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

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

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


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL QUARTER ENDED JUNE 30, 2007

                          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 __.

Indicate by check mark whether the  registrant  is a shell company as defined in
rule 12-b-2 of the Exchange Act)

Yes ___  No _X__



The  number of  outstanding  shares of common  stock as of August  20,  2007 was
199,958,700.



Transitional Small Business Disclosure Format:  Yes  No  X





<PAGE>









                             GREENSHIFT CORPORATION
                         QUARTERLY REPORT ON FORM 10QSB
                   FOR THE FISCAL QUARTER ENDED JUNE 30, 2007

                                TABLE OF CONTENTS
<TABLE>

<CAPTION>

                                                                                                           Page No
Part I            Financial Information

<S>               <C>                                                                                           <C>
Item 1.           Financial Statements (unaudited)...............................................................3
                  Consolidated Balance Sheet - June 30, 2007 (unaudited).........................................4
                  Consolidated Statements of Operations - for the Three and Six
                     Months Ended June 30, 2007 (unaudited) and 2006 (unaudited).................................6
                  Consolidated Statements of Cash Flows - for the Six Months Ended
                    June 30, 2007 (unaudited) and 2006 (unaudited)...............................................7
                  Notes to Consolidated Financial Statements.....................................................9
Item 2.           Management's Discussion and Analysis .........................................................32
Item 3.           Controls and Procedures.......................................................................43

Part II           Other Information

Item 1.           Legal Proceedings.............................................................................43
Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds...................................43
Item 3.           Defaults upon Senior Securities...............................................................43
Item 4.           Submission of Matters to a Vote of Security Holders...........................................43
Item 5.           Other Information ............................................................................43
Item 6.           Exhibits and Reports on Form 8K...............................................................43

Signatures        ..............................................................................................44

</TABLE>








                                       2
<PAGE>




                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS (UNAUDITED)








































                                       3
<PAGE>

<TABLE>

<CAPTION>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEET
                               AS OF JUNE 30, 2007
                                   (UNAUDITED)


ASSETS

Current Assets:
<S>                                                                  <C>
   Cash ........................................................     $ 1,784,411
   Accounts receivable, net ....................................       3,759,797
   Notes receivable ............................................           2,726
   Accrued interest, dividends and fees receivable .............          43,154
   Costs and estimated earnings in excess of
      billings on uncompleted contracts ........................         153,206

   Inventory ...................................................       4,721,924

   Prepaid expenses and other current assets ...................         185,987
                                                                     -----------

         Total current assets ..................................      10,651,205


Net fixed assets ...............................................       9,356,999

Other Assets:
   Investment in unconsolidated subsidiaries, at cost ..........       5,186,952
   Investment in unconsolidated subsidiary - equity method .....         303,078
   Project development costs ...................................         276,664
   Deferred financing fees .....................................       2,043,665
   Intangible assets ...........................................      13,740,190
   Deferred taxes ..............................................          43,261
   Other assets ................................................          29,197
   Net non-current assets of discontinued operations ...........           7,500
   Deposits ....................................................         298,565
   Goodwill ....................................................      24,457,742
                                                                     -----------
         Total other assets ....................................      46,386,814

TOTAL ASSETS ...................................................     $66,395,018
                                                                     ===========

</TABLE>


                                       4
<PAGE>

<TABLE>

<CAPTION>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEET
                               AS OF JUNE 30, 2007
                             (UNAUDITED) (CONTINUED)


LIABILITIES AND STOCKHOLDERS' DEFICIENCY



Current Liabilities:

<S>                                                                <C>
   Accounts payable ...........................................    $  5,522,972
   Accrued expenses ...........................................       5,108,301
   Due to related parties .....................................         671,100
 Current portion of convertible debentures ....................       7,352,832
 Convertible debentures - related party, net of discount ......       1,944,961
   Derivative liability .......................................      10,864,252
 Notes payable and short-term borrowings ......................      12,439,981
   Short-term borrowings - related party ......................         130,000
 Current portion of mortgages and notes payable ...............         263,549
   Current portion of liabilities under capital lease .........           2,784
   Line of credit .............................................         497,341
   Income tax payable .........................................          85,220
   Deferred taxes .............................................          36,607
   Deferred revenue ...........................................          12,037
   Billings in excess of cost and estimated
      earnings on uncompleted contracts .......................          40,798
   Customer deposits ..........................................       6,722,250
   Liabilities of discontinued operations .....................       4,054,804
                                                                   ------------
      Total current liabilities ...............................      55,749,789

   Loans payable - related parties ............................         197,740
 Long-term convertible debenture, net of discount .............      26,078,031
 Long-term convertible debenture - related party ..............       1,197,840
   Long-term leases payable ...................................          38,691
  Long-term debt, net of current maturities ....................      2,505,454
   Discontinued operations, net of current ....................         917,023
   Other long-term liability ..................................         202,601
                                                                   ------------
      Long-term liabilities ...................................      31,137,380
                                                                   ------------

TOTAL LIABILITIES .............................................      86,887,169
                                                                   ------------

Minority interest in consolidated subsidiary ..................       1,113,177

STOCKHOLDERS' DEFICIENCY

Preferred stock

Series C, par $0.001, 1,000,000 shares authorized,
973,054 issued and outstanding ................................             973
Common stock, par $0.001, 200,000,000 authorized
199,959,363 issued and outstanding ............................         199,959
Additional paid-in capital ....................................      72,690,819
Accumulated deficit ...........................................     (94,497,079)
                                                                   ------------
Total stockholders' deficiency ................................     (21,605,328)
                                                                   ------------


TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY ................    $ 66,395,018
                                                                   ============



            The notes to the consolidated financial statement are an
                       integral part of these statements.
</TABLE>
                                       5
<PAGE>


<TABLE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<CAPTION>

                                                          For the three months ended       For the six months ended
                                                                  June 30                          June 30
                                                            2007           2006             2007            2006
                                                      ----------------------------------------------------------------

<S>                                                   <C>              <C>              <C>              <C>
Revenue ...........................................   $   6,581,468    $   2,600,396    $  10,621,409    $   6,779,064
Cost of revenues ..................................       5,233,131        2,260,898        8,404,959        5,535,737
                                                      -------------    -------------    -------------    -------------
  Gross Profit ....................................       1,348,337          339,498        2,216,450        1,243,327

Operating expenses:
     Selling, general and administrative expenses .       4,007,982          760,878        7,804,592        5,309,786
Research and development ..........................            --             34,945             --             34,945
     Stock based compensation .....................       3,810,409        1,668,625        8,087,098        1,668,625
                                                      -------------    -------------    -------------    -------------
  Total operating expenses ........................       7,818,391        2,464,448       15,891,690        7,013,356
                                                      -------------    -------------    -------------    -------------
Operating loss ....................................      (6,470,054)      (2,124,950)     (13,675,240)      (5,770,029)

  Other income (expense):
     Fees and other income, net ...................         559,415             --            402,274             --
     Other income from settlements ................          (2,279)           7,228             --             26,488
     Change in fair value of derivative instruments         560,186       (3,860,757)      (1,851,551)      (2,960,193)
     Interest expense .............................      (2,100,770)       1,761,022       (3,771,925)        (976,861)
     Amortization of debt discount ................      (2,054,693)            --         (3,588,731)            --
     Miscellaneous income .........................           4,692              269            4,692            1,269
     Forgiveness of interest and finance charges ..            --              6,245             --            125,485
     Loss on sale of investments ..................        (288,290)            --           (288,290)            --
     Gain/(loss) on equipment disposal ............          22,061          (59,409)          21,461          (40,802)
     Loss on disposal of technology license .......        (189,832)            --           (189,832)            --
                                                      -------------    -------------    -------------    -------------
        Total other expense, net ..................      (3,489,510)      (2,145,402)      (9,261,902)      (3,824,614)
                                                      -------------    -------------    -------------    -------------

Loss before provision for income taxes ............      (9,959,564)      (4,270,352)     (22,937,142)      (9,594,643)

(Provision for)/benefit from  income taxes ........         (48,257)         112,538          (86,229)         108,229
                                                      -------------    -------------    -------------    -------------

Net loss from continuing operations ...............     (10,007,821)      (4,157,814)     (23,023,371)      (9,486,414)

Discontinued operations:
(Loss)income from discontinued operations .........      (2,936,447)         689,516       (2,936,447)         789,569
Gain on disposal of discontinued operations .......            --               --          2,494,946            6,000
                                                      -------------    -------------    -------------    -------------
  Total discontinued operations ...................      (2,936,447)         689,516         (441,501)         795,569

Net loss before minority interest .................     (12,944,268)      (3,468,298)     (23,464,872)      (8,690,845)
                                                      -------------    -------------    -------------    -------------

     Minority interest ............................          11,010          156,277           10,655          485,110
                                                      -------------    -------------    -------------    -------------

Net loss ..........................................   $ (12,933,258)   $  (3,312,021)   $ (23,454,217)   $  (8,205,735)
                                                      =============    =============    =============    =============

Common share, basic and diluted:
Loss per share from continuing operations .........   $       (0.06)   $       (0.04)   $       (0.18)   $       (0.09)
                                                      =============    =============    =============    =============
Common share, basic and diluted
Loss per share from discontinued operations .......   $       (0.02)   $        0.01    $        --      $        0.01
                                                      =============    =============    =============    =============

Weighted average share of common stock
  outstanding, basic and diluted ..................     178,936,559      107,703,395      124,615,599      108,238,652
                                                      =============    =============    =============    =============
</TABLE>

                                       6
<PAGE>

<TABLE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                   Six months      Six months
                                                                     ending         ending
                                                                 June 30, 2007    June 30, 2006
CASH FLOW FROM OPERATING ACTIVITIES

<S>                                                              <C>             <C>
      Net cash provided by (used in) operating activities ....   $    903,460    $   (567,698)
                                                                 ------------    ------------
CASH FLOW FROM INVESTING ACTIVITIES
   Change in investments .....................................        (16,600)           --
   Long-term investment ......................................       (447,842)           --
   Construction in progress ..................................       (963,265)           --
   Project development costs .................................         (6,191)           --
   Deposits ..................................................         50,000            --
   Issuance of note receivable ...............................        193,348        (661,825)
   Additions to and acquisitions of PPE ......................     (1,158,857)       (114,122)
   Investment of intangible assets ...........................           --            (7,777)
   Investment in unconsolidated subsidiary ...................          8,814      (3,390,414)
   Net cash acquired from purchase of subsidiaries ...........      1,109,490            --
   Proceeds from sale of investments .........................        326,917            --
   Acquisition of technology license .........................           --           (50,000)
                                                                 ------------    ------------

      Net cash used in investing activities ..................       (904,186)     (4,224,138)
                                                                 ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Loan due to affiliate .....................................      1,161,006       1,397,015
   Advances from related parties, net ........................           --           461,228
   Proceeds from convertible debenture, net of financing costs      1,000,000            --
   Net proceeds from short-term borrowing - related party ....         97,415         105,929
   Repayments of short-term borrowings .......................           --          (197,146)
   Loan due from related party ...............................       (930,200)        256,883
   Loan due to related party .................................        130,000            --
   Issuance of (repayment of) long-term debt .................        (91,453)       (162,201)
   Proceeds from convertible debentures ......................        310,000       9,300,000
   Proceeds from notes payable ...............................        615,613            --
   Repayment of lease payable ................................         (4,567)           --
   Repayment of notes payable ................................     (2,907,259)     (1,997,278)
   Repayment of term financing ...............................           --           (50,000)
   Repayment of investment payable ...........................           --          (440,000)
   Repayment of convertible debenture-related party ..........        (98,890)         71,303
   Deferred financing fees ...................................           --           (86,128)
   Proceeds from line of credit ..............................        497,341            --
   Issuance of common stock - exercise of stock options ......           --           262,500
   Proceeds from issuance of common stock ....................           --         4,938,715
                                                                 ------------    ------------

      Net cash provided by (used in) financing activities ....       (220,994)     13,860,820
                                                                 ------------    ------------
</TABLE>


                                       7
<PAGE>

<TABLE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (UNAUDITED) (CONTINUED)
<CAPTION>

                                                                         Six months    Six months
                                                                           ending         ending
                                                                      June 30, 2007    June 30, 2006
                                                                      ------------------------------
<S>                                                                      <C>            <C>
   Net increase (decrease) in cash ...................................   $  (221,720)   $ 9,068,984

   Cash at beginning of period .......................................     2,006,131        708,489
                                                                         -----------    -----------

   Cash at end of period .............................................   $ 1,784,411    $ 9,777,473
                                                                         ===========    ===========

Cash paid during the year for interest ...............................   $    20,862    $    21,548

Supplemental statement of non-cash investing and financing activities:

      Acquisition of equipment and/or vehicles with long-term debt ...       266,978         43,527
      Acquisition of technology license ..............................       191,427        211,328
      Discount on convertible debt ...................................     1,220,964           --
      Beneficial conversion on convertible debt ......................       221,208           --
      Conversion of convertible debentures ...........................       170,802           --
      Issuance of convertible debenture ..............................     1,197,840           --
      Issuance of stock subscription .................................          --           75,000
      Issuance of stock options for services .........................          --          300,000
      Conversion of debenture and accrued interest into common stock .          --          404,122
      Issuance of common stock for services ..........................          --          160,000
      Conversion of Series A Preferred stock to common stock .........          --        3,000,000
      Cancellation of Series B Preferred stock .......................          --              252
      Conversion of convertible debentures and interest
        into Series C Preferred stock ................................          --        1,150,369

</TABLE>





                                       8
<PAGE>



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

1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-QSB of Rule 310(b) of Regulation S-B.  Accordingly,  they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.  In the opinion
of management,  all normal recurring adjustments considered necessary for a fair
statement  of the  results of  operations  have been  included.  The  results of
operations for the six months ended June 30, 2007 are not necessarily indicative
of the results of  operations  for the full year.  When  reading  the  financial
information contained in this Quarterly Report,  reference should be made to the
financial  statements,  schedule  and notes  contained in the  Company's  Annual
Report on Form 10-KSB for the year ended December 31, 2006.

