- Amended Annual Report (10-K/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-K/A

(Amendment No. 1)

_______________________

ANNUAL REPORT UNDER SECTION 13 OR 15 (D)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

COMMISSION FILE NO.: 0-50469

GREENSHIFT CORPORATION

(Exact name of registrant as specified in its charter)

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

5950 Shiloh Road East, Suite N, Alpharetta, Georgia		30005
(Address of principal executive offices)		(Zip Code)
	(212) 994-5374
	(Registrant’s telephone number)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 406 of the Securities Act.	Yes		No	X

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	Yes		No	X

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.	Yes	X	No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer[ ] Smaller reporting company [ X ]

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

As of June 30, 2011 (the last business day of the most recently completed second fiscal quarter) the aggregate market value of the common stock held by non-affiliates was approximately $2,541,929.

As of March 30, 2012, there were 23,000,139 shares of common stock outstanding.

Amendment No. 1

This Amendment No.1 on Form 10-K/A, which amends and restates items identified below with respect to the Form 10-K, filed by GreenShift Corporation with the Securities and Exchange Commission on March 30, 2012, has been filed to include restated Consolidated Financial Statements, as described in Note 21 to the Consolidated Financial Statements, and to include the following modifications to the Notes to Consolidated Financial Statements:

Note 3, “ Fair Value Instruments ” was updated to restate the schedule of conversion liabilities;

Note 4, “ Stockholders’ Equity ” was updated to restate the estimated settlement value of conversion liabilities at December 31, 2011; and,

Note 21, “ Restatement ” was added to outline the corrections that were made to the financial statements.

None of the other disclosures in this Report have been amended or updated.

GREENSHIFT CORPORATION

ANNUAL REPORT ON FORM 10K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

TABLE OF CONTENTS

Part I		Page No

Item 1	Business	5

Item 1A	Risk Factors	16

Item 2	Description of Properties	27

Item 3	Legal Proceedings	27

Item 4	Mine Safety Disclosure	29

Part II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
	Purchase of Equity Securities	30

Item 6	Selected Financial Data	30

Item 7	Management’s Discussion and Analysis	31

Item 8	Financial Statements and Supplementary Schedules	36

Item 9	Changes and Disagreements with Accountants on Accounting and Financial Disclosure	72

Item 9A	Controls and Procedures	72

Item 9B	Other Information	72

Part III

Item 10	Directors, Executive Officers and Corporate Governance	73

Item 11	Executive Compensation	75

Item 12	Security Ownership of Certain Beneficial Owners, and Management and
	Related Stockholder Matters	76

Item 13	Certain Relationships and Related Transactions and Director Independence	77

Item 14	Principal Accountant Fees and Services	79

Part IV

Item 15	Exhibits and Financial Statement Schedules	80

	Signatures	81

PART I

CONVENTIONS USED IN THIS REPORT

In this Annual Report on Form 10-K, the terms “ we ,” “ our ,” “ us ,” “ GreenShift ,” or the “ Company ” refer to GreenShift Corporation, and its subsidiaries on a consolidated basis. The term “ GreenShift Corporation ” refers to GreenShift Corporation on a standalone basis only, and not its subsidiaries. The following is a list of the acronyms and other naming conventions used in this report, unless otherwise specified:

CARB	refers to the Air Resources Board of the California Environmental Protection Agency;

USEPA	refers to the U.S. Environmental Protection Agency;

EIA	refers to the U.S. Energy Information Association;

NBB	refers to the National Biodiesel Board;

RFA	refers to the Renewable Fuels Association;

RFS or RFS2	refers to the Renewable Fuel Standard published by the EPA

TJPC	refers to The Jacobsen Publishing Company;

TNS	refers to the Trade News Service;

USDA	refers to the U.S. Department of Agriculture;

SEC	refers to the U.S. Securities and Exchange Commission;

MMGY	refers to million gallons per year;

BGY	refers to billion gallons per year;

Btu	refers to British thermal units;

MMBtu	refers to million British thermal units; and,

gCO2	refers to grams of carbon dioxide.

MARKET AND INDUSTRY DATA FORECASTS

This document includes data and forecasts that the Company has prepared based, in part, upon information obtained from industry publications. Third-party industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. In particular, we have based much of our discussion of the biodiesel and ethanol industries, including government regulation relevant to the industry, on information published by the NBB, the national trade association for the U.S. biodiesel industry, and the RFA, the national trade association for the U.S. corn ethanol industry. Each is a trade organization for their respective industry and they may present information in a manner that is more favorable than would be presented by an independent source. We have also used data and other information in this document that was published by the TNS, TJPC, the EIA, the USEPA, the USDA, and CARB. Forecasts in particular are subject to a high risk of inaccuracy, especially forecasts projected over long periods of time.

CAUTIONARY INFORMATION REGARDING FORWARD LOOKING STATEMENTS

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report contains such “ forward-looking statements ” within the meaning of the Private Securities Litigation Reform Act of 1995. We make certain forward-looking statements in this Annual Report on Form 10-K and in documents that are incorporated herein by reference. These forward-looking statements relate to our outlook or expectations for earnings, revenues, expenses, asset quality or other future financial or business performance, strategies or expectations, or the impact of legal, regulatory or supervisory matters on our business, results of operations or financial condition. Specifically, forward-looking statements may include statements preceded by, followed by or that include the words “ estimate ,” “ plan ,” “ project ,” “ forecast ,” “ intend ,” “ expect ,” “ anticipate ,” “ believe ,” “ seek ,” “ target ” or similar expressions. These statements reflect our management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause our actual results to differ include:

-	the volatility and uncertainty of commodity prices;

-	operational disruptions at ethanol production facilities;

-	the costs and business risks associated with developing new technologies;

-	our ability to develop and commercialize our technologies;

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

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

-	the effects of mergers and consolidations in the biofuels industry and unexpected announcements or developments from others in the renewable fuels industry;

-	our reliance on key management personnel;

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

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

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

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

-	other risks referenced from time to time in our filings with the SEC and those factors listed in this Annual Report on Form 10-K for the year ended December 31, 2011 under Item 1A, Risk Factors .

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference in this report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 1

BUSINESS

OVERVIEW

GreenShift Corporation (“ we ,” “ our ,” “ us ,” “ GreenShift ,” or the “ Company ”) develops and commercializes clean technologies that facilitate the more efficient use of natural resources. We are focused on doing so today in the U.S. ethanol industry, where we innovate and offer technologies that improve the profitability of licensed ethanol producers.

We invented, developed, commercialized, perfected, and patented new technologies that integrate into the back-end of existing dry mill corn ethanol plants to tap into a new reserve of inedible crude corn oil with an estimated industry-wide output of more than 800 MMGY, an amount capable of offsetting more than about 20 million barrels of fossil fuel-derived crude oil per year. This corn oil is a valuable feedstock for use in the production of advanced carbon-neutral liquid fuels and other biomass-derived alternatives to fossil fuel-based products.

Our corn oil extraction technologies are widely considered to be the quickest and best path for margin improvement for corn ethanol producers today. The current market value of corn oil recovered by our licensees ranges from about four to six times higher than its value without use of our patented corn oil extraction processes. Our corn oil extraction technologies increase corn-to-biofuel yields while reducing the energy and greenhouse gas intensity of corn ethanol production for dry mill ethanol producers. These benefits correspond to increased ethanol producer income ranging from about $0.08 to more than $0.20 per gallon of ethanol produced, depending on the extent to which the producer uses our patented and patent-pending extraction technologies; and, ethanol producer paybacks of less than 1 year at current market prices. No technologies have been developed, commercialized and made available to corn ethanol producers in the history of the ethanol industry that begin to approach these results.

In February 2010, the EPA published its estimate that 70% of the U.S. ethanol industry will use back-end corn oil extraction technology to produce 40% of America’s biodiesel feedstock by 2022. At the end of 2010, industry publications were predicting the adoption of back-end corn oil extraction by the entire industry. If that actually occurs, if our patented technologies actually standardize and shift the majority of the U.S. ethanol industry into increased efficiency and profitability, then we will have fulfilled our founding mission of building value by developing and using technology to catalyze disruptive environmental gain.

We believe that the first, best and most cost-effective way to achieve positive environmental change of any magnitude is to develop technology-driven economic incentives that motivate large groups of people and companies to make incremental environmental contributions that are collectively very significant. At projected levels of adoption, that is precisely what our patented corn oil extraction technologies will have done by sustainably producing globally-meaningful quantities of new carbon-neutral liquid fuels for distribution through existing fossil fuel supply chains; displacing more than 20 million barrels per year of crude oil; saving trillions of cubic feet per year of natural gas; eliminating tens of millions of metric tons per year of greenhouse gas emissions; and infusing more than an estimated $2 billion per year of increased income into the corn ethanol industry – the foundation of North America’s renewable fuel production capability.

We are focused on driving and supporting the full utilization of our patented corn oil extraction technologies by as many licensed ethanol plants as possible, as quickly as possible. We generate revenue by licensing our technologies to ethanol producers, and by providing our licensees with success-driven, value-added services and other solutions based upon our expertise, know-how, technologies, and patent position.

We also maintain our strong commitment to continued innovation and have many additional patents pending for our portfolio of strategically-compatible cleantech designed to leverage our extraction platform and further strengthen the significant competitive advantages that our technologies provide to licensed ethanol producers.

THE U.S. ETHANOL PRODUCTION INDUSTRY

Ethanol is a clean-burning, high-octane fuel that is produced from the fermentation of carbohydrates such as grains, starches and sugars. Ethanol is produced mostly from corn in the U.S., and it is primarily used as a gasoline additive to increase octane rating and to comply with air emissions regulations by reducing emissions of carbon monoxide and nitrogen oxide.

Fuel blended with ethanol is approved for use by major motor vehicle manufacturers and is often recommended because of ethanol’s clean burning characteristics. According to statistics released by the RFA and EIA, ethanol was blended into more than 50% of the gasoline sold in the U.S. during 2010, and comprised about 9% of the 138 billion gallons of gasoline consumed last year in the U.S.

The U.S. ethanol industry has grown significantly over the past 30 years, from an industry-wide output of 175 million gallons per year in 1980, to about 3.4 billion gallons produced during 2004, to about 13.2 billion gallons in 2010, according to the RFA. Demand for ethanol in the United States is expected to increase due to a number of factors, mostly by policies focused on reducing reliance on fossil fuel-based transportation fuels, volatile petroleum prices, heightened environmental concerns, and energy independence and national security concerns. Corn ethanol can be expected to comprise an increasingly larger portion of the U.S. liquid fuel supply during the next several years, as more fully described below:

Environmental Benefits	Ethanol, as an oxygenate, reduces tailpipe emissions when added to gasoline. The additional oxygen in the ethanol results in a more complete combustion of the fuel in the engine cylinder, resulting in reduced carbon monoxide and nitrogen oxide emissions. Prior federal programs that mandated the use of oxygenated gasoline in areas with high levels of air pollution spurred widespread use of ethanol in the United States. The federal Clean Air Act requires the use of oxygenated gasoline during winter months in areas with unhealthy levels of carbon monoxide.

Blending Benefits	Ethanol has an octane rating of 113, and is added to gasoline to raise the octane level of gasoline. Unblended gasoline typically has a base octane level of approximately 84. Typical gasoline and ethanol blends have octane ratings ranging from 87 to 93. Higher octane gasoline has the benefit of reducing engine knocking. Gasoline with higher octane typically has been sold at a higher price per gallon than lower octane gasoline. Ethanol is also a strategically valuable fuel stock extender given energy independence concerns. Use of ethanol in the U.S. gasoline supply has grown from 1.3% in 2000 to about 9% in 2010 according to the EIA. In 2010 alone, ethanol replaced the need for approximately 297 million barrels of crude oil in the U.S. In March 2009, an ethanol industry trade association and 54 ethanol producers requested that the EPA approve the use of up to 15% ethanol blended with gasoline (E15). The EPA recently approved the use of E15 for passenger vehicles manufactured after 2001, paving the way for more than 60% of the 129 million domestic passenger vehicles in service to run on E15. We believe that ethanol blended in the U.S. gasoline supply is an important first step towards the long-term introduction of renewable fuels into the transportation sector.

Use Mandates	In addition to the blender’s credit, the growth in ethanol usage has also been supported by legislative requirements dictating the use of renewable fuels, including ethanol. The Energy Independence and Security Act of 2007, confirmed by the EPA regulations on the Renewable Fuel Standard, or RFS2, issued on February 3, 2010 mandated a minimum usage of corn-derived renewable fuels of 10.5 billion gallons in 2009 and 12.0 billion gallons in 2010. The upper mandate for corn-based ethanol is 15.0 billion gallons by 2015.

ECONOMICS OF ETHANOL PRODUCTION

The profitability of corn ethanol producers is directly related to and strongly impacted by commodity prices. Historically, these commodities primarily included ethanol, corn, natural gas and distillers grain.

Increases in corn or natural gas prices and decreases in ethanol or distillers grain prices can have an adverse impact on an ethanol producer’s cash flow, ability to service debt and profitability. Ethanol producers are generally unable to pass increased corn prices along to their customers since ethanol competes with fuels that are not derived from corn. Further, prices and supplies of these commodities are subject to and determined by market forces over which ethanol producers have no control, such as weather, farmer planting decisions, domestic and global demand, export prices, and general economic, market, and various governmental policies. The timing, significance and relative impact of these factors is complex and difficult to predict.

Commodity price volatility can present ethanol producers and their stakeholders with significant risks. A sustained narrow spread between ethanol and corn prices would adversely affect the liquidity of an ethanol producer. An ethanol producer could be forced to suspend production as a result of commodity price volatility if its ethanol and co-product sales are insufficient to cover its production costs.

The “ crush spread ” is commonly used as an indicator of producer profitability. The simple crush spread is conventionally defined as the market value of 2.8 gallons of ethanol less the cost of one bushel of corn. The graph below shows the impact of volatility in the ethanol and corn markets on the crush spread between 1982 and 2010.

Crush Spread

Producers can partly mitigate the impact of commodity risk with disciplined management and scale, however, the best mitigant is for producers to increase the spread by implementing new technologies and practices that increase output and sales while decreasing raw material consumption and production costs.

OUR PATENTED CORN OIL EXTRACTION TECHNOLOGIES

About 33% of each bushel of corn accepted by corn ethanol producers is refined into ethanol in a process called fermentation. The output of fermentation contains ethanol, water, protein, fiber and corn oil. This mixture is distilled to boil off the ethanol for purification in a molecular sieve, leaving the remainder of the mixture in the bottom of the distillation stage. The distillation bottom, or the whole stillage, is conventionally subjected to mechanical and then thermal dewatering to produce a co-product called distillers grain.

Our patented and patent-pending extraction technologies bolt-on to the back end of the dry mill ethanol production process, where they intercept the flow of the whole stillage at various points downstream of the distillation equipment and before final dewatering. We condition the stillage, extract the oil, and return the flow back to the production process of the host ethanol producer. The extracted oil is then stored and shipped for refining. The following is a simplified flowchart showing the flow of oil from corn through distillation to our patented corn oil extraction process (shown at the bottom of the flowchart):

Ethanol Facility Flowchart with GreenShift’s Corn Oil Extraction Technology

Our corn oil extraction technologies can recover in excess of 1.33 pounds of corn oil for every bushel of corn processed into ethanol, a rate that corresponds to about 6.5 gallons of corn oil for every 100 gallons of ethanol produced. Recovery is accomplished in various methods, the first two of which extract oil from whole stillage (Method II) and an intermediate form of stillage called thin stillage (Method I). We have demonstrated that a properly designed, capitalized, installed and operated Method I extraction system can consistently produce more than 0.91 pounds of corn oil per bushel of corn, or about 4.4 gallons of corn oil for every 100 gallons of ethanol produced.

Increased Ethanol Producer Output and Sales

The corn oil that is recoverable from the ethanol production process with our patented technologies was historically not recovered by ethanol producers. It was instead sold with distillers grain for comparatively low value. More than about 1.68 billion gallons of unrecovered corn oil passed through the U.S. ethanol industry between 1982 and 2004 – the year that we demonstrated the feasibility of our corn oil extraction technologies. This unrecovered corn oil had a market value of more than $1.54 billion but was instead sold, trapped in distillers grain, for about $680 million. The following graph shows the estimated historical value of the corn oil extractable with our patented technologies as compared to the value of distillers grain:

Corn Oil & Distillers Grain Prices

As a result of commercializing our patented corn oil extraction technologies over between 2005 and 2010, our corn oil extraction technologies have been accepted by producers as a competitively necessary addition to the ethanol production process. Still, despite the recent increased market adoption of our technologies, the vast majority of the corn oil recoverable with our patented and patent-pending technologies remains unrecovered. Between 2005 and 2010, U.S. ethanol producers recovered less than 10% of the 2.79 billion gallons of corn oil that we estimate was recoverable during that same period with our technologies. The average prices of corn oil and distillers grain from 2005 to 2010 were about $0.22 and $0.06 per pound, respectively. At those prices, we estimate that the market value of the unrecovered oil that was sold with distillers grain between 2005 and 2010 was about $4.9 billion.

The graph below plots the growth of the ethanol industry against the volume and value of the corn oil that could have been produced had our patented and patent-pending technologies been installed at, and fully utilized by, all dry mill ethanol facilities industry-wide upon the start-up of each facility (ethanol output is shown in millions of gallons per year on the left axis, and the potential corn oil volume and market value is shown in millions of gallons per year and millions of dollars per year, respectively, on the right axis):

Corn Oil Production Potential of GreenShift’s Corn Oil Extraction Technologies

Reduced Ethanol Production Costs

The incremental operating cost to ethanol producers of extracting corn oil with our technologies is negligible. Corn oil extraction systems based on our technologies readily integrate into the ethanol process and can be operated by existing staff. However, use of our patented and patent-pending corn oil extraction processes will in fact reduce the amount of energy consumed by host ethanol plants that produce dried distillers grain by about 3,070 Btu per gallon of ethanol produced, or by about 8.53%. This data is consistent with data reports recently published by the EPA and CARB. These

savings are driven by three sources: (1) the improved heat transfer efficiency during dewatering as a result of the insulating characteristics of the extracted oil; (2) the increased drying efficiency resulting from a lower mass flow through the rotary dryers; and (3), the improved flow characteristics of distillers grain after corn oil removal, resulting in reduced drying time.

The energy savings capabilities of our technologies translates to about $235 million that could have been realized by the U.S. ethanol industry between 1982 and 2004, and about another $735 million from 2005 to 2010, assuming full utilization of our technologies at all dry mill plants during that time.

These lost potential savings are shown in the graph below (energy consumption and the potential historical energy reduction of corn oil extraction use are shown in millions of MMBtu, or trillions of Btu, and the potential historical savings of corn oil extraction use are shown on the right axis in millions of dollars):

Energy Savings Potential of GreenShift’s Corn Oil Extraction Technologies

Enhanced Lifecycle Carbon Footprint

The net reduction in total energy consumed by ethanol producers results in reduced greenhouse gas emissions and a corresponding carbon intensity credit of 1.616 gCO2 per MJ of ethanol produced, or about 130 gCO2 per gallon of ethanol produced. At 6.5 gallons of corn oil recovered for each 100 gallons of ethanol, this credit is equivalent to 15.9 gCO2 per MJ of corn oil produced (after taking into account the difference in energy between corn oil and ethanol), or about 2,010 gCO2 per gallon of corn oil produced.

These rates correspond to about 9 million metric tons of carbon emissions that could have been avoided between 1982 and 2010 had our corn oil extraction technologies been used by all dry mill ethanol producers during that time. These rates also translate to about 1.55 million metric tons of carbon that can be avoided annually at the current ethanol output of the industry, and about 1.76 million metric tons at the 15 billion gallon production level mandated by 2015. A single 100 million gallon per year ethanol plant could reduce its carbon footprint by about 13,000 metric tons per year by using our extraction technologies. These savings correspond further to carbon offset credits that can range in value from $1.00 to $9.00 per metric ton.

Impact on Crush Spread

Our patented and patent-pending corn oil extraction technologies enable licensed ethanol producers to increase sales with a new co-product while decreasing production costs. Increasing profitability and diversifying cash flows decreases risk by partially insulating licensed producers from the commodity price volatility described above. These benefits collectively converge to provide our licensees with a significant competitive advantage as compared to producers that have not licensed our patented and patent-pending corn oil extraction technologies.

The graph immediately following this paragraph shows the simple crush spread (the market value of 2.8 gallons of ethanol less the cost of one bushel of corn) between 1982 and 2010. The impact of, energy costs and savings, carbon credits, and distillers grain is not included. The grey-shaded area is the crush spread (in dollars); the black area shows the estimated historical contribution of corn oil

sales to ethanol producer margins (also in dollars); and, the black bars below illustrate the relative increase in cash, as a percentage of the crush spread, that could have been available to an ethanol producer that extracted corn oil from stillage between 1982 and 2010:

Impact of GreenShift’s Extraction Technologies on Crush Spread From 1982 to 2010

The graph below shows the same information as above but more recently, between 2007 and 2010:

Impact of GreenShift’s Technologies on Crush Spread From 2007 to 2010

Full utilization of our corn oil extraction technologies between 2007 and 2010 could have increased a licensed producer’s crush spread by an average of 28%. Increased cash flows of that magnitude provide a powerful competitive advantage. We believe that this is particularly true when the crush spread decreases and the contribution of corn oil to a producer’s cash flow becomes critical to the producer’s ongoing liquidity needs. For example, more than 20% of all U.S. ethanol facilities ceased operations during 2008 and 2009 due to financial stress. Of these, we estimate that only 1 plant had corn oil extraction installed. Conversely, we estimate that more than an additional 35 plants were using our extraction technology during this same timeframe and, to our knowledge, only 1 of these plants ceased operations.

Significant Competitive Advantage

The profitability of an individual ethanol producer is critically dependent on and very sensitive to its relative variable cost position as compared to an average plant. Further, recent volatility and strain on ethanol producers has demonstrated that efficiency improvements are not just about maximizing profit, but rather also about insulating a producer’s ability to continue to operate and survive when confronted with negative movement in the commodity markets.

Ethanol plants that use our patented and patent-pending corn oil extraction technologies have the ability to decrease their variable costs and both diversify and increase revenues derived from their existing supply of corn. This desensitizes our licensees to risk and gives them the ability to service debt and stay in production, while less efficient plants breach covenants or are forced to shut down.

We believe that there are currently no technologies that have been commercialized and made available to corn ethanol producers that give them anything approaching the degree of competitive advantage made possible by our extraction technologies.

The following chart summarizes the potential benefits of our patented and patent-pending corn oil extraction technologies for ethanol producers at full utilization of 1.33 pounds of corn oil per bushel of corn, or 6.5 gallons of corn oil for every 100 gallons of ethanol produced:

Full Utilization (1.33 lbs/bushel)	Per Gallon of Ethanol Produced	Single 100MMGY Ethanol Plant	Industry-Wide
Full Utilization (1.33 lbs/bushel)	Per Gallon of Ethanol Produced	Single 100MMGY Ethanol Plant	Current	2010	2005 – 2010	1982 – 2004
Corn oil (MMGY)	0.065 gallons	7.09	803	768	2,791	1,678
Reduction in energy (MMBtu)	3,070 Btu	276,000	38,212,000	36,554,000	132,869,000	79,905,000
Reduction in carbon (metric tons)	130 gCO2	13,000	1,618,000	1,547,000	5,626,000	3,383,000
Value of corn oil (millions)	$0.26	$25.54	$2,890	$1,598	$4,985	$1,546
Value of energy savings (millions)	$0.01	$1.15	$159	$152	$735	$235

EPA Designation as Advanced Technology

EPA has established a requirement that corn ethanol production in excess of the levels produced in December 2010 must reduce GHG emissions by more than 20% as compared to gasoline in order to qualify for assignment of a Renewable Identification Number (“RIN”). RINs are required to prove a gasoline blender has used the required amount of a renewable fuel to meet the EPA mandated volumes each year. This requirement applies to new ethanol plants and to expansions of existing facilities beyond their permitted ethanol production maximums.

