Greenshift Corp – ‘10KSB’ for 12/31/07

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Greenshift Form 10-Ksb                               104    673K 
 3: EX-31       E. Carroll Certification                               2±     9K 
 2: EX-31       K. Kreisler Certification                              2±     9K 
 4: EX-32       Certification of Report                                1      6K 

10KSB   —   Greenshift Form 10-Ksb
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

 FORM 10-KSB
 -------------------------

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

COMMISSION FILE NO.: 0-50469

GREENSHIFT 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 whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act__.                                                 

Securities registered pursuant to Section 12(b) of the Act: None.               

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
par value.                                                                      

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 __.                                                              

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form. (_X_).                                                  

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes__ No X.                                    

State issuer's revenues for its most recent fiscal year: $29,966,451            

The number of  outstanding  shares of common stock and value of the voting stock
held by non-affiliates of the Registrant as of April 4, 2008 were 66,200,526 and
$7,944,063, respectively.                                                       

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GREENSHIFT CORPORATION
 ANNUAL REPORT ON FORM 10KSB
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

                                                        [Enlarge/Download Table]
                                TABLE OF CONTENTS                                                              



                                                                                                        Page No
Part I                                                                                                         
                                                                                                               
Item 1      Description of Business .........................................................................4 
Item 1A     Risk Factors....................................................................................24 
Item 2      Description of Properties.......................................................................35 
Item 3      Legal Proceedings...............................................................................35 
Item 4      Submission of Matters to a Vote of Security Holders ............................................35 

Part II                                                                                                        
Item 5      Market for Registrant's Common Equity and Related Stockholder Matters ..........................36 
Item 6      Management's Discussion and Analysis............................................................37 
Item 7      Financial Statements ...........................................................................45 
Item 8      Changes and Disagreements with Accountants on Accounting and Financial Disclosure ..............96 
Item 8A     Controls and Procedures ........................................................................96 

Part III                                                                                                       
Item 9     Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance      
           with Section 16(a) of the Exchange Act   ........................................................98 
Item 10    Executive Compensation .........................................................................100 
Item 11    Security Ownership of Certain Beneficial Owners and Related Stockholder Matters ................101 
Item 12    Certain Relationships and Related Transactions and Director Independence .......................101 

Part IV                                                                                                        
Item 13     Exhibits ......................................................................................103 
Item 14     Principal Accountant Fees and Services ........................................................104 

Signatures                                                                                                     


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PART I

Basis of Presentation                                                           

In this Annual Report on Form 10-KSB, the terms "we," "our," "us," "GreenShift,"
or  the  "Company"   refer  to  GreenShift   Corporation   (f/k/a  GS  CleanTech
Corporation), and its subsidiaries on a consolidated basis. The term "GreenShift
Corporation"  refers to GreenShift  Corporation on a stand alone basis only, and
not its subsidiaries.                                                           

Market and Industry Data Forecasts                                              

This document includes industry data and forecasts that the Company has prepared
based,  in part,  upon data and forecasts  obtained from industry  publications.
Third-party industry publications generally state that the information contained
therein has been  obtained  from  sources  believed to be  reliable,  but do not
guarantee the accuracy and completeness of such information.  In particular,  we
have based much of our  discussion  of the  biodiesel  and  ethanol  industries,
including  government  regulation relevant to the industry and forecasted growth
in demand,  on  information  published  by the  National  Biodiesel  Board,  the
national trade association for the U.S.  biodiesel  industry,  and the Renewable
Fuels  Association,  the national  trade  association  for the U.S. corn ethanol
industry.  Because the National  Biodiesel Board and Renewable Fuels Association
are trade organizations for the U.S. biodiesel and ethanol industries,  they may
present  information  in a manner that is more favorable than would be presented
by an independent source.  Forecasts in particular are subject to a high risk of
inaccuracy, especially forecasts projected over long periods of time.           

Forward Looking Statements                                                      

We make certain forward-looking  statements in this Annual Report on Form 10-KSB
and  in  the  documents  that  are  incorporated  herein  by  reference.   These
forward-looking  statements  relate to our outlook or expectations for earnings,
revenues,  expenses,  asset  quality  or  other  future  financial  or  business
performance,  strategies or expectations,  or the impact of legal, regulatory or
supervisory  matters  on  our  business,  results  of  operations  or  financial
condition.  Specifically,  forward-looking  statements  may  include  statements
preceded  by,  followed  by  or  that  include  the  words  "estimate,"  "plan,"
"project,"  "forecast,"  "intend,"  "expect,"  "anticipate,"  "believe," "seek,"
"target" or similar  expressions.  These  statements  reflect  our  management's
judgment based on currently available  information and involve a number of risks
and  uncertainties  that could cause actual  results to differ  materially  from
those in the forward-looking  statements.  Future performance cannot be ensured.
Actual  results  may  differ  materially  from  those  in  the   forward-looking
statements. Some factors that could cause our actual results to differ include: 

>>   the volatility and uncertainty of commodity prices;              

>>   operational disruptions at our facilities;                       

     >>   the costs and business risks  associated  with developing new products
and entering new markets;                                   

>>   our ability to locate and integrate future acquisitions;         

     >>   our  ability  to  develop  our  corn  oil   extraction  and  biodiesel
production facilities;                                      

     >>   the  effects  of other  mergers  and  consolidations  in the  biofuels
          industry and unexpected  announcements or developments  from others in
the biofuels industry;                                      

     >>   the  impact  of  new,  emerging  and  competing  technologies  on  our
business;                                                   

     >>   the  possibility  of one or more of the  markets  in which we  compete
          being  impacted by political,  legal and  regulatory  changes or other
external factors over which they have no control;           

     >>   changes in or  elimination of  governmental  laws,  tariffs,  trade or
other controls or enforcement practices;                    

>>   our reliance on key management personnel;                        

     >>   limitations  and   restrictions   contained  in  the  instruments  and
agreements governing our indebtedness;                      

     >>   our  ability  to  raise  additional   capital  and  secure  additional
financing;                                                  

     >>   our ability to implement additional financial and management controls,
          reporting  systems and  procedures  and comply with Section 404 of the
Sarbanes-Oxley Act, as amended; and                         

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     >>   other risks  referenced  from time to time in our filings with the SEC
          and those  factors  listed in this Form  10KSB  under  Item 1A,  Risks
Factors, beginning on page 24.                              

You are cautioned not to place undue reliance on any forward-looking statements,
which  speak  only as of the  date  of this  Form  10-KSB,  or in the  case of a
document incorporated by reference,  as of the date of that document.  Except as
required by law, we undertake no  obligation  to publicly  update or release any
revisions  to  these  forward-looking   statements  to  reflect  any  events  or
circumstances after the date of this Form 10-KSB or to reflect the occurrence of
unanticipated events.                                                           

ITEM 1            DESCRIPTION OF BUSINESS                                       

OVERVIEW                                                                        

We develop and  commercialize  clean  technologies that facilitate the efficient
use of natural  resources.  We do this today by developing and  integrating  new
technologies into existing biofuel production  facilities,  by selling equipment
and services based on those  technologies,  and by using those  technologies  to
directly produce and sell biomass-derived oils and fuels.                       

Our  strategy is to use our  patented  and  patent-pending  oil  extraction  and
biodiesel production  technologies to become a leading producer of biofuels, and
to do so at enhanced  cost and risk  profiles by  extracting  and  refining  raw
materials that other producers cannot access or process.                        

We  own  three  operating  production  facilities  -  two  corn  oil  extraction
facilities  based  on  our  patented  and  patent-pending  corn  oil  extraction
technology and one vegetable  oilseed  crushing  facility based on  conventional
process  technology.  We  currently  sell the corn oil we  extract  for  biofuel
production and the refined  vegetable  oils we extract in our crushing  facility
into the food markets.                                                          

We are currently building additional oil extraction facilities, and we are under
contract  to  build  additional  corn  oil  extraction   facilities,   biodiesel
production facilities and to expand our oilseed crush facility. We are currently
operating, building and expanding the following production facilities:          

                                                        [Enlarge/Download Table]

Location                           Technology                      Production Capacity              Current Status
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Oshkosh, Wisconsin                 Corn Oil Extraction             1.5 million gallons per year        Operational
Culbertson, Montana                Oilseed Crushing                1.3 million gallons per year        Operational
Medina, New York                   Corn Oil Extraction             1.5 million gallons per year        Operational
Marion, Indiana                    Corn Oil Extraction             1.5 million gallons per year       Construction
Riga, Michigan                     Corn Oil Extraction             1.5 million gallons per year       Construction
Lakota, Iowa                       Corn Oil Extraction             3.0 million gallons per year       Construction
Fulton, New York                   Corn Oil Extraction             3.0 million gallons per year       Construction
Milton, Wisconsin                  Corn Oil Extraction             1.5 million gallons per year       Construction
Richardton, North Dakota           Corn Oil Extraction             1.5 million gallons per year       Construction

We expect that all of the above  construction  projects will be completed during
2008 and that our annualized  operational  corn oil extraction and oilseed crush
capacity  will be about 15 million  gallons per year and 16 million  gallons per
year,  respectively,  by December 31, 2008. We are under  contract to build many
more corn oil extraction facilities  corresponding to more than an additional 25
million  gallons per year of corn oil.  Some of these  facilities  may  commence
construction during 2008 depending on our available financing and other relevant
factors.                                                                        

Our  corn oil  extraction  facilities  are  located  at  existing  corn  ethanol
production  facilities,  where we extract  corn oil from an  ethanol  co-product
called distillers grain. We install our extraction facility,  at our expense, at
participating  host  facilities in return for the  long-term  right (10 years or
more) to purchase the  extracted  corn oil for a per gallon price equal to about
53% of the spot price for diesel oil. The arrangement benefits both the host and
GreenShift.  The host benefits  because the contract price we pay  substantially
exceeds the market price for distillers grain.  GreenShift  benefits because the
contract price is substantially lower than the cost of comparable vegetable oils
or other feedstocks necessary for biodiesel production.                         

We believe that our ability to obtain large  quantities  of low cost  feedstocks
(i.e., raw materials for biodiesel production),  at prices indexed to the diesel
markets in which our biodiesel  end-product  will compete,  and the fact that we
have the  right to do so for over a decade,  enables  us to  finance,  build and
operate  facilities  that  will  produce  biodiesel  at  enhanced  cost and risk
profiles as compared to competing producers                                     

We have executed agreements to build  GreenShift-owned  biodiesel  facilities at
Global  Ethanol's  Lakota,  Iowa ethanol  facility  and at  Northeast  Biofuels'
Fulton,  New York  ethanol  facility.  Each  facility  is  designed  to commence

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production  at the rate of 10  million  gallons  per year and to scale to higher
capacities  as our corn oil  supplies  increase.  Until our  Lakota  and  Fulton
biodiesel facilities are financed, built and brought online, we plan to sell our
corn oil supplies to a biodiesel production facility in Adrian, Michigan that we
designed  and built for a third party  client,  Biofuel  Industries  Group,  LLC
(d/b/a NextDiesel), based on our biodiesel production technology.               

Our goal is to have at least 15 million  gallons per year of corn oil extraction
capacity,  20 million gallons per year of biodiesel production capacity,  and 16
million  gallons per year of oilseed crush  capacity  online by the end of 2008,
and at least 50 million  gallons per year of corn oil  extraction  capacity,  50
million  gallons  per year of  biodiesel  production  capacity,  and 16  million
gallons per year of oilseed crush capacity online by the end of 2009.           

Our  biodiesel  production  technologies  rely on  innovative  chemical  process
intensification techniques to enhance reaction kinetics,  decrease process time,
reduce  energy and raw material  needs,  and  increase  product  quality.  These
advantages  enable  the  processing  of a wide range of  feedstocks,  especially
including feedstocks that conventional and competing technologies have little or
no ability to process, at maximum yields into high quality biodiesel fuel.      

Many biodiesel  producers with  conventional  process  technology are limited to
using a  narrow  range  of oils  and  fats as  feedstocks.  Producers  that  can
consistently process feedstocks at high yields outside of this narrow range have
a significant  cost advantage  because the feedstocks  that fall outside of this
narrow range have limited  renewable uses and, for that reason,  are available  
at lower  costs.  This  market  dynamic  has  created an  opportunity  for us to
stimulate  cash flows by selling  equipment and services  based on our biodiesel
technology to third party clients who have feedstock models that do not conflict
with our own feedstock model: corn oil extraction.                              

Since June 2007, we have sold and commissioned (installed) a total of 25 million
gallons per year of biodiesel production capacity to third party clients.  These
facilities  are in  production  today  and  consistently  produce  high  quality
biodiesel  fuel out of a number  of lower  cost  fats  and  oils.  We are  under
contract with these same clients to build and commission  additional  production
capacity during 2008.                                                           

INDUSTRY OVERVIEW                                                               

Our  ambition is to become a leading  producer of biofuels at enhanced  cost and
risk profiles through feedstock ownership and technological advantages.         

While feedstock  ownership for us can take the form of ownership of conventional
production assets, as in the case of our oilseed crushing facility,  the primary
driver of our growth will be the use of our technologies and know-how to extract
corn oil and other  feedstocks out of the  co-products and wastes of traditional
agriproducts and other qualified  facilities.  Our strategy in this regard makes
three different industries relevant to our business model today:                

>>   The Biodiesel Production Industry                                

     We currently  sell our corn oil for biodiesel  production  and we intend to
     build our own biodiesel  production  facilities to directly refine the corn
     oil we extract into biodiesel.  We also sell processing  equipment based on
     our  biodiesel  production  technology  to third party clients who focus on
refining conventional feedstocks that we do not own into biodiesel.   

>>   The Corn Ethanol Production Industry                             

     We extract our corn oil from corn ethanol  production  facilities  with our
     patented and patent-pending corn oil extraction technology. We believe that
     the current  dynamics of this  industry  translate to high levels of demand
for participation in our corn oil extraction program.                 

>>   The Culinary Oil Production Industry                             

     We are expanding the production capability of our oilseed crush facility by
     more than ten  times.  When  complete,  we will sell  food- and  fuel-grade
     vegetable oils from this facility.  Fuel-grade oils will either be sold for
     biodiesel  production  or directly  refined  into  biodiesel  at one of our
future biodiesel production facilities.                               

The Biodiesel Production Industry                                               

Introduction                                                                    

Biodiesel is a clean burning natural fuel composed of mono-alkyl  esters of long
chain fatty acids.  It is derived from renewable  resources such as animal fats,
vegetable oils, and waste restaurant  grease.  Biodiesel  contains no petroleum,

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but can be  blended  at any level  with  petroleum  diesel  to create  biodiesel
blends.  In  general,  to  produce  biodiesel,  vegetable  oil or animal  fat is
catalyzed   with  methanol  to  produce   methyl  esters  in  a  process  called
transesterification.  Properly processed  biodiesel can be effectively used as a
substitute for  petroleum-based  diesel fuel, because the viscosity of biodiesel
is close to that of petroleum diesel.                                           

Burning  biodiesel  instead of  petroleum  diesel  fuel in a diesel  engine will
reduce   greenhouse   gas   emissions   by  more  than  20%.   The  most  common
biodiesel-diesel blend, B20, consists of 80% petroleum diesel and 20% biodiesel.
B20 can be distributed through  conventional  channels,  dispensed from standard
diesel fuel pumps,  and burned in standard diesel engines.  While most biodiesel
consumed in the U.S. is B20, a blend of 5% biodiesel  and 95%  petroleum  diesel
called B5 is also used in the U.S.                                              

Factors Contributing to Biodiesel Demand                                        

The chief markets in the U.S. for biodiesel are diesel  blending  facilities and
distributors and governmental and commercial  fleets.  According to the National
Biodiesel Board, U.S. biodiesel production was approximately  15,000,000 gallons
in 2002 and U.S.  production  has grown to an estimated  450,000,000  gallons in
2007. By comparison,  the European biodiesel market is more mature than the U.S.
market, having consumed approximately 1 billion gallons of biodiesel in 2005.   

The rapid growth of the biodiesel  market has been  predominantly  driven by the
following factors:                                                              

     >>   Ready Integration.  Biodiesel, either B100 or petroleum blends, can be
          readily  distributed  and used in the  traditional  markets for diesel
          fuel with no  modifications.  Blended  biodiesel is preferable to pure
          petroleum  diesel because it has the ability to extend engine life and
thus decrease operating expenses.                           

     >>   Lack of  Production  Capacity.  While  the  number  of  operable  U.S.
          petroleum  refineries  decreased  from  319 in  1980  to  149 in  2007
          according to the Energy Information  Administration ("EIA"),  domestic
          demand  increased  17.7%  over  the same  period.  The  United  States
          consumes over 60 billion gallons per year of petroleum diesel based on
2006 volumes reported by the EIA.                           

     >>   Environmental  Benefits.  Biodiesel is  biodegradable,  nontoxic,  and
          contains  only  traces  of sulfur  and  aromatics.  Biodiesel  reduces
          tailpipe  exhaust  emissions,  greenhouse  gas  emissions  and  sulfur
          dioxide   emissions   (acid  rain)  and  minimizes   black  smoke  and
smog-causing particulate matter.                            

     >>   Geopolitical  Concerns.  Increases  in domestic  demand  coupled  with
          decreases  in domestic  oil  production  have  increased  U.S.  import
          requirements;  according  to the EIA,  crude oil  imports  represented
          65.7% of the U.S.  crude oil supply in 2007 and are  estimated to rise
          by  almost  10.0%  by  2025.  Political  unrest  and  attacks  on  oil
          infrastructure in the major oil producing nations, particularly in the
          Middle East,  have  periodically  disrupted the flow of oil.  Fears of
          terrorist  attacks have added a "risk premium" to world oil prices. At
          the same  time,  developing  nations  such as  China  and  India  have
          increased their demand for oil. As a result, in 2007, world oil prices
          topped $100 a barrel at times and we expect oil prices to remain high.
          Biodiesel  can be  produced  from  locally  available  feedstocks  and
contribute to the reduction of dependence on imported oil.  

     >>   Government Incentives.  Government incentives and mandates include tax
          incentives to lower the  effective  cost of biodiesel in order to make
          it more price  competitive  with  petroleum  diesel,  use  mandates to
          increase the use of biodiesel,  and investment incentives to encourage
          investments  in  production  and  distribution  capacity,  as  well as
technology to promote end use of biodiesel.                 

          >>   Tax  Incentives.  The  primary  incentive  intended  to lower the
               effective cost of biodiesel is the Biodiesel Blenders Tax Credit,
               which is included  in the  Volumetric  Ethanol  Excise Tax Credit
               created  under  the  American  Jobs  Creation  Act of 2006.  This
               incentive is currently  set to expire on December 31, 2008.  This
               incentive  generally  provides  for a $0.50 excise tax credit per
               gallon of recycled  feedstock  biodiesel  blended into  petroleum
               diesel  and a $1.00  excise  tax  credit  per  gallon  of  virgin
               feedstock biodiesel, including biodiesel derived from animal fats
               blended into petroleum diesel.  In December 2007,  President Bush
               gave approval to the Energy Independence and Security Act of 2007
               which establishes a renewable fuels standard for biodiesel use in
               the  United  States  of one  billion  gallons  by 2012  and as of
               January  2008,  the  Volumetric  Ethanol  Excise  Tax  Credit  is
               proposed  for  extension  in the Farm Bill  before  Congress.  In
               addition to the federal  Biodiesel  Blenders Tax Credit,  various
               states  also  provide for tax  credits,  rebates,  deductions  or
               reduced state,  excise or other taxes for the blending or sale of
biodiesel within their states.                    

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     >>   Use Mandates.  In August 2005, President Bush signed the Energy Policy
          Act   establishing  the  Renewable  Fuels  Standard   ("RFS"),   which
          eliminated the mandated use of oxygenates in reformulated gasoline and
          mandated annual use of 7.5 billion gallons per year of renewable fuels
          in the U.S. fuel supply by the year 2012. In December 2007,  President
          Bush signed the Energy Independence and Security Act (the "2007 Act"),
          which  increased the mandated  minimum level of use of renewable fuels
          in the RFS to 9.0  billion  gallons per year in 2008 (from 5.4 billion
          gallons  under the RFS  enacted  in 2005),  further  increasing  to 36
          billion gallons per year in 2022. The RFS requires motor fuels sold in
          the U.S. to contain in the aggregate the following  minimum volumes of
renewable fuels in future years:                            

                                                        [Enlarge/Download Table]

                                                                                         Unspecified
Year               Requirement              Corn        Cellulosic        Biodiesel         Advanced
----------------------------------------------------------------------------------------------------
                                                                                                    
2008                       9.0               9.0                --               --               --
2009                      11.1              10.5                --              0.5               --
2010                      13.0              12.0               0.1              0.7               --
2011                      14.0              12.6               0.3              0.8               --
2012                      15.2              13.2               0.5              1.0              0.5
2013                      16.6              13.8               1.0               --              1.8
2014                      18.2              14.4               1.8               --              2.0
2015                      20.5              15.0               3.0               --              2.5
2016                      22.3              15.0               4.3               --              3.0
2017                      24.0              15.0               5.5               --              3.5
2018                      26.0              15.0               7.0               --              4.0
2019                      28.0              15.0               8.5               --              4.5
2020                      30.0              15.0              10.5               --              4.5
2021                      33.0              15.0              13.5               --              4.5
2022                      36.0              15.0              16.0               --              5.0

In  addition  to the  federal  government,  a number  of  states  have  mandated
state-owned  vehicles  to  reduce  petroleum  diesel  usage  through  the use of
biodiesel blends.                                                               

     >>   Investment   Incentives.   Many  governments  have  also  passed  laws
          encouraging investments to support production, distribution and use of
          biodiesel  and other  renewable  fuels.  For  example,  through  2010,
          fueling  stations  are  eligible  for a 30% federal tax credit for the
          cost of installing  clean-fuel refueling equipment,  including any B20
or greater biodiesel blend.                                 

To facilitate a more efficient market,  biodiesel product quality is measured in
the U.S. by ASTM Standard D6751. This standard specifies the required properties
of B100 biodiesel for use as a blend component with petroleum  diesel fuel oils,
as well as maximum amounts of free glycerin,  total glycerin, water and sediment
content,  sulfated ash, total sulfur,  copper  corrosivity,  carbon residue and,
magnesium,  calcium, sodium and phosphorous. The standard also specifies minimum
flash  point and  cetane  number.  Compliance  with these  standards  requires a
process  that  provides  for  complete  transesterification  and  efficient  and
thorough separation and purification processes.                                 

Factors Contributing to Biodiesel Supply                                        

The  largest  single cost of  biodiesel  production  is  feedstock  cost,  which
typically accounts for about 70% to 80% of the finished product cost. To produce
biodiesel profitably, producers must have a process that can efficiently convert
a broad array of feedstocks into high quality fuel at high yields.              

Feedstocks for biodiesel  production  include  vegetable oils and animal fats as
well as  waste  cooking  oils  and  greases.  According  to U.S.  Department  of
Agricultural  statistics,   32.7  billion  pounds  of  conventionally  available
feedstocks  were produced in the U.S. in 2007,  including 23.2 billion pounds of
vegetable  oils,  6.9 billion  pounds of edible and  inedible  tallow,  pork and
poultry fat and 2.6 billion pounds of yellow and other greases.  While these are
the  most  commonly  available  feedstocks  in the  U.S.,  most  of  the  edible
feedstocks  would be used for human and animal  consumption  and,  depending  on
market conditions, could not be used economically for biodiesel production.     

GreenShift's  business model involves the extraction of a crude corn oil that is
not included in these statistics  because it has historically been locked in the
distillers grain co-product of dry mill corn ethanol production.  Our technology
enables us to unlock these corn oil  supplies for our own use, to the  exclusion
of the rest of the biodiesel market.                                            

We can  extract  about 6.5  gallons  of corn oil for every 100  gallons  of corn
ethanol  produced.  According to the Renewable Fuels Association  ("RFA"),  more
than 8.1  billion  gallons of  corn-derived  ethanol  were  produced in 2007 and
another 5.3 billion gallons of annual  production were under  construction as of

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December 2007.  This equates to a market  opportunity for GreenShift of over 878
million  gallons,  or about 6.5  billon  pounds,  of crude  corn oil that is not
suitable for human  consumption  and is potentially  available for refining into
biodiesel.                                                                      

The costs of the various  feedstocks depend largely on whether the feedstock may
be used in the food  market.  Over the last 15 years,  soybean oil has traded at
approximately  $1.67 per  gallon,  inedible  tallow has traded at  approximately
$1.22 per gallon and yellow grease has traded at approximately $1.00 per gallon.
Recent increased demand for soybean oil has increased prices as of December 2007
to as high as  approximately  $4.18 per gallon (a 150% increase from  historical
levels)  with  bleached  fancy tallow at  approximately  $2.28 per gallon (a 90%
increase from historical  levels) and yellow grease at  approximately  $1.75 per
gallon (a 75%increase from historical  levels).  For comparison,  as of December
2007, our own crude corn oil purchase price was about $1.52 per gallon.         

We believe  that there are several  market  factors  responsible  for the recent
increases in conventionally available feedstock prices that are unrelated to the
production of biodiesel. These factors have made it difficult for many producers
using conventional biodiesel process technologies to operate profitably.        

Production Technology and Economics                                             

Biodiesel   is   produced   through   a  process   called   transesterification.
Transesterification involves reacting organically-derived fats, oils and greases
with  an  alcohol,  typically  methanol,  in the  presence  of a base  catalyst,
typically sodium or potassium  hydroxide,  to form methyl esters (biodiesel) and
glycerin.                                                                       

The  traditional  process  typically  requires  feedstock with a free fatty acid
content of less than 2% because the  presence of higher free fatty acid  content
during the  transesterification  process can produce soap, which can prevent the
separation  of the  biodiesel  from the  glycerin  resulting in yield losses and
higher production costs.                                                        

For this  reason,  using  high free  fatty acid  feedstocks  in the  traditional
process requires a pretreatment  step,  consisting of either a stripping process
to remove the free fatty acids or an acid  esterification  process to reduce the
feedstock's free fatty acids through a chemical  reaction that uses acids,  such
as hydrochloric acid, which are later removed after  transesterification using a
water wash process.                                                             

The traditional  process then incorporates a settling or centrifugation  process
to separate the  biodiesel  from the glycerin.  tThe  biodiesel and the glycerin
mixture  each  undergo a separate  process to remove  methanol  and to produce a
crude glycerin of less than 90% purity.  While the normal feedstock to biodiesel
input-output  ratio is about eight pounds of  feedstock  for every one gallon of
biodiesel produced, the use of greater than 2% free fatty acid feedstocks in the
traditional method reduces the amount of biodiesel yield considerably due to the
increased  generation of soaps and the needed  co-product  removal process.  The
entire  process  takes  many  hours  to  complete  using  conventional   process
technologies.                                                                   

GreenShift's  patent-pending  biodiesel  production  technology  intensifies and
idealizes the conditions  under which the biodiesel  reactions  occur and we are
consequently  able to refine high quality product and maximize yields in minutes
instead of hours  under true  continuous  flow  conditions  - at a much  smaller
scales,  on a broader array of feedstocks  and at reduced  capital and operating
costs as compared to traditional processes.  These benefits translate to reduced
financial, operational and market risk.                                         

The single largest factor  affecting  financial risk for biodiesel  producers is
feedstock  cost.  Feedstock  costs  depend  on a number  of  factors,  including
consumer  demand for food  quality  feedstocks,  industrial  demand for non-food
quality  feedstocks,  weather  conditions,  production levels,  feedstock export
markets and demand and government  regulation.  Based on the fourth quarter 2007
market prices  published by the Jacobsen  Commentary  and Market News  Bulletin,
feedstock  supply costs ranged from $1.76 to $4.40 per gallon,  depending on the
type of feedstock.  In contrast,  because we purchase our corn oil supplies at a
price  indexed to the market  spot price for diesel oil,  our corn oil  purchase
price was about $1.45 per gallon in December 2007.                              

To the  extent  that the cost for  biodiesel  production  exceeds  the  price of
petroleum  diesel,  government  incentives  would be  necessary  to  maintain  a
commercially  feasible  market for the  production  of  biodiesel.  However,  at
current  market  prices for animal  fats,  greases  and  certain  conventionally
available unrefined oils, we believe that a biodiesel producer using our process
technology  has the  potential  to produce  biodiesel at a cost that would still
achieve  positive  operating  profits  without  government  incentives.  This is
certain to be the case for our own proprietary crude corn oil supplies.         

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Competition                                                                     

The National  Biodiesel  Board  reports  that,  as of January  2008,  there were
approximately  171  commercial  biodiesel  refineries in the U.S. with an annual
production  capacity  of  approximately  2.2 billion  gallons  per year  (actual
production was about  450,000,000  gallons in 2007).  In addition,  the National
Biodiesel Board reports that there were 55 commercial biodiesel refineries under
construction and 3 existing commercial biodiesel refineries undergoing expansion
in the U.S. The total additional anticipated annual production capacity of these
plants under  construction or expansion is approximately 1.1 billion gallons per
year.                                                                           

     >>   Producer Competition.  The biodiesel production market is very dynamic
          as there are a number of new entrants that may have greater  access to
          capital  or  low  cost  feedstock.  For  example,  large  agricultural
          companies,  such as  Archer  Daniels  Midland  Corporation  and  Bunge
          Limited have begun to build biodiesel  refineries to take advantage of
          their access to their oilseed  feedstock.  Archer  Daniels  Midland is
          already the  largest  ethanol  producer  in the United  States and has
          publicly  stated an intention  to build  biodiesel  refineries  in the
          United  States  to  complement  its  ethanol  production  and to  take
          advantage of its  vertically  integrated  agricultural  supply  chain.
          Archer Daniels Midland estimates that, as of August 2007, it had about
          1.6 million metric tons of biodiesel production capacity worldwide. In
          addition,  major  energy  companies  have  expressed  an  interest  in
          investing in renewable energy projects, including biodiesel. While the
          market for biodiesel may not be  constrained by demand given the large
          volume of consumption of diesel in the United States and worldwide, we
          may face significant  competition for conventional  feedstocks (to the
          extent we  choose  to pursue  them)  and  capital  from  these  large,
          vertically   integrated   competitors,   in   addition  to  the  other
          independent  entrants into the market.  We are largely  insulated from
          these competitive  forces to the extent that we own proprietary rights
          to  our  corn  oil  extraction  technology  and  that  our  extraction
          technology is necessary to obtain  commercially  meaningful volumes of
crude corn oil feedstocks.                                  

     >>   Technology  Provider  Competition.  A  number  of  large,  established
          equipment and technology providers,  such as Crown Iron Works Company,
          Desmet  Ballestra,  and Air  Liquide  Group  provide  design and build
          services for biodiesel  developers,  with a focus on large centralized
          production   facilities  that  are  based  on   conventional   process
          technologies.  While these technology  providers  command  substantial
          market  share  internationally,  the  realities of the  feedstock  and
          biodiesel  markets  (particularly in the North American  markets) make
          smaller,   distributed   production   technologies,    such   as   our
          patent-pending  biodiesel production technology,  much more practical.
          2006 and 2007 saw the introduction and subsequent  failure of a number
          of technology providers that offered small modular technologies.  Most
          of these providers failed for the lack of adequate process  technology
          to  process a broad  range of  feedstocks.  Of the  surviving  modular
          technology providers, Greenline Industries and Biodiesel International
          AG  provide  operable  process  technologies  that  compete  with  our
          offering.  Biodiesel International is more mature but operates chiefly
          in the  European  markets.  Greenline  Industries  claims to have more
          processing  plants  operating  in the  U.S.  markets  than  any  other
          biodiesel  equipment  supplier.  Despite  this,  we  do  not  consider
          Greenline  to pose a  significant  competitive  threat:  they lack our
          capability   and  track  record   processing   high  free  fatty  acid
          feedstocks,  their claimed yields range from 84% to 92% as compared to
          99% with our technology, and their process has been designed to reduce
          upfront  capital  costs  at the  expense  of  significantly  increased
          operating  expenses.  In contrast,  our process has been  deliberately
          designed to be more  capital  intensive to achieve  maximum  operating
          efficiencies  and  minimal  operating  expenses,  which  translate  to
          increased  gross  margins  and cash flows as well as reduced  business
risk for our clients.                                       

The Ethanol Production Industry                                                 

Introduction                                                                    

Ethanol  is  a  clean-burning,  high-octane  fuel  that  is  produced  from  the
fermentation of carbohydrates  such as grains,  starches and sugars.  Ethanol is
produced  primarily  from corn in the U.S.  It is used  primarily  as a gasoline
additive to increase octane rating and to comply with air emissions  regulations
by reducing  emissions of carbon monoxide and nitrogen  oxide.  The RFS mandated
that ethanol  comprise a minimum of 4.0 billion  gallons of the U.S. fuel supply
as of January 1, 2006,  and 7.5 billion  gallons in 2012 - more than 8.1 billion
gallons of  corn-derived  ethanol were  produced in 2007.  According to the RFA,
ethanol  is blended  into more than 50% of the  gasoline  sold in the U.S.  Fuel
blended with up to 10% ethanol,  also  referred to as E10 fuel,  is approved for
use by major motor vehicle manufacturers and is often recommended as a result of
ethanol's  clean  burning  characteristics.  Ethanol  comprises up to 85% of E85
fuel, which currently represents a relatively small portion of the U.S. gasoline

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supply. Approximately six million vehicles out of more than 200 million vehicles
in the United States today are Flexible Fuel Vehicles, or FFVs, capable of using
E85 fuel.                                                                       

Factors Contributing to Ethanol Demand                                          

Increased  demand for ethanol can be expected to translate  to increased  demand
for our corn oil extraction technology.  We believe the ethanol market will grow
as a result of many of the same factors discussed above in Factors  Contributing
to Biodiesel Demand. The following additional factors are relevant to the demand
for ethanol:                                                                    

     >>   Geopolitical  Concerns.  As a  domestic  renewable  source of  energy,
          ethanol reduces the U.S.'s dependence on foreign oil by increasing the
availability of domestic fuel supplies.                     

     >>   Government  Incentives.  We  expect  the RFS  mandate  to  result in a
          significant  increase in ethanol demand, and we believe the actual use
          of  ethanol  and other  renewable  fuels  will  surpass  the  mandated
          requirements.  The 2007 Act and the  Energy  Policy  Act of 2005  also
          proposed   credit   trading   programs  to   facilitate   meeting  the
          industry-wide   renewable   fuels   requirements.   The   Evironmental
          Protection  Agency has  proposed a rule for  issuing  and  trading the
credits. Other factors include                              

          >>   Federal Blenders' Credit.  First implemented in 1979, the federal
               excise tax incentive  program allows  gasoline  distributors  who
               blend ethanol with gasoline to receive a federal  excise tax rate
               reduction  of $0.51 per gallon of  ethanol.  The $0.51 per gallon
               incentive  for  ethanol is  scheduled  to be reduced to $0.46 per
gallon in 2009 and to expire in 2010.             

          >>   Federal  Clean Air Act.  The use of  ethanol as an  oxygenate  is
               driven, in part, by environmental regulations.  The federal Clean
               Air Act requires the use of  oxygenated  gasoline  during  winter
       months in areas with unhealthy levels of carbon monoxide.

          >>   Federal Tariff on Imported Ethanol.  In 1980,  Congress imposed a
               tariff on foreign  produced  ethanol to encourage the development
               of a  domestic,  corn-derived  ethanol  supply.  This  tariff was
               designed to prevent the federal  tax  incentive  from  benefiting
               non-U.S.  producers  of ethanol.  The $0.54 per gallon  tariff is
               scheduled to expire on January 1, 2009.  Ethanol  imports from 24
               countries in Central America and the Caribbean Islands are exempt
               from the  tariff  under the  Caribbean  Basin  Initiative,  which
               provides that  specified  nations may export an aggregate of 7.0%
               of  U.S.  ethanol   production  per  year  into  the  U.S.,  with
               additional exemptions from ethanol produced from feedstock in the
               Caribbean  region over the 7.0% limit.  As a result of new plants
               under  development in the Caribbean  region,  we believe  imports
               from there will  continue,  subject to the limited  nature of the
exemption.                                        

          >>   State and Local  Incentives.  Twenty-one  states have implemented
               incentives  to  encourage  ethanol   production  and  use.  These
               incentives include tax credits, producer payments, loans, grants,
               tax  exemptions  and  other  programs.   Midwestern  states  have
               initiated  most of the programs  and policies to promote  ethanol
               production  and  development.  States on the East and West Coasts
               also are  beginning to initiate  ethanol  production  programs in
               connection  with  drives  to  construct  ethanol  plants in these
states.                                           

          >>   State  Legislation  Banning or Significantly  Limiting the Use of
               MTBE. In recent years, due to environmental  concerns, 25 states,
               including  California,  Connecticut and New York, have banned, or
               significantly  limited,  the use of MTBE. Ethanol has served as a
               replacement  for much of the  discontinued  MTBE  volumes  and is
               expected to continue to serve as a primary replacement product in
               the  future  for  MTBE  volumes  that are  removed  from the fuel
supply.                                           

     >>   Environmental  Benefits.  Ethanol,  as an oxygenate,  reduces tailpipe
          emissions when added to gasoline. The additional oxygen in the ethanol
          results  in a more  complete  combustion  of the  fuel  in the  engine
          cylinder,  resulting in reduced  carbon  monoxide  and nitrogen  oxide
          emissions.  Prior federal programs that mandated the use of oxygenated
          gasoline in areas with high levels of air pollution spurred widespread
use of ethanol in the United States.                        

     >>   Blending  Benefits.  Ethanol has an octane rating of 113, and is added
          to gasoline to raise the octane level of gasoline.  Unblended gasoline
          typically  has a  base  octane  level  of  approximately  84.  Typical
          gasoline and ethanol  blends (up to E10) have octane  ratings  ranging
          from 87 to 93.  Higher  octane  gasoline  has the  benefit of reducing
          engine  knocking.  Gasoline with higher octane typically has been sold
at a higher price per gallon than lower octane gasoline.    

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     >>   Expansion of Gasoline  Supplies.  By blending  ethanol with  gasoline,
          refiners  can  expand  the  volume of fuel  available  for sale.  As a
          result, refiners can produce more fuel from a barrel of oil and expand
          their  ability  to meet  consumer  demand,  especially  when  refinery
          capacity  and octane  sources  are  limited.  According  to the Energy
          Information Administration,  between 1980 and 2005, petroleum refining
          capacity  in  the  United  States  decreased  approximately  5%  while
          domestic demand increased approximately 21%. We believe that increased
          pressure on domestic  fuel  refining  capacity  will result in greater
demand for ethanol.                                         

Factors Contributing to Ethanol Supply                                          

Production in the ethanol  industry  remains  fragmented.  According to the RFA,
domestic ethanol production  capacity increased from 1.7 billion gallons in 1997
to more  than 8.2  billion  gallons  in 2007.  As of  March  2008,  the top five
producers  accounted for approximately 41% of the ethanol production capacity in
the U.S  according to the RFA. The  remaining  production  was generated by more
than 125 smaller producers and farmer-owned  cooperatives,  many with production
of 50 million gallons per year or less. As of March 2008, the RFA estimated that
ethanol  facilities  with capacity of an aggregate of an additional  5.3 billion
gallons per year were under construction.  At 6.5 gallons of corn oil extraction
with our  technology for every 100 gallons of corn ethanol  produced,  increased
ethanol   production  will  equate  to  an  increased  market   opportunity  for
GreenShift.                                                                     

Production Technology and Economics                                             

In the dry mill process of  converting  corn into  ethanol,  each bushel of corn
yields  approximately  2.8  gallons of ethanol  and  approximately  18 pounds of
distillers grains. This process is described below.                             

     >>   The corn kernels are first ground into aflour, or meal, and mixed with
water in cookers to form slurry, called mash;               

     >>   In the cooking system,  the action of heat liquefies the starch in the
          corn,  and enzymes  are added to break down the starch to  fermentable
sugars;                                                     

     >>   The cooked  mash is then  cooled and  pumped to the  fermenters  where
  yeast is added to convert the sugars in the mash into ethanol;

     >>   The  fermented  mash is pumped to the  distillation  system  where the
          ethanol is separated from the  non-fermentable  solids (the stillage),
          and water is  removed to  concentrate  the  ethanol  to a strength  of
190-proof (95% ethanol);                                    

     >>   The ethanol is further concentrated in a molecular sieve dehydrator to
          a strength of 200 proof (99+% ethanol),  to produce fuel-grade ethanol
          which is then denatured  (rendered unfit for human  consumption)  with
gasoline and transferred to storage tanks; and,             

     >>   The stillage from the distillation system is sent through a centrifuge
          that  separates the coarse grain from the  solubles.  The solubles are
          then  concentrated in an evaporator  system.  The resulting  material,
          condensed distillers solubles or syrup, is mixed with the coarse grain
          from the centrifuge and then dried to produce dried distillers  grains
          with solubles ("DDGS") a high quality, nutritious livestock feed. Some
          of the distillers grains may bypass the final drying stage and be sold
as wet distillers grains with solubles, ("WDGS").           

GreenShift's patented and patent-pending corn oil extraction technology extracts
crude corn oil from the  stillage at various  points  between  the  distillation
system and the drying stage.                                                    

Corn is the  principal  raw  material  used to produce  ethanol  and dry and wet
distillers  grains.  As a result,  changes  in the price of corn can  materially
affect ethanol production economics. Rising corn prices result in higher cost of
ethanol and distillers  grains.  Because  ethanol  competes with  non-corn-based
fuels,  producers  generally  are unable to pass along  increased  corn costs to
their customers. At certain levels, corn prices may make ethanol uneconomical to
use in fuel  markets.  Over the  ten-year  period from 1998 through  2007,  corn
prices  (based on the Chicago  Board of Trade (the "CBOT")  daily  futures data)
have ranged from a low of $1.75 per bushel on August 11, 2000 to a high of $4.55
per bushel on December 31, 2007,  with prices  averaging $2.42 per bushel during
this period.                                                                    

The  profitability  of an ethanol  producer  depends  principally  on the spread
between  ethanol and corn  prices.  The price of corn is  influenced  by weather
conditions and other factors  affecting crop yields,  farmer planting  decisions
and general  economic,  market and  regulatory  factors.  These factors  include
government  policies and subsidies with respect to agriculture and international
trade,  and global and local demand and supply.  The  significance  and relative
effect of these factors on the price of corn is difficult to predict.  Any event

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that tends to negatively  affect the supply of corn,  such as adverse weather or
crop disease,  could increase corn prices.  Increasing domestic ethanol capacity
could boost the demand for corn and result in increased  corn  prices.  In 2006,
corn bought by ethanol plants  represented  approximately  18% of the total corn
supply for that year according to results  reported by the National Corn Growers
Association,  and this percentage is expected to increase as additional  ethanol
capacity  comes  online,  rising to more than 30% of the  total  corn  supply by
2009/2010 according to the United States Department of Agriculture  ("USDA"). In
addition,  the price  many of the  companies  pay for corn at a  facility  could
increase  if an  additional  ethanol  production  facility  is built in the same
general vicinity.                                                               

During the  five-year  period from 2003 through 2007,  ethanol  prices (based on
average U.S. ethanol rack prices from Bloomberg) have ranged from a low of $1.11
per gallon to a high of $3.98 per gallon, averaging $1.90 per gallon during this
period.  For the year ended December 31, 2007, ethanol prices averaged $2.12 per
gallon, reaching a high of $2.50 per gallon and a low of $1.69 per gallon (based
on the daily closing prices from Bloomberg).                                    

In early 2006,  the spread between  ethanol and corn prices was at  historically
high  levels,  driven in large  part by oil  companies  removing  a  competitive
product,  MTBE,  from  the  fuel  stream  and  replacing  it with  ethanol  in a
relatively  short time period.  However,  this spread has fluctuated  widely and
narrowed significantly during 2007. Fluctuations are likely to continue to occur
and most industry analysts forecast narrow spreads for the balance of 2008.     

A sustained narrow spread or any further reduction in the spread between ethanol
and corn prices,  whether as a result of sustained high or increased corn prices
or  sustained  low or  decreased  ethanol  prices,  would  adversely  affect the
financial  position of a corn ethanol  producer.  Further,  it is possible  that
ethanol prices could decline below  production  costs,  which could cause a corn
ethanol producer to suspend production.                                         

These market forces can be mitigated by participation in our corn oil extraction
program. Ethanol producers that allow us to install our extraction technology in
their facilities at our expense will generate additional earnings of about $0.08
per  gallon  of  ethanol  produced  at  current  market  prices.  $8,000,000  in
additional  annualized  earnings for a 100 million  gallon  ethanol  facility is
significant and corresponds to materially increased cash flows for participating
facilities.                                                                     

Competition                                                                     

The  ethanol  market  is highly  competitive.  According  to the RFA,  worldwide
ethanol production rose to 13.1 billion gallons in 2007 with the U.S. and Brazil
being the  world's  largest  producers  of ethanol.  As of March 2008,  industry
capacity  in the  U.S.  approximated  8.2  billion  gallons  per  year,  with an
additional  5.3 billion  gallons per year of capacity  under  construction.  The
ethanol industry in the U.S. consists of more than 140 production facilities and
is primarily  corn based,  while the Brazilian  ethanol  production is primarily
sugar cane based.                                                               

As of March 2008, the top five producers  accounted for approximately 41% of the
ethanol  production  capacity in the U.S.  according to the RFA. The industry is
otherwise highly fragmented, with many small, independent firms and farmer-owned
cooperatives  constituting  the rest of the  market.  The  ability  of most corn
ethanol  producers to compete  successfully in the ethanol  production  industry
depends on many factors,  including the following principal competitive factors:
price; quality based on the reliability of production and delivery;  and, volume
of ethanol produced and sold.                                                   

With respect to distillers  grains,  corn ethanol  producers  compete with other
ethanol  producers,  as well as with a number of large and smaller  suppliers of
competing  animal feed.  We believe that the principal  competitive  factors for
sales of  distillers  grains are price,  proximity  to  purchasers  and  product
quality.                                                                        

These competitive  forces all translate to a high value proposition for our corn
oil extraction  technology to corn ethanol  producers.  Corn ethanol  facilities
that  participate  in our  program  have the  ability  to reduce  their  utility
consumption costs and emissions profile while increasing their profitability and
overall plant energy balance - for no cost, all of which  translates to improved
competitive  positioning for our host ethanol  facilities as compared to ethanol
facilities that do not contribute in our corn oil extraction program.           

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The Culinary Oil Production Industry                                            

The domestic  market for culinary  oils accounts for over $10 billion in revenue
per year. Approximately 20 billion pounds of vegetable oil are sold domestically
at average  price  points of $0.50 per pound.  Soybean  oil  retains the largest
share of this market  followed by palm oil (which is imported),  canola and then
mid-oleic  sunflower.  These oils are in the  commodity  category and are traded
based on published prices on large commodity exchange houses such as the Chicago
Board of Trade.  The  specialty  oils such as high oleic  sunflower,  high oleic
safflower,  and flax make up the  balance of the edible oil  market.  This later
specialty  oils  category  is  between  7% and 10% of the  domestic  edible  oil
industry. These oils are not traded on major commodity exchanges,  however their
values  are  indirectly  linked  to the  values  of the  commodity  oils.  These
specialty oils, for reasons outlined below, are gaining edible oil market share.
Our safflower  and  sunflower  oils will be marketed in the specialty oil market
category,  while our canola  business  will seek market  share within the larger
commodity category.                                                             

Factors Contributing to Culinary Oil Demand                                     

Edible food grade,  or culinary  vegetable  oils, are widely  regarded as having
positive  health  benefits.  The high  oleic  safflower  oil we  produce  at our
Culbertson,  Montana based  oilseed  crush  facility is one of the more valuable
trans-fat free  vegetable  oils. It is high in  monounsaturated  fatty acids and
contains  moderate  levels of essential  polyunsaturated  fatty  acids.  We also
produce other oilseed varieties, including canola and high oleic non-genetically
modified sunflower.  Canola and sunflower are used in culinary  applications for
salad oils and in cooking and in pharmaceutical applications.                   

