--------------------------------------------------------------------------------
                       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 JUNE 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 August 21, 2006 was
249,827,813.



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




<PAGE>



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

                                TABLE OF CONTENTS
<CAPTION>


                                                                                                           Page No
<S>               <C>                                                                                          <C>
Part I            Financial Information
Item 1.           Financial Statements (unaudited)...............................................................3
                  Consolidated Balance Sheet - June 30, 2006 (unaudited).........................................4
                  Consolidated Statements of Operations - for the Six Months Ended June 30, 2006 (unaudited)
                  and 2005 (unaudited)...........................................................................5
                  Consolidated Statements of Cash Flows - for the Six Months Ended June 30, 2006 (unaudited) and
                  2005 (unaudited)...............................................................................6
                  Notes to Consolidated Financial Statements.....................................................8
Item 2.           Management's Discussion and Analysis or Plan of Operation.....................................19
Item 3.           Controls and Procedures.......................................................................26

Part II           Other Information
Item 1.           Legal Proceedings.............................................................................27
Item 2.           Changes in Securities.........................................................................27
Item 3.           Defaults Upon Senior Securities...............................................................27
Item 4.           Submission of Matters to a Vote of Security Holders...........................................27
Item 5.           Other Information ............................................................................27
Item 6.           Exhibits and Reports on Form 8K...............................................................27

Signatures                                                                                                      28
</TABLE>



<PAGE>


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


<PAGE>

<TABLE>

     GS CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                            JUNE 30, 2006 (UNAUDITED)

<CAPTION>

ASSETS:                                                                 6/30/06
                                                                     ------------
Current assets:
<S>                                                                  <C>
   Cash ..........................................................   $  2,758,142
   Loans receivable-affiliate ....................................         48,739
   Accounts receivable, net ......................................      2,635,458
   Miscellaneous receivable ......................................          3,000
   Inventories ...................................................      1,783,871
Prepaid expenses and other current assets ........................         85,128
                                                                     ------------
           Total current assets ..................................      7,314,338

Property and equipment, net ......................................      1,317,933

Other Assets:
   Deposits ......................................................        104,297
   Permits, net ..................................................        184,071
   Deferred financing costs, net .................................        417,083
   Assets of discontinued operations .............................          7,500
   Goodwill ......................................................      4,010,303
                                                                     ------------
       Total other assets ........................................      4,723,254
                                                                     ------------

TOTAL ASSETS .....................................................   $ 13,355,525
                                                                     ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Short term borrowings .........................................   $     17,875
   Short term borrowings - related party .........................      1,182,313
   Accounts payable ..............................................      3,475,952
   Accrued expenses ..............................................        988,524
   Current maturities of long-term debt ..........................        214,971
   Billings in excess of earnings ................................        147,708
   Current portion of convertible debentures, net of discount ....        143,166
   Current convertible debentures - related party, net of discount        402,428
   Liability for derivative instruments ..........................      7,414,236
   Liabilities of discontinued operations, net of current ........        561,592
                                                                     ------------
       Total current liabilities .................................     14,548,765

Long-term debt, net of current maturities ........................        309,167
Convertible debentures, net of current portion and net of discount        366,667
                                                                     ------------
       Total long term liabilities: ..............................        675,834
                                                                     ------------

       Total liabilities: ........................................     15,224,599

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 ...........          1,254
     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 ................        249,828

   Additional paid-in capital ....................................     50,297,654
   Accumulated deficit ...........................................    (53,194,249)
                                                                     ------------
       Total stockholders' equity ................................     (2,644,074)
                                                                     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................   $ 13,355,525
                                                                     ============

       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 SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)

<CAPTION>

                                                      For the three months ending     For the six months ending
                                                  -----------------------------------------------------------------
                                                      6/30/06           6/30/05          6/30/06     6/30/05
                                                  -----------------------------------------------------------------

<S>                                               <C>              <C>              <C>              <C>
Revenues: .....................................   $   3,703,542    $   3,122,395    $   6,878,467    $   6,657,043
   Cost of revenues ...........................       2,777,378        2,111,653        5,177,467        4,823,272
                                                  -------------    -------------    -------------    -------------
Gross profit ..................................         926,164        1,010,742        1,697,000        1,833,771

