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

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

                                    FORM 10-Q
                            -------------------------


                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL QUARTER ENDED MARCH 31, 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 X No __.

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 May 19,2008 was
85,031,348.





<PAGE>



<TABLE>

                             GREENSHIFT CORPORATION
                          QUARTERLY REPORT ON FORM 10Q
                   FOR THE FISCAL QUARTER ENDED MARCH 31, 2008

                                TABLE OF CONTENTS

<CAPTION>


                                                                                                           Page No
Part I -  Financial Information
<S>         <C>                                                                                             <C>
Item 1      Financial Statements (unaudited) ................................................................4

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

            Condensed Consolidated Statements of Operations for the Three Months Ended
            March 31, 2008 and 2007 (unaudited)..............................................................6

            Condensed Consolidated Statements of Cash Flows for the Three Months Ended
            March 31, 2008 and 2007 (unaudited)..............................................................7

            Notes to Condensed Consolidated Financial Statements.............................................9

Item 2      Management's Discussion and Analysis or Plan of Operation ......................................31

Item 3      Quantitative and Qualitative Disclosures about Market Risk......................................37

Item 4      Controls and Procedures ........................................................................37

Part II - Other Information

Item 1      Legal Proceedings ..............................................................................38

Item 1A     Risk Factors ...................................................................................38

Item 2      Unregistered Sales of Equity Securities and Use of Proceeds ....................................48

Item 3      Defaults upon Senior Securities ................................................................48

Item 4      Submission of Matters to a Vote of Security Holders.............................................48

Item 5      Other Information ..............................................................................49

Item 6      Exhibits........................................................................................49


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 MARCH 31, 2008 (UNAUDITED) AND DECEMBER 31, 2007
<CAPTION>
                                                                                        3/31/2008         12/31/07
                                                                                    ------------------------------
ASSETS
Current assets:
<S>                                                                                 <C>              <C>
   Cash                                                                             $     412,727    $     486,993
   Restricted cash                                                                        676,679          425,623
   Accounts receivable, net of allowance of doubtful accounts                           2,650,855        1,049,671
   Inventories                                                                          3,896,902        5,017,233
   Cost and earnings in excess of billings                                                  7,280          140,592
   Deferred income taxes                                                                       --               --
   Project development costs                                                              329,726          281,991
   Prepaid expenses and other assets                                                      225,808          483,507
   Assets to be disposed of                                                                    --        9,207,002
                                                                                    -------------    -------------
     Total current assets                                                               8,199,977       17,092,612
                                                                                    -------------    -------------
Other Assets:
   Property and equipment, net                                                          6,059,590        4,105,348
   Deposits                                                                                40,015           12,534
   Construction in progress                                                             7,199,426        4,844,913
   Intangible assets, net                                                              11,761,082       12,286,883
   Deferred financing costs, net                                                        2,302,668        1,444,701
   Long term Investments                                                                6,263,792        4,186,657
   Goodwill                                                                             8,756,559        8,364,457
                                                                                    -------------    -------------
     Total other assets                                                                42,383,132       35,245,493
                                                                                    -------------    -------------
TOTAL ASSETS                                                                        $  50,583,109    $  52,338,105
                                                                                    =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current liabilities:
   Line of credit                                                                   $   2,185,000    $   1,833,192
   Accounts payable and accrued expenses                                                6,614,003        8,703,067
   Accrued interest payable                                                             3,870,361        3,887,662
   Accrued interest payable - related party                                                27,507          196,832
   Billings in excess of earnings                                                       2,576,105        1,222,807
   Deferred tax liability                                                                      --           59,630
   Deferred revenue                                                                     1,949,471        1,582,500
   Income tax payable                                                                      45,000           45,000
   Current portion of long term debt                                                    9,715,903       10,541,390
   Liability for derivative instruments                                                        --        6,704,831
   Related party debt                                                                   1,606,447        5,335,351
   Current portion of convertible debentures, net of discount                          10,104,018        5,292,072
   Liabilities of discontinued operations, current                                        384,267        4,221,059
                                                                                    -------------    -------------
     Total current liabilities                                                         39,078,082       49,625,393
                                                                                    -------------    -------------
   Long term debt, net of current                                                       2,206,213        2,437,196
   Line of credit                                                                       8,103,020               --
   Convertible debenture, net of current                                               21,746,118       28,224,877
                                                                                    -------------    -------------
     Total long term liabilities                                                       32,055,351       30,662,073

Total liabilities                                                                      71,133,433       80,287,465
                                                                                    -------------    -------------
Minority interest                                                                       1,147,935        1,968,762
                                                                                    -------------    -------------
Stockholders' deficit
   Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized:
     Series A: 0 shares issued and outstanding                                                 --            1,254
     Series B: 2,412,037 shares issued and outstanding                                      2,412              151
     Series C: 0 shares issued and outstanding                                                 --               --
       Series D: 800,000 shares issued and outstanding                                        800              800
   Common stock, $0.001 par value, 500,000,000 authorized;
     60,579,709  shares issued and outstanding                                             60,580           30,693
   Additional paid-in capital                                                          81,523,614       63,512,970
   Deferred compensation                                                              (6,027,266)               --
   Accumulated deficit                                                               (97,258,399)      (93,463,990)
                                                                                    -------------    --------------
     Total stockholders' equity (deficit)                                            (21,698,259)     (29,918,122)
                                                                                    -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $  50,583,109    $  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 MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)
<CAPTION>

                                                                                       3/31/08           3/31/07
                                                                              ----------------------------------
<S>                                                                           <C>                  <C>
Revenue                                                                         $    6,555,753     $   1,006,208
Cost of revenues                                                                     4,781,903           909,078
                                                                                --------------     -------------
  Gross profit                                                                       1,773,850            97,130
                                                                                --------------     -------------

Operating expenses:
   General and administrative expenses                                                 935,651         1,215,297
     Selling expenses                                                                   48,002             9,001
   Research and development                                                                601                --
   Stock based compensation                                                            304,017         1,997,861
                                                                                --------------     -------------
     Total operating expenses                                                        1,288,271         3,222,159
                                                                                --------------     -------------

Income (loss) from operations                                                          485,579       (3,125,029)
                                                                                --------------     -------------
Other income (expense):
   Change in fair value of derivative instruments                                      319,829         (436,180)
   Loss on disposal and impairment of investments                                  (1,662,600)                --
   Amortization of debt discount & deferred financing                              (1,114,096)       (1,543,532)
   Amortization of intangibles                                                       (525,000)         (525,801)
   Gain on sale of discontinued operations                                                  --         2,494,946
   Miscellaneous interest income                                                        12,766                --
   Other income (expense)                                                               24,875         (171,360)
   Interest expense - affiliate                                                       (27,597)          (55,770)
   Interest expense                                                                (1,301,146)         (994,838)
                                                                                --------------     -------------
     Total other income (expense), net                                             (4,272,969)       (1,232,535)
                                                                                ---------------    -------------

Loss before provision for income taxes                                             (3,787,390)       (4,357,564)

(Provision for)/benefit from income taxes                                              (7,019)                --
                                                                                --------------     -------------
Loss from continuing operations                                                    (3,794,409)       (4,357,564)
                                                                                --------------     -------------
Income from discontinued operations                                                         --            55,918
                                                                                --------------     -------------
Net loss                                                                           (3,794,409)       (4,301,646)
                                                                                --------------     -------------
Preferred dividends                                                                         --         (151,875)
                                                                                --------------     -------------

Net loss attributable to common shareholders                                    $  (3,794,409)     $ (4,453,521)
                                                                                ==============     =============

Weighted average common shares outstanding
Basic   and diluted                                                                 53,579,671         5,881,260

Earnings (loss) per share

Loss from continuing operations                                                 $       (0.07)     $      (0.74)
Income (loss) from discontinued operations                                                0.00            (0.01)
                                                                                --------------     -------------
Net loss per share - basic and diluted                                          $       (0.07)     $      (0.76)
                                                                                ==============     =============

          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 THREE MONTHS ENDED MARCH 31, 2008 AND MARCH 31, 2007 (UNAUDITED)


<CAPTION>

                                                                          Three Months Ended     Three Months Ended
                                                                                     March 31              March 31
                                                                                         2008                  2007
                                                                          -------------------   -------------------
CASH FLOW FROM OPERATING ACTIVITIES

<S>                                                                          <C>                   <C>
   Net loss from continuing operations                                       $    (3,794,409)      $  (4,357,564)
   Net income from discontinued operations                                                 --              55,918

Adjustments to reconcile net loss to net cash
  provided by (used in) used in operating activities

   Depreciation and amortization                                                      130,132              48,251
   Amortization of intangibles                                                        525,800             525,801
   Amortization of debt discount and deferred financing costs                       1,114,095           1,543,031
   Change in allowance for doubtful accounts                                        (143,047)                  --
   Change in fair value of derivatives                                              (319,829)             436,180
   Stock based compensation                                                           304,017           1,997,861
   Beneficial conversion feature on stock                                                  --             151,875
   Gain on sale of discontinued operations                                                 --         (2,494,946)
   Loss on disposal of investment                                                   1,662,600                  --