EPA has ruled that new ethanol production will meet the 20% GHG emission reduction standard if the plant uses one or more “ Advanced Technologies .” The ethanol produced by a new ethanol production facility or expansion will be deemed to be a renewable fuel if the plant producing the ethanol meets any of the following criteria: (1) it dries less than 50% of its distillers grain, (2) it dries no more than 65% of its distillers grain and uses one Advanced Technology, or (3) it uses two Advanced Technologies. In other words, if an ethanol plant sells more than half of its distillers grain as wet distillers grain, that plant can use one Advanced Technology to generate RINs for its production, but if it dries most of its distillers grain, it must use more than one Advanced Technology.

The EPA has designated back-end corn oil extraction as an Advanced Technology. EPA further clarified that to get credit for an Advanced Technology using back-end extraction, the ethanol plant must extract corn oil from 90% of its production and achieve an annual recovery of 1.33 pounds of corn oil per bushel of corn processed to make ethanol. As an example, if a typical plant uses corn containing about 3.8% corn oil, or approximately 2.1 pounds of corn oil in a 56-pound bushel, then EPA’s target represents about a 62% total oil extraction rate.

Plant conditions vary, but our patented and patent-pending corn oil extraction technologies can generally recover about 70% of the oil from thin stillage, or about 0.74 pounds per bushel of corn. We can double that yield to approximately 1.5 pounds per bushel with another method applied to whole stillage. While each ethanol plant will be different, depending on the corn available, chemicals used, and other process variations, an Advanced Technology can be claimed by an ethanol producer that uses our technologies to extract corn oil.

In order to produce a renewable fuel that generates RINs, new or expanded plants may use corn oil extraction and either produce 35% wet DGS or add an additional Advanced Technology.

EPA concluded in its Regulatory Impact Analysis for RFS2 that:

“ Extraction of oil from the thin stillage or distillers’ grains with solubles (DGS) streams is a proven technology that can be retrofitted into existing plants relatively cheaply…approximately 70 percent of projected total ethanol production will implement some type of corn oil extraction system by 2022, generating approximately 680 million gallons per year of corn oil biofuel feedstock .”

OUR COMPETITIVE STRENGTHS

We have focused our efforts to date on improving the efficiency and profitability of corn ethanol producers, and we have developed a portfolio of patented and patent-pending technologies designed to do so. This portfolio is our core asset and we believe that it provides us with a key competitive advantage.

Our patented and patent-pending corn oil extraction technologies are proven to deliver increased profit, reduced energy costs, a smaller carbon footprint, and lower risks to licensed ethanol producers. In addition, ethanol producers that enter into a license with us can share in the competitive protections afforded us by the U.S. patent laws. These benefits collectively provide licensed ethanol producers with a powerful competitive advantage when compared to ethanol producers that do not license our technologies.

We believe that we have developed a core competency in technology commercialization, and that we have significant expertise and know-how in the design, integration and operation of systems based on our patented corn oil extraction processes. Our expertise, know-how, technologies and patent position collectively comprise our primary competitive strength, and form the basis for the value-added solutions that we offer our clients.

We generate revenue from royalties that are tied to corn oil sales. Our success is based on the ongoing production and sale of oil by our licensees, at the least cost and for the highest value. In contrast to our competitors, we generate sales when our licensees make money from using our technologies. We believe that our royalty model provides us with a natural and competitively important incentive to ensure that our licensees design, deploy and operate the best extraction system for their specific needs and goals.

Any construction contractor approved for work at an ethanol plant can install an extraction system based on our patented technologies. Designing the right system, installing it in the right place, and operating it under the right conditions is far more challenging. Chemistry, oil content and other conditions relevant to extraction vary from one plant to the next and over time. Our preferred corn oil extraction system design is well established, refined after much experimentation such that optimum design parameters are clear. We learned through trial and error as the inventors to select components and equipment to establish installation and operating parameters that will produce the highest yield with less than 1% planned down time. Installation of our preferred system design at a new ethanol plant involves a simple, unobtrusive, plug-and-play integration to gain the most production at the least cost. Producers using our preferred system design and ongoing technical support services benefit from increased optionality and co-product optimization over time in response to dynamic, ever-changing market conditions.

We believe that our extraction technologies provide us with a strategic platform to commercialize and integrate additional technology upgrades into first generation corn ethanol plants. Our portfolio of patented and patent-pending Backend Fractionation ™ technologies is designed with this in mind. We have developed a number of innovative, pre-commercial biological, chemical and physical technologies that are designed to leverage our existing extraction platform to further increase the profitability of corn ethanol producers.

These technologies are intended to address the following key goals for ethanol producers: increase co-product value; decrease energy consumption and lifecycle carbon emissions; reduce commodity and financial risk; diversify the feedstock mix accepted and refined into biofuel; and, standardize corn-friendly cellulosic technology by building on the existing corn ethanol complex. Our Backend

Fractionation ™ portfolio includes the following technologies, among others:

Technology	Function	Status
Method I Corn Oil Extraction	Extraction of corn oil from distillers grain – thin stillage	Commercially Available
Method II Corn Oil Extraction	Extraction of corn oil from distillers grain – whole stillage	Commercially Available
Integral Refining	Integrated refining upgrade for corn oil extraction systems	Commercially Available
Distillers Dried Solubles	Refines defatted syrup into new high value co-product	Pilot Stage
Method III Cellulosic Oil™	Oleaginous microbes convert biomass into lipids and protein	Bench Stage
Energy & Water Recovery	Energy recovery and water removal during evaporation	Bench Stage
Protein Recovery	Fractionates DDG into high and low protein products	Bench Stage

OUR GROWTH STRATEGY

We are focused on licensing and facilitating the integration of our patented and patent-pending corn oil extraction technologies into as many dry mill ethanol plants as possible, as quickly as possible; with as much corn oil produced by our licensees as possible. Our strategy is to win the business and partnership of ethanol producers by providing value-added solutions that are based on our competitive strengths outlined above. Our growth moving forward will be dependent on our ability to be successful in this regard.

Our revenues can be expected to consist chiefly of ongoing royalty fees that are based on the amount of oil that our licensees produce. Since our technologies are deployed in various methods, each new license agreement becomes both a source of current revenue and a highly-qualified opportunity for increased revenue in the future through yield improvement and additional systems integration. Our growth plans primarily involve the execution of license agreements and thereafter working with our licensees to maximize the yield and benefits of our corn oil extraction technologies.

We offer systems design and integration services in order to help our corn oil extraction licensees to meet their needs. These activities may result in additional revenue growth. Product diversification also remains a key objective; our commercialization plans for our other Backend Fractionation ™ technologies are based on leveraging our existing extraction platform and working with our existing corn oil extraction licensees to further improve their profitability.

In February 2010, the U.S. EPA published its estimate that, by 2022, 70% of the U.S. ethanol industry will use back-end corn oil extraction technology to produce about 6.5 gallons of corn oil for every 100 gallons of ethanol produced, or about 680 million gallons per year of extracted corn oil. We have executed license agreements with ethanol producers corresponding to more than about 2.3 billion gallons per year of ethanol. We believe that we will continue to increase our market penetration during 2012.

COMPETITION

Front End Oil Extraction

Conventional varieties of corn have an average fat content of about 3-4%. This fat can either be extracted at the front or the back of an ethanol plant in the form of corn oil. Our patented and patent-pending oil extraction technologies remove the oil at the back of the plant.

Front end separation (fractionation) mechanically separates raw corn into components that can then be processed separately to produce higher value co-products in addition to ethanol. This strips non-fermentable materials from the process flow upstream of fermentation, which increases the overall production capacity of the plant while decreasing energy demand and reducing enzyme utilization. The process also produces a food-grade corn oil that can be sold in selected markets at a premium to the inedible corn oil produced by backend extraction.

According to the EPA’s February 2010 Regulatory Impact Analysis, “while the production capacity of the plant increases with the addition of dry fractionation, the amount of corn used to produce a gallon of ethanol increases by approximately 2-3% due to starch loss in the fractionation process. The starch losses associated with dry fractionation do not occur with backend corn oil extraction as the

whole kernel still goes through the fermentation process.” In addition, front end fractionation is very capital intensive – up to four or more times the capital cost of our backend oil extraction technologies. Consequently, whereas the EPA projected that 70% of the ethanol industry will use backend extraction technology by 2022, the EPA estimated that only about 20% of the industry will use front end separation technology.

Our view is that retrofitting the front end of the dry mill process introduces unnecessary risk that is just not practical. We believe that interrupting the flow of starch is not the answer; there are cheaper, intrinsically better ways of getting more out of starch that do not risk the host facility’s ability to produce ethanol. The cheaper, better, safer path is to intercept, streamline and upgrade the co-product flow at the back end – after the ethanol has been removed and sold. This is a key principle of our Backend Fractionation ™ technology development strategy.

Equipment Suppliers

Our preferred corn oil extraction system design uses components and equipment that we have proven will maximize yield with less than 1% planned down time. A number of equipment suppliers offer different components and equipment to ethanol producers for use in a manner which infringes our patented extraction technologies. We do not believe that competing system designs offered to ethanol producers by such third parties have capabilities and advantages comparable to our preferred system design.

We have initiated several infringement actions involving some of the above suppliers and ethanol producers (see Note 13 to our Consolidated Financial Statements, Commitments and Contingencies , below). Executing a business model based on licensing requires us to invest in the protection of our intellectual property rights and the prosecution of infringement. We believe that litigation will be necessary, not to disrupt the availability of corn oil extraction technology, but rather to maximize its use by as many producers as possible on fair terms; to protect the competitive advantage of our licensees; to deter infringement; and, to ensure that we receive reasonable compensation for our proprietary technologies.

MINORITY INVESTMENTS

The Company holds a minority investment in ZeroPoint Clean Tech, Inc., a renewable energy technology and project development company. ZeroPoint believes that it has developed a highly efficient biomass gasification process capable of converting biomass into renewable synthesis gas to create carbon-neutral energy.

INTELLECTUAL PROPERTIES

GreenShift Corporation holds a number of patents, patent applications, licenses and trademarks. GreenShift , the GreenShift Logo , the Tornado Generator , Cellulosic Oil , and Cellulosic Corn brand names, and the Natural Solutions and A Clear Vision for a Better Environment taglines are all registered trademarks of GreenShift Corporation. We protect our intellectual properties through a combination of patents, patent applications, license and distribution agreements, common law copyrights and trade secrets. The first of our oil extraction patents does not expire until 2028. All of our technical employees enter into confidentiality, non-competition and invention assignment agreements. We also require our vendors, customers and others to enter into confidentiality agreements of varying scope and duration prior to being given access to our proprietary information regarding our technology. There can be no assurance that such measures will be adequate to protect our technologies.

ENVIRONMENT, HEALTH AND SAFETY MATTERS

Our design, engineering, licensing, installation, commissioning and maintenance services are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground; the generation, storage, handling, use, transportation and disposal of hazardous materials; as well as the health and safety of our employees. These laws, regulations and permits require a standard of care to control potential pollution and limit actual or potential impacts to the environment and personnel involved. While we regularly exceed health, safety and environment requirements, a violation of these laws and regulations, or of permit conditions, can result in substantial fines, natural resource damage, criminal sanctions, permit revocations and/or facility shutdowns. We do not anticipate a material adverse effect on our business or financial condition as a result of our efforts to comply with these requirements. Operating expenses to meet

regulatory requirements, including all environmental permits, will be an integral part of service costs. Costs for compliance with environmental laws include safety and health protection measures, controls limiting air emissions and effluent discharges, emergency response capabilities, storm water management, recordkeeping and training. We often assist our customers in environment, health and safety compliance issues, including new requirements concerning greenhouse gas emissions. It may not be possible to completely segregate our environment, health and safety responsibilities from those of our customers

OTHER CONTINGENCIES

Under GreenShift’s insurance programs, coverage is obtained for catastrophic exposures, as well as those risks required to be insured by law or contract. The deductible per occurrence for environmental impairments is $2,500. Environmental liability insurance is carried with policy limits of $1,000,000 per occurrence and $2,000,000 aggregate.

EMPLOYEES

GreenShift Corporation currently has 15 full-time employees as of March 30, 2012. In addition to its executive officers, GreenShift employs sales personnel, staff engineers, process managers, maintenance managers, administrative personnel and general facility technicians. There is no union representation for any of our employees.

ITEM 1A

RISK FACTORS

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

RISKS RELATING TO ECONOMIC CONDITIONS AND THE FINANCIAL MARKETS

Our licensees rely on cash generated from operations and external financing in order to capitalize the purchase and installation of the systems necessary to use our patented and patent-pending corn oil extraction technologies. Limitations on access to external financing could adversely affect our operating results.

Some ethanol producers have faced financial distress recently, culminating with bankruptcy filings by several companies over the past three years. This, in combination with continued volatility in the capital markets has resulted in reduced availability of capital for the ethanol industry generally. Construction of corn oil extraction systems by our licensees is capital intensive and our licensees may not be able to access the capital they need to pay for the components, equipment and installation services needed to implement our technologies (despite the fact that a new licensee would see a return of capital within less than a year at current corn oil market prices). Increases in the liquidity requirements of our licensees could occur due to, for example, increased commodity prices. Our results of operations are dependent on the ability of our licensees to profitably operate their businesses and overall commodity market conditions. In addition, we may need to raise additional financing to refinance our convertible debt balances or to fund new growth. In this market environment, we may experience limited access to incremental financing. This could cause us to defer or cancel growth projects, reduce our business activity or, if we are unable to meet our debt repayment schedules, cause a default in our existing debt agreements. These events could have a materially adverse effect on our operations and financial position. Our ability to repay current and anticipated future indebtedness will depend on our financial and operating performance and on the successful implementation of our business strategies. Our financial and operational performance will depend on numerous factors including prevailing economic conditions, volatile commodity prices, and financial, business and other factors beyond our control. If we cannot pay our debt service, we may be forced to reduce or delay capital expenditures, sell assets, restructure our indebtedness or seek additional capital. If we are unable to restructure our indebtedness or raise funds through sales of assets, equity or otherwise, our ability to operate could be harmed and the value of our stock could be significantly reduced.

The ability of licensed ethanol producers to operate or to commit capital resources to install the systems needed to implement our patented corn oil extraction technologies is dependent on the spread amongst the prices of ethanol, distillers grain, corn and natural gas, which prices are subject to significant volatility and uncertainty.

The results of licensed ethanol producers are highly impacted by commodity prices, including the spread between the cost of corn and natural gas that they must purchase, and the price of ethanol and distillers grains that they sell. Prices and supplies are subject to and determined by market forces over which our licensees have no control, such as weather, domestic and global demand, shortages, export prices, and various governmental policies in the United States and around the world. As a result of price volatility for these commodities, the ability of our licensees to operate or to commit the capital needed to purchase, build and install the systems needed to use our patented extraction technologies is subject to uncertainty. Increases in corn or natural gas prices or decreases in ethanol or distillers grains prices are likely to put pressure on and may strain the liquidity of our licensees. Our ability generate revenue from existing license agreements and to increase revenue from new licenses that we may execute is subject to uncertainty, and our results of operations and financial position may be adversely affected.

Commodity price volatility could adversely affect the ability of our licensees and other producers to operate profitably or at all.

Corn ethanol producers are generally are unable to pass along increased corn costs to their customers since ethanol competes with fossil fuel and other fuels that are not derived from corn. At certain levels, corn prices may make ethanol uneconomical to produce. Corn supplies and prices could be adversely affected by rising prices for alternative crops, increasing input costs, changes in government policies, shifts in global markets, or damaging growing conditions such as plant disease or adverse weather.

The prices for and availability of natural gas are subject to volatile market conditions. These market conditions often are affected by factors beyond our control, such as weather conditions, overall economic conditions, and foreign and domestic governmental regulation and relations. Significant disruptions in the supply of natural gas could impair the ability of ethanol producers to manufacture ethanol.

Ethanol producer revenues are dependent on market prices for ethanol. These market prices can be volatile as a result of a number of factors, including, but not limited to, the availability and price of competing fuels, the overall supply and demand for ethanol and corn, the price of gasoline and corn, and the level of government support. Ethanol is marketed as a fuel additive to reduce vehicle emissions from gasoline, as an octane enhancer to improve the octane rating of the gasoline with which it is blended and, to a lesser extent, as a gasoline substitute. As a result, ethanol prices are influenced by the supply of and demand for gasoline. The financial position of ethanol producers may be materially harmed if the demand for, or the price of, gasoline decreases. Conversely, a prolonged increase in the price of, or demand for, gasoline could lead the U.S. government to relax import restrictions on foreign ethanol that currently benefit ethanol producers.

Distillers grains compete with other protein-based animal feed products. The price of distillers grains may decrease when the prices of competing feed products decrease. The prices of competing animal feed products are based in part on the prices of the commodities from which these products are derived. Downward pressure on commodity prices, such as soybeans, will generally cause the price of competing animal feed products to decline, resulting in downward pressure on the price of distillers grains. Historically, sales prices for distillers grains has been positively (but not directly) correlated with the price of corn. However, there have been occasions when the price increase for this co-product has lagged behind increases in corn prices. In addition, distillers grain competes with products made from other feedstocks, the cost of which may not have risen as corn prices have risen. Consequently, the price ethanol producers may receive for distillers grain may not rise as corn prices rise, thereby lowering the contribution of distillers grain to an ethanol producer’s sales.

Due to industry increases in U.S. dry mill ethanol production, the production of distillers grain in the U.S. has increased dramatically, and this trend may continue. This may cause distillers grain prices to fall in the U.S., unless demand increases or other market sources are found. To date, demand for distillers grain in the U.S. has increased roughly in proportion to supply. This correlation is believed to occur because U.S. farmers use distillers grain as a feedstock, and distillers grain are slightly less expensive than corn, which is a substitute.

Insofar as decreasing ethanol and distillers grain prices and increasing corn and natural gas prices can have a material adverse effect on ethanol producers, such commodity price changes may in turn adversely affect our results of operations and financial position.

Volatility in the price for the corn oil produced by our licensees could each adversely affect our ability to achieve profitability and to operate profitably or at all.

Our business is highly impacted by commodity price volatility, primarily in the market for corn oil. The current market price for corn oil is more than about $3.40 per gallon, up significantly from its trailing four year average. While demand for extracted corn oil is strong in the biodiesel and multiple other markets, decreases in the price of corn oil will have a negative impact on the amount of cash we are able to produce from our operating activities. Any such decreases may adversely affect our results of operations and financial position.

RISKS ATTENDANT TO OUR BUSINESS

We are a developing company with a history of net losses, and we may not achieve or maintain profitability.

We have had a history of operating losses, and may in the future incur operating losses which could be substantial. Although our current licenses may provide sufficient revenue to bring us to profitability, we may not be able to sustain or increase profitability thereafter, which could negatively affect the trading price of our common stock. We have incurred net losses since our inception, including a loss of $12 million in 2010. As of December 31, 2011, we had stockholders' deficit of $41 million, about $30 million of which is due to current obligations convertible into Company stock. We are a developing company and, to date, our revenues have been extremely limited.

The ethanol industry is highly dependent on government usage mandates affecting ethanol production and favorable tax benefits for ethanol blending and any changes to such regulation could adversely affect the market for ethanol and, derivatively, our results of operations.

The domestic market for ethanol is largely dictated by federal mandates for blending ethanol with gasoline. The RFS mandate level for conventional biofuels for 2012 of 13.2 billion gallons approximates current domestic production levels. Future demand will be largely dependent upon the economic incentives to blend based upon the relative value of gasoline versus ethanol, taking into consideration the relative octane value of ethanol, environmental requirements and the RFS. Any significant increase in production capacity beyond the RFS level might have an adverse impact on ethanol prices. Additionally, the RFS mandate with respect to ethanol derived from grain could be reduced or waived entirely. A reduction or waiver of the RFS mandate could adversely affect the prices of ethanol and our future performance. The RFS Flexibility Act was introduced on October 5, 2011 in the U.S. House of Representatives to reduce or eliminate the volumes of renewable fuel use required by RFS based upon corn stocks-to-use ratios. The Domestic Alternative Fuels Act of 2012 was introduced on January 18, 2012 in the U.S. House of Representatives to modify the RFS to include ethanol and other fuels produced from fossil fuels like coal and natural gas. We believe the RFS is a significant component of national energy policy that reduces dependence on foreign oil by the United States. Our operations could be adversely impacted if the RFS Flexibility Act or the Domestic Alternative Fuels Act of 2012 are enacted. Referred to as the blender’s credit, the Volumetric Ethanol Excise Tax Credit, or VEETC, provided companies with a tax credit to blend ethanol with gasoline. The Food, Conservation and Energy Act of 2008, or the 2008 Farm Bill, amended the amount of tax credit provided under VEETC to 45 cents per gallon of pure ethanol and 38 cents per gallon for E85, a blended motor fuel containing 85% ethanol and 15% gasoline. The blender’s credit expired on December 31, 2011. Federal law mandates the use of oxygenated gasoline. If these mandates are repealed, the market for domestic ethanol would be diminished significantly. Additionally, flexible-fuel vehicles receive preferential treatment in meeting corporate average fuel economy, or CAFE, standards. However, high blend ethanol fuels such as E85 result in lower fuel efficiencies. Absent the CAFE preferences, it may be unlikely that auto manufacturers would build flexible-fuel vehicles. Any change in these CAFE preferences could reduce the growth of E85 markets and result in lower ethanol prices, which could adversely impact our operating results. To the extent that such federal or state laws are modified, the demand for ethanol may be reduced, which could negatively and materially affect our ability to operate profitably.

The elimination of the federal excise tax incentive program benefiting biodiesel may have a material and adverse effect on our results of operations and financial condition.

Our licensees sell the corn oil they produce with our technologies into several markets, and primarily for refining into biodiesel or renewable diesel. The production of biodiesel is made significantly more competitive by federal and state tax incentives. These incentives are meant to lower the cost of biodiesel in comparison to petroleum diesel. The biodiesel industry has been dependent on the continuation of certain federal subsidies and regulatory support. The biodiesel tax credit expired on December 31, 2011 and may not be timely renewed, if at all. The revocation or amendment of any one or more of those laws, regulations or programs could adversely affect the market for corn oil and, derivatively, our financial condition.

Future demand for ethanol is uncertain and may be affected by changes to federal mandates, public perception and consumer acceptance, any of which could negatively affect demand for ethanol.

Ethanol production from corn has not been without controversy. Although many trade groups, academics and governmental agencies have supported ethanol as a fuel additive that promotes a cleaner environment, others have criticized ethanol production as consuming considerably more energy and emitting more greenhouse gases than other biofuels and potentially depleting water resources. Some studies have suggested that corn-based ethanol is less efficient than ethanol produced from other feedstocks, such as switchgrass or wheat grain, and that it negatively impacts consumers by causing prices for dairy, meat and other foodstuffs from livestock that consume corn to increase. Additionally, ethanol critics contend that corn supplies are redirected from international food markets to domestic fuel markets. If negative views of corn-based ethanol production gain acceptance, support for existing measures promoting use and domestic production of corn-based ethanol could decline, leading to reduction or repeal of federal mandates which would adversely affect the demand for ethanol. These views could also negatively impact public perception of the ethanol industry and acceptance of ethanol as an alternative fuel. Beyond the federal mandates, there are limited markets for ethanol. Discretionary blending and E85 blending are important secondary markets. Discretionary blending is often determined by the price of ethanol versus the price of gasoline. In periods when discretionary blending is financially unattractive, the demand for ethanol may be reduced. A reduction in the demand for ethanol may depress the price of ethanol, decrease the crush spread, and reduce the ability of our licensees to generate revenue or to operate profitably. Consumer acceptance of E85 fuels and flexible-fuel technology vehicles is needed before ethanol can achieve any significant growth in market share.

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

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

Our business is affected by the regulation of greenhouse gases (“GHG”) and climate change. New climate change regulations could impede the ability of our licensees to successfully operate their businesses and, in turn, adversely affect our operations.