Operating expenses:
  Selling expenses ............................         326,388          261,550          607,245          501,977
  Stock based compensation ....................         148,625             --          1,668,625             --
  Research and development ....................            --               --             34,945             --
  General and administrative ..................       1,028,215          578,435        2,138,600        1,132,161
                                                  -------------    -------------    -------------    -------------
Total operating expenses ......................       1,503,228          839,985          4,449,4        1,634,138

Operating (loss) income .......................        (577,088)         170,757       (2,748,439)         199,633

Other income (expense):
  Miscellaneous income ........................             269            6,378            1,294           16,491
  Gain on forgiveness of interest expense .....           6,245             --            125,485             --
  Gain/Loss on equipment disposal .............         (46,255)          10,435          (40,802)          12,271
  Amortization of deferred financing costs ....            --            (37,916)            --
                                                                                                           (37,916)
  Change in value of derivative instruments ...      (1,685,490)            --         (3,390,053)            --
  Interest expense ............................        (177,669)        (169,654)        (324,362)        (332,151)
                                                  -------------    -------------    -------------    -------------
    Total other income (expense), net .........      (1,940,793)        (152,841)      (3,666,354)        (303,389)

Income/Loss before provision for income taxes .      (2,517,881)          17,916       (6,414,793)        (103,756)
Provision for income tax, net .................            --            (13,534)          (4,309)         (13,847)
-----------------------------------------------   -------------    -------------    -------------    -------------
Income/Loss from continuing operations ........   $  (2,517,881)   $       4,382    $  (6,419,102)   $    (117,603)
                                                  =============    =============    =============    =============

Discontinued operations:

Income (loss) from discontinued operations ....   $      (1,729)   $    (111,526)   $     (11,053)   $    (218,825)
   Gain on disposal, discontinued operations ..          28,469            3,042           34,469            3,042
                                                  -------------    -------------    -------------    -------------
                           Total discontinued .          26,740         (108,484)          23,416         (215,783)
                                                  -------------    -------------    -------------    -------------
operations
Net Loss ......................................   $  (2,491,141)   $    (104,102)   $  (6,399,687)   $    (333,386)
Preferred Dividends ...........................            --               --      $    (681,594)            --

Net loss attributable to shareholders .........   $  (2,491,141)   $    (104,103)   $  (7,081,281)   $    (333,386)

Basic loss attributable to common shareholders,   $       (0.01)   $       (0.00)   $       (0.04)   $       (0.00)
continuing operations .........................
Basic loss attributable to common shareholders,   $       (0.00)   $       (0.00)   $       (0.00)   $       (0.00)
discontinued operations
Basic loss attributable to common shareholders,   $       (0.01)   $       (0.00)   $       (0.04)   $       (0.00)
net
Weighted average shares of common stock .......     241,561,185       44,295,053      196,180,731       44,295,053
outstanding basic and dilutive

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

<PAGE>

<TABLE>
      CLEANTECH CORPORATION (F/K/A/ VERIDIUM CORPORATION) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
                          AND JUNE 30, 2005 (UNAUDITED)

<CAPTION>

                                                                         6/30/06            6/30/05
                                                                       --------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                     <C>            <C>
Net loss ............................................................   $(6,399,687)   $  (333,386)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
   Interest and fees paid through financing activities ..............          --           59,202
   Depreciation and amortization ....................................       107,936         79,862
   Bad debt recovery                                                        (13,854)          --
   Stock-based compensation                                               2,249,400       143,160
   Change in net assets of discontinued operations ..................      (311,403)        (8,901)
   Loss on disposal of fixed assets .................................        40,802          3,042
    Gain on forgiveness of debt                                            (125,485)       (67,197)
   Amortization of deferred finance costs ...........................       (37,917)          --
   Amortization of BCF - related party ..............................        10,082           --
   Change in fair value of derivative instruments ...................      (445,673)          --
   Accretion of debt discounts ......................................     3,835,726           --