   Change in assets and liabilities, net of acquisitions

      Accounts receivable and accrued expenses, net                               (1,450,239)             136,792
      Restricted cash                                                               (251,056)                  --
      Prepaid expenses                                                               (82,522)              47,192
      Deposits                                                                       (27,481)           (502,594)
      Inventory                                                                     1,120,331             697,576
      Costs in excess of earnings                                                     133,312               8,685
      Deferred financing fees                                                       (149,750)                  --
      Accrued interest                                                                874,131             212,514
      Accrued interest - related party                                              (169,325)              61,829
      Billings in excess of cost                                                    1,353,298            (53,538)
      Accounts payable and accrued expenses                                       (2,456,354)            (88,798)
      Deferred income taxes                                                          (59,631)                  --
      Deferred revenue                                                                366,971           2,342,250
      Assets and liabilities of discontinued operations                              (28,225)            (66,422)
                                                                             ----------------      --------------

   Net cash provided by (used in) operating activities                            (1,347,181)             701,893
                                                                             ----------------      --------------

CASH FLOW FROM INVESTING ACTIVITIES

   Cash paid for acquisition                                                         (80,000)                  --
   Cash acquired from acquisition                                                          --           1,109,490
   Construction in progress                                                       (1,775,228)         (1,644,295)
   Investment in unconsolidated subsidiaries                                               --                 295
   Project development costs                                                         (47,735)             (6,191)
   Additions to and acquisition of property, plant and equipment                  (2,084,374)           (203,410)
                                                                             ----------------      --------------

   Net cash provided by (used in) investing activities                            (3,987,337)           (744,111)
                                                                             ----------------      --------------


          The notes to the Condensed Consolidated Financial Statements
                   are an integral part of these statements.
</TABLE>
                                       7
<PAGE>



                     GREENSHIFT CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND MARCH 31, 2007 (UNAUDITED)

<TABLE>

<CAPTION>

CASH FLOWS FROM FINANCING ACTIVITIES
<S>                                                                                 <C>                 <C>
   Repayment of line of credit                                                      (351,808)                  --
   Repayment of note payable - affiliate                                            (997,279)           (794,153)
   Short term borrowings - other                                                           --           1,049,037
   Loan due to an affiliate                                                                --             114,837
   Proceeds from line of credit                                                     8,806,636                  --
   Cash paid to minority shareholders                                               (820,827)                  --
   Repayment of long term debt                                                    (1,376,470)                  --
   Repayment of convertible debentures - affiliate                                         --          (151,653)
                                                                             ----------------      --------------
   Net cash provided by (used in) financing activities                              5,260,252             218,068
                                                                             ----------------      --------------

   Net increase (decrease) in cash                                           $       (74,266)      $      175,850

   Cash at beginning of period                                                        486,993           1,638,602
                                                                             ----------------      --------------

   Cash at end of period                                                     $        412,727      $    1,814,452
                                                                             ================      ==============



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

</TABLE>










                                       8
<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 quarter ended
March  31,  2008.  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  four  production  facilities  - two  corn  oil
extraction  facilities  based  on  our  patented  and  patent-pending  corn  oil
extraction   technology,   one  biodiesel   production  facility  based  on  our
patent-pending  biodiesel production technologies (this facility was acquired in
May 2008; see Note 22,  Subsequent  Events,  below),  and one vegetable  oilseed
crushing facility based on conventional process technology.

The corn oil we extract is shipped to our biodiesel facility where it is refined
into  biodiesel  and  then  sold  into the  biofuels  markets,  and the  refined
vegetable oil we extract in our crushing facility is sold into the food markets.
We also refine  waste fats,  oils and greases into  biodiesel  at our  biodiesel
production facility.

We are currently building a number of corn oil extraction  facilities and we are
expanding our biodiesel  production  and oilseed crush  facilities.  We are also
under contract to build additional corn oil extraction and biodiesel  production
facilities.  We are  currently  operating,  building and expanding the following
production facilities:
<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                 1.5 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   Construction
Riga, Michigan                     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
Richardton, North Dakota           Corn Oil Extraction                 1.5 million gallons per year   Construction
</TABLE>

Our goal is to have at least 15 million  gallons per year of corn oil extraction
capacity,  20 million gallons per year of biodiesel production capacity,  and 16
million  gallons per year of oilseed crush  capacity  online by the end of 2008,
and at least 50 million  gallons per year of corn oil  extraction  capacity,  50
million  gallons  per year of  biodiesel  production  capacity,  and 16  million
gallons per year of oilseed crush capacity online by the end of 2009.

In  addition to our own  production  of  feedstocks,  we provide  equipment  and
services to other participants in the renewable fuels industry. Since June 2007,
we have  commissioned  a total  of 25  million  gallons  per  year of  biodiesel
production  capacity,  and we are under contract to build additional  production
capacity during 2008.

                                       9
<PAGE>
SEGMENT DESCRIPTIONS

The  Company's  operations  during the fiscal  quarter  ended March 31, 2008 are
classified  into three  reportable  business  segments:  Equipment &  Technology
Sales,  Culinary Oil Production & Sales, and Biofuel Production & 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 7,
Discontinued Operations, below). For comparative purposes, the financial results
of this  business  have  been  deconsolidated  from our  consolidated  financial
results for the quarter ended March 31, 2008.

3        GOING CONCERN

The Company had a working  capital  deficit of  $30,878,105  at March,  31 2008,
which includes $3,854,437 in purchase obligations,  $9,004,018 in amounts due to
the prior owners of our oilseed crush facility,  and $1,606,447 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
($3,854,437),  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)  are expected to be  restructured in
the second  quarter  2008 into a form of  subsidiary  preferred  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 these amounts is $16,413,203.


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 March 31, 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
March 31, 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
       GS Global Biodiesel, LLC (90%)                                             Active                  Operating
       GS EnviroServices, Inc. (about 19%)                                        Active        Minority Investment
       Sterling Planet, Inc. (about 10%)                                          Active        Minority Investment

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 March 31, 2008 and
2007 have been  consolidated  to include  the  accounts  of the  Company and its
subsidiaries.
                                       10
<PAGE>

COST METHOD OF ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES

GreenShift accounts for its 10% investment in Sterling Planet, Inc. ("Sterling")
under the cost  method.  Application  of this  method  requires  the  Company to
periodically  review this  investment in order to determine  whether to maintain
the current carrying value or to write off some or all of the investment.  While
the Company uses some objective  measurements in its review,  the review process
involves a number of judgments on the part of the  Company's  management.  These
judgments include assessments of the likelihood of Sterling to obtain additional
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 Sterling's  respective  industry as well as in the general
economy.  There can be no  guarantee  that the  Company  will be accurate in its
assessments and judgments.  To the extent that the Company is not correct in its
conclusion it may decide to write down all or part of the investment.

GreenShift  accounts for its 19%  investment  in GS  EnviroServices,  Inc.  ("GS
EnviroServices") under the cost method.  Application of this method requires the
Company to periodically  review this investment in order to determine whether to
maintain  the  current  carrying  value  or to  write  off  some  or  all of the
investment.  While the Company uses some objective  measurements  in its review,
the review  process  involves a number of judgments on the part of the Company's
management.  These  judgments  include  assessments  of  the  likelihood  of  GS
EnviroServices to obtain  additional  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 GS  EnviroServices'
respective industry as well as in the general economy. There can be no guarantee
that the Company  will be  accurate in its  assessments  and  judgments.  To the
extent that the Company is not correct in its  conclusion it may decide to write
down all or part of the investment.

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
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.

REVENUE RECOGNITION

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

The Company  provides  process  engineering  services on fixed price  contracts.
These  services are  generally  provided  over a short period of less than three
months.  Revenue from fixed price  contracts is  recognized  on a pro rata basis
over the life of the contract as they are  generally  performed  evenly over the
contract period.

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

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

We recognize revenue from the sale of seed commodity when persuasive evidence of
an arrangement exists, title and risk of loss transfers to the customers, prices
are fixed and determinable, and it is reasonably assured the related accounts
receivable is collectible. Our sales terms primarily are FOB shipping point. The
oil seed crushing facility recognizes revenue when the product is shipped to the
customer via truck, railcar or customer pickup and the other criteria noted
above are met.

