|                                                        |                                                                                          
|------------------------------------------------------- | -----------------------------------------------------------------------------------------
|UNITED STATES                                          
|SECURITIES AND EXCHANGE COMMISSION                     
|Washington,
 D.C. 20549                                
|                                                       
|FORM 10-Q                                              
|                                                        |                                                                                          
|x                                                       | QUARTERLY
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                                        |                                                                                          
|                                                        | FOR
 THE QUARTERLY PERIOD ENDED: DECEMBER 31, 2009                                       
|                                                        |                                                                                          
|o                                                       | TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                        |                                                                                          
|                                                        | FOR
 THE TRANSITION PERIOD FROM _______TO_______                                         
|                                                       
|Commission File Number: 000-53797                      
|                                                        |                                                                                          
|GREEN EARTH TECHNOLOGIES, INC.                         
|(Exact
 name of registrant as specified in its charter)

|                                                                |  |                                     
|--------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                        |  | 26-0755102                          
|(State or other jurisdiction of
 incorporation or organization) |  | (I.R.S. Employer Identification No.)

3 Stamford Landing, Suite 200, Stamford,
Connecticut 06902(Address of principal executive offices)

(877) 438-4761(Registrants telephone number, including area code)

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

Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
     Yes o     No o

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.

|                                                                       |                             
|---------------------------------------------------------------------- | ----------------------------
|Large
 accelerated filer o                                             | Accelerated
 filer o        
|Non-accelerated
 filer o (Do not check if a smaller reporting company) | Smaller
 reporting company þ

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

As of February
10, 2010, the issuer had a total of 130,562,153 shares of common stock, $0.001
par value, outstanding.

---



TABLE OF CONTENTS

|           |                                                                                                                                                   |    |     
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ----
|           |                                                                                                                                                   |    | PAGE
|           |                                                                                                                                                   |    |     
|           |                                                                                                                                                   |    |     
|           | PART I.   FINANCIAL INFORMATION                                                                                                                   |    |     
|          
|Item 1.    | Financial
 Statements                                                                                                                             |    |     
|           | Condensed Consolidated Balance Sheets at June 30, 2009 and December
 31, 2009 (unaudited)                                                         |    | 3   
|           | Condensed Consolidated Statements of Operations for the Three and Six
 Months Ended December 31, 2008 and 2009 (unaudited)                        |    | 4   
|           | Condensed Consolidated Statements of Cash Flows for the Six Months
 Ended December 31, 2008 and 2009 (unaudited)                                  |    | 5   
|           | Condensed Consolidated Statement of Stockholders Equity for the Year
 Ended June 30, 2009 and the Six Months Ended December 31, 2009 (unaudited) |    | 6   
|           | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                  |    | 7   
|           |                                                                                                                                                   |    |     
|Item 2.    | Managements Discussion and Analysis of Financial Condition and
 Results of Operations                                                            |    | 17  
|           |                                                                                                                                                   |    |     
|Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                                                                        |    | 26  
|           |                                                                                                                                                   |    |     
|Item 4T.   | Controls and Procedures                                                                                                                           |    | 26  
|           |                                                                                                                                                   |    |     
|           | PART II.   OTHER INFORMATION                                                                                                                      |    |     
|           |                                                                                                                                                   |    |     
|Item 1.    | Legal Proceedings                                                                                                                                 |    | 28  
|           |                                                                                                                                                   |    |     
|Item 1A.   | Risk Factors                                                                                                                                      |    | 29  
|           |                                                                                                                                                   |    |     
|Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                       |    | 29  
|           |                                                                                                                                                   |    |     
|Item 5.    | Other Information                                                                                                                                 |    | 30  
|           |                                                                                                                                                   |    |     
|Item 6.    | Exhibits                                                                                                                                          |    | 30  
|           |                                                                                                                                                   |    |     
|SIGNATURES |                                                                                                                                                   | 31

i

---



|                                             
|---------------------------------------------
|GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARY
|CONDENSED CONSOLIDATED BALANCE SHEETS        
|(in thousands, except share data)            

|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ------------------------------- | - | ------- | -
|                                                                                                                                                                                   |  | June
 30, 2009 |         | December
 31, 2009
 (unaudited) |  
|                                                                                                                                                                                   |  |                |         |                                 |  
|ASSETS                                                                                                                                                                             |  |                |         |                                 |  
|                                                                                                                                                                                  
|Current assets:                                                                                                                                                                    |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Cash                                                                                                                                                                               |  | $              | 697     |                                 | $ | 930     |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Trade receivables, less allowance of $68 and $13                                                                                                                                   |  |                | 278     |                                 |   | 113     |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Inventories, net                                                                                                                                                                   |  |                | 2,276   |                                 |   | 2,283   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Prepaid expenses and current assets                                                                                                                                                |  |                | 459     |                                 |   | 77      |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Total current assets                                                                                                                                                               |  |                | 3,710   |                                 |   | 3,403   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Property and equipment, net                                                                                                                                                        |  |                | 352     |                                 |   | 58      |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Intangibles, net                                                                                                                                                                   |  |                | 2,695   |                                 |   | 1,872   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  | $              | 6,757   |                                 | $ | 5,333   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                                                                                                                              |  |                |         |                                 |   |         |  
|Current liabilities:                                                                                                                                                               |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Accounts payable                                                                                                                                                                   |  | $              | 2,282   |                                 | $ | 1,176   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Accrued expenses                                                                                                                                                                   |  |                | 2,467   |                                 |   | 1,111   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Deferred revenue, related party                                                                                                                                                    |  |                | 674     |                                 |   | 646     |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Notes payable, related party                                                                                                                                                       |  |                | 638     |                                 |   | 499     |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Total current liabilities                                                                                                                                                          |  |                | 6,061   |                                 |   | 3,432   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Commitments and contingencies                                                                                                                                                      |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Stockholders equity:                                                                                                                                                              |  |                |         |                                 |   |         |  
|Common stock, $0.001 par value, 200,000,000 shares
 authorized, 85,745,486 and 119,262,153 shares issued and outstanding, as of
 June 30, 2009 and December 31, 2009, respectively |  |                | 86      |                                 |   | 119     |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Additional paid-in capital                                                                                                                                                         |  |                | 30,964  |                                 |   | 40,209  |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Common Stock Subscription                                                                                                                                                          |  |                | 2,000   |                                 |   |        |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Accumulated deficit                                                                                                                                                                |  |                | (32,354 | )                               |   | (38,427 | )
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|Total stockholders equity                                                                                                                                                         |  |                | 696     |                                 |   | 1,901   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  
|                                                                                                                                                                                   |  | $              | 6,757   |                                 | $ | 5,333   |  
|                                                                                                                                                                                   |  |                |         |                                 |   |         |  

See notes
to condensed consolidated financial statements.

3

---



GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)

|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------ | ---------- | ------------------------------------------------------ | - | ---------------------------------------------------- | - | ---------------------------------------------------- | ---------- | - | - | ---------- | -
|                                                                                                                                 |  | Three
 Months
 Ended 
 December
 31, 2008
 (unaudited) |            | Three
 Months
 Ended 
 December
 31, 2009
 (unaudited) |   | Six
 Months
 Ended 
 December
 31, 2008
 (unaudited) |   | Six
 Months
 Ended 
 December
 31, 2009
 (unaudited) |           
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |           
|Net sales                                                                                                                        |  | $                                                      | 336        |                                                        | $ | 440                                                  |   | $                                                    | 956        |   | $ | 866        |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Operating expense:                                                                                                               |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Cost of sales (exclusive of depreciation and amortization)                                                                       |  |                                                        | 310        |                                                        |   | 361                                                  |   |                                                      | 866        |   |   | 727        |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Selling, general and administrative expenses, including
 stock-based compensation of $750, $910, $1,964 and $1,820, respectively |  |                                                        | 2,468      |                                                        |   | 2,026                                                |   |                                                      | 5,653      |   |   | 4,654      |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Impairment of supplier assets                                                                                                    |  |                                                        |           |                                                        |   | 1,303                                                |   |                                                      |           |   |   | 1,303      |  
|Depreciation and amortization                                                                                                    |  |                                                        | 127        |                                                        |   | 107                                                  |   |                                                      | 253        |   |   | 242        |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|                                                                                                                                 |  |                                                        | 2,905      |                                                        |   | 3,797                                                |   |                                                      | 6,772      |   |   | 6,926      |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Loss from operations                                                                                                             |  |                                                        | (2,569     | )                                                      |   | (3,357                                               | ) |                                                      | (5,816     | ) |   | (6,060     | )
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Interest expense, net                                                                                                            |  |                                                        | (44        | )                                                      |   | (6                                                   | ) |                                                      | (82        | ) |   | (13        | )
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Net loss                                                                                                                         |  | $                                                      | (2,613     | )                                                      | $ | (3,363                                               | ) | $                                                    | (5,898     | ) | $ | (6,073     | )
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Basic and diluted loss per common share                                                                                          |  | $                                                      | (0.03      | )                                                      | $ | (0.03                                                | ) | $                                                    | (0.08      | ) | $ | (0.06      | )
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  
|Basic and diluted weighted average common shares
 outstanding                                                                    |  |                                                        | 75,899,333 |                                                        |   | 111,289,328                                          |   |                                                      | 74,532,757 |   |   | 98,534,527 |  
|                                                                                                                                 |  |                                                        |            |                                                        |   |                                                      |   |                                                      |            |   |   |            |  

