Edgar Filing: GREENMAN TECHNOLOGIES INC

U.S. Securities and Exchange Commission
Washington, D.C. 20549

Form 10-QSB/A
Amendment No. 2

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2004 Commission File Number 1-13776
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GreenMan Technologies, Inc.
----------------------------
(Exact name of small business issuer as specified in its charter)

Delaware 71-0724248
---------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

7 Kimball Lane, Building A, Lynnfield, MA 01940
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(Address of principal executive offices) (Zip Code)

Issuer's telephone number, including area code (781) 224-2411
---------------

----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes |X| No |_|

Number of shares outstanding as of May 12, 2004
Common Stock, $.01 par value: 16,894,886 shares

GreenMan Technologies, Inc.
Form 10-QSB
Quarterly Report
March 31, 2004

Table of Contents

PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (*)

Unaudited Consolidated Balance Sheets as of March 31, 2004 and
September 30, 2003 3

Unaudited Consolidated Statements of Operations for the three and
six months ended March 31, 2004 and 2003 4

Unaudited Consolidated Statement of Changes in Stockholders'
Equity for the six months ended March 31, 2004 5

Unaudited Consolidated Statements of Cash Flows for the six months
ended March 31, 2004 and 2003 6

Notes to Unaudited Consolidated Financial Statements 7-12

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13-23

Item 3. Controls and Procedures 23

PART II - OTHER INFORMATION

Item 2. Changes in Securities 24

Item 6. Exhibits and Reports on Form 8-K 24

Signatures 25

* The financial information at September 30, 2003 has been taken from
audited financial statements at that date and should be read in
conjunction therewith. All other financial statements are unaudited.

GreenMan Technologies, Inc.
Unaudited Consolidated Balance Sheets

March 31, September 30,
2004 2003
------------ ------------

ASSETS
Current assets:
Cash and cash equivalents .............................. $ 473,290 $ 990,745
Accounts receivable, trade, less allowance for
doubtful accounts of $138,385 and $148,031 as
of March 31, 2004 and September 30, 2003 ............. 2,645,714 3,368,435
Insurance claim receivable ............................. -- 634,172
Note receivable officers ............................... 177,249 179,172
Product inventory ...................................... 813,898 112,419
Other current assets ................................... 1,254,543 1,119,872
------------ ------------
Total current assets ................................ 5,364,694 6,404,815
------------ ------------
Property, plant and equipment, net ....................... 11,101,837 11,249,706
------------ ------------
Other assets:
Deferred loan costs .................................... 159,416 221,931
Goodwill, net .......................................... 3,413,894 3,413,894
Customer relationship intangibles, net ................. 228,575 234,875
Deferred income taxes .................................. 270,000 270,000
Other .................................................. 489,014 299,699
------------ ------------
Total other assets .................................. 4,560,899 4,440,399
------------ ------------
$ 21,027,430 $ 22,094,920
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, current ................................. $ 3,518,597 $ 3,748,663
Convertible notes payable .............................. 259,330 --
Accounts payable ....................................... 4,174,844 4,350,643
Accrued expenses, other ................................ 974,785 1,384,652
Notes payable related parties, current ................. 1,095,000 520,000
Obligations under capital leases, current .............. 457,240 423,228
------------ ------------
Total current liabilities ........................... 10,479,796 10,427,186
Notes payable, related parties, non-current portion .... 600,000 975,000
Notes payable, non-current portion ..................... 4,116,954 5,726,958
Obligations under capital leases, non-current portion .. 3,140,695 1,986,828
Deferred gain on sale leaseback transaction ............ 437,337 --
------------ ------------
Total liabilities ................................... 18,774,782 19,115,972
------------ ------------

Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000 shares
authorized, none outstanding ......................... -- --
Common stock, $.01 par value, 30,000,000 shares
authorized, 16,894,886 shares and 16,061,939 shares
issued and outstanding at March 31, 2004 and
September 30, 2003 ................................... 168,948 160,619
Additional paid-in capital ............................. 29,503,864 28,778,002
Accumulated deficit .................................... (27,390,164) (25,914,673)
Notes receivable, common stock ......................... (30,000) (45,000)
------------ ------------
Total stockholders' equity .......................... 2,252,648 2,978,948
------------ ------------
$ 21,027,430 $ 22,094,920
============ ============

See accompanying notes to unaudited condensed
consolidated financial statements.

GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Operations

Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------

Net sales ................................................ $ 5,912,265 $ 6,148,434 $ 13,711,015 $ 14,111,891
Cost of sales ............................................ 5,564,247 5,550,652 12,224,188 12,130,836
------------ ------------ ------------ ------------
Gross profit ............................................. 348,018 597,782 1,486,827 1,981,055
------------ ------------ ------------ ------------
Operating expenses:
Selling, general and administrative ................... 1,167,595 1,452,218 2,235,836 2,831,533
------------ ------------ ------------ ------------
Operating loss ........................................... (819,577) (854,436) (749,009) (850,478)
------------ ------------ ------------ ------------
Other income (expense):
Interest and financing costs .......................... (551,112) (334,748) (905,908) (704,701)
Casualty income, net .................................. 90,047 -- 202,813 --
Other, net ............................................ (17,266) 8,405 (23,386) 19,379
------------ ------------ ------------ ------------
Other income (expense), net ........................ (478,331) (326,343) (726,481) (685,322)
------------ ------------ ------------ ------------
Net loss before income taxes ............................. (1,297,908) (1,180,779) (1,475,491) (1,535,800)
Income tax provision (benefit) ........................... -- -- -- 550
------------ ------------ ------------ ------------
Net loss ................................................. $ (1,297,908) $ (1,180,779) $ (1,475,491) $ (1,536,350)
============ ============ ============ ============

Net loss per share - basic and diluted ................... $ (0.08) $ (0.08) $ (0.09) $ (0.10)
============ ============ ============ ============

Weighted average shares outstanding - basic and diluted .. 16,474,145 15,705,360 16,265,777 15,690,522
============ ============ ============ ============

See accompanying notes to unaudited condensed
consolidated financial statements.

GreenMan Technologies, Inc.
Unaudited Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended March 31, 2004

Notes
Additional Receivable
Common Stock Paid In Accumulated Common
Shares Amount Capital Deficit Stock Total
--------------------- ----------- ------------- --------- -----------

Balance, September 30, 2003 .................... 16,061,939 $160,619 $28,778,002 $(25,914,673) $(45,000) $ 2,978,948
Beneficial conversion discount on convertible
note payable ................................. -- -- 154,226 -- -- 154,226
Common stock issued upon exercise of options
and warrants ................................. 108,666 1,086 35,669 -- -- 36,755
Common stock issued upon conversion of notes
payable and accrued interest ................. 724,281 7,243 535,967 -- -- 543,210
Repayment of notes receivable, common stock .... -- -- -- -- 15,000 15,000
Net loss for the six months ended
March 31, 2004 ............................... -- -- -- (1,475,491) -- (1,475,491)
---------- -------- ----------- ------------ -------- -----------
Balance, March 31, 2004 ....................... 16,894,886 $168,948 $29,503,864 $(27,390,164) $(30,000) $ 2,252,648
========== ======== =========== ============ ======== ===========

See accompanying notes to unaudited condensed
consolidated financial statements.

