCORPORATION

Effective on July 18, 2006, the Corporation filed with the Delaware Secretary of
State a  Certificate  of  Amendment of its  Certificate  of  Incorporation.  The
amendment changed the name of the corporation to "GS CleanTech Corporation."

INCREASE IN AUTHORIZED SHARES

On March 24, 2006, the Company's Board of Directors approved an amendment to the
Company's  Certificate  of  Incorporation.  On March 24,  2006,  the holder of a
majority of the voting  power of the  outstanding  voting stock gave its written
consent to the  amendment.  The  amendment  will be filed and  become  effective
approximately twenty days

after the Company's  Information  Statement is mailed to the  shareholders.  The
effect of the amendment  will be to increase the number of authorized  shares of
common stock, $0.001 par value, from 250,000,000 to 500,000,000.


<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD LOOKING STATEMENTS

In  addition  to  historical   information,   this  Quarterly   Report  contains
forward-looking statements, which are generally identifiable by use of the words
"believes,"  "expects,"  "intends,"   "anticipates,"  "plans  to,"  "estimates,"
"projects," or similar expressions. These forward-looking statements are subject
to certain  risks and  uncertainties  that could cause actual  results to differ
materially from those  reflected in these  forward-looking  statements.  Factors
that might  cause such a  difference  include,  but are not  limited  to,  those
discussed  in the section  entitled  "Description  of  Business - Business  Risk
Factors".   Readers  are  cautioned  not  to  place  undue   reliance  on  these
forward-looking  statements,  which reflect management's opinions only as of the
date  hereof.  We  undertake  no  obligation  to revise or publicly  release the
results of any revision to these forward-looking statements

OVERVIEW

GS CleanTech  Corporation  ("we," "our," "us," "GS CleanTech," or the "Company")
provides  applied  engineering and technology  transfer  services based on clean
technologies  and process  innovations that make it  cost-effective  and easy to
recycle and reuse resources.

We focus on incremental  advances in  technologies  and business  practices that
enable  increased and  sustainable  profits on relatively  small  infrastructure
investments  by  enhancing   manufacturing   efficiencies,   improving  resource
utilization and minimizing waste. Our offerings include:

o    Technology  Transfer  -  we  provide  our  clients  with  innovative  clean
     technologies  for use at their sites in return for various forms of license
     fees and royalties.

o    Equipment Sales - we provide our clients with  proprietary  equipment based
     on our technologies on the basis of rental, lease or purchase terms.

o    Process  Engineering  Services - we provide specialized process engineering
     services bundled with our technology and/or equipment sales.

COMPANY BACKGROUND

The Company was formed in 1984 as KBF Pollution  Management,  Inc.  ("KPMI") and
was merged  with its wholly  owned  subsidiary,  Veridium  Corporation  in 2003.
Veridium changed its name to GS CleanTech Corporation in July 2006.

We conduct these operations through our wholly-owned  subsidiary,  GS Industrial
Design,  Inc.  We also own  several  clean  technology  investments  through our
wholly-owned  venture  group,  GS CleanTech  Ventures,  Inc.  These  investments
include minority investments in General Hydrogen Corporation (about 3%), Ovation
Products  Corporation  (about 12%), and majority  stakes in General  Ultrasonics
Corporation (about 70%) and GS EnviroServices,  Inc. (about 100%). Nearly all of
our revenues are generated by GS Industrial Design,  Inc. and GS EnviroServices,
Inc.

GS Industrial Design

Our industrial  design group is primarily focused on delivering our technologies
and process innovations to the North American Ethanol Production Industry with a
view towards maximizing the yield of traditional  corn-based ethanol production.
As we move beyond our current  efforts in the Ethanol  Production  Industry,  we
intend to market our  technologies  and process  innovations to other industries
including  the  agriproducts,  power  generation,  petrochemical  refining,  and
municipal and industrial waste processing industries.