See notes
to condensed consolidated financial statements

4

---



GREEN EARTH TECHNOLOGIES, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

|                                                                            |  |                                                     |        |                                                     |   |        |  
|--------------------------------------------------------------------------- |  | --------------------------------------------------- | ------ | --------------------------------------------------- | - | ------ | -
|                                                                            |  | Six
 Months
 Ended 
 December 31, 2008
 (unaudited) |        | Six
 Months
 Ended 
 December 31, 2009
 (unaudited) |  
|                                                                            |  |                                                     |        |                                                     |  
|Cash flows from operating activities                                        |  |                                                     |        |                                                     |   |        |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Net loss                                                                    |  | $                                                   | (5,898 | )                                                   | $ | (6,073 | )
|Adjustments to reconcile net loss to net cash used in
 operating activities |  |                                                     |        |                                                     |   |        |  
|Depreciation and amortization                                               |  |                                                     | 253    |                                                     |   | 242    |  
|Stock-based compensation expense                                            |  |                                                     | 1,964  |                                                     |   | 1,820  |  
|Allowance for accounts receivable                                           |  |                                                     |       |                                                     |   | (55    | )
|Increase in allowance for inventory                                         |  |                                                     |       |                                                     |   | 64     |  
|Impairment of supplier assets                                               |  |                                                     |       |                                                     |   | 1,303  |  
|Changes in assets and liabilities:                                          |  |                                                     |        |                                                     |   |        |  
|Accounts receivable                                                         |  |                                                     | 99     |                                                     |   | 220    |  
|Inventories                                                                 |  |                                                     | (634   | )                                                   |   | (210   | )
|Prepaid expenses and other current assets                                   |  |                                                     | (239   | )                                                   |   | 96     |  
|Accounts payable                                                            |  |                                                     | 401    |                                                     |   | (1,088 | )
|Accrued expenses                                                            |  |                                                     | (507   | )                                                   |   | 246    |  
|Deferred revenue                                                            |  |                                                     | (292   | )                                                   |   | (29    | )
|                                                                            |  |                                                     |        |                                                     |   |        |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Net Cash Used in Operating Activities                                       |  |                                                     | (4,854 | )                                                   |   | (3,464 | )
|                                                                            |  |                                                     |        |                                                     |   |        |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Cash flows from investing activities                                        |  |                                                     |        |                                                     |   |        |  
|Acquisition of equipment                                                    |  |                                                     | (32    | )                                                   |   | (21    | )
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Cash flows from financing activities                                        |  |                                                     |        |                                                     |   |        |  
|Proceeds from issuance of common stock, net of issuance
 costs              |  |                                                     | 2,898  |                                                     |   | 3,858  |  
|Proceeds from notes payable, related party                                  |  |                                                     |       |                                                     |   | 10     |  
|Repayment of notes payable                                                  |  |                                                     |       |                                                     |   | (150   | )
|                                                                            |  |                                                     |        |                                                     |   |        |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Net Cash Provided by Financing Activities                                   |  |                                                     | 2,898  |                                                     |   | 3,718  |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Net (decrease) increase in cash                                             |  |                                                     | (1,988 | )                                                   |   | 233    |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Cash                                                                        |  |                                                     |        |                                                     |   |        |  
|Beginning of period                                                         |  |                                                     | 2,015  |                                                     |   | 697    |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|End of period                                                               |  | $                                                   | 27     |                                                     | $ | 930    |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Supplemental information from non-cash investing and
 financing activities  |  |                                                     |        |                                                     |   |        |  
|                                                                            |  |                                                     |        |                                                     |   |        |  
|Conversion of debt to equity                                                |  | $                                                   | 259    |                                                     | $ | 1,600  |  

See notes to condensed consolidated
financial statements.

5

---



GREEN EARTH TECHNOLOGIES, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(in thousands)

|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ------ | - | ----------------------------- |  | --------------------------- | ------ | -------------------- | - | ------ | - | - | ------- | - | - | ------- | -
|                                                                                                                          |  | Common Stock |         |        |   |                               |  |                             |        |                      |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |  
|                                                                                                                          |  | Shares       |         | Amount |   | Additional
 Paid
 In
 Capital |  | Common
 Stock
 Subscription |        | Accumulated
 Deficit |   | Total  |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |  
|Balance at June 30, 2008 (audited)                                                                                        |  |              | 69,801  |        | $ | 70                            |  | $                           | 21,301 |                      | $ |       |   | $ | (17,022 | ) | $ | 4,349   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Private placement of common stock and
 warrants (including 600,000 warrants and 96,429 shares issued for placement
 fees) |  |              | 5,864   |        |   | 6                             |  |                             | 3,333  |                      |   |       |   |   |        |   |   | 3,339   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Common Stock Subscription                                                                                                 |  |              |         |        |   |                               |  |                             |        |                      |   | 2,000  |   |   |         |   |   | 2,000   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Stock-based compensation expense                                                                                          |  |              | 9,010   |        |   | 9                             |  |                             | 5,840  |                      |   |       |   |   |        |   |   | 5,849   |  
|Issuance of common stock upon exercise of
 convertible debt                                                               |  |              | 670     |        |   | 1                             |  |                             | 273    |                      |   |       |   |   |        |   |   | 274     |  
|Issuance of common stock for
 extension/inducement of debt                                                                |  |              | 400     |        |   |                              |  |                             | 217    |                      |   |       |   |   |        |   |   | 217     |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Net loss                                                                                                                  |  |              |        |        |   |                              |  |                             |       |                      |   |       |   |   | (15,332 | ) |   | (15,332 | )
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Balance at June 30, 2009 (audited)                                                                                        |  |              | 85,745  |        | $ | 86                            |  | $                           | 30,964 |                      | $ | 2,000  |   | $ | (32,354 | ) | $ | 696     |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Private placement of common stock
 (including 125,000 shares issued for placement fees)  to accredited
 investors        |  |              | 6,850   |        |   | 7                             |  |                             | 2,051  |                      |   |       |   |   |        |   |   | 2,058   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Private placement of common stock from TTI                                                                                |  |              | 14,667  |        |   | 14                            |  |                             | 3,186  |                      |   | (2,000 | ) |   |        |   |   | 1,200   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Product liability settlement                                                                                              |  |              | 8,000   |        |   | 8                             |  |                             | 1,592  |                      |   |       |   |   |        |   |   | 1,600   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Warrant exercised - TTI                                                                                                   |  |              | 4,000   |        |   | 4                             |  |                             | 596    |                      |   |       |   |   |        |   |   | 600     |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Stock-based compensation expense                                                                                          |  |              |        |        |   |                              |  |                             | 1,820  |                      |   |       |   |   |        |   |   | 1,820   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Net loss (unaudited)                                                                                                      |  |              |        |        |   |                              |  |                             |       |                      |   |       |   |   | (6,073  | ) |   | (6,073  | )
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  
|Balance at December 31, 2009 (unaudited)                                                                                  |  |              | 119,262 |        | $ | 119                           |  | $                           | 40,209 |                      | $ |       |   | $ | (38,427 | ) | $ | 1,901   |  
|                                                                                                                          |  |              |         |        |   |                               |  |                             |        |                      |   |        |   |   |         |   |   |         |  

See notes to
condensed consolidated financial statements.

6

---



GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share data)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | SUMMARY OF BUSINESS AND BASIS FOR
 PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Organization and Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Green Earth
 Technologies, Inc., a Delaware corporation and subsidiary (the Company),
 was formed on August 7, 2007. The Company markets, sells and distributes
 bio-degradable performance and appearance products. The Companys line of
 products cross multiple industries including the automotive aftermarket and outdoor power equipment market. The
 Company sells to home centers, mass retail outlets, automotive stores,
 equipment manufacturers and over the Internet.                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The
 accompanying unaudited condensed consolidated financial statements include
 the accounts of the Company and its wholly-owned subsidiary, GET
 Manufacturing, Inc. All significant intercompany balances and transactions
 have been eliminated in consolidation. The condensed consolidated financial
 statements have been prepared by the Company, without audit (except where
 noted), pursuant to the rules and regulations of the Securities and Exchange
 Commission (the SEC), and reflect all adjustments (consisting of normal
 recurring adjustments unless otherwise indicated) which, in the opinion of
 management, are necessary for a fair presentation of the results for the
 interim periods presented.            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Certain
 information in footnote disclosures normally included in financial statements
 prepared in conformity with accounting principles generally accepted in the
 United States of America has been condensed or omitted pursuant to such
 principles and the financial results for the periods presented may not be
 indicative of the full years results, although the Company believes the
 disclosures are adequate to make the information presented not misleading.
 These financial statements should be read in conjunction with the Companys
 audited financial statements and the notes thereto for the fiscal year ended
 June 30, 2009 included in the Companys Form 10, as amended, originally filed
 on October 6, 2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Liquidity and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Due to the
 Companys limited amount of additional committed capital, recurring losses,
 negative cash flows from operations and its negative working capital, there
 is substantial doubt about its ability to continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | As reflected
 in the accompanying condensed consolidated financial statements, the Company
 had a net loss of $6,073 and net cash used in operations of $3,464 for the
 six months ended December 31, 2009 and has a working capital deficit of $29
 and stockholders equity of $1,901. The Company has relied upon cash from its
 financing activities to fund its ongoing operations as it has not been able
 to generate sufficient cash from its operating activities in the past and
 there is no assurance that it will be able to do so in the future.                                                                                                                                                                              

7

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Unaudited)(in thousands, except share and per share
data)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Due to this
 history of losses and operating cash consumption, the Company cannot predict
 how long it will continue to incur further losses or whether it will ever
 become profitable, or if the Companys business will improve. These factors
 raise substantial doubt as to the Companys ability to continue as a going
 concern. The financial statements do not include any adjustments to reflect
 the possible future effects on the recoverability and classification of
 assets or the amounts and classification of liabilities that may result from
 the outcome of this uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company
 must increase revenues in order to reduce, or eliminate, its operating
 losses. Additionally, the Company may seek additional equity and debt
 financing in order to enable it to continue to meet its financial obligations
 until it achieves profitability. There can be no assurance that any such
 funding will be available to us on favorable terms, or at all. Failure to obtain
 sufficient financing would have substantial negative ramifications to the
 Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Revenue
 Recognition - Revenue is recognized when persuasive
 evidence of an arrangement exists, delivery has occurred or services have
 been rendered, the fee is fixed and determinable and collectability is
 reasonably assured. The risk of loss transfers to the customer on the date
 the product is shipped. The Companys revenue is comprised of the sale of its
 products to retailers and distributors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Impairment
 of Long-Lived Assets  Long-lived assets are
 reviewed for impairment whenever events or changes in circumstances indicate
 that the carrying amount of such assets may not be recoverable. Determination
 of recoverability is generally based on an estimate of undiscounted future
 cash flows resulting from the use of the asset and its eventual disposition,
 as well as specific appraisal in certain instances. Measurement of an
 impairment loss for long-lived assets is based on the fair value of the asset
 as estimated using a discounted cash flow model. Long-lived assets to be
 disposed of are reported at the lower of carrying amount or fair value less
 costs to sell.                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Shipping
 Costs  Shipping costs are included in selling,
 general and administrative expenses. During the quarters ended December 31,
 2008 and 2009 shipping costs totaled $78 and $73, respectively. During the
 three months ended December 31, 2008 and 2009, shipping cost totaled $218 and
 $215, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Net Loss Per
 Share - Basic net loss per share is based upon the
 weighted average number of common shares outstanding. Diluted net loss per
 share is based on the assumption that all dilutive convertible shares and
 stock options were converted or exercised. Dilution is computed by applying
 the treasury stock method. Under this method, options, warrants and
 restricted stock are assumed to be exercised at the beginning of the period
 (or at the time of issuance, if later), and as if funds obtained thereby were
 used to purchase common stock at the average market price during the period.
 Since the Company has incurred losses from all periods presented, the
 dilutive per share calculation is the same as the basic calculation.
 Anti-dilutive securities not included in net loss per share calculation for
 the quarters ended December 31, 2008 and 2009 include 150,000 and 7,122,222
 shares, respectively and for the six months ended December 31, 2008 and 2009,
 15,825,000 and 18,345,972, respectively.

