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

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

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


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

                          COMMISSION FILE NO.: 0-28887



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


Delaware                                                            22-3328734
--------------------------------------------------------------------------------
(State of other jurisdiction of                                  (IRS Employer
incorporation or organization)                               Identification No.)


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


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





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



The number of  outstanding  shares of common  stock as of November  20, 2006 was
113,652,635.



Transitional Small Business Disclosure Format:  Yes         No  X
                                                    ---        ---
<PAGE>




                             GREENSHIFT CORPORATION
                         QUARTERLY REPORT ON FORM 10QSB
                 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2006

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                           Page No
Part I            Financial Information
<S>               <C>                                                                                             <C>
Item 1.           Financial Statements (unaudited)................................................................3
                  Consolidated Balance Sheet - September 30, 2006 (unaudited).....................................4
                  Consolidated Statements of Operations - for the Three and Nine Months Ended
                     September 30, 2006 (unaudited) and 2005 (unaudited)..........................................6
                  Consolidated Statements of Cash Flows - for the Nine Months Ended
                    September 30, 2006 (unaudited) and 2005 (unaudited)...........................................7
                  Notes to Consolidated Financial Statements.....................................................10
Item 2.           Management's Discussion and Analysis or Plan of Operation......................................28
Item 3.           Controls and Procedures........................................................................34

Part II           Other Information
Item 1.           Legal Proceedings..............................................................................35
Item 2.           Changes in Securities..........................................................................35
Item 3.           Defaults upon Senior Securities................................................................35
Item 4.           Submission of Matters to a Vote of Security Holders............................................35
Item 5.           Other Information .............................................................................35
Item 6.           Exhibits and Reports on Form 8K................................................................35

Signatures
</TABLE>


                                       2
<PAGE>


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







































                                        3
<PAGE>
<TABLE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                            AS OF SEPTEMBER 30, 2006
                                   (UNAUDITED)
<CAPTION>

  ASSETS

  Current Assets:
<S>                                                                              <C>
   Cash ......................................................................   $ 3,508,704
   Accounts Receivable, net ..................................................     3,780,921
   Note Receivable ...........................................................       751,832
   Unbilled Revenue ..........................................................       266,848
   Accrued Interest Receivable-Unconsolidated Subsidiaries ...................       118,338
   Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts       401,046
   Inventory .................................................................     1,832,287
   Prepaid Expenses and Other Current Assets .................................       586,634
                                                                                 -----------
     Total Current Assets ....................................................    11,246,610

Net Fixed Assets .............................................................     2,361,318

Other Assets:
   Investment in Unconsolidated Subsidiaries at Cost .........................     5,937,382
   Investment in Unconsolidated Subsidiary - Equity Method ...................       303,078
   Project Development Costs .................................................        20,000
   Deferred Financing Fees ...................................................     1,073,605
   Intangible Assets and License Agreements ..................................       110,000
   Other Assets ..............................................................       371,634
   Property Held for Sale ....................................................        59,298
   Net Noncurrent Assets of Discontinued Operations ..........................        99,300
   Costs and Estimated Earnings in Excess of Billings on Uncompleted Contract        223,569
   Goodwill ..................................................................     7,117,586
                                                                                 -----------
     Total Other Assets ......................................................    15,315,452
                                                                                 -----------

TOTAL ASSETS .................................................................   $28,923,380
                                                                                 ===========
</TABLE>


                                       4
<PAGE>
<TABLE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2006
                             (UNAUDITED) (CONTINUED)
<CAPTION>

  LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
<S>                                                                             <C>
   Accounts Payable and Accrued Expenses ....................................   $  6,124,574
   Derivative Liability .....................................................      7,154,762
   Short-Term Borrowings ....................................................         63,354
   Current Portion of Long Term Debt ........................................        832,199
   Current Portion of Liabilities Under Capital Lease .......................         24,038
   Line of Credit ...........................................................      1,196,972
   Income Taxes Payable .....................................................         91,500
   Current Portion of Convertible Debentures, Net of Discounts ..............      5,161,635
   Deferred Revenue .........................................................        125,000
   Billings in Excess of Cost and Estimated Earnings on Uncompleted Contracts        407,910
   Liabilities of Discontinued Operations ...................................        742,628
                                                                                ------------
     Total Current Liabilities ..............................................     21,924,572

   Long Term Leases Payable .................................................         38,691
   Long Term Debt, Net of Current Maturities ................................      1,075,554
   Convertible Debentures, Net of Current Portion and Discounts .............      8,152,589
   Accrued Liabilities ......................................................        114,462
   Deferred Revenue .........................................................        336,798
                                                                                ------------
     Total Long Term Liabilities ............................................      9,718,094
                                                                                ------------

TOTAL LIABILITIES ...........................................................     31,642,666

Minority Interest in Consolidated Subsidiary ................................      1,695,158

STOCKHOLDERS' DEFICIENCY

Series C Preferred Stock, $0.001 par value; 1,000,000
authorized and outstanding ..................................................          1,000
Common stock, $0.01 par value; 200,000,000 shares authorized
   113,652,635 issued and outstanding) ......................................        113,652
Additional Paid-in-Capital ..................................................     59,794,063
Accumulated Deficit .........................................................    (63,736,006)
                                                                                ------------
Total Stockholders' Deficiency ..............................................     (3,827,291)

Deficit in Variable Interest Entity .........................................       (587,153)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY ..............................   $ 28,923,380
                                                                                ============
</TABLE>

                                       5




<PAGE>
<TABLE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)
<CAPTION>

                                                           FOR THE THREE MONTHS           FOR THE NINE MONTHS
                                                                   ENDED                         ENDED
                                                    ---------------------------------------------------------------
                                                      9/30/2006        9/30/2005         9/30/2006        9/30/2005
                                                    ---------------------------------------------------------------

<S>                                                 <C>              <C>              <C>              <C>
Revenue .........................................   $   5,952,010    $   4,596,214    $  17,260,649    $  14,494,896
Cost of Revenues ................................       4,311,149        2,698,988       12,297,390        9,567,019
                                                    -------------    -------------    -------------    -------------
Gross Profit ....................................       1,640,861        1,897,226        4,963,259        4,927,877

Operating Expenses:
   Selling Expenses .............................         119,671          398,770        2,232,563        2,728,762
   General and Administrative Expenses ..........       1,910,187          863,102        4,680,144        2,199,676
   Research and Development .....................          21,012             --             55,957             --
   Stock Based Compensation .....................         601,576             --          3,186,275          925,837
                                                    -------------    -------------    -------------    -------------
     Total Operating Expenses ...................       2,652,446        1,261,872       10,154,939        5,854,275
                                                    =============    =============    =============    =============

Operating (Loss) Income .........................      (1,011,585)         635,354       (5,191,680)        (926,398)

     Other Income (Expense):
   Other Expense from Settlements ...............         (33,967)            --               --               --
   Change in Fair Value of Derivative Instruments       7,996,848             --          5,036,655             --
   Interest Expense .............................         (86,012)        (340,646)      (1,261,291)      (1,006,486)
   Amortization Expense, Intangible Assets ......         (15,009)           6,676         (140,467)         (45,024)
   Amortization Expense, Deferred Financing Costs        (565,243)            --           (615,954)          67,197
   Amortization of Debt Discount ................      (6,593,825)            --         (6,593,825)            --
   Impairment of Long Lived Asset ...............        (122,887)            --           (190,103)            --
   Miscellaneous Income (Expense) ...............        (106,450)            --            (37,965)            --
   Forgiveness of Interest and Finance Charges ..            --               --            125,484             --
   Write Down of Investment .....................        (436,667)            --           (436,667)            --
   Gain (Loss) on Sale of Fixed Assets ..........             500             --            (40,302)           4,144
                                                    -------------    -------------    -------------    -------------

     Total Other Expense, Net ...................          37,288         (333,970)      (4,154,435)        (980,169)
                                                    =============    =============    =============    =============

Loss before Provision for Income Taxes ..........        (974,297)         301,384       (9,346,115)      (1,906,567)

Provision for Income Taxes ......................          (6,884)            (598)        (121,193)         (14,445)
                                                    -------------    -------------    -------------    -------------

Net (Loss) Income from Continuing Operations ....        (981,181)         300,786       (9,467,308)      (1,921,012)

Discontinued Operations: ........................         (30,708)      (3,978,342)         (41,072)      (3,965,413)
                                                    -------------    -------------    -------------    -------------

Net Loss before Minority Interest ...............      (1,011,889)      (3,677,556)      (9,508,380)      (5,886,425)
                                                    -------------    -------------    -------------    -------------

Minority Interest ...............................         199,432          578,829          393,541          771,494
                                                    -------------    -------------    -------------    -------------

     Net Loss ...................................   $    (812,457)   $  (3,098,727)   $  (9,114,839)   $  (5,114,931)
                                                    =============    =============    =============    =============

Basic and Diluted Income (Loss) Per Share:

Continuing Operations ...........................   $       (0.01)   $        0.01    $       (0.08)   $       (0.05)

Discontinued Operations .........................   $        0.00    $       (0.05)   $        0.00    $       (0.19)
                                                    -------------    -------------    -------------    -------------

Income/(Loss) Per Share, Basic and Diluted ......   $       (0.01)   $       (0.04)   $       (0.08    $       (0.24)


Weighted Average Shares of Common Stock
    Outstanding, Basic and Diluted ..............     112,202,507       77,835,337      109,166,859       21,174,985
                                                    =============    =============    =============    =============
</TABLE>

