UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

                For the quarterly period ended September 30, 2005


[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

          For the transition period from _____________ to ___________.

                        Commission File Number: 000-50542


                          HYDROGEN ENGINE CENTER, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         NEVADA                        000-50542                82-0497807
----------------------------          -----------           --------------------
(State or other jurisdiction          (Commission             (IRS Employer
    of incorporation)                 File Number)          Identification No.)

                    602 East Fair Street, Algona, Iowa 50511
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (515) 295-3178

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

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

               24,494,504 shares of Common Stock, par value $.001
                        outstanding at November 6, 2005.

Transitional Small Business Disclosure Format (Check one): [ ] Yes   [X] No


<PAGE>



                                TABLE OF CONTENTS


PART I.    FINANCIAL INFORMATION

Item 1.  Unaudited Condensed Consolidated Financial Statements

     Unaudited Condensed Consolidated Balance Sheets
     September 30, 2005 and December 31, 2004.............................   3

     Unaudited Condensed Consolidated Statements of Operations Three
     Months Ended September 30, 2005 and 2004; Nine Months
     Ended September 30, 2005 and 2004; Period from inception
     to September 30, 2005.................................................   4

     Unaudited Condensed Consolidated Statements of Stockholders' Equity
     (Deficit).............................................................   5

     Unaudited Condensed Consolidated Statements of Cash Flows Three
     Months Ended September 30, 2005 and 2004; Nine Months
     Ended September 30, 2005 and 2004; Period from inception
     to September 30, 2005.................................................   6

     Notes to Unaudited Condensed Consolidated Financial Statements........   7

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations.....................  14

Item 3.  Controls and Procedures...........................................  25

     PART II.   OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use...................  25
         of Proceeds

Item 4.  Submission of Matters to a Vote of Security Holders...............  25

Item 6.  Exhibits..........................................................  26

Notes About Forward-looking Statements.....................................  26

Signatures.................................................................  26




                                      -2-
<PAGE>

ITEM 1.  FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                  Hydrogen Engine Center, Inc. and Subsidiaries
                    (a corporation in the development stage)
                      Condensed Consolidated Balance Sheets
                                                                       September 30,  December 31,
                                                                            2005          2004
                                                                        -----------    -----------
                                                                        (unaudited)
Assets
------
Current Assets:
<S>                                                                     <C>            <C>
     Cash and cash equivalents                                          $ 3,482,958    $    19,808
     Accounts receivable                                                      2,900           --
     Inventories                                                            143,966        102,124
     Prepaid expenses                                                        25,160          3,163
                                                                        -----------    -----------
Total current assets                                                      3,654,984        125,095

Property and equipment, at cost:
     Land                                                                   146,124           --
     Building - construction in process                                     227,950           --
     Vehicles                                                                 5,000          5,000
     Equipment                                                              154,488         64,453
     Leasehold improvements                                                  13,772         13,772
                                                                        -----------    -----------
                                                                            547,334         83,225
           Less accumulated depreciation and amortization                    37,406         21,882
                                                                        -----------    -----------
                                                                            509,928         61,343
                                                                        -----------    -----------
Total assets                                                            $ 4,164,912    $   186,438
                                                                        ===========    ===========
Liabilities and stockholders' equity (deficit)
Current liabilities:
     Accounts payable                                                   $    83,407    $     1,022
     Accrued expenses                                                        30,557         17,130
     Current portion of long-term debt (Note 2)                              20,000           --
                                                                        -----------    -----------
Total current liabilities                                                   133,964         18,152

Long-term debt:
     Note payable - City of Algona (Note 2)                                 180,000           --
     Note payable - AAEDC (Note 2)                                          146,124           --
     Convertible note payable - Stockholder (Note 2)                         17,280         17,280
     Convertible notes payable - Others (Note 2)                            539,771        269,772
                                                                        -----------    -----------
Total long-term debt                                                        883,175        287,052
                                                                        -----------    -----------
Total liabilities                                                         1,017,139        305,204

Commitments and Contingencies (Note 6)

Stockholders' equity (deficit)
     Preferred stock, $0.001 par value; 10,000,000 shares
         authorized, none issued  (Note 4)                                     --             --
     Common  stock, $0.001 par value; 100,000,000 shares authorized
         (10,000,000 at December 31, 2004), 24,494,504
         shares issued & outstanding (2,000,000 at December 31, 2004)        24,495          2,000
     Additional paid-in capital                                           4,245,381        137,352
     Deficit accumulated during the development stage                      (825,271)      (258,118)
     Unearned compensation                                                 (296,832)          --
                                                                        -----------    -----------
Total stockholders' equity (deficit)                                      3,147,773       (118,766)
                                                                        -----------    -----------
Total liabilities and stockholders' equity (deficit)                    $ 4,164,912    $   186,438
                                                                        ===========    ===========
</TABLE>

      See accompanying notes.
                                      -3-
<PAGE>

<TABLE>
<CAPTION>
                  Hydrogen Engine Center, Inc. and Subsidiaries
                    (a corporation in the development stage)
           Condensed Consolidated Statements of Operations (unaudited)

                                                                                                       Period from May
                            Three Months Ended September 30      Nine Months Ended September 30            19, 2003
                            -------------------------------       ----------------------------         (inception) to
                                 2005            2004                  2005           2004              September 30,
                             ------------    ------------         ------------    ------------         ------------
<S>                          <C>             <C>                  <C>             <C>                  <C>
Sales                        $      7,287    $      3,800         $     20,887    $      3,800         $     40,347
Cost of sales                       7,326           3,500               13,521           3,500               17,621
                             ------------    ------------         ------------    ------------         ------------

Gross profit                          (39)            300                7,366             300               22,726

Sales and marketing                68,354            --                 87,983           7,101              100,084
General and
   administrative                 256,166          36,454              317,766          91,500              503,344
Research and
   development                    113,637           6,258              156,342          12,654              217,954
                             ------------    ------------         ------------    ------------         ------------
                                  438,157          42,712              562,091         111,255              821,382
                             ------------    ------------         ------------    ------------         ------------

Operating loss                   (438,196)        (42,412)            (554,725)       (110,955)            (798,656)

Other income (expense):
   Interest income                  9,492             109               10,589             738               11,332
   Interest expense               (10,665)         (4,341)             (23,017)        (10,589)             (37,947)
                             ------------    ------------         ------------    ------------         ------------
                                   (1,173)         (4,232)             (12,428)         (9,851)             (26,615)
                             ------------    ------------         ------------    ------------         ------------

Net loss                     $   (439,369)   $    (46,644)        $   (567,153)   $   (120,806)        $   (825,271)
                             ============    ============         ============    ============         ============

Weighted average shares
   outstanding                 18,954,208      16,297,200           17,192,602      16,297,200           16,579,795
                             ============    ============         ============    ============         ============

Basic and diluted net loss
   per share                 $      (0.02)   $      (0.00)        $      (0.03)   $      (0.01)        $      (0.05)
                             ============    ============         ============    ============         ============
</TABLE>

See accompanying notes.
                                      -4-
<PAGE>

<TABLE>
<CAPTION>

                  Hydrogen Engine Center, Inc. and Subsidiaries
                    (a corporation in the development stage)
 Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)

                                                                                    Deficit
                                                                                  Accumulated
                                   Common Stock       Common       Additional      During the
                                      Shares          Stock         Paid-in        Development      Deferred
                                                      Account       Capital           Stage       Compensation       Total
                                   ------------    ------------   ------------    ------------    ------------    ------------
<S>                                   <C>          <C>            <C>             <C>             <C>             <C>
Issuance of common stock to
   founder in exchange for
   equipment and expenses
   incurred by founder                2,000,000    $      2,000   $     98,165    $       --      $       --      $    100,165

Net loss                                   --              --             --           (65,642)           --           (65,642)
                                   ------------    ------------   ------------    ------------    ------------    ------------


Balance at 12/31/03                   2,000,000           2,000         98,165         (65,642)           --            34,523

Company-related expenses paid
   by founder                              --              --           39,187            --              --            39,187

Net loss                                   --              --             --          (192,476)           --          (192,476)
                                   ------------    ------------   ------------    ------------    ------------    ------------


Balance at 12/31/04                   2,000,000           2,000        137,352        (258,118)           --           118,766)

Company-related expenses paid
   by founder                              --              --           12,135            --              --            12,135

Exchange of previous shares by
   sole shareholder of HECI          (2,000,000)           --             --              --              --              --

Issuance of common stock to
   the sole shareholder of HECI
   in connection with the merger     16,297,200          14,297        (14,297)           --              --              --

Shares in acquired Company in
   reverse merger                     1,006,000           1,006         (1,006)           --              --              --

Stock split of 3.8 to 1 prior to
   the merger                         2,816,804           2,817         (2,817)           --              --              --

Issuance of restricted common
   stock to employees and
   directors                            426,000             426        425,574            --          (296,832)        129,168

Issuance of common stock in
   connection with the private
   offering                           3,948,500           3,949      3,590,940            --              --         3,594,889

Consultant compensation
   associated with stock options           --              --           97,500            --              --            97,500

Net loss                                   --              --             --          (567,153)           --          (567,153)
                                   ------------    ------------   ------------    ------------    ------------    ------------


Balance at 9/30/05 (unaudited)       24,494,504    $     24,495   $  4,245,381    $   (825,271)   $   (296,832)   $  3,147,773
                                   ============    ============   ============    ============    ============    ============
</TABLE>

See accompanying notes.