8

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Unaudited)(in thousands, except share and per share
data)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Depreciation
 and Amortization  Depreciation and amortization are
 recorded using the straight line method over the estimated useful lives of
 the various classes of depreciable and amortizable property. Depreciation and
 amortization expense was $127 and 107 for the quarters ended December 31,
 2008 and 2009 and $253 and $242 for the six months ending December 31, 2008
 and 2009. The Company records depreciation and amortization net of cost of
 sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Subsequent Events -These financial
 statements were approved by management and available for issuance on
 February16, 2010. Management has evaluated subsequent events through this
 date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Recent
 Accounting Pronouncements - The following is a
 summary of recent authoritative pronouncements that affect accounting,
 reporting and disclosure of financial information by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In October 2009, the FASB
 issued guidance on revenue recognition to require companies to allocate
 revenue in multiple-element arrangements based on an elements estimated
 selling price if vendor-specific or other third-party evidence of value is
 not available. This guidance is effective beginning January 1, 2011 with
 earlier application permitted. The Company is currently evaluating both the
 timing and the impact the adoption of this guidance will have on our
 consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In June
 2009, FASB ASC 105 (formerly SF AS 168), The FASB Accounting Standards
 Codification and the Hierarchy of Generally Accepted Accounting Principles,
 was issued. ASC 105 is the single official source of authoritative U.S. GAAP,
 superseding all other accounting literature except that issued by the
 Securities and Exchange Commission. As of July 2009, only one level of
 authoritative U.S. GAAP exists. All other literature will be considered
 non-authoritative. The Codification does not change U.S. GAAP; instead, it
 introduces a new referencing system that is designed to be an easily
 accessible, user-friendly online research system. ASC 105 is effective for
 financial statements issued for interim and annual periods ending after
 September 15, 2009. The Company adopted ASC 105 for the quarter ended
 September 30, 2009. The adoption did not have a material impact on the
 Companys Consolidated Financial Statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3. | IMPAIRMENT OF SUPPLIER ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On December
 4, 2009, the Company received notice from Bio Tec, the Companys primary
 supplier of performance products, that Bio Tec was terminating its
 exclusivity agreement. The Company reviewed the notice and asserts that Bio
 Tec has breached the agreement. However amounts owed to the Company as a
 result of the breach may not be collectable and the carrying amounts of
 assets related to Bio Tec may not be recoverable. After reviewing these
 factors, the termination notice and the utility of the remaining net assets
 held, the Company concluded that an impairment of the net assets had occurred
 as of the date of the notice.                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | An
 impairment of $1,303 was recorded as a result of this, which included $610
 related to the exclusivity rights held, $286 of net fixed assets held at Bio
 Tecs location, $353 of inventory and $54 of prepaid and other current
 assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company
 is currently in negotiations with a replacement vendor to fill its future
 needs related to its branded performance products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

9

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share data)

|   |                                       
|-- | --------------------------------------
|4. | INVENTORIES, NET                      
|   |                                       
|   | Inventories
 consist of the following:

|                |  |                |       |                    |   |       | 
|--------------- |  | -------------- | ----- | ------------------ | - | ----- | 
|                |  | June 30,
 2009 |       | December 31,
 2009 |  
|                |  |                |       |                    |  
|                |  |                |       | (Unaudited)        |  
|Raw
 materials  |  | $              | 1,954 |                    | $ | 1,732 | 
|Finished
 goods |  |                | 322   |                    |   | 551   | 
|                |  |                |       |                    |   |       | 
|                |  | $              | 2,276 |                    | $ | 2,283 | 
|                |  |                |       |                    |   |       | 

|   |                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------
|   | Inventories
 are presented net of a related valuation allowance of $348 and $550 at
 June 30, 2009 and December 31, 2009, respectively
|   |                                                                                                                                       
|5. | INTANGIBLE ASSETS                                                                                                                     
|   |                                                                                                                                       
|   | Intangible
 assets consist of the following:                                                                                          

|                                             |  |                |       |                    |   |                         |  |  |   | 
|-------------------------------------------- |  | -------------- | ----- | ------------------ | - | ----------------------- |  |  | - | 
|                                             |  | June 30,
 2009 |       | December 31,
 2009 |   | Estimated
 Useful Lives | 
|                                             |  |                |       |                    |   |                         | 
|                                             |  |                |       | (Unaudited)        |   |                         | 
|Purchased
 technology and exclusivity rights |  | $              | 3,350 |                    | $ | 2,550                   |  |  | 7 | 
|Patents                                      |  |                | 20    |                    |   | 20                      |  |  |   | 
|                                             |  |                |       |                    |   |                         |  |  |   | 
|                                             |  |                | 3,370 |                    |   | 2,570                   |  |  |   | 
|                                            
|Less:
 accumulated amortization              |  |                | 675   |                    |   | 698                     |  |  |   | 
|                                             |  |                |       |                    |   |                         |  |  |   | 
|                                             |  | $              | 2,695 |                    | $ | 1,872                   |  |  |   | 
|                                             |  |                |       |                    |   |                         |  |  |   | 

| |                                                           
| | ----------------------------------------------------------
| | Expected
 amortization of intangible assets is as follows:

|           |  |   |       | 
|---------- |  | - | ----- | 
|June 30    |  |   |       | 
|           |  |   |       | 
|2010       |  | $ | 182   | 
|2011       |  |   | 364   | 
|2012       |  |   | 364   | 
|2013       |  |   | 364   | 
|2014       |  |   | 364   | 
|           |  |   |       | 
|Thereafter |  |   | 234   | 
|           |  |   |       | 
|           |  | $ | 1,872 | 
|           |  |   |       | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On December
 4, 2009 the Company recorded an impairment loss of $610 relating to its
 exclusivity rights with Bio Tec. The impairment loss is included in the
 caption impairment of supplier assets in the statements of operations.
 Amortization expenses included in the caption depreciation and amortization
 totaled $121 and $92 for three months ended December 31, 2008 and 2009,
 respectively, and $242 and $213 for the six months ended December 31, 2008
 and 2009, respectively.

10

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share data)

|   |                                               
|-- | ----------------------------------------------
|6. | ACCRUED EXPENSES                              
|   |                                               
|   | Accrued
 liabilities consist of the following:

|                           |  |                |       |                    |   |       | 
|-------------------------- |  | -------------- | ----- | ------------------ | - | ----- | 
|                           |  | June 30,
 2009 |       | December 31,
 2009 |  
|                           |  |                |       |                    |  
|                           |  |                |       | (Unaudited)        |  
|Accrued
 payroll and taxes |  | $              | 492   |                    | $ | 553   | 
|Product
 liability         |  |                | 1,600 |                    |   |      | 
|Accrued
 interest          |  |                | 203   |                    |   | 217   | 
|Other                      |  |                | 172   |                    |   | 341   | 
|                           |  |                |       |                    |   |       | 
|                           |  | $              | 2,467 |                    | $ | 1,111 | 
|                           |  |                |       |                    |   |       | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Included in
 accrued expenses at June 30, 2009 is a $1,600 charge for a liability relating
 to damages incurred by the Companys largest customer Techtronics Industries
 North America, Inc (TTI) and its affiliates in connection with defects in a
 shipment of engine oil. In October 2009 the Company obtained a release from
 TTI for the product liability in exchange for 8,000,000 shares of the
 Companys common stock.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|7. | NOTES PAYABLE, RELATED PARTY                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Notes
 payable consists of the following:                                                                                                                                                                                                                                                                                                                                                                                           

|                                                                                                                                                                            |  |                |     |                    |   |     | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --- | ------------------ | - | --- | 
|                                                                                                                                                                            |  | June 30,
 2009 |     | December 31,
 2009 |  
|                                                                                                                                                                            |  |                |     |                    |  
|                                                                                                                                                                            |  |                |     | (Unaudited)        |  
|Secured note
 dated December 28, 2007 held by the Companys President and Chief Operating
 Officer. Interest accrues at a rate of 6% per annum and is due on July 4,
 2010. |  | $              | 320 |                    | $ | 330 | 
|                                                                                                                                                                            |  |                |     |                    |   |     | 
|Unsecured
 note held by the Companys Chairman and Chief Executive Officer. Interest
 accrues at a rate of 6% per annum and matures on July 4, 2010.                        |  |                | 125 |                    |   | 125 | 
|                                                                                                                                                                            |  |                |     |                    |   |     | 
|Unsecured
 notes held by vendors of the Company. These notes will mature by March 31,
 2010.                                                                                |  |                | 193 |                    |   | 44  | 
|                                                                                                                                                                            |  |                |     |                    |   |     | 
|                                                                                                                                                                            |  |                |     |                    |   |     | 
|                                                                                                                                                                            |  | $              | 638 |                    | $ | 499 | 
|                                                                                                                                                                            |  |                |     |                    |   |     | 