                                       6
<PAGE>
<TABLE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)
<CAPTION>

  CASH FLOWS FROM OPERATING ACTIVITIES                                               9/30/2006       9/30/2005
                                                                                   -----------       -----------
<S>                                                                                 <C>             <C>
  Net Loss ....................................................................     (9,114,839)     (5,114,931)
  Adjustments to reconcile net loss to net cash used in
   operating activities
     Depreciation and amortization ............................................        332,535        159,624
     Write down of long term investment .......................................        436,667            --
     Bad debt recovery ........................................................         53,674            --
     Stock based compensation .................................................      3,186,275            --
     Gain on settlement of debt ...............................................       (213,240)           --
     Amortization of website costs ............................................        235,128          45,024
     Amortization of deferred financing costs .................................        615,954         259,073
    Amortization of note payable discount .....................................      6,593,825            --
    Amortization of BCF - related party .......................................         15,124            --
    Interest expense associated with intrinsic value of convertible debt ......           --           141,429
    Equity issued in exchange for services and accrued interest ...............         69,513         951,474
    Amortization of warrants ..................................................          4,013            --
    Accrued interest, dividends and fees receivable ...........................           --           (40,866)
    Provision for doubtful accounts ...........................................           --            (3,324)
    Interest paid directly from lender ........................................           --            88,803
    Loss on Sale of Fixed Assets ..............................................         40,302          94,541
    Gain on forgiveness of debt ...............................................       (125,485)        (67,197)
    Change in discontinued operations .........................................       (583,080)      3,507,725
    Minority interest .........................................................       (248,883)       (597,130)
    Income from equity method investments .....................................        (18,667)           --
    Loss from variable interest entity ........................................       (144,658)       (174,364)
      Change in fair value of derivative instruments ..........................     (5,036,655)           --
Changes in assets and liabilities,
    Accounts Receivable .......................................................       (877,764)       (468,525)
    Costs and estimated earnings in excess billings on uncompleted contracts ..        374,768          25,383
    Accrued interest receivable ...............................................          4,621            --
    Inventories ...............................................................     (1,925,527)           --
    Work in progress inventory ................................................           --             8,588
    Prepaid expenses and other current assets .................................       (811,730)        (84,143)
    Accounts payable and accrued expenses .....................................        353,578        (161,570)
    Unearned Revenue ..........................................................           --               716
    Unbilled Revenues .........................................................        293,228        (124,292)
    Billings in excess of costs and estimated earnings on uncompleted contracts          1,949        (101,563)
    Estimated losses on contracts in progress .................................           --           (56,054)
    Deferred stock based compensation .........................................           --          (225,000)
    Deferred Revenue ..........................................................        (86,368)        (41,633)
    Other Assets ..............................................................           --              (265)
    Deferred taxes ............................................................         90,000            --
    Other liabilities .........................................................       (234,490)           --
    Liabilities to be disposed of .............................................           --          (352,736)
                                                                                  ------------    ------------

  Net cash used in operating activities .......................................     (6,720,232)     (2,331,213)

</TABLE>

                                       7

<PAGE>

<TABLE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)

<CAPTION>
  CASH FLOWS FROM INVESTING ACTIVITIES ........................................    9/30/2006       9/30/2005
                                                                                  ------------    ------------
<S>                                                                                <C>            <C>
  Change in deposit ...........................................................         (3,438)        (88,799)
  Investment in unconsolidated entity .........................................     (2,501,324)           --
  Restricted cash released from restrictions ..................................         29,254            --
  Project development cost ....................................................        (20,000)           --
  Additional Permit ...........................................................           --           (16,500)
  Proceeds from Sale of Fixed Assets ..........................................           --             3,042
  Additions to and acquisition of property, plant and equipment ...............       (274,242)       (135,440)
  Cash paid on purchase of subsidiary .........................................           --           (50,000)
  Cash acquired on purchase of subsidiaries ...................................           --           370,444
  Issuance of notes receivable ................................................     (1,182,099)       (707,949)
  Investments funded ..........................................................       (119,745)           --
                                                                                  ------------    ------------

    Net cash used in investing activities .....................................     (4,071,594)       (625,202)

CASH FLOWS FROM FINANCING ACTIVITIES

  Repayment of short-term borrowings ..........................................       (224,736)       (190,250)
  Repayment of current maturities of long-term debt, net ......................           --          (125,394)
  Proceeds of Term Financing ..................................................           --         3,166,782
  Repayment of long-term debt, net ............................................       (182,980)           --
  Repayment of term financing .................................................       (100,000)           --
  Repayment of investment payable .............................................       (540,000)           --
  Investment in subsidiary ....................................................       (261,327)           --
  Conversion of minority interest .............................................        (50,000)           --
  Payment of deferred financing fees ..........................................       (310,749)           --
  Proceeds from sale of common stock ..........................................        269,090         100,000
  Proceeds from exercise of stock options in subsidiary .......................        332,155            --
  Proceeds from notes payable - non affiliated parties ........................        186,012            --
  Repayment of Laurus Financing ...............................................           --           (82,244)
  Repayment of Convertible Debenture ..........................................        (78,000)           --
  Proceeds from leases payable ................................................         38,691            --
  Repayment of obligations under capital leases ...............................           --           615,000
  Proceeds from issuance of convertible debt ..................................     14,543,139         (68,000)
  Payment of financing costs ..................................................           --           (16,066)
  Principal payments - mortgages and short term notes .........................           --          (949,563)
  Installment Loans Payable ...................................................           --           (30,380)
  Loans from shareholders .....................................................           --          (234,931)
                                                                                  ------------    ------------

Net cash provided by financing activities .....................................     13,621,295       2,184,954
(Decrease) Increase in cash ...................................................      2,829,469        (771,461)
Cash at beginning of period ...................................................        679,235       1,140,912
                                                                                  ------------    ------------
Cash at end of period .........................................................   $  3,508,704    $    369,451
                                                                                  ============    ============
</TABLE>

                                       8

<PAGE>

<TABLE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)


<CAPTION>

  SUPPLEMENTAL STATEMENT OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES: ...................................................     9/30/2006      9/30/2005
                                                                                  ------------    ------------

<S>                                                                               <C>             <C>
  Cash paid during the period for interest ....................................   $    524,858    $    168,907
                                                                                  ============    ============
  Payment of Laurus financing/accrued interest with proceeds
  of Cornell Capital Financing ................................................   $  2,193,047    $       --
                                                                                  ============    ============

  Deferred Financing costs paid with proceeds of Cornell Capital Financing ....   $    455,000    $       --
                                                                                  ============    ============

  Vehicles purchased via financing ............................................   $     71,145    $       --
                                                                                  ============    ============
  Incurrence of Term financing ................................................   $       --      $    178,000
                                                                                  ============    ============

  Issuance of convertible debentures upon conversion of debt ..................   $  2,786,919    $  2,384,255
                                                                                  ============    ============
</TABLE>




























                                       9


<PAGE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



1        BASIS OF PRESENTATION

The consolidated interim financial statements included herein have been prepared
by GreenShift Corporation ("GreenShift" or "the Company"), pursuant to the rules
and  regulations  of the  Securities  and  Exchange  Commission  with  regard to
Regulation S-B and, in the opinion of management, include all adjustments which,
except  as  described  elsewhere  herein,  are  of a  normal  recurring  nature,
necessary  for a  fair  presentation  of  the  financial  position,  results  of
operations,  and cash flows for the periods  presented.  The results for interim
periods are not necessarily indicative of results for the entire year.

2        NATURE OF OPERATIONS

On July 1, 2006, GreenShift Corporation, Inc. (the "Company") changed the nature
of its  business  so as to cease to be a  business  development  company  and to
actively engage as an operating company.  The Company owns and operates entities
that develop and support clean technologies that facilitate the efficient use of
natural resources and catalyze transformational  environmental gains. During the
nine months ended September 30, 2006 the Company's  operations were administered
through the following Companies:

o    GS CleanTech  Corporation  ("GS  CleanTech")  (OTC Bulletin Board:  GSCT) -
     Clean Technology and Process Engineering

o    GS AgriFuels  Corporation  ("GS  AgriFuels")  (OTC Bulletin Board:  GSGF) -
     Clean Fuels Production and Sales

o    GS Energy  Corporation  ("GS Energy") (OTC  Bulletin  Board:  GSEG) - Clean
     Energy Production and Sales

3        GOING CONCERN

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of $9,114,839 for the nine months ended  September 30, 2006. As of September 30,
2006 the Company  had  $3,508,704  in cash,  its  current  liabilities  exceeded
current  assets by  $10,677,962  and it used cash in operations  of  $6,720,232.
These matters raise substantial doubt about the Company's ability to continue as
a going concern.

Management's  plans  include  raising  additional  proceeds from debt and equity
transactions  to fund  operations  and to increase  revenue and cut  expenses to
reduce the loss from  operations.  There can be no  assurances  that 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.

4        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

For the period ended September 30, 2006, the accompanying consolidated financial
statements  include all accounts of the Company and its subsidiaries  along with
an entity which the Company is a primary  beneficiary under FASB  Interpretation
No.  46R,   "Consolidation  of  Variable  Interest   Entities"  (FIN  46R).  All
significant   intercompany   balances  and   transactions   were  eliminated  in
consolidation.


USE OF ESTIMATES

The  preparation  of  consolidated   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,  liabilities,   revenues,   expenses,  and  disclosures  of
contingencies  during the  reporting  period.  Actual  results could differ from
management's estimates.

                                       10

<PAGE>


                   GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

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

The Company  provides  environmental  services that involve  transportation  and
disposal of industrial waste.  Revenues for the  transportation  and disposal of
waste using Company resources that are 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 that is disposed of at the third party location is recognized when
the waste is delivered to the third party 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.

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

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

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

Revenues from cost-plus-fee  projects (time and material jobs) are recognized at
billable hourly rates as the services are rendered. Other revenue is recorded on
the basis of performance of services or shipment of products.