   Changes in assets and liabilities,
     (Increase) in accounts receivable ..............................      (445,221)      (173,496)
     Billing in excess of earnings ..................................       147,708           --
     (Increase) decrease in inventories .............................    (1,783,871)         3,627
     (Increase) in other receivable .................................        (3,000)          --
     Decrease (increase) in prepaid expenses and other current assets        87,254        (54,008)
        Increase in accounts payable ................................     1,765,282         95,620

        (Decrease) increase in accrued expenses .....................      (517,110)       165,650
                                                                           ---------       -------
       Net cash (used in) provided by operating activities ..........    (2,013,968)       (86,825)
                                                                          ----------       -------

CASH FLOWS FROM INVESTING ACTIVITIES

   Deposits .........................................................          --          (88,799)
   Permits ..........................................................          --          (38,841)
    Restricted  cash released from restrictions                              29,254           --
   Loans to affiliates ..............................................       (48,739)          --
   Proceeds from sales of fixed assets ..............................          --            3,042
   Additions to and acquisition of property, plant and equipment ....          --         (135,440)
                                                                           ---------      -------

       Net cash used in investing activities ........................       (19,485)      (260,038)
                                                                           ---------       -------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds from convertible debenture, net of financing costs ......     4,224,787           --
    Repayment of convertible debentures .............................       (58,161)          --
    Net proceeds from short term borrowings - related party .........       466,123           --
    Repayment of short-term borrowings ..............................        (4,536)      (173,992)
   Repayment of long-term debt, net .................................       (70,746)      (321,990)
   Repayment of term financing ......................................       (50,000)      (100,000)
   Conversion of minority interest                                          (50,000)           --
   Collection of stock subscription receivable ......................          --          175,000
   Purchase of treasury stock .......................................          --         (340,624)
   Proceeds from sale of common stock ...............................          --           75,000
                                                                           --------        -------
       Net cash (used in) provided by financing activities ..........     4,457,467       (686,606)

(Decrease) Increase in cash .........................................     2,424,014     (1,033,469)

Cash at beginning of period .........................................       334,128      1,096,327
                                                                          ---------         -------

Cash at end of period ...............................................   $ 2,758,142    $    62,858
                                                                         ==========        =======
</TABLE>

<PAGE>

<TABLE>

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

                                                                                 6/30/06            6/30/05
                                                                          ----------------------------------

Supplemental Disclosure of cash flow information
<S>                                                                        <C>               <C>
Cash paid during the period for Interest                                   $     439,890     $     55,770
Supplemental disclosure of non-cash investing and financing activities:
   Equity issued for interest payment                                              --                --
   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                                            41,411               --

Acquisition 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  $6,399,687  for the six months ended June 30, 2006.  As of June 30, 2006 the
Company had $2,758,142 in cash, and current liabilities  exceeded current assets
by $7,234,427  including  $7,414,236 in  derivative  liabilities.  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 NEW ACCOUNTING POLICIES

REVENUE RECOGNITION - GS INDUSTRIAL DESIGN, INC.

Fixed  Price  Contract  revenue is  recognized  on the  percentage-of-completion
method in the ratio that costs  incurred bear to estimated  costs at completion.
Costs include all direct material and labor costs,  and indirect costs,  such as
supplies,  tools, repairs and depreciation.  Selling, general and administrative
costs are charged to expense as incurred.  Profits on short term  contracts  are
recorded upon substantial completion of the contract.  Other revenue is recorded
on the basis of performance of services or shipment of products.

The asset  "costs and  estimated  earnings in excess of billings on  uncompleted
contracts"  represents  revenues  recognized in excess of amounts invoiced.  The
liability  "billings in excess of costs and  estimated  earnings on  uncompleted
contracts" represents invoices 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 - GS INDUSTRIAL DESIGN, INC.

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.

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

<PAGE>

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

4        STOCKHOLDERS EQUITY (CONTINUED)

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 September 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.


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.

