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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                  FORM 10-KSB/A
                               (Amendment No. 1)
                                -----------------


                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

                         COMMISSION FILE NO.: 001-16207



                            GS AGRIFUELS CORPORATION
--------------------------------------------------------------------------------
        (Exact name of Small Business Issuer as specified in its charter)


Delaware                                                              98-0226479
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(State of other jurisdiction                                     (IRS Employer
incorporation or organization)                               Identification No.)

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

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


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

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

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

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

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

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

State issuer's revenues for its most recent fiscal year:  $52,230

The  number of  outstanding  shares of  common  stock as of April 16,  2007 was:
28,217,500.  Based on the average closing bid and ask price of the  Registrant's
common  stock,   the  aggregate  market  value  of  the  voting  stock  held  by
non-affiliates of the Registrant as of April 16, 2006 was $70,543,750.

Amendment No. 1

This  amendment is being filed in order to correct an error in the  Statement of
Cash Flows and an error in the certification filed as Exhibit 31.2.

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<PAGE>


<TABLE>

                            GS AGRIFUELS CORPORATION
                           ANNUAL REPORT ON FORM 10KSB
                                DECEMBER 31, 2006

                                TABLE OF CONTENTS


<CAPTION>

                                                                                                          Page No
Part I
<S>         <C>                                                                                             <C>
Item 1      Description of Business .........................................................................3
Item 2      Description of Properties........................................................................8
Item 3      Legal Proceedings................................................................................8
Item 4      Submission of Matters to a Vote of Security Holders .............................................8

Part II
Item 5      Market for Registrant's Common Equity and Related Stockholder Matters ...........................9
Item 6      Management's Discussion and Analysis of Financial Condition and Results of Operations...........10
Item 7      Financial Statements ...........................................................................14
Item 8      Changes and Disagreements with Accountants on Accounting and Financial Disclosure ..............35
Item 8A     Controls and Procedures ........................................................................35

Part III
Item 9      Directors, Executive Officers, Promoters and Control Persons; Compliance with
                  Section 16(a) of the Exchange Act   ......................................................36
Item 10     Executive Compensation .........................................................................37
Item 11     Security Ownership of Certain Beneficial Owners and Related Stockholder Matters ................37
Item 12     Certain Relationships and Related Transactions .................................................38

Part IV
Item 13     Exhibits and Reports on Form 8K ................................................................38
Item 14     Principal Accountant Fees and Services .........................................................38

Signatures                                                                                                  39

</TABLE>




<PAGE>



                           Forward Looking Statements

     In  addition  to  historical  information,   this  Annual  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.  Readers  should
carefully  review the risk  factors  described  in other  documents GS AgriFuels
files from time to time with the Securities and Exchange Commission (the "SEC"),
including  the  Quarterly  Reports on Form 10QSB to be filed by us in the future
fiscal years.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

SUMMARY

GS AgriFuels  Corporation  ("we," "our," "us," "GS AgriFuels," or the "Company")
is  a  development  stage  Delaware  corporation  that  manufactures  and  sells
proprietary   agrifuels  and  renewable  energy  production   equipment  and  is
developing  facilities  to  produce  and sell  clean  fuels and energy and other
agriproducts from biomass utilizing  proprietary  technologies and industry know
how. GS AgriFuels also makes both majority and minority investments in companies
with  which  GS  AgriFuels  seeks  to form  strategic  relationships  and  where
management   believes   such   investments   offer  the  potential  for  capital
appreciation.

Concerns  over  climate  change,  continued  growth  in energy  demand,  and the
stability  and  pricing of the  petroleum  markets  are  driving a global  shift
towards   increased   reliance  on   alternative   energy   sources,   including
biomass-derived  fuels. Biomass is the most abundant and only resource available
in the time to satisfy the world's expansively growing demand for carbon-neutral
liquid  fuels.  GS AgriFuels  and its  portfolio  companies  own or hold the use
rights  to  a  number  of  patented  and  patent-pending   biomass   extraction,
preparation,  and  refining  technologies  that  convert  biomass into clean and
renewable energy and fuels.

Our technologies and the technologies of certain portfolio  companies  encompass
several classes of technology,  including  innovative  extraction,  desiccation,
homogenization,   process   intensification,   biodiesel   production,   biomass
gasification, reformation, and catalytic technologies. Our development plans are
based on the use of these technologies to:

     >>   Sell equipment at high margins into selected market segments;

     >>   Acquire  long term  rights to  high-quality  sources of  biomass  with
          low-risk and at low-cost;

     >>   Produce  biomass-derived  energy  and  fuels  out  of  non-traditional
          feedstocks such as corn oil and cellulosic biomass;

     >>   Acquire   production  assets  in  mature   agribusinesses  -  such  as
          traditional  corn  ethanol,  oilseed  crushing and other  agriproducts
          processing  facilities - and  synergistically  upgrade these locations
          into integrated multi-feedstock, multi-fuel ("IMF") biorefineries.

We believe that combined  applications of these  technologies  may have wide and
disruptive  application  potential  throughout the landscape of the agriproducts
sector. Our technologies are robust,  scalable,  energy efficient,  modular and,
importantly,  capable of rapid and  cost-effective  "plug-and-play"  integration
into the existing agribusiness infrastructure.

These advantages  converge to potentially  enable the refining of many different
alternative feedstocks into clean and renewable energy and a number of different
clean fuels  cost-effectively  at small scales.  This provides us with,  what we
believe  to be,  highly  valuable  opportunities  to  reduce  commodity  risk by
creating  opportunities to manage  production  assets in response to fluctuating
commodity market conditions.  No single  conventional or new technology or group
of technologies that we are aware of can currently achieve this.

Commercial  scale  early-adopter  and pilot  deployments of our technologies are
currently in operation and are used for ongoing  customer  demonstrations  as we
service our current  biodiesel  equipment  sales  pipeline.  We also rely on our
pilot  deployments to prove out the economics of our own planned fuel production
facilities for prospective financing sources and project partners.
<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS (continued)

GS AgriFuels is currently  developing  several sites for the construction of our
planned  production  facilities.  Most of our  planned  facilities  will have an
initial nameplate  capacity of five (5) or ten (10) million gallons of biodiesel
production and potentially five (5) million gallons of ethanol,  methanol and/or
synthetic diesel production derived from biomass  gasification and gas-to-liquid
technologies.  GS AgriFuels' production plans are based on leveraging technology
and/or geography to establish a feedstock procurement  advantage,  and intend to
accomplish this by: (i) co-locating  agrifuels  production assets directly at or
in proximity to our facility's  source of biomass  feedstock,  such as an animal
processing  facility  or an oil seed  crushing  facility;  and/or (ii) by taking
advantage of technologies  that enable us to obtain and process  feedstocks that
other producers  cannot process,  such as the corn ethanol  co-product  known as
distillers  dried grain.  Our  long-term  production  plans are to build a large
number of smaller,  strategically placed or "distributed"  production facilities
at or in proximity to the plants'  source of  feedstocks.  Finally,  the Company
also has and  intends to  continue  to acquire  existing  production  assets and
upgrade  these  assets  through the  implementation  of one or more  proprietary
technologies.

Our  business  model  is  also  based  on our  sales  of  proprietary  agrifuels
production equipment to third party biodiesel and other agrifuels producers.  We
intend  to  provide  our  equipment  sales  clients  with  financial  and  other
assistance  relative to their respective projects and we plan to consider making
equity and other  investments  in  qualified  projects.  Our  current  equipment
offerings  include  turn-key  biodiesel  production  plants  rated  for five (5)
million and ten (10) million  gallons per year,  although the modular nature and
small  footprint  of the  technology  allow our  customers to rapidly and easily
expand plant production capacity.

Key recent developments include:

     >>   Acquisition of Biodiesel  Technology  Provider.  The Company completed
          the acquisition of biodiesel technology provider,  NextGen Fuel, Inc.,
          which has  developed  and begun  commercialization  of a  proprietary,
          patent-pending  continuous flow biodiesel system.  The systems,  which
          include both direct and transesterification,  are skid mounted and can
          produce five (5) million or ten (10) million gallons per year;

     >>   Sales of Biodiesel  Production  Equipment.  The Company has executed a
          number of contracts to sell NextGen's biodiesel  production systems to
          various clients;

     >>   Acquisition of Production Rights to Corn Oil Extraction  Systems.  The
          Company  entered into an  agreement  with an  affiliate,  GS CleanTech
          Corporation,  to obtain the exclusive biodiesel  production rights for
          corn  oil  extracted   through  the   utilization  of  GS  CleanTech's
          patent-pending Corn Oil Extraction Systems ("COES");

     >>   Acquisition of Feedstock.  The Company has executed agreements for the
          purchase of more than 25 million gallons per year of hedged crude corn
          oil from ethanol facilities at rates equal to about 50% of diesel spot
          prices;

     >>   Development  of  Biodiesel  Production  Facilities.  The  Company  has
          completed  preliminary   engineering  and  permitting  activities  for
          biodiesel production sites in Fulton, New York and Spencerville, Ohio,
          and we are  currently in various  stages of  negotiations  to deploy a
          number of  majority-owned  corn oil  biodiesel  production  facilities
          on-site at several  existing  ethanol  facilities  in the  Mid-Western
          U.S.;

     >>   Acquisition of Oilseed Crush  Facility.  The Company  acquired 100% of
          the  outstanding  stock of Sustainable  Systems,  Inc., a developer of
          oilseed  crush  facilities  with  currently  one plant in operation in
          Culbertson, Montana that is currently expanding its oilseed extraction
          and  vegetable  oil refining  capability  from 300 tons per day to 600
          tons per day.  Management  intends to locate biodiesel  production and
          other  biomass-derived  energy and fuels production capability on-site
          at this facility;

     >>   Investment in ZeroPoint  Clean Tech, Inc. The Company made a strategic
          investment  in the  development  stage company  ZeroPoint  Clean Tech,
          Inc.,   which  is  developing   for   commercialization   a  range  of
          technologies related to biomass gasification, gas-to-liquid, and water
          evaporation among others; and

     >>   Distribution  Agreement with ZeroPoint Clean Tech, Inc. In conjunction
          with  the  investment  in  ZeroPoint,   the  Company  entered  into  a
          reciprocal sales and marketing  agreement whereby  ZeroPoint  acquired
          the worldwide,  non-exclusive rights to market and sell certain of our
          technologies,   and  GS  AgriFuels  acquired  the  exclusive  use  and
          marketing  rights for  ZeroPoint's  patent  pending  gasification  and
          gas-to-liquids technology in the North American ethanol industry.

<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS (continued)

COMPANY BACKGROUND

The Company  incorporated in the State of Delaware on February 17, 2000. On June
7, 2006, the Company acquired Mean Green BioFuels, Inc., a newly formed company,
from  GreenShift  Corporation.  At  the  closing,  GreenShift  Corporation  also
surrendered to the Company  300,000  shares of the Company's  Series B Preferred
Stock (which was  convertible  into 67% of the Company's  fully-  diluted common
stock).  In exchange for the Mean Green BioFuels shares and the Company's Series
B Preferred Stock, the Company assumed GreenShift's  obligations under a Secured
Convertible Debenture due to Cornell Capital Partners in the principal amount of
$1,949,631,  and issued to GreenShift  Corporation  1,000,000 shares of Series C
Preferred Stock (which are convertible  into 80% of the Company's  fully-diluted
common  stock).  On July 27,  2006,  the  Company  changed  the name  from  Hugo
International Telecom, Inc. to GS AgriFuels Corporation.

In August 2006, GS AgriFuels  acquired an approximate  10% interest in ZeroPoint
Clean  Tech,  Inc.  ("ZeroPoint")  ZeroPoint  is in the  process  of  building a
commercial  scale pilot unit of its  proprietary  biomass  gasification,  gas to
liquids  and  fuel  reforming   technology.   This  technology  is  designed  to
standardize variable biomass and optimize high yields of high-quality  synthesis
gas or "syngas" and can be operated at greater cost  efficiencies  as well as on
smaller scales. As part of the transaction,  GS AgriFuels also received warrants
to acquire  another 4% of  ZeroPoint.  In  conjunction  with the  investment  in
ZeroPoint,  the Company entered into a reciprocal sales and marketing  agreement
(later  amended and updated in February  2007)  whereby  ZeroPoint  acquired the
worldwide,  non-exclusive  rights to market and sell  certain  of the  Company's
technologies,  and GS AgriFuels  acquired the exclusive use and marketing rights
for ZeroPoint's patent pending gasification and gas-to-liquids technology in the
North American ethanol industry.

On October 18, 2006, GS Energy Corporation and GS AgriFuels Corporation executed
an Agreement  and Plan of Merger.  Pursuant to the terms and  conditions  of the
Merger  Agreement,  GS Energy will merge with and into GS  Acquisition,  Inc., a
newly formed  special  purpose  subsidiary of GS  AgriFuels.  The closing of the
merger will occur after approval of the merger by the shareholders of GS Energy.
GS Energy owns a specialty manufacturing company, Warnecke Design Service, Inc.,
which  currently  provides  manufacturing  services for, among other related and
third  party  customers,  NextGen  Fuel,  Inc.  A merger  of GS  Energy  with GS
AgriFuels  is expected to be strategic to both  companies  for several  reasons,
including: (a) the integration of NextGen's and Warnecke Design's businesses can
be expected to enhance operating  margins for both companies while  establishing
an immediate  stream of revenues and earnings for GS AgriFuels;  and (b) merging
GS Energy and GS AgriFuels  can be expected to increase  stock market  liquidity
for both  companies,  which may  positively  impact  Company's  ability to raise
capital in the future if need be.

On October 31, 2006,  GS AgriFuels  purchased  100% of the  outstanding  capital
stock  of  NextGen  Fuel,  Inc.  NextGen  Fuel is  engaged  in the  business  of
developing  and marketing  proprietary  esterification  and  transesterification
biodiesel process technologies.

As of December 31, 2006, the Company owned 13% of Sustainable  System, Inc. as a
result of investing $2 million in the capital stock of the company.  Sustainable
Systems  business model is to acquire or build multiple oilseed crush facilities
in North and South America.  Sustainable  currently owns and operates an oilseed
crushing  facility in Culbertson,  Montana,  which produces and sells high oleic
safflower,  sunflower,  canola and other  vegetable  oils.  This  acquisition is
designed  to  accelerate  the   development  of  the  company's   oilseed  crush
biorefineries  and  related  biomass-to-energy  development  projects as well as
allow the continued  expansion of and  acceleration of the company's  ability to
service  customers in the food grade  vegetable  oil program.  In March 2007, GS
AgriFuels  completed the  acquisition  of the  remaining 87% of the  outstanding
capital stock of Sustainable Systems, Inc.

BUSINESS STRATEGY

GS AgriFuels is currently  developing  several sites for the construction of our
planned  production  facilities.  Most of our  planned  facilities  will have an
initial nameplate  capacity of five (5) or ten (10) million gallons of biodiesel
production and potentially five (5) million gallons of ethanol,  methanol and/or
synthetic diesel production derived from biomass  gasification and gas-to-liquid
technologies.  GS AgriFuels' production plans are based on leveraging technology
and/or geography to establish a feedstock procurement  advantage,  and intend to
accomplish this by: (i) co-locating  agrifuels  production assets directly at or
in proximity to our facility's  source of biomass  feedstock,  such as an animal
processing  facility  or an oil seed  crushing  facility;  and/or (ii) by taking
advantage of technologies  that enable us to obtain and process  feedstocks that
other producers  cannot process,  such as the corn ethanol  co-product  known as
distillers  dried grain.  Our  long-term  production  plans are to build a large
number of smaller,  strategically placed or "distributed"  production facilities
at or in proximity to the plants'  source of  feedstocks.  Finally,  the Company
also has and  intends to  continue  to acquire  existing  production  assets and
upgrade these assets through the
<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS (continued)

implementation of one or more proprietary technologies.

Our  development  plans  are also  based on our sales of  proprietary  agrifuels
production equipment to third party biodiesel and other agrifuels producers.  We
intend  to  provide  our  equipment  sales  clients  with  financial  and  other
assistance  relative to their respective projects and we plan to consider making
equity and other  investments  in  qualified  projects.  Our  current  equipment
offerings include turn-key  biodiesel  production plants rated for 5 million and
10 million gallons per year,  although the modular nature and small footprint of
the technology allow our customers to rapidly and easily expand plant production
capacity.

MARKET OVERVIEW AND COMPETITION

The ethanol industry has grown significantly over the last few years,  expanding
production  capacity from about 1.3 billion gallons in 1997 to about 4.0 billion
gallons in 2005. As of January 1, 2006,  ethanol  accounted for approximately 3%
of the  U.S.  gasoline  fuel  supply.  As of April  2006,  the  Renewable  Fuels
Association  (the "RFA")  estimated  that  ethanol  facilities  with  capacities
exceeding an additional 2 billion gallons per year were under construction. Over
37 billion gallons of petroleum diesel are used for domestic transportation each
year in the U.S. The total demand for diesel fuel  approaches 50 billion gallons
per year when construction,  farming and other off-road uses are considered.  By
comparison,  the current  production  of  biodiesel  in the U.S is less than 100
million  gallons per year,  but the  production  and use of biodiesel is growing
rapidly.  According  to the  National  Biodiesel  Board,  biodiesel  sales  have
increased  from about 2 million  gallons  in 2000 to over 50 million  gallons in
2005.