The oilseed crush industry is dominated by an oligopoly - Archer Daniels Midland
Corporation,  Cargill,  Inc.,  and Bunge Limited  account for most of the annual
domestic  production and sale of culinary oils. The market  conditions caused by
this  dynamic  and the  growth of the  biodiesel  industry  have put  additional
demands on the supply of vegetable oils, which have resulted in increased prices
for the vegetable oils we offer and sell.                                       

In September 2007, the Food and  Agriculture  Organization of the United Nations
("FAO"),  reported that worldwide  prices reached an all-time record in the case
of  oilseeds  and 23 and 34 year  highs for oils and meals  respectively  during
2007.  According to the FAO, the key factor behind the extraordinary  price rise
is that the  oilseed  crop  markets  have come  under the  direct  influence  of
developments  in the related  feed grain  market.  With corn and  soybeans  both
facing  rising  demand  in the  feed as  well as the  energy  market,  and  thus
increasingly  competing for land, the unprecedented  surge in international corn
prices has spilled over to the oilseeds  and meal market and in  particular  the
soybean complex.  Furthermore,  steadily growing  biodiesel  requirements led to
increased  demand for vegetable oils,  notably  soybean,  rapeseed and palm oil.
This trend, combined with a constant rise in the consumption of vegetable oil as
food and the weak growth of total oil production in 2006/07 has led to a gradual
tightening in global  supplies,  thus explaining  recent surges in vegetable oil
prices.                                                                         

Factors Contributing to Culinary Oil Supply                                     

The oilseed farming  industry  includes about 350,000 farms with combined annual
oilseed revenue of $21 billion.  No major companies dominate and the industry is
highly  fragmented:  the top 10 percent  of farms  generate  one-third  of total
industry  revenue.  Oilseed farms compete with other food oils,  especially palm
tree oil.  Since  crushed  oilseed is an important  livestock  food source,  the
industry  also competes  with corn and other feed crops.  Oilseed  competes with
corn and  other  major  crops for farm  acreage,  as  farmers  tend to plant and
harvest crops with the highest yield and payout. Major products include soybeans
(90 percent of the market) and cottonseed (5 percent).  Other  products  include
sunflower seed, canola,  flaxseed,  safflower,  rapeseed,  and peanuts grown for
oil.  According to U.S.  Department  of  Agricultural  statistics,  23.2 billion
pounds of vegetable oils were produced in the U.S. in 2007, the vast majority of
which was sold into the culinary markets.                                       

Production Technology and Economics                                             

Oilseeds  are  processed  by one of three  types of  processes:  hard  pressing,
prepress solvent extraction,  and direct solvent extraction.  The preferred seed
extraction  process  depends on a number of factors  including the amount of oil
present in the material,  the amount of  unextracted  oil that can remain in the
residual meal without effecting its market value,  whether protein  denaturation
is  allowed  in the  meal,  the  amount of  investment  capital  available,  and
applicable emissions standards.                                                 

Our Culbertson,  Montana plant is currently operating as a hard pressing process
but is expanding to include  solvent  extraction.  Hard pressing is a mechanical
process that  squeezes or presses oil out of an  oilseed-derived  cake,  usually

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after cooing  and/or drying to enhance oil recovery,  through  continuous  screw
presses called expellers.  Hard pressing  involves  squeezing out as much oil as
possible. In prepressing, only the easily extractable oil is squeezed out before
subjecting  the partially  de-oiled  material to more complete  extraction  with
solvent.  Sunflower,  safflower,  wet milled corn germ, rapeseed and sesame seed
are usually prepressed followed by solvent extraction.                          

Crude vegetable oils extracted from oilseeds  typically contain  components that
must be  removed  in a process  called  refining  before the oil can be used for
culinary   applications   and  need  to  be  managed   intelligently   for  fuel
applications. Refining typically involves degumming,  neutralization,  bleaching
and deodorization.  Our oilseed crush facility has integral refining capability.
Integration of hard pressing,  solvent extraction and refining in a single plant
will lead to increased  flexibility and economies of scale as compared to plants
that are not integrated.                                                        

Competition                                                                     

Multi-national  agribusinesses,  such as Archer  Daniels  Midland,  Cargill  and
Bunge,  are well  established  within the oilseed  crush and  vegetable  oil and
protein meal industry.  Archer  Daniels  Midland has a plant  approximately  250
miles from  Culbertson,  Montana in Velva,  North Dakota and Cargill has a crush
plant in West Fargo, North Dakota. The Archer Daniels Midland plant crushes 100%
canola and the West Fargo Cargill plant  crushes 100%  sunflower.  They both use
solvent  extraction  systems  and do not  segregate  expeller  pressed  oil from
solvent  extracted  oil. Both of these  organizations  have large  vegetable oil
accounts with major  corporations such as Frito-Lay.  Our advantage over Cargill
and Archer  Daniels  Midland is our ability to switch between  commodities  with
relative ease. In addition,  we are fostering a closer working relationship with
agricultural  producers.  Service and, importantly,  proximity are also factored
into the  decision of growers to  contract or deliver  seed - we have a regional
advantage in that we are simply closer to many growers as compared to the larger
plants.  We can  effectively  compete for western  North  Dakota acres with both
Archer Daniels Midland and Cargill as they publish their commodity prices and we
price our commodity  based seed prices  considering  their basis while factoring
freight  logistics  into the  cost of  delivery.  Also,  all  oilseeds  that are
produced in Montana and  delivered to  processing  facilities  in North  Dakota,
effectively have to travel past our facility. In addition, because a significant
amount  of  wheat  is  trucked  east,  we  can  take   advantage  of  back  haul
opportunities  to  bring  oilseeds  back  to  Culbertson,  Montana.  This is yet
distinct  advantage as freight  costs  factor in when a producer is  determining
where and when they will deliver their oilseed crop.                            

Our  competition   comes  mainly  from  two  different   categories  of  oilseed
processors.  One category  focuses only on the  processing of specialty  oilseed
crops and the other category  focuses only on processing of commodity  oilseeds.
Our attention is split between these two categories.  Our competitive  advantage
against the specialty oilseed processors is our proximity to lower cost land and
high  value  markets.  Our  competitors  that  contract  and crush  oilseeds  in
California  are  competing  against  high land  values and high value  vegetable
crops. The other category of competitors is the large commodity  processors such
as Cargill,  Archer Daniels Midland and Bunge.  The large  corporations  set the
commodity  markets  and we are subject to their  price  establishment.  However,
these large  organizations  deal in  contract  levels on the tens of millions of
pounds with large food  corporations  such as  Frito-Lay.  As such,  these large
corporations tend to overlook smaller million to ten million pound commodity oil
accounts.  The size of our crush facility allows us to  competitively  establish
sales  contracts with the mid-level to smaller  companies that buy vegetable oil
and who may not  get the  attention  and  service  they  need  from  the  larger
commodity  crush  operations.  We have the ability to switch  between  specialty
oilseeds and commodity oilseeds to take advantage of both market opportunities. 

No other crush facility exists in Montana or the Pacific  Northwest to the scale
that presents a threat to our facility. Crush facilities that are operational in
the  Northwest  are found in  Washington  and  generally  consist of small scale
(under 50 tons per day) expeller  operations and on farm  demonstrations.  These
facilities lack the ability to refine vegetable oil into food grade products. In
addition,  their focus has been on the  conversion  of the oil they produce into
biodiesel  fuel rather than food grade  products.  If they  decided to enter the
food grade business they would have to either establish a refining facility that
requires  economies  of scale  that  their  crush  plants  don't  support  and a
significant  amount of capital or utilize a third party  refinery  such as us or
the refiners located in California.                                             

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Our ability to be flexible  and to offer a diverse  product  line that  includes
other culinary oils, specialty oils for chemical  applications,  toll processing
services,  and protein  meal  provides us with a  diversified  product line that
allows us to remain  profitable  when faced with a challenge  from an individual
competitor  against an individual  product.  We believe that our ability to sell
into both the food and fuel markets  interchangeably  provides  opportunities to
enhance earnings and stabilize margins as commodity markets fluctuate.          

Our oilseed crush facility is strategic to our integrated multi-fuels production
model - we  acquired  and are  currently  expanding  this  facility  with a view
towards   eventual   co-location   of  integrated   biodiesel   production   and
biomass-derived synthetic diesel fuel production capabilities.  Our view is that
the competitive posture of this facility in the oilseed and biofuel markets will
be  markedly  enhanced  to the extent  that we  convert  this  facility  into an
integrated  multi-fuel  biorefinery that produces both food and fuel products in
ways  that  are  unique  among  both  oilseed  crush  and  biofuels   production
facilities.                                                                     

COMPETITIVE STRENGTHS                                                           

We  believe  that  our  patented  and  patent-pending  technologies,   feedstock
acquisition strategy,  production  technology,  and experienced  management team
converge to provide us with significant competitive strengths.                  

Feedstock Acquisition Strategy                                                  

Our corn oil  extraction  model is based on the  integration of our patented and
patent-pending   extraction   technology  on-site  at  corn  ethanol  production
facilities at our expense in return for the  long-term  right (10 years or more)
to purchase the extracted  corn oil for a per gallon price equal to about 53% of
diesel spot prices.                                                             

Significant  Demand for Our Corn Oil  Extraction  Technology in the Corn Ethanol
Production Industry                                                             

The spread  between  ethanol and corn prices has narrowed  significantly  during
2007 and has negatively  impacted  ethanol  producer  margins.  Fluctuations are
likely to continue to occur.  Most industry  analysts are forecasting  tightened
spreads for the balance of 2008 and it is possible  that  ethanol  prices  could
decline  below  ethanol  production  costs,  which  could  cause a corn  ethanol
producer  to suspend  production.  These  market  forces can be  mitigated  to a
significant  extent by our corn oil  extraction  technology and the structure of
our market offering.                                                            

>>   Impact on  Earnings                                              

          Ethanol  producers that allow us to install our extraction  technology
          in their facilities will generate  additional  earnings of about $0.08
          per gallon of ethanol produced at current market prices. $8,000,000 in
          additional  annualized  earnings  for a  100  million  gallon  ethanol
          facility is significant and  corresponds to materially  increased cash
flows for participating facilities.                         

>>   Impact on Risk  Profile                                          

          Tightened  spreads  between  ethanol  and  corn  prices  translate  to
          decreased  operating cash flows. This, in turn, will negatively impact
          the overall risk  profile and ongoing  debt  service and  fund-raising
          capabilities of corn ethanol  producers.  By installing our extraction
          technology  for no cost, the structure of our market  offering  allows
          participating ethanol producers to increase their operating cash flows
          and offset their ethanol/corn  commodity risk without having to commit
          capital  from  existing  resources  or  available  sources  of debt or
          equity.  This same benefit  applies for developers  seeking to finance
          and  build  new  corn   ethanol   production   facilities   such  that
          participation in our program can favorably impact the financability of
new ethanol projects.                                       

We believe that the prevailing  conditions in the corn ethanol  industry and the
benefits presented by our technology converge to establish high levels of demand
for our corn oil extraction technology.                                         

Significant Market Opportunity                                                  

We can  extract  about 6.5  gallons  of corn oil for every 100  gallons  of corn
ethanol  produced  with  our  technology.   According  to  the  Renewable  Fuels
Association ("RFA"),  more than 8.1 billion gallons of corn-derived ethanol were
produced  in  2007  and  another  5.3  billion   gallons  per  year  were  under
construction  as of December  2007.  This  equates to a market  opportunity  for
GreenShift  of over 878 million  gallons of crude corn oil that is not  suitable
for human  consumption  and that is  potentially  available  for  refining  into
biodiesel.                                                                      

Our patented and patent-pending corn oil extraction technology makes this market
opportunity available to us to the exclusion of other biodiesel producers.      

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Significant Cost and Risk Management Advantage                                  

The price of refined  biodiesel is  primarily  related to the price of petroleum
diesel  and  it  typically  sells  at a  premium  to  petroleum  diesel  due  to
governmental  mandates  and  incentives  for  use  of  biodiesel,   as  well  as

environmental  factors and other market drivers.  The profitability of biodiesel
production  is  largely  determined  by  the  difference  between  the  cost  of
feedstocks,  which are  agricultural  commodities not correlated to the price of
petroleum diesel and the price for refined biodiesel.                           

Our extraction  technology  provides us with access to corn oil supplies for our
own use in the  production of biodiesel.  Importantly,  the price we pay for the
corn oil we extract equates to a substantial  discount to the cost of comparable
vegetable oils, animal fats, cooking greases and the other feedstocks  necessary
for biodiesel production.                                                       

The average  price of soybean oil  increased  to about $4.84 per gallon in March
2008  according to the Jacobsen  Publishing  Company  (publisher of the Jacobsen
Commentary and Market News Bulletin). At the same time, market prices for choice
white  grease and yellow  grease  increased to about $2.93 and $2.39 per gallon,
respectively.  With diesel trading at an average of $3.15 per gallon, and at 53%
of the price of diesel, the price we paid for the corn oil we extracted in March
2008 was about $1.67 per gallon.                                                

While  the  capital  intensity  of our  business  model is about  twice  that of
competing  biodiesel  producers  (about $3.00 per gallon of  installed  capacity
including  extraction),  we believe  that our model is superior to  conventional
production  models on a risk  adjusted  basis.  Note the  following  significant
advantages:                                                                     

     >>   Lowest Cost  Feedstock.  In March  2008,  the price of the corn oil we
          extracted was about 34% of the price of soybean oil,  about 56% of the
          price of  choice  white  grease,  and about 70% of the price of yellow
          grease.  The impact of this on estimated  operating income can be seen
          in the  right-hand  graph  below.  Note  also  that we  could  produce
          biodiesel  at a cost  that  would  still  achieve  positive  operating
          profits  without  the $1.00  gallon  tax  credit  or other  government
incentives.                                                 

     >>   Hedged Purchase Price. We have  essentially  hedged our margins to our
          offtake market by linking the purchase of our feedstock to diesel.  We
          consequently  have the ability to remain  profitable while the margins
          of competing producers tighten or are subject to increased  volatility
          in the  agricultural  and other commodity  markets.  This and the fact
          that our extraction agreements include terms of ten years or more form
          the basis of a  production  advantage  that we believe to be extremely
significant.                                                

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Significant Additional Operating Cost Advantages                                

We provide targeted ethanol producers with the option to participate in a hybrid
version of our  extraction  model that includes  co-location  of our  extraction
technology and a GreenShift-owned biodiesel production facility. We are party to
agreements  to co-locate  two such  biodiesel  facilities:  at Global  Ethanol's
Lakota,  Iowa  ethanol  facility  and at Northeast  Biofuels'  Fulton,  New York
ethanol facility. Our co-location agreements include provisions to capitalize on
valuable opportunities for shared utilities,  labor and site management with the
host facility.  This allows us to enjoy  significant  capital and operating cost
savings as compared to competing producers.                                     

Production Technology                                                           

GreenShift's  patent-pending  biodiesel  production  technology  intensifies and
idealizes  the  conditions  under  which  biodiesel  refining  occurs and we are
consequently  able to complete the refining  process in minutes instead of hours
under true continuous flow conditions - at a much smaller scales, and at reduced
capital and operating costs as compared to traditional processes.               

Benefits of Process Intensification                                             

With our technology, targeted feedstocks simply move through the process with no
need to linger at any particular  stage while a reaction is allowed to complete;
targeted  fats and oils are reacted as they pass  through  the system.  This has
several compelling implications:                                                

     >>   Reduced Equipment and Related  Infrastructure Needs. Reacting the fats
          and oils as they move through the system versus at several stops along
          the away simply reduces the amount of tanks, pumps,  controls,  pipes,
          utilities,  and  square  feet  of  floor  space  required  to  produce
biodiesel.                                                  

     >>   Process  Time.   Intensifying  the  chemical   reactions  involved  in
          biodiesel production  accelerates  reaction rates.  Increased reaction
          rates  correspond to less time required to complete the process,  less
          equipment  to manage raw  materials as reactions  are  completed,  and
    overall less labor and other operating and maintenance expenses.

     >>   Greater Native Feedstock  Tolerances.  Standard  biodiesel  processing
          will require  feedstocks  to comply with a range of relevant  material
          specifications  - the chemical  reactions  involved in a  conventional
          process will not produce the desired product quality if feedstocks are
          out of  specification.  Intensifying the relevant  chemical  reactions
          increases  the tolerance of the process to a wider array of feedstocks
 and enables more liberal material specification requirements.

These benefits translate to reduced capital and operating expenses and a broader
feedstock market for the client and equate to reduced financial, operational and
market risk for the client and its stakeholders.                                

Benefits of Modularity                                                          

Concentrations of risk in the feedstock markets  correspond to concentrations of
financing and operational risk for developers. These risks increase dramatically
with the size of the  production  facility.  Smaller  plants simply have smaller
risk  profiles  and are  inherently  easier for  entrepreneurs  to  finance  and
operate.                                                                        

The modular  aspect of the  GreenShift  technology  allows  developers and their
financing  sources to incur less  financial and operating  risk as they initiate
production  at, for  example,  a 10 or a 20 million  gallon per year  production
facility,  and then leverage their cash flows to scale plant sizes up into their
desired  markets.  An additional 10 million  gallon system can simply be plugged
into an existing plant with reduced balance of plant costs.                     

Most  standard  technologies,  regardless  of size,  are  designed  to process a
specific  feedstock  at any given  time.  The modular  aspect of the  GreenShift
systems  allows  operators to dedicate  process lines to specific  feedstocks or
blends of  feedstocks  (for  example,  the first 10  million  gallon  line would
process fat based feeds while the second processes oil based feeds).            

When a standard processing facility needs to be shut-down for maintenance or has
a process  upset,  the  operator's  whole  business  stops.  Modularity  enables
operators to keep their business  operating as lines are  iteratively  shut-down
for maintenance or the like.  Standardization  with a modular process technology
also has compelling regulatory permitting and other operating benefits.         

Competing  modular  process  technologies  have been designed to reduce  upfront
capital costs at the expense of significantly  increased operating expenses.  In

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contrast,  our  process  has  been  deliberately  designed  to be  more  capital
intensive  to achieve  maximum  operating  efficiencies  and  minimal  operating
expenses,  which  translate to increased gross margins and cash flows as well as
reduced business risk.                                                          

Finally,   modularity  and  reduced  equipment  and  infrastructure  needs  also
translate to rapid  delivery  cycles (18-22 weeks) and quicker site  development
(6-9 months) as compared to conventional technologies (18-24 months).           

Chemical Processing Experience                                                  

Nearly every member of our management  team,  including  Kevin  Kreisler,  David
Winsness,  and  Greg  Barlage,  as well  as all of our  senior  engineering  and
technical staff has significant operational, chemical processing, extraction and
refining experience involving agricultural,  municipal, industrial and hazardous
materials.  We believe  that this is a critical  advantage  in the new  biofuels
industry  where  qualified  operational  talent is in great demand and producers
often lack the processing  experience to manage their production facilities in a
safe, compliant and profitable manner.                                          

Technology Development Expertise                                                

Our internal process engineers have developed our corn oil extraction, biodiesel
and related  technologies  over the past several years.  This team has also been
responsible  for  a  series  of  developments   and   improvements  to  our  own
technologies  that, in our view,  further strengthen our technological and other
competitive  advantages.  Our technologies and in-house  engineering and project
delivery teams have built and commissioned three corn oil extraction  facilities
and two biodiesel plants  corresponding to over 25 million gallons of annualized
biodiesel production since January 2007. This team is key to our ability to meet
our internal facility  commissioning schedule as well as our current third party
biodiesel  equipment sales  commitments  that equate to an additional 30 million
gallons per year of biodiesel production capacity.                              

Portfolio of Strategically Compatible Technologies                              

Technology  commercialization  is a capital  intensive  process that  requires a
tremendous amount of resources to move a single technology  through research and
development  and  into  mature  go-to-market  execution.  Importantly,  we  have
selected  technologies  that  integrate into each other as well as targeted host
producers.  We believe that this helps to dramatically reduce  commercialization
costs and other barriers for each new technology.                               

A key  principal  of  our  commercialization  plans  is to  leverage  all of our
commercialization resources - existing client relationships,  sales, engineering
and technical staff, vendor relationships,  financing capabilities, project cash
flows  and  our  own  process  infrastructure  - to  accelerate  each  iterative
technology through early adoption into mature market deployment.                

As applied in the biodiesel  production and corn ethanol production  industries,
we believe that our  "commercialization  pipeline"  presents us with  compelling
opportunities    for    continuous    improvement    through   the    sequential
commercialization,  integration and application of new technologies  that enable
us to maintain our technology  leadership while securing additional low cost and
low risk feedstocks for biofuel production.                                     

BUSINESS STRATEGY                                                               

Our goal is to leverage our technological advantages into a leading position in 
the renewable fuels industry. Our plan to accomplish that goal has several      
facets:                                                                         

1.   Financing, Construction and Operation of Corn Oil Extraction Facilities    

Given the nature of our  competitive  advantages and the current and foreseeable
market  dynamics  in our  target  industries,  the  highest  and best use of our
resources  and our  primary  objective  is to get as many  corn  oil  extraction
systems installed in as many corn ethanol facilities as possible,  as quickly as
possible. We expect that our annualized operational corn oil extraction capacity
will be about 15 million gallons per year by the end of this year and our target
is to have at least 50 million gallons per year of extraction online by December
31, 2009. The total market  opportunity  for our  extraction  technology is many
times this  extraction  rate and our longer term goals involve the deployment of
extraction  systems  corresponding  to over  150  million  gallons  per  year of
extraction.                                                                     

2.   Financing, Construction and Operation of Biodiesel Production Facilities   

While we intend to commit the majority of our capital  resources  (to the extent
they become available) to the construction of corn oil extraction facilities, we
will not be able to scale  our corn oil  extraction  model to the  levels we are

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targeting for 2009 and beyond unless we commit  resources to the  cost-effective
internalization of biodiesel production capability.  We have executed agreements
to build GreenShift-owned  biodiesel facilities at Global Ethanol's Lakota, Iowa
ethanol facility and Northeast Biofuels' Fulton, New York ethanol facility. Each
facility is designed to commence  production  at the rate of 10 million  gallons
per year and to scale to higher  capacities as warranted by the  availability of
our corn oil  supplies as our  extraction  facilities  are brought  online.  Our
development  plan for these  facilities is to phase them into  construction in a
staggered  fashion  that  follows  after  the  construction  of  our  extraction
facilities.                                                                     

3.   Financing and Expansion of Our Oilseed Crush Expansion                     

We have  entered  into  construction  agreements  to expand the  capacity of our
oilseed crush facility from 1.3 million gallons per year to more than 16 million
gallons per year of crush capacity. Once complete later this year, this facility
will  provide us with a stable  source of cash flows that we intend to  reinvest
into  the  execution  of our  corn oil  extraction  model as well as  additional
feedstock  options  for our  biodiesel  production  facilities.  Our longer term
expectations  for this facility involve  leveraging its existing  infrastructure
for integral biofuel production.                                                

4.   Transition Project Execution to Strategic Vendors and Partners             

Our senior  engineering and technical teams currently execute our extraction and
related  construction  projects  and act in many cases as  general  contractors,
direct  laborers and  facility  operators.  This has been  required in the early
stages of our development because of the proprietary nature of our technologies.
These functions will need to be shifted to strategic  vendors and partners under
the direction of our engineering and technical management in order to execute on
the magnitude of construction projects implied by our growth objectives. We have
already started this transition. This goal also applies to execution of projects
for third party  biodiesel  developers.  While providing these services has been
necessary  given the  learning-curve  issues and  process  challenges  that many
biodiesel  developers  face in a new industry,  limiting our  involvement in our
clients' project  execution to the design,  manufacturing  and sale of equipment
based on our technologies will keep us focused on higher value activities.      

5.   Develop International and Other Strategic Partnerships                     

The market potential for sales of equipment based on our biodiesel  technologies
is  limited  by  the  ability  of  developers  to  obtain  financing  for  their
businesses.  Projects lacking a reliable and  cost-effective  feedstock strategy
are typically very difficult to finance given the issues with the U.S. feedstock
markets discussed above. The  international  feedstock markets are generally not
as  constrained  and therefore  represent  potential for  additional  sales.  We
accordingly  intend to develop  strategic  relationships  to establish sales and
project execution capability outside of the North American markets.             

6.   Completion of Financing                                                    

We have retained two investment  banks to assist us with our capital needs.  For
our larger corporate capital needs we have retained  Fieldstone  Private Capital
Group to  assist  us in  raising  capital  to meet our corn oil  extraction  and
biodiesel production capacity goals. In addition to Fieldstone, we have retained
Northland  Networks to assist us with raising the  expansion  capital we need to
expand our oil seed crush facility.                                             

Building corn oil extraction and biodiesel production  facilities will each cost
about $1.50 per gallon of installed capacity. This equates to construction costs
of about $150 million to meet our 2009 target of 50 million  gallons per year of
extraction and production  capacity.  Based on our recently closed financing and
the feedback we have received to date in our financing efforts,  we expect to be
able to conserve our equity and rely on the  strength  and hedged  nature of our
corn oil extraction and biodiesel  production cash flows to finance the majority
of these costs with a combination of debt and project equity.  The same strategy
applies for the  financing of our oilseed  crush  expansion,  which will cost an
estimated  $9.8  million to  complete - that is, we expect to be able to finance
the expansion  almost entirely with debt that will be serviced by the cash flows
we expect to produce at this facility.                                          

7.   Pay Off and Refinance Convertible Debt                                     

We have  historically  raised capital in the form of  convertible  debt that was
structured in ways that were  favorable  from a cash flow  perspective  and less
favorable  from an equity  perspective.  Our  ability  to meet the debt  service
requirements  of this  financing by issuing  common stock allowed us to conserve
cash flows while we developed and refined our  technological  capabilities  into
commercially-viable  production  capabilities.  Now that our  technologies  have
started to produce  reliable cash flows, we have the ability to raise capital at
more  cost-effective  rates  from an  equity  perspective.  Our plan  here is to
leverage our current and  projected  cash flows to payoff and refinance at least
half of our  convertible  debt prior to year end and any  remaining  convertible
debt prior to the end of 2009.                                                  

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8.   Applied Technology Development                                             

Among our core competencies is the ability to develop and implement incremental 
advances in technologies that add value to existing production infrastructure.  
As   we build our own infrastructure in the short term, we plan to continue to  
enhance our extraction and biodiesel technologies with a form of in-the-trenches
commercialization that relies on and is then accretive to the cash flows of     
pre-existing production assets.                                                 

Our longer term  commercialization  plans are based on the iterative integration
and   synergistic   application  of  several   technologies   into   traditional
agriproducts plants in ways that enable us to greenshift the host and to average
down the  costs  and risks  associated  with  both the host and each  subsequent
technology upgrade.                                                             

We are initially focused on executing this strategy in the corn-derived  ethanol
industry.  The  primary  reason  for  this is  that  our  historical  technology
development  efforts and the evolution of the corn ethanol and biodiesel markets
converged at the right time to give two of our technologies, corn oil extraction
and biodiesel production, significant market traction.                          

We believe that the established first generation corn ethanol  infrastructure is
the only  practical  pathway in North America to  cost-effectively  increase the
production and use of carbon-neutral biofuels on globally-meaningful  scales. To
accomplish  this  in a  competitive  and  environmentally  superior  way,  first
generation corn ethanol facilities will need to evolve to achieve  significantly
improved production efficiencies. We intend to contribute to that evolution.    

Our go-to-market  plan today is accordingly based on the  commercialization  and
sequential  integration  of our  technology  upgrades  into Gen 1.0 corn ethanol
process infrastructure on the following roll-out schedule:                      

                                                        [Enlarge/Download Table]

Version           Technology                                                                 Biofuel
----------------------------------------------------------------------------------------------------
                                                                                                    
Gen 1.1           Corn Oil Extraction                                                      Biodiesel
Gen 1.2           Integral Biodiesel Production                                            Biodiesel
Gen 1.3           Integral Biomass Gasification for Heat and Power Applications           Cellulosic
Gen 1.4           Integral Biomass Gasification for Liquid Fuels Applications             Cellulosic
Gen 1.5           Integral Bioreformation of Carbon Dioxide into Liquid Fuels             Cellulosic

Each step is designed to integrate  and work with each  previous step as well as
the host ethanol  facility to capitalize on all practical  operating  synergies.
Gen 1.1 enhances the economic and  environmental  profile of the host  facility;
Gen 1.2 enhances the profile of both Gen 1.1 and the host, and so on.           

We intend to remain focused on developing  and  implementing  technologies  that
make Gen 1.0  ethanol  plants  more  efficient.  We plan do the  same for  other
traditional  agriproducts  plants,  such as our oilseed crush plant, and upgrade
these plants into integrated multi-feedstock, multi-fuel ("IMF") biorefineries. 

HISTORY                                                                         

The  Company  was  formed  to  develop  and  use  innovative  technologies  that
facilitate the efficient use of natural resources.  In its original incarnation,
the  Company's  business  model  was  based on  developing  and  commercializing
technologies  that made more  efficient  use of natural  resources by extracting
metals from  industrial  hazardous  wastes for sale to third party  smelters and
refineries.  These metal extraction  technologies were ultimately successful and
the Company had constructed a proprietary metal extraction facility to implement
its  technologies  on  a  commercially-meaningful  scale,  but  changes  in  the
manufacturing sector in the northeastern U.S. during the early 2000s resulted in
decreased  concentrations of less valuable metals flowing through the industrial
wastes  processed by this facility.  The Company  consequently  discontinued its
metals  extraction  business and shifted its focus away from the  extraction  of
metal-bearing   co-products  to  the  extraction  of  co-products   that  create
value-added renewable energy production opportunities.                          

The  Company  went on to  invest  in a broad  array of  technologies,  including
advanced ultrasonic and nanocatalytic  reformation processes,  novel separation,
extraction  and  preparation  processes,  and  enhanced  chemical,  thermal  and
biological   processes.   We  also  invested  in  strategic  assets,   including
engineering   support,   manufacturing   and   prototyping   capabilities,   and
strategically compatible production assets - all with a view towards development
of a financeable  business model that downshifted the economic and environmental
costs of energy production.                                                     

During 2007, the Company completed development and initiated cash flows with two
of its new  technologies  - its patented and  patent-pending  oil extraction and
biodiesel production technologies.  The Company's broader technology development
activities  were  subsequently   curtailed  and  the  Company  restructured  its
operations based on the go-to-market requirements of these two new technologies.

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                                                        [Enlarge/Download Table]

The following is a summary of the Company's corporate and operational history                                  
since formation:                                                                                               
                                                                                                               
1979              Incorporation                                                                                

1979 - 1984       Manufacturing and distribution of filtration media and equipment for metal finishing industry
                  Name of company during this time frame: Kreisler Bags and Filtration, Inc.                   

1984 - 1998       Development stage operations based on metal extraction technologies                          
                  Name of company during this time frame: KBF Pollution Management, Inc.                       

1998 - 2003       Pilot stage operations based on metal extraction technologies                                
                  Name of company during this time frame: KBF Pollution Management, Inc.                       

2003 - 2005       Commercial scale operations based on metal extraction technologies                           
                  Name of company during this time frame: Veridium Corporation                                 

2005 - 2006       Discontinuance of operations based on metal extraction technologies                          
                  Transition to development stage operations targeting new platform technologies               
                  Name of company during this time frame: Veridium Corporation                                 

2006 - 2007       Pilot stage operations based on oil extraction and biodiesel technologies                    
                  Name of company during this time frame: GS CleanTech Corporation                             

2007 - Present    Commercial scale operations based on oil extraction and biodiesel technologies               
                  Name of company during this time frame: GreenShift Corporation                               

ORGANIZATIONAL STRUCTURE                                                        

We conducted our operations during the fiscal year ended December 31, 2007 in   
the following segments:                                                         

>>   Equipment & Technology Sales                                     

>>   Culinary Oil Production & Sales                                  

>>   Biofuels Production & Sales                                      

>>   Diversified Environmental Services                               

As of December 31, 2007, the Company  administered its operations  through three
tier 1 subsidiaries:  GS CleanTech  Corporation (f/k/a GS Ethanol  Technologies,
Inc.), GS AgriFuels Corporation and GS EnviroServices,  Inc. The following is an
outline of our organizational structure as of December 31, 2007:                

                                                        [Enlarge/Download Table]

Company                                                                           Status                     Nature
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
GreenShift Corporation (OTC Bulletin Board: GERS)                                 Active                    Holding

1.     GS CleanTech Corporation (f/k/a GS Ethanol Technologies, Inc.)             Active                  Operating
         GS Global Biodiesel, LLC                                                 Active                  Operating
         GS Design, Inc. (f/k/a Warnecke Design Services, Inc.)                   Active                  Operating
           GS Rentals, LLC                                                        Active                    Holding
         Sterling Planet, Inc.                                                    Active        Minority Investment

2.     NextGen Acquisition, Inc.                                                  Active                    Holding
         NextGen Fuel, Inc.                                                       Active                    Holding
       Sustainable Systems, Inc.                                                  Active                    Holding
         Sustainable Systems, LLC                                                 Active                  Operating
       ZeroPoint Clean Tech, Inc.                                                 Active        Minority Investment

3.     GS EnviroServices, Inc.                                                    Active                    Holding
         EnviroSafe Corporation (NE), Inc.                                        Active                  Operating
         EnviroSafe Corporation                                                   Active                  Operating
         Enviro-Energy, Inc.                                                      Active                  Operating

In January 2008 we sold our  Diversified  Environmental  Services  business,  GS
EnviroServices (see Note 31 to the Consolidated Financial Statements, Subsequent
Events).  The contribution of GS  EnviroServices  to our consolidated  financial
results  for the year ended  December  31,  2007 is  detailed  in Note 23 to the
Consolidated Financial Statements,  Segment Information, and pro forma financial
statements for the year ended December 31, 2007 that show the deconsolidation of
the GS  EnviroServices  from our core  business  are  provided in Note 29 to the
Consolidated Financial Statements, Acquisitions.                                

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The Company  also  completed  the final stages of its  restructuring  during the
first quarter of 2008.  Our  organizational  structure  including the results of
this  restructuring,  is  included  in  Note  31 to the  Consolidated  Financial
Statements, Subsequent Events.                                                  

MINORITY INVESTMENTS                                                            

We hold minority  stakes in the following  strategically  compatible  companies:
ZeroPoint Clean Tech, Inc. (about 10%) and Sterling Planet, Inc. (about 10%).   

ZeroPoint Clean Tech, Inc.                                                      

ZeroPoint  Clean  Tech,  Inc.  is a  renewable  energy  technology  and  project
development  company.   ZeroPoint  has  developed  a  highly  efficient  biomass
gasification  process capable of converting biomass into renewable synthesis gas
to create carbon-neutral energy in the form of gas, electricity, ethanol, diesel
substitutes and hydrogen.  ZeroPoint's technology is well suited for distributed
deployments,  making it highly applicable to the localized nature of many global
sources of biomass feedstock.                                                   

When biomass is heated in the absence of oxygen it decomposes  into a mixture of
hydrogen and carbon monoxide known as synthesis gas. This clean burning "syngas"
is a valuable energy product that can be used in a wide variety of applications.
ZeroPoint systems do not incinerate and emit no harmful emissions. The emissions
produced by syngas  combustion are the same or better than those for natural gas
combustion. Combustion is a function of the mixture of oxygen with a hydrocarbon
fuel. Gaseous fuels mix with oxygen more easily than liquid fuels, which in turn
mix more easily than solid fuels.  Syngas  therefore burns more  efficiently and
cleanly than the solid biomass from which it is made.  Like natural gas,  syngas
can also be burned in boilers,  furnaces and generators to make  electricity and
heat.  ZeroPoint  successfully  commissioned  its ?rst commercial  scale biomass
gasi?cation system at its technology  development  facility in Potsdam, New York
in March 2007.  Additional  information  on  ZeroPoint  is  available  online at
www.zeropointcleantech.com.                                                     

In addition to being an investor in ZeroPoint,  we hold the exclusive  rights to
use or  market  the  ZeroPoint  biomass  gasification  technology  in the  North
American corn ethanol industry.                                                 

Sterling Planet, Inc.                                                           

Winner of the U.S.  Department of Energy 2007 Renewable  Energy  Marketer of the
Year award, Sterling Planet is a sustainability  pioneer and innovative supplier
of renewable energy, energy efficiency and low-carbon solutions. Sterling Planet
develops new renewable  energy and greenhouse gas reduction  projects and offers
integrated products and services to a broad client base,  delivering supply- and
demand-side solutions in the rapidly expanding environmental market. The company
was the first green power marketer to join the U.S.  Green Building  Council and
to set a  corporate  greenhouse  gas  reduction  goal  as a  U.S.  Environmental
Protection Agency Climate Leaders Partner. Since 2001, sales of renewable energy
to  1,345  business  clients,  43  colleges  and  universities,  138  government
agencies,  58 utilities and thousands of residential customers have avoided more
than 25 billon pounds of carbon dioxide emissions,  which compares to taking 2.2
million cars off the road for a year.                                           

Sterling  Planet  services  an  impressive  array of  clients  including  Intel,
PepsiCo,  Alcoa,  The  Coca-Cola  Company,  DuPont,  Delphi  Corporation,   Duke
University,   University  of  Utah,  Nike,  Pitney  Bowes,  U.S.   Environmental
Protection  Agency,  the U.S.  General  Services  Administration,  the  Homeland
Security Department,  Western Area Power  Administration,  New York State Energy
Research and Development Authority (NYSERDA), the U.S. Army, Staples,  Whirlpool
Corporation,  the  World  Resources  Institute  and  over 150  other  companies.
Additional   information   on   Sterling   Planet   is   available   online   at
www.sterlingplanet.com.                                                         

INTELLECTUAL PROPERTIES                                                         

GreenShift  Corporation  holds a number of patents and  trademarks.  GreenShift,
GreenShift  Corporation,  the  "GreenShift  Logo"  and the brand  name  "Tornado
Generator"  and taglines  "Natural  Solutions"  and "A Clear Vision for a Better
Environment" are the registered trademarks of GreenShift Corporation. We protect
our   intellectual   properties   through  a  combination  of  patents,   patent
applications,  license and  distribution  agreements,  common law copyrights and
trade  secrets.  The first of our patents does not expire until 2019. All of our
technical  employees enter into  confidentiality,  non-competition and invention
assignment  agreements.  We also  require our vendors,  customers  and others to
enter into  confidentiality  agreements of varying  scope and duration  prior to
being given access to our  proprietary  information  regarding  our  technology.
There can be no  assurance  that such  measures  will be adequate to protect our
technology.                                                                     

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We estimate that during the year ended  December 31, 2007 we spent about $95,000
on research and development.  Insofar as our technology development plans moving
forward call for the  development of incremental  advances that are accretive to
the cash flows of, and thus are paid for by, pre-existing  production assets, we
do not expect our research and  development  expenses moving forward to be borne
by our potential  customers as the price of our  biomass-derived  oils and fuels
will be determined primarily by commodity prices at the time of sale.           

Our Technologies                                                                

Our technologies are designed to be robust, scalable, energy efficient,  modular
and  capable  of  rapid  and  cost-effective  "plug-and-play"  integration  into
existing infrastructure. We believe that these advantages enable the extraction,
beneficiation (preparation for refining) and refining of many different forms of
biomass into  carbon-neutral  biofuels  cost-effectively at a range of scales. A
summary of our technologies is provided here:                                   

                                                        [Enlarge/Download Table]


Technology                                  Description                                                                           
-------------------------------------------------------------------------------------------------------------------               
                                                                                                                                  
Corn Oil Extraction                         Extracts crude vegetable oil from co-product of corn ethanol production               
Animal Fat Extraction                       Extracts brown grease from co-product of animal and livestock processing              
Fats & Oils Preparation                     Prepares crude fats and oils for conversion into biodiesel                            
Desiccation/Homogenization                  Prepares cellulosic feedstocks for conversion into biomass-derived liquid fuels       
Biodiesel Production                        Enhanced chemical conversion of fats and oils into biodiesel                          
Biomass Gasification                        Enhanced thermal conversion of cellulosic feedstocks into biomass-derived liquid fuels
Carbon Dioxide Bioreformation               Enhanced biochemical conversion of CO2 into biomass-derived liquid fuels              

Corn Oil Extraction                                                             

Dry mill  ethanol  producers  convert  starch from corn into  ethanol,  which is
currently  the most  widely  used  biofuel in America.  The  by-product  of this
process  contains  the fat from the corn and  exits  the back of the  production
process.   The  Company's  patented  and  patent-pending   corn  oil  extraction
technology  economically  recovers up to 75% of the fat from this by-product and
converts it into crude corn oil which can either be sold as-is or for conversion
into biodiesel.                                                                 

Animal Fat Extraction                                                           

This  technology  reduces the volume of Dissolved Air Flotation  ("DAF")  sludge
disposed  by  livestock  and  poultry  facilities  by 80% while  recovering  the
majority  of  the  animal  fats  contained  in  the  sludge  for  cost-effective
conversion into biodiesel fuel.  This technology  enables  livestock and poultry
processing  facilities  to  dramatically  reduce the  volume of sludge  they are
shipping and disposing while creating a new revenue source for these  facilities
in the form of the refined fat extracted  from the DAF sludge and converted into
biodiesel fuels.                                                                

Fats & Oils Preparation                                                         

Our  fats  and  oils  treatment  process   technologies   include  an  array  of
conventional and enhanced vegetable oil refining,  feedstock treatment and other
associated  processing  equipment  necessary  to process all known  conventional
animal fats and vegetable oils in their natively  available forms in conjunction
with our patent-pending biodiesel production technology.                        

Desiccation/Homogenization                                                      

This is a patented  technology  that  accelerates  compressed  air to supersonic
speeds to instantly  grind,  flash desiccate and atomize solid and liquid wastes
and  other   materials  into  micron  sized  powders.   The  Company's   Tornado
Generator(TM)  can be used for feedstock  extraction and preparation  processes.
The Company holds the exclusive  worldwide rights to this technology  subject to
limited  exclusions  in the  municipal  waste and  precious  metals  markets.  A
commercial scale installation of GreenShift's Tornado  Generator(TM)  technology
is located in Joplin,  Missouri,  where it effectively  processes and dehydrates
poultry products into highly nutritional and shelf stable products.             

Biodiesel Production                                                            

Our  patent-pending  biodiesel process technology  leverages  innovative process
intensification  techniques  to  accelerate  and enhance  traditional  biodiesel
reaction  kinetics,  thus  decreasing  process  time,  reducing  energy  and raw
material needs,  and increasing  product  quality.  These benefits  translate to
increased  capital and operating cost efficiencies at smaller scales as compared
to traditional biodiesel process technologies.                                  

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Biomass Gasification                                                            

Developed by ZeroPoint  Clean Tech, this  patent-pending  technology is a highly
efficient  biomass  gasification  process  capable of  converting  biomass  into
renewable  synthesis  gas to  create  carbon-neutral  energy in the form of gas,
electricity, ethanol, diesel substitutes and hydrogen. ZeroPoint's technology is
well suited for  distributed  deployments,  making it highly  applicable  to the
localized nature of many global sources of biomass feedstock.  The Company holds
the  exclusive  use and  distribution  rights  to this  technology  in the North
American corn ethanol industry.                                                 

Carbon Dioxide Bioreformation                                                   

This patented and  patent-pending  process uses algae to consume  carbon dioxide
emissions from fermentation and fossil-fuel  combustion  processes such as power
plants.  The algae use the available carbon dioxide in the exhaust and water to 
grow new algae and give off pure  oxygen  and water  vapor in the  process.  The
organisms also absorb nitrogen oxide and sulfur dioxide.  Once the algae grow to
maturity,  they are harvested for conversion  into ethanol and biodiesel  fuels.
This technology was originally developed at Ohio University's Ohio Coal Research
Center with funding from the U.S.  Department  of Energy.  GreenShift  holds the
worldwide exclusive rights to Ohio University's  technology and has subsequently
filed  for  patent  protection  on  significant  targeted  improvements  to  the
technology.  GreenShift  has  constructed  a pilot  plant  that will be used for
extended  testing.  This pilot  plant will act as a  demonstration  platform  to
quantify  existing  benchtop testing results and to refine design parameters for
future evolutions of the technology.                                            

ENVIRONMENTAL MATTERS                                                           

Our planned new production facilities will be subject to various federal,  state
and local  environmental  laws and regulations,  including those relating to the
discharge of materials into the air, water and ground; the generation,  storage,
handling,  use,  transportation  and  disposal of hazardous  materials;  and the
health and safety of our employees. These laws, regulations and permits also can
require expensive  pollution  control equipment or operational  changes to limit
actual or potential  impacts to the  environment.  A violation of these laws and
regulations  or permit  conditions  can  result in  substantial  fines,  natural
resource  damage,   criminal  sanctions,   permit  revocations  and/or  facility
shutdowns.  We do not  anticipate a material  adverse  effect on our business or
financial   condition   as  a  result  of  our  efforts  to  comply  with  these
requirements.  Operating expenses to meet regulatory requirements, including all
environmental  permits,  will be an integral part of operating costs.  Costs for
compliance  with   environmental  laws  include  safety  and  health  protection
measures,  controls  limiting air emissions and effluent  discharges,  emergency
response capabilities, storm water management, recordkeeping and training.      

OTHER CONTINGENCIES                                                             

Under  GreenShift'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 $1,000,000
per occurrence and $2,000,000 aggregate with a $4,000,000 umbrella policy.      

EMPLOYEES                                                                       

GreenShift  Corporation  currently has 124  full-time  employees as of March 31,
2008.  In addition to its executive  officers,  GreenShift  Corporation  employs
sales  personnel,  staff  engineers,  process  managers,  maintenance  managers,
administrative  personnel and general  facility  technicians.  There is no union
representation for any of our employees.                                        

ITEM 1A  RISK FACTORS                                                           

There are many  important  factors that have  affected,  and in the future could
affect,  GreenShift'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.                                     

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RISKS ATTENDANT TO OUR BUSINESS                                                 

Our external  auditors  have  included an  explanatory  paragraph in their audit
report 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.                                                              

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
from continuing  operations of $25,509,767 for the year ended December 31, 2007.
As of  December  31,  2007  the  Company  had  $728,565  in  cash,  and  current
liabilities  exceeded  current assets by $38,377,772  which included  derivative
liabilities of $6,704,831, convertible debentures of $5,292,072, $3,979,437 in  
purchase  obligations,  $9,004,018  in  amounts  due to the prior  owners of our
oilseed crush  facility,  and  $5,335,350  in related party debt.  None of these
items are  required to be serviced out of the  Company's  regular cash flows and
the Company's working capital deficit net of these amounts is $8,062,064.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.                                                                  

We are  implementing  new business  plans which make the results of our business
uncertain.                                                                      

A  significant  portion of our  operations  have been acquired or started in the
last 24 months.  Therefore,  our experience in operating the current business is
limited.  Our  limited  operating  history  makes  it  difficult  for  potential
investors to evaluate our  business.  Therefore,  our  proposed  operations  are
subject  to all of the  risks  inherent  in the  initial  expenses,  challenges,
complications and delays frequently encountered in connection with the formation
of any new business,  as well as those risks that are specific to the biodiesel,
ethanol and culinary  oils  industry in general.  Investors  should  evaluate an
investment in our company in light of the problems and uncertainties  frequently
encountered  by  companies  attempting  to  develop  markets  for new  products,
services and  technologies.  Despite best efforts,  we may never  overcome these
obstacles  to  achieve  financial  success.  Our  business  is  speculative  and
dependent upon the  implementation  of our business plan, as well as our ability
to enter into  agreements  with  third  parties  for  necessary  financing,  the
provision  of  necessary   feedstock  sources,   engineering,   procurement  and
construction  services and the sale and  distribution  of our biodiesel  fuel on
terms that will be  commercially  viable for us. There can be no assurance  that
our  efforts  will be  successful  or result in revenue  or profit.  There is no
assurance that we will earn significant  revenues or that our investors will not
lose their entire investment.                                                   

Unanticipated  problems  or delays in  building  our  facilities  to the  proper
specifications may harm our business and viability.                             

Our  current   operating  cash  flow  depends  on  our  ability  to  timely  and
economically  complete  and  operate  our  planned  facilities.  If our  current
production  facilities are disrupted or the economic integrity of these projects
is threatened for unexpected reasons,  our business may experience a substantial
setback.  Prolonged  problems  may threaten  the  commercial  viability of these
facilities.  Moreover,  the occurrence of significant  unforeseen  conditions or
events in  connection  with these  facilities  may require us to  reexamine  our
business model.  Any change to our business model or management's  evaluation of
the  viability  of  these  projects  may  adversely  affect  our  business.  Our
construction  costs for additional  facilities may also increase to a level that
would make a new facility too expensive to complete or  unprofitable to operate.
Contractors,  engineering firms, construction firms and equipment suppliers also
receive requests and orders from other companies and,  therefore,  we may not be
able to secure  their  services or products on a timely  basis or on  acceptable
financial terms. We may suffer  significant  delays or cost overruns as a result
of a variety of  factors,  such as  increases  in the  prices of raw  materials,
shortages of workers or materials,  transportation constraints, adverse weather,
equipment  failures,  fires, damage to or destruction of property and equipment,
environmental  damage,  unforeseen  difficulties  or labor issues,  any of which
could prevent us from commencing operations as expected at our facilities.      

The results of  operations,  financial  condition  and  business  outlook of our
oilseed crush facility will be highly dependent on commodity  prices,  which are
subject to  significant  volatility and  uncertainty,  and the  availability  of
supplies, so our results could fluctuate substantially.                         

The  results of  operations  of our oilseed  crush  facility  are  substantially
dependent  on  different  commodity  prices,  especially  prices for oilseed and
materials used in the construction of our expansion project.  As a result of the
volatility   of  the  prices  for  these  items,   our  results  may   fluctuate
substantially and we may experience periods of declining prices for our products
and  increasing  costs for our raw  materials,  which could  result in operating
losses.  Although  we  may  attempt  to  offset  a  portion  of the  effects  of
fluctuations in prices by entering into forward contracts to supply biodiesel or
purchase  feedstock  or other  items or by engaging  in  transactions  involving
exchange-traded futures contracts,  the amount and duration of these hedging and
other risk  mitigation  activities  may vary  substantially  over time and these
activities also involve substantial risks.                                      

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Biodiesel  fuel is a commodity  whose price is determined  based on the price of
petroleum  diesel,  world  demand,  supply and other  factors,  all of which are
beyond our control.  World prices for biodiesel fuel have  fluctuated  widely in
recent  years.  We expect that prices will  continue to fluctuate in the future.
Price fluctuations will have a significant  impact upon our revenue,  the return
on  our  investment  in  biodiesel  refineries  and  on  our  general  financial
condition.  Price fluctuations for biodiesel fuel may also affect the investment
market,  and our ability to raise investor  capital.  Although market prices for
biodiesel  fuel rose to  near-record  levels  during 2005 and have remained near
those levels since then,  there is no assurance that these prices will remain at
high levels.  Future  decreases  in the prices of biodiesel or petroleum  diesel
fuel may have a material  adverse  effect on our financial  condition and future
results of operations.                                                          

The market for renewable energy sources is undetermined, and may not be adequate
to sustain prices at a profitable level.                                        

We are involved in the  development or production of  renewable  energy and we  
provide  products  and  services  to  companies  involved in the  production  of
renewable energy.  Their success will depend on the level of market acceptance  
of renewable energy sources.  The marketing of renewable energy sources on a    
national  scale is a phenomenon new to this decade.  The portion of U.S.  energy
represented by renewable  energy sources is still small. It is not possible to  
predict with assurance how large the market for renewable  energy sources will  
become.  If it has not developed to a sufficient  breadth when our  subsidiaries
are ready to market their products and services,  the price at which renewable  
energy can be sold will be limited, which may make it impossible for one or more
of our subsidiaries to operate profitably.                                      

The fiscal  efficiencies  of highly  capitalized  competitors  in the  renewable
energy field could defeat our efforts to capture a viable market share.         