While GS  Industrial  Design  currently  accounted  for about 6% of our  revenue
during the three months ended  September 30, 2006,  this division has executed a
number of technology transfer agreements and has developed a pipeline of what we
believe to be high  probability  sales. GS Industrial  Design's  revenues can be
expected to increase as a  percentage  of our overall  sales if we  successfully
deploy our  technologies  under our  executed  agreements  and if we are able to
successfully convert our sales prospects into additional technology deployments.

GS Industrial  Design's revenues during the quarter were primarily  attributable
to the sale of equipment to ethanol  facilities for technology  deployments that
served as early adopter installations of our corn oil extraction technology.



<PAGE>

--------------------------------------------------------------------------------
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GS EnviroServices

The  remainder  of our  revenues,  or about 94% of our revenue  during the three
months  ended  September  30,  2006,  were  generated  by our GS  EnviroServices
subsidiary.

GS EnviroServices is a diversified industrial and hazardous waste management and
environmental  services  company that  specializes in providing its clients with
the following cost-effective and environmentally friendly management services:

o    Transportation and distribution of industrial and hazardous wastes;

o    Site remediation and industrial cleaning projects;

o    Engineering and consulting services; and,

o    Environmental, health and safety compliance.

Headquartered in Sandwich, Massachusetts, GS EnviroServices operates out of five
strategically  located  service  centers  including  its RCRA  Part B  Permitted
Treatment, Storage and Disposal facility.

The table  and below  discussions  should  be read in  conjunction  with Item 1,
Financial Statements,  of this report. Percentage of total revenues in the table
below are presented net of discontinued operations.

                         Percentage of Total Revenues For the Period Ended,
                         --------------------------------------------------
                                                  9/30/06     9/30/05

Revenue .......................................     100.0%    100.0%
Cost of revenue ...............................      69.7      68.9
                                                    -----     -----
   Gross profit ...............................      30.3      31.1

Selling expenses ..............................       6.8       5.9
Research and development ......................       0.7      --
General and administrative expenses ...........      31.6      20.2
Stock based compensation ......................      13.4      --
                                                    -----     -----

   Total operating expenses ...................      52.5      26.2
                                                    -----     -----

Income (loss) from operations .................     (22.2)      4.9

Other income and expense ......................       1.0       0.3
Amortization of deferred finance costs ........      (0.6)     --
Write down of investment ......................      (3.3)     --
Accretion of debt discounts ...................     (39.4)     --
Change in derivative liabilities ..............      23.0      --
Interest expenses - due to parent .............      (1.0)
Interest expense ..............................      (3.9)     (4.9)
                                                    -----     -----
   Total other income (expense) ...............     (24.2)     (4.6)

Income (loss) before provision for income taxes     (45.6)      0.3
   Provision for income taxes .................       0.9       0.1
                                                    -----     -----

Net income (loss) continuing operations .......     (47.3)      0.2
                                                    =====     =====


BUSINESS RISK FACTORS

There are many  important  factors that have  affected,  and in the future could
affect,  the  Company's  business,  including,  but not  limited to the  factors
discussed  below,  which  should  be  reviewed  carefully  together  with  other
information contained in this report. Some of the factors are beyond our control
and future trends are difficult to predict.

Our external  auditors have issued a going concern opinion  raising  substantial
doubt as to the  Company's  ability to  continue  as a going  concern due to the
Company's history of losses, working capital deficiency and cash position, which
conditions could impair the value of the Company's stock.



<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of $6,448,649 for the nine months ended  September 30, 2006. As of September 30,
2006 the Company had $756,659 in cash, and current liabilities  exceeded current
assets by $11,055,761  including $3,620,857 in derivative liability  instruments
(net).  These matters  raise  substantial  doubt about the Company's  ability to
continue as a going concern.

The conversion of our  convertible  debentures,  the exercise of our outstanding
warrants   and   options   and   the   Company's   various   anti-dilution   and
price-protection  agreements could cause the market price of our common stock to
fall, and may have dilutive and other effects on our existing stockholders.