<PAGE>


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


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 June 30, 2006 is as
follows:
                                                        Weighted
                                   Number of Shares      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 June 30, 2006 ...    49,700,427       $   0.12

STOCK ISSUANCES

During the second  quarter of 2006,  various  common  stock  issuances  for debt
repayments and conversions  were as follows:  2,000,000  shares issued to settle
debt  amounting  to  $162,000;  and  54,221,993  shares  were  issued  for  debt
conversions amounting to $1,310,900.

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 June 30, 2006, the Company repaid  $257,810 of the
short  term  loans  due to  Greenshift  leaving a  balance  at June 30,  2006 of
$1,462,509  including a debenture issued to GreenShift in the amount of $280,196
in 2005. Interest in the amount of $83,682 was accrued on the short term note 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.

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.

<PAGE>


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


5        RELATED PARTY TRANSACTIONS (CONTINUED)

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.



6        FINANCING ARRANGEMENTS

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

                                                                 6/30/06
                                                               ------------
Short-term borrowings
Vendor composition plans ...................................   $    17,875
Short term loans - Greenshift ..............................     1,182,313
                                                               -----------
     Total short term borrowings ...........................   $ 1,200,188

Current maturities of long-term debt:
   Term financing ..........................................        50,000
    Vehicle loans and other current obligations ............       164,971
                                                               -----------
     Total current maturities of long-term debt ............   $   214,971

Current portion of convertible debentures:
   Cornell Capital convertible debenture (April 21, 2006) ..   $ 2,102,147
   Convertible debenture - related party ...................       280,196
   Convertible promissory note - Berger ....................        19,840
   Convertible debenture - Serenity Capital, LLC ...........       300,000
   Convertible debenture - Cyrus Capital, LLC ..............       100,000
     Total Note Discounts ..................................    (2,256,589)
                                                               -----------
             Total current portion of convertible debentures   $   545,594

   Long-term debt:
   Vehicle loans and other current obligations .............       309,167

Convertible debentures, non-current
   Cornell Capital convertible debenture (April 13, 2006) ..     4,400,000
   Note Discount ...........................................    (4,033,333)
                                                               -----------
     Total convertible debentures, non-current .............   $   366,667



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

Year                                                         Amount
----                                                     -------------
2006 - 2007                                              $   4,217,342
2007 - 2008                                                    107,700
2008 - 2009                                                  4,499,623
2009 - 2010                                                     76,687
2010 - 2011                                                     25,157
                                                          -------------

Total minimum payments due under current
  and long-term obligations                              $   8,926,509
                                                         =============
<PAGE>

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

6        FINANCING ARRANGEMENTS (CONTINUED)

SHORT TERM BORROWINGS

During the three months ended June 30, 2006, the Company repaid  $257,810 of the
short  term  loans  due to  Greenshift  leaving a  balance  at June 30,  2006 of
$1,462,509  including a debenture issued to GreenShift in the amount of $280,196
in 2005.  Interest in the amount of $83,682 is accrued on the short term note 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.

TERM FINANCING

The Company has certain term financing totaling $50,000 as of June 30, 2006. The
balance of $50,000 was due and payable in March 2006. This obligation is secured
by a first  mortgage  interest  in the  Company's  Massachusetts  property.  The
Company is currently in default of this obligation.

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  second  quarter  2006  Serenity   effected
conversions  totaling $100,000 into a total of 5,000,000 shares of the Company's
common stock,  and the principal  amount due on the debenture was $300,000 as of
June 30, 2006. Interest expense from accretion of the debt discount was $158,593
and loss on the fair market value of the  derivative  liability was $138,300 for
the quarter  ended June 30, 2006. As of June 30, 2006 the  derivative  liability
for debentures due to Serenity was $1,100,700.  Interest is accrued at a rate of
5% on the principal balance.  As of June 30, 2006, $4,083 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 second quarter 2006, Cyrus effected  additional
conversions  totaling $120,000 into a total of 6,000,000 shares of the Company's
common stock,  and the principal  amount due on the debenture was $100,000 as of
June 30, 2006. Interest expense from accretion of the debt discount was $131,544
and gain on the fair market value of the  derivative  liability was $162,420 for
the quarter  ended June 30, 2006. As of June 30, 2006 the  derivative  liability
for debentures due to Cyrus was $366,900. Interest is accrued at a rate of 5% on
the  principal  balance.  As of June 30, 2006,  $2,131 of interest is accrued on
this debenture. Cyrus is owned by a family member of the Company's chairman.