Ethanol plants emit carbon dioxide as a by-product of the ethanol production process. In 2007, the U.S. Supreme Court classified carbon dioxide as an air pollutant under the Clean Air Act in a case seeking to require the EPA to regulate carbon dioxide in vehicle emissions. The EPA published its final regulations on RFS2 during 2010. We believe that the final regulations grandfather existing plants at their current operating capacity. However, expansion of an ethanol producer’s plants will need to meet a threshold of a 20% reduction in GHG emissions from a 2005 baseline measurement for the ethanol over current capacity to be eligible for the RFS2 mandate. The EPA issued its final rule on GHG emissions from stationary sources under the Clean Air Act in May 2010. These final rules may

require ethanol producers to apply for additional permits for existing ethanol plants. Additionally, legislation is pending in Congress on a comprehensive carbon dioxide regulatory scheme, such as a carbon tax or cap-and-trade system. In order for an ethanol producer to expand capacity, the producer may have to apply for additional permits, install advanced technology, or reduce drying of certain amounts of distillers grains. Ethanol producers may also be required to install carbon dioxide mitigation equipment or take other steps that are unknown at this time in order to comply with other future law or regulation. Compliance with future law or regulation of carbon dioxide or, if producers choose to expand their ethanol production capacities, compliance with then-current regulation of carbon dioxide, could be costly and may prevent ethanol producers from operating profitably, which may in turn have a material adverse impact on our operations and financial position. In addition, CARB has adopted a Low Carbon Fuel Standard requiring a 10% reduction in GHG emissions from transportation fuels by 2020. Additionally, an Indirect Land Use Change, or ILUC, component is included in the lifecycle GHG emissions calculation. On December 29, 2011, the U.S. District Court for the Eastern District of California issued several rulings in federal lawsuits challenging the LCFS. One of the rulings preliminarily prevents CARB from enforcing these regulations during the pending litigation. On January 23, 2012, CARB unsuccessfully attempted to appeal these rulings in the U.S. District Court for the Eastern District of California and on January 26, 2012 filed another appeal with the Ninth Circuit Court of Appeals. While this standard is currently being challenged by various lawsuits, implementation of such a standard may have an adverse impact on the market for corn-based ethanol if it is determined that in California corn-based ethanol fails to achieve lifecycle GHG emission reductions.

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

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

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

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

Our debt level could negatively impact our financial condition, results of operations and business prospects.

As of December 31, 2011, our total debt and accrued interest was $38 million. Our level of debt could have significant consequences to our shareholders, including the following:

-	requiring the dedication of a substantial portion of cash flow from operations to make payments on debt, thereby reducing the availability of cash flow for working capital, capital expenditures and other general business activities;

-	requiring a substantial portion of our corporate cash reserves to be held as a reserve for debt service, limiting our ability to invest in new growth opportunities;

-	limiting the ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate and other activities;

-	limiting the flexibility in planning for, or reacting to, changes in the business and industry in which we operate;

-	increasing our vulnerability to both general and industry-specific adverse economic conditions;


-	being at a competitive disadvantage against less leveraged competitors;

-	being vulnerable to increases in prevailing interest rates;

-	subjecting all or substantially all of our assets to liens, which means that there may be no assets left for shareholders in the event of a liquidation; and

-	limiting our ability to make business and operational decisions regarding our business and subsidiaries, including, among other things, limiting our ability to pay dividends to our respective shareholders, make capital improvements, sell or purchase assets or engage in transactions deemed appropriate and in our best interest.

Our ability to make scheduled payments of principal and interest, or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow in the future sufficient to service our debt because of factors beyond our control, including but not limited to the liquidity of our ethanol producers. If we are unable to generate sufficient cash flows, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

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

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a gain from continuing operations of about $5.0 million for the year ended December 31, 2011, but $4.9 million of that gain was attributable to a one-time bonus earned in connection with the YA Corn Oil Transaction. As of December 31, 2011, the Company had about $1.4 million in cash, and current liabilities exceeded current assets by about $41 million, about $34 million of which is due to current obligations convertible into Company stock. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

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

Our proposed operations are subject to all of the risks inherent in the initial expenses, challenges, complications and delays frequently encountered in connection with the formation of any new business, as well as those risks that are specific to the ethanol industry in general. Investors should evaluate an investment in our company in light of the problems and uncertainties frequently encountered by companies attempting to develop markets for new products, services and technologies. Despite best efforts, we may never overcome these obstacles to achieve financial success. Our business is speculative and dependent upon the implementation of our business plan, as well as our ability to enter into agreements with third parties for licensing, engineering, procurement and construction on terms that will be commercially viable for us. There can be no assurance that our efforts will be successful or result in revenue or profit. There is no assurance that we will earn significant revenues or that our investors will not lose their entire investment.

Unanticipated delays may harm our business and viability.

Our current operating cash flow depends on the ability of our licensees to complete and operate their corn oil extraction systems. If the operation of currently licensed extraction systems is disrupted or the economic integrity of projects to build new licensed systems is threatened for unexpected reasons, our business may experience a substantial setback. Prolonged problems may threaten the commercial viability of systems that are under construction. The occurrence of significant unforeseen conditions or events in connection with these systems may require us to reexamine our business model. Any change to our business model or management's evaluation of the viability of these projects may adversely affect our business. Construction costs for corn oil extraction systems may also increase to a level that would make new systems too expensive to complete or unprofitable to operate. Contractors, engineering firms, construction firms and equipment suppliers also receive requests

and orders from other companies and, therefore, may not be able to provide their services or products on a timely basis or on acceptable financial terms. Construction of new systems may suffer significant delays or cost overruns as a result of a variety of factors, such as increases in the prices of raw materials, shortages of workers or materials, transportation constraints, adverse weather, equipment failures, fires, damage to or destruction of property and equipment, environmental damage, unforeseen difficulties or labor issues, any of which could prevent commencement of operations as expected at newly licensed systems.

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

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

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

We will be required to continually enhance and update our technology to maintain its efficacy and to avoid obsolescence. The costs of doing so may be substantial and may be higher than the costs that we anticipate for technology maintenance and development. If we are unable to maintain the efficacy of our technology, our ability to manage our business and to compete may be impaired. Even if we are able to maintain technical effectiveness, our technology may not be the most efficient means of reaching our objectives, in which case we may incur higher operating costs than we would if our technology was more effective. The impact of technical shortcomings could have a material adverse effect on our prospects, business, financial condition, and results of operations.

Development of replacement technologies may result in the obsolescence of our technologies.

New ethanol process technologies may emerge that reduce the effectiveness of our technologies or that render our technologies obsolete. The development of such process technologies could place us and our licensees at a competitive disadvantage and would have a material adverse effect on our operations, cash flows and financial position.

Ethanol is primarily an additive and oxygenate for blended gasoline. Although use of oxygenates is currently mandated, there is always the possibility that a preferred alternative product will emerge and eclipse the current market. Critics of ethanol blends argue that ethanol decreases fuel economy, causes corrosion of ferrous components and damages fuel pumps. Any alternative oxygenate product would likely be a form of alcohol (like ethanol) or ether (like MTBE). Prior to federal restrictions and ethanol mandates, MTBE was the dominant oxygenate. It is possible that other ether products could enter the market and prove to be environmentally or economically superior to ethanol. It is also possible that alternative biofuel alcohols such as methanol and butanol could evolve into ethanol replacement products. Research is currently underway to develop other products that could directly compete with ethanol and may have more potential advantages than ethanol. Advantages of such competitive products may include, but are not limited to: lower vapor pressure, making it easier to add gasoline; energy content closer to or exceeding that of gasoline, such that any decrease in fuel economy caused by the blending with gasoline is reduced; an ability to blend at a higher concentration level for use in standard vehicles; reduced susceptibility to separation when water is present; and suitability for transportation in gas pipelines. Such products could have a competitive advantage over ethanol, making it more difficult to market ethanol, which could reduce the ability of our licensees to generate revenue and profits, and adversely affect our financial condition.

We may not be able to protect our intellectual property rights.

Our success will depend on our ability to obtain and/or maintain and enforce patent and other intellectual property protection for our technologies. We have obtained or developed rights to patents and patent applications in the United States and internationally, and may, in the future, seek rights from third parties to other patent applications or patented technology. There can be no assurance, however, that patents will issue from the patent applications filed or to be filed or that the scope of any claims granted in any patent will provide us with proprietary protection. If the scope of the claim granted in a patent is not sufficient to afford us with protection against competitors with similar technology, our investment in the patented technology may provide us limited or no competitive advantage.

This situation may be exacerbated as we approach the international market opportunities, since the absence of internationally harmonized patent laws makes it difficult to ensure consistent respect for patents worldwide. In addition, governments may adopt regulations and governments or courts may render decisions, requiring compulsory licensing of intellectual property to others, or governments may require that products or services meet specified standards that serve to favor local companies. Our inability to enforce our intellectual property rights under these circumstances could harm our competitive position and our business.

Significant aspects of our technologies are currently protected as trade secrets. For some of this technology, we intend to file patent applications when appropriate. In that event, the descriptions of the processes currently protected as trade secrets will be published in the patent application process. If the patent application does not lead to the issuance of a patent for a claim of adequate breadth, that aspect of our technology will be left without property protection. Further, certain confidentiality agreements may expire prior to the issuance of the relevant patent, permitting the parties to those agreements to enter into competition with us based on our own technology.

In most situations we will be engaged in competition with entities whose financial resources are greater than our own. Any failure to maintain patent or other intellectual property protection on our technologies could have a material adverse effect on our operations, cash flows and financial position.

We may be faced by claims that we have infringed the intellectual property rights of our competitors.

It is possible for third parties to claim that our technologies infringe on patents or other intellectual property rights owned by others. In addition, our assertion of intellectual property rights will often result in the other party seeking to assert alleged intellectual property rights of its own or assert other claims against us, which could harm our business. If we are not ultimately successful in defending ourselves against these claims in litigation, we may not be able to sell a particular product or service due to an injunction, we may have to incur the expense of altering our processes, or we may incur licensing fees. There can be no assurance that a license will be available to us, if at all, upon terms and conditions acceptable to us. In the worst case, an adverse determination of a claim that our technologies infringe the rights of others may cause us to incur an obligation to pay damages that could, in turn, overwhelm our financial resources.

We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or other proceedings.

In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights, or disputes relating to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we are currently and may in the future be subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation are typically very costly and can be disruptive to our business operations by diverting the attention and energies of management and key technical personnel. Litigation and regulatory proceedings are subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or, in cases for which injunctive relief is sought, an injunction prohibiting us from marketing one or more products or services, precluding particular business practices, or requiring other remedies, such as compulsory licensing of intellectual property. If we were to receive an unfavorable ruling in an intellectual property dispute, our business and results of operations could be materially harmed.

Competition may impair our success.

New technologies may be developed by others that could compete with our technologies. Such competition could be intense thus driving down the price for our technologies, products and/or services,

or possibly prevent us from generating any income at all from one or more potential clients. Competition will likely increase as prices of energy in the commodities market rise as they have in recent years. Additionally, new companies are constantly entering the market, thus increasing the competition. Larger foreign owned and domestic companies who have been engaged in this business for substantially longer periods of time or who decide to enter into the renewable fuel production industry may have access to greater resources. These companies may have greater success in the recruitment and retention of qualified employees, as well as in conducting their own refining and fuel marketing operations, and may have greater access to market presence, economies of scale, financial resources and engineering, technical and marketing capabilities, which may give them a competitive advantage. In addition, actual or potential competitors may be strengthened through the acquisition of additional assets and interests. If we are unable to compete effectively or adequately respond to competitive pressures, this may materially adversely affect our results of operation and financial condition and could also have a negative impact on our ability to obtain additional capital from investors.

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

As of March 30, 2012, we had approximately 15 full time equivalent employees. The number of individuals with experience in back-end corn oil extraction, a market we created, is limited; and, to the extent qualified personnel is available, we may have to offer substantial incentives in order to obtain the services of individuals with useful experience. As a result, our labor costs may be greater than they would be in a less dynamic industry. On the other hand, if we are unable to employ the qualified individuals that we will need, our business may fail.

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

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

If we fail to maintain an effective system of internal controls, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and, in the event we become an accelerated filer, our independent registered public accounting firm to report on our internal control over financial reporting. The process of implementing our internal controls and complying with Section 404 will be expensive and time consuming, and will require significant attention of management. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we conclude, and our independent registered public accounting firm concurs, that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations. If we or our independent registered public

accounting firm discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. In addition, a delay in compliance with Section 404 could subject us to a variety of administrative sanctions, including SEC action, ineligibility for short form resale registration, the suspension or delisting of our common stock from the stock exchange on which it is listed and the inability of registered broker-dealers to make a market in our common stock, which would further reduce our stock price and could harm our business.

Our business may be hindered if we lose key personnel, including key management personnel, or are unable to attract and retain additional personnel.

The loss of any key members of our management, including our named executive officers, or the failure to attract or retain other key employees who possess the requisite expertise for the conduct of our business, could prevent us from growing our business and developing and commercializing technologies to execute our business strategy. In addition, the loss of any senior technical staff, or the failure to attract or retain other key technical employees, could prevent us from growing our business and developing and commercializing technologies to execute our business strategy. We may not be able to attract or retain qualified employees in the future due to the intense competition for qualified personnel among technology-based businesses, particularly in the advanced biofuels area, or due to the limited availability of personnel with the qualifications or experience necessary for business. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience staffing constraints that will adversely affect our ability to execute our business strategy.

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

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

RISKS FACTORS ATTENDANT TO OWNERSHIP OF OUR COMMON STOCK

The resale of shares acquired by our lenders may reduce the market price of our common stock. We may be required to amend our certificate of incorporation to reverse split our common stock.

Our lenders own convertible debentures issued by the Company which permit our lenders to acquire Company common stock and resell it to the public. At the current market price, our lenders could convert collectively convert their debentures into over 90% of our outstanding common stock. It is possible that resale of shares by our lenders will significantly reduce the market price for our common stock. In addition, because the market price of our common stock is currently less than its par value, the conversion price, which is a fraction of the market price, is less than par value. Since the Company is not permitted to issue common stock for consideration less than par value, we must either incur costly penalties, or implement one or more additional reverse stock splits to insure that the conversion prices will equal or exceed the par value of our shares.

Existing shareholders may experience significant dilution from our issuance of shares to repay amounts due to holders of loans that are convertible into our common stock.

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

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

As of December 31, 2011, we had approximately $38 million in total debt and accrued interes. Our ability to incur additional debt could adversely affect our business and restrict our operating flexibility. While we have not current plans to do so, it is likely that the terms of any such new debt financing would include customary financial and other covenants, including restrictions on the ability to make distributions to the parent company, to guarantee the debts of the parent company and to incur liens on our subsidiaries, among others.

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

Our ability to make payments on and refinance our debt and to fund our operations and capital expenditures will depend on our ability to generate substantial operating cash flow. If our cash flows prove inadequate to meet our debt service obligations for future debt financings, we may be required to refinance all or a portion of our existing or future debt, to sell assets or to obtain additional financing. We cannot assure you that any such refinancing or that any such sale of assets or additional financing would be possible on favorable terms, or at all. If we raise additional equity or equity-related securities in the future, it may be dilutive to holders of our common stock.

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

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

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

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

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

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

Our common stock price may be volatile.

The trading price of our common stock may fluctuate substantially. The price of the common stock may be higher or lower than the price you pay for your shares, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following: price and volume fluctuations in the overall stock market from time to time; significant volatility in the market price and trading volume of securities traded on the OTC Bulletin Board; and, actual or anticipated changes in our earnings or fluctuations in our operating results.

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

ITEM 2

DESCRIPTION OF PROPERTIES

GreenShift’s corporate headquarters were previously located in New York, New York under a $10,000 per month five year lease terminating in June 2011. In an effort to further reduce costs, the Company moved out of this office in November 2010. The Company’s corporate headquarters are now located in Alpharetta, Georgia. The Alpharetta lease is a three year term that terminated on February 2012, at which time the lease was extended by another year. The monthly lease payment is $1,600.

ITEM 3

LEGAL PROCEEDINGS

INFRINGEMENT

On October 13, 2009, the U.S. Patent and Trademark Office (“PTO”) issued U.S. Patent No. 7,601,858, titled " Method of Processing Ethanol Byproducts and Related Subsystems ” (the ’858 Patent) to GS CleanTech Corporation, a wholly-owned subsidiary of GreenShift Corporation. On October 27, 2009, the PTO issued U.S. Patent No. 7,608,729, titled " Method of Freeing the Bound Oil Present in Whole Stillage and Thin Stillage ” (the ’729 Patent) to GS CleanTech. Both the ‘858 Patent and the ‘729 Patent relate to the Company’s corn oil extraction technologies.

On October 13, 2009, GS CleanTech filed a legal action in the United States District Court, Southern District of New York captioned GS CleanTech Corporation v. GEA Westfalia Separator, Inc.; and DOES 1-20 , alleging infringement of the ‘858 Patent ("New York I Action"). On October 13, 2009, GS CleanTech filed a Motion to Dismiss with the same court relative to a separate complaint filed previously by Westfalia captioned GEA Westfalia Separator, Inc. v. GreenShift Corporation that alleged (1) false advertising in violation of the Lanham Act § 43(a); (2) deceptive trade practices and false advertising in violation of New York General Business Law §§ 349, 350 and 350-a; and (3) common law unfair competition ("New York II Action"). On October 13, 2009, Westfalia filed its First Amended Complaint in the New York II Action to include as a plaintiff, ethanol production company Ace Ethanol, LLC , and to add claims seeking a declaratory judgment of invalidity and non-infringement of the ‘858 Patent. On October 13, 2009, ICM, Inc. filed a complaint in the United States District Court, District of Kansas in the matter captioned ICM, Inc. v. GS CleanTech Corporation and GreenShift Corporation , alleging unfair competition, interference with existing and prospective business and contractual relationships, and deceptive trade practices and also seeking a declaratory judgment of invalidity and non-infringement of the ‘858 Patent.

On October 15, 2009, in the New York I Action, GS CleanTech filed a Notice of Filing First Amended Complaint for infringement of the ‘858 Patent, along with a copy of the First Amended Complaint, which added ICM, Ace Ethanol, Lifeline Foods LLC and ten additional DOES as defendants in the New York I Action. On October 23, 2009, GS CleanTech's First Amended Complaint in the New York I Action was entered by the court. On November 5, 2009, in ICM’s Kansas lawsuit, GS CleanTech filed a motion to dismiss or, in the alternative, to transfer the Kansas case to New York for inclusion in the New York I Action. Also on November 5, 2009, in ICM’s Kansas lawsuit, ICM filed a motion to enjoin CleanTech and GreenShift from prosecuting the claims against ICM in the New York I Action.

During February 2010, GS CleanTech commenced a legal action in the United States District Court, Southern District of Indiana captioned GS CleanTech Corporation v. Cardinal Ethanol, LLC , and a separate legal action in the United States District Court, Northern District of Illinois captioned GS CleanTech Corporation v. Big River Resources Galva, LLC and Big River Resources West Burlington, LLC . ICM sold Cardinal and Big River the equipment that each of Cardinal and Big River have used and are using to infringe the ‘858 Patent as alleged by GS CleanTech. ICM has assumed the defense of each of the above matters.

During May 2010, GS CleanTech commenced the following additional actions: GS CleanTech Corporation v. Lincolnland Agri-Energy, LLC , in the United States District Court, Northern District of Illinois; GS CleanTech Corporation v. Al-Corn Clean Fuel, LLC; Chippewa Valley Ethanol Company, LLLP; Heartland Corn Products, LLC and Bushmills Ethanol, Inc. , in the United States District Court, District of Minnesota; GS CleanTech Corporation v. United Wisconsin Grain Producers, LLC , in the United States District Court, Western District of Wisconsin; GS CleanTech Corporation v. Iroquois BioEnergy Company, LLC , in the United States District Court, Northern District of Indiana; GS CleanTech Corporation v. Blue Flint Ethanol, LLC , in the United States District Court, District of North Dakota; and, GS CleanTech Corporation v. Amaizing Energy Atlantic, LLC; Amaizing Energy Cooperative; Amaizing Energy Denison, LLC; Amaizing Holding Company, LLC; and Lincolnway Energy, LLC , in the United States District Court, Northern District of Iowa.

On May 6, 2010, GreenShift submitted a " Motion to Transfer Pursuant to 28 U.S.C. § 1407 for Consolidated Pretrial Proceedings " to the United States Judicial Panel on Multidistrict Litigation (the "Panel") located in Washington, D.C. In this motion, GreenShift moved the Panel to transfer and consolidate all pending suits involving infringement of GreenShift’s patents to one federal court for orderly and efficient review of all pre-trial matters. On August 6, 2010, the Panel ordered the consolidation and transfer of all pending suits in the U.S. District Court, Southern District of Indiana for pretrial proceedings (the "MDL Case").

On July 14, 2010, GS CleanTech commenced an action entitled GS CleanTech Corporation v. Adkins Energy, LLC , in the United States District Court, Northern District of Illinois alleging infringement of the ‘858 Patent. On August 4, 2010, Adkins filed an answer to the complaint and included counterclaims seeking a declaratory judgment that Adkins does not infringe the '858 Patent and that the '858 Patent is invalid, and also alleging breach of contract. On November 30,2010, the Adkins action was transferred to the MDL Case.

On October 14, 2010, GS CleanTech commenced an action entitled GS CleanTech Corporation v. Flottweg Separation Technology, Inc. and Flottweg AG , in the United States District Court, District of Connecticut alleging infringement of the ‘858 Patent. On November 15, 2010, GS CleanTech filed an amended complaint alleging that Flottweg Separation Technology, Inc., has infringed the ‘858 Patent. On November 15, 2010, the Flottweg action was transferred to the MDL Case.

As part of the MDL Case, on November 15, 2010, GS CleanTech amended its complaint filed in the New York I Action to include a claim of patent infringement personally against the founder, CEO and President of ICM, and ICM amended its complaint filed in the Kansas action to include a claim seeking a declaratory judgment that the '858 Patent is unenforceable. On November 30, 2010, in the MDL Case, GS CleanTech filed a motion to dismiss ICM's amended complaint (including its claim seeking a declaratory judgment that the '858 Patent is unenforceable) or, in the alternative, to transfer the Kansas case to New York for inclusion in the New York I Action. ICM has opposed the motion to dismiss. On December 10, 2010, in the MDL Case, GS CleanTech filed motions to strike the affirmative defenses that the '858 Patent is unenforceable asserted by Cardinal Ethanol, LLC; Big River Resources Galva, LLC; and Big River Resources West Burlington, LLC; and Lincolnland Agri-Energy, LLC. Each defendant has opposed the respective motion to strike. On February 14, 2011, GS CleanTech notified the court in the MDL Case that it will not be proceeding with a motion for preliminary injunction. On February 24, 2011, in the MDL Case, in connection with its breach of contract counterclaim against GreenShift Corporation, Adkins Ethanol, LLC filed a motion for judgment on the pleadings or in the alternative partial summary judgment on the issue of liability on the issue of breach of contract and partial summary judgment on the issue of damages. On March 24, 2011, GreenShift filed an opposition to Adkins’ motion.

construction matter was then held by the Court in the MDL Action on August 22, 2011. On September 29, 2011, the Court issued its ruling with respect to claim construction.

There have been no other substantive rulings on the merits on any of the actions included in the MDL Case and Management is unable to characterize or evaluate the probability of any outcome at this time. The Company intends to take all necessary steps to bring infringement of its patents to an end, including filing additional lawsuits involving any and all infringing use of the Company’s patents. The Company further plans to seek additional relief for instances of willful infringement. The Company’s position is that any infringing ethanol producer is liable for any infringing use of the Company’s patented technologies beginning on the publication date of the application that led to the ‘858 Patent.

OTHER MATTERS

The Company’s subsidiary, GS COES (Yorkville I), LLC, is party to an action entitled Nosan, et at v. GS COES (Yorkville I), LLC, et. al. , pending as Oakland County, Michigan Circuit Court Case No. 10-110329-CK, an action by nineteen plaintiffs to recover on a guarantee secured by a pledge in support of a bridge loan arrangement under which a variety of lenders claim to be owed the aggregate principal amount of $1,734,579, plus interest for claimed breach of their subordinated loan to GS CleanTech Corporation. GreenShift Corporation and GS CleanTech Corporation are not currently parties to this action. On February 27,2012, the Court issued an oral ruling effectively dismissing this matter. A motion to enter an order dismissing the case will be heard on April 16, 2012. GS COES intends to vigorously defend this action. This case is in the discovery phase. At this stage of the proceedings, we cannot evaluate the likelihood of an unfavorable outcome. The Company is party to the matter captioned Nosan, et. al. v. GreenShift Corporation, et. al. , pending in the Lenawee County, Michigan Circuit Court as Case No. 11-4292-CK, a case filed by the same nineteen plaintiffs as a companion case to Case No. 11-4069-CK. The plaintiffs filed this action after the Court denied their request to file an amended complaint in Case No. 11-4069-CK. The complaint alleges that GS CleanTech Corporation breached its obligation to repay the same $1,734,579 loan at issue in the former matter, among other related claims. This case is in the initial pleading phase, however, we expect to file a motion to dismiss based in part on the principles of res judicata and collateral estoppel, in light of the Court's ruling in case No. 11-4069-CK. At this early stage, we cannot evaluate the likelihood of an unfavorable outcome.