FAIR VALUE OF FINANCIAL INSTRUMENTS

For accounts payable and accrued expenses, the carrying amount approximates fair
value because of the short term maturity of these instruments.

Fair value estimates are made at a specific point in time, based on the terms of
the financial  instrument.  These estimates are subjective in nature and involve
uncertainties  and  matters of  significant  judgment  and  therefore  cannot be
determined with precision.  Changes in assumptions  could  significantly  affect
these estimates.

INVENTORIES

Due to the long lead times to obtain some components,  the Company  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. Inventory at September 30, 2006 consists solely of finished goods.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts  receivable  are net of $100,906 in allowance for doubtful  accounts at
September  30, 2006.  Credit is extended by the Company's  subsidiaries  after a
credit review by management that is based on a customer's ability to perform its
obligations.  Such reviews are  regularly  updated.  The  allowance for doubtful
accounts is based upon agings of customer  balances and specific account reviews
by management.  The Company has no  concentration  of credit risks and generally
does not require collateral or other security from its customers.

                                       11
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS (LOSS) PER SHARE

Basic  earnings per share is computed  based on the weighted  average  number of
common shares  outstanding  during the period.  Diluted earnings per share gives
effect to all dilutive  potential common shares  outstanding during this period.
Potential common shares include shares issuable upon exercise of warrants.

At  September  30, 2006  outstanding  warrants to purchase the  Company's  stock
totaled  45,000,000.  Such warrants are excluded from the Company's diluted loss
per share  computation  for the three and the nine month periods ended September
30, 2006 because the Company  incurred a loss from  operations  for both periods
and the inclusion of the warrants has an anti-dilutive effect on loss per share.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at cost, including costs as determined
by the allocation of the purchase price in business  acquisitions  accounted for
using the purchase  method,  and depreciated  over their estimated  useful lives
using the  straight-line  method for  financial  statement  purposes.  Estimated
useful lives in years for  depreciation  are as follows:  25 to 40 for buildings
and  improvements;  7 to 12 for  machinery  and  equipment;  5 to 8 for computer
systems;  7 to  10  for  furniture  and  fixtures.  Additions,  betterments  and
replacements are capitalized, while expenditures for repairs and maintenance are
charged to operations  when incurred.  As units of property are sold or retired,
the related cost and accumulated depreciation are removed from the accounts, and
any resulting gain or loss is recognized in income.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company follows  Statement of Financial  Accounting  Standards  ("SFAS") No.
144,  "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No.
144 requires  that  long-lived  assets,  including  property and  equipment,  be
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that their carrying amount may not be recoverable.  Assets to be disposed of are
reported at the lower of the carrying amount or fair value,  less costs to sell.
Impairment is measured as the difference  between carrying value and fair market
value.  Fair value is based on  appraised  values or  estimated  sales values of
similar assets in recent  transactions.  SFAS No. 144 also requires companies to
separately report discontinued  operations for a component of an entity that has
been disposed of or is classified as held for sale.

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 patents,  which have useful
lives and are subject to impairment testing in the event of certain  indicators.
An  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 September 30, 2006, the Company's  balance sheet included  intangible  assets
with an  aggregate  carrying  value of  approximately  $7,227,586,  representing
approximately  25% of total assets and  including  approximately  $7,117,586  in
goodwill.   This  goodwill  was  recorded  in  connection  with  the  series  of
acquisitions  completed by the Company since April 1, 2005.  Generally  accepted
accounting  principles  require  that the  Company  assess  the fair  values  of
acquired  entities 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  acquired  entity  is less  than the
corresponding net assets amount, including goodwill, an impairment loss would be
identified and recorded at that time.

                                       12
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED FINANCING CHARGES AND DEBT DISCOUNTS

Deferred finance costs represent costs which may include direct costs paid to or
warrants issued 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,
fair value of the  derivative  conversion  feature,  or the  intrinsic  value of
beneficial   conversion  features  associated  with  the  underlying  debt,  are
reflected as a debt discount.  These costs and discounts are generally amortized
over the life of the related debt.  Amortization  expense related to these costs
and discounts were $7,209,779, and ($67,197) for the nine months ended September
30, 2006 and 2005, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities," as amended and EITF Issue No.
00-19,   "Accounting  for  Derivative  Financial  Instruments  Indexed  to,  and
Potentially  Settled in, a Company's Own Stock,"  require all  derivatives to be
recorded  on the balance  sheet at fair  value.  The  embedded  derivatives  are
separately  valued and  accounted  for on our balance sheet with changes in fair
value  recognized  during the period of change as a separate  component of other
income/expense.  Fair values for exchange-traded  securities and derivatives are
based on quoted market  prices.  The pricing model we use for  determining  fair
value of our derivatives is the Black Scholes Pricing Model.  Valuations derived
from this model are subject to ongoing  internal and external  verification  and
review.  The model uses  market-sourced  inputs such as interest rates and stock
price volatilities. Selection of these inputs involves management's judgment and
may impact net income.

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.  Deferred  income tax  assets,  which
relate  primarily to net operating  loss  carry-forwards,  have been offset by a
valuation  allowance  for the same amount for all  financial  statement  periods
presented and  differences  in the basis in property,  equipment and  intangible
assets.

LOAN AND DEBT SECURITIES

For loans and debt securities, fair value generally approximates cost unless the
borrower's  enterprise value,  overall financial condition or other factors lead
to a determination of fair value at a different amount.

When  the  Company  issues  nominal  cost  warrants  or free  equity  securities
("nominal cost equity"),  the Company allocates its cost basis in its investment
between  its  debt  securities  and  its  nominal  cost  equity  at the  time of
origination. At that time, the original issue discount basis of the nominal cost
equity is recorded by increasing the cost basis in the equity and decreasing the
cost basis in the related debt securities.

EQUITY AND COST METHOD INVESTMENTS

The Company  uses the equity  method of  accounting  for  investments  in equity
securities  in  which  it has  more  than a 20%  interest,  but  does not have a
controlling  interest and is not the primary  beneficiary.  The Company uses the
cost method of accounting for investments in equity securities in which it has a
less than 20% equity  interest and  virtually no influence  over the  investee's
operations.

                                       13
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 5       FINANCING ARRANGEMENTS

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

Short-term borrowings
   Vendor composition plans ............................   $    16,975
    Loan payable-overdraft line ........................         1,300
    Loan payable-Lakeland Bank .........................        45,079
                                                           -----------
     Total short term borrowings .......................   $    63,354

Current maturities of long-term debt:
   Note payable - due to non affiliated parties ........   $   335,475
   Line of credit ......................................     1,196,972
   Vehicle loans and other installment loans ...........       167,465
   Mortgages and other term notes ......................       329,259
                                                           -----------
      Total current maturities of long-term debt .......   $ 2,029,171

Current portion of convertible debentures:
   Cornell Capital convertible debenture (July 2005) ...   $   465,000
   Cornell Capital convertible debenture (October 2005)      1,010,000
   Cornell Capital convertible debenture (February 2006)     1,150,369
   Cornell Capital convertible debenture (February 2006)     1,900,000
   Cornell Capital convertible debenture (April 2006) ..     2,102,147
   Convertible debenture - Candent Corporation .........     2,739,415
   Convertible debenture - Serenity Capital, LLC .......       300,000
   Convertible debenture - Cyrus Capital, LLC ..........       100,000
   Note Discounts ......................................    (4,605,296)
                                                           -----------
       Total current portion of convertible debentures .   $ 5,161,635

Long-term debt:
   Vehicle loan, net of current ........................   $   296,997
   Notes payable - due to non-affiliated parties .......       111,679
    Mortgages payable and other installment
     loans, net of current portion .....................       666,878
                                                           -----------
      Total long-term debt .............................   $ 1,075,554

Convertible debentures, non-current
   Cornell Capital convertible debenture (April 2006) ..     4,400,000
   Cornell Capital convertible debenture (February 2006)     1,949,631
   Cornell Capital convertible debenture (June 2006) ...     5,500,000
   Note Discounts ......................................    (3,697,042)
                                                           -----------
     Total convertible debentures, non-current .........   $ 8,152,589

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

     GreenShift ........................................   $ 5,364,784

     GS CleanTech ......................................   $ 8,802,147

     GS AgriFuels ......................................   $ 7,449,631


                                       14

<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 5       FINANCING ARRANGEMENTS (CONTINUED)

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

Year                                         Amount
----                                         -------
2006 - 2007 ............................   $11,843,673
2007 - 2008 ............................       413,835
2008 - 2009 ............................    12,128,371
2009 - 2010 ............................        99,216
2010 - 2011 ............................        45,945
Thereafter .............................       253,601
----------------------------------------   -----------
Total minimum payments due under current
  and long-term obligations ............   $24,784,641
                                           ===========

SHORT TERM BORROWING - LOAN PAYABLE LAKELAND BANK:

The Company has a variable interest rate line of credit with Lakeland Bank (7.5%
at September, 2006), which had an outstanding balance of $45,079 as of September
30, 2006.

LINE OF CREDIT

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

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

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

CORNELL CAPITAL CONVERTIBLE  DEBENTURES - GREENSHIFT

In July 2005  Cornell  Capital  Partners  purchased  $565,000 in 5%  convertible
debentures,  and in October 2005 Cornell purchased an addition  $1,475,000 in 5%
convertible  debentures.  These  debentures are  convertible  into  GreenShift's
common stock at the lesser of $0.10 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 GreenShift is not registered as a business  development
company under Section 54 of the Investment Company Act of 1940, as amended; and,
provided  further  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,  in which case the  relevant
number of conversion shares are held in escrow by the Company pending compliance
with this  limitation.  During the quarter  ended  September  30, 2006,  Cornell
effected  conversions  on the July 2005 and October 2005  debentures of $100,000
and $465,000, respectively.