GreenMan Technologies, Inc.
Unaudited Consolidated Statements of Cash Flow

Six Months Ended
March 31,
2004 2003
----------- -----------

Cash flows from operating activities:
Net loss .......................................................................... $(1,475,491) $(1,536,350)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation ...................................................................... 1,097,982 1,117,065
Loss on disposal of property, plant and equipment ................................. 23,891 4,333
Amortization ...................................................................... 110,763 62,702
Decrease (increase) in assets:
Accounts receivable ........................................................... 722,721 1,334,008
Insurance claim receivable .................................................... 634,172 --
Product inventory ............................................................. (701,479) (459,787)
Other current assets .......................................................... (134,671) 69,329
(Decrease) increase in liabilities:
Accounts payable .............................................................. (151,799) 365,102
Accrued expenses .............................................................. (212,702) 222,175
----------- -----------
Net cash (used for) provided by operating activities ........................ (86,613) 1,178,577
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment ................................................ (553,076) (1,498,529)
Proceeds of sale of property and equipment ........................................ 1,400,000 --
(Increase) decrease in notes receivable, officers ................................. (7,077) (3,429)
Decrease (increase) in other assets ............................................... (189,315) 60,815
----------- -----------
Net cash provided by (used for) investing activities ........................ 650,532 (1,441,143)
----------- -----------
Cash flows from financing activities:
Decrease (increase) in deferred financing costs ................................... 128,692 (6,020)
Proceeds from notes payable ....................................................... 256,497 1,195,987
Proceeds from notes payable, related parties ...................................... 575,000 --
Proceeds from convertible notes payable ........................................... 375,000 --
Net advances under line of credit ................................................. (290,817) (188,893)
Repayment of notes payable ........................................................ (1,921,425) (859,219)
Principal payments on obligations under capital leases ............................ (212,121) (183,131)
Cash received upon exercise of stock options ...................................... 7,800 10,200
Net proceeds on sale of common stock .............................................. -- 110,000
----------- -----------
Net cash (used for) provided by financing activities ........................ (1,081,374) 78,924
----------- -----------
Net decrease in cash .................................................................. (517,455) (183,642)
Cash and cash equivalents at beginning of period ...................................... 990,745 780,497
----------- -----------
Cash and cash equivalents at end of period ............................................ $ 473,290 $ 596,855
=========== ===========

Supplemental cash flow information:
Property, plant and equipment acquired under capital leases ......................... $ 1,400,000 $ 180,376
Common stock issued upon conversion of notes payable and accrued interest ........... 543,210 --
Deferred gain on sale lease back transaction ........................................ 437,337
Interest paid ....................................................................... 887,573 715,184
Taxes paid .......................................................................... -- 550

See accompanying notes to unaudited condensed
consolidated financial statements.

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2004

1. Business

GreenMan Technologies, Inc. (together with its subsidiaries, "we", "us" or
"our") was originally founded in 1992 and has been operated as a Delaware
corporation since 1995. Today, we comprise six operating locations that collect,
process and market scrap tires in whole, shredded or granular form. We are
headquartered in Lynnfield, Massachusetts and currently operate tire processing
operations in California, Georgia, Iowa, Minnesota, Tennessee and Wisconsin and
operate under exclusive agreements to supply whole tires used as alternative
fuel to cement kilns located in Florida, Georgia, Illinois, Missouri, Tennessee
and Texas

2. Basis of Presentation

The consolidated financial statements include the accounts of GreenMan
Technologies, Inc. and our wholly-owned and majority-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

The financial statements are unaudited and should be read in conjunction
with the financial statements and notes thereto for the year ended September 30,
2003 included in our Annual Report on Form 10-KSB. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission rules and
regulations, although we believe the disclosures which have been made are
adequate to make the information presented not misleading. The results of
operations for the periods reported are not necessarily indicative of those that
may be expected for a full year. In our opinion, all adjustments (consisting
only of normal recurring adjustments) which are necessary for a fair statement
of operating results for the interim periods presented have been made.

3. Net Loss Per Share

Basic earnings per share represents income available to common
stockholders divided by the weighted average number of common shares outstanding
during the period. Diluted earnings per share reflects additional common shares
that would have been outstanding if potentially dilutive common shares had been
issued, as well as any adjustment to income that would result from the assumed
conversion. Potential common shares that may be issued by us relate to
outstanding stock options and warrants (determined using the treasury stock
method) and convertible debt. Basic and diluted net loss per share are the same
for the three and six months ended March 31, 2004 and 2003, since the effect of
the inclusion of all outstanding options, warrants and convertible debt would be
anti-dilutive.

4. Insurance Claim Receivable

On March 31, 2003, a portion of our Georgia facility and several pieces of
waste wire processing equipment were damaged by a fire.

In December 2003, we reached a settlement agreement with our insurance
carrier amounting to $1,029,885 of which $821,172 was applicable to losses
incurred during fiscal 2003. The settlement amount, net of direct costs
incurred, resulted in net casualty income of $431,594 during the fiscal year
ended September 30, 2003 and $112,766 during the quarter ended December 31,
2003, which is classified as other income in the accompanying statement of
operations. In December 2003 all remaining amounts associated with this
settlement were received.

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2004

5. Notes Receivable, Officers

In January 1998 we advanced $104,000 to an officer under an 8.5% secured
promissory note with both principal and interest due January 2001. This note was
amended on September 30, 2000 to extend the maturity until April 15, 2002
(subsequently extended to April 15, 2004) and increase the interest rate to
9.5%. As of March 31, 2004, the balance receivable on this note amounted to
$162,174, including accrued interest. On April 30, 2004 the remaining balance of
$163,000, including interest, was applied to offset obligations under our
$400,000 September 30, 2003 note payable due to the officer.

In January 1999, we advanced two officers $55,000, in aggregate, under
8.5% secured promissory notes with both principal and interest due January 2002
(subsequently extended to January 2004). The proceeds were used to participate
in a private placement of our common stock and the loans are secured by 191,637
shares of common stock owned by the two officers. In June 2002, the two officers
repaid $5,000 each toward their respective then outstanding balances. On March
31, 2004, one officer repaid his then outstanding balance of $24,000 in full
settlement of all amounts due under his note. As of March 31, 2004, the amount
receivable on the remaining note, including interest, amounted to $45,302, of
which $30,000 relates to a stock subscription receivable and is classified as an
offset to stockholders' equity. On May 11, 2004 the officer sold 36,717 shares
of common stock valued at $45,611 back to us in full settlement of all amounts
due under his note. We subsequently cancelled these shares, which reduced our
total shares issued and outstanding.

6. Annual Assessment of Goodwill

We have elected to perform the required annual impairment test of our
goodwill on the last day of our fiscal third quarter.

7. Management's Plans For Raising Additional Capital

As of March 31, 2004, we have incurred cumulative losses of $27,390,164,
and have a working capital deficiency of $5,115,102 at March 31, 2004. We
understand that our continued existence is dependent on our ability to achieve
profitable status on a sustainable basis and to raise additional financing.
During the past twelve months, we have invested over $3 million in new equipment
to increase processing capacity at our Iowa, Minnesota, Georgia and Tennessee
locations, and have reconfigured our Wisconsin location to substantially reduce
operating costs and enhance our return on assets. We are evaluating several
immediate financing alternatives which if successful, would provide the capital
necessary to purchase the remaining equipment required to make our Tennessee
facility fully operational and allow us to reduce our transportation costs by an
estimated $80,000 per month.

In addition, we have implemented and/or are in the process of implementing
the following actions:

A. Private Placement of Investment Units

In December 2003, we commenced a private offering of investment units to
accredited investors through an investment bank in an effort to raise up to
$3,000,000. Our agreement with the investment bank expired on March 10, 2004,
and we did not receive any proceeds from the private placement of these units.
As a result, we have written off approximately $130,000 of related deferred
financing costs during the quarter ended March 31, 2004.

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2004

7. Management's Plans For Raising Additional Capital - (Continued)

On April 9, 2004, our Board of Directors authorized a similar private
offering of investment units (the "Units"). Each Unit consists of one share of
our common stock and a warrant to purchase 0.5 shares of our common stock. The
purchase price of the Units will equal 80% of the average closing bid price of
our common stock during the ten days preceding the date each investor's
subscription for Units becomes a binding commitment. The warrants are
exercisable at any time between the ninth month and the third year after the
date of issuance at an exercise price equal to 150% of the closing bid price of
our common stock on the day preceding such date. In addition, in accordance with
American Stock Exchange rules, any Unit purchases made by officers, directors or
affiliates of ours will be made at 100% of the closing bid price of our common
stock on the day preceding the date such investor's subscription for Units
becomes a binding commitment. The sale of the Units is exempt from registration
under the Securities Act of 1933 (as amended, the "Securities Act") pursuant to
Section 4(2) of the Securities Act.