11

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share data)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | In January
 2010, the secured note totaling $330 that was due to Simon Higgs, the
 Companys President, Chief Operating Officer and director was extended to
 July 4, 2010. Mr. Higgs also agreed to waive his right to collect a stock
 issuance of 250,000 shares which was due if the note was extended.
 Additionally, in January 2010, the unsecured note totaling $125 that was due
 to Jeff Marshall, the Companys Chairman and Chief Executive Officer on
 January 4, 2010 was extended to July 4. 2010. For both notes, interest
 accrues at a rate of 6% per annum.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|8. | STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Restricted Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the
 fiscal year ended June 30, 2009, the Company issued restricted stock awards
 in return for services and compensation to various parties, including
 employees and non-employees. The shares were issued at various prices under
 several different agreements with each of the respective parties. The Company
 did not issue any restricted stock for the six months ended December 31,
 2009.                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As of
 December 31, 2009, there were 4,000,000 shares of restricted stock
 outstanding and $737 of unrecognized compensation costs. The Company expects
 to recognize these costs over 1.1 years.                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The 2008
 Employee Stock Award and Incentive Plan, as amended (the 2008 Plan) made
 20,000,000 shares of common stock available for future equity awards. Under
 the 2008 Plan, stock option grants may be exercised for a period up to ten
 years from the date of grant. Option awards are granted with an exercise
 price equal to the market price of the Companys stock on the date of grant
 and generally vest over three years                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Option
 activity for the six months ended December 31, 2009 is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                  |  |                     |           |                                    |   |                                                 |  |                            |           |  |        |  | 
|--------------------------------- |  | ------------------- | --------- | ---------------------------------- | - | ----------------------------------------------- |  | -------------------------- | --------- |  | ------ |  | 
|                                  |  | Number
 of
 Options |           | Weighted
 Average
 Exercise
 Price |   | Weighted
 Average
 Remaining
 Contractual
 Term |  | Aggregate
 Intrinsic Value |          
|                                  |  |                     |           |                                    |   |                                                 |  |                            |          
|Outstanding
 at June 30, 2009     |  |                     | 6,603,750 |                                    | $ | 0.49                                            |  |                            |           |  |        |  | 
|Granted                           |  |                     | 172,500   |                                    | $ | 0.21                                            |  |                            |           |  |        |  | 
|Exercised                         |  |                     | -0-       |                                    |   |                                                 |  |                            |           |  |        |  | 
|Forfeited
 and Cancelled          |  |                     | (340,000  | )                                  |   |                                                 |  |                            |           |  |        |  | 
|                                  |  |                     |           |                                    |   |                                                 |  |                            |           |  |        |  | 
|Outstanding
 at December 31, 2009 |  |                     | 6,436,250 |                                    | $ | 0.48                                            |  |                            | 9.3 years |  | ($708)
|                                  |  |                     |           |                                    |   |                                                 |  |                            |           |  |        |  | 
|Exercisable
 at December 31, 2009 |  |                     | -0-       |                                    |   |                                                 |  |                            |           |  |        |  | 
|                                  |  |                     |           |                                    |   |                                                 |  |                            |           |  |        |  | 

12

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share data)

| |                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The aggregate
 intrinsic value represents the difference between the exercise price of the
 underlying awards and the market price of the Companys common stock for
 those awards that have an exercise price below the market price at December
 31, 2009.
| |                                                                                                                                                                                                                                                             
| | The fair value
 of each time-based option award is estimated on the date of grant using a
 Black-Scholes option pricing model with the following assumptions:                                                                                               

|                                 |  |                                         |  
|-------------------------------- |  | --------------------------------------- | -
|                                 |  | For the Period Ended
 December 31, 2009
|                                 |  |                                        
|Average
 expected life (years)   |  | 6.0                                     |  
|Average risk
 free interest rate |  | 3.5                                     | %
|Expected
 volatility             |  | 125                                     | %
|Expected
 dividend rate          |  | 0                                       | %
|Expected
 forfeiture rate        |  | 5                                       | %

| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | As of
 December 31, 2009, there was $6,906 of unrecognized compensation cost. The
 Company expects to recognize these costs over the next 2.3 years.
| |                                                                                                                                                     
| | At December
 31, 2009, 13,563,750 shares are available for grant under the Companys 2008
 Plan.                                                    
| |                                                                                                                                                     
| | Warrants                                                                                                                                            
| |                                                                                                                                                     
| | Warrant
 activity for the six months ended December 31, 2009 is as follows:                                                                         

|                                                  |  |                     |            |                                    |   |                                                 |  |                             |           |  |        |  | 
|------------------------------------------------- |  | ------------------- | ---------- | ---------------------------------- | - | ----------------------------------------------- |  | --------------------------- | --------- |  | ------ |  | 
|                                                  |  | Number of
 Warrants |            | Weighted
 Average
 Exercise
 Price |   | Weighted
 Average
 Remaining
 Contractual
 Term |  | Aggregate
 Intrinsic
 Value |          
|                                                  |  |                     |            |                                    |   |                                                 |  |                             |          
|Outstanding
 at June 30, 2009                     |  |                     | 600,000    |                                    | $ | 0.05                                            |  |                             |           |  |        |  | 
|Granted                                           |  |                     | 11,309,722 |                                    | $ | 0.16                                            |  |                             |           |  |        |  | 
|Exercised                                         |  |                     | (4,000,000 | )                                  | $ | 0.15                                            |  |                             |           |  |        |  | 
|                                                  |  |                     |            |                                    |   |                                                 |  |                             |          
|Outstanding
 and exercisable at December 31, 2009 |  |                     | 7,909,722  |                                    | $ | 0.16                                            |  |                             | 2.8 years |  | $1,636 | 
|                                                  |  |                     |            |                                    |   |                                                 |  |                             |          

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Bio Tec Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | During the
 quarter ended December 31, 2009 the Company received a notice from Bio Tec
 that Bio Tec was terminating its supply agreement with the Company effective
 December 4, 2009. The Company does not believe that the termination of the
 Bio Tec agreement will have a long-term material adverse impact on the
 Companys business. At the time of termination, the Company had on hand
 approximately a 6-9 month supply of 2- and 4-cycle oil and approximately a
 5-6 month supply of its motor oil. The Company believes

13

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share data)

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | this
 inventory will be able to sustain its current level of operations until the
 fourth quarter of fiscal 2010 (i.e., the second quarter of calendar 2010), by
 which time the Company expects to be receiving shipments from new suppliers.
 Second, although the Company has not concluded any definitive agreements with
 new suppliers, and may never do so, it has already identified alternative
 sources to supply its performance products and is in the process of reviewing
 pricing, production capacity and product quality with a number of these
 potential suppliers. Finally, the Company has developed its own formulations
 for 2-and 4-cycle oil and is working with bio-diesel plants in Michigan and
 New Jersey, multiple additive companies, formulators and blending facilities
 to produce these products and others on a contract basis using the Companys
 proprietary formulation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company
 hopes to have at least one agreement with a contract manufacturer before the
 end of current fiscal yearJune 30, 2010. Whether the Company purchases a new
 product from new suppliers or whether it contract manufactures products using
 its own formulations, the Company believes the quality and the performance
 standard of its performance products will not be compromised.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | On December 21, 2009, the Company commenced
       an action in the United States District Court for the Southern District
       of New York against Bio Tec to enforce the Companys rights under
       the agreement with Bio Tec, including the Companys rights to Bio
       Tecs intellectual property, to recover amounts that the Company
       advanced to or on behalf of Bio Tec and to recover damages that the Company
       incurred as a result of Bio Tecs
       breach of the agreement. It is too soon to determine the likely outcome
    of this matter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Mathew Zuckerman Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During the
 quarter ended December 31, 2009, the Company was served with a summons and complaint, filed in the Superior Court
 of California, County of Los Angeles, on behalf of Mathew Zuckerman, the
 Companys former president and chief operating officer, and other entities
 that he controls or in which he claims a beneficial interest. Each plaintiff
 claims to own or control shares of the Companys common stock. The plaintiffs
 allege that they have suffered damages of not less than $6 million as a
 result of the Companys refusal to allow them to transfer the shares they
 allegedly own or control. Apparently, the basis of this claim is the fact
 that the Company had placed a stop order with its transfer agent on the
 shares the plaintiffs allege to have owned or controlled. The Company placed
 a stop order on the transfer of these shares because the Company believed
 that Mr. Zuckerman was an affiliate under Rule 144 promulgated by the
 Securities and Exchange Commission due to his significant ownership of the
 Companys common stock and that, therefore, those shares are restricted and
 saleable subject to the requirements and limitations of Rule 144. Mr.
 Zuckerman has no other affiliation with the Company. The complaint also seeks
 declaratory relief that Mr. Zuckerman is not in violation of the non-compete
 provisions contained in his employment agreement. Apparently, this portion of
 the complaint is in response to the Company informing Mr. Zuckerman that the
 Company believed he violated that non-compete covenant as a result of his
 affiliation with and employment by Alkane, Inc., a company that markets a
 bio-diesel fuel additive. The Company has not yet filed a response to the
 complaint. It is too soon to determine the likely outcome of this matter.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In February
 2008, the Company entered into an agreement with Inventek under which
 Inventek granted a royalty-free license and exclusivity rights to market,
 sell and distribute appearance products. Inventek is owned by Yasmin
 Andrecola, whose husband Paul Andrecola, beneficially owns approximately 7.6%
 of the Companys stock as of December 31, 2009. Under the terms of the
 agreement, Inventek and the Company agreed to combine resources and work
 together collectively to formulate and manufacture products to be sold under
 the companys brand names. The Company purchased inventory from Inventek                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

14

---



GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(in thousands, except share and per share data)

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | totaling $0
 and $193 for the three months and six months ended December 31, 2008 and
 2009, respectively. As of June 30, 2009, amounts due to Inventek were $325.
 As of December 31, 2009 there were no amounts due to Inventek.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In September
 2008, the Company entered into a services agreement, as amended, with
 Marketiquette which is owned and operated by Jeffrey Loch, one of the
 Companys directors, and Carol Loch, his wife. KeysKwest, LLC, which
 beneficially owns approximately 6.7% of the Companys outstanding shares as
 of December 31, 2009. Carol Loch is the sole member of KeysKwest. Under the
 terms of the services agreement the Company pays Marketiquette a monthly retainer
 of $36 as well as commissions from 5%-10% based on net sales it generates.
 The commission depends on the customers class of trade with a declining
 maximum scale based on volume. The Company paid Marketiquette a total of $163
 and $124 for the three months ended December 31, 2008 and 2009, respectively
 and a total of $364 and $277 for the six months ended December 31, 2008 and
 2009, respectively, which are included in selling, general and administrative
 expenses. As of June 30 and December 31 2009, amounts due to Marketiquette
 were $300 and $146, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In December
 2008, the Company entered into a five-year worldwide distribution agreement
 for G-branded products with TTI. TTI beneficially owns approximately
 29.2% of the Companys outstanding shares as of December 31, 2009. For three
 months ended December 31, 2008 and 2009, approximately 75% and 86% of the
 Companys revenues, respectively, were earned from TTI and for the six months
 ending December 31, 2008 and 2009, approximately 81% of the Companys
 revenues, respectively were earned from TTI. As of June 30, 2009 and December
 31, 2009 amounts due from TTI were $54 and $20, respectively. As of June 30,
 2009 and December 31, 2009 advances received from TTI for future appearance
 and performance product were $674 and $646, respectively.                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11. | CONCENTRATIONS OF RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company
 maintains cash balances at financial institutions that are insured by the
 Federal Deposit Insurance Corporation subject to certain limitations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Net Sales and Accounts Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company
 distributes performance and appearance products to the entire U.S. market.
 For the three months ended December 31, 2008, Steel City and TTI accounted
 for approximately 11% and 75%, respectively, of the Companys net sales.
 For the three months ended December 31, 2009, TTI accounted for approximately
 86% of the Companys net sales. For the six months ended December 31, 2008
 and 2009, TTI accounted for approximately 81% of the Companys net sales.
 As of June 30, 2009 and December 31, 2009, TTI accounted for approximately 19%
 and 18% of the Companys trade receivables, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Inventory and Accounts Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company
 purchases a significant amount of its inventories from Bio Tec and Inventek,
 a related- party. The Companys inventory on hand purchased from Bio Tec and
 Inventek and accounts payable relative to Bio Tec and Inventek are as
 follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