GreenShift Corporation, GS CleanTech Corporation and GS COES (Yorkville I), LLC, are party to the matter captioned Dynalectric of Michigan II, Inc. v. Biofuels Industries Group, et al , Lenawee County, Michigan Circuit Court Case No. 09-3584-CK. This action was originally filed as a lien foreclosure and unjust enrichment claim by Dynalectric of Michigan II, Inc., which claim was resolved. GreenShift, as assignee of GS CleanTech, filed a counterclaim, cross-claim and third party complaint against various parties asserting a claim for money due in the amount of $1,442,082, plus interest, attorney fees and costs, and for foreclosure of its construction lien. Biofuels Industries Group then asserted counterclaims, cross-claims and third party complaints against GreenShift, GS CleanTech, GS COES, Kevin Kreisler and Viridis Capital, LLC claiming breach of contract and seeking damages plus attorney fees, interest and cost. In response, the Company and its subsidiaries has asserted additional claims against Biofuels Industries Group and third party complaints against three of the bridge lenders claiming lender liability and various other claims in excess of $25,000. On June 6, 2011 Biofuels Industries Group filed for Chapter 11 bankruptcy protection in the Southern District of Michigan, Eastern Division, under which protection the collateral upon which the lien was recorded was sold for substantially less than the first mortgage holder’s claimed balance in excess of $9,000,000. Documentation confirming priority claim to the proceeds has been requested, but is not yet received. We are unable to evaluate the likelihood of an unfavorable outcome or the range of possible loss in the event of an adverse verdict at this time.

On October 31, 2006, the Company guaranteed a secured note issued by a wholly owned subsidiary of the Company’s former subsidiary, GS AgriFuels Corporation, in the principal amount of $6,000,000 to Stillwater Asset-Backed Fund, LP. The balance due to Stillwater at December 31, 2010 was $2,071,886. This obligation is guaranteed by the Company, however, Stillwater is party to an intercreditor agreement with the Company’s senior lender which provides that no payments can be made by the Company against the balance due to Stillwater until the senior lender has been fully paid. The operations of GS AgriFuels were discontinued during 2009 and this entity was liquidated in 2010.

ITEM 4

MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5

MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

GreenShift’s common stock trades on the OTCQB under the symbol GERS. The following table sets forth, for the periods indicated, the range of high and low closing bid prices for GreenShift’s common stock as reported by the National Association of Securities Dealers composite. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.

Period	High	Low

2010 First Quarter	0.30	0.20
2010 Second Quarter	0.10	0.10
2010 Third Quarter	0.50	0.40
2010 Fourth Quarter	0.20	0.10

2011 First Quarter	0.30	0.20
2011 Second Quarter	0.20	0.20
2011 Third Quarter	0.10	0.10
2011 Fourth Quarter	0.10	0.06

Title of Class	Approximate Number of Holders of Record as of March 30, 2012
Common Stock, $0.0001 par		930

The number of holders does not give effect to beneficial ownership of shares held in the street name by stock brokerage houses or clearing agents.

REVERSE SPLIT

Effective September 9, 2011, the Company completed a 1 for 1000 reverse stock split. All stock prices, share amounts, per share information, stock options and stock warrants in this Report reflect the reverse stock split.

DIVIDENDS

We have no present intention of paying dividends in the foreseeable future. Our policy for the time being is to retain earnings and utilize the funds for operations and growth. The Board of Directors based on our earnings, financial condition, capital requirements and other existing conditions will determine future dividend policies.

SALE OF UNREGISTERED SECURITIES

The Company did not sell any unregistered securities during the fourth quarter of 2011.

REPURCHASE OF EQUITY SECURITES

The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Act during the fourth quarter of 2011.

ITEM 6

SELECTED FINANCIAL DATA

Not applicable.

ITEM 7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements included herewith and notes to the consolidated financial statements thereto and the risk factors contained herein.

OVERVIEW

We develop and commercialize clean technologies that facilitate the more efficient use of natural resources. We are focused on doing so today in the U.S. ethanol industry, where we innovate and offer technologies that improve the profitability of licensed ethanol producers.

Plan of Operations

Our business continues to improve. We won significant new business during 2011, more than doubling the amount of ethanol production licensed to use our extraction technologies from 1.0 billion gallons per year (“BGY”) at the end of 2010 to more than 2.3 BGY of ethanol production today with our licensees at full production.

We were awarded contracts to design, build and install extraction systems for several of our licensees after extensive due diligence and third party review, including a state of the art new corn oil recovery facility in Fulton, New York for Sunoco, Inc. We helped our licensees to optimize yield while minimizing costs, which enables our licensees to extract the highest percentage of corn oil than any other infringing technology. In support of our clients we have assisted in the marketing of the corn oil into diversified markets outside of biodiesel. Today, only about 65% of our licensee's sell corn oil to biodiesel producers.

New patents were allowed during 2011 that we believe substantially strengthen our issued patents and ability to protect the competitive advantage of our licensees. We expanded our technology portfolio by filing new patent applications and pressing forward with exciting new innovations designed to further enhance the profitability of our licensees. We transitioned to profitability (excluding the impact of one-time bonuses). We reduced debt by about 30% by liquidating our remaining production assets, and we have begun to service our remaining debt to our senior lender out of cash flow to supplement and offset equity conversion.

Looking forward, we will continue to work with our licensees to maximize the benefits and minimize the costs of recovering as much corn oil as possible. Our existing licensees collectively have the potential to recover more than 150 MGY of corn oil. We plan to help our licensees to achieve as much of that potential as possible while also maximizing the value and marketability of their other co-products. We will also remain focused on winning new business and increasing our licensed penetration. To do so, we will continue to provide exceptional win-win services, the highest-performing systems packages available, and access to new technologies for further dramatic gains in licensee profitability and competitive advantage.

We will continue to expand our patent portfolio. We have many additional patents pending and we will remain committed to developing new technologies to further enhance the profitability of our licensees. And, we will stay the course in our ongoing infringement litigation but plan to expand our efforts to aggressively prosecute any entity, manager or other person infringing or inducing infringement of our technologies – all with a view towards enhancing and protecting the significant competitive advantage of our licensees.

Our financial performance for the balance of 2012 and beyond can be expected to be most significantly impacted by the rate at which our existing and new licensees commence production, the amount of corn oil that our licensees produce, the market price for that corn oil, the extent to which we collect reasonable royalties, and the costs incurred in our ongoing litigation for infringement of our patents.

A number of our licensees are in various stages of deploying or optimizing the performance of the systems needed to use our technologies. Notwithstanding the impact of new license agreements that we may enter into or fluctuation in the market price for corn oil, we expect that our quarterly results of operations will continue to improve sequentially at least until the third or fourth quarter of 2012 as all of our existing licensees commence and achieve full production. In addition, future results may be improved by the impact of event-driven systems integration contracts as we continue to receive significant interest for our engineering and other services in connection with the design, construction, integration and modification of corn oil extraction systems and other new systems for existing and prospective licensees.

We expect to continue incurring substantial costs in connection with our ongoing litigation for infringement of our patented corn oil extraction technologies. These costs have increased during the second half of 2011 and are expected to continue to increase through the middle of 2012 in advance of trial, and as we expand our litigation to protect the competitive advantage of our licensees by

prosecuting additional producers and other parties infringing our patents. These expenses may adversely affect our ability to maintain profitability and achieve our debt reduction goals. We hope to eventually eliminate our litigation expense, but we must and will take all necessary steps to bring infringement of our patents to an end. We have reserved cash for this purpose.

COMPONENTS OF REVENUES AND EXPENSES

Our revenues are derived from our technology licensing activities and the provision of related products and services. We issue royalty-bearing licenses to ethanol producers that use our patented and patent-pending technologies. In return, we receive ongoing royalty fees under our license agreements that are based on the market value of the corn oil produced by our licensees. Our license agreements also call for our provision of technical services to our licensees, which we provide to maximize the benefit of our technologies to our clients and, derivatively, us by way of increased royalty income. These services include design, procurement, integration and ongoing support services. During 2011 and 2010, some of our license agreements provided for royalties in the form of a discounted corn oil purchase price. In these cases, our royalty payments were equal to the gross profit realized upon sale of corn oil, or the difference between the market price of the corn oil produced and our discounted purchase price in each relevant license.

Our costs of sales primarily include allocable labor, materials and incidental expenses incurred in connection with our provision of services to our licensees. In addition, during 2011 and 2010, we owned corn oil extraction systems that were located at and operated by several licensees. Our costs of sales during 2011 and 2010 accordingly included additional costs incurred in connection with our corn oil purchase rights under the relevant licenses as well as the ongoing maintenance of these systems.

Selling, general and administrative expenses consist of payroll, office expenses, insurance, and professional fees for accounting, legal, consulting and investor relations activities. Payroll, including employee salaries, incentives and benefits, are the largest single category of expenditures in selling, general and administrative expenses. Other income (expense) includes interest earned, interest expenses, amortization expenses, income or expenses relating to the changing value of the conversion benefit embedded into our convertible debentures and other non-operating items. Notably, our agreements with our lenders provide for the accrual of our interest expenses pending conversion or other payment.

RESULTS OF OPERATIONS

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Total revenues for the year ended December 31, 2011 were $20.0 million as compared to $7.7 million generated during the year ended December 31, 2010. The increase in revenue during the year was due to the impact of new licenses executed during 2011, increased corn oil production by our licensees, the increased market value of corn oil, and the sale of our remaining facilities to YA Corn Oil Systems, LLC. While revenue in future periods can be expected to decrease as a result of the non-recurring nature of the results recognized in connection with the YA Corn Oil Transaction, we expect that this decrease will be offset by the concomitant decrease in costs of sales associated with the transfer of those agreements, as well as increases in revenue generated by new license agreements executed during 2011 and 2010. Revenue growth moving forward will also be affected by fluctuation in the market price for corn oil since the royalty income we generate is tied to sales of corn oil extracted by our licensees with our technologies.

Costs of sales for the year ended December 31, 2011 were $8.9 million. Costs of sales during the year ended December 31, 2010 were about $6.3 million, or about $5.0 million after a non-cash write-down of inventory in the amount of about $1.3 million. Costs of sales for 2011 comprised about 44% of revenue. These amounts compare to 82% of revenue for the same period in 2010. The increase in costs of sales during 2011 as compared to 2010 was in part due to costs incurred in connection with systems integration agreements entered into with various of our licensees and appreciation in the market price of corn oil. Gross profit for the year ended December 31, 2011 was about $11.1 million, or 56% of revenue, as compared to about $1.4 million and 18% of revenue for the same period last year. For comparison purposes, gross profit for 2010 was about $2.7 million or about 35% of revenue without the impact of the write-down noted above. We

expect to achieve increased economies of scale with respect to our costs of sales and gross profit as all of our existing licensees commence production and as we execute new licenses for our technologies.

Operating expenses for the years ended December 31, 2011 and December 31, 2010 were about $6.2 million and $8.7 million, respectively. Operating expenses during 2011 included $2.5 million in overhead, about $2.4 million in professional fees, $1.0 million in bad debt expense and about $119,000 in depreciation expenses. Operating expenses during 2010 included $2.7 million in overhead, about $1.7 million in professional fees, about $2.3 million incurred in connection with a write-off of construction-in-progress, about $1.1 million in depreciation expenses, and about $800,000 in development costs incurred relating to extraction systems transferred to YA Corn Oil. None of the latter three items are expected to continue moving forward given the fact that we no longer build and provide our licensees with the equipment they need to use our technologies. Net of these amounts, operating expenses for the year ended December 31, 2010 were about $4.5 million. Professional fees can be expected to increase moving forward as we defend against patent infringement. While we have no desire to litigate and hope to eventually eliminate this expense, we must and will take all necessary steps to bring infringement of our patents to an end. We expect to continue to incur increased expenses in this regard for the foreseeable future. However, these operating expenses can be expected to decrease overall as a percentage of revenue in future periods given the leaner cost structure associated with our streamlined licensing model, and as we realize increased economies of scale from our new licensing activities.

Our operating income during the year ended December 31, 2011 was about $5.0 million, or about $1.0 million net of the impact of the YA Corn Oil Transaction and non-recurring bad debt expenses of about $1.0 million. These amounts compare to the $7.3 million operating loss from operations that we generated during the year ended December 31, 2010 net of the non-recurring items discussed above. Our operating expenses moving forward will be primarily comprised of technology royalties, employee costs, travel, materials and other expenses incidental to execution of our license support services, general and administrative costs relating to our offices, utilities and insurance, and professional fees relating to accounting, corporate and litigation activities.

Other income for the year ended December 31, 2011 was about $2.8 million, as compared to other expense of about $4.5 million from 2010. The amount for 2011 included about $3.6 million in accrued interest and was offset by about a gain of about $8.1 million upon debt extinguishment. The amount for 2010 included about $3.9 million in accrued interest, about $1.5 million in expenses associated with the conversion features embedded in the Company’s outstanding convertible debentures, and was offset by about $815,000 in non-cash gain upon debt extinguishment.

Net income for the year ended December 31, 2011 was about $7.9 million as compared to a net loss of about $12 million from the same period in 2010, and included the non-cash and non-recurring items discussed above. Interest expenses and expenses associated with the conversion features of our convertible debt can be expected to decrease and to eventually be eliminated as we reduce and fully satisfy our convertible debt obligations. Interest payable to YA Global decreased during 2010 from an average rate of 12% to 6% per year in connection with YA Corn Oil Transaction. Our annual interest expense is now expected to be about $1.8 million, or about 50% less than the interest expense we incurred during 2011.

Conversion Liabilities

We accounted for our convertible debt in accordance with ASC 480, Distinguishing Liabilities from Equity , as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of our common shares. The conversion feature on these debentures is variable and based on trailing market prices. It therefore contains an embedded derivative. The fair value of the conversion features are calculated at the time of issuance and we record a conversion liability for the calculated value. We recognize additional interest expense for the conversion liability which is added to the principal of the debenture for financial reporting purposes (without an actual increase in the amount we owe to the relevant lender). We also recognize interest expense for accretion of the conversion liability to fair value over the term of the note. The conversion liability is valued at the end of each reporting period and results in a gain or loss for the change in fair value. Due to the volatile nature of our stock, the change in the derivative liability and the resulting gain or loss is usually material to our results. The principal amount on our convertible debentures due to various lenders was about $34 million as of December 31, 2011, and corresponded to conversion liabilities of about $2.6 million. We recognized additional interest expense of about $25,000 for accretion of the debt discount during 2011.

LIQUIDITY AND CAPITAL RESOURCES

The Company had a working capital deficit of about $41 million at December 31, 2011, about $37 million of which was attributable to current obligations convertible into Company common stock. Our primary sources of liquidity during 2011 included cash from the licensing activities discussed above in Results of Operations as well as proceeds from issuance of debt. During the year ended December 31, 2011, we produced about $1.8 million in net cash from operating activities and about $2.5 million in net cash from investing activities, and we used about $2.9 million in net cash in financing activities. During the year ended December 31, 2010, we received and used $3.8 million from financing activities to subsidize $3.7 million in net cash used in our operating activities and about $98,000 used in our investing activities. Our cash balance at both the beginning and end of 2011 was about $39,000 and $1.4 million, respectively.

Our financial position and liquidity moving forward will be based on our ability to generate cash flows from our operations, as well as the level of our outstanding indebtedness and our debt service obligations. Our business is highly impacted by commodity price volatility, primarily in the market for corn oil. While demand for extracted corn oil is strong in the biodiesel and multiple other markets, decreases in the price of corn oil will have a negative impact on the amount of cash we are able to produce from our operating activities. Moreover, to the extent that our existing and potential new licensees are all corn ethanol producers, our business is also subject to commodity price risk in the markets for ethanol, distillers grain, corn and natural gas. These risks are partially mitigated for us by the fact that use of our corn oil extraction technologies will enhance the liquidity and financial position of licensed ethanol producers and provide our licensees with vitally important cash flows during periods of reduced ethanol producer margins. However, our ability to generate cash flow may be adversely affected if, for example, a new licensee were forced by a reduced crush spread to suspend operations prior to installing a corn oil extraction system.

We owe about $27.6 million in debt to YA Global and its assignees and about $4.5 million to related parties. Our debt to YA Global and our related party lenders matures on December 31, 2012. In February 2012, we entered into an amended agreement with YA Global pursuant to which we agreed to begin servicing our debt to YA Global with cash payments of about $1.6 million during 2012 to supplement and offset equity conversion. We are otherwise not required to pay any of these amounts in cash in advance of the maturity date for the debt, and the lenders have primarily sought repayment in the form of common stock issued upon the conversion of debt. Despite this feature, repayment of the balance of these obligations in cash is an important objective for us moving forward, and we hope to complete a financing during 2012 to refinance and recapitalize all of our remaining convertible obligations.

ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

	Page No

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	36

Consolidated Balance Sheets	37

Consolidated Statements of Operations	38

Consolidated Statements of Stockholders’ Equity	39

Consolidated Statements of Cash Flows	41

Notes to Consolidated Financial Statements	42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of GreenShift Corporation

We have audited the accompanying balance sheets of GreenShift Corporation as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two year period ended December 31, 2011. GreenShift’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of GreenShift Corporation as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 2 to the financial statements, the Company has current liabilities that exceed current assets by $41.3 million as of December 31, 2011 and the Company’s operating income was primarily due to completion of a non-cash performance bonus. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Rosenberg Rich Baker Berman & Company

Somerset, NJ

March 30, 2012

GREENSHIFT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2011

		12/31/2011			12/31/2010
ASSETS		(Restated)

Current Assets:
Cash	$	1,364,994		$	18,420
Accounts receivable, net of doubtful accounts		1,956,377			194,571
Inventories, net		1,153,357			1,275,815
Prepaid expenses and other assets		41,418			644,781
Total current assets		4,516,146			2,133,587

Other Assets:
Property and equipment, net		--			8,746,240
Intangible assets, net		127,215			516,131
Minority investments		2,501,324			2,501,324
Note receivable		--			500,000
Deposits		51,910			47,571
Assets to be disposed, net of current		--			7,500
Total other assets		2,680,449			12,318,766

TOTAL ASSETS		7,196,595			14,452,353

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:
Accounts payable		3,697,216			4,657,016
Accrued expenses		2,602,476			1,789,800
Accrued expenses – deferred employee compensation		1,333,380			2,012,876
Accrued interest payable		3,925,884			3,608,050
Accrued interest payable – related party		69,909			1,057,052
Deferred revenue		1,197,404			300,396
Current portion of long term debt		1,806,316			1,846,575
Current portion of convertible debentures, net		30,330,995			858,713
Convertible debentures – related party		--			4,985,001
Current liability for conversion feature		11,111			--
Amounts due to minority shareholders		750,472			839,669
Liabilities of discontinued operations, current		137,000			316,133
Total current liabilities		45,862,163			22,271,281

Long term Liabilities:
Asset retirement obligation		--			651,182
Liability for preferred stock – related party		944,471			938,641
Convertible debentures – related party		4,531,000			--
Convertible debentures, net of current		--			45,737,327
Total long term liabilities		5,475,471			47,327,150

Total Liabilities		51,337,634			69,598,431

Stockholders’ Equity (Deficit):
Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized:
Series B: 2,480,544 and 2,480,544 shares issued and outstanding, respectively		2,481			2,481
Series D: 862,262 and 791,034 shares issued and outstanding, respectively		862			791
Common stock: $0.0001 par value, 20,000,000,000 authorized 18,098,873 and
1,398,670 shares issued and outstanding, respectively		1,809			1,398
Additional paid in capital		117,027,377			113,922,918
Accumulated deficit		(161,173,568	)		(169,073,666	)
Total stockholders’ equity (deficit)		(44,141,039	)		(55,146,078	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	7,196,595		$	14,452,353

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

GREENSHIFT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

		12/31/2011			12/31/2010
		(Restated)

Revenue	$	15,057,409		$	7,736,741
Performance bonuses		4,986,568			--
Total revenue		20,043,977			7,736,741

Cost of goods sold		8,797,145			5,007,427
Loss on inventory valuation		121,815			1,315,315
Gross profit		11,125,017			1,413,999

Operating expenses:
Sales, general and administrative expenses		5,126,524			6,353,191
Bad debt expense		1,033,071			29,939
Loss on write-down of assets		--			2,296,417
Total operating expenses		6,159,595			8,679,547

Income (loss) from operations		4,965,422			(7,265,549	)

Other Income (Expense):
Gain on extinguishment of debt		8,108,132			815,181
Gain (loss) on sale of asset		(222,199	)		--
Liquidated damages		(850,000	)		--
Other expense		(1,296,795	)		--
Amortization of debt discount & deferred financing		(25,000	)		(30,261	)
Miscellaneous income		472,697			73,461
Change in conversion liabilities		140,092			(889,784	)
Change in conversion liabilities- affiliate		37,580			(599,577	)
Interest expense - affiliate		(832,625	)		(863,105	)
Interest expense		(2,768,839	)		(3,034,258	)
Total other income (expense), net		2,763,043			(4,528,343	)

Income (loss) before provision for income taxes		7,728,465			(11,793,891	)

(Provision for)/benefit from income taxes		--			(20	)
Income (loss) from continuing operations		7,728,465			(11,793,911	)

Discontinued Operations:
Gain from disposal of discontinued operations		--			67,803
Income (loss) from discontinued operations		171,633			(414,284	)
Total income (loss) from discontinued operations		171,633			(346,481	)

Net income (loss) attributable to common shareholders	$	7,900,098		$	(12,140,392	)

Weighted average common shares outstanding, basic		15,205,062			2,538,217
Weighted average common shares outstanding, diluted		16,695,099			2,538,217

Earnings (Loss) per Share-Basic:
Income (loss) from continuing operations	$	0.51		$	(4.65	)
Income (loss) from discontinued operations		0.01			(0.14	)
Net income (loss) per share – basic		0.52			(4.78	)

Earnings (Loss) per Share Diluted
Income (loss) from continuing operations	$	0.61		$	(4.65	)
Income (loss) from discontinued operations		0.01			(0.14	)
Net income (loss) per share - diluted		0.62			(4.78	)

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

GREENSHIFT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND DECEMBER 31, 2010

	Series B Preferred		Series D Preferred		Series E Preferred
	Shares	Amount	Shares	Amount	Shares	Amount
Balance at December 31, 2009	2,480,544	$2,481	799,954	$800	--	--

Conversion of Series B preferred stock to common	--	--	--	--	--	--
Conversion of Series D preferred stock to common	--	--	(8,920)	(9)	--	--
Stock issued upon conversion of debentures	--	--	--	--	--	--
Stock issued for repayment of accounts payable	--	--	--	--	--	--
Stock issued for services	--	--	--	--	--	--
Conversion of obligation to minority shareholders	--	--	--	--	--	--
Transfer of investments in subsidiaries to affiliate	--	--	--	--	--	--
Change in conversion liabilities due to conversion of debt	--	--	--	--	--	--
Forgiveness of affiliate debt	--	--	--	--	--	--
Net income (loss)	--	--	--	--	--	--
Balance at December 31, 2010	2,480,544	$2,481	791,034	$791	--	--


Conversion of Series D preferred stock to common	--	--	(346)	--	--	--
Cancellation of Series D preferred stock	--	--	71,574	71	--	--
Stock issued upon conversion of debentures	--	--	--	--	--	--
Stock issued for services	--	--	--	--	--	--
Conversion of obligation to minority shareholders	--	--	--	--	--	--
Change in conversion liabilities due to conversion of debt	--	--	--	--	--	--
Forgiveness of affiliate debt	--	--	--	--	--	--
Net income (loss)	--	--	--	--	--	--
Balance at December 31, 2011 (Restated)	2,480,544	$2,481	862,262	$862	--	--