On  February 7, 2006,  Cornell  purchased  $3,050,369  in 5%  debentures  due on
February  7,  2008  and  committed  to  purchase  an  additional  $1,900,000  in
debentures  on or before April 15, 2006.  This  debenture  is  convertible  into
GreenShift's common stock at the lesser of $0.10 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  GreenShift  is not  registered as a
business  development  company under Section 54 of the Investment Company Act of
1940, as amended; and, provided further 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, in which case the
relevant  number of conversion  shares are held in escrow by the Company pending
compliance  with this  limitation.  On July 1, 2006  GreenShift  transferred its
interests in  GreenWorks  Engineering  Corporation,  General  Hydrogen,  General
UltraSonics,  Ovation Products, and Aerogel Composites,  Inc. to its subsidiary,
GS  CleanTech.   In  conjunction  with  this  transfer,   GS  CleanTech  assumed
GreenShift's  obligations under a Secured  Convertible  Debenture due to Cornell
Capital Partners in the principal amount of $1,900,000.

                                       15
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 5       FINANCING ARRANGEMENTS (CONTINUED)

On April 17, 2006, Cornell Capital Partners  completed its previously  committed
purchase  of  $1,900,000  in  convertible   debentures.   These  debentures  are
convertible into  GreenShift's  common stock at the lesser of $0.10 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 GreenShift is not
registered as a business  development company under Section 54 of the Investment
Company Act of 1940, as amended;  and, provided further 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, in
which case the relevant  number of  conversion  shares are held in escrow by the
Company pending compliance with this limitation.

On June 7, 2006  GreenShift  transferred  its interests in Mean Green  BioFuels,
Inc. to its  subsidiary,  GS AgriFuels  Corporation.  In  conjunction  with this
transfer,  GS  AgriFuels  assumed  GreenShift's   obligations  under  a  Secured
Convertible  Debenture  due  to  Cornell  Capital  Partners  in  the  amount  of
$1,949,631 including accrued interest.

CANDENT CONVERTIBLE DEBENTURE - GREENSHIFT

As of  September  30,  2006 the total  amount  due to  Candent  Corporation  was
$2,739,415,  which amount is convertible into Company common stock at the lesser
of $0.10 per share or the average of the three lowest  closing  market prices of
the  Company's  common stock for the thirty days  preceding  conversion,  with a
conversion price floor of $.005,  provided that the Company is not registered as
a business development company under Section 54 of the Investment Company Act of
1940,  as amended;  and,  provided  further  that in the event  conversions  are
subsequently  permissible  the  shareholder may not receive shares issuable upon
any  permissible  conversion  of  any  portion  of  its  debentures  where  such
conversion  would bring the  shareholder  to greater than 4.95% of the Company's
outstanding common stock, in which case the relevant number of conversion shares
are held in escrow by the Company pending  compliance with this limitation.  The
president of Candent is the wife of the  Company's  chairman.  All of the issued
and outstanding capital stock of Candent is held in trust for the benefit of its
president.

DERIVATIVE LIABILITY

On June 30, 2006, GreenShift withdrew its election to be regulated as a business
development  company.  Based  on  the  terms  of  the  Cornell  debentures,  the
debentures are convertible into GreenShift  common stock if GreenShift ceases to
be  regulated  as a  business  development  company  under  Section  54  of  the
Investment  Company Act of 1940, as amended.  The  withdrawal of the election of
business  development  company status resulted in the  convertibility of Cornell
debentures into GreenShift  common stock,  and due to the variable nature of the
conversion option of the debentures, the Company determined that this conversion
option required  bifurcation and classification as a derivative  liability under
the provisions of SFAS 133.

The  conversion  feature  on  the  Cornell  Capital  -  GreenShift   Convertible
Debentures  was  measured  at  fair  value  as  of  June  30,  2006,   with  the
corresponding  discount  on the  debt  amortized  over  the  term  of  the  debt
instrument. The total discount and derivative liability recorded was $4,683,139,
upon  which  interest  expense  for the  amortization  of the  discount  will be
recorded  over  the  remaining  term of the  debentures.  In the  quarter  ended
September 30, 2006,  interest  expense from  accretion of the debt discounts was
$360,591  and gain on the fair  market  value of the  derivative  liability  was
$2,602,043. As of September 30, 2006 the derivative liability for this debenture
due to Cornell Capital Partners,  LP was $4,683,139 and interest of $162,182 has
been accrued.

                                       16
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 5       FINANCING ARRANGEMENTS (CONTINUED)

CORNELL CAPITAL CONVERTIBLE DEBENTURES - GS CLEANTECH

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

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

On July 1, 2006, GS CleanTech assumed from GreenShift  Corporation,  100% of the
outstanding   capital  stock  of  GS  EnviroServices,   Inc.  (f/k/a  GreenWorks
Corporation) and 100% of the outstanding capital stock of GS CleanTech Ventures,
Inc.  and GS  EnviroServices,  Inc.  which  owns  an  environmental  engineering
business called Enviro-Sciences (of Delaware) Corporation. GS CleanTech Ventures
holds  equity  stakes  in  General  Hydrogen  Corporation,  General  Ultrasonics
Corporation,  Ovation  Products  Corporation,  and  Aerogel  Composite,  Inc. In
exchange  for the shares in GS  EnviroServices  and GS  CleanTech  Ventures,  GS
CleanTech assumed  GreenShift's  obligation of a Securities  Purchase  Agreement
with Cornell Capital  Partners,  LP in the principal  amount of $1,900,000.  The
Note is convertible into GS CleanTech's  common stock at the lesser of $0.10 per
share or the average of the three lowest closing market prices of GS CleanTech's
common  stock  for the  thirty  days  preceding  conversion  provided  that  the
shareholder may not

                                       17
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 5       FINANCING ARRANGEMENTS (CONTINUED)

convert  any portion of its  debentures  where such  conversion  would bring the
shareholder to greater than 4.95% of GS CleanTech's outstanding common stock, in
which case the relevant  number of  conversion  shares are held in escrow by the
Company  pending  compliance  with  this  limitation.  The  Debenture  will bear
interest at 5% per annum.  Accrued  interest  and the  principal  amount will be
payable on April 1,  2008.  The  conversion  feature  on this  debenture  due to
Cornell Capital Partners,  LP (dated April 17, 2006) is variable and contains an
embedded derivative. A note discount of $1,471,740 and a derivative liability of
$1,471,740 were recorded at the assumption date. Interest expense from accretion
of the debt  discount  was  $228,784  and gain on the fair  market  value of the
derivative  liability was $300,010 was recorded for the quarter ended  September
30, 2006. As of September 30, 2006 the  derivative  liability for this debenture
due to Cornell Capital  Partners,  LP was $1,171,730 and interest of $23,750 has
been accrued.

CORNELL CAPITAL CONVERTIBLE DEBENTURES - GS AGRIFUELS

On June 7, 2006, GS AgriFuels entered into a Securities  Purchase Agreement with
Cornell  Capital  Partners LP  ("Cornell")  under  which  Cornell  committed  to
purchase $22,000,000 in Secured Convertible Debentures.  The first Debenture, in
the principal amount of $5,500,000 was purchased by Cornell on June 7, 2006, for
which GS AgriFuels paid $600,000 in financing and structuring  fees and received
cash proceeds of $4,900,000.  The second Debenture, also in the principal amount
of $5,500,000 will be purchased on or before  September 30, 2006 if GS AgriFuels
has obtained a commitment  for senior debt financing for the  construction  of a
biodiesel  manufacturing plant. The third Debenture,  in the principal amount of
$11,000,000,  will be purchased when construction of the biodiesel manufacturing
plant  commences.  Under the terms of the  Securities  Purchase  Agreement,  the
Debentures  carry an  interest  rate of 5%, and  principal  and  interest on the
Debenture  may be  converted  into common  stock of GS AgriFuels 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 Cornell may acquire
at any time is 4.99% of the outstanding  common shares.  Cornell can demand that
GS  AgriFuels  redeem up to $550,000  per month of the  principal  amount of the
Debenture  during any calendar  month.  GS AgriFuels can satisfy the  redemption
obligation by paying cash equal to 120% of the principal  redeemed or by issuing
common stock valued at the lowest daily volume weighted average price during the
thirty  trading days preceding the  redemption.  The Debentures are secured by a
pledge  of all of GS  AgriFuels'  assets,  including  the  capital  stock of its
subsidiaries:  Mean Green  BioFuels,  Inc.,  Mean Green Biodiesel #1, Inc., Mean
Green  Biodiesel  #2, Inc.,  and Mean Green  Biodiesel #3, Inc. GS AgriFuels has
agreed  to file a  registration  statement  with  the  Securities  and  Exchange
Commission to enable  Cornell to resell to the public any shares of GS AgriFuels
common  stock it acquires on  conversion  of the  Debentures  or exercise of the
Warrant.

During the three months ended June 30, 2006, GS AgriFuels  issued 1,125,000 five
year  warrants to purchase GS  AgriFuels  common stock that are  exercisable  at
$.001 per share to Cornell Capital Partners.  The options were issued to Cornell
Capital  Partners in  conjunction  with the  Company's  June 7, 2006 issuance of
convertible debentures.  The fair value of the warrants was calculated using the
Black-Scholes Option Pricing Model and the Company recorded the $30,375 value of
the warrants as a discount to the note, and the note discount is being amortized
over the term of the debenture.

In conjunction with the share purchase  agreement with GreenShift,  GS AgriFuels
assumed  GreenShift's  obligations under a Secured Convertible  Debenture due to
Cornell Capital  Partners in the principal  amount of $1,949,631.  The Debenture
carries  an annual  interest  rate of 5%,  and  principal  and  interest  on the
Debenture  may be  converted  into common  stock of GS AgriFuels 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 Cornell may acquire
at any time is 4.99% of the outstanding common shares.