In February 2006, Seaway Valley Fund, LLC,  purchased  $500,000 in debt from GCS
Investments.  The conversion  feature on the debenture due to Seaway 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 second quarter 2006,  Seaway Valley  effected
conversions totaling $200,000 into a total of 10,000,000 shares of the Company's
common stock.  Interest expense from accretion of the debt discount was $181,569
and gain on the fair market value of the  derivative  liability was $481,200 for
the quarter  ended June 30,  2006.  Interest  was accrued at a rate of 5% on the
principal balance.  As of June 30, 2006, accrued interest of $1,083 was forgiven
and the debenture due to Seaway Valley was fully converted.

In February 2006, Hudson Capital Partners,  LLC, purchased $500,000 in debt from
GCS  Investments.  The  conversion  feature  on the  debenture  due to Hudson is
variable based on trailing market prices and contains an embedded derivative.  A
note discount of $500,000 and a derivative liability of $1,751,000 were recorded
at the  assumption  date.  During  the  second  quarter  2006,  Hudson  effected
conversions totaling $300,000 into a total of 15,000,000 shares of the Company's
common stock.  Interest expense from accretion of the debt discount was $282,622
and gain on the fair market value of the  derivative  liability was $766,800 for
the quarter  ended June 30,  2006.  Interest  was accrued at a rate of 5% on the
principal balance.  As of June 30, 2006, accrued interest of $1,208 was forgiven
and the debenture due to Hudson Capital Partners, LLC was fully converted.

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



6        FINANCING ARRANGEMENTS (CONTINUED)

In March 2006,  Highgate  House Funds,  Ltd.  purchased a total of $1,500,000 of
GCS'  convertible  debentures in the Company  directly from GCS. The  conversion
feature on the debentures  due to Cornell is variable  based on trailing  market
prices and contains an embedded derivative.  A note discount of $1,016,000 and a
derivative  liability of $1,016,000 were recorded at the assumption date. During
the second quarter 2006, Highgate effected  conversions totaling $500,000 into a
total of 15,221,993 shares of the Company's common stock.  Interest expense from
accretion of the debt discount was $336,792 and gain on the fair market value of
the  derivative  liability  was  $297,000  for the quarter  ended June 30, 2006.
Interest was accrued at a rate of 5% on the  principal  balance.  As of June 30,
2006,  accrued interest of $4,132 was forgiven and the debenture due to Highgate
was fully converted.

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.  Interest  expense  from
accretion of the debt discount was $366,667 and gain on the fair market value of
the derivative liability was $10,968,188 for the quarter ended June 30, 2006. As
of June 30,  2006 the  derivative  liability  for the  debenture  due to Cornell
Capital Partners, LP was $3,989,920.

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.  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 $214,226
and gain on the fair market value of the  derivative  liability was  $16,699,597
for the  quarter  ended  June  30,  2006.  As of June 30,  2006  the  derivative
liability for the debenture due to Cornell Capital Partners, LP (April 21, 2006)
was $1,745,118.

<PAGE>


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

6        FINANCING ARRANGEMENTS (CONTINUED)

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. Interest expense of
$5,041 in the quarter ended June 30, 2006 has been recorded.  A total of $10,082
has been recorded based on the amortization of the discount in 2006.  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.

7        SEGMENT INFORMATION

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

                               Environmental Services  Process Engineering    Total
                               ----------------------------------------------------
For the three months ended June 30:
-----------------------------------
 Revenue
<S>                                <C>                 <C>                 <C>
  2006                             $3,586,550          $  116,992          $3,703,542
  2005                              3,122,395                  --           3,122,395

   Operating Income
  2006                              (209,309)           (369,779)           (577,088)
  2005                                170,757                  --             170,757


For the six months ended June 30:
--------------------------------
   Revenue
  2006                             $6,686,331          $  192,316          $6,878,647
  2005                              6,657,043                  --           6,657,043

   Operating Income
  2006                             (2,071,369)          (677,070)          (2,748,439)
  2005                                199,633                  --             199,633

   Total Assets
  2006                              8,846,310           4,509,215          13,355,525
  2005                              9,479,023                  --           9,479,023
</TABLE>

<PAGE>

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

8        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".