2 - NATURE OF OPERATIONS

GreenShift   Corporation  (the  "Company")  began  operations  as  a  closed-end
management  investment  company  on April 1,  2005  after the  Company  acquired
majority equity stakes in the  predecessors to the Company's GS CleanTech and GS
Energy subsidiaries and filed an election on Form N54A pursuant to Section 54 of
the Investment  Company Act of 1940 (the "40 Act") to be regulated as a business
development  company  ("BDC").  The Company  conducted  operations as a BDC from
April 1, 2005 through July 1, 2006.  During this time, the Company  acquired its
initial   technology   portfolio,   purchased  majority  equity  stakes  in  the
development  stage and  operating  companies  that would  eventually  become the
Company's  platform  companies,  and the Company  completed a number of minority
equity  investments  in  companies  that were  believed to be  strategic  to the
Company's mission.

On July 1, 2006,  the Company  filed Form N54C  pursuant to Section 54 of the 40
Act to withdraw its election to be regulated as a BDC. This decision was in part
prompted by the fact that the majority of the Company's resources were allocated
to  managing  the  operating  activities  of its  majority-owned  holdings.  The
de-election  changed the nature of the Company's business from an investment and
business  development  company  to an  active  operating  company.  The  Company
commenced  efforts to  restructure  its holdings and  investments at the time of
this de-election.  The primary purpose of this restructuring was to organize the
Company's holdings according to a sector-specific  approach,  within `pure-play'
platform  companies with investment theses that are both distinct and consistent
with GreenShift's overall mission.

During  the  quarter  ended  June  30,  2007  the  Company's   operations   were
administered through the following companies:
<TABLE>
<CAPTION>

        Company                                              Business Model
------------------------------------------------------------------------------------------------
<S>                                                   <C>
GS CleanTech Corporation ("GS CleanTech)
 (OTC Bulletin Board: GSCT)                           Clean Technology and Process Engineering

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

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

GS Carbon Corporation ("GS Carbon")
(OTC Bulletin Board: GSCR)                            Decarbonization Research and Development
</TABLE>

Effective  July 1, 2007,  Seaway  Capital,  Inc.  acquired  GreenShift's  entire
controlling  stake in GS Carbon  Corporation  in return  for the  assumption  of
certain  legacy  liabilities  of GS  Carbon.  As part of  that  transaction,  GS
Carbon's historical operating businesses were acquired by GreenShift Corporation
affiliate, GS CleanTech Corporation. See Note 16, Subsequent Events, below.

                                       9

<PAGE>



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

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  $23,454,217  for the six months ended June 30, 2007. As of June 30, 2007 the
Company's  current  liabilities  exceeded  current assets by  $45,098,584  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 six month  period  ended June 30, 2007,  the  accompanying  consolidated
financial  statements  include all accounts of the Company and its subsidiaries.
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.

BASIC AND DILUTED EARNINGS PER SHARE ("EPS")

Basic  (loss)  earnings  per share is  computed  by  dividing  net income by the
weighted  average  common shares  outstanding  during a period.  Diluted  (loss)
earnings per share is based on the treasury stock method and includes the effect
from potential  issuance of common stock such as shares issuable pursuant to the
exercise of stock  options,  assuming  the  exercise of all  in-the-money  stock
options. Common share equivalents have been excluded where their inclusion would
be anti-dilutive.  Because the Company had a loss from continuing operations for
the three and six month  periods  ended June 30, 2007,  inclusion of options and
warrants has an anti-dilutive effect.

5 - LINE OF CREDIT

On May 31, 2007, GS  EnviroServices,  a subsidiary of GS CleanTech,  closed on a
demand line of credit in the amount of $1,000,000.  The principal  balance bears
interest that  fluctuates  based on the prime lending rate. As of June 30, 2007,
the rate was 8.25%. The line is secured by all assets of the GS  EnviroServices.
The total amount due is payable  upon demand on or before June 30,  2008.  As of
June 30,  2007 there is a balance of  $497,341  drawn on the  credit  line.  The
revolving  credit loan  agreement  includes  the  following  required  financial
covenants of GS EnviroServices:

o    Total Debt to Capital  Funds Ratio - at all times  during which the loan is
     available,  the Borrower shall maintain a total debt to capital funds ratio
     not  exceeding  2.2 to 1 calculated as follows:  (total  liabilities  minus
     subordinated debt) divided by (total net worth minus intangible assets,

                                       10
<PAGE>

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

     affiliates receivables, officer receivables plus subordinated debt).

o    Debt Service Coverage - at all times during which the Loan is available, GS
     EnviroServices  shall maintain a minimum global debt service coverage ratio
     of  1.2  to  1.  Debt  service  coverage  ratio  shall  be  defined  as  GS
     EnviroServices's combined earnings before interest,  taxes,  distributions,
     and amortization,  plus non-recurring income, minus non-recurring expenses,
     minus cash taxes, un-financed capital expenditures, dividends, plus current
     maturities, minus long term debt, plus interest.

As of June 30, 2007,  GS  EnviroServices  was in  compliance  with the financial
covenants.


6 - FINANCING ARRANGEMENTS

The following is a summary of the Company's  financing  arrangements  as of June
30, 2007:

Notes payable and short-term borrowings:

Note payable - Stillwater ...............................   $ 4,044,000
Note payable - NextGen sellers ..........................     4,029,437
Note payable - American State Bank ......................     1,350,000
Note payable - Sustainable sellers ......................     1,900,000
Note payable - First Community Bank .....................       729,016
Note payable - Great Northern Development ...............       100,000
Note payable - Sheridan Electric ........................       250,000
Loan payable - Overdraft line ...........................         3,699
Loan payable - Lakeland Bank ............................        33,829
---------------------------------------------------------   -----------

     Total notes payable and short term borrowings ......   $12,439,981
                                                            ===========

Current portion of mortgages and notes payable:

Vehicle loans and other installment loans ...............   $   184,560
Mortgages and other term notes ..........................        78,989
---------------------------------------------------------   -----------

     Total current portion of mortgages and notes payable   $   263,549
                                                            ===========

Current portion of convertible debentures:

                                       11
<PAGE>



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


Cornell Capital convertible debenture (October 2005) .......   $    395,267
Cornell Capital convertible debenture (February 2006) ......      1,150,369
Cornell Capital convertible debenture (April 2006) .........      1,900,000
Cornell Capital convertible debenture (April 2006) .........        969,444
Convertible debenture - Candent Corporation ................      1,944,961
Sustainable Systems, Inc. convertible debenture (March 2007)      3,552,005
Convertible debenture - Kerns Manufacturing Corp ...........      1,000,000
Note discounts .............................................     (1,614,253)
                                                               ------------

     Total current portion of convertible debentures .......   $  9,297,793
                                                               ============

Long-term debt:

Vehicle loan and other installment loans, net of current ...   $    360,311
Note payable - MT Dept of Agriculture ......................        124,052
Note payable - First Community Bank ........................        595,311
Note payable - Great Northern Development ..................      1,035,518
Mortgages payable and other term notes,
  net of current portion ...................................        390,262
                                                               ------------

     Total long term debt ..................................   $  2,505,454
                                                               ============

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
Cornell Capital convertible debenture (October 2006) .......     13,000,000
Cornell Capital convertible debenture (February 2007) ......      1,125,000
Cornell Capital convertible debenture (June 2007) ..........        570,000
Sustainable Systems, Inc. convertible debenture (March 2007)      3,552,013
Viridis Capital, LLC convertible debenture (June 2007) .....      1,197,840
Note Discounts .............................................     (4,018,613)
                                                               ------------

     Total convertible debentures, non-current .............   $ 27,275,871
                                                               ============

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

GreenShift ..................................................   $ 5,258,437
                                                                ===========
GS CleanTech ................................................   $ 8,269,444
                                                                ===========
GS AgriFuels .................................................  $27,553,649
                                                                ===========
GS Carbon ...................................................   $ 1,125,000
                                                                ===========


                                       12
<PAGE>



                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (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 June 30, 2007 and the Company's ability to meet such obligations:


Year                                                         Amount

2008                                                     $ 18,681,337
2009                                                       10,051,231
2010                                                       25,295,270
2011                                                          712,912
2012 and thereafter                                         2,674,764
                                                         ------------

Total minimum payments due under current and long term    $57,415,514
 obligations                                              ===========


SERENITY CAPITAL

In  February  2006 GS  CleanTech  issued a  $500,000  convertible  debenture  to
Serenity  Capital,  LLC (Serenity) in exchange for a $500,000  debenture  issued
earlier by GS CleanTech  that Serenity has purchased from the  debt-holder.  The
debenture is  convertible  at the lesser of $0.02 or 80% of the average  closing
market price of GS CleanTech's  common stock prior to the date of conversion.  A
note discount of $500,000 and a derivative liability of $1,672,500 were recorded
at the  assumption  date.  During the year 2006  Serenity  effected  conversions
totaling  $288,477 into a total of 14,423,880  shares of GS  CleanTech's  common
stock.  During the year ended 2006 interest  expense from  accretion of the debt
discount was  $464,465  and the gain on the fair market value of the  derivative
liability was $1,401,372.  As of December 31, 2006, the principal  amount due on
the  debenture  was  $211,523.  During the three  months  ended March 31,  2007,
interest expense from accretion of the debt discount was $35,535 and gain on the
fair market value of the derivative  liability was $271,128.  In March 2007, the
remaining  principal on the debenture was converted  into  10,576,120  shares of
common stock.

CYRUS CAPITAL

In February 2006 GS CleanTech issued a $500,000  convertible  debenture to Cyrus
Capital,  LLC (Cyrus) in exchange for a $500,000  debenture issued earlier by GS
CleanTech  that Cyrus had  purchased  from the  debt-holder.  The  debenture  is
convertible at the lesser of $0.02 or 80% of the average closing market price of
GS CleanTech's common stock prior to the date of conversion.  A note discount of
$500,000  and  a  derivative  liability  of  $1,672,000  were  recorded  at  the
assumption  date.  During the year 2006,  Cyrus  effected  conversions  totaling
$400,000 into a total of 20,000,000 shares of GS CleanTech's common stock. As of
December 31, 2006, principal amount due on the debenture was $100,000.  Interest
is accrued at a rate of 5% on the  principal  balance.  As of December 31, 2006,
$4,644 of interest is accrued on this  debenture.  During the three months ended
March 31, 2007, interest expense from accretion of the debt discount was $31,350
and gain on the fair market value of the derivative  liability was $128,188.  In
March  2007,  the  remaining  principal  on the  debenture  was  converted  into
5,000,000  shares  of  Common  Stock.  Cyrus is owned by a family  member of the
Company's chairman.

TRANSACTIONS WITH KERNS MANUFACTURING

On February 28, 2007 GS CleanTech  entered into a  Stipulation  of Settlement to
settle the lawsuit titled "Kerns Manufacturing Corp. v. Veridium Corporation and
KBF Pollution Management, Inc., which was pending in the Supreme Court of the

                                       13
<PAGE>



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

State of New York  (County  of  Queens,  Index No.  19788/03).  Pursuant  to the
Stipulation,  GS CleanTech  issued to Kerns (a) a  Convertible  Debenture in the
principal  amount  of  $500,000  that  was  due on  March  31,  2007  and  (b) a
Convertible Debenture in the principal amount of $1,000,000 that was due on June
30, 2007.  Each Debenture may be converted by its holder into common stock of GS
CleanTech  at a price equal to 90% of the  average of the last trade  prices for
the common stock  during the five days  preceding  conversion.  The total shares
issued  upon  conversion,  however,  may not,  when added to other GS  CleanTech
shares  beneficially  owned  by  the  holder,  total  more  that  4.99%  of  the
outstanding  GS CleanTech  common  stock.  The  Stipulation  provides  that upon
satisfaction of all obligations under the Stipulation, the parties will exchange
mutual general releases.  the Company failed to pay the $1,000,000 principal due
on June 30, 2007.  Therefore,  Kerns  Manufacturing Corp. has filed a motion for
summary  judgment in lieu of complaint in the Supreme  Court of the State of New
York,  Queens County,  seeking  $1,000,000 in damages and ancillary  relief (see
note 16).