We estimate that as of May 12, 2004, 3,125,000 Units, or approximately 19
percent of the shares outstanding prior to the issuance, would be issuable based
upon the preceding ten-day average closing bid price of our common stock as of
May 12, 2004 and the assumption that the entire $3,000,000 is raised. However,
in accordance with American Stock Exchange rules, we may not issue more than 20%
of our presently outstanding common stock without prior approval from our
shareholders. This rule may limit the amount of the proceeds available to us
from this private placement.

As of May 12, 2004, investors including an officer and director and
existing shareholders have committed to purchase approximately $950,000 of
Units. We expect to close these investments upon the listing of the shares
underlying the Units for trading on the American Stock Exchange.

B. Related Party Notes Payable

See the discussion of certain notes payable to related parties at Note 10
"Notes Payable - Related Parties".

C. Convertible Note Payable

In December 2003, we entered into a note purchase agreement (the "Note
Agreement") with an accredited investor (the "Holder") and, pursuant thereto, we
issued a convertible note payable (the "Note") in the aggregate principal amount
of $375,000 and bearing interest at 10%, due December 22, 2004. The Note is
convertible at the option of the Holder at any time prior to maturity but the
Note shall automatically, and without action on the part of Holder, be converted
upon the closing of the offering of investment units described above into
special investment units (the "SIUnits") at a price equal to $1.07 per SIUnit
with each SIUnit consisting of one share of unregistered common stock and a
warrant to purchase 1.5 shares of common stock at an exercise price of $1.07 per
share, exercisable six months after issuance for a period of five years from
date of issuance. The sale of these securities is exempt from registration under
the Securities Act pursuant to Section 4(2) of the Securities Act. The terms of
the Note Agreement reflect a beneficial conversion feature amounting to $154,226
calculated at the date of issue of the Note as the difference between the fair
value of the common stock to be received upon conversion and the proceeds of the
Note to be allocated to the common stock conversion option. The beneficial
conversion feature was recorded as a debt issuance discount and a corresponding
credit to paid-in capital, and is being amortized to interest expense over the
term of the Note, or upon conversion. Amortization expense for the three and six
months ended March 31, 2004 was $38,556.

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2004

7. Management's Plans For Raising Additional Capital - (Continued)

D. Sale and Leaseback of Real Estate

During March 2004, our Minnesota subsidiary sold all of its land and
buildings to an entity co-owned by an officer for $1,400,000 realizing a gain of
$437,337 which has been recorded as unearned income and classified as a
noncurrent liability in the accompanying financial statements. Simultaneously
with the sale, we entered into an agreement to lease property back for a term of
12 years at an annual rent of $195,000 increasing to $227,460 over the term of
the lease. The gain will be recognized into income ratably over the term of the
lease. The lease has been classified as a capital lease, and provides for two
additional 4-year extensions. We used $875,000 of the proceeds to repay an
existing obligation to Bremer Business Finance.

E. Hiring of Financial Advisor

In March 2004, we retained an investment banking firm to serve as our
exclusive financial advisor to assist us in identifying and securing new capital
and to restructure existing obligations.

8. Property, Plant and Equipment

Property, plant and equipment consists of the following:

March 31, September 30, Estimated
2004 2003 Useful Lives
----------- -------------- ------------

Land ................................ $ 167,981 $ 504,346
Buildings ........................... 3,454,238 2,704,693 10-20 years
Machinery and equipment ............. 9,530,002 9,526,045 5-10 years
Furniture and fixtures .............. 285,017 284,484 3-5 years
Motor vehicles ...................... 6,061,838 5,904,050 3-10 years
----------- -----------
19,499,076 18,923,618
Less accumulated depreciation
and amortization (8,397,239) (7,673,912)
----------- -----------
Property, plant and equipment, net $11,101,837 $11,249,706
=========== ===========

9. Notes Payable

In August 1998, our former Louisiana crumb rubber processing facility was
severely damaged by a fire, which necessitated the closure of this operation in
December 1998. As a result of the fire, certain cryogenic equipment we were
leasing from Cryopolymers Leasing, Inc. ("Cryopolymers Leasing"), under an
October 1997 agreement was destroyed.

On May 14, 1999, we reached a settlement agreement valued at $3,255,000,
whereby Cryopolymers Leasing agreed to assign to us all interest in and to any
additional insurance proceeds to be received as a result of the fire; transfer
ownership of some additional cryogenic rubber recycling equipment to us; and
withdraw from all legal proceedings against us. As part of the settlement
agreement, we issued a $1,100,000 sixty-month note payable, bearing interest at
7.75% with monthly payments of $7,553 and a balloon payment due June 2004. The
$1,100,000 note payable is personally guaranteed by three of our officers. We
currently anticipate satisfying this obligation when due by utilizing our
working capital line of credit with Waco Asset Management Co.31, Ltd.

On February 14, 2002, we repurchased and retired all of the Class B
convertible Preferred Stock held by Republic Services of Georgia, Limited
Partnership ("RSLP") (as successor to United Waste Services, Inc.) for a
$1,500,000 promissory note bearing interest at 10% and due in February 2007 and
100,000 shares of common stock valued at $1.60 per share on the date of
issuance. The difference between the liquidation value of the preferred stock
and the consideration given was credited to paid-in-capital.

On May 6, 2002, RSLP converted $750,000 of the principal amount of the
February 14, 2002 promissory note into 300,000 unregistered shares of our common
stock valued at $750,000. We issued RSLP

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2004

9. Notes Payable - (Continued)

a promissory note for the remaining balance on the February 14, 2002 promissory
note in the principal amount of $743,750 bearing interest at 10% and due in
March 2007. As of March 31, 2004, 10 payments totaling $88,830 were past due and
we have received a waiver of default from RSLP through June 30, 2004 on any past
due amounts.

On April 4, 2002, our Iowa subsidiary executed a five-year, $1,185,000
secured term note and a one year $300,000 working capital line of credit
(secured with all Iowa assets) with First American Bank ("First American"),
payable in monthly installments of $23,735, with a final payment of unpaid
principal and accrued interest on April 1, 2007. The term note bears interest at
7.5% and the line of credit bears interest the prime rate plus 1%. The proceeds
of this term note were used in connection with the acquisition of UT Tire
Recyclers, Inc in April 2002. We incurred $34,425 of deferred loan costs
associated with the transaction, which are being amortized to interest expense
over the life of the term note.

On February 13, 2003, our Iowa subsidiary amended its existing term debt,
under the terms of a five-year, $1,760,857 secured term note. The note is
payable in sixty monthly installments of $34,660 and is secured with all Iowa
assets. They also renewed their one-year working capital line of credit
including an increase to $500,000. The line was subsequently extended to July 1,
2004. The term note bears interest at 7.5% and the line of credit bears interest
at the prime rate plus 1%. We are currently working with First American to renew
the working capital line of credit beyond the current July 1, 2004 maturity.

10. Notes Payable - Related Party

Convertible Notes Payable - Related Party

One of our directors was owed $300,000 under the terms of an October 1999
private offering of 10% convertible notes and warrants and $75,000 under the
terms of a February 2000 offering of 11% convertible notes and warrants. The
convertible notes originally matured twelve months after issuance and were
payable in cash or unregistered shares of our common stock at a conversion price
of $1.00 per share. In September 2000 and June 2001, the director agreed to
extend the maturity date of each note for an additional twelve months from their
original maturity. In return for the June 2001 extension, we agreed to reduce
the conversion price to $.75 per share. In September 2002, the director again
agreed to extend the maturity of each note for an additional twenty-four months
from their extended maturity dates which range from October 2004 to February
2005.