ACQUISITIONS - 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)

9         DISCONTINUED OPERATIONS

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. The
results of the recycling business are recorded as discontinued operations, of
which the components are as follows:

<TABLE>
<CAPTION>
                                                              June 30, 2006  June 30, 2005
                                                              -------------  -------------
 <S>                                                             <C>            <C>
Net revenues ................................................   $     353      $ 888,521
Cost of revenues ............................................       8,620        909,641
                                                                ---------      ---------
           Gross profit .....................................      (8,267)       (21,120)

Selling, general and administrative expense .................        --          197,078
                                                                ---------      ---------
           Total ............................................   $    --        $ 197,078

Loss from operations ........................................      (8,267)      (218,198)

Interest  expense ...........................................   $    (249)     $  (7,765)
Other income and expenses ...................................        --            6,179
                                                                ---------      ---------
           Total ............................................        (249)        (1,586)

Loss before provision for income taxes ......................   $  (8,516)     $(219,784)

Total provision for tax .....................................       2,537           --
                                                                ---------      ---------
           Net loss from discontinued operations ............   $ (11,053)     $(219,784)
                  Gain on disposal of discontinued operations      34,469          3,041
                                                                ---------      ---------
                   Total - discontinued operations ..........   $  23,416      $(222,825)
</TABLE>

The results presented above for 2006 and 2005 include the operating activity for
the recycling  operation for the 6 month period.  Assets and  liabilities of the
recycling business were reported as net assets and net liabilities  (current and
net of current) of discontinued operations at June 30, 2006.

           Assets and liabilities of discontinued operations as of June 30, 2006
are as follows:

Assets of discontinued operations:
        Deposits                                                $      7,500

Current liabilities of discontinued operations:
     Accounts payable                                           $     314,859
       Accrued and other liabilities                                  246,733
                                                                -------------
Total current liabilities of discontinued operations            $     561,592

<PAGE>


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

10       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  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 has 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 is  cooperating  fully in the  investigation.  On July 27,
2006,  the  Company  was  notified  that  the U.S.  Department  of  Justice  has
officially dropped 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 June 30,  2006,  the
Company has a reserve $247,000 to cover the balance of assessed  penalties.  The
Company may not have the funds available to settle the case,  which could impact
continuing operations.

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.

<PAGE>


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


11        SUBSEQUENT EVENTS

ACQUISITIONS

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 following pro forma results for the six months ending June 30, 2006 are
presented as if the acquisitions were made on January 1, 2006:

                                    For the 6 months ending June, 30
                                        2006              2005
                                        ----             -----

Net Sales                           $ 9,019,807      $8,834,087

Net Loss                             (2,318,248)        430,743

Net Loss per Share                  $     (0.02)    $      0.01

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 AND 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 Aerogel Composite,  Inc. (about 25%), 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 3% of our  revenue
during the three months ended June 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 AND PLAN OF OPERATION

GS EnviroServices

The  remainder  of our  revenues,  or about 97% of our revenue  during the three
months ended June 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.
<TABLE>
<CAPTION>

                                                    Percentage of Total Revenues For the Period Ended,
                                                    ---------------------------------------------------
                                                                     6/30/06                   6/30/05
<S>                                                                    <C>                      <C>
Revenue                                                                100.0%                   100.0%
Cost of revenue                                                          75.3                     72.5
                                                                  -----------               ----------
   Gross profit                                                          24.7                     27.5

Selling expenses                                                          8.8                      7.5
General and administrative expenses                                      31.6                     17.0
Stock based compensation                                                 24.3                      0.0
                                                                  -----------               ----------

   Total operating expenses                                              64.7                     24.5
                                                                  -----------               ----------