Kerns $0.5 Million Convertible Debenture

A note discount of $290,347 and a derivative liability of $290,347 were recorded
at the  assumption  date.  During the six months ended June 30,  2007,  interest
expense from  accretion  of the debt  discount was $290,347 and gain on the fair
market value of the derivative liability was $290,437. In April 2007, the entire
principal  balance on this  debenture was converted  into  29,513,375  shares of
common stock of GS CleanTech.

Kerns $1.0 Million Convertible Debenture

A note discount of $580,694 and a derivative liability of $580,694 were recorded
at the  assumption  date.  During the six months ended June 30,  2007,  interest
expense from  accretion  of the debt  discount was $580,694 and loss on the fair
market value of the derivative liability was $472,935.  As of June 30, 2007, the
principal  balance on this  debenture  was  $1,000,000.  This  debenture  was in
default as of June 30, 2007.

CONVERTIBLE DEBENTURE - SEAWAY VALLEY FUND

On  December  28,  2006,  GS  AgriFuels  issued to  Seaway  Valley  Fund,  LLC a
Convertible  Debenture  due December 28, 2008 with a face amount of $250,000 for
monies received in January 2007 by GS AgriFuels from Seaway Valley in the amount
of $250,000.  The terms of the Convertible  Debenture are the following:  (i) an
interest rate of eight percent (8%) payable,  at the option of Seaway Valley, in
cash or registered  common stock in GS AgriFuels  Corporation or any combination
thereof; (ii) shall become due and be payable monthly commencing March 31, 2007,
unless otherwise  waived or deferred by Seaway Valley;  (iii) payment in full or
in part of principal  plus accrued but unpaid  interest  shall be made only upon
demand by Seaway Valley  commencing April 31, 2007; (iv) any unpaid balance,  at
the option of Seaway Valley,  shall become  immediately  due and payable without
notice or  demand  in the  event of  default,  and (v) any  accrued  and  unpaid
interest  shall be  convertible  upon demand of Seaway  Valley  into  registered
shares of common  stock  equal to the lower of: (a) $3.00 per share;  or (b) the
lowest convertible  debenture conversion price,  preferred,  common or any other
class of stock or  convertible  security  issuance  price,  or warrant or option
issuance price,  issued from December 28, 2006 until the time of  conversion(s);
or (c) 100% of the closing  market price as of December 28, 2006  provided  that
any such conversion  price shall not trigger a lowering of the conversion  price
of any convertible debenture(s) outstanding at December 28, 2006. This debenture
and the accompanying accrued interest in the amount of $7,726 were paid in full

                                       14

<PAGE>

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


during the six months  ending June 30, 2007.  The  controlling  member of Seaway
Valley is GS AgriFuels' President and CEO.

DEMAND NOTE - STILLWATER ASSET-BASED FUND, LP

On October 30, 2006,  NextGen  Acquisition,  Inc., a subsidiary  of GS AgriFuels
that was formed to  facilitate  the  acquisition  of NextGen Fuel Inc.,  sold to
Stillwater  Asset-Based  Fund,  LP a Term  Note in the  principal  amount  of $6
million.   In  conjunction  with  the  financing  NextGen  Acquisition  paid  an
origination fee of $75,000, prepaid interest of $300,000, legal fees of $35,225,
and received net proceeds of $5,589,775.  NextGen Acquisition used $4,879,236 of
the proceeds to acquire  NextGen Fuel,  Inc.,  made a loan totaling  $568,958 to
Warnecke Design Service,  Inc. (a subsidiary of GS Energy,  who is also owned by
the Company's parent,  GreenShift  Corporation),  and repaid GreenShift $141,580
for  amounts  paid by  GreenShift  in  connection  with the NextGen  Fuel,  Inc.
Acquisition.  The Term Note accrues interest at a rate of 20% per annum. Monthly
payments of principal  and interest are due beginning  February 1, 2007,  with a
monthly principal amount of at least $300,000 and additional  principal payments
made as a  percentage  of cash  receipts of NextGen  Fuel,  Inc.  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.  For the
six  months  ending  June  30,  2007,  interest  expense  of  $517,810  for this
obligation was incurred. The principal balance of this note at June 30, 2007 was
$4,044,000.

DEMAND NOTE - NEXTGEN SELLERS

On October 30, 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
$21,204,437,  of which  $17,000,000  was paid at closing  and demand  notes were
issued to the selling shareholders totaling $4,204,437. $3,204,437 of the demand
notes are due on October 31, 2007 or sooner if NextGen Fuel has realized revenue
of  $7,500,000  subsequent  to the  acquisition  and  there are not  claims  for
indemnification  by GS AgriFuels.  The remaining  $1,000,000  demand note,  with
interest at 6% per annum, is due to a sales consultant and is payable along with
accrued interest upon the payment by customers for biodiesel  production systems
totaling  forty  million  gallons  per year of  production  capacity,  paid on a
pro-rated basis such that the consultant shall receive payments of $250,000 with
each ten million gallon per year system on a pro-rated basis with NextGen Fuel's
receipt of cash payments for such system.  The principal  balance of the note at
June 30, 2007 was $4,029,437.

NOTE AND CONVERTIBLE DEBENTURE - SUSTAINABLE SYSTEMS SELLERS

On March 26, 2007, GS AgriFuels  purchased the remaining 85% of the  outstanding
capital stock of Sustainable Systems,  Inc. Sustainable owns an oilseed crushing
facility in Culbertson, Montana, and is in the business of producing and selling
high oleic safflower, sunflower, and canola and other high value vegetable oils.
The purchase price was approximately $12.6 million of which $100,000 was payable
at  closing,   a  note  was  issued  for  approximately  $1.9  million  and  two
approximately  $3.55 million debentures were issued to the selling  shareholders
totaling $9,004,018.

The  $1.9  million  note  is  due  upon  the  completion  and  commissioning  of
Sustainable's current plant expansion,  which is expected to be completed in the
first  quarter  of 2008.  It  accrues  interest  at 5% per annum to be paid on a
pro-rated basis at maturity.  For the six months ending June 30, 2007,  interest
expense of $30,192 for this obligation was incurred and accrued.

                                       15



<PAGE>


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

One of the convertible  debentures for approximately $3.55 million is due on the
first  anniversary  of the  closing.  The other,  also for  approximately  $3.55
million, is due on the second anniversary of the closing.  The debentures accrue
interest  at 5% per  annum  and  are to be  paid on a  pro-rated  basis  on each
relevant  maturity date. The  convertible  debentures are  convertible  into the
Company's  common stock at the option of the holder any time after each of their
respective  maturity dates at a rate equal to the volume weighted  average price
of the  common  stock  for  the 20  trading  days  prior  to any  such  date  of
conversion,  with a  minimum  conversion  price  of  $4.50.  If at the  time  of
conversion  the market price of the  Company's  common stock is less than $4.50,
the  difference  between  that stock price and $4.50 will be  multiplied  by the
number of  shares  due and that  amount  will be paid in cash.  The  convertible
debentures  may be  redeemed  with  cash by the  Company  at any  time  prior to
conversion by the holder without penalty.  The Company's  obligations  under the
Note and the  convertible  debentures  are secured by the Company's  Sustainable
common stock holdings. For the six months ending June 30, 2007, interest expense
of $112,886 for these obligations was incurred and accrued.

INVENTORY FINANCING - SUSTAINABLE SYSTEMS

On February 5, 2007,  Sustainable Systems,  Inc., prior to becoming a subsidiary
of GS AgriFuels,  entered into an inventory  financing  agreement for $1,800,000
with American  State Bank. The Agreement  allows  American State Bank a security
interest in all  inventory  and any accounts  acquired  after the  agreement was
signed.  The  Agreement  accrues  interest  at a rate of 10% per annum.  Monthly
payments  consist  only of interest as of June 30,  2007 and  Sustainable  began
making  payments  toward the principal in May 2007. All amounts of principal and
interest  remaining  will be due on September 1, 2007. For the six months ending
June 30, 2007,  interest expense of $110,065 for these  obligations was incurred
of which $57,575 was accrued. The principal balance of the financing at June 30,
2007 was $1,350,000.

NOTE PAYABLE - SUSTAINABLE SYSTEMS

On September 25, 1998, Sustainable Systems, Inc., prior to becoming a subsidiary
of GS AgriFuels, signed a note payable for $1,381,733 with First Community Bank.
The note is secured by an  interest in all the assets of  Sustainable  including
the accounts receivable. The note accrues interest at a rate of 7.68% per annum.
Monthly  payments  consist of principal and interest and a final payment will be
due on September  25, 2013.  For the six months  ending June 30, 2007,  interest
expense of $33,377 for these obligations was incurred.  As of June 30, 2006, the
total principal  balance on this note was $1,324,327  with $729,016  included in
current liabilities.

NOTES PAYABLE - SUSTAINABLE SYSTEMS

Sustainable   Systems  has  various  notes  payable  with  two  other   lenders.
Sustainable  has signed  three  notes  payable  with the Montana  Department  of
Agriculture  totaling $124,052.  All notes accrue interest at the rate of 3% per
annum with payments of principal and interest beginning March 6, 2011. The notes
are secured by an interest in various  equipment  including  eleven  pumps and a
solvent  recovery  system.  For the six months  ending June 30,  2007,  interest
expense of $1,846 for these obligations was incurred and accrued.

Sustainable has signed four notes with Great Northern  Development  with balance
at June 30, 2007 of $1,135,518. Three of the notes totaling $440,857 at June 30,
2007  accrue  interest at the rate of 6% per annum.  The  payment  terms for the
notes are as follows: the $11,301 and $129,556 notes are to be paid off with 180
monthly  payments  beginning  December 15, 2005 with a maturity date of November
15,  2020 and the  $300,000  note is to be paid off  with 120  monthly  payments
beginning  March 15, 2006 with a maturity date of February 15, 2016.  The fourth
note for $694,661  accrues interest at the rate of 5% per annum with payments of
principal only thru November 2007 and principal and interests payments until the
maturity  date of November  15, 2010.  For the six months  ending June 30, 2007,
interest expense of $31,561 for these obligations was incurred.

                                       16

<PAGE>



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


DEMAND PROMISSORY NOTE - SUSTAINABLE SYSTEMS

On June 4, 2007, Sustainable Systems, Inc. issued an unsecured demand promissory
note in the amount of $250,000 with Sheridan  Electric  Co-Op,  Inc. in exchange
for the same amount of  pre-existing  accounts  payable to the holder.  The note
accrues  interest  at a rate of 6% per annum.  Monthly  payments  are due in the
amount of $1,500  starting June 1, 2007 and shall  continue until March 1, 2010.
Each  payment  shall  first be applied to the accrued  interest  and then to the
principal balance.  For the six months ending June 30, 2007, interest expense of
$1,250 for these obligations was incurred.

CORNELL CAPITAL CONVERTIBLE DEBENTURES - GREENSHIFT

On June 26, 2007,  GreenShift entered into a Securities Purchase Agreement (this
"Agreement"), with Cornell Capital Partners, LP. ("Cornell"). In connection with
this Agreement,  Cornell purchased secured convertible  debentures  amounting to
$570,000 due on June 26, 2009.

The June 26, 2007 Cornell  debentures  provide for interest in the amount of 12%
per  annum  and are  convertible  at the  lesser  of $0.03 or 90% of the  lowest
closing  bid price of  GreenShift's  common  stock  during the 30  trading  days
immediately  preceding the conversion date.  Cornell will be entitled to convert
the  June  26,  2007  debenture  on the  basis  of  the  conversion  price  into
GreenShift's common stock, provided that Cornell cannot convert into shares that
would cause Cornell to own more 4.9% of GreenShift's outstanding common stock.

GreenShift  at its option  shall have the right,  with three (3)  business  days
advance  written notice (the  "Redemption  Notice"),  to redeem a portion or all
amounts  outstanding  under this Secured  Debenture  prior to the Maturity  Date
provided that the Closing Bid Price of GreenShift's common stock, as reported by
Bloomberg,  LP,  is less  than  the  Fixed  Conversion  Price at the time of the
Redemption Notice.  GreenShift shall pay an amount equal to the principal amount
being redeemed plus a redemption premium ("Redemption  Premium") equal to twenty
percent  (20%) of the principal  amount being  redeemed,  and accrued  interest,
(collectively referred to as the "Redemption Amount").  GreenShift shall deliver
to the Cornell the  redemption  Amount on the third (3rd) business day after the
Redemption Notice.

In connection with the June 2007 Agreement,  GreenShift paid Yorkville Advisors,
LLP a fee equal to 10% of purchase  price and a structuring  fee of $20,000 from
the proceeds of the closing.  Accordingly,  GreenShift  received net proceeds of
$493,000.  These fees were treated as a deferred financing fees and beginning on
June 30, 2007 are being amortized over the term of the loan.

In addition GreenShift issued to Cornell a warrant to purchase 10,000,000 shares
of  GreenShift's  common  stock at $0.05 a share.  The value of the  warrant was
calculated to be $568,178 at the time of the issuance  using the guidance  found
in APB  Opinion  14,  "Accounting  for  Convertible  Debt and Debt  issued  with
Detachable Stock Purchase Warrants" and was recorded as a discount. The discount
is amortized to interest  expense over the term of the loan using the  effective
interest method of amortization.