                                      -5-
<PAGE>

<TABLE>
<CAPTION>
                                 Hydrogen Engine Center, Inc. and Subsidiaries
                                   (a corporation in the development stage)
                          Condensed Consolidated Statements of Cash Flows (unaudited)

                                                           Three Months Ended            Nine Months Ended       Period from
                                                              September 30                 September 30         May 19, 2003
                                                    --------------------------    --------------------------   (inception) to
                                                        2005          2004           2005           2004       Sept. 30, 2005
                                                    -----------    -----------    -----------    -----------    -----------
<S>                                                 <C>            <C>            <C>            <C>            <C>
Operating activities:
Net loss                                            $  (439,369)   $   (46,644)   $  (567,153)   $  (120,806)   $  (825,271)
Adjustments to reconcile net loss to net
  cash used in operating activities:
     Depreciation and amortization                        7,132          3,981         15,524         11,942         37,406
     Compensation given to directors and
       employees in restricted stock                    129,168           --          129,168           --          129,168
     Compensation given to contractors
       in stock options                                  97,500           --           97,500           --           97,500
     (Increase) decrease in:
       Accounts receivable                                4,910         (3,819)        (2,900)        (3,819)        (2,900)
       Inventories                                      (13,282)        (5,800)       (41,840)       (78,784)      (143,964)
       Prepaid expenses                                 (21,998)         1,365        (21,998)        (8,185)       (25,161)
       Accrued interest receivable                        1,058           --             --             --             --
     Increase (decrease) in:
       Accounts payable                                  81,407        (15,026)        94,520          4,760        187,043
       Accrued expenses                                   3,176          4,477         13,427         10,524         30,557
                                                    -----------    -----------    -----------    -----------    -----------
Net cash used in operating activities                  (150,298)       (61,466)      (283,752)      (184,368)      (515,622)

Investing activities:
     Purchases of property and equipment               (317,400)          --         (317,986)       (29,733)      (353,360)
                                                    -----------    -----------    -----------    -----------    -----------
Net cash used in investing activities                  (317,400)          --         (317,986)       (29,733)      (353,360)

Financing activities:
     Proceeds from note payable - bank                     --             --          650,000           --          650,000
     Proceeds from long-term debt - stockholder            --             --             --             --           17,280
     Proceeds from long-term debt - others              309,999           --          469,999        201,772        744,771
     Payment on note payable - bank                    (650,000)          --         (650,000)          --         (650,000)
     Payment on long-term debt                             --             --             --           (5,000)        (5,000)
     Issuance of common stock in private offering     3,948,500           --        3,948,500           --        3,948,500
     Payment of expenses in connection with the
        merger                                         (353,611)          --         (353,611)          --         (353,611)
                                                    -----------    -----------    -----------    -----------    -----------

Net cash provided by financing activities             3,254,888           --        4,064,888        196,772      4,351,940
                                                    -----------    -----------    -----------    -----------    -----------

Net increase (decrease) in cash and cash equiv        2,787,190        (61,466)     3,463,150        (17,329)     3,482,958

Cash and cash equivalents at beginning of period        695,768         93,994         19,808         49,857           --
                                                    -----------    -----------    -----------    -----------    -----------


Cash and cash equivalents at end of period          $ 3,482,958    $    32,528    $ 3,482,958    $    32,528    $ 3,482,958
                                                    ===========    ===========    ===========    ===========    ===========
Supplemental disclosures of cash flow activities:
     Interest paid                                  $     7,106    $      --      $     7,190    $       200    $     7,390

Supplemental schedule of non-cash financing
  and investing activities:
     Additional paid-in capital contribution in
       exchange for expenses paid by founder        $      --      $      --      $    12,135    $      --      $   103,636


     Issuance of common stock and paid-in
       capital through contribution of equipment    $      --      $      --      $      --      $      --      $    47,851

     Acquisition of land through financing          $   146,124    $      --      $   146,124    $      --      $   146,124
</TABLE>


See accompanying notes.

                                      -6-
<PAGE>

                  HYDROGEN ENGINE CENTER, INC. AND SUBSIDIARIES
                    (a corporation in the development stage)
        Notes to Condensed Consolidated Financial Statements (Unaudited)
                               September 30, 2005

1.  Nature of Business and Significant Accounting Policies

Nature of Operations

On August 30, 2005,  Hydrogen Engine Center,  Inc, an Iowa corporation  ("HECI")
merged with our newly  formed  subsidiary  (the  "Merger").  The Merger was made
pursuant  to an  agreement  entered  into on June 3, 2005,  whereby we agreed to
merge our newly created, wholly-owned subsidiary, Green Mt. Acquisitions,  Inc.,
with and into HECI, with HECI being the surviving entity.  Following the Merger,
we changed our name from Green Mt. Labs,  Inc. to Hydrogen  Engine Center,  Inc.
(the  "Company,"  "HYEG," "us," "we," or "our").  Since its inception on May 19,
2003,  HECI has been engaged in designing,  developing  and planning  toward the
manufacturing  of  internal  combustion  engines  that may be  fueled  either by
hydrogen or gasoline for the industrial and power generation  markets.  HECI has
established a process for converting certain Ford internal combustion engines to
run  efficiently on hydrogen fuel.  Hydrogen as a fuel can be readily  extracted
from water,  any hydrocarbon  fuel or biomass.  The Company expects to file core
technology patents covering the use of hydrogen fuel in any internal  combustion
engine with zero or near zero emissions.

The  Company  is in the  development  stage.  This  stage  is  characterized  by
significant  expenditures  for  the  design  and  development  of the  Company's
products and manufacturing  processes, and for construction of the Company's new
building.  Once the Company's planned principal operations  commence,  its focus
will be on the  manufacturing  and  marketing  of its  hydrogen and other fueled
engines and the continued research and development of new products.

In connection with the formation and  capitalization  of the Company,  shares of
common  stock  were  issued  for  other  than cash  consideration  and have been
assigned amounts  equivalent to the fair value of the expense or assets received
in exchange.

Merger

HECI entered into an agreement with Green Mt. Labs, Inc., a Nevada  corporation,
("Green Mt.") under which HECI was acquired by Green Mt. and HECI,  along with a
newly  created  subsidiary  of Green Mt.,  entered into an agreement and plan of
merger on June 3, 2005 and  executed a revised and amended  agreement on July 6,
2005 and an addendum on July 29, 2005. Pursuant to that agreement, the Green Mt.
subsidiary  was merged with and into HECI.  We issued  16,297,200  shares of our
authorized,  but previously  unissued common stock,  to the sole  stockholder of
HECI in exchange for all of the issued and outstanding common stock of HECI.

Upon the closing of the acquisition,  all of our existing officers and directors
resigned and four (4) new  directors  and new  management  were  appointed.  The
acquisition  closed on August 30, 2005 and became  effective  upon the filing of
the  Articles  of Merger with the  offices of the  Secretaries  of the States of
Nevada and Iowa.

At the effective time of the merger,  the sole  stockholder of the Company owned
81.0% of the  outstanding  shares of our common  stock.  We offered a maximum of
4,000,000  of our shares of common  stock to  certain  selected  investors  in a
private  offering  at the price of $1.00  per  share.  3,948,500  shares in this
private offering have been issued.

                                      -7-
<PAGE>

The transaction has been accounted for as a recapitalization, which is accounted
for  similar to the  issuance of stock by HECI for the net assets of the Company
with no  goodwill  or other  intangibles  being  recorded.  Concurrent  with the
closing, Green Mt. changed its name to Hydrogen Engine Center, Inc.