Income (loss) from operations                                          (40.0)                      3.0
her income and expense                                                   0.6                       0.4
Accretion of debt discounts                                            (55.7)                       --
Change in derivative liabilities                                         6.5                        --
Interest expense                                                        (4.7)                    (4.9)
                                                                   -----------               ----------

   Total other income (expense)                                        (53.3)                    (4.5)

Income (loss) before provision for income taxes                        (93.3)                    (1.5)
   Provision for income taxes                                            --                      0.2
                                                                   -----------               ----------
Net (loss) continuing operations                                       (93.3)                    (1.7)
                                                                   ===========               ==========

</TABLE>



<PAGE>


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

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.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of  $6,399,687  for the six months ended June 30, 2006.  As of June 30, 2006 the
Company had $2,758,142 in cash, and current liabilities  exceeded current assets
by $7,234,427  including  $7,414,236 in  derivative  liabilities.  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 August 9, 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.





<PAGE>


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

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
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.

<PAGE>

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

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  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 GrenShift 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).



<PAGE>

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

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.

SIX MONTHS ENDED JUNE 30, 2006 VERSUS THE SIX MONTHS ENDED JUNE 30, 2005

Revenues

Total  revenues  were $3.7  million for the three  months  ended June 30,  2006,
corresponding  to an increase of $0.6 million,  or 18.7%,  over the three months
ended June 30, 2005 revenues of $3.1 million.  Total revenues for the six months
ended June 30,  2006 were $6.9  million  corresponding  to an  increase  of $0.2
million,  or 3.3% more than the six months ended June 30, 2005  revenues of $6.7
million.  Revenue from discontinued  operations of $449,750 and $888,521 for the
three and six months ended June 2005 has been removed  from these  figures.  The
change in revenues over the first six months is  attributable to one large scale
project  conducted  in the first six  months of 2005.  Net of this  large  scale
project, total revenues increased $0.2 million and $1.5 million in the three and
six months  ended June 30,  2006.  The  increase in revenue is  attributable  to
acquisitions acquired in June 2005 and January 2006.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2006 were $2.8 million,  or
75% of revenue,  as compared to $2.1  million,  or 67.6% of revenue for the same
period in 2005.  Cost of  revenues  for the six months  ended June 30, 2006 were
$5.2 million,  or 75.2% of revenue compared to $4.8 million, or 72.4% of revenue
for the same period in 2005. Costs of revenues from  discontinued  operations of
$477,167 and 909,641 for the three and six months ended June 30, 2005 and $6,549
and $8,620 for the three and six months  ended June 30,  2006 have been  removed
from these figures.  The change in cost of revenues over the first six months is
attributable  to a large  budgeted  lower margin  project which  occurred in the
first six months of 2005.  Net of this large scale  project cost of revenues for
the three  months  ended June 30,  2005 were $2.0  million or 67% of revenue and
$3.9 million or 69% of revenue the six months  ended June 30, 2005.  Increase in
costs of revenues in 2006 was largely due to unfavorable  economic factors which
the company has addressed.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30,
2006 were $1.5 million,  or 40.6% of revenue,  as compared to $0.8  million,  or
26.9%  of  revenue   for  the  same  period  in  2005.   Selling,   general  and
administrative  expenses  for the six  months  ended  June 30,  2006  were  $4.4
million, or 64.7% of revenue compared to $1.6 million, or 25% of revenue for the
same  period  in 2005.  Included  in the six  months  ended  June  30,  2006 was
$1,668,625 in stock based compensation or 24.3% of revenue. Increase in selling,
general and administrative  expenses is due to new acquisitions acquired in June
2005 and  January  2006.  Selling,  general  and  administrative  expenses  from
discontinued  operations of $0 and $197,078 for 2006 and 2005  respectively have
been removed from the above figures.



<PAGE>

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

Depreciation and Amortization

Depreciation and amortization  expenses for the three months ended June 30, 2006
was  $58,811 or 1.6% of  revenue,  as compared to $46,322 or 1.5% of revenue for
the same period in 2005.  Depreciation  and  amortization  expenses  for the six
months  ended June 30,  2006 was  $117,867  or 1.7% of  revenue,  as compared to
$79,862 or 1.2% of revenue  for the same  period in 2005.  Depreciation  expense
from  discontinued  operations  of $97,195  and  $138,095  for the three and six
months ended June 2005 have been removed from these figures.