CORNELL CAPITAL CAPITAL PARTNERS, L.P. DEFAULT

On April 2, 2007 Cornell  declared certain  debentures  issued by the Company to
Cornell with an aggregate  principal  amount of the  $6,475,000 to be in default
for the failure by the Company to maintain an effective  registration  statement
as  required   by  the   Investor   Registration   Rights   Agreement   executed
contemporaneous with the issuance of the debentures.  The Debentures are secured
by the Company's holdings in GS CleanTech Corporation, GS AgriFuels Corporation,
GS Energy  Corporation  and GS Carbon  Corporation  (among  other  assets).  The
Debentures are unconditionally guaranteed by Viridis Capital, LLC ("Viridis"), a
wholly-owned  affiliate of the Company's  chairman and chief  executive  officer
(the "Guaranty").

In addition,  on April 2, 2007 the Company,  Cornell and Viridis  entered into a
Forbearance  Agreement,  pursuant  to  which  Cornell  agreed  to  forbear  from
exercising  the remedies  available to it under the  Debentures  and the related
security and stock pledge agreements,  which would have included the liquidation
by Cornell of

                                       17
<PAGE>

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

a portion of the  Company's  holdings.  The terms of the  Forbearance  Agreement
provided  that Cornell shall instead  accept,  convert and liquidate  sufficient
shares of Viridis'  Series C Preferred  Stock in the Company to  facilitate  the
full  repayment of the  Debentures.  Cornell shall accept the Series C Preferred
Stock in tranches of 6,250 shares each, and it shall not convert a tranche until
it has sold 80% of the shares of Company common stock  issuable upon  conversion
of the previous tranche.  Any such conversions shall be subject to the ownership
limitations  specified in the Debentures  (i.e.,  limitations to ownership of no
more than 4.9% of the  outstanding  capital stock of the Company.  Cornell shall
apply the net proceeds, which are defined in the Forbearance Agreement as 90% of
the lowest closing bid price for the Company's common stock for the five trading
days  preceding  the  conversion  date  of the  Series  C  shares,  to the  full
satisfaction of the Company's  obligations under the Debentures in the following
priorities:  (a)  first,  to  accrued  interest  on  the  most  recently  issued
Debenture, (b) then to principal on the most recently issued Debenture, (c) then
to accrued  interest on the next most  recently  issued  Debenture,  (d) then to
principal on the next most recently issued Debenture,  and so forth until all of
the Company's obligations under the Debentures have been satisfied in full.

On June 29, 2007 the Company and Viridis  entered into a letter  agreement  with
Cornell.  The agreement recited that the Company had defaulted in its obligation
to file a  registration  statement  to permit  Cornell to resell  the  Company's
common stock issuable upon conversion of certain convertible debentures that the
Company sold to Cornell.  Cornell agreed to waive the penalties  available to it
as a result of the default if the following conditions were met:

     1.   The  Company  agreed to permit one  conversion  by Cornell of Series C
          Preferred Stock pledged to it by Viridis in excess of the stated limit
          on conversion (4.99% of outstanding  shares).  The converted principal
          amount was $390,000,  which was converted into approximately  9.99% of
          the outstanding common shares on June 28, 2007.

     2.   The Company  agreed to increase its  authorized  shares as promptly as
          reasonably  possible in order to permit the conversion of the Series C
          Preferred Stock.

     3.   The  Company  agreed to effect  the  merger of GS  CleanTech  into the
          Company as soon as  practicable,  but no later than March 1, 2008.  In
          addition the Company agreed to increase its  authorized  capital stock
          to an amount sufficient to permit Cornell after the merger, to convert
          into common stock all of the convertible debentures issued to it by GS
          CleanTech.

     4.   The  Company  agreed  to  file  a  registration   statement  with  the
          Securities and Exchange Commission that will, when declared effective,
          permit  Cornell to resell to the public the common stock issuable upon
          conversion  of the  debentures  issued  to it by the  Company  and the
          debentures issued to it by GS CleanTech.

As of June 30, 2007 Cornell has reduced  accrued  interest and  principal on the
debentures of $118,107 and $1,079,733,  respectively,  based on these agreements
through the acceptance of the Company Series C Preferred Stock from Viridis.

VIRIDIS CAPITAL, LLC DEBENTURE - GREENSHIFT

On March 30,  2007 the Board of  Directors  of the  Company  authorized  that in
return for Viridis'  satisfaction  of any debt to Cornell under the  Forbearance
Agreement,  the Company would issue to Viridis a new unsecured  convertible term
debenture,  on a dollar for dollar basis,  with a term of five years and a fixed
interest rate of 5%. The  debenture is  convertible  into the  Company's  common
stock at the greater of $0.20 per share or 100% of the closing  market price for
the  Company's  common  stock at the time of  conversion.  At June 30,  2007 the
Viridis debenture payable is $1,197,840.


                                       18
<PAGE>



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

CORNELL CAPITAL CONVERTIBLE DEBENTURES - GS CARBON

On February 26, 2007,  GS Carbon  entered into a Securities  Purchase  Agreement
(the  "February  2007  CCP  Agreement"),  with  Cornell  Capital  Partners,  LP.
("Cornell").  In  connection  with  the  February  2007 CCP  Agreement,  Cornell
purchased secured convertible debentures amounting to $1,125,000 due on February
26, 2009.

The February 26, 2007 Cornell  debentures  provide for interest in the amount of
10% per annum and are  convertible  at the  lesser of $0.05 or 90% of the lowest
closing  bid price of GS  Carbon's  common  stock  during  the 30  trading  days
immediately  preceding the conversion date.  Cornell will be entitled to convert
the February 26, 2007  debenture  on the basis of the  conversion  price into GS
Carbon's  common stock,  provided that Cornell  cannot  convert into shares that
would cause Cornell to own more 4.9% of GS Carbon's outstanding common stock.

GS Carbon at its  option  shall have the right,  with  three (3)  business  days
advance  written notice (the  "Redemption  Notice"),  to redeem a portion or all
amounts  outstanding  under the 10% Secured Debenture prior to the Maturity Date
provided that the Closing Bid Price of GS Carbon's  common stock, as reported by
Bloomberg,  LP,  is less  than  the  Fixed  Conversion  Price at the time of the
Redemption  Notice.  GS Carbon shall pay an amount equal to the principal amount
being redeemed plus a redemption premium ("Redemption  Premium") equal to twenty
percent  (20%) of the principal  amount being  redeemed,  and accrued  interest,
(collectively referred to as the "Redemption Amount").

In connection  with the February 2007 CCP  Agreement,  GS Carbon paid  Yorkville
Advisors,  LLP a fee equal to $100,000 and a structuring fee of $25,000 from the
proceeds  of the  closing.  Accordingly,  GS Carbon  received  net  proceeds  of
$1,000,000.  These fees were treated as a deferred  financing fees and beginning
on February 27, 2007 are being  amortized  over the term of the loan.  GS Carbon
used $900,000 of the proceeds from the Cornell  Debenture to repay loans payable
to GreenShift Corporation and GS Ethanol Technologies.

In addition GS Carbon issued to Cornell a warrant to purchase  50,000,000 shares
of GS  Carbon's  common  stock at $0.03 a share.  The value of the  warrant  was
calculated to be $712,125 at the time of the issuance  using the guidance  found
in APB  Opinion  14,  "Accounting  for  Convertible  Debt and Debt  issued  with
Detachable Stock Purchase Warrants" and was recorded as a discount. The discount
is  amortized  to  interest  expense  using  the  effective  interest  method of
amortization.

CORNELL CAPITAL CONVERTIBLE DEBENTURES - GS AGRIFUELS

In conjunction with the May 2006 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 10%, and principal and interest on
the  Debenture,  which  are due at the  maturity  date of June 7,  2009,  may be
converted into common stock by Cornell  Capital  Partners 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.  For the six months ended
June 30, 2007,  interest expense of $96,680 for this obligation was incurred and
accrued.



                                       19

<PAGE>



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

On June 7, 2006,  Cornell  Capital  Partners LP ("Cornell")  purchased a Secured
Convertible  Debentures in the  principal  amount of  $5,500,000,  for which the
Company  paid  $600,000 in financing  and  structuring  fees and  received  cash
proceeds of  $4,900,000.  The  Debenture  carries an interest  rate of 10%,  and
principal  and interest on the Debenture are due at the maturity date of June 7,
2009.  On October 30, 2006 GS  AgriFuels  sold to Cornell a Secured  Convertible
Debenture in the  principal  amount of $13  million.  In  conjunction  with this
financing,  the Company paid a financing fee of $1,300,000, a structuring fee of
$50,000,  legal fees of $15,000,  and received net proceeds of $11,635,000  that
were used for the  acquisition  of NextGen  Fuel,  Inc. The Secured  Convertible
Debenture  will mature on October 30, 2009.  Principal and interest on these two
Debentures may be converted  into common stock by Cornell 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. If the bid price of company
stock falls below the conversion price, GS AgriFuels has the right to redeem the
Debenture by paying cash equal to 120% of the principal  redeemed.  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. The registration rights agreement with Cornell Capital entitles Cornell
to  liquidated  damages  for  failure to  register,  and  Cornell has waived any
liquidated  damages due for failure to  register.  This is a one time waiver and
Cornell retains its rights under the agreement for future  periods.  For the six
months ended June 30, 2007, interest expense of $272,740 for this obligation was
incurred and accrued.

As an inducement to the purchase of the June 2006 Debenture, GS AgriFuels issued
to Cornell  1,125,000  five year warrants to purchase GS AgriFuels  common stock
that are  exercisable  at $.001 per share.  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.  The note discount
is being  amortized  over the term of the debenture.  Interest  expense from the
amortization  of the note  discount was $5,021 for the six months ended June 30,
2007.

In  consideration  of Cornell's  investment  in the October 2006  Debenture,  GS
AgriFuels  issued to Cornell a five year  Warrant  to  purchase  540,000  common
shares.  The  exercise  price is $.001 or any lower price at which GS  AgriFuels
hereafter issues common stock to any third party. The fair value of the warrants
was  calculated  using the  Black-Scholes  Option  Pricing Model and the Company
recorded the $1,079,460 value of the warrants as a discount to the note, and the
note discount is being  amortized  over the term of the  debenture.  For the six
months  June  30,  2007,  interest  expense  from the  amortization  of the note
discount was $178,431.  For the six months ended June 30, 2007, interest expense
of $644,658 for this obligation was incurred and accrued.

Commencing  on February 1, 2007,  Cornell  was  entitled to convert  into common
stock up to  $500,000  of the  principal  amount of the  Debentures  during  any
calendar  month at a  conversion  price equal to 90% of the lowest  daily Volume
Weighted  Average  Price during the thirty  trading days  preceding  conversion.
However,  GS AgriFuels may opt to redeem the portion of the  Debentures  offered
for  conversion in this manner by paying 120% of the amount  converted.  Cornell
has not converted any portion of the Debentures into stock as of June 30, 2007.

The  Debentures  are  secured  by a  pledge  of  all of GS  AgriFuels's  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. The  subsidiaries  of GS AgriFuels  have pledged their assets to secure
the Debentures.  GreenShift Corporation, the parent of GS AgriFuels, and certain
affiliates of GreenShift  Corporation  (including GS CleanTech  Corporation,  GS
Energy Corporation and Viridis Capital) have also pledged their assets to secure
the Debentures and have guaranteed the Debentures due to Cornell.


                                       20
<PAGE>



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


7 - DERIVATIVES

In accordance  with SFAS No. 133,  "Accounting  for Derivative  Instruments  and
Hedging  Activities"  and  EITF  00-19  "Accounting  for  Derivative   Financial
Instruments  Indexed to, and Potentially Settled in, a Company's Own Stock", the
conversion features associated with the convertible  debentures are variable and
contain an  embedded  derivative  that  requires  bifurcation  from their  hosts
contacts.  The company has recognized the embedded derivatives as a liability at
the date the debentures were issued.  As of June 30, 2007 the change in the fair
value  of  the  derivative   resulted  in  an  accounting  loss  of  $1,851,551.
Amortization  of the debt discount  totaled  $2,504,693  and  $3,550,077 for the
three and six month periods ended June 30, 2007,  respectively.  The unamortized
portion of the debt discount  related to the  derivatives was $2,030,221 at June
30, 2007. As of June 30, 2007, the fair value of the derivative  liabilities was
$10,864,252.

8 - TECHNOLOGY LICENSES

On January 14, 2006, General Ultrasonics Corporation, a subsidiary of GS Carbon,
acquired 70% of H2 Energy Solutions,  Inc. H2 Energy owned the rights to certain
patented  ultrasonics  technologies  used in the reformation of synthetic fuels.
The purchase price of $261,328 was paid $50,000 in cash and current  liabilities
of  $211,328  were  assumed.  H2  Energy  subsequently  ceased  operations.  The
technology is under  development by General  Ultrasonics and the entire purchase
price of $261,328  was  assigned  to  technology  license.  The  technology  use
agreement  between H2 Energy and the technology owner is for a term of ten years
and requires certain minimum royalties for the Company to maintain its exclusive
use.