Cash and Cash Equivalents

The Company considers highly-liquid investments with a maturity of six months or
less to be cash  equivalents.  The Company maintains all of its cash balances in
two  institutions.  At  various  times  during the three and nine  months  ended
September  30,  2005,  the  maintained  balances  were in excess of the $100,000
balance  insured by the  Federal  Deposit  Insurance  Corporation.  The  Company
believes  it is not  exposed  to any  significant  credit  risk on cash and cash
equivalents.

Inventories

Inventories  consist  mainly of parts,  finished  engines and  gensets  that are
stated at the lower of cost  (determined by the first-in,  first-out  method) or
market value.

Property and Equipment

Property and equipment are recorded at cost.  Depreciation is computed using the
following  straight-line method over the estimated useful lives of the assets as
follows:
                                                    Years
                                                    -----
                  Vehicles                           5
                  Equipment                         5-7

Depreciation  expense was $7,132 and $3,981 for the three months ended September
30, 2005 and 2004,  $15,524 and $11,942 for the nine months ended  September 30,
2005 and 2004,  and  $37,406 for the period  from May 19,  2003  (inception)  to
September 30, 2005, respectively.

Warrants

As described in Note 6, the Company has granted  warrants to certain  finders in
the private placement,  entitling the finders to purchase 69,640 shares at $1.00
per share. Based on Emerging Issues Task Force 00-19,  Accounting for Derivative
Financial  Instruments  Indexed to, and  Potentially  Settle in, a Company's Own
Stock,   the  sale  of  the  warrants  was  reported  in  permanent  equity  and
accordingly,  there is no impact on the Company's financial position and results
of operation. Subsequent changes in fair value will not be recognized as long as
the warrants continue to be classified as equity instruments.

Income Taxes

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards  ("SFAS")  109,  Accounting  for Income  Taxes,  which  provides for a
liability approach to accounting for income taxes.  Under this method,  deferred
tax assets and liabilities are determined  based on the differences  between the
financial  reporting  and tax bases of assets and  liabilities  and are measured
using the  enacted  tax rates that will be in effect  when the  differences  are
expected to reverse. A valuation  allowance is established,  when necessary,  to
reduce deferred tax assets to the amount expected to be realized.

                                      -8-
<PAGE>

The  Company  recorded  a  deferred  income  tax asset for the tax effect of net
operating  loss  carry  forwards  and  temporary   differences   aggregating  to
approximately  $158,000 and $52,000 at September 30, 2005 and December 31, 2004,
respectively.  These operating loss  carryforwards will begin to expire in 2018.
In recognition of the  uncertainty  regarding the ultimate  amount of income tax
benefits to be derived,  the Company has recorded a full valuation  allowance at
September 30, 2005 and December 31, 2004.

The  effective  tax  rate  differs  from  the  statutory  rate of 34% due to the
increase in the valuation allowance.

Advertising Costs

The Company expenses advertising costs as they are incurred.

Research and Development Costs

Research, development and product improvement costs were $113,637 and $6,248 for
the three months ended September 30, 2005 and 2004, $156,342 and $12,654 for the
nine months ended  September 30, 2005 and 2004, and $217,954 for the period from
May 19, 2003 (inception) to September 30, 2005, respectively.

Net Loss Per Share

The Company  computes net loss per share under the  provisions  of SFAS No. 128,
"Earnings per Share" (SFAS 128), and SEC Staff  Accounting  Bulletin No. 98 (SAB
98).

Under the provisions of SFAS 128 and SAB 98, basic loss per share is computed by
dividing the Company's net loss for the period by the weighted-average number of
shares of common stock outstanding during the period. Diluted net loss per share
excludes  potential common shares if the effect is  anti-dilutive.  Diluted loss
per share is  determined  in the same manner as basic loss per share except that
the  number  of shares is  increased  assuming  exercise  of  convertible  debt,
dilutive  stock options,  and warrants  using the treasury stock method.  As the
Company had a net loss,  the impact of the assumed  exercise of the  convertible
debt, stock options,  and warrants is  anti-dilutive  and as such, these amounts
have been excluded from the calculation of diluted loss per share.

Interim Financial Statements

The financial statements as of September 30, 2005 are unaudited.  In the opinion
of  management,  all  adjustments  (consisting  of  normal  recurring  accruals)
considered  necessary for a fair  representation  in accordance  with accounting
principles  generally  accepted  in the  United  States  of  America  have  been
included.  Operating results for interim periods are not necessarily  indicative
of the results that may be expected for the year ending December 31, 2005.

Use of Estimates

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

                                      -9-
<PAGE>

Fair Value of Financial Instruments

The  carrying   amounts  reported  in  the  balance  sheet  for  cash  and  cash
equivalents,   accounts  receivable,   accounts  payable  and  accrued  expenses
approximate their fair value due to the short-term nature of these instruments.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its  subsidiaries  HECI and  Hydrogen  Engine  Center  (HEC)  Canada,  Inc.  All
intercompany balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In December  2004,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards  (SFAS) No.  123(R),  "Share-Based
Payment"  (SFAS  123R).  The  statement   requires  all  entities  to  recognize
compensation  expense  in an  amount  equal  to the fair  value  of  share-based
payments granted to employees.  The statement  eliminates the alternative method
of accounting  for employee  share-based  payments  previously  available  under
Accounting Principles Board (APB) Opinion No. 25 "Accounting for Stock Issued to
Employees"  (APB 25) and SFAS 123. In April 2005,  the  Securities  and Exchange
Commission  amended  the  compliance  dates to allow small  business  issuers to
implement  SFAS 123(R) at the beginning of 2006.  The Company plans to implement
SFAS 123(R) in 2006.

Stock-Based Compensation

As permitted by SFAS No. 123,  "Accounting  for Stock-Based  Compensation,"  the
Company has elected to follow APB Opinion No. 25,  "Accounting  for Stock Issued
to  Employees,"  ("APB No. 25") and  related  interpretations  for its  employee
stock-based  compensation.   Under  APB  No.  25,  no  compensation  expense  is
recognized  at the time of option  grant if the  exercise  price of the employee
stock  option is fixed and  equals or exceeds  the fair value of the  underlying
common stock on the date of grant and the number of shares to be issued pursuant
to the  exercise  of such  option are known and fixed at the date of grant.  The
Board of Directors determines the fair value of common stock.

The Company accounts for options issued to non-employees  under SFAS No. 123 and
Emerging  Issues Task Force Issue  ("EITF") No.  96-18,  "Accounting  for Equity
Instruments  that are  Issued  to Other  Than  Employees  for  Acquiring,  or in
Conjunction  with Selling,  Goods,  or Services".  Therefore,  the fair value of
options  issued to  non-employees  is recorded  as an expense  and  periodically
remeasured over the vesting terms.

The  following  table  illustrates  the effect on net loss as if the Company had
applied  the  fair  value  recognition   provisions  for  stock-based   employee
compensation  of SFAS No.  123,  as amended  by SFAS No.  148,  "Accounting  for
Stock-Based Compensation -- Transition and Disclosure".

                                      -10-
<PAGE>

<TABLE>
<CAPTION>

                                                                                                       Period From
                                            Three Months Ended              Nine Months Ended          May 19, 2003
                                            September 30,                     September 30,          (Inception) to
                                    ----------------------------    ------------------------------    September 30,
                                        2005            2004            2005             2004              2005
                                    ------------    ------------    ------------    --------------    ------------

<S>                                 <C>             <C>             <C>             <C>               <C>
Net loss, as reported               $   (439,369)   $    (46,664)   $   (567,153)   $(120,806)        $   (825,271)
Add: stock-based
 employee compen-
 sation expense included
 in reported net income
 (loss)                                  129,168            --           129,168              --           129,168
Deduct: stock-based
 employee compensation
 expense determined under
 fair value based method
 for all awards                         (237,001)           --          (237,001)             --          (237,001)
                                    ------------    ------------    ------------    --------------    ------------
Pro forma net loss                  $   (547,202)   $    (46,644)   $   (674,986)   $     (120,806)   $   (933,104)

Net loss per common share:
   Basic and diluted,
     as reported                    $      (0.02)   $      (0.00)   $      (0.03)   $        (0.01)   $      (0.05)
   Basic and diluted,
     pro forma                      $      (0.03)   $      (0.00)   $      (0.04)   $        (0.01)   $      (0.06)

Weighted average number of common
 shares:
   Basic and diluted                  18,954,208      16,297,200      17,192,602        16,297,200      16,579,795
</TABLE>

For purposes of pro forma  disclosures,  the estimated fair value of the options
granted is amortized to expense over the option vesting periods.