On February 16, 2004, the director converted both notes, including
$375,000 of principal and $168,210 of accrued interest into 724,281 shares of
our unregistered common stock pursuant to the amended terms noted above.

Related Party Notes Payable

During the period from June to August 2003, two immediate family members
of an officer loaned us $400,000 in aggregate, under the terms of two year,
unsecured notes payable which bear interest at 12% per annum with interest due
quarterly and the principal due upon maturity through August 2005.

During March 2004, these same individuals loaned us an additional $200,000
in aggregate, under similar terms with the principal due upon maturity March
2006.

In September 2003, an officer loaned us $400,000 under the terms of a
September 30, 2003 unsecured promissory note which bears interest at 12% per
annum with interest due quarterly and the principal originally due March 31,
2004 (subsequently extended to September 30, 2004). In connection with the April
15, 2004 maturity of a note receivable from this officer, we offset the amounts
due from him against this note payable (See Note 5).

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2004

10. Notes Payable - Related Party - (Continued)

In October 2003, one of our officers loaned us $75,000 under the terms of
an October 22, 2003 unsecured promissory note payable which bears interest at
12% per annum with interest due quarterly and the principal due June 30, 2004.
During January and February 2004, the same officer advanced us an additional
$250,000 under substantially similar notes that are also due in June
2004.

11. Stock Options

We apply Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for stock options issued to our employees and
directors. Had the compensation cost for the stock options issued to our
employees and directors been determined based on the fair value at the grant
dates consistent with Statement of Financial Accounting Standards No. 123, the
net loss and net loss per share would have been adjusted to the pro forma
amounts indicated below:

Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
----------- ----------- ----------- -----------

Net loss as reported ................................. $(1,297,908) $(1,180,779) $(1,475,491) $(1,536,350)
Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects ........ (19,845) (11,941) (39,691) (19,862)
----------- ----------- ----------- -----------
Pro forma net loss ................................... $(1,317,753) $(1,192,720) $(1,515,182) $(1,556,212)
=========== =========== =========== ===========

Earnings per share:
Basic - as reported .............................. $ (0.08) $ (0.08) $ (0.09) $ (0.10)
=========== =========== =========== ===========
Basic - pro forma ................................ $ (0.08) $ (0.08) $ (0.09) $ (0.10)
=========== =========== =========== ===========

12. Subsequent Events

In April 2004, our Wisconsin subsidiary reached agreement with the lessor
of certain processing equipment to buy-out the remaining term of the lease. The
lessor agreed to accept several pieces of idle equipment, 50,000 unregistered
shares of our common stock, and cash, valued in the aggregate at approximately
$180,000, in full settlement of our capital lease obligation with a carrying
value of approximately $195,000 at March 31, 2004. We anticipate realizing a
gain of approximately $15,000 in connection with this transaction.

On April 9, 2004, our Board of Directors authorized a private offering of
investment units (the "Units"). Each Unit consists of one share of our common
stock and a warrant to purchase 0.5 shares of our common stock. The purchase
price of the Units will equal 80% of the average closing bid price of our common
stock during the ten days preceding the date each investor's subscription for
Units becomes a binding commitment. The warrants are exercisable at any time
between the ninth month and the third year after the date of issuance at an
exercise price equal to 150% of the closing bid price of our common stock on the
day preceding such date. In addition, in accordance with American Stock Exchange
rules, any Unit purchases made by officers, directors or affiliates of ours will
be made at 100% of the closing bid price of our common stock on the day
preceding the date such investor's subscription for Units becomes a binding
commitment. The sale of the Units is exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act.

In April 2004, our Board of Directors adopted, subject to shareholder
approval, a 2004 Stock Option Plan under similar terms and conditions as the
1993 Stock Option Plan, and have reserved 2 million shares for future issuance
under the plan. Our 1993 Stock Option Plan was established to provide options to
purchase shares of common stock to employees, officers, directors and will
terminate on June 10, 2004.

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

The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto included in
Item 1 of the Quarterly Report, and the audited consolidated financial
statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in our Form 10-KSB filed
for the year ended September 30, 2003.

Results of Operations

Three Months ended March 31, 2004 Compared to the Three Months ended
March 31, 2003

Net sales for the three months ended March 31, 2004 were $5,912,265, a 4%
decrease, compared to last year's net sales of $6,148,434, which included
approximately $572,000 of net sales associated with our majority owned joint
venture which was divested on April 1, 2003 and two kiln relationships
terminated during fiscal 2003. We processed over 6.2 million passenger tire
equivalents during the three months ended March 31, 2004, compared to
approximately 6.1 million passenger tire equivalents during the quarter ended
March 31, 2003.

Overall end product sales increased to 27% of consolidated revenues during
the quarter ended March 31, 2004, compared to 23% for the same period last year,
despite our Georgia waste wire processing equipment being off-line since April
2003. The 15% increase in end product sales is attributable to implementation of
our waste wire processing equipment and stronger crumb rubber and tire derived
fuel sales during the quarter ended March 31, 2004. The overall quality of
revenue (revenue per passenger tire equivalent) benefited from increased tire
volumes and end product sales, which partially offset a 9% reduction in tipping
fees resulting from lower tipping fees in certain markets.

Gross profit for the quarter ended March 31, 2004 was $348,018 or 6% of
net sales, compared to $597,782 or 10% of net sales for quarter ended March 31,
2003. The decrease was primarily attributable to: (1) more than $240,000 of
excess transportation costs and other operating inefficiencies necessitated by
processing Tennessee-sourced tires at our Georgia facility until our Nashville
area facility commences full operation and (2) reduced end product revenue and
excess waste disposal in Georgia as a result of the March 31, 2003 waste wire
processing equipment fire and which we estimate exceeds $300,000 for the quarter
ended March 31, 2004.

Selling, general and administrative expenses for the quarter ended March
31, 2004 decreased $284,623 to $1,167,595 or 20% of net sales, compared to
$1,452,218 or 24% of net sales for the quarter ended March 31, 2003. The
reduction is due to a focused effort to reduce corporate wide expenses and the
elimination of expenses associated with our majority owned joint venture which
was divested in April 2003.

As a result of the foregoing, our operating loss for the quarter ended
March 31, 2004 decreased $34,859 to $819,577, compared to an operating loss of
$854,436 for the quarter ended March 31, 2003.

Interest and financing costs for the quarter ended March 31, 2004
increased $216,364 to $551,112, compared to $334,748 for the quarter ended March
31, 2003. The increase was primarily attributable to the inclusion of
approximately $130,000 of deferred financing costs associated with the
unsuccessful December 2003 private placement of investment Units, approximately
$40,000 of interest expense associated with the $375,000 convertible note
payable issued in December 2003 and $25,000 of cost associated with the March
2004 sale of our Minnesota real estate. During the quarter ended March 31, 2004
we recorded other income of approximately $90,000 relating to a settlement
received for end product which was damaged.

As a result of the foregoing, our net loss for the quarter ended March 31,
2004 increased $117,029 or 10% to $1,297,908 or $.08 per basic share, compared
to a net loss of $1,180,779 or $.08 per basic share for quarter ended March 31,
2003.

Six Months ended March 31, 2004 Compared to the Six Months ended March 31, 2003

Net sales for the six months ended March 31, 2004 were $13,711,015, a 3%
decrease, compared to last year's net sales of $14,111,891, which included
approximately $1,357,000 of net sales associated with our majority owned joint
venture which was divested on April 1, 2003 and two kiln relationships
terminated during fiscal 2003. We processed approximately 14.4 million passenger
tire equivalents during the six months ended March 31, 2004, compared to
approximately 14.1 million passenger tire equivalents during the six months
ended March 31, 2003.