On February 26, 2007, General Carbonics Corporation,  a subsidiary of GS Carbon,
acquired patent-pending technologies involving carbon aerogel composites (United
States Patent Application Nos. 10/327,300,  10/695,214,  10/800,993, 10/840,544,
and  10/198,095)  (the  "GCC  Technologies")  and  several  executory  contracts
pertaining to the GCC  Technologies  in return for $191,427 in debt. On April 1,
2007,  the  Company  assessed  that the  $189,832  book value of the  technology
license would not be recovered in the ordinary  course of business and therefore
recorded a loss of $189,832  for the three and six months  period ended June 30,
2007.


Technology licenses,  included with intangible assets,  consist of the following
at June 30, 2007:

Technology licenses                                       $261,328
Less: Accumulated amortization                              39,199
                                                        ----------
 Technology licenses, net                                 $222,129
                                                        ==========

Amortization expense related to the technology license was $8,128 and $6,533 for
the three months periods ended June 30, 2007 and 2006, respectively.

Amortization  expense related to technology licenses was $14,661 and $13,066 for
the six months  ended June 30,  2007 and the period of  inception  (January  14,
2006) to June 30, 2006, respectively.

The  estimated  aggregate  amortization  expense  for the  next  five  years  is
estimated to be approximately $26,000 for each year.

See Note 16, Subsequent Events, for additional  disclosures  pertaining to these
Technologies.


                                       21

<PAGE>



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


9 - GOVERNMENT GRANTS

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

See Note 16, Subsequent Events, for additional  disclosures  pertaining to these
Technologies.

In November  2005,  Sustainable  Systems  was  awarded a $100,000  grant for the
research and development of a hydraulic fluid  technology from Montana grown oil
seed crops from the Montana Board of Research and  Commercialization  Technology
(MBRCT).  The grant  provides  funding to the  Company  for the  development  or
commercialization of new technology resulting from the grant within the State of
Montana.  The  Company  agrees to use the funds to develop the  hydraulic  fluid
project,  and create the agro-economics  necessary to begin processing  linoleic
safflower  seed variety  needed to produce the Company's  BioSeal  product.  The
original grant  terminated on October 26, 2006 but was renewed for an additional
year.  The  Company is  required  to provide  to the MBRCT  quarterly  financial
statements and progress reports.

Sustainable  recognized  $387,939 in grant income under the above grants,  WIRED
$16,962  and MBRCT  $370,977  during  the  period  from  March 6, 2006  (date of
acquisition) to June 30, 2007.

10 - INCOME TAXES

The Company adopted the provisions of FASB  Interpretation  No. 48,  "Accounting
for  Uncertainty in Income  Taxes-An  Interpretation  of FASB Statement No. 109,
Accounting  for Income Taxes" ("FIN 48"), on January 1, 2007. As a result of the
implementation of FIN 48, the Company  recognized no material  adjustment in the
liability for unrecognized income tax benefits.  At the adoption date of January
1, 2007, and at June 30, 2007, there were no unrecognized tax benefits. Interest
and penalties  related to uncertain  tax positions  will be recognized in income
tax expense. As of June 30, 2007, no interest related to uncertain tax positions
had been accrued.







                                       22

<PAGE>



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

11 - 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>

For the three months ended 6/30/2007:
<CAPTION>

         Corporate       CleanTech        CleanFuel      CleanEnergy      Other        Total
---------------------------------------------------------------------------------------------------
Revenue
<S>    <C>             <C>             <C>             <C>             <C>            <C>
2007   $       --      $  4,101,892    $  1,862,951    $    556,098    $     60,527   $  6,581,468
2006   $       --      $  1,419,575    $       --      $  1,180,821    $       --     $  2,600,396

Net Income (Loss)
2007   $ (7,249,705)   $ (3,206,809)   $ (2,345,115)   $   (131,629)   $       --     $ 12,933,258)
2006   $   (607,551)   $ (2,481,239)   $   (231,829)   $      8,598    $       --     $ (3,312,021)

For the six months ended 6/30/2007:

          Corporate       CleanTech       CleanFuel     CleanEnergy        Other          Total
---------------------------------------------------------------------------------------------------
Revenue
2007   $       --      $  7,297,978    $  2,281,089    $    914,695    $    127,647   $ 10,621,409
2006   $       --      $  4,594,500    $       --      $  2,184,564    $       --     $  6,779,064

Net Loss
2007   $ (8,702,833)   $ (8,063,390)   $ (6,398,883)   $   (289,111)   $       --     $(23,454,217)
2006   $   (891,402)   $ (6,346,194)   $   (271,583)   $   (696,556)   $       --     $ (8,205,735)

Total Assets
2007   $    716,701    $ 16,613,595    $ 45,734,444    $  3,330,278    $       --     $ 66,395,018
</TABLE>

12 - 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 AGRIFUELS CORPORATION

On January 16, 2007, GS AgriFuels  executed an agreement with Fulton  Biodiesel,
LLC, a subsidiary of Homeland Energy Biofuels,  LLC ("Homeland  Energy") to form
GS Fulton  Biodiesel LLC ("GS Fulton  Biodiesel").  The  agreement  calls for GS
AgriFuels to own 80% of this company which will  construct a ten million  gallon
per  year  biodiesel  plant  in  Fulton,  New  York  which  will  be  the  first
commercial-scale  facility in New York.  GS Fulton  Biodiesel  and NextGen Fuel,
Inc. are party to a settlement and services  agreement that requires the payment
of  $660,000 to an  engineering  and design  firm for  technical  services to be
provided for


                                       23
<PAGE>



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

the  construction  of the facility.  As of December 31, 2006 NextGen Fuel,  Inc.
deposited $220,000 into an escrow account under the terms of this agreement. The
engineering and design firm subsequently  refused to accept payment and disputes
certain  provisions  of the  settlement  and services  agreement  and the escrow
amount was returned.

On March 6, 2007,  GS  AgriFuels  completed  the  acquisition  of the  remaining
approximately 85% of the outstanding capital stock of Sustainable Systems,  Inc.
The total  negotiated  purchase  price was  $12,657,093,  to be paid as follows:
$100,000 in a short term note payable,  notes payable  issued to the sellers for
$1,900,000, two convertible debenture issued to the sellers totaling $7,104,018,
and  $3,553,075  in GS  AgriFuels'  common stock at an agreed upon fair value of
$4.50  per  share.  The  $1.9  million  note  is due  upon  the  completion  and
commissioning  of Sustainable's  current plant expansion.  The two $3.55 million
debentures  are due on the  first  anniversary  of the  closing  and the  second
anniversary  of the  closing,  respectively.  The Company  engaged a third party
valuation expert who has finalized the process of determining the purchase price
allocation.  The  excess of the  purchase  price  over the net  assets  has been
recorded in Goodwill in the amount of  $13,918,238.  An  additional  increase of
$123,546 and a decrease of $68,750  resulted in the net effect of an increase of
$54,796 in the purchase  price.  GS  AgriFuels'  results of  operations  for the
period  include the results of operations of  Sustainable  Systems from March 6,
2007 through June 30, 2007.

The  Company  is party to a  Development  Services  Agreement  with  Mean  Green
Biodiesel  of Georgia,  LLC (f/k/a  Cantrell  Winsness  Technologies,  LLC) that
includes  assignment of rights in and to the Company's planned biodiesel project
in Memphis, Tennessee. The terms of this agreement include reimbursement by Mean
Green Biodiesel of Georgia,  LLC of expenses  incurred by the Company both prior
and  subsequent  to the execution of the  Development  Services  Agreement,  the
retention  of 9% equity  ownership  stake by the  Company  in first ten  million
gallon per year facility  developed for Mean Green Biodiesel of Georgia,  LLC at
the site, and the purchase of one ten million  gallon per year biodiesel  system
from NextGen  Fuel,  Inc.  Mean Green  Biodiesel  of Georgia,  LLC is owned by a
former consultant to the Company.  The Company may decide to co-locate a wholly-
or majority-owned biodiesel production facility at the Memphis site.

REVERSE MERGER - TDS (TELEMEDICINE), INC

On March 19, 2007, GS  EnviroServices,  Inc., a subsidiary of GS CleanTech,  and
its  wholly  owned   subsidiaries,   Enviro-Safe   Corporation  and  Enviro-Safe
Corporation (NE) (f/k/a/ Jones Environmental Services (NE) Inc.) entered into an
Agreement   and  Plan  of  Merger  and   Reorganization   ("Merger")   with  TDS
(Telemedicine),  a  publicly  held  corporation.   Pursuant  to  the  Agreement,
19,000,000  shares  of  GS  EnviroServices's  common  stock  were  issued  to GS
CleanTech  in  exchange  for  the   purchase  of  GS   EnviroServices   and  its
subsidiaries. The individuals who were shareholders of TDS (Telemedicine),  Inc.
prior to the  Merger  retained  4,000,000  shares of common  stock in the public
company. The Merger has been accounted for as a reorganization of entities under
common control.

The  above   transaction   has  been   accounted   for  as  a   reverse   merger
(recapitalization)  with GS  EnviroServices,  Inc.  being deemed the  accounting
acquirer  and  TDS   (Telemedicine)   Inc.  being  deemed  the  legal  acquirer.
Accordingly,  the historical  financial  information  presented in the financial
statements is that of GS EnviroServices,  Inc. as adjusted to give effect to any
difference in the par value of the issuer's and the accounting  acquirer's stock
with an offset to  additional  paid in  capital.  The  basis of the  assets  and
liabilities  of  GS  EnviroServices,   Inc.  and  subsidiaries,  the  accounting
acquirer, has been carried over in the recapitalization.

On  May  25,  2007,  GS  EnviroServices  completed  the  reincorporation  of TDS
(Telemedicine)  Inc. by  changing  its state of  incorporation  from New York to
Delaware.  Under the Merger Agreement,  the Corporation merged with and into its
subsidiary, GS EnviroServices, Inc., a Delaware Corporation. As of May 25, 2007,
the New York  Corporation has ceased to exist and the Delaware  Corporation will
continue  to  operate  the New York  Corporation's  business  under the name "GS
EnviroServices, Inc."

                                       24

<PAGE>



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


ACQUISITION - VERTEX ENVIRONMENTAL SERVICES, INC.

On April 9, 2007,  GS  EnviroServices  acquired  certain  assets of the Remedial
Construction Group of Vertex Environmental  Services, Inc. GS EnviroServices has
incorporated  this team of  professionals  with the field service division of GS
EnviroServices's  subsidiary Enviro-Safe Corporation.  With this acquisition, GS
EnviroServices  will expand operations into the southern New England area with a
new Rhode Island  facility.  We believe this acquisition will enhance and expand
our  business  with  minimal  capital  outlay.  This  expansion  of our existing
services through this strategic  acquisition will generate  incremental revenues
from existing and new customers. Operations of this acquisition from the date of
acquisition  through  June  2007  have  been  included  in  GS  EnviroServices's
consolidated statement of operations. The final allocation of the purchase price
over the fixed assets has not been determined as of June 30, 2007. The following
table summarizes the acquisition detailed above:

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

13 - RELATED PARTY TRANSACTIONS

GREENSHIFT MERGER AGREEMENT

GreenShift  Corporation  and GS CleanTech  Corporation are party to an Agreement
and Plan of Merger  pursuant to which GS CleanTech  Corporation  will merge with
and  into GS  CleanTech  Acquisition,  Inc.,  a  newly  formed  special  purpose
subsidiary of GreenShift.

An additional pending merger involves  GreenShift's  majority owned GS AgriFuels
Corporation and GS Energy Corporation.

Once all mergers are complete,  GreenShift  will have two majority  owned public
subsidiaries,  GS AgriFuels Corporation and GS EnviroServices Corporation (f/k/a
TDS  (Telemedicine),  Inc.).  GreenShift  will also hold the  subsidiaries of GS
CleanTech and a number of minority held investments.

GreenShift  believes  that both of the  above  mergers  will be  strategic  for
several reasons, including:

                                       25
<PAGE>



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


     o    the reduction of operational overlap and redundancies,

     o    the promotion of a unified vision among our employees,

     o    the  reduction  of  confusion  to  third  parties  such as  customers,
          vendors, creditors, shareholders and other stakeholders,

     o    the reduction of the focus,  capital,  and other resources required to
          administer  multiple  public  entities  as a result  of the  decreased
          complexity, and

     o    increasing  the  ability  of our  management  to  focus  on  enhancing
          earnings,  strengthening  the Company's  balance  sheet,  and creating
          value for our shareholders.

The  foregoing  descriptions  of the  transactions  planned to be  completed  by
GreenShift,  GS CleanTech, GS AgriFuels and GS Energy are only a summary and are
qualified in their  entirety by reference to the documents and exhibits filed on
Form 8-K.

LOAN TO GS AGRIFUELS FROM SEAWAY VALLEY FUND

On  December  28,  2006,  GS  AgriFuels  issued to  Seaway  Valley  Fund,  LLC a
Convertible  Debenture  due December 28, 2008 with a face amount of $250,000 for
monies received by GS AgriFuels in January 2007 from Seaway Valley in the amount
of $250,000. The terms of the Convertible Debenture are set forth in Note 6. The
controlling  member of Seaway  Valley is the  Company's  President and CEO. This
debenture  and the  accompanying  accrued  interest was paid in full on June 14,
2007.