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

GREENSHIFT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND DECEMBER 31, 2010

	Common Stock		Additional Paid in Capital	Accumulated Deficit	Total Equity
	Shares	Amount	Additional Paid in Capital	Accumulated Deficit	Total Equity
Balance at December 31, 2009	477,362	$48	$93,070,889	$(156,933,274)	$(63,859,056)

Conversion of Series B preferred stock to common
Conversion of Series D preferred stock to common	9,000,000	900	(891)	--	--
Stock issued upon conversion of debentures	4,372,429	437	2,913,429	--	2,913,867
Stock issued for repayment of accounts payable	1,000	--	2,000	--	2,000
Stock issued for services	2,500	--	7,500	--	7,500
Conversion of obligation to minority shareholders	127,380	13	32,437	--	32,450
Transfer of investments in subsidiaries to affiliate	--	--	17,822,476	--	17,822,476
Change in conversion liabilities due to conversion of debt	--	--	455,943	--	455,943
Forgiveness of affiliate debt	--	--	(380,867)	--	(380,867)
Net income (loss)	--	--	--	(12,140,392)	(12,140,392)
Balance at December 31, 2010	13,980,671	$1,398	$113,922,916	$(169,073,666)	$(55,146,078)

Conversion of Series D preferred stock to common	848,765	85	(85)	--	--
Cancellation of Series D preferred stock	(9,000,000)	(900)	1,063,137	--	1,062,308
Stock issued upon conversion of debentures	10,985,010	1,098	1,146,604	--	1,147,702
Stock issued for services	839,427	84	92,253	--	92,337
Conversion of obligation to minority shareholders	445,000	45	44,456	--	44,501
Change in conversion liabilities due to conversion of debt	--	--	525,470	--	525,470
Forgiveness of affiliate debt	--	--	229,625	--	229,625
Net income (loss)	--	--	--	7,900,098	7,900,098
Balance at December 31, 2011 (Restated)	18,098,873	$1,809	$117,027,377	$(161,173,568)	$(44,141,039)

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

GREENSHIFT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND DECEMBER 31, 2010

		12/31/2011			12/31/2010
		(Restated)
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)	$	7,900,098			(12,140,392	)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain on disposal of discontinued operations		--			(67,803	)
Depreciation and amortization		115,311			1,087,150
Amortization of intangibles		24,630			110,345
Amortization of debt discount and deferred financing costs		25,000			30,261
Non-cash payment of performance bonus applied to convertible debentures		(4,986,568	)		--
Non-cash expense associated with convertible debentures		1,167,046			--
Loss (gain) on extinguishment of debt		(8,108,132	)		(815,181	)
Loss on sale of assets		222,199			--
Change in net assets of disposal group		7,500			577,071
Change in conversion liabilities		(177,672	)		1,491,234
Stock based compensation		--			7,500
Write-down of assets		--			2,296,417
Accretion of asset retirement obligation		--			39,976
Interest accretion on notes receivable		(53,852	)		(72,000	)
Expenses incurred by issuance of debentures		236,024			--
Issuance costs – liability for Series F Preferred Stock		--			497,545
Bad debt expense		1,007,015			29,939
Change in inventory valuation		121,815			1,315,315

Changes in operating assets and liabilities:
Accounts Receivable		(2,768,821	)		(176,039	)
Prepaid expenses		82,905			(211,246	)
Deposits		(4,340	)		(10,022	)
Costs in excess of earnings		439,248			--
Deferred revenue		897,007			300,396
Accrued interest		2,675,321			3,025,532
Accrued interest – related party		687,155			863,105
Minority interest		(44,697	)
Accounts payable and accrued expenses		1,845,612			111,293
Net cash provided by (used in) operating activities		1,309,804			(1,709,604	)

CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of inventory components		643			--
Proceeds from sale of property, plant and equipment		2,500,000			--
Additional to and acquisition of property, plant and equipment		(13,739	)		122,235
Loans to related party		(13,019	)		(336,123	)
Net cash provided by (used in) investing activities		2,473,885			(213,888	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable – related party		(89,435	)		--
Proceeds from convertible debentures – related party		80,229			1,902,497
Payments on convertible debentures		(2,000,000	)		--
Repayment of convertible debentures – related party bridge		(427,909	)		--
Net cash provided by (used in)financing activities		(2,437,115	)		1,902,497

Net increase (decrease) in cash		1,346,574			(20,995	)
Cash at beginning of period		18,420			39,415
Cash at end of period	$	1,364,994		$	18,420

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

GREENSHIFT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

REFERENCES TO THE COMPANY

References to “ we ,” “ our ,” “ us ,” “ GreenShift ” or the “ Company ” in the consolidated financial statements and in these notes to the consolidated financial statements refer to GreenShift Corporation, a Delaware corporation, and its subsidiaries.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and entities which we control. All significant intercompany balances and transactions have been eliminated on a consolidated basis for reporting purposes.

USE OF ESTIMATES IN THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

DESCRIPTION OF THE BUSINESS

We generate revenue by licensing our technologies to ethanol producers in exchange for ongoing royalty and other license fees. Several plants were licensed to use our technologies as of the end of 2010 and during 2011. Prior to February 15, 2011, we were also party to license agreements with ethanol producers that were granted the right to use our technologies and equipment at their locations in return for royalties equal to the spread between the market price of the corn oil recovered by our licensees with our technologies and equipment and a discounted purchase price. Our sales and costs of sales include the sales and the costs of the corn oil produced by these licensees with our technologies and equipment through February 15, 2011, the effective date of the YA Corn Oil Transaction (see Note 11, Debt Obligations , below).

FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2011, the FASB amended the guidance on testing for goodwill impairment that allows an entity to elect to qualitatively assess whether it is necessary to perform the current two-step goodwill impairment test. If the qualitative assessment determines that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step test is unnecessary. If the entity elects to bypass the qualitative assessment for any reporting unit and proceed directly to Step One of the test and validate the conclusion by measuring fair value, it can resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 did not have a material impact on the Company’s results of operations or financial condition.

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2011-04, “Fair Value Measurement (Topic 820) Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 is intended to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs, by ensuring that fair value has the same meaning in U.S. GAAP and IFRSs and that their respective disclosure requirements are the same

except for inconsequential differences in wording and style. The amendments in ASU No. 2011-04 apply to all reporting entities that are required or permitted to measure or disclose the fair value of an asset, a liability, or an instrument classified in a reporting entity’s shareholders’ equity in the financial statements. Some of the disclosures required by ASU No. 2011-04 are not required for nonpublic entities. These amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the Board does not intend for the amendments to result in a change in the application of the requirements in ASC Topic 820. Some of the amendments clarify the Board’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The adoption of ASU 2011-04 did not have a material impact on the Company’s results of operations or financial condition.

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-29, “Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations.” The amendments in this ASU affect any public entity as defined by ASC Topic 805 that enters into business combinations that are material on an individual or aggregate basis. The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company does not expect adoption of ASU 2010-29 to have a material impact on the Company’s results of operations or financial condition.

In December 2010, the FASB issued ASU 2010-28, “Intangibles - Goodwill and Other (ASC Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not expect the adoption of ASU 2010-28 to have a material impact on the Company’s results of operations or financial condition.

In April 2010, the FASB issued ASU 2010-17, Revenue Recognition — Milestone Method (“ASU 2010-17”). ASU 2010-17 provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. The following criteria must be met for a milestone to be considered substantive. The consideration earned by achieving the milestone should (i) be commensurate with either the level of effort required to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone; (ii) be related solely to past performance; and (iii) be reasonable relative to all deliverables and payment terms in the arrangement. No bifurcation of an individual milestone is allowed and there can be more than one milestone in an arrangement. Accordingly, an arrangement may contain both substantive and non-substantive milestones. ASU 2010-17 is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Management evaluated the potential impact of ASU 2010-17 and does not expect its adoption to have a material effect on the Company’s results of operations or financial condition.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends ASC 820 to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirements for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance is effective for interim and annual financial periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a significant effect on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

NOTE 2

GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2011, the Company had $1,364,994 in cash, and current liabilities exceeded current assets by $41,346,016. Further, the Company’s operating income for the year ended December 31, 2011 was primarily due to completion of the YA Corn Oil Transaction and the subsequent realization by the Company of non-cash bonuses totaling $4,986,568 (see Note 11, Debt Obligations , below). These matters raise substantial doubt about the Company’s ability to continue as a going concern. Our ability to satisfy our obligations will depend on our success in obtaining financing, our success in developing revenue sources, and our success in negotiating with the creditors. Management’s plans to resolve the Company’s working capital deficit include increasing revenue. There can be no assurances that the Company will be able to eliminate its working capital deficit and that the Company’s historical operating losses will not recur. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.

NOTE 3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

All significant intercompany balances and transactions were eliminated in consolidation. The financial statements for the periods ended December 31, 2011 and 2010 have been consolidated to include the accounts of the Company and its subsidiaries.

COST METHOD OF ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES

The Company accounts for its 10% investment in ZeroPoint Clean Tech, Inc. under the cost method. Application of this method requires the Company to periodically review these investments in order to determine whether to maintain the current carrying value or to write off some or all of the investments. While the Company uses some objective measurements in its review, the review process involves a number of judgments on the part of the Company’s management. These judgments include assessments of the likelihood of ZeroPoint to obtain additional financing, to achieve future milestones, make sales and to compete effectively in its markets. In making these judgments the Company must also attempt to anticipate trends in ZeroPoint’s industry as well as in the general economy.

SEGMENT INFORMATION

products and services to ethanol producers that have entered into license agreements with the Company. No sales of any kind occur, and no costs of sales of any kind are incurred, in the absence of a license agreement. A single management team that reports to the chief operating decision maker comprehensively manages the entire business. We do not operate any material separate lines of business or separate business entities with respect to our technologies, products and services. The Company does not accumulate discrete financial information according to the nature or structure of any specific technology, product and/or service provided to the Company’s licensees. Instead, management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate. Discrete financial information is not available by more than one operating segment, and disaggregation of our operating results would be impracticable.

REVENUE RECOGNITION

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collection is reasonably assured. The Company recognizes revenue from licensing of the Company’s corn oil extraction technologies when corn oil sales occur. Licensing royalties are recognized as earned by calculating the royalty as a percentage of gross corn oil sales by the ethanol plants. For the purposes of assessing royalties, the sale of corn oil is deemed to occur when shipped, which is when four basic criteria have been met: (i) persuasive evidence of a customer arrangement; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured, and (iv) product delivery has occurred, which is generally upon shipment to the buyer of the corn oil. Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services, or when assets received in such exchange are readily convertible to cash or claim to cash, or when such goods or services are transferred. When an income item is earned, the related revenue item is recognized and any deferred revenue is reduced. To the extent revenues are generated from the Company’s licensing support services, the Company recognizes such revenues when the services are completed and billed. The Company provides process engineering services on fixed price contracts. These services are generally provided over a short period of less than three months. Revenue from fixed price contracts is recognized on a pro rata basis over the life of the contract as they are generally performed evenly over the contract period. The Company additionally performs under fixed-price contracts involving design, engineering, procurement, installation, and start-up of oil recovery and other production systems. Revenues and fees on these contracts are recognized using the percentage-of-completion method of accounting, and specifically the efforts-expended percentage-of-completion method using measures such as task duration and completion. The efforts-expended approach is used in situations where it is more representative of progress on a contract than the cost-to-cost or the labor-hours methods. The asset, “costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability, “billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized.

FINANCIAL INSTRUMENTS

The carrying values of accounts receivable, other receivables, accounts payable and accrued expenses approximate their fair values due to their short term maturities. The carrying values of the Company’s long-term debt approximate their fair values based upon a comparison of the interest rate and terms of such debt to the rates and terms of debt currently available to the Company. It was not practical to estimate the fair value of the convertible debt. In order to do so, it would be necessary to obtain an independent valuation of these unique instruments. The cost of that valuation would not be justified in light of the materiality of the instruments to the Company.

RECEIVABLES AND CREDIT CONCENTRATION

Accounts receivable are uncollateralized, non-interest-bearing customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Accounts receivable are stated at the amount billed to the customer. Accounts receivable in excess of 90 days old are evaluated for delinquency. In addition, we consider historical bad debts and current economic trends in evaluating the allowance for bad debts. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the oldest unpaid

invoices. The carrying amount of accounts receivable has been reduced by a valuation allowance that has been set up in the amount $1,007,015 and $29,939 as of December 31, 2011 and 2010, respectively. Management will continue to review the valuation allowance on a quarterly basis.

INVENTORIES

The Company maintains an inventory of equipment and components used in systems designed to extract corn oil from licensed ethanol production facilities. The inventory, which consists of equipment and component parts, is held for sale to the Company’s licensees on an as needed basis. Inventories are stated at the lower of cost or market, with cost being determined by the specific identification method. Inventories at December 31, 2011 and 2010 consist of the following:

		2011		2010

Equipment inventory	$	1,153,357	$	1,275,815

During the year ended December 31, 2011, the Company re-evaluated the inventory on its books and determined that a write-down to market was necessary. As a result, the Company wrote down inventory by $121,815, which was expensed under cost of goods sold as a loss on inventory valuation.

During the year ended December 31, 2010, the Lakota construction in progress project was cancelled and the $2,248,302 in related equipment from that project was transferred into inventory, and the Company re-evaluated the inventory on its books and determined that a write-down to market was necessary. As a result, the Company wrote down inventory by $1,315,315, which was expensed under cost of goods sold as a loss on inventory valuation. During the year ended December 31, 2010, the Company wrote off its $69,000 inventory deposit and recognized a $69,000 impaired inventory deposit expense.

ASSET RETIREMENT OBLIGATIONS

In accordance with ASC 410-20, Asset Retirement Obligations, the Company recognizes the fair value of the liability for an asset retirement obligation, which is recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The fair value of the liability is estimated using projected discounted cash flows. In subsequent periods, the retirement obligation is accreted to its future value, which is the estimate of the obligation at the asset retirement date. The liability is accreted to its present value each period, and the capitalized cost is depreciated or depleted over the useful lives of the respective assets. If the liability is settled for an amount other than the recorded amount, a gain or loss would be recognized at such time. The Company’s asset retirement obligations totaled $0 and $691,435 at December 31, 2011 and 2010, respectively.

CASH AND EQUIVALENTS

The Company considers cash and equivalents to be cash and short-term investments with original maturities of three months or less from the date of acquisition.

PROPERTY AND EQUIPMENT

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the life of the lease or their useful lives. Gains and losses on depreciable assets retired or sold are recognized in the consolidated statement of operations in the year of disposal, and repair and maintenance expenditures are expensed as incurred. Property, plant and equipment are stated at cost. Expenditures for major renewals and improvements which extend the life or usefulness of the asset are capitalized. Once an asset has been completed and placed in service, it is transferred to the appropriate category and depreciation commences. The Company uses the straight line method for depreciation and depreciates equipment over the estimated useful life of the assets: office and computer equipment over 3-5 years and corn oil extraction systems over a 10 year period. Gains and losses on depreciable assets retired or sold are recognized in the statement of operations in the year of disposal, and repair and maintenance expenditures are expensed as incurred. Property and equipment are stated at cost and include amounts capitalized under capital lease obligations.

GOODWILL AND INTANGIBLE ASSETS

The Company accounts for its goodwill and intangible assets pursuant to ASC 350-20-55-24, “ Intangibles – Goodwill and Other” . Under ASC 350, intangibles with definite lives continue to be amortized on a straight-line basis over the lesser of their estimated useful lives or contractual terms. Goodwill and intangibles with indefinite lives are evaluated at least annually for impairment by comparing the asset’s estimated fair value with its carrying value, based on cash flow methodology. Intangibles with definite lives are subject to impairment testing in the event of certain indicators. Impairment in the carrying value of an asset is recognized whenever anticipated future cash flows (undiscounted) from an asset are estimated to be less than its carrying value. The amount of the impairment recognized is the difference between the carrying value of the asset and its fair value. At December 31, 2011, the Company’s balance sheet included intangible assets with an aggregate carrying value of $127,215 as compared to $516,131 at December 31, 2010. During the year ended December 31, 2010, the Company recorded an impairment of goodwill in the amount of $7,281,993 related to the acquisition of BIG.

LONG-LIVED ASSETS

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

INCOME TAXES

Income taxes are accounted for under the asset and liability method, whereby deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized. All of the subsidiaries are consolidate for state income tax purposes.

BASIC AND DILUTED INCOME (LOSS) PER SHARE

The Company computes its net income or loss per common share under the provisions of ASC 260, “ Earnings per Share ,” whereby basic net income or loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Dilutive net loss per share excludes potential common shares issuable upon conversion of all derivative securities if the effect is anti-dilutive. Thus, common stock issuable upon exercise or conversion of options, warrants, convertible preferred stock, or convertible debentures are excluded from computation of diluted net loss per share, but are included in computation of diluted net income per share. During the year ended December 31, 2011, we reported net income and accordingly included potentially dilutive instruments in the fully diluted net income per share calculation on the assumption that all convertible instruments have been full converted. However, we reported net losses during year ended December 31, 2010, and, in accordance with ASC 260, dilutive instruments were excluded from the net loss per share calculation for such periods.

USE OF ESTIMATES

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

accounting for the following significant matters, among others:

-	Allowances for doubtful accounts;

-	Valuation of acquired assets;

-	Inventory valuation and allowances;

-	Fair value of derivative instruments and related hedged items;

-	Useful lives of property and equipment and intangible assets;

-	Asset retirement obligations;

-	Long lived asset impairments, including goodwill;

-	Contingencies;

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

-	Tax related items

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

DEFERRED REVENUE

Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s licensing support services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various clients that have been recorded as deferred revenue in the amount of $1,197,404 and $300,396 as of the years ended December 31, 2011 and 2010, respectively.

DEFERRED FINANCING CHARGES AND DEBT DISCOUNTS

Deferred finance costs represent costs paid to third parties in order to obtain long-term financing and have been reflected as other assets. Costs incurred with parties who are providing the actual long-term financing, which generally include the value of warrants or the fair value of an embedded derivative conversion feature are reflected as a debt discount. These costs and discounts are amortized over the life of the related debt. Amortization expense related to these costs and discounts were $25,000 and $30,261 for the years ended December 31, 2011 and 2010, respectively and are included in other expense.

FINANCIAL INSTRUMENTS

The carrying values of accounts receivable, other receivables, accounts payable, and accrued expenses approximate their fair values due to their short term maturities. The carrying values of the Company’s long-term debt approximate their fair values based upon a comparison of the interest rate and terms of such debt to the rates and terms of debt currently available to the Company. It was not practical to estimate the fair value of the convertible debt. In order to do so, it would be necessary to obtain an independent valuation of these unique instruments. The cost of that valuation would not be justified in light of the materiality of the instruments to the Company.

FAIR VALUE INSTRUMENTS

Effective July 1 2009, the Company adopted ASC 820, Fair Value Measurements and Disclosures . This topic defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance supersedes all other accounting pronouncements that require or permit fair value measurements. The Company accounted for the convertible debentures in accordance with ASC 480, Distinguishing Liabilities from Equity , as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of the Company’s common shares. Effective July 1 2009, the Company adopted ASC 820-10-55-23A, Scope Application to Certain Non-Financial Assets and Certain Non-Financial Liabilities, delaying application for non-financial assets and non-financial liabilities as permitted. ASC 820 establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In January 2010, the FASB issued an update to ASC 820, which requires additional disclosures about inputs into valuation techniques, disclosures about significant transfers into or out of Levels 1 and 2, and disaggregation of purchases, sales, issuances, and settlements in the Level 3 rollforward disclosure. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:


Level 1	quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active exchange-traded securities and exchange-based derivatives

Level 2	inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges

Level 3	unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models

The following table presents the embedded derivative, the Company’s only financial assets measured and recorded at fair value on the Company’s Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy during the years ended December 31, 2011 and 2010:


Embedded conversion liabilities as of December 31, 2011:
Level 1	$	--
Level 2		--
Level 3		3,079,447
Total	$	3,079,447

The following table reconciles, for the period ended December 31, 2011, the beginning and ending balances for financial instruments that are recognized at fair value in the consolidated financial statements:

Balance of embedded derivative as of December 31, 2009	$	4,629,312
Present value of beneficial conversion features of new debentures		325,656
Present value of beneficial conversion features of preferred stock liability		428,381
Accretion adjustments to fair value – beneficial conversion features		760,387
Reductions in fair value due to conversion of principal		(480,254	)
Balance of embedded derivatives at December 31, 2010		5,663,482
Write off due to restructured terms		(2,195,265	)
Present value of beneficial conversion features of new debentures		655,214
Accretion adjustments to fair value – beneficial conversion features		310,809
Reductions in fair value due to repayments/redemptions		(1,175,570	)
Reductions in fair value due to principal conversions		(179,223	)
Balance at December 31, 2011	$	3,079,447

The fair value of the conversion features are calculated at the time of issuance and the Company records a conversion liability for the calculated value. The Company recognizes the initial expense for the

conversion liability which is added to the carrying value of the debenture or the liability for preferred stock. The Company also recognizes expense for accretion of the conversion liability to fair value over the term of the note. The Company has adopted ASC 480, Distinguishing Liabilities from Equity , as the conversion feature embedded in each debenture and/or convertible preferred share could result in the note principal and/or preferred shares being converted to a variable number of the Company’s common shares.

STOCK BASED COMPENSATION

The Company accounts for stock, stock options and stock warrants issued for services and compensation by employees under the fair value method. For non-employees, the fair market value of the Company’s stock is measured on the date of stock issuance or the date an option/warrant is granted as appropriate under ASC 718 “Compensation – Stock Compensation”. The Company determined the fair market value of the warrants/options issued under the Black-Scholes Pricing Model. Effective July 1, 2006, the Company adopted the provisions of ASC 718, which establishes accounting for equity instruments exchanged for employee services. Under the provisions ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).

RECLASSIFICATIONS

Certain items in the financial statements have been reclassified to conform with the current year presentation. Such reclassification had no effect on net income.

NOTE 4

CONCENTRATIONS

The Company maintains cash balances with financial institutions that at times may exceed the limits insured by the Federal Deposit Insurance Corporation. Accounts receivable are uncollateralized, non-interest-bearing customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Accounts receivable are stated at the amount billed to the customer. One customer balance represents 36% of accounts receivable; one customer's revenue represented 37% of total revenue.

NOTE 5

STOCKHOLDERS’ EQUITY

SERIES B PREFERRED STOCK

Each share of Series B Preferred Stock may be converted by the holder into twenty-five shares of common stock. The holders would be entitled to cumulative dividend rights equal to that of twenty-five common shareholders upon the declaration of dividends on common stock, and have voting privileges of one vote to every one common share. At December 31, 2008, there were 2,512,219 shares of Series B Preferred Stock issued and outstanding. A total of 38,676 shares of Series B Preferred Stock were converted into 96,690 shares of Company common stock during 2009 as compensation. At December 31, 2011 and 2010, there were 2,480,544 shares of Series B Preferred Stock issued and outstanding.

SERIES D PREFERRED STOCK

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

D Shares had been converted into common shares. Effective September 30, 2011, Minority Interest Fund (II), LLC (“MIF”) was issued 62,500 shares of Series D Preferred Stock in partial consideration of the contribution of principal and accrued interest and various other modified terms of MIF’s agreements with the Company. The Company’s Series D Preferred Stock is beneficially owned by Viridis Capital, LLC (634,199 shares), Edward Carroll (187,500 shares), Acutus Capital, LLC (124,875 shares) and Minority Interest Fund (II), LLC (103,534 shares).