SERENITY CAPITAL AND CYRUS CAPITAL CONVERTIBLE DEBENTURE - GS CLEANTECH

In February 2006, Serenity Capital, LLC, purchased $500,000 in GS CleanTech debt
from GCS Investments. The conversion feature on the debenture due to Serenity is
variable based on trailing market prices and contains an embedded derivative.  A
note discount of $500,000 and a derivative liability of $1,672,000 were recorded
at the assumption date.

                                       18
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 5       FINANCING ARRANGEMENTS (CONTINUED)

During  the  first and  second  quarter's  2006  Serenity  effected  conversions
totaling $200,000 into a total of 10,000,000 shares of the GS CleanTech's common
stock.  As of September 30, 2006, the principal  amount due on the debenture was
$300,000.  In the third quarter 2006 interest expense from accretion of the debt
discount  was  $68,182  and gain on the  fair  market  value  of the  derivative
liability was $732,540.  As of September 30, 2006 the  derivative  liability for
debenture due to Serenity was  $368,160.  Interest is accrued at a rate of 5% on
the principal  balance.  As of September 30, 2006, $7,875 of interest is accrued
on this  debenture.  Serenity  is  owned by a family  member  of GS  CleanTech's
chairman.

In February 2006, Cyrus Capital,  LLC,  purchased  $500,000 in GS CleanTech debt
from GCS  Investments.  The conversion  feature on the debenture due to Cyrus is
variable based on trailing market prices and contains an embedded derivative.  A
note discount of $500,000 and a derivative liability of $1,672,000 were recorded
at the  assumption  date.  During  the first and second  quarter of 2006,  Cyrus
effected  conversions totaling $400,000 into a total of 20,000,000 shares of the
Company's  common stock.  As of September 30, 2006, the principal  amount due on
the  debenture was  $100,000.  In the third  quarter 2006 interest  expense from
accretion of the debt  discount was $22,727 and gain on the fair market value of
the derivative  liability was $224,180.  As of September 30, 2006 the derivative
liability  for the  debenture  due to Cyrus  was  $122,720.  Cyrus is owned by a
family member of GS CleanTech's chairman.

6.          PROPERTY, PLANT AND EQUIPMENT

Property,  plant and equipment  (PP&E) of continuing  operations is comprised of
the following:


Land ...............................   $  275,000
Buildings ..........................      940,058
Leasehold improvements .............      514,432
Furniture and fixtures .............      106,948
Automobiles ........................      953,578
Computer software and equipment ....      180,556
Machinery and equipment ............      659,748
                                       ----------
Property, plant and equipment ......    3,630,320

Less: Accumulated depreciation        (1,269,002)
                                       ----------

  Property, plant and equipment, net   $2,361,318
                                       ==========

Depreciation charged to operations,  which includes amortization of assets under
capital lease,  was $36,174 and $159,624 for the nine months ended September 30,
2006 and 2005,  respectively.  Depreciation expense from discontinued operations
of $5,136 and $300,259 for the nine months  ended  September  30, 2006 and 2005,
respectively, have been excluded from these figures.

7        STOCKHOLDERS EQUITY

SERIES C PREFERRED STOCK

On February 15, 2006  GreenShift  filed a Certificate of Designation  creating a
class of  1,000,000  shares of Series C  Preferred  Stock.  The  Certificate  of
Designation was corrected by a Certificate of Correction  filed on September 11,
2006. The holder of all 1,000,000 shares of Series C Preferred Stock may convert
it  into  common  shares  representing  80%  of  the  GreenShift  common  shares
outstanding  after  conversion,  but  only if,  at the  time of the  conversion,
GreenShift is not registered with the SEC as a Business Development Company. The
holder  of the  Series C  Preferred  Stock  may cast  the  number  of votes at a
shareholders  meeting or by  written  consent  that  equals the number of common
shares into which the Preferred  Stock is convertible on the record date for the
shareholder  action.  In the  event  that the  Board  of  Directors  declares  a
dividend,  the holder of each share of Series C Preferred  Stock will  receive a
dividend  equal to the dividend  that would be payable if the Series C Preferred
Stock  were  converted  into  common  stock.  In the event of a  liquidation  of
GreenShift, the holder of a share of Series C Preferred Stock will receive $.001
and have no further participation in the liquidation.

                                       19
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7        STOCKHOLDERS EQUITY (CONTINUED)

CONVERSION OF SERIES B PREFERRED  STOCK TO SERIES C PREFERRED  STOCK

On February 15, 2006 GreenShift  Interim Corp.  surrendered all of its 1,000,000
shares of Series B Preferred Stock. In exchange, GreenShift issued to GreenShift
Interim Corp. all 1,000,000 authorized shares of Series C Preferred Stock. Kevin
Kreisler,  GreenShift's  Chief Executive  Officer,  is the sole owner of Viridis
Capital, LLC, which owns all the equity in GreenShift Interim Corp.

CANCELLATION OF COMMON STOCK

On February 17, 2006 GreenShift  Interim Corp.  surrendered to GreenShift all of
the 47,440,678 shares of GreenShift common stock in its name.

8        NOTES RECEIVABLE - UNCONSOLIDATED SUBSIDIARIES

FINANCING AGREEMENT

On September  13, 2006, GS AgriFuels,  Inc.  entered into a financing  agreement
with  Sustainable  Systems,  LLC whereby  AgriFuels  agreed to invest a total of
$3,000,000 into Sustainable.  As part of the agreement,  GS AgriFuels  completed
bridge loan  financing in the amount of  $500,000.  Upon  closing,  the $500,000
bridge loan will be converted to equity as a credit to the total investment.  GS
AgriFuels will receive 3,121,688 shares of Series A Preferred  Convertible stock
representing 20% of Sustainable Systems, LLC's outstanding stock.

LOANS TO RELATED PARTIES

During the third quarter of 2006, GS Energy loaned Sterling Planet  $250,752.  A
subsidiary of GS Energy owns approximately 10% of Sterling Planet.

9        OPERATING LEASE COMMITMENTS

The Company has leases on certain  office space and  equipment  under  operating
leases which expire through June 30, 2011. The following is a schedule of future
minimum lease payments:

     2006             $110,761
     2007              220,553
     2008              229,506
     2009              158,610
     2010              122,397
     2011               62,054
                      --------
      Total           $903,881

10       RETIREMENT PLAN

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

                                       20
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

11       UNCOMPLETED PROJECTS
<TABLE>
<CAPTION>

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

<S>                                                                              <C>
 Costs incurred on uncompleted projects ......................................   $ 4,416,200
 Estimated earnings (losses) .................................................      (158,605)
 Less:  Billings to date .....................................................     4,040,890
                                                                                 -----------

          Totals .............................................................   $   216,705
                                                                                 ===========
Included in the accompanying balance sheets under the following captions:

 Costs and estimated  earnings  (losses) in excess of billings on  uncompleted   $   624,615
 projects
                                                                                 -----------
 Billings in excess of costs and estimated earnings on uncompleted contracts .      (407,910)
                                                                                 -----------

 Net .........................................................................   $   216,705
                                                                                 ===========
</TABLE>

12       DEFERRED REVENUES

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

13       PROPERTY HELD FOR SALE

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

14         CAPITAL LEASES

The Company has certain capital lease liabilities that have lease expirations in
various years through 2006. The assets and liabilities  under capital leases are
recorded at the lower of the present value of minimum lease payments or the fair
values of the asset at the inception of the lease. The assets are amortized over
the lower of their  related  lease terms or their  estimated  productive  lives.
Certain leased  equipment has been returned and  negotiations are in progress to
terminate the lease based on a reduced payment of past and future lease payments
due. The asset has been fully  amortized  through expense based on the return of
the equipment.

The following is a schedule of future minimum payments required under capital
leases as of September 30, 2006:

Year                                                     Amount
----                                                     -------
2007                                               $      17,002
2008                                                      17,002
2009                                                      17,002
2010                                                      15,056
2011                                                       4,020
                                                    -------------
Total minimum payments due under capital leases     $     70,082
                                                    =============

15       MEDICAL BENEFITS PROGRAM

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

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

                                       21
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

16       SEGMENT INFORMATION

GreenShift   currently  operates  five  business  segments:   Corporate,   Clean
Technology Services, Clean Fuel Production and Sales, Clean Energy Manufacturing
and Sales,  and Other  Segments.  Summarized  financial  information  about each
segment is as follows:
<TABLE>
<CAPTION>

For the three months ended 9/30/2006:

Revenue      Corporate       CleanTech       CleanFuel     CleanEnergy           Other           Total
<S>       <C>             <C>             <C>             <C>             <C>             <C>
   2006   $       --      $  4,529,556    $       --      $  1,314,279    $    108,175    $  5,952,010
   2005   $       --      $  3,785,815    $       --      $    810,399    $       --      $  4,596,214

Operating Income
   2006   $   (243,777)   $   (563,774)   $   (202,262)   $   (103,911)   $    102,139    $ (1,011,585)
   2005   $    (75,869)   $    284,768    $     (1,516)   $    194,960    $    233,011    $    635,354

For the nine months ended 9/30/2006:

Revenue      Corporate       CleanTech       CleanFuel     CleanEnergy           Other           Total
   2006   $       --      $ 13,551,586    $       --      $  3,498,843    $    210,220    $ 17,260,649
   2005   $      4,381    $ 12,864,742    $       --      $  1,625,773    $       --      $ 14,494,896

Operating Income
   2006   $   (904,360)   $ (3,003,461)   $   (378,166)   $   (807,168)   $    (98,525)   $ (5,191,680)
   2005   $   (677,763)   $    736,188    $   (262,260)   $   (722,563)   $       --      $   (926,398)

Total Assets
   2006   $  2,599,606    $ 13,810,771    $  5,285,241    $  7,224,852    $      2,910    $ 28,923,380
   2005   $  4,097,975    $  9,277,546    $     24,667    $  5,109,126    $      9,585    $ 18,518,899
</TABLE>

17       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
an asset apart from goodwill only if it is capable of being separated or divided
from the acquired entity and sold, transferred,  licensed, rented, or exchanged.
For transfers of assets under common control,  the Company follows provisions of
Appendix D of SFAS No. 141.

