UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

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


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

                          COMMISSION FILE NO.: 0-50469


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


Delaware                                                             59-3764931
--------------------------------------------------------------------------------
(State of other jurisdiction of                                   IRS Employer
incorporation or organization)                              Identification No.)


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


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



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

Large accelerated filer                 Accelerated filer
                            ----                                 ----
Non-accelerated filer                   Small reporting company    X
                            ----                                 ----

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

The number of  outstanding  shares of common  stock as of November  19, 2008 was
89,809,764.





<PAGE>

                                AMENDMENT NO. 1

This Amendment No.1 on Form 10-Q/A,  which amends and restates items  identified
below with respect to the Form 10- Q, filed by GreenShift  Corporation  ("we" or
"the Company") with the  Securities and Exchange  Commission  (the "SEC") on May
21, 2007 (the "Original Filing"),  is being filed to correct minor typographical
errors.


<PAGE>

                             GREENSHIFT CORPORATION
                          QUARTERLY REPORT ON FORM 10Q
                 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2008

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

                                                                                                         Page No
Part I - Financial Information

<S>       <C>                                                                                                 <C>
Item 1    Financial Statements (unaudited) ...................................................................4

          Condensed Consolidated Balance Sheet as of September 30, 2008 (unaudited)
           and December 31, 2007..............................................................................5

          Condensed Consolidated Statements of Operations for the Three and Nine Month Periods
           Ended September 30, 2008 and 2007 (unaudited)......................................................6

          Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
           September 30, 2008 and 2007 (unaudited)............................................................7

          Notes to Condensed Consolidated Financial Statements................................................8

Item 2    Management's Discussion and Analysis of Financial Condition and Results of Operations .............28

Item 3    Quantitative and Qualitative Disclosures about Market Risk.........................................39

Item 4    Controls and Procedures ...........................................................................39

Part II - Other Information

Item 1    Legal Proceedings .................................................................................40

Item 1A   Risk Factors ......................................................................................40

Item 2    Unregistered Sales of Equity Securities and Use of Proceeds .......................................51

Item 3    Defaults upon Senior Securities ...................................................................51

Item 4    Submission of Matters to a Vote of Security Holders................................................51

Item 5    Other Information .................................................................................51

Item 6    Exhibits...........................................................................................51


Signatures

</TABLE>


                                       2
<PAGE>



Basis of Presentation

In  this   Quarterly   Report  on  Form  10-Q,  the  terms  "we,"  "our,"  "us,"
"GreenShift,"  or  the  "Company"  refer  to  GreenShift  Corporation,  and  its
subsidiaries on a consolidated  basis. The term "GreenShift  Corporation" refers
to GreenShift Corporation on a stand alone basis only, and not its subsidiaries.

Market and Industry Data Forecasts

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

Forward Looking Statements

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

     >>   the volatility and uncertainty of commodity prices;

     >>   operational disruptions at our facilities;

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

     >>   our ability to locate and integrate future acquisitions;

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

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

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

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

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

     >>   our reliance on key management personnel;

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

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

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

     >>   other risks  referenced  from time to time in our filings with the SEC
          and  those  factors  listed  in this  Form 10Q  under  Item 1A,  Risks
          Factors, beginning on page 39.

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


                                       3
<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1            FINANCIAL STATEMENTS (UNAUDITED)





































                                       4
<PAGE>
<TABLE>
                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
           AS OF SEPTEMBER 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
<CAPTION>
                                                                                       9/30/2008        12/31/2007
                                                                                   -------------------------------
ASSETS
Current assets:
<S>                                                                                <C>              <C>
   Cash ........................................................................   $     541,183    $     486,993
   Restricted cash .............................................................          49,492          425,623
   Accounts receivable, net of allowance of doubtful accounts of $47,011 .......         705,200        1,049,671
   Inventories .................................................................       2,314,498        5,017,233
   Cost and earnings in excess of billings .....................................       1,832,395          140,592
   Project development costs ...................................................         372,892          281,991
   Prepaid expenses and other assets ...........................................         158,777          483,507
                                                                                   -------------    -------------
     Total current assets ......................................................       5,974,437        7,885,610
                                                                                   -------------    -------------
Other Assets:
   Property and equipment, net .................................................      23,531,239        4,105,348
   Deposits ....................................................................         275,134           12,534
   Restricted cash, long term ..................................................         254,352             --
   Construction in progress ....................................................      10,792,901        4,844,913
   Intangible assets, net ......................................................      10,725,578       12,286,883
   Deferred financing costs, net ...............................................       1,799,281        1,444,701
   Long term investments .......................................................       2,501,324        4,186,657
   Excess purchase price of net assets acquired ................................       6,516,992             --
   Assets of discontinued operations, non-current ..............................           7,500        9,207,002
   Goodwill ....................................................................       8,756,559        8,364,457
                                                                                   -------------    -------------
     Total other assets ........................................................      65,160,860       44,452,495
                                                                                   -------------    -------------
TOTAL ASSETS ...................................................................   $  71,135,297    $  52,338,105
                                                                                   =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current liabilities:
   Line of credit ..............................................................   $  10,834,235    $   1,833,192
   Accounts payable and accrued expenses .......................................      13,851,985        8,703,067
   Accrued interest payable ....................................................       5,376,465        3,887,662
   Accrued interest payable - related party ....................................          83,332          196,832
   Billings in excess of earnings ..............................................         335,136        1,222,807
   Deferred tax liability ......................................................            --             59,630
   Deferred revenue, current portion ...........................................          45,173        1,582,500
   Income tax payable ..........................................................          45,000           45,000
   Current portion of long term debt ...........................................      10,049,390       10,541,390
   Liability for derivative instruments ........................................            --          6,704,831
   Related party debt ..........................................................       1,572,068        5,335,351
   Current portion of convertible debentures ...................................      18,303,649        5,292,072
   Current portion of convertible notes ........................................         778,193             --
   Other current liabilities ...................................................         636,435             --
   Liabilities of discontinued operations, current .............................         363,228        4,221,059
                                                                                   -------------    -------------
     Total current liabilities .................................................      62,274,289       49,625,393
                                                                                   -------------    -------------
   Long term debt, net of current ..............................................       9,687,723        2,437,195
   Convertible notes, net of current ...........................................         956,386             --
   Asset retirement obligation .................................................         184,195             --
   Deferred revenue, net of current portion ....................................         142,437             --
   Mandatorily redeemable preferred equity .....................................       9,000,000             --
   Convertible debentures, net of current ......................................      15,086,810       28,224,877
                                                                                   -------------    -------------
     Total long term liabilities ...............................................      35,057,551       30,662,072
Total liabilities ..............................................................      97,331,840       80,287,465
                                                                                   -------------    -------------
Minority interest ..............................................................       1,127,935        1,968,762
                                                                                   -------------    -------------
Stockholders' deficit
   Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized:
     Series A: 0 and 1,254,244 shares issued and outstanding, respectively .....            --              1,254
     Series B: 2,512,037 and 151,250 shares issued and outstanding, respectively           2,512              151
     Series C: 0 shares issued and outstanding .................................            --               --
       Series D: 800,000 and 800,000 shares issued and outstanding, respectively             800              800
       Series E : 20,000 and 0 shares issued and outstanding, respectively .....              20             --
   Common stock, $0.001 par value, 500,000,000 authorized;
     85,891,214 and 30,693,083, shares issued and outstanding, respectively ....          85,891           30,693
   Additional paid-in capital ..................................................      84,492,423       63,512,970
   Deferred performance based compensation .....................................      (5,579,873)            --
   Accumulated deficit .........................................................    (106,326,250)     (93,463,990)
                                                                                   -------------    -------------
     Total stockholders' equity (deficit) ......................................     (27,324,478)     (29,918,122)
                                                                                   -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .....................................   $  71,135,297    $  52,338,105
                                                                                   =============    =============
       The notes to the Condensed Consolidated Financial Statements are an
                       integral part of these statements.
</TABLE>
                                       5
<PAGE>
<TABLE>

                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                                   (UNAUDITED)
<CAPTION>
                                                                      Three Months Ended               Nine Months Ended
                                                                  9/30/08         9/30/07         9/30/08        9/30/07
                                                             -----------------------------------------------------------

<S>                                                          <C>             <C>             <C>             <C>
Revenue ..................................................   $  6,088,754    $ 10,815,623    $ 24,126,662    $ 13,946,236
Cost of revenues .........................................      6,347,635       9,140,180      19,194,414      11,739,467
                                                             ------------    ------------    ------------    ------------
  Gross profit ...........................................       (258,881)      1,675,443       4,932,248       2,206,769
                                                             ------------    ------------    ------------    ------------
Operating expenses:
   General and administrative expenses ...................      1,917,500         793,715       4,812,733       3,667,954
   Selling expenses ......................................         98,247            --           160,788            --
   Research and development ..............................        (13,476)          1,467          18,732           1,467
   Amortization of intangibles ...........................        525,000         523,399       1,575,000       1,575,000
   Stock based compensation ..............................         33,176         226,593         370,009       2,314,655
                                                             ------------    ------------    ------------    ------------
     Total operating expenses ............................      2,560,448       1,545,174       6,937,261       7,559,076
                                                             ------------    ------------    ------------    ------------
Income (loss) from operations ............................     (2,819,329)        130,269      (2,005,013)     (5,352,307)
                                                             ------------    ------------    ------------    ------------
Other income (expense):
   Change in fair value of derivative instruments ........           --           526,389         319,829       3,405,607
   Loss on disposal and impairment of investments ........       (685,333)        (23,373)     (3,425,068)       (388,150)
   Amortization of debt discount & deferred financing ....     (1,042,257)       (650,828)     (3,157,312)     (3,564,105)
   Grant revenue .........................................        107,417         127,303         107,417         515,242
   Other income (expense) ................................        (10,674)         34,515          45,076         116,910
   Gain on sale of equipment .............................        164,382            --           164,382            --
   Interest expense - affiliate ..........................        (35,871)       (599,643)        (91,547)       (873,625)
   Interest expense ......................................     (1,831,224)       (981,682)     (4,820,702)     (3,040,310)
                                                             ------------    ------------    ------------    ------------
     Total other income (expense), net ...................     (3,333,560)     (1,567,319)    (10,857,925)     (3,828,431)
                                                             ------------    ------------    ------------    ------------

Loss before minority interest and income taxes ...........     (6,152,889)     (1,437,050)    (12,862,938)     (9,180,738)

Minority interest in net loss of consolidated subsidiaries          2,489           8,908           8,908           8,908
                                                             ------------    ------------    ------------    ------------

Loss before provision for income taxes ...................     (6,150,399)     (1,428,142)    (12,854,030)     (9,171,830)
(Provision for)/benefit from income taxes ................         (8,229)       (254,410)        (8,229)        (254,410)
                                                             ------------    ------------    ------------    ------------
Loss from continuing operations ..........................     (6,158,628)     (1,682,552)    (12,862,259)     (9,426,240)
                                                             ------------    ------------    ------------    ------------
Income from discontinued operations ......................           --           120,772            --         2,781,869
                                                             ------------    ------------    ------------    ------------
Net loss .................................................     (6,158,628)     (1,561,780)    (12,862,259)     (6,644,371)
                                                             ------------    ------------    ------------    ------------
Preferred dividends ......................................           --              --              --          (151,875)
                                                             ------------    ------------    ------------    ------------
Net loss attributable to common shareholders .............   $ (6,158,628)   $(1,561,780)    $(12,862,259)   $ (6,796,246)
                                                             ============    ============    ============    ============



Weighted average common shares outstanding
Basic and diluted                                              84,870,755       5,470,350      67,982,782       9,289,850

Earnings (loss) per share

Loss from continuing operations ........................      $    (0.07)   $      (0.01)   $      (0.19)   $      (1.01)
Income (loss) from discontinued operations ...............           --              --              --            0.30
                                                              ------------    ------------    ------------    ------------
Net loss per share - basic and diluted ...................    $    (0.07)   $      (0.01)   $      (0.19)   $      (0.73)
                                                              ============    ============    ============    ============

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

</TABLE>


                                       6
<PAGE>

<TABLE>


                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND SEPTEMBER 30, 2007 (UNAUDITED)
<CAPTION>

                                                               Nine Months Ended Nine Months Ended
                                                                         9/30/08           9/30/07
                                                              ------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                <C>             <C>
   Net loss from continuing operations .........................   $(12,862,259)   $ (9,426,240)
   Net income from discontinued operations .....................           --         2,781,869
Adjustments to reconcile net loss to net cash
  provided by (used in) used in operating activities
   Depreciation and amortization ...............................        855,378         (44,857)
   Amortization of intangibles .................................      1,561,305       1,575,000
   Amortization of debt discount and deferred financing costs ..      2,791,256       3,564,105
   Change in fair value of derivatives .........................       (319,829)     (3,405,607)
   Stock based compensation ....................................        370,009       2,314,655
   Beneficial conversion feature on stock ......................           --           151,875
   Gain on sale of discontinued operations .....................           --        (2,494,946)
   Loss on disposal of investments .............................      3,425,068         388,150
   Income from discontinued operations .........................           --          (289,992)
   Accretion of asset retirement obligation ....................           --              --
   Change in minority interest .................................        (20,000)         (8,908)
   Change in assets and liabilities, net of acquisitions
      Accounts receivable ......................................        731,947         (79,636)
      Restricted cash ..........................................        121,779            --
      Prepaid expenses .........................................        871,230         299,769
      Deposits .................................................       (262,600)       (116,475)
      Inventory ................................................      3,938,502       3,698,349
      Costs in excess of earnings ..............................     (1,691,851)     (1,040,307)
      Deferred financing fees ..................................        (99,830)        (84,252)
      Accrued interest .........................................      3,383,958       2,140,681
      Accrued interest - related party .........................         83,332         417,773
      Billings in excess of cost ...............................       (887,671)        338,635
      Accounts payable and accrued expenses ....................      3,091,326         718,865
      Other current liabilities ................................        136,435            --
      Deferred income taxes ....................................        (59,630)           --
      Deferred revenue .........................................     (1,037,327)       (844,526)
      Assets and liabilities of discontinued operations ........           --          (311,192)
                                                                   ------------    ------------
   Net cash provided by (used in) operating activities .........      4,120,528          90,914
                                                                   ------------    ------------
CASH FLOW FROM INVESTING ACTIVITIES
   Cash paid for acquisition ...................................        (80,000)           --
   Cash acquired from acquisition ..............................           --           250,000
   Proceeds from the sale of long term investment ..............      1,000,000            --
   Construction in progress ....................................     (4,862,842)       (131,930)
   Investment in unconsolidated subsidiaries ...................           --         1,685,333
   Project development costs ...................................        (90,901)        (58,654)
   Additions to and acquisition of property, plant and equipment     (6,346,132)     (3,857,484)
                                                                   ------------    ------------
   Net cash provided by (used in) investing activities .........    (10,379,875)     (2,112,735)
                                                                   ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Repayment of line of credit .................................     (1,636,765)           --
   Proceeds (repayment) of convertible debentures ..............      2,484,579      (1,673,603)
   Repayment of note payable - affiliate .......................           --           783,576
   Issuance of note payable - affiliate ........................           --           130,000
   Issuance of short term borrowings - affiliate ...............           --         1,820,905
   Repayment of short term borrowings - affiliate ..............     (1,530,849)     (1,069,061)
   Issuance of short term borrowings ...........................           --         5,708,250
   Repayment of short term borrowings ..........................           --        (4,939,947)
   Loan due to an affiliate ....................................           --          (360,400)
   Proceeds from line of credit ................................      9,987,808            --
   Loans to related parties ....................................         (3,681)           --
   Cash paid to minority shareholders ..........................       (820,827)           --
   Proceeds from long term debt ................................        713,582            --
   Repayment of long term debt .................................     (2,880,310)           --
   Repayment of convertible debentures .........................           --              --
                                                                   ------------    ------------
   Net cash provided by (used in) financing activities .........      6,313,537       1,120,521
                                                                   ------------    ------------
   Net increase (decrease) in cash .............................   $     54,190    $   (901,299)
   Cash at beginning of period .................................        486,993       1,638,600
                                                                   ------------    ------------
   Cash at end of period .......................................   $    541,183    $    737,300
                                                                   ============    ============
       The notes to the Condensed Consolidated Financial Statements are an
                       integral part of these statements.

</TABLE>

                                       7
<PAGE>



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

1        BASIS OF PRESENTATION

The consolidated interim financial statements included herein have been prepared
by GreenShift  Corporation ("we," "our," "us,"  "GreenShift," or the "Company"),
pursuant to the rules and regulations of the Securities and Exchange  Commission
and, in the opinion of  management,  include all  adjustments  which,  except as
described  elsewhere herein,  are of a normal recurring nature,  necessary for a
fair  presentation of the financial  position,  results of operations,  and cash
flows for the  periods  presented.  The  results  for  interim  periods  are not
necessarily  indicative of results for the entire year. The financial statements
presented  herein  should be read in connection  with the  financial  statements
included  in the  Company's  Annual  Report on Form  10-KSB  for the year  ended
December 31, 2007.

Effective  January  1,  2008,  we  sold  the  majority  of  our  interest  in GS
EnviroServices,   Inc.  (see  Note  7,  Discontinued  Operations,   below).  For
comparative  purposes,   the  financial  results  of  this  business  have  been
deconsolidated from our consolidated financial results for the nine months ended
September  30,  2007.  The  balance  sheet has been  reclassified  to reflect GS
EnviroServices as discontinued.

2        NATURE OF OPERATIONS

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

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

We  currently  own  and  operate  six  production  facilities  - four  corn  oil
extraction  facilities  based  on  our  patented  and  patent-pending  corn  oil
extraction  technologies,   one  biodiesel  production  facility  based  on  our
patent-pending  biodiesel  production  technologies,  and one vegetable  oilseed
crushing facility based on conventional process technology.

Our  corn oil  extraction  facilities  are  located  at  existing  corn  ethanol
production  facilities,  where we extract  corn oil from an  ethanol  co-product
called distillers grain. We install our extraction facility,  at our expense, at
participating  host  facilities in return for the  long-term  right (10 years or
more) to  purchase  the  extracted  corn oil for about 50% of the spot  price of
diesel fuel. This  arrangement  benefits both the host and GreenShift.  The host
benefits  because the  contract  price we pay  substantially  exceeds the market
price for distillers  grain.  GreenShift  benefits because the contract price is
substantially  lower  than  the  cost of  comparable  feedstocks  for  biodiesel
production  and because  indexing  our  feedstock  costs to our offtake  markets
allows us to hedge our biodiesel production margins.