The  business  of  producing  renewable  energy is a  capital-intense  business,
requiring  substantial  capital  resources.  The  costs  that  we may  incur  in
obtaining capital are substantially greater per dollar than the cost incurred by
large scale  enterprises  in the  industry.  If  competition  reduces the prices
available for renewable  energy  sources,  our  dependence on expensive  capital
sources may prevent us from  lowering our prices to meet the  competition.  This
situation could cause us to be unable to compete effectively.                   

We may be unable to obtain the  additional  capital  required to  implement  our
business plan.                                                                  

We expect that current  capital and other existing  resources will be sufficient
to provide only a limited amount of capital to operate and build our plants. The
revenues  generated from designing and building  biodiesel  facilities for third
parties  will  not be  sufficient  to  cover  the  anticipated  total  costs  of
construction.  We will  require  additional  capital to  continue  to expand our
business  beyond our current stage of operations.  There is no assurance that we
will be able to obtain the capital  required in a timely  fashion,  on favorable
terms or at all. If we are unable to obtain required  additional  financing,  we
may be forced to  restrain  our growth  plans or cut back  existing  operations.
Future  construction  and operation of our facilities,  capital  expenditures to
build and operate our facilities, hiring qualified management and key employees,
complying  with  licensing,  registration  and other  requirements,  maintaining
compliance  with   applicable   laws,   production  and  marketing   activities,
administrative  requirements,  such as salaries,  insurance expenses and general
overhead  expenses,  legal  compliance  costs and  accounting  expenses will all
require a substantial  amount of additional  capital and cash flow.  There is no
assurance  that we will  successfully  complete  suitable  financing in a timely
fashion or at all. Future  financings  through equity  investments are possible,
and these are likely to be dilutive to the  existing  shareholders,  as we issue
additional shares of common stock to investors in future financing transactions.
Also,  the terms of securities we issue in future  capital  transactions  may be
more  favorable  for our new  investors.  Newly  issued  securities  may include
preferences,   superior  voting  rights,  the  issuance  of  warrants  or  other
derivative  securities,  and the  issuances of incentive  awards under  employee
equity incentive plans, which may have additional dilutive effects.  Further, we
may incur substantial  costs in pursuing future capital or financing,  including
investment banking fees, legal fees,  accounting fees, securities law compliance
fees,  printing  and  distribution  expenses  and  other  costs.  We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue,  such as convertible  notes and warrants,  which may adversely affect
our financial results. Our ability to obtain needed financing may be impaired by
such factors as the capital  markets,  both  generally and  specifically  in the
biodiesel,  ethanol  and  culinary  oil  industries,  the fact that we are a new
company  without  a  proven  operating  history,  the  location  of our  planned
biodiesel  facilities in the United  States,  instead of Europe or other regions
where biodiesel is more widely  accepted,  and the price of biodiesel and oil on
the commodities  market.  Furthermore,  if petroleum or biodiesel  prices on the
commodities  markets  decrease,  then our  revenues  will  likely  decrease  and
decreased  revenues  may  increase our  requirements  for  capital.  Some of the
contractual  arrangements  governing our  operations  may require us to maintain
minimum  capital,  and we may lose  our  contract  rights  if we do not have the
required  minimum  capital.  If the  amount of capital we are able to raise from
financing  activities,  together  with  our  revenues  from  operations,  is not
sufficient to satisfy our capital  needs,  even to the extent that we reduce our
operations accordingly, we may be required to cease operations.                 

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Strategic relationships on which we may rely are subject to change.             

Our ability to identify and enter into  commercial  arrangements  with feedstock
suppliers,  construction  contractors,  equipment  fabricators,  transportation,
logistics and marketing services  providers and biodiesel  customers will depend
on  developing  and  maintaining  close  working   relationships  with  industry
participants. Our success in this area will also depend on our ability to select
and evaluate suitable projects as well as to consummate transactions in a highly
competitive  environment.  These  realities are subject to change and may impair
our ability to grow.                                                            

The U.S.  biodiesel and ethanol industries are highly dependent upon a myriad of
federal and state  legislation  and regulation and any changes in legislation or
regulation  could  materially and adversely affect our results of operations and
financial position.                                                             

Our corn oil  extraction  model relies on the ethanol  market (to purchase  corn
oil)  and the  biodiesel  market  (to  sell our corn  oil).  The  production  of
biodiesel  and ethanol is made  significantly  more  competitive  by federal and
state tax incentives. The federal excise tax incentive program for biodiesel was
originally  enacted as part of the American  Jobs  Creation Act of 2004,  but is
scheduled to expire on December 31, 2008.  This program  provides fuel blenders,
generally distributors,  with a one-cent tax credit for each percentage point of
vegetable oil derived  biodiesel  blended with  petroleum  diesel.  For example,
distributors that blend  soybean-derived  biodiesel with petroleum diesel into a
B20 blend would receive a twenty cent per gallon excise tax credit.  The program
also provides blenders of recycled oils, such as yellow grease from restaurants,
with a one-half  cent tax  credit  for each  percentage  point of  recycled  oil
derived biodiesel blended with petroleum diesel. For example,  distributors that
blend  recycled oil derived  biodiesel  with  petroleum  diesel into a B20 blend
would  receive  a  ten  cent  per  gallon   excise  tax  credit.   In  addition,
approximately thirty-one states provide mandates,  programs and other incentives
to increase biodiesel  production and use, such as mandates for fleet use or for
overall use within the state,  tax credits,  financial  grants,  tax deductions,
financial assistance,  tax exemptions and fuel rebate programs. These incentives
are meant to lower the cost of biodiesel in comparison to petroleum diesel.  The
elimination or significant reduction in the federal excise tax incentive program
or state incentive programs benefiting biodiesel may have a material and adverse
effect on our results of operations and financial condition.                    

The cost of production of ethanol is made  significantly  more  competitive with
regular  gasoline by federal tax  incentives.  The federal  excise tax incentive
program  currently allows gasoline  distributors who blend ethanol with gasoline
to receive a federal  excise tax rate  reduction  for each  blended  gallon they
sell. If the fuel is blended with 10% ethanol, the refiner/marketer  pays $0.051
per  gallon  less tax,  which  equates  to an  incentive  of $0.51 per gallon of
ethanol.  The $0.51 per gallon  incentive for ethanol is scheduled to be reduced
to $0.46 per gallon in 2009 and to expire in 2010.  The blenders'  credits could
be  eliminated  or reduced at any time through an act of Congress and may not be
renewed in 2010 or may be renewed on different terms. In addition, the blenders'
credits, as well as other federal and state programs benefiting ethanol (such as
tariffs),   generally  are  subject  to  U.S.   government   obligations   under
international   trade   agreements,   including  those  under  the  World  Trade
Organization  Agreement on Subsidies and Countervailing  Measures,  and might be
the subject of challenges thereunder, in whole or in part.                      

Ethanol can be imported into the U.S.  duty-free from some countries,  which may
undermine the ethanol industry in the U.S. Imported ethanol is generally subject
to a $0.54 per gallon  tariff  that was  designed to offset the $0.51 per gallon
ethanol  incentive  that is  available  under the federal  excise tax  incentive
program for  refineries  that blend  ethanol in their fuel. A special  exemption
from the tariff exists for ethanol imported from 24 countries in Central America
and the Caribbean Islands,  which is limited to a total of 7% of U.S. production
per year.  Imports from the exempted  countries  may increase as a result of new
plants under development.  Since production costs for ethanol in these countries
are  estimated  to be  significantly  less than  what they are in the U.S.,  the
duty-free  import of ethanol through the countries  exempted from the tariff may
negatively affect the demand for domestic ethanol and the price at which we sell

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ethanol. Although the $0.54 per gallon tariff has been extended through December
31,  2008,  bills  were  previously   introduced  in  both  the  U.S.  House  of
Representatives  and U.S. Senate to repeal the tariff. We do not know the extent
to which the volume of imports would  increase or the effect on U.S.  prices for
ethanol if the tariff is not renewed beyond its current expiration.  Any changes
in the tariff or exemption from the tariff could have a material  adverse effect
on our results of operations and our financial position. In addition,  the North
America Free Trade Agreement,  or NAFTA,  which entered into force on January 1,
1994,  allows Canada and Mexico to export ethanol to the United States duty-free
or at a reduced  rate.  Canada  is exempt  from  duty  under the  current  NAFTA
guidelines, while Mexico's duty rate is $0.10 per gallon.                       

The  effect  of the  renewable  fuel  standard  ("RFS")  program  in the  Energy
Independence  and  Security  Act signed into law on December 19, 2007 (the "2007
Act") is uncertain.  The mandated minimum level of use of renewable fuels in the
RFS under the 2007 Act increased to 9 billion gallons per year in 2008 (from 5.4
billion gallons under the RFS enacted in 2005), further increasing to 36 billion
gallons  per year in 2022.  The 2007 Act  also  requires  the  increased  use of
"advanced" biofuels,  which are alternative biofuels produced without using corn
starch such as  cellulosic  ethanol and  biomass-based  diesel,  with 21 billion
gallons of the mandated 36 billion  gallons of renewable  fuel  required to come
from  advanced  biofuels by 2022.  Required  RFS  volumes  for both  general and
advanced  renewable  fuels in years  to  follow  2022  will be  determined  by a
governmental  administrator,  in coordination with the U.S. Department of Energy
and U.S.  Department of Agriculture.  Increased  competition from other types of
biofuels  could have a material  adverse effect on our results of operations and
our financial position.                                                         

The RFS program and the 2007 Act also include  provisions  allowing "credits" to
be granted  to fuel  producers  who blend in their  fuel more than the  required
percentage  of  renewable  fuels in a given year.  These  credits may be used in
subsequent  years to satisfy RFS production  percentage and volume standards and
may be traded to other parties. The accumulation of excess credits could further
reduce  the impact of the RFS  mandate  schedule  and result in a lower  ethanol
price or could result in greater fluctuations in demand for ethanol from year to
year,  both of which  could  have a  material  adverse  effect on the  financial
condition of participants in our corn oil extraction program which could require
us to  incur  additional  costs to  relocate  one or more  corn  oil  extraction
facilities to other ethanol production facilities.                              

Waivers of the RFS minimum levels of renewable  fuels included in gasoline could
have a material  adverse affect on our results of  operations.  Under the RFS as
passed  as part  of the  Energy  Policy  Act of  2005,  the  U.S.  Environmental
Protection  Agency,  in  consultation  with the Secretary of Agriculture and the
Secretary of Energy,  may waive the renewable  fuels mandate with respect to one
or more states if the Administrator of the U.S. Environmental Protection Agency,
or "EPA",  determines upon the petition of one or more states that  implementing
the requirements  would severely harm the economy or the environment of a state,
a  region  or the  U.S.,  or  that  there  is  inadequate  supply  to  meet  the
requirement.  In  addition,  the Energy  Independence  and  Security Act of 2007
allows  any  other  person  subject  to the  requirements  of the RFS or the EPA
Administrator  to file a petition for such a waiver.  Any waiver of the RFS with
respect to one or more  states  could  adversely  offset  demand for ethanol and
could have a  material  adverse  effect on our  results  of  operations  and our
financial condition                                                             

Disruptions to  infrastructure,  or in the supply of fuel, natural gas or water,
could materially and adversely affect our business.                             

Our business depends on the continuing availability of rail, road, port, storage
and distribution infrastructure. Any disruptions in this infrastructure network,
whether  caused  by  labor  difficulties,  earthquakes,  storms,  other  natural
disasters,  human error or malfeasance  or other reasons,  could have a material
adverse effect on our business.  We rely upon third-parties to maintain the rail
lines from their plants to the national rail  network,  and any failure on these
third parties' part to maintain the lines could impede the delivery of products,
impose  additional  costs  and  could  have a  material  adverse  effect  on our
business, results of operations and financial condition.                        

We also depend on the continuing  availability of raw materials,  including fuel
and natural gas, and the ability of ethanol  producers  that  participate in our
corn oil programs to remain in production.  The production of ethanol,  from the
planting  of  corn  to the  distribution  of  ethanol  to  refiners,  is  highly
energy-intensive.  Significant  amounts of fuel and natural gas are required for
the  growing,   fertilizing   and  harvesting  of  corn,  as  well  as  for  the
fermentation,  distillation  and  transportation  of  ethanol  and the drying of
distillers  grains.  A serious  disruption  in supplies of fuel or natural  gas,
including as a result of delivery  curtailments  to industrial  customers due to
extremely  cold  weather,  or  significant  increases  in the  prices of fuel or
natural gas, could significantly reduce the availability of raw materials at our
plants,  increase  production  costs and could have a material adverse effect on
our business, results of operations and financial condition.                    

Ethanol plants also require a significant and  uninterrupted  supply of water of
suitable quality to operate.  If there is an interruption in the supply of water
for any  reason,  one or  more  participating  ethanol  producer  plants  may be
required to halt production. If                                                 

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production  is halted at one or more of these  plants for an extended  period of
time,  it could  have a  material  adverse  effect on our  business,  results of
operations and financial condition                                              

Our commercial success will depend in part on our ability to obtain and maintain
protection of our intellectual property.                                        

Our success will depend in part on our ability to maintain or obtain and enforce
patent and other  intellectual  property  protection for our technologies and to
preserve  our  trade  secrets,  and  to  operate  without  infringing  upon  the
proprietary  rights of third  parties.  We have obtained or developed  rights to
patents and patent  applications in the United States and  internationally,  and
may, in the future,  seek rights from third parties to other patent applications
or patented  technology.  Significant  aspects of our  technology  are currently
protected as trade secrets, for which we intend to file patent applications when
appropriate.  The  description  of the  processes  currently  protected as trade
secrets  is likely  to be  published  at some  point in the  patent  application
process with no  assurance  that the related  patents  will be issued.  Further,
certain  confidentiality  agreements  may expire  prior to the  issuance  of the
relevant  patent.  There can be no  assurance  that  patents will issue from the
patent applications filed or to be filed or that the scope of any claims granted
in any patent  will  provide us with  proprietary  protection  or a  competitive
advantage.  There can be no  assurance  that our  patents  will be valid or will
afford us with  protection  against  competitors  with similar  technology.  The
failure to obtain or maintain patent or other intellectual  property  protection
on the technologies underlying our biodiesel process may have a material adverse
effect on our competitive  position and business prospects.  It is also possible
that our  technologies  may infringe on patents or other  intellectual  property
rights  owned by others.  We may have to alter our  products or  processes,  pay
licensing fees,  defend an infringement  action or challenge the validity of the
patents in court,  or cease  activities  altogether  because of patent rights of
third parties,  thereby causing  additional  unexpected  costs and delays to us.
There can be no  assurance  that a license  will be  available to us, if at all,
upon  terms  and  conditions  acceptable  to us or that we will  prevail  in any
intellectual property litigation. Intellectual property litigation is costly and
time  consuming,  and there  can be no  assurance  that we will have  sufficient
resources to pursue such  litigation.  If we do not obtain a license  under such
intellectual  property rights, are found liable for infringement or are not able
to have such patents declared  invalid,  we may be liable for significant  money
damages and may encounter  significant  delays in bringing products and services
to market.  There can be no assurance that we have identified  United States and
foreign patents that pose a risk of infringement.                               

Competition may impair our success.                                             

New technologies may be developed by others that could compete with our corn oil
extraction  model.  In addition,  we face  competition  from other  producers of
biodiesel equipment and related products. Such competition could be intense thus
driving down the price for our  products.  Competition  will likely  increase as
prices of energy in the commodities  market,  including petroleum and biodiesel,
rise, as they have in recent years.  Additionally,  new companies are constantly
entering the market,  thus increasing the competition.  Larger foreign owned and
domestic  companies  who have been engaged in this  business  for  substantially
longer  periods of time,  such as vertically  integrated  agricultural  and food
supply  companies  such as Cargill,  Archer  Daniels  Midland and Bunge,  or who
decide to enter into the biodiesel production industry, such as Tyson and Conoco
Phillips, may have access to greater resources. These companies may have greater
success in the recruitment and retention of qualified  employees,  as well as in
conducting  their  own  refining  and fuel  marketing  operations,  and may have
greater access to feedstocks,  market  presence,  economies of scale,  financial
resources and engineering,  technical and marketing capabilities, which may give
them a competitive advantage.  In addition,  actual or potential competitors may
be strengthened  through the acquisition of additional assets and interests.  If
we are unable to  compete  effectively  or  adequately  respond  to  competitive
pressures,  this may  materially  adversely  affect our results of operation and
financial  condition  and could  also have a negative  impact on our  ability to
obtain additional capital from investors.                                       

We may be unable to employ  and  retain  the  qualified  personnel  that will be
necessary for our success.                                                      

As of  December  31,  2007,  we  had  approximately  124  full  time  equivalent
employees.  The number of individuals with experience in biofuels  production is
considerably smaller than the number of jobs available for such individuals.  We
will have to offer  substantial  incentives  in order to obtain the  services of
individuals  with useful  experience in the production of biodiesel and ethanol.
As a result, our labor costs may be greater than they would be in a less dynamic
industry.  On  the  other  hand,  if we  are  unable  to  employ  the  qualified
individuals that we will need, our business may fail.                           

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Competition  due to  advances  in  renewable  fuels may  lessen  the  demand for
biodiesel and negatively impact our profitability.                              

Alternative fuels, gasoline oxygenates, ethanol and biodiesel production methods
are continually under development. A number of automotive,  industrial and power
generation  manufacturers  are developing  alternative clean power systems using
fuel cells or  clean-burning  gaseous fuels that,  like  biodiesel,  may address
increasing  worldwide  energy  costs,  the long-term  availability  of petroleum
reserves and environmental concerns. Additionally, there is significant research
and  development  being  undertaken  regarding  the  production  of ethanol from
cellulosic  biomass,  the production of methane from anaerobic digesters and the
production of  electricity  from wind and solar thermal  energy  systems,  among
other potential  sources of renewable  energy. If these renewable fuels continue
to expand and gain broad  acceptance  such that the overall demand for diesel is
reduced, we may not be able to compete effectively.                             

We will rely on  technology  to conduct our  business and our  technology  could
become ineffective or obsolete.                                                 

We will be required to continually enhance and update our technology to maintain
its efficacy and to avoid obsolescence. The costs of doing so may be substantial
and may be higher than the costs that we anticipate for  technology  maintenance
and  development.  If we are unable to maintain the efficacy of our  technology,
our ability to manage our business  and to compete may be  impaired.  Even if we
are able to maintain technical effectiveness, our technology may not be the most
efficient  means of reaching our  objectives,  in which case we may incur higher
operating costs than we would if our technology was more  effective.  The impact
of technical shortcomings could have a material adverse effect on our prospects,
business,  financial  condition,  and results of  operations.  In addition,  our
biodiesel  production plants, when constructed,  will be single purpose entities
with no use other than the production of biodiesel and associated  produces.  So
if  our  facilities  become  technologically  obsolete,  we  may  be  unable  to
restructure our operations  without a massive  capital  expense  associated with
converting our facilities                                                       

Litigation or other proceedings  relating to intellectual  property rights could
result in  substantial  costs and  liabilities  and prevent us from  selling our
biodiesel.                                                                      

We must operate in a way that does not infringe the intellectual property rights
of others in the U.S. and foreign  countries.  Third  parties may claim that our
production  process  or related  technologies  infringe  their  patents or other
intellectual property rights.  Competitors may have filed patent applications or
have issued patents and may obtain  additional  patents and  proprietary  rights
related to production processes that are similar to ours. We may not be aware of
all of  the  patents  potentially  adverse  to our  interests.  We may  need  to
participate in interference  proceedings in the U.S. Patent and Trademark Office
or in similar  agencies of foreign  governments  to  determine  the  priority of
invention  involving issued patents and pending  applications of another entity.
The cost to us of any litigation or other  proceeding  relating to  intellectual
property  rights,  even  if  resolved  in  our  favor,  may  cause  us to  incur
significant  expenses,  divert the attention of our management and key personnel
from other  business  concerns  and,  in certain  cases,  result in  substantial
additional  expenses to license  technologies  from third  parties.  Some of our
competitors  may be able to sustain the costs of complex patent  litigation more
effectively  than we can because they have  substantially  greater  resources or
engage legal counsel  willing to advance the  litigation  costs.  An unfavorable
outcome in an interference  proceeding or patent infringement suit could require
us to pay substantial damages,  cease using the technology or to license rights,
potentially at a substantial  cost, from prevailing  third parties.  There is no
assurance  that any  prevailing  party would offer us a license or that we could
acquire any license made available to us on commercially  acceptable terms. Even
if we are able to obtain rights to a third party's intellectual property,  those
rights may be  non-exclusive  and therefore our competitors may obtain access to
the same intellectual property. Ultimately, we may be unable to produce and sell
our  biodiesel or may have to cease some of our business  operations as a result
of infringement claims,  which could severely harm our business.  We cannot give
assurances  that  our  biodiesel   technologies   will  not  conflict  with  the
intellectual  property  rights  of  others.  Additionally,  any  involvement  in
litigation  in which we are  accused  of  infringement  may  result in  negative
publicity about us and injure our relations with any then-current or prospective
customers or vendors.                                                           

Our business is subject to local legal,  political,  and economic  factors which
are beyond our control.                                                         

We believe  that the  current  political  environment  for  construction  of our
planned future biodiesel  facilities is sufficiently  supportive to enable us to
plan and implement our operations. However, there are risks that conditions will
change in an adverse manner.  These risks include,  but are not limited to, laws
or policies  affecting  mandates or  incentives to promote the use of biodiesel,
environmental  issues,  land use, air emissions,  water use,  zoning,  workplace
safety, restrictions imposed on the biodiesel fuel industry such as restrictions
on production, substantial changes in product quality standards, restrictions on

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feedstock supply,  price controls and export controls.  Any changes in biodiesel
fuel,  financial  incentives,  investment  regulations,  policies  or a shift in
political attitudes are beyond our control and may adversely affect our business
and future financial results.                                                   

Changes in industry specification  standards for biodiesel may negatively impact
our ability to sell corn oil for the purposes of biodiesel production,  increase
production  costs or require more capital than we have planned to construct  our
biodiesel production facilities.                                                

The  American  Society of Testing  and  Materials,  or ASTM,  is the  recognized
standard-setting  body for fuels and additives in the U.S. ASTM's  specification
for  biodiesel  as a blend  stock,  D6751,  has been  adopted  by the  EPA,  and
compliance  with such  specification  is required in order for our  biodiesel to
qualify as a legal motor fuel for sale and  distribution.  In Europe,  biodiesel
standard is EN 14214,  which has been modified to a more  stringent  standard in
Germany.  ASTM and the  European  standard  setting  bodies  have  modified  the
biodiesel specifications in the past, and are expected to continue to modify the
specification  in the  future  as the  use of  biodiesel  expands.  There  is no
guarantee that our production facilities will be able to produce  ASTM-compliant
biodiesel in the event of changes to the  specifications.  We may need to invest
significant  capital  resources to upgrade or modify our production  facilities,
which might cause delays in  construction  or stoppages  of  production  and the
resultant loss of revenue,  or which might not be economically  feasible at all.
Any  modifications  to  our  production  facilities  or to  the  biodiesel  ASTM
specification or other  specification with which we attempt to comply may entail
increased construction or production costs or reduced production capacity. These
consequences could result in a negative impact on our financial performance.    

Changes in 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 biodiesel 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.                                                          

Environmental risks and regulations may adversely affect our business.          

All phases of designing, constructing and operating biodiesel refineries present
environmental  risks and  hazards.  We are subject to  environmental  regulation
implemented  or imposed by a variety of federal,  state and  municipal  laws and
regulations  as  well  as   international   conventions.   Among  other  things,
environmental  legislation  provides for restrictions and prohibitions on spills
and  discharges,  as  well  as  emissions  of  various  substances  produced  in
association  with  biodiesel  fuel  operations.  Legislation  also requires that
facility  sites be operated,  maintained,  abandoned and reclaimed in such a way
that would  satisfy  applicable  regulatory  authorities.  Compliance  with such
legislation can require significant  expenditures and a breach may result in the
imposition of fines and penalties, some of which may be material.  Environmental
legislation  is evolving in a manner we expect may result in stricter  standards
and enforcement,  larger fines and liability,  as well as potentially  increased
capital   expenditures  and  operating  costs.  The  presence  or  discharge  of
pollutants  in or into the air,  soil or water may give rise to  liabilities  to
governments  and third  parties and may require us to incur costs to remedy such
presence  or  discharge.   If  we  are  unable  to  remediate  such   conditions
economically or obtain  reimbursement or indemnification from third parties, our
financial  condition and results of operations could be adversely  affected.  We
cannot give assurance that the application of environmental laws to our business
will not cause us to limit our production,  to significantly  increase the costs
of our  operations and  activities,  to reduce the market for our products or to
otherwise  adversely  affect our financial  condition,  results of operations or
prospects.                                                                      

Penalties we may incur could impair our business.                               

Failure to comply  with  government  regulations  could  subject us to civil and
criminal  penalties  require  us to forfeit  property  rights and may affect the
value of our  assets or our  ability  to conduct  our  business.  We may also be
required to take corrective actions,  including,  but not limited to, installing
additional  equipment,  which  could  require  us to  make  substantial  capital
expenditures. We could also be required to indemnify our employees in connection
with any expenses or liabilities that they may incur  individually in connection
with regulatory  action against them.  These could result in a material  adverse
effect on our  prospects,  business,  financial  condition  and our  results  of
operations.                                                                     

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Our business  will suffer if we cannot obtain or maintain  necessary  permits or
licenses.                                                                       

Our  operations  will require  licenses,  permits and in some cases  renewals of
these licenses and permits from various governmental authorities. Our ability to
obtain, sustain, or renew such licenses and permits on acceptable,  commercially
viable terms are subject to change,  as, among other things, the regulations and
policies of applicable  governmental  authorities  may change.  Our inability to
obtain or extend a license or a loss of any of these  licenses  or  permits  may
have a material adverse effect on our operations and financial condition.       

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.                        

Increases in energy costs will affect operating results and financial condition.

Our  production  costs will be dependent on the costs of the energy sources used
to run our facilities. These costs are subject to fluctuations and variations in
different  locations  where  we  intend  to  operate,  and we may not be able to
predict or control these costs. If these costs exceed our expectations, this may
adversely affect our results of operations                                      

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  operations  will require  licenses,  permits and in some cases  renewals of
these licenses and permits from various governmental authorities. Our ability to
obtain, sustain, or renew such licenses and permits on acceptable,  commercially
viable terms are subject to change,  as, among other things, the regulations and
policies of applicable  governmental  authorities  may change.  Our inability to
obtain or extend a license or a loss of any of these  licenses  or  permits  may
have a material adverse effect on our operations and 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.                   

RISKS ATTENDANT TO OUR CORPORATE STRUCTURE                                      

We will be unable to service our debts if our  subsidiaries  default in settling
their obligations to us.                                                        

We have incurred  substantial  debt  obligations  and will continue to do so, in
order to fund the operations of our subsidiaries.  Since we carry on no business
at the level of our parent  corporation,  our  ability to service  our own debts
will  depend  on the  cash  flow  from our  subsidiaries.  If one or more of our
subsidiaries becomes unable to pay its debts to GreenShift,  we may be forced to
default  on our  own  debt  obligations.  Such a  default  could  result  in the
liquidation  of a portion of our assets,  most likely at less than their  market
value.                                                                          

We will be contingently liable for the debts of some of our subsidiaries.       

We recently  guaranteed  $19  million in debt  incurred  by our  subsidiary,  GS
AgriFuels Corporation. In order for GS AgriFuels to obtain the capital and it is
likely that in the future we will provide  guarantees of other debts incurred by
our  subsidiaries.  These  guarantees will subject our assets to the risk of the
failure of a subsidiary whose debt we have guaranteed.  If, for example, we were
forced to satisfy our guarantee of GS AgriFuels  debt, to do so we would have to
liquidate  our  holdings in our  successful  subsidiaries.  Such a result  could
eliminate the value of our shareholders' investments.                           

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We are  subject to  financial  reporting  and other  requirements  for which our
accounting, internal audit and other management systems and resources may not be
adequately prepared.                                                            

We are subject to reporting and other obligations under the Securities  Exchange
Act of 1934, including the requirements of Section 404 of the Sarbanes-Oxley Act
of 2002. Section 404 will require us to conduct an annual management  assessment
of the effectiveness of our internal controls over financial reporting,  provide
a report  on our  assessment  and  obtain a report by our  independent  auditors
addressing our  assessments.  These reporting and other  obligations  will place
significant  demands on our management,  administrative,  operational,  internal
audit and accounting and financial resources.                                   

Our business  development could be hindered if we lost the services of our Chief
Executive Officer.                                                              

Kevin  Kreisler is the Chief  Executive  Officer of GreenShift  and serves in an
executive  capacity  with each of our  primary  subsidiaries.  Mr.  Kreisler  is
responsible  for  strategizing  not only our business plan but also the means of
financing  it. If Mr.  Kreisler were to leave us or become unable to fulfill his
responsibilities,  our business  would be  imperiled.  At the very least,  there
would be a substantial  delay in the  development  of our plans until a suitable
replacement for Mr. Kreisler could be retained.                                 

The absence of  independent  directors on our board of  directors  may limit the
quality of management decision making.                                          

Each of the four  members  of our  Board of  Directors  is also an  employee  of
GreenShift  Corporation.  There  is no  audit  committee  of  the  board  and no
compensation  committee.  This situation means that the Board will determine the
direction  of our company  without the benefit of an objective  perspective  and
without the contribution of insights from outside observers.  This may limit the
quality of the decisions that are made. In addition,  the absence of independent
directors  in the  determination  of  compensation  may result in the payment of
inappropriate levels of compensation.                                           

RISKS FACTORS ATTENDANT TO OWNERSHIP OF OUR COMMON STOCK                        

The resale of shares  acquired  by YA Global  Investments  from  GreenShift  may
reduce the market price of GreenShift's shares.                                 

YA Global  Investments owns convertible  debentures issued by GreenShift,  which
will permit it to acquire  GreenShift  common stock and resell it to the public.
At the current market price, YA Global  Investments could convert its debentures
into over 50% of our  outstanding  common  stock.  It is possible that resale of
shares by YA Global Investments will  significantly  reduce the market price for
GreenShift common stock.                                                        

Existing  shareholders may experience  significant dilution from our issuance of
shares to YA Global Investments.                                                

The issuance of shares on conversion of the  convertible  debentures  held by YA
Global Investments will have a dilutive impact on our stockholders. As a result,
our net income per share could decrease in future periods,  and the market price
of our common stock could  decline.  In addition,  the lower our stock price is,
the more  shares of common  stock we will  have to issue if the  debentures  are
converted on the basis of the  contemporaneous  market price. If our stock price
is lower, then our existing stockholders would experience greater dilution.     

We may incur additional indebtedness in the future. Our current indebtedness and
any future indebtedness could adversely affect our business and may restrict our
operating flexibility.                                                          

As of December 31, 2007, we had  approximately  $52,316,824  in total debt.  Our
ability  to incur  additional  debt could  adversely  affect  our  business  and
restrict our operating  flexibility.  We face several risks relating to our need
to complete  additional  financings  in the future.  We must satisfy the closing
conditions for each drawdown of our $10,000,000 construction credit facility. We
must also secure  additional  financing to build our planned corn oil extraction
and biodiesel production  facilities.  We anticipate that 50,000,000 gallons per
year of extraction and biodiesel production will cost approximately $150,000,000
to build.  However,  there can be no  assurances  that  costs may not be greater
depending on site conditions,  costs of materials,  labor costs, engineering and
design changes and other potential cost and integration overruns.  The financing
may consist of debt but may also consist of common or preferred equity,  project
financing or a combination of these financing  techniques.  Additional debt will
increase our leverage and interest expense and will likely be secured by certain
of our assets; additional equity or equity-linked financings may have a dilutive
effect on our equity and equity-linked securities holders. It is likely that the
terms of any project  financing  would  include  customary  financial  and other
covenants on our project subsidiaries,  including restrictions on the ability to
make  distributions to the parent company,  to guarantee the debts of the parent
company and to incur liens on the refineries of such project subsidiaries, among
others.                                                                         

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If our cash flow proves inadequate to service our debt and provide for our other
obligations,  we may be required to  refinance  all or a portion of our existing
and future debt at terms unfavorable to us.                                     

Our  ability  to make  payments  on and  refinance  our  debt,  and to fund  our
operations  and  capital  expenditures  will  depend on our  ability to generate
substantial  operating cash flow. If our cash flows prove inadequate to meet our
debt service obligations,  in the future, we may be required to refinance all or
a portion of our existing or future debt, to sell assets or to obtain additional
financing.  We cannot assure you that any such refinancing or that any such sale
of assets or additional  financing  would be possible on favorable  terms, or at
all. If we raise additional equity or  equity-related  securities in the future,
it may be dilutive to holders of our common stock.                              

Future sales of shares of our common stock or the issuance of securities  senior
to our common  stock  could  adversely  affect the  trading  price of our common
stock,  the value of our debt  securities  and our ability to raise funds in new
equity offerings.                                                               

We may issue additional common stock,  preferred stock or securities convertible
into  or  exchangeable  for  common  stock,  in  the  future.  Future  sales  of
substantial  amounts of our common  stock or  equity-related  securities  in the
public market or privately, or the perception that such sales could occur, could
adversely affect prevailing  trading prices of our common stock and the value of
our debt securities and could impair our ability to raise capital through future
offerings of equity or equity-related  securities.  No prediction can be made as
to the  effect,  if any,  that  future  sales of shares  of common  stock or the
availability of shares of common stock for future sale, will have on the trading
price of our common stock or the value of our debt securities.                  

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  Global  Market or the  NASDAQ  Capital
Market.  Because our common  stock does not trade on a stock  exchange or on the
NASDAQ Global Market or the NASDAQ Capital  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.                                               

We will be quoted on the OTC Bulletin Board for the immediate future.           

We currently do not meet the eligibility  requirements for listing on the NASDAQ
Stock  Market.  Until we meet those  standards  and are accepted into the NASDAQ
Stock Market,  or unless we are successful in securing a listing on the American
Stock Exchange or some other  exchange,  our common stock will be quoted only on
the OTC Bulletin  Board.  Such a listing is considered less  prestigious  than a
NASDAQ Stock Market or an exchange  listing,  and many brokerage  firms will not
recommend  Bulletin Board stocks to their clients.  This situation may limit the
liquidity of your shares.                                                       

Our common stock price may be volatile.                                         

The trading price of our common stock may fluctuate substantially.  The price of
the common  stock may be higher or lower than the price you pay for your shares,
depending on many  factors,  some of which are beyond our control and may not be
directly related to our operating  performance.  These factors include,  but are
not limited to, the following:                                                  

     >>   price and volume fluctuations in the overall stock market from time to
time;                                                       

     >>   significant  volatility  in the  market  price and  trading  volume of
securities traded on the OTC Bulletin Board companies;      

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     >>   actual or anticipated  changes in our earnings or  fluctuations in our
operating results.                                          

As a result of these  factors,  you cannot be assured that when you are ready to
sell your  shares,  the market price will  accurately  reflect the value of your
shares or that you will be able to obtain a reasonable price for your shares.   

ITEM 2            DESCRIPTION OF PROPERTIES                                     

GreenShift's  corporate  headquarters  is located in New York, New York. The New
York lease is a five year lease  terminating  in June 2011.  The  monthly  lease
payment is $8,800.                                                              

The Company maintains its engineering and manufacturing  services in Alpharetta,
Georgia. The Alpharetta lease is a three year term terminating in February 2011.
The monthly lease payment is $1,480.                                            

The Company  maintains its  manufacturing  facilities in Ottoville and Van Wert,
Ohio. The Van Wert facility is a one-year lease  terminating  June 30, 2008. The
monthly lease payments are $5,000 and $3,200, respectively.                     

The  Company  maintains  its oil seed  crushing  facility  and  office  space in
Missoula, Montana. The term of lease is for one-year, terminating June 30, 2008.
The monthly lease payment is $421.                                              

The following table identifies all of the locations where the Company carries on
operations. Locations in which our property interest is identified as "Operating
Agreement"  are third party  ethanol  plants  where we have located our corn oil
extraction  equipment under the terms of an operating  agreement where we retain
title to our facility.                                                          

                                                        [Enlarge/Download Table]

Location                                    Nature of Operation                                  Property Interest
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
New York, New York                          Corporate Headquarters                                           Lease
Alpharetta, Georgia                         Engineering and Technology Sales                                 Lease
Ottoville, Ohio                             Equipment Manufacturing                                          Owned
Van Wert, Ohio                              Equipment Manufacturing                                          Lease
Missoula, Montana                           Culinary Oilseed Marketing                                       Lease
Culbertson, Montana                         Culinary Oilseed Production               At-will; acquisition pending
Oshkosh, Wisconsin                          Corn Oil Extraction                                Operating Agreement
Medina, New York                            Corn Oil Extraction                                Operating Agreement

In Construction:                                                                                                  
Marion, Indiana                             Corn Oil Extraction                                Operating Agreement
Riga, Michigan                              Corn Oil Extraction                                Operating Agreement
Lakota, Iowa                                Corn Oil Extraction                                Operating Agreement
Fulton, New York                            Corn Oil Extraction                                Operating Agreement
Milton, Wisconsin                           Corn Oil Extraction                                Operating Agreement
Richardton, North Dakota                    Corn Oil Extraction                                Operating Agreement

ITEM 3            LEGAL PROCEEDINGS                                             

The Company is party to the matter  entitled  LeBlanc v. Tomoiu,  et. al., which
action was filed in the Superior Court of Connecticut.                          

The verified  complaint  seeks damages  relating to the  acquisition  by General
Ultrasonics of the stock of H2 Energy Solutions,  Inc. from substantially all of
its  shareholders,  as well as  attorney's  fees  and  costs.  The  Company  has
responded to the verified complaint and denies any liability.                   

The Company is party to the matter  entitled  O'Brien & Gere  Limited,  et al v.
NextGen Chemical Processors, Inc., et al., which action was filed in the Supreme
Court of the State of New York. The verified complaint had sought performance of
and damages relating to certain service and related agreements,  plus attorney's
fees and costs.  This matter  relates to the  provision by plaintiffs of certain
engineering  services to NextGen Chemical  Processors,  Inc. ("NCP") during 2005
and  2006.  NCP is owned by the  former  shareholders  of  NextGen  Fuel,  Inc.,
subsidiary.  On September  19, 2007,  the Supreme Court of the State of New York
dismissed a significant  portion of O'Brien & Gere's  complaint with  prejudice.
Management  does not believe  that there is a  reasonable  probability  that the
claims made against NextGen Fuel by the plaintiffs in this  litigation  indicate
that a material  loss has  occurred.  Accordingly,  no accrual  has been made in
connection with those claims.                                                   

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

None.                                                                           

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 PART II

ITEM 5   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER          
MATTERS                                                     

GreenShift's  Common  Stock  trades on the OTC  Bulletin  Board under the symbol
"GERS." The following table sets forth, for the periods indicated,  the range of
high and low closing bid prices for GreenShift's Common Stock as reported by the
National   Association  of  Securities  Dealers  composite.   The  reported  bid
quotations  reflect  inter-dealer  prices  without  retail  markup,  markdown or
commissions, and may not necessarily represent actual transactions.             

                                                        [Enlarge/Download Table]

Period                                                    High                       Low 
-----------------------------------------------------------------------------------------
                                                                                         
2006 First Quarter                                        7.00                      7.00 
2006 Second Quarter                                      10.90                      4.05 
2006 Third Quarter                                        4.75                      2.00 
2006 Fourth Quarter                                       3.95                      2.40 

2007 First Quarter                                        3.65                      2.20 
2007 Second Quarter                                       1.73                      0.29 
2007 Third Quarter                                        0.64                      0.37 
2007 Fourth Quarter                                       1.05                      0.25 

Title of Class              Approximate Number of Holders of Record as of March 30, 2008 
Common Stock, 0.001 par                                                              929 

The number of holders  does not give effect to  beneficial  ownership  of shares
held in the street name by stock brokerage houses or clearing agents.           

REVERSE SPLIT                                                                   

On December 11, 2007, the Company  completed a 1 for 50 reverse stock split. All
stock prices,  share  amounts,  per share  information,  stock options and stock
warrants in this Report reflect the reverse stock split.                        

DIVIDENDS                                                                       

We have no present intention of paying dividends in the foreseeable  future. Our
policy  for the time  being is to  retain  earnings  and  utilize  the funds for
operations and growth.  The Board of Directors based on our earnings,  financial
condition,  capital  requirements  and other existing  conditions will determine
future dividend policies.                                                       

SALE OF UNREGISTERED SECURITIES                                                 

The Company did not sell any unregistered  securities  during the 4th quarter of
2007.                                                                           

REPURCHASE OF EQUITY SECURITES                                                  

The Company did not repurchase any of its equity securities that were registered
under Section 12 of the Securities Act during the 4th quarter of 2007.          

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ITEM 6   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION              

OVERVIEW                                                                        

We develop and  commercialize  clean  technologies that facilitate the efficient
use of natural  resources.  We do this today by developing and  integrating  new
technologies into existing biofuel production  facilities,  by selling equipment
and services based on those  technologies,  and by using those  technologies  to
directly produce and sell biomass-derived oils and fuels.                       

Our  strategy is to use our  patented  and  patent-pending  oil  extraction  and
biodiesel production  technologies to become a leading producer of biofuels, and
to do so at enhanced  cost and risk  profiles by  extracting  and  refining  raw
materials that other producers cannot access or process.                        

We  own  three  operating  production  facilities  -  two  corn  oil  extraction
facilities and one vegetable  oilseed crushing  facility.  We currently sell the
corn oil we extract for biofuel  production,  and we sell the refined  vegetable
oils we extract in our crushing facility into the food markets.                 

We are currently building additional oil extraction facilities, and we are under
contract  to  build  additional  corn  oil  extraction   facilities,   biodiesel
production facilities and to expand our oilseed crush facility. We are currently
operating, building and expanding the following production facilities:          

                                                        [Enlarge/Download Table]

Location                           Technology                      Production Capacity              Current Status
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Oshkosh, Wisconsin                 Corn Oil Extraction             1.5 million gallons per year        Operational
Culbertson, Montana                Oilseed Crushing                1.3 million gallons per year        Operational
Medina, New York                   Corn Oil Extraction             1.5 million gallons per year        Operational
Marion, Indiana                    Corn Oil Extraction             1.5 million gallons per year       Construction
Riga, Michigan                     Corn Oil Extraction             1.5 million gallons per year       Construction
Lakota, Iowa                       Corn Oil Extraction             3.0 million gallons per year       Construction
Fulton, New York                   Corn Oil Extraction             3.0 million gallons per year       Construction
Milton, Wisconsin                  Corn Oil Extraction             1.5 million gallons per year       Construction
Richardton, North Dakota           Corn Oil Extraction             1.5 million gallons per year       Construction

Our goal is to have at least 15 million  gallons per year of corn oil extraction
capacity,  20 million gallons per year of biodiesel production capacity,  and 16
million  gallons per year of oilseed crush  capacity  online by the end of 2008,
and at least 50 million  gallons per year of corn oil  extraction  capacity,  50
million  gallons  per year of  biodiesel  production  capacity,  and 16  million
gallons per year of oilseed crush capacity online by the end of 2009.           

In addition to our production  operations,  we market  equipment and services to
other  participants in the biofuel  industry.  Since June 2007, we have sold and
commissioned  (installed)  a total of 25 million  gallons per year of  biodiesel
production  capacity based on our  technologies  to third party  clients.  These
facilities  are in  production  today  and  consistently  produce  high  quality
biodiesel  fuel out of a number  of lower  cost  fats  and  oils.  We are  under
contract with these same clients to build and commission  additional  production
capacity during 2008.                                                           

Executive Summary                                                               

Highlights for the year ended December 31, 2007 are as follows:                 

     >>   Our total  revenues were  $29,966,451  as compared to  $18,399,360  in
revenues for 2006;                                          

     >>   Our  EBITDA  in  2007  was   $2,320,241   as  compared  to  EBITDA  of
$(3,484,490) in 2006;                                       

     >>   We  completed  construction  of our corn oil  extraction  facility  in
Oshkosh, Wisconsin;                                         

     >>   We  completed  the  acquisition  of  our  oilseed  crush  facility  in
Culbertson, Montana;                                        

     >>   We completed  development  on our biodiesel  technology  and built and
          commissioned  a total of 15  million  gallons  per year of  production
capacity for two third party clients; and,                  

     >>   We reduced debt, liquidated  non-strategic assets, and streamlined our
operations.                                                 

Components of Revenue                                                           

Our principal sources of revenue during the year ended December 31, 2007 derived
from the following activities:                                                  

>>   Equipment & Technology Sales                                     

>>   Culinary Oil Prodction & Sales                                   

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>>   Biofuel Production & Sales                                       

>>   Diversified Environmental Services                               

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006           

Revenues                                                                        

Total revenues for the twelve months ended  December 31, 2007 were  $29,966,451,
representing  an increase of  $11,567,091,  or 63%, over the twelve months ended
December 31, 2006 revenues of  $18,399,360.  Revenue for the year ended December
31, 2007 included                                                               

>>   $9,101,281 in revenue from equipment and technology sales,       

>>   $5,087,451 million from culinary oil production and sales,       

>>   $491,655 from the sales of corn oil for biofuel production,      

>>   $15,286,064 from the sales of environmental services.            

In the comparable  period of the prior year,  revenue  totaled  $18,399,360,  of
which $13,919,838 was attributable to environmental services and $4,479,522 from
equipment sales.                                                                

The  increase in revenue  during 2007 was  primarily  due to sales of 15 million
gallons per year of biodiesel  production  equipment to third party clients, the
acquisition  of our  oilseed  crush  facility  in March  2007,  and the onset of
operations at our Oshkosh, Wisconsin corn oil extraction system during the third
quarter 2007.                                                                   

Revenues in 2008 can be expected to decrease to the extent that the Company sold
its  environmental  services  business  during 2008 (in return for a  $2,000,000
reduction of the Company's  debt to YA Global  Investments,  LP), but management
believes that these  decreases can be offset by increases in our other  business
segments.                                                                       

We  commissioned  our Medina,  New York corn oil extraction  facility during the
first quarter of 2008 and we are currently  financed to build several additional
corn oil extraction  facilities that are expected to become  operational  during
2008.  In  addition,  we  commissioned  a 10 million  gallon per year  biodiesel
processing  system for a third party  client  during the first  quarter of 2008.
Further,  we are  subject to a contract  to build,  install  and  commission  an
additional 20 million gallons of biodiesel  production and related equipment for
a third party  client.  At a combined 30 million  gallons per year of production
capacity,  these biodiesel  production  systems correspond to twice what we sold
during 2007. Moreover, during the first quarter of 2008, we executed a biodiesel
plant management  contract with one of our biodiesel  equipment clients pursuant
to which the Company is to be paid a fee tied to the profitability of the plant.
Finally,  increased  revenues  can  also be  expected  from  increased  sales of
culinary  oils during 2008 if the Company  successfully  completes the financing
necessary for the expansion of its oilseed crush facility.                      

Cost of Revenues                                                                

Cost  of  revenues  for  the  twelve  months  ended   December  31,  2007f  were
$24,049,969,  or 80.3% of revenue  compared to $14,108,953,  or 76.7% of revenue
for the same period in 2006.                                                    

Cost of revenue  for the  Company's  environmental  services  segment  increased
$696,267,  or 2.3% as a percentage of sales,  to $10,962,181  for the year ended
December 31, 2007 from  $10,265,914 for the year ended DecembeFr 31, 2006. These
costs are not expected to continue since this business was liquidated in 2008.  

During  the twelve  months  ended  December  31,  2007,  the  Company's  biofuel
production  costs of revenue were $348,192 as compared to $0 for the same period
in  2006,  and  were  attributable  to costs  of corn  oil,  transportation  and
maintenance for our Oshkosh, Wisconsin corn oil extraction facility commissioned
during 2007.  Cost of revenue for our equipment and  technology  sales  business
were  $7,187,047  for the twelve  months ended  December 31, 2007 as compared to
$4,948,450 for the same period in 2006.  This increase was  attributable  to the
increased  costs  associated  with the 15 million  gallons per year of biodiesel
production  equipment  sold to third party  clients.  Cost of  revenues  for the
Company's  oilseed  crush  facility,  which was  acquired  in March  2007,  were
$5,384,135  from the period of acquisition  through  December 31, 2007, and were
primarily attributable to oilseed purchases and direct labor.                   