GS CLEANTECH CORPORATION (F/K/A VERIDIUM CORPORATION)

On April 1, 2005  GreenShift  entered into a Share  Purchase and Sale  Agreement
with GreenShift Interim  Corporation and its sole shareholder,  Viridis Capital,
L.L.C.  Kevin  Kreisler,  the sole  member  of  Viridis  Capital,  is the  Chief
Executive Officer of GreenShift.

Pursuant  to  the  Share  Purchase  and  Sale  Agreement,   GreenShift   Interim
transferred to GreenShift on April 1, 2005 equity securities representing 55% of
the fully-diluted common stock of GS CleanTech  Corporation (OTCBB: GSCT). Kevin
Kreisler is the Chairman of GS CleanTech Corporation.

                                       22
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

17       ACQUISITIONS (CONTINUED)

The specific securities transferred by GreenShift Interim to GreenShift were:

     a.   7,106,382 shares of GS CleanTech common stock;

     b.   627,122 shares of GS CleanTech Series A Preferred Stock;

     c.   966,968 shares of GS CleanTech Series B Preferred Stock;

     d.   750,000 shares of GS CleanTech Series C Preferred Stock;

     e.   an  option  to  purchase  187,500  shares  of GS  CleanTech  Series  B
          Preferred Stock at $4.00 per share; and

     f.   an  option  to  purchase  375,000  shares  of GS  CleanTech  Series  C
          Preferred Stock at $4.00 per share.

In exchange for the GS CleanTech securities,  GreenShift delivered the following
to GreenShift Interim :

     a.   46,300,000 shares of GreenShift common stock;

     b.   1,000,000  shares of  non-voting  Series B Preferred  Stock,  which is
          convertible  on  December  31,  2006 into the lesser of  (i)50,000,000
          shares of common  stock or (ii) that number of shares of common  stock
          which,  when added to other common stock owned by GreenShift  Interim,
          will equal 80% of the outstanding common stock on that date; and

     c.   an assumption of GreenShift  Interim's  obligation to Cornell  Capital
          Partners,  L.P.  under  a 5%  Secured  Convertible  Debenture  in  the
          principal amount of $2,000,000 dated December 22, 2004.

GS  ENERGY   CORPORATION   (F/K/A  INSEQ  CORPORATION  AND  INCODE   TECHNOLGIES
CORPORATION)

On April 1, 2005  GreenShift  entered into a Share  Purchase and Sale  Agreement
with Incandent  Capital,  L.L.C.  The sole member of Incandent  Capital is Kevin
Kreisler, GreenShift's Chairman and Chief Executive Officer.

Pursuant to the Share  Purchase and Sale  Agreement,  on April 1, 2005 Incandent
Capital sold to GreenShift  1,000,000  shares of Series A Preferred  Stock of GS
Energy Corporation.  (OTCBB: GSEG). The Series A Preferred Stock was convertible
into  875,000,000  shares of GS Energy  common  stock,  representing  64% of the
outstanding  equity in GS Energy.  Kevin  Kreisler,  GreenShift's  Chairman,  is
Chairman of GS Energy  Corporation.  James Grainer,  GreenShift's  President and
Chief Financial  Officer,  is President and Chief Financial Officer of GS Energy
Corporation.  The purchase price paid by GreenShift to Incandent Capital for the
Incode Technologies shares was $1.00.

GS AGRIFUELS CORPORATION (F/K/A HUGO INTERNATIONAL TELECOM, INC.

On August  20,  2005,  the  Company  acquired  300,000  shares  of GS  Agrifuels
Corporation Series B Preferred Stock for $300,000.

The following summary highlights the assets acquired and liabilities  assumed as
of August 20, 2005:

Prepaid and other current assets   $ 98,667
Goodwill .......................    383,856
                                   --------
 Total assets acquired .........   $482,523
                                   --------

Accounts payable ...............   $182,223
Accrued expenses ...............        300
                                   --------
     Total liabilities assumed .   $182,523
                                   --------
     Total purchase price ......   $300,000
                                   ========

                                       23
<PAGE>
                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

18 DISCONTINUED OPERATIONS

During 2003, one of the Company's  subsidiaries  discontinued  the operations of
its construction  division.  The decision to dispose of this component was based
on  significant  losses  incurred  and a  desire  for a  greater  focus  on  its
consulting division.  Net sales of the construction division for the nine-months
ended  September  300,  2006 and 2005 were $ 211,506 and  $283,008  respectively
resulting in losses from operations of $ 68,488 in 2006 and $ 23,157 in 2005.

On October 24, 2005, the Board of Directors of GS CleanTech, a subsidiary of the
Company,  adopted a plan to close its subsidiary's  former Paterson,  New Jersey
recycling  facility.  The plan included the discontinuation of the operations of
the facility  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. The
subsidiary has ceased  accepting  waste and has removed all hazardous waste from
the facility.  The  subsidiary  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 construction  division and recycling  businesses are recorded
as discontinued operations, of which the components are as follows:
<TABLE>
<CAPTION>
                                                              Sept  30, 2006    Sept 30, 2005
                                                              --------------    -------------
<S>                                                             <C>            <C>
Net revenues ................................................   $   211,859    $ 1,252,814
Cost of revenues ............................................       286,543      1,899,936
                                                                -----------    -----------
           Gross profit .....................................       (74,684)      (647,122)

Selling, general, and administrative expense ................        (1,929)       291,470
                                                                -----------    -----------

Loss from operations ........................................       (72,755)      (938,592)

Interest expense ............................................   $      (249)   $   (23,298)
Other income and expenses ...................................          --       (3,005,063)
                                                                -----------    -----------
           Total ............................................          (249)    (3,028,361)

Loss before provision for income taxes ......................   $   (73,004)   $(3,966,953)

Total provision for tax .....................................        (2,539)        (1,501)
                                                                -----------    -----------
           Net loss from discontinued operations ............   $   (75,541)   $(3,968,454)
                  Gain on disposal of discontinued operations        34,469          3,041
                                                                -----------    -----------
                   Total - discontinued operations ..........       (41,072)   $(3,965,413)
</TABLE>

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

Assets of discontinued operations:

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

Current liabilities of discontinued operations:
     Accounts payable ..............................   $496,453
     Accrued and other liabilities .................    246,175
                                                       --------
Total current liabilities of discontinued operations   $742,628

                                       24

<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

19       CONTINGENCIES

LEGAL PROCEEDINGS

GS CleanTech is party to the matter  entitled Kerns  Manufacturing  Corp. v. KBF
Pollution Management Inc. The action was filed in the Supreme Court of the State
of New York,  August 14,  2003.  The verified  complaint  seeks  performance  of
certain agreements between the plaintiffs and GS CleanTech, plus attorney's fees
and costs. The matter is ongoing and counsel is therefore unable to evaluate the
probability of an  unfavorable  outcome or range of potential loss at this time.
This matter relates to GS CleanTech's  2003 acquisition of Vulcan Waste Systems,
Inc.  from Kerns  Manufacturing  Corp.  and the breach by Kerns of the terms and
conditions of the relevant acquisition  agreement.  GS CleanTech incurred a loss
in December 31, 2003 on its write-off of $1,890,000 of idle equipment  connected
to this transaction.  1,350,000 shares of GS CleanTech's restricted common stock
related to the Vulcan  acquisition  remain outstanding which shares GS CleanTech
is seeking to have cancelled. GS CleanTech is currently pursuing the reversal of
this acquisition and seeking the return of the common stock issued.

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

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

GS CleanTech's  subsidiary ESI is the subject of several lawsuits,  for which GS
CleanTech  has not assumed  responsibility.  It is,  however,  possible  that GS
CleanTech may, in certain cases,  be found to be responsible and may be required
to make settlements with the Plaintiffs.

ESI was a  defendant  in a  lawsuit  where a  vendor  was  seeking  damages  for
non-payment in the amount of $251,291. This obligation was paid by the end-user,
a customer of ESI. ESI has reached a settlement  with the end-user.  This amount
is included in the $665,000 settlement discussed below.

ESI is a defendant in a lawsuit  where a vendor is seeking  payment for trucking
services in the amount of $56,591.  A judgment has been  entered  against ESI in
this  matter.  Satisfaction  of this  obligation  is  expected to be paid by the
end-user in August 2006 pursuant to the  settlement  agreement  reached with the
end user. This amount is included in the $665,000 settlement discussed below.

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

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

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

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

                                       25

<PAGE>
                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

19       CONTINGENCIES (CONTINUED)

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

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

OTHER CONTINGENCIES

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

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

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

GS CleanTech  has failed to comply with certain  registration  requirements  for
stock issued to certain debt holders.

The subsidiary of the Company's  variable  interest  entity,  tds  (Dermatology)
Limited,  "Limited",  was placed into administrative status of the UK bankruptcy
code in June 2004.  Certain claims might be brought  against the Company seeking
to hold the Company liable for certain  transfers made by Limited to the Company
and/or for Limited's  obligations to creditors under various equitable  theories
recognized  under  bankruptcy law. As of September 30, 2006,  there have been no
claims  filed  against  the  Company's  variable  interest  entity or any of its
current or former  officers  or  directors,  and we do not  expect any  material
claims to be filed. However, the outcome of complex litigation (including claims
which may be asserted  against us) cannot be predicted  with  certainty  and its
dependent  upon many factors  beyond the Company's  control;  however,  any such
claims,  if  successful,  could have a material  adverse impact on the Company's
financial  condition.  We may  incur  additional  costs in  connection  with the
Company's involvement in the Limited bankruptcy proceedings.