As  of  November  15,  2006,  the  conversion  of  our  outstanding  convertible
debentures,  and the  exercise of our  outstanding  warrants  and options  could
result in the  issuance of  approximately  129 million  shares of common  stock,
assuming all  outstanding  warrants and options are currently  exercisable,  and
taken with the Company's various anti-dilution and price-protection  agreements,
are subject to adjustment pursuant to certain anti-dilution and price-protection
provisions.  Such  issuances  would  reduce the  percentage  of ownership of our
existing common stockholders and could, among other things, depress the price of
our common stock.  This result could  detrimentally  affect our ability to raise
additional equity capital.  In addition,  the sale of these additional shares of
common stock may cause the market price of our stock to decrease.

Our industrial waste management  services subject us to potential  environmental
liability.

Our business of  rendering  services in  connection  with  management  of waste,
including  certain types of hazardous  waste,  subjects us to risks of liability
for damages.  Such  liability  could  involve,  without  limitation,  claims for
clean-up  costs,  personal injury or damage to the environment in cases in which
we are held  responsible for the release of hazardous  materials;  and claims of
employees,  customers,  or third parties for personal  injury or property damage
occurring in the course of our operations.

We could  also be  deemed a  responsible  party  for the  cost of  cleaning  any
property which may be contaminated by hazardous  substances  generated by us and
disposed  at  such  property  or  transported  by us to a site  selected  by us,
including properties we own or lease.

If we cannot  maintain  our  government  permits or cannot  obtain any  required
permits, we may not be able to continue or expand our operations.

Our  business is subject to  extensive,  evolving,  and  increasingly  stringent
federal,  state, and local  environmental  laws and  regulations.  Such federal,
state,  and local  environmental  laws and  regulations  govern  our  activities
regarding the treatment,  storage,  recycling,  disposal,  and transportation of
hazardous and non-hazardous waste. We must obtain and maintain permits, licenses
and/or  approvals to conduct these  activities in compliance  with such laws and
regulations.  Failure to obtain and  maintain  the  required  permits,  licenses
and/or  approvals  would result in an inability to operate certain of our assets
and significantly impair our financial  condition.  If we are unable to maintain
our currently held permits,  licenses, and/or approvals or obtain any additional
permits,  licenses  and/or  approvals  which may be  required  as we expand  our
operations, we may not be able to continue certain of our operations.

Changes in environmental  regulations and enforcement  policies could subject us
to  additional  liability  which could  impair our  ability to continue  certain
operations due to the regulated nature of our operations.

Because the  environmental  industry  continues  to develop  rapidly,  we cannot
predict the extent to which our operations may be affected by future enforcement
policies as applied to existing laws, by changes to current  environmental  laws
and regulations,  or by the enactment of new environmental laws and regulations.
Any  predictions  regarding  possible  liability under such laws are complicated
further by current  environmental  laws which  provide  that we could be liable,
jointly and severally, for certain activities of third parties over whom we have
limited or no control.

As our operations expand, we may be subject to increased  litigation which could
significantly  impair our ability to operate and our future financial results by
causing the Company to expend  significant  amounts of time,  effort,  money and
focus matters not directly related to our operations and expansion.

Our  operations  are regulated by numerous laws  regarding  procedures for waste
treatment,  storage,  recycling,  transportation and disposal activities, all of
which may provide the basis for  litigation  against  us. In recent  years,  the
waste  treatment  industry has  experienced a significant  increase in so-called
"toxic-tort"  litigation as those injured by  contamination  seek to recover for
personal injuries or property damage. We believe that as our operations and
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

activities  expand,  there  will be a  similar  increase  in the  potential  for
litigation  alleging  that we are  responsible  for  contamination  or pollution
caused  by  our  normal  operations,  negligence  or  other  misconduct,  or for
accidents which occur in the course of our business activities. Such litigation,
if significant and not adequately  insured against,  could impair our ability to
fund  our  operations.  Protracted  litigation  would  likely  cause us to spend
significant  amounts  of our time,  effort and money.  This  could  prevent  our
management from focusing on our operations and expansion

If we cannot maintain adequate insurance coverage, we will be unable to continue
certain operations.