The Company has an incentive  compensation plan under which  participants may be
granted  options to purchase  shares of the  Company's  common  stock or receive
restricted  stock.  Restricted  stock and options may be granted with respect to
2,000,000  shares.  On September 1, 2005,  grants were made under the plan for a
total of 1,220,000  shares,  leaving 780,000 shares available for future grants.
Of the shares which were the subject of these  grants,  426,000 were  restricted
stock,  464,000 were qualified incentive stock options ("ISOs") and 330,000 were
non qualified stock options.  The ISOs that have been granted to employees under
the  Company's  plan vest ratably  over a four-year  period and expire ten years
from the date of grant.  All options were granted at exercise prices that either
equaled or exceeded fair market value at the respective dates of grant.

A  summary  of  ISOs  granted  to  employees   under  the  Company's   incentive
compensation plan is presented below (in thousands, except per share data).

                                      -11-
<PAGE>


<PAGE>
                                                   Weighted
                                                   Average            Number
                               Outstanding      Exercise Price      of Shares
                                 Options          Per Share         Exercisable
                               -------------   -----------------   -------------
Granted                                  464   $            1.00            100
Forfeited                               --                  --              --
Exercised                               --                  --              --
                               -------------   -----------------   -------------
Balance at September 30, 2005            464   $            1.00             100
                               =============   =================   =============

The weighted-average  fair values of ISOs granted to employees during the period
ended September 30, 2005 was $1.00 per share.

The weighted-average exercise prices and weighted-average  remaining contractual
lives of the Company's outstanding ISOs granted to employees as of September 30,
2005 are $1.00 and 10 years respectively.

For  purposes of pro forma  disclosures,  the  estimated  fair value of the ISOs
granted to employees is amortized to expense over the option vesting periods.

The Company has determined,  based on the Black-Scholes  option pricing formula,
the fair value of ISOs at date of  issuance,  was $1.00 per share,  using a risk
free interest rate of 3.81%,  expected life of 10 years, zero expected dividends
and estimated volatility of 190%.

In addition,  the option  valuation  models  require input of highly  subjective
assumptions.  Because changes in the subjective input assumptions can materially
affect the fair value estimate,  in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of ISOs. The
pro forma net loss may not be  representative  of  future  disclosure  since the
estimated fair value of ISOs is amortized to expense over the vesting period and
additional options may be granted in future years.

2.  Long - Term Debt

Convertible  debt payable to a stockholder  and various  other  parties  require
annual  payments of interest  at 6% and are  payable  after five (5) years.  The
Company had not made any interest  payments on these notes as of  September  30,
2005.  These note  holders  have the right to convert the initial  loan value to
Company stock at a price ranging from 80% to 100% of the share price paid by the
outside  investors.  The note holders can elect to be paid in full within thirty
(30) days after the closing of the first  outside round of equity  funding.  The
Company has been notified that all of these notes will be converted to stock. As
a result of these conversions, approximately 663,401 shares of common stock will
be issued.

The note  payable to the City of Algona  requires  quarterly  payments of $5,000
starting  April 1, 2006 and a final payment due October 1, 2015. The interest on
this loan is 0%, subject to certain job creation and retention requirements.  If
such  requirements are not met,  interest on the loan will be payable at 10% per
annum.

The note payable of $146,124 to the Algona Area Economic Development Corporation
is  payment  for  land  received  to be  used  for the  construction  of the new
facility. The loan is a ten (10) year partially forgivable loan with interest at
8%, conditioned upon the Company achieving performance targets as follows:

                                      -12-
<PAGE>

     -   $67,650 of principal  and interest  will be forgiven if the Company has
         certified that it has created fifty (50) new full-time  equivalent jobs
         by June 1, 2010.
     -   $67,650 of principal  and interest  will be forgiven if the Company has
         certified  that  is has  created  one  hundred  (100)  new  full-  time
         equivalent jobs by June 1, 2015.
     -   Balance of $10,824 due on June 1, 2015 without interest if paid by that
         date.

Future  maturities  of long-term  debt  (exclusive of  convertible  debt) are as
follows:

                  Years (Period) ending December 31:

          2005 (Period)                         $       --
          2006                                      20,000
          2007                                      20,000
          2008                                      20,000
          2009                                      20,000
          Thereafter                               266,124
                                                ------------
                                                   346,124
                           Less current portion    (20,000)
                                                ------------
                                                $  326,124

3.  Operating Leases

The Company leases a building which is used for  production,  storage and office
space. The Company is responsible for insurance and repairs. This lease requires
monthly  rental  payments of $600 and expires on May 30, 2006.  At the option of
the Company,  the lease can be extended for two (2) additional terms at $650 per
month for the first year and $700 per month for the second  year.  Rent  expense
under this lease was $1,800 and $1,800 for the three months ended  September 30,
2005 and 2004,  $6,600 and $4,800 for the nine months ended  September  30, 2005
and 2004, and $26,900 for the period from May 19, 2003  (inception) to September
30, 2005, respectively.

The following is a schedule of future  non-cancelable  lease obligations for the
building:

                  Year (Period) ending December 31:

          2005 (Period)                          $   1,800
          2006 (Year)                                3,000
                                                 ------------
                                                 $   4,800

The Company  also leases  storage  sheds on a  month-to-month  lease for various
amounts.  Rent expense under this lease was $0 and $420 for the three months and
nine months ended September 30, 2005, respectively.

4.  Preferred Stock

The Company is authorized  to issue  10,000,000  shares of preferred  stock with
such designations, voting and other rights and preferences, as may be determined
from time to time by the Board of Directors.

                                      -13-
<PAGE>

5.  Common Stock

Prior to the merger of Green Mt. with HECI,  Green Mt.  amended its  Articles of
Incorporation to increase its authorized  shares from 10,000,000 to 100,000,000.
It also  effected a 3.8 to 1 stock split and, in  connection  therewith,  issued
2,816,804 more shares.

In connection with the merger,  Green Mt. issued  16,297,200  shares to the sole
shareholder of HECI in exchange for HECI's stock.

On September 1, 2005, the Company  issued 426,000 shares of restricted  stock to
directors and employees. Part of the stock is vested immediately and the balance
is vested each year through September 1, 2009. All unvested shares of restricted
stock are subject to a risk of forfeiture upon termination of the  participant's
service as a full-time consultant or employee prior to vesting.

During  September 2005, the Company issued 3,948,500 shares in connection with a
private offering.

6.   Commitments and Contingencies

In August 2005, the Company issued  warrants to purchase up to a total of 69,640
shares,  for services rendered in connection with the private offering of stock.
These are  warrants to purchase  Company  stock,  for $1 per share for the first
three years and $1.50 for years four and five. The warrants  expire on the fifth
anniversary date from issuance.

During 2005, the Company acquired a parcel of land located in Algona,  Iowa, for
approximately  $146,000.  In August  2005,  the  Company  began  constructing  a
manufacturing facility at an approximate cost of $1,200,000 for Phase 1. Phase I
of the project is expected to be completed in December 2005,  with the remaining
phases to be completed during 2006, and will be financed through a bank mortgage
agreement  and notes  from  governmental  entities.  Proceeds  from the  Private
Offering are also available and could be applied toward construction costs.

7.       Subsequent Event

As of November 17, 2005, the  convertible  note payable - stockholder  ($17,280)
and  convertible  notes payable - others  ($539,771) are in the process of being
converted to 663,401  shares of common stock as allowed in their  original  loan
agreement.

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

         THE FOLLOWING  DISCUSSION  AND ANALYSIS  SHOULD BE READ IN  CONJUNCTION
WITH THE OTHER FINANCIAL  INFORMATION AND CONSOLIDATED  FINANCIAL STATEMENTS AND
RELATED NOTES APPEARING IN THIS FORM 10-QSB.  THIS DISCUSSION  CONTAINS  FORWARD
LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS WILL
DEPEND UPON A NUMBER OF FACTORS  BEYOND OUR CONTROL AND COULD DIFFER  MATERIALLY
FROM THOSE ANTICIPATED IN THE FORWARD LOOKING STATEMENTS.  SOME OF THESE FACTORS
ARE DISCUSSED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS FORM 10-QSB.


                                      -14-
<PAGE>

                                     MERGER

         On August 30, 2005,  Hydrogen Engine Center,  Inc, an Iowa  corporation
("HECI") merged with our newly formed subsidiary (the "Merger").  The Merger was
made pursuant to an agreement entered into on June 3, 2005, whereby we agreed to
merge our newly created, wholly-owned subsidiary, Green Mt. Acquisitions,  Inc.,
with and into HECI, with HECI being the surviving entity.  Following the Merger,
we changed our name from Green Mr. Labs,  Inc. to Hydrogen  Engine Center,  Inc.
(the "Company," "HYEG," "us," "we," or "our").

