U.S.
Securities and Exchange Commission
 Washington,
D.C. 20549
 
 Form
10-K
 
 (Mark
One)
 [
X ]           ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For
the fiscal year ended September 30, 2009
 
 OR
 
 [    ]           TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 
 Commission
File Number1-13776
 
 
 GreenMan Technologies,
Inc.
 (
Name of small business issuer  in its charter)
 
 
 Delaware
              71-0724248(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)205 South Garfield,
      Carlisle, Iowa
              50047(Address
      of principal executive offices)
              (Zip
      Code)
 
 
 Issuer’s
telephone number  (781)
224-2411
 
 Securities
registered pursuant to Section 12 (g) of the Exchange Act:
 
 Title of each
class
 
 Common Stock, $ .01 par
value
 (Title
of each class)
 
 
 Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.Yes |_|   No |X|
 
 Indicate
by check mark if the issuer is not required to file reports pursuant to Section
13 or 15(d) of the Exchange
Act.  Yes |_|   No |X|
 
 Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes |X|   No |_|
 
 Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files).Yes |X|   No |_|
 
  1
  Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   |X|
 
 Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company in Rule 12b-2 of theAct. (Check
one):
  |_|  Large Accelerated Filer
              |_|  Accelerated Filer|_|  Non-accelerated Filer  (do not check if a smaller reporting company)
              |X|  Smaller reporting company
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act).   Yes |_|   No |X|
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of March 31,
2009, the last business day of the registrant’s most recent completed second
quarter was approximately $5,149,000.
 
 As
of January 6, 2010, 33,077,310 shares of common stock of issuer were
outstanding.
 
  2
  
 GREENMAN
TECHNOLOGIES, INC.
 INDEX
 
 PagePART
      IItem
      1.
              Business
              
              4Item
      1A.
              Risk
      Factors
              
              7Item
      1B.
              Unresolved
      Staff Comments
              
              10Item
      2.
              Properties
              
              10Item
      3.
              Legal
      Proceedings
              
              10Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              
              11PART
      IIItem
      5.
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
              
              11Item
      6.
              Selected
      Financial Data
              
              11Item
      7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              
              11Item
      7A.
              Quantitative
      and Qualitative Disclosures About Market Risk
              
              14Item
      8.
              Financial
      Statements and Supplementary Data
              
              15Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting andFinancial
      Disclosure
              
              15Item
      9A.
              Controls
      and Procedures
              
              15Item
      9B.
              Other
      Information
              
              15PART
      IIIItem
      10.
              Directors,
      Executive Officers and Corporate Governance
              
              16Item
      11.
              Executive
      Compensation
              
              17Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Managementand
      Related Stockholder Matters
              
              21Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              
              22Item
      14.
              Principal
      Accounting Fees and Services
              
              23PART
      IVItem
      15.
              Exhibits,
      Financial Statement Schedules
              
              24Signatures
              
              
              52Exhibits
 
  3
 
 INFORMATION
REGARDING FORWARD-LOOKING STATEMENTS
 
 This Annual Report on
Form 10-K contains forward-looking statements regarding future events and
the future results of GreenMan Technologies, Inc. within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are based on current expectations,
estimates, forecasts, and projections and the beliefs and assumptions of our
management. Words such as “expect,” “anticipate,” “target,” “goal,” “project,”
“intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “likely,” “may,”
“designed,” “would,” “future,” “can,” “could” and other similar expressions that
are predictions of or indicate future events and trends or which do not relate
to historical matters are intended to identify such forward-looking statements.
These statements are based on management’s current expectations and beliefs and
involve a number of risks, uncertainties, and assumptions that are difficult to
predict. Consequently, actual results may differ materially from those
projected, anticipated, or implied.
 
 PART I
 
 Item
      1.
              Business
  General
  GreenMan
Technologies, Inc. (together with its subsidiaries “we”, “us” or “our”) was
originally founded in 1992 and has operated as a Delaware corporation since
1995. Today, we are comprised of two business segments, our dual fuel conversion
operations (American Power Group) and our molded recycled rubber products
operations (Green Tech Products). As described below under the caption “Recent
Developments”, our business changed substantially in November 2008, when we sold
substantially all of the assets of our tire recycling operations. The tire
recycling operations were located in Savage, Minnesota and Des Moines, Iowa and
collected, processed and marketed scrap tires in whole, shredded or granular
form.
  Recent Developments
  On
September 12, 2008 we executed an asset purchase agreement with Liberty Tire
Services of Ohio, LLC, a wholly-owned subsidiary of Liberty Tire Services, LLC,
the largest tire recycling company in the United States, for sale of our tire
recycling business, subject to shareholder approval. On November 13, 2008 our
shareholders approved the sale and on November 17, 2008 we completed the
divestiture of substantially all of the assets of our GreenMan Technologies of
Minnesota, Inc. and GreenMan Technologies of Iowa, Inc. subsidiaries, which had
operated our tire recycling business, for approximately $27.7 million in cash.
We recognized a gain on the sale of approximately $13.8 million, net of
estimated income taxes of approximately $6.1 million which is included in the
net gain on the sale of discontinued operations.
  On
March 24, 2009 we purchased and retired warrants to purchase 4,811,905 shares of
common stock at an exercise price of $.01 per share held by our former secured
lender, Laurus Master Fund, Ltd., for $700,000 in cash, or approximately $0.145
per share.
  On
June 17, 2009, we signed an exclusive license agreement with American Power
Group, Inc., an Iowa corporation, under which we acquired the exclusive
worldwide right to commercialize American Power Group’s patented dual fuel
alternative energy technology. American Power Group’s unique external fuel
delivery enhancement system converts existing diesel engines into more efficient
and environmentally friendly engines that have the flexibility to run on: (1)
diesel fuel and compressed natural gas; (2) diesel fuel and bio-methane; or (3)
100% on diesel fuel, depending on the circumstances. In conjunction with
executing the license agreement, we issued American Power Group two million
shares of our common stock, valued at $500,000 (based on the value of our stock
on the date of the license). In addition, we will be required to pay royalties
to the former owners of American Power Group upon the sales of dual fuel
products and services.
 
 On
July 27, 2009, our wholly owned subsidiary GreenMan Alternative Energy, Inc.
entered into an agreement with American Power Group for the purchase of
substantially all of their operating assets, including the name American Power
Group (excluding the dual fuel patent previously licensed). The consideration
for the acquisition consisted of (i) approximately $850,000 in cash (financed by
a local bank through short term debt), which was used by American Power Group to
retire indebtedness to a bank, (ii) loans of approximately $611,000 from
GreenMan to American Power Group, which loans were also assumed by GreenMan
Alternative Energy and have been eliminated as intercompany loans in
consolidation subsequent to the acquisition, and (iii) the assumption by
GreenMan Alternative Energy of approximately $555,000 of American Power Group’s
accounts payable and other liabilities to third parties. After the acquisition,
we changed GreenMan Alternative Energy’s name to American Power
Group.
  4
  Products
and Services
  Our
Green Tech Products’ molded recycled rubber products operations specialize in
the design, development and manufacturing of branded recycled products and
services that provide schools and municipalities with environmentally
responsible products to create safer work and play environments. Green Tech’s
patented cold-cured products and processes include playground safety tiles,
roadside anti-vegetation products, construction molds and highway guard-rail
rubber spacer blocks. Green Tech’s Duromat Extended LifeTM playground safety
tiles are manufactured with a patented “cold-cure” process that allows high
quality crumb rubber tiles to have a unique long life, even in extreme hot and
cold temperatures. Green Tech also provides innovative playground design,
equipment and installation. We are currently evaluating several new types of
products and marketing agreements outside the playground and parks markets that
would use Green Tech’s patented cold-cure process and exclusive school board
contract network.
  Our
American Power Group’s patented dual fuel conversion system is a unique external
fuel delivery enhancement system that converts existing diesel engines into more
efficient and environmentally friendly engines that have the flexibility to run
on:
 
 ·
              Diesel
      fuel and compressed natural gas
(CNG);
 ·
              Diesel
      fuel and bio-methane; or
 ·
              100%
      on diesel fuel, depending on the
circumstances.
  The
proprietary technology seamlessly displaces 40% to 60% of the normal diesel fuel
consumption with CNG or bio-methane and the energized fuel balance between the
two fuels is maintained with a patented control system ensuring the engines
operate to Original Equipment Manufacturers’ (OEM) specified temperatures and
pressures with no loss of horsepower. Installation requires no engine
modification, unlike the more expensive high-pressure alternative fuel systems
in the market.
  By
displacing highly polluting and expensive diesel fuel with inexpensive, abundant
and cleaner burning natural gas, a user can:
 
 ·
              Reduce
      fuel and operating costs by 25% to
40%;
 ·
              Reduce
      toxic emissions such as nitrogen oxide (NOX), carbon monoxide (CO) and
      fine particulate emissions;
 ·
              Enhance
      the engine’s operating life, since natural gas is a cleaner burning fuel
      source; and
 ·
              Minimize
      diesel fuel storage space by as much as
50%.
 
 End
market applications include both primary and back-up diesel generators as well
as mid- to heavy-duty vehicular diesel engines.
  Manufacturing/Processing
  Our
molded recycled rubber products operations currently have the maximum capacity
to produce approximately 120,000 standard playground tile equivalents annually
with 50,000 - 60,000 being considered the range of “normal” production capacity
during the past several years. During the fiscal year ended September 30, 2009,
Green Tech Products produced approximately 30,000 standard playground tile
equivalents, due to high beginning finished goods inventory levels and flat 2009
revenue. In addition, Green Tech has an exclusive five-year manufacturing and
supply agreement with a third party based in China for distribution of certain
proprietary rubber and plastic molded products.
  Our
dual fuel conversionenhancement
system is configured by our internal engineering staff based on customer engine
specifications andthen modeled through Computational Fluid Dynamics
Analysis to scientifically determine the optimum mixture of diesel and natural
gas prior to final installation. All components, including several proprietary
patented components, are purchased from external sources and currently delivered
on site for installation. All installations are managed by an American Power
Group lead team that completes final testing and commissioning of the diesel
engines.
  Raw
Materials
  We
believe our molded products operations have access to an adequate supply of
crumb rubber, sufficient to meet our requirements for the foreseeable future.
According to the 2009 Scrap Tire and Rubber User’s Directory, in 2008
approximately 300 million passenger tire equivalents (approximately one per
person per year) were discarded in the United States, with over 75% of those
currently recycled in various forms, including crumb rubber.
  As
described above, all dual fuel conversion components, including several
proprietary patented components, are purchased from external sources. While we
believe our dual fuel conversion operations have access to sufficient components
for the foreseeable future, management is currently identifying multiple
potential sources for critical components to reduce the likelihood that supply
issues could negatively impact our business.
  5
  Customers
  Our
molded recycled rubber products customers primarily consist of schools,
community and state parks, governmental agencies and child care
centers.  Although we benefit from the five business development and
product endorsement agreements described below to procure potential business,
our customers typically are individual entities within the respective school
districts. A majority of our revenue is derived from specific one-time
installations with minimal follow-on revenue from the installed project.
Therefore, we do not believe that the loss of any individual customer would have
a material adverse effect on our business. During 2009 only one customer
accounted for greater than 10% of total net sales (14%), with no single customer
accounting for more than 10% of our total net sales in 2008. We do not have any
long-term purchase contracts that require any customer to purchase any minimum
amount of products from us. There can be no assurance that we will continue to
receive orders of the same magnitude as in the past from existing customers or
that we will be able to market our current or proposed products to new
customers.
  The
U.S. Environmental Protection Agency estimates there are 20 million diesel
engines operating in the U.S., with an estimated 13 million used in vehicular
applications and 7 million in stationary generator applications. Diesel powered
generators are commonly used as backup or load reducing power sources in
hospitals, critical care facilities, cold storage warehouses, data centers,
financial centers and exchanges and government facilities, while vehicular
applications include school buses, public transit, refuse haulers, commercial
route fleets, government vehicles and short-haul trains.
  The
number of available international stationary and vehicular diesel engines is
estimated to be significantly higher than the U.S. market.  There have
been over 1,000 American Power Group dual fuel conversion systems installed in
North and South America, Africa, India and Pakistan since the dual fuel
technology was patented.
  Sales
and Marketing
  Our
molded recycled rubber products operations have created a unique marketing
program focused on: (1) improving playground safety and accessibility; (2)
lowering playground maintenance costs; and (3) mitigating playground liability
risks for schools, community and state parks, and child care centers. We use an
experienced in-house sales staff for securing new accounts and marketing product
offerings. In June 2008, Green Tech Products, through one of its subsidiaries,
signed new five-year business development and product endorsement agreements
with the state school board associations of Iowa, Missouri, Minnesota and
California to provide state-of-the-art playground compliance programs to their
member school districts. In August  2009, the Oklahoma state school
board association signed a similar five-year agreement. Under the brand name of
the National Playground Compliance Group, (NPCG), the company’s playground
compliance programs offer school districts a full portfolio of safety design
assessments, playground and outdoor fitness equipment, recycled rubber
surfacing, and installation solutions with an integrated approach to child
safety, American Disabilities Act accessibility and risk
mitigation.  Additionally, NPCG assists school districts in
identifying financing alternatives for their playground projects.
  Our
dual fuel conversion operations address the alternative fuel market in three
distinct segments: (1) international; (2) domestic stationary; and (3) domestic
vehicular.  The international segment uses an in-house sales director
and qualified in-country alternative fuel distributors to promote both our
stationary and vehicular dual fuel products.  Our domestic stationary
market is addressed by an in-house sales staff, independent sales
representatives and strategic third-party endorsements. The domestic vehicular
market will be addressed later in fiscal year 2010, once several upgrades have
been incorporated, with sales and marketing coverage similar to our domestic
stationary coverage.
  Competition
  Our
molded recycled rubber products operations compete in a highly fragmented and
decentralized market with a large number of small competitors that provide
alternatives to our patented cold-cured molded tiles, such as “pour-in-place
surfacing materials” or loose-fill surfacing materials (e.g., wood chips, mulch,
sand, and pea gravel). In addition, many competitors sell only components of the
total project, using traditional distributor channels, while Green Tech sells
complete project management, turn-key installation services and safety
certification directly to the end customer. Since 2007, a new market requirement
created by the American Disabilities Act (“ADA”) requires schools and other
public playgrounds to provide all children access to outdoor play.  We
believe that loose-fill surfacing is typically not maintained to proper safety
levels and will not allow children in wheelchairs or with other disabilities to
easily access playground equipment. Green Tech Product’s  playground
tiles are fully-ADA compliant and, during independent tests performed by the
National Program for Playground Safety, demonstrated a 75 percent reduction in
emergency room injuries given proper supervision.
  As
noted earlier, our patented dual fuel conversion system is an external fuel
delivery enhancement system that requires no engine modifications and can run on
a combination of diesel fuel and compressed natural gas or 100% on diesel fuel,
depending on the circumstances.  The primary alternative fuel
solutions available to existing diesel engine operators are:
  ·
              New
      Engine- replace existing diesel engines with new 100% dedicated natural
      gas or propane burning engines. This is an expensive solution and is not
      typically an economically viable solution for customers operating an
      existing large diesel engine
fleet;
  6
  ·
              Invasive
      retrofits - an existing diesel engine can be converted to be run
      exclusively on natural gas or some other type of fuel such as propane. The
      invasive solution tends to be a higher priced solution than dual fuel
      because the engine must be totally disassembled and re-configured to run
      exclusive on the new fuel.
 ·
              Non-Invasive
      retrofits - are solutions where no major changes to the existing diesel
      engine are required.  Our dual fuel conversion system is one of
      several known non-invasive retrofit systems available in the
      market.
 
 Today,
our primary focus is on upgrading the installed base of existing diesel engines.
We believe our dual fuel conversion technology upgrade is ideally suited for the
large domestic and international installed base of both stationary and vehicular
diesel engines, which is estimated to be in the millions of units.
  Government
Regulation
  Our
molded recycled production operations are governed by industry design and safety
standards, but no government permits or regulations are required to market our
products and services.
  Our
dual fuel conversion business, as it applies to out-of-warranty after-market
diesel engines, does not have any formal governmental permitting or
approvals.  When we address the later-model years, specific United
States EPA guidelines for emission levels must be met and
certified.
  Failure
to comply with applicable regulatory requirements can result in, among other
things, fines, suspensions of approvals, seizure or recall of products,
operating restrictions and criminal prosecutions.  Furthermore,
changes in existing regulations or adoption of new regulations could impose
costly new procedures for compliance, or prevent us from obtaining, or affect
the timing of, regulatory approvals.  We use our best efforts to keep
abreast of changed or new regulations for immediate implementation.
  Protection
of Intellectual Property Rights and Proprietary Rights
  Our
Green Tech Products subsidiary has been granted three U.S. patents for various
molded products and one for its method for making cold-cured composite molded
articles. In addition, Green Tech Products has been granted ten
trademarks.
  Our
American Power Group subsidiary has an exclusive, worldwide license under one
U.S. patent for dual fuel conversion technology owned by the former owners of
American Power Group.
  We
have used the name “GreenMan” in interstate commerce since inception and assert
a common law right in and to that name.
  Employees
  As
of September 30, 2009, we had 35 full time employees. We are not a party to any
collective bargaining agreements and consider the relationship with our
employees to be satisfactory.
 
 Item  1A.
              Risk
      Factors
 
 An
investment in our common stock involves a high degree of risk. Investors should
carefully consider the following risk factors in evaluating our Company and our
business.  If any of these risks, or other risks not presently known
to us or that we currently believe are not significant, develops into an actual
event, then our business, financial condition and results of operations could be
adversely affected.  If that happens, the market price of our common
stock could decline.
  Risks
Related to our Business
 
 By completing the November
2008 sale of our tire recycling business, we have sold the operations which have
historically generated substantially all our revenue and profitability.Our remaining operations have lost money in the last eight consecutive
quarters and may need additional working capital if we do not return to
sustained profitability, which if not received, may force us to adjust
operations accordingly.
  Green
Tech Products has incurred operating losses of approximately $800,000 per year
during each of the past two fiscal years, and had negative cash flow from
operations and stagnant revenue growth during fiscal 2009.  We are
currently evaluating several new types of products and marketing agreements
outside the playground and parks markets that would use Green Tech Product’s
patented cold-cure process and exclusive school board contract
network.
  Since
the July 2009 acquisition of American Power Group’s dual fuel conversion
operations, we have also made a significant investment in sales and marketing
initiatives intended to promote American Power Group’s dual fuel conversion
technology and establish broader market presence. We have launched a diesel
generator maintenance and service group that we believe is unlike any other
offered by our competition and will significantly differentiate us in the
marketplace.  Since the date of acquisition, American Power Group has
incurred an operating loss of approximately $480,000.
  7
  We
understand that our continued existence is dependent on our ability to generate
positive operating cash flow, achieve profitable status on a sustained basis for
all operations and settle existing obligations. Our fiscal 2010 budget reflects
improved operating results in both our Green Tech Products and American Power
Group subsidiaries, and we anticipate improved performance during the seasonally
stronger second half of the fiscal year.  Based on our fiscal 2010
budget and existing cash and marketable investments, we believe we will be able
to satisfy our cash requirements. If Green Tech Products and American Power
Group are unable to achieve sustained profitability during fiscal 2010 and we
are unable to obtain additional financing to supplement our cash position, our
ability to maintain our current level of operations could be materially and
adversely affected.  There is no guarantee we will be able to achieve
sustained profitability of at either business.
  We
will require additional funding to grow our business, which funding may not be
available to us on favorable terms or at all. If we do not obtain funding when
we need it, our business will be adversely affected. In addition, if we have to
sell securities in order to obtain financing, the rights of our current holders
may be adversely affected.
  In
November 2008, our credit facility with Laurus Master Fund, Ltd. was terminated
and we have not yet established any new credit facility.  We will have
to seek additional outside funding sources to satisfy our future financing
demands if our operations do not produce the level of revenue we require to
maintain and grow our business.  We understand that achieving positive
cash flow from operations as well as sustained profitability will be key
components necessary to re-establish a new credit facility. Management is
currently evaluating several financing alternatives that would enhance our
financial position and provide growth capital to supplement our existing working
capital position. We are diligently working to determine the feasibility of each
alternative. We cannot assure investors that outside funding will be available
to us at the time that we need it and in the amount necessary to satisfy our
needs, or, that if such funds are available, they will be available on terms
that are favorable to us. If we are unable to secure financing when we need it,
our business will be adversely affected and we may need to discontinue some or
all of our operations. If we have to issue additional shares of common stock or
securities convertible into common stock in order to secure additional funding,
our current stockholders will experience dilution of their ownership of our
shares. In the event that we issue securities or instruments other than common
stock, we may be required to issue such instruments with greater rights than
those currently possessed by holders of our common stock.
  Improvement
in our business depends on our ability to increase demand for our products and
services.
  Factors
that could limit demand for our products and services are adverse events or
economic or other conditions affecting markets for our products and services,
potential delays in product development, product and service flaws, changes in
technology, changes in the regulatory environment and the availability of
competitive products and services.
  The
markets in which we offer our molded products and dual fuel conversion
technology is highly competitive, fragmented and decentralized and our
competitors may have greater technical and financial resources.
  The
markets for our molded products and dual fuel conversion technology is highly
competitive, fragmented and decentralized.  Some of our larger
competitors may have greater financial and technical resources than we
do.  As a result, they may be able to adapt more quickly to new or
emerging technologies, changes in customer requirements, or devote greater
resources to the promotion and sale of their products and
services.  Competition could increase if new companies enter the
markets in which we operate or our existing competitors expand their service
lines. These factors may limit or prevent any further development of our
businesses.
  Our
success depends on the retention of our senior management and other key
personnel.
  Our
success depends largely on the skills, experience and performance of our senior
management. The loss of any key member of senior management could have a
material adverse effect on our business.
  Seasonal
factors may affect our quarterly operating results.
  Seasonality
may cause our total revenues to fluctuate.  Our Green Tech Products
subsidiary experiences a reduction playground tile and equipment sales during
the winter as a majority of its current business is derived from the Midwestern
United States where colder weather impacts the ability to install Green Tech’s
products.  Our American Power Group subsidiary will experience some
seasonality in the “Hurricane Belt” located in the Southeastern U.S., where
critical care installations are usually not scheduled during the July-October
timeframe.
  Inflation
and changing prices may hurt our business.
  Generally,
we are exposed to the effects of inflation and changing prices.  Given
that our dual fuel conversion technology replaces a certain percentage of diesel
fuel with natural gas, we would be impacted by any material change in the net
fuel savings between the two fuels (for example, if diesel fuel prices decrease
and natural gas prices increase). We have generally been unaffected by interest
rate changes in fiscal 2009, because we no longer maintain any floating-rate
debt.
 