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Included  within cost of revenue is  depreciation  and  amortization  expense of
$325,891  and  $172,171  for the  years  ended  December  31,  2007,  and  2006,
respectively.  Depreciation and amortization  expense increased by $153,720 over
the same period in 2006.                                                        

Gross Profit                                                                    

Gross profit for year ended  December 31, 2007 was  $5,916,482,  representing  a
gross margin of 19.7%.  This compared to  $4,290,407,  23.3%,  in the comparable
period of the prior year.  The decrease in margin as a  percentage  of sales was
primarily due to the Company's  changed business  operations during 2007 as well
as the development and early stage nature of those  operations  during the first
half of 2007.                                                                   

Operating Expenses                                                              

Operating  expenses  for the year ended  December 31, 2007 were  $12,442,647  or
41.5% of revenue compared to $9,574,271, or 52.0% of revenue for the same period
in 2006.  Included  in the year  ended  December  31,  2007  was  $3,060,756  in
stock-based  compensation  as compared to $2,399,401 for the year ended December
31, 2006. The increase in operating  expenses was primarily due to the Company's
changed  business  operations  during 2007 and the  development  and early stage
nature  of  those  operations  during  the  first  half of  2007,  and  included
non-recurring equity and other transactions relating to our restructuring.      

Management believes that selling,  general and administrative  expenses over the
next  reporting  period  will be  reduced  as a percent  of  revenue  due to our
recently  completed  restructuring.  Additional  decreases,  as a percentage  of
sales,  are expected as our biofuels,  culinary and equipment  sales  businesses
continue to grow.                                                               

Interest Expense                                                                

Interest  expense for the twelve months ended  December 31, 2007 was  $5,026,485
representing  an increase of $3,277,035  from  $1,749,450 for the same period in
2006.  This  increase was mostly due to the debt  service of the debt  financing
associated with the Company's  biodiesel  equipment sales and culinary oil sales
businesses.                                                                     

Expenses Associated with Derivative Instruments                                 

Gain from the change in the fair  market  value of  derivative  liabilities  was
$3,974,422 for the twelve months ended December 31, 2007 compared with a gain of
$776,841 for the twelve months ended December 31, 2006. Amortization of deferred
financing costs and debt discounts was $4,689,896 and $5,283,960, respectively. 

Net Income or Loss                                                              

Net loss from  continuing  operations  for the year ended December 31, 2007, was
$25,509,767  as compared to a loss from  discontinued  operations of $13,529,057
from the same period in 2006. Net gain from  discontinued  operations for twelve
months ended  December 31, 2007 was  $2,468,466  as compared to $359,283 for the
same period in 2006.                                                            

Despite  the  increase in  revenues,  the  Company's  net loss during the twelve
months ended  December  31, 2007 was  $24,307,063,  which is increased  from the
$13,165,926  loss recorded in the same period of 2006.  The primary  reasons for
the magnitude of this net loss were expenses attributable to the transition from
technology  development to mature market execution,  our new product and service
mix, and expenses  attributable to past financing and restructuring  activities.
Specifically,  during the year ended  December  31, 2007,  the Company  incurred
substantial expenses attributable to:                                           

>>   Technology development activities;                               
     >>   One-time  equity grants to employees and  consultants  in lieu of cash
compensation;                                               
>>   Charges relating to impairment of intangibles and goodwill; and  
     >>   Adjustments to the book value of derivatives associated with financing
activities in 2005 and 2006.                                

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Management  does not expect many of these costs to  continue  and,  net of these
costs,  the Company  produced an adjusted  EBITDA of $2,320,241  during the year
ended  December 31, 2007.  To clarify the effect of these  one-time  charges and
financing charges on the Company's  results,  the following table reconciles the
Company's net loss on an  unconsolidated  basis with adjusted EBITDA (a non-GAAP
measure of performance):                                                        

                                                        [Enlarge/Download Table]

                                                                                                Year Ended         
                                                                                              2007            2006 
                                                                                      ------------   ------------- 
                                                                                                                   
Net income .........................................................................  $(24,458,938)   $(16,332,905)

Adjustments to net income (loss) from operations:                                                                  
   Interest expense ................................................................     9,771,965       1,944,023 
   Depreciation ....................................................................       712,173         713,629 
   Amortization of intangibles .....................................................     2,480,692       7,742,316 
   Impairment of goodwill ..........................................................    11,153,816       1,746,624 
   Minority interest and dividends .................................................     1,417,637            --   
                                                                                      ------------    ------------ 

EBITDA before adjustment for non-recurring items ...................................     1,077,345      (4,186,313)

Adjustments for non-recurring items:                                                                               
   Non-recurring stock issuance ....................................................     3,060,756       2,728,827 
   Other non-recurring equity, restructuring and consolidation (income) expense, net    (1,817,860)     (2,027,004)
                                                                                      ------------    ------------ 

Adjusted EBITDA ....................................................................  $  2,320,241    $ (3,484,490)
                                                                                      ============    ============ 

Non-GAAP Financial Measures                                                     

It should be noted,  in  connection  with review of the  preceding  table,  that
EBITDA is not a financial  measure  employed  in the  application  of  generally
accepted accounting  principles.  Nevertheless,  we believe that earnings before
interest expense, income tax provision (benefit), depreciation and amortization,
or EBITDA is useful to investors  and  management  in  evaluating  our operating
performance in relation to other  companies in our industry.  the calculation of
EBITDA  generally  eliminates the effects of financings and income taxes,  which
items  may vary  for  different  companies  for  reasons  unrelated  to  overall
operating performance. In addition, we have calculated the effect of eliminating
non-recurring items, so as to enable meaningful comparison between years. EBITDA
is a non-GAAP  financial  measure and has limitations as an analytical tool, and
should not be considered  in isolation or as a substitute  for net income or any
other  measure of  performance  under  GAAP,  or to cash  flows from  operating,
investing or financing  activities as a measure of liquidity.  We compensate for
these limitations by relying on our GAAP results, as well as on our EBITDA.     

DERIVATIVE LIABILITIES                                                          

As  of  December  31,  2007,  the  Company  and  its  subsidiaries  had  several
convertible  debentures  due.  The  conversion  feature on these  debentures  is
variable  based on trailing  market  prices and  therefore  contains an embedded
derivative.  We value the  conversion  feature at the time of issuance using the
Black-Scholes Model and record a note discount and derivative  liability for the
calculated  value.  We  recognize  interest  expense for  accretion  of the note
discount over the term of the note.  The  derivative  liability is valued at the
end of each  reporting  period  and  results in a gain or loss for the change in
fair value. Due to the volatile nature of our stock, as well as the stock of our
subsidiaries,  the change in the derivative  liability and the resulting gain or
loss is usually material to our results.                                        

The  principal  amount  on our  convertible  debentures  was  $33,516,949  as of
December 31, 2007 and the unamortized note discount was $3,061,767. For the year
ended  December 31, 2007,  we recognized  interest  expense for accretion of the
debt  discount  of  $3,609,641  and a gain for the  change in fair  value of the
derivative of $3,974,422 for these debentures. The total derivative liability as
of December 31, 2007 was $6,704,831.                                            

LIQUIDITY AND CAPITAL RESOURCES                                                 

Consolidated Cash Balances                                                      

As of December 31, 2007, we had a cash balance of $728,565, down from a balance 
of $1,890,894 at December 31, 2006. This net cash is summarized below and       
discussed in more detail in the subsequent sub-sections:                        

     >>   Operating  Activities  $3,630,884  of net cash  provided by  operating
          activities  primarily  deriving from sales of equipment and technology
as well as corn oil for biofuel production.                 

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     >>   Investing  Activities   $4,053,414  of  net  cash  used  in  investing
          activities  mainly for purchase of equipment for and  construction  of
  our corn oil extraction facilities and oilseed crush facility.

     >>   Financing Activities $314,176 of net cash used in financing activities
          primarily  for the  repayment of debt and was offset by an increase in
related party debt.                                         

Current and Prior Year Activity                                                 

Our primary  source of liquidity is cash provided by financing  activities.  For
the year ended December 31, 2007, net cash provided by our operating  activities
was  $3,630,884 as compared to the net cash used by our operating  activities of
$4,110,638 for the year ended December 31, 2006.                                

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 December  31,  2007,  accounts  receivable,  net of  allowance  for  doubtful
accounts,  totaled  $3,606,367,  and inventories  totaled  $5,017,233.  Accounts
payable and accrued expenses totaled $11,208,566.                               

For the  year  ended  December  31,  2007,  we used  $4,053,414  from  investing
activities as compared to $4,937,578 used in investing activities for the twelve
months ended December 31, 2006. For the twelve months ended December 31, 2007 we
used cash from  financing  activities  of $314,176  as  compared to  $10,502,188
provided by financing activities during December 31, 2006.                      

The Company had a working  capital  deficit of $38,377,772 at December 31, 2007,
which includes derivative  liabilities of $6,704,831,  convertible debentures of
$5,292,072, $3,979,437 in purchase obligations, $9,004,018 in amounts due to the
prior owners of our oilseed crush facility and $5,335,350 in related party debt.
Despite their  classification  as current  liabilities,  neither the  derivative
liabilities  ($6,704,831) or current  convertible  debentures  ($5,292,072)  are
serviceable out of the Company's cash flows (the terms of the  convertible  debt
require  repayment in shares of either  GreenShift  Corporation  or GS AgriFuels
Corporation common stock); the $3,979,437 in purchase obligations, to the extent
due, are tied to the earnings of the Company's  equipment sales business and can
only be serviced after the Company's senior secured debt has been serviced; and,
the notes payable to the prior owners of our oilseed crush facility ($9,004,018)
are  expected  to be  restructured  in the  second  quarter  2008 into a form of
subsidiary  preferred  stock that will service these amounts  exclusively out of
the net cash flows (after  regular debt service) of our oilseed crush  facility.
The Company's working capital deficit net of these amounts is $8,062,064.       

Management  expects the majority of the derivative  liabilities to be eliminated
due to the Company's January 2008 restructuring of the majority of the Company's
convertible debt to provide for fixed price conversion  features (see Note 31 to
the Consolidated Financial Statements, Subsequent Events, below).               

At the present time, the Company's only source of committed financing is its $10
million revolving credit facility,  the proceeds of which are to be used for the
construction of the Company's corn oil extraction facilities and general working
capital purposes related to those efforts.  We are currently  investigating  the
availability of both equity and debt financing necessary to complete the balance
of the  Company's  contracted  corn oil  extraction,  biodiesel  production  and
oilseed  crush  projects.  We  are  also  evaluating  various  opportunities  to
restructure our convertible debt in favor of traditional,  non-convertible  long
term debt.  We do not know at this time if the  necessary  funds can be obtained
nor on what terms they may be available.                                        

Our financial  position and liquidity are, and will be,  influenced by a variety
of factors,  including: our ability to generate cash flows from operations;  the
level of our outstanding  indebtedness  and the interest we are obligated to pay
on this indebtedness;  and our capital expenditure  requirements,  which consist
primarily of facility construction and the purchase of equipment.               

We intend to fund our  principal  liquidity  and capital  resource  requirements
through cash  provided by operations  and  borrowings  under our current  credit
agreement.  Notably,  but for the cash needs  associated  with our  construction
projects,  Management  expects that its currently  committed  sources of revenue
will be  sufficient to meet the Company's  debt service,  operational  and other
regular cash needs during 2008.                                                 

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Contractual Commitments                                                         

Our material  contractual  obligations are composed of construction  commitments
for plants  being  built for our own use,  construction  commitments  for plants
being built for  outside  parties,  repayment  of amounts  borrowed  through our
convertible   debentures  and  other  notes  payable.   The  following  schedule
summarizes our contractual  obligations as of December 31, 2007. Our obligations
are likely to increase  significantly  as we enter into agreements in connection
with  the   construction   of  additional   corn  oil   extraction   facilities,
GreenShift-owned biodiesel facilities, and or oilseed crush expansion project:  

                                                        [Enlarge/Download Table]

                                                                                                          2012 and               
                                                          2008          2009         2010        2011    Thereafter        Total 
                                                    ----------   -----------  -----------  ----------   -----------   -----------
                                                                                                                                 
Current convertible debt obligations (1) ......   $ 1,740,067   $      --     $      --    $      --     $      --    $ 1,740,067
Current note payable obligations (2) ..........     5,700,000          --            --           --            --      5,700,000
Other current obligations .....................       411,124         6,029         6,029        6,029        42,203      471,414
Long term convertible debt obligations, net (3)          --      24,672,864          --           --            --     24,672,864
Long term note payable obligations, net (4) ...       630,765     1,257,527       590,173      181,943          --      2,660,407
Convertible purchase obligations (5) ..........     3,552,005     3,552,013          --           --            --      7,104,018
Other purchase obligations (6) ................     3,979,437          --            --           --            --      3,979,437
Other obligations .............................          --         487,695       113,718       31,662        20,193      653,266
                                                  -----------   -----------   -----------  -----------   -----------  -----------

Total obligations .............................   $16,013,398   $29,976,128   $   709,918  $   219,634   $    62,396  $46,981,474

-----------                                                                                                                      
<FN>                                                                                                                             
(1)  Current  convertible  debt  obligations  represents  amounts  due to  third                                                 
     parties but that are payable in the form of either  GreenShift  Corporation                                                 
     common stock or GS AgriFuels  Corporation  common  stock.  The terms of the                                                 
     Company's  convertible debt do not generally  require regular  principal or                                                 
     interest  payments in cash. The amount due at December 31, 2007 was reduced                                                 
     by $1,000,000 during the first quarter 2008.                                                                                

(2)  Current note payable  obligations  included $3,800,000 at December 31, 2007                                                 
     due to Stillwater  Asset Backed Fund, L.P., the proceeds of which were used                                                 
     to complete the Company's 2006  acquisition of NextGen Fuel, Inc. (see Note                                                 
     29 to the Consolidated  Financial  Statements,  Acquisitions,  below).  The                                                 
     Company  primarily  services  this  obligation  out  of its  equipment  and                                                 
     technology  sales cash flows and it has been  reduced to  $2,472,000  as of                                                 
     March 31,  2008.  The Company  expects this  obligation  to be paid in full                                                 
     during 2008.                                                                                                                

(3)  Long term convertible debt obligations  include  $7,425,000 and $20,309,631                                                 
     due  from  GreenShift  and  GS  AgriFuels,   respectively,   to  YA  Global                                                 
     Investments,  L.P.  ("YAGI").  These  amounts are  collectively  reduced by                                                 
     applicable  debt discounts of $3,061,767.  Debt discounts are applied under                                                 
     U.S.  GAAP and  represent  additional  value  given to the  holders  of the                                                 
     debentures (in excess of the face value of the  debentures) due to embedded                                                 
     derivative  securities contained within the conversion feature of the debt.                                                 
     The amount due from  GreenShift  Corporation  was reduced by  $2,000,000 in                                                 
     January  2008  (see  Note  31 to  the  Consolidated  Financial  Statements,                                                 
     Subsequent  Events).  The  Company  intends  to payoff  and  refinance  the                                                 
     substantial  majority of its  convertible  debt due to YAGI during 2008 and                                                 
     2009 in  conjunction  with expected  increases in the Company's  cash flows                                                 
     from its biofuel production and other operations.                                                                           

(4)  Long term note payable  obligations  primarily  include amounts due to term                                                 
     and working capital lenders for our oilseed crush facility.                                                                 

(5)  Purchase  obligations  pertain to the 2007  acquisition  by GS AgriFuels of                                                 
     Sustainable  Systems,  Inc.,  the holding  company  for our  oilseed  crush                                                 
     facility.   These  amounts  include  $3,552,005  in  GS  AgriFuels  current                                                 
     convertible  debentures  payable,   $3,552,013  in  long  term  convertible                                                 
     debentures payable,  and $1,900,000 in long term notes payable to the prior                                                 
     owners of our oilseed crush facility. Given the recent completion of the GS                                                 
     AgriFuels Go Private Transaction (see Note 31 to the Consolidated Financial                                                 
     Statements,  Subsequent Events,  below), the Company expects to restructure                                                 
     the  terms and  conditions  of the  relevant  purchase  agreements  for its                                                 
     oilseed  crush  facility to provide for the payment of the  purchase  price                                                 
     exclusively out of this  facility's cash flows after its expansion  project                                                 
     is complete.                                                                                                                

(6)  Other  purchase  obligations  at  December  31,  2007  relate  to the  2006                                                 
     acquisition by GS AgriFuels of NextGen Fuel,  Inc., the holding company for                                                 
     our biodiesel production technology, and include $3,979,437 relating to the                                                 
     Company's 2006  acquisition of NextGen Fuel,  Inc.,  which  obligations are                                                 
     potentially subject to adjustment by the terms of the relevant  acquisition                                                 
     agreement and, to the extent due, may only be serviced by the Company after                                                 
     the Company has  serviced  and remains in  continuing  compliance  with its                                                 
     senior debt obligations.                                                                                                    
</FN>                                                                                                                            

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                                                        [Enlarge/Download Table]

The  following   schedule  of  selected   balance  sheet  data  and  contractual                                                     
commitments at December 31, 2007 is presented on a segment-specific basis:                                                           


                                                               Equipment &   Culinary Oil       Biofuel                              
                                                                Technology     Production    Production   Environmental              
                                                   Corporate         Sales        & Sales       & Sales        Services       Total  
                                                  ---------------------------------------------------------------------------------  
Current liabilities:                                                                                                                 
                                                                                                                                     
Line of credit ................................   $      --     $      --     $ 1,833,191   $      --     $   747,341   $ 2,580,533  
Accounts payable and                                                                                                                 
   accrued expenses ...........................       456,593     1,369,728     4,196,773     2,578,102     2,607,369    11,208,566  
Accrued interest payable ......................          --       2,653,154       449,872       780,915         3,721     3,887,662  
Accrued interest payable,                                                                                                            
   related party ..............................          --         196,832          --            --            --         196,832  
Billings in excess of earnings-- ...............     1,222,807          --            --            --       1,222,807               
Deferred tax liability ........................          --          59,630          --            --            --          59,630  
Deferred revenue ..............................          --       1,582,500          --            --            --       1,582,500  
Income tax payable ............................          --          45,000          --            --          69,788       114,788  
Current portion of                                                                                                                   
   long term debt .............................          --       4,030,932     1,900,000           256       179,936     6,111,124  
Liability for derivative                                                                                                             
   instruments ................................     6,704,831          --            --            --            --       6,704,831  
Related party debt ............................     2,948,831       287,370          --       2,099,149          --       5,335,350  
Current portion of                                                                                                                   
   convertible debentures,                                                                                                           
   net of discount ............................     1,740,067          --       3,552,005          --            --       5,292,072  
Liabilities of discontinued                                                                                                          
   operations, current ........................       412,492          --            --            --            --         412,492  
                                                   -----------   -----------   -----------   -----------   -----------   ----------- 
Total current liabilities .....................   $11,850,324   $11,443,955   $11,931,843   $ 5,458,424   $4,020,649$    44,709,187  
                                                   -----------   -----------   -----------   -----------   -----------   ----------- 

Long term liabilities:                                                                                                               
Long term debt,                                                                                                                      
   net of current .............................          --       4,326,700     2,660,407        60,290       306,003     7,353,400  
Convertible debenture,                                                                                                               
   net of current .............................     5,035,248    19,637,616     3,552,013          --            --      28,224,877  
                                                  -----------   -----------   -----------   -----------   -----------   -----------  
Total long term liabilities ...................   $ 5,035,248   $23,964,316   $ 6,212,420   $    60,290   $   306,003   $35,578,277  
                                                  -----------   -----------   -----------   -----------   -----------   -----------  

Liabilities relating to contractual                                                                                                  
  commitments at December 31, 2007:                                                                                                  

Current convertible debt                                                                                                             
due to YAGI, net ..............................   $   740,067   $      --     $      --     $      --     $      --     $   740,067  

Other current                                                                                                                        
convertible debt ..............................     1,000,000          --            --            --            --       1,000,000  

Current convertible                                                                                                                  
convertible purchase                                                                                                                 
obligations ...................................          --            --       3,552,005          --            --       3,552,005  

Current note payable                                                                                                                 
obligations ...................................          --       3,800,000     1,900,000          --            --       5,700,000  

Other current                                                                                                                        
obligations ...................................          --         230,932          --          60,546       179,936       471,414  

Long-term convertible                                                                                                                
debt due to YAGI, net ..........................     5,035,248    19,637,616          --            --            --      24,672,864 

Long-term note                                                                                                                       
payable obligations ............................          --            --       2,660,407          --            --       2,660,407 

Long-term convertible                                                                                                                
convertible purchase                                                                                                                 
obligations ....................................          --            --       3,552,013          --            --       3,552,013 

Total other purchase                                                                                                                 
obligations ....................................          --       3,979,437          --            --            --       3,979,437 

Other obligations ..............................          --         347,263          --            --         306,003       653,267 
                                                   -----------   -----------   -----------   -----------   -----------   ----------- 
.................................................   $ 6,775,315   $27,995,249   $11,664,425   $    60,546   $   485,939   $46,981,474
                                                   ===========   ===========   ===========   ===========   ===========   =========== 


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ITEM 7            FINANCIAL STATEMENTS                                          

                                                        [Enlarge/Download Table]


                                                                                                     Page No
FINANCIAL STATEMENTS                                                                                        

                                                                                                            
Report of Independent Registered Public Accounting Firm...................................................46

Consolidated Balance Sheet ...............................................................................47

Consolidated Statements of Operations ....................................................................48

Consolidated Statements of Stockholders' Equity...........................................................49

Consolidated Statements of Cash Flows.....................................................................51

Notes to Consolidated Financial Statements ...............................................................53

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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and                                                   
Stockholders of GreenShift Corporation (f/k/a GS CleanTech Corporation) and     
Subsidiaries                                                                    

We have  audited  the  accompanying  consolidated  balance  sheet of  GreenShift
Corporation (f/k/a GS CleanTech Corporation) and Subsidiaries as of December 31,
2007,  and the related  consolidated  statements  of  operations,  stockholders'
equity  and cash  flows  for  each of the  years in the  two-year  period  ended
December  31,   2007.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.         

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audits included consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.                                               

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,   the  financial  position  of  GreenShift
Corporation (f/k/a GS CleanTech Corporation) and Subsidiaries as of December 31,
2007, and the results of its operations and its cash flows for each of the years
in the two-year  period ended  December 31, 2007 in conformity  with  accounting
principles generally accepted in the United States of America.                  

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from  operations  and is in a  working  capital  deficit  position  that  raises
substantial doubt about its ability to continue as a going concern. Management's
plans  concerning  these matters are also described in Note 2. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.                                                    

                                 /s/   Rosenberg Rich Baker Berman & Company

Bridgewater, New Jersey                                                         

March 31, 2008                                                                  

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    GREENSHIFT CORPORATION (F/K/A GS CLEANTECH CORPORATION) AND SUBSIDIARIES                  
                           CONSOLIDATED BALANCE SHEET                                         
                             AS OF DECEMBER 31, 2007                                          

ASSETS                                                                                        

Current assets:                                                                               
                                                                                              
   Cash ......................................................................   $    728,565 
    Restricted cash ..........................................................        425,623 
   Accounts receivable, net of allowance of doubtful accounts ................      3,606,367 
   Inventories ...............................................................      5,017,233 
   Cost & earnings in excess of billings .....................................        140,592 
   Deferred income taxes .....................................................         79,646 
   Project development costs .................................................        281,991 
   Prepaid expenses and other assets .........................................        661,600 
                                                                                 ------------ 
            Total current assets .............................................     10,941,617 
                                                                                 ------------ 
Other Assets:                                                                                 
   Property and equipment, net ...............................................      5,548,640 
   Deposits ..................................................................        114,008 
   Construction in progress ..................................................      4,844,913 
   Intangible assets, net ....................................................     12,454,293 
   Deferred financing costs, net .............................................      1,444,701 
   Long term Investments .....................................................      4,186,657 
   Goodwill ..................................................................     12,795,776 
   Assets of discontinued operations .........................................          7,500 
                                                                                 ------------ 
     Total other assets ......................................................     41,396,488 
                                                                                 ------------ 

TOTAL ASSETS .................................................................   $ 52,338,105 
                                                                                 ============ 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):                                               
Current liabilities:                                                                          
   Line of credit ............................................................   $  2,580,533 
   Accounts payable and accrued expenses .....................................     11,208,566 
   Accrued interest payable ..................................................      3,887,662 
   Accrued interest payable - related party ..................................        196,832 
   Billings in excess of earnings ............................................      1,222,807 
   Deferred tax liability ....................................................         59,630 
   Deferred revenue ..........................................................      1,582,500 
   Income tax payable ........................................................        114,788 
   Current portion of long term debt .........................................     10,721,326 
   Liability for derivative instruments ......................................      6,704,831 
   Related party debt ........................................................      5,335,350 
   Current portion of convertible debentures, net of discount ................      5,292,072 
   Liabilities of discontinued operations, current ...........................        412,492 
                                                                                 ------------ 
     Total current liabilities ...............................................     49,319,389 
                                                                                 ------------ 

   Long term debt, net of current ............................................      2,743,199 
   Convertible debenture, net of current .....................................     28,224,877 
                                                                                 ------------ 
     Total long term liabilities .............................................     30,968,076 

Total liabilities ............................................................     80,287,465 
                                                                                 ------------ 

Minority interest in consolidated subsidiary .................................      1,968,762 
                                                                                 ------------ 
Stockholders' deficit                                                                         
   Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized:                
     Series A: 1,254,244 shares issued and outstanding .......................          1,254 
     Series B: 151,250 shares issued and outstanding .........................            151 
     Series C:  0 shares issued and outstanding ..............................           --   
       Series D: 800,000 shares issued and outstanding .......................            800 
   Common stock, $0.001 par value, 500,000,000 authorized;                                    
      30,693,083 shares issued and outstanding ...............................         30,693 
   Additional paid-in capital ................................................     63,502,789 
   Accumulated other comprehensive income ....................................         10,181 
   Accumulated deficit .......................................................    (93,463,990)
                                                                                 ------------ 
     Total stockholders' equity (deficit) ....................................    (29,918,122)
                                                                                 ------------ 
TOTALLIABILITIES AND STOCKHOLDERS' EQUITY.....................................  $ 52,338,105  

            The notes to the Consolidated Financial Statements are an                         
                       integral part of these statements.                                     

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    GREENSHIFT CORPORATION (F/K/A GS CLEANTECH CORPORATION) AND SUBSIDIARIES          
                      CONSOLIDATED STATEMENTS OF OPERATIONS                           
                 FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006                       

                                                             12/31/07         12/31/06
                                                         -----------------------------
                                                                                      
Revenue ..............................................   $ 29,966,451    $ 18,399,360 
Cost of revenues .....................................     24,049,969      14,108,953 
                                                         ------------    ------------ 
  Gross profit .......................................      5,916,482       4,290,407 

Operating expenses:                                                                   
   General and administrative expenses ...............      7,884,428       5,785,303 
   Selling expenses ..................................      1,402,220       1,157,782 
   Research and development ..........................         95,243         231,785 
   Stock based compensation ..........................      3,060,756       2,399,401 
                                                         ------------    ------------ 
     Total operating expenses ........................     12,442,647       9,574,271 
                                                         ------------    ------------ 

Net income (loss) from operations ....................     (6,526,165)     (5,283,864)

Other income (expense):                                                               
   Change in fair value of derivative instruments ....      3,974,422         776,841 
   Impairment of goodwill ............................    (11,153,816)           --   
   Loss on disposal and impairment of investments ....       (512,732)       (436,667)
   Amortization of debt discount & deferred financing      (4,689,896)     (5,283,960)
   Amortization of intangibles .......................     (2,100,000)           --   
Gain (loss) on equipment disposal ....................           --           (30,380)
   Gain on extinguishment of debt ....................           --           125,484 
   Loss on legal settlement ..........................           --        (1,500,000)
   Miscellaneous income ..............................        719,728           6,189 
   Other expense .....................................        (92,634)           --   
   Interest expense - affiliate ......................        (55,584)       (153,250)
   Interest expense ..................................     (5,026,485)     (1.749,450)
                                                         ------------    ------------ 
     Total other income (expense), net ...............    (18,936,997)     (8,245,193)
                                                         ------------    ------------ 

Income (loss) before provision for income taxes ......    (25,463,162)    (13,529,057)

(Provision for)/benefit from income taxes ............        (46,605)          3,848 
                                                         ------------    ------------ 
  Income (loss) from continuing operations ...........    (25,509,767)    (13,525,209)
                                                         ============    ============ 
Discontinued operations:                                                              
Gain from disposal of discontinued operations ........      2,481,691            --   
Gain (loss) from discontinued operations .............        (13,225)        359,283 
                                                         ------------    ------------ 
   Total discontinued operations .....................      2,468,466         359,283 
                                                         ============    ============ 

Net income (loss) before minority interest ...........   $(23,041,301)   $(13,165,926)

Minority interest ....................................     (1,265,762)           --   
                                                         ------------    ------------ 

Net loss .............................................    (24,307,063)    (13,165,926)

Preferred dividends ..................................       (151,875)       (681,593)
                                                         ------------    ------------ 
Net income (loss) attributable to  common shareholders   $(24,458,938)   $(13,847,519)
                                                         ============    ============ 

Weighted average common shares outstanding                                            
Basic and diluted ....................................      9,060,512         927,309 

Earnings (loss) per share                                                             

Basic                                                                                 
Loss from continuing operations ......................   $      (2.97)   $     (15.32)
Income (loss) from discontinued operations ...........           0.27            0.39 
                                                         ------------    ------------ 
Net loss per share - basic and diluted ...............   $      (2.70)   $     (14.93)
                                                         ============    ============ 

            The notes to the Consolidated Financial Statements are an                 
                       integral part of these statements.                             

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    GREENSHIFT CORPORATION (F/K/A GS CLEANTECH CORPORATION) AND SUBSIDIARIES                                             
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                                         
           FOR THE YEARS ENDED DECEMBER 31, 2007 AND DECEMBER 31, 2006                                                   

                                     ----------------------------------------------------------------------------------- 
                                        Series A         Series B           Series C        Series D                     
                                     Preferred Stock  Preferred Stock    Preferred Stock  Preferred Stock  Common Stock  
------------------------             ------- ------- --------- ------ -------- ------- ------- ------- --------- --------
                                     Shares    Amount   Shares   Amount Shares  Amount   Shares  Amount   Shares   Amount
------------------------             ------- ------- --------- ------ -------- ------- ------- ------- --------- --------
                                                                                                                         
Balance at 12/31/05                1,881,366   1,882  1,646,218 $1,646 750,000  $ 750     --       -- 1,477,703   $1,478 
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Settlement of debt and payables          --      --      --       --      --      --      --       --    14,139       14 
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Gain on sales of marketable                                                                                              
securities - related party               --      --      --       --      --      --      --       --       --       --  
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Shares issued for                                                                                                        
conversion of debentures                 --      --      --       --      --      --      --       -- 2,792,865    2,793 
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Settlement of debt -                                                                                                     
payables - related party                 --      --      --       --      --      --      --       --       --       --  
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Anti dilution price                                                                                                      
protection - related party               --      --      --       --      --      --      --       --   372,800      373 
 -----------------------            ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Exchange for services                    --      --      --       --      --      --      --       --   115,094      115 
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Exchange for services                    --      --      --       --      --      --      --       --       --       --  
- related party                                                                                                          
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Conversion of                           --      --      --       --      --      --      --       --    33,333       33  
minority interest                                                                                                        
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Cancellation or redemption                                                                                               
- related party                        --      --      --       --      --      --      --       --  (134,899)    (135)  
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Issuance of warrants                    --      --      --       --      --      --      --       --       --       --   
and options                                                                                                              
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Conversion of Series A and                                                                                               
B Preferred Stock to Common       (627,122)  (627) (1,207,468) (1,207)   --      --      --       -- 1,519,479    1,519  
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Conversion of Series                                                                                                     
C and Common to Series D                --      --      --       --  (750,000) (750) 1,000,000 1,000 (1,272,666)  (1,273)
-----------------------             ------- ------- -------- ------- ------- ------- -------- ------- --------- -------- 
Gain on sale of marketable                                                                                               
securities - related party              --      --      --       --      --      --      --       --       --       --   
-----------------------            ------- ------- -------- ------- ------- ------- -------- ------- --------- --------  
Cancellation of treasury stock          --      --      --       --      --      --      --       --       --       --   
-----------------------            ------- ------- -------- ------- ------- ------- -------- ------- --------- --------  
Settlement of debt                      --      --      --       --      --      --      --       --       --       --   
-----------------------            ------- ------- -------- ------- ------- ------- -------- ------- --------- --------  
Preferred dividends                     --      --      --       --      --      --      --       --       --       --   
-----------------------            ------- ------- -------- ------- ------- ------- -------- ------- --------- --------  
Net Loss                                --      --      --       --      --      --      --       --       --       --   
------------------------           ------- ------- --------- ------ -------- ------- ------- ------- --------- --------  
Balance at 12/31/06               1,254,244  $ 1,255  438,750  $ 439    --      --  1,000,000 $1,000 4,917,848  $4,918   
------------------------           ======= ======= ========= ====== ======== ======= ======= ======= ========= ========  
Settlement of debt                      --      --      --       --      --      --      --       --    559,022    559   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Sale of subsidiary                      --      --      --       --      --      --      --       --       --       --   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Shares issued for                                                                                                        
conversion of debentures                --      --      --       --      --      --      --       --  3,481,697  3,482   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Feature on convertible                                                                                                   
preferred stock                         --      --      --       --      --      --      --       --       --       --   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Adjustment for                                                                                                           
acquisition of entity                   --      --      --       --      --      --      --       --       --       --   
under common control                                                                                                     
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Stock based compensaton                 --      --      --       --      --      --      --       --    489,516    490   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Conversion of                           --      --      --       --      --      --      --       --    200,000    200   
minority interest                                                                                                        
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Conversion of Series B                                                                                                   
Preferred Stock to Common               --      -- (287,500)   (288)     --      --      --       --    245,000    245   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Conversion of Series D                                                                                                   
D Preferred Stock to Common             --      --      --       --      --      -- (200,000)  (200) 20,800,000 20,800   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Unrealized gain on securities           --      --      --       --      --      --      --       --       --       --   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Net loss                                --      --      --       --      --      --      --       --       --       --   
-----------------------           ------- ------- -------- ------- ------- ------- -------- ------- --------- --------   
Balance at 12/31/07              1,254,244 $1,255  151,250   $ 151      --       --  800,000 $ 800 30,693,083  $30,693   
-----------------------           ======= ======= ======== ======= ======= ======= ======== ======= ========= ========   

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GREENSHIFT CORPORATION (F/K/A GS CLEANTECH CORPORATION) AND SUBSIDIARIES                                
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                        
           FOR THE YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005                                  

----------------------- ---------- ---------------- ------------- --------- ----------- ------------    
                                                                      Accumulated                       
                           Additional                                       Other                       
                              Paid-in                   Accumulated Comprehensive     Deferred     Total
                              Capital  Treasury Stock       Deficit        Income Compensation    Equity
-----------------------     ---------- -------- ------- ------------- --------- ----------- ------------
                             Amount    Shares   Amount       Amount      Amount     Amount      Amount  
-----------------------     ---------- -------- ------- ------------- --------- ----------- ------------
                                                                                                        
Balance at 1/1/05        $48,596,096    3,225  ($63,754)(55,157,535)        --  ($150,000) ($6,769,437) 
-----------------------     ---------- -------- ------- ------------- --------- ----------- ------------
Settlement of debt            21,805      --       --         --          --         --         21,819  
and payables                                                                                            
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Gain on  marketable                                                                                     
securities - related         105,664      --       --         --          --         --        105,664  
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Shares issued for                                                                                       
conversion of debentures   1,556,585      --       --         --          --         --      1,559,378  
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Settlement of debt -                                                                                    
payables - related party    (166,667)     --       --         --          --         --       (166,667) 
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Anti dilution price                                                                                     
protection - related          18,267      --       --         --          --         --         18,640  
party                                                                                                   
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Exchange for services        282,036      --       --         --          --         --        282,151  
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Exchange for services                                                                                   
- related party              428,610      --       --         --          --         --        428,610  
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Conversion of                 49,967      --       --         --          --         --         50,000  
minority interest                                                                                       
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Cancellation or redemption                                                                              
- related party                  135      --       --         --          --         --          --     
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Issuance of warrants       3,937,917      --       --         --          --         --      3,937,917  
and options                                                                                             
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Conversion of Series                                                                                    
A and B Preferred                315      --       --         --          --         --          --     
Stock to Common                                                                                         
----------------------    ---------- -------- ------- ------------- ---------- ---------- ------------  
Conversion of Series                                                                                    
C and Common to                1,023      --       --         --          --         --          --     
Series D                                                                                                
----------------------    ---------- -------- ------- ------------- ---------- ---------- ------------  
Gain on marketable                                                                                      
securities - related             --        --       --         --          --       150,000     150,000 
party                                                                                                   
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Cancellation of              (63,754)    (3,225)  63,754       --          --         --          --    
treasury stock                                                                                          
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Settlement of debt         1,934,929       --       --         --          --         --      1,934,929 
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Preferred dividends           --           --       --      (681,593)      --         --       (681,593)
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Net Loss                      --           --       --   (13,165,926)      --         --    (13,165,926)
-----------------------    ---------- -------- ------- ------------- --------- ----------- ------------ 
Balance at 12/31/06      $56,702,928       --   $   --   (69,005,054)      --       $ --   ($12,294,514)
-----------------------   ========== ======== ======= ============= ========= =========== ============  
Settlement of debt           310,963       --       --         --          --         --        311,522 
----------------------    ---------- -------- ------- ------------- ---------- ---------- ------------  
Sale of subsidiary         1,958,883       --       --         --          --         --      1,958,883 
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Shares issued for                                                                                       
conversion of debenture    2,173,566       --       --         --          --         --      2,177,048 
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Preferred dividend           151,875       --       --     (151,875)       --         --          --    
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Adjustment for acquisition                                                                              
of entity under common      (260,912)      --       --         --          --         --      (260,912) 
control                                                                                                 
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Stock based compensation   2,051,152       --       --         --          --         --      2,051,642 
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Cancellation of debt         363,092       --       --         --          --         --        363,092 
- related party                                                                                         
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Write-off of               1,080,223       --       --         --          --         --      1,080,223 
subsidiary                                                                                              
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Conversion of                 71,800       --       --         --          --         --         72,000 
minority interest                                                                                       
----------------------    ---------- -------- ------- ------------- ---------- ---------- ------------  
Adjustment for               859,387       --       --         --          --         --        859,387 
closing of subsidiary                                                                                   
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Conversion of Series                                                                                    
B Preferred Stock to Common       43       --       --         --          --         --          --    
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Conversion of Series                                                                                    
D Preferred Stock to Common  (20,600)      --       --         --          --         --          --    
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Conversion of Series C                                                                                  
and Common to Series D          --         --       --         --          --         --          --    
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Unrealized gain on              --         --       --         --        10,181       --         10,181 
securities                                                                                              
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Preferred dividends             --         --       --       (151,875)     --         --       (151,875)
----------------------     ---------- -------- ------- ------------- ---------- ---------- ------------ 
Net loss                        --         --       --    (24,307,063)     --         --    (24,307,063)
-----------------------     ---------- -------- -------- ------------ ---------- ----------- -----------
Balance at 12/31/07      $63,502,790       --       --   ($93,463,992)   10,181      $ --  ($29,918,122)
-----------------------     ========== ======== ======== ============ ========== =========== ===========

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    GREENSHIFT CORPORATION (F/K/A GS CLEANTECH CORPORATION) AND SUBSIDIARIES                    
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                                     
           FOR THE YEARS ENDED DECEMBER 31, 2007 AND DECEMBER 31, 2006                          


                                                                 Twelve Months    Twelve Months 
                                                                         Ended            Ended 
                                                                   December 31      December 31 
                                                                 -------------    ------------- 
                                                                          2007             2006 
                                                                 -------------    ------------- 
CASH FLOW FROM OPERATING ACTIVITIES                                                             
                                                                                                
   Net loss from continuing operations .........................   $(26,775,529)   $(13,525,209)
   Net income from discontinued operations .....................      2,468,466         359,283 

Adjustments to reconcile net loss to net cash                                                   
  Provided by (used in) used in operating activities                                            

   Depreciation and amortization ...............................        712,173         713,629 
   Amortization of intangibles .................................      2,114,114         370,826 
   Amortization of debt discount and deferred financing costs ..      4,990,323       5,283,960 
   Change in allowance for doubtful accounts ...................           --            15,625 
   Change in fair value of derivatives .........................     (3,974,422)       (776,841)
   Stock based compensation ....................................      3,060,756       2,511,601 
   Deferred financing costs ....................................           --          (261,553)
   Change in deferred compensation .............................           --           150,000 
   Gain (loss) on equipment disposal ...........................           --            30,380 
   Stock issued for services - affiliates ......................           --            17,517 
   Gain on sale of discontinued operations .....................      2,481,721            --   
   Loss on disposal of investment ..............................        512,732         436,667 
   Unrealized gain on investment ...............................        (10,181)           --   
   Impairment of goodwill ......................................     11,153,816            --   
   Minority interest ...........................................      1,265,762            --   
   Settlement of debt ..........................................           --          (142,209)

Change in assets and liabilities, net of acquisitions                                           
   Accounts receivable, net ....................................       (680,281)     (1,031,095)
   Prepaid expenses ............................................         61,253        (369,783)
   Deposits ....................................................           --          (248,460)
   Inventory ...................................................     (1,252,065)       (553,440)
   Project development costs ...................................        (11,518)           --   
   Note payable - related party ................................           --            40,000 
   Costs in excess of earnings .................................         63,670        (281,334)
   Income tax payable ..........................................        114,788            --   
   Accrued interest - related party ............................           --           153,250 
   Billings in excess of cost ..................................      1,138,452          67,808 
   Accounts payable and accrued expenses .......................      8,486,479       1,715,569 
   Deferred taxes ..............................................        (20,017)           --   
   Assets and liabilities of discontinued operations ...........     (2,269,608)      1,213,171 
                                                                   ------------    ------------ 
      Net cash provided by (used in) operating activities ......      3,630,884      (4,110,638)
                                                                   ------------    ------------ 

CASH FLOW FROM INVESTING ACTIVITIES                                                             

   Cash paid for acquisition ...................................       (422,078)           --   
   Cash acquired from acquisition ..............................        185,092       2,280,937 
   Loan due to an affiliate ....................................           --          (282,671)
   Investment in unconsolidated subsidiaries ...................           --        (4,501,324)
   Patent ......................................................           --           (50,000)
   Construction in progress ....................................           --        (1,775,810)
   Project development costs ...................................           --          (270,473)
   Proceeds from sales of fixed assets .........................           --            28,000 
   Proceeds/advances of cash under restriction .................     (1,211,601)           --   
   Restricted cash released from restriction ...................        785,978            --   
   Additions to and acquisition of property, plant and equipment     (3,816,428)       (366,237)
                                                                   ------------    ------------ 
      Net cash provided by (used in) investing activities ......     (4,479,037)     (4,937,578)
                                                                   ------------    ------------ 

            The notes to the Consolidated Financial Statements are an                           
                       integral part of these statements.                                       

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    GREENSHIFT CORPORATION (F/K/A GS CLEANTECH CORPORATION) AND SUBSIDIARIES          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
           FOR THE YEARS ENDED DECEMBER 31, 2007 AND DECEMBER 31, 2006                



CASH FLOWS FROM FINANCING ACTIVITIES                                                  

                                                                                      
Proceeds from debt ...................................        420,191            --   
Repayment of debt ....................................     (2,520,641)       (251,902)
Short term borrowings - other ........................           --           (11,897)
Proceeds from line of credit .........................        756,540            --   
Proceeds from related party debt .....................      1,291,084       1,458,856 
Repayment of related party debt ......................       (261,350)           --   
Issuance of long term debt ...........................           --          (796,569)
Issuance of convertible debentures -affiliate ........           --             7,883 
Issuance of convertible debentures ...................           --        10,095,816 
                                                         ------------    ------------ 
   Net cash provided by (used in) financing activities       (314,176)     10,502,188 
                                                         ------------    ------------ 

Net increase (decrease) in cash ......................   $ (1,162,329)   $  1,453,972 

Cash at beginning of period ..........................      1,890,894         436,922 
                                                         ------------    ------------ 

Cash at end of period ................................   $    728,565    $  1,890,894 
                                                         ============    ============ 

 The notes to the Consolidated Financial Statements are an
integral part of these statements.

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 GREENSHIFT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1        NATURE OF OPERATIONS                                                   

GreenShift  Corporation  (f/k/a GS CleanTech  Corporation)  ("we,"  "our," "us,"
"GreenShift," or the "Company")  develops and commercializes  clean technologies
that  facilitate  the  efficient use of natural  resources.  We do this today by
developing and integrating new  technologies  into existing  biofuel  production
facilities,  by selling equipment and services based on those technologies,  and
by using those  technologies to directly produce and sell  biomass-derived  oils
and fuels.                                                                      

Our  strategy is to use our  patented  and  patent-pending  oil  extraction  and
biodiesel production  technologies to become a leading producer of biofuels, and
to do so at enhanced  cost and risk  profiles by  extracting  and  refining  raw
materials that other producers cannot access or process.                        

We  own  three  operating  production  facilities  -  two  corn  oil  extraction
facilities  based  on  our  patented  and  patent-pending  corn  oil  extraction
technology and one vegetable  oilseed  crushing  facility based on  conventional
process  technology.  We  currently  sell the corn oil we  extract  for  biofuel
production and the refined  vegetable  oils we extract in our crushing  facility
into the food markets.                                                          

We are currently building additional oil extraction facilities, and we are under
contract  to  build  additional  corn  oil  extraction   facilities,   biodiesel
production facilities and to expand our oilseed crush facility. We are currently
operating, building and expanding the following production facilities:          

                                                        [Enlarge/Download Table]


Location                           Technology                      Production Capacity              Current Status
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Oshkosh, Wisconsin                 Corn Oil Extraction             1.5 million gallons per year        Operational
Culbertson, Montana                Oilseed Crushing                1.3 million gallons per year        Operational
Medina, New York                   Corn Oil Extraction             1.5 million gallons per year        Operational
Marion, Indiana                    Corn Oil Extraction             1.5 million gallons per year       Construction
Riga, Michigan                     Corn Oil Extraction             1.5 million gallons per year       Construction
Lakota, Iowa                       Corn Oil Extraction             3.0 million gallons per year       Construction
Fulton, New York                   Corn Oil Extraction             3.0 million gallons per year       Construction
Milton, Wisconsin                  Corn Oil Extraction             1.5 million gallons per year       Construction
Richardton, North Dakota           Corn Oil Extraction             1.5 million gallons per year       Construction

Our goal is to have at least 15 million  gallons per year of corn oil extraction
capacity,  20 million gallons per year of biodiesel production capacity,  and 16
million  gallons per year of oilseed crush  capacity  online by the end of 2008,
and at least 50 million  gallons per year of corn oil  extraction  capacity,  50
million  gallons  per year of  biodiesel  production  capacity,  and 16  million
gallons per year of oilseed crush capacity online by the end of 2009.           

In  addition to our own  production  of  feedstocks,  we provide  equipment  and
services to other  participants  in the alternative  fuels industry.  Since June
2007, we have sold and  commissioned  a total of 25 million  gallons per year of
biodiesel  production capacity based on our technologies to third party clients.
These facilities are in production  today and consistently  produce high quality
biodiesel  fuel out of a number  of lower  cost  fats  and  oils.  We are  under
contract with these same clients to build and commission  additional  production
capacity during 2008                                                            

SEGMENT DESCRIPTIONS                                                            

The  Company's  operations  during the fiscal year ended  December  31, 2007 are
classified into four reportable business segments: Equipment & Technology Sales,
Culinary Oil  Production  & Sales,  Biofuel  Production & Sales and  Diversified
Environmental  Services.  Each of these  segments  is  organized  based upon the
nature of products and services offered.  The Company's remaining operations are
aggregated and classified herein as Corporate.                                  

During  the  year  ended   December  31,  2007  our   discontinued   Diversified
Environmental  Services  business was administered by GS  EnviroServices,  Inc.,
which company  provides a variety of  transportation,  distribution,  recycling,
disposal, engineering and remediation services to producers of industrial wastes
throughout  the  northeastern  region of the U.S.  In  January  2008 we sold our
interest in GS EnviroServices, Inc. (see Note 31, Subsequent Events, below). The
contribution of this business to our consolidated financial results for the year
ended December 31, 2007 is detailed below in Note 23, Segment  Information,  and
pro forma  financial  statements  for the year ended December 31, 2007 that show
the deconsolidation of the Diversified  Environmental Services business from our
continuing business are provided in Note 29, Acquisitions, below.               

RESTRUCTURING                                                                   

On  November  9, 2007,  the  Company  and  Carbonics  Capital  Corporation  (the
Company's  former parent)  initiated and completed a series of  transactions  to

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restructure of the Company,  including the transfer to the Company of Carbonics'
stakes in GS  AgriFuels  Corporation  and  EcoSystem  Corporation.  The  Company
assumed all of Carbonics'  intercompany,  affiliate  related party notes payable
and receivable,  all trade  payables,  and all  receivables,  but did not assume
Carbonics debt to YA Global Investments,  LP. In exchange, the Company issued to
Carbonics a  promissory  note in the  aggregate  net amount of  $2,948,831  (the
"Carbonics  Note").  The  principal and interest on the  Carbonics  Note,  which
accrues at the per annum rate of 8%, are due and payable in full on December 31,
2008.                                                                           

On December 12, 2007, Carbonics  distributed all of what was then Carbonics' 80%
stake in the Company on a pro-rated basis to all of Carbonics' shareholders.  To
accomplish  the  distribution,  Carbonics  converted  200,000  shares of Company
Series D Preferred Stock into 20,800,000  shares of Company common stock,  which
it  distributed  to the minority  shareholders  of  Carbonics,  and  distributed
800,000  shares of Company  Series D Preferred  Stock (see Note 5  Shareholders'
Equity;  below) to Viridis  Capital,  LLC, the Company's  majority  shareholder.
Kevin Kreisler,  the sole member of Viridis  Capital,  is the Chairman and Chief
Executive Officer of the Company.                                               

Effective December 31, 2007, EcoSystem transferred its stakes in GS Design, Inc.
and GS Rentals, LLC to the Company in return for the reduction in the Company's 
note receivable from EcoSystem by $170,385 and the issuance to EcoSystem of a   
term note in the amount of $319,517 which note bears interest at 6% per annum   
and matures on December 31, 2008.                                               

REVERSE STOCK SPLIT                                                             

On December 11, 2007, the Company effected a one-for-fifty  reverse stock split.
All stock prices, share amounts, per share information,  stock options and stock
warrants in this Report reflect the reverse split.                              