We intend to build a relatively large number of clean fuel production facilities
in North America.  Most of our planned facilities will have an initial nameplate
capacity  of ten (10)  million  gallons of  biodiesel,  and some may  include an
additional  five (5)  million  gallons of  ethanol,  methanol  and/or  synthetic
diesel.  Since the production  technologies the Company is utilizing are modular
in nature,  each  facility is also being  designed to scale to meet the needs of
its  regional  markets  over  time.  Our  production  plans  are  based  on  the
application  of a  number  of  proprietary  technologies,  including  innovative
desiccation,  process  intensification,   gasification,  catalytic,  and  carbon
capture technologies,  synergistically at small-scales to enable the refining of
many forms of biomass  into clean fuels and energy.  Currently,  the majority of
the  ethanol  produced  domestically  is based on a dry milling  technique  that
converts  corn into  ethanol.  Once  commercialized,  the  Company's own ethanol
production  capabilities  will be  primarily  based on a process  that  includes
biomass   gasification   and  catalytic   conversion  of  synthesis  gases  into
carbon-neutral liquid fuels including ethanol, methanol and synthetic diesel.

LAWS AND REGULATIONS

Energy Policy Act

The Energy Policy Act of 2005  established  minimum  annual volumes of renewable
fuel to be used by petroleum refiners in the fuel supply. The annual requirement
grows  to  7.5  BGY by  2012.  The  Energy  Policy  Act  removed  the  oxygenate
requirements for  reformulated  gasoline that were put in place by the Clean Air
Act. The Energy Policy Act also included anti-backsliding  provisions,  however,
that require refiners to maintain  emissions quality standards in the fuels that
they produce, thus providing a source for continued need for ethanol.

Tax Incentives

Gasoline  distributors  who blend ethanol with gasoline receive a federal excise
tax credit for each  gallon of ethanol  they blend.  The federal  Transportation
Efficiency Act of the 21st Century, or TEA-21,  extended this ethanol tax credit
first  passed in 1979  through  2007.  The  American  Jobs  Creation Act of 2004
extended  the  subsidy  again to 2010 by allowing  distributors  to take a $0.51
excise  tax  credit  for each  gallon of  ethanol  they  blend.  We cannot  give
assurance  that the tax  incentives  will be renewed in 2010 or, if renewed,  on
what terms they will be renewed.

Clean Air Act

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

Renewable Fuels Standard

Adopted  on August 8, 2005 as part of the  Energy  Policy  Act of 2005,  the RFS
establishes minimum nationwide levels of renewable fuels (ethanol,  biodiesel or
any other  liquid  fuel  produced  from  biomass or biogas)  to be  included  in
gasoline,  increasing  from 4.0 billion gallons of RFS mandated usage in 2006 to
7.5 billion gallons by 2012. The RFA expects that ethanol should account for the
largest share of renewable fuels produced and consumed under the RFS.
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS (continued)

Ban on Use of MTBE

Due to their  availability  and cost,  ethanol and MTBE had been the two primary
additives  that  were  used  to meet  the  federal  Clean  Air  Act's  oxygenate
requirements.  Because MTBE could be blended  with  gasoline at the refinery and
transported via pipeline (and was produced from petroleum  derivatives),  it was
initially the preferred oxygenate ingredient used by the petroleum industry.  In
contrast,  ethanol's  affinity  for water makes it more  difficult  to transport
ethanol blended gasoline through existing petroleum pipelines since the presence
of water in the pipelines  (which often  results from the previous  transport of
diesel fuel) could  result in the ethanol  separating  from the gasoline  during
transport.  Therefore,  ethanol  has  historically  been  transported  at higher
expense via truck,  rail or barge to a terminal for blending  with  gasoline and
then  transported  via truck to the customer.  In recent years,  public  concern
about  MTBE  contamination  of water  supplies  grew as a result  of leaks  from
underground  storage  tanks and pipes.  Twenty-five  states have now banned,  or
significantly limited, the use of MTBE, including California and New York. Since
most of the states that consumed significant amounts of oxygenated gasoline have
already  banned  or  limited  the use of  MTBE,  the  potential  for  additional
significant  growth in ethanol  consumption  as a result of the  prohibition  or
significant limitation on the use of MTBE is limited.

Tariff on Imported Ethanol

In 1980,  Congress imposed a tariff on foreign produced ethanol to encourage the
development of a domestic, corn-derived ethanol supply. This tariff was designed
to prevent the federal tax  incentive  from  benefiting  non-U.S.  producers  of
ethanol.  The $0.54 per gallon tariff was  scheduled to expire in 2007,  but was
extended in late 2006 until January 1, 2009.  Ethanol  imports from 24 countries
in Central  America and the  Caribbean  Islands are exempt from the tariff under
the Caribbean Basin Initiative, which provides that specified nations may export
an aggregate of 7.0% of U.S.  ethanol  production  per year into the U.S.,  with
additional  exemptions  from ethanol  produced  from  feedstock in the Caribbean
region over the 7.0% limit.  As a result of new plants under  development in the
Caribbean  region,  we believe imports from there will continue,  subject to the
limited  nature of the exemption.  In addition,  there is a flat 2.5% ad valorem
tariff on all imported ethanol.

ENVIRONMENTAL MATTERS

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

OTHER CONTINGENCIES

In 2001 the Company issued shares of Series A Preferred  Stock.  37,350 of those
shares remain  outstanding.  By their terms, they  automatically  converted into
37.35 shares of common stock  (adjusted to reflect the 1-for-1000  reverse stock
split in 2006.  In  November  2006 a claim was made by  certain  holders  of the
Series A Preferred Stock that they are entitled to receive  8,300,000  shares of
common  stock by  reason of  promises  made to them by prior  management  of the
Company and actions taken by the sole  director of the Company in 2003.  Current
management has reviewed the claims and the underlying  facts,  and has concluded
that the claims are not legally  valid.  Negotiations  are  ongoing,  aimed at a
resolution of the claims.

CUSTOMERS

The  Company's  customers  are  currently  entirely  comprised of  developers of
renewable  fuel  production  facilities who purchase our  proprietary  biodiesel
production equipment.

INTELLECTUAL PROPERTIES

We and certain of our portfolio  companies own or hold the rights to a number of
proprietary    technologies,    including   innovative   desiccation,    process
intensification,  gasification,  catalytic and carbon capture technologies.  Our
biodiesel  production  capability is designed around a patent-pending  biodiesel
process technology that leverages
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS (continued)

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

We also acquired  certain  exclusive  use rights for a  proprietary  new biomass
gasifier  that is designed to  standardize  variable  biomass feeds and optimize
high yields of high-quality  syngas in real-time with greatly  increased capital
and operating  cost  efficiencies  at smaller  scales as compared to traditional
gasification technologies.

EMPLOYEES

As of December 31, 2006, GS AgriFuels had no  employees,  but Thomas  Scozzafava
and Kevin Kreisler  served on an "at will" basis as the Company's  President and
Chief Executive Officer, and Chairman and Chief Financial Officer, respectively.
It is anticipated that in 2007 Mr. Scozzafava shall become a full-time  employee
of the Company.

Upon the March 2007  acquisition of Sustainable  Systems,  Inc., the Company now
directly  employs 23 in its  oilseed  crush  subsidiary.  The  majority of those
employees are located at Sustainable's Culbertson, MT oilseed crush plant.

Additionally  and subject to approval of the merger of GS AgriFuels  Corporation
and GS Energy  Corporation,  the Company would add  approximately  35 additional
employees through GS Energy's  fabrication  division,  Warnecke Design Services,
Inc., based in Ottoville, OH.

CONSULTING AGREEMENTS

As part of the October 2006  acquisition  of NextGen  Fuel,  Inc.,  GS AgriFuels
entered in consulting  services contracts with certain founders and designers of
NextGen and its technology,  respectively. Under the terms of the agreement, Dr.
Phil Leveson and John Gaus shall serve as consultants  and provide such services
to NextGen as may be assigned  from time to time by NextGen,  provided that such
services are commensurate with the consultants'  respective positions and titles
when with NextGen. Such services may include technical support, including design
work on additional  NextGen product  offerings,  and limited marketing and sales
support.  They have  agreed to be  available  to receive  sales  inquiries  from
customers  and  prospective  customers  on behalf of the  NextGen  and agreed to
exercise  their  best  efforts  to sell or market  the  NextGen's  products  and
services  to any  customers  or  prospective  customers  of  NextGen  during the
consulting period, which is for twelve (12) months from the date of acquisition.

Also  concurrent  to the October 2006  acquisition  of NextGen  Fuel,  Inc.,  GS
AgriFuels  entered in  consulting  services  contract  with NextGen  Fuel,  Inc.
President,  Jeff DeWeese. The consulting  agreement,  which was made through Mr.
DeWeese's holding company, JTD Ventures,  Inc., calls for a minimum of two years
of sales, marketing,  technical, and all other reasonable assistance relative to
NextGen,  but with a specific  view towards  sales and  marketing  efforts.  The
agreement calls for compensation to be rendered to Mr. DeWeese's company through
a  combination  of sales  commissions  and the  attainment  of  post-acquisition
cumulative NextGen system sales milestones of $30 million and $50 million.

GS AgriFuels is also party to an agreement with GS CleanTech Corporation, also a
subsidiary of GreenShift,  pursuant to which GS CleanTech  provides GS AgriFuels
with technology rights,  engineering services, and right of first refusal rights
to purchase GS CleanTech's  inventory of clean fuel  feedstocks,  including corn
oil.  Under the  agreement,  GS  AgriFuels  utilizes  the  services of select GS
CleanTech's staff of engineers across various technical disciplines.

In addition,  in August  2005,  the Company  entered into a Management  Services
Agreement with GreenShift  Corporation  under which GreenShift agreed to provide
management  assistance,  financial  support and business  development  services.
Under this agreement,  the Company utilizes the services of executive  officers,
sales personnel, staff engineers,  process managers and administrative personnel
on an as-needed and part time basis.

BUSINESS RISK FACTORS

There are many  important  factors that have  affected,  and in the future could
affect,  GS  AgriFuels'  business,  including,  but not  limited to the  factors
discussed  below,  which  should  be  reviewed  carefully  together  with  other
information contained in this report. Some of the factors are beyond our control
and future trends are difficult to predict.

We may be unsuccessful at developing profitable facilities.

GS  AgriFuels is a start-up  company.  Only in June 2006 did we obtain the funds
necessary to initiate  operations.  Before we begin to generate revenue, we will
have to obtain sites for our facilities,  obtain the necessary  permits and
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS (continued)

licenses to construct the facilities,  retain qualified  contractors,  engineers
and architects, employ a qualified staff, and

obtain the business relationships  necessary to insure a supply of raw materials
and a market for our end  product.  Many  factors  could cause our efforts to be
defeated, including both factors that we already anticipate and factors that may
surprise us.

We may be unable to obtain the  financing  required  to  construct  our  planned
facilities.

In order to complete  construction  of our planned  facilities,  we will have to
obtain  equity and senior debt  financing  equal to our  aggregate  construction
costs.  This  currently  corresponds  to about  $25,000,000.  At present we have
received no  commitment  for those funds,  nor do we know whether the  financing
will be available on terms that will allow us to operate  profitably.  If we are
unable to obtain the necessary financing, our business will fail.

Our failure to manage our growth  effectively  could  prevent us from  achieving
profitability.

Our strategy  envisions a period of rapid  growth that may impose a  significant
burden  on our  administrative  and  operational  resources.  The  growth of our
business, and in particular, the completion of construction of our planned clean
fuel production facilities,  will require significant investments of capital and
management's close attention.  Our ability to effectively manage our growth will
require us to substantially  expand the capabilities of our  administrative  and
operational  resources  and to  attract,  train,  manage  and  retain  qualified
management,  technicians  and  other  personnel.  We may be  unable to do so. In
addition,  our failure to  successfully  manage our growth  could  result in our
sales not  increasing  commensurately  with our capital  investments.  If we are
unable to successfully manage our growth, our business may fail..

If federal legislation that puts imported alternative fuels at a disadvantage is
repealed,  competition from foreign-produced  ethanol could significantly reduce
our revenues.

At the present  time,  most of the  financial  benefits and  subsidies  that the
federal  government  provides  to  spur  the  use of  agrifuels  are  denied  to
foreign-produced  agrifuels.  However, there is substantial pressure on Congress
to eliminate the exclusion of foreign-produced agrifuels from those benefits. If
imported    ethanol   were   given   the   same    legislative    treatment   as
domestically-produced  biodiesel,  the  likely  result  would  be a  significant
reduction in the market price of ethanol. This would have the effect of reducing
our revenues and reducing or eliminating our profits.

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.

We may engage in hedging transactions and other risk mitigation strategies that
could harm our results.

In an attempt to partially  offset the effects of  volatility of fuel prices and
prices  for  agricultural  products,  we may enter  into  contracts  to supply a
portion of our  biodiesel  and ethanol  production  or purchase a portion of our
feedstock  requirements  on a forward basis and may also engage in other hedging
transactions  involving  exchange-traded  futures  contracts for feedstocks from
time to time. The financial  statement  impact of these  activities is dependent
upon, among other things, the prices involved and our ability to sell sufficient
products  to use all of the  feedstocks  for  which we have  futures  contracts.
Hedging  arrangements also expose us to the risk of financial loss in situations
where the other party to the hedging  contract  defaults on its  contract or, in
the case of exchange-traded  contracts,  where there is a change in the expected
differential  between  the  underlying  price in the hedging  agreement  and the
actual prices paid or received by us. Hedging  activities can themselves  result
in losses when a position is  purchased  in a declining  market or a position is
sold in a rising market.

Our  business  development  would be  hindered  if we lost the  services  of our
Chairman.

Kevin Kreisler is the Chairman of GS AgriFuels.  Mr. Kreisler is responsible for
strategizing  not only our business  plan but also the means of financing it. If
Mr.  Kreisler  were to leave GS  AgriFuels  or  become  unable  to  fulfill  his
responsibilities,  our business  would be  imperiled.  At the very least,  there
would be a delay in the development of GS AgriFuels until a suitable replacement
for Mr. Kreisler could be retained.

Related  party  transactions  may occur on terms  that are not  favorable  to GS
AgriFuels.

GS AgriFuels is a subsidiary of GreenShift Corporation, which currently controls
over 92% of the voting power in
<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS (continued)

GS  AgriFuels.  GreenShift  Corporation  is the parent of  several  corporations
involved in the development and

implementation of environmentally responsible technologies,  and has significant
investments in several others.

GreenShift intends to foster cooperation among its affiliates, so as to gain the
benefits of intellectual  cross-fertilization,  economies of scale,  and captive
markets.  For example,  GS AgriFuels is currently  party to an agreement with GS
CleanTech Corporation,  a majority-owned  subsidiary of GreenShift,  pursuant to
which GS AgriFuels will purchase corn oil from GS CleanTech. GreenShift will not
obtain  independent  evaluations of the transactions  between its  subsidiaries.
Therefore,  it may occur that  GreenShift  will cause GS AgriFuels to enter into
transactions  with affiliates on terms which are less beneficial to GS AgriFuels
than it might obtain in an arms-length transaction.

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

GS AgriFuels  has  contracted  to sell to Cornell  Capital  Partners a series of
Convertible  Debentures  that Cornell  Capital may convert into shares of common
stock. The Debentures are convertible at $3.00 per share, although under certain
circumstances  they may also be converted at 90% of the market price at the time
of conversion. Cornell Capital Partners may also acquire 1,665,000 of the shares
by exercising a Warrant to purchase  shares at $0.001 per share.  It is possible
that resale of shares by Cornell  Capital  Partners  may reduce the market price
for GS AgriFuels 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 Secured Convertible  Debenture or on
exercise of the Warrant to Purchase  Common Stock 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 Debenture is converted on the basis of the  contemporaneous  market
price.  If our  stock  price is  lower,  then our  existing  stockholders  would
experience greater dilution.

There is a very limited market for our common stock.

The number of shares of our common stock held by persons who are not  affiliated
with GS AgriFuels is less than 200,000. For that reason, there is a very limited
market  for our  common  stock.  On  most  days it  does  not  trade.  If a more
substantial  market for our stock  does not  develop,  shareholders  may find it
difficult to sell their shares when they wish to do so.

The  volatility  of the  market  for GS  AgriFuels  common  stock may  prevent a
shareholder from obtaining a fair price for his shares.

GS AgriFuels  at the present time has fewer than 200,000  shares held by persons
who are not affiliated  with GS AgriFuels and only a very small number of market
makers.  As a result,  the market  price for our common  stock is  volatile.  It
seldom  trades,  and when it does,  the price may increase or decrease by 50% in
one day.  Unless and until the market for our common stock grows and stabilizes,
the common  shares you  purchase  will  remain  illiquid.  A  shareholder  in GS
AgriFuels  who wants to sell his  shares,  therefore,  runs the risk that at the
time he wants to sell, the market price may be much less than the price he would
consider to be fair.

ITEM 2.  DESCRIPTION OF PROPERTIES

FACILITIES

GS  AgriFuels's  corporate  headquarters  is located in New York,  New York,  in
offices provided free-of-charge by GreenShift  Corporation,  a shareholder of GS
Agrifuels. There is no lease associated with this location.

