The present invention involves the discovery of a novel endophytic fungus, Muscodor albus, which produces volatile antibiotics that are effective in the treatment of human and animal waste products. Through experimentation, this invention confirms that Muscodor albus can be used in disposable bags in connection with portable toilets to solve the problem of degradation of waste products in situations where humans are removed from sanitary facilities. This invention includes the discovery of non-volatile inhibitors that are also produced by Muscodor albus and that are similarly effective in treating human and animal wastes. This invention covers a unique and novel method for preparing Muscodor albus for commercial use in the treatment of human and animal wastes. This method entails infesting a seed grain with Muscodor albus and then storing it under conditions that will allow the fungus to remain viable.