We  recognize  revenue  from  the sale of  biodiesel  production  systems  under
contract  accounting  pursuant to Accounting  Research  Bulletin No. 45 (ARB No.
45),  Long-Term  Construction-Type  Contracts,  and  the  guidance  under  AICPA
Statement  of  Position  81-1  ("SOP  81-1"),   Accounting  for  Performance  of
Construction-Type  and Certain  Production-Type  Contracts.  Under the completed

                                       11

<PAGE>

contract  method  income is  recognized  only when a contract  is  completed  or
substantially  completed.  During the period of performance,  billings and costs
are accumulated on the balance sheet, but no profit or income is recorded before
completion or  substantial  completion  of the work.  SOP 81-1 requires that the
percentage of completion method be used in lieu of the completed contract method
when all of the following are present: reasonably reliable estimates can be made
of revenue and costs; the construction contract specifies the parties' rights as
to the goods,  consideration to be paid and received, and the resulting terms of
payment or settlement; the contract purchaser has the ability and expectation to
perform all contractual duties; and the contract contractor has the same ability
and expectation to perform.  During the Company's initial construction projects,
reliable  cost and  revenue  estimates  were not  available  and as a result the
completed contract method was used to recognize  revenue. A substantial  portion
of our revenues for the sale of equipment in the past year was recognized  using
the completed contract basis method of accounting. Management believes that with
the resulting  experience gained from the initial completed  projects,  reliable
cost estimates are now available and all four requirements under SOP81-1 can now
be satisfied. As a result, the balance of our revenues for the sale of equipment
in the current year was recognized using the percentage of completion  method of
accounting.  The Company  recognized  $2,512,100  in revenues  under this method
during the three months March 31, 2008. This method of accounting results in the
Company  recognizing  revenue  as  work on a  contract  advances.  Earnings  are
recognized  periodically  based upon our estimate of contract revenues and costs
in  providing  the  services  required  under the  contract.  Under this method,
deferred  construction costs or work in progress ("WIP") is accumulated.  At the
end the reporting  period, if the billings to date under the contract exceed the
amount of the WIP plus a portion of the  estimated  gross  profits,  billings in
excess of costs and estimated  earnings is  recognized  as a current  liability.
This liability  records the remaining  obligation to complete the remaining work
required under the contract prior to recognizing  the excess billing as revenue.
If the  accumulated  WIP and earned  gross  profit  exceed the billings to date,
costs and  estimated  earnings  in excess of  billings  is recorded as a current
asset.  This asset  represents  the portion of the deferred  costs  incurred and
estimated  earnings  that have been earned but not yet billed.  Each  project is
reviewed on a separate  basis.  Any loss on a contract is  recognized in full as
soon as we determine that it will occur.  The Company has the contracts in place
which  lists  the price of the  equipment  as well as a list of  add-ons  if the
customer wants to upgrade.  The Company usually  requires a substantial  deposit
when the  contract is signed and work begins on the  equipment.  Notwithstanding
the above,  we recognize  revenue from the sale of these systems when persuasive
evidence of an arrangement exists, prices are fixed and determinable,  and it is
reasonably  assured that any related  accounts  receivable  is  collectible.  In
addition,  revenue  under  the  completed  contract  method is  recognized  upon
delivery. Delivery related to the systems takes place when the title and risk of
loss  transfers to the  customers as defined in the agreement or by operation of
law.

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

The liability "customer  deposits"  represents amounts invoiced to customers for
deposits and partial  payments on orders or projects for which  construction has
not commenced.  The revenue,  along with the project costs, is recognized  under
the completed contract or percentage-of-completion  method, as appropriate under
the circumstances.

CLASSIFICATION OF EXPENSES

The types of  expenses  that are  included  in the cost of sales for the oilseed
crushing facility include the cost of all seed commodity and direct labor needed
to take the seed  through  the  various  stages  of  manufacture.  The  types of
expenses  that are  included  in selling  and  administrative  expenses  include
advertising,  warehouse expenses,  railcar costs, legal,  accounting,  salaries,
etc.

CAPITALIZATION PROCEDURES

The Company capitalizes certain  expenditures  related to development  projects.
Overhead costs allocable to our biofuels  construction projects are capitalized.
For the first quarter of 2008,  the Company  capitalized  $1,213,949 of overhead
costs of which $582,050 was from stock based compensation. For the first quarter
of 2007, no overhead costs were capitalized.

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

                                       12
<PAGE>

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.

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  March  31,  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  56,300,942  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

     >>   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

                                       13

<PAGE>

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  $1,114,096  and $1,543,532 for the three months
ended  March 31,  2008 and  2007,  respectively  and are  included  in  interest
expense.

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 loss of $436,180  for the three months ended
March 31, 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        BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE

Basic  earnings  (loss) per common  share  ("EPS") is computed  by dividing  net
income  by the  weighted  average  common  shares  outstanding  during a period.
Diluted  (loss)  earnings  per share is based on the  treasury  stock method and
includes  the effect  from  potential  issuance  of common  stock such as shares
issuable pursuant to the exercise of stock options, assuming the exercise of all
stock options. Common share equivalents have been excluded where their inclusion
would be  anti-dilutive.  A reconciliation  of net income and common stock share
amounts  used in the  calculation  of basic and diluted EPS for the three months
ended March 31, 2008 and 2007 follows:
<TABLE>
<CAPTION>

                                                                             Weighted Average
                                                      Net Income (Loss)    Shares Outstanding     Per Share Amount
------------------------------------------------------------------------------------------------------------------
2008:
<S>                                                  <C>                           <C>           <C>
Basic EPS                                            $      (3,794,409)            53,579,671    $          (0.07)
Effects of dilutive securities:
   Exercise of options, warrants and restricted stock                --            95,163,092                   --
                                                     ------------------    ------------------    -----------------
Diluted EPS                                          $      (3,794,409)           148,742,763    $              --
                                                     ==================    ==================    =================

2007:
Basic EPS                                            $      (4,453,521)             5,881,260    $          (0.76)
Effects of dilutive securities:
   Exercise of options, warrants and restricted stock                --            38,862,150                   --
                                                     ------------------    ------------------    -----------------
Diluted EPS                                          $      (4,453,521)    $       44,743,410    $              --
                                                     ==================    ==================    =================
</TABLE>

6        STOCKHOLDERS' EQUITY

The  Company  accounts  for stock and stock  options  issued  for  services  and
compensation by employees under the fair value method.  For  non-employees,  the
fair  market  value of the  Company's  stock on the  date of stock  issuance  or
option/grant  is used.  The  Company  determined  the fair  market  value of the
options issued under the  Black-Scholes  Pricing Model.  The Company adopted the
provisions  of  Statement  of  Financial   Accounting   Standards   (SFAS)  123R
SHARE-BASED  PAYMENT,   which  establishes  accounting  for  equity  instruments
exchanged  for  employee   services.   Under  the  provisions  of  SFAS  123(R),

                                       14
<PAGE>
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).

STOCK OPTIONS

No options or warrants were issued during the three months ended March 31, 2008.
Issuances of options and/or warrants for the period ended March 31, 2008 is as
follows:
<TABLE>
<CAPTION>
                                                                          Number of Shares      Weighted Average
                                                                                                 Exercise Price
                                                                        ---------------------------------------
<S>                                                                     <C>                    <C>
Outstanding at December 31, 2005                                                  204,009      $          19.50
   Granted at fair value                                                          800,000                  2.00
   Forfeited                                                                      (7,380)                 91.50
   Exercised                                                                           --                    --
                                                                        -----------------      ----------------
Outstanding at December 31, 2006                                                  996,629      $           5.00
   Granted at fair value                                                               --                    --
   Forfeited                                                                        (350)                    --
   Exercised                                                                           --                    --
                                                                        -----------------      ----------------
Outstanding at December 31, 2007                                                  996,279      $           5.00
                                                                        -----------------      ----------------
   Granted at fair value                                                               --                    --
   Forfeited                                                                           --                    --
   Exercised                                                                           --                    --
                                                                        -----------------     -----------------
Outstanding at March 31, 2008                                                     996,279      $           5.00
                                                                        =================      ================

Exercisable                                                             $         996,279      $           5.00
                                                                        =================      ================
</TABLE>
INCREASE IN AUTHORIZATION OF COMMON STOCK

On February 27, 2007, an Amendment to the Certificate of Incorporation was filed
with the State of Delaware  increasing the total number of shares of all classes
of stock which the  Corporation  shall have  authority to issue to  505,000,000,
consisting of 5,000,000  shares of blank check Preferred Stock, par value $0.001
per shares (the "Preferred Stock"),  and 500,000,000 shares of Common Stock, par
value $0.001 per share (the "Common  Stock").  On December 11, 2007, the Company
affected a one-for-fifty  reverse stock split. All stock prices,  share amounts,
per share  information,  stock options and stock warrants in this Report reflect
the reverse split.

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 March 31, 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.

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 March 31, 2008, there were 2,412,037 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

                                       15
<PAGE>

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
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.

7         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 has ceased  consolidating the revenue and
earnings of GS  EnviroServices  effective  January 1, 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:

                                       16

<PAGE>



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.

The Stock  Purchase  Agreement,  combined  with a letter  agreement  between  GS
EnviroServices  and  YAGI,  further  provides  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 $1,200,000 to redeem the remaining
6,266,667 shares of GS EnviroServices held by the Company. This payment shall be
made to YAGI in return for the reduction of the Company's convertible debt
obligations to YAGI.

Sale by GS EnviroServices of Substantially All of its Assets

On March 31, 2008 GS  EnviroServices  entered  into an Asset and Stock  Purchase
Agreement  dated as of March 29,  2008 by and among  Triumvirate  Environmental,
Inc. ("Buyer") and GS EnviroServices, Inc., and GS EnviroServices' subsidiaries,
Enviro-Safe Corporation and Enviro-Safe Corporation (NE) (the "Agreement").  The
Agreement provides that after satisfaction of certain specified  conditions,  GS
EnviroServices  will  sell  substantially  all  of  its  assets  to  Triumvirate
Environmental.  Specifically,  the  assets to be sold are most of the  assets of
Enviro-Safe  Corporation and the capital stock of Enviro-Safe  Corporation (NE).
At the same  time  Triumvirate  Environmental  will  assume  responsibility  for
certain designated liabilities of Enviro-Safe  Corporation,  including its trade
payables, its accrued expenses, and certain identified executory contracts.