         On July 6, 2005, we revised  certain terms of the proposed  Merger and,
accordingly,  executed a revised and amended  agreement  and plan of merger.  On
July 29,  2005,  we added an addendum to the  agreement.  The revised  agreement
provided  for  effecting  a 3.8 shares for 1 share  forward  stock  split of our
issued and  outstanding  common stock,  instead of the previously  announced 1.5
shares for 1 share split.  The split was payable August 17, 2005 to stockholders
of record on August 16, 2005.  As a result of the revised  forward  stock split,
our  outstanding  shares of common  stock  increased  from  1,006,000  shares to
approximately 3,822,804 shares, representing 19% of the total outstanding shares
following  consummation of the Merger.  Under the terms of the merger agreement,
we issued 16,297,200 shares of post-split common stock  (representing 81% of our
total  outstanding  shares  (post-split)   following  the  transaction)  to  Ted
Hollinger, who was prior to the Merger HECI's sole stockholder,  in exchange for
100% of  HECI's  then  outstanding  capital  stock,  and  HECI  has  become  our
wholly-owned subsidiary. In connection with the Merger, we have changed our name
to Hydrogen Engine Center, Inc.

         We also  commenced a private  placement of up to four million shares of
our common stock at the offering  price of $1.00 per share,  which  offering was
closed as of October 11, 2005 (the "Private Offering"). We sold 3,948,500 shares
of our common stock, $.001 par value, for a total of $3,948,500 to approximately
93  investors,   which  represents  16.1%  of  the  now  24,494,504  issued  and
outstanding  shares of common  stock of the  Company.  The  shares  were sold in
reliance  upon an exemption  from  registration  pursuant to Regulation D, Rules
Governing the Limited Offer and Sale of Securities  without  Registration  under
the  Securities Act of 1933.  Funds relating to the Private  Offering had either
been  released  to the  Company,  or were  being held in escrow on behalf of the
Company, as of September 30, 2005.

         The accompanying  condensed  consolidated balance sheet as of September
30, 2005 and the condensed  consolidated  statements of operations for the three
and nine months ended September 30, 2005,  consolidate the historical  financial
statements of the company with HECI after giving effect to the Merger where HECI
is the accounting acquirer and after giving effect to the Private Offering.


                                    OVERVIEW

         As a result of the Merger we have assumed all of the operations, assets
and  liabilities  of  HECI.  HECI is a  development  stage  company  engaged  in
designing,  developing and manufacturing internal combustion engines that may be
fueled either by hydrogen or gasoline for the  industrial  and power  generation
markets.  HECI has  established a process for  converting  certain Ford internal
combustion  engines to run efficiently on hydrogen fuel.  Hydrogen as a fuel can
be readily  extracted from water, any hydrocarbon fuel or biomass.  HECI expects
to  file  core  technology  patents  covering  the use of  hydrogen  fuel in any
internal combustion engine with zero or near zero emissions.

         HECI  was  incorporated  on May  19,  2003 by Ted  Hollinger,  formerly
Director of  Engineering  at Ford Motor Company and Vice  President of the Power
Conversion  Group at Ballard  Power  Systems,  responsible  for  development  of


                                      -15-
<PAGE>

hydrogen engine gensets.  Operations  commenced with the lease of the facilities
in Algona,  Iowa.  Mr.  Hollinger,  left Ballard with the ultimate  intention of
continuing the commercialization of hydrogen engines.

         HECI has funded its  operations  from inception  through  September 30,
2005 through a series of financing  transactions,  including  an  investment  of
$151,487  by Ted  Hollinger;  $3,948,500  in gross  proceeds  from  the  Private
Offering,  and convertible  loans in the amount of $557,051.  All holders of the
convertible notes have indicated a desire to convert the notes into shares. Upon
conversion of these notes we will issue an additional 663,401 shares.

Critical Accounting Policies

         Our  discussion  and analysis of our financial  position and results of
operations are based upon our condensed consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America. The preparation of these condensed consolidated
financial  statements  requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and the disclosure of contingent
assets  and  liabilities  at the date of the  condensed  consolidated  financial
statements and the reported revenues and expenses during the period.

         We consider certain accounting policies related to the recapitalization
of the  Company and  stock-based  compensation  to be  critical to our  business
operations and the understanding of our results of operations.

Stock-Based Compensation

         The Company has granted to employees  qualified incentive options under
its incentive  compensation  plan to purchase 464,000 shares of its common stock
at $1.00 per share.  The Company has granted  under its  incentive  compensation
plan  nonqualified  options to purchase  330,000  shares of its common  stock at
$1.00 per share and 426,000 shares of restricted stock.

         As   permitted   by  SFAS  No.   123,   "Accounting   for   Stock-Based
Compensation," the Company has elected to follow APB Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB No. 25") and related  interpretations  for
its employee stock-based compensation. Under APB No. 25, no compensation expense
is recognized at the time of option grant if the exercise  price of the employee
stock  option is fixed and  equals or exceeds  the fair value of the  underlying
common stock on the date of grant and the number of shares to be issued pursuant
to the  exercise  of such  option are known and fixed at the date of grant.  The
Board of Directors determines the fair value of common stock.

         The Company accounts for options issued to non-employees under SFAS No.
123 and Emerging  Issues Task Force Issue  ("EITF") No. 96-18,  "Accounting  for
Equity Instruments that are Issued to Other Than Employees for Acquiring,  or in
Conjunction  with Selling,  Goods,  or Services."  Therefore,  the fair value of
options  issued to  non-employees  is recorded  as an expense  and  periodically
remeasured over the vesting terms.

Results of Operations

         Historical information prior to the Merger is that of HECI.

         Because  HECI  is  still   developing  its  hydrogen  powered  internal
combustion  engines and related products and has not yet completed  construction
of its  manufacturing  facility,  we have not realized  significant  revenues to


                                      -16-
<PAGE>

date.  During 2004 we realized  $19,460  from the sale of one engine and partial
payments  on two  gensets.  Management  believes  that we may  begin to  realize
increased sales revenues by the first quarter of 2006, subject to timely receipt
of parts ordered from suppliers and timely completion of our new facilities.

         We  are  in  the  process  of  accelerating  our  efforts  toward  full
commencement of operations.  Our new building is under construction.  We are now
in the process of hiring new personnel and  purchasing the inventory of parts we
will need to manufacture engines in our new building. General and administrative
expenses  increased  $96,965 (153%) from $63,342 for the year ended December 31,
2003 to  $160,307  for the year ended  December  31,  2004.  Management  expects
similar or greater  increases  for the year ending  December 31, 2005 and during
2006 in general and  administrative  expenses due to the  anticipated  hiring of
additional personnel,  purchase of inventory,  costs related to the new facility
and other efforts related to the commencement and expansion of our operations.

         Costs related to research and development increased from $2,300 in 2003
to $33,342 for 2004,  which  reflects the  beginning of  development  activities
during  2004.  Management  believes  that with  funding  provided by the Private
Offering,  research and development expenses will increase  significantly during
the remainder of 2005 and into 2006.

         We recorded a net loss of $192,476  for 2004  compared to a net loss of
$65,642 for 2003. We expect to continue to operate at a net loss until such time
as we can complete construction of our facilities and development of our initial
engines and begin to realize increased sales.

COMPARISON  OF THREE  MONTHS  ENDED  SEPTEMBER  30, 2005 TO THREE  MONTHS  ENDED
SEPTEMBER 30, 2004

         For the quarter ended September 30, 2005 cash and cash equivalents were
$3,482,958 as compared  with $32,528 for the quarter  ended  September 30, 2004.
This  increase  is  mainly  attributed  to the  receipt  of  gross  proceeds  of
$3,948,500 from our Private Offering.  Net cash used in operating activities and
cash used in investing  activities for the three months ended September 30, 2005
were  $150,298  and  $317,400  respectively,  as  compared  to  $61,466  and  $0
respectively  for the same period in 2004. These increases are the result of the
commencement of our operations,  including  expenditures for new personnel,  our
new facility and the purchase of property and equipment.

         For the quarter ended  September 30, 2005 total revenues were $7,287 as
compared  with $3,800 in the 2004 period.  For the quarter  ended  September 30,
2005 the cost of goods  sold was  $7,326  as  compared  with  $3,500 in the 2004
period.  The increases are attributed to increasing  activities related to sales
of engines during the current quarter.