Our business exposes us to various risks, including claims for causing damage to
property and injuries to persons who may involve  allegations  of  negligence or
professional errors or omissions in the performance of our services. Such claims
could be  substantial.  We believe  that our  insurance  coverage  is  presently
adequate  and similar to, or greater  than,  the  coverage  maintained  by other
companies  in the industry of our size.  If we are unable to obtain  adequate or
required  insurance coverage in the future or, if our insurance is not available
at  affordable   rates,  we  would  violate  our  permit  conditions  and  other
requirements of the  environmental  laws,  rules and regulations  under which we
operate.  Such  violations  would  render us unable to  continue  certain of our
operations.  These events would result in an inability to operate certain of our
assets and significantly impair our financial condition.

Our operations will suffer if we are unable to manage our rapid growth.

We are  currently  experiencing  a  period  of  rapid  growth  through  internal
expansion and strategic acquisitions. This growth has placed, and could continue
to place, a significant strain on our management, personnel and other resources.
Our  ability to grow will  require us to  effectively  manage our  collaborative
arrangements  and to  continue  to  improve  our  operational,  management,  and
financial systems and controls,  and to successfully train,  motivate and manage
our  employees.  If we are unable to effectively  manage our growth,  we may not
realize the expected  benefits of such growth,  and such failure could result in
lost sales opportunities,  lost business,  difficulties operating our assets and
could therefore significantly impair our financial condition.

We may have difficulty integrating our recent acquisitions into our existing
operations.

Acquisitions  will involve the  integration  of companies  that have  previously
operated independently from us, with focuses on different geographical areas. We
may not be able to fully  integrate the  operations of these  companies  without
encountering difficulties or experiencing the loss of key employees or customers
of such companies.  In addition,  we may not realize the benefits  expected from
such integration.

Key personnel are critical to our business and our future success depends on our
ability to retain them.

Our success depends on the  contributions  of our key management,  environmental
and engineering personnel. The loss of these officers could result in lost sales
opportunities,  lost business,  difficulties operating our assets,  difficulties
raising additional funds and could therefore  significantly impair our financial
condition.  Our future  success  depends on our ability to retain and expand our
staff  of  qualified  personnel,   including  environmental  technicians,  sales
personnel and engineers.  Without  qualified  personnel,  we may incur delays in
rendering our services or be unable to render  certain  services.  We may not be
successful  in our efforts to attract and retain  qualified  personnel  as their
availability is limited due to the demand of hazardous waste management services
and the highly competitive nature of the hazardous waste management industry. We
do not  maintain  key person  insurance  on any of our  employees,  officers  or
directors.

If environmental regulation or enforcement is relaxed, the demand for our
services will decrease.

The demand for our services is substantially dependent upon the public's concern
with, the continuation and proliferation of, the laws and regulations  governing
the treatment,  storage,  recycling, and disposal of hazardous and non-hazardous
waste. A decrease in the level of public concern,  the repeal or modification of
these  laws,  or any  significant  relaxation  of  regulations  relating  to the
treatment,   storage,   recycling,   and  disposal  of  hazardous   waste  would
significantly  reduce the demand for our  services  which  could  result in lost
sales opportunities and lost business,  which could in turn significantly impair
our ability to operate as well as our financial  condition.  We are not aware of
any current federal or state  government or agency efforts in which a moratorium
or  limitation  has been,  or will be, placed upon the creation of new hazardous
waste regulations that would have an adverse effect on us.

GreenShift  Corporation  controls our operations and may not make decisions that
further the best interests of all stockholders.