The  purchase  price  for  the  assets  and  capital  stock  will  be the sum of
$5,000,000,  to be paid in cash on the closing date. In addition,  approximately
60  days  after  the  closing,   Triumvirate   Environmental   will  pay  to  GS
EnviroServices  an  amount  equal  to the net  working  capital  of  Enviro-Safe
Corporation  and Enviro-Safe  Corporation  (NE) as of the closing date, less the
amount of any claims or  adjustments,  as  provided  for in the  Agreement.  The
purchase price will be applied first to satisfy GS  EnviroServices'  liabilities
to YA  Global  Investments  ("YAGI"),  TD  Banknorth,  and  the  holders  of its
outstanding  debentures,  and to satisfy all tax liabilities.  The net amount of
the  purchase  price  will  be paid to GS  EnviroServices  directly.  Management
estimates  that the net  amount  paid to GS  EnviroServices  (including  the net
working  capital  adjustment)  will be  approximately  $1,700,000,  and  that GS
EnviroServices will have approximately  $150,000 in liabilities  remaining after
the closing,  depending on the results of operations  prior to the closing date.
The Agreement contains customary  representations  and warranties of the selling
parties and Buyer, and provides for  indemnification  by GS  EnviroServices  and
Enviro-Safe   Corporation   for  any  breach  of  their   covenants   and  their
representations and warranties in the Agreement, with a threshold of $50,000 and
a cap of $1 Million, subject to exclusions for certain claims and matters as set
forth in the Agreement.

The Agreement provides that if the closing has not occurred by July 31, 2008,
the Agreement may be terminated by either party. This disclosure is qualified in
its entirety by the provisions of the Agreement, which is being filed as an
exhibit to the Company's Form 8K filed on April 4, 2008.

The Company expects that a successful closing of this transaction will result in
the cash repayment of $1,200,000 of the Company's convertible debt due to YAGI.



                                       17
<PAGE>

<TABLE>

The following financial statements present the balance sheet for the Company as
though the disposition of GS EnviroServices had occurred as of December 31,
2007.
<CAPTION>

                                                                               GS EnviroServices        Pro Forma
                                                                     12/31/07           12/31/07         Balances
                                                               --------------------------------------------------
Assets
Current assets
<S>                                                            <C>               <C>                <C>
Cash                                                           $      728,565    $       241,572    $     486,993
Restricted cash                                                       425,623                 --          425,623
Accounts receivable, net                                            3,606,367          2,556,696        1,049,671
Inventories                                                         5,017,233                 --        5,017,233
Costs and earnings in excess if billings                              140,592                 --          140,592
Deferred income taxes                                                  79,647             79,647               --
Project development costs                                             281,991                 --          281,991
Prepaid expenses and other assets                                     661,599            178,092          483,507
                                                               --------------    ---------------    -------------
   Total current assets                                            10,941,617          3,056,007        7,885,610

Property and equipment, net                                         4,341,732          1,443,292        2,898,440
Property held for sale, net                                         1,206,908                 --        1,206,908
Deposits                                                              121,508            108,974           12,534
Construction in process                                             4,844,913                 --        4,844,913
Intangibles, net                                                   12,454,293            167,410       12,286,883
Deferred financing costs                                            1,444,701                 --        1,444,701
Long term investments, net                                          4,186,657                 --        4,186,657
Goodwill                                                           12,795,776          4,431,319        8,364,457
Assets of discontinued operations - non current                         7,500                 --            7,500
                                                               --------------    ---------------    -------------
                                                                   41,396,488          6,150,995       35,245,493

Total assets                                                       52,338,105          9,207,002       43,131,103
                                                               ==============    ===============    =============

Liabilities and stockholders' equity (deficit)

Current liabilities

Line of credit                                                      2,580,533            747,341        1,833,192
Accounts payable and accrued expenses                              11,208,565          2,505,498        8,703,067
Accrued interest                                                    3,887,662                 --        3,887,662
Accrued interest - related party                                      196,832                 --          196,832
Billings in excess                                                  1,222,807                 --        1,222,807
Deferred tax liability                                                 59,630                 --           59,630
Deferred revenue                                                    1,582,500                 --        1,582,500
Income taxes payable                                                  114,788             69,788           45,000
Long term debt, current                                            10,721,326            179,936       10,541,390
Liability for derivatives                                           6,704,831                 --        6,704,831
Related party debt                                                  5,335,351                 --        5,335,351
Current convertible debentures, net of discount                     5,292,072                 --        5,292,072
Liabilities of discontinued operations - current                      412,492                 --          412,492
                                                               --------------    ---------------    -------------
   Total current liabilities                                       49,318,389          3,502,563       45,816,826

LT convertible debentures, net of current                          28,224,877                 --       28,224,877
Long term debt, net of current                                      2,743,199            306,003        2,437,196
                                                               --------------    ---------------    -------------
                                                                   30,968,076            306,003       30,662,073

Total liabilities                                                  80,287,465          3,808,566       76,478,899

Minority interest                                                   1,968,762                 --        1,968,762
                                                               --------------    ---------------    -------------

Preferred stock A Series                                                1,254                 --            1,254
Preferred stock B Series                                                  151                 --              151
Preferred stock C Series                                                   --                 --               --
Preferred stock D Series                                                  800                 --              800
Common stock                                                           30,693             26,185            4,508
Additional paid-in capital                                         63,502,789          6,280,131       57,222,658
Accumulated other comprehensive income                                 10,181             10,181               --
Retained earnings                                                (93,463,990)          (918,061)     (92,545,929)
                                                               --------------    ---------------    -------------
Total stockholders' deficit                                      (29,918,122)          5,398,436     (35,316,558)
                                                               --------------    ---------------    -------------
Total liabilities and shareholders' equity (deficit)           $   52,338,105    $     9,207,002    $  43,131,103
                                                               ==============    ===============    =============

</TABLE>
                                       18
<PAGE>


8        DEPOSITS

The Company has security deposits on property leases in the amount of $40,015 as
of the three months ended March 31, 2008.

9        RESTRICTED CASH

As of March 31, 2008, the Company had $676,679 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 March 31, 2008 was $22,901.

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 $43,651 as of March 31,
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 COE's  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 was $610,127 as of March 31, 2008.

10        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 matures 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 $2,185,000 as of March 31, 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 million.
The balance on the line of credit was  $8,103,020 as of March 31, 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 July 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.

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

                                       19
<PAGE>

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
$579,304 at March 31, 2008 after recording  $64,685 in amortization of financing
fees for the quarter.

11       FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>

The following is a summary of the Company's financing arrangements as of March
31, 2008:

Current portion of long term debt:
<S>                                                                                                      <C>
Note payable from GS AgriFuels to Stillwater                                                             $  2,771,886
Seller holdback from GS AgriFuels to NextGen sellers                                                        3,979,437
Note payable from GS AgriFuels to Sustainable sellers                                                       1,900,000
Asset retirement obligation, current                                                                              256
Note Payable to former employee                                                                               105,434
Current portion of Note payable from GS AgriFuels to Sustainable System's creditors                           349,376
Vehicle loans and other short term borrowings                                                                 124,549
Current portion of notes payable from GreenShift to P. Bollheimer                                             240,000
Current portion of Notes payable from GS AgriFuels to  Sheridan Electric                                      244,965
                                                                                                          -----------
     Total notes payable and short term borrowings                                                        $ 9,715,903
                                                                                                          ===========
Long-term debt, net of current maturities:
Mortgages and other term notes                                                                            $   341,898
Notes payable from GreenShift to P. Bollheimer                                                                 80,000
Notes payable from GS AgriFuels to  MT Dept of Agriculture                                                    124,052
Asset retirement obligation                                                                                   123,354
Installment debt payable from GS AgriFuels to Sheridan                                                        605,793
Notes payable from GS AgriFuels to Great Northern Development                                                 931,116
                                                                                                         ------------
     Total long term debt                                                                                $  2,206,213
                                                                                                         ============
Current portion of convertible debentures:
YAGI convertible debenture payable, current portion                                                         3,000,000
Convertible debenture for acquisition of Sustainable Systems issued March 2007                              3,552,005
Convertible debenture for acquisition of Sustainable Systems issued March 2007                              3,552,013
                                                                                                         ------------
     Total current portion of convertible debentures                                                     $ 10,104,018
                                                                                                         ============
 Long-term convertible debenture:
YAGI convertible debenture payable from GreenShift assumed April 2006 (as amended and restated)             2,084,986
YAGI convertible debenture payable from GreenShift issued April 2006 (as amended and restated)                657,615
YAGI convertible debenture payable from GreenShift issued February 2007 (as amended and                     1,224,063
restated)
YAGI convertible debenture payable from GreenShift issued April 2007 (as amended and restated)              2,789,278
YAGI convertible debenture payable from GS AgriFuels issued February 2006                                   1,949,631
YAGI convertible debenture payable from GS AgriFuels issued June 2006                                       5,500,000
YAGI convertible debenture payable from GS AgriFuels issued October 2006                                   12,860,000
Less: current portion - YAGI debentures                                                                   (3,000,000)
Note discounts
                                                                                                          (2,319,455)
    Total current portion of convertible debentures                                                      $ 21,746,118
                                                                                                         ============
</TABLE>

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

GreenShift Corporation                         $ 6,755,942
GS AgriFuels Corporation                        27,413,649
                                               -----------
Total                                          $34,169,591
                                               ===========



                                       20
<PAGE>

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 March 31, 2008 and the Company's ability to meet such obligations:

Year                                                 Amount
--------------------------------------------------------------
2008                                              $ 19,819,921
2009                                                25,890,520
2010                                                   101,697
2011                                                   193,221
2012 and thereafter                                     86,348
                                                  ------------
Total minimum payments due under current and
long term obligations                             $ 46,091,707
                                                  ============

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 three months ended March 31, 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 $497,556 as of the three months ended March 31, 2008.