  8
  If
we acquire other companies or businesses we will be subject to risks that could
hurt our business.
  A
significant part of our business strategy is based on future acquisitions or
significant investments in businesses that offer “green” products and
services.  Promising acquisitions are difficult to identify and
complete for a number of reasons. Any acquisitions completed by our company may
be made at a premium over the fair value of the net assets of the acquired
companies and competition may cause us to pay more for an acquired business than
its long-term fair market value. There can be no assurance that we will be able
to complete future acquisitions on terms favorable to us or at all. In addition,
we may not be able to integrate any future acquired businesses, at all or
without significant distraction of management into our ongoing business. In
order to finance acquisitions, it may be necessary for us to issue shares of our
capital stock to the sellers of the acquired businesses and/or to seek
additional funds through public or private financings. Any equity or debt
financing, if available at all, may be on terms which are not favorable to us
and, in the case of an equity financing or the use of our stock to pay for an
acquisition, may result in dilution to our existing stockholders.
 
 As
we grow, we are subject to growth related risks.
  We
are subject to growth-related risks, including capacity constraints and pressure
on our internal systems and personnel. In order to manage current operations and
any future growth effectively, we will need to continue to implement and improve
our operational, financial and management information systems and to hire,
train, motivate, manage and retain employees. We may be unable to manage such
growth effectively. Our management, personnel or systems may be inadequate to
support our operations, and we may be unable to achieve the increased levels of
revenue commensurate with the increased levels of operating expenses associated
with this growth. Any such failure could have a material adverse impact on our
business, operations and prospects. In addition, the cost of opening new
facilities and the hiring of new personnel for those facilities could
significantly decrease our profitability, if the new facilities do not generate
sufficient additional revenue.
 
 We
may not be able to protect our intellectual property rights
adequately.
  Our
ability to compete is affected by our ability to protect our intellectual
property rights.  We rely on a number of patents, as well as on
trademarks, copyrights, trade secrets, confidentiality procedures and licensing
arrangements to protect our intellectual property rights.  Despite
these efforts, we cannot be certain that the steps we take to protect our
proprietary information will be adequate to prevent misappropriation of our
technology, or that our competitors will not independently develop technology
that is substantially similar or superior to our technology.  More
specifically, no assurance can be given that any future patent applications will
be approved, or that any issued patents will provide us with competitive
advantages or will not be challenged by third parties.  Nor can we
give any assurance that, if challenged, our patents will be found to be valid or
enforceable, or that the patents of others will not have an adverse effect on
our ability to do business.  Furthermore, others may independently
develop similar products or processes, duplicate our products or processes or
design their products around any patents that may be issued to us.
  Risks
Related to the Securities Market
 
 Our
stock price may be volatile, which could result in substantial losses for our
shareholders.
 
 Our
common stock is thinly traded and an active public market for our stock may not
develop. Consequently, the market price of our common stock may be highly
volatile.  Additionally, the market price of our common stock could
fluctuate significantly in response to the following factors, some of which are
beyond our control:
  ·
              we
      are now traded on the OTC Bulletin
Board;
  ·
              changes
      in market valuations of similar
companies;
  ·
              announcements
      by us or by our competitors of new or enhanced products, technologies or
      services or significant contracts, acquisitions, strategic relationships,
      joint ventures or capital
commitments;
  ·
              regulatory
      developments;
  ·
              additions
      or departures of senior management and other key
  personnel;
  ·
              deviations
      in our results of operations from the estimates of securities analysts;
      and
  ·
              future
      issuances of our common stock or other
  securities.
 
  9
  We
have options and warrants currently outstanding.  Exercise of these
options and warrant will cause dilution to existing and new
shareholders.
  As of September 30, 2009, we had options and warrants
outstanding to purchase3,902,500 additional shares of common stock.
These reserved shares relate to the following: 3,452,500 shares for issuance
upon exercise of awards granted under our 1993 Stock Option Plan, 1996
Non-Employee Director Stock Option Plan and 2005 Stock Option Plan, and 450,000
shares for issuance upon exercise of other stock options and stock purchase
warrants.
  The
exercise of our options and warrants will cause additional shares of common
stock to be issued, resulting in dilution to investors and our existing
stockholders. As of September 30, 2009, approximately 31 million shares of our
common stock were eligible for sale in the public market exclusive of the
options and warrants noted above.
 
 Our
directors, executive officers and principal stockholders own a significant
percentage of our shares, which will limit your ability to influence corporate
matters.
 
 Our
directors, executive officers and other principal stockholders owned
approximately 25 percent of our outstanding common stock as of September 30,
2009. Accordingly, these stockholders could have a significant influence over
the outcome of any corporate transaction or other matter submitted to our
stockholders for approval, including mergers, consolidations and the sale of all
or substantially all of our assets and also could prevent or cause a change in
control. The interests of these stockholders may differ from the interests of
our other stockholders. Third parties may be discouraged from making a tender
offer or bid to acquire us because of this concentration of
ownership.
 
 We
have never paid dividends on our capital stock and we do not anticipate paying
any cash dividends in the foreseeable future.
 
 We
have paid no cash dividends on our capital stock to date and we currently intend
to retain our future earnings, if any, to fund the development and growth of our
business. As a result, capital appreciation, if any, of our common stock will be
shareholders’ sole source of gain for the foreseeable future.
 
 Anti-takeover provisions in our
charter documents and Delaware law could discourage potential acquisition
proposals and could prevent, deter or delay a change in control of our
company.
 
 Certain
provisions of our Restated Certificate of Incorporation and By-Laws could have
the effect, either alone or in combination with each other, of preventing,
deterring or delaying a change in control of our company, even if a change in
control would be beneficial to our stockholders.  Delaware law may
also discourage, delay or prevent someone from acquiring or merging with
us.
  Item
      1B.
              Unresolved Staff
      Comments
  None.
  Item
      2.
              Properties
  Our
Iowa molded products location consists of production facilities and office space
situated on approximately four acres which were purchased in 2006.
  Our
Iowa dual fuel conversion location consists of office and warehouse space which
we currently rent on a tenant at will basis for approximately $2,000 per
month.
  We rent approximately 1,100 square feet
of office space in Lynnfield, Massachusetts, the site of our former corporate
headquarters, on a rolling six-month basis at $1,250 per month.
  We
consider our properties in good condition, well maintained and generally
suitable to carry on our business activities for the foreseeable
future.
  Item 3.
              Legal
      Proceedings
  In
April 2009, Jacquelyn M. Cyronis filed a complaint in the United States District
Court for the Middle District of Georgia against MART Management, Inc., GreenMan
and Tires Into Recycled Energy & Supplies, Inc. (“TIRES”), following the
death of an individual employed by TIRES resulting from a fire at a tire
recycling facility in Georgia in 2007. MART Management, Inc. was the owner of
the premises at the time of the incident and leased the property to us. We, in
turn, had subleased the property to TIRES. Pursuant to the terms of the March
2001 lease agreement, we have agreed to indemnify MART against such claims. We
believe that we have substantial defenses against the plaintiff’s claims and are
contesting the matter vigorously through our insurance company.
  We
are subject to routine claims from time to time in the ordinary course of our
business.  We do not believe that the resolution of any of the claims
that are currently known to us will have a material adverse effect on our
company or on our financial statements.
  
  10
  Item
      4.
              Submission of Matters
      to a Vote of Security
Holders
  There
were no matters submitted to a vote of our shareholders during the fourth
quarter of the fiscal year ended September 30, 2009.
  PART II
 
 Item
      5.
              Market for
      Registrant’s Common Equity, Related Stockholder Matters and Issuer’s
      Purchases of Equity
Securities
 
 Our common stock trades on the OTC Bulletin Board under
the symbol “GMTI”. The following table sets forth the high and low bid
quotations for our common stock for the periods indicated. Quotations from the
OTC Bulletin Boardreflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
 
 Common
      StockHigh
              LowFiscal
      2008Quarter
      Ended December 31, 2007
              $
      0.54
              $
      0.35Quarter
      Ended March 31, 2008
              0.51
              0.20Quarter
      Ended  June 30, 2008
              0.30
              0.20Quarter
      Ending September 30, 2008
              0.39
              0.16Fiscal
      2009Quarter
      Ended December 31, 2008
              $
      0.38
              $
      0.18Quarter
      Ended March 31, 2009
              0.25
              0.12Quarter
      Ended  June 30, 2009
              0.31
              0.18Quarter
      Ending September 30, 2009
              0.65
              0.28
  On
July 1, 2009, we issued 25,000 shares of our unregistered common stock, valued
at $9,750, to a director for services rendered. See Note 8, “Stockholder’s
Equity” of Notes to the Consolidated Financial Statements included in this
report.  The issuance of these shares was exempt from registration
under the Securities Act of 1933, as amended, pursuant to Section 4(2) of the
Securities Act.
  On
January 6, 2010 the closing price of our common stock was $.48 per
share.
  As
of September 30, 2009, we estimate the approximate number of stockholders of
record of our common stock to be 1,750.  This number excludes
individual stockholders holding stock under nominee security position
listings.
  We
have not paid any cash dividends on our common stock since inception and do not
anticipate paying any cash dividends in the foreseeable future.
 
 Item
      6.
              Selected Consolidated
      Financial Data
  Not
Applicable.
  Item 7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
 
 Forward-Looking
Statements
  This
Annual Report on Form 10-K contains certain statements that are
“forward-looking” within the meaning of the Private Securities Litigation Reform
Act of 1995 (the “Litigation Reform Act”).  These forward looking
statements and other information are based on our beliefs as well as assumptions
made by us using information currently available.
  The
words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should”
and similar expressions, as they relate to us, are intended to identify
forward-looking statements.  Such statements reflect our current views
with respect to future events, are subject to certain risks, uncertainties and
assumptions, and are not guaranties of future performance.  Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected, intended or
using other similar expressions.
  In
accordance with the provisions of the Litigation Reform Act, we are making
investors aware that such forward-looking statements, because they relate to
future events, are by their very nature subject to many important factors that
could cause actual results to differ materially from those contemplated by the
forward-looking statements contained in this Annual Report on Form
10-K.  Important factors that could cause actual results to differ
from our predictions include those discussed under “Risk Factors,” this
“Management’s Discussion and Analysis” and “Business.”  Although we
have sought to identify the most significant risks to our business, we cannot
predict whether, or to what extent, any of such risks may be realized, nor can
there be any assurance that we have identified all possible issues which we
might face.  In addition, assumptions relating to budgeting,
marketing, product development and other management decisions are subjective in
many respects and thus susceptible to interpretations and periodic
   11
  revisions
based on actual experience and business developments, the impact of which may
cause us to alter our marketing, capital expenditure or other budgets, which may
in turn affect our financial position and results of operations.  For
all of these reasons, the reader is cautioned not to place undue reliance on
forward-looking statements contained herein, which speak only as of the date
hereof.  We assume no responsibility to update any forward-looking
statements as a result of new information, future events, or otherwise except as
required by law.
  Introduction
  As
described in Item 1, above, our business changed substantially in November 2008,
when we sold substantially all of the assets of our tire recycling operations.
Because we operated our tire recycling assets during only a portion of the
fiscal year covered by this Annual Report on Form 10-K we have included in this
report relevant information on this business segment but have classified its
assets, liabilities and results of operations as discontinued operations for all
periods presented in the accompanying consolidated financial statements. On July
27, 2009 we purchased substantially all the dual fuel conversion operating
assets of American Power Group (excluding its dual fuel patent). The results
described below include the operations of American Power Group since July 27,
2009.
  Fiscal
Year ended September 30, 2009 Compared to Fiscal Year ended September 30,
2008
  Net
sales from continuing operations for the fiscal year ended September 30, 2009
decreased $237,781 or 7% to $3,227,633 as compared to net sales of $3,465,414
for the fiscal year ended September 30, 2008. The decrease is primarily
attributable to decreased playground tile and equipment sales in the Midwestern
and Western regions of the United States due to a general economic slowdown
during fiscal 2009. A majority of our revenue is derived from specific one-time
installations with minimal follow-on revenue from the installed project, thus
making quarterly revenue comparisons particularly difficult. There were no net
sales from our American Power Group subsidiary during the fiscal year ended
September 30, 2009.
  Our
gross profit for the fiscal year ended September 30, 2009 was $522,369 or 16% of
net sales compared to a gross profit of $969,701 or 28% of net sales for the
fiscal year ended September 30, 2008. The decrease was primarily attributable to
the inclusion of $200,476 of costs associated with our American Power Group
subsidiary without any corresponding revenues. The remaining decrease was
attributable to slower tile sales during the seasonally slower first half of
fiscal 2009 and management’s decision to produce a minimal amount of playground
tiles during that period, resulting in the inability to fully absorb all
manufacturing overhead which negatively impacted our gross profit for the entire
fiscal year.
  Selling,
general and administrative expenses for the fiscal year ended September 30,
2009increased
$874,277 to $4,253,614 as compared to $3,379,337 for the fiscal year ended
September 30, 2008. The increase was primarily attributable to an increase of
$300,000 in professional expenses relating to business development initiatives
and the November 2008 sale of our tire recycling operations, and an increase of
approximately $250,000 in performance-based incentives. In addition, the results
for the fiscal year ended September 30, 2009 include $270,906 of costs
associated with our American Power Group subsidiary which primarily relate to
sales and marketing initiatives. These increases were partially offset by
reduced travel, marketing and sales related costs at our molded products
operations.
  During
the past two fiscal years, Green Tech Products has incurred operating losses of
approximately $800,000 per year and has had negative cash flow from operations.
Green Tech also had stagnant revenue growth during in fiscal 2009.  As
a result of the losses and our annual evaluation of potential goodwill
impairment, management has determined the carrying value of Green Tech Product’s
goodwill to be impaired and accordingly wrote-off all goodwill, recording a
non-cash impairment loss of $2,289,939 at September 30, 2009.
  Interest
and financing expense for the fiscal year ended September 30, 2009decreased to $112,676,
compared to $148,063 during the fiscal year ended September 30, 2008, due to
reduced borrowings.
  As
a result of the foregoing, our loss from continuing operations after income
taxes increased $3,345,222 to $6,092,884 for the fiscal year ended September 30,
2009 as compared to $2,747,662 for the fiscal year ended September 30,
2008.
  During
the fiscal year ended September 30, 2009, we recognized a gain on sale of
discontinued operations net of income taxes ($6.1 million), of $13,792,616
associated with the sale of our tire recycling business in November
2008.  The income from discontinued operations of $289,583 for the
fiscal year ended September 30, 2009 relates primarily to the net results of our
tire recycling operations, including approximately $391,000 of one-time gains
associated with the termination of a long-term land and building lease agreement
in Minnesota.
  The
income from discontinued operations for the fiscal year ended September 30, 2008
includes a net benefit for income taxes of $5,332,561, primarily due to the
recognition of a deferred tax asset of $5,300,000, approximately $2,361,000
associated with the de-consolidation of our Georgia subsidiary with the balance
relating to the net results of our tire recycling operations. As a result of the
gain to be realized in fiscal 2009 from the sale of the tire recycling
operations, we expected to be able to realize the benefit of a portion of their
federal net operating loss carry-forwards and therefore reduced our deferred tax
valuation reserve resulting in the recognition of the deferred tax
asset.
  12
  Our
net income for the fiscal year ended September 30, 2009 was $7,989,315 or $.26
per basic share as compared to net income of $7,891,685 or $.26 per basic share
for the fiscal year ended September 30, 2008.
  Liquidity
and Capital Resources
  As
of September 30, 2009, we had $6,407,244 in cash, cash equivalents, certificates
of deposit, marketable investments and net working capital of $5,498,631,
primarily due to the sale of our tire recycling business in November 2008. Our
tire recycling business has historically been the source of substantially all of
our revenue and cash flow.  Our primary focus during fiscal 2010 will
be to invest a portion of our available liquidity to grow our dual fuel
conversion business (American Power Group) and molded products (Green Tech
Products) operations. In addition, we will continue to evaluate additional
recycling, alternative fuel, alternative energy and other “green” business
opportunities as they present themselves to us.
  During
the past two fiscal years Green Tech Products has incurred operating losses of
approximately $800,000 per year and had negative cash flow from operations.
Green Tech Products had stagnant revenue growth during the past
year.  Since the date of acquisition, we have made a significant
investment in sales and marketing initiatives intended to promote Green Tech
Products’ patented products and broaden market presence. We are currently
evaluating several new types of products and marketing agreements outside the
playground and parks markets that would use Green Tech Product’s patented
cold-cure process and exclusive school board contract network.  While
our fiscal 2010 budget reflects improved operating results, we understand that
our continued existence is dependent on our ability to generate positive
operating cash flow from Green Tech Product existing operations and to achieve
profitability on a sustained basis.
  Since
the July 2009 acquisition of American Power Group’s dual fuel conversion
operations, we have also made a significant investment in sales and marketing
initiatives intended to promote American Power Group’s dual fuel conversion
technology and establish broader market presence. We are supplementing our
internal engineering staff with an array of industry experience byestablishing a technical
advisory board comprised of world class diesel engine and emissions
experts.  Since the date of acquisition to the end of the fiscal 2009,
American Power Group has incurred an operating loss of approximately $480,000.
While our fiscal 2010 budget reflects improved operating results we understand
that our continued existence is dependent on our ability to generate positive
operating cash flow from American Power Group’s existing operations and to
achieve profitability on a sustained basis.
  In
November 2008, our credit facility with Laurus Master Fund, Ltd. was terminated
and we have not yet established any new corporate-wide credit
facility.  We understand that achieving positive cash flow from
operations as well as sustained profitability will be key components necessary
to re-establish a new credit facility. Based on our September 30, 2009 results
and traditional credit facility advance rates of 75% of eligible accounts
receivable and 50% of eligible inventory, we believe could have an additional
$1.3 million of available liquidity through a traditional credit facility.
Management is currently evaluating several financing alternatives that would
enhance our financial position and provide growth capital to supplement our
existing working capital position. We are diligently working to determine the
feasibility of each alternative. No assurances can be given that any such
financing will be concluded in the near future, on terms favorable to us, or at
all.  If we are unable to obtain additional growth capital, our
ability to implement our business plan may be materially and adversely
affected.
  We
understand our continued existence is dependent on our ability to generate
positive operating cash flow, achieve profitability on a sustained basis for all
operations and settle existing obligations and we anticipate improved
performance during the warmer second half of the fiscal year which is when a
majority of the playground and athletic surfaces which are typically installed.
Based on our fiscal 2010 budget and existing cash and marketable investments, we
believe we will be able to satisfy our cash requirements. If Green Tech Products
and American Power Group are unable to achieve sustained profitability during
fiscal 2010 and we are unable to obtain additional financing to supplement our
cash position, our ability to maintain our current level of operations could be
materially and adversely affected.  There is no guarantee we will be
able to achieve sustained profitability of either business.
  In
September 2008 we announced the formation of a new subsidiary, GreenMan
Renewable Fuel and Alternative Energy, Inc.  Our primary objective for
this subsidiary is to pursue licenses, joint-ventures and long-term contracts
focused on the commercialization of existing and late-stage development products
and processes in green-based technologies including renewable fuels and
alternative energy. There has been significant global investment made over the
past several years in the area of renewable fuels, alternative energy and
clean-tech technologies and management does not see this momentum slowing down.
To date, GreenMan Renewable Fuel and Alternative Energy has generated no
revenues and has not incurred any operating expenses.
  Our
Consolidated Statements of Cash Flows reflect events for the fiscal year ended
September 30, 2009 and 2008 as they affect our liquidity. During the fiscal year
ended September 30, 2009, net cash used by operating activities was $3,514,926.
Our net income for the fiscal year ended September 30, 2009 was $7,989,315,
reflecting a $19,227,445 gain on sale of our tire recycling operations and the
application of $6.1 million of non-cash income taxes. Our cash flow was
positively impacted by the following: $2,289,939 goodwill impairment loss and
$977,252 of depreciation and amortization and a $536,469 decrease in accounts
receivables and inventory which was offset a decrease of $951,540 in accounts
payable and accrued expenses. Our net income for the fiscal year ended September
30, 2008 was $7,891,685, including a one-time, non-cash gain of $2,360,930
associated with the de-consolidation of our Georgia subsidiary and recognition
of a $5.3 million deferred tax benefit. Our cash flow was positively impacted by
the following: $2,307,161 of depreciation and amortization which was offset by a
$2,255,257 increase in product inventory and accounts receivable primarily due
to the acquisition of Green Tech Products on October 1, 2007.
  13
  Net
cash provided by investing activities was $21,917,042 for the fiscal year ended
September 30, 2009, reflecting net proceeds from the sale of our scrap tire
processing operations of approximately $27.9 million. During the fiscal year
ended September 30, 2009, we purchased approximately $3 million of marketable
investments and $1,800,000 of certificates of deposit.  In addition we
used $613,363 in connection with the purchase of the American Power Group
operating assets. Net cash used by investing activities was $1,764,100 for the
fiscal year ended September 30, 2008, primarily reflecting the net purchase of
equipment of $1,777,415.
  Net
cash used by financing activities was $17,427,499 during the fiscal year ended
September 30, 2009, reflecting the payoff of approximately $12.85 million
associated with our Laurus credit facility and approximately $3.4 million of
other debt and capital lease obligations associated with our discontinued scrap
tire operations and $534,320 of related party debt. In addition, we used
$700,000 to purchase warrants from our former secured lender to purchase
approximately 4.8 million shares of our common stock.  Net cash
provided by financing activities was $1,584,428 during the fiscal year ended
September 30, 2008, reflecting an increase in our working capital line of
$3,300,221, which offset normal debt payments including the payoff of
approximately $467,000 of Green Tech debt in conjunction with the acquisition
and capital lease repayments.
  Effects
of Inflation and Changing Prices
  Generally,
we are exposed to the effects of inflation and changing prices.  Given
that our dual fuel conversion technology replaces a certain percentage of diesel
fuel with natural gas, we would be impacted by any material change in the net
fuel savings between the two fuels (for example, if diesel fuel prices decrease
and natural gas prices increase). We have generally been unaffected by interest
rate changes in fiscal 2009, because we no longer maintain any floating-rate
debt.
  Off-Balance
Sheet Arrangements
  We
lease various facilities and equipment under cancelable and non-cancelable short
and long term operating leases which are described in Note 7 to our Audited
Consolidated Financial Statements.
  Environmental
Liability
  There
are no known material environmental violations or assessments.
  Recent
Accounting Pronouncements
  In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
guidance that defines fair value, established a framework for measuring fair
value and expands disclosure about fair value measurements. This guidance also
establishes a fair value hierarchy that prioritizes information used in
developing assumptions when pricing an asset or liability.  This
guidance is included in ASC 820, “Fair Value Measurements and
Disclosures”. We have adopted this guidance effective October 1, 2008.
The adoption of this guidance had no impact on our consolidated financial
condition and the results of operations. In February 2008, FASB delayed the
statements on a nonrecurring basis to fiscal years beginning after November 15,
2008.  We have not applied the provisions of this guidance to our
nonfinancial assets and nonfinancial liabilities as of September 30,
2009.  The provisions for this guidance for nonfinancial assets and
nonfinancial liabilities will be effective for us beginning in the first quarter
of fiscal 2010.
  In
May 2009, the FASB issued guidance intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be
issued.  This guidance requires disclosure of the date through which
the company has evaluated subsequent events and whether that date represents the
date the financial statements were issued or were available to be
issued.  This guidance is included in ASC 855, “Subsequent Events”, and was
effective for our third quarter ended June 30, 2009.  Refer to Note 1,
“Subsequent Events”, for the disclosure of our subsequent events for the current
reporting period. The adoption of this guidance had no impact on our
consolidated financial condition and the results of operations.
  In
June 2009, the FASB issued Statement of Financial Accounting Standards No. 168,
“The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principals.” This guidance establishes the Accounting Standards
Codification (ACS) as the source of authoritative U.S. GAAP recognized by the
FASB (other than rules and interpretive releases issued by the Securities
and Exchange Commission) and is effective for us in the fourth quarter ended
September 30, 2009.  The adoption of this guidance had no impact on
our consolidated financial condition and the results of operations.
  Item
      7A.
              Quantitative and
      Qualitative Disclosures About Market
Risk
  Not
applicable.
   14
  Item
      8.
              Financial Statements
      and Supplementary Data
  For
information required with respect to this Item 8, see “Consolidated Financial
Statements” on pages __ through __ of this report.
  Item
      9.
              Changes In and
      Disagreements With Accountants on Accounting and Financial
      Disclosure
  None.
  Item
      9A.
              Controls and
      Procedures
  As
required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities
Exchange Act of 1934, as amended, our chief executive officer and chief
financial officer evaluated our company’s disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of
the period covered by this Annual Report on Form 10-K. Disclosure controls and
procedures are controls and other procedures that are designed to ensure that
information required to be disclosed in our company's reports filed or submitted
under the Exchange Act 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 controls and procedures
designed to ensure that information required to be disclosed in our company's
reports filed under the Exchange Act is accumulated and communicated to our
chief executive officer and our chief financial officer, as appropriate, to
allow timely decisions regarding required disclosure.
 