15

---



GREEN EARTH TECHNOLOGIES, INC. AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(in thousands, except share and per share data)

|                    |  |               |       |                   |  |     | 
|------------------- |  | ------------- | ----- | ----------------- |  | --- | 
|                    |  | June 30, 2009 |       | December 31, 2009 | 
|                    |  |               |       |                   | 
|Inventory on hand   |  |               |       |                   |  |     | 
|Bio Tec             |  |               | 406   |                   |  | 153 | 
|Inventek            |  |               | 1,009 |                   |  | 828 | 
|                    |  |               |       |                   |  |     | 
|Accounts Payable    |  |               |       |                   |  |     | 
|Bio Tec             |  |               | 4     | %                 |  |    | 
|Inventek            |  |               | 14    | %                 |  |    | 
|                    |  |               |       |                   |  |     | 
|Inventory purchased |  |               |       |                   |  |     | 
|Inventek            |  |               | 704   |                   |  | 193 | 

|    |                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | See note 3 for discussion of vendor impairment.                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                               
|12. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | Private Placement  Common Stock                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | In January
 2010, the Company issued to accredited investors 7,200,000 shares of common
 stock at $0.278 per share for gross proceeds of $2,000. In connection with
 the issuance, the Company issued warrants to purchase 1,080,000 shares of
 common stock at $0.38 per share for $410. The warrants have a three year term
 and are exercisable at anytime.
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | Warrant Exercise  TTI                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | TTI
 exercised their remaining 4,000,000 warrants for total gross proceeds of
 $600,000.                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | Extension of Note Payable                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | In January
 2010, the secured note totaling $330 that was due to Simon Higgs, the Companys
 President, Chief Operating Officer and director was extended to July 4. 2010.
 Mr. Higgs also agreed to waive his right to collect a stock issuance of
 250,000 shares which was due if the note was extended. Interest accrues at a
 rate of 6% per annum.      
|    |                                                                                                                                                                                                                                                                                                                                                               
|    | In January
 2010, the unsecured note totaling $125 that was due to Jeff Marshall, the
 Companys Chairman and Chief Executive Officer on January 4, 2010 was
 extended to July 4. 2010. Interest accrues at a rate of 6% per annum.                                                                                                                           

16

---



|                                                                                               | 
|---------------------------------------------------------------------------------------------- | 
|Item 2. Managements Discussion and Analysis of
 Financial Condition and Results of Operations

Special Note About Forward-Looking Statements

Certain
statements in Managements Discussion and Analysis (MD&A), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives, and expected operating results, and
the assumptions upon which those statements are based, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These forward-looking statements generally
are identified by the words believes, project, expects, anticipates,
estimates, intends, strategy, plan, may, will, would, will be,
will continue, will likely result, and similar expressions. Forward-looking
statements are based on current expectations and assumptions that are subject
to risks and uncertainties which may cause actual results to differ materially
from the forward-looking statements. We undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.

Overview of our Business

We
market, sell and distribute an array of branded, environmentally-friendly,
bio-based automotive and outdoor power equipment performance and appearance
products. These products are produced for us under long-term supply and
requirements contracts with three domestic manufacturers. The green base of
our performance products is comprised of animal fats, while our appearance
products use plant oils. This biodegradable green base replaces traditional
petroleum and chemical derived bases typically used to make motor oils,
cleaning solutions and other consumer products without compromising performance
or value. We believe our products deliver comparable or superior performance at
competitive prices, thus giving consumers the ability to do their part in
protecting the environment. With our products consumers can SAVE THE EARTH 
SACRIFICE NOTHING®.

Our
G-brand family of products includes G-OIL®, G-Fuel,
G-WASH, G-GLASS, G-CLEAN, G-WHEEL, and G-TIRE. These products are offered
in a wide range of automotive and outdoor power equipment categories including
performance and appearance chemicals. We sell the majority of our products
through master distribution agreements with wholesalers and contractual arrangements
with independent sales professionals. Our products are now available at a
number of national retail outlets and chain stores.

We
are actively pursuing relationships with other wholesalers and retailers to
include additional major national consumer purchase locations in the household
goods, automotive aftermarket, outdoor power equipment market and marine
market.

We
received a notice from Bio Tec that Bio Tec was terminating its supply
agreement with us, effective December 4, 2009. In the termination notice, Bio
Tec alleged that we failed to comply with and fulfill the provisions of the
agreement and also made various claims regarding amounts we owe to Bio Tec as
result of our failure to comply with the terms of the agreement. In addition,
Bio Tec demanded that we cease immediately any representations that [we have]
an exclusive right to market, sell and distribute products utilizing technology
to produce products. On December 21, 2009, we commenced an action in the United
States District Court for the Southern District of New York against Bio Tec to
enforce our rights under our agreement with Bio Tec, including our rights to
Bio Tecs intellectual property, and to recover certain amounts that we
advanced to or on behalf of Bio Tec and to recover damages that we incurred as
a result of Bio Tecs breach of the agreement.

We
do not believe that the termination of Bio Tec agreement will have a long term
material adverse impact on our business for a number of reasons. At the time of
termination, we had on hand approximately a 6-9 month supply of our 2- and
4-cycle oil and approximately a 5-6 month supply of our motor oil. We believe
this inventory will be able to sustain our current level of operations until
the fourth quarter of fiscal 2010 (i.e., the second quarter of calendar 2010),
by which time we expect to be receiving shipments from new suppliers. Second,
although hawse

17

---



have not
concluded any definitive agreements with new suppliers, and may never do so, we
have already identified alternative sources to supply our performance products
and are in the process of reviewing pricing, production capacity and product
quality with a number of these potential suppliers. Finally, we have developed
our own formulations for 2-and 4-cycle oil and are working with bio-diesel
plants in Michigan and New Jersey, multiple additive companies, formulators and
blending facilities to produce these products and others on a contract basis
using our proprietary formulations.

We
hope to have at least one agreement with a contract manufacturer before the end
of current fiscal yearJune 30, 2010. Whether we purchase a new product from
new suppliers or whether they contract manufacture products using our own
formulations, we believe the quality and the performance standard of our
performance products will not be compromised

Results of Operations

Three
Months Ended December 31, 2008 and 2009

Our
activities for the three months ended December 31, 2008 and 2009 essentially
included capital origination, product development, marketing and sales of our
bio-degradable appearance and performance products and development of an
infrastructure to support the planned business.

Our
results of operations for the three months ended December 31, 2008 and 2009
were as follows:

|                      |  |                                  |        |      |   |        |  
|--------------------- |  | -------------------------------- | ------ | ---- | - | ------ | -
|                      |  | Three Months Ended
 December 31, |       
|                      |  | 2008                             |        | 2009 |  
|                      |  |                                  |        |      |  
|                      |  | ($000s)                         |       
|Net sales             |  | $                                | 336    |      | $ | 440    |  
|Loss from
 operations |  | $                                | (2,569 | )    | $ | (3,357 | )
|Other
 expense        |  | $                                | (44    | )    | $ | (6     | )
|Net Loss              |  | $                                | (2,613 | )    | $ | (3,363 | )

Net Sales

Net
Sales for the three months ended December 31, 2008 and 2009 primarily include
sales of appearance products and G-OIL®: 5W-30 motor oil, 2-cycle
oil, 4-cycle oil and bar and chain lubricants. Additional products sold during
the three months ended December 31, 2009 include G-FUEL, biodegradable
charcoal lighter fluid and fuel stabilizer and G-CLEAN grill & surface
cleaner. We did not ship any motor oils during the three months ended December
31, 2008. Two customers accounted for 86% of our net sales in the three months
ended December 31, 2008. One customer accounted for 86% of our net sales in the
three months ended December 31, 2009. Net sales are comprised as follows:

18

---



|                      |  |                                  |     |      |   |     | 
|--------------------- |  | -------------------------------- | --- | ---- | - | --- | 
|                      |  | Three Months Ended
 December 31, |    
|                      |  | 2008                             |     | 2009 |  
|                      |  |                                  |     |      |  
|                      |  | ($000s)                         |    
|Performance
 products |  | $                                | 285 |      | $ | 308 | 
|Appearance
 products  |  |                                  | 51  |      |   | 132 | 
|                      |  |                                  |     |      |   |     | 
|Total                 |  | $                                | 336 |      | $ | 440 | 
|                      |  |                                  |     |      |   |     | 

Cost of Sales (exclusive of depreciation and amortization)

Cost
of sales (exclusive of depreciation and amortization) primarily consists of the
cost of obtaining bio solvent animal fats, plant oils, additives, packaging
components and fees paid to our affiliates for the costs of salaries and
benefits of operations employees. Cost of sales (exclusive of depreciation and
amortization) for the three months ended December 31, 2008 and 2009 were
approximately $310,000 and $361,000 respectively. The increase in cost of sales
(exclusive of depreciation and amortization) is primarily due to the increase
in net sales.

Selling, General and Administrative Expenses

Selling,
general and administrative expenses consist primarily of salaries and benefits,
product development and testing fees, advertising and marketing expenses,
public relations, insurance, fees for professional services and non-cash
charges for stock compensation. Selling, general and administrative expenses,
for the three months ended December 31, 2008 and 2009 include the following:

|                                                    |  |                                 |       |      |   |       | 
|--------------------------------------------------- |  | ------------------------------- | ----- | ---- | - | ----- | 
|                                                    |  | Three Months Ended December 31, |      
|                                                    |  | 2008                            |       | 2009 |  
|                                                    |  |                                 |       |      |  
|                                                    |  | ($000s)                        |      
|Salaries                                            |  | $                               | 405   |      | $ | 242   | 
|Stock-based compensation                            |  |                                 | 750   |      |   | 910   | 
|Selling, marketing, public relations and
 related   |  |                                 | 605   |      |   | 344   | 
|Development, product release and testing            |  |                                 | 64    |      |   | 39    | 
|Management and operating fees                       |  |                                 | 186   |      |   | 166   | 
|Legal and professional                              |  |                                 | 296   |      |   | 165   | 
|Occupancy, communications and all other,
 net       |  |                                 | 162   |      |   | 160   | 
|                                                    |  |                                 |       |      |   |       | 
|                                                   
|Total Selling, general and administrative
 expenses |  | $                               | 2,468 |      | $ | 2,026 | 
|                                                    |  |                                 |       |      |   |       | 

The
decrease in salaries for the three months ended December 31, 2008 compared to
2009 is primarily due to the resignation of our former president and chief
operating officer and a reduction of salary paid to our chief executive
officer. The increase in stock-based compensation is primarily due to stock
option grants to employees. The decrease in sales and marketing was due to a
reduction in advertising campaigns. The decrease in legal and professional fees
is primarily due to organization costs incurred during the quarter ended
December 31, 2008.