Overall end product sales increased to 24% of consolidated revenues during
the six months ended March 31, 2004, compared to 20% for the same period last
year, despite our Georgia waste wire processing equipment being off-line since
April 2003. The 24% increase in end product sales is attributable to
implementation of our waste wire processing equipment and stronger crumb rubber
and tire derived fuel sales during the six months ended March 31, 2004. The
overall quality of revenue (revenue per passenger tire equivalent) benefited
from increased tire volumes and end product sales, which partially offset a 10%
reduction in tipping fees resulting from lower tipping fees in certain markets.

Gross profit for the six months ended March 31, 2004 was $1,486,827 or 11%
of net sales, compared to $1,981,055 or 14% of net sales for six months ended
March 31, 2003. The decrease was primarily attributable to: (1) more than
$480,000 of excess transportation costs and other operating inefficiencies
necessitated by processing Tennessee-sourced tires at our Georgia facility until
our Nashville area facility commences full operation and (2) reduced end product
revenue and excess waste disposal in Georgia as a result of the March 31, 2003
waste wire processing equipment fire and which we estimate exceeds $570,000 for
the six months ended March 31, 2004.

Selling, general and administrative expenses for the six months ended
March 31, 2004 decreased $595,697 to $2,235,836 or 16% of net sales, compared to
$2,831,533 or 20% of net sales for the six months ended March 31, 2003. The
reduction is due to a focused effort to reduce corporate wide expenses and the
elimination of expenses associated with our majority owned joint venture which
was divested in April 2003.

As a result of the foregoing, our operating loss for the six months ended
March 31, 2004 decreased $101,468 to $749,009, compared to an operating loss of
$850,478 for the six months ended March 31, 2003.

Interest and financing costs for the six months ended March 31, 2004
increased $201,207 to $905,908, compared to $704,701 for the six months ended
March 31, 2003. The increase was primarily attributable to the inclusion of
approximately $130,000 of deferred financing costs associated with the
unsuccessful December 2003 private placement of investment Units, approximately
$40,000 of interest expense associated with the $375,000 convertible note
payable issued in December 2003 and $25,000 of cost associated with the March
2004 sale of our Minnesota real estate. In addition to the lost product revenues
caused by the March 2003 fire at our Georgia facility, we also incurred
additional direct costs relating to excess disposal costs totaling approximately
$95,000, which were offset by an insurance recovery of $207,873 received during
the quarter ended December 31, 2003. During the quarter ended March 31, 2004 we
also recorded other income of approximately $90,000 relating to a settlement for
damaged product.

As a result of the foregoing, our net loss for the six months ended March
31, 2004 decreased $60,859 or 4% to $1,475,491 or $.09 per basic share, compared
to a net loss of $1,536,350 or $.10 per basic share for six months ended March
31, 2003.

Liquidity and Capital Resources

As of March 31, 2004, we had $473,290 in cash and cash equivalents and a
working capital deficiency of $5,115,102. We understand that the continued,
successful sales and marketing of our services and products, the introduction of
new products, raising additional growth capital and re-establishing continued
profitability from operations will be critical to our future liquidity.

The Consolidated Statements of Cash Flows reflect events in 2004 and 2003
as they affect our liquidity. During the six months ended March 31, 2004, net
cash used for operating activities was $86,613 which reflects a reduction in
accounts payable and accrued expenses of $364,501 in the aggregate, a $701,479
increase in product inventory, which is typical as we end our seasonally slower
fiscal second quarter, an increase in other current assets of $134,671,
reflecting increased prepaid expenses and parts inventories and a net loss from
operations. Positively impacting cash flows for the six months ended March 31,
2004 was depreciation, amortization, and the receipt of $922,092 of insurance
proceeds. During the six months ended March 31, 2003, net cash provided by
operating activities was $1,178,577. Cash flows during this period were
positively impacted by depreciation, amortization, a $1,334,008 decrease in
accounts receivable and an increase in accounts payable and accrued expenses of
$587,277 in the aggregate which offset a $457,787 increase in product inventory.

Net cash provided by investing activities was $650,532 for the six months
ended March 31, 2004 reflecting the $1,400,000 of proceeds received from the
sale of our Minnesota real estate which offset the purchase of $553,076 of
property and equipment. The net cash used by investing activities for the six
months ended March 31, 2003 was $1,441,143 reflecting significant investments
made for the purchase of property and equipment to increase capacity and
efficiencies at several of our operating locations.

Net cash used by financing activities was $1,081,374 during the six months
ended March 31, 2004 which reflected the repayment of notes payable of
$1,921,425, including approximately $875,000 associated with payoff of the loan
outstanding on our Minnesota real estate. Positively affecting cash flows from
financing activities for both periods were proceeds from the issuance of notes
payable to unrelated and related parties.

During the past five years, we have terminated under-performing operations
and initiatives and eliminated the use of non-conventional financing methods
that had contributed over $18.7 million to our accumulated deficit. In order to
position our company to be stronger, more profitable and to enhance shareholder
value in the future, we began initiatives during fiscal 2003 to upgrade existing
operations, expand into new geographic locations to maximize existing
transportation and marketing infrastructures, and continue to identify better
and more profitable uses for existing and new products.

Based on our fiscal 2004 operating plan, we believe that available working
capital together with revenues from operations, the sale of common stock and
Units pursuant to the revised April 2004 private placement, loans from
affiliated and unaffiliated lenders, the remaining availability under our
exiting working capital lines of credit, the acquisition of machinery and
equipment through capital leases and notes payable, and the possible issuance of
common stock and common stock options and warrants in lieu of cash for services
rendered should be sufficient to meet our cash requirements through fiscal 2004.
As noted, we have identified and are currently negotiating with several
immediate financing alternatives which, if successful would enhance our
financial position and are diligently working to determine the feasibility of
each alternative. No assurances can be given that such financing will be
concluded in the near future on favorable terms, if at all. If we are unable to
obtain additional financing, we will be forced to curtail certain operations.

Operating Performance Enhancements

Historically, our tire shredding operations were able to recover and sell
approximately 60% of a processed tire with the balance disposed of as waste wire
residual (cross-contaminated rubber and steel) at an annual cost exceeding
$1,000,000 in prior years. We have purchased secondary equipment for our Georgia
(damaged in the March 2003 fire), Iowa and Minnesota facilities to further
process the waste wire residual into saleable components of rubber and steel
that not only provide new sources of revenue but also reduced residual disposal
costs.

During the fourth quarter of fiscal 2002, we initiated a $1.5 million
equipment upgrade to our Des Moines, Iowa tire processing facility. We
completely replaced all tire shredders with more efficient, higher volume
equipment and installed a waste wire processing equipment line that will reduce
waste wire disposal costs while increasing our capacity to produce over 20
million pounds of rubber feedstock per year for our internal crumb rubber
operations. From July through December 2002, we experienced inevitable one-time
operational disruptions during the equipment installation. Additionally, we
incurred increased transportation costs because a significant portion of Iowa
tires were diverted to our Minnesota plant for processing during the upgrade.
These disruptive factors negatively impacted earnings in the first quarter of
fiscal 2003 by approximately $150,000. Additionally, we believe that these
actions position us to better meet the growing market demand for our products
and services as evidenced by the fact that Iowa crumb product shipments have
increased almost three-fold during the fiscal year ended September 30, 2003,
compared to the same period last year. The capital investment in Iowa was funded
by a combination of internal cash flow and long-term debt provided by First
American Bank of Des Moines, Iowa and the State of Iowa.

On March 31, 2003, a portion of our Georgia facility and several pieces of
waste wire processing equipment were damaged by a fire. We therefore will incur
increased disposal costs and reduced product revenue in Georgia into our third
fiscal quarter, when the equipment is currently expected to be re-installed and
operational. As of September 30, 2003, damaged equipment and parts with a net
book value of approximately $179,000 have been written off and we have incurred
$225,000 of expenses associated with the fire, including $211,000 of excess
waste wire disposal. In December 2003 we reached a $1.03 million settlement with
our insurance carrier in connection with the claims associated with the fire and
have received all remaining amounts due under this insurance claim. During the
quarter ended December 31, 2003, we recognized $207,873 of casualty income
associated with the insurance settlement before related costs.