 Based
on its evaluation, our management concluded that as of the end of the period
covered by this Annual Report on Form 10-K, our disclosure controls and
procedures were effective.
 
 Management’s
Report on Internal Control Over Financial Reporting
  Our
company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act) for our company. Our company’s internal control
over financial reporting is designed to provide reasonable assurance, not
absolute assurance, regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States of America.
Internal control over financial reporting includes those policies and procedures
that: (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our company’s
assets; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles in the United States of America, and
that our company’s receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on the financial statements.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. In addition, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions and that the degree of compliance
with the policies or procedures may deteriorate.
  As
required by Rule 13a-15(c) promulgated under the Exchange Act, our management,
with the participation of our chief executive officer and chief financial
officer, evaluated the effectiveness of our internal control over financial
reporting as of September 30, 2009. Management’s assessment was based on
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control over Financial Reporting – Guidance for Smaller
Public Companies. Management, under the supervision and with the participation
of the Company’s chief executive officer and chief financial officer, assessed
the effectiveness of the company’s internal control over financial reporting as
of September 30, 2009 and concluded that it is effective.
  This
Annual Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities Exchange
Commission that permit the Company to provide only management’s report in this
Annual Report.
 
 Changes
in Internal Control over Financial Reporting
  There
were no changes in our internal control over financial reporting during the
fourth quarter of our fiscal year ended September 30, 2009 that have materially
affected or are reasonably likely to materially affect, our internal control
over financial reporting.
  Item
      9B.
              Other
      Information
 
 None.
   15
  PART III
  Item
      10.
              Directors, Executive
      Officers and Corporate
Governance
 
 Our
directors and executive officers are as follows:
 
 Name
              Age
              PositionMaurice
      E. Needham
              69
              Chairman
      of the Board of DirectorsLyle
      Jensen
              59
              Chief
      Executive Officer; President; DirectorCharles
      E. Coppa
              46
              Chief
      Financial Officer; Treasurer; SecretaryDr.
      Allen Kahn
              88
              DirectorLew
      F. Boyd
              64
              DirectorKevin
      Tierney
              50
              Director
 
 Each
director is elected for a period of one year at the annual meeting of
stockholders and serves until his or her successor is duly elected by the
stockholders.  The officers are appointed by and serve at the
discretion of the Board of Directors. All outside directors receive $5,000 per
quarter as board compensation.
  We
have established an Audit Committee consisting of Messrs. Tierney (Chair) and
Boyd and Dr. Kahn, and a Compensation Committee consisting of Messrs. Boyd
(Chair) and Dr. Kahn.  Our Board of Directors has determined that Mr.
Tierney is an “audit committee financial expert” within the meaning given that
term by Item 407(d)(5) of Regulation S-K. On February 25, 2009, Nicholas
DeBenedictis resigned from the Board of Directors and the Audit and Compensation
Committees.  As a result of Mr. DeBenedictis’ resignation, Mr. Boyd
served as Interim Chairman of the Audit Committee until Mr. Tierney joined the
Board on July 1, 2009.
  MAURICE E. NEEDHAM has been
Chairman since June 1993. From June 1993 to July 21, 1997, Mr. Needham also
served as Chief Executive Officer.  He has also served as a Director
of Comtel Holdings, an electronics contract manufacturer since April
1999.  He previously served as Chairman of Dynaco Corporation, a
manufacturer of electronic components which he founded in 1987. Prior to 1987,
Mr. Needham spent 17 years at Hadco Corporation, a manufacturer of electronic
components, where he served as President, Chief Operating Officer and
Director.
  LYLE JENSENhas been a
Director since May 2002. On April 12, 2006, Mr. Jensen became our Chief
Executive Officer. Mr. Jensen previously was Executive Vice President/Chief
Operations Officer of Auto Life Acquisition Corporation, an automotive
aftermarket dealer of fluid maintenance equipment.  Prior to that, he
was a Business Development and Operations consultant after holding executive
roles as Chief Executive Officer and minority owner of Comtel and Corlund
Electronics, Inc.  He served as President of Dynaco Corporation from
1988 to 1997; General Manager of Interconics from 1984 to 1988; and various
financial and general management roles within Rockwell International from 1973
to 1984.
  CHARLES E. COPPAhas served as
Chief Financial Officer, Treasurer and Secretary since March
1998.  From October 1995 to March 1998, he served as Corporate
Controller.  Mr. Coppa was Chief Financial Officer and Treasurer of
Food Integrated Technologies, a publicly-traded development stage company from
July 1994 to October 1995.  Prior to joining Food Integrated
Technologies, Inc., Mr. Coppa served as Corporate Controller for Boston Pacific
Medical, Inc., a manufacturer and distributor of disposable medical products,
and Corporate Controller for Avatar Technologies, Inc., a computer networking
company.
  ALLEN KAHN, M.D., has been a
Director since March 2000. Dr. Kahn operated a private medical practice in
Chicago, Illinois, which he founded in 1953 until his retirement in October
2002. Dr. Kahn has been actively involved as an investor in “concept companies”
since 1960. From 1965 through 1995 Dr. Kahn served as a member of the Board of
Directors of Nease Chemical Company (currently German Chemical Company),
Hollymatic Corporation and Pay Fone Systems (currently Pay Chex,
Inc.).
  LEW F. BOYD has been a
Director since August 1994. Mr. Boyd is the founder and since 1985 has been the
Chief Executive Officer of Coastal International, Inc., an international
business development and executive search firm, specializing in the energy and
environmental sectors.  Previously, Mr. Boyd had been Vice
President/General Manager of the Renewable Energy Division of Butler
Manufacturing Corporation and had served in academic administration at Harvard
and Massachusetts Institute of Technology.
  KEVIN TIERNEYhas been a
Director since July 2009.  Since 2006, Mr. Tierney has served as the
President and Chief Executive Officer of Saugusbank, a $200 million,
state-chartered community bank located in Saugus,
Massachusetts.  Prior to joining Saugusbank, he served as executive
vice president and general manager of BISYS Group’s Corporate Financial
Solutions Division which provided corporate banking services to Fortune 500
treasury departments as well as to the life insurance and health insurance
industries. From 1999 to 2004, Mr. Tierney was executive vice president and
chief operating officer of Abington Bancorp, a $1.2 billion, publicly traded
bank holding company.  Mr. Tierney previously served as executive vice
president and general manager of a division of  Electronic Data
Systems Inc. where he oversaw a business unit that provided emerging payment
technologies to the retail and financial services industries.
  16
  Compliance
with Section 16(a) of the Securities Exchange Act of 1934
 
 Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons who own more than 10% of our common stock, to file with the Securities
and Exchange Commission initial reports of ownership of our common stock and
other equity securities on Form 3 and reports of changes in such ownership on
Form 4 and Form 5. Officers, directors and 10% stockholders are required by the
Securities and Exchange Commission regulations to furnish us with copies of all
Section 16(a) forms they file.
  To
the best of management’s knowledge, based solely on review of the copies of such
reports furnished to us during and with respect to, our most recent fiscal year,
and written representation that no other reports were required, all Section
16(a) filing requirements applicable to our officers and directors have been
complied with.
  Code
of Ethics
  On
May 28, 2005, we adopted a code of ethics which applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions.  We have posted
our code of ethics on our corporate website, www.greenman.biz.
  Item
      11.
              Executive
      Compensation
 
 Summary
Compensation Table
 
 The
following table summarizes the compensation paid or accrued for services
rendered during the fiscal years ended September 30, 2009 and 2008, to our Chief
Executive Officer and our Chief Financial Officer. We granted restricted stock
awards in fiscal 2009 only. We did not grant any stock appreciation rights or
make any long-term plan payouts during the fiscal years ended September 30, 2009
and or September 30, 2008.
 
 Annual Compensation
              
              
              Option
              
              
              All
      OtherName and Principal
      Position
              Fiscal
      Year
              
              Salary
              
              
              Bonus
              
              
              Awards (1)(2)
              
              
              Compensation(3)
              
              
              TotalLyle
      Jensen
              2009
              
              $
              250,000
              
              
              $
              275,000
              
              
              $
              39,000
              
              
              $
              37,479
              
              
              $
              601,479Chief
      Executive Officer
              2008
              
              
              250,000
              
              
              
              150,000
              
              
              
              39,200
              
              
              
              23,923
              
              
              
              463,123Charles
      E. Coppa
              2009
              
              $
              161,500
              
              
              $
              130,000
              
              
              $
              55,000
              
              
              $
              28,649
              
              
              $
              375,149Chief
      Financial Officer
              2008
              
              
              158,625
              
              
              
              75,000
              
              
              
              --
              
              
              
              12,760
              
              
              
              246,385
  (1)
              Amounts shown do not reflect compensation actually
      received by the named executive officer. The amounts in the Option Awards
      column reflect the dollar amount recognized as compensation cost for
      financial statement reporting purposes for the fiscal years ended
      September 30, 2009 and September 30, 2008, in accordance with ASC 718 for
      all stock options granted in such fiscal years. The calculation in the
      table above excludes all assumptions with respect to forfeitures. There
      can be no assurance that the amounts set forth in the Option Awards column
      will ever be realized. A forfeiture rate of zero was used in the expense
      calculation in the financial
statements.
  (2)
              Options
      granted have a ten-year term and vest at an annual rate of 20% over a
      five-year period from the date of grant with the exception of the 200,000
      granted to Mr. Jensen in fiscal 2008 and 100,000 granted in fiscal 2009
      which, pursuant to the terms of his employment, vest immediately on the
      date of grant and have a ten-year
term.
  (3)
              Represents
      payments made to or on behalf of Messrs. Jensen and Coppa for health and
      life insurance and auto allowances. In addition, during June 2009, the
      Board of Directors approved the issuance of 50,000 shares of unregistered
      common stock as restricted stock awards to Mr. Jensen and Mr. Coppa in
      recognition of past services and as future incentive.  The value
      assigned to each individual’s grant is $15,000 based on the closing bid
      price on the date of grant plus the anticipated income tax affect
      associated with the issuance of these shares.  Each recipient
      has agreed to hold the shares for a minimum of 18 months after
      issuance.
  17
  Employment
Agreements
  On
April 12, 2006, we entered into a five-year employment agreement with Mr. Jensen
pursuant to which Mr. Jensen receives a base salary of $195,000 per year. The
agreement automatically renews for one additional year upon each anniversary,
unless notice of non-renewal is given by either party.  We may
terminate the agreement without cause on 30 days’ prior notice.  The
agreement provides for payment of twelve months’ salary and certain benefits as
a severance payment for termination without cause. Any increases in Mr. Jensen’s
base salary will be made in the discretion of the Board of Directors upon the
recommendation of the Compensation Committee. The agreement also provided for
Mr. Jensen to be eligible to receive incentive compensation in the form of cash
and stock options based on (i) non-financial criteria which may be established
by the Board of Directors and (ii) upon a calculation of our annual audited
earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a
percentage of our revenue, as follows:
 
 EBITDA
      as
                % of
      Revenue
              Cash Performance
      IncentiveBase:
              10.0
      % or Less
              NoneLevel
      I:
              10.1%
      – 12.0%
              10%
      of EBITDA dollars above BaseLevel
      II:
              12.1%
      – 15.0%
              12%
      of EBITDA dollars above BaseLevel
      III:
              >
      15.0%
              15%
      of EBITDA dollars above Base
 
 EBITDA
      as a% of
      Revenue
              Stock Option
      Performance Incentive EarnedBase:
              <11.0%
              NoneLevel
      I:
              11.1%
      – 11.99%
              Options
      to purchase 20,000 shares of the Company’s common
stock.Level
      II:
              12.0%
      – 12.99%
              Options
      to purchase 40,000 shares of the Company’s common
stock.Level
      III:
              13.0%
      – 13.99%
              Options
      to purchase 60,000 shares of the Company’s common
stock.Level
      IV:
              14.0%
      – 14.99%
              Options
      to purchase 80,000 shares of the Company’s common
stock.Level
      V:
              >
      15.0%
              Options
      to purchase 100,000 shares of the Company’s common
  stock.
 
 On
February 8, 2008, Mr. Jensen was granted immediately exercisable options to
purchase 100,000 shares of common stock at an exercise price of $.34 per share
based on fiscal 2007 EBITDA performance.
  Mr.
Jensen’s employment agreement was amended in January 2008 to increase Mr.
Jensen’s base salary to $250,000 per year, with such increase retroactive to
October 1, 2007. In addition, the amendment deleted the EBITDA-based cash
incentive compensation measures described above, and provided instead for
incentive compensation in respect of any fiscal year of up to the lesser of (x)
20% of our audited annual profit after tax, as reported in the financial
statements included in our Annual Report on Form 10-K for such fiscal year and
(y) $150,000.  The EBITDA-based stock option incentive compensation
measures described above remained unchanged. During fiscal 2008, Mr. Jensen
earned an incentive bonus of $150,000 and on September 30, 2008 was granted
immediately exercisable options to purchase 100,000 shares of common stock at an
exercise price of $.33 per share based on fiscal 2008 EBITDA performance. During
fiscal 2009, Mr. Jensen earned an incentive bonus of $150,000 and on June 9,
2009 was granted immediately exercisable options to purchase 100,000 shares of
common stock at an exercise price of $.23 per share based on fiscal 2009 EBITDA
performance. In addition, the Board of Directors approved a discretionary
incentive bonus of $125,000 to Mr. Jensen in recognition of successful sale of
the tire recycling operations and repayment of all amounts due our secured
lender, Laurus Master Fund, Ltd., in November 2008.
  In
June 1999, we entered into a two-year employment agreement with Mr. Coppa which
automatically renews for two additional years upon each anniversary, unless
notice of non-renewal is given by either party. The agreement provides for
payment of twelve months salary as a severance payment for termination without
cause. In January 2008, Mr. Coppa’s employment agreement was amended to increase
his base salary from $150,000 to $161,500 per year, effective January 1, 2008
and provides for incentive compensation in respect of any fiscal year based on
mutually agreed performance measures as determined our Compensation Committee.
Any increases or bonuses will be made at the discretion of our Board of
Directors upon the recommendation of the Compensation Committee.
  During
fiscal 2009 and 2008, Mr. Coppa earned a discretionary incentive bonus of
$80,000 and $75,000 respectively, based on individual and company performance.
In addition, the Board of Directors approved a discretionary incentive bonus of
$50,000 to Mr. Coppa in recognition of successful sale of the tire recycling
operations and repayment of all amounts due our secured lender, Laurus Master
Fund, Ltd., in November 2008.
  18
  Outstanding
Equity Awards
  The
following table sets forth information concerning outstanding stock options for
each named executive officer as of September 30, 2009:
 
 Number
      of Securities Underlying
              Exercise
              OptionUnexercised
      Options
              Price
              ExpirationName
              Date of
      Grant
              Exercisable
              Unexercisable
              Per
      Share
              DateLyle
      Jensen
              March
      12, 2002 (1)
              25,000
              --
              $1.51
              March
      12, 2012August
      23, 2002 (2)
              2,500
              --
              $1.80
              August
      23, 2012February
      20, 2003 (3)
              2,000
              --
              $1.95
              February
      20, 2013April
      24, 2004 (3)
              2,000
              --
              $1.10
              April
      24, 2014June
      15, 2005 (3)
              2,000
              --
              $0.51
              June
      15, 2015April
      12, 2006 (4)
              300,000
              200,000
              $0.28
              April
      12, 2016December
      18, 2006 (4)
              40,000
              60,000
              $0.35
              December
      18, 2016December
      29, 2006 (5)
              25,000
              --
              $0.36
              December
      29, 2016February
      8, 2008 (5)
              100,000
              --
              $0.34
              February
      8, 2018September
      30, 2008 (5)
              100,000
              --
              $0.33
              September
      30, 2018November
      17, 2008 (4)
              --
              100,000
              $0.33
              November
      17, 2018June
      8, 2009 (5)
              100,000
              --
              $0.22
              June
      8, 2019Charles
      E. Coppa
              February
      18, 2000 (1)
              100,000
              --
              $0.50
              February
      18, 2010January  12,
      2001 (2)
              40,000
              --
              $0.40
              January  12,
      2011August
      23, 2002 (2)
              7,500
              --
              $1.80
              August
      23, 2012June
      6, 2006 (4)
              82,200
              54,800
              $0.36
              June
      6, 2016September
      28, 2007 (4)
              18,000
              27,000
              $0.35
              September
      28, 2017November
      18, 2008 (4)
              --
              100,000
              $0.35
              November
      18, 2018June
      8, 2009 (4)
              --
              200,000
              $0.22
              June
      8, 2019
  (1)
              These
      options are non-qualified, have a ten-year term and vest at an
      annual rate of 20% over a five-year period from the date of
      grant.
  (2)
              These
      options were granted under the 1993 Stock Option Plan, have a ten-year term and vest at an
      annual rate of 20% over a five-year period from the date ofgrant.
  (3)
              These
      options were granted under the 1996 Non Employee Stock Option Plan, have a
      ten-year term and vested immediately on the date of
  grant.
  (4)
              These
      options were granted under the 2005 Stock Option Plan, have a ten-year
      term and vest at an annual rate of 20% over a five-year period from the
      date of grant.
  (5)
              These
      options were granted under the 2005 Stock Option Plan, have a ten-year
      term and vested immediately on the date of
  grant.
  Director
Compensation
  The
following table sets forth information concerning the compensation of our
Directors who are not named executive officers for the fiscal year ended
September 30, 2009:
 
 Name
              Fees
      Earned or Paid in
                Cash or Common Stock
      (1)
              Option
      Awards
                (2)
      (3)
              All
      Other
                Compensation
      (4)
              TotalMaury
      Needham
              $                --
              $     55,000
              $     15,000
              $   70,000Lew
      Boyd
              $       20,000
              $     39,000
              $     15,000
              $   74,000Dr.
      Allen Kahn
              $       20,000
              $     39,000
              $     15,000
              $   74,000Nick
      DeBenedictis
              $         5,000
              $     23,000
              $             --
              $   28,000Kevin
      Tierney, Sr.
              $         5,000
              $     11,000
              $       7,500
              $   23,500
  (1)
              All
      non-employee directors receive a quarterly board fee of $5,000 per
      quarter.
  (2)
              Amounts
      shown do not reflect compensation actually received by the named director.
      The amounts in the Option Awards column reflect the dollar amount
      recognized as compensation cost for financial statement reporting purposes
      for the fiscal year ended September 30, 2009, in accordance with ASC
      718 for all stock options granted in such fiscal years. The
      calculation in the table above excludes all assumptions with respect to
      forfeitures. There can be no assurance that the amounts set forth in the
      Option Awards column will ever be realized. A forfeiture rate was used in
      the expense calculation in the financial
  statements.
  19
  (3)
              On
      November 17, 2008, Messrs. Needham, Boyd, Kahn and DeBenedictis were each
      granted options to purchase 100,000 shares of common stock at an exercise
      price of $.33 per share, have a 10 year term and vest equally over a 5
      year term from date of grant. Mr. DeBenedictis’ options expired upon his
      termination as a director in February 2009. On June 9, 2009, Mr. Needham
      was granted options to purchase 200,000 shares of common stock and Messrs.
      Boyd and Kahn were each granted options to purchase 100,000 shares of
      common stock. All options are exercisable price of $.23 per share, have a
      10 year term and vest equally over a 5 year term from date of grant. On
      July 1, 2009, Mr. Tierney was granted options to purchase 50,000 shares of
      common stock at an exercise price of $.32 per share, have a 10-year term
      and vest equally over a 5-year term from date of
  grant.
  (4)
              During
      June and July 2009, the Board of Directors approved the issuance of
      175,000 shares of unregistered common stock in aggregate as restricted
      stock awards to Messrs. Needham, Boyd, Kahn and Tierney in recognition of
      past services and as future incentive, and recorded a $52,500 expense
      (assigned fair value based on closing bid price plus the anticipated
      income tax affect) associated with the issuance of these
      shares.  All recipients have agreed to hold the shares for a
      minimum of 18 months after
issuance.
  As
of September 30, 2009, each non-employee director holds the following aggregate
number of shares under outstanding stock options:
 