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

We are currently operating and building facilities that correspond to 20 million
gallons  per year of corn oil  extraction  and 10  million  gallons  per year of
biodiesel  production  capacity,  and we are  under  contract  to  later  expand
existing and build new corn oil  extraction  facilities  to extract more than an
additional 20 million  gallons per year of corn oil, and to increase our oilseed
crush capacity to about 16 million gallons per year.

SEGMENT DESCRIPTIONS

The Company's  operations during the fiscal quarter ended September 30, 2008 are
classified into three reportable business segments: Biofuels Production & Sales,
Culinary Oil Production & Sales, and Equipment & Technology Sales. Each of these
segments is organized  based upon the nature of products  and services  offered.
The Company's  remaining  operations are  aggregated  and  classified  herein as
Corporate.

During  the  year  ended   December  31,  2007  our   discontinued   Diversified
Environmental  Services  business was administered by GS  EnviroServices,  Inc.,
which company  provides a variety of  transportation,  distribution,  recycling,
disposal, engineering and remediation services to producers of industrial wastes
throughout the  northeastern  region of the U.S.  Effective  January 1, 2008, we
sold the  majority  of our  interest  in GS  EnviroServices,  Inc.  (see Note 6,
Discontinued Operations, below). For comparative purposes, the financial results
of this  business  have  been  deconsolidated  from our  consolidated  financial
results for the nine months ended September 30, 2007.

                                       8

3        GOING CONCERN

The Company had a working  capital deficit of $56,299,852 at September 30, 2008,
which includes $3,979,437 in purchase obligations,  $9,004,018 in amounts due to
the prior owners of our oilseed crush facility, $11,977,824 in convertible debt,
and  $1,572,068 in related party debt.  These  matters raise  substantial  doubt
about the Company's ability to continue as a going concern.

Despite  their  classification  as  current  liabilities,  purchase  obligations
($3,979,437),  to the extent  due,  are tied to the  earnings  of the  Company's
equipment  sales  business and can only be serviced  after the Company's  senior
secured debt has been serviced; and, the current amounts due to the prior owners
of our oilseed crush facility  ($9,004,018) have been restructured in the fourth
quarter  2008 (See Note 22,  Subsequent  Events,  below)  partly  into a form of
subsidiary stock that will service these amounts exclusively out of the net cash
flows (after regular debt service) of our oilseed crush facility.  The Company's
working capital deficit net of all of the above amounts is $29,766,505.


Management's  plans  include  raising  additional  proceeds from debt and equity
transactions  to fund  operations,  and to increase  revenue and cut expenses to
reduce the loss from  operations.  There can be no  assurances  that the Company
will be able to eliminate  both its working  capital  deficit and its  operating
losses.  The  accompanying  financial  statements do not contain any adjustments
which may be required as a result of this uncertainty.

4        SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

As of September 30, 2008, the Company  administered its operations through three
tier 1 subsidiaries: GS CleanTech Corporation, GS Design, Inc., and GS AgriFuels
Corporation.  The following is an outline of our organizational  structure as of
September 30, 2008:
<TABLE>
<CAPTION>

Company                                                                           Status                     Nature
--------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>           <C>
GreenShift Corporation (OTC Bulletin Board: GERS)                                 Active                    Holding

1.   GS CleanTech Corporation (100%)                                              Active                  Operating
       GS COES (Yorkville I), LLC (100%)                                          Active                  Operating
          Biofuel Industries Group, LLC (d/b/a NextDiesel) (100%)                 Active                  Operating
       GS Global Biodiesel, LLC (90%)                                             Active                  Operating

2.   GS Design, Inc. (100%)                                                       Active                  Operating
       Bollheimer & Associates, Inc. (100%)                                       Active                  Operating
       GS Rentals, LLC (100%)                                                     Active                    Holding

3.   GS AgriFuels Corporation (100%)                                              Active                    Holding
       NextGen Acquisition, Inc. (100%)                                           Active                    Holding
         NextGen Fuel, Inc. (100%)                                                Active                    Holding
       Sustainable Systems, Inc. (100%)                                           Active                    Holding
         Sustainable Systems, LLC (100%)                                          Active                  Operating
       ZeroPoint Clean Tech, Inc. (about 10%)                                     Active        Minority Investment
</TABLE>

All  significant  intercompany  balances and  transactions  were  eliminated  in
consolidation. The financial statements for the periods ended September 30, 2008
and 2007 have been  consolidated  to include the accounts of the Company and its
subsidiaries.

COST METHOD OF ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES

GreenShift   accounted  for  its  10%  investment  in  Sterling   Planet,   Inc.
("Sterling")  under the cost method.  On September 10, 2008, the Company entered
into Stock Purchase  Agreement with Sterling Planet  Holdings,  Inc.  ("Sterling
Planet").  Under the Stock  Purchase  Agreement,  the Company agreed to sell the
1,459,854  shares of Sterling  Planet which  encompassed  the 10% investment the
Company had in Sterling Planet.

The Company  accounts for its 10% investment in ZeroPoint Clean Tech, Inc. under
the cost method. Application of this method requires the Company to periodically
review these  investments in order to determine  whether to maintain the current
carrying value or to write off some or all of the investments. While the Company
uses some objective  measurements in its review,  the review process  involves a
number of judgments on the part of the  Company's  management.  These  judgments
include  assessments  of  the  likelihood  of  ZeroPoint  to  obtain  additional

                                       9

<PAGE>

financing,  to achieve future milestones,  make sales and to compete effectively
in its  markets.  In making  these  judgments  the Company  must also attempt to
anticipate trends in ZeroPoint's industry as well as in the general economy.

CAPITALIZATION PROCEDURES

The Company capitalizes certain  expenditures  related to development  projects.
Overhead costs allocable to our biofuels  construction projects are capitalized.
For the nine months ended September 30, 2008, the Company capitalized $3,482,852
of overhead costs of which $1,088,451 was from stock based compensation.

GOODWILL AND INTANGIBLE ASSETS

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

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

Effective  January 1, 2008, the Company acquired 100% of the stock of Bollheimer
& Associates,  Inc.  ("BA").  The total  purchase price is $450,000 in cash plus
shares of performance  based Series B Preferred Stock that are convertible  into
500,000  shares of Company  common  stock.  The cash portion of the  acquisition
price  is to be paid in five  installments  (the  first  of  which  was  paid at
closing),  with the last  installment  due on or before January 1, 2011 provided
that BA continues to generate at least  $125,000 in gross sales per year for the
next three years.  The excess of the purchase price over the net assets has been
recorded as Goodwill in the amount of $392,103.

ASSET RETIREMENT OBLIGATIONS

In accordance with SFAS 143,  Accounting for Asset Retirement  Obligations,  the
Company  recognizes  the fair  value of the  liability  for an asset  retirement
obligation,  which is  recorded  in the period in which it is  incurred  and the
corresponding  cost capitalized by increasing the carrying amount of the related
long-lived  asset.  The  liability is accreted to its present value each period,
and the capitalized cost is depreciated or depleted over the useful lives of the
respective  assets.  If the  liability  is settled for an amount  other than the
recorded amount, a gain or loss would be recognized at such time.

NET LOSS PER COMMON SHARE

The  Company  computes  its net  income  or loss  per  common  share  under  the
provisions of SFAS No. 128,  "Earnings  per Share",  whereby basic net income or
loss per  share is  computed  by  dividing  the net loss for the  period  by the
weighted-average number of shares of common stock outstanding during the period.
Dilutive net loss per share  excludes  potential  common shares if the effect is
anti-dilutive.  For the years ended  September  30, 2008 and 2007,  common stock
equivalent  shares  arising from the assumed  exercise of options,  warrants and
debt  conversions  of  convertible  debt  instruments  were  excluded  from  the
computation of diluted net loss per share.  Potential future dilutive securities
include 996,279 outstanding options and warrants, and 37,865,871 shares issuable
for the conversion of convertible  debentures  and  62,800,925  shares  issuable
after the conversion of the Series B Preferred stock under the employee pool.

USE OF ESTIMATES

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management  to make  estimates  and  assumptions  that  affect (i) the  reported
amounts of assets and liabilities,  (ii) the disclosure of contingent assets and
liabilities  at the date of the  financial  statements,  and (iii) the  reported
amounts of revenues and expenses during the reporting  period.  We use estimates
and  assumptions  in accounting  for the following  significant  matters,  among
others:

     >> Allowances for doubtful accounts

     >> Valuation of acquired assets

                                       10

<PAGE>

     >>   Inventory valuation and allowances

     >>   Fair value of derivative instruments and related hedged items

     >>   Useful lives of property and equipment and intangible assets

     >>   Asset retirement obligations

     >>   Long-lived asset impairments, including goodwill

     >>   Contingencies

     >>   Fair value of options and  restricted  stock  granted under our stock-
          based compensation plans

     >>   Tax related items

Actual  results  may  differ  from  previously   estimated  amounts,   and  such
differences may be material to our condensed  consolidated financial statements.
We periodically  review estimates and assumptions,  and the effects of revisions
are  reflected  in the period in which the  revision is made.  The  revisions to
estimates  or  assumptions  during the  periods  presented  in the  accompanying
condensed   consolidated   financial   statements  were  not  considered  to  be
significant

DEFERRED FINANCING CHARGES AND DEBT DISCOUNTS

Deferred  finance costs represent costs paid to third parties in order to obtain
long-term financing and have been reflected as other assets. Costs incurred with
parties  who are  providing  the actual  long-term  financing,  which  generally
include  the  value of  warrants  or the fair  value of an  embedded  derivative
conversion  feature are reflected as a debt discount.  These costs and discounts
are amortized over the life of the related debt. Amortization expense related to
these costs and discounts  were  $3,157,312  and  $3,564,105 for the nine months
ended September 30, 2008 and 2007, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

Certain  of  the  Company's  debt  and  equity   instruments   include  embedded
derivatives that require bifurcation from the host contract under the provisions
of SFAS No. 133, "Accounting for Derivative  Instruments and Hedging Activities"
and EITF 00-19 "Accounting for Derivative Financial  Instruments Indexed to, and
Potentially  Settled in, a Company's Own Stock".  Under the  provisions of these
statements, the Company records the related derivative liabilities at fair value
and records the accounting gain or loss resulting from the change in fair values
at the end of each  reporting  period.  Change  in the  derivatives  instruments
resulted in gain of $319,829 and a gain of $3,405,607  for the nine months ended
September 30, 2008 and 2007, respectively.

STOCK BASED COMPENSATION

The Company  accounts for stock,  stock  options and stock  warrants  issued for
services  and  compensation  by  employees  under  the fair  value  method.  For
non-employees,  the fair market value of the Company's  stock is measured on the
date of stock issuance or the date an  option/warrant  is granted as appropriate
under  EITF  96-18.  The  Company  determined  the  fair  market  value  of  the
warrants/options issued under the Black-Scholes Pricing Model. Effective January
1, 2006, the Company adopted the provisions of SFAS 123(R), SHARE-BASED PAYMENT,
which  establishes  accounting  for equity  instruments  exchanged  for employee
services. Under the provisions of SFAS 123(R),  share-based compensation cost is
measured  at the  grant  date,  based on the fair  value  of the  award,  and is
recognized as an expense over the employee's requisite service period (generally
the vesting period of the equity grant).

5        STOCKHOLDERS' EQUITY

SERIES A PREFERRED STOCK

Each share of Series A Preferred  Stock may be converted by the holder into 0.02
shares of common stock, and the holders have voting  privileges of five votes to
every one common share issuable upon  conversion.  At September 30, 2008,  there
were 0 shares of Series A Preferred Stock issued and  outstanding.  These shares
were originally  issued in 2003 and were converted into 25,085 shares of Company
common stock during the first quarter 2008.


                                       11
<PAGE>

SERIES B PREFERRED STOCK

Each share of Series B  Preferred  Stock may be  converted  by the  holder  into
twenty-five  shares of common stock. The holders would be entitled to cumulative
dividend  rights  equal  to that of  twenty-five  common  shareholders  upon the
declaration of dividends on common stock, and have voting privileges of one vote
to every one common share.  At December 31, 2007,  there were 151,250  shares of
Series B Preferred  Stock issued and  outstanding.  These shares were originally
issued in 2003 and were converted into 6,797,633  shares of Company common stock
during the first  quarter  2008.  At September  30, 2008,  there were  2,512,037
shares of Series B Preferred Stock issued and outstanding.

In connection  with the reduction and  restriction  of the shares  issuable upon
conversion of the Series D Shares held by Viridis Capital,  LLC (see below), the
Company  entered into amended and restated  employment  agreements in March 2008
with all senior  management and technical staff and certain  consultants.  These
agreements  called for the  issuance  of  2,765,333  shares of Company  Series B
Preferred  Stock  (the  "Series B  Shares")  shares  of  Company  common  stock;
provided,  however,  that  the  conversion  of the  Series  B  Shares  shall  be
restricted such that the Series B Shares shall only be convertible  into Company
common shares on a pro-rated basis in conjunction with the Company's realization
of $50,000,000 in annualized earnings before interest,  taxes,  depreciation and
amortization and non-cash and non-recurring items ("EBITDA").

SERIES D PREFERRED STOCK

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

Reduction and Restriction of Founder Shares

Effective  March 20,  2008,  the Company  entered  into an amended and  restated
employment  agreement  with its  chairman  and chief  executive  officer,  Kevin
Kreisler,  and Viridis Capital,  LLC, pursuant to which Viridis agreed to reduce
and restrict the shares of Company  common stock  issuable  upon  conversion  of
Viridis' founder shares - its 800,000 shares of Company Series D Preferred Stock
(the "Series D Shares"). The Series D Certificate of Designations (the "Series D
CD")  currently  provides for the  conversion of the Series D Shares into 64% of
GreenShift's  fully-diluted  common  stock  (which  includes  all common  shares
outstanding plus all common shares  potentially  issuable upon the conversion of
all derivative securities not held by Viridis).

Viridis'  Series D Shares are the  primary  collateral  securing  the  Company's
repayment  obligations  to YA Global  Investments,  LP ("YAGI"),  the  Company's
senior  creditor.  The Company's  agreements with YAGI  accordingly  require the
Company to receive YAGI's consent to the amendment of the Series D CD.

Subject to the receipt of YAGI's consent, the Company,  Viridis and Mr. Kreisler
have  agreed to amend  the  Series D CD as soon as  practicable  to  provide  as
follows:  (a) the  Conversion  Ratio shall be reduced and amended such that each
one share of Series D Preferred Stock shall be convertible into no more than 156
shares of Company  common stock;  and (b), the conversion of the Series D Shares
shall be restricted such that the Series D Shares shall only be convertible into
Company  common  shares  at the new  conversion  ratio on a  pro-rated  basis in
conjunction with the Company's realization of $75,000,000 in EBITDA.

STOCK COMPENSATION

On February 14, 2008,  the Company voted for the creation of an employee pool of
certain  shares  of the  Company's  preferred  stock  to be  issued  to  certain
employees  and  consultants.  The pool  consists of 2,765,333  shares of Company
Series B Shares (see  above),  which shares have a fixed  conversion  ratio of 1
preferred  share to 25 common shares.  Of these shares,  353,296 Series B Shares


                                       12
<PAGE>

automatically  converted upon execution of certain  employment and/or consulting
agreements  into  8,832,391   common  shares.   The  remaining  shares  will  be
convertible  by the  holders  on a  pro-rated  basis  in  conjunction  with  the
Company's realization of $50,000,000 in EBITDA. The preferred shares were valued
using the fair market value of the Company's common stock at grant date based on
the total  potentially  convertible  common shares at grant date. The grant date
fair value was $6,913,333.  Pursuant to the  agreements,  $883,239 was for prior
services of which the Company  capitalized  $582,050 as overhead  related to its
projects  and  recognized  $304,017  in stock  based  compensation.  The Company
recorded  $6,027,266  in  deferred  stock  compensation  related  to the  EBITDA
conditions  mentioned above that will be amortized over the life of the relevant
agreements.  The Company  has  recognized  $370,009 in stock based  compensation
during the nine months ended September 30, 2008.

SERIES E PREFERRED STOCK

On May 15, 2008,  the Company issued 20,000 shares of the Company's new Series E
Preferred  Stock (the "Series E Shares") to the BIG  shareholders  (See Note 22,
Acquisition below),  which shares are convertible at a fixed rate of 1 preferred
share to 1,000 common shares into a total of 20,000,000 shares of Company common
stock;  provided,  however,  that the Series E Shares shall be convertible  into
Company common shares in proportion to the Company's  earnings before  interest,
taxes,  depreciation  and  amortization  and  non-cash and  non-recurring  items
("EBITDA") and will be fully  convertible into 20,000,000 common shares on a pro
rated  basis as the  Company  achieves  $50,000,000  in EBITDA  during  one year
period.  The holders  would be entitled to cumulative  dividend  rights equal to
that of 1,000 common  shareholders  upon the  declaration of dividends on common
stock, and have voting privileges of one vote to every one common share.

6         DISCONTINUED OPERATIONS

TRANSACTIONS RELATING TO GS ENVIROSERVICES

During  January 2008, GS  EnviroServices  redeemed the majority of the Company's
stock  holdings  in GS  EnviroServices  in return for the  reduction  of certain
Company  convertible debts due to YA Global  Investments,  L.P. ("YAGI").  As of
January 25, 2008,  the Company held only a minority  stake in GS  EnviroServices
(6,266,667  shares,  or about  19%) and ceased  consolidating  the  revenue  and
earnings  of GS  EnviroServices  effective  January 1, 2008.  These  shares were
subsequently  liquidated  in June 2008.  Subsequent to this  transaction,  Kevin
Kreisler,  the Company's  chairman and chief executive officer resigned from the
position of chairman of the GS  EnviroServices  board of  directors.  Additional
information on these and other subsequent  events relevant to GS  EnviroServices
are provided here:

Liquidation of Majority Stake in GS EnviroServices

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

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

This letter  agreement was amended  during the second quarter 2008 in connection
with the sale by GS  EnviroServices  of  substantially  all of its  assets  (see
below)  to  provide  for the  payment  of  $1,000,000  to redeem  the  remaining
6,266,667 shares of GS EnviroServices held by the Company. This payment was made
to YAGI in June 2008 in return for the reduction of the  Company's  subsidiary's
(GS AgriFuels Corporation) convertible debt obligations to YAGI by $1,000,000.

7        DEPOSITS

The Company has  security  deposits on property  leases in the amount of $56,134
and deposits on equipment of $219,000 as of the nine months ended  September 30,
2008.


                                       13
<PAGE>


8        RESTRICTED CASH

As of September 30, 2008, the Company had $303,844 in restricted cash. According
to the terms of the Line of Credit with American State Bank & Trust  Company,  a
lockbox is used for the collection of payments on Sustainable  Systems' accounts
receivable. The balance in this account as of September 30, 2008 was $49,223.