We estimate that during the six months ended March 31, 2004, reduced end
product revenue and excess waste disposal in Georgia associated with the impact
of the March 31, 2003 waste wire processing equipment fire exceeded $570,000.

Following the February 2003 decision to reconfigure our Wisconsin
operations, waste wire processing equipment in Wisconsin was taken off line in
March 2003 with the intention of moving it to our Minnesota operation. We had
originally delayed the relocation of the equipment to Minnesota in order to
evaluate whether to deploy it in Georgia to temporarily replace the damaged
equipment; however in May 2003 we decided to relocate the Wisconsin equipment to
Minnesota as planned. The Minnesota waste wire processing equipment began
initial operation in July 2003. We estimate this equipment will reduce disposal
expense by over $160,000 per year, while providing new sources of revenue and
much needed material feedstock for our Iowa crumb rubber operations. In addition
to the existing waste wire processing equipment, we invested an additional
$250,000 in new support equipment and infrastructure improvements. These capital
investments were funded by internal cash flow.

In addition, during the first half of fiscal 2003, several new pieces of
shredding and screening equipment were installed at our Minnesota and Georgia
locations in order to meet increased demand for more lucrative smaller
tire-derived fuel material in the Midwest and Southeast. These capital
investments, which exceeded $525,000, were funded by internal cash flow.

Effects of Inflation and Changing Prices

Generally, we are exposed to the effects of inflation and changing prices.
Primarily because the largest component of our collection and disposal costs is
transportation, we are adversely affected by significant increases in the cost
of fuel. Additionally, because we rely on floating-rate debt for certain
financing arrangements, rising interest rates would have a negative effect on
our performance.

Other Matters That Have Impacted Our Liquidity

New Market Development Initiatives

The July 2002 acquisition of a scrap tire business in Azusa, California
marked our first location in the western portion of the United States. We have
devoted significant resources during the past twelve months to expand and
enhance our California market position in order to provide a solid foundation
for future growth and sustainable profitability.

In February 2003, we announced our intent to open a new high-volume tire
processing facility in LaVergne, Tennessee as a result of experiencing
significant market share growth during the last two years. Historically, we
transported all Tennessee-sourced tires to our Georgia facility to be processed.
We anticipated that a majority of the funding to implement this initiative would
come from our principal lender, which unfortunately was closed by the
Commissioner of Financial Institutions of the State of California in February
2003, shortly after we received verbal approval to move forward. In July 2003,
our Tennessee facility began processing local tires on a limited basis using
excess and idle equipment from various other locations. We are evaluating
several immediate financing alternatives to provide the capital necessary to
purchase all remaining equipment, which is estimated to cost approximately $1.5
million. When the Tennessee facility is fully operational, we estimate the cost
savings realized by processing Tennessee-sourced tires locally instead of
transporting them to Georgia should exceed $80,000 per month.

Also, in February 2003, we decided to reconfigure the operations of our
Wisconsin facility from an unprofitable low-volume size reduction facility to a
whole tire transfer station supplying compliant tires to a cement kiln. The
decision was made because the cement kiln is anticipated to continue consuming a
majority of the scrap tires collected by our Wisconsin facility. We intend to
either use the available Wisconsin size reduction equipment at our other
locations or initiate an effort to sell. We also intend to continue our efforts
to increase Wisconsin tire volumes and reduce expenses in order to reach
profitability in the near term.

During fiscal 2003 we invested over $1.5 million developing and/or
reconfiguring our California, Tennessee and Wisconsin operations. These
investments have come in the form of new internally financed capital equipment
and the funding of new market development initiatives.

Private Offerings of Common Stock

In February 2002, we commenced a private offering of our common stock to
accredited investors (as that term is defined in Rule 501 of Regulation D under
the Securities Act) in an effort to raise up to $2,000,000 in gross proceeds
(subsequently increased to $3,000,000 in August 2002). As of September 30, 2003,
when the offering terminated, we had sold 1,458,511 shares of our unregistered
common stock to investors, including existing shareholders, for gross proceeds
of $2,133,603. The investors have been granted limited registration rights to
cause us to register the common stock for resale in the event that we register
shares of common stock for our own account. The investors have agreed not to
sell or transfer the shares for a period of at least 18 months after issuance. A
majority of the proceeds of this offering were used to acquire certain tire
recycling operations and assets. The sale of these shares was exempt from
registration under the Securities Act pursuant to Rule 506 of Regulation D and
Section 4(2) of the Securities Act.

In December 2003, we commenced a private offering of investment units to
accredited investors through an investment bank in an effort to raise up to
$3,000,000. Our agreement with the investment bank expired on March 10, 2004,
and we did not receive any proceeds from the private placement of these
investment units and as a result have written off approximately $130,000 of
related deferred financing costs.

purchases made by officers, directors or affiliates of ours will be made at 100%
of the closing bid price of our common stock on the day preceding the date an
investor's subscription for Units becomes a binding commitment. The sale of the
Units is exempt from registration under the Securities Act of 1933 (as amended,
the "Securities Act") pursuant to Section 4(2) of the Securities Act.

As of May 12, 2004, investors including an officer and director and
existing shareholders have committed to purchase approximately $950,000 of Units
pursuant to the revised terms. We expect to close these investments upon the
listing of the shares underlying the Units for trading on the American Stock
Exchange.

If the private placement is successful, we intend to utilize the net
proceeds to: (1) purchase new shredding and processing equipment for our
Tennessee facility which will allow us to eliminate over $80,000 per month in
excess transportation costs necessitated by processing a majority of
Tennessee-sourced tires at our Georgia facility until the required high volume
equipment is installed; (2) re-establish our Georgia waste wire processing
capacity; and (3) provide additional working capital during the upcoming
seasonally slower portion of our fiscal year.

Hiring of Financial Advisor

In March 2004, we retained an investment banking firm to serve as our
exclusive financial advisor to assist us in identifying and securing new capital
and to restructure existing obligations.

Repurchase of Class B Convertible Preferred Stock

On May 6, 2002, RSLP converted $750,000 of the principal amount of the
February 14, 2002 promissory note into 300,000 unregistered shares of our common
stock valued at $750,000. We issued RSLP a promissory note for the remaining
balance on the February 14, 2002 promissory note in the principal amount of
$743,750 bearing interest at 10% and due in March 2007. As of March 31, 2004, 10
payments totaling $88,830 were past due and we have received a waiver of default
from RSLP through June 30, 2004 on any past due amounts.

Credit Facility

On February 7, 2003, Southern Pacific Bank ("SPB") and its wholly owned
subsidiary Coast Business Credit ("CBC") were closed by the Commissioner of
Financial Institutions of the State of California. The Federal Deposit Insurance
Company ("FDIC") was appointed receiver of SPB and its subsidiaries. Prior to
its closure, CBC had been our principal source of working capital financing and
long term debt (the "Credit Facility") and had verbally agreed to provide the
necessary funding to implement several growth initiatives including shredding
and screening upgrades in Georgia and Minnesota, our waste wire processing
equipment in Minnesota and a new high volume tire processing facility in
Tennessee. As a result of the CBC failure, these initiatives have taken longer
to implement as they have been funded by internal cash flows.