ASC 480, Distinguishing Liabilities from Equity , sets forth the requirements for determination of whether a financial instrument contains an embedded derivative that must be bifurcated from the host contract, therefore the Company evaluated whether the conversion feature for Series D Preferred Stock would require such treatment; one of the exceptions to bifurcation of the embedded conversion feature is that the conversion feature as a standalone instrument would be classified in stockholders’ equity. Management has determined that the conversion option would not be classified as a liability as a standalone instrument, therefore it meets the exception for bifurcation of the embedded derivative under ASC 815, Derivatives and Hedging . ASC 815 addresses whether an instrument that is not under the scope of ASC 480 would be classified as liability or equity; one of the factors that would require liability classification is if the Company does not have sufficient authorized shares to effect the conversion. If a company could be required to obtain shareholder approval to increase the company's authorized shares in order to net-share or physically settle a contract, share settlement is not controlled by the company. The majority of the Company’s outstanding shares of Series D Preferred Stock are owned by Viridis Capital, LLC, an entity controlled by Kevin Kreisler, the chairman and chief executive officer of the Company. If all the Series D shares held by Viridis Capital were converted and exceeded the number of authorized common shares, there would be no contingent factors or events that a third party could bring up that would prevent Mr. Kreisler from authorizing the additional shares. There would be no need to have to go to anyone outside the Company for approval since Mr. Kreisler, through Viridis Capital, is the Company’s majority shareholder. As a result, the share settlement is controlled by the Company and with ASC 815. The Company assessed all other factors in ASC 815 to determine how the conversion feature would be classified.

SERIES F PREFERRED STOCK

Effective January 1, 2010, GS CleanTech Corporation, a wholly-owned subsidiary of the Company, executed an Amended and Restated Technology Acquisition Agreement (“TAA”) with Cantrell Winsness Technologies, LLC (“CWT”), David F. Cantrell, David Winsness, Gregory P. Barlage and John W. Davis (the “Sellers”) pursuant to which the parties amended and restated the method of calculating the purchase price for the Company’s corn oil extraction technology (the “Technology”). The TAA provides for the payment by the Company of royalties in connection with the Company’s corn oil extraction technologies, the reduction of those royalties as the Sellers receive payment, and a mechanism for conversion of accrued or prepaid royalties into Company common stock. To achieve this latter mechanism, the Company agreed to issue to the Sellers a one-time prepayment in the form of 1,000,000 shares of redeemable Series F Preferred Stock with a face value of $10 per preferred share. The Series F preferred shares are redeemable at face value and a rate equal to the amount royalties paid or prepaid under the TAA. In addition, the Sellers have the right to convert the Series F preferred shares to pay or prepay royalties at a rate equal to the cash proceeds received by the Sellers upon sale of the common shares issued upon conversion Series F preferred shares. The TAA provides for the payment to the Sellers of an initial royalty fee equal to the lesser of $0.10 per gallon or a percentage of net cash flows, both of which are reduced ratably to $0.025 per gallon upon payment, prepayment or conversion as described above. The Company’s obligations under the TAA are guaranteed by Viridis Capital, LLC, which guarantee was subordinated by the Sellers to the rights of YA Global under its guaranty agreement with Viridis Capital (see Note 14, Guaranty Agreements , below). The Company accounted for the Series F preferred shares in accordance with ASC 480, Distinguishing Liabilities from Equity , as the conversion feature embedded in the convertible Series F preferred shares could result in the preferred shares being converted to a variable number of the Company’s common shares. The Company determined the value of the Series F preferred shares at the grant date to be $925,926 which represented the estimated value of the preferred shares based on common shares into which they could be converted at the grant date, which included the present value of the conversion feature, which was determined to be $428,381. During the year ended December 31, 2010, the Company recognized a total expense of $925,926 based on the grant date value. During the year ended December 31, 2011, the Company recognized a reduction in conversion liability at present value of $61,046 for the redemptions that occurred via payments of royalties under the agreement and recorded an expense of $66,876 for the accretion to fair value of the conversion liability for the period. The carrying value of the liability for the Series F shares was $944,472 at December 31, 2011, including the grant date value plus the accretion less redemptions of the conversion liability during the year. The liability for the conversion feature shall increase from its present value of $446,927 at December 31, 2011 to its estimated settlement value of $1,002,193 at June 10, 2020.

The only conditions under which the Company would be required to redeem its convertible preferred stock for cash would be in the event of a liquidation of the Company or in the event of a cash-out merger of the Company.

STOCK OPTIONS

The Company accounts for stock and stock options issued for services and compensation by employees under the fair value method. For non-employees, the fair market value of the Company’s stock on the date of stock issuance or option/grant is used. The Company determined the fair market value of the options issued under the Black-Scholes Pricing Model. The Company adopted the provisions of ASC 505, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 505, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). Activity under the plan and issuances of options and/or warrants for the years ended December 31, 2011 and 2010 is as follows:

	Number of Shares		Wt. Avg. Exercise Price
Outstanding at December 31, 2009	99,663	$	49.19
Granted at fair value
Forfeited
Exercised
Outstanding at December 31, 2010	99,663		49.19

Granted at fair value
Forfeited
Exercised
Outstanding at December 31, 2011	99,663	$	49.19
Exercisable

COMMON STOCK

The Company completed a 1 for 1,000 reverse stock split on September 9, 2011. This stock split became effective under applicable laws on September 9, 2011. All stock prices, share amounts, per share information, stock options and stock warrants in this report reflect the impact of the reverse stock split. Every thousand shares of issued and outstanding Company common stock was automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. All fractional shares resulting from the reverse split were rounded to a full share.

During the years ended December 31, 2011 and December 31, 2010, the Company issued a total of 10,977,016 shares and 437,243 shares of common stock, respectively, upon conversion in each year of $901,678 and $2,913,866, respectively, of amounts due pursuant to the Company’s various convertible debentures (see Note 11, Debt Obligations , below).

NOTE 6

DISCONTINUED OPERATIONS

The Company’s former specialty equipment manufacturing operations (“GS Design”) were discontinued during the fourth quarter 2009, at which time all assets were liquidated at auction. The proceeds of the auction were applied to reduction of secured obligations due to the Ottoville Bank Company and YA Global Investments, L.P. The financial results of discontinued subsidiaries are presented as discontinued operations during the year ended December 31, 2010. The components of the loss from discontinued operations for year ended December 31, 2010 are as follows:

		2011		2010
Revenue	$	--	$	--
Cost of revenue		--		--
Gross profit		--		--

Selling, general and administrative expenses		--		27,894
Gain (loss) on equipment disposal		--		(147,581	)
Income (loss) from operations				119,687

Other income (expense):
Interest expense		--		27,477
Debt forgiveness		--		--
Amortization of debt discount		--		--
Miscellaneous income		--		47,095
Gain on extinguishment of debt		--		(608,542	)
Total other income (expense)				(533,970	)

Income (loss) before provision for income taxes		--		(414,283	)
Total benefit (provision) for tax				--
Net income (loss)	$	--	$	(414,283	)

In addition, the Company recorded $171,633 in income during the year ended December 31, 2011 in connection with a gain on extinguishment of obligations previously due.

NOTE 7

DEPOSITS

The Company has total deposits in the amount of $51,910 and $47,571 as of the years ending December 31, 2011 and 2010.

NOTE 8

GOODWILL AND INTANGIBLE ASSETS

The Company reviews its goodwill annually for possible impairment and more frequently if events or changes in circumstances indicate goodwill might be impaired. The fair value of the Company’s reporting units is analyzed using a discounted cash flow valuation approach. The discounted cash flow calculation is made utilizing various assumptions and estimates regarding future revenues and expenses, cash flow and discount rates. The assumptions used are sometimes significantly different than historical results due to the Company’s current business initiatives. If the Company fails to achieve results in line with the assumptions used, intangible assets may be impaired. Possible impairment may exist if the fair value computed using the discounted cash flow valuation approach is lower than the carrying amount of the reporting unit (including goodwill). Further analysis would be required if possible impairment exists by comparing the implied fair value of the reporting unit, which is the excess of the fair value of the reporting unit over amounts assigned to the reporting unit’s assets and liabilities, to the carrying amount of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value, an impairment loss equal to the difference would be recorded and goodwill would be written down.

The Company tests goodwill and intangible assets annually for impairment at the reporting level using a two-step process. The first step includes the following review criteria: (a) compare fair value of reporting unit with its carrying amount (accounting value); (b) if fair value of reporting unit is greater than its carrying amount (including recorded goodwill), then no impairment and therefore there is no need to perform Step II; and (c), if the reporting unit carrying amount (including recorded goodwill) is greater than its fair value, then must complete Step II to measure the amount of impairment, if any. The second step includes the following review criteria: (a) measuring the amount of impairment loss; (b) the implied fair market value of goodwill shall be determined in the same manner as the amount of goodwill recognized in a business combination is determined; (c) in order to determine the implied fair value of the goodwill, we value all assets; (d) assets subject to testing under ASC 350-20-55-24, Intangibles – Goodwill and Other must be tested before goodwill can be tested under ASC 350-20-55-24, Intangibles – Goodwill and Other ; and (e) if the carrying amount of a reporting unit goodwill exceed the implied fair value of that goodwill, then an impairment loss is recognized for an amount equal to that excess. The Company used three methods of valuation to determine impairment. The first method used is book value, the second methodology is Discounted Cash Flow analysis and the third method is a combination of Discounted Cash Flow analysis and Market Multiples.

The Company relied heavily on the Discounted Cash Flow Analysis and the Market Multiple Approach. In the prior years the Company used the same methodology, with heavy reliance on the Discounted Cash Flow analysis and the Market Multiple Approach. The historical losses in our reporting units heavily influenced our analysis and are what triggered Step I. Given the development stage nature of our operations during the reporting period, we relied heavily on future sales rather than historical sales to forecast our sales growth. Management recast its projections in subsequent periods which, in turn, caused impairment.

The Company’s intangible assets at December 31, 2011 and 2010, respectively, include the following:

		2011		2010
License fees	$	150,000	$	750,000
Patent		50,000		50,000
Website		45,076		45,076
Accumulated amortization		(117,861)		(328,945)
Intangible assets, net	$	127,215	$	516,131

Amortization of intangible assets was $110,346 and $174,001 for the twelve months ended December 31, 2011 and 2010 respectively. Estimated amortization expense for future years is as follows:

2012	$	24,631
2013		24,631
2014		24,631
2015		24,631
2016		25,488
Thereafter		3,203
Total	$	127,215

The changes in the carrying amount of goodwill during the year ended December 31, 2010 were as follows:


Balance at January 1, 2009	$	8,364,456
Goodwill acquisition		7,703,720
Impairment/loss		(16,068,176	)
Balance at December 31, 2010	$	--

NOTE 9

PROPERTY AND EQUIPMENT

Property, plant and equipment consisted of the following:

		2011		2010
Furniture and fixtures	$	46,223	$	32,484
Machinery and equipment		75,634		75,634
Computer equipment		35,584		35,584
Processing equipment		--		11,413,724
Sub-total		157,441		11,557,426
Less accumulated depreciation		(157,441)		(2,811,186)
Total	$	--	$	8,746,240

During the year ended December 31, 2010, the Lakota construction in progress project was cancelled and the $2,248,302 in related equipment from the Lakota project was transferred into inventory. At December 31, 2011, and 2010, total construction in progress related to the Company’s corn oil extraction systems was $0. Depreciation charged to operations was $115,311 and $1,087,150 for the years ended December 31, 2011 and 2010, respectively. On January 4, 2010, the Company announced its execution of an agreement with Global Ethanol, LLC (“Global”), pursuant to which the Company granted Global the right to use GreenShift’s patented corn oil extraction technologies at Global’s 100 million gallon ethanol plant in Lakota, Iowa. Under the terms of the agreement, Global directly built a facility based on the Company’s patented corn oil extraction technologies designed to extract more than 2.2 million gallons per year of corn oil in return for an ongoing royalty payment. As a result, the Lakota project was cancelled and the $2,248,302 in related equipment from the Lakota project was transferred from construction in progress to inventory. During its yearly review process, the Company wrote off $2,296,417 in construction in progress for the year ended December 31, 2010 that was deemed fully impaired. During the year ended December 31, 2011, the Company liquidated its interest in its remaining corn oil extraction systems for a total of $12.5 million located in Indiana, Iowa, New York and Wisconsin (see Note 11, Debt Obligations , below).

NOTE 10

DEFERRED REVENUE

NOTE 11

DEBT OBLIGATIONS

The following is a summary of the Company’s financing arrangements as of December 31, 2011 and 2010:

		2011		2010
Current portion of long term debt:
Asset retirement obligation, current	$	--	$	40,253
Mortgages and other term notes		21,743		21,743
Current portion of notes payable		50,000		50,000
Current portion of subsidiary notes payable		1,734,579		1,734,579
Total current portion of long term debt		1,806,322		1,846,575


Asset retirement obligation	--	651,182

Current portion of convertible debentures:
Note discounts	--	(35,196	)
YA Global Investments, L.P., 6% interest, conversion at 90% of market	21,532,558	--
Andypolo, LP, 6% interest, conversion at 90% of market	4,391,643	--
Barry Liben, 6% interest, conversion at 90% of market	111,000	--
Circle Strategic Allocation Fund, LP, 6% interest, conversion at 90% of market	341,500	--
EFG Bank, 6% interest, conversion at 90% of market	190,000	--
Epelbaum Revocable Trust, 6% interest, conversion at 90% of market	385,000	--
Judy Klein, 6% interest, conversion at 90% of market	34,000	--
JMC Holdings, LP, 6% interest, conversion at 90% of market	234,164	--
Dr. Michael Kesselbrenner, 6% interest, conversions at 90% of market	18,500	--
MD Global Partners, LLC, 6% interest, conversions at 90% of market	10,000	--
David Moran & Siobhan Hughes, 6% interest, conversion at 90% of market	70,266	--
Susan Schneider, 6% interest, conversions at 90% of market	20,500	--
Saul Skoler, IRA, 6% interest, conversions at 90% of market	28,500	--
Stuttgart, LP, 6% interest, conversion at 90% of market	271,237	--
Yorkville Advisors (GP), LLC, 6% interest, conversion at 90% of market	70,718	--
Convertible debentures to Minority Interest Fund (II), LLC	--	3,998,326
Convertible debentures to Viridis Capital, LLC	--	518,308
Convertible debentures to JMJ Financial Corp	--	481,748
Convertible debentures to Mammoth Corporation	--	59,489
Convertible debentures to E-Lionheart Associates	--	40,000
Conversion liabilities	2,621,409	791,039
Total current portion of convertible debentures	30,330,995	5,843,714

Long term convertible debentures:
YA Global Investments, L.P., 6% interest, conversion at 90% of market	--	41,305,979
Acutus Capital, LLC, 6% interest, no conversion discount	940,000	--
Minority Interest Fund (II), LLC, 6% interest, no conversion discount	1,482,844	--
Minority Interest Fund (II), LLC, 6% interest, no conversion discount	1,519,217	--
Viridis Capital, LLC, 6% interest, no conversion discount	237,939	--
Related Party Debenture, 6% interest, no conversion discount	251,000	--
Related Party Debenture, 6% interest, no conversion discount	100,000	--
Conversion liabilities	--	4,431,348
Total long term convertible debentures	4,531,000	45,737,327

A total of $32,240,586 in principal from the convertible debt noted above is convertible into the common stock of the Company (see Note 11 , Debt Obligations ). The following chart is presented to assist the reader in analyzing the Company’s ability to fulfill its fixed debt service requirements as of December 31, 2011 and the Company’s ability to meet such obligations:

Year		Amount
2012	$	29,515,908
2013		4,531,000
2014		--
2015		--
2016		--
Thereafter		--
Total minimum payments due under current and long term obligations	$	34,046,908

YA GLOBAL INVESTMENTS, L.P.

On June 17, 2010, the Company and its subsidiaries signed a series of agreements with YA Global Investments, L.P. (“YA Global”) to reduce convertible debt due from the Company to YA Global (the “YACO Agreements”). On July 30, 2010, the Company and YA Global entered into an agreement pursuant to which the transactions contemplated by the YACO Agreements (the “YA Corn Oil Transaction”) were to close effective August 1, 2010 (the “Effective Date”) subject to satisfaction of certain closing conditions. The conditions to effectiveness of this transaction were satisfied and the transaction was deemed effective for reporting purposes as of February 15, 2011. Since the conditions of closing were not satisfied as of December 31, 2010, the Company’s results of operations for the year ended December 31, 2010 were reported on the basis that the closing of the YA Corn Oil Transaction had not occurred as of such date. The YACO Agreements provided for various GreenShift-

owned corn oil extraction facilities based on GreenShift’s patented and patent-pending technologies to be transferred as of August 1, 2010 to a newly formed entity, YA Corn Oil Systems, LLC (“YA Corn Oil”). In exchange, $10,000,000 of the convertible debt issued by GreenShift to YA Global was deemed satisfied as of August 1, 2010. The conditions for the YA Corn Oil Transaction were satisfied as of February 15, 2011, and the Company subsequently earned a performance bonus of $2,486,568 as of February 28, 2011 and another bonus of $2,500,000 as of March 31, 2011. The Company recognized a $5.8 million gain on extinguishment of debt and reduced liabilities for asset retirement obligation and accounts payable by an additional $847,000 as a result of the completion of the YA Corn Oil Transaction. The performance bonuses earned during 2011 were recognized as revenue and applied to reduction of the Company’s convertible debt with YA Global pursuant to the terms of the YACO Agreements. Certain indemnification events subsequently occurred, resulting in the Company recording an accrued expense of about $2.1 million during the year ended December 31, 2011. The Company entered into an Amended and Restated Management Agreement with YA Corn Oil on January 17, 2012, pursuant to which the foregoing amounts were reconciled, resulting in the payment to YA Global of such expense in the form of convertible debt. The Company's accrual is evaluated at the completion of each reporting period, and additional expense or income will be recognized in the future should an event come to pass which either justifies reduction or removal of the liquidated damages accrual, or otherwise gives rise to an actual or a potential, but determinable, expense.

In connection with the completion of the YA Corn Oil Transaction, the Company issued YA Global an amended and restated convertible debenture in the amount of $33,308,023, inclusive of previously accrued interest (the “A&R Debenture”). The A&R Debenture matures on December 31, 2012 and bears interest at the rate of 6% per annum. YA Global has the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. YA Global will not be permitted, however, to convert into a number of shares that would cause it to own more than 4.99% of the Company’s outstanding common shares. The A&R Debenture is additionally subject to ongoing compliance conditions, including the absence of change of control events and timely issuance of common shares upon conversion. The difference between August 1, 2010 date of the YACO Agreements and the February 15, 2011 effective date for reporting purposes resulted in an increased interest expense of $915,464 as of December 31, 2010 that was subsequently, on February 15, 2011, eliminated in connection with the completion of the YA Corn Oil Transaction.

During the year ended December 31, 2011, YA Global subdivided the A&R Debenture and assigned to a total of sixteen of its equity-holders portions of the A&R Debenture totaling $6,281,394 principal, which assignments reduced the balance due to YA Global alone under the A&R Debenture as of December 31, 2011. $6,177,028 of the portion of the A&R Debenture assigned by YA Global remained outstanding at December 31, 2011. The Company accounted for the A&R Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity , as the conversion feature embedded in the A&R Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company had determined the fair value of the A&R Debenture at December 31, 2010 to be $45,908,129 which represented the face value of the debenture plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recognized a reduction in conversion liability relating to the A&R Debenture at a present value of $1,542,609 for the conversion liability portion of the gain on extinguishment of debt, of $7,125 for the conversions during the period, and $1,074,660 for assignments and/or repayments during the period and recorded an expense of $185,815 for the accretion of the present value of the conversion liability for the period. The carrying value of the A&R Debenture was $23,525,327 at December 31, 2011, including principal of $21,532,558 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $1,992,769 at December 31, 2011 to its estimated settlement value of $2,170,286 at December 31, 2012. Interest expense of $2,035,708 for the A&R Debenture was accrued for the year ended December 31, 2011.

RELATED PARTY OBLIGATIONS

As of December 31, 2010, the Company had convertible debentures payable to Minority Interest Fund (II), LLC (“MIF”) in an aggregate principal amount of $3,988,326 (the “MIF Debenture”). Prior to September 30, 2011, MIF was entitled to convert the accrued interest and principal of the MIF convertible debenture into common stock of the Company at a conversion price equal to 80% of the lowest daily volume weighted average price for the twenty trading days preceding conversion. During the nine months ended September 30, 2011, MIF converted $545,624 of the principal balance and interest due to MIF into 6,385,921 shares of Company common stock. The Company accounted for the MIF Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion

feature embedded in the MIF Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the MIF Debenture at December 31, 2010 to be $4,407,852 which represented the face value of the debenture of $3,988,326 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recognized a reduction in the conversion liability at present value of $88,734 for the conversions and recorded income of $7,278 for the fair value of new advances less assignments plus the accretion to fair value of the conversion liability. Due to the elimination of the conversion discount at September 30, 2011, and the related conversion liability, the carrying value of the MIF Debenture consisted of $3,002,061 in principal at December 31, 2011. The elimination of the conversion liability was recorded as contributed capital of $323,514. Interest expense of $45,480 for these obligations was accrued for the year ended December 31, 2011.

As of December 31, 2010, the Company had convertible debentures payable to Viridis Capital, LLC in an aggregate principal amount of $518,308 (the “Viridis Debenture”). Prior to September 30, 2011, Viridis was entitled to convert the accrued interest and principal of the convertible debenture into common stock of the Company at a conversion price equal to 90% of the lowest daily volume weighted average price for the twenty trading days preceding conversion. The Company accounted for the Viridis Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Viridis Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Viridis Debenture at December 31, 2010 to be $577,149 which represented the face value of the debenture of $518,308 plus the present value of the conversion feature. The increase in the debenture during the year ended December 31, 2010 was due to Viridis’ payments to YA Global on behalf of the Company, totaling $257,229, which amount was applied to reduce the Company’s balance with YA Global under the A&R Debenture. The Company recognized a reduction in conversion liabilities at present value of $36,430 for reductions during the period, and recorded an expense of $297 for the accretion to fair value of the conversion liability for the year ended December 31, 2011. Viridis assigned $112,020 of the Viridis Debenture to a related party during the year ended December 31, 2011. Due to the elimination of the conversion discount during the year ended December 31, 2011 and the related conversion liabnility, the carrying value of the Viridis Debenture consisted of $237,939 in principal at December 31, 2011. The elimination of the conversion liability was recorded as contributed capital of $22,708. Interest expense of $3,598 for these obligations was accrued for the year ended December 31, 2011.

As discussed more fully in Note 13, Related Party Transactions , below, the Company entered into agreements with MIF and Viridis to amend and restate the terms of the MIF Debenture and Viridis Debenture effective September 30, 2011 to extend the maturity date to June 30, 2013; to eliminate and contribute $502,086 in accrued interest and $1,065,308 of principal; to reduce the applicable interest rate to 6% per annum; to eliminate MIF’s and Viridis’ right to convert amounts due at a discount to the market price of the Company’s common stock; and to reverse various non-cash assignments of debt involving related parties.

The terms of these debentures provide for interest at 6% per annum, a maturity date of June 30, 2013, and the right to convert amounts due into Company common stock at 100% of the market price for the Company’s common stock at the time of conversion. MIF received 62,500 shares of Series D Preferred Stock in partial consideration of the contribution of principal and accrued interest and the various other modified terms of MIF’s agreements with the Company. All of the foregoing amounts remain subject to the terms and conditions of the June 2010 subordination agreement by and between MIF and the Company’s senior lender, which agreement limits transfer of shares issued upon conversion of debt to 5% of the average monthly volume for the Company’s common stock.