 Name
              Number
      of Shares UnderlyingOutstanding Stock
      OptionsMaury
      Needham
              742,500Lew
      Boyd
              245,500Dr.
      Allen Kahn
              251,500Kevin
      Tierney, Sr.
              50,000
  Stock
Option Plans
  Our
1993 Stock Option Plan (the “2003 Plan”) was established to provide options to
purchase shares of common stock to our employees, officers, directors and
consultants. The 1993 Plan expired on June 10, 2004 as it related to new
grants.
  During
fiscal 2009, options to purchase 521,962 shares of common stock at prices
ranging from $.38 to $1.80 per share expired un-exercised. As of September 30,
2009, there were 72,500 options granted and outstanding under the 1993 Plan
which are exercisable at prices ranging from $0.40 to $1.80.
  On
March 18, 2005, our Board of Directors adopted the 2005 Stock Option Plan (the
“2005 Plan”), which was subsequently approved by our stockholders on June 16,
2005. The 2005 Plan replaced the 1993 Plan. In April 2008, our stockholders
approved an increase to the number of shares authorized under the 2005 Plan from
2,000,000 to 3,500,000 shares.   Options granted under the 2005
Plan may be either options intended to qualify as “incentive stock options”
under Section 422 of the Internal Revenue Code of 1986, as amended; or
non-qualified stock options.
  Incentive
stock options may be granted under the 2005 Plan to employees, including
officers and directors who are employees. Non-qualified options may be granted
to our employees, directors and consultants.  The 2005 Plan is
administered by our Board of Directors, which has the authority to
determine:
  ·
              the
      persons to whom options will be
granted;
  ·
              the
      number of shares to be covered by each
option;
  ·
              whether
      the options granted are intended to be incentive stock
      options;
  ·
              the
      manner of exercise; and
  ·
              the
      time, manner and form of payment upon exercise of an
    option.
  Incentive
stock options granted under the 2005 Plan may not be granted at a price less
than the fair market value of our common stock on the date of grant (or less
than 110% of fair market value in the case of persons holding 10% or more of our
voting stock). Non-qualified stock options may be granted at an exercise price
established by our Board which may not be less than 85% of fair market value of
our shares on the date of grant. Current tax laws adversely impact recipients of
non-qualified stock options granted at less than fair market value; however, we
do not expect to make such grants. Incentive stock options granted under the
2005 Plan must expire no more than ten years from the date of grant, and no more
than five years from the date of grant in the case of incentive stock options
granted to an employee holding 10% or more of our voting stock.
  During
the year ended September 30, 2008, 870,000 options were granted under the 2005
Plan at prices ranging from $.33 to $.35.
  During
the year ended September 30, 2009, 2,050,000 options were granted under the 2005
Plan at prices ranging from $.23 to $.33 and options to purchase 1,230,000
shares of common stock at prices ranging from $.28 to $.35 per share expired
un-exercised. As of September 30, 2009 there were 3,352,000 options granted and
outstanding under the 2005 Plan which are exercisable at prices ranging from
$0.23 to $0.55.
  20
  Non-Employee
Director Stock Option Plan
  Our
1996 Non-Employee Director Stock Option Plan is intended to promote our
interests by providing an inducement to obtain and retain the services of
qualified persons who are not officers or employees to serve as members of our
Board of Directors. The Board of Directors has reserved 60,000 shares of common
stock for issuance under Non-Employee Director Stock Option Plan. During fiscal
2006, the Compensation Committee agreed to discontinue future option grants made
under the Non-Employee Director Stock Option Plan.
  As
of September 30, 2009, options to purchase 38,000 shares of our common stock
have been granted under the 1996 Non-Employee Director Stock Option Plan, of
which 28,000 are outstanding and exercisable at prices ranging from $0.38 to
$1.95.
  Employee
Benefit Plan
  We
have implemented a Section 401(k) plan for all eligible employees. Employees are
permitted to make elective deferrals of up to 75% of employee compensation up to
the maximum contribution allowed by law and employee contributions to the 401(k)
plan are fully vested at all times. We may make discretionary contributions to
the 401(k) plan which become vested over a period of five years. We did not make
any discretionary contributions to the 401(k) plan during the fiscal years ended
September 30, 2009 and 2008.
  Item
      12.
              Security Ownership of
      Certain Beneficial Owners and Management and Related Stockholder
      Matters
 
 The following tables set forth certain
information regarding beneficial ownership of our common stock as of September
30, 2009:
 
 ·
              by
      each of our directors and executive
officers;
 ·
              by
      all of our directors and executive officers as a group;
  and
 ·
              by
      each person (including any “group” as used in Section 13(d) of the
      Securities Exchange Act of 1934) who is known by us to own beneficially 5%
      or more of the outstanding shares of common
  stock.
  Unless
otherwise indicated below, to the best of our knowledge, all persons listed
below have sole voting and investment power with respect to their shares of
common stock, except to the extent authority is shared by spouses under
applicable law. As of September 30, 2009, 33,077,310 shares of our common stock
were issued and outstanding.
  Security
Ownership of Management and Directors
 
 Name
      (1)
              Number
      of Shares
                Beneficially Owned
      (2)
              Percentage
                of Class
      (2)Dr.
      Allen Kahn (3)
              4,430,975
              
              13.39%Maury
      Needham (4)
              1,650,839
              
              4.95%Lyle
      Jensen (5)
              1,453,522
              
              4.30%Charles
      E. Coppa (6)
              724,628
              
              2.17%Lew
      F. Boyd (7)
              363,678
              
              1.04%Kevin
      Tierney, Sr.
              29,000
              
              *All
      officers and directors
                as a group (6 persons)
              8,652,642
              
              25.16%
 *less than 1%
 _____________________________
 (1)
              Except
      as noted, each person’s address is care of GreenMan Technologies, Inc.,
      205 South Garfield, Carlisle, Iowa,
      50047.
 (2)
              Pursuant
      to the rules of the Securities and Exchange Commission, shares of common
      stock that an individual or group has a right to acquire within 60 days
      pursuant to the exercise of options or warrants are deemed to be
      outstanding for the purpose of computing the percentage ownership of such
      individual or group, but are not deemed to be outstanding for the purpose
      of computing the percentage ownership of any other person shown in the
      table.
 (3)
              Includes
      23,500 shares of common stock issuable pursuant to immediately exercisable
      stock options.
 (4)
              Includes
      272,500 shares of common stock issuable pursuant to immediately
      exercisable stock options. Also includes 59,556 shares of common stock
      owned by Mr. Needham’s wife.
 (5)
              Includes
      718,500 shares of common stock issuable pursuant to immediately
      exercisable stock options.
 (6)
              Includes
      267,700 shares of common stock issuable pursuant to immediately
      exercisable stock options.
 (7)
              Includes
      37,500 shares of common stock issuable pursuant to immediately exercisable
      stock options.
 
 Common
Stock Authorized for Issuance Under Equity Compensation Plans
 
 For
descriptions of equity compensation plans under which our common stock is
authorized for issuance as of September 30, 2009, see Note 8 (“Stockholders’
Equity”) of the Consolidated Financial Statements contained herein. For
additional information concerning certain compensation arrangements, not
approved by stockholders, under which options to purchase common stock may be
issued, see “Executive Compensation – Employment Agreements’, above, and
“Certain Relationships and Transactions – Stock Issuances: Stock Options;
Warrants”, below.
 
  21
  Item
      13.
              Certain Relationships
      and Related Transactions, and Director
  Independence
  Stock
Issuances; Options Granted
  During
the year ended September 30, 2008, Messrs. Boyd, Dr. Kahn and a former director
agreed to accept 84,838 shares of unregistered common stock valued at $30,796 in
lieu of cash for certain director’s fees, interest and expenses due the
directors. All shares were issued at a price equal to the closing price of our
common stock on the date of issuance.
  During
fiscal 2008, 200,000 qualified options in aggregate were granted at exercise
prices ranging from $.33 to $.34 per share to Mr. Jensen. All options vest
immediately and have a ten-year term from the date of grant.
  In
November 2008, in recognition of the company’s enhanced performance, we granted
options to our Messrs. Needham, Boyd, Jensen, Kahn, DeBenedictis (who resigned
in February 2009) and Coppa to purchase an aggregate of 600,000 shares of our
common stock at an exercise price of $.33 per share, which represented the
closing price of our stock on the date of each respective grant. The options
were granted under the 2005 Stock Option Plan, have a ten-year term and vest
equally over a five-year period from date of grant. In February 2008, 100,000
options expired un-exercised with the departure of Mr.
DeBenedictis.
  In
June 2009, the Board of Directors approved the issuance of 250,000 shares of
unregistered common stock, in aggregate, as restricted stock awards to Messrs.
Needham, Boyd, Jensen, Kahn and Coppa. The awards were in recognition of past
services, including the successful November 2008 sale of the tire recycling
operations and repayment of all amounts due our secured lender, Laurus Master
Fund, Ltd., as well as future incentives. All recipients have agreed to hold the
shares for a minimum of 18 months after issuance. In addition, we granted
options to the directors and Mr. Coppa to purchase an aggregate of 700,000
shares of our common stock at an exercise price of $.23 per share, which
represented the closing price of our stock on the date of each respective grant.
The options were granted under the 2005 Stock Option Plan, have a ten-year term
and vest equally over a five-year period from date of grant with the exception
of an option to purchase 100,000 shares granted to our Chief Executive Officer,
which are immediately exercisable pursuant to the terms of his employment
agreement.
  In
July 2009, the Board of Directors approved the issuance of 25,000 shares of
unregistered common stock as restricted stock awards to Mr. Tierney. The award
was an incentive to join the Board and Mr. Tierney has agreed to hold the shares
for a minimum of 18 months after issuance. In addition, we granted options to
Mr. Tierney to purchase an aggregate of 50,000 shares of our common stock at an
exercise price of $.32 per share, which represented the closing price of our
stock on the date of each respective grant. The options were granted under the
2005 Stock Option Plan, have a ten-year term and vest equally over a five-year
period from date of grant.
  Related
Party Transactions
  On
November 18, 2008 we entered into a four-month (extended in March 2009 on a
month-to-month basis) consulting agreement at a rate of $7,500 per month with a
company owned by Mr. Boyd who also serves as the Chairman of our Compensation
committee.  The consulting firm is currently providing assistance in
the areas of due diligence support, “green” market opportunity identification
and evaluation, Board of Director candidate identification and evaluation and
other services as our Board may determine.
  As
a result of the divestiture of our tire recycling operations on November 17,
2008, all related party transactions described below have been
terminated.
  We
rented several pieces of equipment on a monthly basis from Valley View Farms,
Inc. and Maust Asset Management, LLC, two companies co-owned by a former
employee. We have entered into three equipment operating lease agreements with
Maust Asset Management.  Under these leases, we were required to pay
between $1,500 and $2,683 per month rental and had the ability to purchase the
equipment at the end of the lease for between $12,000 and $16,000. Rent expense
associated with payments made to the two companies for the fiscal years ended
September 30, 2009 and 2008 was $12,401 and $82,858, respectively.
  During
fiscal 2008, we entered into two capital lease agreements with Maust Asset
Management for equipment valued at $358,548. Under the terms of the leases we
were required to pay between $2,974 and $5,000 per month rental for a period of
60 months from inception. We had the ability to purchase the equipment at the
end of each lease for $1 per unit.
  In
April 2003, our Iowa subsidiary entered into a ten-year lease agreement with
Maust Asset Management for our Iowa facility.  Under the lease,
monthly rent payments of $8,250 plus real estate taxes were required for the
first five years, increasing to $9,000 plus real estate taxes per month for the
remaining five years. Maust Asset Management acquired the property from the
former lessor. In April 2005, our Iowa subsidiary entered into an eight-year
lease agreement with Maust Asset Management for approximately three acres
adjacent to our existing Iowa facility.  Under that lease, monthly
rent payments of $3,500 were required. For the fiscal years ended September 30,
2009 and 2008 payments made in connection with these leases amounted to $32,800
and $168,180, respectively.
  During
March 2004, our Minnesota subsidiary sold all of its land and buildings to an
entity co-owned by a former employee for $1,400,000, realizing a gain of
$437,337 which has been recorded as unearned income and classified as a
non-current liability in the accompanying financial statements. Simultaneous
with the sale, we entered into an agreement to lease the property back for a
term of 12 years at an annual rent of $195,000, increasing to $227,460 over the
term of the lease. The gain was being recognized as income ratably over the term
of the lease. The building lease was classified as a capital lease at September
30, 2008 valued at $1,036,000 with the portion allocated to land treated as an
operating lease. For the fiscal years ended September 30, 2009 and 2008 payments
made in connection with this lease amounted to $44,604 and $257,429,
respectively.
  22
  All
transactions, including loans, between us and our officers, directors, principal
stockholders, and their affiliates are approved by a majority of the independent
and disinterested outside directors on the Board of Directors. Management
believes these transactions were consummated on terms no less favorable to us
than could be obtained from unaffiliated third parties.
  Independence
of the Board of Directors
  The
Board of Directors has adopted director independence guidelines that are
consistent with the definitions of “independence” as set forth in Section 301 of
the Sarbanes-Oxley Act of 2002 and Rule 10A-3 under the Securities Exchange Act
of 1934.  In accordance with these guidelines, the Board of Directors
has reviewed and considered facts and circumstances relevant to the independence
of each of our directors and director nominees. In particular, the Board has
carefully considered the fact that Mr. Needham serves on the board of directors
of Saugusbank (of which Mr. Tierney is president and chief executive officer)
and has determined that, each of the Company’s non-management directors
qualifies as “independent.”
 
 The
Board of Directors has determined that all of the members of each committee of
the Board of Directors are independent as defined under the NYSE Alternext US
Rules, including, in the case of all members of the Audit Committee (i.e.,
Messrs. Tierney and Boyd and Dr. Kahn), the independence requirements
contemplated by Rule 10A-3, under the Exchange Act. In addition, all members of
the Audit Committee are independent as defined by the NYSE Alternext US Rules
and otherwise satisfy the NYSE Alternext US eligibility requirements for Audit
Committee membership.
  Item
      14.
              Principal Accounting
      Fees and Services
  The
firm of Schechter, Dokken, Kanter, Andrews & Selcer, Ltd. (“SDKAS”) is our
independent auditors for the fiscal years ending September 30, 2009 and
2008.
  In
addition to audit services, SDKAS also provided certain non-audit services to us
during the fiscal years ended September 30, 2009 and 2008.  The Audit
Committee has considered whether the provision of these additional services is
compatible with maintaining the independence of SDKAS.
  Audit Fees. The aggregate
fees billed for professional services rendered by SDKAS for (1) the audit
of our financial statements as of and for the fiscal years ended September 30,
2009 and 2008 and (2) the review of the financial statements included our
company’s Form 10-Q filings for fiscal 2009 and 2008 were $133,683 and
$147,039, respectively.
  Audit-Related Fees. The
aggregate fees billed in fiscal 2009 and 2008 for assurance and related services
rendered by SDKAS that are reasonably related to the performance of the audit or
review of our financial statements, was $8,633 and $36,833, respectively.
Services rendered in this category consisted of (i) financial accounting
and reporting consultations, (ii) participation in board and audit
committee meetings and (iii) assurance services on specific
transactions.
  Tax Fees. The aggregate fees
billed in fiscal 2009 and 2008 for professional services rendered by SDKAS for
tax compliance, tax advice and tax planning was $43,500 and $35,913,
respectively.
  All Other Fees. There were no
other fees billed during fiscal 2009 and 2008 by SDKAS.
  Pre-Approval Policies and
Procedures.  The Audit Committee has adopted policies which
provide that our independent auditors may only provide those audit and non-audit
services that have been pre-approved by the Audit Committee, subject, with
respect to non-audit services, to a de minimis exception
(discussed below) and to the following additional requirements: (1) such
services must not be prohibited under applicable federal securities rules and
regulations, and (2) the Audit Committee must make a determination that
such services would be consistent with the principles that the independent
auditor should not audit its own work, function as part of management, act as an
advocate of our company, or be a promoter of our company’s stock or other
financial interests. The chairman of the Audit Committee has the authority to
grant pre-approvals of permitted non-audit services between meetings, provided
that any such pre-approval must be presented to the full Audit Committee at its
next scheduled meeting.
  During
fiscal 2009 and 2008, all of the non-audit services provided by SDKAS were
pre-approved by the Audit Committee. Accordingly, the Audit Committee did not
rely on the de minimisexception noted above. This exception waives the pre-approval
requirements for non-audit services if certain conditions are satisfied,
including, among others, that such services are promptly brought to the
attention of and approved by the Audit Committee prior to the completion of the
audit.
   23
  PART
IV
  Item
      15.
              Exhibits, Financial Statement
    Schedules
 
 (a)
              Financial
      Statements: For a list of financial statementsfiled with
      this report, see page 27.
  (b)      The
following exhibits are filed with this report:
 
 Exhibit
      No.
              
              Description2.1
      (1)
              
              --
              Asset
      Purchase Agreement among GreenMan Technologies, Inc., Liberty Tire
      Services, LLC, Liberty Tire Services of Ohio, LLC, GreenMan Technologies
      of Iowa, Inc., and GreenMan Technologies of Minnesota, Inc., dated
      September 12, 20082.2
      (1)
              
              --
              Stockholder
      Voting Agreement among Liberty Tire Services, LLC, Liberty Tire Services
      of Ohio, LLC, GreenMan Technologies, Inc., GreenMan Technologies of Iowa,
      Inc., GreenMan Technologies of Minnesota, Inc., Maurice E. Needham, Lyle
      Jensen, Dr. Allen Kahn, Lew F. Boyd, Nicholas DeBenedictis and Charles E.
      Coppa, dated September 12, 2008.2.3
      (2)
              
              --
              Share
      Exchange Agreement among GreenMan Technologies, Inc., Welch Products, Inc.
      and the Stockholders of Welch Products, Inc., dated October 1,
      20072.4
      (2)
              
              --
              Escrow
      Agreement among GreenMan Technologies, Inc., Welch Products, Inc., the
      Stockholders of Welch Products, Inc. and Dreher, Simpson and Jensen, P.C.,
      as Escrow Agent, dated October 1, 20072.5
      (2)
              
              --
              Agreement
      among GreenMan Technologies, Inc., Welch Products, Inc., the Stockholders
      of Welch Products, Inc. and Laurus Master Fund Ltd., dated October 1,
      20072.6
      (3)
              
              --
              Exclusive
      Patent License Agreement dated as of June 17, 2009, by and between
      GreenMan Technologies, Inc. and American Power Group, Inc.2.7
      (3)
              
              --
              Escrow
      Agreement dated as of June 17, 2009, by and among GreenMan Technologies,
      Inc., American Power Group, Inc. and Morse, Barnes-Brown & Pendleton,
      P.C., as escrow agent2.8
      (4)
              
              --
              Asset
      Purchase Agreement dated as of July 27, 2009, by and among GreenMan
      Alternative Energy, Inc., GreenMan Technologies, Inc. and American Power
      Group, Inc2.9
      (4)
              
              --
              Promissory
      Note dated as of July 27, 2009, in the principal amount of $531,500,
      issued by American Power Group, Inc. to GreenMan Alternative Energy,
      Inc.2.10*
              
              --
              Amended
      and Restated Promissory Note dated as of December 1, 2009, in the
      principal amount of $800,000, issued by M & R, Inc. (formerly known as
      American Power Group, Inc.) to American Power Group, Inc. (formerly known
      as GreenMan Alternative Energy, Inc.) (amending, restating and replacing
      Exhibit 2.9)2.11
      (4)
              
              --
              Escrow
      Agreement dated as of July 27, 2009, by and among GreenMan Alternative
      Energy, Inc., GreenMan Technologies, Inc., American Power Group, Inc. and
      Morse, Barnes-Brown & Pendleton, P.C., as escrow agent3.1
      (5)
              
              --
              Restated
      Certificate of Incorporation as filed with the Secretary of State of the
      State of Delaware on May 1, 2003, as amended3.2
      (6)
              
              --
              By-laws
      of GreenMan Technologies, Inc.4.1
      (6)
              
              --
              Specimen
      certificate for Common Stock of GreenMan Technologies, Inc.4.2
      (7)
              
              --
              Option
      Agreement, dated July 20, 2005 by and between GreenMan Technologies, Inc.
      and Laurus Master Fund, Ltd.4.3
      (8)
              
              --
              Common
      Stock Purchase Warrant, dated June 30, 2006, issued to Laurus Master Fund,
      Ltd.4.4
      (8)
              
              --
              Registration
      Rights Agreement dated June 30, 2006, made by GreenMan Technologies, Inc.
      to Laurus Master Fund, Ltd.
  24
 
 4.5
      (9)
              
              --
              Warrant and Option Purchase Agreementdated
      March 24, 2009, betweenGreenMan
      Technologies, Inc. and PSource Structured Debt Ltd.10.1
      (10)
              
              --
              Employment
      Agreement dated April 1, 2003 between GreenMan Technologies, Inc. and
      Maurice E. Needham10.2
      (11)
              
              --
              Employment
      Agreement dated April 12, 2006, between GreenMan Technologies, Inc. and
      Lyle E. Jensen10.3
      (12)
              
              --
              Addendum
      dated January 30, 2008, to the Employment Agreement dated April 12, 2006,
      between GreenMan Technologies, Inc. and Lyle E. Jensen10.4
      (13)
              
              --
              Employment
      Agreement dated June 1, 1999,between
      GreenMan Technologies, Inc. and Charles E. Coppa10.5
      (12)
              
              --
              Addendum
      dated January 30, 2008, to the Employment Agreement dated June 1, 1999,
      between GreenMan Technologies, Inc. and Charles E. Coppa10.6
      (2)
              
              --
              Consulting
      Agreement between GreenMan Technologies, Inc. and Bruce A. Boland, dated
      October 1, 200710.7
      (2)
              
              --
              Consulting
      Agreement between GreenMan Technologies, Inc. and John W. Brown, dated
      October 1, 200710.8
      (14)
              
              --
              Consulting
      Agreement among Coastal International, Inc. and GreenMan Technologies,
      Inc., dated November 18, 200810.9
      (6)
              
              --
              1993
      Stock Option Plan10.10
      (15)
              
              --
              2005
      Stock Option Plan, as amended January 18, 200810.11
      (6)
              
              --
              Form
      of confidentiality and non-disclosure agreement for executive
      employees10.12
      (16)
              
              --
              Lease
      Agreement By and Between WTN Realty Trust to GreenMan Technologies of
      Georgia, Inc. dated April 2, 200121.1
      *
              
              --
              List
      of All Subsidiaries31.1
      *
              
              --
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
      15d-14(a)31.2
      *
              
              --
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule
      15d-14(a)32.1
      *
              
              --
              Certification
      of Chief Executive Officer under 18 U.S.C. Section 135032.2
      *
              
              --
              Certification
      of Chief Financial Officer under 18 U.S.C. Section 1350
 ________________________
  (1)
              Filed as an Exhibit to GreenMan Technologies,
      Inc.’s Form 8-K dated September 12, 2008 and filed September 17, 2008, and
      incorporated herein by
reference.
  (2)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 8-K dated October 1,
      2007 and filed October 5, 2007, and incorporated herein by
      reference.
  (3)
              Filed as an Exhibit to GreenMan Technologies,
      Inc.’s Form 8-K dated June 17, 2009 and filed June 23, 2009, and
      incorporated herein by
reference.
  (4)
              Filed as an Exhibit to GreenMan Technologies,
      Inc.’s Form 8-K dated July 27, 2009 and filed July 31, 2009, and
      incorporated herein by
reference.
  (5)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-QSB for the Quarter
      Ended June 30, 2008 and incorporated herein by
  reference.
  (6)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Registration Statement on
      Form SB-2 No. 33-86138 and incorporated herein by
    reference.
  (7)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-QSB for the Quarter
      Ended June 30, 2005 and incorporated herein by
  reference.
  25
   (8)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-QSB for the Quarter
      Ended June 30, 2006 and incorporated herein by
  reference.
  (9)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-Q for the Quarter
      Ended March 31, 2009 and incorporated herein by
  reference.
  (10)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-KSB for the Fiscal
      Year Ended September 30, 2003 and incorporated herein by
      reference.
  (11)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 8-K dated April 12,
      2006 and filed April 17, 2006, and incorporated herein by
      reference.
  (12)
              Filed as an Exhibit to GreenMan Technologies,
      Inc.’s Form 8-K dated January 28, 2008 and filed January 31, 2008, and
      incorporated herein by
reference.
  (13)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-QSB for the Quarter
      Ended December 31, 2000 and incorporated herein by
    reference.
  (14)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-Q for the Quarter
      Ended December 31, 2008 and incorporated herein by
    reference.
  (15)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-KSB for the Fiscal
      Year Ended September 30, 2008 and incorporated herein by
      reference.
  (16)
              Filed
      as an Exhibit to GreenMan Technologies, Inc.’s Form 10-QSB for the Quarter
      Ended June 30, 2001 and incorporated herein by
  reference.
  *
              Filed
      herewith.
 