On May 16, 2003, we were notified by the FDIC that Waco Asset Management
Co.31, Ltd., an affiliate of First City Financial Company ("FCFC"), had
purchased a pool of loans from the FDIC that included our Credit Facility. FCFC
focuses on acquiring and resolving distressed loans and other assets at
discounted values and is not generally a long-term, asset-based lender.
Accordingly, we have been advised that because the Credit Facility does not
represent a typical FCFC loan, FCFC intends to sell its interest in the Credit
Facility to a third party. No assurance can be given that FCFC will be
successful in selling its interest in the Credit Facility. We are in compliance
with all covenants and other terms of the Credit Facility. Although FCFC must
honor the terms of the Credit Facility as long as we are not in default, FCFC is
not willing to expand the Credit Facility to provide us with necessary growth
capital. No assurance can be given that FCFC will grant waivers of defaults that
we may need in the future. Our management is currently evaluating several
financing alternatives which would provide growth capital and enhance our
financial position, and is diligently working to determine the feasibility of
each alternative. No assurances can be given that any such financing will be
concluded in the near future, on terms favorable to us, or at all. If we are
unable to obtain additional growth capital, our ability to implement our
business plan may be materially and adversely affected. If we are forced to
refinance our obligations, we would be required to write off the then
unamortized balance of deferred financing charges relating to the Credit
Facility ($142,337 at March 31, 2004).

Related Party Notes Payable

During March 2004, these same individuals advanced us an additional
$200,000 in aggregate, under similar terms with the principal due upon maturity
through March 2006.

One of our directors is owed $300,000 under the terms of an October 1999
private offering of 10% convertible notes and warrants and $75,000 under the
terms of a February 2000 offering of 11% convertible notes and warrants. The
convertible notes originally matured twelve months after issuance and were
payable in cash or unregistered shares of our common stock at a conversion price
of $1.00 per share. In September 2000 and June 2001, the director agreed to
extend the maturity date of each note for an additional twelve months from their
original maturity. In return for the June 2001 extension, we agreed to reduce
the conversion price to $.75 per share. In September 2002, the director again
agreed to extend the maturity of each note for an additional twenty-four months
from their extended maturity dates which range from October 2004 to February
2005.

On February 16, 2004, the director converted $375,000 of principal and
$168,210 of accrued interest into 724,281 shares of our unregistered common
stock pursuant to the amended terms noted above.

Convertible Note Payable

described above into special investment units (the "SIUnits") at a price equal
to $1.07 per SIUnit with each SIUnit consisting of one share of unregistered
common stock and a warrant to purchase 1.5 shares of common stock at an exercise
price of $1.07 per share, exercisable six months after issuance for a period of
five years from date of issuance. The sale of these securities is exempt from
registration under the Securities Act pursuant to Section 4(2) of the Securities
Act. The terms of the Note Agreement reflect a beneficial conversion feature
amounting to $154,226 calculated at the date of issue of the Note as the
difference between the fair value of the common stock to be received upon
conversion and the proceeds of the Note to be allocated to the common stock
conversion option. The beneficial conversion feature will be recorded as a debt
issuance discount and a corresponding credit to paid-in capital, and will be
amortized to interest expense over the term of the Note, or upon conversion.

Off-Balance Sheet Arrangements

We lease various facilities and equipment under cancelable and
non-cancelable short and long term operating leases which are described in
Footnote 10 to the Audited Consolidated Financial Statements contained in our
annual report on Form 10-KSB.

Cautionary Statement

Information contained or incorporated by reference in this document
contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, which statements can be identified by
the use of forward-looking terminology such as "may," "will," "would," "can,"
"could," "intend," "plan," "expect," "anticipate," "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties that could cause actual results to differ materially from those in
such forward-looking statements.

Factors That May Affect Future Results

Risks Related to our Business

We have lost money in the past six consecutive quarters and may need additional
working capital, which if not received, may force us to curtail operations.

We have experienced six consecutive quarters of net losses. While
management has identified several significant non-recurring charges which have
contributed to these losses, the continued, successful sales and marketing of
our services and products, the introduction of new products and the
re-establishment of profitable operations will be critical to our future
liquidity. If we are unable to return to profitability before our cash is
depleted, we will need to seek additional capital. There can be no assurance
that we will be profitable in the future or, if we are not, that we will be able
to obtain additional capital on terms and conditions acceptable to us or at all.

We may need to seek an alternate principal source of working capital financing
and long term debt.

See the discussion regarding our Credit Facility in "Other Matters That
Have Impacted Our Liquidity - Credit Facility," above. In addition to the risks
disclosed in that discussion, the uncertainty surrounding the status of the
Credit Facility, which expires on December 31, 2006, may become a significant
distraction of management from our ongoing business.

On March 31, 2003, a portion of our Georgia facility and several pieces of
waste wire processing equipment were damaged by a fire, which resulted in
increased disposal costs and reduced product revenue in Georgia. We anticipate
that these conditions will continue into our third fiscal quarter, when the

equipment is expected to be repaired and returned to operative status. No
assurance can be given, however, that we will be able to re-establish our
Georgia waste wire processing capabilities in a timely manner.

We may not realize the anticipated benefits associated with the establishment of
our Tennessee operations.

In February 2003, as a result of experiencing significant market share
growth during the last two years, we announced our intent to open a new
high-volume tire processing facility in LaVergne, Tennessee. Historically, we
have transported all Tennessee-sourced tires to our Georgia facility for
processing. In July 2003, we began processing tires on a limited basis in
Tennessee utilizing excess and idle equipment from various GreenMan
subsidiaries. Until we are successful in purchasing the appropriate high-volume
shredding and ancillary equipment for our Tennessee facility, we will continue
to incur excess transportation costs necessitated by transporting
Tennessee-sourced tires to Georgia instead of processing them locally.

We may not realize the anticipated benefits associated with the reconfiguration
of our Wisconsin operations.

In February 2003, we decided to reconfigure the operations of our
low-volume Wisconsin size reduction facility to a whole tire transfer station
supplying compliant tires to a cement kiln. The cement kiln has been and is
anticipated to continue to consume a majority of the scrap tires collected by
the Wisconsin facility. We do not have a long-term supply contract with the
cement kiln and there can be no assurance that we will realize the anticipated
benefits associated with the reconfiguration of these operations.

Improvement in our business depends on our ability to increase demand for our
products and services.

Adverse events or economic or other conditions affecting markets for our
products and services, potential delays in product development, product and
service flaws, changes in technology, changes in the regulatory environment and
the availability of competitive products and services are among a number of
factors that could limit demand for our products and services.

Our business is subject to extensive and rigorous government regulation; failure
to comply with applicable regulatory requirements could substantially harm our
business.

Our tire recycling activities are subject to extensive and rigorous
government regulation designed to protect the environment. The establishment and
operation of plants for tire recycling are subject to obtaining numerous permits
and compliance with environmental and other government regulations. The process
of obtaining required regulatory approvals can be lengthy and expensive. The
Environmental Protection Agency and comparable state and local regulatory
agencies actively enforce environmental regulations and conduct periodic
inspections to determine compliance with government regulations. Failure to
comply with applicable regulatory requirements can result in, among other
things, fines, suspensions of approvals, seizure or recall of products,
operating restrictions, and criminal prosecutions. Furthermore, changes in
existing regulations or adoption of new regulations could impose costly new
procedures for compliance, or prevent us from obtaining, or affect the timing
of, regulatory approvals.

The market in which we operate is highly competitive, fragmented and
decentralized and our competitors may have greater technical and financial
resources.

The market for our services is highly competitive, fragmented and
decentralized. Many of our competitors are small regional or local businesses.
Some of our larger competitors may have greater financial and technical
resources than we do. As a result, they may be able to adapt more quickly to new
or emerging technologies and changes in customer requirements, or to devote
greater resources to the promotion and sale of their services. Competition could
increase if new companies enter the markets in which we operate or our existing
competitors expand their service lines. These factors may limit or prevent any
further development of our business.

Our success depends on the retention of our senior management and other key
personnel.

Our success depends largely on the skills, experience and performance of
our senior management, particularly, Robert H. Davis, our Chief Executive
Officer; Charles E. Coppa, our Chief Financial Officer; Mark T. Maust, our
Midwest Regional Vice President; Thomas A. Carter, our Southeastern Regional
Vice President; and James C. Dodenhoff, our Western Regional Vice President. The
loss of any of these personnel could have a material adverse effect on our
business, financial condition and results of operations. We have obtained "key
man" insurance only on the lives of Messrs. Davis and Coppa.