OTHER CONVERTIBLE DEBENTURES

During the year ended December 31, 2011, YA Global assigned $4,391,643 in convertible debt to Andypolo, LP (“Andypolo” and the “Andypolo Debenture”). Andypolo shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Andypolo Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Andypolo Debenture could result in the note principal being converted to a variable number of the Company’s common

shares. The Company determined the value of the Andypolo Debenture upon assignment to be $4,809,790 which represented the face value of the debenture of $4,391,643 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $29,920 for the accretion to fair value of the conversion liability for the period. The carrying value of the Andypolo Debenture was $4,839,710 at December 31, 2011, including principal of $4,391,643 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $448,067 at December 31, 2011 to its estimated settlement value of $487,961 at December 31, 2012. Interest expense of $189,141 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $321,237 in convertible debt to Stuttgart, LP (“Stuttgart” and the “Stuttgart Debenture”). Stuttgart shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Stuttgart Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Stuttgart Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Stuttgart Debenture upon assignment to be $351,824 which represented the face value of the debenture of $321,237 plus the present value of the conversion feature. During the year ended December 31, 2011, $50,000 in principal was converted into common stock. During the year ended December 31, 2011, the Company recorded an expense of $2,019 for the accretion to fair value of the conversion liability for the period and recognized a reduction in conversion liability at present value of $5,046 for the conversions. The carrying value of the Stuttgart Debenture was $298,796 December 31, 2011, including principal of $271,237 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $27,559 at December 31, 2011 to its estimated settlement value of $30,137ecember 31, 2012. Interest expense of $17,524 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $263,498 in convertible debt to JMC Holdings, LP (“JMC” and the “JMC Debenture”). JMC shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the JMC Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the JMC Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the JMC Debenture upon assignment to be $288,876 which represented the face value of the debenture of $261,070 plus the present value of the conversion feature. During the year ended December 31, 2011, $73,554 in principal was converted into common stock. During the year ended December 31, 2011, the Company recorded an expense of $1,208 for the accretion to fair value of the conversion liability for the period and recognized a reduction in conversion liability at present value of $7,130 for the conversions. The carrying value of the JMC Debenture was $212,869 at December 31, 2011, including principal of $193,414 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $19,456 at December 31, 2011 to its estimated settlement value of $21,491 at December 31, 2012. Interest expense of $3,115 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $123,893 in convertible debt to The Cascade Fund, LLP (“Cascade” and the “Cascade Debenture”). Cascade shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Cascade Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Cascade Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Cascade Debenture upon assignment to be $135,825 which represented the face value of the debenture of $123,893 plus the present value of the conversion feature. During the year ended December 31, 2011, $55,000 in principal was converted into common stock. During the year ended December 31, 2011, the Company recorded an expense of $762

for the accretion to fair value of the conversion liability for the period. During the year ended December 31, 2011, Cascade assigned the $68,893 and $1,825 in accrued interest to Yorkville Advisors, LLC. The carrying value of the Cascade Debenture was $0 at December 31, 2011, Interest expense of $2,401for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $70,266 in convertible debt to David Moran & Siobhan Hughes (“Moran-Hughes” and the “Moran-Hughes Debenture”). Moran-Hughes shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Moran-Hughes Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Moran-Hughes Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Moran-Hughes Debenture upon assignment to be $77,033 which represented the face value of the debenture of $70,266 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $347 for the accretion to fair value of the conversion liability for the period. The carrying value of the Moran-Hughes Debenture was $77,380 at December 31, 2011, including principal of $70,266 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $7,114 at December 31, 2011 to its estimated settlement value of $7,807 at December 31, 2012. Interest expense of $2,114 for these obligations was accrued for the year ended December 31, 2011.

On September 9, 2009, JMJ Financial Corporation (“JMJ”) issued the Company a 14.4% secured promissory note in the amount of $500,000 (the “JMJ Note”) in return for $600,000 in 12% convertible debt (the “JMJ Debenture”) issued by the Company. The principal balance due under the JMJ Note was $500,000 as of September 30, 2011 and accrued interest receivable under the JMJ Note was $160,767. The principal balance due under the JMJ Debenture was $481,748 as of September 30, 2011 and accrued interest owed under the JMJ Debenture was $135,664. On September 2, 2011, JMJ sent notice of its election to offset the JMJ Note against the JMJ Debenture. As a result of this offset, the Company and JMJ are both released of their liability in regards to the JMJ Note and the JMJ Debenture. This resulted in the recognition of $246,653 in gain on extinguishment of the conversion liability. As of December 31, 2011, the balances on the JMJ Note and the JMJ Debenture have been paid in full. For the year ended December 31, 2011, interest expense of $43,239 for these obligations was incurred.

During the year ended December 31, 2011, YA Global assigned $111,000 in convertible debt to Barry Liben (“Liben” and the “Liben Debenture”). Liben shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Liben Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Liben Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Liben Debenture upon assignment to be $121,948 which represented the face value of the debenture of $111,000 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $277 for the accretion to fair value of the conversion liability for the period. The carrying value of the Liben Debenture was $122,225 at December 31, 2011, including principal of $111,000 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $11,225 at December 31, 2011 to its estimated settlement value of $12,333 at December 31, 2012. Interest expense of $1,660 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $341,550 in convertible debt to Circle Strategic Allocation Fund, LP (“Circle Strategic” and the “Circle Strategic Debenture”). Circle Strategic shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Circle Strategic Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Circle Strategic Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Circle Strategic Debenture upon assignment to be $375,182 which represented the face value of the debenture of $341,500 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $852 for the accretion to fair value of

the conversion liability for the period. The carrying value of the Circle Strategic Debenture was $376,034 at December 31, 2011, including principal of $341,500 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $34,534 at December 31, 2011 to its estimated settlement value of $37,944 at December 31, 2012. Interest expense of $5,108 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $75,000 in convertible debt to EFG Bank (“EFG” and the “EFG Debenture”). EFG shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the EFG Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the EFG Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the EFG Debenture upon assignment to be $82,397 which represented the face value of the debenture of $75,000 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $187 for the accretion to fair value of the conversion liability for the period. The carrying value of the EFG Debenture was $82,584 at December 31, 2011, including principal of $75,000 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $7,584 at December 31, 2011 to its estimated settlement value of $8,333 at December 31, 2012. Interest expense of $1,122 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned an additional $115,000 in convertible debt to EFG Bank (“EFG” and the “EFG Debenture”). EFG shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the EFG Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the EFG Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the EFG Debenture upon assignment to be $126,343 which represented the face value of the debenture of $115,000 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $287 for the accretion to fair value of the conversion liability for the period. The carrying value of the EFG Debenture was $126,630 at December 31, 2011, including principal of $115,000 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $11,630 at December 31, 2011 to its estimated settlement value of $12,778 at December 31, 2012. Interest expense of $1,720 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $385,000 in convertible debt to Epelbaum Revocable Trust (“Epelbaum” and the “Epelbaum Debenture”). Epelbaum shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Epelbaum Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Epelbaum Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Epelbaum Debenture upon assignment to be $422,973 which represented the face value of the debenture of $385,000 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $961 for the accretion to fair value of the conversion liability for the period. The carrying value of the Epelbaum Debenture was $423,934 at December 31, 2011, including principal of $385,000 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $38,934 at December 31, 2011 to its estimated settlement value of $42,778 at December 31, 2012. Interest expense of $5,759 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $34,000 in convertible debt to Judy Klein (“Klein” and the “Klein Debenture”). Klein shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Klein Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Klein Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Klein Debenture upon assignment to be $37,354 which represented the face value of the debenture of $34,000 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $85 for the accretion to fair value of the conversion liability for the period. The carrying value of the Klein Debenture was $37,439 at December 31, 2011, including principal of $34,000 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $3,439 at December 31, 2011 to its estimated settlement value of $3,778 at December 31, 2012. Interest expense of $509 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned an additional $40,750 in convertible debt to JMC Holdings, LP (“JMC” and the “JMC Debenture”). JMC shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the

Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the JMC Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the JMC Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the JMC Debenture upon assignment to be $44,769 which represented the face value of the debenture of $40,750 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $102 for the accretion to fair value of the conversion liability for the period. The carrying value of the JMC Debenture was $44,871 at December 31, 2011, including principal of $40,750 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $4,121 at December 31, 2011 to its estimated settlement value of $4,528 at December 31, 2012. Interest expense of $610 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $18,500 in convertible debt to Dr. Michael Kesselbrenner TTEE Money Purchase Plan (“Kesselbrenner” and the “Kesselbrenner Debenture”). Kesselbrenner shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Kesselbrenner Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Kesselbrenner Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Kesselbrenner Debenture upon assignment to be $20,325 which represented the face value of the debenture of $18,500 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $46 for the accretion to fair value of the conversion liability for the period. The carrying value of the Kesselbrenner Debenture was $20,371 at December 31, 2011, including principal of $18,500 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $1,871 at December 31, 2011 to its estimated settlement value of $2,056 at December 31, 2012. Interest expense of $277 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $10,000 in convertible debt to MD Global Partners, LLC (“MD Global” and the “MD Global Debenture”). MD Global shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the MD Global Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the MD Global Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the MD Global Debenture upon assignment to be $10,986 which represented the face value of the debenture of $10,000 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $25 for the accretion to fair value of the conversion liability for the period. The carrying value of the MD Global Debenture was $11,011 at December 31, 2011, including principal of $10,000 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of 1,011 at December 31, 2011 to its estimated settlement value of $1,111 at December 31, 2012. Interest expense of $150 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $20,500 in convertible debt to Susan Schneider (“Schneider” and the “Schneider Debenture”). Schneider shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Schneider Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Schneider Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Schneider Debenture upon assignment to be $22,522 which represented the face value of the debenture of $20,500 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $51 for the accretion to fair value of the conversion liability for the period. The carrying value of the Schneider Debenture was $22,573 at December 31, 2011, including principal of $20,500 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $2,073 at December 31, 2011 to its estimated settlement value of $2,278 at December 31, 2012. Interest expense of $307 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, YA Global assigned $28,500 in convertible debt to Saul Skoler (“Skoler” and the “Skoler Debenture”). Skoler shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Skoler Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Skoler Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Skoler Debenture upon assignment to be $31,311 which represented the face value of the debenture of $28,500 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $59 for the accretion to fair value of the conversion liability for the period. The carrying value of the Skoler Debenture was $31,370 at December 31, 2011, including principal of $28,500 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $2,870 at December 31, 2011 to its estimated settlement value of $3,167 at December 31, 2012. Interest expense of $426 for these obligations was accrued for the year ended December 31, 2011.

During the year ended December 31, 2011, Cascade assigned $70,718 in convertible debt to Yorkville Advisors, LLC (“Yorkville” and the “Yorkville Debenture”). Yorkville shall have the right, but not the obligation, to convert any portion of the A&R Debenture into the Company’s common stock at a rate equal to the lesser of (a) $1.00 or (b) 90% of the lowest daily volume weighted average price of the Company’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The Company accounted for the Yorkville Debenture in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the Yorkville Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the Yorkville Debenture upon assignment to be $78,576 which represented the face value of the debenture of $70,718 plus the present value of the conversion feature. During the year ended December 31, 2011, the Company recorded an expense of $177 for the accretion to fair value of the conversion liability for the period. The carrying value of the Yorkville Debenture was $77,870 at December 31, 2011, including principal of $70,718 and the value of the conversion liability. The liability for the conversion feature shall increase from its present value of $7,152 at December 31, 2011 to its estimated settlement value of $7,858 at December 31, 2012. Interest expense of $535 for these obligations was accrued for the year ended December 31, 2011.

On September 4, 2008, the Company’s subsidiary, GS CleanTech Corporation, entered into a transaction involving the intended issuance of a series of convertible notes totaling $1,734,579 (the “Bridge Loan”), which notes bear interest at a rate 20% per annum and mature on December 31, 2011. The notes were intended to be convertible into shares of GS CleanTech subsidiary preferred stock (par $0.001) at the closing by GS CleanTech of a planned preferred stock financing with GE Energy Financial Services (see Note 13, Commitments and Contingencies , below). A $1,259,279 portion of the intended Bridge Loan was retained by the lenders and a portion of that amount was provided to Biofuels Industries Group, LLC (“BIG”) during 2008 in contravention of the applicable agreements. Company’s subsidiary has accordingly asserted claims against the lenders involving breach and failure of conditions precedent to the effectiveness of the Bridge Loan agreements (see Note 13, Commitments and Contingencies , below). Pending adjudication of that dispute, the Company has recorded the Bridge Loan and accrued the associated interest expense. For the year ended December 31, 2011, interest expense of $428,876 was accrued.

NOTE 12

ASSET RETIREMENT OBLIGATION

Pursuant ASC 410-20, Asset Retirement Obligations, the Company had recognized the fair value of the asset retirement obligation for the removal of its corn oil extraction facilities. The present value of the estimated asset retirement costs was capitalized as part of the carrying amount of the related long-lived assets. This liability was $691,435 as of December 31, 2010, and it has been written-off in connection with the satisfaction of the closing conditions for the YA Corn Oil Transaction during the year ended December 31, 2011 (see Note 11, Debt Obligations,above).

NOTE 13

COMMITMENTS AND CONTINGENCIES

FACILITIES

GreenShift’s corporate headquarters were previously located in New York, New York under a $10,000 per month five year lease terminating in June 2011. In an effort to further reduce costs, the Company moved out of this office in November 2010. The Company’s corporate headquarters are now located in Alpharetta, Georgia. The Alpharetta lease is a three year term that terminated on January 31, 2012, at which time the lease was extended by another year. The monthly lease payment is $1,600.

INFRINGEMENT

Westfalia captioned GEA Westfalia Separator, Inc. v. GreenShift Corporation that alleged (1) false advertising in violation of the Lanham Act § 43(a); (2) deceptive trade practices and false advertising in violation of New York General Business Law §§ 349, 350 and 350-a; and (3) common law unfair competition ("New York II Action"). On October 13, 2009, Westfalia filed its First Amended Complaint in the New York II Action to include as a plaintiff, ethanol production company Ace Ethanol, LLC , and to add claims seeking a declaratory judgment of invalidity and non-infringement of the ‘858 Patent. On October 13, 2009, ICM, Inc. filed a complaint in the United States District Court, District of Kansas in the matter captioned ICM, Inc. v. GS CleanTech Corporation and GreenShift Corporation , alleging unfair competition, interference with existing and prospective business and contractual relationships, and deceptive trade practices and also seeking a declaratory judgment of invalidity and non-infringement of the ‘858 Patent.

All of the parties in the MDL Action filed their respective briefs with the Court in connection with proposed claim construction for certain claim limitations in the '858 Patent. A hearing on the claim construction matter was then held by the Court in the MDL Action on August 22, 2011. On September 29, 2011, the Court issued its ruling with respect to claim construction.

OTHER MATTERS

GreenShift Corporation, GS CleanTech Corporation and GS COES (Yorkville I), LLC, are party to the matter captioned Dynalectric of Michigan II, Inc. v. Biofuels Industries Group, et al , Lenawee County, Michigan Circuit Court Case No. 09-3584-CK. This action was originally filed as a lien foreclosure and unjust enrichment claim by Dynalectric of Michigan II, Inc., which claim was resolved. GreenShift, as assignee of GS CleanTech, filed a counterclaim, cross-claim and third party complaint against various parties asserting a claim for money due in the amount of $1,442,082, plus interest, attorney fees and costs, and for foreclosure of its construction lien. Biofuels Industries Group then asserted counterclaims, cross-claims and third party complaints against GreenShift, GS CleanTech, GS COES, Kevin Kreisler and Viridis Capital, LLC claiming breach of contract and seeking damages plus attorney fees, interest and cost. In response, the Company and its subsidiaries has asserted additional claims against Biofuels Industries Group and third party complaints against three of the bridge lenders claiming lender liability and various other claims in excess of $25,000. On June 6, 2011, Biofuels Industries Group filed for Chapter 11 bankruptcy protection in the Southern District of Michigan, Eastern Division, under which protection the collateral upon which the lien was recorded was sold for substantially

less than the first mortgage holder’s claimed balance in excess of $9,000,000. Documentation confirming priority claim to the proceeds has been requested, but is not yet received. Recovery by GS CleanTech on the construction lien does not appear at this time. As to the other claims, this case is in the discovery stage, but was stayed secondary to the bankruptcy filing. We are unable to evaluate the likelihood of an unfavorable outcome or the range of possible loss in the event of an adverse verdict at this time.

The Company is party to the matter entitled JMJ Financial v. GreenShift et.al. an action in which the plaintiff has alleged breach of contract and other caused of action for which the plaintiff seeks damages of about A300,000 plus costs. The Company intends to vigorously defend this action. At this stage of the proceedings, we cannot evalutatye the likelihood of an unfavorable outcome in excess of the amounts previously accued.

The Company is also involved in various collection matters for which vendors are seeking payment for services rendered and goods provided. The Company and its subsidiaries are party to numerous matters pertaining to outstanding amounts alleged to be due. Management is unable to characterize or evaluate the probability of any outcome at this time.

Under the Company’s insurance programs, coverage is obtained for catastrophic exposures, as well as those risks required to be insured by law or contract. There is a $2,500 deductible per occurrence for environmental impairments. Environmental liability insurance is carried with policy limits of $1,000,000 per occurrence and $2,000,000 aggregate.

Effective March 20, 2008, the Company amended and restated its employment agreements with Kevin Kreisler, the Company’s Chief Executive Officer, David Winsness, the Company’s Chief Technology Officer, Greg Barlage, the Company’s Chief Operating Officer, and Ed Carroll, the Company’s Chief Financial Officer. Each agreement also included terms for reimbursement of expenses, periodic bonuses, four weeks’ vacation and participation in any employee benefits provided to all employees of GreenShift Corporation.

The Company’s Articles of Incorporation provide that the Company shall indemnify its officers, directors, employees and agents to the full extent permitted by Delaware law. The Company’s Bylaws include provisions to indemnify its officers and directors and other persons against expenses (including attorney’s fees, judgments, fines and amounts paid for settlement) incurred in connection with actions or proceedings brought against them by reason of their serving or having served as officers, directors or in other capacities. The Company does not, however, indemnify them in actions in which it is determined that they have not acted in good faith or have acted unlawfully. The Company is further subject to various indemnification agreements with various parties pursuant to which the Company has agreed to indemnify and hold such parties harmless from and against expenses and costs incurred (including attorney’s fees, judgments, fines and amounts paid for settlement) in connection with the provision by such parties of certain financial accommodations to the Company. Such parties indemnified by the Company include YA Global Investments, L.P., YA Corn Oil Systems, LLC, Viridis Capital, LLC, Minority Interest Fund (II), LLC, Acutus Capital, LLC and various family members of the Company’s chairman that have provided the Company with cash investments.

NOTE 14

GUARANTY AGREEMENT

Viridis Capital, LLC (“Viridis”) is the majority shareholder of the Company and is solely owned by Kevin Kreisler, the Company’s founder, chairman and chief executive officer. Viridis has guaranteed all of the Company’s senior debt and has pledged all of its assets, including its shares of Company Series D Preferred Stock, to YA Global to secure the repayment by the Company of its obligations YA Global (see Note 5, Stockholders’ Equity , above) Viridis has also guaranteed all amounts due to Cantrell Winsness Technologies, LLC in connection with the acquisition by the Company’s subsidiary of its patented and patent-pending extraction technologies (see Note 18, Related Party Transactions , below). The Company has separately agreed to indemnify and hold Viridis harmless from any and all losses, costs and expenses incurred by Viridis in connection with its guaranty of the Company’s obligations.

NOTE 15

SEGMENT INFORMATION

We determined our reporting units in accordance with FASB ASC 280, “ Segment Reporting ” (“ASC 280”). We evaluate a reporting unit by first identifying its operating segments under ASC 280. We then evaluate each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, we evaluate those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, we determine if the segments are economically similar and, if so, the operating segments are aggregated. We have one operating segment and reporting unit. We operate in one reportable business segment; we provide technologies and related products and services to U.S.-based ethanol producers. We are organized and operated as one business. We exclusively sell our technologies, products and services to ethanol producers that have entered into license agreements with the Company. No sales of any kind occur, and no costs of sales of any kind are incurred, in the absence of a license agreement. A single management team that reports to the chief operating decision maker comprehensively manages the entire business. We do not operate any material separate lines of business or separate business entities with respect to our technologies, products and services. The Company does not accumulate discrete financial information according to the nature or structure of any specific technology, product and/or service provided to the Company’s licensees. Instead, management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate. Discrete financial information is not available by more than one operating segment, and disaggregation of our operating results would be impracticable.

NOTE 16

MINORITY SHAREHOLDER OBLIGATIONS

The Company has accrued $204,630 as of December 31, 2011 in connection with the merger completed by its former subsidiary, GS AgriFuels, during 2008, and another $543,801 in connection with the conversion right of certain minority shareholders of an inactive subsidiary. During the year ended December 31, 2011, the Company issued 445,000 shares of common stock upon the conversion of $44,500 of amounts due to certain shareholders. The Company also recorded a gain of $44,697 upon extinguishment of that amount of this accrual, leaving a balance of $748,431 at December 31, 2011.

NOTE 17

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

The following is a summary of supplemental disclosures of cash flow information:

		2011		2010
Cash paid during the year for the following:
Interest	$	3,276	$	3,276
Income taxes		--		--
Total		3,276		3,276

Supplemental schedule of non-cash investing and financing activities:
Debentures converted into common stock		1,146,604		2,626,048
Transfer of construction in progress into inventory		--		2,248,301
Direct payment of convertible debentures by Viridis Capital, LLC, increasing affiliate debentures		--		257,229
Reduction in value of conversion features of convertible debt from conversions		179,248		455,943
Common shares issued in settlement of accounts payable		--		2,000
Forgiveness of affiliate receivable charged against paid-in capital		195,494		510,560
Transfer of affiliate receivable offset against other affiliated debenture		--		445,113
Proceeds from auction of assets offset convertible debt due to YA Global		--		145,573
Sale of discontinued subsidiaries to affiliate to reduce affiliate debenture, offset to paid in capital		--		17,779,586
Conversion of Series D Preferred stock into common stock		--		899
Cancellation of Series D preferred stock		1,066,137		--
Forgiveness of affiliate loan payable and related interest		--		120,630

NOTE 18

RELATED PARTY TRANSACTIONS

Minority Interest Fund (II), LLC (“MIF”) is party to certain convertible debentures issued by the Company. The managing member of MIF is a relative of the Company’s chairman.

The Company entered into agreements with MIF and Viridis to amend and restate the terms of the MIF Debenture and Viridis Debenture effective September 30, 2011 to extend the maturity date to June 30, 2013; to eliminate and contribute $502,086 in accrued interest and $1,065,308 of principal; to reduce the applicable interest rate to 6% per annum; to eliminate MIF’s and Viridis’ right to convert amounts due at a discount to the market price of the Company’s common stock; and to reverse various non-cash assignments of debt involving related parties (see Note 11, Debt Obligations , above).

The restated balances due to MIF and Viridis at September 30, 2011, were $3,017,061 and $237,939, respectively. No interest was payable to either MIF or Viridis after these amendments. These transactions additionally resulted in the issuance of $1,090,000 and $351,000 in convertible debt to Acutus Capital, LLC (“Acutus”) and family members of the Company’s chairman, respectively, for cash investments previously provided to the Company. The terms of these debentures provide for interest at 6% per annum, a maturity date of June 30, 2013, and the right to convert amounts due into Company common stock at 100% of the market price for the Company’s common stock at the time of conversion. MIF received 62,500 shares of Series D Preferred Stock in partial consideration of the contribution of principal and accrued interest and the various other modified terms of MIF’s agreements with the Company. All of the foregoing amounts remain subject to the terms and conditions of the June 2010 subordination agreement by and between MIF and the Company’s senior lender, which agreement limits transfer of shares issued upon conversion of debt to 5% of the average monthly volume for the Company’s common stock.

During the year ended December 31, 2011, the Company’s chairman waived $411,061 in deferred salaries due from prior years as of September 20, 2011 (which amount was subsequently reduced to $265,192), $138,001 in unreimbursed expenses, and $112,020 previously assigned to an employee of the Company. Various other related party employees waived an aggregate of $133,101 in deferred compensation from prior years, and one former employee (a family member of the Company’s chairman) agreed to accept payment of $92,337 in deferred salaries due from prior years in the form of restricted Company common stock at $0.11 per share.

Between January 1, 2008 and December 31, 2010, Viridis, MIF, Acutus, and management personnel provided us with the cash resources we needed for our overhead needs, including all legal expenses incurred in the prosecution of infringing use of our patented technologies. Viridis is owned by our chairman, MIF is owned by a family member of our chairman, and Acutus is owned by our chairman's attorney. In addition, Viridis has guaranteed all of the Company’s debt due to YA Global and all amounts due to Cantrell Winsness Technologies, LLC in connection with the acquisition by the Company’s subsidiary of its patented and patent-pending extraction technologies (see Note 14, Guaranty Agreements , above). The Company has separately agreed to indemnify and hold Viridis and its affiliates harmless from any and all losses, costs and expenses incurred by Viridis and its affiliates in connection with its and their various investments with the Company as well as Viridis’ guarantees of Company’s obligations.