ITEM 3.  LEGAL PROCEEDINGS

The Company is party to the matter entitled  O'Brien & Gere Limited,  et. al. v.
NextGen  Chemical  Processors,  Inc.,  et.  al.,  which  action was filed in the
Supreme Court of the State of New York. The verified complaint, which also names
the Company  and certain of its  affiliates,  seeks  performance  of and damages
relating to certain  service and related  agreements,  plus  attorney's fees and
costs. This matter relates to the provision by plaintiffs of certain engineering
services to NextGen Chemical Processors,  Inc. ("NCP") during 2005 and 2006. NCP
is owned by the former shareholders of our recently acquired NextGen Fuel, Inc.,
subsidiary.  The Company has responded to the verified  complaint and denies any
liability.



<PAGE>


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

None.

                                     PART II

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

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

<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- -------------------------
Period                                                   High                                 Low
---------------------------------------- -------------------------------------- -------------------------
<S>                                                     <C>                                    <C>
2005 First Quarter                                      22.00                                  9.00
2005 Second Quarter                                     22.00                                  9.00
2005 Third Quarter                                      10.00                                  6.00
2005 Fourth Quarter                                     10.00                                  5.00
2006 First Quarter                                       9.00                                  2.00
2006 Second Quarter                                     15.00                                  1.01
2006 Third Quarter                                      15.00                                  1.10
2006 Fourth Quarter                                      3.00                                  0.70

Title of Class                                      Approximate Number of Holders of Record as of April 16, 2007
Common Stock, 0.0001 par value                                                   821
</TABLE>

The number of holders  does not give effect to  beneficial  ownership  of shares
held in the street name of stock  brokerage  houses or clearing  agents and does
not necessarily reflect the actual ownership of the shares. Based on information
from nominee  holders,  we believe that the number of owners of our common stock
exceeds 821.

DIVIDENDS

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

SALE OF UNREGISTERED SECURITIES

REPURCHASE OF EQUITY SECURITES

The Company did not repurchase any of its equity securities that were registered
under Section 12 of the Securities Act during the 4th quarter of 2006.

<PAGE>



ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

In  addition  to   historical   information,   this   Annual   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.  Readers  should
carefully  review the risk  factors  described  in other  documents GS AgriFuels
files from time to time with the Securities and Exchange Commission (the "SEC"),
including  the  Quarterly  Reports on Form 10QSB to be filed by us in the fiscal
year 2007.

OVERVIEW

GS AgriFuels  Corporation  ("we," "our," "us," "GS AgriFuels," or the "Company")
is  a  development  stage  Delaware  corporation  that  manufactures  and  sells
proprietary   agrifuels  and  renewable  energy  production   equipment  and  is
developing  facilities  to  produce  and sell  clean  fuels and energy and other
agriproducts from biomass utilizing  proprietary  technologies and industry know
how. GS AgriFuels also makes both majority and minority investments in companies
with  which  GS  AgriFuels  seeks  to form  strategic  relationships  and  where
management   believes   such   investments   offer  the  potential  for  capital
appreciation.

Concerns  over  climate  change,  continued  growth  in energy  demand,  and the
stability  and  pricing of the  petroleum  markets  are  driving a global  shift
towards   increased   reliance  on   alternative   energy   sources,   including
biomass-derived  fuels. Biomass is the most abundant and only resource available
in the time to satisfy the world's expansively growing demand for carbon-neutral
liquid  fuels.  GS AgriFuels  and its  portfolio  companies  own or hold the use
rights  to  a  number  of  patented  and  patent-pending   biomass   extraction,
preparation,  and  refining  technologies  that  convert  biomass into clean and
renewable energy and fuels.

Our technologies and the technologies of certain portfolio  companies  encompass
several classes of technology,  including  innovative  extraction,  desiccation,
homogenization,   process   intensification,   biodiesel   production,   biomass
gasification, reformation, and catalytic technologies. Our development plans are
based on the use of these technologies to:

     >>   Sell equipment at high margins into selected market segments;

     >>   Acquire  long term  rights to  high-quality  sources of  biomass  with
          low-risk and at low-cost;

     >>   Produce  biomass-derived  energy  and  fuels  out  of  non-traditional
          feedstocks such as corn oil and cellulosic biomass;

     >>   Acquire   production  assets  in  mature   agribusinesses  -  such  as
          traditional  corn  ethanol,  oilseed  crushing and other  agriproducts
          processing  facilities - and  synergistically  upgrade these locations
          into integrated multi-feedstock, multi-fuel biorefineries.

We believe that combined  applications of these  technologies  may have wide and
disruptive  application  potential  throughout the landscape of the agriproducts
sector. Our technologies are robust,  scalable,  energy efficient,  modular and,
importantly,  capable of rapid and  cost-effective  "plug-and-play"  integration
into the existing agribusiness infrastructure.

These advantages  converge to potentially  enable the refining of many different
alternative feedstocks into clean and renewable energy and a number of different
clean fuels  cost-effectively  at small scales.  This provides us with,  what we
believe  to be,  highly  valuable  opportunities  to  reduce  commodity  risk by
creating  opportunities to manage  production  assets in response to fluctuating
commodity market conditions.  No single  conventional or new technology or group
of technologies that we are aware of can currently achieve this.

Commercial  scale  early-adopter  and pilot  deployments of our technologies are
currently in operation and are used for ongoing  customer  demonstrations  as we
service our current  biodiesel  equipment  sales  pipeline.  We also rely on our
pilot  deployments to prove out the economics of our own planned fuel production
facilities for prospective financing sources and project partners.

GS  AgriFuels'  production  plans  are  based on  leveraging  technology  and/or
geography  to  establish  a  feedstock  procurement  advantage.   We  intend  to
accomplish this by: (i) co-locating  agrifuels  production assets directly at or
in

<PAGE>

ITEM 6.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS (continued)

proximity  to our  facility's  source of  biomass  feedstock,  such as an animal
processing  facility  or an oil seed  crushing  facility;  and/or (ii) by taking
advantage of technologies  that enable us to obtain and process  feedstocks that
other producers  cannot process,  such as the corn ethanol  co-product  known as
distillers  dried grain.  Our  long-term  production  plans are to build a large
number of smaller,  strategically placed or "distributed"  production facilities
at or in proximity to the plants'  source of  feedstocks.  Finally,  the Company
also has and  intends to  continue  to acquire  existing  production  assets and
upgrade  these  assets  through the  implementation  of one or more  proprietary
technologies.

Our  business  model  is  also  based  on our  sales  of  proprietary  agrifuels
production equipment to third party biodiesel and other agrifuels producers.  We
intend  to  provide  our  equipment  sales  clients  with  financial  and  other
assistance  relative to their respective projects and we plan to consider making
equity and other  investments  in  qualified  projects.  Our  current  equipment
offerings  include  turn-key  biodiesel  production  plants  rated  for five (5)
million and ten (10) million  gallons per year,  although the modular nature and
small  footprint  of the  technology  allow our  customers to rapidly and easily
expand plant production capacity.

Key recent developments include:

     >>   Acquisition of Biodiesel  Technology  Provider.  The Company completed
          the acquisition of biodiesel technology provider,  NextGen Fuel, Inc.,
          which has  developed  and begun  commercialization  of a  proprietary,
          patent-pending  continuous flow biodiesel system.  The systems,  which
          include both direct and transesterification,  are skid mounted and can
          produce five (5) million or ten (10) million gallons per year;

     >>   Sales of Biodiesel  Production  Equipment.  The Company has executed a
          number of contracts to sell NextGen's biodiesel  production systems to
          various clients;

     >>   Acquisition of Production Rights to Corn Oil Extraction  Systems.  The
          Company  entered into an  agreement  with an  affiliate,  GS CleanTech
          Corporation,  to obtain the exclusive biodiesel  production rights for
          corn  oil  extracted   through  the   utilization  of  GS  CleanTech's
          patent-pending Corn Oil Extraction Systems ("COES");

     >>   Acquisition of Feedstock.  The Company has executed agreements for the
          purchase of more than 25 million gallons per year of hedged crude corn
          oil from ethanol facilities at rates equal to about 50% of diesel spot
          prices;

     >>   Development  of  Biodiesel  Production  Facilities.  The  Company  has
          completed  preliminary   engineering  and  permitting  activities  for
          biodiesel production sites in Fulton, New York and Spencerville, Ohio,
          and we are  currently in various  stages of  negotiations  to deploy a
          number of  majority-owned  corn oil  biodiesel  production  facilities
          on-site at several  existing  ethanol  facilities  in the  Mid-Western
          U.S.;

     >>   Acquisition of Oilseed Crush  Facility.  The Company  acquired 100% of
          the  outstanding  stock of Sustainable  Systems,  Inc., a developer of
          oilseed  crush  facilities  with  currently  one plant in operation in
          Culbertson, Montana that is currently expanding its oilseed extraction
          and  vegetable  oil refining  capability  from 300 tons per day to 600
          tons per day.  Management  intends to locate biodiesel  production and
          other  biomass-derived  energy and fuels production capability on-site
          at this facility;

     >>   Investment in ZeroPoint  Clean Tech, Inc. The Company made a strategic
          investment  in the  development  stage company  ZeroPoint  Clean Tech,
          Inc.,   which  is  developing   for   commercialization   a  range  of
          technologies related to biomass gasification, gas-to-liquid, and water
          evaporation among others; and

     >>   Distribution  Agreement with ZeroPoint Clean Tech, Inc. In conjunction
          with  the  investment  in  ZeroPoint,   the  Company  entered  into  a
          reciprocal sales and marketing  agreement whereby  ZeroPoint  acquired
          the worldwide,  non-exclusive rights to market and sell certain of our
          technologies,   and  GS  AgriFuels  acquired  the  exclusive  use  and
          marketing  rights for  ZeroPoint's  patent  pending  gasification  and
          gas-to-liquids technology in the North American ethanol industry.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our  consolidated  financial  statements  requires us to make
estimates that affect the reported
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS (continued)

amounts of assets,  liabilities,  revenues and  expenses.  The following are the
areas  that  we  believe  require  the  greatest  amount  of  estimates  in  the
preparation  of our financial  statements:  impairment  testing,  allowances for
doubtful  accounts and accruals for legal  matters.  Prior to the filing of this
Annual  Report on Form  10KSB,  the Audit  Committee  of our Board of  Directors
reviewed  these  critical  accounting  policies and estimates and discussed them
with our management

We recognize  revenue from the sale of equipment when persuasive  evidence of an
arrangement  exists,  title and risk of loss transfers to the customers,  prices
are fixed and  determinable,  and it is reasonably  assured the related accounts
receivable is collectable. Our sales terms primarily are FOB shipping point.

The Company accounts for its approximate 10% investment in ZeroPoint Clean Tech,
Inc. under the cost method.  Application of this method  requires the Company to
periodically  review this  investment in order to determine  whether to maintain
the current carrying value or to write off some or all of the investment.  While
the Company uses some objective  measurements in its review,  the review process
involves a number of judgments on the part of the Company's  management.  To the
extent that the Company is not correct in its  conclusion it may decide to write
down all or part of the investment.

On an  annual  basis  GS  AgriFuels  retains  the  services  of  an  independent
contractor,  to value its  intangible  assets  including the value of the Energy
Technologies  and  Goodwill.  For  long-lived  assets  to be held and  used,  we
recognize  an  impairment  loss only if its carrying  amount is not  recoverable
through its  undiscounted  cash flows and measures the impairment  loss based on
the difference between the carrying amount and fair value

YEAR ENDED DECEMBER 31, 2006 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 2005

GS AgriFuels was a shell  company,  without any business  operations,  from 2003
until June 2006. During that time, its expenses  consisted of (a) administration
expenses,  and (b)  write-offs  of assets  remaining  from the business  that it
operated  prior to 2003.  During the twelve  months ended  December 31, 2006, GS
AgriFuels  incurred  $1,385.253 in selling,  general and  administrative  costs,
consisting  primarily of  amortization  of  intangibles,  consulting,  legal and
accounting  expenses as well as other expenses related to the development of the
Company's  biofuels  initiatives.   GS  Agrifuels  incurred  $1,287,675  in  the
amortization  of  financing  related  costs  and the  fair  market  value of the
debenture-related  derivative as well as interest expense, offset by a gain from
the write-down of a derivative liability of $104,657.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2006, GS AgriFuels had current  assets  totaling  $3,224,860 and
had current  liabilities  totaling  $13,794,978,  resulting in a working capital
deficit of $10,570,118.

On June 7, 2006, GS AgriFuels entered into a Securities  Purchase Agreement with
Cornell  Capital  Partners.  The  Agreement  is  designed  to provide  mezzanine
financing to enable GS AgriFuels to develop its first two clean fuels production
facilities.  Net proceeds of $4,900,000  under a debenture were received on June
7, 2006.

In June 2006,  GS AgriFuels  assumed  responsibility  for payment of a debenture
issued by GreenShift to Cornell Capital  Partners in the  approximate  amount of
$1.9 million.  The terms of the debenture are equal to the terms and  conditions
of the June 7, 2006 Cornell Debenture noted above.

On October 30, 2006 GS AgriFuels completed the sale of a $13,000,000 convertible
debenture,  for which the company received  proceeds of $11,635,000,  to Cornell
Capital Partners pursuant to a Securities Purchase Agreement dated as of October
25, 2006.  The terms of the debenture  are equal to the terms and  conditions of
the June 7, 2006 Cornell  Debenture  noted above.  The new  Securities  Purchase
Agreement  replaces any additional  financing  commitments  from Cornell Capital
under the June 7, 2006 Securities Purchase Agreement.

On October 30, 2006 NextGen  Acquisition,  Inc., a newly formed subsidiary of GS
AgriFuels,  completed a sale of securities to  Stillwater  Asset-Based  Fund, LP
pursuant to a Securities  Purchase  Agreement  dated as of October 27, 2006. The
Agreement  called for Stillwater to purchase a Term Note in the principal amount
of $6  million.  The Term Note was  issued to  Stillwater  on October 30 for net
proceeds  of  $5,544,775.  The Term Note  accrues  interest at a rate of 20% per
annum.  Monthly  payments of  principal  and  interest  are due,  commencing  on
February 1, 2007.  The amount of each  principal  payment is variable based on a
percentage of NextGen's cash receipts but in no case will be less than $300,000.

The net proceeds of  $17,179,775  from the October 30, 2006 Cornell  Capital and
Stillwater financings were used to acquire NextGen Fuel, Inc.
<PAGE>

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS (continued)

Management  expects the  construction  of GS  AgriFuels'  first two  facilities,
corresponding  to 15 to 20 million  gallons  per year of fuel  production,  will
require a total of about $30.0  million,  consisting  of about $25.0  million in
capital costs and about $5.0 million in working capital.  If competition reduces
the market price of alternative fuels, the

resulting  shortfall in meeting our revenue  estimates  will cause an equivalent
shortfall in meeting our gross  profit  estimate.  In that event,  we could find
ourselves unable to service our debt.

At the present  time, GS AgriFuels  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.

FORGIVENESS OF ACCRUED INTEREST

There was no forgiveness of interest recorded in 2006.

CASH FLOWS FOR 2006

Operating  activities  in 2006 used  approximately  $1.4  million in cash flows.
Non-cash  expenses  recorded  for the  year  ended  December  31,  2006  totaled
$1,644,387 and consisted of $356,712 in amortization of intangibles, $230,200 in
amortization  of deferred  financing  costs and $1,057,475 in interest  expense,
which included $172,533 from amortization of debt discounts.

Investing  activities  for the year ended  December 31, 2006 used  $2,220,387 in
cash  flows  to fund  the  acquisition  of  NextGen  Fuel,  Inc.  as well as the
investment in unconsolidated subsidiaries.

For the year ended  December  31, 2006,  we obtained net cash from  financing of
approximately  $4.6  million.   GS  AgriFuels  used  these  funds  to  fund  the
acquisitions as well as to provide working capital for operations.

GOING CONCERN

GS AgriFuels incurred a loss of approximately $2.5 million during the year ended
December 31,  2006.  Also as of December  31,  2006,  GS  AgriFuels  had current
liabilities exceeding its current assets by $ 10.6million.  These matters caused
the Company's auditors to add an explanatory  paragraph in their auditors report
which  raises  substantial  doubt about GS  AgriFuels'  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 to reduce the loss from
operations.  However,  there  can be no  assurances  that GS  AgriFuels  will be
successful in this regard or 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.

STOCKHOLDER MATTERS

Stockholders'  equity  (deficit)  was ($3.6)  million at  December  31,  2006 as
compared to ($354,000) at December 31, 2005.

OFF-BALANCE SHEET ARANGEMENTS

We do not have any off-balance  sheet  arrangements  that have or are reasonably
likely to have a current or future effect on our financial  condition or results
of operations.

NEW ACCOUNTING PRONOUNCEMENTS

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standard  ("SFAS")  No. 123R "Share  Based
Payment." This statement is a revision to SFAS No. 123 and supersedes Accounting
Principles  Board  (APB)  Opinion  No.  25,  "Accounting  for  Stock  Issued  to
Employees,"  and amends FASB Statement No. 95,  "Statement of Cash Flows".  This
statement  requires a public  entity to expense  the cost of  employee  services
received in exchange for an award of equity  instruments.  This  statement  also
provides  guidance on valuing and expensing these awards,  as well as disclosure
requirements  of these equity  arrangements.  This  statement  was adopted by GS
AgriFuels effective as of the beginning of fiscal 2006. The revised SFAS No. 123
may have a material effect on the Company's results of operations but not on the
Company's financial position.