During the year ended December 31, 2007, the Company borrowed $30,000 from David
Winsness,  the Company's Chief Technology Officer.  The note carried interest at
5% per year and was payable  upon  demand.  The Company  repaid the loan in full
during the three months ended March 31, 2008.

During the year ended  December  31,  2007,  the Company  borrowed  $20,000 from
Edward Carroll, the Company's Chief Financial Officer. The note carried interest
at 5% per year and was payable upon demand.  The Company repaid the loan in full
during the three months ended March 31, 2008.

As of March 31,  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.

As of March 31,  2008,  the Company  owed Viridis  Capital,  LLC  $346,039  (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 in three years.

During the first quarter 2008,  the Company  cancelled its $319,517 note payable
to EcoSystem Corporation as well as certain note payables to and receivable from
various  Company  subsidiaries  totaling,  $400,863 and  $688,234.  EcoSystem is
majority owned by Viridis.

13         CONVERTIBLE DEBENTURES

YA GLOBAL INVESTMENTS, LP

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 pursuant to the stock purchase transaction between the Company and
GS  EnviroServices,  Inc. (see Note 7, Discontinued  Operations).  The aggregate
principal amount of the restated debentures was $6,755,942 as of March 31, 2008.

                                       21
<PAGE>
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 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.

Amended Forbearance Agreement

In connection with the financing transactions described above, YAGI entered into
an Amended  and  Restated  Forbearance  Agreement  with the  Company,  Carbonics
Capital Corporation (the Company's former parent), and Viridis Capital, LLC (the
Company's  majority  shareholder).  The  Forbearance  Agreement  recited  that a
default  previously  existed  under  certain  debentures  issued  to YAGI by the
Company and its  subsidiaries,  which were guaranteed by the Company and Viridis
Capital.  In order to secure the defaulted  debentures,  the parties had, at the
time of issuance of the debentures, pledged to YAGI the following securities:
<TABLE>
<CAPTION>
Pledgor                Pledged Shares                                                                          Issuer
---------------------- --------------------------------------------------------------------- -------------------------
<S>                    <C>                                                                     <C>
Viridis                800,000 shares of Series D Preferred Stock  convertible  into common    GreenShift Corporation
                       stock
Viridis                1,000,000  shares  of  Series C  Preferred  Stock  convertible  into    Carbonics Capital Corp
                       common stock
Viridis                1,000,000  shares  of  Series C  Preferred  Stock  convertible  into     EcoSystem Corporation
                       common stock
GreenShift             6,266,666 shares of common stock of GS EnviroServices                        GS EnviroServices
GreenShift             8,733,333 shares of common stock of GS EnviroServices                        GS EnviroServices
</TABLE>

The Amended and Restated  Forbearance  Agreement stipulates that YAGI may not at
any time own more  than  4.99% of the  outstanding  common  shares of any of the
issuers.  Each time YAGI takes  shares  under the  Agreement,  90% of the volume
weighted  average  market price for the five trading days preceding the delivery
will be applied  against the  principal  amount of the  Debentures.  YAGI agreed
that, if no other defaults occur under the Debentures,  it would waive all other
rights and penalties available to it as a result of the present defaults.

Restatement of 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.  The Loans and the Debentures are also guaranteed up to $1.5 million by
GS EnviroServices,  Inc., an affiliate and former subsidiary 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.

Because GS  AgriFuels is indebted to YAGI in the amount of  $20,309,631,  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.

                                       22
<PAGE>

     >>   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.

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.

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 March 31, 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 March 31, 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.

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
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

                                       23
<PAGE>

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 three months March 31, 2008, interest expense of $172,447 for
this  obligation was incurred.  The principal  balance of this note at March 31,
2008 was $2,771.886.

Sustainable Systems

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  approximately  $3.55  million
debentures were issued to the selling shareholders totaling $9,004,018. The $1.9
million  note is due upon the  completion  and  commissioning  of  Sustainable's
current plant expansion, which is expected to be completed in the fourth quarter
of 2008. It accrues  interest at 5% per annum to be paid on a pro-rated basis at
maturity.

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

The Company has  entered  into  discussions  with the  selling  shareholders  of
Sustainable to amend the terms of the relevant acquisition agreements to provide
for the payment of 100% of all amounts due under the  acquisition  agreement out
of the cash flows of the  Sustainable  oilseed  crush  facility  in  Culbertson,
Montana after its expansion has been completed.

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.  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 $1,720,899 in installment  debt equal to the
mortgage obligation of the seller, which must be fully paid off or refinanced by
the Company by the end of the primary term (through  October 31, 2006 or the end
of any additional  option  periods).  Sustainable  Systems occupied the plant on
October 1, 2005. To ensure payment of the installment debt, the deposits paid by
the Company are  non-refundable  and the seller  shall not deliver  title to the
premises  and the  personal  property  until  the  debt  is  fully  paid  off or
refinanced.  From 2006 to present,  and under the terms of the Installment  Sale
and Purchase Agreement,  Sustainable Systems exercised several letter agreements
to extend the refinance period to June 1, 2008. Under the terms of the extension
agreement,  Sustainable  paid  $300,000 as of the March 31, 2008  extension  due
date. This amount was applied to principal along with the usual monthly payment.
All the terms and conditions under the Installment  Sale and Purchase  Agreement
remain applicable under the extended refinance  periods.  The note is secured by
an interest in all the assets of Sustainable  including the accounts receivable.
The note accrues interest at a rate of 7.68% per annum. Monthly payments consist
of principal and interest and a final payment will be due on September 25, 2013.
For the three months ended March 31, 2008, interest expense of $25,413 for these
obligations was incurred.  As of March 31, 2008, the total principal  balance on
this note was $845,417.

                                       24
<PAGE>

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 three
months ended March 31, 2008,  interest expense of $997 for these obligations was
incurred and accrued.

Sustainable has signed four notes with Great Northern Development.  Three of the
notes totaling  $411,072 at March 31, 2008 accrue interest at the rate of 6% per
annum. The payment terms for the notes are as follows:  the $10,663 and $122,009
notes are to be paid off with 180 monthly payments  beginning  December 15, 2005
with a maturity  date of November 15, 2020 and the  $278,400  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
$629,796  (as of March 31,  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 three  months  ended March 31,  2008,  interest  expense of
$13,152 for these obligations was incurred. The principal balance of these notes
at March 31, 2008 was $1,040,868.

On June 4, 2007, Sustainable Systems, Inc. issued an unsecured demand promissory
note in the amount of $250,000 with Sheridan  Electric  Co-Op,  Inc. in exchange
for the same amount of  pre-existing  accounts  payable to the holder.  The note
accrues  interest at a rate of 6% per annum.  Monthly  payments  were due in the
amount of $1,500  starting June 1, 2007 and shall  continue until March 1, 2010.
Each  payment  shall  first be applied to the accrued  interest  and then to the
principal balance.  For the three months ending March 31, 2008, interest expense
of $3,719 for these obligations was incurred. The principal balance of this note
at March 31, 2008 was $244,965.

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 was 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
capital  adjustments and provided that there are no claims for  indemnification.
To the extent due, the balance of the  estimated  holdback at March 31, 2008 was
$3,979.437.

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.

                                       25
<PAGE>

14        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 contain an embedded  derivative  that
requires  bifurcation from their host contracts.  The Company has recognized the
embedded  derivatives as a liability at the date the debentures  related to YAGI
were issued.

During the three  months  ended March 31, 2008 and 2007,  the change in the fair
value of the  derivative  resulted in a non-cash  gain of  $319,829  and loss of
$436,180,  respectively.  Amortization of the debt discount totaled $742,313 for
the three months ended March 31, 2008.  As of March 31, 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.

15       COMMITMENTS AND CONTINGENCIES

The Company is party to the matter  entitled  LeBlanc v. Tomoiu,  et. al., which
action was filed in the Superior Court of  Connecticut.  The verified  complaint
seeks damages  relating to the acquisition by the Company's  former  subsidiary,
General Ultrasonics Corporation,  of the stock of H2 Energy Solutions, Inc. from
substantially all of its shareholders, as well as attorney's fees and costs. The
Company has responded to the verified complaint and denies any liability.

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.

16       GUARANTY AGREEMENT

On October 31, 2006, the Company guaranteed the following obligations:

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

     >>   3 year  Secured  Convertible  Debenture  in the  principal  amount  of
          $13,000,000   issued  by  GS  AgriFuels   Corporation   to  YA  Global
          Investments, LP.

     >>   3 year  Secured  Convertible  Debenture  in the  principal  amount  of
          $5,500,000   issued  by  GS   AgriFuels   Corporation   to  YA  Global
          Investments, LP.