Effective December 31, 2010, Viridis and the Company entered into an agreement pursuant to which Viridis acquired the stock of two inactive subsidiaries from the Company for $5,000. The terms of the agreement provided for the acknowledgment by the parties of the continuing first priority security interest of the Company’s senior lender on the stock and assets of each entity, and the continuing guarantees and obligations of Viridis, each entity, and the Company with respect to amounts due from the Company to its senior lender.

corn oil extraction technologies, the reduction of those royalties as the Sellers receive payment, and a mechanism for conversion of accrued or prepaid royalties into Company common stock. To achieve this latter mechanism, the Company agreed to issue to the Sellers a one-time prepayment in the form of 1,000,000 shares of redeemable Series F Preferred Stock with a face value of $10 per preferred share. The Series F preferred shares are redeemable at face value and a rate equal to the amount royalties paid or prepaid under the TAA. In addition, the Sellers have the right to convert the Series F preferred shares to pay or prepay royalties at a rate equal to the cash proceeds received by the Sellers upon sale of the common shares issued upon conversion Series F preferred shares. The TAA provides for the payment to the Sellers of an initial royalty fee equal to the lesser of $0.10 per gallon or a percentage of net cash flows, both of which are reduced ratably to $0.025 per gallon upon payment, prepayment or conversion as described above. The Company’s obligations under the TAA are guaranteed by Viridis Capital, LLC, which guarantee was subordinated by the Sellers to the rights of YA Global under its guaranty agreement with Viridis Capital. As of December 31, 2009, the Company accrued royalty fees payable of $1,047,832 and prepaid royalty fees of another $300,000, for a total of $1,347,832. $750,000 of this amount was capitalized and then amortized and included in the Company’s cost of sales for the years ended December 31, 2011, December 31, 2010 and December 31, 2009. During the year ended December 31, 2009, the Company issued unsecured convertible debentures (collectively, the “TAA Debentures”) to each of David Cantrell, David Winsness, Greg Barlage, and John W. Davis in consideration for amounts due and/or accrued pursuant to the TAA ($1,347,832). The TAA Debentures were acquired by MIF during 2009 and paid to a balance of $851,422 as of December 31, 2010. The Company subsequently accrued royalties of $271,186 and $1,468,589 during 2010 and 2011, respectively, which amounts were then offset against prepaid royalties of $300,000 from 2009 and an additional $1,300,000 from 2011, corresponding to a balance of about $982,138 in accrued royalties payable under the TAA as of December 31, 2011.

NOTE 19

INCOME TAXES

The Company adopted the provisions of ASC 740 Income Taxes . As a result of the implementation of FIN 48, the Company recognized no material adjustment in the liability for unrecognized income tax benefits. At the adoption date of January 1, 2007, and at December 31, 2008, there were no unrecognized tax benefits. Interest and penalties related to uncertain tax positions will be recognized in income tax expense. As of December 31, 2011, no interest related to uncertain tax positions had been accrued. The Company provides for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The provision for income taxes as of December 31, 2011 and December 31, 2010 consisted of the following:

		2011		2010
Current provision:
Federal	$	--	$	--
State		--		20
Total current provision		--		20

Deferred provision (benefit) for tax:
Federal		--		--
State		--		--
Total deferred provision (benefit) for tax		--		--

Total provision for tax	$	--	$	20

The Company’s total deferred taxes asset and valuation allowance as of December 31, 2011 are as follows:

NOL carryforwards	--	$	12,371,060

Differences in financial statement and tax accounting for:
Deferred compensation			--
Allowance for doubtful accounts receivable			--
Property, equipment and intangible assets			(79,500	)
Net deferred tax asset			12,291,560

Less valuation allowances			(12,291,560	)
Total deferred tax asset, net of valuation allowance		$	--

In assessing whether the deferred tax assets are realizable, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, Management believes it is more likely than not that the Company will not realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. The change in valuation allowance for 2011 was $3,867,508.

NOTE 20

SUBSEQUENT EVENTS

On January 17, 2012, the Company entered into an Amended Management Agreement in connection with the YA Corn Oil Transaction (see Note 11, Debt Obligations , above), pursuant to which the Company agreed to certain terms which reconciled the impact of about $1.9 million in indemnification expenses accrued by the Company during the year ended December 31, 2011.

On February 29, 2012, the Company entered into an Amended Global Forbearance Agreement pursuant to which the Company agreed to amend the terms of the A&R Debenture issued to YA Global (see Note 11, Debt Obligations , above), to provide for about $1.6 million in cash payments during 2012.

NOTE 21

RESTATEMENT

The Company has restated its financial statements for the year ended December 31, 2011 to include certain typographical corrections that were not previously included in an electronic version originally filed on March 30, 2012. The table below summarizes the impact of the restatement described above:

Excerpt from 2011 Consolidated Balance Sheets:		Restated			As Reported
Liabilities of discontinued operations, current	$	137,000		$	(137,000	)

Excerpt from 2011 Statement of Operations:
Earnings (Loss) per Share - Basic:
Income (loss) from continuing operations	$	0.51		$	0.52
Income (loss) from discontinued operations		0.01			0.01
Net income (loss) per share – basic	$	0.52		$	0.53

Earnings (Loss) per Share - Diluted:
Income (loss) from continuing operations	$	0.61		$	0.62
Income (loss) from discontinued operations		0.01			0.01
Net income (loss) per share – diluted	$	0.62		$	0.63

Excerpt from 2011 Statement of Stockholders’ Equity:
Total Equity, conversion of obligation to minority shareholders	$	44,501		$	44,500
Total Equity, net income (loss)		7,900,098			7,099,098

Excerpt from 2011 Consolidated Statement of Cash Flows:
Non-cash expense associated with convertible debentures	$	1,167,046		$	1,667,046
Net cash provided by (used in) operating activities		1,309,804			1,809,804
Payments on convertible debentures		(2,000,000	)		(2,500,000	)
Net cash provided by (used in)financing activities		(2,437,115	)		(2,937,115	)

ITEM 9

CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A

CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer participated in and supervised the evaluation of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The Company’s chief executive officer and chief financial officer determined that, as of the end of the period covered by this report, the Company had a material weakness because it did not have a sufficient number of personnel with an appropriate level of knowledge and experience of generally accepted accounting principles in the United States of America (U.S. GAAP) that are commensurate with the Company’s financial reporting requirements. As a result, Management concluded that the Company’s disclosure controls and procedures were not effective at December 31, 2011.

There have been no changes in the company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management has conducted, with the participation of the Chief Executive Officer and the Chief Financial Officer, an assessment, including testing of the effectiveness of our internal control over financial reporting. The assessment was conducted using the criteria in Internal Control—Integrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of the company’s internal control over financial reporting, management identified the following material weakness in the company’s internal control over financial reporting as of December 31, 2011. Management determined that at December 31, 2011, the company had a material weakness related to its control environment because it did not have a sufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience commensurate with its financial reporting requirements. This material weakness resulted in the identification of adjustment during the financial statement close process that have been recorded in the financial statements.

Because of the material weakness described above, management has concluded that the company did not maintain effective internal control over financial reporting as of December 31, 2011, based on the Internal Control—Integrated Framework issued by COSO.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit a smaller reporting company to provide only management’s report in this annual report.

ITEM 9B

OTHER INFORMATION

None.

PART III

ITEM 10

DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Name	Age	Position
Kevin Kreisler	39	Chairman, Chief Executive Officer
Edward Carroll	45	Director, President & Chief Financial Officer
David Winsness	44	Director, Chief Technology Officer
Greg Barlage	47	Director, Chief Operating Officer
Richard Krablin	67	Director, Executive Vice President

Kevin Kreisler is the founder, chairman and chief executive officer of GreenShift Corporation. Mr. Kreisler has been responsible for devising the Company’s business plans, hiring the Company’s management and technologists, directing the financing, acquisition, development and commercialization of the Company’s technologies, overseeing the financing, design, construction and operation of facilities based on those technologies, and completing the financing and acquisition of strategically compatible companies. Mr. Kreisler served as the Company’s vice president from 1998 to 2000, president from 2000 to 2002, chief executive officer from 2002 to 2005 and has served as the Company’s chairman from 2005 to the present. Mr. Kreisler is a graduate of Rutgers University College of Engineering (B.S., Civil and Environmental Engineering, 1994), Rutgers University Graduate School of Management (M.B.A., 1995), and Rutgers University School of Law (J.D., 1997). Mr. Kreisler is admitted to practice law in New Jersey and the United States District Court for the District of New Jersey.

Edward Carroll serves as GreenShift’s president and chief financial officer. Mr. Carroll has over 13 years in investment banking and corporate finance. Mr. Carroll has experience executing mergers & acquisitions and large scale transactions and has managed the entire lifecycle of M&A transactions from negotiating financial terms to financing the deals to implementing change across multiple business units to increasing shareholder value. He has extensive experience in general industrial and cross-border M&A/change of control transactions including acquisitions, divestitures, recapitalizations and joint ventures. Mr. Carroll has worked with both U.S., European and Japanese companies in acquiring U.S. and overseas assets. Prior to joining GreenShift, Mr. Carroll worked at Daiwa Securities where he was an officer in the Mergers & Acquisitions group. Through this experience, he has developed an expertise in several industry sectors, including alternative fuels, energy, consumer products and general manufacturing. Mr. Carroll is a prior board member of the Westchester Venture Group, and holds a Bachelor of Science in Finance with a Minor in Asian Studies from Saint John's University, and an MBA in Finance from the American Graduate School of International Management (Thunderbird). Mr. Carroll also has military experience as a former infantry officer in the United States Army.

David Winsness is GreenShift’s chief technology officer and has led the commercialization effort for technologies. Mr. Winsness has spearheaded the addition of over a dozen patented and patent pending technologies to GreenShift’s portfolio, many of which were developed and authored directly by Mr. Winsness, including GreenShift’s Corn Oil Extraction Technology. Mr. Winsness is a graduate of Clemson University (B.S., Mechanical Engineering) and he has spent his professional career as a process engineer in the chemical, food, pharmaceutical and power generation markets. Prior to accepting a position with GreenShift, Mr. Winsness served as chief technology officer and eventually chief executive officer of Vortex Dehydration Technology where he directed the research, development and commercialization of a technology that is now GreenShift’s Tornado Generator™.

Greg Barlage is GreenShift’s chief operating officer. His prior experience includes 15 years of process engineering, manufacturing optimization, maintenance and operations management with a leading food products company. For the past 6 years Mr. Barlage worked for Alfa Laval, a global leader in heat transfer, separation, and fluid handling solutions. There he was responsible for all capital equipment sales to the meat processing and vegetable oil processors in the U.S. In this position he effectively reformed the sales team to grow sales and innovate with new products and systems for these industries. Notably, Mr. Barlage lead the Alfa Laval team as it worked with GreenShift’s management in the commercialization of its proprietary corn oil extraction technology. Mr. Barlage has also worked on the engineering and installation of a commercial scale version of GreenShift’s Tornado Generator™ technology located in Joplin, Missouri, where it effectively processes and dehydrates poultry products into highly nutritional and shelf stable products. This system operates 24 hours per day, 5 days per week and also uses Alfa Laval heat transfer and centrifuge components in conjunction with the Tornado Generator™ to produce high quality animal fats, chicken broth and dehydrated poultry proteins. Mr. Barlage has a B.S. in Electrical Engineering from the University of Toledo, Toledo, Ohio, and an MBA from the University of St. Thomas, Minneapolis.

Richard Krablin is GreenShift’s executive vice president in charge of special projects. Dr. Krablin directs GreenShift’s environmental, health and safety programs and plays an integral role in GreenShift’s research and development activities and other special projects. Prior to joining GreenShift, Dr. Krablin served as Senior Vice President of Environment, Health and Safety for Horsehead Industries, Inc., a leading zinc recycler. Dr. Krablin administered Horsehead’s compliance as it extracted zinc from electric arc furnace dust, a hazardous waste produced by the steel industry. Prior to joining Horsehead, Dr. Krablin had a multi-tasked career with Atlantic Richfield Company (ARCO) where he directed the worldwide environmental affairs of the mining and mineral processing subsidiary and managed the legacies and Superfund sites of the former Anaconda Co. Dr. Krablin started his industry career with The Anaconda Co. in Montana. Dr. Krablin has a Ph.D. and M.S. in physics from Drexel University in Philadelphia and a B.S. in physics from Lafayette College, and is a graduate of the Stanford Executive Program for business leaders.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than 10 percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater than 10 percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on the Company’s review of copies of such forms received by the Company, the Company believes that during the year ended December 31, 2011, all filing requirements applicable to all officers, directors, and greater than 10% beneficial stockholders were complied with.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our certificate of incorporation provides that we shall indemnify to the fullest extent permitted by, and in the manner permissible under the laws of the State of Delaware, any person made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he is or was a director or officer, or served any other enterprise as director, officer or employee at our request. The board of directors, in its discretion, has the power on our behalf to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he/she is or was one of our employees.

Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act, and is therefore, unenforceable.

AUDIT COMMITTEE; COMPENSATION COMMITTEE; NOMINATING COMMITTEE

The Board of Directors does not have an audit, compensation committee or a nominating committee, due to the small number of directors. If nominations to the Board of Directors are proposed, all directors will be involved in the determination. The Board of Directors has determined that Edward Carroll is an audit committee financial expert, by reason of his experience in investment banking.

CODE OF CONDUCT AND ETHICS

The Company has adopted a written code of conduct and ethics that applies to all directors, and employees, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller and any persons performing similar functions. The Company will provide a copy of its code of ethics to any person without charge upon written request addressed to GreenShift Corporation, 5950 Shiloh Road East, Suite N, Alpharetta, GA 30005.

ITEM 11

EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to, earned by, or paid by GreenShift Corporation and its subsidiaries (or by third parties as compensation for services to GreenShift Corporation or its subsidiaries) to Kevin Kreisler, the Company’s Chief Executive Officer, Dave Winsness, the Company’s Chief Technology Officer, Greg Barlage, the Company’s Chief Operating Officer, Ed Carroll, the Company’s Chief Financial Officer, and Dr. Richard Krablin, the Company’s Executive Vice President, Special Projects. There were no other executive officers whose total salary and bonus for the fiscal year ended December 31, 2011 exceeded $100,000.

Name	Year		Salary	Bonus	Stock Awards	Option Awards	Other Compensation

Kevin Kreisler	2011	$	219,250	--	--	--	--
	2010		100,500	--	--	--	--
	2009		66,982	--	--	--	--

Edward Carroll	2011		223,077	--	--	--	50,000
	2010		150,000	--	--	--	--
	2009		162,819	--	--	--	--

David Winsness	2011		153,846	--	--	--	--
	2010		109,211	--	--	--	--
	2009		100,500	--	--	--	--

Greg Barlage	2011		122,692	--	--	--	--
	2010		104,404	--	--	--	--
	2009		100,500	--	--	--	--

Richard Krablin	2011		133,769	--	--	--	--
	2010		100,500	--	--	--	--
	2009		100,500	--	--	--	--

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements effective March 20, 2008 with each of its officers. Each agreement provides for an annual salary of $150,000, periodic bonuses, four weeks of vacation and participation in any employee plans made available to all Company employees. The agreements terminate on March 20, 2018.

COMPENSATION OF DIRECTORS

None.

ITEM 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the voting stock beneficially owned by any person who, to our knowledge, owned beneficially more than 5% of any class of voting stock as well as by the members of our Board of Directors and by all officers and directors as a group.

Name and Address Of Beneficial Owner (1)	Common	% of Class	Series B Preferred	% of Class	Series D Preferred	% of Class	Percentage of Voting Power

Kevin Kreisler (2)	149	<0.01%	--	--	634,199	60.39%	51.00%
Edward Carroll (3)	167	<0.01%	393,183	13.56%	187,500	17.86%	15.00%
David Winsness (3)	98	<0.01%	360,933	12.45%	--	--	--
Greg Barlage (3)	109	<0.01%	356,478	12.30%	--	--	--
Richard Krablin (3)	59	<0.01%	376,183	12.99%	--	--	--

Officers and Directors as a group (5 persons)	581	<0.01%	1,487,186	51.30%	821,699	78.25%	66.00%

(1)	The address of each shareholder is c/o GreenShift Corporation, 5950 Shiloh Road East, Suite N, Alpharetta, Georgia, 30005.

(2)	All shares listed for Mr. Kreisler are owned of record by Viridis Capital, LLC, of which Mr. Kreisler is the sole member.

(3)	Shares of Company Series B Preferred Stock are convertible at the fixed rate of 1 Series B Share to 25 Company common shares.

ITEM 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

RELATED PARTY TRANSACTIONS

Minority Interest Fund (II), LLC (“MIF”) is party to certain convertible debentures issued by the Company. The managing member of MIF is a relative of the Company’s chairman.

During the year ended December 31, 2011, the Company’s chairman waived $411,061 in deferred salaries due from prior years as of September 30, 2011 (which amount was subsequently reduced to $265,192), $138,001 in unreimbursed expenses, and $112,020 previously assigned to an employee of the Company. Various other related party employees waived an aggregate of $133,101 in deferred compensation from prior years, and one former employee (a family member of the Company’s chairman) agreed to accept payment of $92,337 in deferred salaries due from prior years in the form of restricted Company common stock at $0.11 per share.

this latter mechanism, the Company agreed to issue to the Sellers a one-time prepayment in the form of 1,000,000 shares of redeemable Series F Preferred Stock with a face value of $10 per preferred share. The Series F preferred shares are redeemable at face value and a rate equal to the amount royalties paid or prepaid under the TAA. In addition, the Sellers have the right to convert the Series F preferred shares to pay or prepay royalties at a rate equal to the cash proceeds received by the Sellers upon sale of the common shares issued upon conversion Series F preferred shares. The TAA provides for the payment to the Sellers of an initial royalty fee equal to the lesser of $0.10 per gallon or a percentage of net cash flows, both of which are reduced ratably to $0.025 per gallon upon payment, prepayment or conversion as described above. The Company’s obligations under the TAA are guaranteed by Viridis Capital, LLC, which guarantee was subordinated by the Sellers to the rights of YA Global under its guaranty agreement with Viridis Capital. As of December 31, 2009, the Company accrued royalty fees payable of $1,047,832 and prepaid royalty fees of another $300,000, for a total of $1,347,832. $750,000 of this amount was capitalized and then amortized and included in the Company’s cost of sales for the years ended December 31, 2011, December 31, 2010 and December 31, 2009. During the year ended December 31, 2009, the Company issued unsecured convertible debentures (collectively, the “TAA Debentures”) to each of David Cantrell, David Winsness, Greg Barlage, and John W. Davis in consideration for amounts due and/or accrued pursuant to the TAA ($1,347,832). The TAA Debentures were acquired by MIF during 2009 and paid to a balance of $851,422 as of December 31, 2010. The Company subsequently accrued royalties of $271,186 and $1,468,589 during 2010 and 2011, respectively, which amounts were then offset against prepaid royalties of $300,000 from 2009 and an additional $1,300,000 from 2011, corresponding to a balance of about $982,138 in accrued royalties payable under the TAA as of December 31, 2011.

DIRECTOR INDEPENDENCE

None of the members of our Board of Directors are independent as "independent" is defined in the rules of the NYSE Amex.

PART IV

ITEM 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES

INDEPENDENT AUDITOR FEES

Fees for professional services provided by GreenShift’s independent auditors, Rosenberg, Rich, Baker Berman and Company for the years ended December 31, 2011 and 2010 are as follows:

Audit Fees

Rosenberg Rich Baker Berman & Co. billed $121,650 to the Company for professional services rendered for the audit of fiscal 2011 financial statements and review of the financial statements included in fiscal 2011 10-Q filings. Rosenberg Rich Baker Berman & Co. billed $124,335 to the Company for professional services rendered for the audit of fiscal 2010 financial statements and review of the financial statements included in fiscal 2010 10-Q filings.

Audit-Related Fees

Rosenberg Rich Baker Berman & Co. billed $0 to the Company during fiscal 2011 for assurance and related services that are reasonably related to the performance of the 2010 audit or review of the quarterly financial statements. Rosenberg Rich Baker Berman & Co. billed $0 to the Company during fiscal 2010 for assurance and related services that are reasonably related to the performance of the 2009 audit or review of the quarterly financial statements.

Tax Fees

Rosenberg Rich Baker Berman & Co. billed $0 to the Company during fiscal 2011 for professional services rendered for tax compliance, tax advice and tax planning. Rosenberg Rich Baker Berman & Co. billed $0 to the Company during fiscal 2010 for professional services rendered for tax compliance, tax advice and tax planning .

All Other Fees.

Rosenberg Rich Baker Berman & Co. billed $0 to the Company in fiscal 2011 and $0 in fiscal 2010 for services not described above.

It is the policy of the Company’s Board of Directors that all services, other than audit, review or attest services must be pre-approved by the Board of Directors, acting in lieu of an audit committee. All of the services described above were approved by the Board of Directors.

ITEM 15

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following are exhibits filed as part of GreenShift’s Form 10K for the year ended December 31, 2011:

INDEX TO EXHIBITS

Exhibit Number	Description

3(a)	Certificate of Incorporation, as amended – filed as an Exhibit to the Registration Statement on Form SB-2 (File No. 333-116946) filed on June 29, 2004, and incorporated herein by reference

3(a)(1)	Certificate of Amendment of Certificate of Incorporation – filed as an Exhibit to the Current Report on Form 8-K filed on July 20, 2006, and incorporated herein by reference.

3(a)(2)	Certificate of Amendment of Certificate of Incorporation – filed as an Exhibit to the Current Report on Form 8-K filed on February 22, 2007, and incorporated herein by reference.

3(a)(3)	Certificate of Amendment of Certificate of Incorporation – filed as an Exhibit to the Current Report on Form 8-K filed on December 11, 2007 and incorporated herein by reference.

3(a)(4)	Certificate of Amendment of Certificate of Incorporation filed as an Exhibit to the Current Report on Form 8-K filed on February 13, 2008 and incorporated herein by reference.

3(a)(5)	Certificate of Amendment of Certificate of Incorporation filed as an Exhibit to the Current Report on Form 8-K filed on September 9, 2009 and incorporated herein by reference.

3(a)(6)	Certificate of Amendment of Certificate of Incorporation filed as an Exhibit to the Current Report on Form 8-K filed on April 5, 2010 and incorporated herein by reference.

3(a)(7)	Certificate of Amendment of Certificate of Incorporation filed as an Exhibit to the Current Report on Form 8-K filed on August 9, 2010 and incorporated herein by reference.

3(a)(8)	Certificate of Amendment of Certificate of Incorporation filed as an Exhibit to the Current Report on Form 8-K filed on November 10, 2011 and incorporated herein by reference.

3(b)	By-Laws - filed as an Exhibit to the Registration Statement on Form SB-2 (File No. 333-116946) filed on June 29, 2004, and incorporated herein by reference

10(a)	Agreement to Accept Collateral dated June 17, 2010 - filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated hereby by reference.

10(b)	Amended and Restated Secured Convertible Debenture dated July 31, 2010- filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated hereby by reference.

10(b)(1)	First Amendment to Amended and Restated Secured Convertible Debenture dated February 29, 2012.

10(c)	Amended Global Guaranty Agreement dated as of June 17, 2010 among Kevin Kreisler, Viridis Capital, LLC, GreenShift Corporation and YA Global Investments, L.P. - filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated hereby by reference.


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

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

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

SIGNATURES

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

GREENSHIFT CORPORATION

By:	/s/	KEVIN KREISLER
		KEVIN KREISLER, Chairman
		Chief Executive Officer
Date:		March 30, 2012

In accordance with the Exchange Act, this Report has been signed below by the following persons, on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/	KEVIN KREISLER
		KEVIN KREISLER, Chairman
		Chief Executive Officer
Date:		March 30, 2012

By:	/s/	EDWARD CARROLL
		EDWARD CARROLL, Director
		Chief Financial Officer &
		Chief Accounting Officer
Date:		March 30, 2012

By:	/s/	DAVID WINSNESS
		DAVID WINSNESS, Director
Date:		March 30, 2012

By:	/s/	GREG BARLAGE
		GREG BARLAGE, Director
Date:		March 30, 2012

By:	/s/	RICHARD KRABLIN
		RICHARD KRABLIN, Director
Date:		March 30, 2012