         Sales and  marketing  expenses  were $68,354 for the three month period
ended  September  30,  2005  compared  to $0 for the three  month  period  ended
September 30, 2004.

         General and  administrative  expenses  were  $256,166 as compared  with
$36,454 for the three month period  ended  September  30, 2004.  The increase is
attributed  to increasing  activities  related to  commencement  of our business
operations.

         Research and  development  expenses  were  $113,637 for the three month
period ended  September  30, 2005  compared to $6,258 for the three month period
ended  September 30, 2004.  The increase is attributed to increasing  activities
related to the  continued  development  of the  hydrogen  engine in the  current
quarter.

                                      -17-
<PAGE>

         Interest  expense was $10,665 for the third quarter of 2005 compared to
$4,341 for the third quarter of 2004, attributed to interest on debt. Management
believes that interest expense will not vary materially  during the remainder of
2005.

         The net loss for the three month  period ended  September  30, 2005 was
$439,369 versus $46,644 for the comparable 2004 period.

COMPARISON  OF NINE  MONTHS  ENDED  SEPTEMBER  30,  2005 TO  NINE  MONTHS  ENDED
SEPTEMBER 30, 2004.

         For the nine months ended September 30, 2005 cash and cash  equivalents
were $3,482,958 as compared with $32,528 for the nine months ended September 30,
2004.  This increase is mainly  attributed  to the receipt of gross  proceeds of
$3,948,500 from our Private Offering.  Net cash used in operating activities and
cash used in investing  activities for the nine months ended  September 30, 2005
were  $283,752  and $317,986  respectively,  as compared to $184,368 and $29,733
respectively  for the same period in 2004. These increases are the result of the
commencement of our operations,  including  expenditures for new personnel,  our
new facility and the purchase of property and equipment.

         For the nine  months  ended  September  30,  2005 total  revenues  were
$20,887 as compared  with $3,800 in the 2004  period.  For the nine months ended
September 30, 2005 the cost of goods sold was $13,521 as compared with $3,500 in
the 2004 period.  The increases are attributed to increasing  activities related
to sales of engines during the current period.

         Sales and  marketing  expenses  were  $87,983 for the nine month period
ended  September  30, 2005  compared to $7,101 for the nine month  period  ended
September 30, 2004.

         General and  administrative  expenses  were $317,766 for the nine month
period ended  September 30, 2005 compared with $91,500 for the nine month period
ended  September 30, 2004.  The increase is attributed to increasing  activities
related to commencement of our business operations.

         Research  and  development  expenses  were  $156,342 for the nine month
period ended  September  30, 2005  compared to $12,654 for the nine month period
ended  September 30, 2004.  The increase is attributed to increasing  activities
related to the  continued  development  of the hydrogen  engine  throughout  the
current calendar year.

         Interest  expense was $23,017 for the third quarter of 2005 compared to
$10,589  for the  third  quarter  of  2004,  attributed  to  interest  on  debt.
Management  believes that interest  expense will not vary materially  during the
remainder of 2005.

         The net loss for the nine month  period  ended  September  30, 2005 was
$567,153 versus $120,806 for the comparable 2004 period.

         Management  believes  that we will  continue  to  operate at a net loss
until  such  time  as  we  can  complete  construction  of  our  facilities  and
development of our initial engines and begin to realize increased sales.

Liquidity and Capital Resources

         From  inception  through  September  30, 2005, we have used $515,622 in
cash in our  operating  activities.  Cash for our  operations  came from various
financing  transactions,  including an investment of $151,487 by Ted  Hollinger;
$3,948,500 in gross proceeds from the Private Offering and convertible  loans in


                                      -18-
<PAGE>

the amount of $557,051. Our aggregated net loss from inception,  as of September
30, 2005, was $825,271.  Our cumulative net loss has resulted  principally  from
expenditures related to the commencement of operations.

         At September 30, 2005, we had cash on hand of  $3,482,958,  compared to
$32,528 at September 30, 2004;  $19,808 at December 31, 2004;  and $49,857 as of
December 31, 2003.  Inventories  increased  from $19,452 at December 31, 2003 to
$102,124  at  December  31,  2004;  and from  $98,235 at  September  30, 2004 to
$143,966 at September 30, 2005 due to the purchase of engines and parts.

         We had accrued  expenses of $30,557 at September  30, 2005  compared to
$10,524 at September  30, 2004.  We had accrued  expenses of $17,130 at December
31, 2004 compared to no accrued expenses at December 31, 2003.

         Although we  anticipate  that our expenses will continue to increase as
we work toward  commencement  of operations in our new  manufacturing  facility,
including additional  personnel,  inventory  purchases,  and construction costs,
management  believes that current cash on hand will be sufficient to satisfy our
cash requirements for the next twelve months. We anticipate that increased sales
of our  products  could  commence the first  quarter of 2006,  subject to timely
receipt  of parts  ordered  from  suppliers  and  timely  completion  of our new
facilities,  which will likely add to cash reserves. However, if additional cash
is  needed  during  the next  twelve  months,  or if  management  determines  to
accelerate the expansion of our operations, we may seek additional funds through
private or public sources and/or the sale of securities. Presently, there are no
firm plans as to the source of any future funding and there is no assurance that
such funds will be available or, that even if they are available, that they will
be available on terms that will be acceptable to us.

         At  September  30,  2005,  we had  total  assets  of  $4,164,912  and a
stockholders'  equity of $3,147,773,  compared to total assets of $219,582 and a
stockholders'  deficit of $86,203 at September  30, 2004. We had total assets of
$186,438  and total  stockholders'  deficit of $118,766 at  December  31,  2004,
compared to total assets $128,934 and total a stockholders' equity of $34,523 at
December 31, 2003.

Net Operating Loss

         We  have  accumulated  approximately  $755,000  of net  operating  loss
carryforwards  as of September  30, 2005,  which may be offset  against  taxable
income  and  income  taxes in future  years.  The use of these  losses to reduce
future income taxes will depend on the  generation of sufficient  taxable income
prior  to  the  expiration  of  the  net  operating  loss   carryforwards.   The
carry-forwards  will begin to expire in the year  2018.  In the event of certain
changes  in  control,  there will be an annual  limitation  on the amount of net
operating loss carryforwards which can be used. No tax benefit has been reported
in the financial  statements for the year ended September 30, 2005 because there
is a 50% or greater chance that the carryforward will not be used.  Accordingly,
the  potential  tax  benefit of the loss  carryforward  is offset by a valuation
allowance of the same amount.

Inflation

         In the  opinion of  management,  inflation  has not and will not have a
material  effect on our  operations in the  immediate  future.  Management  will
continue to monitor  inflation  and  evaluate  the  possible  future  effects of
inflation on our business and operations.

                                      -19-
<PAGE>


                                  RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW TOGETHER WITH ALL OF THE
OTHER  INFORMATION  INCLUDED IN THIS FORM 10-QSB WHEN EVALUATING THE COMPANY AND
ITS  BUSINESS.  IF ANY OF THE FOLLOWING  RISKS  ACTUALLY  OCCURS,  OUR BUSINESS,
FINANCIAL  CONDITION,  OR RESULTS OF OPERATIONS COULD SUFFER.  IN THAT CASE, THE
PRICE OF OUR COMMON  STOCK COULD  DECLINE AND OUR  STOCKHOLDERS  MAY LOSE ALL OR
PART OF THEIR INVESTMENT.


We have a limited  operating  history and have not recorded an operating  profit
since our  inception.  Continuing  losses may exhaust our capital  resources and
force us to discontinue operations.
--------------------------------------------------------------------------------
         HECI  was  incorporated  on May 19,  2003 and has a  limited  operating
history and has incurred net losses since  inception.  Prior to the Merger Green
Mt. had been inactive for several years and had a net  stockholders'  deficit of
$43,617 as of March 31, 2005. The potential for us to generate  profits  depends
on many factors, including the following:

     o   the size and timing of future customer orders,  milestone  achievement,
         product delivery and customer acceptance, if required;

     o   success in maintaining and enhancing existing  strategic  relationships
         and developing new strategic
              relationships with potential customers;

     o   our ability to protect our intellectual property;

     o   actions  taken  by  competitors,  including  suppliers  of  traditional
         engines,  hydrogen fuel cells and new product introductions and pricing
         changes;

     o   the costs of maintaining and expanding operations; and

     o   our  ability to attract  and retain a  qualified  work force in a small
         town.

         We cannot  assure you we will achieve any of the  foregoing  factors or
realize profitability in the immediate future or at any time.