19

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Impairment of Supplier Assets

On
December 4, 2009 we received a notice from Bio Tec, one of our suppliers of
performance products, that it was terminating its agreement with us. As a
result, we recorded charges of approximately $1,303,000. Though we believe that
Bio Tec has breached the agreement, amounts owed to us may not be collectable
and the carrying amounts of assets related to Bio Tec may not be recoverable.
As such, we recorded an impairment loss of $610,000 related to Bio Tec
exclusivity rights, recorded a charge of $286,000 for fixed assets at the Bio
Tec facility, reserved $353,000 for inventory and expensed other Bio Tec
related charges totaling $54,000.

We
have identified alternative sources for performance related products and we are
conducting product performance and specification testing with such sources.

Depreciation and amortization

Depreciation
and amortization expense for the three months ended December 31, 2008 and 2009
was approximately $127,000 and $107,000, respectively. Depreciation charges
totaled $6,000 and $15,000 for the three months ended December 31, 2008 and
2009, respectively. Amortization expense for intangible assets totaled $121,000
and $92, 000 for the three months ended December 31, 2008 and 2009,
respectively. The expense is excluded from cost of sales.

Interest expense, net

Net
interest expense for the three months ended December 31, 2008 and 2009 was
approximately $44,000 and $6,000, respectively. Interest expense primarily
consists of interest due on notes payable to related parties. The decrease in
interest expense is due to a reduction in the interest rate from 12% to 6% on a
note payable due to our president and chief operating officer. Interest income
consists of interest earned on bank deposits and deposits in an institutional
money market fund.

Six Months Ended December 31, 2008 and 2009

Our
activities for the six months ended December 31, 2008 and 2009 essentially included
capital origination, product development, marketing and sales of our
bio-degradable appearance and performance products, development of mass market
product distribution networks for the intended distribution of our products,
recruiting personnel, development of an infrastructure to support the planned
business and commencement of revenues.

Our
results of operations for the six months ended December 31, 2008 and 2009 are
as follows:

|                      |  |                   |        |                   |   |        |  
|--------------------- |  | ----------------- | ------ | ----------------- | - | ------ | -
|                      |  | Six Months Ended  |       
|                      |  | December 31
 2008 |        | December 31
 2009 |  
|                      |  |                   |        |                   |  
|                      |  | ($000s)          |       
|Net sales             |  | $                 | 956    |                   | $ | 866    |  
|Loss from
 operations |  | $                 | (5,816 | )                 | $ | (6,060 | )
|Other
 expense        |  | $                 | (82    | )                 | $ | (13    | )
|Net loss              |  | $                 | (5,898 | )                 | $ | (6,073 | )

20

---



Net Sales

Net
sales for the six months ended December 31, 2008 consist primarily of shipments
of 2-cycle oil, 4-cycle oil, bar and chain lubricants and appearance chemicals.
Net sales for the six months ended December 31, 2009 consist primarily of
shipments of charcoal starter fluid, 4-cycle oil, bar and chain lubricants,
fuel stabilizer and 5W-30 motor oil and appearance chemicals including grill
& surface cleaners. The decrease in net sales is primarily due to a
reduction in 2-cycle oil sales during the six months ended December 31, 2009
offset by initial sales of charcoal starter fluid and grill & surface
cleaners. One customer, TTI, accounted for 81% of our net sales in the six
months ended December 31, 2008 and 2009. Net sales are comprised as follows:

|                      |  |                   |     |                   |   |     | 
|--------------------- |  | ----------------- | --- | ----------------- | - | --- | 
|                      |  | Six Months Ended  |    
|                      |  | December 31
 2008 |     | December 31
 2009 |  
|                      |  |                   |     |                   |  
|                      |  | ($000s)          |    
|Performance
 products |  | $                 | 871 |                   | $ | 684 | 
|Appearance
 products  |  |                   | 85  |                   |   | 182 | 
|                      |  |                   |     |                   |   |     | 
|Total                 |  | $                 | 956 |                   | $ | 866 | 
|                      |  |                   |     |                   |   |     | 

Cost of Sales (exclusive of depreciation and amortization)

Cost
of sales (exclusive of depreciation and amortization) primarily consists of the
cost of obtaining bio solvent animal fats, plant oils, additives, packaging
components and fees paid to our affiliates for the costs of salaries and
benefits of operations employees. Cost of sales (exclusive of depreciation and
amortization) for the six months ended December 31, 2008 and 2009 were
approximately $866,000 and $727,000 respectively. The decrease in cost of sales
(exclusive of depreciation and amortization) is primarily due to the decrease in
net sales.

Selling, General and Administrative Expenses

Selling,
general and administrative expenses consist primarily of salaries and benefits,
product development and testing fees, advertising and marketing expenses,
public relations, insurance, fees for professional services and non-cash
charges for stock compensation. Selling, general and administrative expenses
for the six months ended December 31, 2008 and 2009 include the following:

21

---



|                                                   |  |                   |       |                   |   |      
|-------------------------------------------------- |  | ----------------- | ----- | ----------------- | - | -----
|                                                   |  | Six Months Ended 
|                                                   |  | December 31
 2008 |       | December 31
 2009
|                                                   |  | ($000s)         
|Salaries                                           |  | $                 | 689   |                   | $ | 512  
|Stock-based
 compensation                          |  |                   | 1,964 |                   |   | 1,820
|Selling,
 marketing, public relations and related  |  |                   | 1,423 |                   |   | 1,013
|Development,
 product release and testing          |  |                   | 371   |                   |   | 107  
|Management
 and operating fees                     |  |                   | 412   |                   |   | 393  
|Legal and
 professional                            |  |                   | 489   |                   |   | 395  
|Occupancy,
 communications and all other, net      |  |                   | 305   |                   |   | 414  
|                                                   |  |                   |       |                   |   |      
|Total Selling, general and administrative expenses |  | $                 | 5,653 |                   | $ | 4,654
|                                                   |  |                   |       |                   |   |      

The
decrease in salaries for the three months ended December 31, 2008 compared to
2009 is primarily due to the resignation of our former president and chief
operating officer and a reduction of salary paid to our chief executive
officer. The decrease in stock-based compensation is due to restricted shares
granted during fiscal 2008 for recruiting executive management offset by stock
option grants to employees. The decrease in sales and marketing is primarily
due to decreased shipping costs, public relation fees and last years
advertising campaigns. The decrease in development, product release and testing
is primarily due to the 2008 independent testing fees for obtaining the SM
rating from the American Petroleum Institute (API) for our 5W-30 motor oil. The
decrease in legal and professional fees is primarily due to organization cost,
incurred during the quarter ended December 31, 2008 for the our reincorporation
offset by fees incurred with the preparation of our registration statement
filed during the quarter ended December 31, 2009. The increase in occupancy,
communications and all other is primarily due to higher office, travel, rent
and insurance fees.

Impairment
of Supplier Assets

On
December 4, 2009 we received a notice from Bio Tec, one of our suppliers of
performance products, that it was terminating its agreement with us. As a
result, we recorded charges of $1,303,000. Though we believe that Bio Tec has
breached the agreement, amounts owed to us may not be collectable and the
carrying amounts of assets related to Bio Tec may not be recoverable. As such,
we recorded an impairment loss of $610,000 related to Bio Tec exclusivity
rights, recorded a charge of $286,000 for fixed assets at the Bio Tec facility,
reserved $353,000 for inventory and expensed other Bio Tec related charges
totaling $54,000.

We
have identified alternative sources for performance related products and we are
conducting product performance and specification testing with such sources.

Depreciation
and amortization

Depreciation
and amortization expense for the six months ended December 31, 2008 and 2009
was approximately $253,000 and $242,000, respectively. Depreciation charges
totaled $11,000 and $29,000 for the six months ended December 31, 2008 and
2009, respectively. The increase in depreciation expense is primarily due to a
full six months of expense. Amortization expense for intangible assets totaled
$242,000 and $213,000 for the six months ended December 31, 2008 and 2009,
respectively. The decrease in amortization expense is primarily due to

22

---



the write off
of intangible assets relating to the Bio Tec intellectual property rights and
an impairment charge of $180,000 relating to the patents that were assigned to
us by our former president and chief operating officer. The expense is excluded
from cost of sales.

Interest
expense, net

Net
interest expense for the six months ended December 31, 2008 and 2009 was
approximately $82,000 and $13,000, respectively. The decrease in interest
expense is due to a reduction in the interest rate from 12% to 6% on a note
payable due to our president and chief operating officer. Interest expense is
currently accruing at approximately $7,000 per quarter. Interest expense
consists of interest due on notes payable to related parties. Interest income
consists of interest earned on bank deposits and deposits in an institutional
money market fund.

Impact of Inflation

Inflation
has not had a material effect on our results of operations. We expect the cost
of our bio-based performance products to track the increase and decrease in the
worldwide oil prices.

Seasonality

Although
our various product lines are sold on a year-round basis, the appearance
chemicals and outdoor power equipment markets are inherently seasonal. Seasonality impacts liquidity in that
we generally record the majority of our annual sales in the quarters ending
March and June. This requires us to maintain higher inventory levels during the
quarters ending September and December, therefore increasing the working
capital needs during these periods.

Liquidity and Capital
Resources

At
June 30, 2009 and December 31, 2009, we had $697,000 and $930,000 in cash, an
accumulated deficit of $32,354,000 and $38,427,000 and had a working capital
deficit of $2,351,000 and $29,000 respectively.