20       SUBSEQUENT EVENTS

ACQUISITION OF NEXTGEN FUEL, INC.

On October 31, 2006, a wholly-owned subsidiary of GS AgriFuels purchased 100% of
the outstanding  capital stock of NextGen Fuel, Inc.  NextGen Fuel is engaged in
the   business   of   developing    and    distributing    esterification    and
transesterification  biodiesel  process  technologies.  The  purchase  price was
approximately  $21,300,000,  of  which  17,000,000  was  paid  at  closing.  The
remaining  $4,300,000  will be payable on October 31,  2007 if NextGen  Fuel has
realized revenue of at least $7,500,000  subsequent to the acquisition and there
are no claims for indemnification by GS AgriFuels.

On October 31, 2006 NextGen  Acquisition,  Inc.,  a  subsidiary  of GS AgriFuels
which was formed to facilitate the acquisition of NextGen Fuel Inc., completed a
sale of securities to Stillwater  Asset-Based  Fund, LP pursuant to a Securities
Purchase  Agreement  dated as of October  27,  2006.  The  Agreement  called for
Stillwater  to purchase a Term Note in the principal  amount of $6 million.  The
Term Note was purchased by Stillwater on October 31, 2006 for a

                                       26
<PAGE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

20       SUBSEQUENT EVENTS (CONTINUED)

payment  of  $5,867,500.  The Term Note  accrues  interest  at a rate of 20% per
annum.  Monthly payments of principal and interest are due beginning February 1,
2007. All amounts of principal and interest not previously satisfied will be due
on December 31, 2007. The obligations of NextGen Acquisition Inc. under the Term
Note have been  guaranteed  by GS  AgriFuels  and by the  following  affiliates:
GreenShift Corporation, GS Energy Corporation, GS CleanTech Corporation, NextGen
Fuel,  Inc.,  Warnecke  Design  Services,  Inc. and Warnecke  Rentals,  LLC (the
"Guarantors").  Each of the  Guarantors  has  pledged  its  assets to secure its
guaranty.

ACQUISITIONS OF SECURITIES

On October 18, 2006,  the Company  acquired  from GS Energy,  of which it is the
majority  shareholder,   the  following  securities:   85%  of  the  issued  and
outstanding equity of DirectView, Inc., 30% of the issued and outstanding equity
of  AirCycle  Corporation,  and 100% of the  issued  and  outstanding  equity of
Separation and Recovery Technologies,  Inc. In exchange for the securities,  the
Company  waived  payment of certain  debentures  and other  amounts  due from GS
Energy to the  Company  in the  aggregate  amount of  $604,000  and  surrendered
400,000 shares of GS Energy's Series C Preferred Stock.

GS ENERGY CORPORATION MERGER TRANSACTION

On October 18, 2006,  GS Energy and GS AgriFuels  executed an Agreement and Plan
of Merger.  Pursuant to the terms and  conditions  of the Merger  Agreement,  GS
Energy will merge with and into GS  Acquisition,  Inc., a newly  formed  special
purpose subsidiary of GS AgriFuels.  As a result of the merger, GS Energy common
stock  shareholders  will receive 1 share of GS AgriFuels common stock in return
for every 1,000 shares of GS Energy common stock held at the time of the closing
of the Merger which equals approximately 2,500,000 shares of GS AgriFuels common
stock.  GreenShift  Corporation,  which owns  preferred  stock in GS Energy will
receive GS AgriFuels  Series D Preferred  Stock.  The closing of the merger will
occur after approval of the merger by the shareholders of GS Energy.

GS Energy owns a specialty manufacturing company, Warnecke Design Service, Inc.,
which  currently  provides  manufacturing  services for NextGen.  A merger of GS
Energy with GS  AgriFuels  is expected to be  strategic  to both  companies  for
several  reasons,  including:  (a) the  integration  of  NextGen's  and Warnecke
Design's  businesses  can be  expected  to enhance  operating  margins  for both
companies while establishing an immediate stream of revenues and earnings for GS
AgriFuels;  and (b)  merging  GS Energy  and GS  AgriFuels  can be  expected  to
increase  liquidity  for both  companies,  which can be  material  to the future
development activities of the combined companies.

GUARANTEE OF OBLIGATIONS

On October 31, 2006 the  Company  guaranteed  the  following  obligations  of GS
AgriFuels:

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

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

The Company's guaranty was secured by a pledge of its assets.

The proceeds of the financing  transactions were used to fund the acquisition by
GS AgriFuels of NextGen Fuels, Inc.

                                       27
<PAGE>

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



FORWARD LOOKING STATEMENTS

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

OVERVIEW

GreenShift  Corporation  (OTC Bulletin Board:  GSHF) develops and supports clean
technologies  and  companies  that  facilitate  the  efficient  use  of  natural
resources.

We focus  on  supporting  incremental  advances  in  technologies  and  business
practices  that enable  increased and  sustainable  profits on relatively  small
infrastructure  investments  while  contributing to the resolution of compelling
environmental  challenges.  Our ambition is to catalyze the rapid realization of
disruptive  environmental  gains by enabling and then  leveraging the collective
actions of a great many people and  companies  by showing them how to save money
or to be more profitable.

These incremental shifts forward in both economic and environmental gain - these
green shifts - are at the core of GreenShift's philosophy,  and they fall within
the following key activities:

Clean Fuels           Reducing the consumption of petroleum hydrocarbon fuels.

Clean Energy          Decreasing the carbon intensity of traditional energy
                      production and consumption.

Clean Production      Enhancing  production efficiencies to reduce raw material
                      use while  decreasing  process waste.

Clean Technology      Developing and commercializing strategic new clean
                      technologies.

GreenShift's  current  operations  include a combination  of  majority-held  and
minority-owned  companies,  some of which are  mature  operating  companies  and
others are venture investments in emerging technology companies.

We manage  our  operations  with a  sector-specific  approach,  where we develop
'pure-play' platform companies with investment theses that are both distinct and
consistent with GreenShift's overall mission. Today, our majority-held companies
include:  GS AgriFuels  Corporation  (clean fuels), GS Energy Corporation (clean
energy),  GS CleanTech  (clean  technology),  and GS Carbon  Corporation  (clean
energy attributes).

                                       28
<PAGE>

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

                   Risk Factors That May Affect Future Results

You should carefully consider the risks described below before buying our common
stock.  If any of the risks described  below actually  occurs,  that event could
cause the trading  price of our common stock to decline,  and you could lose all
or part of your investment.

                       I. Risks Attendant to our Business

We Have Lost Money  Historically Which Means That We May Not Be Able to Maintain
Profitability.

We have historically lost money and future losses may occur. Accordingly, we may
experience  liquidity  and cash flow  problems if we are not able to improve our
operating  performance or raise  additional  capital as needed and on acceptable
terms.

Most of our Subsidiaries are Implementing New Business Plans, Which Make the
Results of their Business Uncertain.

Some of our  subsidiaries,  such as GS  AgriFuels  or General  Ultrasonics,  are
development stage enterprises that are only now implementing the first stages of
their business plans. Others among our subsidiaries,  such as GS CleanTech or GS
Energy, have been in business for several years, but have recently substantially
revised  their  business  plans.  Most of our  subsidiaries  will be  engaged in
businesses  in the  coming  year that are  substantially  different  from  their
business  operations  in  prior  years.  This  revolution  in the  focus  of our
operations   means  that  the  success  of  our  several   enterprises  will  be
speculative. Our subsidiaries will face the uncertainty that accompanies any new
business venture.  If we have not planned adequately for  contingencies,  one or
more of our  subsidiaries  could fail, which would have a negative effect on our
overall financial results.

We Have Limited Experience Running Our Businesses Which May Hamper Our Ability
to Make Effective Management Decisions.

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.  Further,  we intend to pursue  additional  acquisitions to further the
development  of our clean  technology,  agrifuels,  and  environmental  services
businesses.  Most of our senior  executives are recently hired and consequently,
internal  communication and business-decision  making processes are evolving. We
may react too  slowly or  incorrectly  to trends  that may emerge and affect our
business.  Our future success depends on the ability of the senior executives to
establish an effective organizational structure and to make effective management
decisions despite their limited experience.

Some of Our Businesses  Are Based on Unproven  Revenue  Generation  Models Which
Means  That  We  May  Not  Achieve  Anticipated  Revenues  Our  revenue  models,
especially  for our  clean  technology  and  agrifuels  businesses,  are new and
evolving.  Our ability to generate revenue depends,  among other things,  on our
ability to provide quality products,  effectively install equipment,  and secure
suppliers and customers.  Because some of our businesses are either newly formed
or acquired,  based on emerging opportunities and technologies,  we have limited
experience with our revenue models.  There can be no assurance that the projects
will be successfully  completed or that the completed  projects will provide the
anticipated revenues.  Accordingly,  there can be no assurance that our business
revenue  models  will be  successful  or that we can sustain  revenue  growth or
maintain profitability.

The Market  for  Alternative  Energy  Sources  is  Undetermined,  and May Not Be
Adequate for Sustain Prices at a Profitable Level.