OTHER RELATED PARTY TRANSACTIONS

In August 2006 GS AgriFuels paid a $200,000  deposit to Warnecke Design Service,
Inc.  for the purchase of a NextGen  Fuel 10 million  gallon per year  biodiesel
system.  The total  purchase  price for this  system  is  $3,200,000,  and it is
expected  that GS  AgriFuels  will take  delivery  of the system in the third or
fourth quarter of 2007.

NextGen Fuel, Inc. has an exclusive manufacturing agreement with Warnecke Design
Service, Inc., for the design, fabrication, assembly, testing, and commissioning
of NextGen Fuel's biodiesel production systems. During the six months ended June
30, 2007, the Company paid deposits under the manufacturing  agreement  totaling
approximately  $1,561,733  to  Warnecke,  and had work in process  inventory  of
$1,897,997  and  accounts  payable and accrued  expenses  of  $1,235,600  due to
Warnecke  at June 30,  2007.  GreenShift  Corporation,  the  Company's  majority
shareholder, is also the majority shareholder of GS Energy Corporation. Warnecke
Design Service, Inc. is a wholly owned subsidiary of GS Energy Corporation.

During the six months ended June 30, 2007,  GS CleanTech  borrowed  $30,000 from
David Winsness,  the Company's Chief Executive Officer. The note is non-interest
bearing and payable upon demand. The Company also borrowed $100,000 from Candent
Corporation.  Candent  Corporation  is owned by a  relative  of Kevin  Kreisler,
Chairman and Chief Financial Officer of GS CleanTech.

During the six months ended June 30,  2007,  the Company paid $4,952 to R. Green
Management for services,  a company owned and operated by a relative of James F.
Green, President and CEO of GS EnviroServices.

                                       26

<PAGE>



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


14 - DISCONTINUED OPERATIONS

During the year ended  December  31, 2006,  the GS CleanTech  Board of Directors
adopted a plan for the sale of the Company's environmental  consulting business,
which was located in Mount Arlington,  New Jersey and operated by EnviroSciences
Inc. On May 4, 2007, the Company  executed a Share  Purchase  Agreement with the
former owners of  EnviroSciences  with an effective  date of January 1, 2007. In
exchange for the outstanding shares of  EnviroSciences,  Inc., the former owners
agreed the pay $250,000 to the Company.  This has been paid as of June 30, 2007.
The Company  recognized a gain of $2,494,946  from the sale. A breakdown of this
purchase is as follows:


Cash received on purchase ..............................   $   250,000

         Assets disposed of ............................     1,298,382
         Liabilities disposed of .......................    (3,543,328)
                                                           -----------
         Net gain on disposals of assets and liabilities     2,244,946
                                                           -----------
         Total gain on sales of discontinued operations    $ 2,494,946
                                                           -----------

On October 24, 2005, the GS CleanTech  Corporation  Board of Directors adopted a
plan to close the Paterson,  New Jersey recycling  facility operated by American
Metal Recovery  Corporation  ("AMRC").  The plan included the discontinuation of
the  operations of Metal Recovery  Transportation  Corporation  ("MRTC")  during
2005, as well. The decision to terminate operations at the Paterson facility was
made due to overall  economic  factors,  in particular the decreasing  volume of
inorganic,  metal  bearing  wastes  suitable  for  recycling.  AMRC  has  ceased
accepting waste and has removed all hazardous waste from the facility.  AMRC has
disposed  of all of the  equipment  and  cleaned  the  facility  as  required by
regulation and surrendered the premises on December 31, 2005. The results of the
recycling business are recorded as discontinued operations.


On July 1, 2007, the Company sold its entire interest in GS Carbon. In addition,
on July 1, 2007,  GS CleanTech  acquired  100% of the capital stock of GS Carbon
Trading,  Inc., a subsidiary of GS Carbon.  Certain  convertible  debentures and
related discounts and derivative  liabilities  remained with GS Carbon after the
sale of GS Carbon Trading,  Inc. These  convertible  debentures are reflected in
discontinued operations.

                                       27
<PAGE>



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


<TABLE>
<CAPTION>

The components of discontinued operations for the three months ended June 30,
2007 are as follows:

                                                                       2007          2006
                                                                       ----          ----

<S>                                                                <C>            <C>
Net revenues ...................................................   $      --      $ 3,353,081
Cost of revenues ...............................................          --        1,849,053
                                                                   -----------    -----------
     Gross profit ..............................................          --        1,504,028
                                                                   -----------    -----------

Selling, general and administrative expense ....................          --          627,258
                                                                   -----------    -----------
     Income from operations ....................................          --          876,770
                                                                   -----------    -----------
Other income and expenses, net .................................    (2,936,447)        11,746
                                                                   -----------    -----------
     Total other income and expense ............................    (2,936,447)        11,746
                                                                   -----------    -----------
     Income before provision for income taxes ..................    (2,936,447)       888,516
Total provision for tax ........................................          --         (195,000)
                                                                   -----------    -----------
     Net income (loss) from discontinued operations ............    (2,936,447)       693,516
             Gain (loss) on disposal of discontinued operations            --          (6,000)
                                                                   -----------    -----------
                   Total income (loss) - discontinued operations   $(2,936,447)  $    687,516
                                                                   ===========    ===========

The components of discontinued operations for the six months ended June 30, 2007
are as follows:

                                                                        2007           2006
                                                                        ----           ----
Net revenues ...................................................  $      --      $4,425,307
Cost of revenues ...............................................         --       2,450,504
                                                                    ----------    ----------
     Gross profit ..............................................         --       1,974,803
                                                                    ----------    ----------

Selling, general and administrative expense ....................         --         941,890
                                                                    ----------    ----------
     Income from operations ....................................         --       1,032,913
                                                                    ----------    ----------
Other income and expenses, net .................................   (2,936,447)      (14,806)
                                                                    ----------    ----------
     Total other income and expense ............................   (2,936,447)      (14,806)
                                                                    ----------    ----------
     Income before provision for income taxes ..................   (2,936,447)    1,018,107
Total provision for tax ........................................         --         228,538
                                                                    ----------    ----------
     Net income (loss) from discontinued operations ............   (2,936,447)      789,569
             Gain on disposal of discontinued operations            2,494,946         6,000
                                                                    ----------    ----------
                   Total income (loss) - discontinued operations   $ (441,501)    $ 795,569
                                                                    ==========    ==========
</TABLE>

The results presented above for 2007 and 2006 include the operating activity for
the  discontinued  operations  for the three and six month  periods.  Assets and
liabilities of the  discontinued  businesses were reported as net assets and net
liabilities (current and net of current) of discontinued  operations at June 30,
2007.


Assets and  liabilities  of  discontinued  operations as of June 30, 2007 are as
follows:

                                       28




<PAGE>



                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>

Non-current assets of discontinued operations
<S>                                                                   <C>
         Other assets .............................................   $     7,500
                                                                      -----------
               Total assets of discontinued operations ............         7,500
                                                                      ===========

Current liabilities of discontinued operations:
         Accounts payable .........................................       254,958
         Accrued Expenses .........................................       340,284
         Derivative liability .....................................     3,459,562
                                                                      -----------
               Total current liabilities of discontinued operations     4,054,804
                                                                      -----------

Long term liabilities of discontinued operations:
         Convertible debentures, net of discount ..................       917,023
                                                                      -----------
Net liabilities of discontinued operations ........................   $(4,964,327)
                                                                      ===========
</TABLE>

15 - COMMITMENTS AND 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.

GS CleanTech  owns property in Lowell,  Massachusetts,  the location of our RCRA
permitted Treatment,  Storage and Disposal Facility (TSDF). Per the requirements
of the permit  associated  with the  operation of this  facility,  a third party
evaluation is conducted on a yearly basis to evaluate the costs  associated with
the retirement of this asset.  Per the outcome of this  evaluation,  $90,000 has
been  placed  in a trust  with the  Massachusetts  Department  of  Environmental
Protection listed as beneficiary.  GS CleanTech has included the $90,000 in this
trust as part of deposits in other assets.

GS CleanTech  currently has $50,000 held in an escrow account  pending review of
possible expansion  activities.  The $50,000 is refundable and has been included
in deposits on the balance sheet.

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 $1,000,000
per occurrence and $2,000,000 aggregate.

In  February  2007,  GS  CleanTech  received a notice from the state of New York
Department  of  Environmental   Conservation   that  it  may  be  a  Potentially
Responsible Party in connection with the mandatory  clean-up of a treatment site
maintained  by Frontier  Chemical,  to whom GS CleanTech  transferred  hazardous
materials in the past. GS CleanTech is investigating the matter.  However, as of
June 30, 2007,  liability has not been  ascertained and amount of loss cannot be
reasonably  estimated.  Therefore,  GS CleanTech  has made no allowance  for any
financial responsibility at this time.

On  February  28,  2007 GS  CleanTech  issued  to Kerns  Manufacturing  Corp.  a
Convertible  Debenture in the principal  amount of $1,000,000 in settlement of a
pending legal action. The Convertible Debenture was payable on June 30, 2007 and
did not bear interest.  It is convertible into common stock of GS CleanTech at a
conversion  rate equal to 90% of the average of the  closing  price for the five
trading days preceding conversion.  GS CleanTech failed to pay the principal due
on June 30, 2007.  Therefore,  Kerns  Manufacturing Corp. has filed a motion for
summary  judgment in lieu of complaint in the Supreme  Court of the State of New
York,  Queens County,  seeking  $1,000,000 in damages and ancillary  relief (see
note 16).



                                       29

<PAGE>



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

16 - SUBSEQUENT EVENTS

PURCHASE AGREEMENT

On July 1, 2007 the Company sold its entire interest in GS Carbon,  specifically
78,250 shares of preferred  stock and  320,534,884  shares of Common  Stock,  to
Seaway  Capital Inc.,  which is owned by GS AgriFuels'  current Chief  Executive
Officer. Seaway Capital, Inc. agreed to assume responsibility for the management
and  certain  convertible  debentures  of GS  Carbon  Corporation,  but  gave no
additional consideration to GreenShift Corporation.

GS CLEANTECH ACQUISITION OF GS CARBON TRADING INC.

Effective  July 1, 2007,  GS CleanTech  acquired 100% of the capital stock of GS
Carbon  Trading,  Inc., and its holdings in Sterling  Planet,  Inc.,  TerraPass,
Inc.,  Air  Cycle  Corporation,  General  Ultrasonics  Corporation  and  General
Carbonics  Corporation,  in return for the  assumption  by GS  CleanTech  of One
Million One Hundred Twenty Five Thousand ($1,125,000) in convertible debt due to
Cornell Capital Partners, LP.

During July 2007, GS CleanTech  liquidated its holdings in Air Cycle Corporation
and  Ovation   Products   Corporation   for   $335,000  and  $945,000  in  cash,
respectively,  and GS CleanTech  sold 80% of its stake in TerraPass for $326,000
in cash. GS CleanTech's  chairman  resigned from the director  posts  previously
held at Air Cycle and TerraPass at the time of each closing.

In addition,  GS CleanTech converted the substantial majority of its investments
in General Ultrasonics Corporation, H2 Energy Solutions, Inc., General Carbonics
Corporation and Aerogel Composite,  Inc. into senior secured demand notes in the
amounts of $1,574,191  (including an accretion  clause for residual  advances),
$261,327,  $191,427 (including an accretion clause for residual  advances),  and
$500,000,  respectively  (GS  CleanTech had  previously  written off its initial
investment  in Aerogel  Composite  during 2006).  GS CleanTech  continues to own
1,000  shares  in each of  General  Ultrasonics,  H2 Energy  Solutions,  General
Carbonics and Aerogel Composite.  GS CleanTech's chairman also resigned from the
officer and  director  posts  previously  held at General  Ultrasonics,  General
Carbonics  and H2 Energy  Solutions  and the director  post  previously  held at
Aerogel Composite.

LEGAL MATTERS

On  February  28,  2007 the  Company  issued  to  Kerns  Manufacturing  Corp.  a
Convertible  Debenture in the principal  amount of $1,000,000 in settlement of a
pending legal action. The Convertible Debenture was payable on June 30, 2007 and
did not bear interest.  It is convertible  into common stock of the Company at a
conversion  rate equal to 90% of the average of the  closing  price for the five
trading days preceding  conversion.  The Company failed to pay the principal due
on June 30, 2007.  Therefore,  Kerns  Manufacturing Corp. has filed a motion for
summary  judgment in lieu of complaint in the Supreme  Court of the State of New
York, Queens County, seeking $1,000,000 in damages and ancillary relief.

EMPLOYMENT AGREEMENTS

On July 6, 2007, GS AgriFuels signed an Employment Agreement with Tom Scozzafava
with an effective  date of January 1, 2007.  Under the terms of this  agreement,
Tom  Scozzafava  has been  employed by GS AgriFuels as its  President  and Chief
Executive  Officer.  The  agreement  is for a term of five  years  and  shall be
automatically  renewed for additional one-year terms until either party gives at
least a sixty  day  written  notice  of  termination.  Under  the  terms  of the
agreement, Mr. Scozzafava shall be paid an annual salary of $150,000 and will be
eligible to fully  participate in all benefit plans  maintained by GS AgriFuels.
The salary will be paid in registered  shares of common stock until GS AgriFuels
has sufficient cash flow to support payment of the salary in cash, at which time
Mr. Scozzafava may opt for payment in cash or in stock. The salary will


                                       30

<PAGE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)


increase to $250,000 per year if GS AgriFuels  completes an equity financing for
$25,000,000 at a per share valuation of $3.00 or greater. In connection with the
execution of the Employment  Agreement,  GreenShift  Corporation assigned to Mr.
Scozzafava 378,653 shares of GS AgriFuels' Series C Preferred Stock. The Company
accrued $54,526 in consulting  fees related to this transfer of shares.  For the
six months ended June 30, 2007, Mr. Scozzafava  received $57,692 as compensation
for past services.