GreenShift  Corporation,  by reason of its  ownership  of our Series D preferred
stock  determines  who will serve as management  of GS  CleanTech.  As a result,
GreenShift Corporation may exerts a significant degree of influence
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

over our management and affairs and over matters requiring stockholder approval,
including  the  election of  directors  and  approval of  significant  corporate
transactions.  In addition, this concentration of ownership may delay or prevent
a change in control of us and might affect the market price of our common stock,
even when a change in control may be in the best  interest of all  stockholders.
Furthermore,  the interests of GreenShift  Corporation  may not always  coincide
with our interests or the interests of other  stockholders and  accordingly,  it
could  cause us to enter  into  transactions  or  agreements  which we would not
otherwise consider.

Our common stock  qualifies as a "penny stock" under SEC rules which may make it
more difficult for our stockholders to resell their shares of our common stock.

Our common stock trades on the OTC Bulletin Board.  As a result,  the holders of
our  common  stock  may find it more  difficult  to obtain  accurate  quotations
concerning  the market  value of the  stock.  Stockholders  also may  experience
greater difficulties in attempting to sell the stock than if it were listed on a
stock exchange or quoted on the NASDAQ National  Market or the NASDAQ  Small-Cap
Market.  Because our common  stock does not trade on a stock  exchange or on the
NASDAQ National Market or the NASDAQ Small-Cap  Market,  and the market price of
the common stock is less than $5.00 per share,  the common stock  qualifies as a
"penny stock." SEC Rule 15g-9 under the Securities  Exchange Act of 1934 imposes
additional  sales practice  requirements  on  broker-dealers  that recommend the
purchase or sale of penny  stocks to persons  other than those who qualify as an
"established   customer"  or  an  "accredited   investor."   This  includes  the
requirement   that  a   broker-dealer   must   make  a   determination   on  the
appropriateness  of  investments  in penny stocks for the customer and must make
special  disclosures  to the  customer  concerning  the  risks of penny  stocks.
Application  of the penny  stock  rules to our common  stock  affects the market
liquidity of the shares,  which in turn may affect the ability of holders of our
common stock to resell the stock.

The Company is subject to a lawsuit that may affect the value of our stock

The Company is involved in a lawsuit with Kerns Manufacturing  Corporation which
could  substantially  dilute  the value of the GS  CleanTech  stock  (see  Legal
Proceedings, Notes to Consolidated Financial Statements).

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our  consolidated  financial  statements  requires us to make
estimates that affect the reported amounts of assets, liabilities,  revenues and
expenses.  The  following  are the areas that we believe  require  the  greatest
amount of estimates in the preparation of our financial  statements:  allowances
for doubtful  accounts and legal matters.  Prior to the filing of this Quarterly
Report on Form 10QSB,  the Company's  Audit  Committee  reviewed  these critical
accounting policies and estimates and discussed them with our management.

We establish an allowance  for doubtful  accounts to cover  accounts  receivable
that  may  not be  collectible.  In  establishing  the  allowance  for  doubtful
accounts,  we analyze the collectibility of accounts that are large or past due.
In addition,  we consider  historical bad debts and current  economic  trends in
evaluating the allowance for doubtful accounts.  Accounts receivable written off
in  subsequent  periods can differ  materially  from the  allowance for doubtful
accounts provided.

As described more fully in Commitments and Contingencies,  above, we are subject
to  legal  proceedings  which  we have  assumed  in our  consolidation  process.
Accruals are established for legal matters when, in our opinion,  it is probable
that a  liabilities  exists  and  the  liability  can be  reasonably  estimated.
Estimates of the costs associated with dispute  settlement are adjusted as facts
emerge.  Actual expenses  incurred in future periods can differ  materially from
accruals established.

We attempt to make good faith  realistic  estimates in providing  allowances for
assets and recording liabilities.  Our experience has been that overestimates in
one area can occur but are often offset by underestimates in other areas.  While
it is probable in the future that unexpected  events could materially affect the
results of operations of a future  period,  we believe that our risk  management
protocols  would prevent the  occurrence of such an event from having a material
impact on our financial condition.