The  Company's  guaranty  was  secured by a pledge of all its  assets  including
investments in its subsidiaries. GS AgriFuels Corporation is a subsidiary of the
Company. NextGen Acquisition, Inc., is a subsidiary of GS AgriFuels Corporation.
The balance due to Stillwater at March 31, 2008 was 2,771,886.

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 $36.2
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.

                                       26
<PAGE>

17       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 March 31, 2008 are
classified  into three  reportable  business  segments:  Equipment &  Technology
Sales,  Culinary Oil Production & Sales, and Biofuel Production & 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.
<TABLE>

Summarized financial information about each segment is provided below:
<CAPTION>
3 Months                                         Equipment &        Culinary Oil            Biofuel
Ended 3/31/08                   Corporate   Technology Sales  Production & Sales Production & Sales          Total
------------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>                 <C>                 <C>                <C>
Total revenue              $          --  $        2,564,428  $        3,659,954  $         331,371  $   6,555,753
Cost of revenue                   14,608           1,283,225           3,261,803            222,267      4,781,903
                           -------------  ------------------  ------------------  -----------------  -------------
   Gross profit                 (14,608)           1,281,203             398,152            109,104      1,773,850

Operating expenses               452,976             401,006             344,823             89,465      1,288,271
                           -------------  ------------------  ------------------  -----------------  -------------
 Income(loss) from operations  (467,583)             880,197              53,328             19,639        485,581

Other income (expense)       (2,428,931)         (1,488,963)           (106,356)          (248,719)    (4,272,969)
                           -------------  ------------------  ------------------  -----------------  -------------
   Loss before taxes         (2,896,514)           (608,766)            (53,028)          (229,080)    (3,787,388)
Taxes                                 --               7,019                  --                 --          7,019
                           -------------  ------------------  ------------------  -----------------  -------------
Net loss attributable to
common shareholders        $ (2,896,514)  $        (615,785)  $         (53,028)  $       (229,080)  $ (3,794,407)
                           =============  ==================  ==================  =================  =============


3 Months                                         Equipment &        Culinary Oil            Biofuel
Ended 3/31/07                   Corporate   Technology Sales  Production & Sales Production & Sales          Total
------------------------------------------------------------------------------------------------------------------
Total revenue              $          --  $          588,070  $          418,138  $              --  $   1,006,208
Cost of revenue                       --             456,615             452,463                 --        909,078
                           -------------  ------------------  ------------------  -----------------  -------------
   Gross profit                       --             131,455            (34,325)                 --         97,130
Operating expenses                80,179           2,520,156              50,309            571,515      3,222.159
                           -------------  ------------------  ------------------  -----------------  -------------
   Income(loss)
   from operations              (80,179)         (2,388,702)            (84,634)          (571,515)    (3,125.030)
Other income (expense)           384,473         (1,680,736)              69,966             (6237)    (1,232,535)
                           -------------  ------------------  ------------------  -----------------  -------------
   Income (loss) before taxes    304,293         (4,069,438)         (14,668)           (577,752)     (4,357,564)
Taxes                                 --                  --                  --                 --             --
                           -------------  ------------------  ------------------  -----------------  -------------
Net loss from
continuing operations      $     304,293  $      (4,069,438)  $         (14,668)  $        (55,278)  $ (4,357.564)
                           =============  ==================  ==================  =================  =============
Gain (loss) from
discontinued operations           55,918                  --                  --                 --         55,918

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

Net loss                   $     208,336  $      (4,069,438)  $         (14,668)  $       (565,278)  $ (4,453.521)
                           =============  ==================  ==================  =================  =============
</TABLE>

18       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

                                       27
<PAGE>

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. This obligation was reduced to $432,701 as of March 31, 2008,
which amount the Company  expects to either cancel or satisfy  during the second
quarter 2008.

19       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                                                               $    272,751       $      31,911
         Income taxes                                                                 15,558                  --
                                                                                ------------      --------------
                Total                                                                288,309              31,911
                                                                                ============      ==============
     Supplemental Schedule of Non-Cash Investing and Financing Activities:

     Acquisition of Bollheimer & Associates with Debt                                320,000                  --
     Stock issued for compensation                                                   304,017              83,574
     Reduction of convertible debentures from disposal
      of investment in GS EnviroServices                                           2,000,000                  --
     Reduction of related party debt from forgiveness                              2,000,000                  --
</TABLE>


20       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.

21       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.

                                       28

<PAGE>

22       SUBSEQUENT EVENTS

ACQUISITION OF BIOFUELS INDUSTRIES GROUP, LLC

Effective May 15, 2008, the Company and Biofuels  Industries  Group,  LLC (d/b/a
NextDiesel(TM)) ("BIG") entered into an Exchange Agreement pursuant to which the
Company  exchanged  Company  stock in return for 100% of the equity of BIG. This
transaction  is currently in escrow  pending  receipt of all final  post-closing
deliverables, which are expected to be finalized within two days.

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 Exchange Agreement and related transaction documents (collectively, the "BIG
Acquisition Agreement") provides for the following terms and conditions:

     >>   Vested  Company  Shares.  The  issuance  by the  Company  to  the  BIG
          shareholders of 20,000,000 shares of Company common stock.

     >>   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 20,000,00 common shares
          if only if 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.

     >>   Redemption of BIG Equity  Investment.  The  redemption by BIG of BIG's
          "Class A  Membership  Units" for a total of $9 million  payable 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").

     >>   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").

     >>   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,  if
          relevant,  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.

                                       29
<PAGE>

     >>   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.  Mr.  Nosan  was  also
          appointed to the Company's board of directors.

Series E Preferred Stock

Each share of Series E Preferred Stock may be converted by the holder into 1,000
shares of common stock.  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.  As noted above,  the Series E Shares are only  convertible  into
Company  common shares on a pro-rated  basis in  conjunction  with the Company's
realization of $50,000,000 in EBITDA.

The following is a schedule of Company common shares  potentially  issuable upon
conversion  of the  Series E Shares  in the  event  and to the  extent  that the
Company achieves the agreed upon EBITDA targets:
<TABLE>
<CAPTION>

Annualized                           Number of Series E Shares                             Number of Common Shares
EBITDA Target ($)                       That Can Be Converted                             Issuable Upon Conversion
------------------------------------------------------------------------------------------------------------------
<C>                                                      <C>                                             <C>
$    5,000,000                                           2,000                                           2,000,000
$   10,000,000                                           4,000                                           4,000,000
$   15,000,000                                           6,000                                           6,000,000
$   20,000,000                                           8,000                                           8,000,000
$   25,000,000                                          10,000                                          10,000,000
$   30,000,000                                          12,000                                          12,000,000
$   35,000,000                                          14,000                                          14,000,000
$   40,000,000                                          16,000                                          16,000,000
$   45,000,000                                          18,000                                          18,000,000
$   50,000,000                                          20,000                                          20,000,000
</TABLE>

Pro Forma Fully Diluted Shares of Common Stock Outstanding

The following  schedule  reconciles the Company current share structure with its
pro forma fully  diluted  share  structure  based on the shares of common  stock
outstanding as of May 15, 2008 (after closing of the BIG  acquisition  described
above) plus the performance-based shares described above:
<TABLE>
<CAPTION>

                              Current Issued                Pro Forma Shares Outstanding Upon Satisfaction of
                             and Outstanding                       Performance-Based EBITDA Threshold
                                Common Stock       $10,000,000       $25,000,000      $50,000,000      $75,000,000
------------------------------------------------------------------------------------------------------------------
<S>                               <C>               <C>               <C>              <C>              <C>
Public Float                      56,044,957        56,044,957        56,044,957       56,044,957       56,044,957
Employee Pool                      8,832,392        16,533,333        36,133,333       69,133,333       69,133,333
Viridis Capital, LLC                 154,000        16,794,000        41,754,000       83,354,000      124,954,000
BIG Shareholder Group             20,000,000        24,000,000        30,000,000       40,000,000       40,000,000
-------------------------------------------------------------------------------------------------------------------
Pro Forma Shares Outstanding      85,031,348       113,172,290       163,932,290      248,532,290      290,132,290
</TABLE>


























                                       30

<PAGE>
ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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  four  production  facilities  - two  corn  oil
extraction  facilities  based  on  our  patented  and  patent-pending  corn  oil
extraction   technology,   one  biodiesel   production  facility  based  on  our
patent-pending  biodiesel production technologies (this facility was acquired in
May  2008;  see  Note 22 to the  Condensed  Consolidated  Financial  Statements,
Subsequent Events,  above), and one vegetable oilseed crushing facility based on
conventional process technology.

The corn oil we extract is shipped to our biodiesel facility where it is refined
into  biodiesel  and  then  sold  into the  biofuels  markets,  and the  refined
vegetable oil we extract in our crushing facility is sold into the food markets.
We also refine  waste fats,  oils and greases into  biodiesel  at our  biodiesel
production facility.