In  mid-2005,  a  significant  wind  storm  caused  damage to the plant that the
Company  purchased in October 2005. The Company received  insurance  proceeds of
$82,893  during the year ended  December  31,  2005 due to the  property  losses
incurred. The funds were deposited into the Company's account at First Community
Bank  and are  restricted  for use in  repair  and  replacement  of the  damaged
property.  Restricted  cash at First  Community Bank was $18,174 as of September
30, 2008.

According to the Credit Agreement with YA Global,  GS COES established a lockbox
and related blocked account under the credit line whereby collection of payments
of GS COES'  accounts are remitted to this account.  Accordingly,  the funds are
restricted for use in the  construction  of the corn oil extraction  systems and
for  repayment of its debt  obligation  upon default  demand by the lender or if
certain  conditions  are met  (See  Note  11,  Financing  Arrangements,  below).
Restricted cash allocated for this purpose was $269 as of September 30, 2008.

Biofuel  Industries Group, LLC is obligated to pay for certain road improvements
near its facility. These funds are restricted for use in the improvements to the
roads.  Restricted  cash allocated for this purpose was $236,178 as of September
30, 2008.

9         LINES OF CREDIT

Inventory Line of Credit for Culinary Oil Production Facility

In  October  2007,  Sustainable  Systems,  LLC,  which  owns our  oilseed  crush
facility,  entered  into a Line of Credit with  American  State Bank.  The total
amount  available  under the Line of Credit is  $2,225,000.  The Line shall bear
interest at a rate of 10.25% which is due monthly.  The default rate shall be 3%
over the note rate.  The Line matured on  September  1, 2008.  The funds will be
advanced on a borrowing base certificate as follows: (1) 75% of receivables less
than 60 days;  (2) 55% of  contracted  seed price in the  house;  (3) 75% of oil
price as contracted for in the house;  and (4) 75% of meal inventory  value. The
Line has been  guaranteed by  Sustainable  Systems,  Inc. and GS AgriFuels.  The
balance on the line was $89,000 as of September 30, 2008.  The line was past due
and in default as of  September  30, 2008 but was paid off in full on October 6,
2008.

Revolving Line of Credit for Construction of Corn Oil Extraction Facilities

On January 25, 2008,  GS COES  (Yorkville  I), LLC, a subsidiary of the Company,
closed  on the  terms of a  Credit  Agreement  with YA  Global  Investments,  LP
("YAGI").  The Credit  Agreement will make funds available to GS COES (Yorkville
I) for the purpose of constructing and installing corn oil extraction facilities
based  on  the  Company's  patented  and  patent-pending   corn  oil  extraction
technology.  The current  availability under this line of credit is $10,000,000.
The balance on the line of credit was  $10,000,000  as of  September  30,  2008.
Amounts  advanced by YAGI to GS COES  (Yorkville  I), LLC (the  "Loans") will be
repayable on the following terms:

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

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

     >>   GS COES may prepay the Loans without penalty.

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

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

     >>   Unused  line fees  equal to 5% per year of the  unused  portion of the
          line.

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

                                       14

<PAGE>

Effective  July 1,  2008,  the  Credit  Agreement  was  amended  to  extend  the
commencement  of  payments  to  YAGI  to  October  1,  2008  and to  extend  all
performance timelines to December 31, 2008.

To induce YAGI's entry into the Credit  Agreement and in consideration of YAGI's
execution of the Restructuring Agreement described below, the Company issued six
million shares of its common stock to YAGI valued at $1,080,000.  In conjunction
with the  financing GS COES paid  structuring  fees of  $210,000,  legal fees of
$150,000,  monitoring fees of $175,000, due diligence fees of $35,000 as well as
prepaid  interest  of  $250,000.  The  balance of  deferred  financing  fees was
$325,315 at  September  30, 2008 after  recording  $244,685 in  amortization  of
financing fees for the nine months ended September 30, 2008.

Revolving Line of Credit for Biodiesel Production Facility

On January 16, 2008,  Biofuel  Industries  Group, LLC ("BIG"),  a newly acquired
subsidiary of the Company,  restructured its previous line of credit.  The total
amount  available  under new revolving  line of credit is  $1,750,000.  The Line
shall bear interest at a rate of LIBOR Rate plus two and twenty five  hundredths
percent per annum and matures on January 11,  2009.  The Company  owed  Citizens
Bank $3,043 in payments and the balance on the line was $745,235 as of September
30, 2008.

10       CONVERTIBLE NOTES

On September  4, 2008,  the  Company's  subsidiary,  GS  CleanTech  Corporation,
entered into a series of convertible notes totaling $1,734,579.  The notes shall
bear  interest  at a rate  15% per  annum  and  mature  on  December  31,  2010.
Commencing on February 1, 2009,  payments are due at a rate equal to the greater
of the interest  accrued on the unpaid principal or $100,000 times the principal
amount divided by $3,000,000.  Beginning July 1, 2009, payments are due based on
an eighteen month amortization,  with all principal and accrued interest paid on
or  before  December  31,  2010.  The notes are  convertible  into  shares of GS
CleanTech subsidiary preferred stock (par $0.001) at the closing by GS CleanTech
of a planned  Preferred  Stock Financing at a 15% discount to the final terms of
any such  Preferred  Stock  Financing.  If any portion of the note is prepaid in
cash, GS CleanTech shall pay a 10% redemption premium at the time of redemption.
If the Preferred  Stock  Financing  does not close on or before January 1, 2009,
the interest  and  redemption  premium will  increase to 20%. The balance of the
loans was $1,734,579 as of September 30, 2008.

11       FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>

The  following  is a  summary  of the  Company's  financing  arrangements  as of
September 30, 2008:

Current portion of long term debt:
<S>                                                                                   <C>
Note payable from GS AgriFuels to Stillwater ......................................   $ 2,071,886
Purchase obligations from GS AgriFuels to NextGen sellers .........................     3,979,437
Purchase obligations from GS AgriFuels to Sustainable Systems sellers .............     1,900,000
Asset retirement obligation, current ..............................................           277
Note payable to former employee ...................................................       103,684
Current portion of note payable from GS AgriFuels to Sustainable Systems' creditors       126,275
Current portion of installment debt payable from GS AgriFuels .....................       302,079
Vehicle loans and other short term borrowings .....................................       101,863
Mortgages and other term notes ....................................................       968,035
Current portion of notes payable from GreenShift to Bollheimer ....................       240,000
Current portion of convertible notes payable from GS CleanTech ....................       778,193
Unsecured notes payable from GS AgriFuels to Sheridan Electric due March 2010 .....       245,855
                                                                                      -----------
     Total notes payable and short term borrowings ................................   $10,827,584
                                                                                      ===========
Long-term debt, net of current maturities:
Mortgages and other term notes ....................................................   $ 8,207,412
Notes payable from GreenShift to Bollheimer .......................................        80,000
Notes payable from GS AgriFuels to Montana Dept of Agriculture ....................       124,052
Asset retirement obligation .......................................................       184,196
Convertible notes payable from GS CleanTech .......................................       956,386
Installment debt payable from GS AgriFuels to First Community Bank ................       379,724
Notes payable from GS AgriFuels to Great Northern Development .....................       896,532
                                                                                      -----------
     Total long term debt .........................................................   $10,828,302
                                                                                      ===========
</TABLE>

                                       15

<PAGE>

<TABLE>
<CAPTION>

Current portion of convertible debentures:
<S>                                                                                                <C>
Convertible debentures payable from GS AgriFuels to YAGI, current portion ......................   $  3,000,000
Convertible debenture payable from GS AgriFuels to YAGI issued February 2006 ...................      1,949,631
Convertible debenture payable from GS AgriFuels to YAGI issued June 2006 .......................      5,500,000
Convertible debentures payable from GreenShift to Acutus Capital ...............................        750,000
Convertible debenture payable from GS AgriFuels to Sustainable Systems sellers issued March 2007      3,552,005
Convertible debenture payable from GS AgriFuels to Sustainable Systems sellers issued March 2007      3,552,013
                                                                                                   ------------
     Total current portion of convertible debentures ...........................................   $ 18,303,649
                                                                                                   ============
 Long-term convertible debenture:
Convertible debenture payable from GreenShift to YAGI assumed April 2006 (as amended) ..........   $  2,084,986
Convertible debenture payable from GreenShift to YAGI issued April 2006 (as amended) ...........        336,015
Convertible debenture payable from GreenShift to YAGI issued February 2007 (as amended) ........      1,224,063
Convertible debenture payable from GreenShift to YAGI issued April 2007 (as amended) ...........      2,789,278
Convertible debenture payable from GS AgriFuels to YAGI issued October 2006 (as amended) .......     12,860,000
Less: current portion - convertible debenture payable from GS AgriFuels to YAGI ................     (3,000,000)
Note discounts .................................................................................     (1,207,531)
                                                                                                   ------------
     Total current portion of convertible debentures ...........................................   $ 15,086,810
                                                                                                   ============

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

GreenShift Corporation .........................................................................   $  7,184,341
GS AgriFuels Corporation .......................................................................     27,413,649
                                                                                                   ------------
     Total .....................................................................................   $ 34,597,990
                                                                                                   ============
</TABLE>

The following chart is presented to assist the reader in analyzing the Company's
ability to fulfill its fixed debt service requirements (net of note discounts)
of as of September 30, 2008 and the Company's ability to meet such obligations:

Year                                                          Amount
--------------------------------------------------------------------
2008                                              $       19,995,247
2009                                                      22,625,529
2010                                                       2,676,575
2011                                                       4,569,987
2012 and thereafter                                        6,386,538
                                                  ------------------
Total minimum payments due under current and      $       56,253,876
                                                  ==================
long term obligations

12        NOTES PAYABLE - RELATED PARTIES

On  November  9, 2007,  the  Company  and  Carbonics  Capital  Corporation  (the
Company's former parent) completed a series of transactions that resulted in the
assumption by the Company of all of Carbonics'  intercompany,  affiliate related
party notes payable and receivable, all trade payables, and all receivables, but
not  including  all amounts owed by Carbonics to YA Global  Investments,  LP. In
exchange  the Company  issued to Carbonics a  promissory  note in the  aggregate
amount of $2,948,831 (the "Carbonics  Note").  The principal and interest on the
Carbonics  Note,  which accrues at the per annum rate of 8%, are due and payable
in full on December 31, 2009.  During the nine months ended  September 30, 2008,
the  Carbonics  Note was  reduced  by  $2,000,000  as a result of the  Company's
realization  during 2007 of  impairment  charges  associated  with the Company's
NextGen  Fuel and  Sustainable  Systems  subsidiaries.  The balance  owed on the
Carbonics Note was $391,123 as of the nine months ended September 30, 2008.

As of September 30, 2008,  the Company owed Viridis  Capital,  LLC $418,592 (the
"Viridis  Note").  Kevin Kreisler,  the sole member of Viridis  Capital,  is the
Chairman and Chief Executive Officer of the Company. The note payable to Viridis
shall bear interest at a rate of 10% per year and matures November 8, 2010.


                                       16
<PAGE>




13        DEBT AND PURCHASE OBLIGATIONS

CONVERTIBLE DEBENTURES

Restructuring Agreements with YA Global Investments, LP

Restructuring of Convertible Debentures Previously Issued by GreenShift

In connection  with the GS COES (Yorkville I), LLC financing (see Note 10, Lines
of Credit, above), the Company and YAGI entered into a Restructuring  Agreement.
The  Restructuring  Agreement  provided  for  the  exchange  of all  convertible
debentures  issued  by the  Company  to  YAGI  for  four  amended  and  restated
debentures.  However, the principal balance of one of the debentures was reduced
by $2,000,000 and the accrued interest was reduced by $1,000,000 pursuant to the
stock purchase transaction between the Company and GS EnviroServices,  Inc. (see
Note 7,  Discontinued  Operations).  The net aggregate  principal  amount of the
restated debentures was $6,434,341 as of September 30, 2008.

The terms of the amended and restated debentures are:

     >>   Principal and interest may be converted, at YAGI's option, into shares
          of Company common stock, at a conversion price of $1.25 per share.

     >>   On the first business day of each month, the Company must pay $250,000
          to YAGI.  If the  Company  fails to make the  payment,  YAGI  shall be
          entitled to convert that amount of accrued interest and principal into
          common stock of the Company at a conversion  price equal to the lesser
          of (a) $1.25 or (b) 90% of the lowest  daily volume  weighted  average
          price for the twenty trading days preceding  conversion.  If a monthly
          payment is not made and YAGI does not opt to convert,  then the unpaid
          amount  will  be  added  to the  amount  due on the  first  day of the
          following month.

     >>   All unpaid  interest and principal will be due and payable on December
          31, 2011.

     >>   The debentures bear interest at 10% per annum.

Guarantees by GreenShift, Viridis Capital, LLC and Kevin Kreisler

Payment of all  obligations  with respect to the Loans and the Debentures  noted
above has been guaranteed by the Company,  by its Chairman,  Kevin Kreisler,  by
his holding company, Viridis Capital, LLC, and by all of the subsidiaries of the
Company.  GS COES  (Yorkville  I), LLC and each guarantor has pledged all of its
assets to secure repayment of the Loans and the Debentures.

Consent to Short-Form Merger of GS AgriFuels

In  connection  with the  foregoing  financing  transactions,  the Company,  its
subsidiary,  GS  AgriFuels  Corporation,  and  YAGI  entered  into an  Agreement
relating to the previously  announced plan of the Company to effect a short-form
merger of GS AgriFuels  so as to redeem for cash all shares of GS AgriFuels  not
owned by the Company. YAGI's consent to the short-form merger was required. YAGI
gave its consent in the Agreement,  subject to the following  commitments by the
Company and GS AgriFuels:

     >>   GS AgriFuels was required to amend the Certificate of Designations for
          its Series C Preferred  Stock to provide that it would be  convertible
          at a fixed rate of 32 common  shares for each share of Series C stock,
          and to provide that no Series C shares may be issued while any portion
          of the debt to YAGI is outstanding.

     >>   GS AgriFuels agreed to issue 3,329,630 common shares to YAGI after the
          short-form merger is completed.

     >>   The parties agreed that no more than 36,650,630 shares of GS AgriFuels
          may be issued, on a fully-diluted basis.

     >>   The Company agreed to obtain an independent  appraisal of the value of
          GS AgriFuels.  The debentures issued by GS AgriFuels to YAGI will then
          be modified to provide that the interest and principal are convertible
          by YAGI into GS AgriFuels  common stock at a price equal to the lesser
          of (a) $0.255 or (b) 80% of the appraised value on a per share basis.

     >>   GS AgriFuels agreed to pay to YAGI, on account of its debentures,  10%
          of its cash  receipts  and 50% of free cash flows after  regular  debt
          service.


                                       17
<PAGE>


Completion of GS AgriFuels Corporation Go-Private Transaction

On  February  29,  2008,  a  wholly  owned  subsidiary  of the  Company  filed a
Certificate  of Ownership and Merger  merging the  subsidiary  into GS AgriFuels
pursuant to the  short-form  merger  provisions  of Section 253 of the  Delaware
General  Corporation  Law. As a result of that  filing,  the Company  became the
owner of 100% of the  outstanding  shares of GS AgriFuels.  The  Certificate  of
Ownership and Merger provided that  shareholders of record of GS AgriFuels as of
the close of  business  on  February  29, 2008 would be paid cash at the rate of
$0.50 per share on March 27,  2008,  which  payment was  initiated  on March 27,
2008. The common stock of GS AgriFuels continued to be listed for trading on the
OTC Bulletin Board through March 27, 2008.  Effective March 28, 2008, the common
stock of GS  AgriFuels  was  delisted  from the OTC  Bulletin  Board and  became
non-transferable.

Reduction of Debt Payable to Related Parties

Effective March 31, 2008, Carbonics Capital  Corporation,  an entity that is 80%
owned by Viridis Capital,  LLC, waived  $2,000,000 of notes payable to Carbonics
by the Company.

OTHER CONVERTIBLE DEBENTURES

On February 28, 2007,  the Company  entered into a Stipulation  of Settlement to
settle the lawsuit titled Kerns Manufacturing Corp. v. KBF Pollution Management,
Inc., which was pending in the Supreme Court of the State of New York (County of
Queens, Index No. 19788/03).  Pursuant to the Stipulation,  GreenShift issued to
Kerns (a) a Convertible  Debenture in the principal  amount of $500,000 that was
paid on June 30, 2007 (the "Kerns  $500,000  Debenture")  and (b) a  convertible
debenture in the principal  amount of  $1,000,000  that was due on June 30, 2007
(the "Kerns  $1,000,000  Debenture") and paid in full in February 2008. In April
2007,  the entire  principal  balance on the June 30, 2007 Kerns  debenture  was
converted into 590,268 shares of the common stock of the Company. As of December
31, 2007,  the  principal  balance on the Kerns  debenture  was  $1,000,000.  In
January 2008,  Kerns  consented to an extension of the due date of the debenture
in return for  additional  interest of $100,000.  During the first quarter 2008,
Minority   Interest  Fund  (II),  LLC  ("MIF")  acquired  the  Kerns  $1,000,000
Debenture.  This  debenture  was due to be paid by the  Company in two  payments
$600,000 on January 15, 2008 and $500,000 (plus  residual  interest and costs of
$100,000) on February 15, 2008. MIF purchased the Kerns $1,000,000 Debenture and
paid these sums in cash to Kerns on the requisite due dates.  In February  2008,
MIF  subsequently  fully converted this debenture at the rate of $0.16 per share
into 6,875,000  shares of Company common stock.  The managing member of MIF is a
relative of Kevin Kreisler, the Company's chairman and chief executive officer.

As of September  30, 2008,  the Company owed Candent  Corporation  $757,853 (the
"Candent  Note").  The former  president of Candent is the wife of the Company's
chairman.  All of the issued and outstanding capital stock held by Candent is in
trust for the benefit of its former president. The note payable to Candent shall
bear interest at a rate of 10% per year and matures November 8, 2010. Candent is
entitled to convert the accrued  interest and principal of the Candent Note into
common  stock of the  Company at a  conversion  price equal to the lesser of (a)
$1.25 per share or (b) 90% of the lowest daily volume weighted average price for
the twenty trading days preceding conversion.