Seasonal factors may affect our quarterly operating results.

Seasonality may cause our total revenues to fluctuate. We typically
process fewer tires during the winter and experience a more pronounced volume
reduction in severe weather conditions. In addition, a majority of our crumb
rubber is used for playground and athletic surfaces, running tracks and
landscaping/groundcover applications which are typically installed during the
warmer portions of the year. Similar seasonal or other patterns may develop in
our business.

If we acquire other companies or businesses, we will be subject to risks that
could hurt our business.

A significant part of our business strategy entails future acquisitions,
or significant investments in, businesses that offer complementary products and
services. Promising acquisitions are difficult to identify and complete for a
number of reasons. Any acquisitions completed by our company may be made at
substantial premiums over the fair value of the net assets of the acquired
companies, and competition may cause us to pay more for an acquired business
than its long-term fair market value. There can be no assurance that we will be
able to complete future acquisitions on terms favorable to us or at all. In
addition, we may not be able to integrate future acquired businesses, at all or
without significant distraction of management from our ongoing business. In
order to finance acquisitions, it may be necessary for us to issue shares of our
capital stock to the sellers of the acquired businesses and/or to seek
additional funds through public or private financings. Any equity or debt
financing, if available at all, may be on terms which are not favorable to us
and, in the case of an equity financing or the use of our stock to pay for an
acquisition, may result in dilution to our existing stockholders.

As we grow, we are subject to growth related risks.

We are subject to growth-related risks, including capacity constraints and
pressure on our internal systems and personnel. In order to manage current
operations and any future growth effectively, we will need to continue to
implement and improve our operational, financial and management information
systems and to hire, train, motivate, manage and retain employees. We may be
unable to manage such growth effectively. Our management, personnel or systems
may be inadequate to support our operations, and we may be unable to achieve the
increased levels of revenue commensurate with the increased levels of operating
expenses associated with this growth. Any such failure could have a material
adverse impact on our business, operations and prospects. In addition, the cost
of opening new facilities and the hiring of new personnel for those facilities
could significantly decrease our profitability, if the new facilities do not
generate sufficient additional revenue.

Risks Related to the Securities Market

Our stock price may be volatile, which could result in substantial losses for
our shareholders.

Our common stock is thinly traded and an active public market for our stock
may not develop. Consequently, the market price of our common stock may be
highly volatile. Additionally, the market price of our common stock could
fluctuate significantly in response to the following factors, some of which are
beyond our control:

o changes in market valuations of similar companies;

o announcements by us or by our competitors of new or enhanced
products, technologies or services or significant contracts,
acquisitions, strategic relationships, joint ventures or capital
commitments;

o regulatory developments;

o additions or departures of senior management and other key
personnel;

o deviations in our results of operations from the estimates of
securities analysts; and

o future issuances of our common stock or other securities.

We have options, warrants and convertible promissory notes currently
outstanding. Exercise of these options and warrants, and conversions of these
promissory notes will cause dilution to existing and new shareholders.

As of March 31, 2004, we have options and warrants to purchase
approximately 3,678,794 shares of common stock outstanding in addition to
$375,000 of convertible promissory notes. These notes are convertible into
approximately 350,000 shares of common stock and warrants to purchase
approximately 526,000 shares of our common stock at an exercise price of $1.07
per share. The exercise of our options and warrants, and the conversion of these
promissory notes, will cause additional shares of common stock to be issued,
resulting in dilution to investors and our existing stockholders.

We have never paid dividends on our capital stock, and we do not anticipate
paying any cash dividends in the foreseeable future.

We have paid no cash dividends on our capital stock to date and we
currently intend to retain our future earnings, if any, to fund the development
and growth of our businesses. As a result, capital appreciation, if any, of our
common stock will be shareholders' sole source of gain for the foreseeable
future.

Anti-takeover provisions in our charter documents and Delaware law could
discourage potential acquisition proposals and could prevent, deter or delay a
change in control of our company.

Certain provisions of our Restated Certificate of Incorporation and
By-Laws could have the effect, either alone or in combination with each other,
of preventing, deterring or delaying a change in control of our company, even if
a change in control would be beneficial to our stockholders. Delaware law may
also discourage, delay or prevent someone from acquiring or merging with us.

Item 3 Controls and Procedures

Our management, with the participation of our chief executive officer and
chief financial officer, evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as December 31, 2003. In designing and evaluating our disclosure controls
and procedures, we recognized that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving
their objectives and management necessarily applied its judgment in evaluating
the cost-benefit relationship of possible controls and procedures. Based on this
evaluation, our chief executive officer and chief financial officer concluded
that as of March 31, 2004, the our disclosure controls and procedures were (1)
designed to ensure that material information relating to the company, including
our consolidated subsidiaries, is made known to our chief executive officer and
chief financial officer by others within those entities, particularly during the
period in which this report was being prepared and (2) effective, in that they
provide reasonable assurance that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms.

No change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal
quarter ended March 31, 2004 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 2. Changes in Securities

On February 16, 2004, we issued 724,281 shares of our unregistered
common stock to one of our directors upon conversion of $375,000 of
principal and $168,210 of accrued interest on a promissory note. See
Note 9, "Notes Payable - Related Party" of Notes to Unaudited
Condensed Consolidated Financial Statements included in this report.
The issuance of these shares is exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act.

During the six months ended March 31, 2004, the Company issued
108,666 unregistered shares of its common stock upon exercise of
stock options for gross proceeds of $36,755. Exemption from
registration for this transaction is claimed under Section 4(2) of
the Securities Act of 1933, as amended.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 10.1 $100,000 Promissory Note issued by GreenMan
Technologies, Inc. to Maurice E. Needham dated
January 13, 2004.
Exhibit 10.2 $100,000 Promissory Note issued by GreenMan
Technologies, Inc. to Maurice E. Needham dated
January 26, 2004.
Exhibit 10.3 $50,000 Promissory Note issued by GreenMan
Technologies, Inc. to Maurice E. Needham dated
February 6, 2004.
Exhibit 10.4 $100,000 Promissory Note issued by GreenMan
Technologies, Inc. to Joyce Ritterhauss dated March
10, 2004.
Exhibit 10.5 $50,000 Promissory Note issued by GreenMan
Technologies, Inc. to Richard Ledet dated March 12,
2004.
Exhibit 10.6 $100,000 Promissory Note issued by GreenMan
Technologies, Inc. to Barbara Morey dated March 18,
2004.
Exhibit 10.7 Purchase Agreement dated February 21, 204
between GreenMan Technologies of Minnesota, Inc. and
Earl Fisher
Exhibit 10.8 Commercial Lease Agreement dated March 25,
2004 between GreenMan Technologies of Minnesota,
Inc. and Two Oaks, LLC
Exhibit 10.9 Extension Agreement dated March 31, 2004
between GreenMan Technologies, Inc. and Robert H.
Davis and Nancy Karfilis-Davis.
Exhibit 10.10 Waiver agreement by Republic Services of
Georgia, LP.
Exhibit 31.1 Certification of Chief Executive Officer
pursuant to Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 31.2 Certification of Chief Financial Officer
pursuant to Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 32.1 Certification of Chief Executive Officer under
18 U.S.C Section 1350.
Exhibit 32.2 Certification of Chief Financial Officer under
18 U.S.C Section 1350.

(b) Reports on Form 8-K

A Current Report on Form 8-K was filed on February 19, 2004,
covering Item 5 ("Other Information") and Item 9 ("Regulation FD
Disclosure"). Our press releases dated February 13, 17 and 18, 2004
were included as exhibits under Item 7.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant
certifies that it has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

By: GreenMan Technologies, Inc.

/s/ Robert H. Davis
--------------------------
Robert H. Davis
Chief Executive Officer

By: GreenMan Technologies, Inc.

/s/ Charles E. Coppa
--------------------------
Chief Financial Officer, Treasurer,
Secretary