In December 2004, the FASB issued FASB statement No. 153 ("SFAS 153").  SFAS 153
addresses  accounting for non-monetary  transactions.  The Company's adoption of
SFAS 153 did not have a material  impact on the  Company's  financial  position,
results of operations and cash flows.
<PAGE>

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS (continued)


In  February  2006,  the FASB  issued SFAS 155,  Accounting  for Certain  Hybrid
Financial  Instruments.  SFAS 155 amends FASB  Statements  133,  Accounting  for
Derivative Instruments and Hedging Activities, and 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities and permits
fair value  remeasurement  for any hybrid financial  instrument that contains an
embedded derivative that otherwise would


require  bifurcation.  SFAS  155 is  effective  for  all  financial  instruments
acquired,  issued,  or subject to a  remeasurement  (new basis) event  occurring
after the beginning of an entity's first fiscal year that begins after September
15, 2006.  Management does not expect the implementation of this new standard to
have  a  material  impact  on  the  Company's  financial  position,  results  of
operations and cash flows.

On  February  3, 2006,  the FASB  issued  FASB Staff  Position  FSP FAS  123R-4,
"Classification   of  Options  and  Similar   Instruments   Issued  as  Employee
Compensation  That Allow for Cash Settlement Upon the Occurrence of a Contingent
Event ." This FASB Staff Position (FSP) addresses the  classification of options
and  similar  instruments  issued as employee  compensation  that allow for cash
settlement upon the occurrence of a contingent  event.  The guidance in this FSP
amends  paragraphs  32 and  A229 of  FASB  Statement  No.  123  (revised  2004),
Share-Based Payment.

On  February  3, 2006,  the FASB  issued  FASB Staff  Position  FSP FAS  123R-6,
"Technical  Corrections of FASB Statement No.  123(R)." This FASB Staff Position
(FSP) addresses certain technical corrections of FASB Statement No. 123 (revised
2004),  Share-Based  Payment.  The  Company's  adoption  of SFAS  123(R) and the
implementation  of these new  standards  did not have a  material  impact on the
Company's financial position, results of operations and cash flows.

On October  10,  2006,  the FASB  issued  FASB Staff  Position  FSP FAS  123R-5,
"Amendment of FASB Staff  Position FAS 123R-1.  " This FASB Staff Position (FSP)
addresses  whether a modification  of an instrument in connection with an equity
restructuring  should be considered a modification  for purposes of applying FSP
FAS  123(R)-1  ,  "Classification  and  Measurement  of  Freestanding  Financial
Instruments  Originally  Issued in Exchange  for  Employee  Services  under FASB
Statement No. 123(R) ."

In March 2006, the Financial  Accounting Standards Board (FASB) issued Statement
of Financial  Accounting  Standard  (SFAS) No. 156,  Accounting for Servicing of
Financial  Asset.  SFAS No. 156 amends FASB  Statement No. 140,  Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
with respect to the accounting for separately  recognized  servicing  assets and
servicing liabilities.

SFAS No. 156 is effective as of the  beginning of an entity's  first fiscal year
that  begins  after   September  15,  2006.   Management  does  not  expect  the
implementation  of this new standard to have a material  impact on the Company's
financial position, results of operations and cash flows.

In September 2006, the FASB issued SFAS 157, Fair Value  Measurements.  SFAS 157
defines  fair  value,  establishes  a  framework  for  measuring  fair  value in
generally accepted  accounting  principles (GAAP), and expands disclosures about
fair value measurements.  SFAS 157 is effective for financial  statements issued
for fiscal years  beginning  after November 15, 2007, and interim periods within
those fiscal years.  Management does not expect the  implementation  of this new
standard to have a material impact on the Company's financial position,  results
of operations and cash flows.

On September  13,  2006,  the SEC released  Staff  Accounting  Bulletin No. 108,
"Considering  the  Effects  of  Prior  Period   Misstatements  When  Quantifying
Misstatements in Current Year Financial Statements.", which provides guidance on
the  consideration  of the effects of prior year  misstatements  in  quantifying
current year  misstatements  for the purpose of a  materiality  assessment.  The
standard is effective for the first annual financial statements for fiscal years
beginning  after  November 15, 2006.  The Company is currently  considering  the
effect of implementing the requirements of this standard.



<PAGE>


<TABLE>

ITEM 7.          FINANCIAL STATEMENTS

<CAPTION>


                                                                                                     Page No
FINANCIAL STATEMENTS [Update page numbers when complete]

<S>                                                                                                      <C>
Report of Independent Registered Public Accounting Firm ..................................................15

Consolidated Balance Sheet ...............................................................................17

Consolidated Statements of Operations ....................................................................18

Consolidated Statements of Stockholders' Equity........................................................19-20

Consolidated Statements of Cash Flows.....................................................................21

Notes to Consolidated Financial Statements ............................................................22-34

</TABLE>







<PAGE>



ITEM 7.  FINANCIAL STATEMENTS (continued)



Report of Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders of GS Agrifuels and Subsidiaries

We have audited the accompanying  balance sheet of GS Agrifuels  Corporation and
Subsidiaries  as of December 31,  2006,  and the related  statements  of income,
stockholders'  equity and cash flows of the years  ended  December  31, 2006 and
2005.  These  financial  statements  are  the  responsibility  of the  company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position of GS Agrifuels
Corporation  and  Subsidiaries  as of December 31, 2006,  and the results of its
consolidated operations and its cash flows for the years ended December 31, 2006
and 2005 in conformity  with  accounting  principles  generally  accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that GS Agrifuels Corporation and Subsidiaries will continue as a going concern.
As discussed in Note 2 to the financial statements, GS Agrifuels Corporation and
Subsidiaries  has  suffered  recurring  losses from  operations  and has working
capital deficiency of $10,570,000 and an accumulated deficit of $3,154,850 as of
December 31, 2006. These conditions raise  substantial doubt about the Company's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also described in Note 2. The consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.




Rosenberg Rich Baker Berman & Co.

Bridgewater, New Jersey
April 11, 2007








<PAGE>




<TABLE>


                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
<CAPTION>
                           CONSOLIDATED BALANCE SHEET
                                                                       DECEMBER 31, 2006
ASSETS:
Current assets:
<S>                                                                      <C>
   Cash ..............................................................   $  1,006,672
   Accounts receivable, net of allowance for doubtful accounts of $0 .         52,230
   Loans receivable - related party ..................................        568,958
  Inventory - work in progress .......................................        846,337
   Escrow deposit ....................................................        220,000
   Other deposits ....................................................        177,478
   Other deposits - related party ....................................        222,373
   Other current assets ..............................................         92,508
   Other current assets - related parties ............................         38,304
                                                                         ------------
       Total current assets ..........................................      3,224,860

Other Assets:
   Investments in unconsolidated subsidiaries at cost ................      4,501,324
     Deferred financing fees .........................................      2,010,025
   Intangible asset - energy technologies, net .......................     14,343,288
   Goodwill ..........................................................      5,453,816
   Other assets - related party ......................................         97,683
                                                                         ------------
       Total other assets ............................................     26,406,136
                                                                         ------------

TOTAL ASSETS .........................................................   $ 29,630,996
                                                                         ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable ..................................................        399.325
   Accounts payable and accrued expenses - related party .............        373,106
   Accrued expenses ..................................................         47,773
   Accrued interest ..................................................        648,910
   Accrued interest - related party ..................................         29,818
   Customer deposits .................................................      1,654,750
   Due to related parties ............................................        304,819
   Notes payable .....................................................     10,059,875
   Convertible debenture - related party .............................        276,602
                                                                         ------------
       Total current liabilities .....................................     13,794,978

Long term convertible debentures (net of discount) ...................     19,407,671
                                                                         ------------

TOTAL LIABILITIES ....................................................     33,202,649

Stockholders' deficiency:
   Preferred Stock, par value - $0.0001
     Series A convertible preferred stock, par value - $0.0001
       400,000 shares authorized, 37,350 shares issued and outstanding              4
   Common Stock, par value - $0.0001
       50,000,000 shares Authorized, 28,217,500
        shares issued and outstanding ................................          2,822
Additional paid-in capital ...........................................      1,846,715
Accumulated deficit ..................................................     (3,154,850)
Deficit accumulated during development stage .........................     (2,266,344)
                                                                         ------------

Total stockholders' deficiency .......................................     (3,571,653)
                                                                         ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...........................   $ 29,630,996
                                                                         ============

            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>


<PAGE>
<TABLE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

<CAPTION>
                                                                               Cumulative
                                                                              Amounts Since
                                                                              Inception of
                                                                               Development
                                                                               Stage 4/1/06
                                                  12/31/06      12/31/05       to 12/31/06
                                                ----------     ----------     ------------
<S>                                            <C>           <C>             <C>
Revenues ...................................   $    52,230   $       --      $    52,230
  Cost of revenues .........................        32,505           --           32,505
                                                ----------    -----------    -----------
     Gross profit ..........................   $    19,725    $      --      $    19,725

Operating expenses:

    Selling, general and administrative ....     1,028,541           --          776,073
    Amortization - intangibles .............       356,712        442,241        356,712
                                               -----------    -----------    -----------
 Total Operating Expenses ..................     1,385,253       (442,241)     1,142,786
                                               -----------    -----------    -----------

Operating Loss .............................   $(1,365,528)   $  (442,241)   $(1,113,060)

Other income (expense):
    Amortization of deferred financing costs      (230,200)          --         (230,200)
    Gain on FMV of derivatives .............       104,657           --          104,067
    Gain on settlement .....................          --           27,979           --
    Interest expense .......................    (1,027,657)          --       (1,001,493)
    Interest expense - related party .......       (29,818)        (3,787)       (25,658)
                                               -----------    -----------    -----------

        Total other expense, net ...........    (1,183,018)        24,192     (1,153,284)
                                               -----------    -----------    -----------


Loss before provision for income taxes .....    (2,548,547)      (418,049)    (2,266,344)
Provision for income taxes .................          --            6,762           --
Net loss from continuing operations ........   $(2,548,547)   $  (424,811)   $(2,266,344)
                                               -----------    -----------    -----------

Net loss ...................................   $(2,548,547)   $  (424,811)   $(2,266,344)

Net loss applicable to common shareholders .   $(2,548,547)   $  (424,811)   $(2,266,344)



Net loss per common share, basic and diluted   $     (0.39)   $     (8.50)
                                               ===========    ============

Weighted average shares of common stock
Outstanding, basic and diluted                   6,527,486         50,000
                                               ===========    ============



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


</TABLE>





<PAGE>




<TABLE>



                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005


<CAPTION>
                                          Common Stock     Series A Preferred   Series B Preferred      Series C Preferred
                                                                   Stock              Stock                   Stock
                                         -------------------------------------------------------------------------------------
                                         Shares     Amount    Shares    Amount     Shares    Amount       Shares     Amount
                                         -------------------------------------------------------------------------------------
<S>                                       <C>      <C>          <C>      <C>        <C>      <C>         <C>         <C>
Balance at 1/ 1/05 (see Note below)....   50,000   $      5     90,000   $     9        --     $    --     $   --     $    --

 Issuance of Series B Preferred
 Stock in exchange for Series A
 Preferred Stock ......................      --        --      (52,650)       (5)    300,000       30          --         --
  Net loss ............................      --        --        --          --        --         --                      --
                                       ----------   --------   --------  --------   --------   --------   --------   --------

Balance at 12/31/05 (see Note below)...    50,000   $     5     37,350   $     4     300,000   $   30           --    $   --
                                       ==========   ========   ========  ========   ========   =========  ========    =======
 Exchange for services-related party .. 2,025,000       203       --         --         --        --           --         --
 Exchange for services ................   142,500        14       --         --         --        --           --         --
 Consideration for business combination      --         --         --        --     (300,000)     (30)     1,000,000    1,000
 Bifurcation of warrants ..............      --         --         --        --         --        --           --         --
 Issuance of options ..................      --         --         --        --         --        --           --         --
 Conversion of Series C Preferred ..... 26,000,000    2,600        --        --         --        --     (1,000,000)   (1,000)
 Net loss .............................      --         --         --        --         --        --           --         --

Balance at 12/31/06 ................... 28,217,500  $ 2,822     37,350   $     4        --     $  --           --     $   --
                                        ==========  ========   ========  ========  =========   ========= ==========   ========

Note 1: The balances of common  shares,  Common Stock,  and  Additional  Paid-In
     Capital have been retroactively restated to reflect the effects of a 1000:1
     reverse common stock split during the year ended December 31, 2006.

Note 2: All stock related  transactions during the year ended 2006 have occurred
        after the inception date of April 1, 2006.



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

</TABLE>










<PAGE>


<TABLE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005




<CAPTION>
                                                                                            Development
                                                                                            Stage Deficit
                                                                                            Apportionment
                                                                             Total           Of Current
                                               Additional                  Stockholders'        Year
                                               Paid-in       Accumulated     Equity          Consolidated
                                               Capital       Deficit                            Loss
                                           -------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>
Balance at 1/1/05 (see Note below) ......   $ 2,505,184    $(2,434,048)   $    71,150    $      --

   Issuance of Series B Preferred
   Stock in exchange for SeriesA
   Preferred Stock ......................           (25)          --             --             --
   Net loss .............................          --         (424,811)      (424,811)          --
                                            -----------    -----------    -----------    -----------
Balance at 12/31/05 (see Note below) ....   $ 2,505,159    $(2,858,859)   $  (353,661)          --
                                            ===========    ===========    ===========    -----------

   Exchange for services - related party         37,297           --           37,500           --
   Exchange for services ................         2,625           --            2,639           --
   Consideration for business combination    (1,950,601)       (13,788)    (1,963,419)          --
     Bifurcation of warrants ............     1,109,835           --        1,109,835           --
   Issuance of options ..................       144,000           --          144,000           --
   Conversion of Series C Pref Stk ......        (1,600)          --             --             --
   Net loss .............................          --       (2,548,547)    (2,548,547)    (2,266,344)
                                            -----------    -----------    -----------    -----------
Balance at 12/31/06 .....................   $ 1,846,715    $(5,421,194)   $(3,571,653)   $(2,266,344)
                                            ===========    ===========    ===========    ===========

Note 1: The balances of common shares, Common Stock, and Additional Paid-In
Capital have been retroactively restated to reflect the effects of a 1000:1
reverse common stock split during the year ended December 31, 2006.

Note 2: All stock related transactions during the year ended 2006 have occurred
after the inception date of April 1, 2006.




            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>

<PAGE>





<PAGE>

<TABLE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
<CAPTION>
                                                                                         Cumulative
                                                                                      Amounts Since
                                                                                       Inception of
                                                                                        Development
                                                                                       Stage 4/1/06
                                                            12/31/06      12/31/05      To 12/31/06
                                                         -----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                     <C>            <C>            <C>
Net loss ............................................   $(2,548,547)   $  (424,811)   $(2,266,344)
Adjustments to reconcile net loss to net cash
used in operating activities:
   Amortization of deferred financing costs .........       230,200
                                                                              --          230,200
   Amortization of note discount ....................       172,533           --          146,369
   Amortization of Energy Technology ................       356,712
                                                                              --          356,712
   Write off of FMV of derivatives ..................      (104,657)          --         (104,067)
    Issuance of equity securities for services ......        57,656           --           57,656
    Debt issuance for related party payable .........          --          187,995           --
   Changes in assets and liabilities
     Accounts receivable ............................       (52,230)          --          (52,230)
Other current assets ................................       197,988        246,667        197,988

Deposits ............................................      (619,851)          --         (619,851)
     Inventory ......................................      (846,337)          --         (846,337)
     Accounts payable ...............................       359,016        (13,638)       308,443
     Customer deposit ...............................       578,250           --          578,250
         Accrued interest ...........................       674,941          3,787        670,781
     Accrued expenses ...............................       131,712           --          131,711
                                                        -----------    -----------    -----------
       Net cash used in operating activities ........    (1,412,614)          --       (1,210,719)
                                                        -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES

Cash investments in unconsolidated subsidiaries .....    (4,501,324)          --       (4,501,324)
Cash acquired from acquisition of subsidiaries ......     2,280,937           --        2,280,937
                                                        -----------    -----------    -----------
       Net used in investing activities .............   (2,220, 87)           --       (2,220,387)
                                                        -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

   Borrowings from related parties-short term .......       304,819           --          129,944
   Issuance of convertible debentures - related party        65,180           --           38,160
   Net proceeds from long-term convertible debentures     4,900,000           --        4,900,000
   Repayments on notes payable ......................      (630,326)          --         (630,326)
                                                        -----------    -----------    -----------
       Net cash provided by financing activities ....     4,639,673           --        4,437,778

Increase (decrease) in cash .........................     1,006,672           --        1,006,672
Cash at beginning of year ...........................          --             --             --
                                                        -----------    -----------    -----------
Cash at end of year .................................   $ 1,006,672    $      --      $ 1,006,672
                                                        ===========    ===========    ===========

                                  Cumulative


During the year ended  December 31, 2005 a related party paid expenses  totaling
$37,995 on behalf of the Company.

During the year ended December 31, 2005, the Company issued a convertible demand
note to  GreenShift  Corporation  in the  amount of  $187,995  in  exchange  for
advances  made by  GreenShift  Corporation  for expenses  paid on the  Company's
behalf, and accrued management fees of $150,000.