  26
  GreenMan
Technologies, Inc.
 Index
to Consolidated Financial Statements
 
 PageReports
      of Independent Registered Public Accounting Firm
              28Consolidated
      Balance Sheets as of September 30, 2009 and 2008
              29Consolidated
      Statements of Operations and Comprehensive Income for the Years Ended
      September 30, 2009 and 2008
              30Consolidated
      Statements of Changes in Stockholders’ Equity (Deficit) for the Years
      Ended September 30, 2009 and 2008
              31Consolidated
      Statements of Cash Flows for the Years Ended September 30, 2009 and
      2008
              32Notes
      to Consolidated Financial Statements
              34
 
 
  27
   Report
of Independent Registered Public Accounting Firm
  The
Board of Directors and Stockholders
 GreenMan
Technologies, Inc.
 Carlisle,
Iowa
  We
have audited the accompanying consolidated balance sheets of GreenMan
Technologies, Inc. and subsidiaries as of September 30, 2009 and 2008 and the
related consolidated statements of operations and comprehensive income, changes
in stockholders' equity (deficit) and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
  We
conducted our audit 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 includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
  In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of GreenMan Technologies, Inc. and
subsidiaries as of September 30, 2009 and 2008 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
 
 /s/
schechter dokken kanter andrews &
Selcer,  ltd.
 .
 
 Minneapolis,
Minnesota
 January
13, 2010
  
 
  28
  GreenMan
Technologies, Inc.
 Consolidated
Balance Sheets
 
 September 30,
                2009
              
              
              September 30,
      2008ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              1,760,988
              
              
              $
              210,080Certificates
      of deposit
              
              
              750,000
              
              
              
              --Certificates
      of deposit, restricted
              
              
              800,000
              
              
              
              --Marketable
      investments
              
              
              2,846,256
              
              
              
              --Accounts
      receivable, trade, less allowance for doubtful accounts of $1,935 and
      $96,338 as of September 30, 2009 and September 30, 2008
              
              
              907,547
              
              
              
              1,135,015Inventory
              
              
              1,319,149
              
              
              
              1,323,748Seller’s
      note, related party, current portion
              
              
              150,000
              
              
              
              --Other
      current assets
              
              
              684,754
              
              
              
              291,371Assets
      related to discontinued operations
              
              
              --
              
              
              
              10,145,282Total
      current assets
              
              
              9,218,694
              
              
              
              13,105,496Property,
      plant and equipment, net
              
              
              872,358
              
              
              
              551,683Other
      assets:Goodwill
              
              
              --
              
              
              
              2,289,939Certificates
      of deposit, restricted
              
              
              250,000
              
              
              
              --Long
      term contracts, net
              
              
              866,667
              
              
              
              554,250Seller’s
      note, related party, non-current
              
              
              650,000
              
              
              
              --Purchased
      technology
              
              
              491,667
              
              
              
              --Patents,
      net
              
              
              86,667
              
              
              
              113,433Other
              
              
              206,074
              
              
              
              425,908Assets
      related to discontinued operations
              
              
              --
              
              
              
              6,566,780Total
      other assets
              
              
              2,551,075
              
              
              
              9,950,310$
              12,642,127
              
              
              $
              23,607,489LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable
              
              $
              673,707
              
              
              $
              782,494Accrued
      expenses
              
              
              1,794,901
              
              
              
              1,176,408Notes
      payable, current
              
              
              1,134,130
              
              
              
              506,678Obligations
      due under lease settlement, current
              
              
              68,518
              
              
              
              68,518Notes
      payable, related parties, current
              
              
              48,807
              
              
              
              534,320Liabilities
      related to discontinued operations
              
              
              --
              
              
              
              16,140,322Total
      current liabilities
              
              
              3,720,063
              
              
              
              19,208,740Notes
      payable, non-current
              
              
              484,753
              
              
              
              482,881Obligations
      due under lease settlement, non-current
              
              
              505,540
              
              
              
              580,540Notes
      payable, related parties, non-current
              
              
              44,593
              
              
              
              --Liabilities
      related to discontinued operations
              
              
              --
              
              
              
              3,397,258Total
      liabilities
              
              
              4,754,949
              
              
              
              23,669,419Stockholders'
      equity (deficit):Preferred
      stock, $1.00 par value, 1,000,000 shares authorized, none
      outstanding
              
              
              --
              
              
              
              --Common
      stock, $.01 par value, 60,000,000 shares authorized, 33,077,310 shares and
      30,880,435 issued and outstanding at September 30, 2009 and
      2008
              
              
              330,773
              
              
              
              308,804Additional
      paid-in capital
              
              
              38,839,342
              
              
              
              38,881,669Accumulated
      deficit
              
              
              (31,263,088
              )
              
              
              (39,252,403
              )Accumulated
      other comprehensive loss
              
              
              (19,849
              )
              
              
              --Total
      stockholders’ equity (deficit)
              
              
              7,887,178
              
              
              
              (61,930
              )$
              12,642,127
              
              
              $
              23,607,489
 
  
 See
accompanying notes to consolidated financial statements.
  29
  GreenMan
Technologies, Inc.
 Consolidated
Statements of Operations and Comprehensive Income
 
 Years
      Ended September 30,2009
                
                
                2008Net
      sales
                
                $
                3,227,633
                
                
                $
                3,465,414Cost
      of sales
                
                
                2,705,264
                
                
                
                2,495,713Gross
      profit
                
                
                522,369
                
                
                
                969,701Operating
      expenses:Selling,
      general and administrative
                
                
                4,253,614
                
                
                
                3,379,337Impairment
      loss - goodwill
                
                
                2,289,939
                
                
                
                --6,543,553
                
                
                
                3,379,337Operating
      loss from continuing operations
                
                
                (6,021,184
                )
                
                
                (2,409,636
                )Other
      income (expense):Interest
      and financing expense
                
                
                (112,676
                )
                
                
                (148,063
                )Other,
      net
                
                
                41,432
                
                
                
                (189,963
                )Other
      (expense), net
                
                
                (71,244
                )
                
                
                (338,026
                )Loss
      from continuing operations before income taxes
                
                
                (6,092,428
                )
                
                
                (2,747,662
                )Provision
      for income taxes
                
                
                (456
                )
                
                
                --Loss
      from continuing operations
                
                
                (6,092,884
                )
                
                
                (2,747,662
                )Discontinued
      operations:Gain
      on sale of discontinued operations, net of taxes
                
                
                13,792,616
                
                
                
                --Income
      from discontinued operations
                
                
                289,583
                
                
                
                10,639,34714,082,199
                
                
                
                10,639,347Net
      income
                
                $
                7,989,315
                
                
                $
                7,891,685Other
      comprehensive income (loss)Unrealized
      loss on marketable investments
                
                
                (19,849
                )
                
                
                --Comprehensive
      income
                
                $
                7,969,466
                
                
                $
                7,891,685Loss
      from continuing operations per share –basic
                
                $
                (0.19
                )
                
                $
                (0.09
                )Income
      from discontinued operations per share –basic
                
                
                0.45
                
                
                
                0.35Net
      income per share –basic
                
                $
                0.26
                
                
                $
                0.26Net
      income per share –diluted
                
                $
                0.26
                
                
                $
                0.22Weighted
      average shares outstanding - basic
                
                
                31,506,385
                
                
                
                30,880,435Weighted
      average shares outstanding - diluted
                
                
                31,506,385
                
                
                
                35,546,787
  
  
  See
accompanying notes to consolidated financial statements.
  
  30
  GreenMan
Technologies, Inc.
 Consolidated
Statements of Changes in Stockholders’ Equity (Deficit)
 Years
Ended September 30, 2009 and 2008
 
 Common
      Stock
              
              
              Additional
                Paid
      In
              
              
              Accumulated
              
              
              Accumulated
                Other
                ComprehensiveShares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              Loss
              
              
              TotalBalance,
      September 30, 2007
              
              
              22,880,435
              
              
              $
              228,804
              
              
              $
              35,995,473
              
              
              $
              (47,144,088
              )
              
              $
              --
              
              
              $
              (10,919,811
              )Common
      stock issued for acquisition
              
              
              8,000,000
              
              
              
              80,000
              
              
              
              2,720,000
              
              
              
              --
              
              
              
              --
              
              
              
              2,800,000Compensation
      expense associated with stock options
              
              
              --
              
              
              
              --
              
              
              
              151,928
              
              
              
              --
              
              
              
              --
              
              
              
              151,928Value
      of warrants issued for services rendered
              
              
              --
              
              
              
              --
              
              
              
              14,268
              
              
              
              --
              
              
              
              --
              
              
              
              14,268Net
      income for fiscal year ended September 30, 2008
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              7,891,685
              
              
              
              --
              
              
              
              7,891,685Balance,
      September 30, 2008
              
              
              30,880,435
              
              
              $
              308,804
              
              
              $
              38,881,669
              
              
              $
              (39,252,403
              )
              
              $
              --
              
              
              $
              (61,930
              )Repurchase
      of warrants
              
              
              --
              
              
              
              --
              
              
              
              (700,000
              )
              
              
              --
              
              
              
              --
              
              
              
              (700,000
              )Compensation
      expense associated with stock options
              
              
              --
              
              
              
              --
              
              
              
              126,942
              
              
              
              --
              
              
              
              --
              
              
              
              126,942Value
      of warrants issued for services rendered
              
              
              --
              
              
              
              --
              
              
              
              12,200
              
              
              
              --
              
              
              
              --
              
              
              
              12,200Unrealized
      loss on marketable investments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (19,849
              )
              
              
              (19,849
              )Common
      stock returned per settlement agreement
              
              
              (78,125
              )
              
              
              (781
              )
              
              
              (24,219
              )
              
              
              
              
              
              
              --
              
              
              
              (25,000
              )Common
      stock issued for services rendered
              
              
              275,000
              
              
              
              2,750
              
              
              
              62,750
              
              
              
              
              
              
              
              --
              
              
              
              65,500Common
      stock issued for license agreement
              
              
              2,000,000
              
              
              
              20,000
              
              
              
              480,000
              
              
              
              
              
              
              
              --
              
              
              
              500,000Net
      income for fiscal year ended September 30, 2009
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              7,989,315
              
              
              
              --
              
              
              
              7,989,315Balance,
      September 30, 2009
              
              
              33,077,310
              
              
              $
              330,773
              
              
              $
              38,839,342
              
              
              $
              (31,263,088
              )
              
              $
              (19,849
              )
              
              $
              7,887,178
  
  
  
 See
accompanying notes to consolidated financial statements
  31
  GreenMan
Technologies, Inc.
 Consolidated
Statements of Cash Flows
 
 Years
      Ended September 30,2009
              
              
              2008Cash
      flows from operating activities:Net
      income
              
              $
              7,989,315
              
              
              $
              7,891,685Adjustments
      to reconcile net income to net cash provided by operating
      activities:Gain
      on sale of tire recycling operations
              
              
              (19,847,445
              )
              
              
              --Net
      settlement income from discontinued operations
              
              
              (144,420
              )
              
              
              --Deferred
      tax asset application (recognition)
              
              
              5,010,000
              
              
              
              (5,300,000
              )Impairment
      loss - goodwill
              
              
              2,289,939
              
              
              
              --Gain
      associated with de-consolidation of Georgia subsidiary
              
              
              --
              
              
              
              (2,360,930
              )Gain
      on lease termination
              
              
              (124,628
              )
              
              
              --(Gain)
      loss on disposal of property, plant and equipment
              
              
              --
              
              
              
              (81,194
              )Gain
      on return of escrowed shares
              
              
              (25,000
              )
              
              
              --Shares
      issued for services rendered
              
              
              65,500
              
              
              
              --Write
      off of lease receivables
              
              
              --
              
              
              
              65,570Depreciation
              
              
              266,811
              
              
              
              1,429,042Amortization
      of deferred interest expense
              
              
              359,927
              
              
              
              518,325Amortization
      of customer relationships
              
              
              890
              
              
              
              6,949Amortization
      of stock compensation expense
              
              
              126,942
              
              
              
              151,928Amortization
      of patents
              
              
              26,766
              
              
              
              21,667Amortization
      of long term contracts
              
              
              187,583
              
              
              
              179,250Amortization
      of purchased technology
              
              
              8,333
              
              
              
              --Deferred
      gain on sale leaseback transaction
              
              
              (270,228
              )
              
              
              (36,515
              )Warrants
      issued
              
              
              12,200
              
              
              
              22,143(Increase)
      decrease in assets:Accounts
      receivable
              
              
              95,916
              
              
              
              (1,155,739
              )Inventory
              
              
              440,553
              
              
              
              (1,099,518
              )Other
      current assets
              
              
              (252,873
              )
              
              
              (56,918
              )Other
      assets
              
              
              310,533
              
              
              
              288,077(Decrease)
      increase in liabilities:Accounts
      payable
              
              
              (386,820
              )
              
              
              (90,160
              )Accrued
      expenses
              
              
              345,280
              
              
              
              195,662Net
      cash (used) provided by operating activities
              
              
              (3,514,926
              )
              
              
              589,324Cash
      flows from investing activities:Purchase
      of property and equipment
              
              
              (350,142
              )
              
              
              (1,777,415
              )Purchase
      of marketable investments
              
              
              (2,866,105
              )
              
              
              --Purchase
      of certificates of deposit
              
              
              (1,800,000
              )
              
              
              --Proceeds
      from the sale of tire recycling operations
              
              
              27,546,652
              
              
              
              --Net
      cash used in the purchase of American Power Group, Inc. operating
      assets
              
              
              (613,363
              )
              
              
              --Purchase
      of Welch Products, Inc., net of cash acquired
              
              
              --
              
              
              
              68,571Deposits
              
              
              --
              
              
              
              (149,600
              )Proceeds
      from the sale of equipment and insurance settlements
              
              
              --
              
              
              
              94,344Net
      cash provided (used) by investing activities
              
              
              21,917,042
              
              
              
              (1,764,100
              )Cash
      flows from financing activities:Net
      activity under line of credit
              
              
              (3,300,221
              )
              
              
              3,300,221Proceeds
      from notes payable
              
              
              1,142,741
              
              
              
              1,073,283Repayment
      of notes payable
              
              
              (12,847,119
              )
              
              
              (2,508,551
              )Principal
      payments on obligations under capital leases
              
              
              (1,188,625
              )
              
              
              (280,525
              )Purchase
      of warrants
              
              
              (700,000
              )
              
              
              --Repayment
      of notes payable, related parties
              
              
              (534,320
              )
              
              
              --Net
      cash (used) provided by financing activities
              
              
              (17,427,544
              )
              
              
              1,584,428Net
      increase in cash and cash equivalents
              
              
              974,572
              
              
              
              409,652Cash
      and cash equivalents at beginning of year
              
              
              786,416
              
              
              
              376,764Cash
      and cash equivalents at end of year including $0 and $576,336
      respectively, of cash related to discontinued operations
              
              $
              1,760,988
              
              
              $
              786,416
  32
 
 Supplemental
      cash flow information:Machinery
      and equipment acquired under capital leases
              
              $
              --
              
              
              $
              828,564Unrealized
      loss on marketable investments
              
              
              19,849
              
              
              
              --Shares
      issued in acquisition
              
              
              --
              
              
              
              2,800,000Shares
      issued for technology license
              
              
              500,000
              
              
              
              --Interest
      paid
              
              
              528,371
              
              
              
              1,445,471Taxes
      paid
              
              
              310,949
              
              
              
              82,323
 
 Supplemental Schedule of Non-Cash
Investing and Financing Activities
 
 As
described in Note 5 to the financial statements, on July 27, 2009, GreenMan
acquired substantially all operations of American Power Group, Inc. as
follows:
 
 Working
      capital acquired, net of cash and debt
                
                $
                164,817Property
      acquired
                
                
                107,185Seller’s
      note receivable
                
                
                800,000Dual
      fuel conversion technology acquired
                
                
                500,000Short
      term debt
                
                
                (800,000
                )Long
      term debt
                
                
                (772,002
                )Cash
      acquired upon purchase of business
                
                $
                --
 
 As
described in Note 2, on October 1, 2007, GreenMan acquired all of the capital
stock of Welch Products, Inc. as follows:
 
 Working
      capital acquired, net of cash
                
                $
                82,429Property
      acquired
                
                
                574,000Goodwill
      and intangibles, acquired
                
                
                3,168,000Long
      term debt
                
                
                (1,093,000
                )Common
      stock issued
                
                
                (2,800,000
                )Cash
      acquired upon purchase of business
                
                $
                68,571
 
  33
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 1.
              Summary
      of Significant Accounting Policies
  Nature
of Operations, Risks, and Uncertainties
  GreenMan
Technologies, Inc. (together with its subsidiaries “we”, “us” or “our”) was
originally founded in 1992 and has operated as a Delaware corporation since
1995. Today, we are comprised of two business segments, our dual fuel conversion
operations and our molded recycled rubber products operations. Prior to November
17, 2008, we also had tire recycling operations. As described below, our
business changed substantially in November 2008, when we sold substantially all
of the assets of our tire recycling operations. The tire recycling operations
were located in Savage, Minnesota and Des Moines, Iowa and collected, processed
and marketed scrap tires in whole, shredded or granular form.
  On
October 1, 2007, we acquired Welch Products, Inc., a company headquartered in
Carlisle, Iowa, which specializes in designing, developing, and manufacturing of
environmentally responsible products using recycled materials, primarily
recycled rubber and providing innovative playground design, equipment and
installation (See Note 2). Welch’s patented products and processes include
playground safety tiles, roadside anti-vegetation products, construction molds
and highway guard-rail rubber spacer blocks. In March 2009, we changed Welch’s
name to Green Tech Products, Inc. which better reflects the nature of its new
product-line extension strategy beyond playground safety tiles and
equipment.
  On
June 17, 2009, we signed an exclusive license agreement with American Power
Group, Inc., an Iowa corporation, under which we acquired the exclusive
worldwide right to commercialize American Power Group’s patented dual fuel
alternative energy technology. American Power Group’s unique external fuel
delivery enhancement system converts existing diesel engines into more efficient
and environmentally friendly engines that have the flexibility to run on: (1)
diesel fuel and compressed natural gas; (2) diesel fuel and bio-methane; or (3)
100% on diesel fuel depending on the circumstances. On July 27, 2009, we entered
into an agreement with American Power Group to purchase substantially all of
their operating assets (excluding its dual fuel patent). (See Note
2)
  As
of September 30, 2009, we had $6,407,244 in cash, cash equivalents, certificates
of deposit, marketable investments and net working capital of $5,498,631,
primarily due to the sale of our tire recycling business in November 2008. Our
tire recycling business has historically been the source of substantially all of
our revenue and cash flow.
  During
the past two fiscal years Green Tech Products has incurred operating losses of
approximately $800,000 per year and had negative cash flow from operations and
stagnant revenue growth during the past year. We are currently evaluating
several new types of products and marketing agreements outside the playground
and parks markets that would use Green Tech Product’s patented cold-cure process
and exclusive school board contract network.
  Since
the July 2009 acquisition of American Power Group’s dual fuel conversion
operations, we have also made a significant investment in sales and marketing
initiatives intended to promote American Power Group’s dual fuel conversion
technology and establish broader market presence. Since the date of acquisition
to the end of the fiscal 2009, American Power Group has incurred an operating
loss of approximately $480,000.
  In
November 2008, our credit facility with Laurus Master Fund, Ltd. was terminated
and we have not yet established any new corporate-wide credit facility. We
understand that achieving positive cash flow from operations as well as
sustained profitability will be key components necessary to re-establish a new
credit facility. Based on our September 30, 2009 results and traditional credit
facility advance rates of 75% of eligible accounts receivable and 50% of
eligible inventory, we believe this could have an additional $1.3 million
of available liquidity through a traditional credit facility. Management is
currently evaluating several financing alternatives that would enhance our
financial position and provide growth capital to supplement our existing working
capital position. No assurances can be given that any such financing will be
concluded in the near future, on terms favorable to us, or at all.
  We
understand our continued existence is dependent on our ability to generate
positive operating cash flow, achieve profitability on a sustained basis for all
operations and we anticipate improved performance during the warmer second half
of the fiscal year which is when a majority of the playground and athletic
surfaces are typically installed. Based on our fiscal 2010 budget and existing
cash and marketable investments, we believe we will be able to satisfy our cash
requirements. If Green Tech Products and American Power Group are unable to
achieve sustained profitability and we are unable to obtain additional financing
to supplement our cash position, our ability to maintain our current level of
operations could be materially and adversely affected. There is no guarantee we
will be able to achieve sustained profitability of either business.
  Principles
of Consolidation and Basis of Presentation
  The
consolidated financial statements include the accounts of GreenMan Technologies,
Inc. and our wholly-owned subsidiaries Green Tech Products, Inc. and American
Power Group, Inc., (included since July 27, 2009). All significant intercompany
accounts and transactions have been eliminated in consolidation.
  