2        GOING CONCERN                                                          

The Company had a working  capital  deficit of $38,377,772 at December 31, 2007,
which includes derivative  liabilities of $6,704,831,  convertible debentures of
$5,292,072, net of discounts, $3,979,437 in purchase obligations, and $9,004,018
in amounts due to the prior owners of our oilseed crush facility, and $5,335,350
in related party debt. These matters raise substantial doubt about the Company's
ability to continue as a going concern.                                         

Despite their  classification  as current  liabilities,  neither the  derivative
liabilities  ($6,704,831) or current  convertible  debentures  ($5,292,072)  are
serviceable out of the Company's cash flows (the terms of the  convertible  debt
require  repayment in shares of either  GreenShift  Corporation  or GS AgriFuels
Corporation common stock); the $3,979,437 in purchase obligations, to the extent
due, are tied to the earnings of the Company's  equipment sales business and can
only be serviced after the Company's senior secured debt has been serviced; and,
the notes payable to the prior owners of our oilseed crush facility ($9,004,018)
are  expected  to be  restructured  in the  second  quarter  2008 into a form of
subsidiary  preferred  stock that will service these amounts  exclusively out of
the net cash flows (after  regular debt service) of our oilseed crush  facility.
The Company's working capital deficit net of these amounts is $8,062,064.       

In addition, Management expects the majority of the derivative liabilities to be
eliminated due to the Company's  January 2008  restructuring  of the majority of
the Company's  convertible debt to provide for fixed price  conversion  features
(see Note 31, Subsequent Events, below).                                        

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 the Company
will be able to eliminate  both its working  capital  deficit and its  operating
losses.  The  accompanying  financial  statements do not contain any adjustments
which may be required as a result of this uncertainty.                          

3     SIGNIFICANT ACCOUNTING POLICIES                                           

PRINCIPLES OF CONSOLIDATION                                                     

As of December 31, 2007, the Company  administered its operations  through three
tier 1 subsidiaries:  GS CleanTech  Corporation (f/k/a GS Ethanol  Technologies,
Inc.), GS AgriFuels Corporation and GS EnviroServices,  Inc. The following is an
outline of our organizational structure as of December 31, 2007:                

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Company                                                                           Status                     Nature
-------------------------------------------------------------------------------------------------------------------
GreenShift Corporation (OTC Bulletin Board: GERS)                                 Active                    Holding

                                                                                                                   
1.     GS CleanTech Corporation (f/k/a GS Ethanol Technologies, Inc.) (100%)      Active                  Operating
       GS Global Biodiesel, LLC (90%)                                             Active                  Operating
       GS  Design, Inc. (f/k/a Warnecke Design Services, Inc.) (100%)             Active                  Operating
         GS Rentals, LLC (100%)                                                   Active                    Holding
       Sterling Planet, Inc. (about 10%)                                          Active        Minority Investment

2.     GS AgriFuels Corporation (90%)                                             Active                    Holding
       NextGen Acquisition, Inc. (100%)                                           Active                    Holding
         NextGen Fuel, Inc. (100%)                                                Active                    Holding
       Sustainable Systems, Inc. (100%)                                           Active                    Holding
         Sustainable Systems, LLC (100%)                                          Active                  Operating
       ZeroPoint Clean Tech, Inc. (about 10%)                                     Active        Minority Investment

3.     GS EnviroServices, Inc. (about 60%)                                        Active                    Holding
       EnviroSafe Corporation (NE), Inc. (100%)                                   Active                  Operating
       EnviroSafe Corporation (100%)                                              Active                  Operating
       Enviro-Energy, Inc. (100%)                                                 Active                  Operating

In January 2008 we sold our interest in GS EnviroServices,  which carried on our
Diversified  Environmental  Services business (see Note 31,  Subsequent  Events,
below).  The contribution of GS  EnviroServices  to our  consolidated  financial
results  for the year ended  December  31,  2007 is  detailed  below in Note 23,
Segment  Information,  and pro forma  financial  statements  for the year  ended
December 31, 2007 that show the  deconsolidation  of the GS EnviroServices  from
our core business are provided in Note 29, Acquisitions, below.                 

All  significant  intercompany  balances and  transactions  were  eliminated  in
consolidation.  The financial statements for the periods ended December 31, 2007
and 2006 have been  consolidated  to include the accounts of the Company and its
subsidiaries.                                                                   

COST METHOD OF ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES                       

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

The Company  accounts for its 10% investment in ZeroPoint Clean Tech, Inc. under
the cost method. Application of this method requires the Company to periodically
review these  investments in order to determine  whether to maintain the current
carrying value or to write off some or all of the investments. While the Company
uses some objective  measurements in its review,  the review process  involves a
number of judgments on the part of the  Company's  management.  These  judgments
include  assessments  of  the  likelihood  of  ZeroPoint  to  obtain  additional
financing,  to achieve future milestones,  make sales and to compete effectively
in its  markets.  In making  these  judgments  the Company  must also attempt to
anticipate trends in ZeroPoint's industry as well as in the general economy.    

During the twelve  months ended  December 31, 2007,  GreenShift  liquidated  its
holdings in Ovation Products Corporation, TerraPass, Inc., Air Cycle Corporation
and General Hydrogen Corporation for $945,000,  $402,000, $335,000, and $135,223
respectively. The Company recorded a net gain in the amount of $1,817,223 on the
disposal of these unconsolidated subsidiaries.                                  

REVENUE RECOGNITION                                                             

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

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

The Company provides  environmental  services that involve the recycling of oily
wastes.  Revenues for disposal of waste are recognized when waste is received at
the location for processing.  Revenues for the disposal oily waste is recognized
when the Company has received the waste due to the fact that the customer has no
additional  recourse  and no  additional  services  are provided to the customer
after  the  waste is  received.  Once the oily  waste is  recycled,  revenue  is
recognized from the sale of the recycled oil at the time of delivery.           

The  Company  also  provides  environmental  services  and  process  engineering
services on fixed price contracts.  These services are generally provided over a
short period of less than three  months.  Revenue from fixed price  contracts is
recognized  on a pro  rata  basis  over  the  life of the  contract  as they are
generally performed evenly over the contract period.                            

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

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

We recognize revenue from the sale of seed commodity when persuasive evidence of
an arrangement exists, title and risk of loss transfers to the customers, prices
are fixed and  determinable,  and it is reasonably  assured the related accounts
receivable is collectible. Our sales terms primarily are FOB shipping point. The
oil seed crushing facility recognizes revenue when the product is shipped to the
customer  via truck,  railcar or customer  pickup and the other  criteria  noted
above are met.  During the twelve  months ended  December 31, 2007,  the oilseed
crushing  facility  provided  rebates to customers  under a planting seed rebate
program.  Of the  $159,000 in total  rebates  recorded  as a reduction  in gross
revenues  for the period  ending  December  31,  2007,  $89,000 was  provided to
customers  located in Montana.  Rebates given to these customers were reimbursed
to the company as part of training costs under the WIRED grant from the State of
Montana during the year. The Company  accounted for the rebates under EITF-01-9,
which  allows an  exception to  offsetting  gross  revenues for rebates when the
seller  receives a benefit for providing the sales  incentive and the seller can
reasonably estimate the benefit. As a result, the amount of rebates attributable
to Montana  customers  have been recorded as training  expense and have not been
offset against revenue.                                                         

We  recognize  revenue  from  the sale of  biodiesel  production  systems  under
contract  accounting  pursuant to Accounting  Research  Bulletin No. 45 (ARB No.
45),  Long-Term  Construction-Type  Contracts,  and  the  guidance  under  AICPA
Statement  of  Position  81-1  ("SOP  81-1"),   Accounting  for  Performance  of
Construction-Type  and Certain  Production-Type  Contracts.  Under the completed
contract  method  income is  recognized  only when a contract  is  completed  or
substantially  completed.  During the period of performance,  billings and costs
are accumulated on the balance sheet, but no profit or income is recorded before
completion or  substantial  completion  of the work.  SOP 81-1 requires that the
percentage of completion method be used in lieu of the completed contract method
when all of the following are present: reasonably reliable estimates can be made
of revenue and costs; the construction contract specifies the parties' rights as
to the goods,  consideration to be paid and received, and the resulting terms of
payment or settlement; the contract purchaser has the ability and expectation to
perform all contractual duties; and the contract contractor has the same ability
and expectation to perform.  During the Company's initial construction projects,
reliable  cost and  revenue  estimates  were not  available  and as a result the
completed contract method was used to recognize  revenue. A substantial  portion
of our revenues  for the sale of  equipment  in the current year was  recognized

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using the  completed  contract  basis  method of  accounting.  NextGen Fuel Inc.
recognized  $5,464,473  in revenues  under this method  during the twelve months
ended December 31, 2007.  Management believes that with the resulting experience
gained from the initial  completed  projects,  reliable  cost  estimates are now
available and all four  requirements  under  SOP81-1 can now be satisfied.  As a
result,  the balance of our  revenues  for the sale of  equipment in the current
year was  recognized  using the  percentage of completion  method of accounting.
NextGen Fuel Inc. recognized $1,664,728 in revenues under this method during the
year ended December 31, 2007.  This method of accounting  results in the Company
recognizing  revenue as work on a contract  advances.  Earnings  are  recognized
periodically based upon our estimate of contract revenues and costs in providing
the  services  required  under  the  contract.   Under  this  method,   deferred
construction  costs or work in progress  ("WIP") is accumulated.  At the end the
reporting  period,  if the billings to date under the contract exceed the amount
of the WIP plus a portion of the estimated gross profits,  billings in excess of
costs  and  estimated  earnings  is  recognized  as a  current  liability.  This
liability  records the  remaining  obligation  to complete  the  remaining  work
required under the contract prior to recognizing  the excess billing as revenue.
If the  accumulated  WIP and earned  gross  profit  exceed the billings to date,
costs and  estimated  earnings  in excess of  billings  is recorded as a current
asset.  This asset  represents  the portion of the deferred  costs  incurred and
estimated  earnings  that have been earned but not yet billed.  Each  project is
reviewed on a separate  basis.  Any loss on a contract is  recognized in full as
soon as we determine that it will occur.  The Company has the contracts in place
which  lists  the price of the  equipment  as well as a list of  add-ons  if the
customer wants to upgrade.  The Company usually  requires a substantial  deposit
when the  contract is signed and work begins on the  equipment.  Notwithstanding
the above,  we recognize  revenue from the sale of these systems when persuasive
evidence of an arrangement exists, prices are fixed and determinable,  and it is
reasonably  assured that any related  accounts  receivable  is  collectible.  In
addition,  revenue  under  the  completed  contract  method is  recognized  upon
delivery. Delivery related to the systems takes place when the title and risk of
loss  transfers to the  customers as defined in the agreement or by operation of
law.                                                                            

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

The liability "customer  deposits"  represents amounts invoiced to customers for
deposits and partial  payments on orders or projects for which  construction has
not commenced.  The revenue,  along with the project costs, is recognized  under
the completed contract or percentage-of-completion  method, as appropriate under
the circumstances.                                                              

RECEIVABLES AND CREDIT CONCENTRATION                                            

Accounts   receivable  are   uncollateralized,   non-interest-bearing   customer
obligations due under normal trade terms  requiring  payment within 30 days from
the invoice  date.  Accounts  receivable  are stated at the amount billed to the
customer.  Accounts  receivable  in  excess  of 90 days  old are  evaluated  for
delinquency.  In addition, we consider historical bad debts and current economic
trends  in  evaluating  the  allowance  for  bad  debts.  Payments  of  accounts
receivable are allocated to the specific  invoices  identified on the customer's
remittance advice or, if unspecified, are applied to the oldest unpaid invoices.

The  carrying  amount of  accounts  receivable  has been  reduced by a valuation
allowance  that has been set up in the amount  $190,009 as of December 31, 2007.
Management will continue to review the valuation allowance on a quarterly basis.

INVENTORIES                                                                     

Due to the long lead times to obtain some components,  GS Ethanol  Technologies,
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.                                              

Equipment inventories are stated at the lower of cost or market, with cost being
determined by the first-in, first-out (FIFO) method. These inventories consist  
of equipment and component parts not yet assigned to projects in process in our 
biodiesel production segment.                                                   

Inventory  at the  oilseed  crush  facility  consists of seed  commodity  at the
various stages of manufacture and is stated at the lower of cost or market, with
cost being  determined  at  average  cost under a  process-costing  system.  The
commodity  is valued based on the  standard  contract  signed by all the growers
plus the cost of crushing the seed.                                             

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Inventories at December 31, 2007 consist of the following:                      

Separators and related parts   $  169,000                                       
Equipment inventories ......      765,415                                       
Raw materials and supplies .    3,089,679                                       
Finished goods .............      993,139                                       
----------        

Total Inventory ............   $5,017,233                                       
==========        

CASH AND EQUIVALENTS                                                            

The Company considers cash and equivalents to be cash and short-term investments
with original maturities of three months or less from the date of acquisition.  

CLASSIFICATION OF EXPENSES                                                      

The types of  expenses  that are  included  in the cost of sales for the oilseed
crushing facility include the cost of all seed commodity and direct labor needed
to take the seed  through  the  various  stages  of  manufacture.  The  types of
expenses  that are  included  in selling  and  administrative  expenses  include
advertising,  warehouse expenses,  railcar costs, legal,  accounting,  salaries,
etc.                                                                            

RESEARCH AND DEVELOPMENT COSTS                                                  

Research and  development  costs are charged to operations when incurred and are
included  in  operating  expenses.  The  amounts  charged  in 2007 and 2006 were
$95,243 and $231,785 respectively.                                              

PROPERTY AND EQUIPMENT                                                          

Property and equipment are depreciated using the  straight-line  method over the
estimated useful lives of the assets.  Leasehold improvements are amortized over
the lesser of the life of the lease or their useful  lives.  Gains and losses on
depreciable assets retired or sold are recognized in the consolidated  statement
of operations in the year of disposal,  and repair and maintenance  expenditures
are  expensed as incurred.  Property,  plant and  equipment  are stated at cost.
Expenditures  for major  renewals  and  improvements  which  extend  the life or
usefulness of the asset, are  capitalized.  Once an asset has been completed and
placed  in  service,   it  is  transferred  to  the  appropriate   category  and
depreciation commences.                                                         

The Company uses the straight line method for  depreciation  and depreciates its
vehicles  over a five year period,  equipment  over a 3-18 year period and lease
hold  improvements  over a 15-20 year  period.  Gains and losses on  depreciable
assets retired or sold are recognized in the statement of operations in the year
of disposal,  and repair and maintenance  expenditures are expensed as incurred.
Property and equipment are stated at cost and include amounts  capitalized under
capital lease obligations.                                                      

GOODWILL AND INTANGIBLE ASSETS                                                  

The Company accounts for its goodwill and intangible assets pursuant to SFAS No.
142, "Goodwill and Other Intangible  Assets".  Under SFAS 142,  intangibles with
definite lives continue to be amortized on a straight-line basis over the lesser
of their estimated useful lives or contractual  terms.  Goodwill and intangibles
with  indefinite  lives  are  evaluated  at least  annually  for  impairment  by
comparing the asset's  estimated  fair value with its carrying  value,  based on
cash flow methodology.                                                          

Intangibles  with definite lives consist  primarily of energy  technology  which
have useful lives and are subject to impairment  testing in the event of certain
indicators.  Impairment in the carrying value of an asset is recognized whenever
anticipated future cash flows  (undiscounted)  from an asset are estimated to be
less than its carrying  value.  The amount of the  impairment  recognized is the
difference between the carrying value of the asset and its fair value.          

At December 31, 2007,  the Company's  balance sheet included  intangible  assets
with an aggregate carrying value of $25,250,069  representing  approximately 48%
of total  assets and  including  $12,795,776  in  goodwill.  This  goodwill  was
recorded in connection with the series of acquisitions  completed by the Company
since  April 1, 2005.  $5,453,816  in goodwill  was  recorded in relation to the
acquisition  of NextGen  Fuel.  During the year ended  December  31,  2007,  the
Company  recorded an impairment of goodwill in the amount of $5,453,816  related
to the  NextGen  Fuel  acquisition.  $13,158,877  in  goodwill  was  recorded in
relation to the  acquisition of Sustainable  System,  LLC. During the year ended
December 31, 2007, the Company  recorded an impairment of goodwill in the amount
of $5,700,000 related to the Sustainable System acquisition.  Generally accepted
accounting  principles  require  that the  Company  assess  the fair  values  of

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intangible  assets at least  annually in order to identify any impairment in the
values.  However,  on a  quarterly  basis,  management  is alert  for  events or
circumstances  that would indicate that, more likely than not, the fair value of
a reporting  segment has been reduced below its carrying  amount.  If there is a
determination  that  the  fair  value of an  intangible  asset is less  than the
corresponding net assets amount, including goodwill, an impairment loss would be
identified and recorded at that time.                                           

LONG-LIVED ASSETS                                                               

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

ENVIRONMENTAL LIABILITIES                                                       

Environmental  liabilities  include  accruals for the estimates of  GreenShift's
obligations  associated  with  remedial  environmental  matters at  GreenShift's
facilities and pending  administrative  matters assumed in GreenShift's  various
acquisitions.  Accruals are adjusted if and as further  information  relative to
the underlying  obligations develop or circumstances  change. As of December 31,
2007, the Company had no environmental liabilities.                             

INCOME TAXES                                                                    

Income taxes are  accounted for under the asset and  liability  method,  whereby
deferred income taxes are recorded for temporary  differences  between financial
statement carrying amounts and the tax basis of assets and liabilities. Deferred
tax assets and  liabilities  reflect the tax rates  expected to be in effect for
the  years in which  the  differences  are  expected  to  reverse.  A  valuation
allowance  is  provided  if it is more  likely  than not that some or all of the
deferred tax asset will not be realized.  GS  EnviroServices is not consolidated
for federal income tax return purposes.  All of the subsidiaries are consolidate
for state income tax purposes.  For financial  reporting  purposes,  current and
deferred  taxes are  provided for on the portion of earnings  recognized  by the
Company with respect to its interest in GS EnviroServices.                      

NET LOSS PER COMMON SHARE                                                       

The  Company  computes  its net  income  or loss  per  common  share  under  the
provisions of SFAS No. 128,  "Earnings  per Share",  whereby basic net income or
loss per  share is  computed  by  dividing  the net loss for the  period  by the
weighted-average number of shares of common stock outstanding during the period.
Dilutive net loss per share  excludes  potential  common shares if the effect is
anti-dilutive.  For the years ended  December  31, 2007 and 2006,  common  stock
equivalent  shares  arising from the assumed  exercise of options,  warrants and
debt  conversions  of  convertible  debt  instruments  were  excluded  from  the
computation of diluted net loss per share.  Potential future dilutive securities
include 996,279 outstanding options and warrants, and 37,865,871 shares issuable
for the conversion of convertible debentures.                                   

USE OF ESTIMATES                                                                

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

DEFERRED FINANCING CHARGES AND DEBT DISCOUNTS                                   

Deferred  finance costs represent costs paid to third parties in order to obtain
long-term financing and have been reflected as other assets. Costs incurred with
parties  who are  providing  the actual  long-term  financing,  which  generally
include  the  value of  warrants  or the fair  value of an  embedded  derivative
conversion  feature are reflected as a debt discount.  These costs and discounts

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are amortized over the life of the related debt. Amortization expense related to
these costs and discounts  were  $4,689,896  and  $5,283,960 for the years ended
December 31, 2007 and 2006, respectively and are included in interest expense.  

DERIVATIVE FINANCIAL INSTRUMENTS                                                

Certain  of  the  Company's  debt  and  equity   instruments   include  embedded
derivatives that require bifurcation from the host contract under the provisions
of SFAS No. 133, "Accounting for Derivative  Instruments and Hedging Activities"
and EITF 00-19 "Accounting for Derivative Financial  Instruments Indexed to, and
Potentially  Settled in, a Company's Own Stock".  Under the  provisions of these
statements, the Company records the related derivative liabilities at fair value
and records the accounting gain or loss resulting from the change in fair values
at the end of each  reporting  period.  Change  in the  derivatives  instruments
resulted  in gain of  $3,974,422  and a gain of  $776,841  for the  years  ended
December 31, 2007 and 2006, respectively.                                       

FINANCIAL INSTRUMENTS                                                           

The carrying values of accounts receivable, other receivables, accounts payable,
and  accrued  expenses  approximate  their fair  values due to their  short term
maturities.  The carrying  values of the Company's  long-term  debt  approximate
their fair values based upon a comparison of the interest rate and terms of such
debt to the rates and terms of debt currently  available to the Company.  It was
not practical to estimate the fair value of the convertible debt. In order to do
so, it would be  necessary  to obtain an  independent  valuation of these unique
instruments.  The cost of that valuation  would not be justified in light of the
materiality of the instruments to the Company                                   

STOCK BASED COMPENSATION                                                        

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 is measured on the
date of stock issuance or the date an  option/warrant  is granted as appropriate
under  EITF  96-18.  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 SFAS 123(R), SHARE-BASED PAYMENT,
which  establishes  accounting  for equity  instruments  exchanged  for employee
services. Under the provisions of SFAS 123(R),  share-based compensation cost is
measured  at the  grant  date,  based on the fair  value  of the  award,  and is
recognized as an expense over the employee's requisite service period (generally
the vesting period of the equity grant).                                        

SHIPPING AND HANDLING COSTS                                                     

Shipping and handling  costs are expensed as incurred and have been  included in
costs of goods sold.                                                            

NEW ACCOUNTING PRONOUNCEMENTS                                                   

In 2007, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
Financial   Accounting   Standard   (SFAS)  No.  141  (revised   2007)  Business
Combinations.   This  Statement   replaces  FASB  Statement  No.  141,  Business
Combinations.  This  Statement  requires  an acquirer  to  recognize  the assets
acquired,  the  liabilities  assumed,  and any  non-controlling  interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the Statement.                             

SFAS No. 141  (revised) is effective  for  business  combinations  for which the
acquisition  date is on or after the  beginning  of the first  annual  reporting
period  beginning on or after December 15, 2008.  Management does not expect the
implementation  of this new standard to have a material  impact on the Company's
financial position, results of operations and cash flows.                       

In February  2007,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial  Accounting  Standard  (SFAS) No. 159,  "The Fair Value
Option for Financial Assets and Financial  Liabilities"  including and amendment
of FASB Statement No. 115 with respect to improvement of financial  reporting of
certain  investments  in debt and  equity  securities.  This  Statement  permits
entities to choose to measure many financial instruments and certain other items
at fair value.  The  objective  is to improve  financial  reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities  differently without having to apply
complex hedge  accounting  provisions.  This Statement is expected to expand the
use of fair value  measurement,  which is consistent with the Board's  long-term
measurement objectives for accounting for financial instruments.                

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SFAS No. 159 is effective as of the beginning of the Company's first fiscal year
that  begins  after   November  15,  2007.   Management   does  not  expect  the
implementation  of this new standard to have a material  impact on the Company's
financial position, results of operations and cash flows.                       

In September  2006,  the  Financial  Accounting  Standards  Board (FASB)  issued
Statement  of  Financial   Accounting   Standard  (SFAS)  No.  157,  Fair  Value
Measurements.  SFAS No. 157 defines  fair  value,  establishes  a framework  for
measuring fair value in generally  accepted  accounting  principles  (GAAP), and
expands disclosures about fair value measurements.                              

SFAS No. 157 is  effective  for  financial  statements  issued for fiscal  years
beginning  after  November 15,  2007,  and interim  periods  within those fiscal
years.  Management  does not expect the  implementation  of this new standard to
have  a  material  impact  on  the  Company's  financial  position,  results  of
operations and cash flows.                                                      

In December  2007,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial  Accounting  Standard  (SFAS)  No.  160  Noncontrolling
Interest in  Consolidated  Financial  Statements  as an amendment to ARB No. 51.
This  Statement  is  expected  to  improve  the  relevance,   comparability  and
transparency of the financial  information  that a reporting  entity provides in
its consolidated  financial statements by establishing  accounting and reporting
standards  for  the  noncontrolling   interest  in  a  subsidiary  and  for  the
deconsolidation  of a subsidiary.  Management does not expect the implementation
of this new  standard  to have a  material  impact  on the  Company's  financial
position, results of operations and cash flows.                                 

4        CONCENTRATIONS                                                         

The Company  maintains cash balances with financial  institutions  that at times
may exceed the limits  insured by the  Federal  Deposit  Insurance  Corporation.
Accounts   receivable  are   uncollateralized,   non-interest-bearing   customer
obligations due under normal trade terms  requiring  payment within 30 days from
the invoice  date.  Accounts  receivable  are stated at the amount billed to the
customer.                                                                       

5        STOCKHOLDERS' EQUITY                                                   

The  Company  accounts  for stock and stock  options  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
options issued under the  Black-Scholes  Pricing Model.  The Company adopted the
provisions  of  Statement  of  Financial   Accounting   Standards   (SFAS)  123R
SHARE-BASED  PAYMENT,   which  establishes  accounting  for  equity  instruments
exchanged  for  employee   services.   Under  the  provisions  of  SFAS  123(R),
share-based  compensation  cost is measured at the grant date, based on the fair
value  of the  award,  and is  recognized  as an  expense  over  the  employee's
requisite service period (generally the vesting period of the equity grant).    

STOCK OPTIONS                                                                   

Activity under the Plan and issuances of options and/or  warrants for the period
ended December 31, 2007 is as follows:                                          

                      Number of Shares    Weighted Average
                                            Exercise Price
                      ------------------------------------
Outstanding at December 31, 2005         204,009            $   19.50           
Granted at fair value .......         800,000                 2.00        
Forfeited ...................          (7,380)               91.50        
Exercised ...................            --                   --          
                            ---------             --------

Outstanding at December 31, 2006         996,629            $    5.00           
Granted at fair value .......            --                   --          
Forfeited ...................            (350)                --          
Exercised ...................            --                   --          
                            ---------            ---------

Outstanding at December 31, 2007       $ 996,279            $    5.00           
                            =========            =========

Exercisable ....................      $ 996,279             $    5.00           
                           =========             =========

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On March 6, 2007, the Company's subsidiary,  GS AgriFuels Corporation,  acquired
85% of the  outstanding  capital stock of  Sustainable  Systems,  Inc. Under the
purchase  agreement,  GS  AgriFuels  issued  options  to  certain  employees  of
Sustainable  Systems,  Inc.  (the  "Optionees").   None  of  the  Optionees  was
affiliated  with  GS  AgriFuels  or  with  any of its  affiliates  prior  to the
acquisition,  but each of them  remained as an employee of  Sustainable  Systems
after it was acquired by GS AgriFuels.  The options were issued in order to give
the Optionees an incentive to expand the operations of  Sustainable  Systems and
improve its profitability.  The options were exercisable for five years from the
date of grant (i.e.,  March 6, 2007).  The options  permitted  the  Optionees to
purchase 534,500 shares of GS AgriFuels common stock at $3.50 per share, 267,250
shares of GS AgriFuels common stock at $7.00 per share, and 133,625 shares of GS
AgriFuels  common  stock at $10.50 per share.  The fair value of the options was
determined  to be  $1,102,673,  $527,017  and  $255,090,  respectively,  and was
calculated  using the  Black-Scholes  Option Pricing Model. The assumptions used
were the  following:  Volatility  was 150%, the Risk Free Rate was 4.53% and the
term was five years.  The fair value was expensed as  compensation in accordance
with the principles set forth in EITF 95-8. As of December 31, 2007, the Company
had entered into  discussions  with the former majority owners of Sustainable to
restructure  the GS  AgriFuels-Sustainable  acquisition  agreements.  Management
expects that this  restructuring  will include the cancellation of these options
during 2008                                                                     

INCREASE IN AUTHORIZATION OF COMMON STOCK                                       

On February 27, 2007, an Amendment to the Certificate of Incorporation was filed
with the State of Delaware  increasing the total number of shares of all classes
of stock which the  Corporation  shall have  authority to issue to  505,000,000,
consisting of 5,000,000  shares of blank check Preferred Stock, par value $0.001
per shares (the "Preferred Stock"),  and 500,000,000 shares of Common Stock, par
value $0.001 per share (the "Common  Stock").  On December 11, 2007, the Company
affected a one-for-fifty  reverse stock split. All stock prices,  share amounts,
per share  information,  stock options and stock warrants in this Report reflect
the reverse split.                                                              

SERIES A PREFERRED STOCK                                                        

Each share of Series A Preferred  Stock may be converted by the holder into 0.02
shares of common stock, and the holders have voting  privileges of five votes to
every one common share  issuable upon  conversion.  At December 31, 2007,  there
were 1,254,244 shares of Series A Preferred Stock issued and outstanding,  which
shares were convertible into 25,085 shares of Company common stock. These shares
were originally  issued in 2003 and were converted into 25,085 shares of Company
common stock during the first quarter 2008.                                     

SERIES B PREFERRED STOCK                                                        

Each share of Series B  Preferred  Stock may be  converted  by the  holder  into
twenty-five  shares of common stock and are subject to  customary  anti-dilution
adjustments.  The holders would be entitled to cumulative  dividend rights equal
to that of twenty-five common  shareholders upon the declaration of dividends on
common  stock,  and have  voting  privileges  of five  votes to every one common
share.  At December  31, 2007,  there were 151,250  shares of Series B Preferred
Stock issued and  outstanding.  These shares were originally  issued in 2003 and
were converted  into  6,797,633  shares of Company common stock during the first
quarter 2008.                                                                   

SERIES D PREFERRED STOCK                                                        

Shares of the Series D Preferred  Stock (the "Series D Shares") may be converted
by the holder into Company common stock.  The conversion  ratio is such that the
full  1,000,000  Series D Shares  originally  issued convert into Company common
shares   representing  80%  of  the  fully  diluted  outstanding  common  shares
outstanding after the conversion  (which includes all common shares  outstanding
plus  all  common  shares  potentially  issuable  upon  the  conversion  of  all
derivative securities not held by the holder). The holder of Series D Shares may
cast the number of votes at a  shareholders  meeting or by written  consent that
equals  the  number  of  common  shares  into  which  the  Series D  Shares  are
convertible  on the record  date for the  shareholder  action.  In the event the
Board of Directors  declares a dividend payable to Company common  shareholders,
the holders of Series D Shares will receive the  dividend  that would be payable
if the Series D Shares were  converted  into Company  common shares prior to the
dividend.  In the event of a liquidation of the Company, the holders of Series D
Shares will receive a preferential  distribution  of $0.001 per share,  and will
share in the  distribution  as if the  Series D Shares had been  converted  into
common shares.                                                                  

On December 12, 2007, Carbonics Capital Corporation (the Company's prior parent)
distributed  all of what was then  Carbonics'  80%  stake  in the  Company  on a
pro-rated  basis  to  all  of  Carbonics'  shareholders.  The  distribution  was

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accomplished  by  Carbonics'  conversion of 200,000  shares of Company  Series D
Preferred  Stock into  20,800,000  shares of Company  common  stock,  which were
distributed to the minority  shareholders of Carbonics,  and its distribution of
800,000 shares of Company Series D Preferred Stock to Viridis Capital,  LLC, the
Company's  majority  shareholder.  Kevin  Kreisler,  the sole  member of Viridis
Capital, is the Chairman and Chief Executive Officer of the Company.            

At December 31, 2007, 800,000 shares of Series D Preferred Stock were issued and
outstanding,   which  shares  are   convertible   into  64%  of  the   Company's
fully-diluted  common stock (which includes all common shares  outstanding  plus
all common shares  potentially  issuable upon the  conversion of all  derivative
securities  not held by  Viridis).  Viridis'  Series D  Shares  are the  primary
collateral securing Viridis' guarantee of the Company's repayment obligations to
YAGI.                                                                           

CONTRIBUTION OF CAPITAL BY CARBONICS CAPITAL CORPORATION                        

On  November  9,  2007  Carbonics  Capital  Corporation  (which,  prior  to  the
distribution of its stake in the Company to its shareholders, owned the majority
interest in the Company), contributed to the Company's capital 26,000,000 shares
of GS AgriFuels  common stock  representing  about 91% of the outstanding  fully
diluted  capital  stock of GS  AgriFuels.  On November 9, 2007,  Carbonics  also
contributed  to the  Company's  capital  160,000,000  shares of common stock and
921,313 shares of the Series D preferred stock of EcoSystem  Corporation  (f/k/a
GS  Energy  Corporation)  ("EcoSystem"),  representing  75% of  the  outstanding
capital stock of EcoSystem.  On November 9, 2007,  Carbonics also contributed to
the Company's capital 1,000,000 shares of GS EnviroServices,  Inc. common stock,
representing 3.8% of the outstanding capital stock of GS EnviroServices.        

On  December  31,  2007,  the  Company  transferred  its  160,000,000  shares of
EcoSystem common stock and 921,313 shares of Series D Preferred Stock to Viridis
Capital, LLC ("Viridis"),  the Company's majority  shareholder,  in exchange for
the $500,000 reduction in the note payable by the Company to Viridis.           

Effective December 31, 2007, EcoSystem transferred its stakes in GS Design, Inc.
and GS Rentals,  LLC to the Company in return for the reduction in the Company's
note  receivable  from  EcoSystem by $170,385 and the issuance to EcoSystem of a
term note in the amount of $319,517,  which note bears  interest at 6% per annum
and matures on December 31, 2008.                                               

6         DISCONTINUED OPERATIONS                                               

During the year ended  December  31,  2006,  the  Company's  Board of  Directors
adopted a plan for the sale of the Company's environmental  consulting business,
which was located in Mount Arlington,  New Jersey and operated by EnviroSciences
Inc. On May 4, 2007, the Company  executed a Share  Purchase  Agreement with the
former owners of  EnviroSciences  with an effective  date of January 1, 2007. In
exchange for the outstanding shares of  EnviroSciences,  Inc., the former owners
paid $250,000 to the Company as of June 30, 2007. The Company  recognized a gain
of $2,481,721 from the sale. A breakdown of this purchase is as follows:        

Cash received on sale ........................   $   250,000                    
                             ===========

Assets disposed of ...........................     1,298,382                    
Liabilities disposed of ......................    (3,516,848)                   
                             -----------
Net gain on disposal of assets and liabilities     2,218,466                    
                             ===========

Total gain on sales of discontinued operation    $ 2,468,466                    
                             -----------

On October 24, 2005, the  GreenShift  Corporation  Board of Directors  adopted a
plan to close the Paterson,  New Jersey recycling  facility operated by American
Metal Recovery  Corporation  ("AMRC").  The plan included the discontinuation of
the  operations of Metal Recovery  Transportation  Corporation  ("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 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.                               

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The components of discontinued operations are as follows:                            

                                                                 2007           2006 
                                                           -----------   ------------
                                                                                     
Net revenues ............................................  $      --     $ 3,678,232 
Cost of revenues ........................................         --       2,135,293 
                                                           -----------   ----------- 
     Gross profit .......................................         --       1,542,939 
                                                           -----------   ----------- 
Selling, general and administrative expense .............       13,225     1,265,987 
                                                           -----------   ----------- 
     (Loss) income from operations ......................      (13,225)      276,953 
                                                           -----------   ----------- 
Other income and expenses, net ..........................         --        (110,400)
                                                           -----------   ----------- 
     Total other income and expense .....................         --        (110,400)
                                                           -----------   ----------- 
     (Loss) income before provision for income taxes ....      (13,225)      387,352 

Total provision for tax .................................         --          28,069 
                                                           -----------   ----------- 
     Net income (loss) from discontinued operations .....      (13,225)      359,283 
       Gain (loss) on disposal of discontinued operations    2,481,691          --   
                                                           -----------   ----------- 
     Total income (loss) - discontinued operations ......  $ 2,468,466   $   359,283 
                                                           ===========   =========== 

The results presented above for 2007 and 2006 include the operating activity for
the  discontinued  operations for the year ended  December 31, 2007.  Assets and
liabilities of the  discontinued  businesses were reported as net assets and net
liabilities (current and net of current) of discontinued  operations at December
31, 2007.                                                                       

Assets and liabilities of discontinued operations as of December 31, 2007 are as
follows:                                                                        

Assets of discontinued operations                                               
Other assets .....................................   $  7,500         
                                            --------
Total assets of discontinued operations ....      7,500   
                                            ========
Current liabilities of discontinued operations:                                 
Accounts payable .................................    254,959         
Accrued expenses .................................    157,533         
                                            --------
Total liabilities of discontinued operations    412,492   
                                            --------
Net liabilities of discontinued operations ............   $404,992              
                                            ========

7         DEPOSITS                                                              

In 2005,  the  Company  deposited  $90,000 to satisfy a  regulatory  requirement
should  the  Company  decide  to  close  its  Lowell  location  operated  by  GS
EnviroServices.  The funds  were  invested  in  marketable  securities  and have
accumulated  an unrealized  gain of $10,181.  With the  unrealized  gain on this
investment, the account balance as of December 31, 2007 is $100,181.            

Other deposits in the amount of $24,008  include  security  deposits on property
leases,  deposits on bid bonds and deposits for our hazardous waste  transporter
permits.                                                                        

8        RESTRICTED CASH                                                        

As of December 31, 2007, the Company had $425,623 in restricted cash.  According
to the terms of the Line of Credit with American State Bank & Trust  Company,  a
lockbox is used for the collection of payments on Sustainable  Systems' accounts
receivable. The balance in this account as of December 31, 2007 was $381,971.   

In  mid-2005,  a  significant  wind  storm  caused  damage to the plant that the
Company  purchased in October 2005. The Company received  insurance  proceeds of
$82,893  during the year ended  December  31,  2005 due to the  property  losses
incurred. The funds were deposited into the Company's account at First Community
Bank  and are  restricted  for use in  repair  and  replacement  of the  damaged
property.  The Company had  incurred  $19,308 in  expenditures  during the year,
causing this amount of cash to be released from restrictions. Restricted cash at
First Community Bank was $43,652 as of December 31, 2007.                       

9        GOODWILL AND INTANGIBLE ASSETS                                         

The Company reviews its goodwill  annually at December 31 each year for possible
impairment and more  frequently if events or changes in  circumstances  indicate
goodwill might be impaired.  The fair value of the Company's  reporting units is
analyzed using a discounted  cash flow valuation  approach.  The discounted cash
flow calculation is made utilizing various  assumptions and estimates  regarding

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future revenues and expenses, cash flow and discount rates. The assumptions used
are  sometimes  significantly  different  than  historical  results  due  to the
Company's current business initiatives.  If the Company fails to achieve results
in line with the assumptions used,  intangible assets may be impaired.  Possible
impairment may exist if the fair value  computed using the discounted  cash flow
valuation  approach  is lower than the  carrying  amount of the  reporting  unit
(including goodwill).  Further analysis would be required if possible impairment
exists by comparing the implied fair value of the reporting  unit,  which is the
excess of the fair value of the  reporting  unit over  amounts  assigned  to the
reporting unit's assets and liabilities,  to the carrying amount of goodwill. If
the carrying amount of the reporting unit's goodwill is greater than the implied
fair value,  an impairment  loss equal to the  difference  would be recorded and
goodwill would be written down.                                                 

As a result of our annual assessment of goodwill in accordance with Statement of
Financial  Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets," the Company has concluded  that an  impairment of its goodwill  exists.
The Company's  results include a non-cash pre-tax goodwill  impairment charge of
$11,153,816  million.  This  impairment  results  from  the  Company's  year-end
analysis of goodwill for its NextGen Fuel, Inc. and its Sustainable  Systems LLC
subsidiaries,  which demonstrated  goodwill impairment of $5,453,816 million and
$5,700,000 million, respectively.                                               

In April of 2007, the Company's subsidiary,  GS EnviroServices  acquired certain
assets of the Remedial Construction Group of Vertex Environmental  Services, The
excess  purchase  price over the fair value of the net assets  acquired was $0.4
million which was recorded as goodwill.  The assets were  consolidated  into the
Enviro-Safe  Corporation  division.  For the year end  December  31,  2007,  the
Company retained a third party to test for impairment of the Company's goodwill.
Based on the discounted future earnings method utilized,  the implied fair value
of goodwill exceeds the reported value.  Therefore, as of December 31, 2007, the
Company did not record impairment to goodwill.                                  

On October 31,  2006,  the  Company's  subsidiary,  GS AgriFuels  completed  the
acquisition of NextGen Fuel, Inc. Cash in the amount of $17,000,000 was paid for
the  acquisition  of  NextGen  Fuel  with an  additional  $4,204,437  in  seller
holdback.  The fair value of the net assets  acquired  was  $1,050,621  with the
excess  purchase price of $20,153,816 to be allocated to intangible  assets.  GS
AgriFuels allocated $14,700,000 to energy technology  intangibles,  and recorded
$5,453,816  in goodwill at the time of the NextGen  closing.  For the year ended
December 31, 2007, the Company tested for impairment of the goodwill  related to
NextGen Fuel,  Inc.  Based on  management's  evaluation,  the carrying  value of
goodwill related to NextGen Fuel, Inc. exceeded the implied fair value. Based on
management's  assessment,   as  of  December  31,  2007,  the  Company  recorded
$5,453,816 in impairment to goodwill.                                           

On September  13, 2006,  GS AgriFuels  entered into a financing  agreement  with
Sustainable  Systems,  LLC whereby  AgriFuels would invest a total of $3,000,000
into the company  for a 15% stake in the  company.  As of March 6, 2007,  we had
acquired an approximately 15% interest through advances of $2,000,000, accounted
for under the cost method.                                                      

On March 6, 2007,  GS  AgriFuels  completed  the  acquisition  of the  remaining
approximately 85% of the outstanding capital stock of Sustainable Systems,  Inc.
The total  negotiated  purchase  price was  $12,657,093,  to be paid as follows:
$100,000 in a short term note payable,  notes payable  issued to the sellers for
$1,900,000, two convertible debenture issued to the sellers totaling $7,104,018,
and  $3,553,075  in GS  AgriFuels'  common stock at an agreed upon fair value of
$4.50  per  share.  The  $1.9  million  note  is due  upon  the  completion  and
commissioning  of Sustainable's  current plant expansion.  The two $3.55 million
debentures  are due on the  first  anniversary  of the  closing  and the  second
anniversary of the closing,  respectively. The excess of the purchase price over
the net  liabilities  acquired  has been  recorded  as Goodwill in the amount of
$13,158,877 as of September 30, 2007.                                           

The Company's intangible assets at December 31, 2007 include the following:     

Patent .................   $     50,000                                         
Permits ................        216,500                                         
Energy technology ......     14,700,000                                         
Accumulated amortization     (2,512,207)                                        
------------              
Intangible assets, net .   $ 12,454,293                                         
============              

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Amortization of intangible assets was $2,114,114 and $370,826 for the twelve    
months ended December 31, 2007 and 2006 respectively. Estimated amortization    
expense for future years is as follows:                                         

2008   $ 2,114,119                                        
2009     2,114,119                                        
2010     2,114,119                                        
2011     2,114,119                                        
2012     2,114,119                                        
Thereafter          1,883,698                                                   
-----------                                 
Total             $12,454,293                                                   
===========                                 

10        PROPERTY AND EQUIPMENT                                                

Property, plant and equipment consisted of the following at December 31, 2007:  

Land and building ...........   $ 2,066,904                                     
Furniture and fixtures ......       107,687                                     
Machinery and equipment .....     1,905,910                                     
Vehicles ....................     1,069,337                                     
Computer equipment ..........       253,050                                     
Processing equipment ........     1,285,584                                     
Leasehold improvements ......       393,276                                     
-----------     
Sub-total .................     7,081,748                                   

Less accumulated depreciation    (1,533,108)                                    
-----------     
Total ..................   $ 5,548,640                                
===========     

For the year ended  December  31,  2007,  total  construction  in  progress  was
$4,844,913.  Of this amount,  $1,900,864  was related to the Company's  corn oil
extraction  systems  that  are  currently  being  installed  and  are not yet in
service.  The  remaining  $2,944,049  is related to the expansion in progress at
Sustainable Systems' oilseed crush facility.                                    

Depreciation charged to operations was $712,173 and $713,629 for the years ended
December 31, 2007 and 2006, respectively.                                       

During the year ended December 31, 2007, the Company  commissioned  the corn oil
extraction system in Oshkosh,  Wisconsin.  This system was commissioned in April
2007.  As of  December  31,  2007,  the total  amount  invested  into the system
including system upgrades was $1,285,584.  Pursuant to SFAS No. 143,  Accounting
for Asset  Retirement  Obligations,  as  interpreted  by FIN 47,  Accounting for
Conditional Asset Retirement Obligations.  The Company recognized the fair value
of the asset retirement  obligation for the removal or abandonment of systems in
the amount of $60,439. The present value of the estimated asset retirement costs
has been  capitalized as part of the carrying  amount of the related  long-lived
assets.  The  liability  has been  accreted to its present value at December 31,
2007.  The Company  evaluated the Oshkosh  system and has  determined a range of
abandonment  dates between  December 2017 and December 2018. The total estimated
cost to  dispose  of this  asset  when  its  useful  life has  expired  has been
estimated as $63,000.  This  obligation  will be accreted  over ten years with a
discount rate of 10%. Accretion expense for the year ended December 31, 2007 was
$107.                                                                           

Depreciation charged to operations was $712,173 and $713,629 for the years ended
December 31, 2007 and 2006, respectively.                                       

11        LINES OF CREDIT                                                       

On May 31,  2007,  GS  EnviroServices  closed on a Demand  Line of Credit in the
amount of $1,000,000. The principal balance bears interest that fluctuates based
on the prime lending rate. As of December 31, 2007, the rate was 7.25%. The line
is secured by all assets of GS  EnviroServices.  The total amount due is payable
upon  demand on or before June 30,  2008.  GS  EnviroServices  also has a Master
Letter of Credit  Agreement  whereby the Bank will secure  funds for the Company
for certain  payments  obligations.  As of December 31, 2007, there was $747,341
drawn of the line of credit  with a $178,097  Letter of Credit  commitment.  The
total  amount  available  on the line of  credit  as of  December  31,  2007 was
$74,562.  The revolving  credit loan agreement  includes the following  required
financial covenants for GS EnviroServices:                                      

     >>   Total debt to capital funds ratio.  At all times during which the loan
          is  available,  the  Borrower  shall  maintain a total debt to capital
          funds  ratio  not  exceeding  3 to 1  calculated  as  follows:  (total
          liabilities minus subordinated debt) divided by (total net worth minus
          intangible assets,  affiliates  receivables,  officer receivables plus
subordinated debt).                                         

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     >>   Debt service coverage.  At all times which the loan is available,  the
          Company shall maintain a minimum global debt service coverage ratio of
          1.2  to 1.  Debt  service  coverage  ratio  shall  be  defined  as the
          Company's combined earnings before interest, taxes, distributions, and
          amortization, minus non-recurring income, plus non-recurring expenses,
          minus  cash  taxes,  minus  un-financed  capital  expenditures,  minus
          dividends,  divided by the current  maturity of principal for the year
and interest expense.                                       

As of  December  31,  2007  GS  EnviroServices  was  in  compliance  with  these
covenants.                                                                      

In October 2007,  Sustainable  Systems,  Inc. entered into a Line of Credit with
American  State Bank.  The total  amount  available  under the Line of Credit is
$2,225,000.  The Line  shall  bear  interest  at a rate of  10.25%  which is due
monthly.  The default  rate shall be 3% over the note rate.  The Line matures on
September 1, 2008. The funds will be advanced on a borrowing base certificate as
follows:  (1) 75% of receivables  less than 60 days; (2) 55% of contracted  seed
price in the house; (3) 75% of oil price as contracted for in the house; and (4)
75% of meal  inventory  value.  The  Line  has been  guaranteed  by  Sustainable
Systems,  Inc. and GS  AgriFuels.  The balance on the line was  $1,833,192 as of
December 31, 2007.                                                              

12       FINANCING ARRANGEMENTS                                                 

                                                        [Enlarge/Download Table]


The following is a summary of the Company's financing arrangements as of                       
December 31, 2007:                                                                             

Current portion of long term debt:                                                             
                                                                                               
Note payable from GS AgriFuels to Stillwater ...................................  $  3,800,000 
Seller holdback from GS AgriFuels to NextGen sellers ...........................     3,979,437 
Note payable from GS AgriFuels to Sustainable sellers ..........................     1,900,000 
Asset retirement obligation, current ...........................................           256 
Note Payable to former employee ................................................       138,558 
Current portion of installment debt from GS AgriFuels to Sheridan ..............       253,301 
Current portion of Note payable  from GS AgriFuels to Great Northern Development       129,240 
Vehicle loans from GS EnviroServices ...........................................       179,936 
Mortgages and other term notes .................................................        92,374 
Current portion of Notes payable from GS AgriFuels to  Sheridan Electric .......       248,224 
                                                                                  ------------ 
     Total notes payable and short term borrowings .............................  $ 10,721,326 
                                                                                  ============ 
Long-term debt, net of current maturities:                                                     
Vehicle loans ..................................................................  $    306,003 
Mortgages and other term notes                                                                 
                                                                                       347,263 
Note payable from GS AgriFuels to  MT Dept of Agriculture ......................       124,052 
Asset retirement obligation ....................................................        60,290 
Note payable from GS AgriFuels to Sheridan .....................................       951,078 
Notes payable from GS AgriFuels to Great Northern Development ..................       954,513 
                                                                                  ------------ 
     Total long term debt ......................................................  $  2,743,199 
                                                                                  ============ 
Current portion of convertible debentures:                                                     
YAGI convertible debenture payable from GreenShift issued April 2006 ...........       740,067 
YAGI convertible debenture payable from GreenShift issued February 2007 ........     1,125,000 
Convertible debenture for acquisition of Sustainable Systems issued March 2007 .     3,552,005 
Kerns convertible debenture payable from GreenShift issued March 2007 ..........     1,000,000 
--------------------------------------------------------------------------------  ------------ 
     Total current portion of convertible debentures ...........................  $  5,292,072 
                                                                                  ============ 
 Long-term convertible debenture:                                                              
YAGI convertible debenture payable from GreenShift assumed April 2006 ..........     1,900,000 
YAGI convertible debenture payable from GreenShift issued February 2007 ........     1,125,000 
YAGI convertible debenture payable from GreenShift issued April 2007 ...........     4,400,000 
YAGI convertible debenture payable from GS AgriFuels issued February 2006 ......     1,949,631 
YAGI convertible debenture payable from GS AgriFuels issued June 2006 ..........     5,500,000 
YAGI convertible debenture payable from GS AgriFuels issued October 2006 .......    12,869,000 
Note discounts .................................................................    (3,061,767)
Convertible debenture for acquisition of Sustainable Systems issued March 2007                 
                                                                                     3,552,013 
    Total current portion of convertible debentures ............................  $ 28,224,877 
                                                                                  ============ 

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The convertible debentures noted above are convertible into the common stock of 
the following companies:                                                        

GreenShift Corporation                     $ 6,775,315                          
GS AgriFuels Corporation                    26,741,634                          
                ------------
Total                                      $33,516,949                          
                 ===========

The following chart is presented to assist the reader in analyzing the Company's
ability to fulfill its fixed debt service  requirements  (net of note discounts)
of as of December 31, 2007 and the Company's ability to meet such obligations:  

Year                                  Amount                                    
--------------------------------------------                                    
2008                             $12,213,398                                    
2009                              36,837,895                                    
2010                                 709,918                                    
2011                                 219,634                                    
2012 and thereafter                   62,396                                    
----------  
Total minimum payments due                                                      
under current and long term                                                     
obligation                       $50,043,241                                    
===========   

13        NOTES PAYABLE - AFFILIATES/OFFICERS                                   

On  November  9, 2007,  the  Company  and  Carbonics  Capital  Corporation  (the
Company's  former  parent)  completed  a series  of  transactions  (see Note 27,
Related  Party  Transactions,  below)  that  resulted in the  assumption  by the
Company of all of Carbonics' intercompany, affiliate related party notes payable
and receivable,  all trade payables, and all receivables,  but not including all
amounts owed by Carbonics to YA Global Investments,  LP. In exchange the Company
issued to Carbonics a promissory note in the aggregate amount of $2,948,831 (the
"Carbonics  Note").  The  principal and interest on the  Carbonics  Note,  which
accrues at the per annum rate of 8%, are due and payable in full on December 31,
2009.                                                                           

During the twelve months ended December 31, 2007, the Company  borrowed  $30,000
from David Winsness,  the Company's Chief Technology  Officer.  The note carried
interest at 5% per year and was payable upon demand. The Company repaid the loan
in full subsequent to the year ended December 31, 2007.                         