Interest Expense

Interest expense for the three months ended June 30, 2006 was $178,000,  or 4.7%
of  revenue,  as  compared to $170,000 or 5.3% of revenue for the same period in
2005. Interest expenses for the six months ended June 30, 2006 were $324,400, or
4.7% of revenue, as compared to $332,000, or 4.8% of revenue for the same period
in 2005.  Interest  expense for the three and six months ended June 30, 2006 for
derivatives in the amount of $1,672,013  and $3,835,726  have been excluded from
these figures.  Interest expense from discontinued  operations for the three and
six months  ended June 30, 2006 in the amount of $4,767 and $10,807 in 2005 have
been removed from the above figures.

Net Income or Loss

Net loss from  continuing  operations  for the three months ended June 30, 2006,
was $2.5 million, or (68.0)% of revenue, as compared to a profit from continuing
operations  of $4,400 or 0.1% of revenue from the same period in 2005.  Net loss
from  continuing  operations  for the six months ended June 30,  2006,  was $6.4
million, or (93.3)% of revenue, as compared to a loss from continuing operations
of $117,000,  or (1.7) % of revenue from the same period in 2005.  Net loss from
discontinued  operations  of $108,500  and $215,800 for the three and six months
ended  June 30,  2005 have been  removed  from the above  figures.  The net loss
realized  during the period was due  primarily  to the  adjustments  to the fair
market value of the derivative liability instruments and issuance of stock based
compensation.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary  sources of liquidity are cash provided by operating,  investing and
financing activities,  and availability under our various credit facilities. For
the six months ended June 30, 2006,  net cash used by our  operating  activities
was $2.0 million as compared to the net cash used by our operating activities of
about $87,000 as of the six months ended June 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  June  30,  2006  the  Company  had  cash  of  about
$2,758,000.  This cash  represents  an increase of  $2,594,000  from the quarter
ended March 31, 2006.

Cash Flows for the Six Months Ended June 30, 2006

Our  operating  activities  during the first  quarter  2006 used $2.0 million in
cash.  Accounts  receivable  at June 30,  2006,  net of  allowance  for doubtful
accounts, totaled $2.6 million as compared to the June 30, 2005, balance of $2.5
million.  Inventories  at June 30,  2006  totaled 1.8 million as compared to the
June 30, 2005  balance of $0.  Accounts  payable at June 30, 2006  totaled  $3.5
million as  compared  to the June 30,  2005,  balance of $2.0  million.  Accrued
expenses at June 30, 2006  totaled $1.0 million as compared to the June 30, 2005
balance of $1.0  million.  The increase in accounts  payable is primarily due to
the NCES  acquisition  in May 2005 and GSID in January  2006.  The  increase  in
inventories is due to the acquisition of GSID in January 2006.

For  the six  months  ended  June  30,  2006,  we used  $20,000  from  investing
activities,  and we provided net cash from  financing of $4.5  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 $7.2 million at June 30,
2006.


<PAGE>

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

STOCKHOLDER MATTERS

Stockholders'  impairment  was $2.6 million at June 30, 2006,  as compared to an
impairment of $4.4 million of stockholders equity at June 30, 2005.

As of June,  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.

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our principal  executive officer and principal  financial and accounting 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 second 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

During the three  months  ended June 30,  2006,  Serenity  Capital,  LLC,  Cyrus
Capital,  LLC, Seaway Valley Fund, LLC, Hudson Capital  Partners,  LLC, Highgate
House  Funds,  Ltd.,  and  Cornell  Capital  Partners,  LP  converted a total of
$1,472,900 of debt and interest into 56,221,993  shares of the Company's  common
stock.  Each  of the  issuances  was  exempt  pursuant  to  Section  4(2) of the
Securities Act since the issuance was not made in a public offering and was made
to an entity  whose  principals  had access to  detailed  information  about the
Company and which was  acquiring  the shares for its own  account.  There was no
underwriter.

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 June 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:                   August 21, 2006