RESTATEMENT OF PRIOR PERIODS

In its Annual  Report on Form 10-KSB for the year ended  December 31, 2006,  the
Company disclosed in Note 21 to the Financial Statements the following:

A subsidiary  of GS Carbon that was spun-off  from GS Carbon in 2006 issued debt
instruments in the principal amount of $498,074 several years ago. GS Carbon was
recently presented with evidence that GS Carbon may be liable for payment of the
debts.  GS  Carbon's   management  is  actively   investigating  the  facts  and
circumstances  with  respect to the debts,  and is not able to determine at this
time if GS Carbon has liability for the debts.

On July 26, 2007, GS Carbon determined it was liable for approximately  $498,000
of  convertible  debt along  with  approximately  $59,000 of related  derivative
liabilities at the acquisition date and that it existed at December 31, 2006 and
March 31,  2007.  The Company  will  restate its December 31, 2006 and March 31,
2007 financial statement as a result of these omissions.






                                       31

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS


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 OF OUR BUSINESS

GreenShift  Corporation  develops and supports clean  technologies and companies
that facilitate the efficient use of natural resources.

We face  environmental  challenges  today that are the collective  by-product of
several generations of industrial development. These challenges do not originate
because of this  development  but rather  because  of how our  economy  consumes
natural resources and manages the by-products of those resources.

The resolutions to these challenges will not come from compulsory changes to how
we consume things,  but rather from the cost-savings and increased  profits that
flow from consuming things more  efficiently.  GreenShift's view is that this is
entirely achievable through innovation and the intelligent use of technology.

We believe that tremendous  environmental gains can be realized simply by making
it easy and  cost-effective  to use renewable sources of energy, to burn cleaner
fuels, and to reduce waste just by consuming natural resources more efficiently.

Our ambition is to catalyze the rapid  realization  of disruptive  environmental
gains by creating  valuable  opportunities for a great many people and companies
to use resources more efficiently and to be more profitable. To accomplish this,
we target and reduce or eliminate consumption inefficiencies by

     >>   developing and implementing  incremental  advances in technologies and
          business practices

     >>   that leverage established  infrastructure and distribution channels to
          enable increased and sustainable profits

     >>   by decreasing the consumption of natural  resources and the generation
          of wastes and emissions.

These incremental shifts forward in both economic and environmental gain - these
green shifts - are at the core of our  philosophy and they are the basis for our
primary operations: GS CleanTech, GS AgriFuels, GS Energy and GS EnviroServices.

We are  focused on  implementing  this model first in the  agriproducts  sector,
where we have sought out and  commercialized  applications  of  technology  that
create value-added co-product and waste extraction and refining opportunities.

Prototypical Approach

Consider  the  example of dry mill corn  ethanol  production.  One third of each
bushel of corn processed in an ethanol plant is converted into ethanol.  Another
third is exhausted out of the  fermentation  stage of the process in the form of
carbon  dioxide  and the final  third ends up in a  cellulosic  material  called
distillers  grain  which  is sold as an  animal  feed.  Increasing  corn to fuel
conversion efficiencies,  even incrementally,  at any point in this process will
increase  fuel  production  per  bushel  of corn,  reduce  costs,  reduce  plant
emissions  and enable more  consumers  to use less fossil fuels and more cleaner
burning ethanol.

                                       32
<PAGE>

GreenShift acquires,  develops and commercializes technologies that reduce these
types of inefficiencies, and our approach for corn ethanol producers exemplifies
the prototypical GreenShift solution: we focus on the co-products and we seek to
increase fuel yields by integrating scalable and cost-effective  "plug-and-play"
technologies  directly into the ethanol producer's facility that are designed to
extract, beneficiate and refine the co-products into higher value commodities.

Our current  commercial  offerings,  which extract corn oil out of the grain and
convert it into  biodiesel,  increase  fuel clean fuel  yields to 3 gallons  per
bushel from 2.8 gallons per bushel. We also are supporting the commercialization
of  technologies  to convert the remainder of the distillers  grain biomass (and
other  locally  available  biomass  such as  corn  stover)  into  carbon-neutral
synthetic fuels (which can increase yields to more than 4.2 gallons per bushel),
as well as the research and development of a process to bioreform exhaust carbon
dioxide  into  additional  clean  fuels  (which can  increase  fuel  yields even
higher).

OPERATIONS AND BUSINESS STRATEGY

In just two years  GreenShift  has  raised  and  deployed  about $40  million in
capital to successfully:  (i) acquire and develop  technologies that are capable
of cost-effective "plug-and-play" integration into existing agriproducts plants;
(ii) develop the go-to-market capabilities necessary to bring these technologies
to  market;  (iii)  complete  early-stage  commercialization  and  finalize  the
application  of the first two of these  technologies;  (iv) sell and  commission
early-adopter  and commercial  implementations  of these two  technologies;  (v)
execute   agreements  that  are  vital  to  the  foundation  of  our  long  term
commercialization  plans,  and,  importantly,  (vi) initiate cash flows with our
technologies.

Our  operations are currently  focused on sales and earnings  growth through the
deployment  and  commissioning  of corn oil  extraction  systems,  the  sales of
biodiesel equipment, the financing, construction and operation of our co-located
corn oil  biodiesel  production  facilities,  the expansion and operation of our
oilseed crush plant, and the growth of our environmental  services group.  These
operations are currently administered in the following  subsidiaries,  which are
shown here with their current focus and longer-term strategic goals:

<TABLE>
<S>                                                                             <C>
>>       GS CleanTech Corporation (OTC Bulletin Board: GSCT)                    Majority Owned Public Subsidiary
>>       Process Engineering & Plant Construction Services
>>       Technology Licensing
>>       Feedstock Extraction & Sales
>>       Early Stage Technology Acquisition and Development

>>       GS AgriFuels Corporation (OTC Bulletin Board: GSGF)                    Majority Owned Public Subsidiary
>>       Biofuels Production Equipment Sales
>>       Biodiesel Production & Sales
>>       Other Biomass Derived Fuel & Energy Production & Sales
>>       Oilseed Crushing & Vegetable Oil Sales

>>       GS Energy Corporation (OTC Bulletin Board: GSEG)                       Majority Owned Public Subsidiary
>>       Equipment Manufacturing & Sales

>>       GS EnviroServices, Inc. (OTC Bulletin Board: GSEN)                     Majority Owned Public Subsidiary
>>       Industrial Waste Management and Recycling Services
>>       Environmental Engineering and Consulting Services
>>       Site Remediation Services
</TABLE>
                                       33
<PAGE>
Our Technology Commercialization Plan

The  carbon,  hydrogen  and other  resources  latent in the  co-product  flow of
traditional  agriproducts  businesses are relatively  easy to extract and refine
into  valuable  products.  Moreover,  we believe  that the  dynamics of the fuel
markets,  the increased focused on carbon and its roles in our ecosystem and the
amenability of agriproducts  infrastructure to incremental  process upgrades are
all  factors  that weigh  heavily in favor of mining the  agriproducts  vertical
first.

Our technologies are robust, scalable, energy efficient,  modular and capable of
rapid and cost-effective  "plug-and-play" integration into existing agribusiness
infrastructure.  These  advantages  converge  to  enable  the  refining  of many
different  alternative  feedstocks  into clean and renewable  energy and several
different  clean fuels  cost-effectively  at small scales.  We believe that this
capability is highly valuable  because it enables us to reduce commodity risk by
creating  opportunities to manage  production  assets in response to fluctuating
market  conditions.  No  single  conventional  or new  technology  or  group  of
technologies that we are aware of can currently achieve this.

We acquired and currently own or otherwise hold certain rights to a number of
important clean technologies through our various operating companies, some of
which are listed here:
<TABLE>
<CAPTION>

Technology                             Status                          IP Rights                              Owned By
--------------------------------------------------------------------------------------------------------------------------

<S>                                    <C>                             <C>                                   <C>
Corn Oil Extraction                    Patent-Pending                  Owned                                 GS CleanTech
Flash Desiccation/Homogenization       Patented                        Exclusive License                     GS CleanTech
Carbon Dioxide Bioreactor              Patented/Patent-Pending         Exclusive License/Owned               GS CleanTech
Integrated Multi-Fuels Production      Patent-Pending                  Owned                                 GS CleanTech
Biodiesel Production                   Patent-Pending                  Owned                                 GS AgriFuels
Biomass Gasification                   Patent-Pending                  Limited Exclusive Rights(*)           GS AgriFuels
<FN>

(*)  GS AgriFuels holds the exclusive  distribution rights to this technology in
     the  North  American  Ethanol  Production  Industry.  This  technology  was
     developed by GS AgriFuels' portfolio company, ZeroPoint Clean Tech, Inc.
</FN>
</TABLE>

Our  commercialization  plan  for  these  technologies  involves  the  iterative
integration and synergistic application of several technologies into traditional
agriproducts   plants  in  ways  that  enable  us  to  upgrade   production  and
cost-average down the capital and operating costs traditionally  associated with
renewable  fuel  production  and  each  new  technology.  Our  intention  is  to
commercialize  and generate  cash flows from our  technologies  according to the
following roll-out schedule:

         Step 1   corn oil extraction
         Step 2   integral biodiesel production
         Step 3   integral biomass gasification for heat and power applications
         Step 4   integral biomass gasification for liquid fuels applications
         Step 5   integral bioreformation of carbon dioxide into biomass and
                  additional liquid fuels

Importantly,  each  step is  designed  to  integrate  and work  with each of the
previous  steps as well as the host  facility  to  capitalize  on all  practical
operating synergies. The commercialization process for Steps 1 and 2 is complete
and we are actively implementing a go-to-market based on these technologies. The
technologies   needed  for  Step  3  are   complete   with   their   early-stage
commercialization   process  and  we  plan  to  start  our  marketing  of  these
capabilities  later this year. Step 4 has been proven at the  small-scale  pilot
level and slated for a larger  demonstration  later this year. The  technologies
needed for Step 5 are still deep in the R&D stage and require additional capital
to prove out. We are very committed to bringing a cost-effective  implementation
of  bioreactor  technology  to  market  - this a key  strategic  initiative  for
GreenShift moving forward.

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

                                       34
<PAGE>

Our  long-term  technology  development  strategy is to focus on the  inevitable
consequences  of the way  industrial  processes  use natural  resources  to make
things,  and to extract  opportunities for positive  economics by simultaneously
increasing  production  efficiencies  and reducing  the upstream and  downstream
burdens of that production on our ecosystem.  With increasing burdens on natural
resources  globally,  both at the  beginning and end of product  supply  chains,
resource  utilization must improve.  GreenShift's long term mission is to make a
significant contribution to achieving this.

Current Go-To-Market Activities

Technology  commercialization  is in general a capital  intensive  process  that
requires a tremendous  amount of resources to move a single  technology  through
research and development  and into mature  go-to-market  execution.  We are very
mindful of this and we have selected technologies that integrate into each other
as well as targeted  host  producers.  While there are  important  technical and
operational  reasons for this in the case of each technology,  the impact on the
commercialization process for each new technology can be dramatic.

Some of our recent  go-to-market  achievements  during the six months ended June
30, 2007 are provided here:

>>       GS CleanTech

          We acquired our patent-pending Corn Oil Extraction technology in 2005.
          This technology  efficiently extracts crude corn oil from a co-product
          of ethanol  production  at rates and  efficiencies  that  outstrip any
          conventional   extraction   process.   Our  business  model  for  this
          technology is to offer it to participating  ethanol  facilities for no
          up-front cost in return for the  long-term  right to buy the extracted
          corn oil at a price equal to a discount off of diesel spot prices.

          We have  executed 6  agreements  to date with ethanol  producers  that
          provide for the  extraction  of more than 33 million  gallons of crude
          corn  oil  from 7  separate  ethanol  facilities.  Two  early  adopter
          extraction  systems were sold and  commissioned  during  2006,  and we
          recently  commissioned  our first  system where we retain the right to
          buy and sell the  extracted  oil at rate  equal to about  1.5  million
          gallons per year. We are currently  selling this oil at a rate of more
          than  $1.50 per  gallon.  An  additional  6 systems  are  planned  for
          deployment  over the  balance  of this year and we have  many  similar
          potential contracts in our sales pipeline.

>>       GS AgriFuels

          During 2006, we acquired and completed  early stage  commercialization
          of  our   patent-pending   NextGen  Fuel   continuous  flow  biodiesel
          technology.  The  NextGen  systems,  which  include  both  direct  and
          transesterification,  are skid  mounted and sized to produce 5 million
          or ten 10  million  gallons  of  biodiesel  per  year - and  they  can
          integrate with our Corn Oil Extraction technology at small scales.