              The Notes to Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>

<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1         DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

GS AgriFuels  Corporation  is a  development  stage  Delaware  corporation  that
manufactures and sells  proprietary  agrifuels and renewable  energy  production
equipment  and is  developing  facilities  to produce  and sell clean  fuels and
energy and other  agriproducts from biomass utilizing  proprietary  technologies
and  industry  know how. GS  AgriFuels  also makes both  majority  and  minority
investments  in  companies  with  which GS  AgriFuels  seeks  to form  strategic
relationships and where management believes such investments offer the potential
for capital appreciation.

Concerns  over  climate  change,  continued  growth  in energy  demand,  and the
stability  and  pricing of the  petroleum  markets  are  driving a global  shift
towards   increased   reliance  on   alternative   energy   sources,   including
biomass-derived  fuels. Biomass is the most abundant and only resource available
in the time to satisfy the world's expansively growing demand for carbon-neutral
liquid  fuels.  GS AgriFuels  and its  portfolio  companies  own or hold the use
rights  to  a  number  of  patented  and  patent-pending   biomass   extraction,
preparation,  and  refining  technologies  that  convert  biomass into clean and
renewable energy and fuels.

Our technologies and the technologies of certain portfolio  companies  encompass
several classes of technology,  including  innovative  extraction,  desiccation,
homogenization,   process   intensification,   biodiesel   production,   biomass
gasification, reformation, and catalytic technologies. Our development plans are
based on the use of these technologies to:

     >>   Sell equipment at high margins into selected market segments;

     >>   Acquire  long term  rights to  high-quality  sources of  biomass  with
          low-risk and at low-cost;

     >>   Produce  biomass-derived  energy  and  fuels  out  of  non-traditional
          feedstocks such as corn oil and cellulosic biomass;

     >>   Acquire   production  assets  in  mature   agribusinesses  -  such  as
          traditional  corn  ethanol,  oilseed  crushing and other  agriproducts
          processing  facilities - and  synergistically  upgrade these locations
          into integrated multi-feedstock, multi-fuel biorefineries.

We believe that combined  applications of these  technologies  may have wide and
disruptive  application  potential  throughout the landscape of the agriproducts
sector. Our technologies are robust,  scalable,  energy efficient,  modular and,
importantly,  capable of rapid and  cost-effective  "plug-and-play"  integration
into the existing agribusiness infrastructure.

These advantages  converge to potentially  enable the refining of many different
alternative feedstocks into clean and renewable energy and a number of different
clean fuels  cost-effectively  at small scales.  This provides us with,  what we
believe  to be,  highly  valuable  opportunities  to  reduce  commodity  risk by
creating  opportunities to manage  production  assets in response to fluctuating
commodity market conditions.  No single  conventional or new technology or group
of technologies that we are aware of can currently achieve this.

Commercial  scale  early-adopter  and pilot  deployments of our technologies are
currently in operation and are used for ongoing  customer  demonstrations  as we
service our current  biodiesel  equipment  sales  pipeline.  We also rely on our
pilot  deployments to prove out the economics of our own planned fuel production
facilities for prospective financing sources and project partners.

GS AgriFuels is currently  developing  several sites for the construction of our
planned  production  facilities.  Most of our  planned  facilities  will have an
initial nameplate  capacity of five (5) or ten (10) million gallons of biodiesel
production and potentially five (5) million gallons of ethanol,  methanol and/or
synthetic diesel production derived from biomass  gasification and gas-to-liquid
technologies.  GS AgriFuels' production plans are based on leveraging technology
and/or geography to establish a feedstock procurement  advantage,  and intend to
accomplish this by: (i) co-locating  agrifuels  production assets directly at or
in proximity to our facility's  source of biomass  feedstock,  such as an animal
processing  facility  or an oil seed  crushing  facility;  and/or (ii) by taking
advantage of technologies  that enable us to obtain and process  feedstocks that
other producers  cannot process,  such as the corn ethanol  co-product  known as
distillers  dried grain.  Our  long-term  production  plans are to build a large
number of smaller,  strategically placed or "distributed"  production facilities
at or in proximity to the plants'  source of  feedstocks.  Finally,  the Company
also has and  intends to  continue  to acquire  existing  production  assets and
upgrade  these  assets  through the  implementation  of one or more  proprietary
technologies.

Our  business  model  is  also  based  on our  sales  of  proprietary  agrifuels
production equipment to third party biodiesel
<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


and other agrifuels producers.  We intend to provide our equipment sales clients
with financial and other assistance relative to their respective projects and we
plan to consider making equity and other investments in qualified projects.  Our
current equipment  offerings include turn-key biodiesel  production plants rated
for five (5) million and ten (10) million gallons per year, although the modular
nature and small footprint of the technology  allow our customers to rapidly and
easily expand plant production capacity.

The Company  incorporated in the State of Delaware on February 17, 2000. On June
7, 2006, the Company acquired Mean Green BioFuels, Inc., a newly formed company,
from  GreenShift  Corporation.  At  the  closing,  GreenShift  Corporation  also
surrendered to the Company  300,000  shares of the Company's  Series B Preferred
Stock (which was  convertible  into 67% of the Company's  fully-  diluted common
stock).  In exchange for the Mean Green BioFuels shares and the Company's Series
B Preferred Stock, the Company assumed GreenShift's  obligations under a Secured
Convertible Debenture due to Cornell Capital Partners in the principal amount of
$1,949,631,  and issued to GreenShift  Corporation  1,000,000 shares of Series C
Preferred Stock (which are convertible  into 80% of the Company's  fully-diluted
common  stock).  On July 27,  2006,  the  Company  changed  the name  from  Hugo
International Telecom, Inc. to GS AgriFuels Corporation.

In August 2006, GS AgriFuels  acquired an approximate  10% interest in ZeroPoint
Clean  Tech,  Inc.  ("ZeroPoint")  ZeroPoint  is in the  process  of  building a
commercial  scale pilot unit of its  proprietary  biomass  gasification,  gas to
liquids  and  fuel  reforming   technology.   This  technology  is  designed  to
standardize variable biomass and optimize high yields of high-quality  synthesis
gas or "syngas" and can be operated at greater cost  efficiencies  as well as on
smaller scales. As part of the transaction,  GS AgriFuels also received warrants
to acquire  another 4% of  ZeroPoint.  In  conjunction  with the  investment  in
ZeroPoint,  the Company entered into a reciprocal sales and marketing  agreement
(later  amended and updated in February  2007)  whereby  ZeroPoint  acquired the
worldwide,  non-exclusive  rights to market and sell  certain  of the  Company's
technologies,  and GS AgriFuels  acquired the exclusive use and marketing rights
for ZeroPoint's patent pending gasification and gas-to-liquids technology in the
North American ethanol industry.


On October 18, 2006, GS Energy Corporation and GS AgriFuels Corporation executed
an Agreement  and Plan of Merger.  Pursuant to the terms and  conditions  of the
Merger  Agreement,  GS Energy will merge with and into GS  Acquisition,  Inc., a
newly formed  special  purpose  subsidiary of GS  AgriFuels.  The closing of the
merger will occur after approval of the merger by the shareholders of GS Energy.
GS Energy owns a specialty manufacturing company, Warnecke Design Service, Inc.,
which  currently  provides  manufacturing  services for, among other related and
third  party  customers,  NextGen  Fuel,  Inc.  A merger  of GS  Energy  with GS
AgriFuels  is expected to be strategic to both  companies  for several  reasons,
including: (a) the integration of NextGen's and Warnecke Design's businesses can
be expected to enhance operating  margins for both companies while  establishing
an immediate  stream of revenues and earnings for GS AgriFuels;  and (b) merging
GS Energy and GS AgriFuels  can be expected to increase  stock market  liquidity
for both  companies,  which may  positively  impact  Company's  ability to raise
capital in the future if need be.


On October 31, 2006,  GS AgriFuels  purchased  100% of the  outstanding  capital
stock  of  NextGen  Fuel,  Inc.  NextGen  Fuel is  engaged  in the  business  of
developing  and marketing  proprietary  esterification  and  transesterification
biodiesel process technologies.


As of December  31,  2006,  the  Company  effectively  owned 13% of  Sustainable
System,  Inc. as a result of  investing  $2 million in the capital  stock of the
company.  Sustainable  Systems  business  model is to acquire or build  multiple
oilseed crush facilities in North and South America.  Sustainable currently owns
and operates an oilseed crushing facility in Culbertson, Montana, which produces
and sells high oleic safflower, sunflower, canola and other vegetable oils. This
acquisition is designed to accelerate the  development of the company's  oilseed
crush biorefineries and related  biomass-to-energy  development projects as well
as allow the continued expansion of and acceleration of the company's ability to
service  customers in the food grade  vegetable  oil program.  In March 2007, GS
AgriFuels  completed the  acquisition  of the  remaining 87% of the  outstanding
capital stock of Sustainable Systems, Inc.

BUSINESS STRATEGY

GS AgriFuels is currently  developing  several sites for the construction of our
planned  production  facilities.  Most of our  planned  facilities  will have an
initial nameplate  capacity of five (5) or ten (10) million gallons of biodiesel
production and potentially five (5) million gallons of ethanol,  methanol and/or
synthetic diesel production derived
<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


from  biomass  gasification  and  gas-to-liquid   technologies.   GS  AgriFuels'
production  plans  are  based  on  leveraging  technology  and/or  geography  to
establish a feedstock procurement  advantage,  and intend to accomplish this by:
(i) co-locating  agrifuels  production assets directly at or in proximity to our
facility's source of biomass feedstock, such as an animal processing facility or
an oil seed crushing  facility;  and/or (ii) by taking advantage of technologies
that  enable us to obtain and process  feedstocks  that other  producers  cannot
process,  such as the corn ethanol  co-product  known as distillers dried grain.
Our  long-term  production  plans  are to  build  a  large  number  of  smaller,
strategically placed or "distributed"  production  facilities at or in proximity
to the plants' source of feedstocks.  Finally,  the Company also has and intends
to continue to acquire  existing  production  assets and  upgrade  these  assets
through the implementation of one or more proprietary technologies.

Our  development  plans  are also  based on our sales of  proprietary  agrifuels
production equipment to third party biodiesel and other agrifuels producers.  We
intend  to  provide  our  equipment  sales  clients  with  financial  and  other
assistance  relative to their respective projects and we plan to consider making
equity and other  investments  in  qualified  projects.  Our  current  equipment
offerings include turn-key  biodiesel  production plants rated for 5 million and
10 million gallons per year,  although the modular nature and small footprint of
the technology allow our customers to rapidly and easily expand plant production
capacity.

2         GOING CONCERN

GS AgriFuels  incurred a loss from continuing  operations of approximately  $2.5
million during the year ended  December 31, 2006.  Also as of December 31, 2006,
GS  AgriFuels  had  current   liabilities   exceeding  its  current   assets  by
approximately $10.6 million.  These matters caused the Company's auditors to add
an explanatory paragraph in their auditors report which raises substantial doubt
about GS AgriFuels'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.  However,  there can be no assurances  that GS
AgriFuels  will be successful  in this regard or will be able to eliminate  both
its working capital deficit and its operating losses.

The accompanying  financial  statements do not contain any adjustments which may
be required as a result of this uncertainty.

3         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

References  to the  "FASB",  "SFAS"  and "SAB"  herein  refer to the  "Financial
Accounting Standards Board," "Statements of Financial Accounting Standards," and
the "SEC Staff Accounting Bulletin," respectively.

PRINCIPLES OF CONSOLIDATION

For the period ended December 31, 2006, the accompanying  consolidated financial
statements include all accounts of GS AgriFuels Corporation and its wholly-owned
subsidiaries,  Mean  Green  BioFuels,  Inc and  NextGen  Acquisition,  Inc.  All
significant   intercompany   balances  and   transactions   were  eliminated  in
consolidation.  The  consolidated  financial  statements  for the  period  ended
December 31, 2006 include the accounts of Mean Green  BioFuels,  Inc.  beginning
June 7, 2006 and NextGen Acquisition, Inc. beginning October 30, 2006.

COST METHOD OF ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES

The Company  accounts for its 10% investment in ZeroPoint  Clean Tech,  Inc. and
its 13% investment in Sustainable Systems under the cost method.  Application of
this method  requires the Company to  periodically  review these  investments in
order to determine  whether to maintain the current  carrying  value or to write
off some or all of the  investments.  While  the  Company  uses  some  objective
measurements in its review, the review process involves a number of judgments on
the part of the Company's management. These judgments include assessments of the
likelihood of ZeroPoint  and  Sustainable  to obtain  additional  financing,  to
achieve  future  milestones,  make  sales and to  compete  effectively  in their
markets.  In making these  judgments the Company must also attempt to anticipate
trends in  ZeroPoint's  and  Sustainable's  industry  as well as in the  general
economy.  Based on  management's  assessment,  the Company  believes there is no
impairment at December 31, 2006.

CASH AND EQUIVALENTS

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

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


GS AgriFuels  maintains cash balances with financial  institutions that at times
may exceed the limits insured by the Federal Deposit Insurance Corporation. Cash
balances in excess of these limits at December 31, 2006 amounted to $906,672.

NET LOSS PER COMMON SHARE

3   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

GS  AgriFuels  computes  its net  income  or loss per  common  share  under  the
provisions of SFAS No. 128,  "Earnings  per Share",  whereby basic net income or
loss per  share is  computed  by  dividing  the net loss for the  period  by the
weighted-average number of shares of common stock outstanding during the period.
Dilutive net loss per share  excludes  potential  common shares if the effect is
anti-dilutive.  For the years ended  December  31, 2006 and 2005,  common  stock
equivalent  shares  arising from the assumed  exercise of options,  warrants and
debt  conversions  of  convertible  debt  instruments  were  excluded  from  the
computation of diluted net loss per share.

REVENUE RECOGNITION

We recognize  revenue from the sale of equipment when persuasive  evidence of an
arrangement  exists,  title and risk of loss transfers to the customers,  prices
are fixed and  determinable,  and it is reasonably  assured the related accounts
receivable is collectible. Our sales terms primarily are FOB shipping point.

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

INVENTORIES

Inventories  are  stated  at the  lower  of  cost or  market,  with  cost  being
determined by the first-in, first-out (FIFO) method. Inventories consist of work
in process used in our biodiesel production segment.

RECEIVABLES AND CREDIT CONCENTRATION

Accounts   receivable  are   uncollateralized,   non-interest-bearing   customer
obligations due under normal trade terms  requiring  payment within 30 days from
the invoice  date.  Accounts  receivable  are stated at the amount billed to the
customer.   Accounts  receivable  in  excess  of  90  days  old  are  considered
delinquent.  Payments of  accounts  receivable  are  allocated  to the  specific
invoices identified on the customer's remittance advice or, if unspecified,  are
applied to the oldest unpaid invoices.

The carrying amount of accounts receivable has not been reduced by any valuation
allowance as of December 31, 2006.  The  receivables  in question are fairly new
and it is GS  AgriFuels'  view  that  100% will be  collected.  Management  will
consider the need to establish a valuation  allowance and review that  allowance
on a quarterly basis.

GOODWILL AND INTANGIBLE ASSETS

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

Intangibles  with definite  lives consist  primarily of developed  technologies,
which have useful  lives and are subject to  impairment  testing in the event of
certain  indicators.  An  impairment  in  the  carrying  value  of an  asset  is
recognized whenever  anticipated future cash flows  (undiscounted) from an asset
are estimated to be less than its carrying  value.  The amount of the impairment
recognized  is the  difference  between the carrying  value of the asset and its
fair value. Based on management's  assessment,  the Company believes there is no
impairment at December 31, 2006.

<PAGE>


                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

DEFERRED FINANCING CHARGES AND DEBT DISCOUNTS

Deferred finance costs represent costs which may include direct costs paid to or
warrants issued to third parties in order to obtain long-term financing and have
been  reflected as other assets.  Costs  incurred with parties who are providing
the  actual  long-term  financing,  which  generally  may  include  the value of
warrants,  fair value of the  derivative  conversion  feature,  or the intrinsic
value of beneficial conversion features associated with the underlying debt, are
reflected as a debt discount.  These costs and discounts are generally amortized
over the life of the related debt.  Amortization  expense related to these costs
and  discounts  were  $402,733 for the year ended  December 31, 2006,  including
$172,533 in debt  discount  amortization  included  in  interest  expense on the
Statement of Operations.

DERIVATIVE LIABILITY

In accordance with SFAS 133 and EITF 00-19,  the conversion  feature  associated
with the convertible debenture  represented an embedded derivative.  The Company
had recognized the embedded derivative as a liability on its balance sheet as of
September 30, 2006. As a result of a restructuring  of the debt from a debenture
to short term debt,  the Company has written off the remaining fair value of the
liability as of December 31, 2006.

Certain  of the  Company's  debt and equity  instruments  may  include  embedded
derivatives that require bifurcation from the host contract under the provisions
of SFAS No. 133. Under the provisions of this statement, the Company records the
related derivative  liabilities at fair value and records the accounting gain or
loss  resulting  from the  change in fair  values  at the end of each  reporting
period.

INCOME TAXES

Income taxes are  accounted for under the asset and  liability  method,  whereby
deferred income taxes are recorded for temporary  differences  between financial
statement carrying amounts and the tax basis of assets and liabilities.