NOTES PAYABLE

Stillwater Asset Backed Fund, LP

On October 30, 2006,  NextGen  Acquisition,  Inc., a subsidiary  of GS AgriFuels
that was formed to  facilitate  the  acquisition  of NextGen Fuel Inc.,  sold to
Stillwater  Asset-Based  Fund,  LP a Term  Note in the  principal  amount  of $6
million.   In  conjunction  with  the  financing  NextGen  Acquisition  paid  an
origination fee of $75,000, prepaid interest of $300,000, legal fees of $35,225,
and received net proceeds of $5,589,775.  NextGen Acquisition used $4,879,236 of
the proceeds to acquire NextGen Fuel, Inc., made a loan totaling  $568,958 to GS
Design, Inc. (a subsidiary of the Company),  and repaid the Company $141,580 for
amounts  paid  by  the  Company  in  connection  with  the  NextGen  Fuel,  Inc.
acquisition.  The Term Note accrues interest at a rate of 20% per annum. Monthly
payments of principal and interest were due beginning  February 1, 2007,  with a
monthly principal amount of at least $300,000 and additional  principal payments
made as a percentage of cash  receipts of NextGen  Fuel,  Inc. On July 31, 2007,
NextGen Acquisition,  Inc. entered into Amendment 1 to the Credit Agreement with

                                       18
<PAGE>

Stillwater  Asset-Based  Fund, LP. According the Amendment,  NextGen received an
additional  principal  amount of $555,600.  In conjunction with the refinancing,
NextGen  Acquisition  paid a financing fee of $72,880 and legal fees of $24,245,
$13,125  of which was paid via  $17,500  shares of GS  AgriFuels  common  stock.
According  to the amended  terms,  all amounts of  principal  and  interest  not
previously  satisfied will be due on September 30, 2008.  Monthly  payments have
been  adjusted as follows:  interest  only August 2007  payment;  September  and
October  2007  payments  would be an amount  equal to the  applicable  Biodiesel
Systems Net  Revenue  Repayment  Percentage  of 10% (the  Biodiesel  Systems Net
Revenue is a defined term in the relevant  agreements and it is defined as gross
cash  receipts  received  during the  preceding  month);  November  2007 through
January  2008  payments  would  be an  amount  equal  to the  $200,000  plus the
applicable  Biodiesel  Systems Net Revenue Repayment  Percentage;  and, payments
from  February 2008 until the Maturity Date would be an amount equal to $300,000
plus the applicable  Biodiesel Systems Net Revenue Repayment Percentage with all
outstanding  obligations  due  and  payable  on the  final  Maturity  Date.  The
obligations of NextGen Acquisition Inc. under the Term Note have been guaranteed
by the  Company,  GS  AgriFuels,  NextGen  Fuel,  Inc.,  and  by  the  following
affiliates:  Carbonics Capital Corporation,  GreenShift  Corporation,  EcoSystem
Corporation,  GS Design,  Inc., GS Rentals,  LLC and Viridis  Capital,  LLC (the
"Guarantors").  Each of the  Guarantors  has  pledged  its  assets to secure its
guaranty.  For the nine months September 30, 2008,  interest expense of $325,203
for  this  obligation  was  incurred.  The  principal  balance  of this  note at
September 30, 2008 was $2,071,886.

Sustainable Systems

Installment Debt Refinancing

In October 2005,  prior to becoming a subsidiary  of GS  AgriFuels,  Sustainable
Systems and  Sheridan  Electric  Co-op signed an  Installment  Sale and Purchase
Agreement on September 30, 2005 (the "IPSA").  Under the agreement,  the Company
acquired $1,913,185 of property,  plant and equipment by application of $192,286
in deposits paid and the  assumption of the repayment  obligations  due to First
Community Bank from Sheridan in the amount of $1,720,899 (the "FCB Note"), which
amount was to have been fully paid off or refinanced by  Sustainable  by the end
of the primary  term  (through  October  31,  2006 or the end of any  additional
option  periods) to remove Sheridan as the primary obligor of the amounts due to
First Community Bank under the FCB Note (the "IPSA Obligation").  To ensure that
Sustainable either pays off or refinances the FCB Note,  Sheridan shall continue
to hold title to the premises and the real property  upon which the  Sustainable
facility  is  located.  From 2006 to  present,  and under the terms of the IPSA,
Sustainable  exercised  several letter agreements to extend the refinance period
to June 1, 2008.  Under the terms of the extension  agreement,  the Company paid
$300,000 as of the March 31, 2008 extension due date. This amount was applied to
principal  along with the usual monthly  payment of the FCB Note.  All the terms
and conditions  under the IPSA remain  applicable  under the extended  refinance
periods. The FCB Note is secured by an interest in all the assets of Sustainable
including the accounts receivable.  The note accrues interest at a variable rate
of interest,  currently 6.50% per annum.  Monthly  payments consist of principal
and interest and a final payment will be due on September 25, 2013. For the nine
months  ended  September  30,  2008,  interest  expense  of  $51,648  for  these
obligations was incurred.  As of September 30, 2008, the total principal balance
on FCB Note was $681,806 but the IPSA  Obligation  had not been fulfilled - that
is, while Sustainable's payments to First Community Bank under the FCB Note were
current,  Sustainable  has not paid  off or  refinanced  the FCB Note to  remove
Sheridan as the  primary  obligor of the FCB Note.  Sheridan  issued a notice to
this  effect and has  commenced  efforts to enforce  its rights  under the IPSA.
Sustainable  has begun to pay First  Community  Bank off at an increased rate as
provided  for by the  terms  of the  IPSA.  The  Company's  plan  to  accelerate
Sustainable's   compliance  with  the  IPSA  Obligation  is  to  facilitate  the
refinancing  of the FCB Note  coincident  with the  completion  of the expansion
financing for the Sustainable facility.

Term Notes

Sustainable   Systems  has  various  notes  payable  with  two  other   lenders.
Sustainable  has signed  three  notes  payable  with the Montana  Department  of
Agriculture   totaling  $124,052.   These  notes  were  issued  by  the  Montana
Agriculture  Development Council under Return On Investment Agreements,  numbers
0250714,  0350764,  and 0450785.  A return on investment (ROI) pursuant to these
agreements is an award of money with the  expectation  that all or a part of the
money will be repaid after a deferral period.  No payments are required,  and no
interest is accrued during the initial time period.  After the deferral  period,
the award recipient  repays the investment plus interest over a remaining period
(up to seven  years).  As of  December  31,  2005,  all three  notes were in the
deferral  period with expected  deferral of interest and payments until February
2006. The deferral periods were subsequently extended and the notes were further
modified  with  regard to interest  and  subordination  (see Note 10).  ROI note
number  0450785 is  secured by a lien on  specific  equipment  including  pumps,
blending vessels,  storage bins and a solvent recovery system.  All notes accrue
interest at the rate of 3.2% per annum with  payments of principal  and interest
beginning  March 6,  2011.  The notes are  secured  by an  interest  in  various
equipment  including eleven pumps and a solvent  recovery  system.  For the nine
months  ended  September  30,  2008,   interest  expense  of  $3,031  for  these
obligations was incurred and accrued.

                                       20
<PAGE>

Sustainable has signed four notes with Great Northern Development.  Three of the
notes totaling  $402,127 at September 30, 2008 accrue interest at the rate of 6%
per annum.  The  payment  terms for the notes are as  follows:  the  $10,504 and
$120,121 notes are to be paid off with 180 monthly payments  beginning  December
15, 2005 with a maturity  date of November 15, 2020 and the $271,502  note is to
be paid off with 120 monthly  payments  beginning March 15, 2006 with a maturity
date of January 15, 2016; the monthly payments on this note are $1,800 per month
from April 2007 to March 2008 and then  $3,300  thereafter.  The fourth note for
$620,680 (as of September 30, 2008) accrues interest at the rate of 5% per annum
with  payments  of  principal  only  through  November  2007 and  principal  and
interests  payments  until the maturity  date of November 15, 2010;  the monthly
payments on this note are $7,500  during 2007,  $10,000  during 2008 and $17,302
thereafter.  For the nine months ended September 30, 2008,  interest  expense of
$42,734 for these obligations was incurred. The principal balance of these notes
at September 30, 2008 was $1,022,807.

On June 4, 2007,  Sustainable issued an unsecured  promissory note in the amount
of $250,000 with Sheridan  Electric Co-Op,  Inc. in exchange for the same amount
of  pre-existing  accounts  payable to the holder  (the  "Sheridan  Note").  The
Sheridan Note accrues interest at a rate of 6% per annum.  Monthly payments were
due in the amount of $1,500 starting June 1, 2007 and shall continue until March
1, 2010 (the  "Maturity  Date").  Each  payment  shall  first be  applied to the
accrued interest and then to the principal  balance.  For the nine months ending
September  30,  2008,  interest  expense  of $8,426  for these  obligations  was
incurred. The principal balance of this note at September 30, 2008 was $245,854.
Despite the fact that Sustainable was current in all of its payment  obligations
under the Sheridan  Note as of September 30, 2008,  Sheridan  issued a notice of
default and filed suit in an attempt to accelerate payment of the Sheridan Note.
The Company  intends to facilitate  Sustainable's  ongoing  compliance  with the
terms of the  Sheridan  Note and may consider  accelerating  full payment of the
Sheridan Note prior to the stated  Maturity Date  coincident with the completion
of the expansion financing for the Sustainable facility.

Biofuel Industries Group, LLC

Citizens Bank

On September 30, 2008, Biofuels Industries Group, LLC ("BIG") issued a permanent
note (the  "Permanent  Note") in the amount of $7,200,000  with Citizens Bank in
exchange for a  construction  note payable that was executed on January 11, 2007
and was due on September 30, 2008. The Permanent Note accrues interest at a rate
equal to LIBOR plus two and twenty five  hundredths  percent per annum.  Monthly
payments  are due in the  amount of  $60,000  starting  July 31,  2008 and shall
continue until September 30, 2013. The Company owed Citizens Bank  approximately
$114,644 as of September 30, 2008.  Each payment shall first be applied  against
costs and  expenses  required  to be paid under the  Permanent  Note then to the
principal  balance.  For the nine months  ending  September  30, 2008,  interest
expense of $280,672 for these obligations was incurred. The principal balance of
the Permanent Note at September 30, 2008 was $7,080,000.

On September 30, 2008, BIG issued a replacement promissory note in the amount of
$1,688,700  with Citizens Bank (the  "Replacement  Note") in exchange for a note
payable on January 11, 2009.  The  Replacement  Note accrues  interest at a rate
equal to the Applicable  LIBOR Rate plus two and twenty five hundredths  percent
per annum.  Monthly  payments of accrued interest and principal are due starting
September 1, 2008 and shall continue  until August 31, 2015.  Each payment shall
first be  applied  against  costs and  expenses  required  to be paid  under the
Replacement  Note  then  against  accrued  interest  and  then to the  principal
balance.  For the nine months  ending  September 30, 2008,  interest  expense of
$41,863  for these  obligations  was  incurred.  The  principal  balance  of the
Replacement Note at September 30, 2008 was $1,671,250.

PURCHASE OBLIGATIONS

NextGen Selling Shareholders

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


                                       20
<PAGE>

capital  adjustments and provided that there are no claims for  indemnification.
To the extent due, and prior to accounting  for any claims for  indemnification,
the balance of the estimated holdback at September 30, 2008 was $3,979,437.

Sustainable Selling Shareholders

On March 26, 2007, GS AgriFuels  purchased the remaining 85% of the  outstanding
capital  stock  of  Sustainable  Systems,  Inc.  (GS  AgriFuels  had  previously
purchased  15% of the capital  stock of  Sustainable).  The  purchase  price was
approximately $12.6 million of which $100,000 was payable at closing, a note was
issued for  approximately  $1.9 million and two $3.55  million  debentures  were
issued to the selling shareholders  totaling  $9,004,018.  The $1.9 million note
was to be due upon the completion and  commissioning  of  Sustainable's  current
plant expansion. The terms of the relevant acquisition agreements are in default
and the Company intends to restructure the acquisition  agreements  given recent
events and the impact of the IPSA Obligation.  The payment terms of the relevant
acquisition  agreements  are expected to be  restructured  in the fourth quarter
2008 to provide for  payment a form of  subsidiary  stock that will  service any
amounts due exclusively out of the net cash flows of the Company's oilseed crush
facility  after its expansion has been  completed.  During the fourth quarter of
2008, GS AgriFuels entered into a restructuring  agreement with a shareholder of
Sustainable (see Note 22, Subsequent Events, below).

Bollheimer & Associates

As a result of its  acquisition of 100% of the stock of Bollheimer & Associates,
Inc., the Company  entered into a purchase  obligation of $320,000.  This amount
does not bear interest and is payable in the amount of $80,000 on or before July
1, October, 2008 and January 1, 2009 with the remaining $80,000 due on or before
January 1, 2011 subject to certain sales based hurdles.

14        ASSET RETIREMENT OBLIGATION


Pursuant to SFAS 143, Accounting for Asset Retirement  Obligations,  the Company
has recognized the fair value of the asset retirement obligation for the removal
of its COES systems.  The present value of the estimated asset  retirement costs
has been  capitalized as part of the carrying  amount of the related  long-lived
assets. The liability has been accreted to its present value as of September 30,
2008,  and  the  capitalized  cost  approximated  $9184,000.   The  Company  has
recognized  $334 due to accretion from the  acquisition  dates.  The Company has
determined a range of abandonment  dates between December 2018 and December 2019
and a total salvage value of $250,000 per system.  The following  represents the
amount of the retirement  obligation at the beginning and the nine months ending
September 30, 2008:

                                                                       2008
     Beginning balance at January 1                           $          --
     Liabilities incurred during the period                         183,861
     Liabilities settled during the period                               --
     Accretion of interest                                              334
                                                              -------------
     Ending balance at September 30, 2008                     $     184,195

15        EMBEDDED DERIVATIVES

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

During the nine months ended September 30, 2008 and 2007, the change in the fair
value of the  derivative  resulted in a non-cash  gain of  $319,829  and loss of
$3,405,607,  respectively.  Amortization of the debt discount totaled $1,750,873
for the nine months ended September 30, 2008. As of September 30, 2008, the fair
value of the derivative liabilities was $0 since the derivatives were eliminated
due to the  restructuring  of the YAGI debt resulted in the embedded  conversion
option no longer meeting the  bifurcation  criteria of SFAS 133. The derivatives
were marked to fair market value as of the date of the restructure,  January 11,
2008.  The  change in value was  recorded  as income  and the fair  value of the
derivative was reclassified against additional paid in capital.


                                       21
<PAGE>


16       COMMITMENTS AND CONTINGENCIES

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

The Company's  Sustainable  Systems  subsidiary is party to the matter  entitled
Sheridan Electric Co-Op.,  Inc., v. Sustainable  Systems,  LLC, which action was
filed  in the  District  Court  of  Montana.  The  verified  complaint  seeks to
accelerate  repayment  of an  unsecured  note due March 1,  2010 (the  "Sheridan
Note"),  as well as attorney's fees and costs.  All payments due on the Sheridan
Note were current at the time Sheridan filed this action.  Sustainable otherwise
has been and remains in compliance with the terms of Sheridan Note.  Sustainable
has responded to the verified complaint and denies any liability.

17       GUARANTY AGREEMENT

On October 31,  2006,  the Company  guaranteed  the 14 month Term Note issued by
NextGen   Acquisition,   Inc.,  a  wholly  owned   subsidiary  of  GS  AgriFuels
Corporation,  in  the  principal  amount  of  $6,000,000  issued  to  Stillwater
Asset-Backed Fund, LP (see Note 13, Debt and Purchase  Obligations,  above). The
balance due to Stillwater at September 30, 2008 was 2,071,886.

Both Viridis Capital, LLC ("Viridis"),  the majority shareholder of the Company,
and its sole member,  Kevin Kreisler,  the Company's  chairman,  have guaranteed
nearly all of the Company's senior debt (in the outstanding  amount of about $45
million),  and Viridis has  pledged  all of its assets,  including  its share of
Company Series D Preferred Stock (see Note 6, Shareholders Equity, above), to YA
Global Investments,  LP ("YAGI"),  to secure the repayment by the Company of its
obligations to YAGI.

18       SEGMENT INFORMATION

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

The Company's  operations during the fiscal quarter ended September 30, 2008 are
classified into three reportable business segments:  Biofuel Production & Sales,
Culinary Oil Production & Sales, and Equipment & Technology Sales. Each of these
segments is organized  based upon the nature of products  and services  offered.
The Company's  remaining  operations are  aggregated  and  classified  herein as
Corporate.