We are currently building a number of corn oil extraction  facilities and we are
expanding our biodiesel  production  and oilseed crush  facilities.  We are also
under contract to build additional corn oil extraction and biodiesel  production
facilities.  We are  currently  operating,  building and expanding the following
production facilities:
<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                 1.5 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   Construction
Riga, Michigan                     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
Richardton, North Dakota           Corn Oil Extraction                 1.5 million gallons per year   Construction
</TABLE>
Our goal is to have at least 15 million  gallons per year of corn oil extraction
capacity,  20 million gallons per year of biodiesel production capacity,  and 16
million  gallons per year of oilseed crush  capacity  online by the end of 2008,
and at least 50 million  gallons per year of corn oil  extraction  capacity,  50
million  gallons  per year of  biodiesel  production  capacity,  and 16  million
gallons per year of oilseed crush capacity online by the end of 2009.

In  addition to our own  production  of  feedstocks,  we provide  equipment  and
services to other participants in the renewable fuels industry. Since June 2007,
we have  commissioned  a total  of 25  million  gallons  per  year of  biodiesel
production  capacity,  and we are under contract to build additional  production
capacity during 2008.

Executive Summary

Highlights for the quarter ended March 31, 2008 are as follows:

     >>   Our total  revenues  were  $6,55,753  as  compared  to  $1,006,208  in
          revenues for 2007;

     >>   Our EBITDA was $920,324 as compared to EBITDA of $(1,250,277)  for the
          same period in 2007;

     >>   We  produced  and sold more than  502,000  gallons of  biomass-derived
          oils;

     >>   We  completed   construction  (which  was  started  during  2007)  and
          delivered  an  additional  10 million  gallons  per year of  biodiesel
          production capacity for a third party client;

     >>   We closed on a $10 million  revolving  credit  facility to support the
          construction of our corn oil extraction facilities;

     >>   We completed construction and commenced  commissioning of our corn oil
          extraction facility in Medina, New York;

                                       31
<PAGE>

     >>   We completed the  acquisition  of  Bollheimer &  Associates,  Inc., an
          engineering firm specializing in process design and automation for the
          vegetable oil and biofuels industries; and,

     >>   We reduced debt by $5,122,557,  liquidated  non-strategic  assets, and
          further streamlined our operations.

Components of Revenue

Our principal sources of revenue during the quarter ended March 31, 2008 derived
from the following activities:

     >>   Equipment & Technology Sales

     >>   Culinary Oil Production & Sales

     >>   Biofuel Production & Sales

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

Revenues

Total  revenues  for the three  months  ended  March 31,  2008 were  $6,555,753,
representing  an increase of  $5,549,545,  or 552%,  over the three months ended
March 31, 2007 revenues of $1,006,208.  Revenue for the three months ended March
31, 2008 included:

     >>   $2,564,428 in equipment and technology sales;

     >>   $3,659,954 in culinary oil sales; and,

     >>   $331,371 in sales of corn oil for biofuel production.

In the  comparable  period of last year, our revenues were comprised of $588,070
from equipment  sales,  $418,138 from culinary oil production and sales,  and $0
from the biofuels production segment.

We expect that our quarterly revenues will steadily increase for the foreseeable
future as we complete the following planned activities during the second,  third
and fourth quarters of 2008:

     >>   Equipment & Technology Sales.

          As noted above, we delivered and  commissioned a 10 million gallon per
          year biodiesel  facility for an Indiana-based  client during the first
          quarter 2008. The majority of the revenue and contribution  margin for
          this  system  were  realized   during  2007.  We  expect  to  complete
          construction  and  commence  the  commissioning  of another 10 million
          gallon  per year  facility  for this same  client  during  the  second
          quarter  2008.  The  majority  of the  revenue  and  margin  for  this
          additional  system will be realized  during the second quarter of this
          year.  Moreover,  we are  party to  agreements  to  design,  build and
          commission  biodiesel  and  related  production  infrastructure  for a
          number of additional third party clients. We expect that equipment and
          technology  sales will increase in the second  quarter and  thereafter
          will remain  episodic and  dependent on the issuance by our clients of
          notices to proceed under existing contracts.

     >>   Culinary Oil Production & Sales.

          Culinary oil sales were higher than expected  during the first quarter
          2008 due to opportunistic sales of whole seed into higher end culinary
          markets. Quarterly revenues from this segment for the second and third
          quarters of this year can be expected to decrease to historical levels
          due to the fact that we have scaled back production  until we complete
          our  plant  expansion  project.  We  will  not  operate  at  efficient
          economies of scale until we complete of this  project.  We will not be
          able to recover all of the  available oil in the seed we process until
          then.  Revenues in this segment can be expected to rise  significantly
          after we complete  this plant  expansion  (which is  targeted  for the
          fourth quarter of this year).

     >>   Biofuel Production & Sales.

          We commenced commissioning of our Medina, New York corn oil extraction
          facility and a scheduled  upgrade of our Oshkosh,  Wisconsin  corn oil
          extraction  facility  during the first  quarter.  We are  scheduled to
          commission  several  more  corn  oil  extraction  facilities  over the
          balance  of this  year.  Ordinarily,  these  new  facilities  would be
          expected to significantly increase revenue during the balance of 2008.
          However,  in May  2008,  we  completed  the  acquisition  of  Biofuels
          Industries Group, LLC ("BIG"), which company owns a biodiesel facility
          that is based on our biodiesel technologies.

                                       32
<PAGE>

          The BIG facility has been designed to efficiently refine our extracted
          corn oil into biodiesel.  Given our current and expected production of
          corn oil,  this  acquisition  will result in  additional  increases in
          sales  associated with our corn oil extraction  efforts.  Prior to the
          BIG acquisition,  we sold corn oil for biodiesel  production at prices
          that were discounted to diesel spot prices. By internalizing biodiesel
          production  capacity,  we can now  refine  and sell  corn oil  derived
          biodiesel (instead of extracted corn oil alone) at more than $4.50 per
          gallon at current  market prices - more than two times the sales price
          of extracted corn oil realized during the first quarter.

          Furthermore, BIG's current annualized biodiesel production capacity is
          greater than our current corn oil extraction capacity.  This allows us
          to opportunistically  purchase and refine waste fats, oils and greases
          into ASTM  standard  biodiesel.  We intend to expand BIG's  annualized
          production  capability to at least 20 million  gallons per year by the
          fourth quarter 2008.  This  expansion  will allow us refine  increased
          volumes of these waste fats, oils and greases.

          These activities are all expected to result in significantly increased
          revenue  during the second  quarter  and the balance of 2008 from this
          segment.  At  current  market  prices,  a 10  million  gallon per year
          production  facility can be expected to generate  about $45 million in
          annualized biodiesel sales.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2008 were  $4,781,903,  or
72.9% of revenue  compared to $909,078,  or 90.3% of revenue for the same period
in 2007.

During the three months ended March 31, 2008, the Company's  biofuel  production
costs of revenue  were  $222,267  as compared to $0 for the same period in 2007,
and were attributable to costs of oil,  transportation and maintenance.  Cost of
revenue for our equipment and technology  sales business were $1,283,225 for the
three months ended March 31, 2008 as compared to $456,615 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  oilseed  crush  facility,  which was  acquired  in March  2007,  were
$3,261,803 for the three months ended March 31, 2007 as compared to $452,463 for
the three months ended March 31, 2007 and were primarily attributable to oilseed
purchases and direct labor.

Included  within cost of revenue is  depreciation  and  amortization  expense of
$100,103  and  $48,251 for the three  months  ended  March 31,  2008,  and 2007,
respectively.  Depreciation and amortization  expense  increased by $51,852 over
the same period in 2007.

Gross Profit

Gross profit for three months ended March 31, 2008 was $1,773,850,  representing
a gross margin of 27.1%.  This  compared to $97,130 or 9.7%,  in the  comparable
period of the prior year.  The increase in margin as a  percentage  of sales was
primarily due to the Company's  changed business  operations during 2007 as well
as the development and early stage nature of those  operations  during the first
half of 2007.

We expect that our gross profit will increase due to the following factors:

     >>   Equipment & Technology Sales.

          We expect that our gross margins will  increase in the second  quarter
          due to planned construction and commissioning activities for our third
          party clients in our equipment and technology sales segment as well as
          increased  production  of corn oil and, with the  acquisition  of BIG,
          biodiesel.

     >>   Biofuel Production & Sales.

          Significant  increases  in gross  profit  can be  expected  during the
          balance  of 2008  as we  commission  additional  corn  oil  extraction
          facilities. Prior to the BIG acquisition, the contribution of corn oil
          sales to gross margins was less than $1.00 per gallon. Moving forward,
          since  we are now  directly  refining  our  extracted  corn  oil  into
          biodiesel,  the  contribution  of  corn  oil to our  gross  profit  is
          expected  to  increase  to  more  than  $2.00  per  gallon.  Plus,  an
          additional  $0.70 per gallon in gross profit is expected to the extent
          that we use our surplus  biodiesel  production  capacity (which equals
          our biodiesel  nameplate capacity less our current corn oil extraction
          rates) to refine waste fats, oils and greases into biodiesel at BIG.

                                       33
<PAGE>

Operating Expenses

Operating  expenses for the three  months  ended March 31, 2008 were  $1,288,271
compared to $3,222,159 for the same period in 2007. Included in the three months
ended March 31, 2008 was  $304,017 in  stock-based  compensation  as compared to
$1,997,861  for the three months ended March 31, 2007. The decrease in operating
expenses was primarily due to the Company's  changed business  operations during
2008 and included  non-recurring  equity and other transactions  relating to our
restructuring.