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 VERSUS THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2005

Revenues

Total revenues were $4.5 million for the three months ended  September 30, 2006,
matching  revenue of $4.5 million for the three months ended September 30, 2005.
Total  revenues for the nine months ended  September 30, 2006 were $13.5 million
corresponding to an increase of $0.7 million, or 5.4% over the nine months ended
September 30,
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

2005 revenues of $12.9 million.  Revenue from discontinued operations of $68,880
and $211,506 for the three and nine months ended  September 2006 and $63,347 and
$283,008  for the three and nine months ended  September  2005 have been removed
from these figures. The Company recorded revenue of $1,607,329 associated with a
large scale  project in the first nine  months of 2005.  Net of this large scale
project, total revenues increased $0.5 million and $2.3 million in the three and
nine months ended  September 30, 2006.  Included in the revenues for nine months
ended  2006  are  revenues  of  439,723  attributable  to the  acquisition  of a
subsidiary in 2006.

Cost of Revenues

Cost of  revenues  for the  three  months  ended  September  30,  2006 were $3.1
million,  or 69.6% of revenue,  as compared to $3.1 million, or 69.4% of revenue
for the same  period  in  2005.  Cost of  revenues  for the  nine  months  ended
September  30,  2006 were $9.4  million,  or 69.7% of revenue  compared  to $8.8
million, or 68.9% of revenue for the same period in 2005. Costs of revenues from
discontinued  operations  of $89,806 and  $286,544 for the three and nine months
ended  September  30, 2006 and  $683,853 and  $2,138,258  for the three and nine
months ended September 30, 2005 have been removed from these figures. The change
in cost of  revenues  over the  first  nine  months is  attributable  to a large
budgeted  lower margin project which occurred in the first six months of 2005 as
well as unfavorable economic factors in 2006 which the company has addressed. In
addition, included in the cost of revenue for nine months ended 2006 is $388,201
or 2.7% of revenue  attributable  to the  acquisition of a subsidiary  (GIDC) in
2006.

Selling, General and Administrative Expenses

Selling,  general  and  administrative  expenses  for  the  three  months  ended
September 30, 2006 were $1.9 million,  or 42.8% of revenue,  as compared to $1.2
million, or 25.6% of revenue for the same period in 2005.  Selling,  general and
administrative  expenses for the nine months ended  September 30, 2006 were $7.1
million,  or 52.5% of revenue compared to $3.4 million,  or 26.2% of revenue for
the same period in 2005.  Included in the nine months ended  September  30, 2006
was $2,249,401 in stock based  compensation or 16.6% of revenue.  In addition to
the stock based  compensation,  increase in selling,  general and administrative
expenses is also due to new acquisitions  acquired in January 2006  representing
$848,347  or 6.3% of  revenue  and July 2006  representing  $414,217  or 3.1% of
revenue.   Selling,   general  and  administrative  expenses  from  discontinued
operations of $0 and $380,282 for 2006 and 2005  respectively  have been removed
from the above figures.

Depreciation and Amortization

Depreciation and amortization  expenses for the three months ended September 30,
2006 was $55,717 or 1.2% of  revenue,  as compared to $52,172 or 1.2% of revenue
for the same period in 2005. Depreciation and amortization expenses for the nine
months ended September 30, 2006 was $170,586 or 1.3% of revenue,  as compared to
$126,335 or 1.0% of revenue for the same  period in 2005.  Depreciation  expense
from  discontinued  operations  of $792 and $5,136 for the three and nine months
ended  September  2006 and  $101,764  and $300,259 for the three and nine months
ended September 2005 have been removed from these figures.