                                       22
<PAGE>


<TABLE>
<CAPTION>

Summarized financial information about each segment is provided below:

Nine months                                      Equipment &        Culinary Oil            Biofuel
Ended 9/30/08                   Corporate   Technology Sales  Production & Sales Production & Sales          Total
------------------------------------------------------------------------------------------------------------------

<S>                        <C>            <C>                 <C>                 <C>                <C>
Total revenue              $          --  $       10,065,613  $        7,742,630  $       6,318,419  $  24,126,661
Cost of revenue                   88,968           5,097,031           6,950,383          7,058,033     19,194,414
                           -------------  ------------------  ------------------  -----------------  -------------
   Gross profit                 (88,968)           4,968,582             792,248          (739,614)      4,932,248

Operating expenses             1,718,446           2,260,748             945,842          2,012,225      6,937,261
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss)
     from operations         (1,807,414)           2,707,834           (153,594)        (2,751,839)   (2,005,013)

Other income (expense)       (6,055,928)         (2,754,245)           (137,402)        (1,910,350)   (10,857,925)
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss)
    before taxes             (7,863,342)         (46,411)            (290,996)          (4,662,189)   (12,862,938)

Minority interest                     --               8,908                  --                 --          8,908
                           -------------  ------------------  ------------------  -----------------  -------------
Taxes                            (4,094)             (1,944)                  --            (2,192)        (8,229)
                           -------------  ------------------  ------------------  -----------------  -------------
Net loss from
continuing operations      $ (7,867,436)  $         (39,447)  $        (290,996)  $     (4,664,381)  $(12,862,259)
                           -------------  ------------------  ------------------  -----------------  -------------
Gain (loss) from,
discontinued operations               --                  --                  --                 --             --

Preferred dividends                   --                  --                  --                 --             --

Net loss                   $ (7,867,436)  $         (39,447)  $        (290,996)  $     (4,664,381)  $(12,862,259)
                           =============  ==================  ==================  =================  =============

Nine months                                      Equipment &        Culinary Oil            Biofuel
Ended 9/30/07                   Corporate   Technology Sales  Production & Sales Production & Sales          Total
------------------------------------------------------------------------------------------------------------------

Total revenue              $          --  $        9,238,804        $  4,206,338       $  501,094     $ 13,946,236
Cost of revenue                       --           7,179,694           4,125,491            434,282     11,739,467
                           -------------  ------------------  ------------------  -----------------  -------------
   Gross profit                       --           2,059,110              80,847             66,812      2,206,769

Operating expenses               176,005           5,245,974             759,138          1,377,959      7,559,076
                           -------------  ------------------  ------------------  -----------------  -------------
 Income (loss)
  from operations              (176,005)         (3,186,864)           (678,291)        (1,311,147)    (5,352,307)

Other income (expense)         (558,038)         (3,556,337)             358,663           (72,719)    (3,828,431)
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss)
    before taxes               (734,043)         (6,743,201)           (319,628)        (1,383,867)    (9,180,738)

Minority interest                     --               8,908                  --                 --          8,908
                           -------------  ------------------  ------------------  -----------------  -------------
Taxes                            (1,079)           (253,331)                  --                 --      (254,410)
                           -------------  ------------------  ------------------  -----------------  -------------
Net loss from
continuing operations      $   (735,122)  $      (6,987,623)  $        (319,628)  $     (1,383,867)  $ (9,426,239)
                           -------------  ------------------  ------------------  -----------------  -------------
Gain (loss) from,
discontinued operations        2,781,869                  --                  --                 --      2,781,869

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

Net loss                   $   1,894,872  $      (6,987,623)  $        (319,628)  $     (1,383,867)  $ (6,796,246)
                           =============  ==================  ==================  =================  =============
</TABLE>




                                       23
<PAGE>


<TABLE>
<CAPTION>


Three Months                                     Equipment &        Culinary Oil            Biofuel
Ended 9/30/08                   Corporate   Technology Sales  Production & Sales Production & Sales          Total
------------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>                 <C>                 <C>                <C>
Total revenue              $          --  $        2,313,312  $        1,559,187  $       2,216,255  $   6,088,754
Cost of revenue                   45,308           1,729,355           1,348,654          3,224,318      6,347,635
                           -------------  ------------------  ------------------  -----------------  -------------
   Gross profit                 (45,308)             583,957             210,533        (1,008,063)      (258,881)

Operating expenses               456.931             705,411             363,528          1,034,578      2,560,448
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss)
    from operations            (502,239)           (121,454)           (152,995)        (2,042,641)    (2,819,329)

Other income (expense)       (1,537,846)           (806,710)              64,232        (1,053,236)    (3,333,560)
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss)
    before taxes             (2,040,085)           (928,164)            (88,763)        (3,095,877)    (6,152,889)

Minority interest                     --               2,489                  --                 --          2,489
                           -------------  ------------------  ------------------  -----------------  -------------
Taxes                            (4,094)             (1,943)                  --            (2,192)        (8,229)
                           -------------  ------------------  ------------------  -----------------  -------------
Net loss from
continuing operations      $ (2,044,179)  $        (927,618)  $         (88,763)  $     (3,098,069)  $ (6,158,629)
                           -------------  ------------------  ------------------  -----------------  -------------
Gain (loss) from,
discontinued operations               --                  --                  --                 --             --

Preferred dividends                   --                  --                  --                 --             --

Net loss                   $ (2,044,179)  $        (927,618)  $         (88,763)  $     (3,098,069)  $ (6,158,629)
                           =============  ==================  ==================  =================  =============

Three Months                                     Equipment &        Culinary Oil            Biofuel
Ended 9/30/07                   Corporate   Technology Sales  Production & Sales Production & Sales          Total
------------------------------------------------------------------------------------------------------------------

Total revenue              $          --  $        8,527,219        $  1,925,249        $  363,156    $ 10,815,624
Cost of revenue                       --           6,998,138           1,816,612            325,430      9,140,180
                           -------------  ------------------  ------------------  -----------------  -------------
   Gross profit                       --           1,529,081             108,637             37,726      1,675,444

Operating expenses                40,196             557,117             292,363            132,100      1,545,174
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss)
    from operations             (40,196)            971,964            (183,726)           (94,374)        130,269

Other income (expense)         (332,040)         (1,727,683)              49,673           (80,668)    (1,567,319)
                           -------------  ------------------  ------------------  -----------------  -------------
  Income (loss)
   before taxes                (372,236)           (755,719)           (134,053)          (175,043)    (1,437,050)
Minority interest                     --               8,908                  --                 --          8,908
                           -------------  ------------------  ------------------  -----------------  -------------
Taxes                            (1,079)           (253,331)                  --                 --      (254,410)
                           -------------  ------------------  ------------------  -----------------  -------------
Net loss from
continuing operations      $   (373,315)  $      (1,000,141)  $        (134,053)  $       (175,043)  $ (1,682,551)
                           -------------  ------------------  ------------------  -----------------  -------------
Gain (loss) from,
discontinued operations          120,772                  --                  --                 --        120,772

Preferred dividends                   --                  --                  --                 --             --

Net loss                   $   (252,543)  $      (1,000,141)  $        (134,053)  $       (175,043)  $ (1,561,780)
                           =============  ==================  ==================  =================  =============
</TABLE>

19       MINORITY INTEREST

In 2003, the Company's  inactive  subsidiary  American  Metals  Recovery,  Corp.
("AMRC") a discontinued  entity issued the Subsidiary  Preferred Equity,  with a
par value of  $0.001.  Subsidiary  Preferred  Equity  holders  were to receive a
quarterly dividend ranging from 3% to 5% of AMRC's annualized  revenue,  limited
to 30% of AMRC's operating income.  AMRC failed to generate  operating income in
2006 and 2005;  therefore no dividends  were payable in December  2006 and 2005.
The shares could not be liquidated or transferred. In December 2004, $100,000 of
the Minority  Interest was converted into 10,000 shares of the Company's  common
stock and a five-year  option to purchase  5,000 shares of the Company's  common
stock at $5.00 per share. In February 2006, $50,000 of the Minority Interest was
converted  into 33,333 shares of the Company's  common stock at $1.50 per share.
In August 2007, $72,000 of the Minority Interest debt was converted into 200,000
shares of common stock.

In accordance  with the  completion of the GS AgriFuels  Go-Private  Transaction
(see  Note  13,  Convertible  Debentures),  the  Company  recorded  the  related
obligation to the former minority  shareholders of GS AgriFuels of $1,265,762 at
December 31, 2007.  During the nine months ended September 30, 2008, the Company
made payments against this obligation of $833,061, leaving a balance of $432,701
that the Company expects to either cancel or satisfy during 2008.


                                       24
<PAGE>




20       SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
The following is a summary of supplemental disclosures of cash flow information:
<CAPTION>
                                                                                       2008                2007
                                                                                ------------      --------------
     Cash paid during the year for the following:
<S>                                                                             <C>               <C>
       Interest                                                                 $  1,345,277      $      187,686
       Income taxes                                                                   34,256              12,660
                                                                                ------------      --------------
         Total                                                                  $  2,086,924      $       59,750
                                                                                ============      ==============

     Acquisition of Bollheimer & Associates with debt                                320,000                  --
     Reduction of convertible debentures from disposal of
       investment in GS EnviroServices                                             2,000,000                  --
     Reduction of related party debt and accrued interest from forgiveness         2,827,330                  --
     Acquisition of Biofuel Industries Group, LLC for redeemable
       preferred equity in subsidiary                                              9,000,000                  --
     Common shares issued for deferred financing fees                              1,080,000                  --
     Common shares issued in settlement of debenture                               1,100,000                  --
     Debentures converted into common stock                                          496,558                  --
     Conversion of accrued interest into convertible debt                            891,432                  --
     Reclassification of derivative liability into equity                          6,385,002                  --
     Recognition of deferred compensation from issuance of preferred stock         6,910,568                  --
     Increase in construction in progress through
       amortization of deferred compensation                                       1,085,146                  --
     Issuance of debt and equity for net assets due to Sustainable acquisition            --          12,657,093
     Contribution of capital from debt and accrued interest due to affiliate              --           2,335,856
     Acquisition of equipment and/or vehicles with long-term debt                         --             231,797
     Issuance of Series C Preferred Stock upon conversion                                 --                 100
</TABLE>

21       RELATED PARTY TRANSACTIONS

In January  2008,  the Company  issued  25,085 and  6,797,633  shares of Company
common stock to relatives of Kevin Kreisler upon conversion of 1,254,244  shares
of Company  Series A  Preferred  Stock and  151,250  shares of Company  Series B
Preferred Stock, respectively, which Series A and Series B preferred shares were
originally issued in 2003 in connection with financial  accommodations  provided
to the Company by the holders.

On September 10, 2008, the Company  entered into Stock  Purchase  Agreement with
Sterling Planet Holdings,  Inc.  ("Sterling  Planet").  Under the Stock Purchase
Agreement,  the Company agreed to sell the 1,459,854  shares of Sterling  Planet
which  encompassed  the 10% investment the Company had in Sterling  Planet.  The
total purchase price for the stock was $1,000,000. The Company had accounted for
its investment in Sterling Planet under the cost method.  Under this method, the
value of the stock was  valued  on its books at  $1,685,333.  As a result of the
sale, the Company recognized a $685,333 loss on the sale of the stock.

22       ACQUISITION

The Company follows SFAS No. 141, "Business  Combinations." Under this standard,
business  acquisitions  are accounted for under the purchase method and goodwill
represents the excess of the purchase price of a business  acquisition  over the
fair market  value of the net assets  acquired at the date of  acquisition.  The
statement also requires the recognition of acquired intangible assets apart from
goodwill if it arises from contractual and other legal rights.  If an intangible
does not arise from contractual or other legal rights, it shall be recognized as
an asset apart from goodwill only if it is capable of being separated or divided
from the acquired entity and sold, transferred, licensed, rented, or exchanged.

ACQUISITION OF BOLLHEIMER & ASSOCIATES, INC.

Effective  January 1, 2008, the Company acquired 100% of the stock of Bollheimer
&  Associates,  Inc.  ("BA")  in return  for  $450,000  in cash  plus  shares of
performance  based Series B Preferred  Stock that are  convertible  into 500,000
shares of Company common stock. The cash portion of the acquisition  price is to
be paid in five installments (the first of which was paid at closing),  with the
last  installment due on or before January 1, 2011 provided that BA continues to
generate at least $125,000 in gross sales per year for the next three years. The
shares of  performance  based  Series B  Preferred  Stock  issued at closing are
convertible  on a pro rated basis into 500,000 shares of Company common stock in
conjunction  with the Company's  realization of  $50,000,000  in EBITDA.  Of the
$450,000 total, $400,000 was allocated to the purchase; goodwill of $392,102 was
recorded  which  represents  the excess of the purchase  price of the net assets
acquired.  Phil  Bollheimer,  the  president of BA,  entered into an  employment
agreement with the Company in connection with this transaction.

                                       25
<PAGE>


ACQUISITION OF BIOFUEL INDUSTRIES GROUP, LLC

Effective May 15, 2008,  the Company and Biofuel  Industries  Group,  LLC (d/b/a
NextDiesel(TM)) ("BIG") entered into an Exchange Agreement pursuant to which the
Company exchanged 20,000,000 common shares and 20,000 preferred shares in return
for 100% of the equity of BIG subject to the redemption by BIG of BIG's "Class A
Membership Units" for a total of $9 million preferred equity interest with a 12%
coupon  commencing  January  30,  2009 at a rate  equal to 30% of BIG's net cash
flows (after all operating  costs and regular debt payments have been paid) (the
"Class A Redemption").  The $9 million  preferred equity interest is mandatorily
redeemable if it is not paid on or before the twentieth  anniversary  of closing
and is classified  as a liability  under the  provisions of SFAS No. 150.  Other
terms of the Exchange Agreement are summarized here:

     >>   Vested  Company  Shares.  The  issuance  by the  Company  to  the  BIG
          shareholders  of  20,000,000  shares of Company  common  stock.  These
          shares were  valued at  $2,085,000  based on the  average  fair market
          value of the  Company's  common  stock for the three  days  before and
          after the acquisition date.

     >>   Performance-based  Company Shares.  The issuance by the Company to the
          BIG  shareholders  of 20,000  shares  of the  Company's  new  Series E
          Preferred Stock (the "Series E Shares"),  which shares are convertible
          at a fixed rate of 1  preferred  share to 1,000  common  shares into a
          total of 20,000,000 shares of Company common stock; provided, however,
          that the Series E Shares  shall be  convertible  into  Company  common
          shares in proportion to the Company's earnings before interest, taxes,
          depreciation  and amortization  and non-cash and  non-recurring  items
          ("EBITDA") and will be fully convertible into 20,000,000 common shares
          on a pro rated basis as the  Company  achieves  $50,000,000  in EBITDA
          during one year period.

     >>   Performance-based  Cash Hurdle.  The payment by BIG to BIG's  founding
          shareholders of $1,000,000 in cash payable upon the realization by the
          Company of $10,000,000 in annualized EBITDA.

     >>   Guaranty of BIG's Founding  Shareholders.  BIG's founding shareholders
          have agreed to keep their personal guaranties of BIG's senior loans in
          place (the "BIG  Loans")  in return for a guaranty  fee equal to 5% of
          the balance due under the BIG Loans (the "Guaranty  Fee"). The Company
          has  agreed  to use its best  efforts  to  refinance  the BIG Loans to
          remove  these  guaranties  on or before the first  anniversary  of the
          effective date of the acquisition. If this condition is not satisfied,
          then the  Guaranty Fee shall  increase to 7% and BIG shall  accelerate
          and  prepay  the  principal  amount  of the BIG  Loans  at the rate of
          $1,000,000  plus 25% of BIG's net cash  flows  until paid in full (the
          "Guaranty  Payments").  $58,561 has been accrued as of  September  30,
          2008.

     >>   Guaranty of the Company and its  Founding  Shareholder.  The  Company,
          Viridis  Capital,  LLC and Kevin Kreisler (the  "GreenShift  Parties")
          entered into a Contribution Agreement with NextFuels, LLC, the holding
          company of the founding shareholders of BIG, relative to the agreement
          of the GreenShift Parties to guaranty the guaranty of the BIG Loans by
          BIG's founding shareholders. The obligations of the GreenShift Parties
          under the Contribution  Agreement are subordinated to the interests of
          YA Global Investments, LP ("YAGI"), the Company's senior lender.

     >>   Potential  Rescission.  The  Company's  equity  in BIG is  subject  to
          rescission  in the  event  that:  (a) the  BIG  Loans  are not  timely
          serviced and kept in good standing,  (b) the Guaranty Payments, to the
          extent due,  are not timely  made,  and (c) if the Class A  Redemption
          payments  are not made to the  extent  that  they are due.  This  term
          expires  automatically upon the full payment and/or refinancing of the
          BIG Loans  without the guaranty of the BIG founding  shareholders  and
          the full payment of the Class A Redemption.

     >>   Consulting  Agreement.  BIG's chief  executive  officer and one of its
          founding   shareholders,   Terry  Nosan,  entered  into  a  consulting
          agreement  with BIG at closing  pursuant  to Mr.  Nosan  will  provide
          management  services  to BIG  and the  Company  for a  monthly  fee of
          $12,500.  $18,750 has been accrued as of September 30, 2008. Mr. Nosan
          was also appointed to the Company's board of directors.

     >>   Creditor Consent. BIG's agreements with its senior creditor, Citizens'
          Bank,  require Citizens' Bank to provide its written consent to change
          of control transactions.  While Citizens' Bank has expressed,  through
          its loan officer,  its  willingness to issue  consent,  formal written
          consent  has not yet been  issued.  Citizens'  Bank  has the  right to
          declare default under its credit agreements with BIG in the absence of
          its formal written consent.  Based on recent discussions,  the Company


                                       26
<PAGE>

          believes that formal writtenconsent will be provided during the fourth
          quarter  2008.  If  Citizens'  Bank does not issue its formal  written
          consent as contemplated and instead issues a written  objection to the
          change of control,  then the  Company  may deposit its BIG  membership
          units into an escrow account pending either issuance by Citizens' Bank
          of formal  written  consent or the  refinancing  of the amounts due to
          Citizens' Bank.

BIG owns and operates a biodiesel production facility in Adrian,  Michigan based
on the  Company's  patent-pending  biodiesel  technology.  This  facility  has a
current  production  capacity of 10 million gallons of biodiesel per year and it
already includes much of the equipment  necessary to rapidly scale to 20 million
gallons per year. In addition,  this facility has been specifically  designed to
refine the Company's extracted corn oil supplies into biodiesel.

The Company is in the process of  obtaining a  third-party  valuation of certain
assets and liabilities,  including acquired intangible assets and finalizing its
own internal assessment of the purchase price allocation;  thus, the preliminary
allocation of purchase price will change, and such change could be material. The
Company  anticipates  completing  the  purchase  price  allocation  in the third
quarter of fiscal 2008.

Revenue Recognition

The Company  recognizes  revenue from its biodiesel  production  activities when
four  basic  criteria  have been met:  (i)  persuasive  evidence  of a  customer
arrangement   exists;   (ii)  the   price  is  fixed  or   determinable;   (iii)
collectability  is reasonably  assured,  and (iv) product delivery has occurred,
which is generally upon delivery to the customer.

Unaudited Pro Forma Consolidated Financial Information for Acquisition of BIG

The following unaudited pro forma consolidated  financial  information  presents
the combined  results of operations of the Company as if the BIG acquisition had
occurred on January 1, 2008.  The  unaudited  pro forma  consolidated  financial
information  is not intended to represent or be indicative  of the  consolidated
results of  operations  of the  Company  that would have been  reported  had the
acquisition been completed as of the dates presented, and should not be taken as
representative of the future consolidated  results of operations of the Company.
Summarized unaudited pro forma consolidated results were as follows:

                                                 Nine Months Ended September 30
                                                         2008             2007
                                                ------------------------------

Revenue                                        $  26,114,841   $    13,946,236
Net income (loss) from operations                 (3,672,676)       (6,060,735)
Net income (loss) applicable to shareholders     (14,592,741)       (7,447,276)
                                               -------------   ---------------
Basic income (loss) per share                  $      (0.21)   $        (0.80)

23       SUBSEQUENT EVENTS

PURCHASE OBLIGATIONS

Sustainable Selling Shareholders

On March 26, 2007,  GS AgriFuels  entered into an agreement to purchase  certain
capital  stock of  Sustainable  Systems,  Inc.  from  Paul  Miller,  a  founding
shareholder  of  Sustainable  (the  "Miller  Purchase  Agreement").  The  Miller
Purchase  Agreement  called  for  $46,448  to be paid  at  closing,  a note  for
approximately $882,000 and two $1.6 million debentures,  totaling $4,228,729. In
November  2008, the Company and Miller  entered a  restructuring  agreement (the
"Miller  Restructuring  Agreement")  pursuant to which Miller waived all amounts
due to him  pursuant  to the  Miller  Purchase  Agreement  totalling  44,511,134
including accrued interest.  The Miller Restructuring  Agreement also included a
term that called for the Company and Miller to use their respective best efforts
to restructure GS AgriFuels' March 26, 2007 purchase  agreements with the former
unaffiliated minority shareholders of Sustainable Systems, Inc., on an equitable
basis to  facilitate a return on their  respective  investments  out of the cash
flows of  Sustainable's  Culbertson,  Montana  oilseed  crush  plant  after  its
expansion has been completed.