Net
cash used by operating activities was $4,854,000 and $3,464,000 for the six
months ended December 31, 2008 and 2009, respectively. The increase was
primarily due to the increase in accounts payable in the six months ended
December 31, 2008

Net
cash provided in financing activities was $2,898,000 and $3,718,000 for the six
months ended December 31, 2008 and 2009, respectively. The net proceeds from our
financing activities will be used to support our expansion, including purchases
from suppliers, and increased infrastructure costs. We cannot estimate at this
time the cost of capital necessary to integrate a new supplier for our
performance related products. Nor have we determined if the funding will
involve cash, debt or equity as negotiations are ongoing.

Our
capital requirements are not significant as the majority of our performance and
appearance products are outsourced to third party suppliers. During six months
ended December 31, 2008 and 2009, our cash used for investing activities
(capital requirements) was $32,000 and $21,000, respectively. In the
foreseeable future, we will require capital for the growth of our business,
including increases in personnel, sales and marketing, purchasing raw materials
and packaging finished goods to fulfill orders.

We
currently have no material commitments for capital expenditures.

23

---



Further,
losses from operations are continuing subsequent to December 31, 2009 and we
anticipate that we will continue to generate losses from operations in the near
future. As a result, in their report for the fiscal year ended June 30, 2009,
our auditors raised substantial doubt about our ability to continue as a going
concern.

Since
inception, we have financed our operations by issuing securities (common stock
and debt instruments) in various private placement transactions and from
revenue generated by sales of our products.

Equity

From
July 1, 2009 through December 31, 2009, we issued 6,850,000 shares of common
stock for gross proceeds of $2,100,000 in private placement transactions.
Included in those shares are 125,000 shares, having a value of $43,000 issued
to a placement agent in connection with those transactions. In addition, there
was $25,000 in cash payments in connection with these private placement
transactions.

On
March 31 2009, TTI subscribed for 6,666,667 shares of common stock and warrants
to purchase 2,222,222 shares of common stock at $0.20 per share at any time on
or before March 31, 2012. The aggregate purchase price for the stock and
warrants was $2,000,000. The securities were issued in October 2009.

In
October 2009, we entered into an investment agreement with TTI under which TTI
agreed to purchase 8,000,000 shares of our common stock for an aggregate
purchase price of $1,200,000. In addition, we granted TTI warrants to purchase
another 8,000,000 shares of our common stock at a price of $0.15 per share, or
$1,200,000 in the aggregate. In October 2009, TTI exercised half its warrants
and we issued 4,000,000 shares. In January 2010, TTI exercised the other half
of the warrants and we issued the remaining 4,000,000 shares for proceeds of
$600,000. Under the agreement, we also agreed to issue 8,000,000 shares of our
common stock in satisfaction of all claims, except for product liability claims or any claims that cannot be
released as a matter of law, relating to liabilities and/or damages incurred by
TTI and its affiliates in connection with a shipment of defective engine oil.
After taking into account the exercise of outstanding warrants and options, TTI
beneficially owned 24.8% of our issued and outstanding shares as of
February 10, 2010.

Subsequent
to December 31, 2009, we issued 7,200,000 shares of common stock for gross
proceeds of $2,000,000 in private placement transactions.

Debt

From
August 2007 through June 30, 2009, we issued notes with an aggregate original
principal amount of $1,320,000, of which $445,000 remains outstanding at
December 31, 2009. From July 1, 2009 through December 31, 2009 we issued a note
with an aggregate principal amount of $10,000, all of which remains
outstanding. These amounts do not include $44,000 of trade payables evidenced
by notes.

Going Concern Consideration

Due
to our limited amount of additional committed capital, recurring losses,
negative cash flows from operations and our ability to pay outstanding
liabilities, there is substantial doubt about our ability to continue as a
going concern. These consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles, assuming that we
will continue as a going concern.

Since
inception, we have incurred operating losses and negative cash flows from
operations. As of December 31, 2009, we had an accumulated deficit of
$38,427,000, with total stockholders equity of $1,901,000.

We
had a working capital deficiency of $29,000 at December 31, 2009. However, we
believe the $646,000 recorded as deferred revenue from TTI and the notes
payable to our chief executive officer and chief operating

24

---



officer for
$455,000, if needed, we could request both TTI and our officers to forego the
short term nature of these amounts owed. This would provide us with an adjusted
working capital of approximately $1,072,000 at December 31, 2009.

In
addition, we incurred net losses of $6,073,000 for the six months ended
December 31, 2009. We have analyzed our cash requirements for the next 6 months
of operations and have determined that, included in these losses are the
following non-cash items and non-recurring items that will not have an effect
on our cash position for the fiscal year ending June 30, 2010:

|                               |  |                                     |        |  
|------------------------------ |  | ----------------------------------- | ------ | -
|                               |  | Six months ended
 December 31, 2009 |       
|                               |  |                                     |       
|                               |  | (000s)                            
|                               |  |                                     |        |  
|Net loss                       |  | $                                   | (6,073 | )
|Add-backs:                     |  |                                     |        |  
|Stock based
 compensation      |  |                                     | 1,820  |  
|Depreciation
 and amortization |  |                                     | 242    |  
|Impairment
 of supplier assets |  |                                     | 1,303  |  
|Other
 non-cash items          |  |                                     | 9      |  
|                               |  |                                     |        |  
|Net loss                       |  | $                                   | (2,699 | )
|                               |  |                                     |        |  

Also
since December 31, 2009, we have received $2,000,000 from accredited investors,
$600,000 from TTI and continue to have discussions with existing and potential new
investors regarding an investment in us. Although we do not have any firm
commitments, we intend to continue these discussions. Additionally, we believe
revenues will increase as consumers learn of and experience the efficacy of our
products. Increased revenues will reduce, or eliminate our operating losses and
enable us to meet our financial obligations. However, there can be no
assurances that we can attract new investment or increase revenues. Failure to
obtain sufficient equity financing would have substantial negative
ramifications to us.

Between
our available cash balance at December 31, 2009 of $930,000, our adjusted
working capital of $1,072,000, and the $2,600,000 sale of equity securities and
warrant exercises in January 2010 we have estimated, we may require
approximately $2.5  $3.5 million of additional cash for fiscal year ending
June 30, 2010.

Contractual
Arrangements

Significant
contractual obligations as of December 31, 2009 are as follows:

|                   |  |                  |  |                 
|------------------ |  | ---------------- |  | ----------------
|                   |  |                  |  | Amount Due in   
|                   |  |                  |  |                 
|Type of Obligation |  | Total Obligation |  | Less than 1 year
|                   |  |                  |  |                 
|Facility Lease     |  | $60,000          |  | $60,000         

Under
our agreement with Bio Tec, we were obligated to purchase a minimum quantity of
three tanker loads, or 18,750 gallons in the aggregate, of performance products
per month, provided that Bio Tec (i) can produce the quantity and type of
products we require on a timely basis and (ii) the products satisfy our quality
standards. If we failed to take delivery of the minimum quantity, we were obligated
to pay Bio Tec $10,000 per tanker load (6,250 gallons) up to $30,000 per month.
We believed we were in compliance with the terms of our agreement with

25

---



Bio Tec. We
received a notice from Bio Tec that it was terminating its agreement with us,
effective December 4, 2009. On December 21, 2009, we commenced an action in the
United States District Court for the Southern District of New York against Bio
Tec to enforce our rights under its agreement with Bio Tec, including our
rights to Bio Tecs intellectual property, and to recover certain amounts that
we advanced to or on behalf of Bio Tec and to recover damages that we incurred
as a result of Bio Tecs breach of the agreement. It is too soon to determine the likely outcome of this matter.

Off Balance Sheet
Arrangements

We
have no material off balance sheet arrangements that are likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
resources or capital expenditures.

Critical Accounting
Policies

There
have been no material changes in our critical accounting policies and estimates
from those disclosed in Item 15 of our Registration Statement on Form 10 for
the fiscal year ended June 30, 2009 and three months ended September 30, 2009.

Summary of
Significant Accounting Policies and new Accounting Pronouncements

The
following is a summary of recent authoritative pronouncements that affect
accounting, reporting and disclosure of financial information by us.

In
October 2009, the FASB issued guidance on revenue recognition to require
companies to allocate revenue in multiple-element arrangements based on an
elements estimated selling price if vendor-specific or other third-party
evidence of value is not available. This guidance is effective beginning
January 1, 2011 with earlier application permitted. We are currently evaluating
both the timing and the impact the adoption of this guidance will have on our
consolidated financial statements.

In
June 2009, FASB ASC 105 (formerly SF AS 168), the FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, was
issued. ASC 105 is the single official source of authoritative U.S. GAAP,
superseding all other accounting literature except that issued by the
Securities and Exchange Commission. As of July 2009, only one level of
authoritative U.S. GAAP exists. All other literature will be considered
non-authoritative. The Codification does not change U.S. GAAP; instead, it
introduces a new referencing system that is designed to be an easily
accessible, user-friendly online research system. ASC 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. We adopted ASC 105 for the quarter ended September 30,
2009. The adoption did not have a material impact on our Consolidated Financial
Statements.

|                                                                    | 
|------------------------------------------------------------------- | 
|Item 3. Quantitative and Qualitative Disclosures
 About Market Risk

Not Applicable

|                                  | 
|--------------------------------- | 
|Item 4T. Controls and Procedures.

Evaluation of
Disclosure Controls and Procedures

Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act. Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial
reporting and the

26

---



preparation of
financial statements in accordance with GAAP. Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projection of any evaluation of effectiveness to
future periods is subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Management
has conducted, with the participation of our Chief Executive Officer and our
Chief Financial Officer, an assessment, including testing of the effectiveness,
of our internal control over financial reporting as of December 31, 2009.
Managements assessment of internal control over financial reporting was
conducted using the criteria in Internal
Control over Financial Reporting - Guidance for Smaller Public Companiesissued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is
a reasonable possibility that a material misstatement of our annual or interim
financial statements will not be prevented or detected on a timely basis. In
connection with our assessment of our internal control over financial reporting
as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified
the following material weaknesses in our internal control over financial
reporting as of December 31, 2009:

|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have
 concluded that there were not effective financial reporting controls in the
 following areas that could lead to inaccurate financial reporting:
|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                         | We have
 difficulty in accounting for complex accounting transactions particularly as
 it relates to valuation of share based payments, the valuation of warrants,
 fair value measurements and other complex debt /equity transactions.                                                
|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                         | Documented
 processes do not exist at our Stamford, CT headquarters and Detroit, MI
 facility for several key processes such as a closing checklist,
 budget-to-actual analyses, standard monthly reporting process, pro forma
 financial statements, and the usage of key spreadsheets.
|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
| | We have
 identified weaknesses in our inventory controls:                                                                                               
|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                         | Documented
 processes do not exist for several key inventory control processes including
 inventory adjustments, reserves for excess, defective and obsolete inventory,
 product shipments and the tracking and recording of in-transit inventory.                                      
|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                         | We have not
 effectively monitored third-party warehouse operations to ensure the
 acquisition, tracking and disposition of inventory is appropriate. In
 addition we do not have the proper reconciliation controls regarding the
 safeguarding of inventory at third-party warehouses.
|  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                         | Documented
 inventory valuation processes are lacking or do not exist including costs to
 be expensed versus inventoried, standard cost changes, actual versus standard
 cost analysis and the accurate accumulation of total production costs.                                         

Because
of the material weaknesses noted above, we have concluded that we did not
maintain effective internal control over financial reporting as of December 31,
2009, based on Internal Control over
Financial Reporting - Guidance for Smaller Public Companiesissued
by COSO.