Interest Expense

Interest expense for the three months ended September 30, 2006 was $197,843,  or
4.4% of revenue,  as compared to $207,045 or 4.6% of revenue for the same period
in 2005.  Interest  expenses for the nine months ended  September  30, 2006 were
$524,858, or 3.9% of revenue, as compared to $627,685 or 4.9% of revenue for the
same  period in 2005.  Interest  expense  for the three  and nine  months  ended
September 30, 2006 for  derivatives  in the amount of $1,487,978  and $5,323,704
have been  excluded  from these  figures.  Interest  expense  from  discontinued
operations  for the three and nine months ended  September 30, 200 in the amount
of $2,431 and $9,183 have been  removed  from the above  figures.  In  addition,
interest  expense due to parent was $52,978 and  $126,973 for the three and nine
months ended September 2006.

Net Income or Loss

Net loss from  continuing  operations  for the three months ended  September 30,
2006,  was $(0.1)  million,  or (2.6)% of revenue,  as compared to a profit from
continuing  operations  of $23,060 or 0.5% of  revenue  from the same  period in
2005. Net loss from  continuing  operations for the nine months ended  September
30, 2006,  was $(6.4)  million,  or (47.3)% of revenue,  as compared to a profit
from continuing operations of $34,396 or 0.3% of revenue from the same period in
2005. Net loss from discontinued operations of $34,707 and $41,072 for the three
and nine months ended  September  2006,  and  $3,110,913  and $3,286,436 for the
three and nine months  ended  September  2005 have been  removed  from the above
figures. The net loss realized during the nine period was due primarily to the

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

adjustments  to the fair market value of the derivative  liability  instruments,
interest and  amortization  charges  associated  with  financing and issuance of
stock based compensation.

DEBENTURES DUE TO CORNELL CAPITAL PARTNERS

As of  September  30, 2006 we had three  convertible  debentures  due to Cornell
Capital.  The  conversion  feature  on these  debentures  is  variable  based on
trailing market prices and therefore contains an embedded  derivative.  We value
the conversion feature at the time of issuance using the Black-Scholes Model and
record a note discount and  derivative  liability for the calculated  value.  We
recognize  interest  expense for accretion of the note discount over the term of
the note. The derivative liability is valued at the end of each reporting period
and results in a gain or loss for the change in fair value.  Due to the volatile
nature of our stock,  the change in the  derivative  liability and the resulting
gain or loss is usually material to our results.

The principal amount on our three convertible  debentures due to Cornell Capital
was  $8,493,047 as of September 30, 2006 and the  unamortized  note discount was
$6,086,825.  For the quarter ended  September  30, 2006, we recognized  interest
expense for  accretion  of the debt  discount of  $1,120,985  and a gain for the
change in fair value of the derivative of $1,534,014 for these  debentures.  The
derivative  liability  as of  September  30, 2006 was  $3,429,360  for the three
debentures due to Cornell Capital.

LIQUIDITY AND CAPITAL RESOURCES

Our primary  sources of liquidity are cash provided by operating,  investing and
financing  activities.  For the nine months ended  September 30, 2006,  net cash
used by our  operating  activities  was $4.5 million as compared to the net cash
used by our operating  activities of about  $870,000 as of the nine months ended
September 30, 2005.

The Company's  capital  requirements  consist of general  working capital needs,
scheduled  principal  and  interest  payments on debt,  obligations  and capital
leases and planned capital expenditures. The Company's capital resources consist
primarily of cash generated  from  operations and proceeds from issuance of debt
and common  stock.  The Company's  capital  resources are impacted by changes in
accounts  receivable as a result of revenue  fluctuations,  economic trends, and
collection  activities.  At  September  30,  2006 the  Company had cash of about
$757,000.  This cash  represents a decrease of $2,001,000 from the quarter ended
June 30, 2006.