  34
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 1.
              Summary
      of Significant Accounting Policies –
(Continued)
  In
September 2005, due to the magnitude of continued operating losses, our Board of
Directors approved plans to divest the operations of our GreenMan Technologies
of Georgia, Inc. subsidiary and dispose of its assets. Accordingly, we
classified all remaining liabilities associated with our Georgia entity and its
results of operations as discontinued operations for all periods presented in
the accompanying consolidated financial statements. In June 2008, GreenMan
Technologies of Georgia, Inc. filed for liquidation under Chapter 7 of the
federal bankruptcy laws in the Bankruptcy Court of the Middle District of
Georgia and a trustee was appointed (see Note 7). As a result of the bankruptcy
proceedings we relinquished control of our Georgia subsidiary to the Bankruptcy
Court and therefore we de-consolidated substantially all remaining obligations
from our financial statements as of September 30, 2008.
  All
tire recycling assets, liabilities and results of operations have been
classified as discontinued operations for all periods presented in the
accompanying consolidated financial statements.
  Management
Estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles 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 date of the financial statements and
the amounts of revenues and expenses recorded during the reporting period.
Actual results could differ from those estimates. Such estimates relate
primarily to the estimated lives of property and equipment, other intangible
assets, the valuation reserve on deferred taxes, the value of our lease
settlement obligation and the value of equity instruments issued. The amount
that may be ultimately realized from assets and liabilities could differ
materially from the values recorded in the accompanying financial statements as
of September 30, 2009.
  Cash
Equivalents
  Cash
equivalents include short-term investments with original maturities of three
months or less.
  Reclassification
  Certain
amounts in the 2008 financial statements have been reclassified to conform to
the 2009 presentation. Because we operated our tire recycling assets during only
a portion of the fiscal year we have included in this report relevant
information on this business segment but have classified their respective
assets, liabilities and results of operations as discontinued operations for all
periods presented in the accompanying consolidated financial
statements.
  Certificates
of Deposit
  We
invest excess cash in certificates of deposit issued by various banks. All
certificate of deposit investments have an original maturity of more than three
months but less than three years and are stated at original purchase price which
approximates fair value. As of September 30, 2009, we have pledged $1,050,000 of
our certificates of deposit as collateral for two loans currently outstanding.
(See Note 5)
  Marketable
Investments
  We
also invest excess cash in marketable investments, including highly-liquid debt
securities of the United States Government and its agencies and high-quality
corporate debt securities. All highly-liquid investments with an original
maturity of more than three months at original purchase price are considered
investments available for sale.
  We
evaluate marketable investments periodically for possible other-than-temporary
impairment and review factors such as length of time to maturity, the extent to
which fair value has been below cost basis and our intent and ability to hold
the marketable investments for a period of time which may be sufficient for
anticipated recovery in market value. We recorded impairment charges equal to
the amount that the carrying value of the available-for-sale investments exceeds
the estimated fair market value of the investments as of the evaluation date, if
appropriate. The fair value for all investments is determined based on quoted
market prices as of the valuation date as available. Effective January 1, 2008,
we adopted ASC 820, Fair Value
Measurements and Disclosureswhich defines fair value, establishes a
framework for measuring fair value under generally accepted accounting
principals and enhances disclosures about fair value measurements. Fair value is
defined under ASC 820 as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. Valuation techniques used to
measure fair value under ASC 820 must maximize the use of observable inputs and
minimize the use of unobservable inputs. The standard describes a fair value
hierarchy based on three levels of inputs, of which the first two are considered
observable and the last unobservable, that may be used to measure fair value
which are the following:
 
  35
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 1.
              Summary
      of Significant Accounting Policies -
(Continued)
  ·
              Level
      1 – Quoted prices in active markets for identical assets or
      liabilities.
  ·
              Level
      2 – Inputs other than Level 1 that are observable, either directly or
      indirectly, such as quoted prices for similar assets or liabilities;
      quoted prices in markets that are not active; or other inputs that are
      observable or can be corroborated by observable market data for
      substantially the full term of the assets or
  liabilities.
  ·
              Level
      3 – Unobservable inputs that are supported by little or no market activity
      and that are significant to the fair value of the assets or
      liabilities.
  The
adoption of this standard with respect to our financial assets and liabilities,
did not impact our consolidated results of operations and financial condition,
but required additional disclosure for assets and liabilities measured at fair
value.
  In
accordance with ASC 820, the following table represents the fair value hierarchy
for our financial assets (cash equivalents and investments) measured at fair
value on a recurring basis as of September 30, 2009:
 
 Description:
              Level
      1Marketable
      investments
              $
      2,846,256
  During
the year ended September 30, 2009, we recorded an unrealized loss of $19,849
which is shown as a reduction to stockholders’ equity (deficit) until such time
as we sell the underlying investments or determine the unrealized loss to be an
other-than-temporary loss at which time we will record the loss in our statement
of operations.
  The
following is a summary of maturities of carrying values of all marketable
investments at September 30, 2009:
 
 Years Ending September
      30,2010
              
              $
              599,3552011
              
              
              620,0212012
              
              
              808,4102013
              
              
              490,2442014
              
              
              328,225$
              2,846,255
  Concentration
of Credit Risk
  Financial
instruments which potentially subject the Company to a concentration of credit
risk are cash and cash equivalents. The Company maintains its bank accounts that
at times the balances exceed FDIC insured limits. The Company has not
experienced any losses as a result of this practice.
  Accounts
Receivable
  Accounts
receivable are carried at original invoice amount less an estimate made for
doubtful accounts. Management determines the allowance for doubtful accounts by
regularly evaluating past due individual customer receivables and considering a
customer’s financial condition, credit history, and the current economic
conditions. Individual accounts receivable are written off when deemed
uncollectible, with any future recoveries recorded as income when
received.
  Inventory
  Raw
material inventory primarily consists of dual fuel conversion components and
crumb rubber used in production of molded rubber products by our molded recycled
rubber products operation. Work in progress includes materials, labor and direct
overhead associated with incomplete dual fuel conversion projects. Finished
goods primarily consist of molded products and playground equipment. All
inventory is valued at the lower of cost or market on the first-in first-out
(FIFO) method. Inventory consists of the following:
 
 September
      30,
                2009
              
              
              September
      30,
                2008Raw
      materials
              
              $
              86,132
              
              
              $
              118,499Work
      in progress
              
              
              448,023
              
              
              
              --Finished
      goods
              
              
              784,994
              
              
              
              1,205,249Total
      inventory
              
              $
              1,319,149
              
              
              $
              1,323,748
  
  36
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 1.
              Summary
      of Significant Accounting Policies -
(Continued)
  Property,
Plant and Equipment
  Property,
plant and equipment are stated at cost. Depreciation and amortization expense is
provided on the straight-line method. Expenditures for maintenance, repairs and
minor renewals are charged to expense as incurred. Significant improvements and
major renewals that extend the useful life of equipment are
capitalized.
  Advertising
Costs
  The
Company expenses advertising costs as incurred. Advertising costs were $152,291
and $37,632 for the fiscal years ended September 30, 2009 and 2008,
respectively.
  Revenue
Recognition
  We
have primarily two sources of revenue from each business segment. Our molded
recycled rubber products operations derive revenue from (1) product revenue
which is earned from the sale of molded rubber products and playground equipment
and (2) installation revenue which is earned from the installation of molded
products and playground equipment. Revenues from product sales are recognized
when the products are shipped and collectability is reasonably assured. Revenues
derived from installations of our products are recognized when the installation
is complete. Our dual fuel conversion operations derive revenue from (1) product
revenue which is earned from the sale and installation of dual fuel conversion
equipment and (2) maintenance and service agreements. Revenues from product
sales are recognized when the products installation is complete and
collectability is reasonably assured. Revenues derived from maintenance and
service agreements are recognized when the service has been rendered to the
customer.
  Income
Taxes
  Deferred
tax assets and liabilities are recorded for temporary differences between the
financial statement and tax bases of assets and liabilities using the currently
enacted income tax rates expected to be in effect when the taxes are actually
paid or recovered. A deferred tax asset is also recorded for net operating loss
and tax credit carry forwards to the extent their realization is more likely
than not. The deferred tax benefit for the period represents the change in the
net deferred tax asset or liability from the beginning to the end of the
period.
  Stock-Based
Compensation
  Effective
October 1, 2006, we adopted the provisions of ASC 718 “Stock Compensation” for our
share-based compensation plans. We adopted ASC 718 using the modified
prospective transition method. Under this transition method, compensation cost
recognized includes (a) the compensation cost for all share-based awards granted
prior to the effective date of ASC 718, but not yet vested, as of October 1,
2006, based on the grant-date fair value estimated and (b) the compensation cost
for all share-based awards granted subsequent to September 30, 2006, based on
the grant-date fair value estimated in accordance with the provisions of ASC
718. In addition, we have used the vesting term
for determining expected terms on stock options for calculating expense as our
stock option exercise experience does not provide a reasonable basis for an
estimated expected option term. Amortization of stock compensation
expense was $126,942 and $151,928 for the fiscal years ended September 30, 2009
and 2008 respectively. The unamortized compensation expense at September 30,
2009 was $487,572 and will be amortized over a weighted average remaining
amortizable life of approximately 4 years.
  The
fair value of each option grant during the year ended September 30, 2009 under
the 2005 Stock Option Plan were estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions; dividend yield of 0%; risk-free interest rate of 2.3%; expected
volatility based on historical trading information of approximately 87% and
expected term of 5 years.
  The
fair value of each option grant during the year ended September 30, 2008 under
the 2005 Stock Option Plan were estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions; dividend yield of 0%; risk-free interest rates ranging from 2.7% to
4.33%; expected volatility based on historical trading information ranging from
64% to 86% and expected term ranging from 5 to 7.5 years.
  Intangible
Assets
  We
review intangibles for impairment annually, or more frequently if an event
occurs or circumstances change that would more likely than not reduce the fair
value of our intangible assets below their carrying value.
  
  37
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 1.
              Summary
      of Significant Accounting Policies -
(Continued)
  In conjunction with the Green Tech
Products acquisition (See Note 2) we recognized $2,289,939 of goodwill $735,000
associated with long term contractual relationships acquired and $130,000 to
acquired patents. The long term contractual relationships are being amortized on
a straight line basis over an estimated useful life ranging from 48 to 60 months
and the patents are being amortized on a straight line basis over an estimated
useful life of 60 months. Amortization expense associated with contractual
relationships amounted to $179,250 for the fiscal year ended September 30, 2009
and accumulated amortization was $360,000 at September 30, 2009. Amortization
expense associated with patents amounted to $26,766 and $21,667 for the
fiscal years ended September 30, 2009 and 2008 and accumulated amortization was
$48,433 and $21,667 at September 30, 2009 and 2008,
respectively.
  During
the past two fiscal years Green Tech Products incurred operating losses of
approximately $800,000 per year and has had negative cash flow from operations
and stagnant revenue growth. Management has determined that based on several
fair value determination scenarios the estimated fair value of Green Tech
Products to be below it’s carrying value including goodwill and therefore an
impairment exists. We have determined the entire goodwill balance to be impaired
and have recorded a non-cash impairment loss of $2,289,939 at September 30,
2009.
  In
conjunction with the American Power Group acquisition and license agreement (See
Note 2) we recognized $500,000 associated with execution of a long term
technology license agreement and $500,000 associated with purchased dual fuel
conversion technology. Both values are being amortized on a straight line basis
over an estimated useful life of 120 months. Amortization expense associated
with long term technology license agreement and purchased dual fuel conversion
technology amounted to $16,667 for the fiscal year ended September 30, 2009 and
accumulated amortization was $16,667 at September 30, 2009.
  Product Warranty
Costs
  Our
recycled rubber products operations typically offer a five-year warranty for all
of our tile and playground equipment. We provide for the estimated cost of
product warranties at the time product revenue is recognized. Factors that
affect our warranty reserves include the number of units sold, historical and
anticipated rates of warranty repairs, and the cost per repair. We assess the
adequacy of the warranty provision and we may adjust this provision if
necessary.
  The
following table provides the detail of the change in our product warranty
accrual as of:
 
 September
      30,
                2009
              
              
              September
      30,
                2008Warranty
      accrual at the beginning of the year
              
              $
              28,000
              
              
              $
              35,000Charged
      to costs and expenses relating to new sales
              
              
              65,456
              
              
              
              8,488Costs
      to product warranty claims
              
              
              (13,726
              )
              
              
              (15,488
              )Warranty
      accrual at the end of year
              
              $
              79,730
              
              
              $
              28,000
  Long-Lived
Assets
  Long-lived
assets to be held and used are analyzed for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. We evaluate at each balance sheet date whether events and
circumstances have occurred that indicate possible impairment. If there are
indications of impairment, we use future undiscounted cash flows of the related
asset or asset grouping over the remaining life in measuring whether the assets
are fully recoverable. In the event such cash flows are not expected to be
sufficient to recover the recorded asset values, the assets are written down to
their estimated fair value. Long-lived assets to be disposed of are reported at
the lower of carrying amount or fair value of asset less the cost to
sell.
  New
Accounting Pronouncements
  In
September 2006, the FASB issued guidance that defines fair value, established a
framework for measuring fair value and expands disclosure about fair value
measurements. This guidance also establishes a fair value hierarchy that
prioritizes information used in developing assumptions when pricing an asset or
liability. This guidance is included in ASC 820, “Fair Value Measurements and
Disclosures”. We have adopted this guidance effective October 1, 2008. The
adoption of this guidance had no impact on our consolidated financial condition
and the results of operations. In February 2008, FASB delayed the statements on
a nonrecurring basis to fiscal years beginning after November 15, 2008. We have
not applied the provisions of this guidance to our nonfinancial assets and
nonfinancial liabilities as of September 30, 2009. The provisions for this
guidance for nonfinancial assets and nonfinancial liabilities will be effective
for us beginning in the first quarter of fiscal 2010.
  
  38
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 1.
              Summary
      of Significant Accounting Policies -
(Continued)
  In
May 2009, the FASB issued guidance intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. This
guidance requires disclosure of the date through which the company has evaluated
subsequent events and whether that date represents the date the financial
statements were issued or were available to be issued. This guidance is included
in ASC 855, “Subsequent Events”, and was effective for our third quarter ended
June 30, 2009. The adoption of this guidance had no impact on our consolidated
financial condition and the results of operations.
  In
June 2009, the FASB issued ASU No. 2009-01, Topic 105 – Generally Accepted
Accounting Principals – amendments based on – Statement of Financial Accounting
Standards No. 168- The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principals.” This guidance establishes the
Accounting Standards Codification (ASC) as the source of authoritative U.S. GAAP
recognized by the FASB and is effective for us in the fourth quarter ended
September 30, 2009. The adoption of this guidance had no impact on our
consolidated financial condition and the results of operations.
  Net
Income Per Share
  Basic
earnings per share represents income available to common stockholders divided by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share reflects additional common shares that would have
been outstanding if potentially dilutive common shares had been issued, as well
as any adjustment to income that would result from the assumed conversion.
Potential common shares that may be issued by us relate to outstanding stock
options and warrants (determined using the treasury stock method). Diluted net
income per share for the fiscal years ended are as follows:
 
 September 30,
                2009
              
              
              September 30,
                2008Weighted
      average shares outstanding
              
              
              31,506,385
              
              
              
              30,880,435Exercisable
      options and warrants
              
              
              --
              
              
              
              4,666,352Weighted
      average shares, fully diluted
              
              
              31,
      506,385
              
              
              
              35,546,787Net
      (loss) per share – fully diluted from continuing
operations
              
              $
              (0.19
              )
              
              $
              (0.08
              )Net
      income per share – fully diluted from discontinued
    operations
              
              $
              0.45
              
              
              $
              0.30Net
      income per share – fully diluted
              
              $
              0.26
              
              
              $
              0.22
  The calculation of additional
exercisable options and warrants above excludes 3,902,500 and 5,024,012 options
and warrants that are outstanding at September 30, 2009 and 2008 respectively,
but are deemed to be anti-dilutive as their exercise price exceeds the average
closing price used in the calculation of fully diluted shares.
  Subsequent
Events
  We
have evaluated for subsequent events through January 13, 2010, the date the
financial statements were available for issuance.
 
 2.
              Acquisition
      of Subsidaries
  Dual
Fuel Technology License Agreement
  On
June 17, 2009, we signed an exclusive license agreement with American Power
Group, Inc., an Iowa corporation, under which we acquired the exclusive
worldwide right to commercialize American Power Group’s patented dual fuel
alternative energy technology. American Power Group’s unique external fuel
delivery enhancement system converts existing diesel engines into more efficient
and environmentally friendly engines that have the flexibility to run on: (1)
diesel fuel and compressed natural gas; (2) diesel fuel and bio-methane; or (3)
100% on diesel fuel depending on the circumstances. The proprietary technology
seamlessly displaces up to 60% of the normal diesel fuel consumption with
compressed natural gas or bio-methane and the energized fuel balance between the
two fuels is maintained with a patented control system ensuring the engines
operate to Original Equipment Manufacturers’ (“OEM”) specified temperatures and
pressures with no loss of horsepower. Installation requires no engine
modification unlike the more expensive high-pressure alternative fuel systems in
the market.
  In
conjunction with executing the license agreement, we issued American Power Group
two million shares of our common stock, valued at $500,000 (based on the value
of our stock on the date of the license) and subject to a one-year lock-up and
certain escrow provisions. The value assigned to this long-term contract is
being amortized on a straight line basis over an estimated useful life 120
months. In addition, we will be required to pay royalties to American Power
Group upon the sales of dual fuel products and services.
  On
May 14, 2009, we loaned American Power Group $250,000 under a 24 month secured
promissory note bearing interest at 5% with interest only due for the first six
months with the balance (including interest) amortized in monthly payments of principal and interest
over an eighteen month period commencing in November
2009.
  39
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 2.
              Acquisition
      of Subsidiaries – (Continued)
  American
Power Group, Inc.
  On
July 27, 2009, our wholly owned subsidiary GreenMan Alternative Energy, Inc.
entered into an agreement with American Power Group for the purchase of
substantially all of their operating assets, including the name American Power
Group (excluding its dual fuel patent) which we believe will enhance our ability
to utilize the technology license agreement described earlier. The consideration
for the acquisition consisted of (i) approximately $850,000 in cash (financed by
a local bank through short term debt), which was used by American Power Group to
retire indebtedness to a bank, (ii) loans of approximately $611,000 from
GreenMan to American Power Group (including the $250,000 loan described above
and an additional loan of $361,000 made on the closing date), which loans were
also assumed by GreenMan Alternative Energy and have been eliminated as
intercompany loans in consolidation subsequent to the acquisition, and (iii) the
assumption by GreenMan Alternative Energy of approximately $555,000 of American
Power Group’s accounts payable and other liabilities to third
parties.
  The
acquisition will be accounted for as a purchase, and accordingly the results of
American Power Group’s operations since the date of acquisition are included in
our consolidated financial statements. The total purchase price of $2,018,000 is
as follows:
 
 Working
      capital acquired, net of cash and debt
              
              $
              164,817Property
      acquired
              
              
              107,185Seller’s
      note receivable
              
              
              800,000Dual
      fuel conversion technology acquired
              
              
              500,000Short
      term debt
              
              
              (800,000
              )Long
      term debt
              
              
              (772,002
              )Cash
      acquired upon purchase of business
              
              $
              --
  The
total consideration paid exceeded the fair value of the net assets acquired by
$500,000 resulting in the recognition of $500,000 of intangibles which have been
allocated to the patented dual fuel conversion technology acquired. This
allocation was based on our estimated cost to reproduce the technology acquired
as described in the dual fuel technology license agreement. The value assigned
to the purchased technology is being amortized on a straight line basis over an
estimated useful life of 120 months. The assets acquired include a
promissory note from the previous owners of American Power Group of $800,000 to
GreenMan and bearing interest at the rate of 5.5% per annum and was based on the
difference between the assets acquired and the consideration given. The note is
due in a single, lump sum payment on July 27, 2013; provided, however, that 25%
of any royalties due from time to time to American Power Group under the
technology license agreement will be applied against outstanding interest and
principal due under the terms of the note rather than to American Power Group.
We consider this a related party note as one owner is now an employee or
ours. In August 2009, we changed GreenMan Alternative Energy’s name to
American Power Group.
  Green
Tech Products, Inc (formerly Welch Products, Inc.)
  On
October 1, 2007, we acquired Green Tech Products, Inc., a company headquartered
in Carlisle, Iowa, which specializes in designing, developing and manufacturing
of environmentally responsible products using recycled materials, primarily
recycled rubber and innovative playground design, equipment and installation.
Green Tech’s patented products and processes include playground safety tiles,
roadside anti-vegetation products, construction molds and highway guard-rail
rubber spacer blocks. Green Tech had been one of our crumb rubber customers for
the past several years. The transaction was structured as a share exchange in
which 100 percent of Green Tech’s common stock was exchanged for 8 million
shares of our common stock, valued at $2,800,000 based on the value of the 8
million shares issued in this transaction on the date of issuance.
  The
acquisition has been accounted for as a purchase, and accordingly the results of
Green Tech’s operations since the date of acquisition are included in our
consolidated financial statements. The total purchase price of $2,890,000
including approximately $90,000 of transaction costs has been allocated as
follows:
 
 Total
      identifiable assets acquired
              $
      2,571,000Total
      identifiable liabilities acquired
              $
      2,821,000
 
 The
total consideration paid exceeded the fair value of the net assets acquired by
$3,140,000 resulting in the recognition of $2,289,939 of goodwill and $645,000
assigned to long term contracts (in addition to $90,000 assigned to an existing
contract and being amortized over a 5-year term) based on an analysis of the
discounted future net cash flows of the contracts. In addition, we increased the
value of land and buildings by $195,000 based on a recent appraisal and
increased the value assigned to patents by $11,000 based on an analysis of
discounted future cash flows associated with the patents. The value assigned to
the long-term contracts is being amortized on a straight line basis over an
estimated useful life ranging from 48 to 60 months and the value assigned to
patents is being amortized on a straight line basis over an estimated useful
life of 60 months.
  