During the twelve months ended December 31, 2007, the Company  borrowed  $20,000
from Edward Carroll,  the Company's Chief  Financial  Officer.  The note carried
interest at 5% per year and was payable upon demand. The Company repaid the loan
in full subsequent to the year ended December 31, 2007.                         

As of December 31, 2007,  the Company owed  Candent  Corporation  $757,853  (the
"Candent  Note").  The former  president of Candent is the wife of the Company's
chairman.  All of the issued and outstanding capital stock held by Candent is in
trust for the benefit of its former president. The note payable to Candent shall
bear interest at a rate of 10% per year and matures November 8, 2010.           

As of December 31, 2007,  the Company owed Viridis  Capital,  LLC $949,704  (the
"Viridis  Note").  Kevin Kreisler,  the sole member of Viridis  Capital,  is the
Chairman and Chief Executive Officer of the Company. The note payable to Viridis
shall bear interest at a rate of 10% per year and matures in three years.  As of
December 31, 2007, the Company also owed Kevin Kreisler $22,076.                

In December 2007, the Company owed EcoSystem Corporation $319,517.  EcoSystem is
majority  owned by Viridis  Capital.  The note payable to  EcoSystem  shall bear
interest at a rate of 6% per year and matures on December 31, 2008.  The balance
on the note payable as of December 31, 2007 was $319,517.                       

As of December 31, 2007, GS Design owed $688,234 to EcoSystem  Corporation,  and
EcoSystem owed $400,863 to GS AgriFuels Corporation. Both amounts were cancelled
during the first quarter 2008.                                                  

14       VEHICLE LOANS                                                          

The Company has vehicle  loans with  varying  interest  rates from 0% to 11.99%.
These loans have maturity  dates that range from August 2007 to June 2013. As of
December 31, 2007, vehicle notes totaled $485,939 with $179,936 currently due.  

15       ASSET RETIREMENT OBLIGATION                                            

During the year ended December 31, 2007, the Company  commissioned  the corn oil
extraction system in Oshkosh,  Wisconsin.  This system was commissioned in April
2007. Pursuant to SFAS No. 143, Accounting for Asset Retirement Obligations, the

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Company recognizes the fair value of asset retirement obligation for the removal
or  abandonment  of systems in the amount of $60,439.  The present  value of the
estimated asset  retirement  costs has been  capitalized as part of the carrying
amount of the related  long-lived assets. The liability has been accreted to its
present value at December 31, 2007. The Company evaluated the Oshkosh system and
has determined a range of abandonment  dates between  December 2017 and December
2018. The total estimated cost to dispose of this asset when its useful life has
expired has been estimated as $63,000. This obligation will be accreted over ten
years with a discount  rate of 10%.  Accretion  expense at December 31, 2007 was
$107.  SFAS 143 is interpreted by FIN 47 Accounting  for the  Conditional  Asset
retirement Obligations.                                                         

16       NOTE PAYABLE - FORMER EMPLOYEE                                         

During the year ended December 31, 2007, a former  employee  loaned  $138,558 to
the Company.                                                                    

17         CONVERTIBLE DEBENTURES                                               

YA GLOBAL INVESTMENTS, LP                                                       

GreenShift Corporation                                                          

On April 13, 2006, YA Global Investments, LP ("YAGI"), formerly known as Cornell
Capital  Partners,  purchased  from  GreenShift a  Convertible  Debenture in the
amount of  $4,400,000.  GreenShift  paid $440,000 in deferred  finance costs and
$15,000 in structuring fees as part of this transaction. The conversion price of
the  Debenture  is equal to the  lesser of $5.00 per share or 90% of the  volume
weighted  average  price of the  Company's  common  stock  for the  thirty  days
preceding  conversion.  YAGI will be entitled to convert  the  Debenture  on the
basis of the conversion price into GreenShift  common stock,  provided that YAGI
cannot  convert  into shares that would cause YAGI to own more than 4.99% of the
Company's  outstanding  common  stock.  The Debenture  bears  interest at 5% per
annum.  Accrued  interest and the principal amount are payable on April 1, 2009.
The Company may redeem the debentures at any time for an amount equal to 120% of
the outstanding principal and accrued interest.  The Company's obligations under
the Debenture are secured by a pledge of all of its assets.  In connection  with
the debenture the Company issued to YAGI a five year Warrant to purchase 150,000
common shares at $5.00 per share, a five year Warrant to purchase 150,000 common
shares at $7.50 per share, a five year Warrant to purchase 300,000 common shares
at $10.00 per share,  a five year Warrant to purchase  400,000  common shares at
$12.50 per share.  A note discount of $4,400,000  and a derivative  liability of
$14,958,108  were recorded at the  assumption  date. As of December 31, 2007 the
balance due for  debentures  due to YAGI was $4,400,000 and interest of $383,166
has been  accrued.  During the twelve months ended  December 31, 2007,  interest
expense was $226,111,  interest  expense from accretion of the debt discount was
$1,466,667.                                                                     

On April 21, 2006,  YAGI  purchased  from Laurus  Master Fund,  Ltd. the Secured
Minimum  Borrowing Note and the Revolving Note that the Company issued to Laurus
on March 31, 2004. The aggregate debt, including accrued interest and penalties,
was $2,193,047. Subsequently the Company agreed with YAGI to amend the Revolving
Note such that its terms are now  identical  to the  Secured  Minimum  Borrowing
Note. The debenture  bears interest at a rate of the prime lending rate plus 5%.
The Company also agreed to modify the conversion  feature of the two Notes.  The
debentures,  as  modified,  may be  converted  by YAGI  into  common  stock at a
conversion  rate  equal to the  lesser  of (a) $5.00 per share or (b) 90% of the
lowest  volume  weighted  average  price for the thirty  trading days  preceding
conversion.  A  note  discount  of  $2,193,047  and a  derivative  liability  of
$18,444,715  were recorded at the  assumption  date. As of December 31, 2007 the
balance due for  debenture due to YAGI was $740,067 and interest of $119,464 has
been accrued.  During the twelve months ended December 31, 2007,  $1,362,080 was
converted into 3,138,929 shares of Common Stock. Interest expense from accretion
of the debt discount was $116,786.                                              

On July 1, 2006, the Company assumed  Carbonics'  obligation under a convertible
debenture issued to YAGI in the principal  amount of $1,900,000.  The Debenture,
as assumed,  is  convertible  into the  Company's  common stock at the lesser of
$5.00 per share or the  average of the three  lowest  closing  market  prices of
GreenShift's common stock for the thirty days preceding conversion provided that
the  shareholder  may not  convert  any  portion  of its  debentures  where such
conversion  would bring the  shareholder  to greater than 4.95% of  GreenShift's
outstanding common stock. The Debenture bears interest at 5% per annum.  Accrued
interest  and the  principal  amount are  payable on  February  8, 2009.  A note
discount of $1,471,740 and a derivative liability of $1,471,740 were recorded at
the  assumption  date. As of December 31, 2007 the balance due for the debenture
due to YAGI was $1,900,000 and interest of $182,347 has been accrued. During the
twelve months ended December 31, 2007,  interest expense was $134,847,  interest
expense from accretion of the debt discount was $413,944.                       

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On July 1, 2007, the Company assumed  $1,125,000 in convertible  debt previously
issued by a former  affiliate  of the  Company to YAGI.  This  debenture  is due
February  26, 2009 and  provides for interest in the amount of 10% per annum and
convertibility  at the lesser of $2.50 or 90% of the lowest closing bid price of
the Company's common stock during the 30 trading days immediately  preceding the
conversion date. YAGI will be entitled to convert this debenture on the basis of
the conversion price into the Company's common stock,  provided that YAGI cannot
convert  into  shares  that would  cause YAGI to own more 4.9% of the  Company's
outstanding common stock. A note discount of $593,438 and a derivative liability
of  $3,266,171  existed at the  assumption  date.  As of December 31, 2007,  the
balance due for the debenture due to YAGI was $1,125,000 and interest of $95,937
has been accrued.  During the year ended December 31, 2007, interest expense was
$95,937 and interest expense from accretion of the debt discount was $247,266.  

GS AgriFuels Corporation                                                        

In  conjunction  with that  certain  May 2006 Share  Purchase  Agreement  by and
between  the  Company  and  GS  AgriFuels,   GS  AgriFuels  assumed   Carbonics'
obligations under a Secured  Convertible  Debenture due to YAGI in the principal
amount of $1,949,631.  The Debenture carries an annual interest rate of 10%, and
principal and interest on the  Debenture,  which are due at the maturity date of
June 7, 2009, may be converted  into common stock by YAGI at a conversion  price
equal to $3.00 per common share.  However,  the conversion price will be reduced
to equal  any  price at which GS  AgriFuels  hereafter  issues  common  stock or
derivative securities. The maximum number of shares that YAGI may acquire at any
time is 4.99% of the  outstanding  common  shares.  For the twelve  months ended
December 31, 2007,  interest expense of $57,324 for this obligation was incurred
resulting in accrued interest of $168,426.                                      

On  June 7,  2006,  YAGI  purchased  a  Secured  Convertible  Debentures  in the
principal  amount  of  $5,500,000,  for  which GS  AgriFuels  paid  $600,000  in
financing and  structuring  fees and received cash proceeds of  $4,900,000.  The
Debenture  carries an interest  rate of 10%, and  principal  and interest on the
Debenture  are due at the maturity  date of June 7, 2009.  Interest  incurred on
this obligation during the year ended December 31, 2007 was $548,493,  resulting
in accrued  interest  $861,918.  On October 30, 2006 GS AgriFuels sold to YAGI a
Secured  Convertible  Debenture  in the  principal  amount  of  $13,000,000.  In
conjunction with this financing, the Company paid a financing fee of $1,300,000,
a structuring fee of $50,000,  legal fees of $15,000,  and received net proceeds
of  $11,635,000  that were used for the  acquisition  of NextGen Fuel,  Inc. The
Secured  Convertible  Debenture  will mature on October 30, 2009.  Principal and
interest on these two Debentures may be converted into common stock by YAGI at a
conversion price equal to $3.00 per common share.  However, the conversion price
will be reduced to equal any price at which GS AgriFuels hereafter issues common
stock or  derivative  securities.  The  maximum  number of shares  that YAGI may
acquire at any time is 4.99% of the outstanding  common shares. If the bid price
of company stock falls below the conversion price, GS AgriFuels has the right to
redeem the  Debenture  by paying cash equal to 120% of the  principal  redeemed.
During the twelve months ended  December 31, 2007,  $140,000 was converted  into
277,173  shares of GS  AgriFuels'  Common  Stock.  For the twelve  months  ended
December 31, 2007, the balance of the debenture was $12,860,000.  For the twelve
months  ended  December  31,  2007,  interest  expense  of  $1,347,254  for this
obligation was incurred resulting in accrued interest of $1,571,638.            

As an inducement to the purchase of the June 2006 Debenture, GS AgriFuels issued
to YAGI 1,125,000 five year warrants to purchase GS AgriFuels  common stock that
are  exercisable  at  $0.001  per  share.  The fair  value of the  warrants  was
calculated  using  the  Black-Scholes  Option  Pricing  Model  and GS  AgriFuels
recorded the $30,375  value of the warrants as a discount to the note.  The note
discount is being  amortized  over the term of the debenture.  Interest  expense
from the  amortization  of the note  discount was $10,125 for the twelve  months
ended December 31, 2007.                                                        

In  consideration  of  YAGI's  investment  in the  October  2006  Debenture,  GS
AgriFuels  issued to YAGI a five year Warrant to purchase 540,000 common shares.
The exercise price is $0.001 or any lower price at which GS AgriFuels  hereafter
issues  common  stock to any third  party.  The fair value of the  warrants  was
calculated  using  the  Black-Scholes  Option  Pricing  Model  and GS  AgriFuels
recorded the $1,079,460 value of the warrants as a discount to the note, and the
note discount is being amortized over the term of the debenture.  For the twelve
months ended December 31, 2007,  interest  expense from the  amortization of the
note discount was $359,820                                                      

Commencing  on February 1, 2007,  YAGI was entitled to convert into common stock
up to $500,000 of the  principal  amount of the  Debentures  during any calendar
month at a conversion  price equal to 90% of the lowest  daily  Volume  Weighted
Average Price during the thirty trading days preceding  conversion.  However, GS
AgriFuels may opt to redeem the portion of the Debentures offered for conversion

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in this manner by paying 120% of the amount converted.  As of December 31, 2007,
YAGI has converted $140,000 into 277,173 shares of common stock.                

The Debentures are secured by a pledge of all of GS AgriFuels' assets, including
the capital stock of its  subsidiaries.  The  subsidiaries  of GS AgriFuels have
also  pledged  their  assets to secure the  Debentures.  The Company and certain
affiliates of the Company (including  Carbonics Capital  Corporation,  EcoSystem
Corporation and Viridis  Capital,  LLC) have also pledged their assets to secure
the Debentures and have guaranteed the Debentures due to YAGI.                  

Kerns Manufacturing                                                             

On February 28, 2007,  the Company  entered into a Stipulation  of Settlement to
settle the lawsuit titled Kerns Manufacturing Corp. v. KBF Pollution Management,
Inc., which was pending in the Supreme Court of the State of New York (County of
Queens, Index No. 19788/03).  Pursuant to the Stipulation,  GreenShift issued to
Kerns (a) a Convertible  Debenture in the principal  amount of $500,000 that was
paid on March 31, 2007 and (b) a convertible  debenture in the principal  amount
of $1,000,000  that was due on June 30, 2007 and paid in full in February  2008.
In April  2007,  the  entire  principal  balance  on the  March 31,  2007  Kerns
debenture was converted  into 590,268 shares of the common stock of the Company.
The Kerns  debenture  may be  converted  by its holder into common  stock of the
Company at a price  equal to the lesser of $5.00 per share or 90% of the average
of the last trade  prices for the common  stock  during the five days  preceding
conversion.  The total shares  issued upon  conversion,  however,  may not, when
added to other Company shares beneficially owned by the holder,  total more than
4.99% of the outstanding Company common stock. A note discount of $580,694 and a
derivative  liability of $580,694 were recorded at the assumption  date.  During
the twelve months ended  December 31, 2007,  interest  expense from accretion of
the  debt  discount  was  $580,694  and  gain on the  fair  market  value of the
derivative  liability  was  $281,828.  As of December  31, 2007,  the  principal
balance on the Kerns debenture was $1,000,000.                                  

NOTES PAYABLE                                                                   

Stillwater Asset Backed Fund, LP                                                

On October 30, 2006,  NextGen  Acquisition,  Inc., a subsidiary  of GS AgriFuels
that was formed to  facilitate  the  acquisition  of NextGen Fuel Inc.,  sold to
Stillwater  Asset-Based  Fund,  LP a Term  Note in the  principal  amount  of $6
million.   In  conjunction  with  the  financing  NextGen  Acquisition  paid  an
origination fee of $75,000, prepaid interest of $300,000, legal fees of $35,225,
and received net proceeds of $5,589,775.  NextGen Acquisition used $4,879,236 of
the proceeds to acquire NextGen Fuel, Inc., made a loan totaling  $568,958 to GS
Design, Inc. (a subsidiary of the Company),  and repaid the Company $141,580 for
amounts  paid  by  the  Company  in  connection  with  the  NextGen  Fuel,  Inc.
acquisition.  The Term Note accrues interest at a rate of 20% per annum. Monthly
payments of principal and interest were due beginning  February 1, 2007,  with a
monthly principal amount of at least $300,000 and additional  principal payments
made as a percentage of cash  receipts of NextGen  Fuel,  Inc. On July 31, 2007,
NextGen Acquisition,  Inc. entered into Amendment 1 to the Credit Agreement with
Stillwater  Asset-Based  Fund, LP. According the Amendment,  NextGen received an
additional  principal  amount of $555,600.  In conjunction with the refinancing,
NextGen  Acquisition  paid a financing fee of $72,880 and legal fees of $24,245,
$13,125  of which was paid via  $17,500  shares of GS  AgriFuels  common  stock.
According  to the amended  terms,  all amounts of  principal  and  interest  not
previously  satisfied will be due on September 30, 2008.  Monthly  payments have
been  adjusted as follows:  interest  only August 2007  payment;  September  and
October  2007  payments  would be an amount  equal to the  applicable  Biodiesel
Systems Net  Revenue  Repayment  Percentage  of 10% (the  Biodiesel  Systems Net
Revenue is a defined term in the relevant  agreements and it is defined as gross
cash  receipts  received  during the  preceding  month);  November  2007 through
January  2008  payments  would  be an  amount  equal  to the  $200,000  plus the
applicable  Biodiesel  Systems Net Revenue Repayment  Percentage;  and, payments
from  February 2008 until the Maturity Date would be an amount equal to $300,000
plus the applicable  Biodiesel Systems Net Revenue Repayment Percentage with all
outstanding  obligations  due  and  payable  on the  final  Maturity  Date.  The
obligations of NextGen Acquisition Inc. under the Term Note have been guaranteed
by the  Company,  GS  AgriFuels,  NextGen  Fuel,  Inc.,  and  by  the  following
affiliates:  Carbonics Capital Corporation,  GreenShift  Corporation,  EcoSystem
Corporation,  GS Design,  Inc., GS Rentals,  LLC and Viridis  Capital,  LLC (the
"Guarantors").  Each of the  Guarantors  has  pledged  its  assets to secure its
guaranty.  For the twelve months December 31, 2007, interest expense of $930,124
for this obligation was incurred. The principal balance of this note at December
31, 2007 was $3,800,000.                                                        

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Sustainable Systems                                                             

Selling Shareholders                                                            

On March 26, 2007, GS AgriFuels  purchased the remaining 85% of the  outstanding
capital  stock  of  Sustainable  Systems,  Inc.  (GS  AgriFuels  had  previously
purchased  15% of the capital  stock of  Sustainable).  The  purchase  price was
approximately $12.6 million of which $100,000 was payable at closing, a note was
issued for  approximately  $1.9  million  and two  approximately  $3.55  million
debentures were issued to the selling shareholders totaling $9,004,018. The $1.9
million  note is due upon the  completion  and  commissioning  of  Sustainable's
current plant expansion, which is expected to be completed in the second quarter
of 2008. It accrues  interest at 5% per annum to be paid on a pro-rated basis at
maturity.  For the twelve months December 31, 2007,  interest expense of $78,082
for this  obligation  was  incurred  and  accrued.  The Company has entered into
discussions  with the selling  shareholders of Sustainable to amend the terms of
the relevant  acquisition  agreements  to provide for the payment of 100% of all
amounts  due  under  the  acquisition  agreement  out of the  cash  flows of the
Sustainable  oilseed crush facility in  Culbertson,  Montana after its expansion
has been completed.                                                             

As written, one of the convertible debentures for approximately $3.55 million is
due on the first  anniversary of the closing.  The other, also for approximately
$3.55 million,  is due on the second anniversary of the closing.  The debentures
accrue  interest at 5% per annum and are to be paid on a pro-rated basis on each
relevant  maturity date. The  convertible  debentures  are  convertible  into GS
AgriFuels' common stock at the option of the holder any time after each of their
respective  maturity dates at a rate equal to the volume weighted  average price
of the  common  stock  for  the 20  trading  days  prior  to any  such  date  of
conversion,  with a  minimum  conversion  price  of  $4.50.  If at the  time  of
conversion  the market price of GS  AgriFuels'  common stock is less than $4.50,
the  difference  between  that stock price and $4.50 will be  multiplied  by the
number of  shares  due and that  amount  will be paid in cash.  The  convertible
debentures  may be  redeemed  with  cash by the  Company  at any  time  prior to
conversion by the holder without penalty.  GS AgriFuels'  obligations  under the
Note and the  convertible  debentures  are secured by GS AgriFuels'  Sustainable
common stock holdings. For the twelve months December 31, 2007, interest expense
of $291,946 for these obligations was incurred and accrued.                     

Installment Debt Refinancing                                                    

In October 2005,  prior to becoming a subsidiary  of GS  AgriFuels,  Sustainable
Systems and  Sheridan  Electric  Co-op signed an  Installment  Sale and Purchase
Agreement  on September  30, 2005.  Under the  agreement,  the Company  acquired
$1,913,185  of  property,  plant and  equipment  by  application  of $192,286 in
deposits paid and the assumption of $1,720,899 in installment  debt equal to the
mortgage obligation of the seller, which must be fully paid off or refinanced by
the Company by the end of the primary term (through  October 31, 2006 or the end
of any additional  option  periods).  Sustainable  Systems occupied the plant on
October 1, 2005. To ensure payment of the installment debt, the deposits paid by
the Company are  non-refundable  and the seller  shall not deliver  title to the
premises  and the  personal  property  until  the  debt  is  fully  paid  off or
refinanced.  From 2006 to present,  and under the terms of the Installment  Sale
and Purchase Agreement,  Sustainable Systems exercised several letter agreements
to extend the refinance period to June 1, 2008. Under the terms of the extension
agreement,  Sustainable  paid  $300,000 as of the March 31, 2008  extension  due
date. This amount was applied to principal along with the usual monthly payment.
All the terms and conditions under the Installment  Sale and Purchase  Agreement
remain applicable under the extended refinance periods.                         

The note is secured by an  interest in all the assets of  Sustainable  including
the accounts receivable. The note accrues interest at a rate of 7.68% per annum.
Monthly  payments  consist of principal and interest and a final payment will be
due on September  25, 2013.  For the twelve months  December 31, 2007,  interest
expense of $103,038 for these obligations was incurred. As of December 31, 2007,
the total principal balance on this note was $1,204,379.                        

Term Notes                                                                      

Sustainable   Systems  has  various  notes  payable  with  two  other   lenders.
Sustainable  has signed  three  notes  payable  with the Montana  Department  of
Agriculture   totaling  $124,052.   These  notes  were  issued  by  the  Montana
Agriculture  Development Council under Return On Investment Agreements,  numbers
0250714,  0350764,  and 0450785.  A return on investment (ROI) pursuant to these
agreements is an award of money with the  expectation  that all or a part of the
money will be repaid after a deferral period.  No payments are required,  and no

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interest is accrued during the initial time period.  After the deferral  period,
the award recipient  repays the investment plus interest over a remaining period
(up to seven  years).  As of  December  31,  2005,  all three  notes were in the
deferral  period with expected  deferral of interest and payments until February
2006. The deferral periods were subsequently extended and the notes were further
modified  with  regard to interest  and  subordination  (see Note 10).  ROI note
number  0450785 is  secured by a lien on  specific  equipment  including  pumps,
blending vessels,  storage bins and a solvent recovery system.  All notes accrue
interest at the rate of 3.2% per annum with  payments of principal  and interest
beginning  March 6,  2011.  The notes are  secured  by an  interest  in  various
equipment  including eleven pumps and a solvent recovery system.  For the twelve
months December 31, 2007,  interest expense of $3,933 for these  obligations was
incurred and accrued.                                                           

Sustainable has signed four notes with Great Northern Development.  Three of the
notes totaling  $419,591 at December 31, 2007 accrue  interest at the rate of 6%
per annum.  The  payment  terms for the notes are as  follows:  the  $10,908 and
$124,883 notes are to be paid off with 180 monthly payments  beginning  December
15, 2005 with a maturity  date of November 15, 2020 and the $283,800  note is to
be paid off with 120 monthly  payments  beginning March 15, 2006 with a maturity
date of January 15, 2016; the monthly payments on this note are $1,800 per month
from April 2007 to March 2008 and then  $3,300  thereafter.  The fourth note for
$664,162 (as of December 31, 2007) accrues  interest at the rate of 5% per annum
with  payments  of  principal  only  through  November  2007 and  principal  and
interests  payments  until the maturity  date of November 15, 2010;  the monthly
payments on this note are $7,500  during 2007,  $10,000  during 2008 and $17,302
thereafter. For the twelve months December 31, 2007, interest expense of $56,796
for these  obligations  was incurred.  The  principal  balance of these notes at
December 31, 2007 was $1,083,753.                                               

On June 4, 2007, Sustainable Systems, Inc. issued an unsecured demand promissory
note in the amount of $250,000 with Sheridan  Electric  Co-Op,  Inc. in exchange
for the same amount of  pre-existing  accounts  payable to the holder.  The note
accrues  interest at a rate of 6% per annum.  Monthly  payments  were due in the
amount of $1,500  starting June 1, 2007 and shall  continue until March 1, 2010.
Each  payment  shall  first be applied to the accrued  interest  and then to the
principal  balance.  For the twelve  months ending  December 31, 2007,  interest
expense of $8,724 for these  obligations was incurred.  The principal balance of
this note at December 31, 2007 was $248,224.                                    

PURCHASE OBLIGATIONS                                                            

NextGen Selling Shareholders                                                    

On October 30, 2006, a wholly-owned subsidiary of GS AgriFuels purchased 100% of
the  outstanding  capital  stock of NextGen  Fuel,  Inc. The purchase  price was
$21,204,437,  of  which  $17,000,000  was paid at  closing  leaving  a  holdback
obligation to the selling shareholders  totaling  $4,204,437.  $3,204,437 of the
holdback was due when NextGen Fuel has realized revenue of $7,500,000 subsequent
to the acquisition  subject to certain working capital  adjustments and provided
that there are no claims for  indemnification  or otherwise  against the selling
shareholders.  The remaining $1,000,000 holdback, with interest at 6% per annum,
is due to a former sales consultant to NextGen and a selling shareholder subject
to the payment by customers  for biodiesel  production  systems  totaling  forty
million gallons per year of production capacity.  To the extent due, the balance
of the estimated holdback at December 31, 2007 was $3,979,437.                  

18        EMBEDDED DERIVATIVES                                                  

In accordance  with SFAS No. 133,  "Accounting  for Derivative  Instruments  and
Hedging  Activities"  and  EITF  00-19  "Accounting  for  Derivative   Financial
Instruments  Indexed to, and Potentially Settled in, a Company's Own Stock", the
conversion features associated with the convertible debentures held by YA Global
Investments,  LP ("YAGI") are variable and contain an embedded  derivative  that
requires  bifurcation from their host contracts.  The Company has recognized the
embedded  derivatives as a liability at the date the debentures  related to YAGI
were issued.                                                                    

During the years ended December 31, 2007 and 2006, the change in the fair value 
of the derivative resulted in an accounting gain of $3,974,422 and $2,894,264,  
respectively. Amortization of the debt discount totaled $3,609,641 for the year 
ended December 31, 2007. As of December 31, 2007, the fair value of the         
derivative liabilities was $6,704,831.                                          

19       DISPOSED TECHNOLOGY LICENSES                                           

On January 14, 2006, General Ultrasonics Corporation, a former subsidiary of the
Company, acquired 70% of H2 Energy Solutions, Inc. H2 Energy owned the rights to
certain  ultrasonic  technologies used in the reformation of synthetic fuels. On
February 26, 2007,  General  Carbonics  Corporation,  a former subsidiary of the

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Company,   acquired   patent-pending   technologies   involving  carbon  aerogel
composites  (United  States  Patent  Application  Nos.  10/327,300,  10/695,214,
10/800,993, 10/840,544, and 10/198,095) (the "GCC Technologies").               

Effective July 1, 2007, the Company  converted the  substantial  majority of its
investments  in General  Ultrasonics  Corporation,  H2 Energy  Solutions,  Inc.,
General Carbonics  Corporation and Aerogel  Composite,  Inc. into senior secured
demand notes in the amounts of  $1,574,191  (including  an accretion  clause for
advances),  $261,327,  $191,427  (including  an  accretion  clause for  residual
advances),  and $500,000,  respectively (the Company had previously  written off
its initial investment in Aerogel Composite during 2006). In addition, effective
July 1, 2007, the Company assigned all but 1,000 shares of the shares of each of
General Ultrasonics  Corporation,  H2 Energy Solutions,  Inc., General Carbonics
Corporation  and Aerogel  Composite,  Inc. back to certain  shareholders of each
company.  Also effective July 1, 2007 the Company's  chairman also resigned from
the officer and director posts previously held at General  Ultrasonics,  General
Carbonics  and H2 Energy  Solutions  and the director  post  previously  held at
Aerogel  Composite.  The Company will continue to hold an interest in the senior
secured  demand  notes  but as it is  highly  doubtful  these  amounts  will  be
collected,  the  Company  has taken a  conservative  stance  and has  decided to
write-off these investments. Neither the Company, nor any of its affiliates, has
any license or other  right to any of the  technologies  of General  Ultrasonics
Corporation,  H2 Energy  Solutions,  Inc.,  General  Carbonics  Corporation  and
Aerogel  Composite,   Inc.   GreenShift's  sole  interest  in  each  of  General
Ultrasonics   Corporation,   H2  Energy  Solutions,   Inc.,   General  Carbonics
Corporation and Aerogel Composite,  Inc. are is 1,000 shares in each company and
its senior secured loans in each company.                                       

20       GOVERNMENT GRANTS                                                      

On September 28, 2006,  Sustainable  Systems, a subsidiary of GS AgriFuels,  was
awarded a $700,000 Workforce Innovation in Regional Economic Development (WIRED)
grant from the Montana Department of Commerce (MDOC).  This grant reimburses the
Company  for  expenses  related to  training  employees  in  gaining  skills and
competencies  needed to  obtain  or  upgrade  employment  skills in high  growth
industries or economic  sectors.  The Company is required to provide to the MDOC
detailed  documentation  regarding the projected  training  costs,  a hiring and
training plan as well as a commitment to provide the resources necessary for the
completion  of the training  project.  Sustainable  Systems will not obligate or
utilize  funds for any  activities  provided  for by the grant until the Company
submits  evidence to MDOC showing  evidence of the firm  commitment of the other
resources  necessary for the completion of the project per the WIRED application
that was approved by MDOC.  All project  funding had to be fully  committed  and
available  and the project  had to be ready to proceed  within six months of the
award of the grant (in April  2007).  MDOC will  evaluate  Sustainable  System's
progress a year from the contract date. Sustainable recognized $576,131 in grant
income  under the above  grants  during the  period  from March 6, 2007 (date of
acquisition) to December 31, 2007.                                              

21        COMMITMENTS AND CONTINGENCIES                                         

FACILITIES                                                                      

GreenShift Corporation                                                          

GreenShift's  corporate  headquarters  is located in New York, New York. The New
York lease is a five year lease  terminating  in June 2011.  The  monthly  lease
payment is $8,800.                                                              

The Company maintains its engineering and manufacturing  services in Alpharetta,
Georgia. The Alpharetta lease is a three year term terminating in February 2011.
The monthly lease payment is $1,480.                                            

The Company  maintains its  manufacturing  facilities in Ottoville and Van Wert,
Ohio. The Van Wert facility is a one-year lease  terminating  June 30, 2008. The
monthly lease payments are $5,000 and $3,200, respectively.                     

The  Company  maintains  its oil seed  crushing  facility  and  office  space in
Missoula, Montana. The term of lease is for one-year, terminating June 30, 2008.
The monthly lease payment is $421.                                              

GS EnviroServices                                                               

GS EnviroServices leases properties in Sandwich and Milford, Massachusetts which
houses their field services operations and administrative  offices. The lease in
Sandwich,  Massachusetts  terminates  in May of 2009 with a five year option for
renewal.  The  monthly  lease  payment for the  Sandwich  location is $1,575 per
month. The lease in Milford,  Massachusetts terminates in June 2010. The monthly
lease payment for the Milford  location is $1,800 per month.  GS  EnviroServices

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recently added a new field service location in Smithfield,  Rhode Island in May,
2007.  The  monthly  lease for the  Smithfield  location is $2,600 per month and
terminates in June 2008. Additionally,  GS EnviroServices leases office space in
Plainville,  Connecticut,  which  houses their  technical  services  group.  The
Plainville,  Connecticut  lease is on a month to month basis.  The monthly lease
payment for the Plainville  location is $2,999 per month. In December,  2007, GS
EnviroServices  entered into a ground lease agreement at Olson's  Greenhouses in
Raynham,  Massachusetts.  This location  houses their equipment as part of their
most recent  agreement with Olson's  Greenhouses for the management of a Class A
Recycling  Permit for the recycling of  on-specification  of oil and water.  The
monthly lease is $6,000 for the Raynham location and terminates in December 2010
with  an  option  to  continue  yearly  thereafter.  GS  EnviroServices  has one
equipment  operating  lease  with a  monthly  payment  of  $578  per  month.  GS
EnviroServices  owns  property in Lowell,  Massachusetts,  the location of their
RCRA permitted Treatment, Storage and Disposal Facility (TSDF)                  

A summary of GS EnviroServices' future minimum lease obligations over the next  
five years are as follows:                                                      

Year                                                           Operating Leases 
------------------------------------------------------------------------------- 
2008                                                           $        253,598 
2009                                                                    231,193 
2010                                                                    206,159 
2011                                                                     52,799 
                                                                ----------------
Total minimum lease payments                                   $        743,749 
                                                                ================

Rent  expense  for years  ended  December  31,  2007 and 2006 was  $194,898  and
$87,791, respectively.                                                          

Management Agreement                                                            

On December 5, 2007, GS EnviroServices  entered into a Management Agreement with
Olson's  Greenhouses,  Inc.  located in Raynham,  MA. Olson's  operates  225,000
square feet of  greenhouses,  60 (sixty) acres of outdoor  production  and has a
Class A Recycling  Permit for the  recycling of one million  gallons per year of
on-specification  of oil and water. GS EnviroServices  has a ground lease at the
Raynham location where it has located equipment used to process the oily wastes.
The services to be provided by Enviro-Safe shall consist generally of:          

     >>   Sales and marketing for  specification  used oil fuel for recycling at
Olson's;                                                    

     >>   Management of delivery and receipt of  specification  used oil fuel at
Olson's;                                                    

     >>   Management of the used oil receiving  area at Olson's;  >> Delivery of
          specification  used oil fuel from receiving area to Olson fuel storage
tanks;                                                      

     >>   Transport  and  disposal  of any waters  and/or  solids  removed  from
         specification used oils at licensed off-site disposal facilities; and

     >>   Project  development  and planning  for  additional  future  recycling
activities.                                                 

Olson retains full management and supervisory control over all activities at the
Facility,  including  all  activities of  Enviro-Safe  conducted at the Facility
pursuant to this Agreement.  Olson retains all existing  permits,  approvals and
authorizations  related to the Facility and shall have the right to conduct such
inspections  and  audits  and to take such  action  that it may deem  reasonably
necessary  to ensure that the  Facility is being  managed  appropriately  and in
accordance  with  all  such  permits,   approvals  and  authorizations  and  all
applicable  rules and  regulations.  It is  understood  and  agreed by Olson and
Enviro-Safe  that this  Agreement,  and the  business  arrangement  contemplated
herein,  shall not be construed or interpreted  to, and shall not,  constitute a
transfer  of  Olson's  permits  to  operate  the  Facility.   GS  EnviroServices
recognizes  revenue from clients disposing of oil and oil/water at the facility.
Upon completion of processing the waste, GS EnviroServices  transfers the oil to
Olson's  Greenhouses  who uses the oil to heat their  greenhouses at the Raynham
location.  This  Agreement  has an  initial  term of three  (3) years and may be
terminated  by either  party  with a sixty  (60) day  written  notification.  In
consideration for this Agreement,  GS EnviroServices has issued to MC Green, LLC
1,000,000 shares of GS EnviroServices,  Inc. stock with a fair value of $100,000
which is  included  in other  assets  and being  amortized  over the life of the
agreement.  The  unamortized  balance as of December  31, 2007 was  $97,222.  MC
Green, LLC is a holding Company for land owned by Olson's Greenhouses.          

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.                                    

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GS EnviroServices  owns property in Lowell,  Massachusetts,  the location of our
RCRA  permitted  Treatment,  Storage  and  Disposal  Facility  (TSDF).  Per  the
requirements  of the permit  associated  with the operation of this facility,  a
third party  evaluation  is  conducted  on a yearly  basis to evaluate the costs
associated  with  the  retirement  of  this  asset.  Per  the  outcome  of  this
evaluation, $90,000 has been placed in a trust with the Massachusetts Department
of  Environmental  Protection  listed as  beneficiary  to  satisfy a  regulatory
requirement for the closure of the Lowell  location.  The funds were invested in
marketable  securities and have accumulated an unrealized gain of $10,181.  With
the unrealized gain on this  investment,  the account balance as of December 31,
2007 is $100,181  The Company has  included the $90,000 in this trust as part of
deposits in other assets.                                                       

The Company is party to the matter  entitled  LeBlanc v. Tomoiu,  et. al., which
action was filed in the Superior Court of  Connecticut.  The verified  complaint
seeks damages relating to the acquisition by General Ultrasonics of the stock of
H2 Energy Solutions, Inc. from substantially all of its shareholders, as well as
attorney's fees and costs.  The Company has responded to the verified  complaint
and denies any liability.                                                       

The Company is party to the matter  entitled  O'Brien & Gere  Limited,  et al v.
NextGen Chemical Processors, Inc., et al., which action was filed in the Supreme
Court of the State of New York. The verified complaint had sought performance of
and damages relating to certain service and related agreements,  plus attorney's
fees and costs.  This matter  relates to the  provision by plaintiffs of certain
engineering  services to NextGen Chemical  Processors,  Inc. ("NCP") during 2005
and  2006.  NCP is owned by the  former  shareholders  of  NextGen  Fuel,  Inc.,
subsidiary.  On September  19, 2007,  the Supreme Court of the State of New York
dismissed a significant  portion of O'Brien & Gere's  complaint with  prejudice.
Management  does not believe  that there is a  reasonable  possibility  that the
claims made NextGen Fuel by the  plaintiffs in this  litigation  indicate that a
material loss has occurred.  Accordingly, no accrual has been made in connection
with those claims.                                                              

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.
There is a $2,500  deductible  per  occurrence  for  environmental  impairments.
Environmental  liability  insurance is carried with policy  limits of $1,000,000
per occurrence and $2,000,000 aggregate.                                        

EMPLOYMENT AGREEMENTS                                                           

GreenShift Corporation                                                          

Effective March 20, 2008 (see Note 31, Subsequent  Events,  below),  the Company
amended  and  restated  its  employment  agreements  with  Kevin  Kreisler,  the
Company's  Chief  Executive  Officer,   David  Winsness,   the  Company's  Chief
Technology Officer,  Greg Barlage, the Company's Chief Operating Officer, and Ed
Carroll,  the Company's Chief  Financial  Officer.  These  agreements call for a
salary of $150,000 per year for each employee and reduce and restrict the shares
and other  compensation  due to each employee as compared to earlier  agreements
between each employee and the Company.  Each  agreement  also included terms for
reimbursement   of  expenses,   periodic   bonuses,   four  weeks  vacation  and
participation in any employee  benefits  provided to all employees of GreenShift
Corporation.                                                                    

GS EnviroServices, Inc.                                                         

GS  EnviroServices is party to an employment  agreement with James Green,  which
agreement  calls for an annual base salary of  $175,000,  and  reimbursement  of
expenses,  use of a company automobile,  periodic bonuses,  three weeks vacation
and  participation  in any  employee  benefits  provided to all  employees of GS
EnviroServices. Mr. Green is the President and CEO of GS EnviroServices.        

GS  EnviroServices  is party to an employment  agreement with Doris  Christiani,
which agreement calls for an annual base salary of $100,000,  and  reimbursement
of expenses,  periodic  bonuses,  three weeks vacation and  participation in any
employee benefits provided to all employees of GS EnviroServices. Ms. Christiani
is the Chief Financial Officer of GS EnviroServices, Inc.                       

GS EnviroServices is party to an employment  agreement with Steven Powers, which
agreement  calls  for an  annual  base  salary  of  $115,000,  use of a  company
automobile,  reimbursement of expenses,  periodic bonuses,  three weeks vacation

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and  participation  in any  employee  benefits  provided to all  employees of GS
EnviroServices.  Mr. Powers is the President of  Enviro-Safe  Corporation  NE, a
subsidiary of GS EnviroServices, Inc.                                           

GS EnviroServices is party to an employment  agreement with Ross Hartman,  which
agreement  calls  for an  annual  base  salary  of  $115,000,  use of a  company

automobile,  reimbursement of expenses,  periodic bonuses,  three weeks vacation
and  participation  in any  employee  benefits  provided to all  employees of GS
EnviroServices.  Mr.  Powers is the  President  of  Enviro-Safe  Corporation,  a
subsidiary of GS EnviroServices, Inc.                                           

22       GUARANTY AGREEMENT                                                     

On October 31, 2006, the Company guaranteed the following obligations:          

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

     >>   3 year  Secured  Convertible  Debenture  in  the  principal  amont  of
          $13,000,000   issued  by  GS  AgriFuels   Corporation   to  YA  Global
Investments, LP.                                            

     >>   3 year  Secured  Convertible  Debenture  in  the  principa  amount  of
          $5,500,000   issued  by  GS   AgriFuels   Corporation   to  YA  Global
Investments, LP.                                            

The  Company's  guaranty  was  secured by a pledge of all its  assets  including
investments in its subsidiaries. GS AgriFuels Corporation is a subsidiary of the
Company. NextGen Acquisition, Inc., is a subsidiary of GS AgriFuels Corporation.

On March 19, 2007, YA Global Investments,  LP and Stillwater  Asset-Backed Fund,
LP  consented  to  subordinate  their  security   interests  in  the  assets  of
Enviro-Safe  Corporation and Enviro-Safe  Corporation (NE) ), subsidiaries of GS
EnviroServices,  to a credit  facility with a bank which was executed on May 31,
2007.                                                                           

Both Viridis Capital, LLC ("Viridis"),  the majority shareholder of the Company,
and its sole member,  Kevin Kreisler,  the Company's  chairman,  have guaranteed
nearly all of the  Company's  senior  debt (in the  outstanding  amount of $36.2
million),  and Viridis has  pledged  all of its assets,  including  its share of
Company Series D Preferred Stock (see Note 5, Shareholders Equity, above), to YA
Global Investments,  LP ("YA Global"), to secure the repayment by the Company of
its obligations to YA Global.                                                   

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23       SEGMENT INFORMATION                                                    

Segment information is presented in accordance with SFAS 131, "Disclosures about
Segments of an Enterprise and Related  Information." This standard is based on a
management  approach that designates the internal  organization  that is used by
management  for making  operating  decisions  and assessing  performance  as the
sources of the Company's reportable segments.  Operating segments are defined as
components of an enterprise about which financial  information is available that
is  evaluated  on a regular  basis by the  chief  operating  decision-maker,  or
decision-making  groups, in deciding how to allocate  resources to an individual
segment and in assessing performance of the segment.                            

The  Company's  operations  during the fiscal year ended  December  31, 2007 are
classified into four reportable business segments: Equipment & Technology Sales,
Culinary Oil  Production  & Sales,  Biofuel  Production & Sales and  Diversified
Environmental  Services.  Each of these  segments  is  organized  based upon the
nature of products and services offered.  The Company's remaining operations are
aggregated and classified herein as Corporate.                                  

                                                        [Enlarge/Download Table]

Summarized financial information about each segment is provided below:                                                  


                                            Equipment &    Culinary Oil        Biofuel                                  
12 Months                                    Technology      Production     Production   Environmental                  
Ended 21/31/07               Corporate            Sales         & Sales        & Sales        Services       Total      
                            ------------------------------------------------------------------------------------------- 
                                                                                                                        
Total assets ...........   $  4,186,657    $ 13,473,276    $ 17,410,612    $  6,770,791    $ 10,496,768    $ 52,338,105 

Total revenue ..........   $       --      $  9,101,281    $  5,308,241    $    270,866    $ 15,286,063    $ 29,966,451 

Cost of revenue ........           --         7,187,047       5,384,135         516,606      10,962,181      24,049,969 

Operating expenses .....      3,718,859       1,199,311         998,326       2,338,566       4,187,585      12,442,647 

Other income                                                                                                            
(expense) ..............    (10,147,653)     (8,893,191)        340,722        (160,481)        (76,394)    (18,936,997)

Taxes ..................          2,491          48,916            --               138          (4,940)         46,605 

Minority interest ......     (1,265,762)           --              --              --              --        (1,265,762)

Gain (loss) from                                                                                                        
discontinued operations       2,468,466            --              --              --              --         2,468,466 
Net loss ...............     (2,264,606)    (11,816,766)     (6,396,032)     (3,752,474)        (77,184)    (24,307,063)

Preferred dividends ....       (151,875)           --              --              --              --          (151,875)

Net loss attributable to                                                                                                
common shareholders ....   $ (2,416,481)   $(11,816,766)   $ (6,396,032)   $ (3,752,474)   $    (77,184)   $(24,458,938)

                                                        [Enlarge/Download Table]


                                           Equipment &    Culinary Oil        Biofuel                                 
12 Months                                   Technology      Production     Production   Environmental                 
Ended 21/31/06              Corporate            Sales         & Sales        & Sales        Services       Total     
                           -------------------------------------------------------------------------------------------
                                                                                                                      
Total assets ..........  $ 11,247,064    $ 31,804,319    $          --     $  3,018,541   $  6,268,181   $ 52,338,105 

Total revenue .........  $       --      $  4,479,522    $          --     $       --     $ 13,919,838    $18,399,360 

Cost of revenue .......          --         3,843,038               --             --       10,265,915     14,108,953 

Operating expenses ....     2,219,178       4,075,521               --             --        3,279,572      9,574,271 

Other Income                                                                                                          
   (expense) ..........    (6,854,811)     (1,508,932)              --             --          118,549     (8,245,194)

Taxes .................          --              --                 --             --            3,848          3,848 

Gain (loss) from                                                                                                      
discontinued operations       359,283            --                 --             --             --          359,283 

Net loss ..............  $(9,396,299) $    (4,947,969)   $          --     $       --     $    496,748   $(13,847,519)


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In January 2008 we sold our interest in GS  EnviroServices,  Inc., which carried
on our  Diversified  Environmental  Services  business  (see Note 31  Subsequent
Events,  below). The contribution of this business to our consolidated financial
results for the year ended  December 31, 2007 is detailed  below,  and pro forma
financial  statements  for the  year  ended  December  31,  2007  that  show the
deconsolidation  of the  Diversified  Environmental  Services  business from our
continuing business are provided in Note 29, Acquisitions, below.               