Remediation of
Material Weaknesses in Internal Control over Financial Reporting

We
are in the process of implementing remediation efforts with respect to the
material weaknesses noted above as follows:

|  |                                                        | 
|- | ------------------------------------------------------ | 
| | We are
 improving our financial reporting controls by:

27

---



|  |                                                                                                                                                                                                                                                                                                                                              |                                                                                               
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|  | o                                                                                                                                                                                                                                                                                                                                            | Implementing
 a process to review all journal entries prior to entry into the General
 Ledger.
|  |                                                                                                                                                                                                                                                                                                                                              |                                                                                               
|  | o                                                                                                                                                                                                                                                                                                                                            | Documenting
 all key financial reporting processes.                                           
|  |                                                                                                                                                                                                                                                                                                                                              |                                                                                               
|  | o                                                                                                                                                                                                                                                                                                                                            | Establishing
 an effective document control and retention procedure.                          
|  |                                                                                                                                                                                                                                                                                                                                              |                                                                                               
|  | o                                                                                                                                                                                                                                                                                                                                            | Establishing
 budgets and examining on a month to month basis budget versus actual
 variances.
|  |                                                                                                                                                                                                                                                                                                                                              |                                                                                               
| | We are
 improving the effectiveness of the accounting group by continuing to augment
 our existing resources with additional consultants or employees to assist in
 the analysis and recording of complex accounting transactions.                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                              |                                                                                               
| | During our
 second fiscal quarter of 2010 we implemented a new Enterprise Resource
 Planning (ERP) system and are documenting along with the implementation of
 our ERP system all key inventory control processes, bills of materials,
 measurement and valuation processes, purchasing and production forecasts and
 inventory management.

We
believe the foregoing efforts will enable us to improve our internal control
over financial reporting. Management is committed to continuing efforts aimed
at improving the design adequacy and operational effectiveness of its system of
internal controls.

(b) Changes in
Internal Control Over Financial Reporting

During
our second fiscal quarter of 2010, we implemented a new accounting system which
allows us to develop better internal controls around issuing purchase orders,
processing accounts payable, accounts receivable, inventory, manufacturing and
reporting. We expect the ERP system to significantly improve our internal
control framework beginning in our third fiscal quarter of 2010.

PART
II - OTHER INFORMATION

|                          | 
|------------------------- | 
|Item 1. Legal Proceedings

On November
20, 2009, we were served with a summons and complaint, filed in the Superior
Court of California, County of Los Angeles, on behalf of Mathew Zuckerman, our
former president and chief operating officer, and other entities that he
controls or in which he claims a beneficial interest. Each plaintiff claims to
own or control shares of our common stock. The plaintiffs allege that they have
suffered damages of not less than $6 million as a result of our refusal to
allow them to transfer the shares they allegedly own or control. Apparently,
the basis of this claim is the fact that we had placed a stop order with our
transfer agent on the shares the plaintiffs allege to have owned or controlled.
We placed a stop order on the transfer of these shares because we believed that
Mr. Zuckerman was an affiliate under Rule 144 promulgated by the Securities
and Exchange Commission due to his significant ownership of our common stock
and that, therefore, those shares are restricted and saleable subject to the
requirements and limitations of Rule 144. Mr. Zuckerman has no other
affiliation with us. The complaint also seeks declaratory relief that Mr.
Zuckerman is not in violation of the non-compete provisions contained in his
employment agreement. Apparently, this portion of the complaint is in response
to us informing Mr. Zuckerman that we believed he violated that non-compete
covenant as a result of his affiliation with and employment by Alkane, Inc., a
company that markets a bio-diesel fuel additive. We have not yet filed a
response to the complaint. It is too soon to determine the likely outcome of
this matter.

We
received a notice from Bio Tec that Bio Tec was terminating its agreement with
us, effective December 4, 2009. In the termination notice, Bio Tec claimed that
we had breached our agreement with Bio Tec by failing to purchase and market
the minimum amount of Bio Tecs products as required by the agreement. As a
result, Bio Tec

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claims that we are required to pay one of Bio Tecs
principals $300,000 per year and also demanded that we cease immediately any
representations that [we have] an exclusive right to market, sell and
distribute products utilizing technology proprietary to Bio Tec and that we
cease advertising that [we] may have a right to use Bio Tecs technology to
produce products. We believe, however, that we have complied with all of the
terms of the agreement and that Bio Tec is not entitled to any termination penalties.
In fact, we believe that Bio Tec has breached the agreement. On December 21,
2009, we commenced an action in the United States District Court for the
Southern District of New York against Bio Tec to enforce our rights under the
agreement with Bio Tec, including our rights to Bio Tecs intellectual
property, to recover amounts that we advanced to or on behalf of Bio Tec and to
recover damages that we incurred as a result of Bio Tecs breach of the
agreement. It is too soon to determine the likely outcome of this matter.

|         |             
|-------- | ------------
|Item 1A. | Risk Factors

The
following risk factors have been updated with respect to results from the period
covered by this report. Other than those below, there were no other material
changes from the risk factors previously reported in our Registration Statement
    on Form 10 for the fiscal year ended June 30, 2009 and three months ended
    September 30, 2009. Please refer to Item 1A of our Form 10 for disclosures
    regarding other risks and uncertainties related to our business.

We
      have determined that there is a material weakness in our internal controls
      over financial reporting, which may be insufficient to detect in a timely
      manner misstatements that could occur in our financial statements in amounts
      that may be material.



As
    set forth in Item 4T of this report, in connection with our assessment of
    internal control over financial reporting for the period ended December 31,
    2009, we concluded that we did not maintain effective internal control over
    financial reporting as of December 31, 2009 due to material weaknesses in
    our financial reporting controls and our inventory controls. A material weakness
    is a deficiency, or a combination of deficiencies, in internal control over
    financial reporting, such that there is a reasonable possibility that a material
    misstatement of our annual or interim financial statements will not be prevented
    or detected on a timely basis.We
    are in the process of implementing remediation efforts with respect to the
    material weaknesses noted. However, despite these steps, we may experience
    reportable conditions and material weaknesses in the future, which may render
    us unable to detect in a timely manner misstatements that could occur in
    our financial statements in amounts that may be material. We cannot assure
    you that we will determine that our material weakness have been remedied
    by the end of our next reporting period.



Future
sales or the potential for sale of a substantial number of shares of our common
stock could cause the trading price of our common stock 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
stock to decline and could materially impair our ability to raise capital
through the sale of additional equity securities. As of February 10, 2010, we
had 130,562,153 shares of common stock issued and outstanding. In addition, as
of February 10, 2010, we had reserved an additional 28,989,722 shares for
issuance as follows:

| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | 20,000,000 shares reserved for issuance under our
 stock option plan, of which 6,436,250 underlie outstanding options at
 December 31, 2009;
| |   |                                                                                                                                             
| |  | 4,000,000 shares issuable to our chief executive
 officer under his employment agreement;                                                   
| |   |                                                                                                                                             
| |  | 2,767,500 shares underlying outstanding warrants;
 and                                                                                      
| |   |                                                                                                                                             
| |  | 2,222,222 shares underlying the warrants issuable to
 TTI under the TTI Investment Agreement.                                               

|        |                                                              
|------- | -------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity
 Securities and Use of Proceeds.

In
August, 2009, we issued 625,000 shares of our common stock and warrants to
purchase 187,500 shares at an exercise price of $0.05 per share for gross
proceeds of $250,000. The warrants have a three year term and are exercisable
at anytime. There were no cash payments in connection with these private
placement transactions.

In
November 2009, we issued 1,800,000 shares of common stock and warrants to
purchase 900,000 shares of common stock at $0.23 per share for gross proceeds
of $500,000 in a private placement transaction. There were no cash payments in
connection with this private placement transaction.

In
November 2009, we issued 3,600,000 shares of common stock for gross proceeds of
$1,000,000 in a private placement transaction. We paid $25,000 in cash and
agreed to issue 100,000 shares of common stock, having a value of $25,000, to a
placement agent in connection with this private placement transaction.

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In
December 2010, we agreed to issue 700,000 shares of common stock for gross
proceeds of $350,000 in a private placement transaction. There were no cash
payments in connection with these private placement transactions.

In
January 2010, we issued 7,200,000 shares of common stock and warrants to
purchase 1,080,000 shares of common stock at $0.38 per share for gross proceeds
of $2,000,000. There were no cash payments in connection with these private
placement transactions.

|                          | 
|------------------------- | 
|Item 5. Other Information

None

|                   | 
|------------------ | 
|Item 6.  Exhibits

|                 |                                                                                                                                                                                               |             | 
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | 
|Exhibit
 Numbers |                                                                                                                                                                                               | Description | 
|                 |                                                                                                                                                                                              
|31.1             | Certification of Chairman and Chief Executive
 Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *                                                                           
|                 |                                                                                                                                                                                              
|31.2             | Certification of Chief Financial Officer pursuant to
 Section 302 of the Sarbanes Oxley Act of 2002 *                                                                                        
|                 |                                                                                                                                                                                              
|32.1             | Certification of Chairman and Chief Executive
 Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

|  |               
|- | --------------
| 
|* | filed herewith

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SIGNATURES

Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.

|                        |                                             |                         | 
|----------------------- | ------------------------------------------- | ----------------------- | 
|                        | GREEN EARTH TECHNOLOGIES, INC.             
|                        |                                             |                         | 
|Date: February 16, 2010 | By:                                         | /s/ William J. Marshall | 
|                        | Name: William J. Marshall                  
|                        | Title: Chairman and Chief Executive Officer
|                        |                                             |                        
|                        | By:                                         | /s/ Greg D. Adams       | 
|                        | Name: Greg D. Adams                        
|                        | Title: Chief Financial Officer             

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