Deferred  tax assets and  liabilities  reflect  the tax rates  expected to be in
effect  for the  years in which the  differences  are  expected  to  reverse.  A
valuation  allowance  is provided if it is more likely than not that some or all
of the  deferred  tax asset will not be  realized.  Deferred  income tax assets,
which relate primarily to net operating loss carry-forwards, have been offset by
a valuation  allowance for the same amount for all financial  statement  periods
presented and  differences  in the basis in property,  equipment and  intangible
assets.

USE OF ESTIMATES

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

STOCK BASED COMPENSATION

The Company  accounts for stock,  stock  options and stock  warrants  issued for
services  and  compensation  by  employees  under  the fair  value  method.  For
non-employees,  the fair market value of the Company's  stock is measured on the
date of stock  issuance or the date an  option/warrant  is granted.  The Company
determined  the fair  market  value of the  warrants/options  issued  under  the
Black-Scholes Pricing Model.  Effective January 1, 2006, the Company adopted the
provisions of SFAS 123(R), SHARE-BASED PAYMENT, which establishes accounting for
equity instruments exchanged for employee services. Under the provisions of SFAS
123(R),  share-based  compensation  cost is measured at the grant date, based on
the fair value of the award, and is recognized as an expense over the employee's
requisite  service  period  (generally  the vesting period of the equity grant).
Prior to January 1, 2006, the Company accounted for share-based  compensation to
employees in accordance with Accounting  Principles  Board (APB) Opinion No. 25,
ACCOUNTING  FOR STOCK  ISSUED TO  EMPLOYEES,  and related  interpretations.  The
Company also followed the disclosure  requirements  of SFAS 123,  ACCOUNTING FOR
STOCK-BASED COMPENSATION.  The Company elected to adopt the modified prospective
transition  method  as  provided  by SFAS  123(R)  and,  accordingly,  financial
statement  amounts for the prior  periods  presented in the Form 10-KSB have not
been  restated  to  reflect  the fair  value  method  of  expensing  share-based
compensation.

<PAGE>
                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FINANCIAL INSTRUMENTS

The carrying values of accounts receivable, other receivables, accounts payable,
and  accrued  expenses  approximate  their fair  values due to their  short term
maturities.  The carrying  values of GS AgriFuels'  long-term  debt  approximate
their fair values based upon a comparison of the interest rate and terms of such
debt to the rates and terms of debt currently available to GS AgriFuels.  It was
not  practical  to estimate  the fair value of the  convertible  debt due to the
nature of these items.  These estimates would be based on the carrying  amounts,
maturities,  effective interest rates and volatility of the Company's stock. The
Company does not believe it is practical  due to the  significant  volatility of
the Company's stock.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 123R "Share  Based  Payment."  This  statement is a revision to SFAS 123 and
supersedes  Accounting  Principles  Board (APB) Opinion No. 25,  "Accounting for
Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash
Flows".  This statement requires a public entity to expense the cost of employee
services received in exchange for an award of equity instruments. This statement
also  provides  guidance  on valuing  and  expensing  these  awards,  as well as
disclosure  requirements  of  these  equity  arrangements.   This  statement  is
effective as of the  beginning of the first interim or annual  reporting  period
that begins after  December 15, 2005. The adoption of SFAS No. 123(R) may have a
material effect on the Company's  results of operations but not on the Company's
financial position.

In December 2004, the FASB issued FASB statement No. 153 ("SFAS 153").  SFAS 153
addresses  accounting for non-monetary  transactions.  The Company's adoption of
SFAS 153 did not have a material  impact on the  Company's  financial  position,
results of operations and cash flows.

In June,  2005,  the  Financial  Accounting  Standards  Board  (FASB) has issued
Statement No. 154,  Accounting Changes and Error  Corrections,  a replacement of
APB  Opinion  No. 20 and FASB  Statement  No. 3. The  Statement  applies  to all
voluntary  changes in accounting  principle,  and changes the  requirements  for
accounting for and reporting of a change in accounting principle. This statement
will  improve  financial  reporting  because its  requirements  will enhance the
consistency of financial information between periods.

In  February  2006,  the FASB  issued SFAS 155,  Accounting  for Certain  Hybrid
Financial  Instruments.  SFAS 155 amends FASB  Statements  133,  Accounting  for
Derivative Instruments and Hedging Activities, and 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities and permits
fair value  remeasurement  for any hybrid financial  instrument that contains an
embedded  derivative  that  otherwise  would  require  bifurcation.  SFAS 155 is
effective  for all  financial  instruments  acquired,  issued,  or  subject to a
remeasurement  (new basis) event  occurring  after the  beginning of an entity's
first fiscal year that begins after  September  15,  2006.  Management  does not
expect the  implementation of this new standard to have a material impact on the
Company's financial position, results of operations and cash flows.

On  February  3, 2006,  the FASB  issued  FASB Staff  Position  FSP FAS  123R-4,
"Classification   of  Options  and  Similar   Instruments   Issued  as  Employee
Compensation  That Allow for Cash Settlement Upon the Occurrence of a Contingent
Event ." This FASB Staff Position (FSP) addresses the  classification of options
and  similar  instruments  issued as employee  compensation  that allow for cash
settlement upon the occurrence of a contingent  event.  The guidance in this FSP
amends  paragraphs  32 and  A229 of  FASB  Statement  No.  123  (revised  2004),
Share-Based Payment.

On October  10,  2006,  the FASB  issued  FASB Staff  Position  FSP FAS  123R-5,
"Amendment of FASB Staff  Position FAS 123R-1.  " This FASB Staff Position (FSP)
addresses  whether a modification  of an instrument in connection with an equity
restructuring  should be considered a modification  for purposes of applying FSP
FAS  123(R)-1  ,  "Classification  and  Measurement  of  Freestanding  Financial
Instruments  Originally  Issued in Exchange  for  Employee  Services  under FASB
Statement No. 123(R) ."

<PAGE>

                     AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

On  February  3, 2006,  the FASB  issued  FASB Staff  Position  FSP FAS  123R-6,
"Technical  Corrections of FASB Statement No.  123(R)." This FASB Staff Position
(FSP) addresses certain technical corrections of FASB Statement No. 123 (revised
2004),  Share-Based  Payment.  The  Company's  adoption  of SFAS  123(R) and the
implementation  of these new  standards  did not have a  material  impact on the
Company's financial position, results of operations and cash flows.

In March 2006, the Financial  Accounting Standards Board (FASB) issued Statement
of Financial  Accounting  Standard  (SFAS) No. 156,  Accounting for Servicing of
Financial  Asset.  SFAS No. 156 amends FASB  Statement No. 140,  Accounting  for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ,
with respect to the accounting for separately  recognized  servicing  assets and
servicing liabilities.

SFAS No. 156 is effective as of the  beginning of an entity's  first fiscal year
that  begins  after   September  15,  2006.   Management  does  not  expect  the
implementation  of this new standard to have a material  impact on the Company's
financial position, results of operations and cash flows.

In September 2006, the FASB issued SFAS 157, Fair Value  Measurements.  SFAS 157
defines  fair  value,  establishes  a  framework  for  measuring  fair  value in
generally accepted  accounting  principles (GAAP), and expands disclosures about
fair value measurements.  SFAS 157 is effective for financial  statements issued
for fiscal years  beginning  after November 15, 2007, and interim periods within
those fiscal years.  Management does not expect the  implementation  of this new
standard to have a material impact on the Company's financial position,  results
of operations and cash flows.

On September  13,  2006,  the SEC released  Staff  Accounting  Bulletin No. 108,
"Considering  the  Effects  of  Prior  Period   Misstatements  When  Quantifying
Misstatements in Current Year Financial Statements.", which provides guidance on
the  consideration  of the effects of prior year  misstatements  in  quantifying
current year  misstatements  for the purpose of a  materiality  assessment.  The
standard is effective for the first annual financial statements for fiscal years
beginning  after  November 15, 2006.  The Company is currently  considering  the
effect of implementing the requirements of this standard.

4         ACQUISITIONS & MERGERS

GS AgriFuels 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.

On June 7, 2006, the Company acquired Mean Green BioFuels,  Inc., a newly formed
company, from GreenShift  Corporation.  At the closing,  GreenShift  Corporation
surrendered to the Company  300,000  shares of the Company's  Series B Preferred
Stock (which was  convertible  into 67% of the  Company's  fully-diluted  common
stock).  In exchange for the Mean Green BioFuels shares and the Company's Series
B Preferred Stock, the Company assumed GreenShift's  obligations under a Secured
Convertible Debenture due to Cornell Capital Partners in the principal amount of
$1,949,631 and issued to GreenShift 1,000,000 shares of Series C Preferred Stock
(which are convertible  into 80% of the Company's  fully-diluted  common stock).
Since the combination was consummated between entities under common control, the
transaction  was  accounted for at book value,  and the amount of  consideration
paid over the book value of assets  received  of  $1,950,601  was  recorded as a
reduction  of  paid  in  capital.  Prior  to the  acquisition,  the  predecessor
operations of Mean Green  BioFuels,  Inc.  recorded an operating loss of $57,573
for the period from January 1, 2006 to May 23, 2006.

<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

On October 30, 2006 GS AgriFuels,  through its subsidiary  NextGen  Acquisition,
Inc.,  completed the  acquisition of NextGen Fuel, Inc. The total purchase price
of $21,204,437  paid  $17,000,000 in cash at closing and notes payable issued to
the sellers for $4,204,437.  The seller notes are payable upon NextGen obtaining
sales of at least $7,500,000 subsequent to the acquisition.  The Company engaged
a third party valuation expert to perform the purchase price allocation, and the
purchase price was allocated as follows:  $2,280,937 to cash; $14,700,000 to the
intangible asset energy technologies,  amortizable over the expected useful life
of seven years; $5,453,816 to goodwill; $153,800 to accounts payable and accrued
expenses; and $1,076,500 to customer deposit liability.  To fund the acquisition
of NextGen, GS AgriFuels issued a $13,000,000  convertible  debenture to Cornell
Capital  Partners and a $6,000,000  Senior Secured Term note to Stillwater Asset
Backed Fund,  LP, the  proceeds  both of which are  detailed  below.  See Note 5
Financing  Arrangements  for  additional  details on the seller  note due to the
NextGen's former shareholders.

ACQUISITIONS - SUBSEQUENT EVENTS

In March 2007, GS AgriFuels  completed the acquisition of  approximately  87% of
the outstanding  capital stock of Sustainable  Systems,  Inc. As of December 31,
2006, the Company  effectively owned 13% of Sustainable System, Inc. as a result
of investing $2 million in the capital stock of the company. Sustainable Systems
owns an oilseed crushing facility in Culbertson,  Montana and is in the business
of  producing  and selling  high oleic  safflower,  sunflower,  canola and other
vegetable  oils.  This  acquisition is designed to accelerate the development of
the  company's  oilseed  crush  biorefineries  and  related  biomass  to  energy
development   projects  as  well  as  allow  the  continued   expansion  of  and
acceleration  of the  company's  ability to service  customers in the food grade
vegetable oil program.





<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5         FINANCING ARRANGEMENTS

The following is a summary of GS AgriFuels' financing arrangements as of
December 31, 2006:

Short-term borrowings
     Short term loans - Greenshift ..................   $    129,935
     Short term loans - affiliate ...................        174,875
     Convertible debenture - GreenShift .............        276,602
                                                        ------------
             Total short-term borrowings ............   $    581,412

Long term convertible debentures:
     Convertible debenture - Cornell Capital Partners   $  1,949,631
     Convertible debenture - Cornell Capital Partners   $  5,500,000
     Convertible debenture - Cornell Capital Partners   $ 13,000,000
     Note discounts .................................     (1,041,960)
                                                        ------------
 Total oflong term convertible debentures ...........   $ 19,407,671
Long-term debt, current portion:
     Note payable - Stillwater ......................   $  5,855,438
     Note payable - NextGen sellers .................      4,204,437
                                                        ------------
         Total long-term debt, current portion ......   $ 10,059,875


The  following  chart  is  presented  to  assist  the  reader  in  analyzing  GS
AgriFuels's  ability to fulfill its fixed debt service  requirements of December
31, 2006 and GS AgriFuels' ability to meet such obligations:

Year Amount
2007                                           $   10,641,287
2008                                                     --
2009                                               20,449,631
                                              ---------------
Total minimum payments due under
  current and long-term obligations            $   31,090,918
                                               ==============

SHORT TERM BORROWINGS FROM GREENSHIFT

During the twelve months ended December 31, 2006, GS AgriFuels received $129,935
in short term loans from  GreenShift  Corporation.  These loans bear interest at
8%, for which $6,945 in interest expense was accrued for the twelve months ended
December 31, 2006. The total  principal  amount due to GreenShift for short term
loans was $129,935 as of December 31, 2006.

SHORT TERM BORROWINGS - AFFILIATE

During 2006, GS CleanTech Corporation,  a subsidiary of GreenShift  Corporation,
paid $174,875 on behalf of GS AgriFuels for services  performed during the year.
These  non-interest-bearing  advances  are payable on demand.  GreenShift  is an
approximate 80% shareholder of GS AgriFuels and is controlled by Kevin Kreisler,
Chairman and Chief Executive Officer of GS AgriFuels.

CONVERTIBLE DEBENTURES ISSUED TO GREENSHIFT

On December 29, 2005,  the Company issued an $187,995  convertible  debenture in
exchange for its outstanding liability to GreenShift  Corporation.  The $187,995
convertible debenture was due and payable on December 31, 2006, bearing interest
at 8% per year,  payable  in cash or  convertible  into our common  shares.  The
number of issuable  common shares upon conversion was equal to the amount of the
note divided by the average of the three  lowest  closing  market  prices of the
stock  during  the thirty  trading  days  preceding  conversion,  provided  such
issuance did not give GreenShift more than a 4.95% ownership of the Company. The
company  determined that the variable price conversion  feature on the debenture
was an  embedded  derivative,  and  recorded  a  note  discount  and  derivative
liability of $104,657 at December 31, 2005.  During the year ended  December 31,
2006,  GreenShift paid $88,607 on behalf of the Company for current  liabilities
and operating  expenses.  In exchange for these  payments the Company  issued to
GreenShift  additional  convertible  debentures totaling $88,607. As of December
31, 2006, the principal  balance due on these  debentures was $276,602.  For the
year ended December 31, 2006,  interest  expense of $22,874 for this  obligation
was incurred and accrued.  Interest expense from the amortization of the note GS

<PAGE>

                     AGRIFUELS CORPORATION AND SUBSIDIARIES
                     (A DEVELOPMENT STAGE COMPANY) NOTES TO
                       CONSOLIDATED FINANCIAL STATEMENTS

5         FINANCING ARRANGEMENTS (continued)

discount  was  $104,657  for the year  ended  December  31,  2006,  and the note
discount has been fully amortized as of December 31, 2006.

CONVERTIBLE DEBENTURES - CORNELL CAPITAL

On June 7, 2006, GS AgriFuels entered into a Securities  Purchase Agreement with
Cornell  Capital  Partners LP  ("Cornell")  under  which  Cornell  committed  to
purchase $22,000,000 in Secured Convertible Debentures.  The first Debenture, in
the principal amount of $5,500,000 was purchased by Cornell on June 7, 2006, for
which the company paid $600,000 in financing and  structuring  fees and received
cash proceeds of $4,900,000.  The Securities  Purchase  Agreement was amended on
October 30, 2006 to provide for only the one $5,500,000 debenture,  with certain
modifications  (see below) Under the terms of the Securities  Purchase Agreement
(as amended on October 30, 2006), the Debenture carries an 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.  If the bid
price of company stock falls below the  conversion  price,  GS AgriFuels has the
right to satisfy the  redemption  obligation by paying cash equal to 120% of the
principal  redeemed.  For the year ended December 31, 2006,  interest expense of
$313,425  for this  obligation  was incurred and  accrued.  The  Debentures  are
secured by a pledge of all of GS AgriFuels' assets,  including the capital stock
of its subsidiaries:  Mean Green BioFuels,  Inc., Mean Green Biodiesel #1, Inc.,
Mean Green  Biodiesel #2, Inc.,  and Mean Green  Biodiesel #3, Inc. GS AgriFuels
has agreed to file a  registration  statement  with the  Securities and Exchange
Commission to enable  Cornell to resell to the public any shares of GS AgriFuels
common  stock it  acquires on  conversion  of the  Debenture  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 for the year ended  December 31,
2006.  This is a one time  waiver  and  Cornell  retains  its  rights  under the
agreement for future periods.

Pursuant to the terms of the agreement,  GS AgriFuels issued 1,125,000 five year
warrants to purchase GS AgriFuels common stock that are exercisable at $.001 per
share to Cornell  Capital  Partners.  The options were issued to Cornell Capital
Partners in conjunction  with the Company's June 7, 2006 issuance of convertible
debentures.   The  fair  value  of  the  warrants  was   calculated   using  the
Black-Scholes Option Pricing Model and the Company recorded the $30,375 value of
the warrants as a discount to the note, and the note discount is being amortized
over the term of the debenture.  Interest  expense from the  amortization of the
note discount was $5,770 for the year ended December 31, 2006.

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 year ended December
31,  2006,  interest  expense of $111,102 for this  obligation  was incurred and
accrued.