If we cannot achieve  commercial  application of our hydrogen engine and related
technology, we may not achieve profitability.
--------------------------------------------------------------------------------
         The  development  of a market for our engines is dependent in part upon
the  development  of a market for  hydrogen as a fuel,  which may be impacted by
many factors, including:

     o   the cost competitiveness of hydrogen as a fuel relative to other fuels;

     o   the future availability of hydrogen as a fuel;

     o   consumer  perception of the safety of hydrogen and  willingness  to use
         engines powered by hydrogen;

     o   adverse  regulatory  developments,  including  the  adoption of onerous
         regulations regarding hydrogen use or storage;

     o   barriers  to entry  created by  existing  energy  providers;  and

     o   the emergence of new competitive technologies and products.

                                      -20-
<PAGE>


Financing to proceed with our  anticipated  business  activities may be required
following  completion  of  the  acquisition.  There  can  be no  assurance  that
financing will be available on terms beneficial to us, or at all.
--------------------------------------------------------------------------------
         In order to proceed with our  anticipated  business  activities  we may
need to obtain additional  financing.  If we raise additional capital by selling
equity or equity-linked securities,  these securities would dilute the ownership
percentage of our existing stockholders.  Also, these securities could also have
rights,  preferences  or  privileges  senior  to  those  of  our  common  stock.
Similarly,  if we raise  additional  capital by issuing debt  securities,  those
securities may contain covenants that restrict us in terms of how we operate our
business, which could also affect the value of our common stock. We also may not
be able to raise capital on reasonable terms, or at all.

We cannot assure you that there will be an active  trading market for our common
stock.
--------------------------------------------------------------------------------
         Even though our common stock is quoted on the OTC Bulletin Board,  most
shares  outstanding,   including  those  issued  pursuant  to  the  Merger,  are
"restricted  securities"  within the meaning of Rule 144  promulgated by the SEC
and are therefore  subject to certain  limitations  on the ability of holders to
resell such shares.  Restricted shares may not be sold or otherwise  transferred
without registration or reliance upon a valid exemption from registration. Thus,
holders of our common  stock may be required to retain  their  shares for a long
period of time.

Certain government  regulations  concerning  electrical and hydrogen generation,
delivery and storage of fuels and other related  matters may  negatively  impact
our business.
--------------------------------------------------------------------------------
         Our  business is subject to and effected by federal,  state,  local and
foreign  laws and  regulations.  These may  include  state and local  ordinances
relating to building codes, public safety,  electrical and hydrogen  production,
delivery and refueling infrastructure, hydrogen storage and related matters. The
use of hydrogen  inside a building will require  architectural  and  engineering
changes in the  building  to allow the  hydrogen  to be handled  safely.  As our
engines and other new  products  are  introduced  into the market  commercially,
governments may impose new  regulations.  We do not know the extent to which any
such  regulations  may impact our business or the  businesses of our  customers'
businesses. Any new regulation may increase costs and could reduce our potential
to be profitable.

The  industry  in which we operate is highly  competitive  and could  affect our
results of  operations,  which would make  profitability  even more difficult to
achieve and sustain.
--------------------------------------------------------------------------------
         The  power   generation  and   alternative   fuel  industry  is  highly
competitive and is marked by rapid technological  growth.  Other competitors and
potential competitors include Ford Power Products,  H2Car Co., Cummins,  Daimler
Chrysler,  General  Motors,  Koehler and Generac.  Many  existing and  potential
competitors have greater  financial  resources,  larger market share, and larger
production  and  technology  research  capability,  which  may  enable  them  to
establish a stronger  competitive position than we have, in part through greater
marketing opportunities. The governments of the United States, Canada, Japan and
certain European  countries have provided funding to promote the development and
use of fuel cells.  Tax incentives  have also been initiated in Japan,  and have
been proposed in the United States and other countries,  to stimulate the growth
of the fuel cell  market by  reducing  the cost of these  fuel cell  systems  to
consumers.  Our business does not currently  enjoy any such  advantages and, for
that reason, may be at a competitive  disadvantage to the fuel cell industry. If
we fail to address competitive developments quickly and effectively, we will not
be able to grow.

                                      -21-
<PAGE>

Our business could be adversely affected by any adverse economic developments in
the power generation industry and/or the economy in general.
--------------------------------------------------------------------------------
         We depend on the perceived demand for the application of our technology
and resulting products. These products are focused on reducing gas emissions and
upon  the use of  alternative  fuels  for the  Ground  Support  Equipment  (GSE)
business  and for the power  generation  business.  Therefore,  our  business is
susceptible  to downturns in the airline  industry and the genset portion of the
distributed power industry and the economy in general.  Any significant downturn
in the market or in general economic conditions would likely hurt our business.

If we fail to keep up with changes affecting our technology and the markets that
we will ultimately  service,  we will become less competitive and thus adversely
affect future financial performance.
--------------------------------------------------------------------------------
         In order to  remain  competitive  and  serve  our  potential  customers
effectively,  we must respond on a timely and cost-efficient basis to changes in
technology,  industry standards and procedures and customer preferences. We need
to  continuously  develop new  technology,  products and services to address new
technological  developments.  In some cases these changes may be significant and
the cost to comply with these changes may be  substantial.  We cannot assure you
that we will be able to adapt to any  changes in the future or that we will have
the financial  resources to keep up with changes in the  marketplace.  Also, the
cost of adapting our  technology,  products and services may have a material and
adverse effect on our operating results.

Our  business   could  be  adversely   affected  by  local,   state,   national,
international laws or regulations.
--------------------------------------------------------------------------------
         Our future success depends in part on laws and regulations  that exist,
or are expected to be enacted around the world. Should these laws or regulations
take an adverse turn, this could negatively  affect our business and anticipated
revenues. We cannot guarantee a positive outcome in direction,  timing, or scope
of laws and regulations that may be enacted which will affect the business.

The hydrogen and power generation business may expose us to certain safety risks
and potential liability claims.
--------------------------------------------------------------------------------
         Our business will expose us to potential  product liability claims that
are inherent in hydrogen and products that use hydrogen. Hydrogen is a flammable
gas and therefore a potentially  dangerous product.  Any accidents involving our
engines or other  hydrogen-using  products could  materially  impede  widespread
market acceptance and demand for our hydrogen-fueled  engines.  In addition,  we
might  be held  responsible  for  damages  beyond  the  scope  of our  insurance
coverage.  We also  cannot  predict  whether  we will  be able to  maintain  our
insurance coverage on acceptable terms, or at all.

Our future  success  depends on retaining  our existing key employees and hiring
and assimilating  new key employees.  The loss of key employees or the inability
to attract  new key  employees  could  limit our  ability to execute  our growth
strategy, resulting in lost sales and a slower rate of growth.
--------------------------------------------------------------------------------
         Our  future  success  depends  in part on our  ability  to  retain  key
employees  including our executive officers and, in particular,  our founder Ted
Hollinger. We do not carry, nor do we presently anticipate obtaining,  "key man"
insurance on our executives.  It would be difficult for us to replace any one of
these  individuals.  In addition,  as we grow we may need to hire additional key
personnel.  We may not be able to identify and attract high quality employees or
successfully assimilate new employees into our existing management structure.

We may be  unable  to  protect  our  intellectual  property  adequately  or cost
effectively, which may cause us to lose market share or reduce prices.
--------------------------------------------------------------------------------
         Our  future  success  depends in part on our  ability  to  protect  and
preserve  our  proprietary  rights  related  to  our  technology  and  resulting
products.  We cannot  assure you that we will be able to prevent  third  parties
from  using  our  intellectual   property  rights  and  technology  without  our


                                      -22-
<PAGE>

authorization.  We do not  currently  own any  patents,  although  one patent is
pending related to our technology.  We anticipate making patent  applications in
the future. We rely on trade secrets,  common law trademark rights and trademark
registrations. We intend to protect our intellectual property via non-disclosure
agreements,   contracts,  and  limited  information  distribution,  as  well  as
confidentiality  and  work  for  hire,   development,   assignment  and  license
agreements with our employees,  consultants,  third party developers,  licensees
and customers. However, these measures afford only limited protection and may be
flawed or inadequate.  Also,  enforcing  intellectual  property  rights could be
costly  and  time-consuming  and  could  distract  management's  attention  from
operating business matters.

