Forward Looking Statements

The Company is including the following cautionary statement in this Interim Report on Form 10-Q for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. Certain statements contained herein are forward-looking statements and accordingly involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Our expectations, beliefs and projections are expressed in good faith and are believed by us to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties, but there can be no assurance that management's expectation, beliefs or projections will result or be achieved or accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements: technological advances by our competitors, changes in health care reform, including reimbursement programs, changes to regulatory requirements relating to environmental approvals for the treatment of infectious medical waste, capital needs to fund any delays or extensions of development programs, delays in the manufacture of new and existing products by us or third party contractors, market acceptance of our products, the loss of any key employees, delays in obtaining federal, state or local regulatory clearance for new installations and operations, changes in governmental regulations, availability of capital on terms satisfactory to us. We are also subject to numerous Risk Factors relating to manufacturing, regulatory, financial resources and personnel as described in our Annual Report on Form 10-K. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Results of Operations

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Net Revenue

Total revenue for the quarter ended June 30, 2009 was $354,755 compared with $517,955 for the same period in 2008, a reduction of $163,200 or 31.5%.

Revenues derived from the sale of consumables, component parts, service billings and amortization of maintenance contracts increased $167,539 or 89.5% in the current quarter to $354,755. The increase in revenue was attributable to increased billings for goods and services from an increased install base of hospitals that have previously purchased our MedClean system.

In the current quarter, we did not recognize any revenue from system installations. We are currently working on two contracts amounting to approximately $1,246,000. We expect to have these two contracts installed and recognize revenue in the third quarter of 2009. The remaining contracts in backlog have not yet been scheduled.

Gross Profit

The gross profit for the three months ended June 30, 2009 was $128,790 (36.3% of total revenue) compared with a gross margin of $184,471 (35.6% of total revenue) for the same three month period of 2008. Gross profit was impacted by the reduction of revenue and improved margins.

Operating Expenses

Total operating expenses for the three months ended June 30, 2009 was $2,348,784 compared with $859,249 for the same three month period in 2008, an increase of $1,489,535. In the three months ended June 30, 2009, we recognized non-cash amortization expense for stock options issued amounting to $1,738,636 compared to $43,750 in the same three month period of 2008. The increase was due to the amount of new options issued in the quarter. On May 1, 2009, the Company issued options to purchase 461 million shares of MedClean's common stock in consideration of employees accepting no and or reduced compensation for a specified period of time. The option grants as approved by the Compensation Committee were fully vested when issued with an exercise price of $0.004 per share. Additionally, certain employees and business consultants have agreed to no compensation and or reduced compensation for a specified period of time. This action among others to preserve cash has resulted in cash savings amounting to $107,069 in salaries and wages, $151,358 saving in professional fees, $40,011 in insurance costs and $20,325 in travel related costs. These savings were partially offset by expanded facilities costs of $45,975, outsourcing our Information Technology needs by $12,733 and all other operating expenses increased $9,704 net.

Interest Income

Interest income for the quarter was $38 compared with $239 of interest income in the same period of 2008.

Interest Expense and Amortization

Interest expense and amortization for the three month period ended June 30, 2009 was $448,203 compared with $836,081 in the same three month period of 2008. Interest expense for the three month period ended June 30, 2009, was $3,219 on decreased borrowings as compared to $52,593 in the same period of 2008. In the three months ended June 30, 2009, we recognized non-cash amortization expense amounting to $444,984 compared to $783,488 in the same three month period of 2008. The decrease was due to the conversion of debt to common stock as a result of the Master Restructuring Agreement signed on August 4, 2008.

Net loss

Net loss for the current quarter was $(2,668,159) compared to a net loss for the same period in 2008 of $(1,510,620).

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for this period of 2009 was $(2,668,159) or $(0.00) cents per share (basic and diluted), compared to a net loss of $(1,615,620) or $(0.07) cents per share (basic and diluted) for the same period in 2008.

In the three months ended June 30, 2008, the Company accrued $105,000 in dividends with an interest rate of 6% on $7,000,000, the total value received for both series A and B preferred stock. On August 4, 2008, all accrued dividends were settled for the issuance of 42,960,480 shares of common stock.

Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

Net Revenue

Total revenue for the six months ended June 30, 2009 was $772,182 compared with $1,305,981 for the same six month period of 2008.

Revenues derived from the sale of consumables, component parts, service billings and amortization of maintenance contracts more than doubled to $772,182 in the first six months of 2009. The increase in revenue was attributable to increased billings for goods and services from an increased install base of hospitals that have previously purchased our MedClean system.

For the first six months of 2009, we did not recognize any revenue from system installations. As previously mentioned we are currently working on two contracts amounting to approximately $1,246,000 which we expect to have these two contracts installed and recognize revenue in the third quarter of 2009. The remaining contracts in backlog have not yet been scheduled.