Management believes that selling,  general and administrative  expenses over the
next  reporting  period  will be  reduced  as a percent  of  revenue  due to our
recently  completed  restructuring.  Additional  decreases,  as a percentage  of
sales,  are expected as our biofuels,  culinary and equipment  sales  businesses
continue to grow.

Interest Expense

Interest  expense  for the three  months  ended  March 31,  2008 was  $1,328,743
representing  an  increase of $278,135  from  $1,050,608  for the same period in
2007.  This  increase was mostly due to the debt  service of the debt  financing
associated with the Company's  biodiesel  equipment sales and culinary oil sales
businesses.

Expenses Associated with Derivative Instruments

Gain from the change in the fair  market  value of  derivative  liabilities  was
$319,829  for the three  months  ended  March 31, 2008  compared  with a loss of
$436,180 for the three months  ended March 31,  2007.  Amortization  of deferred
financing costs and debt discounts was $1,114,096 and $1,543,532, respectively.

Net Income or Loss

Net loss from  continuing  operations for the three months ended March 31, 2008,
was $3,794,409 as compared to a loss of $4,357,564 from the same period in 2007.
Income for  discontinued  operations was $0 for the three months ended March 31,
2008 as compared to $55,918 for the three  months  ended March 31,  2007.  There
were no  preferred  dividends  for the three  months  ended  March  31,  2008 as
compared to preferred dividends of $151,875 for the three months ended March 31,
2007.  Net loss for the three  months ended March 31, 2008,  was  $3,794,409  as
compared to a loss of $4,453,521 from the same period in 2007.

The  Company  produced an adjusted  EBITDA of $920,324  during the three  months
ended  March 31,  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):
<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                    2008                      2007
                                                                       -----------------         -----------------

<S>                                                                    <C>                       <C>
Net income (loss)                                                      $     (3,794,406)         $     (4,453,521)

Adjustments to net income (loss) from operations:
   Interest expense                                                            1,328,743                 1,050,608
   Depreciation                                                                  100,103                    48,251
   Amortization of intangibles                                                   525,000                   525,801
   Amortization of debt discount and deferred financing                        1,114,096                 1,543,532
   Gain/loss on fair market value of derivatives                               (319,829)                   436,180
   Stock based compensation                                                      304,017                 1,997,861
   Loss on disposal of investment                                              1,662,600                        --
   Preferred dividends                                                                --                   151,875
   Gain from discontinued operations                                                  --               (2,494,946)
   Other non-recurring equity, restructuring and
    consolidation (income) expense, net                                               --                  (55,918)
                                                                       -----------------        ------------------

Adjusted EBITDA                                                        $         920,324         $     (1,250,277)
                                                                       =================         =================
</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

                                       34
<PAGE>

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.

DERIVATIVE LIABILITIES

As of March 31, 2008, the Company and its subsidiaries  had several  convertible
debentures due. The conversion  feature on these debentures is variable based on
trailing market prices and therefore contains an embedded  derivative.  We value
the conversion feature at the time of issuance using the Black-Scholes Model and
record a note discount and  derivative  liability for the calculated  value.  We
recognize  interest  expense for accretion of the note discount over the term of
the note. The derivative liability is valued at the end of each reporting period
and results in a gain or loss for the change in fair value.  Due to the volatile
nature of our stock, as well as the stock of our subsidiaries, the change in the
derivative  liability and the resulting gain or loss is usually  material to our
results.

The principal  amount on our convertible  debentures was $34,169,591 as of March
31, 2008 and the unamortized note discount was $2,319,455.  For the three months
ended March 31, 2008, we recognized  interest  expense for accretion of the debt
discount of $742,313  and a gain for the change in fair value of the  derivative
of $319,829 for these debentures. The total derivative liability as of March 31,
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.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated Cash Balances

As of March 31, 2008, we had a cash balance of $412,727, down from a balance of
$1,814,452 at March 31, 2007. This net cash is summarized below and discussed in
more detail in the subsequent sub-sections:

>>     Operating Activities         $1,335,924 of net cash
                                    used by operating activities primarily
                                    deriving from sales of equipment and
                                    technology as well as corn oil for biofuel
                                    production.

>>     Investing Activities         $3,987,337 of net cash
                                    used in investing activities mainly for
                                    purchase of equipment for and construction
                                    of our corn oil extraction facilities and
                                    oilseed crush facility.

>>     Financing Activities         $5,260,252 of net cash provided by financing
                                    activities was offset by an increase in
                                    related party debt.

Current and Prior Year Activity

Our primary  source of liquidity is cash provided by financing  activities.  For
the three months ended March 31, 2008, net cash used by our operating activities
was $1,335,924 as compared to the net cash provided by our operating  activities
of $701,893 for the three months ended March 31, 2007.

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

At March 31, 2008, accounts receivable,  net of allowance for doubtful accounts,
totaled  $2,650,855 and inventories  totaled  $3,896,902.  Accounts  payable and
accrued expenses totaled $6,614,003.

For the three  months  ended March 31,  2008,  we used  $3,987,337  in investing
activities  as compared to $744,111 used in investing  activities  for the three
months  ended March 31, 2007.  For the three  months ended March 31, 2008,  cash
from financing  activities  provided $5,260,252 as compared to $218,068 provided
by financing activities during March 31, 2007.

The Company had a working  capital  deficit of  $30,878,105  at March 31,  2008,
which includes $3,854,437 in purchase obligations,  $9,004,018 in amounts due to
the prior owners of our oilseed crush  facility and  $1,606,447 in related party
debt.  Despite their  classification  as current  liabilities  the $3,854,437 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

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<PAGE>


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 second  quarter  2008 into a form of  subsidiary  preferred
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 these amounts is $16,413,203.

Expected Activity Moving Forward

We intend to fund our  principal  liquidity  and capital  resource  requirements
through cash  provided by operations  and  borrowings  under our current  credit
agreement.  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.

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.

Cash Flows Provided By Operating Activities

Among our current  and known  sources of  operating  cash flows are our corn oil
extraction  facilities in Oshkosh,  Wisconsin and Medina, New York, our new corn
oil extraction facility in Marion,  Indiana (which is targeted for commissioning
in June 2008), and our biodiesel facility in Adrian,  Michigan.  Notwithstanding
any  contributions  to our cash flows from our  equipment or culinary oil sales,
these  four  facilities  alone are  expected  to  generate  over $45  million in
annualized  sales and  produce  about $10  million in cash flows from  operating
activities. This degree of cash flow alone is expected to be sufficient to cover
all of our debt service and operational cash needs for the foreseeable future.

Cash Flows Provided By Financing Activities

At the present time, the Company's only source of committed financing is its $10
million revolving credit facility,  the proceeds of which are to be used for the
construction of the Company's corn oil extraction facilities and general working
capital purposes related to those efforts.

We are  currently  investigating  the  availability  of  both  equity  and  debt
financing necessary to complete the balance of the Company's contracted corn oil
extraction,  biodiesel  production  and  oilseed  crush  projects.  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 a large
number of corn oil  extraction  facilities,  to expand of our culinary  oils and
biodiesel   production   facilities,   and  to  build  new  biofuels  production
facilities.















                                       36

<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 March 31,
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.




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<PAGE>



                           PART II - OTHER INFORMATION

ITEM 1            LEGAL PROCEEDINGS

The Company is party to the matter  entitled  LeBlanc v. Tomoiu,  et. al., which
action was filed in the Superior Court of  Connecticut.  The verified  complaint
seeks damages  relating to the acquisition by the Company's  former  subsidiary,
General Ultrasonics Corporation,  of the stock of H2 Energy Solutions, Inc. from
substantially all of its shareholders, as well as attorney's fees and costs. The
Company has responded to the verified complaint and denies any liability.

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.

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  $3,794,409  for the three months ended March 31, 2008.  As of March 31, 2008
the Company had  $412,727 in cash,  and  current  liabilities  exceeded  current
assets  by  $30,878,105  which  included  $3,854,437  in  purchase  obligations,
$9,004,018 in amounts due to the prior owners of our oilseed crush facility, and
$1,606,447  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  $16,413,203.  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
large scale  enterprises  in the  industry.  If  competition  reduces the prices

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<PAGE>

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.

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

                                       40
<PAGE>

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
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

                                       41
<PAGE>

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
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.

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<PAGE>

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 March 31, 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
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

                                       43
<PAGE>

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
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.


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<PAGE>
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.

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.

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<PAGE>
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.

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.


                                       46
<PAGE>



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 March 31,  2008,  we had  approximately  $55,666,719  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
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.


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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.

ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From time to time  during the three  months  ended  March 31,  2008 the  Company
issued a total of 1,356,517 shares to YA Global Investments, LP upon its partial
conversion  of the original $2.1 million  debenture in the  aggregate  amount of
$199,201.  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.


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ITEM 5   OTHER INFORMATION

None.

ITEM 6   EXHIBITS

The following are exhibits filed as part of GreenShift's Form 10QSB for the
quarter ended March 31, 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.



















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                                   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/        ED CARROLL
             ----------------------------------------
                        ED CARROLL,
                        Chief Financial and Accounting Officer


Date:         May 20, 2008































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