Our  intellectual  property may  infringe on the rights of others,  resulting in
costly litigation.
--------------------------------------------------------------------------------
         In recent years,  there has been  significant  litigation in the United
States involving patents and other intellectual  property rights. In particular,
there has been an  increase  in the  filing of suits  alleging  infringement  of
intellectual property rights, which pressure defendants into entering settlement
arrangements quickly to dispose of such suits, regardless of their merits. Other
companies  or  individuals  may allege that we  infringe  on their  intellectual
property rights.  Litigation,  particularly in the area of intellectual property
rights,  is costly and the outcome is inherently  uncertain.  In the event of an
adverse result, we could be liable for substantial  damages and we may be forced
to discontinue  our use of the subject matter in question or obtain a license to
use those rights or develop  non-infringing  alternatives.  Any of these results
would  increase  our  cash  expenditures,   adversely  affecting  our  financial
condition.

We may not be able to manage  our  growth  effectively,  which  could  adversely
affect our operations and financial performance.
--------------------------------------------------------------------------------
         The  ability to manage  and  operate  our  business  as we execute  our
development and growth  strategy will require  effective  planning.  Significant
rapid  growth  could  strain  our  management  and other  resources,  leading to
increased  cost of  operations,  an  inability  to ship  enough  product to meet
customers  demand and other problems that could  adversely  affect our financial
performance.  We expect that our efforts to grow will place a significant strain
on  personnel,  management  systems,  infrastructure  and other  resources.  Our
ability to manage future growth effectively will also require us to successfully
attract, train, motivate, retain and manage new employees and continue to update
and improve our operational,  financial and management  controls and procedures.
If we do not manage our growth  effectively,  our operations  could be adversely
affected,  resulting  in slower  growth  and a failure  to  achieve  or  sustain
profitability.

Being a public company  involves  increased  administrative  costs,  which could
result in lower net income  and make it more  difficult  for us to  attract  and
retain key personnel.
--------------------------------------------------------------------------------
         As a public company,  we incur significant legal,  accounting and other
expenses  that  HECI did not  incur  as a  private  company.  In  addition,  the
Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the
SEC,  have  required  changes  in  corporate   governance  practices  of  public
companies.  We expect that these new rules and  regulations  will  increase  our
legal  and  financial  compliance  costs  and make  some  activities  more  time
consuming.  For example,  in connection with being a public company, we may have
to create several board committees,  implement  additional internal controls and
disclose controls and procedures, retain a transfer agent and financial printer,
adopt an insider  trading  policy and incur  costs  relating  to  preparing  and
distributing  periodic public reports in compliance  with our obligations  under
securities  laws.  These  new  rules  and  regulations  could  also make it more
difficult  for us to  attract  and  retain  qualified  members  of our  board of
directors, particularly to serve on our audit committee, and qualified executive
officers.

                                      -23-
<PAGE>

We do not anticipate paying dividends in the foreseeable future. This could make
our stock less attractive to potential investors.
--------------------------------------------------------------------------------
         We  anticipate  that we will retain any future  earnings and other cash
resources for future operation and development of our business and do not intend
to declare  or pay any cash  dividends  in the  foreseeable  future.  Any future
payment of cash  dividends  will be at the  discretion of our board of directors
after  taking into  account  many  factors,  including  our  operating  results,
financial  condition and capital  requirements.  Corporations that pay dividends
may be viewed as a better investment than corporations that do not.

Future sales or the potential for sale of a substantial  number of shares of our
common  stock  could  cause our  market  value to decline  and could  impair our
ability to raise capital through subsequent equity offerings.
--------------------------------------------------------------------------------
         Sales of a  substantial  number of shares  of our  common  stock in the
public markets,  or the perception  that these sales may occur,  could cause the
market  price of our common  stock to decline  and could  materially  impair our
ability to raise capital through the sale of additional  equity  securities.  In
addition  to the shares of our common  stock  actually  issued and  outstanding,
there will be another 2.663 million  shares of common stock  reserved for future
issuance as follows:

     o   approximately  663,401 shares which we expect to issue upon  conversion
         of promissory notes; and

     o   2.0  million  shares  reserved  for  issuance  under our new  incentive
         compensation plan, subject to shareholder appoval.

The  authorization  and issuance of blank-check  preferred  stock may prevent or
discourage a change in our management.
--------------------------------------------------------------------------------
         Our  amended  certificate  of  incorporation  authorizes  the  board of
directors  to  issue  up  to  10  million  shares  of  preferred  stock  without
stockholder  approval  having  terms,   conditions,   rights,   preferences  and
designations as the board may determine. The rights of the holders of our common
stock will be subject to, and may be  adversely  affected  by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
preferred  stock,  while  providing  desirable  flexibility  in connection  with
possible  acquisitions  and other corporate  purposes,  could have the effect of
discouraging a person from acquiring a majority of our outstanding common stock.

It may be difficult  for a third party to acquire us, and this could depress our
stock price.
--------------------------------------------------------------------------------
         Nevada  corporate law includes  provisions  that could delay,  defer or
prevent a change in control of our company or our management.  These  provisions
could  discourage  information  contests and make it more  difficult for you and
other  stockholders to elect directors and take other  corporate  actions.  As a
result, these provisions could limit the price that investors are willing to pay
in the future for shares of our common stock. For example:

     o   Without  prior  stockholder  approval,  the board of directors  has the
         authority to issue one or more  classes of preferred  stock with rights
         senior to those of common stock and to determine the rights, privileges
         and inference of that preferred stock;

     o   There is no cumulative voting in the election of directors, which would
         otherwise  allow less than a majority of stockholders to elect director
         candidates; and

     o   Stockholders cannot call a special meeting of stockholders.

                                      -24-
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

         Our  President  and our Board of Directors are currently in the process
of designing and developing our disclosure controls and procedures.  We are also
in the  process  of  hiring a Chief  Financial  Officer.  We expect to have that
officer, as well as our disclosure controls and procedures in place on or before
the end of the fourth quarter.

PART II.  OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         Information  regarding  unregistered sales of equity securities and use
of  proceeds  is  included  in our  Current  Report on Form 8-K  filed  with the
Commission on September 6, 2005 and amended on September 7, 2005 which report is
incorporated herein by reference.

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

         Information  relating to matters  submitted to shareholders is included
in our Current Report on Form 8-K filed with the Commission on September 6, 2005
and  amended  on  September  7,  2005  which  report is  incorporated  herein by
reference.

                                      -25-
<PAGE>

<TABLE>
<CAPTION>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit No.           Description

<S>               <C>
2.2               Revised and Amended  Agreement  and Plan of Merger with  Hydrogen  Engine  Center,  Inc.  and
                  Green Mt.  Acquisitions,  Inc.  (Incorporated  by  reference to the  preliminary  information
                  statement filed with the SEC on July 12, 2005).
3.1               Certificate  of  Incorporation  (Previously  filed  as an  Exhibit  to the Form  10-SB  filed
                  January 8, 2004)
3.2               Bylaws (Previously filed as an Exhibit to the Form 10-SB filed January 8, 2004)
3.3               Certificate of Amendment to Articles of Incorporation
3.4               Amendment to Bylaws
4.1               Instrument defining rights of stockholders (See Exhibits No. 3.1-3.4)
10.1              Iowa Department of Economic Development Enterprise Zone Program Agreement
10.2              Iowa Department of Economic Development PIAP Loan Agreement
10.3              Iowa Department of Economic Development CEBA Loan Agreement
10.4              Construction Agreement
10.5              Lease
10.6              Loan Agreement - City of Algona
10.7              Loan Agreement Algona Area Economic Development Corporation
10.8              Jobs Training Agreement
10.9              Consortium Agreement
10.10             Agreement with Universite Du Quebec a Trois-Rivieres
31.1              Certification  pursuant to Item 601(b)(31) of Regulation  S-K, as adopted  pursuant to Section
                  302 of the  Sarbanes-Oxley  Act of 2002,  by  Theodore  G.  Hollinger,  the  Company's  Chief
                  Executive Officer.
32.1              Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002, by Theodore G. Hollinger, the Company's Chief Executive Officer.
----------------
</TABLE>

Notes about Forward-looking Statements

         Statements  contained in this current  report which are not  historical
facts,  including some  statements  regarding the effects of the Merger,  may be
considered "forward-looking  statements" under the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on current expectations
and  the  current   economic   environment.   We  caution   readers   that  such
forward-looking  statements  are not guarantees of future  performance.  Unknown
risks and uncertainties as well as other uncontrollable or unknown factors could
cause  actual  results to  materially  differ from the results,  performance  or
expectations expressed or implied by such forward-looking statements.

                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                           HYDROGEN ENGINE CENTER., INC.

Date:  November 21, 2005               By /s/ THEODORE G. HOLLINGER
                                           -------------------------------------
                                           Theodore G. Hollinger
                                           President and Chief Executive Officer


                                      -26-