Orders for the MedClean system are contracted by purchase order and are billed in 3 increments. Due to the size and off shore location of one active contract we have asked for and received milestone billings for 40% of the contact value at signing, 30% when the equipment is shipped to the customer and 30% upon completion of installation. Consumables and component parts are billed when shipped and service contracts are invoiced at the start of the service period and revenue is pro-rated over the life of the contract.

Gross Profit

The gross profit for the six months ended June 30, 2009 was $273,145 (35.4% of total revenue) compared with a gross profit of $396,899 (32.9% of total revenue) for the same six month period of 2008. Gross profit was impacted by reduced sales and improved margins.

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

Operating Expenses

Total operating expenses for the six month period ended June 30, 2009 were $3,929,274 compared with $1,817,996 for the same six month period of 2008, an increase of $2,111,278. In the six months ended June 30, 2009, we recognized non-cash amortization expense for stock options issued amounting to $2,388,187 compared to $111,372 in the same six month period of 2008. The increase was due to the amount of new options issued in the period. On May 1, 2009, the Company issued options to purchase 461 million shares of MedClean's common stock in consideration of employees accepting no and or reduced compensation for a specified period of time. The option grants as approved by the Compensation Committee were fully vested when issued with a strike price of $0.004 per share. Additionally, plans initiated to preserve cash have resulted in cash savings amounting to $202,975 of professional fees, insurance costs of 56,727 and travel related costs of $31,140. These savings were partially offset by expanded facilities costs of $87,148 and increased marketing efforts of $40,201. All other operating costs decreased by a net $2,044.

Interest (Income) Expense

Interest income for the six months ended June 30, 2009 was $944 compared with $614 of interest income in the same six month period of 2008.

Interest expense and amortization for the six months ended June 30, 2009 was $896,700 compared with $1,613,932 in the same six month period of 2008. Interest expense for the six month period ending June 30, 2009 was $6,733 on decreased borrowings compared to $96,106 of interest expense in the same six months period of 2008. In the six month period ending June 30, 2009 we recognized non-cash amortization expense for warrants issued amounting to $889,967 compared to $1,517,826 in the same six month period of 2008. The decrease was due to conversion of debt to common stock as a result of the Master Restructuring Agreement signed on August 4, 2008.

Net loss

Net loss for the six months ended June 30, 2009 was $(4,551,885) compared to a net loss for the same six month period in 2008 of $(3,034,415).

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for this period of 2009 was $(4,551,885) or $(0.01) cents per share (basic and diluted), compared to a net loss of $(3,244,415) or $(0.07) cents per share (basic and diluted) for the same period in 2008.

During the six months ended June 30, 2008, the Company accrued $210,000 in dividends with an interest rate of 6% on $7,000,000, the total value received for both series A and B preferred stock. On August 4, 2008, all accrued dividends were settled for the issuance of 42,960,480 shares of common stock.

Financial Condition

Liquidity and Capital Resources

The Company's cash on hand and working capital as of June 30, 2009 and December
31, 2008 are as follows:

                                      June 30,       December 31,
                                        2009             2008

                   Cash on hand      $  166,191     $    1,922,401

                   Working capital   $ (626,587 )   $      626,293

The Company has purchased $23,309 in new fixed assets in the first six months of 2009. Under current conditions the Company anticipates purchasing approximately $10,000 in additional fixed assets in 2009.

Net cash used in operating activities totaled $1,732,901 for the six months ended June 30, 2009

Our accounts receivable balance may have dramatic swings from one period to another depending upon the timing and the amount of milestone billings included in the balance at the end of any accounting period. There are three milestone billings representing a percentage of the contract value for each installment and our payment terms are ``upon receipt''. Receivable balances are typically paid within 15 days of the invoice date. Billings for maintenance contracts and consumables are due within 45 days and are more numerous but much smaller in value than milestone billings. We review our outstanding receivable balances on a regular basis to ensure that the allowance for bad debt is adequate. Due to the varying nature in the timing and amounts of the receivable balances as noted above, the change in the allowance for doubtful account will not necessarily correlate with the increase or decrease in the accounts receivable balance. The accounts receivable balance as of June 30, 2009 was $154,579 net of an allowance of $23,081, a decrease of $21,705 from year end.

Our inventory balance may have dramatic swings from one period to another depending upon the expected installation date of our MedClean systems and our accounts payable balances can have similar swings depending on payment terms and any volume purchases or discounts we may take advantage of from time to time. During the six months ended June 30, 2009, the Company increased its inventory on hand by $421,564 to $1,307,915. The increase is due to the completion of the first containerized unit and component parts which has shipped to the intended site but was not installed by June 30, 2009. The accounts payable balance as of June 30, 2009 was $265,959.

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