  40
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 2.
              Acquisition
      of Subsidiaries – (Continued)
  During
the past two fiscal years Green Tech Products incurred operating losses of
approximately $800,000 per year and have had negative cash flow from operations
and stagnant revenue growth during the past year. Management has determined that
based on several fair value determination scenarios the estimated fair value of
Green Tech Products to be below it’s carrying value including goodwill and
therefore an impairment exists. We have determined the entire goodwill balance
to be impaired and have recorded a non-cash impairment loss of $2,289,939 at
September 30, 2009.
  Included
in other current assets are lease receivables of $211,021 which bear interest at
rates ranging from 1.99% to 5.5% per annum.
  Amortization
expense during the next five years is anticipated to be:
 
 Twelve
      months ending September 30:
              
              Contracts
              
              
              Patents
              
              
              Technology
              
              
              Total2010
              
              $
              229,250
              
              
              $
              21,667
              
              
              $
              50,000
              
              
              $
              300,9172011
              
              
              229,250
              
              
              
              21,667
              
              
              
              50,000
              
              
              
              300,9172012
              
              
              66,500
              
              
              
              21,667
              
              
              
              50,000
              
              
              
              138,1672013
              
              
              50,000
              
              
              
              21,666
              
              
              
              50,000
              
              
              
              121,6662014
      and thereafter
              
              
              291,667
              
              
              
              --
              
              
              
              291,667
              
              
              
              583,334$
              866,667
              
              
              $
              86,667
              
              
              $
              491,667
              
              
              $
              1,445,001
 
 3.
              Discontinued
      Operations
  Georgia
Operations
  Due
to the magnitude of the continuing operating losses incurred by our GreenMan
Technologies of Georgia, Inc. subsidiary our Board of Directors determined it to
be in the best interest of our company to discontinue all Georgia operations and
completed the divestiture of its operating assets during fiscal 2006.
Accordingly, we have classified all remaining liabilities associated with our
Georgia entity and its results of operations as discontinued
operations.
  On
June 27, 2008, GreenMan Technologies of Georgia, Inc. filed for liquidation
under Chapter 7 of the federal bankruptcy laws in the Bankruptcy Court of the
Middle District of Georgia and a trustee was appointed. On September 30, 2008 we
received approval of the Trustee’s Final Report of No Distribution in relation
to the Chapter 7 filing and the case is considered closed. The Trustee's Report
of No Distribution certifies that the trustee has performed the duties required
of a trustee under 11 U.S.C. Section 704 and has concluded that there are no
assets to administer.As a result of
the bankruptcy proceedings we de-consolidated substantially all remaining
obligations from our financial statements as of September 30, 2008 resulting in
the recognition of non-cash income from discontinued operations of $2,360,930
during the fiscal year ended September 30, 2008.
  The
major classes of liabilities associated with Georgia discontinued operations
were:
 
 September
      30,
                2009
              
              
              September
      30,
                2008Liabilities
      related to discontinued operations:Accounts
      payable
              
              $
              --
              
              
              $
              116,664Accrued
      expenses, other
              
              
              --
              
              
              
              163,147Total
      liabilities related to discontinued operations
              
              $
              --
              
              
              $
              279,811
  During
the fiscal year ended September 30, 2009, we recognized net income from Georgia
discontinued operations of approximately $38,000 including income of
approximately $161,000 associated with the completion of a March 2008 settlement
agreement with a former Georgia vendor and an expense of $106,564 associated
with an April 2009 settlement agreement, including legal fees with a former
Georgia vendor (see Note 7).
  Tire
Recycling Operations
  On
September 12, 2008 we executed an Asset Purchase Agreement with Liberty Tire
Services of Ohio, LLC, a wholly-owned subsidiary of Liberty Tire Services, LLC,
the largest tire recycling company in the United States, for sale of our tire
recycling business, subject to shareholder approval. On November 13, 2008 our
shareholders approved the sale and on November 17, 2008 we completed the
divestiture of substantially all of the assets of our GreenMan Technologies of
Minnesota, Inc. and GreenMan Technologies of Iowa, Inc. subsidiaries, which had
operated our tire recycling business, for approximately $27.9 million in cash.
We recognized a gain on sale of approximately $13.8 million, net of estimated
taxes of approximately $6.1 million which is included in gain on sale of
discontinued operations.
  41
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 3.
              Discontinued
      Operations – (Continued)
  We
used approximately $16.5 million of the proceeds of this sale to retire certain
transaction related obligations and other debt including approximately $12.8
million due our former primary secured lender, Laurus Master Fund, Ltd., and
approximately $645,000 of related party debt (including approximately $111,000
of accrued interest). In addition, $750,000 of the proceeds were placed in an
escrow account for twelve months to cover possible
indemnification claims by the purchaser as well as the pending finalization of
several other post-closing reconciliations. As of November 18, 2009, all
escrowed funds had been released from escrow and received.
  The
major classes of assets and liabilities associated with discontinued tire
recycling operations were:
 
 September
      30,
                2009
              
              
              September
      30,
                2008Assets
      related to discontinued operations:Cash
              
              $
              --
              
              
              $
              576,336Accounts
      receivable, net
              
              
              --
              
              
              
              3,019,978Deferred
      income tax asset
              
              
              --
              
              
              
              5,300,000Other
      current assets
              
              
              --
              
              
              
              1,248,968Total
      current assets related to discontinued operations
              
              
              --
              
              
              
              10,145,282Property,
      plant and equipment (net)
              
              
              --
              
              
              
              6,399,172Other
              
              
              --
              
              
              
              167,608Total
      other assets related to discontinued operations
              
              
              --
              
              
              
              6,566,780Total
      assets related to discontinued operations
              
              $
              --
              
              
              $
              16,712,062Liabilities
      related to discontinued operations:Accounts
      payable
              
              $
              --
              
              
              $
              1,766,196Notes
      payable, current
              
              
              --
              
              
              
              9,566,387Notes
      payable, line of credit
              
              
              --
              
              
              
              3,300,221Accrued
      expenses, other
              
              
              --
              
              
              
              1,125,150Capital
      leases, current
              
              
              --
              
              
              
              382,368Total
      current liabilities related to discontinued operations
              
              
              --
              
              
              
              16,140,322Notes
      payable, non-current
              
              
              --
              
              
              
              1,540,150Capital
      leases, non-current
              
              
              --
              
              
              
              1,623,325Deferred
      gain on sale leaseback transaction, non-current
              
              
              --
              
              
              
              233,783Total
      non-current liabilities related to discontinued operations
              
              
              --
              
              
              
              3,397,258Total
      liabilities related to discontinued operations
              
              $
              --
              
              
              $
              19,537,580
  We
leased various tire recycling facilities and equipment under capital lease
agreements with terms ranging from 36 months to 240 months and requiring monthly
payments ranging from $57 to $16,250. Assets acquired under capital leases with
an original cost of $3,698,225 and related accumulated amortization of
$1,673,382 are included in property, plant and equipment at September 30, 2008.
Amortization expense for the years ended September 30, 2008 amounted to
$258,165. All leases were terminated in conjunction with the
divestiture.
  In
March 2004, our Minnesota subsidiary leased back their property from a company
co-owned by a former employee under a twelve-year lease requiring an annual
rental of $195,000, increasing to $227,460 over the term of the lease. The
building lease was classified as a capital lease with a value of $1,036,000 and
the portion allocated to the land had been treated as an operating lease. In
conjunction with the sale of our Minnesota tire recycling operations, we
terminated this long term land and building lease agreement and realized a gain
on termination of the lease of $124,627 which is included in income from
discontinued operations for the fiscal year ended September 30, 2009. In
addition, included in income from discontinued operations for the fiscal year
ended September 30, 2009 is the remaining unamortized gain of $265,570
associated with a 2004 sale lease back transaction associated with this
property. Previously, we had been amortizing a gain of $437,337 as income
ratably over the term of the lease.
  Net
sales and income from discontinued tire recycling operations were as
follows:
 
 Fiscal
      Year EndedSeptember
      30,
              
              
              September
      30,2009
              
              
              2008Net
      sales from discontinued operations
              
              $
              3,441,713
              
              
              $
              23,283,359Income
      from discontinued operations
              
              
              14,082,199
              
              
              
              8,278,417
 
  42
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 4.
              Property,
      Plant and Equipment
  Property,
plant and equipment consists of the following:
 
 September
      30,
                2009
              
              
              September
      30,
                2008
              
              
              Estimated
                Useful
      LivesLand
              
              $
              175,000
              
              
              $
              175,000
              
              
              --Buildings
      and improvements
              
              
              285,000
              
              
              
              285,000
              
              
              10
      - 20 yearsMachinery
      and equipment
              
              
              1,746,559
              
              
              
              1,350,137
              
              
              5
      - 10 yearsFurniture
      and fixtures
              
              
              59,954
              
              
              
              65,842
              
              
              3
      - 5 years2,266,513
              
              
              
              1,875,979Less
      accumulated depreciation
              
              
              (1,394,155
              )
              
              
              (1,324,296
              )Property,
      plant and equipment, net
              
              $
              872,358
              
              
              $
              551,683
 
 5.
              Credit
      Facility/Notes Payable
  June
2006 Laurus Credit Facility
  In
June 2006, we entered into a $16 million amended and restated credit facility
with Laurus Master Fund, Ltd. The credit facility consisted of a $5 million
non-convertible secured revolving note and an $11 million secured
non-convertible term note. The credit facility is secured by first priority security interests in all of
the assets of our company and all of the assets of our GreenMan Technologies of
Minnesota, Inc., GreenMan Technologies of Iowa, Inc. and Green Tech Products,
Inc. subsidiaries, as well as by pledges of the capital stock of those
subsidiaries.
  The
revolving note had a maturity of June 30, 2009, bore interest on any outstanding
amounts at the prime rate plus 2% (7% at September 30, 2008 and November 17,
2008), with a minimum rate of 8%. Amounts advanced under the line are limited to
90% of eligible accounts receivable and 50% of finished goods inventory, up to a
maximum of $5 million, subject to certain limitations. The term note had a
maturity date of June 30, 2009 and bore interest at the prime rate plus 2% (7%
at September 30, 2008 and November 17, 2008), with a minimum rate of 8%.
Principal was amortized over the term of the loan, commencing on July 2, 2007,
with minimum monthly payments of principal as follows: (i) for the period
commencing on July 2, 2007 through June 2008, minimum principal payments of
$150,000; (ii) for the period from July 2008 through June 2009, minimum
principal payments of $400,000; and (iii) the balance of the principal will be
payable on the maturity date. In May 2007, Laurus agreed to reduce the principal
payments required during the period of July 2007 to September 2008 to $100,000
per month and defer the difference of $1,500,000 to the June 2009 maturity date.
All amounts due Laurus under the revolving note ($3.4 million) and term note
($9.4 million plus accrued interest of $35,511) were paid off on November 17,
2008 in conjunction with the sale of our tire recycling business (see Note 2),
and this credit facility has been terminated.
  On
April 1, 2009 our Green Tech Products subsidiary executed a $250,000 secured
term note with Great Western Bank, Carlisle, Iowa. The note bears interest at 8%
and is payable in 26 monthly installments of $4,735.48 including interest with a
final payment of $145,309 due on July 15, 2011. The loan is secured by certain
Green Tech Products equipment and a $250,000 certificate of deposit which
matures on July 15, 2011.
  On
July 27, 2009 we executed a six month, $800,000 secured term note with Iowa
State Bank, Algona, Iowa in conjunction with the American Power Group
acquisition. The note which is due on February 1, 2010 bears interest at 6% and
is secured by an $800,000 certificate of deposit which matures on February 1,
2010. On December 17, 2009 we extended the maturity of both the note and
certificate of deposit to September 30, 2009.
  During
the period of July through September 2009, we executed several additional
secured term notes with Iowa State Bank aggregating approximately $94,000. The
notes which are payable in 60 monthly installments ranging from $305 to $603
including interest at rates ranging from 6.39% to 7.7% and are secured by
certain purchased equipment.
  
  43
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 5.
              Credit
      Facility/Notes Payable –
(Continued)
 
 Notes
      payable consists of the following at:
                
                September 30,
                  2009
                
                
                September 30,
                  2008Term
      note payable, Great Western Bank, secured by certain receivables of Green
      Tech Products, due in annual payments of $200,626 plus interest at 8% with
      remaining principal due July 2010
                
                
                250,303
                
                
                
                401,786Term
      note payable, Great Western Bank, secured by certain equipment of Green
      Tech Products and a $250,000 certificate of deposit, due in monthly
      installments of $4,735 including interest at 8% with remaining principal
      due July 2011
                
                
                231,587
                
                
                
                --Term
      note payable, William Welch, secured by all real estate of Welch Products,
      due in monthly installments of $1,927 plus interest at 7.1% and due
      December 2026
                
                
                229,519
                
                
                
                236,080Term
      note payable, Iowa State Bank, secured by an $800,000 certificate of
      deposit, with interest paid monthly at 6% and principal due September 30,
      2010
                
                
                799,110
                
                
                
                --Term
      notes payable, Iowa State Bank, secured by various American Power Group
      equipment with interest rates ranging from 6.39% to 7.7% and requiring
      monthly payments from $305 to $603
                
                
                93,046
                
                
                
                --Other
      term notes payable and assessments, secured by various equipment with
      interest rates ranging from 6% to 13.2% and requiring monthly installments
      from $639 to $5,490
                
                
                15,318
                
                
                
                351,6931,618,883
                
                
                
                989,559Less
      current portion
                
                
                (1,134,130
                )
                
                
                (506,678
                )Notes
      payable, non-current portion
                
                $
                484,753
                
                
                $
                482,881
  The
following is a summary of maturities of carrying values of all notes payable at
September 30, 2009:
 
 Years Ending September
      30,2010
              
              $
              1,134,1302011
              
              
              210,5882012
              
              
              26,8922013
              
              
              28,8632014
              
              
              29,6572015
      and thereafter
              
              
              188,753$
              1,618,883
 
 6.
              Notes
      Payable –Related Party
  Note
Payable-Related Party
  During
2003, two immediate family members of an officer loaned us a total of $400,000
under the terms of two-year, unsecured promissory notes which bore interest at
12% per annum with interest due quarterly and the principal due upon maturity.
In March 2004, these same individuals loaned us an additional $200,000 in
aggregate, under similar terms with the principal due upon maturity March 2006.
These individuals each agreed to invest $200,000 in aggregate of their loans
into our April 2004 private placement of investment units and each received
113,636 units. They also agreed to extend the maturity of the remaining $400,000
until the earlier of when all amounts due under the Laurus credit facility have
been repaid or June 30, 2009.
  In
September 2003, a former officer loaned us $400,000 under an unsecured
promissory note which bore interest at 12% per annum and matured at the earlier
of when all amounts due under the Laurus credit facility have been repaid or
June 30, 2009. In July 2006, the former officer assigned the remaining balance
of $99,320 as follows: $79,060 to one of an officer’s immediate family members
noted above and the remaining balance of $20,260 plus interest of $13,500 to the
officer.
  Between
January and June 2006, a former director loaned us $155,000 under three
unsecured promissory notes which bore interest at 10% per annum with interest
and principal due during periods ranging from June 30, 2006 through September
30, 2006 (subsequently extended until the earlier of when all amounts due under
the restructured Laurus credit facility have been repaid or June 30, 2009).
During fiscal 2006, the former director agreed to convert $91,676 (including
interest of $1,676) into 315,330 shares of unregistered common stock at the
closing price of our stock on the dates of conversion ($.28 and $.35). During
the year ended of September 30, 2008 the former director was repaid
$30,000.
  In
December 2008, all remaining amounts due parent related parties ($534,320 of
principal and $122,903 of accrued interest) were repaid.
  Prior
to the July 2009 acquisition of substantially all American Power Group assets, a
former officer of theirs loaned the company $93,400. In conjunction with the
acquisition, we hired this former officer and executed a 24 month unsecured
promissory note which bears interest at 6.5% interest per annum and is payable
in monthly installments of $4,175.
  Total
interest expense for related party notes amounted to $10,342 and $63,444, for
the fiscal years ended September 30, 2009 and 2008, respectively.
 
 44
 
 GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 7.
              Commitments
      and Contingencies
  Employment
Agreements
  We
have employment agreements with three of our corporate officers, which provide
for base salaries, participation in employee benefit programs including our
stock option plans and severance payments for termination without
cause.
  Related
Party Consulting Agreement
  On
November 18, 2008 we entered into a four-month (extended in March 2009 on a
month-to-month basis) consulting agreement at a rate of $7,500 per month with a
company owned by one of our directors who also serves as the Chairman of our
Compensation committee. The consulting firm is currently providing assistance in
the areas of due diligence support, “green” market opportunity identification
and evaluation, Board of Director candidate identification and evaluation and
other services as our Board may determine.
  Rental
Agreements
  Our
Iowa tire recycling subsidiary leased a facility located on approximately 4
acres of land under a 10-year lease commencing in April 2003 from Maust Asset
Management Company, LLC (“Maust Asset Management”), a company co-owned by a
former employee. Under the terms of the lease, monthly rental payments of $8,250
on a triple net basis are required for the first five years increasing to $9,000
on a triple net basis per month for the remaining five years. Maust Asset
Management acquired the property from the former lessor. In April 2005, our Iowa
subsidiary entered into an eight-year lease agreement with Maust Asset
Management for approximately 3 acres adjacent to our existing Iowa facility at
monthly rent payments of $3,500. These leases were terminated on November
17, 2008. (See Note 3). For the years ended September 30, 2009 and 2008 total
rental expense in connection with all non-cancellable related party real estate
leases amounted to $32,800 and $198,228, respectively.
  We
also rented various vehicles and equipment from third parties under
non-cancellable operating leases with monthly rental payments ranging from
$1,500 to $2,683 and with terms ranging from 38 to 47 months. In addition, we
rent several pieces of equipment on a monthly basis from a company co-owned by a
former employee at monthly rentals ranging from $263 to $1,295. For the fiscal
years ended September 30, 2009 and 2008 total rent expense in connection with
non-cancellable operating vehicle and equipment leases amounted to $12,401 and
$38,683, respectively with all amounts paid to related parties. These leases
were terminated on November 17, 2008. (See Note 3)
  We
rent approximately 1,100 square feet of office space in Lynnfield,
Massachusetts, the site of our former corporate headquarters, on a rolling
six-month basis at $1,250 per month. For the years ended September 30, 2009 and
2008, total rental expense in connection with this real estate lease amounted to
$15,000 per year, respectively.
  In
February 2006, we amended our Georgia capital lease agreement to obtain the
right to terminate the original lease, which had a remaining term of
approximately 15 years, by providing the landlord with six months notice. In the
event of termination, we will be obligated to continue to pay rent until the
earlier to occur of (1) the sale by the landlord of the premises; (2) the date
on which a new tenant takes over; or (3) three years from the date on which we
vacate the property. In addition, on August 28, 2006 we received notice from the
Georgia landlord indicating that the Georgia subsidiary was in default under the
lease due to its insolvent financial condition. The landlord agreed to waive the
default in return for a $75,000 fee to be paid upon termination of the lease and
required that all current and future rights and obligations under the lease be
assigned to GreenMan Technologies, Inc. pursuant to a March 2001 guaranty
agreement. During fiscal 2009, we paid the $75,000 of accrued fees at the
landlord’s request.
  Litigation
  As
previously disclosed, substantially all of GreenMan Technologies of Georgia,
Inc.’s assets were sold as of March 1, 2006. Several vendors of this subsidiary
commenced legal action, primarily in the state courts of Georgia, in attempts to
collect past due amounts, plus accruing interest, attorneys’ fees, and costs,
all relating to various services rendered to these subsidiaries. Although
GreenMan Technologies, Inc. itself was not a party to any of these vendor
relationships, two of the plaintiffs, representing approximately $900,000 of
these claims named GreenMan Technologies, Inc. as a defendant along with
GreenMan Technologies of Georgia, Inc.
  On
June 27, 2008, GreenMan Technologies of Georgia, Inc. filed for liquidation
under Chapter 7 of the federal bankruptcy laws in the Bankruptcy Court of the
Middle District of Georgia and a trustee was appointed. As a result of the
bankruptcy proceedings all pending litigation was stayed and GreenMan
Technologies of Georgia, Inc. was de-consolidated from our financial statements
as of June 30, 2008. (See Note 3)
 
  45
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 7.
              Commitments
      and Contingencies – (Continued)
  During
fiscal 2008, one vendor secured a summary judgment for approximately $890,000
against GreenMan Technologies, Inc. While GreenMan Technologies, Inc. believed
it had valid defenses to these claims, as well as against any similar or related
claims that may be made against us in the future, we did not receive proper
notice of the summary judgment against us and therefore were unable to timely
appeal the judgment. Management therefore determined it to be in the best
interests of GreenMan Technologies, Inc. to reach settlement on this judgment
rather than to attempt to appeal the judgment for lack of proper notice. On
March 28, 2008, GreenMan Technologies, Inc. agreed to a cash settlement of
$450,000 with $100,000 paid upon signing the settlement agreement and nine
additional monthly payments of $38,889 commencing on April 30, 2008 and ending
on December 31, 2008. In January, 2009, after receipt of the final payment, the
plaintiff marked the judgment satisfied with the appropriate courts, at which
time we recorded a gain on settlement of approximately $161,000 relating to
amounts accrued for but forgiven per the agreement and which are included in
income from discontinued operations for the nine months ended June 30,
2009.On April 15,
2009, we settled the only remaining Georgia legal action involving GreenMan,
executing a settlement and general release agreement with the plaintiff in
return for a payment of $100,000, which is included in the loss from
discontinued operations for the fiscal year ended September 30,
2009.
  In
April 2009, Jacquelyn M. Cyronis filed a complaint in the United States District
Court for the Middle District of Georgia against MART Management, Inc., GreenMan
and Tires Into Recycled Energy & Supplies, Inc. (“TIRES”), following a death
of an individual employed by TIRES resulting from a fire at a tire recycling
facility in Georgia in 2007. MART Management, Inc. was the owner of the premises
at the time of the incident and leased the property to us. We in turn, had
subleased the property to TIRES. Pursuant to the terms of the March 2001 lease
agreement, we have agreed to indemnify MART against such claims. We believe that
we have substantial defenses against the plaintiff’s claims and are contesting
the matter vigorously through our insurance company.
 