                                       27
<PAGE>

ITEM 2    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

OVERVIEW

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

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

We  currently  own  and  operate  six  production  facilities  - four  corn  oil
extraction  facilities  based  on  our  patented  and  patent-pending  corn  oil
extraction  technologies,   one  biodiesel  production  facility  based  on  our
patent-pending  biodiesel  production  technologies,  and one vegetable  oilseed
crushing facility based on conventional process technology.

Our  corn oil  extraction  facilities  are  located  at  existing  corn  ethanol
production  facilities,  where we extract  corn oil from an  ethanol  co-product
called distillers grain. We install our extraction facility,  at our expense, at
participating  host  facilities in return for the  long-term  right (10 years or
more) to  purchase  the  extracted  corn oil for about 53% of the spot  price of
diesel fuel. This  arrangement  benefits both the host and GreenShift.  The host
benefits  because the  contract  price we pay  substantially  exceeds the market
price for distillers  grain.  GreenShift  benefits because the contract price is
substantially  lower  than  the  cost of  comparable  feedstocks  for  biodiesel
production  and because  indexing  our  feedstock  costs to our offtake  markets
allows us to hedge our biodiesel production margins.

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

We are currently operating and building facilities that correspond to 20 million
gallons  per year of corn oil  extraction  and 10  million  gallons  per year of
biodiesel  production  capacity,  and we are  under  contract  to  later  expand
existing and build new corn oil  extraction  facilities  to extract more than an
additional 20 million  gallons per year of corn oil, and to increase our oilseed
crush capacity to about 16 million gallons per year.
<TABLE>
<CAPTION>
Location                           Technology                 Production Capacity                   Current Status
------------------------------------------------------------------------------------------------------------------
<S>                                <C>                        <C>                              <C>
Adrian, Michigan                   Biodiesel Production      10.0 million gallons per year             Operational
Culbertson, Montana                Culinary Oil Production    1.3 million gallons per year             Operational
Oshkosh, Wisconsin                 Corn Oil Extraction        1.3 million gallons per year             Operational
Medina, New York                   Corn Oil Extraction        1.5 million gallons per year             Operational
Marion, Indiana                    Corn Oil Extraction        1.5 million gallons per year             Operational
Riga, Michigan                     Corn Oil Extraction        1.5 million gallons per year             Operational
Albion, Michigan                   Corn Oil Extraction        1.5 million gallons per year     12/08 Commissioning
Richardton, North Dakota           Corn Oil Extraction        1.5 million gallons per year            Construction
Lakota, Iowa                       Corn Oil Extraction        3.0 million gallons per year            Construction
Fulton, New York                   Corn Oil Extraction        3.0 million gallons per year            Construction
Milton, Wisconsin                  Corn Oil Extraction        1.5 million gallons per year            Construction
Adams, Nebraska                    Corn Oil Extraction        1.5 million gallons per year            Construction
Concordia, Kansas                  Corn Oil Extraction        3.0 million gallons per year       Pending Financing
</TABLE>
Executive Summary

During the nine months  ended  September  30,  2008,  we produced and sold about
1,054,000  gallons of corn oil and waste animal fat derived biodiesel to clients
for use instead of diesel fuel, about 273,000 gallons of corn oil, about 688,477
gallons  of  culinary  oils  and  about  5,750  tons  of  animal  feed.  We also
manufactured  biodiesel  refining  and other  custom  equipment  for third party
clients during the nine months ended September 30, 2008.

Highlights for the nine months ended September 30, 2008 are as follows:

     >>   Our total  revenues were  $24,126,662  as compared to  $13,946,236  in
          revenues for 2007;

     >>   Our operating loss was  $(2,005,013)  as compared to an operating loss
          of $(5,352,307) for the same period in 2007;

                                       28
<PAGE>

     >>   Our EBITDA was  $1,104,518 as compared to EBITDA of $(710,711) for the
          same period in 2007; and,

     >>   We reduced debt by $6,603,334.

Plan of Operations

Biofuel Production Activities

We commenced production at our Adrian,  Michigan-based biodiesel refinery on May
15,  2008 with a fuel mix  refined  from corn oil  extracted  from our  off-site
extraction facilities and conventionally available waste fats, oils and greases.

In the first quarter 2008 and the first half of the second quarter 2008, we sold
corn oil to third  parties for use as a feedstock  in biodiesel  production.  By
internalizing  biodiesel  production  capacity  in the second half of the second
quarter, we were able to directly refine the corn oil we produced into biodiesel
which we then sold for  increased  rates and at enhanced  margins as compared to
corn oil alone.

We also  purchased  and refined  choice white  grease (pork fat) into  biodiesel
during the second  half of the second  quarter  and the first third of the third
quarter,  an activity made possible only by the fact that our current annualized
biodiesel  production  capacity is greater than our current corn oil  extraction
capacity.  While this practice can allow us to generate  incremental  additional
cash flows on significantly  increased sales, the contribution of conventionally
available  waste fats,  oils and greases to cash and  earnings is subject to the
volatility inherent in the relevant commodities markets.

During the latter  half of the second  quarter  2008,  conventionally  available
feedstocks  constituted  about 70% of our feedstock mix but the associated gross
margins  deteriorated  rapidly in June and July 2008 due to record spikes in the
relevant  commodity  prices.  This dynamic reduced the positive  contribution of
choice  white  grease to our cash flows  during June and July 2008.  Despite the
strain on our  liquidity,  we continued to purchase  choice white grease  during
this time frame to satisfy pre-existing  contractual  commitments for biodiesel.
We  thereafter  ceased this  activity in August 2008 and we scaled our biodiesel
production  operations back to match the rate of our corn oil production,  which
is  currently  a fraction of our  biodiesel  production  capacity.  This rate of
production is sub-optimal  and less than the minimum  required for our biodiesel
refinery to generate positive operating income.

GreenShift's  business  model is designed to avoid  commodity  risk by obtaining
large quantities of hedged feedstock  initially  through the use of its corn oil
extraction  technologies.  Given this and the negative movement of the commodity
markets during the third quarter,  we elected not to use our capital to purchase
sufficient  quantities  of  conventional  feedstocks  to operate  our  biodiesel
refinery at capacity,  and we committed  all of our  available  resources to the
construction  and  commissioning  of  our  third,  fourth  and  fifth  corn  oil
extraction facilities.

We are  operating  four corn oil  extraction  facilities  today and our  current
construction  schedule calls for the  installation of another  facility prior to
year end, and another nine  extraction  facilities  and a 10 million  gallon per
year expansion to our biodiesel refinery during 2009.

Culinary Oil Production Activities

Revenues from our culinary oil segment  during the second  quarter  decreased to
historical  levels from the abnormal  levels  realized  during the first quarter
2008 made possible by opportunistic sales of whole seed into higher end culinary
markets.   Revenues  are  expected  to  remain  at  historical  levels  for  the
foreseeable future as we have scaled back production until we complete our plant
expansion  project.  We will not be able to recover all of the  available oil in
the seed and operate at  efficient  economies  of scale  until we complete  this
expansion project.

While  revenues in this segment can be expected to rise  significantly  after we
complete  the  expansion,  the  financing  for the  expansion  project  has been
delayed.  We are currently awaiting final approval of a  government-backed  loan
guaranty for the financing we have sourced for the  completion of the expansion.
While  there can be no  assurances  in this  regard,  we expect to receive  this
approval  this year.  The  expansion  can be  expected  to be  completed  within
approximately  nine months after the successful  completion of a  cost-effective
financing for this project.


                                       29
<PAGE>

Equipment & Technology Sales

Revenues from our equipment sales activities  decreased during the third quarter
2008 as compared to the second  quarter  2008.  Equipment  sales are expected to
decrease during the fourth quarter 2008 and will thereafter  remain episodic and
dependent on our clients' ability to obtain  financing.  While we are party to a
number of  agreements  to  design,  build  and  commission  biofuels  production
equipment  and  facilities  for  several  domestic  third  party  clients,   the
volatility in the commodity  markets has made financing very difficult to obtain
for clients that lack a robust feedstock and risk management strategy.

Results of Operations

The following table sets forth, for the periods  presented,  revenues,  expenses
and net income in our condensed consolidated statement of operations, as well as
other key financial and operating data:
<TABLE>
<CAPTION>
                                                                      Three Months Ended               Nine Months Ended
                                                            -----------------------------  ------------------------------
                                                                  9/30/08        9/30/07         9/30/08          9/30/07
                                                             ------------    -----------    ------------     ------------
Summary Statement of Operations:
<S>                                                          <C>             <C>             <C>             <C>
Revenue ..................................................   $  6,088,754    $ 10,815,623    $ 24,126,662    $ 13,946,236
Cost of revenues .........................................      6,347,635       9,140,180      19,194,414      11,739,467
                                                             ------------    ------------    ------------    ------------
  Gross profit ...........................................       (258,881)      1,675,443       4,932,248       2,206,769

Selling, general and administrative expenses .............      2,560,448       1,545,174       6,937,261       7,559,076
                                                             ------------    ------------    ------------    ------------
   Income (loss) from operations .........................     (2,819,329)        130,269      (2,005,013)     (5,352,307)

Other income (expense), net ..............................     (3,333,560)     (1,567,319)    (10,857,925)     (3,828,431)
                                                             ------------    ------------    ------------    ------------
   Lossbefore minority interest and taxes ................     (6,152,889)     (1,437,050)    (12,862,938)     (9,180,738)

Minority interest in net loss of consolidated subsidiaries          2,489           8,908           8,908           8,908
(Provision for) benefit from income taxes ................         (8,229)       (254,410)         (8,229)       (254,410)
Income from discontinued operations ......................           --           120,772            --         2,781,869
Preferred dividends ......................................           --              --              --           151,875
                                                             ------------    ------------    ------------    ------------
   Net loss ..............................................   $ (6,158,628)   $ (1,561,780)   $(12,862,259)   $ (6,796,246)
                                                             ============    ============    ============    ============


Other financial data:
Net cash flows (used in) provided by operating activities                                       4,120,528          90,914
Net cash flows (used in) provided by investing activities                                     (10,379,875)     (2,112,735)
Net cash flow (used in) provided by financing activities .                                      6,313,537       1,120,521
   Net (decrease) increase in cash and cash equivalents ..                                        (54,190)       (901,299)

Other non-GAAP financial performance data:
EBITDA ...................................................   $ (1,524,175)   $  4,429,583    $  1,104,518    $   (710,711)

Operating data:
Corn oil extracted (gallons) .............................        461,282            --           934,142            --
Biodiesel produced (gallons) .............................        511,935            --         1,605,693            --
Average gross price of biodiesel sold per gallon ($) .....   $       4.55    $       --      $       4.38    $       --

Culinary oils produced (gallons) .........................         71,393         103,609         688,477         809,342
Animal feed produced (tons) ..............................            543             730           5,750           7,222
</TABLE>

Non-GAAP Financial Measures

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

The Company  produced  an  adjusted  EBITDA of $1,104,518 during the nine months
ended  September 30, 2008. To clarify the effect of these  one-time  charges and
financing charges on the Company's  results,  the following table reconciles the
Company's net loss on an  unconsolidated  basis with adjusted EBITDA (a non-GAAP
measure of performance):

                                       30
<PAGE>

<TABLE>
<CAPTION>
                                                                    Three Months Ended               Nine Months Ended
                                                                9/30/08        9/30/07         9/30/08         9/30/07
                                                          ------------------------------------------------------------
<S>                                                       <C>             <C>             <C>             <C>
Net income (loss) .....................................   $ (6,158,628)   $ (1,561,780)   $(12,862,259)   $ (6,796,246)

Adjustments to net income (loss) from operations:
   Interest expense ...................................      1,867,095       1,589,051       4,912,249       3,913,935
   Depreciation .......................................        473,362          60,894         838,740          78,959
Amortization of intangibles ...........................        525,000         523,399       1,575,000       1,575,000
   Amortization of debt discount and deferred financing      1,042,257       3,564,105       3,157,312       3,564,105

EBITDA before non-recurring items .....................     (2,250,914)      4,175,670      (2,378,959)      2,335,753

   Gain/loss on fair market value of derivatives ......           --          (526,389)       (319,829)     (3,405,607)
   Stock based compensation ...........................         33,176         226,592         370,009       2,314,655
   Loss on disposal of investment .....................        685,333         420,072       3,425,068         420,072
   Preferred dividends ................................           --              --              --           151,875
   Gain from discontinued operations ..................           --              --              --        (2,494,946)

Taxes
                                                                 8,229         254,410           8,229         254,410
   Other non-recurring equity, restructuring
     and consolidation (income) expense, net ..........           --          (120,772)           --          (286,923)
                                                          ------------    ------------    ------------    ------------
Adjusted EBITDA .......................................   $ (1,524,175)   $  4,429,583    $  1,104,518    $   (710,711)
                                                          ============    ============    ============    ============
</TABLE>

Three Months Ended  September 30, 2008 Compared to Three Months Ended  September
30, 2007

Revenues

Total  revenues for the three months ended  September  30, 2008 were  $6,088,754
representing  a decrease of  $4,726,869,  or 43.7%,  over the three months ended
September 30, 2007 revenues of  $10,815,623.  Revenue for the three months ended
September 30, 2008 included:

     >>   $2,216,255 in biofuel sales;

     >>   $1,559,187 in culinary oil sales; and,

     >>   $2,313,311 in equipment and technology sales.

In the  comparable  period of last year, our revenues were comprised of $363,156
from  the  sales of  biofuels,  $1,925,249  from  sales of  culinary  oils,  and
$8,527,219 from sales of equipment and technology.

Cost of Revenues

Cost of revenues for the three months ended September 30, 2008 were  $6,347,635,
or 104 % of revenue compared to $9,140,180 or 85% of revenue for the same period
in 2007.

During  the three  months  ended  September  30,  2008,  the  Company's  biofuel
production costs of revenue were $3,224,318 as compared to $325,430 for the same
period in 2007, and were  attributable  to costs  associated  with feedstock and
other raw material purchases,  transportation and maintenance.  Cost of revenues
for the Company's oilseed crush facility, which was acquired in March 2007, were
$1,348,654  for the  three  months  ended  September  30,  2007 as  compared  to
$1,816,612  for the three months  ended  September  30, 2007 and were  primarily
attributable  to oilseed  purchases  and direct  labor.  Cost of revenue for our
equipment and  technology  sales  business were  $1,729,356 for the three months
ended  September 30, 2008 as compared to $6,998,138 for the same period in 2007.
This increase was  attributable to the increased costs associated with increased
sales of equipment to third party  clients.  Cost of revenues for the  Company's
corporate  office was  $45,308 as compared to $0 for the same period in 2007 and
were attributable to corn oil royalties.

Included  within cost of revenue is  depreciation  and  amortization  expense of
$473,362 and $60,894 for the three months ended  September  30, 2008,  and 2007,
respectively.  Depreciation and amortization  expense increased by $412,468 over
the same period in 2007.

Gross Profit

Gross  profit  for  three  months  ended  September  30,  2008  was  $(258,881),
representing a gross margin of 4.3%.  This compared to $1,675,443,  or 15.0%, in
the comparable  period of the prior year. The decrease in margin as a percentage
of sales was primarily due to the Company's  increased  equipment and technology
sales realized during the prior period.

Operating Expenses

Operating expenses for the three months ended September 30, 2008 were $2,560,448
compared to $1,545,174 for the same period in 2007. Included in the three months

                                       31
<PAGE>

ended September 30, 2008 was $33,176 in stock-based  compensation as compared to
$226,592  for the three  months  ended  September  30,  2007.  The  increase  in
operating   expenses  was  primarily  due  to  the  Company's  changed  business
operations during 2008 as compared to 2007.

Management believes that selling,  general and administrative  expenses over the
next  reporting  period will be reduced as a percent of revenue as our  biofuels
and culinary oil production segments continue to grow.

Interest Expense

Interest  expense for the three months ended  September 30, 2008 was  $1,867,095
representing  an  increase of $278,043  from  $1,589,051  for the same period in
2007.  This  increase was mostly due to the debt  service of the debt  financing
associated with the construction of the Company's various extraction facilities.

Expenses Associated with Derivative Instruments

Gain from the change in the fair market value of derivative  liabilities  was $0
for the three months ended  September  30, 2008 compared with a gain of $526,389
for the  three  months  ended  September  30,  2007.  Amortization  of  deferred
financing costs and debt discounts was $1,042,257 and $650,828, respectively.

Net Income or Loss

Net loss from  continuing  operations  for the three months ended  September 30,
2008, was $6,150,399 as compared to a loss of $1,428,142 from the same period in
2007.  Income for  discontinued  operations  was $0 for the three  months  ended
September 30, 2008 as compared to $120,772 for the three months ended  September
30, 2007. Net loss for the three months ended September 30, 2008, was $6,158,628
as compared to a loss of $1,561,780 from the same period in 2007.

Nine months Ended September 30, 2008 Compared to Nine months Ended September 30,
2007

Revenues

Total  revenues for the nine months ended  September 30, 2008 were  $24,126,662,
representing  an increase of  $10,180,426,  or 73%,  over the nine months  ended
September  30, 2007 revenues of  $13,946,236.  Revenue for the nine months ended
September 30, 2008 included:

     >>   $6,318,419 in biofuel sales;

     >>   $7,742,630 in culinary oil sales; and,

     >>   $10,065,613 in equipment and technology sales.

In the  comparable  period of last year, our revenues were comprised of $501,094
from  the  sales of  biofuels,  $4,206,338  from  sales of  culinary  oils,  and
$9,238,804 from sales of equipment and technology.

Cost of Revenues

Cost of revenues for the nine months ended September 30, 2008 were  $19,194,414,
79.6% of revenue  compared  to  $11,739,467,  or 84.2% of  revenue  for the same
period in 2007.