24 MINORITY INTEREST                                                            

In 2003, the Company's  inactive  subsidiary  American  Metals  Recovery,  Corp.
("AMRC") a discontinued  entity issued the Subsidiary  Preferred Equity,  with a
par value of  $0.001.  Subsidiary  Preferred  Equity  holders  were to receive a
quarterly dividend ranging from 3% to 5% of AMRC's annualized  revenue,  limited
to 30% of AMRC's operating income.  AMRC failed to generate  operating income in
2006 and 2005;  therefore no dividends  were payable in December  2006 and 2005.
The shares could not be liquidated or transferred. In December 2004, $100,000 of
the Minority  Interest was converted into 10,000 shares of the Company's  common
stock and a five-year  option to purchase  5,000 shares of the Company's  common
stock at $5.00 per share. In February 2006, $50,000 of the Minority Interest was
converted  into 33,333 shares of the Company's  common stock at $1.50 per share.
In August 2007, $72,000 of the Minority Interest debt was converted into 200,000
shares of common  stock.  The  remaining  balance of the Minority  Interest debt
totaling $703,000 is convertible into the Company's common stock on the basis of
the average of the three lowest  closing  market prices of the Company's  common
stock for the thirty days  preceding  conversion.  In February 2008, the balance
outstanding  of $703,000  was  converted in full at the rate of $0.16 per common
share into 4,393,756 restricted shares of Company common stock.                 

In accordance with the planned GS AgriFuels Go-Private Transaction (see Note 31,
Subsequent  Events),  the Company has  recorded  the related  obligation  to the
minority shareholders of GS AgriFuels of $1,265,762 at December 31, 2007.       

25       SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                       

                                                        [Enlarge/Download Table]
The following is a summary of supplemental disclosures of cash flow information:                            

                                                                                        2007            2006
                                                                                ------------  --------------
                                                                                                            
     Cash paid during the year for the following:                                                           
         Interest                                                               $     47,090   $      31,911
         Income taxes                                                                 12,660              --
                                                                                ------------  --------------
                Total                                                                 59,750          31,911
                                                                                ============  ==============
     Supplemental Schedule of Non-Cash Investing and Financing Activities:                                  
     Contribution of capital from debt and accrued interest due to affiliate    $  1,146,536  $           --
     Acquisition of equipment and/or vehicles with long-term debt                    231,797          70,917
     Stock issued for debt conversions                                             2,173,566          24,458

26       RETIREMENT PLAN                                                        

GS  EnviroServices,   Sustainable   Systems  and  GS  Design  Services  maintain
retirement  plans  pursuant to Section  401(k) of the Internal  Revenue Code for
their employees. Contributions during the years ended December 31, 2007 and 2006
were as follows:  GS  EnviroServices  $0 and 42,658,  respectively,  Sustainable
Systems  $14,720  in 2007  (Sustainable  was  acquired  on March 6, 2007 so only
financial data from that time forward is included) and GS Design Services $0 and
$0,  respectively.  GS Design and GS  EnviroServices  currently do not provide a
matching contribution.                                                          

27       RELATED PARTY TRANSACTIONS                                             

In June  2007,  the  Company  sold its 3%  investment  in General  Hydrogen  for
$135,223. The Company realized a $364,777 loss on the sale of this investment.  

On  November  9, 2007,  the  Company  and  Carbonics  Capital  Corporation  (the
Company's  former  parent)  completed a series of  transactions,  including  the
transfer to the Company of  Carbonics'  stakes in GS AgriFuels  Corporation  and
EcoSystem  Corporation.  The  Company  assumed all of  Carbonics'  intercompany,
affiliate  related party notes payable and receivable,  all trade payables,  and
all receivables, but did not assume Carbonics debt to YA Global Investments, LP.
In exchange the Company  issued to Carbonics a promissory  note in the aggregate
amount of $2,948,831 (the "Carbonics  Note").  The principal and interest on the
Carbonics  Note,  which accrues at the per annum rate of 8%, are due and payable
in full on December  31, 2009.  The  Carbonics  Note was  cancelled in the first
quarter 2008 (see Note 31, Subsequent Events, below).                           

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On  November  9, 2007,  in  connection  with the  transfer  to the Company of of
Carbonics'  stakes in GS  AgriFuels  and  EcoSystem,  the Company  also  assumed
liability  for a term note issued by  Carbonics to Viridis  Capital,  LLC with a
face amount of $1,339,704 (the "Viridis Note"),  which amount is due upon demand
and bears  interest at the rate of 8%. As of December 31, 2007,  the balance due
on the  Viridis  Note was  reduced by  $500,000  to  $949,704  in return for the
assignment  to  Viridis  by the  Company  of  100%  of its  stake  in  EcoSystem
Corporation,  which included  160,000,000  shares of EcoSystem  common stock and
921,313 shares of EcoSystem Series D Preferred Stock.                           

On  November  9,  2007,  in  connection  with the  transfer  to the  Company  of
Carbonics'  stakes in GS  AgriFuels  and  EcoSystem,  the Company  also  assumed
liability for a term note issued by Carbonics to Candent Corporation with a face
amount of $757,852  (the "Candent  Note").  The Candent Note has a term of three
years and shall be payable in full on or before November 8, 2010. The note shall
bear interest at the rate of 10%.  Further,  during the year ended  December 31,
2007, the Company borrowed an additional  $100,000 from Candent.  As of December
31, 2007,  Candent  forgave this debt and  contributed  the amount to additional
paid in capital.  The former  president of Candent is the wife of the  Company's
chairman.  All of the issued and outstanding capital stock held by Candent is in
trust for the benefit of its former president.                                  

On December 12, 2007, Carbonics  distributed all of what was then Carbonics' 80%
stake in the Company on a  pro-rated  basis to all of  Carbonics'  shareholders.
This was  accomplished  by Carbonics'  conversion  of 200,000  shares of Company
Series D Preferred Stock into 20,800,000  shares of Company common stock,  which
were distributed to the minority shareholders of Carbonics, and the distribution
by Carbonics of 800,000  shares of Company  Series D Preferred  Stock to Viridis
Capital,  LLC, the Company's  majority  shareholder.  Kevin  Kreisler,  the sole
member of Viridis  Capital,  is the Chairman and Chief Executive  Officer of the
Company.                                                                        

Effective  December  15,  2007,  the Company  executed  an Amended and  Restated
Technology  Acquisition  Agreement  (the  "TAA")  with Mean Green  Biodiesel  of
Georgia,  LLC (f/k/a Cantrell  Winsness  Technologies,  LLC), David F. Cantrell,
David  Winsness,  Gregory P.  Barlage and John W. Davis (the  "Inventors").  The
amendment changed the method of calculating the purchase price for the Company's
corn oil extraction technology (the "Technology"). The TAA, as amended, provides
for the payment to the  Inventors of a one-time  license fee of $150,000 per 1.5
million gallon per year system (a "System") built and commissioned  based on the
Technology  plus an ongoing  royalty  of $0.10 per gallon of corn oil  extracted
with the Technology.  The Company is required to sell, market,  deploy or in any
way cause the  initiation of operations of a total of three Systems on or before
December 31, 2008, a total of eight Systems on or before  December 31, 2009, and
an additional five Systems per year up to a total of eighteen Systems,  at which
point  the  Company  has  no  continuing  commercialization  requirement.  David
Winsness and Greg Barlage are both members of the  Company's  board of directors
and,  respectively,  the Company's Chief Technology  Officer and Chief Operating
Officer. For the year ended December 31, 2007, the Company incurred license fees
and royalties related to corn oil sales totaling $168,450,  including $56,125 to
David Winsness and Greg Barlage,  due at December 31, 2007.  Such fees have been
included in cost of sale.                                                       

Effective December 31, 2007, EcoSystem transferred its stakes in GS Design, Inc.
and GS Rentals,  LLC to the Company in return for the reduction in the Company's
note  receivable  from  EcoSystem by $170,385 and the issuance to EcoSystem of a
term note in the amount of  $319,517  which note bears  interest at 6% per annum
and matures on December 31, 2008.                                               

During the twelve months ended  December 31, 2007, GS Ethanol  borrowed  $30,000
from David Winsness,  the Company's Chief Technology  Officer.  The note carried
interest at 5% per year and was payable upon demand. The Company repaid the loan
in full subsequent to the year ended December 31, 2007.                         

During the twelve months ended December 31, 2007, Edward Carroll,  the Company's
Chief Financial Officer,  loaned the Company $20,000.  The note carried interest
at 5% per year and was payable upon demand.  The Company repaid the loan in full
subsequent to the year ended December 31, 2007.                                 

28       INCOME TAXES                                                           

The Company adopted the provisions of FASB  Interpretation  No. 48,  "Accounting
for  Uncertainty in Income  Taxes-An  Interpretation  of FASB Statement No. 109,
Accounting  for Income Taxes" ("FIN 48"), on January 1, 2007. As a result of the

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implementation of FIN 48, the Company  recognized no material  adjustment in the
liability for unrecognized income tax benefits.  At the adoption date of January
1, 2007,  and at December 31, 2007,  there were no  unrecognized  tax  benefits.
Interest and penalties  related to uncertain tax positions will be recognized in
income tax expense.  As of December 31, 2007,  no interest  related to uncertain
tax positions had been accrued                                                  

The Company  provides  for income  taxes using the asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.                            

The provision for income taxes as of December 31, 2007 and December 31, 2006    
consisted of the following:                                                     

Current provision:                                2007         2006   
                                         ----------    ---------
Federal ..................................   $    --      $    --     
State ....................................     126,251        3,848   
                                          ---------    ---------
Total current provision ..................   $ 126,251    $   3,848   
                                          =========    =========

Deferred provision (benefit) for tax:                                           
Federal .....................................   $    --      $    --        
State ....................................     (79,646)        --     
                                          ---------    ---------
Total deferred provision (benefit) for tax   $ (79,646)   $    --     
                                          =========    =========

Total provision for tax .......................   $  46,605    $   3,848        
                                          =========    =========

The Company's total deferred taxes asset and valuation allowance as of December 
31, 2007 are as follows:                                                        

NOL carryforwards ........................................   $ 8,360,000        

Differences in financial statement and tax accounting for:                      
Deferred compensation ....................................        91,000        
Allowance for doubtful accounts receivable ...............       143,000        
Property, equipment and intangible assets ................        33,000        
                                                     -----------
Net deferred tax asset ..............................     8,627,000   

Less valuation allowance .................................    (8,547,354)       
                                                     -----------
Total deferred tax asset, net of valuation allowance    $    79,646   
                                                     ===========

In  assessing  whether  the  deferred  tax  assets  are  realizable,  Management
considers  whether it is more  likely  than not that some  portion or all of the
deferred tax assets will not be realized.  The ultimate  realization of deferred
tax assets is dependent  upon the generation of future taxable income during the
periods in which  those  temporary  differences  become  deductible.  Management
considers the scheduled  reversal of deferred tax liabilities,  projected future
taxable income,  and tax planning  strategies in making this  assessment.  Based
upon the level of historical  taxable income and  projections for future taxable
income  over the  periods  in which the  deferred  tax  assets  are  deductible,
Management believes it is more likely than not that the Company will realize the
benefits of these deductible  differences.  The amount of the deferred tax asset
considered  realizable,  however, could be reduced in the near term if estimates
of future taxable income during the carry forward period are reduced.           

29       ACQUISITIONS                                                           

The Company 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

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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. 

MINORITY INVESTMENT IN ZEROPOINT CLEAN TECH, INC.                               

In August 2006, GS AgriFuels  entered into a Series A Preferred  Stock  Purchase
Agreement with  ZeroPoint  Clean Tech,  Inc. under which GS AgriFuels  agreed to
purchase 113,800 shares of Series A Preferred Stock, representing  approximately
10% of the capital  stock of ZeroPoint at a purchase  price of $21.98 per share.
In conjunction with the Agreement,  ZeroPoint Clean Tech, Inc. also issued to GS
AgriFuels  56,900  five year  warrants to purchase  ZeroPoint  Clean Tech,  Inc.
common stock that are exercisable at $32.97 per share.  The Company accounts for
its 10%  investment in ZeroPoint  Clean Tech,  Inc. under the cost method and is
carried on the books at $2,501,324. At about the same time GS AgriFuels made its
investment in ZeroPoint,  the Company,  GS AgriFuels and ZeroPoint  executed and
later amended a reciprocal  marketing  and  distribution  agreement  whereby the
Company obtained the exclusive right to use or market the ZeroPoint gasification
and gas-to-liquids technologies in the North American corn ethanol industry.    

ACQUISITION OF NEXTGEN FUEL, INC.                                               

On October 30, 2006, a wholly-owned subsidiary of GS AgriFuels purchased 100% of
the  outstanding  capital  stock of NextGen  Fuel,  Inc. The purchase  price was
$21,204,437,  of  which  $17,000,000  was paid at  closing  leaving  a  holdback
obligation to the selling shareholders  totaling  $4,204,437.  $3,204,437 of the
holdback was due when NextGen Fuel has realized revenue of $7,500,000 subsequent
to the acquisition  subject to certain working capital  adjustments and provided
that there are no claims for  indemnification  or otherwise  against the selling
shareholders.  The remaining $1,000,000 holdback, with interest at 6% per annum,
is due to a former  sales  consultant  to  NextGen  and a  selling  shareholders
subject to the payment by customers for biodiesel  production  systems  totaling
forty million  gallons per year of production  capacity.  To the extent due, the
balance of the estimated holdback at December 31, 2007 was $3,979,437.          

ACQUISITION OF SUSTAINABLE SYSTEMS, INC.                                        

On September  13, 2006,  GS AgriFuels  entered into a financing  agreement  with
Sustainable  Systems,  Inc.  pursuant to which GS  AgriFuels  agreed to purchase
certain capital stock of Sustainable  for a total of $3,000,000.  As of March 6,
2007, GS AgriFuels had acquired an  approximately  15% interest through advances
of  $2,000,000,  which  investment  was accounted for under the cost method.  On
March  6,  2007,  GS  AgriFuels  completed  the  acquisition  of  the  remaining
approximately 85% of the outstanding capital stock of Sustainable Systems,  Inc.
The original  acquisition  agreements called for a purchase price of $12,657,093
to be paid as follows:  $100,000  in a short term note  payable,  notes  payable
issued  to the  sellers  for  $1,900,000,  two  debentures  convertible  into GS
AgriFuels  common stock  totaling  $7,104,018,  and  $3,553,075  in GS AgriFuels
common  stock at an agreed upon value of $4.50 per share.  The $1.9 million note
is due upon the  completion and  commissioning  of  Sustainable's  current plant
expansion.  The two $3.55  million  debentures  were due on the first and second
anniversary of closing,  respectively. The excess of the purchase price over the
net assets has been recorded in goodwill in the amount of $13,428,565.          

GS  AgriFuels'  results of  operations  for the period  include  the  results of
operations of Sustainable  Systems from March 6, 2007 through December 31, 2007.
The  following  tables show the pro forma  effect on the  historical  results of
GreenShift if the acquisition had been completed on January 1, 2006.            

                                                        [Enlarge/Download Table]

                                           GreenShift        Sustainable Systems                 Pro Forma 
                               Historical Data for the    Historical Data for the         Balances for the 
                                Year Ended 12/31/2007        1/1/2007 - 3/5/2007     Year Ended 12/31/2007 
                               ----------------------------------------------------------------------------
                                                                                                           
Revenue                        $           29,966,451     $           1,522,1891    $           31,488,640 
                               ----------------------     ----------------------    ---------------------- 
Income (loss) from operations            (25,509,767)                    130,562              (25,379,205) 
                               ----------------------     ----------------------    ---------------------- 
Net Income                     $         (24,307,063)     $              127,496    $         (24,179,567) 
                               ======================     ======================    ====================== 
Earnings Per Share             $               (2.97)     $                 0.30    $               (2.67) 

                                         GS AgriFuels        Sustainable Systems                 Pro Forma 
                               Historical Data for the    Historical Data for the         Balances for the 
                                Year Ended 12/31/2006      Year Ended 12/31/2006     Year Ended 12/31/2006 
Revenue                        $           18,399,360     $            3,524,610    $           21,923,970 
                               ----------------------     ----------------------    ---------------------- 
Loss from operations                     (13,525,209)                (1,216,271)              (14,741,480) 
                               ----------------------     ----------------------    ---------------------- 
Net Income                     $         (13,165,926)     $          (1,301,785)    $         (14,467,711) 
                               ======================     ======================    =====================  
Earnings Per Share             $              (15.32)     $                (0.28    $              (15.60) 

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On March 6, 2007 the balance sheet of Sustainable Systems, Inc. was as follows: 

                                               Condensed Balance Sheet
ASSETS                                                  as of March 6, 2007     
                                                   -------------------

Current assets:                                                                 
Cash .....................................................   $  185,092   
Accounts receivable, net of allowance of doubtful accounts      353,565   
Inventories ..............................................    2,984,322   
Other current assets .....................................       61,969   
                                                          ----------
      Total current assets ............................    3,584,948
                                                          ----------

Other assets:                                                                   
Property and equipment, net ..............................    3,190,997   
Other assets .............................................       29,113   
                                                          ----------
Total other assets .....................................    3,220,110 
                                                          ----------

TOTAL ASSETS ................................................   $6,805,058      
                                                          ==========

LIABILITIES AND MEMBERS' EQUITY                                                 

Current liabilities:                                                            
Note payable .............................................    1,800,000   
Long term debt, current ..................................      320,000   
Accrued interest .........................................       23,993   
Accounts payable .........................................      783,233   
                                                          ----------
Total current liabilities ..............................    2,607,226 

Long term notes payable .....................................    2,379,617      
                                                          ----------

TOTAL LIABILITIES ...........................................    5,306,843      
                                                          ----------

Members' equity .............................................    1,498,215      

TOTAL LIABILITIES AND MEMBERS' EQUITY .......................   $6,805,058      
                                                          ==========

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

Note to Condensed Balance Sheet                                                 

Members'  Equity  includes  $2,000,000  invested  in  Sustainable  Systems by GS
AgriFuels.  That balance was  eliminated  when the balance sheet of  Sustainable
Systems was consolidated  with that of GS AgriFuels.  As of December 31, 2007, a
$5,700,000  impairment to goodwill  related to the  Sustainable  acquisition has
been recorded.  The Company's  results of operations for the year ended December
31, 2007 include the results of operations of Sustainable  Systems from March 6,
2007 through December 31, 2007.                                                 

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                                                        [Enlarge/Download Table]

The  following  financial  statements  present the results of  operation  for GS                      
AgriFuels as though the acquisition of Sustainable Systems, Inc. and disposition                      
of GS EnviroServices had occurred as of January 1, 2007.                                              


                                                                     GS EnviroServices       Pro Forma
                                                          12/31/07           12/31/07         Balances
                                                         ---------------------------------------------
Assets                                                                                                
Current assets                                                                                        
                                                                                                      
Cash ...............................................   $    728,565    $    241,572    $    486,993   
Restricted cash ....................................        425,623            --           425,623   
Accounts receivable, net ...........................      3,606,367       2,556,696       1,049,671   
Inventories ........................................      5,017,233            --         5,017,233   
Costs and earnings in excess if billings ...........        140,592            --           140,592   
Deferred income taxes ..............................         79,647          79,647            --     
Project development costs ..........................        281,991            --           281,991   
Prepaid expenses and other assets ..................        661,599         178,092         483,507   
                                                       ------------    ------------    ------------   
   Total current assets ............................     10,941,617       3,056,007       7,885,610   

Property and equipment, net ........................      4,341,732       1,443,292       2,898,440   
Property held for sale, net ........................      1,206,908            --         1,206,908   
Deposits ...........................................        114,008         108,974           5,034   
Construction in process ............................      4,844,913            --         4,844,913   
Intangibles, net ...................................     12,454,293         167,410      12,286,883   
Deferred financing costs ...........................      1,444,701            --         1,444,701   
Long term investments, net .........................      4,186,657            --         4,186,657   
Goodwill ...........................................     12,795,776       4,431,319       8,364,457   
Assets of discontinued operations - non current ....          7,500            --             7,500   
                                                       ------------    ------------    ------------   
                                                         41,396,488       6,150,995      35,245,493   

Total assets .......................................     52,338,105       9,207,002      43,131,103   
                                                       ============    ============    ============   

Liabilities and stockholders' equity (deficit)                                                        

Current liabilities                                                                                   

Line of credit .....................................      2,580,533         747,341       1,833,192   
Accounts payable and accrued expenses ..............     11,208,565       2,505,498       8,703,067   
Accrued interest ...................................      3,887,662            --         3,887,662   
Accrued interest - related party ...................        196,832            --           196,832   
Billings in excess .................................      1,222,807            --         1,222,807   
Deferred tax liability .............................         59,630            --            59,630   
Deferred revenue ...................................      1,582,500            --         1,582,500   
Income taxes payable ...............................        114,788          69,788          45,000   
Long term debt, current ............................      8,821,326         179,936       8,641,390   
Liability for derivatives ..........................      6,704,831            --         6,704,831   
Related party debt .................................      5,335,351            --         5,335,351   
Current convertible debentures, net of discount ....      5,292,072            --         5,292,072   
Liabilities of discontinued operations - current ...        412,492            --           412,492   
                                                       ------------    ------------    ------------   
   Total current liabilities .......................     47,419,389       3,502,563      43,916,826   

LT convertible debentures, net of current ..........     28,224,877            --        28,224,877   
Long term debt, net of current .....................      4,643,199         306,003       4,337,196   
                                                       ------------    ------------    ------------   
                                                         32,868,076         306,003      32,562,073   

Total liabilities ..................................     80,287,465       3,808,566      76,478,899   

Minority interest ..................................      1,968,762            --         1,968,762   
                                                       ------------    ------------    ------------   

Preferred stock A Series ...........................          1,254            --             1,254   
Preferred stock B Series ...........................            151            --               151   
Preferred stock C Series ...........................           --              --              --     
Preferred stock D Series ...........................            800            --               800   
Common stock .......................................         30,693          26,185           4,508   
Additional paid-in capital .........................     63,502,789       6,280,131      57,222,658   
Accumulated other comprehensive income .............         10,181          10,181            --     
Retained earnings ..................................    (93,463,990)       (918,061)    (92,545,929)  
                                                       ------------    ------------    ------------   
Total stockholders' deficit ........................    (29,918,122)      5,398,436     (35,316,558)  
                                                       ------------    ------------    ------------   
Total liabilities and shareholders' equity (deficit)   $ 52,338,105    $  9,207,002    $ 43,131,103   
                                                       ============    ============    ============   

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                                              Consolidated  GS EnviroServices  Sustainable Systems Pro Forma
                                                  12/31/07           12/31/07         12/31/07      12/31/07
                                              --------------------------------------------------------------

                                                                                                            
Sales ......................................   $ 29,966,451    $ 15,286,064    $  1,522,189    $ 16,202,576 
Cost of sales ..............................     24,049,969      10,962,181       1,271,789      14,359,576 
                                               ------------    ------------    ------------    ------------ 
   Gross profit ............................      5,916,482       4,323,883         250,401       1,843,000 
                                               ------------    ------------    ------------    ------------ 

General and administrative .................      7,884,428       2,490,663          73,457       5,467,222 
Selling expense ............................      1,402,220       1,319,714           2,679          85,185 
Research and development ...................         95,243            --              --            95,243 
Stock based compensation ...................      3,060,756         377,208            --         2,683,548 
                                               ------------    ------------    ------------    ------------ 
   Total operating expenses ................     12,442,647       4,187,585          76,136       8,331,198 
                                               ------------    ------------    ------------    ------------ 

   Loss from operations ....................     (6,526,165)        136,298         174,264      (6,488,198)
                                               ------------    ------------    ------------    ------------ 

Change in fair value-derivative instrument .      3,974,422            --              --         3,974,422 
Impairment of goodwill .....................    (11,153,816)           --              --       (11,153,816)
Loss on disposal of investments ............       (512,732)         20,245            --          (532,977)
Amortization debt discount .................     (4,689,896)           --              (584)     (4,690,480)
Amortization of intangibles ................     (2,100,000)           --              --        (2,100,000)
Miscellaneous income .......................        719,728           1,480          20,572         738,820 
Other expense ..............................        (92,634)           --              --           (92,634)
Interest expense-related party .............        (55,584)        (30,612)           --           (24,972)
Interest expense ...........................     (5,026,485)        (67,508)        (66,756)     (5,025,733)
                                               ------------    ------------    ------------    ------------ 
   Total other income (expense), net .......    (18,936,997)        (76,395)        (46,768)    (18,907,371)
                                               ------------    ------------    ------------    ------------ 

Loss before provision for income taxes .....    (25,463,162)         59,903         127,496     (25,395,569)

Provision for income taxes .................        (46,605)          4,940            --         (51,545)) 
                                               ------------    ------------    ------------    ------------ 

   Income (loss) from continuing operations     (25,509,767)         64,843         127,469     (25,447,114)

Discontinued operations:                                                                                    

Gain from disposal of discontinue operations      2,481,721            --              --         2,481,721 
Loss from discontinue operations ...........        (13,255)           --              --           (13,255)
                                               ------------    ------------    ------------    ------------ 
   Discontinue operations ..................      2,468,466            --              --         2,468,466 

Loss before minority interest ..............    (23,041,301)         64,843         127,496     (22,978,648)

Minority interest ..........................     (1,265,762)           --              --        (1,265,762)
                                               ------------    ------------    ------------    ------------ 

Net income (loss) ..........................    (24,307,063)         64,843         127,496     (24,244,410)

Preferred dividends ........................       (151,875)           --              --          (151,875)
                                               ------------    ------------    ------------    ------------ 

Net loss applicable to common shareholders .   $(24,458,938)   $     64,843    $    127,496    $(24,396,285)
                                               ============    ============    ============    ============ 

Earnings per share                                                                                          
Weighted average shares outstanding ........      9,298,850            --              --         9,298,850 
                                                 23,006,041            --              --        23,006,041 
Basic                                                                                                       
Income from continuing operations ..........   $       --      $       --      $       --      $       --   
Income from discontinued operations ........           0.01            --              --              0.01 
Net income per share - basic and diluted ...           --              --              --              --   


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                                             Consolidated   GS EnviroServices  Sustainable Systems   Pro Forma    
                                                 12/31/06            12/31/06          12/31/06       12/31/06    
                                               -------------------------------------------------------------------

                                                                                                                  
Sales .......................................   $ 18,399,360    $ 13,919,838    $  3,524,610    $  8,004,132      
Cost of sales ...............................     14,108,953      10,265,914      3,671,0249       7,514,063      
                                                ------------    ------------    ------------    ------------      
   Gross profits ............................      4,290,407       3,653,924        (146,414)        490,068      
                                                ------------    ------------    ------------    ------------      

General and administrative expense ..........      5,785,303       2,603,143       1,055,957       4,238,117      
Selling expense .............................      1,157,782       1,136,593          13,980          35,169      
Research and development ....................        231,785            --              --           231,785      
Stock based compensation ....................      2,399,401         150,000            --         2,249,401      
                                                ------------    ------------    ------------    ------------      
   Total operating expenses .................      9,574,271       3,889,736       1,069,937       6,754,472      
                                                ------------    ------------    ------------    ------------      

   Loss from operations .....................     (5,283,864)       (235,812)     (1,216,352)     (6,264,404)     
                                                                ------------    ------------    ------------      

Change in fair value - derivative instrument         776,841         101,423            --           675,418      
Loss on disposal of investments .............       (436,667)           --              --          (436,667)     
Amortization debt discount ..................     (5,283,960)       (101,423)         (1,000)     (5,183537)      
Gain (loss) equipment disposal ..............        (30,380)        (30,688)           --               308      
Gain on extinguishment of debt ..............        125,484            --              --           125,484      
Loss on legal settlement ....................     (1,500,000)           --              --        (1,500,000)     
Miscellaneous income ........................          6,189           2,774         130,304         133,719      
Interest expense - related party ............       (153,250)        (23,690)           --          (129,560)     
Interest expense ............................     (1,749,450)        (42,028)       (214,737)     (1,922,159)     
                                                ------------    ------------    ------------    ------------      
   Total other income (expense), net ........     (8,245,193)        (93,632)        (85,434)     (8,236,995)     
                                                ------------    ------------    ------------    ------------      

Loss before provision for income taxes` .....    (13,529,057)       (329,444)     (1,301,785)    (14,501,398)     

Provision for income taxes ..................          3,848         136,743            --          (132,895)     
                                                ------------    ------------    ------------    ------------      

   Income (loss) from continuing operations .    (13,525,209)       (192,701)     (1,301,785)    (14,634,293)     

Discontinued operations                                                                                           

Gain from disposal of discontinued operations                                                                     
Loss from discontinued operations ...........        359,283            --              --           359,283      
                                                ------------    ------------    ------------    ------------      
   Discontinued operations ..................        359,283            --              --           359,283      

Loss before minority interest ...............    (13,165,926)       (192,701)     (1,301,785)    (14,275,010)     
Minority interest ...........................           --              --              --              --        
                                                ------------    ------------    ------------    ------------      
Net loss ....................................    (13,165,926)       (192,701)     (1,301,785)    (14,275,010)     

Preferred dividends .........................       (681,593)           --              --          (681,593)     
                                                ------------    ------------    ------------    ------------      
Net loss applicable to common shareholders ..   $(13,847,519)   $   (192,701)   $ (1,301,785)   $(14,956,603)     
                                                ============    ============    ============    ============      

Earnings per share                                                                                                
Weighted average common shares outstanding ..        927,290            --              --           927,290      
                                                     927,290            --              --           927,290      
Basic                                                                                                             
Income from continuing operations ...........   $       0.03            --              --      $       0.03      
Income from discontinued operations .........           --              --              --              --        
                                                ------------    ------------    ------------    ------------      
                                                $       0.03            --              --      $       0.03      

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ACQUISITION OF VERTEX ENVIRONMENTAL SERVICES, INC.                              

On April 9, 2007,  GS  EnviroServices  acquired  certain  assets of the Remedial
Construction  Group of Vertex  Environmental  Services,  Inc.  The  Company  has
incorporated  this team of professionals  with the field service division of the
Company's subsidiary Enviro-Safe Corporation. With this acquisition, the Company
will expand  operations  into the  southern  New  England  area with a new Rhode
Island  facility.  We  believe  this  acquisition  will  enhance  and expand our
business with minimal  capital outlay.  This expansion of our existing  services
through this  strategic  acquisition  will  generate  incremental  revenues from
existing and new  customers.  Operations  of this  acquisition  from the date of
acquisition   through  September  2007  have  been  included  in  the  Company's
consolidated  statement  of  operations.  FAS 141,  EITF 98-3 and APB 16 address
financial accounting and reporting for business combinations. In accordance with
these  statements,  the excess  purchase price over the assets acquired has been
recorded as goodwill.  The following table  summarizes the acquisition  detailed
above:                                                                          

Cash paid directly to seller from Line of Credit              $       387,000   
Cash paid directly to seller                                           43,000   
Closing costs                                                       17,842
                                                           ---------------
Total purchase cost                                        $       447,842
                                                           ===============
Allocation of purchase price:                                                   
Tools and equipment                                        $        26,826
Goodwill                                                           421,016
                                                           ---------------
Total assets acquired                                      $       447,842
                                                           ===============

On January 16, 2007, GS AgriFuels  executed an agreement with Fulton  Biodiesel,
LLC, a subsidiary of Homeland Energy Biofuels,  LLC ("Homeland  Energy") to form
GS Fulton  Biodiesel LLC ("GS Fulton  Biodiesel").  The  agreement  calls for GS
AgriFuels to own 80% of this company which will  construct a ten million  gallon
per year biodiesel plant in Fulton,  New York. The agreement  additionally calls
for Homeland  Energy to contribute  executed  feedstock and off take  agreements
that are sufficient for the biodiesel facility to meet its profitability  goals.
Homeland Energy has not to date contributed such agreements. GS Fulton Biodiesel
is consequently expected to be dissolved during 2008.                           

30       DISPOSAL OF MINORITY INVESTMENTS                                       

During the twelve  months ended  December 31, 2007,  GreenShift  liquidated  its
holdings in Ovation Products Corporation, TerraPass, Inc., Air Cycle Corporation
and General Hydrogen Corporation for $945,000,  $402,000, $335,000, and $135,223
respectively.                                                                   

On January 14, 2006,  General  Ultrasonics  Corporation,  a former subsidiary of
GreenShift, acquired 70% of H2 Energy Solutions, Inc. H2 Energy owned the rights
to  certain  patented  ultrasonics  technologies  used  in  the  reformation  of
synthetic fuels.                                                                

On February 26, 2007,  General  Carbonics  Corporation,  a former  subsidiary of
GreenShift,   acquired  patent-pending  technologies  involving  carbon  aerogel
composites  (United  States  Patent  Application  Nos.  10/327,300,  10/695,214,
10/800,993, 10/840,544, and 10/198,095) (the "GCC Technologies").               

Effective July 1, 2007,  GreenShift  converted the  substantial  majority of its
investments  in General  Ultrasonics  Corporation,  H2 Energy  Solutions,  Inc.,
General Carbonics  Corporation and Aerogel  Composite,  Inc. into senior secured
demand notes in the amounts of  $1,574,191  (including  an accretion  clause for
advances),  $261,327,  $191,427  (including  an  accretion  clause for  residual
advances),  and $500,000,  respectively.  (GreenShift had previously written off
its initial investment in Aerogel Composite during 2006). In addition, effective
July 1, 2007, the Company assigned all but 1,000 shares of the shares of each of
General Ultrasonics  Corporation,  H2 Energy Solutions,  Inc., General Carbonics
Corporation  and Aerogel  Composite,  Inc. back to certain  shareholders of each
company.  Also effective July 1, 2007  GreenShift's  chairman  resigned from the
officer and  director  posts  previously  held at General  Ultrasonics,  General
Carbonics  and H2 Energy  Solutions  and the director  post  previously  held at
Aerogel  Composite.  GreenShift  will continue to hold an interest in the senior
secured  demand  notes,  but as it is  highly  doubtful  these  amounts  will be
collected,  the  Company  has taken a  conservative  stance  and has  decided to
write-off these investments. Neither the Company, nor any of its affiliates, has
any license or other  right to any of the  technologies  of General  Ultrasonics
Corporation,  H2 Energy  Solutions,  Inc.,  General  Carbonics  Corporation  and
Aerogel  Composite,  Inc.  The  Company's  sole  interest  in  each  of  General
Ultrasonics   Corporation,   H2  Energy  Solutions,   Inc.,   General  Carbonics
Corporation and Aerogel Composite,  Inc. is 1,000 shares in each company and its
senior secured loans in each company.                                           

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31       SUBSEQUENT EVENTS                                                      

Completion of Name Change                                                       

Effective  February  11,  2008,  the Company  changed its name from GS CleanTech
Corporation to GreenShift Corporation.                                          

Completion of Acquisition of Bollheimer & Associates, Inc.                      

Effective  January 1, 2008, the Company acquired 100% of the stock of Bollheimer
&  Associates  in return for $450,000 in cash plus shares of  performance  based
Series B Preferred  Stock that are  convertible  into 500,000  shares of Company
common stock.  The cash portion of the  acquisition  price is to be paid in five
installments (the first of which was paid at closing), with the last installment
due on or before January 1, 2011 provided that Bollheimer & Associates continues
to generate at least  $125,000 in gross sales per year for the next three years.
The shares of performance  based Series B Preferred  Stock issued at closing are
convertible  on a pro rated basis into 500,000 shares of Company common stock in
conjunction  with the  Company's  realization  of  $50,000,000  in EBITDA.  Phil
Bollheimer, the president of Bollheimer & Associates, entered into an employment
agreement with the Company in connection with this transaction.                 

Revolving Line of Credit for Construction of Corn Oil Extraction Facilities     

On January 25, 2008,  GS COES  (Yorkville  I), LLC, a subsidiary of the Company,
closed on the terms of a Credit  Agreement with YAGI. The Credit  Agreement will
make funds  available to GS COES  (Yorkville I) for the purpose of  constructing
and installing corn oil extraction  facilities that have been ordered by several
ethanol  manufacturers.  The funds  available  will equal $10  million  less the
outstanding  balance due at the time of borrowing from NextGen Fuels, Inc. (also
a subsidiary of the Company) to  Stillwater  Asset-Based  Fund,  LP. The current
balance due to  Stillwater  Asset-Based  Fund is  currently  approximately  $3.8
million.  At the current rate of payment,  the entire  balance due to Stillwater
Asset-Based Fund will be satisfied by July 2008.                                

Amounts advanced by YAGI to GS COES (Yorkville I) LLC (the "Loans") will be     
repayable on the following terms:                                               

>>   All Loans must be repaid on or prior to August 31, 2009.         

     >>   Commencing on July 1, 2008, GS COES must pay to YAGI on account of the
          principal  amount of the Loans an amount  equal to the  greater of (a)
$100,000 and (b) 30% of its EBITDA for the month.           

>>   GS COES may prepay the Loans without penalty.                    

GS COES (Yorkville I) is also required to pay to YAGI:                          

>>   Interest on the Loans at a rate of 20% per annum.                

     >>   A fee equal to $0.10 per gallon of corn oil  extracted  at the GS COES
          (Yorkville I)  installations  until the later of (a) the date on which
          the Credit  Agreement is  terminated or (b) the date on which YAGI has
received the fee with respect to 20 million gallons.        

To induce YAGI's entry into the Credit  Agreement and in consideration of YAGI's
execution of the  Restructuring  Agreement  described below, GS CleanTech issued
six million shares of its common stock to YAGI.                                 

Transactions Relating to GS EnviroServices                                      

During  January 2008, GS  EnviroServices  redeemed the majority of the Company's
stock  holdings  in GS  EnviroServices  in return for the  reduction  of certain
Company  convertible debts due to YA Global  Investments,  L.P. ("YAGI").  As of
January 25, 2008,  the Company held only a minority  stake in GS  EnviroServices
and will  consequently  cease to  consolidate  the  revenue  and  earnings of GS
EnviroServices.  Subsequent to this transaction,  Kevin Kreisler,  the Company's
chairman and chief executive  officer  resigned from the position of chairman of
the GS EnviroServices  board of directors.  Additional  information on these and
other subsequent events relevant to GS EnviroServices are provided here:        

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Liquidation of Majority Stake in GS EnviroServices                              

On January 25, 2008,  the Company,  which owned 15 million  shares of the common
stock of GS EnviroServices,  53% of its outstanding shares, entered into a Stock
Purchase Agreement with GS EnviroServices. The Stock Purchase Agreement provided
that GS  EnviroServices  would repurchase  8,733,333 shares of GS EnviroServices
common  stock  from  the  Company  in  exchange  for the  issuance  to YAGI of a
$2,000,000 convertible debenture,  and the cancellation by YAGI of $2,000,000 of
indebtedness owed by the Company.                                               

The Stock  Purchase  Agreement,  combined  with a letter  agreement  between  GS
EnviroServices  and  YAGI,  further  provides  that  if GS  EnviroServices  pays
$1,000,000  to YAGI on or before  May 10,  2008,  then the  remaining  6,266,667
shares of GS  EnviroServices  owned by the  Company  will be  transferred  to GS
EnviroServices  in  return  for  the  cancellation  by  YAGI  of  an  additional
$1,000,000 of indebtedness owed by the Company.                                 

As part of these  transactions,  the  Company  granted  a proxy to the  board of
directors of GS  EnviroServices  authorizing  the board to vote the shares of GS
EnviroServices  issued in the name of the Company. The proxy with respect to the
8,733,333 shares exchanged for $2,000,000 noted above terminates in the event of
a default by GS  EnviroServices  of its loan obligations to YAGI. The proxy with
respect to the 6,266,667 shares will terminate on May 10, 2008.                 

Convertible Debenture Issued by GS EnviroServices to YAGI                       

The Secured  Convertible  Debenture that GS EnviroServices  issued to YAGI bears
interest at 10% per annum,  payable monthly.  Principal  payments will be due as
follows:  $1,000,000 due on February 11, 2008;  $27,777.77 due on March 10, 2008
and on the first business day of every month thereafter (although YAGI may defer
any such monthly payment to the Maturity Date);  the balance due on February 11,
2009 (the "Maturity Date").                                                     

The  Debenture  provides that GS  EnviroServices  will be entitled to redeem the
Debenture  at any time when the closing  bid price for its common  stock is less
than $0.05 and no event of default  has  occurred.  However,  a separate  Letter
Agreement provides that GS EnviroServices may redeem the Debenture in full on or
before May 10, 2008 if it makes the $1,000,000  payment for the 6,266,667 shares
purchased from GS CleanTech under the Stock Purchase Agreement described above. 

YAGI may convert the  accrued  interest  and  principal  into GS  EnviroServices
common  stock at a  conversion  rate  equal to the lesser of $0.05 or 80% of the
lowest closing bid price for the 30 trading days preceding conversion.  However,
at no time may YAGI  beneficially own more than 4.99% of the outstanding  shares
of GS EnviroServices  common stock. The conversion feature on this debenture due
to YAGI is variable  based on trailing  market  prices and  contains an embedded
derivative.  On February 11, 2008,  the Company  paid the  $1,000,000  principal
payment and redeemed  4,366,667  shares.  A note  discount of  $1,125,000  and a
derivative  liability of $1,125,000  were recorded by GS  EnviroServices  at the
assumption date.                                                                

GS EnviroServices Guarantees                                                    

On January 25, 2008, in connection with the  transactions  described  above, the
Company  completed a financing that resulted in GS  EnviroServices  becoming the
guarantor  of up to  $1,500,000  in debts  owed by  several  of its  affiliates,
pursuant to a Global Guaranty  Agreement dated January 11, 2008. The beneficiary
of  the  guarantees  was  YAGI,  which  committed  to  extend  credit  to  those
affiliates.  The Global  Guaranty  Agreement was modified by a letter  agreement
between YAGI and GS EnviroServices  dated January 11, 2008. The Letter Agreement
provides  that the  liability  of GS  EnviroServices  under the Global  Guaranty
Agreement  will be  limited to $1.5  million  plus any costs of  collection.  In
addition,  the potential  liability will be further reduced by the amount of any
proceeds realized by YAGI from the sale of shares pledged by GreenShift pursuant
to the Amended Forbearance  Agreement described below. The Letter Agreement also
provides that:                                                                  

     >>   if GS  EnviroServices  pays YAGI $1,000,000 on or before May 10, 2008,
          the 6,266,666  shares  identified  below as "GS Pledged Shares Pool 1"
will be released from the pledge;                           

     >>   if GS EnviroServices satisfies the $1,000,000 payment obligation under
          its  Debenture  due on February  11, 2008,  one-half of the  8,733,333
          shares identified below as "GS Pledged Shares Pool 2" will be released
from the pledge; and                                        

     >>   when the Debenture issued by GS  EnviroServices  to YAGI is satisfied,
          all of the shares in GS Pledged  Shares Pool 2 will be  released  from
the pledge.                                                 

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If,  therefore,  GS  EnviroServices  pays  $3  million  (plus  interest  on  the
Debenture)  on or before May 10, 2008,  then it will be relieved of its guaranty
obligations.  If it does  not  make  that  payment,  then  its  total  potential
liability to YAGI will consist of its obligations under the $2 million Debenture
and its guaranty of up to $1.5 million of its affiliates' debts. On February 11,
2008, GS  EnviroServices  paid the $1,000,000  principal payment due on February
11, 2008.                                                                       

Stock Issuance by GS EnviroServices                                             

To induce YAGI's entry into the Letter Agreement and other transactions recited 
in this Report, GS EnviroServices issued two million shares of its common stock 
to YAGI. This stock was issued on January 17, 2008 at $0.07 per share. The      
Company recorded a $140,000 expense in January of 2008 for this stock issuance. 

Convertible Debentures Issued by GS EnviroServices                              

On February 11, 2008, GS EnviroServices accepted $800,000 from key employees and
investors.  The  proceeds  were used to complete the  $1,000,000  due to YAGI on
February 11, 2008.  The remaining  $200,000 was drawn from the Company's Line of
Credit. James F. Green,  President and CEO contributed a total of $400,000.  Mr.
Green converted $200,000 into 4,366,667 shares of stock at $0.45 per share.     

On February 11, 2008, GS EnviroServices accepted loans from the                 
following individuals:                                                          

>>       $200,000 James F. Green, President and CEO                             
>>       $100,000 Doris Christiani, Chief Financial Officer                     
>>       $100,000 Steven Powers, President, Enviro-Safe Corporation (NE)        
>>       $100,000 Ross Hartman, President, Enviro-Safe Corporation              
>>       $100,000 Nickel City Ventures, Consultant                              

In  consideration  for the above loans,  GS  EnviroServices  issued each party a
Convertible  Debenture for the face value on February 11, 2008.  The  conversion
price on the  Debentures  is the lesser of $0.06 or eighty  percent (80%) of the
lowest Closing Bid Price of the Common Stock during the thirty (30) trading days
immediately  preceding the Conversion  Date. The Debentures bear interest at 10%
per annum.  Accrued  interest  and  principal is due and payable on February 11,
2010. The conversion  feature on these  debentures is variable based on trailing
market  prices and contain  embedded  derivatives.  A $870,000 note discount and
$870,000 derivative liability in aggregate were recorded at the assumption date.
On February 11, 2008, the holders of the $600,000  convertible  debentures  were
granted 600,000  warrants,  which entitle the holders to purchase 600,000 common
shares of the  Company at an  exercise  price of $0.10 per share,  and expire on
February 11, 2018. In accordance with APB 14,  "Accounting for Convertible  Debt
and Debt  issued  with  Stock  Purchase  Warrants,"  $44,484,  representing  the
relative  fair value of the  warrants at the  issuance  date,  was  allocated to
additional paid in capital.                                                     

Restructuring Agreements with YA Global Investments, LP                         

Restructuring of Convertible Debentures Previously Issued by GreenShift         

In connection  with the GS COES  (Yorkville  I) financing,  the Company and YAGI
entered into a Restructuring Agreement. The Restructuring Agreement provided for
the  exchange  of all  convertible  debentures  issued  by the  Company  to YAGI
(formerly known as Cornell Capital  Partners,  LP) for four amended and restated
debentures.  However, the principal balance of one of the debentures was reduced
by $2,000,000 pursuant to the stock purchase transaction between the Company and
GS EnviroServices,  Inc. discussed above. The aggregate  principal amount of the
restated debentures was $6,931,288.                                             

The terms of the amended and restated debentures are:                           

     >>   Principal and interest may be converted, at YAGI's option, into shares
      of Company common stock, at a conversion price of $1.25 per share.

     >>   On the first business day of each month, the Company must pay $250,000
          to YAGI.  If the  Company  fails to make the  payment,  YAGI  shall be
          entitled to convert that amount of accrued interest and principal into
          common stock of the Company at a conversion  price equal to the lesser
          of (a) $1.25 or (b) 90% of the volume  weighted  average price for the
          twenty trading days preceding conversion.  If a monthly payment is not
          made and YAGI does not opt to convert,  then the unpaid amount will be
    added to the amount due on the first day of the following month.

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     >>   All unpaid  interest and principal will be due and payable on December
31, 2011.                                                   

>>   The debentures bear interest at 10% per annum.                   

The  following  table shows the  current  status of the  convertible  debentures
issued by GS CleanTech and its  affiliates  to YAGI,  after  application  of the
covenants in the Restructuring Agreement.                                       

                                                        [Enlarge/Download Table]

                                                                                                     Principal Amount 
                                                                         Current                       of Amended and 
                                                       Original        Principal      Accrued and            Restated 
Creditor              Original Issuance Date  Principal Balance          Balance  Unpaid Interest          Debentures 
------------------- ------------------------- ------------------ ---------------- ---------------- -------------------
GreenShift Corporation                                                                                                
                                                                                                                      
                    February 8, 2006                 $1,900,000       $1,900,000         $184,986          $2,084,986 
                    April 13, 2006                   $4,400,000       $2,400,000         $389,277          $2,789,277 
                    February 27, 2007                $1,125,000       $1,125,000          $99,062          $1,224,062 
                    March 31, 2004                   $2,190,410         $712,510         $120,453            $832,963 

GS AgriFuels Corporation (subsidiary of GreenShift)                                                                   
                    June , 2006                      $5,500,000       $5,500,000         $863,425                N.A. 
                    October, 2006                   $13,000,000      $12,860,000       $1,524,384                N.A. 

GS EnviroServices, Inc. (former subsidiary of GreenShift)                                                             
                    January 11, 2008                                                                       $2,000,000 

Amended Forbearance Agreement                                                   

In connection with the financing transactions described above, YAGI entered into
an Amended  and  Restated  Forbearance  Agreement  with the  Company,  Carbonics
Capital Corporation (the Company's former parent), and Viridis Capital, LLC (the
Company's  majority  shareholder).  The  Forbearance  Agreement  recited  that a
default  previously  existed  under  certain  debentures  issued  to YAGI by the
Company and its  subsidiaries,  which were guaranteed by the Company and Viridis
Capital.  In order to secure the defaulted  debentures,  the parties had, at the
time of issuance of the debentures, pledged to YAGI the following securities:   

                                                        [Enlarge/Download Table]

Pledgor                Pledged Shares                                                                          Issuer 
---------------------- --------------------------------------------------------------------- -------------------------
                                                                                                                      
Viridis                800,000 shares of Series D Preferred Stock  convertible into common     GreenShift Corporation 
                       stock                                                                                          
Viridis                1,000,000  shares  of  Series C  Preferred  Stock  convertible  into    Carbonics Capital Corp 
                       common stock                                                                                   
Viridis                1,000,000  shares  of  Series C  Preferred  Stock  convertible  into     EcoSystem Corporation 
                       common stock                                                                                   
GreenShift             6,266,666 shares of common stock of GS EnviroServices                        GS EnviroServices 
GreenShift             8,733,333 shares of common stock of GS EnviroServices                        GS EnviroServices 

The Amended and Restated  Forbearance  Agreement stipulates that YAGI may not at
any time own more  than  4.99% of the  outstanding  common  shares of any of the
issuers.  Each time YAGI takes  shares  under the  Agreement,  90% of the volume
weighted  average  market price for the five trading days preceding the delivery
will be applied  against the  principal  amount of the  Debentures.  YAGI agreed
that, if no other defaults occur under the Debentures,  it would waive all other
rights and penalties available to it as a result of the present defaults.       