Most of our  subsidiaries  are  involved in the  development  or  production  of
alternative  energy,  or are  providing  services to  companies  involved in the
production  of  alternative.  Their  success  will depend on the level of market
acceptance of alternative  energy sources.  The marketing of alternative  energy
sources on a national scale is a phenomenon  new to this decade.  The portion of
U.S. energy  represented by alternative  energy sources is still quite small. It
is not possible to predict with  assurance how large the market for  alternative
energy sources will become. If it has not developed to a

                                       29
<PAGE>

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

sufficient  breadth when our subsidiaries are ready to market their products and
services,  the price at which  alternative  energy can be sold will be  limited,
which may make it  impossible  for our or more of our  subsidiaries  to  operate
profitably.

The Fiscal  Efficiencies  of Highly  Capitalized  Competitors in the Alternative
Energy  Field Could Defeat the Efforts of Our  Subsidiaries  to Capture a Viable
Market Share.

The  business of producing  alternative  energy is a  capital-intense  business,
requiring substantial capital resources. Relative to many of the participants in
this  industry,  our  capital  resources  are  miniscule.  The  costs  that  our
subsidiaries  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 alternative  energy sources,  our
dependence on expensive  capital sources may prevent us from lowering our prices
to  meet  the  competition.  This  situation  could  cause  one or  more  of our
subsidiaries to be unable to compete effectively.

The Business Plans of most of our  Subsidiaries  Will Fail if They are Unable to
Obtain Substantial Additional Capital on Acceptable Terms.

Most of our  subsidiaries  have  developed  business  plans  that  will  require
significant  amounts of capital  for  development  of  research  and  production
facilities  and/or  marketing.  The  availability  of that capital on acceptable
terms  will  depend  on many  factors,  such  the flux of the  U.S.  and  global
economies,  global energy prices,  the success of investors in other alternative
energy ventures, and the success of our other enterprises.  If GreenShift and/or
our subsidiaries are not able to obtain the capital necessary to implement their
business  plans,  or cannot obtain capital on terms that make the business plans
viable, the under-funded subsidiaries will fail.

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

The alternative  fuels industry is growing rapidly.  As a result,  the number of
individuals  with  experience in the industry 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.

                II. Risks Attendant to our Corporation 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 our subsidiaries to obtain the capital that
will be  required  for their  growth,  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.

                                       30

<PAGE>

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

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 of each of its
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.

Viridis  Capital LLC has the ability to  determine  all  matters  submitted  for
stockholder approval, and its interests may differ from other stockholders.

Viridis Capital,  LLC is owned by Kevin Kreisler,  our chief executive  officer.
Viridis Capital owns capital stock in GreenShift that gives it the power to cast
80% of the votes at any meeting of our  shareholders.  Accordingly,  Viridis can
determine the outcome of any corporate  transaction or other matter submitted to
our stockholders for approval, including mergers,  acquisitions,  consolidations
and the sale of all or  substantially  all of our assets.  Viridis  also has the
power to prevent or cause a change in  control.  The  interests  of Viridis  may
differ from the interests of the other stockholders, which could prevent actions
from being taken that might be in the best interests of GreenShift.


          III. Risks Factors Attendant to Ownership of our Common Stock

The resale of shares  acquired by Cornell  Capital  Partners from GreenShift may
reduce the market price of GreenShift' shares.

Cornell Capital Partners 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,  Cornell  Capital  Partners  could  convert  its
debentures  into over 50% of our  outstanding  common stock. It is possible that
resale of shares by  Cornell  Capital  Partners  will  significantly  reduce the
market price for GreenShift common stock.


Existing  shareholders may experience  significant dilution from our issuance of
shares to Cornell Capital Partners.


The  issuance of shares on  conversion  of the  convertible  debentures  held by
Cornell Capital Partners 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 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:

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

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

     o    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.

                                       31

<PAGE>


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



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

Revenues

Total revenues for the nine months ended  September 30, 2006 were $17.3 million,
representing an increase of $2.8 million,  or 19.3%,  over the nine months ended
September  30,  2005  revenues  of  $14.5  million.  Revenue  from  discontinued
operations of $0.2 million and $0.3 million for the nine months ended  September
2006 and  September  2005,  respectively,  were  excluded  from  these  figures.
Included in the revenues for nine months ended 2006 are revenues of $0.4 million
attributable to the acquisition of a subsidiary in 2006.

Cost of Revenues

Cost of  revenues  for the nine  months  ended  September  30,  2006 were  $12.3
million,  or 71.1% of revenue compared to $9.6 million,  or 66.2% of revenue for
the same period in 2005. Costs of revenues from discontinued  operations of $0.3
million  and $2.1  million  for the nine  months  ended  September  30, 2006 and
September 30, 2005, respectively, were excluded from these figures. The increase
in cost of  revenues  as a  percentage  of sales was  primarily  related  to the
completion of low margin projects at the Company's GS Energy  subsidiary,  whose
revenue and cost of revenue  increased as a blended  percentage of the Company's
total sales.

Operating Expenses

Operating  expenses  for the nine  months  ended  September  30, 2006 were $10.2
million,  or 58.9% of revenue compared to $5.9 million,  or 40.7% of revenue for
the same period in 2005.  Included in the nine months ended  September  30, 2006
was $2.3  million  in stock  based  compensation,  equal to 13.3% of  revenue as
compared to $0.9 million for the nine months ended  September  30, 2005, or 6.2%
of revenue.  The increase in operating expenses is due primarily to increases in
personnel and other  overhead  related to the  Company's  clean  technology  and
renewable  fuels  segments.  Selling,  general and  administrative  expense from
discontinued  operations  of $0.4 million for 2005 was  excluded  from the above
figures.

Interest Expense

Interest  expense for the nine months ended September 30, 2006 was $1.3 million,
representing  an increase of $0.3  million from $1.0 million for the same period
in 2005.  Interest  expense from  discontinued  operations for nine months ended
September  30, 2005 in the amount of $0.1  million was  excluded  from the above
figures.

Expenses Associated with Derivative Instruments

Gain from the change in the fair market value of derivative liabilities was $5.0
million for the nine months ended  September 30, 2006.  Amortization of deferred
financing   costs  and  debt  discounts  was  $0.6  million  and  $6.6  million,
respectively.

Net Income or Loss

Net loss from  continuing  operations  for the nine months ended  September  30,
2006, was $5.2 million as compared to a loss from continuing  operations of $0.9
million from the same period in 2005. Net loss from  discontinued  operations of
$4.0 million for nine months  ended  September  30, 2005 was  excluded  from the
above figures.  Net loss of $9.1 million for the nine months ended September 30,
2006  was due  primarily  to  increased  operating  expenses  for  new  business
initiatives,  adjustments to the fair market value of the  derivative  liability
instruments,  interest and amortization  charges associated with financing,  and
issuance of stock based compensation.

                                       32
<PAGE>

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

DERIVATIVE LIABILITIES

As of September 30, 2006 we had several  convertible  debentures  due to Cornell
Capital.  The  conversion  feature  on these  debentures  is  variable  based on
trailing market prices and therefore contains an embedded  derivative.  We value
the conversion feature at the time of issuance using the Black-Scholes Model and
record a note discount and  derivative  liability for the calculated  value.  We
recognize  interest  expense for accretion of the note discount over the term of
the note. The derivative liability is valued at the end of each reporting period
and results in a gain or loss for the change in fair value.  Due to the volatile
nature of our stock, 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 due to Cornell Capital was
$18.5  million as of September  30, 2006 and the  unamortized  note discount was
$8.1 million.  For the quarter ended September 30, 2006, we recognized  interest
expense for  accretion  of the debt  discount of $6.6 million and a gain for the
change in fair value of the derivative of $8.0 million for these debentures. The
derivative  liability as of September  30, 2006 was $6.2 million for  debentures
due to Cornell Capital.

LIQUIDITY AND CAPITAL RESOURCES

Our primary  source of liquidity is cash  provided by  operating,  investing and
financing  activities.  For the nine months ended  September 30, 2006,  net cash
used by our  operating  activities  was $6.7 million as compared to the net cash
used by our  operating  activities  of $2.3  million for the nine  months  ended
September 30, 2005.

The Company's  capital  requirements  consist of general  working capital needs,
scheduled  principal  and  interest  payments on debt,  obligations  and capital
leases and planned capital expenditures. The Company's capital resources consist
primarily of cash generated  from  operations and proceeds from issuance of debt
and common  stock.  The Company's  capital  resources are impacted by changes in
accounts  receivable as a result of revenue  fluctuations,  economic trends, and
collection  activities.  At  September  30,  2006 the  Company  had cash of $3.5
million.

Cash Flows for the Nine Months Ended September 30, 2006

Our operating  activities during the first nine months of 2006 used $6.7 million
in cash.  At  September  30, 2006,  Accounts  receivable,  net of allowance  for
doubtful  accounts,  totaled $3.8 million and inventories  totaled $1.8 million.
Accounts  payable and accrued  expenses  totaled $6.1  million.  The increase in
accounts payable is primarily due to the acquisition of and GSID in January 2006
and GS Clean Tech Ventures in July of 2006.  The increase in  inventories is due
to the acquisition of GSID in January 2006.

For the nine months ended September 30, 2006, we used $4.1 million for investing
activities,  and we obtained cash from financing activities of $13.6 million. We
used these funds to further provide working capital for operations and to invest
in our subsidiaries.

The Company had a working  capital  deficit of $10.7  million at  September  30,
2006,  which includes  derivative  liabilities  of $7.2 million and  convertible
debentures of $5.2 million, net of discounts.

At the present  time,  GreenShift  has no source of  committed  capital.  We are
currently  investigating  the  availability  of both  equity and debt  financing
necessary to complete the  Company's  current  projects.  We do not know at this
time if the  necessary  funds  can be  obtained  nor on what  terms  they may be
available.


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<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

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



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<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

Exhibit Number             Description
--------------             -----------

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

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

                                       35


<PAGE>




                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the date indicated.

GREENSHIFT CORPORATION

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

Date:                   November  20, 2006


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