During  the  nine  months  ended  September  30,  2008,  the  Company's  biofuel
production costs of revenue were $7,058,033 as compared to $434,282 for the same
period in 2007, and were  attributable  to costs  associated  with feedstock and
other raw material purchases,  transportation and maintenance.  Cost of revenues
for the Company's oilseed crush facility, which was acquired in March 2007, were
$6,950,383  for  the  nine  months  ended  September  30,  2007 as  compared  to
$4,125,491  for the nine months  ended  September  30,  2007 and were  primarily
attributable  to oilseed  purchases  and direct  labor.  Cost of revenue for our
equipment and  technology  sales  business were  $5,097,031  for the nine months
ended  September 30, 2008 as compared to $7,179,694 for the same period in 2007.
This increase was  attributable to the increased costs associated with increased
sales of equipment to third party  clients.  Cost of revenues for the  Company's
corporate  office was  $88,968 as compared to $0 for the same period in 2007 and
were attributable to corn oil royalties.

Included  within cost of revenue is  depreciation  and  amortization  expense of
$838,740 and $78,959 for the nine months  ended  September  30, 2008,  and 2007,
respectively.  Depreciation and amortization  expense increased by $759,781 over
the same period in 2007.


                                       32
<PAGE>

Gross Profit

Gross  profit  for  nine  months  ended   September  30,  2008  was  $4,932,248,
representing a gross margin of 20.4%. This compared to $2,206,769,  or 15.8%, in
the comparable  period of the prior year. The increase in margin as a percentage
of sales was primarily due to the Company's  increased  equipment and technology
sales realized during the quarter.

Operating Expenses

Operating  expenses for the nine months ended September 30, 2008 were $4,812,733
compared to $7,559,076 for the same period in 2007.  Included in the nine months
ended September 30, 2008 was $370,009 in stock-based compensation as compared to
$2,314,655  for the nine  months  ended  September  30,  2007.  The  decrease in
operating   expenses  was  primarily  due  to  the  Company's  changed  business
operations during 2008 as compared to 2007.

Management believes that selling,  general and administrative  expenses over the
next  reporting  period will be reduced as a percent of revenue as our  biofuels
and culinary oil production segments continue to grow.

Interest Expense

Interest  expense for the nine months ended  September  30, 2008 was  $4,912,249
representing  an  increase of $998,314  from  $3,913,935  for the same period in
2007.  This  increase was mostly due to the debt  service of the debt  financing
associated with the construction of the Company's various extraction facilities.

Expenses Associated with Derivative Instruments

Gain from the change in the fair  market  value of  derivative  liabilities  was
$319,829 for the nine months ended  September  30, 2008  compared with a gain of
$3,405,607  for the nine  months  ended  September  30,  2007.  Amortization  of
deferred  financing  costs and debt  discounts was  $3,157,312  and  $3,564,105,
respectively.

Net Income or Loss

Net loss from  continuing  operations  for the nine months ended  September  30,
2008, was  $12,854,030 as compared to a loss of $9,171,380  from the same period
in 2007.  Income for  discontinued  operations  was $0 for the nine months ended
September 30, 2008 as compared to $2,781,869 for the nine months ended September
30, 2007. There were no preferred  dividends for the nine months ended September
30, 2008 as  compared to  preferred  dividends  of $151,875  for the nine months
ended September 30, 2007. Net loss  attributable to common  shareholders for the
nine months ended  September 30, 2008, was  $12,862,259 as compared to a loss of
$6,796,246 from the same period in 2007.

Profitability

After  accounting  for  the  non-recurring  loss  realized  on  disposal  of the
Company's  investment  in Sterling  Planet,  our Other Income  (Expense) for the
three months ended September 30, 2008 was about $2,648,000, or about $10,592,000
on an  annualized  basis.  Most of this  amount  is  attributable  to  recurring
non-cash  items such as  amortization  (about  $6,270,000 per year) and interest
accruals (about $4,360,000 per year on an annualized  basis), and about $460,000
per year corresponds to interest paid on an ongoing annualized basis in cash.

We are  focused  on the  elimination  of our net  losses  and  transitioning  to
profitability and we plan to achieve this goal by commissioning as many corn oil
extraction facilities as possible as soon as possible.  Combined, seven corn oil
extraction facilities will produce more than 10 million gallons per year of corn
oil. At current  market prices,  extracting and refining 10 million  gallons per
year of corn oil into  biodiesel  will produce about $1.00 per gallon,  or about
$10,000,000 per year, in operating income. Achieving break-even profitability at
current market prices will require us to successfully  commission eight corn oil
extraction facilities.

Our plan is to maximize  profitability  through realization of the following key
goals:

     >>   Financing,   Construction   and  Operation  of  Corn  Oil   Extraction
          Facilities

          The highest and best use of our resources and our primary objective is
          to get as many corn oil extraction  systems  installed in as many corn
          ethanol facilities as possible,  as quickly as possible.  Moreover, we
          have seen  increased  activity in our sales  pipelines for  additional
          corn oil extraction  contracts and we plan to add significantly to our
          backlog during 2009.


                                       33
<PAGE>

     >>   Financing,   Construction   and  Operation  of  Biodiesel   Production
          Facilities

          We must  cost-effectively  internalize biodiesel production capability
          as we  increase  our corn  oil  extraction  backlog.  In  addition  to
          expanding our existing 10 million gallon per year biodiesel production
          facility in Adrian,  Michigan to 20 million  gallons per year over the
          next  three   quarters,   we  have   executed   agreements   to  build
          GreenShift-owned biodiesel facilities at Global Ethanol's Lakota, Iowa
          ethanol  facility and  Northeast  Biofuels'  Fulton,  New York ethanol
          facility.  Each new facility is designed to commence production at the
          rate of 10 million gallons per year and to scale to higher  capacities
          as  warranted  by the  availability  of our corn oil  supplies  as our
          extraction  facilities are brought online.  Our  development  plan for
          these new facilities is to phase them into construction in a staggered
          fashion  that  follows  after  the   construction  of  our  extraction
          facilities.

     >>   Financing and Expansion of Our Oilseed Crush Expansion

          We have entered into construction agreements to expand the capacity of
          our oilseed crush  facility from 1.3 million  gallons per year to more
          than 16 million gallons per year of crush capacity. Once completed, we
          intend to reinvest  the net cash after debt  service  produced by this
          facility into the continued growth of this division,  the execution of
          our corn oil  extraction  model,  and the  development  of  additional
          feedstock options for our biodiesel production facilities.  Our longer
          term  expectations  for this facility  involve the  integration of new
          technologies to produce additional food and biofuel products.

     >>   Completion of Financing

          We must  complete  additional  financing  to achieve  all of the above
          goals on the stated time frames.  Based on financing  closed this year
          and our ongoing financing efforts, we expect to be able to rely on the
          strength and hedged  nature of our corn oil  extraction  and biodiesel
          production  cash flows to finance the  construction  costs of our corn
          oil  extraction  and  biodiesel  production  facilities  with  project
          equity.  The same  strategy  applies for the  financing of our oilseed
          crush expansion, which will cost an estimated $9.8 million to complete
          - that is, we expect to be able to finance the expansion primarily out
          of  the  cash  flows  this   facility  is  planned  to  produce  after
          commissioning of its expansion.

     >>   Pay Off and Refinance Convertible Debt

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

DERIVATIVE LIABILITIES

As of  September  30,  2008,  the  Company  and  its  subsidiaries  had  several
convertible  debentures  due. The  conversion  feature on these  debentures  was
variable  based on trailing  market prices and  therefore  contained an embedded
derivative.  We valued the conversion  feature at the time of issuance using the
Black-Scholes  Model and recorded a note discount and  derivative  liability for
the calculated  value. We recognize  interest  expense for accretion of the note
discount over the term of the note.  The  derivative  liability is valued at the
end of each  reporting  period  and  results in a gain or loss for the change in
fair value. Due to the volatile nature of our stock, as well as the stock of our
subsidiaries,  the change in the derivative  liability and the resulting gain or
loss is usually material to our results.

The  principal  amount  on our  convertible  debentures  was  $34,597,990  as of
September 30, 2008 and the  unamortized  note discount was  $1,207,531.  For the
nine months  ended  September  30,  2008,  we  recognized  interest  expense for
accretion of the debt discount of  $1,750,873  and a gain for the change in fair
value of the derivative of $319,829 for these  debentures.  The total derivative
liability  as of  September  30,  2008  was $0 as  the  derivative  feature  was
eliminated  when  the  YA  Global  debentures  were  restructured  and  a  fixed
conversion price was put in place.


                                       34
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Consolidated Cash Balances

As of September 30, 2008, we had a cash balance of $541,183, down from a balance
of  $737,301  at  September  30,  2007.  This net cash is  summarized  below and
discussed in more detail in the subsequent sub-sections:

     >>   Operating  Activities  $4,120,528  of net cash  provided by  operating
          activities  primarily  deriving from sales of equipment and technology
          and from biofuel sales.

     >>   Investing  Activities  $10,379,875  of  net  cash  used  in  investing
          activities  mainly  for the  construction  of our corn oil  extraction
          facilities and the purchase of equipment for our biodiesel facility.

     >>   Financing  Activities  $6,313,537  of net cash  provided by  financing
          activities.

Current and Prior Year Activity

Our primary source of liquidity is cash  generated from  operations and proceeds
from issuance of debt and common stock.  For the nine months ended September 30,
2008,  net cash provided by our operating  activities was $4,120,528 as compared
to the net cash  provided by our  operating  activities  of $90,914 for the nine
months ended September 30, 2007.

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

The Company's capital  resources are impacted by changes in accounts  receivable
as a result of revenue fluctuations, economic trends, and collection activities.
At  September  30, 2008,  accounts  receivable,  net of  allowance  for doubtful
accounts, totaled $705,200 and inventories totaled $2,314,498.  Accounts payable
and accrued expenses totaled $13,851,984.

For the nine months ended  September 30, 2008, we used  $10,379,875 in investing
activities as compared to $2,112,735  used in investing  activities for the nine
months ended September 30, 2007, and financing activities provided $6,313,537 in
cash as compared  to  $1,120,521  in cash used by  financing  activities  during
September 30, 2007.

The Company had a working  capital deficit of $56,299,852 at September 30, 2008,
which includes $3,979,437 in purchase obligations,  $9,004,018 in amounts due to
the prior owners of our oilseed crush facility, including $7,104,018 convertible
into common stock,  $11,977,824  in other  convertible  debt,  and $1,572,068 in
related party debt.  Despite their  classification  as current  liabilities  the
$3,979,437 in purchase obligations,  to the extent due, are tied to the earnings
of the Company's  equipment  sales  business and can only be serviced  after the
Company's  senior secured debt has been serviced;  and, the notes payable to the
prior  owners of our oilseed  crush  facility  ($9,004,018)  are  expected to be
restructured in the fourth quarter 2008 to service these amounts exclusively out
of the net  cash  flows  (after  regular  debt  service)  of our  oilseed  crush
facility.  The  Company's  working  capital  deficit net of all of these amounts
would be $29,766,505.

Expected Activity Moving Forward

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

Cash Flows Provided By Operating Activities

Among our  current  and  known  sources  of  operating  cash  flows are our four
existing corn oil extraction  facilities  and our biodiesel  facility in Adrian,
Michigan. Notwithstanding any contributions to our cash flows from our equipment
or culinary  oil sales,  or from  refining  and selling  conventional  waste fat
derived biodiesel, refining the oil extracted by five extraction facilities into
biodiesel  is  expected to provide  sufficient  cash to cover all of our regular
debt service and operational needs for the foreseeable future.

                                       35
<PAGE>

Cash Flows Provided By Financing Activities

At the present time, the Company's existing sources of financing include its $10
million  revolving  credit  facility,  the  proceeds  of which were used for the
construction of the Company's corn oil extraction facilities and general working
capital purposes related to those efforts,  its $1,750,000  working capital line
of  credit,  the  proceeds  of  which  are to be used  for the  purchase  of raw
materials for the Company's biodiesel  production  facility,  and its $1,688,500
term  loan,  the  proceeds  of  which  are  to be  used  for  the  purchase  and
installation of equipment at the Company's biodiesel production facility.

We  require  significant  new  equity  and  debt  financing  to  accelerate  the
completion of our  contracted  corn oil  extraction,  biodiesel  production  and
oilseed  crush  projects.  We expect to complete  additional  financing for this
purpose during the fourth quarter 2008.

We are also evaluating various opportunities to restructure our convertible debt
in favor of traditional,  non-convertible long term debt. We do not know at this
time if the  necessary  funds  can be  obtained  or on what  terms  they  may be
available.

Cash Flows Used In Investment Activities

We intend to use our available sources of cash from operations and financing for
the balance of 2008 and all of 2009 to execute on our plan to build as many corn
oil  extraction  facilities as possible,  as quickly as possible,  to expand our
oilseed crushing and biodiesel production facilities,  and to build new biofuels
production facilities.


                                       36
<PAGE>

Contractual Commitments

Our material  contractual  obligations are composed of construction  commitments
for plants  being  built for our own use,  construction  commitments  for plants
being built for  outside  parties,  repayment  of amounts  borrowed  through our
convertible   debentures  and  other  notes  payable.   The  following  schedule
summarizes our contractual obligations as of September 30, 2008. Our obligations
are likely to increase  significantly  as we enter into agreements in connection
with  the   construction   of  additional   corn  oil   extraction   facilities,
GreenShift-owned biodiesel facilities, and or oilseed crush expansion project:

<TABLE>
<CAPTION>
                                                                                                            2012 and
                                                         2008          2009         2010          2011     Thereafter        Total
                                                   ----------   -----------  -----------     ----------   -----------  -----------
<S>                                             <C>             <C>            <C>          <C>           <C>           <C>
Current convertible debt obligations (1)(3) ... $   3,750,000   $ 7,449,631          --     $      --     $      --     $11,199,631
Current note payable obligations (2) ..........     3,077,319       552,758          --            --            --       3,630,077
Other current obligations .....................           277        18,420          --            --            --          18,697
Long term convertible debt obligations, net (3)          --      12,860,000          --       3,434,341          --      16,294,341
Long term note payable obligations, net .......          --       1,744,721     1,501,769     1,117,226     6,257,602    10,621,317
Convertible purchase obligations (4) ..........     7,104,018          --            --            --            --       7,104,018
Other purchase obligations (5) ................     5,879,437          --            --            --            --       5,879,437
Other obligations .............................       184,196          --       1,174,806        18,420       128,936     1,506,358
                                                  ---------------------------------------------------------------------------------
Total obligations .............................   $19,995,247   $22,625,529   $ 2,676,575   $ 4,569,987   $ 6,386,538   $56,503,876
<FN>
-----------

(1)  Current  convertible  debt  obligations  represents  amounts  due to  third
     parties but that are payable in the form of either  GreenShift  Corporation
     common stock or GS AgriFuels  Corporation  common  stock.  The terms of the
     Company's  convertible debt do not generally  require regular  principal or
     interest  payments  in cash.  The  amount  due at  September  30,  2008 was
     $7,184,341,  and was reduced by  $116,000  from  conversions  for the three
     months ended  September 30, 2008 and a new debenture for $250,000 was added
     during the nine months ended September 30, 2008.

(2)  Current note payable obligations  included $2,071,886 at September 30, 2008
     due to Stillwater  Asset Backed Fund, L.P., the proceeds of which were used
     to complete  the  Company's  2006  acquisition  of NextGen  Fuel,  Inc. The
     Company  primarily  services  this  obligation  out  of its  equipment  and
     technology  sales cash flows and it has been  reduced to  $2,071,886  as of
     September 30, 2008. The Company  expects this obligation to be paid in full
     during 2008.

(3)  Current and long term convertible debt obligations  include  $6,434,341 and
     $20,309,631  due from  GreenShift  and GS  AgriFuels,  respectively,  to YA
     Global Investments,  L.P. ("YAGI").  These amounts are collectively reduced
     by applicable  debt  discounts of  $1,207,530.  Debt  discounts are applied
     under U.S. GAAP and represent  additional value given to the holders of the
     debentures (in excess of the face value of the  debentures) due to embedded
     derivative  securities contained within the conversion feature of the debt.
     The amount due from  GreenShift and GS AgriFuels were reduced by $2,000,000
     and  $1,000,000,  respectively,  during the nine months ended September 30,
     2008. The Company intends to payoff and refinance the substantial  majority
     of its  convertible  debt due to YAGI during  2008 and 2009 in  conjunction
     with  expected  increases  in the  Company's  cash flows  from its  biofuel
     production and other operations.

(4)  Purchase  obligations  pertain to the 2007  acquisition  by GS AgriFuels of
     Sustainable  Systems,  Inc.,  the holding  company  for our  oilseed  crush
     facility.   These  amounts  include  $7,104,018  in  GS  AgriFuels  current
     convertible debentures payable and $1,900,000 in notes payable to the prior
     owners  of  our  oilseed  crush  facility  (see  Note  5 to  the  Condensed
     Consolidated Financial Statements).  The Company expects to restructure the
     terms and  conditions of the relevant  purchase  agreements for its oilseed
     crush facility to provide for the payment of the purchase price exclusively
     out of this facility's cash flows after its expansion project is complete.

(5)  Other  purchase  obligations  at  September  30,  2008  include  $3,979,437
     relating to GS AgriFuels'  2006  acquisition of NextGen Fuel,  Inc.,  which
     obligations  are  potentially  subject  to  adjustment  by the terms of the
     relevant  acquisition  agreements  and,  to the  extent  due,  may  only be
     serviced by the  Company  after the  Company  has  serviced  and remains in
     continuing  compliance with its senior debt  obligations (See Note 4 to the
     Condensed Consolidated Financial Statements).
</FN>
</TABLE>

                                       37
<PAGE>

ITEM 3            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4            CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report,  the Chief Executive Officer
and the Chief  Financial  Officer  carried out an  evaluation  of the  Company's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the  Securities  Exchange Act of 1934) as of the end of the period covered
by this report.

The  Company's  disclosure  controls  and  procedures  are  designed  to provide
reasonable  assurance that  information  required to be disclosed in its reports
filed under the Exchange Act,  such as this Form 10-Q,  is recorded,  processed,
summarized and reported  within the time periods  specified in the SEC rules and
forms.  The Company's  disclosure  controls and  procedures are also designed to
ensure that such  information is accumulated  and  communicated to management to
allow timely decisions  regarding  required  disclosure.  The Company's internal
controls are designed to provide reasonable  assurance regarding the reliability
of  financial  reporting  and  the  preparation  of its  consolidated  financial
statements in conformity with GAAP.  Management determined that at September 30,
2008, the Company had a material  weakness  because it did not have a sufficient
number of personnel  with an  appropriate  level of knowledge and  experience of
generally accepted  accounting  principles in the United States of America (U.S.
GAAP) that are commensurate with the Company's financial reporting requirements.
Contributing  to this  lack of  sufficient  resources  was the  large  number of
non-recurring transactions completed during the fourth quarter of 2007 and first
quarter of 2008.  This caused the Company to take the following  actions.  These
actions  included (i) appointing a new Chief Financial  Officer with substantial
public company business management,  governance and financial  experience,  (ii)
supplementing   existing  resources  with  technically   qualified  third  party
consultants and (iii) performing additional procedures and reviews.