On October  30, 2006 GS  AgriFuels  completed  a sale of  securities  to Cornell
Capital  Partners,  LP pursuant to a Securities  Purchase  Agreement dated as of
October  30,  2006.  The  Agreement  called for  Cornell  to  purchase 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.  Interest will accrue on
the  Debenture  at the rate of 10% per annum and will be payable on the maturity
date.  If the  market  price  of GS  AgriFuels  common  stock  is less  than the
conversion  price,  GS  AgriFuels  can  redeem  the  Debenture  for  120% of its
principal  amount.  Cornell will be entitled to convert the accrued interest and
principal amount of the Debenture into GS AgriFuels common stock at a conversion
price of $3.00 (or any lower price at which GS AgriFuels hereafter issues common
stock to any third party). The maximum number of shares that Cornell may acquire
at any  time is 4.99%  of the  outstanding  common  shares.  For the year  ended
December 31, 2006, interest expense of $220,597 for this obligation was incurred
and accrued.
<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5         FINANCING ARRANGEMENTS (continued)

In consideration of Cornell's  investment in the October 30, 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.  GS AgriFuels has also 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 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.  Interest  expense from the amortization of the note discount was
$62,106 for the year ended December 31, 2006

Commencing  on February 1, 2007,  Cornell  will also be entitled to convert into
common stock up to $500,000 of the principal amount of the Debentures (including
the  $5,500,000  Debenture  sold to Cornell on June 6, 2006) 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.

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
subsidiaries 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.

CONVERTIBLE DEBENTURE - THOMAS SCOZZAFAVA

On  December  28,  2006,  the  Company  issued  its  President  and CEO,  Thomas
Scozzafava,  a Convertible Debenture due December 28, 2008 with a face amount of
$250,000 for monies received by the Company from Mr. Scozzafava 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 Mr. Scozzafava, 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 Mr. Scozzafava;  (iii) payment in full or
in part of principal  plus accrued but unpaid  interest  shall be made only upon
demand by Mr. Scozzafava  commencing April 31, 2007; (iv) any unpaid balance, at
the option of Mr.  Scozzafava,  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 Mr.  Scozzafava  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 the date hereof  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. As of the date of
this filing,  Mr.  Scozzafava has received neither cash re-payments of principal
or cash  payments of  interest,  nor has he  exercised  his right to convert any
obligations in GS AgriFuels common stock.

DEMAND NOTE:  STILLWATER ASSET-BASED FUND, LP

On October 30, 2006,  NextGen  Acquisition,  Inc., a subsidiary  of GS AgriFuels
which was formed to facilitate the acquisition of NextGen Fuel Inc., completed a
sale of securities to Stillwater  Asset-Based  Fund, LP pursuant to a Securities
Purchase  Agreement  dated as of October  27,  2006.  The  Agreement  called for
Stillwater  to purchase a Term Note in the principal  amount of $6 million.  The
Term Note was purchased by Stillwater  on October 31, 2006,  and 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
<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5         FINANCING ARRANGEMENTS (continued)

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.

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.

6         RELATED PARTY TRANSACTIONS

MANAGEMENT SERVICES AGREEMENT WITH GREENSHIFT

In August 2005, the Company  entered into a Management  Services  Agreement with
GreenShift  Corporation  under  which  GreenShift  agreed to provide  management
assistance,  financial support, and business development services. The agreement
is for a term of five years and provides for GreenShift to receive  $150,000 per
year  payable  in cash or the  Company's  common  stock.  On May 23,  2006,  the
management  services  agreement  with  GreenShift  was  amended to  include  the
issuance of 6,000,000 options to purchase GS AgriFuels common stock at $3.00 per
share at the  later  to  occur  of  December  31,  2006 or the  commencement  of
construction of a biodiesel plant, and extend the term of the cash  compensation
of $150,000 per annum  through May 23,  2011.  The fair value of the options was
calculated using the  Black-Scholes  model to be $144,000,  and the Company will
recognize the related expense over the five year term of the management services
agreement..  Management  fee  expense of $8,013 was  recognized  during the year
ended December 31, 2006 and $126,483 of prepaid  management  fees were recorded,
of which $38,304 is considered short tem and $97,683 is considered long term. GS
AgriFuels  issued  2,025,000  shares to  GreenShift  in  payment  of  $37,500 of
management  fees due in the  second  quarter  of 2006 and to waived  $37,500  of
management  fees for the first quarter of 2006. The Company  accrued  $75,000 of
expense related to the Management Services Agreement during the final six months
of the year ended December 31, 2006.

SHARE PURCHASE AGREEMENT WITH GREENSHIFT

On June 7, 2006, the Company acquired Mean Green BioFuels,  Inc., a newly formed
company, from GreenShift  Corporation.  At the closing,  GreenShift  Corporation
surrendered to the Company  300,000  shares of the Company's  Series B Preferred
Stock (which was  convertible  into 67% of the  Company's  fully-diluted  common
stock).  In exchange for the Mean Green BioFuels shares and the Company's Series
B Preferred Stock, the Company assumed GreenShift's  obligations under a Secured
Convertible Debenture due to Cornell Capital Partners in the principal amount of
$1,949,631 and issued to GreenShift 1,000,000 shares of Series C Preferred Stock
(which are convertible  into 80% of the Company's  fully-diluted  common stock).
Since the combination was consummated between entities under common control, the
transaction  was  accounted for at book value,  and the amount of  consideration
paid over the book value of assets  received  of  $1,950,601  was  recorded as a
reduction  of  paid  in  capital.  Prior  to the  acquisition,  the  predecessor
operations of Mean Green  BioFuels,  Inc.  recorded an operating loss of $57,573
for the period from January 1, 2006 to May 23, 2006.

LOAN TO COMPANY FROM PRESIDENT AND CEO THOMAS SCOZZAFAVA

On  December  28,  2006,  the  Company  issued  its  President  and CEO,  Thomas
Scozzafava,  a Convertible Debenture due December 28, 2008 with a face amount of
$250,000 for monies received by the Company from Mr. Scozzafava 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 Mr. Scozzafava, in
cash or registered common stock in GS AgriFuels
<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6         RELATED PARTY TRANSACTIONS (continued)

Corporation  or any  combination  thereof;  (ii) shall become due and be payable
monthly  commencing  March 31, 2007,  unless otherwise waived or deferred by Mr.
Scozzafava;  (iii)  payment in full or in part of  principal  plus  accrued  but
unpaid  interest  shall be made only upon  demand by Mr.  Scozzafava  commencing
April 31, 2007; (iv) any unpaid balance, at the option of Mr. Scozzafava,  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 Mr.  Scozzafava  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 the date hereof 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. As of the date of this filing,  Mr. Scozzafava
has received neither cash re-payments of principal or cash payments of interest,
nor has he exercised his right to convert any obligations in GS AgriFuels common
stock.

OTHER RELATED PARTY TRANSACTIONS

GS  AgriFuels  is  party  to an  agreement  with  GS  CleanTech  Corporation,  a
subsidiary of GreenShift,  pursuant to which GS CleanTech  provides GS AgriFuels
with technology rights,  engineering services, and right of first refusal rights
to  purchase  GS  CleanTech's  inventory  of clean  fuel  feedstocks.  Under the
agreement,  GS AgriFuels holds the exclusive rights to the use of GS CleanTech's
technologies that are deployed in ethanol plants to obtain biodiesel  feedstocks
from co-products of ethanol production.

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 first 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 year
ended  December 31,  2006,  The Company paid  deposits  under the  manufacturing
agreement totaling $800,000 to Warnecke during the year ended December 31, 2006,
and had work in process inventory of $620,938,  other deposits of $222,373,  and
accounts  payable and accrued  expenses of $147,707  due to Warnecke at December
31, 2006. 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.

7         INVESTMENTS

INVESTMENT IN SUSTAINABLE SYSTEMS UNDER FINANCING AGREEMENT

On September  13, 2006, GS AgriFuels,  Inc.  entered into a financing  agreement
with  Sustainable  Systems,  LLC  whereby  AgriFuels  will  invest  a  total  of
$3,000,000 into the company. As part of the agreement,  as of December 31, 2006,
GS AgriFuels  completed bridge loan financing in the amount of $2,000,000.  Upon
closing,  the total  advances  will be credited to the total  investment  and GS
AgriFuels will receive 3,121,688 shares of Series A Preferred  Convertible stock
representing  20% of Sustainable  Systems,  LLC's  outstanding  stock.  See Note
12-Subsequent Events for information  regarding the Company's acquisition of and
contract for the sale of a biodiesel system to Sustainable Systems.

INVESTMENT IN ZEROPOINT CLEAN TECHNOLOGIES, INC.

In August 2006, GS AgriFuels  entered into a Series A Preferred  Stock  Purchase
Agreement with  ZeroPoint  Clean Tech,  Inc. under which GS AgriFuels  agreed to
purchase 113,800 shares of Series A Preferred Stock, representing  approximately
10% of the capital stock of ZeroPoint,  at a purchase price of $21.98 per share.
In conjunction with the Agreement,  ZeroPoint Clean Tech, Inc. also issued to GS
AgriFuels  56,900  five year  warrants to purchase  ZeroPoint  Clean Tech,  Inc.
common stock that are exercisable at $32.97 per share.

8             COMMITMENTS AND CONTINGENCIES

CONSULTING AGREEMENTS

The Company's subsidiary NextGen Fuel, Inc. is a party to consulting  agreements
with three of the founders and former  shareholders  of NextGen  Fuel,  Inc. The
agreements  with  two of the  consultants  are for the  provision  of  technical
services  related to  design,  engineering,  sales,  technical  assistance,  and
obtaining patents for NextGen
<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8         COMMITMENTS AND CONTINGENCIES (continued)

Fuel's biodiesel  production systems, and require an aggregate payment of $5,000
per  month  for one  year.  The  agreement  with a third  consultant  is for the
provision  of  sales  and  marketing   services  for  NextGen  Fuel's  biodiesel
production systems.  This agreement calls for a commission payment of 3% for the
first  $30,000,000  in  sales  and  5% of  sales  thereafter,  a cash  bonus  of
$1,000,000  upon the execution and full  collection of the first  $30,000,000 in
sales and an additional  $1,500,000  upon the  execution and full  collection of
$50,000,000 in sales, and full payment seller note of $1,000,000  issued to this
consultant  upon the payment by customers  for the sale of biodiesel  production
systems equaling forty million gallons of annual production capacity.

SERIES A PREFERRED STOCK

In 2001 the Company issued shares of Series A Preferred  Stock.  37,350 of those
shares remain  outstanding.  By their terms, they  automatically  converted into
37.35 shares of common stock  (adjusted to reflect the 1-for-1000  reverse stock
split in 2006.  In  November  2006 a claim was made by  certain  holders  of the
Series A Preferred Stock that they are entitled to receive  8,300,000  shares of
common  stock by  reason of  promises  made to them by prior  management  of the
Company and actions taken by the sole  director of the Company in 2003.  Current
management has reviewed the claims and the underlying  facts,  and has concluded
that the claims are not legally  valid.  Negotiations  are  ongoing,  aimed at a
resolution of the claims.

LEGAL MATTERS

The Company is party to the matter entitled  O'Brien & Gere Limited,  et. al. v.
NextGen  Chemical  Processors,  Inc.,  et.  al.,  which  action was filed in the
Supreme Court of the State of New York. The verified complaint, which also names
the Company  and certain of its  affiliates,  seeks  performance  of and damages
relating to certain  service and related  agreements,  plus  attorney's fees and
costs. This matter relates to the provision by plaintiffs of certain engineering
services to NextGen Chemical Processors,  Inc. ("NCP") during 2005 and 2006. NCP
is owned by the former shareholders of our recently acquired NextGen Fuel, Inc.,
subsidiary.  The Company has responded to the verified  complaint and denies any
liability.

9              INCOME TAXES

INCOME TAXES

GS AgriFuels  has incurred  losses,  which have  generated  net  operating  loss
carryforwards for GS AgriFuels as of December 31, 2006. These loss carryforwards
are subject to  limitation  in future years  should  certain  ownership  changes
occur.  For the years ended December 31, 2006 and 2005, GS AgriFuels'  effective
tax  rate  differs  from  the  federal  statutory  rate  principally  due to net
operating  losses  and other  temporary  differences  for which no  benefit  was
recorded.  The provision  for income taxes for the year ended  December 31, 2005
consisted of a state income tax provision. Deferred tax assets are as follows:

                                    12/31/2006     12/31/2005
                                   ------------   ------------
Deferred Tax Asset:

Net operating loss carryforwards   $ 1,993,000    $   798,000
                                   -----------    -----------

Total deferred tax assets ......     1,993,000        798,000
Less: Valuation allowance ......    (1,993,000)      (798,000)
                                   -----------    -----------

Net deferred tax asset .........   $      --      $      --
                                   ===========    ===========

GS AgriFuels  has federal net operating  loss  carry-forwards  of  approximately
$2,927,000 which expire through December 31, 2026.

In accordance  with the provisions of Financial  Accounting  Standards Board No.
109, "Accounting for Income Taxes",  deferred taxes are recognized for operating
losses that are available to offset future taxable income.  Valuation allowances
are  established  when  necessary  to reduce  deferred  tax assets to the amount
expected to be realized. The Company incurred net operating losses for financial
reporting and tax reporting purposes.
<PAGE>


                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


10        STOCKHOLDERS' EQUITY

Our  authorized  capital stock  consists of  50,000,000  shares of common stock,
10,000,000  shares of Series C Preferred  Stock,  and 400,000 shares of Series A
Preferred  Stock.  The Board of Directors is  authorized  to issue the preferred
stock with any rights and  preferences  that the Board of Directors  decides are
appropriate. As of December 31, 2006, there were 28,217,500 shares of our common
stock   outstanding,   and  37,350  shares  of  our  Series  A  Preferred  Stock
outstanding.

COMMON STOCK

On January 13, 2006 the Board of Directors of GS AgriFuels unanimously adopted a
resolution to amend the Certificate of  Incorporation  to effect a reverse split
of GS  AgriFuels'  outstanding  common stock at a ratio of 1:1000 (the  "Reverse
Split").  The holder of shares representing a majority of the voting power of GS
AgriFuels'  outstanding  voting stock  subsequently  gave written consent to the
resolution.  The Company filed the Amendment to its Certificate of Incorporation
with the  Secretary  of the State of Delaware on May 18,  2006,  and the Reverse
Split was effective as of that date.  All per share amounts in the  accompanying
financial  statements have been  retroactively  adjusted to the beginning of the
periods presented to reflect the reverse split.

SERIES A PREFERRED STOCK

In 2001 the Company issued shares of Series A Preferred  Stock.  37,350 of those
shares remain  outstanding.  By their terms, they  automatically  converted into
37.35 shares of common stock  (adjusted to reflect the 1-for-1000  reverse stock
split in 2006.  In  November  2006 a claim was made by  certain  holders  of the
Series A Preferred Stock that they are entitled to receive  8,300,000  shares of
common  stock by  reason of  promises  made to them by prior  management  of the
Company and actions taken by the sole  director of the Company in 2003.  Current
management has reviewed the claims and the underlying  facts,  and has concluded
that the claims are not legally  valid.  Negotiations  are  ongoing,  aimed at a
resolution of the claims.

SERIES C PREFERRED STOCK

In conjunction  with the June 7, 2006 Mean Green  BioFuels,  Inc. share purchase
agreement  with  GreenShift  Corporation,  the  Company's  parent  (See Note 4),
GreenShift   surrendered   300,000  of  Series  B  Preferred  Stock  (which  was
convertible into 67% of the Company's  fully-diluted  common stock). In exchange
for the Mean Green BioFuels shares and the Company's  Series B Preferred  Stock,
the  Company  assumed  GreenShift's  obligations  under  a  Secured  Convertible
Debenture due to Cornell Capital  Partners in the principal amount of $1,949,631
and issued to  GreenShift  1,000,000  shares of Series C Preferred  Stock (which
were convertible into 80% of the Company's fully-diluted common stock).

On October 17, 2006 GreenShift  Corporation converted 1,000,000 shares of Series
C Preferred  Stock,  representing  100% of the issued and  outstanding  Series C
Preferred Stock, into 26,000,000 shares of common stock.

SHARE BASED PAYMENT

The Company  accounts for stock,  stock  options and stock  warrants  issued for
services  and  compensation  by  employees  under  the fair  value  method.  For
non-employees,  the fair market value of the Company's  stock is measured on the
date of stock  issuance or the date an  option/warrant  is granted.  The Company
determined  the fair  market  value of the  warrants/options  issued  under  the
Black-Scholes Pricing Model.  Effective January 1, 2006, the Company adopted the
provisions of SFAS 123(R), SHARE-BASED PAYMENT, which establishes accounting for
equity instruments exchanged for employee services. Under the provisions of SFAS
123(R),  share-based  compensation  cost is measured at the grant date, based on
the fair value of the award, and is recognized as an expense over the employee's
requisite  service  period  (generally  the vesting period of the equity grant).
Prior to January 1, 2006, the Company accounted for share-based  compensation to
employees in accordance with Accounting  Principles  Board (APB) Opinion No. 25,
ACCOUNTING  FOR STOCK  ISSUED TO  EMPLOYEES,  and related  interpretations.  The
Company also followed the disclosure  requirements  of SFAS 123,  ACCOUNTING FOR
STOCK-BASED COMPENSATION.  The Company elected to adopt the modified prospective
transition  method  as  provided  by SFAS  123(R)  and,  accordingly,  financial
statement  amounts for the prior  periods  presented in the Form 10-KSB have not
been  restated  to  reflect  the fair  value  method  of  expensing  share-based
compensation.