          Traditional  processes typically require several hours to complete the
          conversion of qualified vegetable oils and animal fats into biodiesel;
          we intensify and idealize the conditions  under which this  conversion
          occurs and we are  consequently  able to complete  the  conversion  in
          minutes  instead of hours - at a much smaller  scale than  traditional
          processes,  and at reduced  capital and operating costs as compared to
          traditional  processes.  These  benefits also allow us to  efficiently
          convert a broader array of  feedstocks  than any  traditional  process
          that we are aware of.  Since  acquiring  NextGen we have  improved and
          refined the technology,  completed  commercialization and successfully
          commissioned three systems.

                                       35
<PAGE>

          We sell  systems  based  on the  NextGen  technology  to  third  party
          biodiesel  producers  in  markets  where  we do not  have a  feedstock
          acquisition  strategy  (like  we do with  our  corn  oil  model).  Our
          contracted   sales  pipeline  for  sales  of  our  NextGen   biodiesel
          production  systems  to  third  party  biodiesel  producers  currently
          exceeds $53 million.

          Notably,  part of our  investment  thesis  in the  acquisition  of the
          NextGen  biodiesel  production  technology was its strategic impact on
          our go-to-market strategy for our Corn Oil Extraction technology.

          We have  executed  a number of letters  of intent  and  agreements  to
          deploy  GreenShift-owned  Corn Oil  Extraction  systems with  integral
          NextGen biodiesel systems at 4 separate ethanol production facilities.
          We call these  installations  "Co-locates"  because  we are  literally
          integrating  co-located biodiesel production assets onsite at the host
          facility.  These  Co-locates will first extract and then convert about
          30 million gallons of crude corn oil into biodiesel. Once built, these
          facilities   will  correspond  to  about  $90  million  in  annualized
          biodiesel sales.

Environmental Engineering and Management Services

GS EnviroServices is a diversified  environmental services company that provides
industrial and hazardous waste management  services,  environmental  engineering
services,  and site remediation services. GS EnviroServices' focus is to provide
its clients  with  value-added,  environmentally  conscious  and  cost-effective
hazardous waste management services based on its efficient management of wastes.

GS  EnviroServices'  growth  strategy  is to expand its  geographic  base,  both
through increased sales activities and acquisitions,  and to add new services in
the area of technology implementation utilizing unique technologies developed by
affiliated GreenShift companies. We believe that our technologies will enable GS
EnviroServices  to  differentiate  itself from  standard  environmental  service
providers.  GS  EnviroServices'  ambition is to provide its services  across the
full range of needs of its  industrial and  government  clients with  particular
emphasis on technology-driven energy and water resource conservation.

Minority Investments

We hold minority  stakes in the following  strategically  compatible  companies:
ZeroPoint Clean Tech, Inc. (10%; owned by GS AgriFuels),  Sterling Planet,  Inc.
(10%; owned by GS CleanTech), and TerraPass, Inc. (2%; owned by GS CleanTech).

ZeroPoint  Clean Tech,  Inc. is  commercializing  patent pending and proprietary
gasification,  gas to  liquids  and fuel  reforming  technology  that  ZeroPoint
management  believes  is the  most  effective  technology  available  for use in
gasifying a wider range of various  biomass  materials to create  carbon-neutral
energy (gas, electricity, ethanol, diesel substitutes and hydrogen), clean water
and  other  valuable  products.   ZeroPoint's  technology  is  well  suited  for
distributed deployments,  making it highly applicable to the localized nature of
many global sources of biomass feedstock.

Sterling Planet,  Inc. has established a strong reputation as the premier market
maker  for  renewable  energy  certificates.  Sterling  has sold  over 4 billion
kilowatt hours of renewable energy certificates since its inception.  The energy
underlying those  certificates  represents  enough energy to power 350,000 homes
for a full year and offset 2.6 million tons of carbon  dioxide.  Sterling Planet
currently services an impressive array of clients including Alcoa, The Coca-Cola
Company, DuPont, Delphi Corporation, Duke University,  University of Utah, Nike,
Pitney Bowes, U.S.  Environmental  Protection  Agency, the U.S. General Services
Administration,   the   Homeland   Security   Department,   Western  Area  Power
Administration,  New  York  State  Energy  Research  and  Development  Authority
(NYSERDA),  the U.S. Army, Staples,  Whirlpool Corporation,  the World Resources
Institute and over 150 other companies. GS Carbon holds a 10% stake in Sterling.

By  issuing a  "TerraPass"  to its  members,  TerraPass  utilizes  its  members'
voluntary  contributions to promote global energy  efficiency and greenhouse gas
reduction through targeted  projects.  It is through these clean energy projects
that TerraPass counterbalances  pollution from its members' vehicles.  TerraPass
recently  partnered with Ford Motor Company in a program called "Greener Miles,"
which allows  consumers to calculate  the amount of carbon  dioxide  produced by
their car in one year of driving, and then to purchase a TerraPass linked to the
cost of  producing an amount of clean energy  equivalent  to the carbon  dioxide
produced.  Individual purchases range from $29.95 to $79.95 annually,  depending
on the type of vehicle, amount of carbon dioxide emitted and miles traveled, and
the funds are used to invest in U.S. based renewable energy projects.  GS Carbon
holds a 10% stake in TerraPass.

                                       36

<PAGE>

Restructuring Plan

We recently  narrowed our focus to financing and supporting the  development and
iterative roll-out of our leading  technologies and related operations.  We have
commercialized  essential  technologies that have been designed to service needs
that few others currently have the capability to fulfill, and we have positioned
these  technologies  for deployment in an expansively  growing  renewable  fuels
market.

With this narrowing in focus,  we have initiated  steps to simplify our capital
structure. This is a process that we believe to be critical to our growth and we
are  committed  to  seeing  it  through  to  an  expedient  and   cost-effective
conclusion.

Our plan  involves (1) merging GS CleanTech  into  GreenShift  and,  separately,
merging GS Energy into GS AgriFuels,  (2) liquidating  non-core assets,  and (3)
restructuring  and refinancing our debt while we (4) increase sales and earnings
in our core business units.

GS Energy  shareholders  will  receive 1 share of GS  AgriFuels  for every 1,000
shares  held in GS Energy on the record  date for the GS  AgriFuels  - GS Energy
merger,  and GS CleanTech  shareholders  will receive 1 share of GreenShift  for
every 3 shares of GS CleanTech  held on the record date for the  GreenShift - GS
CleanTech merger.

We believe that the pending mergers between GreenShift and GS CleanTech,  and GS
AgriFuels   and  GS  Energy  will  help  to  reduce   operational   overlap  and
redundancies, promote a unified vision among our employees, reduce the confusion
created  by  our  current   structure  among  customers,   vendors,   creditors,
shareholders and other stakeholders.  Additionally, we believe cost efficiencies
will result from the reduction of focus, capital and other resources required to
administer  multiple public  entities,  while increasing our ability to focus on
creating value for our shareholders.

At the  conclusion  of the  mergers  and  other  transactions  described  above,
GreenShift will have two majority-owned public subsidiaries, GS AgriFuels and GS
EnviroServices, as shown here:

                             GREENSHIFT CORPORATION
                                 (OTCBB: GSHF)
              -----------------------------------------------------
         GS AGRIFUELS                                    GS ENVIROSERVICES
        (OTCBB: GSGF)                                       (OTCBB:GSEN)
<TABLE>
<CAPTION>

The operations of each company will be as follows:

<S>                                                                             <C>
>>       GreenShift Corporation
>>       Process Engineering & Plant Construction Services
>>       Technology Licensing
>>       Feedstock Extraction & Sales
>>       Early Stage Technology Acquisition and Development

>>       GS AgriFuels Corporation (OTC Bulletin Board: GSGF)                    Majority Owned Public Subsidiary
>>       Biofuels Production Equipment Manufacturing & Sales
>>       Biodiesel Production & Sales
>>       Other Biomass Derived Fuel & Energy Production & Sales
>>       Oilseed Crushing & Vegetable Oil Sales

>>       GS EnviroServices, Inc. (OTC Bulletin Board: GSEN)                     Majority Owned Public Subsidiary
>>       Industrial Waste Management Services
>>       Environmental Engineering Services
>>       Site Remediation Services
</TABLE>




                                       37
<PAGE>

                   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 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  energy.  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 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 one 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.

                                       38
<PAGE>

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.

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

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

                                       39
<PAGE>

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.

                                       40
<PAGE>

RESULTS OF OPERATIONS

THE SIX MONTHS ENDED JUNE 30, 2007 VERSUS THE SIX MONTHS ENDED JUNE 30, 2006

Revenues

Total  revenues  for the six  months  ended June 30,  2007 were  $10.6  million,
representing an increase of $3.8 million, or 56%, over the six months ended June
30, 2006 revenues of $6.8  million.  Loss from  discontinued  operations of $0.4
million and a gain of $0.8  million  for the six months  ended June 30, 2007 and
June 30, 2006, respectively, were excluded from these figures.

Cost of Revenues

Cost of revenues  for the six months ended June 30, 2007 were $8.4  million,  or
79% of revenue  compared to $5.5 million,  or 82% of revenue for the same period
in 2006.

Operating Expenses

Operating expenses for the six months ended June 30, 2007 were $15.9 million, or
150% of revenue compared to $7.0 million, or 103% of revenue for the same period
in 2006.  Included  in the six months  ended June 30,  2007 was $8.1  million in
stock based  compensation  as compared to $1.7  million for the six months ended
June 30, 2006. 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.

Interest Expense

Interest  expense  for the six  months  ended  June 30,  2007 was $3.8  million,
representing  an increase of $2.8 million from $1 million for the same period in
2006.

Expenses Associated with Derivative Instruments

Loss from the change in the fair market value of derivative liabilities was $1.9
million for the six months ended June 30, 2007  compared to $3.0 million for the
six months ended June 30, 2006.  Amortization  of deferred  financing costs and
debt discounts was $1.2 million and $3.6 million, respectively.

Net Income or Loss

Net loss from continuing  operations for the six months ended June 30, 2007, was
$23 million as compared to a loss from  continuing  operations  of $9.5  million
from the same  period in 2006.  Net loss from  discontinued  operations  of $0.4
million for six months  ended June 30, 2007 and $0.8 for the same period in 2006
were  excluded  from the above  figures.  Net loss of $23.5  million for the six
months ended June 30, 2007 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.

DERIVATIVE LIABILITIES

As of June 30, 2007  GreenShift  and its  subsidiaries  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.

                                       41
<PAGE>

The principal  amount on our  convertible  debentures due to Cornell Capital was
$31  million as of June 30,  2007 and the  unamortized  note  discount  was $5.6
million. For the quarter ended June 30, 2007, we recognized interest expense for
accretion of the debt discount of $3.6 million and a loss for the change in fair
value of the  derivative of $1.9 million for these  debentures.  The  derivative
liability as of June 30, 2007 was $10.9  million.

LIQUIDITY AND CAPITAL RESOURCES

Our source of liquidity is cash  provided by financing  activities.  For the six
months ended June 30, 2007,  net cash provided by our operating  activities  was
$0.9  million as compared to the net cash used by our  operating  activities  of
$0.6 million for the six months ended June 30, 2006.

The Company's  capital  requirements  consist of general  working capital needs,
scheduled  principal  and  interest  payments on debt,  obligations  and capital
leases and planned capital expenditures. The Company's capital resources consist
primarily of cash generated  from  operations and proceeds from issuance of debt
and common  stock.  The Company's  capital  resources are impacted by changes in
accounts  receivable as a result of revenue  fluctuations,  economic trends, and
collection activities. At June 30, 2007 the Company had cash of $1.8 million.

Our  operating  activities  during  the first six  months of 2007  provided  $.9
million in cash.  At June 30, 2007,  accounts  receivable,  net of allowance for
doubtful  accounts,  totaled $3.8 million and inventories  totaled $4.7 million.
Accounts payable and accrued expenses totaled $10.6 million.

For the six months  ended June 30,  2007,  we used $0.9  million  for  investing
activities, and we used cash from financing activities of $0.2 million.

The Company had a working capital deficit of $45 million at June 30, 2007, which
includes derivative liabilities of $10.9 million and convertible debentures of
$9.9 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.





                                       42
<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  them in a timely  manner to
material  information  relating  to the  Company  required to be included in the
Company's periodic SEC filings.

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


                           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

The  following are exhibits  filed as part of the Company's  Form 10-QSB for the
period ended June 30, 2007:

Exhibit Number             Description


31.1 Certification    of   Chief    Executive    Officer    pursuant   to   Rule
     13a-14(a)/15d-14(a),   as  adopted   pursuant   to   Section   302  of  the
     Sarbanes-Oxley Act of 2002.

31.2 Certification    of   Chief    Financial    Officer    pursuant   to   Rule
     13a-14(a)/15d-14(a),   as  adopted   pursuant   to   Section   302  of  the
     Sarbanes-Oxley Act of 2002.

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


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<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
                        Chief Executive Officer

Date:                   August 20, 2007


             /S/        JACQUELINE FLYNN
            ----------------------------
                        JACQUELINE FLYNN
                        Chief Financial Officer

Dated:                  August 20 , 2006
























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