Management  intends to  strengthen  its  accounting  and  compliance  procedures
further in 2008 by hiring  additional  accounting  staff to help ensure that the
Company is following  best  practices  with respect to regulatory and compliance
matters by:

     >>   appointing a new controller,  who is primarily responsible for keeping
          the Company apprised of contemporary accounting issues;

     >>   enhancing  the Company's  internal  audit  function by increasing  the
          number of accounting  staff and recruiting  additional  seasoned audit
          professionals where required;

     >>   developing  written  procedures  for,  among  other  items,  reviewing
          unusual  financial  statement  adjustments and allocating costs to the
          Company's segments;

     >>   adopting  process  improvements  concerning  the  Company's  financial
          statement close process;

     >>   developing  additional training programs for the Company's finance and
          accounting personnel; and,

     >>   developing enhanced  educational  programs for personnel at all levels
          in ethics, corporate compliance,  disclosure, procedures for anonymous
          reporting of concerns and mechanisms for enforcing Company policies.

Implementation  of  those  additional   procedures  is  ongoing.   Nevertheless,
management  concluded that at the end of the period covered by this report,  for
the reason set forth above,  the Company's  disclosure  controls and  procedures
were not effective.

Change in Internal Control Over Financial Reporting

Other than described above, there have been no changes in the company's internal
control over  financial  reporting  during the most  recently  completed  fiscal
quarter that have  materially  affected or are  reasonably  likely to materially
affect, the company's internal control over financial reporting.


                                       38
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1            LEGAL PROCEEDINGS

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

The Company's  Sustainable  Systems  subsidiary is party to the matter  entitled
Sheridan Electric Co-Op.,  Inc., v. Sustainable  Systems,  LLC, which action was
filed  in the  District  Court  of  Montana.  The  verified  complaint  seeks to
accelerate  repayment  of an  unsecured  note due March 1,  2010 (the  "Sheridan
Note"),  as well as attorney's fees and costs.  All payments due on the Sheridan
Note were current at the time Sheridan filed this action.  Sustainable otherwise
has been and remains in compliance with the terms of Sheridan Note.  Sustainable
has responded to the verified complaint and denies any liability.

ITEM 1A  RISK FACTORS

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

RISKS ATTENDANT TO OUR BUSINESS

Our external  auditors  have  included an  explanatory  paragraph in their audit
report raising  substantial  doubt as to the Company's  ability to continue as a
going concern due to the Company's history of losses, working capital deficiency
and cash position.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of $12,862,259 for the nine months ended September 30, 2008. As of September 30,
2008 the Company had $541,183 in cash, and current liabilities  exceeded current
assets  by  $56,299,852  which  included  $3,979,437  in  purchase  obligations,
$9,004,018  in amounts  due to the prior  owners of our oilseed  crush  facility
(including  $7,104,018 in convertible  debt),  $11,977,824 in other  convertible
debt and  $1,572,068 in related party debt.  None of these items are required to
be serviced out of the Company's  regular cash flows and the  Company's  working
capital  deficit  net of these  amounts  is  $29,766,505.  These  matters  raise
substantial doubt about the Company's ability to continue as a going concern.

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

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

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<PAGE>

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

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

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

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

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

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

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

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

The  business  of  producing  renewable  energy is a  capital-intense  business,
requiring  substantial  capital  resources.  The  costs  that  we may  incur  in
obtaining capital are substantially greater per dollar than the cost incurred by

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<PAGE>

large scale  enterprises  in the  industry.  If  competition  reduces the prices
available for renewable  energy  sources,  our  dependence on expensive  capital
sources may prevent us from  lowering our prices to meet the  competition.  This
situation could cause to be unable to compete effectively.

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

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

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

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

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

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

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

Ethanol can be imported into the U.S.  duty-free from some countries,  which may
undermine the ethanol industry in the U.S. Imported ethanol is generally subject
to a $0.54 per gallon  tariff  that was  designed to offset the $0.51 per gallon
ethanol  incentive  that is  available  under the federal  excise tax  incentive
program for  refineries  that blend  ethanol in their fuel. A special  exemption
from the tariff exists for ethanol imported from 24 countries in Central America
and the Caribbean Islands,  which is limited to a total of 7% of U.S. production
per year.  Imports from the exempted  countries  may increase as a result of new
plants under development.  Since production costs for ethanol in these countries
are  estimated  to be  significantly  less than  what they are in the U.S.,  the
duty-free  import of ethanol through the countries  exempted from the tariff may
negatively affect the demand for domestic ethanol and the price at which we sell
ethanol. Although the $0.54 per gallon tariff has been extended through December
31,  2008,  bills  were  previously   introduced  in  both  the  U.S.  House  of
Representatives  and U.S. Senate to repeal the tariff. We do not know the extent
to which the volume of imports would  increase or the effect on U.S.  prices for
ethanol if the tariff is not renewed beyond its current expiration.  Any changes
in the tariff or exemption from the tariff could have a material  adverse effect
on our results of operations and our financial position. In addition,  the North
America Free Trade Agreement,  or NAFTA,  which entered into force on January 1,
1994,  allows Canada and Mexico to export ethanol to the United States duty-free
or at a reduced  rate.  Canada  is exempt  from  duty  under the  current  NAFTA
guidelines, while Mexico's duty rate is $0.10 per gallon.

The  effect  of the  renewable  fuel  standard  ("RFS")  program  in the  Energy
Independence  and  Security  Act signed into law on December 19, 2007 (the "2007
Act") is uncertain.  The mandated minimum level of use of renewable fuels in the
RFS under the 2007 Act increased to 9 billion gallons per year in 2008 (from 5.4
billion gallons under the RFS enacted in 2005), further increasing to 36 billion
gallons  per year in 2022.  The 2007 Act  also  requires  the  increased  use of
"advanced" biofuels,  which are alternative biofuels produced without using corn
starch such as  cellulosic  ethanol and  biomass-based  diesel,  with 21 billion

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<PAGE>

gallons of the mandated 36 billion  gallons of renewable  fuel  required to come
from  advanced  biofuels by 2022.  Required  RFS  volumes  for both  general and
advanced  renewable  fuels in years  to  follow  2022  will be  determined  by a
governmental  administrator,  in coordination with the U.S. Department of Energy
and U.S.  Department of Agriculture.  Increased  competition from other types of
biofuels  could have a material  adverse effect on our results of operations and
our financial position.

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

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

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

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

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

Ethanol plants also require a significant and  uninterrupted  supply of water of
suitable quality to operate.  If there is an interruption in the supply of water
for any  reason,  one or  more  participating  ethanol  producer  plants  may be
required to halt  production.  If  production  is halted at one or more of these
plants for an extended  period of time, it could have a material  adverse effect
on our business, results of operations and financial condition

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

Our success will depend in part on our ability to maintain or obtain and enforce
patent and other  intellectual  property  protection for our technologies and to
preserve  our  trade  secrets,  and  to  operate  without  infringing  upon  the
proprietary  rights of third  parties.  We have obtained or developed  rights to
patents and patent  applications in the United States and  internationally,  and
may, in the future,  seek rights from third parties to other patent applications
or patented  technology.  Significant  aspects of our  technology  are currently


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<PAGE>

protected as trade secrets, for which we intend to file patent applications when
appropriate.  The  description  of the  processes  currently  protected as trade
secrets  is likely  to be  published  at some  point in the  patent  application
process with no  assurance  that the related  patents  will be issued.  Further,
certain  confidentiality  agreements  may expire  prior to the  issuance  of the
relevant  patent.  There can be no  assurance  that  patents will issue from the
patent applications filed or to be filed or that the scope of any claims granted
in any patent  will  provide us with  proprietary  protection  or a  competitive
advantage.  There can be no  assurance  that our  patents  will be valid or will
afford us with  protection  against  competitors  with similar  technology.  The
failure to obtain or maintain patent or other intellectual  property  protection
on the technologies underlying our biodiesel process may have a material adverse
effect on our competitive  position and business prospects.  It is also possible
that our  technologies  may infringe on patents or other  intellectual  property
rights  owned by others.  We may have to alter our  products or  processes,  pay
licensing fees,  defend an infringement  action or challenge the validity of the
patents in court,  or cease  activities  altogether  because of patent rights of
third parties,  thereby causing  additional  unexpected  costs and delays to us.
There can be no  assurance  that a license  will be  available to us, if at all,
upon  terms  and  conditions  acceptable  to us or that we will  prevail  in any
intellectual property litigation. Intellectual property litigation is costly and
time  consuming,  and there  can be no  assurance  that we will have  sufficient
resources to pursue such  litigation.  If we do not obtain a license  under such
intellectual  property rights, are found liable for infringement or are not able
to have such patents declared  invalid,  we may be liable for significant  money
damages and may encounter  significant  delays in bringing products and services
to market.  There can be no assurance that we have identified  United States and
foreign patents that pose a risk of infringement.

Competition may impair our success.

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

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

As of  September  30,  2008,  we had  approximately  124  full  time  equivalent
employees.  The number of individuals with experience in biofuels  production is
considerably smaller than the number of jobs available for such individuals.  We
will have to offer  substantial  incentives  in order to obtain the  services of
individuals  with useful  experience in the production of biodiesel and ethanol.
As a result, our labor costs may be greater than they would be in a less dynamic
industry.  On  the  other  hand,  if we  are  unable  to  employ  the  qualified
individuals that we will need, our business may fail.

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

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

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

We will be required to continually enhance and update our technology to maintain
its efficacy and to avoid obsolescence. The costs of doing so may be substantial

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<PAGE>

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

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

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

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

We believe  that the  current  political  environment  for  construction  of our
planned future biodiesel  facilities is sufficiently  supportive to enable us to
plan and implement our operations. However, there are risks that conditions will
change in an adverse manner.  These risks include,  but are not limited to, laws
or policies  affecting  mandates or  incentives to promote the use of biodiesel,
environmental  issues,  land use, air emissions,  water use,  zoning,  workplace
safety, restrictions imposed on the biodiesel fuel industry such as restrictions
on production, substantial changes in product quality standards, restrictions on
feedstock supply,  price controls and export controls.  Any changes in biodiesel
fuel,  financial  incentives,  investment  regulations,  policies  or a shift in
political attitudes are beyond our control and may adversely affect our business
and future financial results.

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

The  American  Society of Testing  and  Materials,  or ASTM,  is the  recognized
standard-setting  body for fuels and additives in the U.S. ASTM's  specification
for  biodiesel  as a blend  stock,  D6751,  has been  adopted  by the  EPA,  and
compliance  with such  specification  is required in order for our  biodiesel to
qualify as a legal motor fuel for sale and  distribution.  In Europe,  biodiesel
standard is EN 14214,  which has been modified to a more  stringent  standard in
Germany.  ASTM and the  European  standard  setting  bodies  have  modified  the
biodiesel specifications in the past, and are expected to continue to modify the
specification  in the  future  as the  use of  biodiesel  expands.  There  is no
guarantee that our production facilities will be able to produce  ASTM-compliant
biodiesel in the event of changes to the  specifications.  We may need to invest

                                       45
<PAGE>

significant  capital  resources to upgrade or modify our production  facilities,
which might cause delays in  construction  or stoppages  of  production  and the
resultant loss of revenue,  or which might not be economically  feasible at all.
Any  modifications  to  our  production  facilities  or to  the  biodiesel  ASTM
specification or other  specification with which we attempt to comply may entail
increased construction or production costs or reduced production capacity. These
consequences could result in a negative impact on our financial performance.

Changes in regulations and enforcement policies could subject us to additional
liability which could impair our ability to continue certain operations due to
the regulated nature of our operations.

Because the biodiesel industry  continues to develop rapidly,  we cannot predict
the  extent to which  our  operations  may be  affected  by  future  enforcement
policies as applied to existing laws, by changes to current  environmental  laws
and regulations,  or by the enactment of new environmental laws and regulations.
Any  predictions  regarding  possible  liability under such laws are complicated
further by current  environmental  laws which  provide  that we could be liable,
jointly and severally, for certain activities of third parties over whom we have
limited or no control.

Environmental risks and regulations may adversely affect our business.

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

Penalties we may incur could impair our business.

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

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

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

If we cannot maintain adequate insurance coverage, we will be unable to continue
certain operations.

Our business exposes us to various risks, including claims for causing damage to
property and injuries to persons who may involve  allegations  of  negligence or
professional errors or omissions in the performance of our services. Such claims
could be  substantial.  We believe  that our  insurance  coverage  is  presently
adequate  and similar to, or greater  than,  the  coverage  maintained  by other
companies  in the industry of our size.  If we are unable to obtain  adequate or
required  insurance coverage in the future or, if our insurance is not available
at  affordable   rates,  we  would  violate  our  permit  conditions  and  other
requirements of the  environmental  laws,  rules and regulations  under which we
operate.  Such  violations  would  render us unable to  continue  certain of our
operations.  These events would result in an inability to operate certain of our
assets and significantly impair our financial condition.

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

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

If we cannot maintain our government permits or cannot obtain any required
permits, we may not be able to continue or expand our operations.

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


Our operations will suffer if we are unable to manage our rapid growth.

We are  currently  experiencing  a  period  of  rapid  growth  through  internal
expansion and strategic acquisitions. This growth has placed, and could continue
to place, a significant strain on our management, personnel and other resources.
Our  ability to grow will  require us to  effectively  manage our  collaborative
arrangements  and to  continue  to  improve  our  operational,  management,  and
financial systems and controls,  and to successfully train,  motivate and manage
our  employees.  If we are unable to effectively  manage our growth,  we may not
realize the expected  benefits of such growth,  and such failure could result in
lost sales opportunities,  lost business,  difficulties operating our assets and
could therefore significantly impair our financial condition.

RISKS ATTENDANT TO OUR CORPORATE STRUCTURE

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

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

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

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

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

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

                                       47
<PAGE>

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

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

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

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

RISKS FACTORS ATTENDANT TO OWNERSHIP OF OUR COMMON STOCK

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

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

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

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

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

As of September 30, 2008, we had  approximately  $56,000,000  in total debt. Our
ability  to incur  additional  debt could  adversely  affect  our  business  and
restrict our operating  flexibility.  We face several risks relating to our need
to complete  additional  financings  in the future.  We must satisfy the closing
conditions for each drawdown of our $10,000,000 construction credit facility. We
must also secure  additional  financing to build our planned corn oil extraction
and biodiesel production  facilities.  We anticipate that 50,000,000 gallons per
year of extraction and biodiesel production will cost approximately $150,000,000
to build.  However,  there can be no  assurances  that  costs may not be greater
depending on site conditions,  costs of materials,  labor costs, engineering and
design changes and other potential cost and integration overruns.  The financing
may consist of debt but may also consist of common or preferred equity,  project
financing or a combination of these financing  techniques.  Additional debt will
increase our leverage and interest expense and will likely be secured by certain
of our assets; additional equity or equity-linked financings may have a dilutive
effect on our equity and equity-linked securities holders. It is likely that the
terms of any project  financing  would  include  customary  financial  and other
covenants on our project subsidiaries,  including restrictions on the ability to
make  distributions to the parent company,  to guarantee the debts of the parent
company and to incur liens on the refineries of such project subsidiaries, among
others.

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

Our  ability  to make  payments  on and  refinance  our  debt  and to  fund  our
operations  and  capital  expenditures  will  depend on our  ability to generate
substantial  operating cash flow. If our cash flows prove inadequate to meet our
debt service obligations,  in the future, we may be required to refinance all or

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<PAGE>

a portion of our existing or future debt, to sell assets or to obtain additional
financing.  We cannot assure you that any such refinancing or that any such sale
of assets or additional  financing  would be possible on favorable  terms, or at
all. If we raise additional equity or  equity-related  securities in the future,
it may be dilutive to holders of our common stock.

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

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

Our common stock qualifies as a "penny stock" under SEC rules which may make it
more difficult for our stockholders to resell their shares of our common stock.

Our common stock trades on the OTC Bulletin Board.  As a result,  the holders of
our  common  stock  may find it more  difficult  to obtain  accurate  quotations
concerning  the market  value of the  stock.  Stockholders  also may  experience
greater difficulties in attempting to sell the stock than if it were listed on a
stock  exchange  or quoted on the NASDAQ  Global  Market or the  NASDAQ  Capital
Market.  Because our common  stock does not trade on a stock  exchange or on the
NASDAQ Global Market or the NASDAQ Capital  Market,  and the market price of the
common  stock is less than $5.00 per  share,  the common  stock  qualifies  as a
"penny stock." SEC Rule 15g-9 under the Securities  Exchange Act of 1934 imposes
additional  sales practice  requirements  on  broker-dealers  that recommend the
purchase or sale of penny  stocks to persons  other than those who qualify as an
"established   customer"  or  an  "accredited   investor."   This  includes  the
requirement   that  a   broker-dealer   must   make  a   determination   on  the
appropriateness  of  investments  in penny stocks for the customer and must make
special  disclosures  to the  customer  concerning  the  risks of penny  stocks.
Application  of the penny  stock  rules to our common  stock  affects the market
liquidity of the shares,  which in turn may affect the ability of holders of our
common stock to resell the stock.

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

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

Our common stock price may be volatile.

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

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

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

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

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


                                       49
<PAGE>



ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From time to time during the nine months  ended  September  30, 2008 the Company
issued a total of 6,168,833 shares to YA Global Investments, LP upon its partial
conversion of a convertible  debenture in the aggregate amount of $399,600.  The
sales were exempt pursuant to Section 4(2) of the Securities Act since the sales
were not made in a public  offering and were made to an entity whose  principals
had access to detailed  information  about the Company  and were  acquiring  the
shares for the entity's own account. There were no underwriters.

ITEM 3   DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5   OTHER INFORMATION

None.

ITEM 6   EXHIBITS

The  following  are exhibits  filed as part of  GreenShift's  Form 10Q/A for the
quarter ended September 30, 2008:

INDEX TO EXHIBITS

Exhibit
Number                     Description

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

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

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






                                       50
<PAGE>



                                   SIGNATURES

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


GREENSHIFT CORPORATION

By:

              /S/       KEVIN KREISLER
              -----------------------------
                        KEVIN KREISLER
                        Chief Executive Officer

             /S/        EDWARD R. CARROLL
             ------------------------------
                        EDWARD R. CARROLL
                        Chief Financial and Accounting Officer


Date:         November 19, 2008








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