 8.
              Stockholders’
      Equity
  Authorized
Shares
  On
April 2, 2008, our shareholders approved an amendment to our Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock from 40,000,000 to 60,000,000 shares.
  Common
Stock Transactions
  During
the fiscal year ended September 30, 2008, several directors agreed to accept
64,559 shares of unregistered common stock valued at $22,500 (all shares were
issued at a price equal to the closing price of our common stock on date of
issuance) in lieu of cash for certain director’s fees and expenses due the
directors.
  On
October 1, 2007, we issued 8,000,000 shares of our unregistered common stock
valued at $2,800,000 (at $.35 which was the closing price of our stock on the
date of issuance) in connection with the acquisition of Green Tech Products.
(See Note 2)
  In
April 2009, the former Welch shareholders returned 78,125 shares of our common
stock valued at $25,000 pursuant to the indemnification terms of the October 1,
2008 asset purchase agreement. The $25,000 is included in other income for the
fiscal year ended September 30, 2009. We subsequently retired the
shares.
  On
June 17, 2009, we issued 2,000,000 shares of our unregistered common stock
valued at $500,000 (at $.25 which was the closing price of our stock on the date
of issuance) in connection with execution of an exclusive dual fuel technology
license agreement with American Power Group, Inc. (See Note 2).
  During
June and July 2009, the Board of Directors approved the issuance of 275,000
shares of unregistered common stock, in aggregate, as restricted stock awards to
our directors and management in recognition of past services and as future
incentive and recorded a $84,750 expense (assigned fair value based on closing
bid price plus the anticipated income tax affect) associated with the issuance
of these shares during the fiscal year ended September 30, 2009. All recipients
have agreed to hold the shares for a minimum of 18 months after
issuance.
  1993
Stock Option Plan
  The
1993 Stock Option Plan was established to provide stock options to our
employees, officers, directors and consultants. On March 29, 2001, our
stockholders approved an increase to the number of shares authorized under the
Plan to 3,000,000. This plan expired in June 2004 as it relates to new
grants.
  
  46
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 8.
              Stockholders’
      Equity - (Continued)
  Stock
options and activity under the Plan is summarized as follows:
 
 Year
      Ended
                  September
      30, 2009
                
                
                Year
      Ended
                  September
      30, 2008Weighted
                  Average
                
                
                
                
                
                Weighted
                  AverageExercise
                
                
                
                
                
                ExerciseShares
                
                
                Price
                
                
                Shares
                
                
                PriceOutstanding
      at beginning of period
                
                
                594,462
                
                
                $
                .62
                
                
                
                1,022,356
                
                
                $
                .82Granted
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Forfeited
      or expired
                
                
                (521,962
                )
                
                
                .60
                
                
                
                (427,894
                )
                
                
                1.09Exercised
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Outstanding
      at end of period
                
                
                72,500
                
                
                
                .83
                
                
                
                594,462
                
                
                
                .62Exercisable
      at end of period
                
                
                72,500
                
                
                
                .83
                
                
                
                594,462
                
                
                
                .62Reserved
      for future grants at end of period
                
                
                --
                
                
                
                
                
                
                
                --Aggregate
      intrinsic value of exercisable options
                
                $
                8,000
                
                
                
                
                
                
                $
                100Weighted
      average fair value of options granted during the period
                
                
                
                
                
                $
                --
                
                
                
                
                
                
                $
                --
  Information
pertaining to options outstanding under the plan at September 30, 2009 is as
follows:
 
 Options
      Outstanding
              
              
              Options
      ExercisableWeighted
              
              
              
              
              
              
              WeightedAverage
              
              Weighted
              
              
              
              
              Average
              
              WeightedRemaining
              
              Average
              
              
              
              
              Remaining
              
              AverageExercise
              
              Number
              
              Contractual
              
              Exercise
              
              
              Number
              
              Contractual
              
              ExercisePrices
              
              Outstanding
              
              Life
              
              Price
              
              
              Exercisable
              
              Life
              
              Price$.40
              
              
              50,000
              
              1.25
      years
              
              $
              .40
              
              
              
              50,000
              
              1.25
      years
              
              $
              .40$1.80
              
              
              22,500
              
              2.92
      years
              
              
              1.80
              
              
              
              22,500
              
              2.92
      years
              
              
              1.8072,500
              
              1.9
      years
              
              $
              .83
              
              
              
              72,500
              
              1.9
      years
              
              $
              .83
 
 2005
Stock Option Plans
  On
March 18, 2005, our Board of Directors adopted the 2005 Stock Option Plan (the
“2005 Plan”), which was subsequently approved by our stockholders on June 16,
2005. The options granted under the 2005 Stock Option Plan may be either options
intended to qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended; or non-qualified stock options. In
April 2008, our stockholders approved an increase to the number of shares
authorized under the 2005 Plan from 2,000,000 to 3,500,000 shares.
  During
the fiscal 2008, 870,000 qualified options in aggregate were granted with
670,000 options having an exercise price of $.35 per share, vest annually at 20%
per year over a five-year period from date of grant and have a ten-year term.
The remaining 200,000 have exercise prices ranging from $.33 to $.34 per share,
vest immediately and have a ten-year term.
  In
November 2008, we granted options to our directors and management to purchase an
aggregate of 600,000 shares of our common stock at an exercise price of $.33 per
share, which represented the closing price of our stock on the date of each
respective grant. The options were granted under the 2005 Stock Option Plan,
have a ten-year term and vest equally over a five-year period from date of
grant. The fair value of the options at the date of grant in aggregate was
$136,000 which was determined on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions; dividend
yield of 0%; risk-free interest rates of approximately 2.3%; expected volatility
based on historical trading information of 87% and expected term of 5
years.
  In
June 2009, we granted options to our directors and management to purchase an
aggregate of 700,000 shares of our common stock at an exercise price of $.23 per
share, which represented the closing price of our stock on the date of each
respective grant. The options were granted under the 2005 Stock Option Plan,
have a ten-year term and vest equally over a five-year period from date of grant
with the exception of an option to purchase 100,000 shares granted to our Chief
Executive Officer which are immediately exercisable pursuant to the terms of his
employment agreement. The fair value of the options at the date of grant in
aggregate was $110,754 which was determined on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions; dividend yield of 0%; risk-free interest rates of approximately
2.3%; expected volatility based on historical trading information of 87% and
expected term of 5 years.
 
  47
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 8.
              Stockholders’
      Equity - (Continued)
  In
July 2009, we granted options to a director and several employees to purchase an
aggregate of 750,000 shares of our common stock at an exercise prices ranging
from $.28 to $.32 per share, which represented the closing price of our stock on
the date of each respective grant. The options were granted under the 2005 Stock
Option Plan, have a ten-year term and vest equally over a five-year period from
date of grant. The fair value of the options at the date of grant in aggregate
was approximately $146,000 which was determined on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions; dividend yield of 0%; risk-free interest rates of approximately
2.3%; expected volatility based on historical trading information of 87% and
expected term of 5 years.
 
 Year
      Ended
                September
      30, 2009
              
              
              Year
      Ended
                September
      30, 2008Weighted
      Average
              
              
              
              
              
              Weighted
                AverageExercise
              
              
              
              
              
              ExerciseShares
              
              
              Price
              
              
              Shares
              
              
              PriceOutstanding
      at beginning of period
              
              
              2,532,000
              
              
              $
              .34
              
              
              
              1,662,000
              
              
              $
              .34Granted
              
              
              2,050,000
              
              
              
              .28
              
              
              
              870,000
              
              
              
              .35Forfeited
      or expired
              
              
              (1,230,000
              )
              
              
              .34
              
              
              
              --
              
              
              
              .--Exercised
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Outstanding
      at end of period
              
              
              3,352,000
              
              
              
              .30
              
              
              
              2,532,000
              
              
              
              .34Exercisable
      at end of period
              
              
              923,200
              
              
              
              .32
              
              
              
              724,800
              
              
              
              .33Reserved
      for future grants
              
              
              148,000
              
              
              
              
              
              
              
              968,000Aggregate
      intrinsic value of exercisable options
              
              $
              218,800
              
              
              
              
              
              
              $
              50,494Aggregate
      intrinsic value of all options
              
              $
              859,800
              
              
              
              
              
              
              $
              148,410Weighted
      average fair value of options granted during the period
              
              
              
              
              
              $
              .19
              
              
              
              
              
              
              $
              .23
 
 Information
pertaining to options outstanding under the plan at September 30, 2009 is as
follows:
 
 Options
      Outstanding
              
              Options
      ExercisableWeighted
              
              
              
              
              
              WeightedAverage
              
              Weighted
              
              
              
              Average
              
              WeightedRemaining
              
              Average
              
              
              
              Remaining
              
              AverageExercise
              Number
              
              Contractual
              
              Exercise
              
              Number
              
              Contractual
              
              ExercisePrices
              Outstanding
              
              Life
              
              Price
              
              Exercisable
              
              Life
              
              Price$   .23
      - .55
              3,352,000
              
              8.6
      years
              
              $   .30
              
              923,200
              
              7.5
      years
              
              $   .32
 
 The
following table summarizes activity related to non-vested
options:
 
 Year
      Ended
                September
      30, 2009Weighted AverageGrant
      DateShares
              
              
              Fair
      ValueNon-vested
      at beginning of period
              
              
              1,807,200
              
              
              $
              .25Granted
              
              
              2,050,000
              
              
              
              .19Forfeited
      or expired
              
              
              (1,093,200
              )
              
              
              .23Vested
              
              
              (335,400
              )
              
              
              .23Non-vested
      at end of period
              
              
              2,428,600
              
              
              
              .21
 
 Non-Employee
Director Stock Option Plan
  Under
the terms of our 1996 Non-Employee Director Stock Option Plan on a non-employee
director’s initial election to the Board of Directors, they are automatically
granted an option to purchase 2,000 shares of our common stock. The exercise
price per share of options granted under the Non-Employee Director Stock Option
Plan is 100% of the fair-market value of our common stock on the business day
immediately prior to the date of the grant and is immediately exercisable for a
period of ten years from the date of the grant.
  As
of September 30, 2009, options to purchase 38,000 shares of our common stock
have been granted of which 28,000 are outstanding and exercisable at prices
ranging from $0.38 to $1.95. During fiscal 2006, the Compensation Committee
agreed to discontinue future option grants pursuant to the Non-Employee Director
Stock Option Plan.  At September 30, 2009, options outstanding had a
weighted average exercise price of $1.10 per share and a weighted average
contractual life of 3.5 years.
  48
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 8.
              Stockholders’
      Equity - (Continued)
  Other
Stock Options and Warrants
  On
March 24, 2009 we purchased and retired warrants to purchase 4,811,905 shares of
common stock at an exercise price of $.01 per share held by our former secured
lender, Laurus Master Fund, Ltd for $700,000, or approximately $0.145 per
share.
  Information
pertaining to all other options and warrants granted and outstanding is as
follows:
 
 Year
      Ended
                September
      30, 2009
              
              
              Year
      Ended
                September
      30, 2008Weighted
      Average
              
              
              
              
              
              Weighted
                AverageExercise
              
              
              
              
              
              ExerciseShares
              
              
              Price
              
              
              Shares
              
              
              PriceOutstanding
      at beginning of period
              
              
              6,535,902
              
              
              $
              .44
              
              
              
              7,163,402
              
              
              $
              .44Granted
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Forfeited,
      expired, repurchased
              
              
              (6,085,902
              )
              
              
              .25
              
              
              
              (627,500
              )
              
              
              1.92Exercised
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Outstanding
      at end of period
              
              
              450,000
              
              
              
              .53
              
              
              
              6,535,902
              
              
              
              .44Exercisable
      at end of period
              
              
              450,000
              
              
              
              .53
              
              
              
              6,479,652
              
              
              
              .44Aggregate
      intrinsic value of exercisable options/warrants
              
              $
              29,500
              
              
              
              
              
              
              $
              1,829,744Aggregate
      intrinsic value of all options/warrants
              
              $
              29,500
              
              
              
              
              
              
              $
              1,829,744Weighted
      average fair value of options granted during the period
              
              
              
              
              
              $
              --
              
              
              
              
              
              
              $
              --
 
 Options/Warrants
      Outstanding
              
              Options/Warrants
      ExercisableWeighted
              
              
              
              
              
              WeightedAverage
              
              Weighted
              
              
              
              Average
              
              WeightedRemaining
              
              Average
              
              
              
              Remaining
              
              AverageExercise
              Number
              
              Contractual
              
              Exercise
              
              Number
              
              Contractual
              
              ExercisePrices
              Outstanding
              
              Life
              
              Price
              
              Exercisable
              
              Life
              
              Price$   .34
      - $1.51
              450,000
              
              1.21
      years
              
              $   .53
              
              450,000
              
              1.21
      years
              
              $   .53
 
 Common
Stock Reserved
  We
have reserved common stock at September 30, 2009 as follows:
 
 Stock
      option plans
              
              3,424,500Other
      stock options
              
              328,000Other
      warrants
              
              150,0003,902,500
 
 9.
              Employee
      Benefit Plan
  We
have implemented a Section 401(k) plan for all eligible employees. Employees are
permitted to make elective deferrals of up to 75% of employee compensation up to
the maximum contribution allowed by law and employee contributions to the 401(k)
plan are fully vested at all times.  We may make discretionary
contributions to the 401(k) plan which become vested over a period of five
years. There were no corporate contributions to the 401(k) plan during the years
ended September 30, 2009 and 2008, respectively.
 
 10.
              Segment
      Information
  Today,
we have two reportable operating segments: (1) molded recycled rubber products
and (2) dual fuel conversion operations (See Note 2). We have identified the
tire recycling and molded recycled rubber product as operating segments for
which discrete financial information is available. Each operating segment has
its respective management team. Prior to November 17, 2008, we also had tire
recycling operations. As described in Note 3 our business changed substantially
in November 2008, when we sold substantially all of the assets of our tire
recycling operations. The tire recycling operations were located in Savage,
Minnesota and Des Moines, Iowa and collected, processed and marketed scrap tires
in whole, shredded or granular form.
  The
molded recycled rubber products operation specializes in designing, developing,
and manufacturing of environmentally responsible products using recycled
materials, primarily recycled rubber and providing innovative playground design,
equipment and services that provide schools and other political subdivisions
viable solutions for safety, compliance, and accessibility.
  49
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 10.
              Segment
      Information – (Continued)
  Our
dual fuel conversion operations provide a unique external fuel delivery
enhancement system which converts existing diesel engines into more efficient
and environmentally friendly engines that have the flexibility to run on: (1)
diesel fuel and compressed natural gas; (2) diesel fuel and bio-methane; or (3)
100% on diesel fuel depending on the circumstances.
  Our
Chief Executive Officer has been identified as the chief operating decision
maker (CODM) as he assesses the performance of the segments and decides how to
allocate resources to the segments. Income (loss) from operations is the measure
of profit and loss that our CODM uses to assess performance and make decisions.
Assets are not a measure used to assess the performance of the company by the
CODM; therefore we will report assets by segment in our disclosures. Income
(loss) from operations represents the net sales less the cost of sales and
direct operating expenses incurred within the operating segments as well the
allocation of some but not all corporate operating expenses. These unallocated
costs include certain corporate functions (certain legal, accounting, wage,
public relations and interest expense) are included in the results below under
Corporate and other in the reconciliation of operating results. Management does
not consider unallocated Corporate and other in its management of segment
reporting.
  The
following table provides total assets for our operating segments as
of:
  
 Total
      assets:
              
              September 30,
                2009
              
              
              September 30,
                2008Molded
      recycled rubber products
              
              $
              3,117,492
              
              
              $
              6,610,698Dual
      fuel conversion
              
              
              2,872,031
              
              
              
              --Corporate
      and other
              
              
              6,652,604
              
              
              
              16,996,791Total
      assets
              
              $
              12,642,127
              
              
              $
              23,607,489
  The
following table provides net sales and income from operations for our operating
segments:
  
 Fiscal Year EndedSeptember 30,
              
              
              September 30,2009
              
              
              2008Net
      sales;Molded
      recycled rubber products
              
              $
              3,227,633
              
              
              $
              3,465,414Dual
      fuel conversion
              
              
              --
              
              
              
              --Corporate
      and other
              
              
              --
              
              
              
              --Total
      net sales
              
              $
              3,227,633
              
              
              $
              3,465,414
 
 There were no sales between the
segments during the fiscal years ended September 30, 2009 and 2008.
 
 Fiscal Year EndedSeptember 30,
              
              
              September 30,2009
              
              
              2008Loss from continuing
      operations:Molded
      recycled rubber products
              
              $
              (3,208,109
              )
              
              $
              (
      800,157
              )Dual
      fuel conversion
              
              
              (479,893
              )
              
              
              --Corporate
      and other
              
              
              (2,404,882
              )
              
              
              (1,947,505
              )Total
      loss from continuing operations
              
              $
              (6,092,884
              )
              
              $
              (2,747,662
              )
 
 11.
              Major
      Customers
  During
the fiscal year ended September 30, 2009 there was one molded products customer
who accounted for 14% of consolidated net sales. During fiscal 2008, no one
customer accounted for more than 10% of our consolidated net sales.
 
 12.
              Fair
      Value of Financial Instruments
  At
September 30, 2009 and 2008, our financial instruments consist of marketable
investments, accounts receivable, accounts payable and notes payable to banks
and others. These instruments approximate their fair values as these instruments
are either due currently or were negotiated currently and bear interest at
market rates.
 
  50
  GreenMan
Technologies, Inc.
 Notes
To Consolidated Financial Statements
 
 13.
              Income
      Taxes
  The
provision (benefit) for income taxes was comprised of the following amounts for
the years ended:
 
 September 30,
              
              
              September 30,2009
              
              
              2008Current:Federal
              
              $
              330,000
              
              
              $
              --State
              
              
              490,000
              
              
              
              (32,561
              )820,000
              
              
              
              (32,561
              )Deferred:Federal
              
              $
              4,280,000
              
              
              $
              --State
              
              
              1,020,000
              
              
              
              (32,561
              )5,300,000
              
              
              
              (32,561
              )Change
      in valuation reserve
              
              
              --
              
              
              
              (5,300,000
              )Total
      provision (benefit) for income taxes included in discontinued
      operations
              
              $
              6,120,000
              
              
              $
              (5,332,561
              )
  Historically
we have provided a valuation reserve equal to 100% of our potential deferred tax
benefit due to the uncertainly of our ability to realize the anticipated benefit
given our historical losses. As a result of the estimated gain to be realized in
fiscal 2009 from the sale of the tire recycling operations and anticipated
overall Company results for fiscal 2009, we expected to be able to realize the
benefit of a portion of our federal net operating loss
carry-forwards.  Using an effective overall tax rate of 30% (which
takes into account certain state net operating loss limitations) we have
recognized a change in the valuation allowance of $5.3 million during the fiscal
year ended September 30, 2008 based on the estimated gain associated with the
November 2008 sale of our tire recycling operations. Based on actual results for
the year ended September 30, 2009, we recognized total income tax expense of
$6,120,000.
  In
addition, as of September 30, 2008, using an effective overall tax rate of 30%
(which takes into account certain state net operating loss limitations) we have
calculated a deferred tax liability of approximately $700,000 associated with
the income recognized from the write-off all liabilities associated with the
de-consolidation GreenMan of Georgia during fiscal 2008. We have sufficient net
operating loss carry-forwards to offset this anticipated deferred tax liability
and accordingly will not recognize any additional income tax at September 30,
2009.
  The
difference between the statutory federal income tax rate of 34% and the
effective rate is primarily due to net operating losses incurred by us and the
provision of a valuation reserve against the related deferred tax
assets.
  The
following differences give rise to deferred income taxes:
 
 September 30,
              
              
              September 30,2009
              
              
              2008Net
      operating loss carry forwards
              
              $
              4,790,948
              
              
              $
              11,118,532Differences
      in fixed asset bases
              
              
              (87,684
              )
              
              
              (1,043,729
              )Capital
      loss carryover
              
              
              --
              
              
              
              1,286,937AMT
      tax
              
              
              353,805
              
              
              
              --Other,
      net
              
              
              108,058
              
              
              
              734,9005,165,127
              
              
              
              12,096,640Valuation
      reserve
              
              
              (5,165,127
              )
              
              
              (6,796,640
              )Net
      deferred tax asset
              
              $
              --
              
              
              $
              5,300,000
  As of September 30, 2009, we had net
operating loss carry forwards of approximately $13.5 million. The Federal and
state net operating loss carry forwards expire in varying amounts beginning in
2010 and 2013, respectively. In addition, we have Federal tax credit carry
forwards of approximately $17,000 available to reduce future tax liabilities.
The Federal tax credit carry forwards expire beginning in 2013. Use of net
operating loss and tax credit carry forwards maybe subject to annual limitations
based on ownership changes in our common stock as defined by the Internal
Revenue Code.
 
 14.
                Fourth
      Quarter Adjustments
  During
the three months ended September 30, 2009 we recognized additional income tax
expense of $620,000 primarily due to the finalization of the accounting for the
tire recycling operations sale and finalization of our fiscal year end results.
In addition, during the three months ended September 30, 2009, we recorded a
goodwill impairment of $2,289,939 associated with our Green Tech Products
subsidiary in conjunction with our annual review of potential asset
impairment.
  51
  SIGNATURES
 
 
 In accordance with Section 13 or 15(d)
of the Exchange Act, the Registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
 
 GreenMan
      Technologies, Inc./s/ Lyle
      JensenLyle
      JensenChief
      Executive Officer
 
 In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant in the capacities and on the dates
indicated.
 
 Signature
              Title(s)
              Date/s/ Maurice E.
      Needham
              Chairman
      of the Board
              January
      12, 2010Maurice
      E. Needham/s/ Lyle
      Jensen
              Chief
      Executive Officer, President
              January
      12, 2010Lyle
      Jensen
              and
      Director/s/ Charles E.
      Coppa
              Chief
      Financial Officer,Charles E.
      Coppa
              Treasurer
      and Secretary
                (Principal
      Financial Officer and Principal
                Accounting
      Officer)
              January
      12, 2010/s/ Lew F.
      Boyd
              Director
              January
      12, 2010Lew
      F. Boyd/s/ Dr. Allen
      Kahn
              Director
              January
      12, 2010Dr.
      Allen Kahn/s/ Kevin Tierney,
      Sr.
              Director
              January
      12, 2010Kevin
      Tierney, Sr.
 
 
 
  52