Cash Flows for the Nine Months Ended September 30, 2006

Our operating  activities during the first nine months of 2006 used $4.5 million
in cash.  Accounts  receivable  at  September  30, 2006,  net of  allowance  for
doubtful  accounts,  totaled $3.2 million as compared to the September 30, 2005,
balance of $3.1 million.  Inventories  at September 30, 2006 totaled 1.8 million
as  compared  to the  September  30,  2005  balance of $0.  Accounts  payable at
September  30, 2006 totaled $3.2 million as compared to the  September 30, 2005,
balance of $2.9  million.  Accrued  expenses at September  30, 2006 totaled $1.8
million as  compared to the  September  30, 2005  balance of $1.6  million.  The
increase in accounts  payable is primarily due to the acquisition of and GSID in
January 2006 GC Clean Tech Ventures in July of 2006. The increase in inventories
is due to the acquisition of GSID in January 2006.

For the nine months ended  September 30, 2006,  we used $355,315 from  investing
activities,  and we provided net cash from  financing of $5.2  million.  We used
these funds to further provide  working  capital for  operations.  Our financing
arrangements  are  discussed  further below in this Item 2 and in more detail in
financing arrangements.

The  Company  had a negative  working  capital  position  of $(11.0)  million at
September 30, 2006 which includes 3.6 million in derivative instruments (net).

STOCKHOLDER MATTERS

Stockholders'  impairment was $5.0 million at September 30, 2006, as compared to
an impairment of $5.0 million of stockholders equity at September 30, 2005.

As of  September,  2006,  the Company did not have  sufficient  shares of common
stock authorized to accommodate  conversion of all outstanding  preferred stock,
options, warrants and convertible debt.

On March 24, 2006, the Company's Board of Directors approved an amendment to the
Company's  Certificate  of  Incorporation.  On March 24,  2006,  the holder of a
majority of the voting  power of the  outstanding  voting stock gave its written
consent to the  amendment.  The  amendment  will be filed and  become  effective
approximately  twenty  days  after  the  Company's  April 27,  2006  Information
Statement is mailed to the shareholders.  The effect of the amendment will be to
increase the number of authorized shares of common stock, $0.001 par value, from
250,000,000 to 500,000,000.
<PAGE>


ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer  participated in
and  supervised  the  evaluation of our  disclosure  controls and procedures (as
defined in Rules 13(a)-15(e) and 15(d)-15(e)  under the Securities  Exchange Act
of 1934,  as amended  (the  "Exchange  Act"))  that are  designed to ensure that
information  required  to be  disclosed  by us in the  reports  that  we file is
recorded,  processed,  summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation,  controls and procedures designed to
ensure that the  information  required to be disclosed by us in the reports that
we  file  or  submit  under  the  Act is  accumulated  and  communicated  to our
management,  including our principal executive officer or officers and principal
financial officer, to allow timely decisions regarding required disclosure.  The
Company's chief executive officer and chief financial  officer  determined that,
as of the  end of  the  period  covered  by  this  report,  these  controls  and
procedures  are  adequate and  effective  in alerting him in a timely  manner to
material  information  relating  to the  Company  required to be included in the
Company's periodic SEC filings.

There was no change in internal controls over financial reporting (as defined in
Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) identified
in connection  with the  evaluation  described in the preceding  paragraph  that
occurred during the Company's third fiscal quarter that has materially  affected
or is reasonably likely to materially affect the Company's internal control over
financial reporting.





<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

The following are exhibits filed as part of the Company's Form 10-QSB for the
period ended September 30, 2006:

Exhibit Number             Description

31.1 Certification  of Chief  Executive  Officer  and  Chief  Financial  Officer
     pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e).

32.1 Certification  of Chief  Executive  Officer  and  Chief  Financial  Officer
     pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to Section 906 of
     the Sarbanes-Oxley Act of 2002.




<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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 on the date indicated.

GS CLEANTECH CORPORATION

By:           /S/       KEVIN KREISLER
              ------------------------
                        KEVIN KREISLER
                        Chairman of the Board, Chief Executive Officer,
                        Chief Financial Officer

Date:                   November 15, 2006