<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


10    STOCKHOLDERS' EQUITY (continued)

STOCK OPTIONS

On May 23,  2006,  GS  AgriFuels  entered  into an amended  management  services
agreement  with  GreenShift  that  provides  for the issuance to  GreenShift  of
6,000,000 five year options to purchase GS AgriFuels  common stock,  exercisable
at $3.00 per share,  at the later of December  31, 2006 or the  commencement  of
construction of a biodiesel  plant. The fair value of the options was determined
to be $144,000, and was calculated using the Black-Scholes Option Pricing Model.

STOCK WARRANTS

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

In  conjunction  with GS  AgriFuels's  October 30, 2006 issuance of  convertible
debentures to Cornell  Capital,  GS AgriFuels  issued to Cornell Capital 640,000
five year warrants to purchase GS AgriFuels common stock that are exercisable at
$.001 per share to Cornell Capital Partners.  The fair value of the warrants was
calculated using the Black-Scholes Option Pricing Model and the Company recorded
a note discount of  $1,079,460.  The note discount is being  amortized  over the
term of the debenture.

Summarized information about GS AgriFuels' stock warrants outstanding at
December 31, 2005 is as follows:

Weighted Average                       Number of Shares        Exercise Price

Outstanding at January 1, 2006              --                 $       --
Granted at fair value                    7,665,000                    1.26
Forfeited                                   --                         --
Exercised                                   --                         --
                                         ---------                   -------
Outstanding at December 31, 2006         7,665,000                    1.26
<TABLE>

Summarized information about GS AgriFuels's stock options and warrants
outstanding at December 31, 2006 is as follows:
<CAPTION>

                                                   Weighted
                                                   Average                                  Exercisable
                                   Number of      Remaining        Weighted    -------------------------------------
                                   Options       Contractual      Average        Number of       Weighted Average
    Exercise Prices              Outstanding        Life       Exercise Price     Options         Exercise Price
--------------------------------------------------------------------------------------------------------------------
<C>                                  <C>               <C>           <C>          <C>                      <C>
$0.001                               1,665,000         5.00          0.001        1,665,000                0.001
$3.00                                6,000,000         5.00          3.00         1,200,000               3.0000
                                ---------------                               --------------------------------------
                                     7,125,000                                    2,325,000                 1.26
</TABLE>

The fair value of each option  granted  during 2006 is  estimated on the date of
grant  using  the   Black-Scholes   option-pricing   model  with  the  following
assumptions:

                                                                     2006
                                                                  ----------
Dividend yield                                                            --
Expected volatility                                                     112%
Risk-free interest rate                                        4.64% - 5.07%
Expected life                                                       5-10yrs.

<PAGE>



                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


10    STOCKHOLDERS' EQUITY (continued)


                     STOCK AND OPTIONS ISSUED FOR SERVICES

During 2006, GS AgriFuels  issued  2,167,500 shares of common stock with a value
of $40,139,  in exchange for services rendered,  which included 2,025,000 shares
in payment of $37,500 in management fees due to GreenShift  under the Management
Services Agreement.

EXERCISE OF STOCK OPTIONS

No options were exercised during 2006 and 2005.

INVESTMENT ACTIVITY

In the year 2006, there were no investment activities.


11   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

needs to be updated

The following is a summary of supplemental disclosures of cash flow information:
<TABLE>

<CAPTION>
                                                                          2006        2005
                                                                       ----------------------
Cash paid during the year for the following:
<S>                                                                     <C>          <C>
     Interest .......................................................   $     --     $     --
     Income Taxes ...................................................         --           --
Supplemental Schedule of Non-Cash Investing and Financing Activities:
     Issuance of Series C Preferred Stock ...........................        1,000         --
     Assumption of convertible debenture pursuant to share
       purchase agreement with parent ...............................    1,949,631         --
     Issuance of warrants upon issuance of convertible debentures ...    1,109,710         --
</TABLE>


<PAGE>

                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12       SUBSEQUENT EVENTS

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  and the  construction  of 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 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.

On January 16, 2007, the Company's President and Chief Executive Officer, Thomas
Scozzafava, was appointed to the Company's Board of Directors.

On March 13, 2007,  GS AgriFuels  Corporation  executed an agreement to purchase
approximately 85% of the outstanding capital stock of Sustainable  Systems,  Inc
for a total purchase price of about $12.6 million.  As of December 31, 2006, the
Company  effectively  owned  13% of  Sustainable  System,  Inc.  as a result  of
investing $2 million in the capital  stock of the company.  Sustainable  owns an
oilseed  crushing  facility in  Culbertson,  Montana,  and is in the business of
producing  and selling high oleic  safflower,  sunflower,  canola and other high
value vegetable oils.  Sustainable is currently expanding its oilseed extraction
and refining capability from 300 tons per day to 600 tons per day.

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 Tennessee, 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 on-siteat the Memphis
site.

<PAGE>



ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

None.

ITEM 8A.     CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our principal  executive officer and principal  financial and accounting 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 Exchange 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.  GS AgriFuels' chief executive officer and chief financial
officer  determined  that,  as of the end of the period  covered by this report,
these  controls and  procedures  are adequate and effective in alerting him in a
timely manner to material  information  relating to GS AgriFuels  required to be
included in GS AgriFuels' periodic SEC filings.

CHANGES IN INTERNAL CONTROLS

None.





<PAGE>



                    GS AGRIFUELS CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                    PART III

ITEM 9.      DIRECTORS AND EXECUTIVE OFFICERS

Name                       Age      Position
--------------------------------------------------------------------------------
Kevin Kreisler              34   Chairman of the Board of Directors
Thomas W. Scozzafava        37   President and Chief Executive Officer

Mr.  Kreisler is the  founder of  GreenShift.  Mr.  Kreisler  is  currently  the
Chairman of the Board and Chief Executive Officer of GreenShift Corporation, and
he serves as  Chairman  of the Board and Chief  Executive  Officer of several of
GreenShift's  companies.  Previously,  Mr.  Kreisler  worked at  GreenShift's GS
CleanTech  Corporation,  where he  served as  vice-president  from 1998 to 2000,
president from 2000 to 2002, and chief  executive  officer from 2002 to February
2005. Mr.  Kreisler is a graduate of Rutgers  University  College of Engineering
(B.S., Civil and Environmental  Engineering,  1994), Rutgers University Graduate
School of Management (M.B.A., 1995), and Rutgers University School of Law (J.D.,
1997).  Mr.  Kreisler is  admitted to practice  law in New Jersey and the United
States District Court for the District of New Jersey.

Mr.  Scozzafava  has over 15 years  experience  in  venture  capital  and buyout
investing and has extensive capital markets experience.  In 2002, Mr. Scozzafava
founded Seaway Capital  Partners,  LLC, an investment  company that, among other
activities, founded and financed WiseBuys Stores, Inc. Prior to founding his own
firm, Mr. Scozzafava was a Director of Prudential's Merchant Banking Group where
he helped  find,  evaluate,  negotiate,  and  structure  leveraged  buyouts  and
investments of companies in industries that included telecommunications,  media,
business  services,  and  manufacturing  industries.  Mr. Scozzafava also held a
senior management position at Prudential's  employee limited  partnerships where
he completed  numerous  venture  capital and LBO  investments.  Prior to joining
Prudential,  Mr.  Scozzafava  was member of Lehman  Brothers'  Merchant  Banking
Group,  where he analyzed  leveraged buyout and growth equity investments across
various industries. Mr. Scozzafava began his career with GE Capital Corporation,
where he completed the company's  Financial  Management  Program. In March 2006,
then New York State Governor  George E. Pataki  appointed Mr.  Scozzafava to the
Board of Trustees to the New York State Power Authority ("NYPA"). Mr. Scozzafava
also sits on the  Governance and Audit  Committees of NYPA,  whose mission is to
provide clean,  economical and reliable energy while promoting energy efficiency
and innovation.  NYPA had revenues of over $2.5 billion in 2005. Mr.  Scozzafava
received  a Bachelor  of Arts cum laude with  concentrations  in  economics  and
mathematics with Honors  distinction from Hamilton College in 1992.  During this
period Mr.  Scozzafava  held  capital  market  positions  at Tucker  Anthony and
Merrill Lynch in New York City.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the  Company's  equity  securities,  to file reports of  ownership  and
changes in  ownership  with the  Securities  and  Exchange  Commission  ("SEC").
Officers,  directors,  and greater than 10 percent  stockholders are required by
SEC  regulation  to furnish the Company  with copies of all Section  16(a) forms
they file.

Based  solely on the  Company's  review of copies of such forms  received by the
Company,  the Company believes that during the year ended December 31, 2006, all
filing requirements applicable to all officers,  directors, and greater than 10%
beneficial stockholders were complied with.

INDEMNIFICATION OF DIRECTORS AND OFFICERS.

We shall  indemnify  to the  fullest  extent  permitted  by,  and in the  manner
permissible  under  the laws of the  State of  Delaware,  any  person  made,  or
threatened  to be made, a party to an action or  proceeding,  whether  criminal,
civil, administrative or investigative,  by reason of the fact that he is or was
a director or officer,  or served any other  enterprise as director,  officer or
employee at our request.  The board of  directors,  in its  discretion,  has the
power on behalf of our behalf to indemnify any person,  other than a director or
officer,  made a party to any action,  suit or  proceeding by reason of the fact
that he/she is or was one of our employees.

Insofar  as  indemnification  for  liabilities  arising  under  the  Act  may be
permitted  to  directors,  officers  and  controlling  persons  pursuant  to the
foregoing provisions,  or otherwise, we have been advised that in the opinion of
the Securities and Exchange  Commission,  such indemnification is against public
policy as expressed in the Act, and is therefore, unenforceable.

AUDIT AND COMPENSATION COMMITTEE

The Company currently does not have either an audit or a compensation committee.
The Company only has two directors and neither is a financial expert.

CODE OF CONDUCT AND ETHICS

The Company has adopted a written code of conduct and ethics that applies to all
directors,  and employees,  including the Company's principal executive officer,
principal financial officer,  principal accounting officer or controller and any
persons  performing  similar  functions.  The Company will provide a copy of its
code of ethics to any person without charge upon written request addressed to GS
AgriFuels Corporation, One Penn Plaza, Suite 1612, New York, NY 10119.

ITEM 10.    EXECUTIVE COMPENSATION SCOZZAFAVA IS CEO.

The  following  table sets forth  compensation  information  for GS  AgriFuels's
executive  officers during the years  indicated as relevant.  As of December 31,
2006, no executive officer held shares of exercisable options for GS AgriFuels's
Common Stock.

<TABLE>
<CAPTION>

Name and Principal Position                 Annual Compensation              Long-term Compensation        All Other
                                                                                                         Compensation
---------------------------------------------------------------------------------------------------------------------
                                    Year    Salary      Bonus       Other       Securities Underlying
                                                                                Options Granted (shares)
---------------------------------------------------------------------------------------------------------------------
<S>                                 <C>     <C>         <C>        <C>               <C>                  <C>
Thomas W. Scozzafava                2006    $    --     $   --     $   --                   --            $     --
Chairman, President  & CEO          2005         --         --         --                   --                  --
                                    2004         --         --         --                   --                  --
</TABLE>


EMPLOYMENT AGREEMENTS

None.

COMPENSATION OF DIRECTORS

None.

STOCK OPTION AND ISSUANCE PLANS

None.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides  information with respect to the equity  securities
that are authorized for issuance under our compensation  plan as of December 31,
2006:
<TABLE>
<CAPTION>

                                                                                      Number of securities
                                                                                      remaining available for
                                 Number of securities to   Weighted average exercise   issuance under equity
                                 be issued upon exercise      price of outstanding       compensation plans
                                 of outstanding options,     options, warrants and     (excluding securities
                                 warrants and rights (a)             rights           reflected in column (a)
---------------------------------------------------------------------------------------------------------------
<S>                                     <C>                          <C>                    <C>
Equity compensation plans                   --                       $ --                        --
approved by security holders
Equity compensation plans not               --                         --                        --
approved by security holders
Total                                   9,700,427                    $0.47                   5,322,652
</TABLE>

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth   information   regarding  the  voting  stock
beneficially owned by any person who, to our knowledge,  owned beneficially more
than 5% of any class of voting stock . Mr.  Kreisler is the only officer and the
only member of the Board of Directors of GS AgriFuels.

<TABLE>
<CAPTION>
                                    Amount and Nature of Beneficial Ownership
                                 ------------------------------------------------
Name and Address                                  Percentage       Series D      Percentage      Percentage of
of Beneficial Owner(1)             Common          of Class       Preferred       of Class       Voting Power
-------------------              ---------        -----------     ---------      -----------     ------------
<S>                                <C>               <C>          <C>                <C>             <C>
Kevin Kreisler(2)                       --            0%          1,000,000          100%             70%
Thomas W. Scozzafava(3)            399,792             %              --              --                 %
<FN>

     (1)  The address of each  shareholder  is c/o to GS AgriFuels  Corporation,
          One Penn Plaza, Suite 1612, New York, NY 10119.

     (2)  All shares listed for Kevin Kreisler are owned of record by GreenShift
          Corporation,   of  which  Mr.   Kreisler  is  Chairman   and  majority
          shareholder.

     (3)  Shares held in Seaway Valley Fund,  LLC,  which Mr.  Scozzafava is the
          sole manager.
</FN>
</TABLE>


ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS

The  obligations  of NextGen  Acquisition,  Inc.  under the Term Note  issued to
Stillwater  Asset-Based Fund, LP 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.

At the same time, the Debentures  issued by NextGen  Acquisition Inc. to Cornell
Capital  Partners  LP 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
subsidiaries of GreenShift  Corporation  (including GS CleanTech Corporation and
GS Energy Corporation) have also pledged their assets to secure the Debentures.

DIRECTOR INDEPENDENCE

None of the members of the Board of Directors is independent,  as  "independent"
is defined in the rules of the NASDAQ National Market System.









<PAGE>

                                     PART IV

ITEM 13.    EXHIBITS

The  following are exhibits  filed as part of GS  AgriFuels'  Form 10KSB for the
year ended December 31, 2006:

EXHIBITS - What are we attaching?



Exhibits to this Form 10-KSB  Annual  Report  have been  included  only with the
copies of the Form 10-KSB filed with the  Securities  and  Exchange  Commission.
Upon request to GS  AgriFuels  and payment of a  reasonable  fee,  copies of the
individual exhibits will be furnished.

Index to Exhibits

Exhibit Number             Description

     3.1* Certificate of Incorporation *

     3.1(a)* Certificate of Designation for Series A Preferred Stock *

     3.1(b)* Certificate of Designation for Series B Preferred Stock *

     3.1(c)* Certificate of Designation for Series C Preferred Stock *

     3.2  * Bylaws *

     10.1* Acquisition Agreement and Amendment

     10.2* Revised Purchase Agreement

     10.4** Convertible Debenture issued to CCS *

     10.5** Warrants issued to

     10.6* Convertible Debenture issued

     10.7* Security Agreement with Laurus *

     10.8 * Registration Rights Agreement with

     10.9* Warrant issued to

     10.10*** GCS Debenture

     10.11*** GCS Warrants

     31   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.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
INDEPENDENT AUDITOR FEES

In September  2005,  GS AgriFuels  retained  Rosenburg,  Rich,  Baker Berman and
Company as its principal accountant.  Rosenburg,  Rich, Baker Berman and Company
had performed no services for GS AgriFuels prior to that date.

     Audit fees

     Rosenburg,  Rich,  Baker  Berman  &  Co.  billed  the  Company  $30,000  in
connection with the audits of the Company's  financial  statements for the years
ended December 31, 2006, 2005, 2004, 2003 and 2002.

     Audit-Related Fees

     Rosenburg,  Rich, Baker Berman & Co billed the Company $ for  Audit-Related
fees in the years ended December 31, 2006 and 2005.

     Tax Fees

     Rosenburg,  Rich,  Baker  Berman & Co did not bill the Company in the years
ended  December  31, 2006 or 2005 for  professional  services  rendered  for tax
compliance, tax advice and tax planning.

     All Other Fees

     Rosenburg,  Rich,  Baker  Berman & Co billed the  Company $ for SEC related
fees for the years ended December 2006 and 2005.

Audit  fees  consist  of  fees  related  to GS  AgriFuels'  year  end  financial
statements and review of GS AgriFuels'  quarterly  reports on Form 10QSB.  Audit
related fees principally include accounting  consultations.  Tax fees consist of
fees related to analysis of GS AgriFuels'  net operating loss carry forwards and
preparation of GS AgriFuels' United States federal, state, and local tax returns
in 2005 and 2004.

It is the policy of GS AgriFuels'  audit committee to approve all engagements of
GS AgriFuels'  independent  auditors to render audit or non-audit services prior
to the initiation of such services.



<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.



GS AGRIFUELS CORPORATION

By:           /S/       THOMAS SCOZZAFAVA
              ---------------------------
                        THOMAS SCOZZAFAVA
                        Chief Executive Officer


Date:         April 16 , 2007


     In  accordance  with the Exchange Act, this Report has been signed below on
April 16, 2006 by the following persons,  on behalf of the Registrant and in the
capacities and on the dates indicated.

              /S/       KEVIN KREISLER
              ------------------------
                        KEVIN KREISLER
                        Chief Financial Officer


Date:         April 16, 2007