Restatement of Guarantees by GreenShift, Viridis Capital, LLC and Kevin Kreisler

Payment of all  obligations  with respect to the Loans and the Debentures  noted
above has been guaranteed by the Company,  by its Chairman,  Kevin Kreisler,  by
his holding company, Viridis Capital, LLC, and by all of the subsidiaries of the
Company.  The Loans and the Debentures are also guaranteed up to $1.5 million by
GS EnviroServices,  Inc., an affiliate and former subsidiary of the Company.  GS
COES  (Yorkville  I) LLC and each  guarantor  has  pledged  all of its assets to
secure repayment of the Loans and the Debentures.                               

Consent to Short-Form Merger of GS AgriFuels                                    

In  connection  with the  foregoing  financing  transactions,  the Company,  its
subsidiary,  GS  AgriFuels  Corporation,  and  YAGI  entered  into an  Agreement
relating to the previously  announced plan of the Company to effect a short-form
merger of GS AgriFuels  so as to redeem for cash all shares of GS AgriFuels  not
owned by the Company.                                                           

Because GS  AgriFuels is indebted to YAGI in the amount of  $20,359,631,  YAGI's
consent to the  short-form  merger was  required.  YAGI gave its  consent in the
Agreement, subject to the following commitments by the Company and GS AgriFuels:

>>       GS AgriFuels was required to amend the Certificate of Designations for 
         its Series C Preferred Stock to provide that it would be convertible at
        a fixed rate of 32 common shares for each share of Series C stock, and
       to provide that no Series C shares may be issued while any portion of
the debt to YAGI is outstanding.                              

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     >>   GS AgriFuels agreed to issue 3,329,630 common shares to YAGI after the
short-form merger is completed.                             

     >>   The parties agreed that no more than 36,650,630 shares of GS AgriFuels
may be issued, on a fully-diluted basis.                    

     >>   The Company agreed to obtain an independent  appraisal of the value of
          GS AgriFuels.  The debentures issued by GS AgriFuels to YAGI will then
          be modified to provide that the interest and principal are convertible
          by YAGI into GS AgriFuels  common stock at a price equal to the lesser
         of (a) $0.255 or (b) 80% of the appraised value on a per share basis.

     >>   GS AgriFuels agreed to pay to YAGI, on account of its debentures,  10%
          of its cash  receipts  and 50% of free cash flows after  regular  debt
service.                                                    

Completion of GS AgriFuels Corporation Go-Private Transaction                   

On  February  29,  2008,  a  wholly  owned  subsidiary  of the  Company  filed a
Certificate  of Ownership and Merger  merging the  subsidiary  into GS AgriFuels
pursuant to the  short-form  merger  provisions  of Section 253 of the  Delaware
General  Corporation  Law. As a result of that  filing,  the Company  became the
owner of 100% of the  outstanding  shares of GS AgriFuels.  The  Certificate  of
Ownership and Merger provided that  shareholders of record of GS AgriFuels as of
the close of  business  on  February  29, 2008 would be paid cash at the rate of
$0.50 per share on March 27,  2008,  which  payment was  initiated  on March 27,
2008. The common stock of GS AgriFuels continued to be listed for trading on the
OTC Bulletin Board through March 27, 2008.  Effective March 28, 2008, the common
stock of GS  AgriFuels  was  delisted  from the OTC  Bulletin  Board and  became
non-transferable.                                                               

Reduction of Debt Payable to Related Parties                                    

Effective March 31, 2008, Carbonics Capital  Corporation,  an entity that is 80%
owned by  Viridis,  waived  $2,000,000  of notes  payable  to  Carbonics  by the
Company.                                                                        

Reduction and Restriction of Founder Shares                                     

Effective  March 20,  2008,  the Company  entered  into an amended and  restated
employment  agreement  with its  chairman  and chief  executive  officer,  Kevin
Kreisler,  and Viridis Capital,  LLC, pursuant to which Viridis agreed to reduce
and restrict the shares of Company  common stock  issuable  upon  conversion  of
Viridis' founder shares - its 800,000 shares of Company Series D Preferred Stock
(the "Series D Shares"). The Series D Certificate of Designations (the "Series D
CD")  currently  provides for the  conversion of the Series D Shares into 64% of
GreenShift's  fully-diluted  common  stock  (which  includes  all common  shares
outstanding plus all common shares  potentially  issuable upon the conversion of
all derivative securities not held by Viridis).                                 

Importantly,  Viridis' Series D Shares are the primary  collateral  securing the
Company's  repayment  obligations  to YAGI. The Company's  agreements  with YAGI
accordingly  require the Company to receive  YAGI's  consent to the amendment of
the Series D CD.                                                                

Subject to the receipt of YAGI's consent, the Company,  Viridis and Mr. Kreisler
have  agreed to amend  the  Series D CD as soon as  practicable  to  provide  as
follows:  (a) the  Conversion  Ratio shall be reduced and amended such that each
one share of Series D Preferred Stock shall be convertible into no more than 156
shares of Company  common stock;  and (b), the conversion of the Series D Shares
shall be restricted such that the Series D Shares shall only be convertible into
Company  common  shares  at the new  conversion  ratio on a  pro-rated  basis in
conjunction with the Company's realization of $75,000,000 in annualized earnings
before  interest,   taxes,   depreciation  and  amortization  and  non-cash  and
non-recurring  items  ("EBITDA").  The  following  is a  schedule  of the shares
potentially  issuable upon conversion of the Series D Shares in the event and to
the extent that the Company achieves the agreed upon EBITDA targets:            

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                                                        [Enlarge/Download Table]

Annualized                           Number of Series D Shares                             Number of Common Shares
EBITDA Target ($)                       That Can Be Converted                             Issuable Upon Conversion
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
$    5,000,000                                          53,333                                           8,320,000
$   10,000,000                                         106,667                                          16,640,000
$   15,000,000                                         160,000                                          24,960,000
$   20,000,000                                         213,333                                          33,280,000
$   25,000,000                                         266,667                                          41,600,000
$   30,000,000                                         320,000                                          49,920,000
$   35,000,000                                         373,333                                          58,240,000
$   40,000,000                                         426,667                                          66,560,000
$   45,000,000                                         480,000                                          74,880,000
$   50,000,000                                         533,333                                          83,200,000
$   55,000,000                                         586,667                                          91,520,000
$   60,000,000                                         640,000                                          99,840,000
$   65,000,000                                         693,333                                         108,160,000
$   70,000,000                                         746,667                                         116,480,000
$   75,000,000                                         800,000                                         124,800,000

Reduction and Restriction of Management Shares                                  

In connection  with the reduction and  restriction  of the shares  issuable upon
conversion  of the Series D Shares held by Viridis,  the  Company  entered  into
amended  and  restated  employment  agreements  in March  2008  with all  senior
management  and technical  staff.  These  employment  agreements  called for the
issuance of 2,425,333  shares of Company Series B Preferred Stock (the "Series B
Shares"),  which shares are  convertible  into Company common stock at the fixed
rate of one  Series B Share into 25 shares of Company  common  stock;  provided,
however,  that the  conversion of the Series B Shares shall be  restricted  such
that the Series B Shares shall only be convertible into Company common shares on
a pro-rated basis in conjunction  with the Company's  realization of $50,000,000
in  annualized  EBITDA.  The  following is a schedule of the shares  potentially
issuable  upon  conversion of the Series D Shares in the event and to the extent
that the Company achieves the agreed upon EBITDA targets:                       

                                                        [Enlarge/Download Table]

Annualized                           Number of Series B Shares                             Number of Common Shares
EBITDA Target ($)                       That Can Be Converted                             Issuable Upon Conversion
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
$    5,000,000                                         242,533                                           6,063,333
$   10,000,000                                         485,067                                          12,126,665
$   15,000,000                                         737,600                                          18,189,998
$   20,000,000                                         970,133                                          24,253,330
$   25,000,000                                       1,212,667                                          30,316,663
$   30,000,000                                       1,455,200                                          36,379,995
$   35,000,000                                       1,697,733                                          42,443,328
$   40,000,000                                       1,940,266                                          48,506,660
$   45,000,000                                       2,182,800                                          54,569,993
$   50,000,000                                       2,425,333                                          60,633,325

Executive Officer Employment Agreements                                         

Effective  March 20,  2008,  the  Company  entered  into  amended  and  restated
employment  agreements  with David  Winsness,  the  Company's  Chief  Technology
Officer,  Greg Barlage,  the Company's Chief Operating Officer,  and Ed Carroll,
the Company's Chief  Financial  Officer.  These  agreements call for a salary of
$150,000 per year for each employee and reduce and restrict the shares and other
compensation due to each employee as compared to earlier agreements between each
employee and the  Company.  Each  agreement  also  included the above  described
EBITDA performance  restriction on conversion and provides for 400,000,  300,000
and 240,000 shares of Series B Shares to be issued to Mr. Winsness,  Mr. Barlage
and Mr.  Carroll,  respectively.  These shares are  convertible  into a total of
10,000,000,  7,500,000  and  6,000,000  shares,  respectively,  in line with the
satisfaction  of the $50,000,000  EBITDA targets noted above.  In Mr.  Carroll's
case,  40,000 of his Series B Shares,  corresponding to 1,000,000 common shares,
are subject to an additional  restriction  that  requires the  completion by the
Company of certain financing.                                                   

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Pro Forma Fully Diluted Shares of Common Stock Outstanding                      

The following pro forma fully diluted share  structure is based on the shares of
common stock outstanding as of March 31, 2008 plus the performance-based  shares
described above:                                                                

                                                        [Enlarge/Download Table]

                       Performance-Based EBITDA Threshold                                                         

                                 $ 2,320,241       $10,000,000       $25,000,000      $50,000,000      $75,000,000
------------------------------------------------------------------------------------------------------------------
                                                                                                                  
Outstanding at March 31, 2008     55,546,526        55,700,526        55,700,526       55,700,526       55,700,526
Employee Pool                      9,167,609        12,126,665        30,316,663       60,633,325       60,633,325
Viridis Capital, LLC               1,486,391        16,640,000        41,600,000       83,200,000      124,800,000
------------------------------------------------------------------------------------------------------------------
Pro Forma Shares Outstanding      66,200,526        84,467,191       127,617,189      199,533,851      241,133,851

Completion of Restructuring                                                     

Consolidation of Subsidiaries                                                   

Effective  March 31, 2008, the Company's  subsidiary,  GS CleanTech  Corporation
(f/k/a GS Ethanol Technologies, Inc.), and its subsidiaries, GS Design, Inc., GS
Rentals,  LLC and GS CO2 Technologies,  Inc.,  executed an Agreement and Plan of
Merger calling for the merger of these four entities.  GS CleanTech  Corporation
(f/k/a GS Ethanol Technologies,  Inc.) will be the survivor of this merger. This
transaction  is to enable the Company to administer  its  operations at improved
cost-efficiencies and it is expected to close in May 2008 and.                  

Sale by GS EnviroServices of Substantially All of its Assets                    

On March 31, 2008 GS  EnviroServices  entered  into an Asset and Stock  Purchase
Agreement  dated as of March 29,  2008 by and among  Triumvirate  Environmental,
Inc. ("Buyer") and GS EnviroServices, Inc., and GS EnviroServices' subsidiaries,
Enviro-Safe Corporation and Enviro-Safe Corporation (NE) (the "Agreement").  The
Agreement provides that after satisfaction of certain specified  conditions,  GS
EnviroServices  will  sell  substantially  all  of  its  assets  to  Triumvirate
Environmental.  Specifically,  the  assets to be sold are most of the  assets of
Enviro-Safe  Corporation and the capital stock of Enviro-Safe  Corporation (NE).
At the same  time  Triumvirate  Environmental  will  assume  responsibility  for
certain designated liabilities of Enviro-Safe  Corporation,  including its trade
payables, its accrued expenses, and certain identified executory contracts.     

The  purchase  price  for  the  assets  and  capital  stock  will  be the sum of
$5,000,000,  to be paid in cash on the closing date. In addition,  approximately
60  days  after  the  closing,   Triumvirate   Environmental   will  pay  to  GS
EnviroServices  an  amount  equal  to the net  working  capital  of  Enviro-Safe
Corporation  and Enviro-Safe  Corporation  (NE) as of the closing date, less the
amount of any claims or  adjustments,  as  provided  for in the  Agreement.  The
purchase price will be applied first to satisfy GS  EnviroServices'  liabilities
to YA  Global  Investments  ("YAGI"),  TD  Banknorth,  and  the  holders  of its
outstanding  debentures,  and to satisfy all tax liabilities.  The net amount of
the  purchase  price  will  be paid to GS  EnviroServices  directly.  Management
estimates  that the net  amount  paid to GS  EnviroServices  (including  the net
working  capital  adjustment)  will be  approximately  $1,700,000,  and  that GS
EnviroServices will have approximately  $150,000 in liabilities  remaining after
the closing,  depending on the results of operations  prior to the closing date.
The Agreement contains customary  representations  and warranties of the selling
parties and Buyer, and provides for  indemnification  by GS  EnviroServices  and
Enviro-Safe   Corporation   for  any  breach  of  their   covenants   and  their
representations and warranties in the Agreement, with a threshold of $50,000 and
a cap of $1 Million, subject to exclusions for certain claims and matters as set
forth in the Agreement.                                                         

The closing will occur after all conditions stated in the Agreement have been   
satisfied or waived. The conditions include:                                    

     >>   Satisfactory  review of  Disclosure  Schedules  and  completion of due
diligence by Buyer;                                         

     >>   That YAGI grants an  extension of the May 10 deadline set forth in its
          letter  agreement  with GS  EnviroServices,  which provides that if GS
          EnviroServices  redeems 6,266,667 of its outstanding shares by payment
          of  $1,000,000  on or  before  May 10,  2008  and  repays  in full the
          debenture  held by YAGI by such  date,  then GS  EnviroServices'  $1.5
          million  limited  guaranty of certain third party  indebtedness  to YA
 Global Investments will be cancelled without further payment;

     >>   That  the  net  working   capital  of  Enviro-Safe   Corporation   and
          Enviro-Safe  Corporation  (NE) as of the closing date shall be no less
than $500,000; and                                          

     >>   That  the   holders   of  the   requisite   number  of  shares  of  GS
          EnviroServices shall have approved the transaction,  which has already
          occurred,  and that GS EnviroServices shall have distributed to all of
          its shareholders the information  statement required by Regulation 14C
of the Securities and Exchange Commission.                  

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The  Agreement  provides  that if the closing has not occurred by July 31, 2008,
the Agreement may be terminated by either party. This disclosure is qualified in
its  entirety by the  provisions  of the  Agreement,  which is being filed as an
exhibit to the Company's Form 8K filed on April 4, 2008.                        

The Company expects that a successful closing of this transaction will result in
the cash repayment of $1,000,000 of the Company's convertible debt due to YAGI. 

Pro Forma Organizational Structure                                              

The  following  is an outline of our  expected  organizational  structure at the
targeted completion of all of the above-described transactions:                 

                                                        [Enlarge/Download Table]

Company                                                                           Status                     Nature
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
GreenShift Corporation (OTC Bulletin Board: GERS)                                 Active                    Holding

1.   GS CleanTech Corporation (f/k/a GS Ethanol Technologies, Inc.)               Active                  Operating
       GS COES (Yorkville I), LLC                                                 Active                  Operating
       GS Global Biodiesel, LLC                                                   Active                  Operating
       Bollheimer & Associates, Inc.                                              Active                  Operating
       Sterling Planet, Inc.                                                      Active        Minority Investment

2.     GS AgriFuels Corporation Active Holding NextGen Acquisition, Inc.          Active                    Holding
         NextGen Fuel, Inc.                                                       Active                    Holding
       Sustainable Systems, Inc.                                                  Active                    Holding
         Sustainable Systems, LLC                                                 Active                  Operating
       ZeroPoint Clean Tech, Inc.                                                 Active        Minority Investment

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ITEM 8   CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING               
AND FINANCIAL DISCLOSURE                    

None.                                                                           

ITEM 8A  CONTROLS AND PROCEDURES                                                

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES                                

As of the end of the period covered by this report,  the Chief Executive Officer
and the Chief Financial Officer carried out an evaluation which was supported by
an outside  accounting firm and included  inquiries made to certain other of our
employees,  of the Company's  disclosure  controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934) as of
the end of the period covered by this report.                                   

The  Company's  disclosure  controls  and  procedures  are  designed  to provide
reasonable  assurance that  information  required to be disclosed in its reports
filed under the Exchange Act, such as this Form 10-KSB, is recorded,  processed,
summarized and reported  within the time periods  specified in the SEC rules and
forms.  The Company's  disclosure  controls and  procedures are also designed to
ensure that such  information is accumulated  and  communicated to management to
allow timely decisions  regarding  required  disclosure.  The Company's internal
controls are designed to provide reasonable  assurance regarding the reliability
of  financial  reporting  and  the  preparation  of its  consolidated  financial
statements in conformity with GAAP.  Management  determined that at December 31,
2007, the Company had a material  weakness  because it did not have a sufficient
number of personnel  with an  appropriate  level of knowledge and  experience of
generally accepted  accounting  principles in the United States of America (U.S.
GAAP) that are commensurate with the Company's financial reporting requirements.
Contributing  to this  lack of  sufficient  resources  was the  large  number of
non-recurring transactions completed during the fourth quarter of 2007 and first
quarter of 2008.  This caused the Company to take the following  actions so that
its consolidated financial statements as of, and for the year ended December 31,
2007,  are presented in accordance  with U.S. GAAP.  These actions  included (i)
appointing  a new  Chief  Financial  Officer  with  substantial  public  company
business  management,  governance and financial  experience,  (ii) supplementing
existing resources with technically  qualified third party consultants and (iii)
performing additional procedures and reviews.                                   

Management  intends to  strengthen  its  accounting  and  compliance  procedures
further in 2008 by hiring  additional  accounting  staff to help ensure that the
Company is following  best  practices  with respect to regulatory and compliance
matters by:                                                                     

     >>   appointing a new controller,  who is primarily responsible for keeping
the Company apprised of contemporary accounting issues;     

     >>   enhancing  the Company's  internal  audit  function by increasing  the
          number of accounting  staff and recruiting  additional  seasoned audit
professionals where required;                               

     >>   developing  written  procedures  for,  among  other  items,  reviewing
          unusual  financial  statement  adjustments and allocating costs to the
Company's segments;                                         

     >>   adopting  process  improvements  concerning  the  Company's  financial
statement close process;                                    

     >>   developing  additional training programs for the Company's finance and
accounting personnel; and,                                  

     >>   developing enhanced  educational  programs for personnel at all levels
          in ethics, corporate compliance,  disclosure, procedures for anonymous
        reporting of concerns and mechanisms for enforcing Company policies.

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Management's Report on Internal Control Over Financial Reporting                

Management is responsible for  establishing  and maintaining  adequate  internal
control over financial reporting,  as defined in rules 13a-15(f) and 15(f) under
the  Exchange  Act.  Internal  control  over  financial  reporting  is a process
designed to provide reasonable  assurance regarding the reliability of financial
reporting and the  preparation of financial  statements in accordance  with U.S.
GAAP.  Because of its inherent  limitations,  internal  control  over  financial
reporting  may not  prevent or detect  misstatements.  Also,  projection  of any
evaluation  of  effectiveness  to future  periods  is  subject  to the risk that
controls  may become  inadequate  because of change in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.           

Management has conducted,  with the participation of the Chief Executive Officer
and the  Chief  Financial  Officer,  an  assessment,  including  testing  of the
effectiveness of our internal control over financial  reporting.  The assessment
was  conducted  using the  criteria  in Internal  Control--Integrated  Framework
issued by the committee of Sponsoring  Organizations of the Treadway  Commission
("COSO").                                                                       

A material weakness is a deficiency, or combination of deficiencies, in internal
control over financial  reporting,  such that there is a reasonable  possibility
that a  material  misstatement  of the  company's  annual or  interim  financial
statements  will not be prevented or detected on a timely  basis.  In connection
with  management's  assessment of the company's  internal control over financial
reporting,   management  identified  the  following  material  weakness  in  the
company's  internal  control over  financial  reporting as of December 31, 2007.
Management  determined  that at December  31,  2007,  the company had a material
weakness related to its control environment because it did not have a sufficient
number  of  personnel  with an  appropriate  level of U.S.  GAAP  knowledge  and
experience commensurate with its financial reporting requirements.  Contributing
to this lack of sufficient resources was the unanticipated voluntary turnover of
key  personnel  late  in  the  year.  This  material  weakness  resulted  in the
identification of adjustment  during the financial  statement close process that
have been recorded in the consolidated financial statements.                    

Because of the material weakness described above, management has concluded that 
the company did not maintain effective internal control over financial reporting
as of December 31, 2007, based on the Internal Control--Integrated Framework    
issued by COSO.                                                                 

Remediation of Material Weakness in Internal Control over Financial Reporting   

The  company  has  commenced  efforts to address  the  material  weakness in its
internal  control  over  financial  reporting  and  the  ineffectiveness  of the
company's disclosure controls and procedures. The company plans to remediate its
material weakness through the following actions:                                

     >>   the  Company  has  hired a new  corporate  controller  and  reassigned
responsibilities among key accounting personnel,            

     >>   the Company will add personnel with an appropriate  level of U.S. GAAP
          tax  accounting  knowledge and experience to its income tax accounting
function,                                                   

     >>   the Company will add personnel with an appropriate  level of U.S. GAAP
accounting knowledge and experience, and                    

     >>   the  Company  will  continue to  supplement  existing  resources  with
consultants where needed.                                   

Change in Internal Control Over Financial Reporting                             

Other than described above, there have been no changes in the company's internal
control over  financial  reporting  during the most  recently  completed  fiscal
quarter that have  materially  affected or are  reasonably  likely to materially
affect, the company's internal control over financial reporting.                

This  annual  report  does not include an  attestation  report of the  Company's
registered  public  accounting  firm regarding  internal  control over financial
reporting.  Management's  report was not subject to attestation by the Company's
registered  public accounting firm pursuant to temporary rules of the Securities
and Exchange  Commission  that permit the Company to provide  only  management's
report in this annual report.                                                   

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PART III

ITEM 9   DIRECTORS AND EXECUTIVE OFFICERS                                       

Name                        Age  Position                                       
-----------------------------------------------------------------------------   
Kevin Kreisler               35  Chairman, President & Chief Executive Officer  
David Winsness               40  Director, Chief Technology Officer             
Greg Barlage                 43  Director, Chief Operating Officer              
Edward Carroll               41  Director, Chief Financial Officer              

Kevin  Kreisler  is  the  founder,  chairman  and  chief  executive  officer  of
GreenShift  Corporation.  Mr.  Kreisler  has been  responsible  for devising the
Company's  business plans,  hiring the Company's  management and  technologists,
directing the financing,  acquisition,  development and commercialization of the
Company's  technologies,  overseeing the  financing,  design,  construction  and
operation  of  facilities  based  on  those  technologies,  and  completing  the
financing and acquisition of strategically  compatible  companies.  Mr. Kreisler
served as the Company's vice president from 1998 to 2000, president from 2000 to
2002, chief executive  officer from 2002 to 2005 and has served as the Company's
chairman  from 2005 to the  present.  Mr.  Kreisler  is a  graduate  of  Rutgers
University College of Engineering  (B.S.,  Civil and Environmental  Engineering,
1994),  Rutgers  University  Graduate School of Management  (M.B.A.,  1995), and
Rutgers  University  School of Law (J.D.,  1997).  Mr.  Kreisler  is admitted to
practice law in New Jersey and the United States District Court for the District
of New Jersey.  On January 31, 2008, Mr. Kreisler resigned as the Chairman of GS
EnviroServices.                                                                 

David  Winsness  is  GreenShift's  chief  technology  officer  and  has  led the
commercialization  effort for  technologies.  Mr.  Winsness has  spearheaded the
addition  of  over  a  dozen  patented  and  patent  pending   technologies   to
GreenShift's  portfolio,  many of which were developed and authored  directly by
Mr.  Winsness,  including  GreenShift's  Corn  Oil  Extraction  Technology.  Mr.
Winsness is a graduate of Clemson University (B.S.,  Mechanical Engineering) and
he has spent his  professional  career as a process  engineer  in the  chemical,
food, pharmaceutical and power generation markets. Prior to accepting a position
with GreenShift,  Mr. Winsness served as chief technology officer and eventually
chief executive officer of Vortex  Dehydration  Technology where he directed the
research,  development  and  commercialization  of  a  technology  that  is  now
GreenShift's Tornado Generator(TM).                                             

Greg Barlage is  GreenShift's  chief  operating  officer.  His prior  experience
includes   15  years  of  process   engineering,   manufacturing   optimization,
maintenance and operations  management with a leading food products company. For
the past 6 years Mr.  Barlage  worked for Alfa  Laval,  a global  leader in heat
transfer, separation, and fluid handling solutions. There he was responsible for
all capital  equipment sales to the meat processing and vegetable oil processors
in the U.S. In this  position  he  effectively  reformed  the sales team to grow
sales and innovate with new products and systems for these industries.  Notably,
Mr. Barlage lead the Alfa Laval team as it worked with  GreenShift's  management
in the commercialization of its proprietary corn oil extraction technology.  Mr.
Barlage has also worked on the  engineering  and  installation  of a  commercial
scale  version  of  GreenShift's  Tornado  Generator(TM)  technology  located in
Joplin, Missouri, where it effectively processes and dehydrates poultry products
into highly nutritional and shelf stable products. This system operates 24 hours
per day, 5 days per week and also uses Alfa Laval heat  transfer and  centrifuge
components in conjunction with the Tornado Generator(TM) to produce high quality
animal fats,  chicken broth and dehydrated  poultry proteins.  Mr. Barlage has a
B.S. in Electrical  Engineering from the University of Toledo, Toledo, Ohio, and
an MBA from the University of St. Thomas, Minneapolis.                          

Edward Carroll serves as GreenShift's chief financial  officer.  Mr. Carroll has
over 13 years in  investment  banking and  corporate  finance.  Mr.  Carroll has
experience executing mergers & acquisitions and large scale transactions and has
managed the entire  lifecycle of M&A  transactions  from  negotiating  financial
terms to financing the deals to  implementing  change across  multiple  business
units to increasing  shareholder  value. He has extensive  experience in general
industrial  and  cross-border   M&A/change  of  control  transactions  including
acquisitions,  divestitures,  recapitalizations and joint ventures.  Mr. Carroll
has worked with both U.S., European and Japanese companies in acquiring U.S. and
overseas  assets.  Prior to  joining  Greenshift,  Mr.  Carroll  worked at Daiwa
Securities where he was an officer in the Mergers & Acquisitions group.  Through
this  experience,  he has  developed an expertise in several  industry  sectors,
including   alternative   fuels,   energy,   consumer   products   and   general
manufacturing.  Mr. Carroll is a prior board member of the  Westchester  Venture
Group,  and holds a Bachelor of Science in Finance with a Minor in Asian Studies
from Saint John's  University,  and an MBA in Finance from the American Graduate
School of International Management (Thunderbird).  Mr. Carroll also has military
experience as a former infantry officer in the United States Army.              

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the  Company's  equity  securities,  to file reports of  ownership  and
changes in  ownership  with the  Securities  and  Exchange  Commission  ("SEC").
Officers,  directors,  and greater than 10 percent  stockholders are required by
SEC  regulation  to furnish the Company  with copies of all Section  16(a) forms
they file.                                                                      

Based  solely on the  Company's  review of copies of such forms  received by the
Company,  the Company believes that during the year ended December 31, 2007, all
filing requirements applicable to all officers,  directors, and greater than 10%
beneficial stockholders were complied with.                                     

INDEMNIFICATION OF DIRECTORS AND OFFICERS                                       

Our certificate of incorporation provides that we shall indemnify to the fullest
extent permitted by, and in the manner  permissible  under the laws of the State
of Delaware,  any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative,  by reason
of the fact  that he is or was a  director  or  officer,  or  served  any  other
enterprise  as  director,  officer  or  employee  at our  request.  The board of
directors,  in its  discretion,  has the power on our  behalf to  indemnify  any
person,  other than a director or officer,  made a party to any action,  suit or
proceeding by reason of the fact that he/she is or was one of our employees.    

Insofar  as  indemnification  for  liabilities  arising  under  the  Act  may be
permitted  to  directors,  officers  and  controlling  persons  pursuant  to the
foregoing provisions,  or otherwise, we have been advised that in the opinion of
the Securities and Exchange  Commission,  such indemnification is against public
policy as expressed in the Act, and is therefore, unenforceable.                

AUDIT COMMITTEE; COMPENSATION COMMITTEE; NOMINATING COMMITTEE                   

The Board of  Directors  does not have an  audit,  compensation  committee  or a
nominating  committee,  due to the small number of directors.  If nominations to
the Board of  Directors  are  proposed,  all  directors  will be involved in the
determination.  The Board of Directors has determined  that Edward Carroll is an
audit  committee  financial  expert,  by reason of his  experience in investment
banking.                                                                        

CODE OF CONDUCT AND ETHICS                                                      

The Company has adopted a written code of conduct and ethics that applies to all
directors,  and employees,  including the Company's principal executive officer,
principal financial officer,  principal accounting officer or controller and any
persons  performing  similar  functions.  The Company will provide a copy of its
code of ethics to any person  without charge upon written  request  addressed to
GreenShift Corporation, One Penn Plaza, Suite 1612, New York, NY 10119.         

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ITEM 10  EXECUTIVE COMPENSATION                                                 

The following table sets forth all  compensation  awarded to, earned by, or paid
by  GreenShift  Corporation  and  its  subsidiaries  (or  by  third  parties  as
compensation  for services to GreenShift  Corporation  or its  subsidiaries)  to
Kevin  Kreisler,  the Company's  Chief  Executive  Officer,  Dave Winsness,  the
Company's Chief Technology Officer,  Greg Barlage, the Company's Chief Operating
Officer,  Ed Carroll,  the Company's Chief Financial  Officer,  and James Green,
President of GS  EnviroServices,  Inc.  There were no other  executive  officers
whose  total  salary  and bonus for the  fiscal  year ended  December  31,  2007
exceeded $100,000.                                                              

Mr. Kreisler and Mr. Winsness cancelled their 2006 option awards in 2007.       

                                                        [Enlarge/Download Table]

                                                     Stock         Option            Other   
                Year       Salary      Bonus        Awards         Awards        Compensation
                -----------------------------------------------------------------------------
                                                                                             
Kevin Kreisler  2007       81,346        --         20,523           --               --     
                2006         --          --         25,000        380,000*            --     
                2005      103,462        --           --             --               --     

David Winsness  2007      150,000        --         47,544           --               --     
                2006         --          --         79,875        95,000*             --     
                2005         --          --           --             --               --     

Greg Barlage    2007      125,000      50,000       136,750          --               --     
                2006         --          --         79,875           --               --     
                2005         --          --           --             --               --     

Ed Carroll      2007      150,000      50,000         --             --               --     
                2006         --          --           --             --               --     
                2005         --          --           --             --               --     

EMPLOYMENT AGREEMENTS                                                           

The Company has entered into employment agreements effective March 20, 2008 with
each of its officers.  Each agreement provides for an annual salary of $150,000,
periodic  bonuses,  four weeks vacation and  participation in any employee plans
made available to all Company employees.  The agreements  terminate on March 20,
2013.                                                                           

In connection with the execution of the agreements,  the Company issued Series B
Preferred  Shares to  officers  other  than Kevin  Kreisler  as  follows:  David
Winsness - 400,000 shares;  Greg Barlage - 300,000 shares;  Ed Carroll - 240,000
shares. The Series B Shares are convertible into the Company's common stock only
if the Company achieves  certain defined levels of EBITDA.  The conversion terms
are set forth in Note 31 to the Consolidated  Financial  Statements,  Subsequent
Events - Reduction and Restriction of Management Shares.                        

COMPENSATION OF DIRECTORS                                                       

None.                                                                           

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ITEM 11    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT       

The  following  table  sets  forth   information   regarding  the  voting  stock
beneficially owned by any person who, to our knowledge,  owned beneficially more
than 5% of any class of voting  stock as well as by the  members of our Board of
Directors and by all officers and directors as a group.                         

                                                        [Enlarge/Download Table]
                                          Amount and Nature of Beneficial Ownership                               
                                          -----------------------------------------                               

Name and Address(1)                                 Series B                  Series D               Percentage of
Of Beneficial Owner       Common    % of Class     Preferred   % of Class    Preferred   % of Class   Voting Power
                      ----------   -----------  ------------  -----------  -----------  -----------  -------------
                                                                                                                  
Kevin Kreisler(2),(4)  1,486,391         2.25%           --           --      791,459          100%         54.98%

David Winsness(3)        726,667         1.10%       370,933       18.02%           --           --          4.15%

Greg Barlage(3)          838,043         1.27%       266,478       12.94%           --           --          3.11%

Edward Carroll(3)        670,435         1.01%       213,183       10.36%           --           --          2.49%
                      ----------   -----------  ------------  -----------  -----------  -----------  -------------
Officers and Directors                                                                                            
as a Group (4 persons) 3,721,536         5.63%       850,594       41.32        791,459        100%         64.73%
<FN>                                                                                                              

     (1)  The address of each  shareholder  is c/o GreenShift  Corporation,  One                                  
          Penn Plaza, Suite 1612, New York, NY 10119.                                                             

     (2)  All  shares  listed  for Mr.  Kreisler  are owned of record by Viridis                                  
          Capital, LLC, of which Mr. Kreisler is the sole member.                                                 

     (3)  Shares of Company  Series B  Preferred  Stock are  convertible  at the                                  
          fixed  rate of 1 Series B Share to 25  Company  common  shares but are                                  
          restricted from conversion such that the Series B Shares shall only be                                  
          convertible  into  Company  common  shares  on a  pro-rated  basis  in                                  
          conjunction   with  the  Company's   realization   of  $50,000,000  in                                  
          annualized  EBITDA;  Mr.  Carroll's  Series B Shares are subject to an                                  
          additional  restriction on conversion tied to the Company's completion                                  
          of certain financing for its various planned facilities.                                                

     (4)  The Company,  Viridis and Mr.  Kreisler have entered into an agreement                                  
          to reduce and  restrict the shares of Company  common  stock  issuable                                  
          upon  conversion  of the Series D Shares such that Series D Shares are                                  
          convertible  at the  fixed  rate of 1 Series  D Share  to 156  Company                                  
          common shares but are restricted  from conversion such that the Series                                  
          D Shares shall only be  convertible  into Company  common  shares on a                                  
          pro-rated  basis in  conjunction  with the  Company's  realization  of                                  
          $75,000,000 in annualized EBITDA.                                                                       
</FN>                                                                                                             

ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

In June  2007,  the  Company  sold its 3%  investment  in General  Hydrogen  for
$135,223. The Company realized a $364,777 loss on the sale of this investment.  

On  November  9, 2007,  the  Company  and  Carbonics  Capital  Corporation  (the
Company's  former  parent)  completed a series of  transactions,  including  the
transfer to the Company of  Carbonics'  stakes in GS AgriFuels  Corporation  and
EcoSystem  Corporation.  The  Company  assumed all of  Carbonics'  intercompany,
affiliate  related party notes payable and receivable,  all trade payables,  and
all receivables, but did not assume Carbonics debt to YA Global Investments, LP.
In exchange the Company  issued to Carbonics a promissory  note in the aggregate
amount of $2,948,831 (the "Carbonics  Note").  The principal and interest on the
Carbonics  Note,  which accrues at the per annum rate of 8%, are due and payable
in full on December  31, 2009.  The  Carbonics  Note was  cancelled in the first
quarter 2008 (see Note 31, Subsequent Events, below).                           

On  November  9,  2007,  in  connection  with the  transfer  to the  Company  of
Carbonics'  stakes in GS  AgriFuels  and  EcoSystem,  the Company  also  assumed
liability  for a term note issued by  Carbonics to Viridis  Capital,  LLC with a
face amount of $1,339,704 (the "Viridis Note"),  which amount is due upon demand
and bears  interest at the rate of 8%. As of December 31, 2007,  the balance due
on the  Viridis  Note was  reduced by  $500,000  to  $949,704  in return for the
assignment  to  Viridis  by the  Company  of  100%  of its  stake  in  EcoSystem
Corporation,  which included  160,000,000  shares of EcoSystem  common stock and
921,313 shares of EcoSystem Series D Preferred Stock.                           

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On  November  9,  2007,  in  connection  with the  transfer  to the  Company  of
Carbonics'  stakes in GS  AgriFuels  and  EcoSystem,  the Company  also  assumed
liability for a term note issued by Carbonics to Candent Corporation with a face
amount of $757,852  (the "Candent  Note").  The Candent Note has a term of three
years and shall be payable in full on or before November 8, 2010. The note shall
bear interest at the rate of 10%.  Further,  during the year ended  December 31,
2007, the Company borrowed an additional  $100,000 from Candent.  As of December
31, 2007,  Candent  forgave this debt and  contributed  the amount to additional
paid in capital.  The former  president of Candent is the wife of the  Company's
chairman.  All of the issued and outstanding capital stock held by Candent is in
trust for the benefit of its former president.                                  

On December 12, 2007, Carbonics  distributed all of what was then Carbonics' 80%
stake in the Company on a  pro-rated  basis to all of  Carbonics'  shareholders.

This was  accomplished  by Carbonics'  conversion  of 200,000  shares of Company
Series D Preferred Stock into 20,800,000  shares of Company common stock,  which
were distributed to the minority shareholders of Carbonics, and the distribution
by Carbonics of 800,000  shares of Company  Series D Preferred  Stock to Viridis
Capital,  LLC, the Company's  majority  shareholder.  Kevin  Kreisler,  the sole
member of Viridis  Capital,  is the Chairman and Chief Executive  Officer of the
Company.                                                                        

Effective  December  15,  2007,  the Company  executed  an Amended and  Restated
Technology  Acquisition  Agreement  (the  "TAA")  with Mean Green  Biodiesel  of
Georgia,  LLC (f/k/a Cantrell  Winsness  Technologies,  LLC), David F. Cantrell,
David  Winsness,  Gregory P.  Barlage and John W. Davis (the  "Inventors").  The
amendment changed the method of calculating the purchase price for the Company's
corn oil extraction technology (the "Technology"). The TAA, as amended, provides
for the payment to the  Inventors of a one-time  license fee of $150,000 per 1.5
million gallon per year system (a "System") built and commissioned  based on the
Technology  plus an ongoing  royalty  of $0.10 per gallon of corn oil  extracted
with the Technology.  The Company is required to sell, market,  deploy or in any
way cause the  initiation of operations of a total of three Systems on or before
December 31, 2008, a total of eight Systems on or before  December 31, 2009, and
an additional five Systems per year up to a total of eighteen Systems,  at which
point  the  Company  has  no  continuing  commercialization  requirement.  David
Winsness and Greg Barlage are both members of the  Company's  board of directors
and,  respectively,  the Company's Chief Technology  Officer and Chief Operating
Officer.                                                                        

Effective December 31, 2007, EcoSystem transferred its stakes in GS Design, Inc.
and GS Rentals,  LLC to the Company in return for the reduction in the Company's
note  receivable  from  EcoSystem by $170,385 and the issuance to EcoSystem of a
term note in the amount of  $319,517  which note bears  interest at 6% per annum
and matures on December 31, 2008.                                               

During the twelve months ended  December 31, 2007, GS Ethanol  borrowed  $30,000
from David Winsness,  the Company's Chief Technology  Officer.  The note carried
interest at 5% per year and was payable upon demand. The Company repaid the loan
in full subsequent to the year ended December 31, 2007.                         

During the twelve months ended December 31, 2007, Edward Carroll,  the Company's
Chief Financial Officer,  loaned the Company $20,000.  The note carried interest
at 5% per year and was payable upon demand.  The Company repaid the loan in full
subsequent to the year ended December 31, 2007.                                 

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 PART IV
ITEM 13  EXHIBITS                                                               

The following are exhibits filed as part of GreenShift's Form 10KSB for the year
ended December 31, 2007:                                                        

INDEX TO EXHIBITS                                                               

Exhibit                                                                         
Number                     Description                                          

3-a       Certificate of Incorporation (1)                                      

3-a(1) Certificate of Amendment of Certificate  of  Incorporation  - filed as an
     Exhibit  to the  Current  Report  on Form 8-K filed on July 20,  2006,  and
incorporated herein by reference.                                     

3-a(2) Certificate of Amendment of Certificate  of  Incorporation  - filed as an
     Exhibit to the Current  Report on Form 8-K filed on February 22, 2007,  and
incorporated herein by reference.                                     

3-a(3) Certificate  of Amendment of  Certificate  of  Incorporation  filed as an
     Exhibit to the Current  Report on Form 8-K filed on  December  11, 2007 and
incorporated herein by reference.                                     

3-a(4) Certificate  of Amendment of  Certificate  of  Incorporation  filed as an
     Exhibit to the Current  Report on Form 8-K filed on  February  13, 2008 and
incorporated herein by reference.                                     

3-b  Bylaws (1)                                                                 

YA Global                                                                       

10-a Credit  Agreement  dated January 11, 2008 between GS COES (Yorkville I) LLC
and YA Global Investments, LP (2)                                     

10-b Stock  Purchase   Agreement   between  GS  CleanTech   Corporation  and  GS
EnviroServices, Inc. (2)                                              

10-c Restructuring  Agreement  dated  January  10,  2008  between  GS  CleanTech
Corporation and YA Global Investments, LP (2)                         

10-d Form of Amended and Restated  Secured  Convertible  Debenture  issued by GS
     CleanTech Corporation to YA Global Investments,  LP. as of January 10, 2008
(2)                                                                   

10-e Amended and  Restated  Forbearance  Agreement  dated as of January 11, 2008
     among GS CleanTech Corporation,  GreenShift  Corporation,  Viridis Capital,
LLC and YA Global Investments, LP. (2).                               

10-f Global Guaranty Agreement dated January 11, 2008 among Viridis Capital LLC,
     Kevin  Kreisler,  GreenShift  Corporation,  GS  AgriFuels  Corporation,  GS
     CleanTech   Corporation,   each  of  their  subsidiaries,   and  YA  Global
Investments, LP (2).                                                  

10-g Agreement dated as of January 10, 2008 among GS CleanTech  Corporation,  GS
AgriFuels Corporation, and YA Global Investments, LP. (2)             

31.1 Certification    of   Chief    Executive    Officer    pursuant   to   Rule
     13a-14(a)/15d-14(a),   as  adopted   pursuant   to   Section   302  of  the
Sarbanes-Oxley Act of 2002 as incorporated herein by reference.       

31.2 Certification of Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as
     adopted  pursuant  to  Section  302 of the  Sarbanes-Oxley  Act of  2002 as
incorporated herein by reference.                                     

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

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

(1)  Filed as an Exhibit to the  Registration  Statement  on Form SB-2 (File No.
   333-116946) filed on June 29, 2004, and incorporated herein by reference.

(2)  Filed as an Exhibit to the Current  Report on Form 8-K filed on January 31,
2008, and incorporated herein by reference.                           

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ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES                                 

INDEPENDENT AUDITOR FEES                                                        

Fees for professional  services provided by GreenShift's  independent  auditors,
Rosenberg,  Rich, Baker Berman and Company for the years ended December 31, 2007
and 2006 are as follows:                                                        

Audit Fees                                                                      

Rosenberg  Rich  Baker  Berman  &  Co.  billed   $283,035  to  the  Company  for
professional services rendered for the audit of fiscal 2007 financial statements
and review of the financial  statements  included in fiscal 2007 10-QSB filings.
Rosenberg  Rich  Baker  Berman  &  Co.  billed   $125,000  to  the  Company  for
professional services rendered for the audit of fiscal 2006 financial statements
and review of the financial statements included in fiscal 2006 10-QSB filings.  

Audit-Related Fees                                                              

Rosenberg  Rich Baker Berman & Co.  billed $0 to the Company  during fiscal 2007
for  assurance  and  related  services  that  are  reasonably   related  to  the
performance of the 2007 audit or review of the quarterly  financial  statements.
Rosenberg  Rich Baker Berman & Co.  billed $0 to the Company  during fiscal 2006
for  assurance  and  related  services  that  are  reasonably   related  to  the
performance of the 2006 audit or review of the quarterly financial statements.  

Tax Fees                                                                        

Rosenberg  Rich Baker Berman & Co. billed  $12,560 to the Company  during fiscal
2007 for professional  services rendered for tax compliance,  tax advice and tax
planning. Rosenberg Rich Baker Berman & Co. billed $10,000 to the Company during
fiscal 2006 for professional  services  rendered for tax compliance,  tax advice
and tax planning.                                                               

All Other Fees                                                                  

Rosenberg Rich Baker Berman & Co. billed $0 to the Company in fiscal 2007 and $0
in fiscal 2006 for services not described above.                                

It is the policy of the Company's  Board of Directors  that all services,  other
than audit,  review or attest  services,  must be  pre-approved  by the Board of
Directors,  acting in lieu of an audit committee.  All of the services described
above were approved by the Board of Directors.                                  

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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.
GREENSHIFT CORPORATION By                                                       

/S/       KEVIN KREISLER                            
------------------------------                      
KEVIN KREISLER                  
Chief Executive Officer         

Date:         April 7, 2008                                                     

In accordance  with the Exchange Act, this Report has been signed below on March
31,  2008 by the  following  persons,  on  behalf of the  Registrant  and in the
capacities and on the dates indicated.                                          

/s/ Kevin Kreisler                                                            
--------------------------                                                      
Kevin Kreisler, Chairman                                              
Chief Executive Officer                                               

/s/ Ed Carroll                                                                  
--------------------------                                                      
Ed Carroll, Director                                                    
Chief Financial and Accounting Officer                                  

/s/ David Winsness                                                              
--------------------------                                                      
David Winsness                                                          
Director                                                                

/s/ Greg Barlage                                                                
---------------------------                                                     
Greg Barlage                                                            
Director                                                                

105 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		11/15/20		72
		2/11/18		89
		1/15/16		72
		9/25/13		71
		3/20/13		99
		12/31/11		90					10-K,  10-K/A
		3/6/11		72
		1/1/11		87
		11/15/10		72					NT 10-Q
		11/8/10		67		101
		3/1/10		72
		2/11/10		89
		12/31/09		18		101			10-K,  10-K/A,  NT 10-K
		10/30/09		69
		8/31/09		87
		6/7/09		69
		4/1/09		68
		2/26/09		69
		2/11/09		88
		2/8/09		68
		1/1/09		10
		12/31/08		4		101			10-K,  10-K/A,  NT 10-K
		12/15/08		59					8-K
		9/30/08		70					10-Q,  10-Q/A,  NT 10-Q
		9/1/08		66
		7/31/08		94
		7/1/08		87
		6/30/08		35		73			10-Q,  NT 10-Q
		6/1/08		71
		5/10/08		88		93
Filed on:		4/7/08		104
		4/4/08		1		94
		3/31/08		24		104			10-Q,  NT 10-K,  NT 10-Q
		3/30/08		36
		3/29/08		93
		3/28/08		91
		3/27/08		91
		3/20/08		75		99
		3/10/08		88
		2/29/08		91					8-K
		2/13/08		102					8-K
		2/11/08		87		89			8-K
		1/31/08		97		102			8-K
		1/25/08		87		88			8-K
		1/17/08		89
		1/11/08		88		102			DEF 14C
		1/10/08		102
		1/1/08		87
For Period End:		12/31/07		1		103			NT 10-K,  NT 10-K/A,  PRE 14C
		12/19/07		28
		12/15/07		79		101
		12/12/07		53		101
		12/11/07		36		102			8-K
		12/5/07		74
		11/15/07		60
		11/9/07		52		101			8-K,  PRE 14C
		9/30/07		64					10QSB
		9/19/07		35		75
		7/31/07		70
		7/1/07		69		86			8-K
		6/30/07		62		70			10QSB,  8-K
		6/4/07		72
		6/1/07		72
		5/31/07		65		76
		5/4/07		62
		4/9/07		86
		3/31/07		70					10QSB,  NT 10-Q
		3/26/07		71
		3/19/07		76
		3/6/07		61		82			8-K
		2/28/07		70					8-K
		2/27/07		61		90
		2/26/07		72		86
		2/22/07		102					8-K
		2/1/07		69		70
		1/16/07		86					DEF 14C
		1/1/07		62		83
		12/31/06		38		103			10KSB,  NT 10-K
		10/31/06		64		76			8-K
		10/30/06		69		81
		9/28/06		73
		9/13/06		64		81
		7/20/06		102					8-K
		7/1/06		68					8-K,  8-K/A
		6/7/06		69
		4/21/06		68
		4/13/06		68		90
		3/15/06		72					8-K
		2/8/06		90
		1/14/06		72		86
		1/1/06		9		81
		12/31/05		49		72			10KSB,  NT 10-K
		12/15/05		72
		10/24/05		62
		10/1/05		71
		9/30/05		71					10QSB,  NT 10-Q
		4/1/05		57					3,  4
		6/29/04		102					4,  8-K,  SB-2
		3/31/04		68		90			10QSB
		8/11/00		11
		1/1/94		28
									List all Filings

4 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 5/05/09  SEC                               UPLOAD¶     9/24/17    1:71K  Greenshift Corp.
 2/26/09  SEC                               UPLOAD¶     9/24/17    1:79K  Greenshift Corp.
 1/15/09  SEC                               UPLOAD¶     9/24/17    1:43K  Greenshift Corp.
11/25/08  SEC                               UPLOAD¶     9/24/17    1:110K Greenshift Corp.