GREENMAN TECHNOLOGIES INC, 10QSB, 1999-08-16

GREENMAN TECHNOLOGIES INC
10QSB, 1999-08-16
PLASTICS PRODUCTS, NEC

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

Form 10-QSB

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

For Quarter Ended June 30, 1999 Commission File Number 1-13776

GreenMan Technologies, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

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

7 Kimball Lane, Building A, Lynnfield, MA 01940
----------------------------------------- -----
(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 August 16, 1999

Common Stock, $.01 par value, 11,745,970 shares
<PAGE>

GreenMan Technologies, Inc.
Form 10-QSB
Quarterly Report
June 30, 1999

Table of Contents

PART I - FINANCIAL INFORMATION Page
----

Item 1. Financial Statements (*)

Unaudited Condensed Consolidated Balance Sheets as of
September 30, 1998 and June 30, 1999 3

Unaudited Condensed Consolidated Statements of Operations for the
three months ended May 31, 1998 and June 30, 1999 and nine months
ended May 31, 1998 and June 30, 1999 4

Unaudited Condensed Consolidated Statement of Changes in
Stockholders' Equity for the nine months ended June 30, 1999 5

Unaudited Condensed Consolidated Statements of Cash Flows for
the nine months ended May 31, 1998 and June 30, 1999 6-7

Notes to Unaudited Condensed Consolidated Financial Statements 8-16

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 17-22

PART II - OTHER INFORMATION

Item 1. Legal Proceedings 22

Item 2. Changes in Securities 22

Item 3. Defaults Upon Senior Securities 23

Item 4. Submission of Matters to a Vote of Security Holders 23

Item 5. Other Information 23

Item 6. Exhibits and Reports on Form 8-K 23

Signatures 24

* The financial information at September 30, 1998 has been taken from
audited financial statements at that date and should be read in
conjunction therewith. All other financial statements are unaudited.

** All share and per share data in this Form 10-QSB have been adjusted to
give retroactive effect to a reverse split of the Company's Common Stock
pursuant to which each five shares of Common Stock then outstanding were
converted into one share. The reverse split became effective on March 23,
1998.

2
<PAGE>

GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
September 30, June 30,
1998 1999
------------ ------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents ............................................. $ 161,215 $ 131,803
Accounts receivable, trade, less allowance for doubtful
accounts of $58,166 and $51,706 as of September 30, 1998
and June 30, 1999 ..................................................... 1,685,885 2,089,154
Inventory ............................................................. 229,037 --
Insurance claim receivable ............................................ 2,120,284 --
Other current assets .................................................. 740,859 745,023
------------ ------------
Total current assets ............................................... 4,937,280 2,965,980
------------ ------------
Property and equipment, net ............................................. 9,126,573 8,159,212
------------ ------------

Other assets:
Deferred financing costs .............................................. 306,304 --
Deferred loan costs ................................................... 250,436 169,927
Goodwill, net ......................................................... 2,347,143 1,847,090
Real estate held for investment, net .................................. -- 712,185
Other ................................................................. 439,023 495,283
------------ ------------
3,342,906 3,224,485
------------ ------------
$ 17,406,759 $ 14,349,677
============ ============

LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Convertible notes payable, current .................................... $ 300,000 $ 300,000
Notes payable, related party .......................................... 4,956 --
Notes payable, current ................................................ 1,678,399 2,079,624
Accounts payable ...................................................... 1,714,529 1,782,808
Accrued expenses, other ............................................... 1,932,789 1,316,740
Obligations under capital leases, current ............................. 542,058 --
------------ ------------
Total current liabilities .......................................... 6,172,731 5,479,172
Convertible notes payable, non-current portion ........................ 839,740 --
Notes payable, non-current portion .................................... 3,546,207 3,102,844
Obligations under capital leases, non-current portion ................. 1,568,364 1,100,000
------------ ------------
Total liabilities .................................................. 12,127,042 9,682,016
------------ ------------
Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000 shares
authorized: Class B convertible, liquidation value
$10.00 per share, 320,000 shares issued and
outstanding at September 30, 1998 and June 30, 1999 ................ 3,200,000 3,200,000
Common stock, $.01 par value, 20,000,000 shares
authorized; 6,910,247 and 11,745,970 shares
issued and outstanding at September 30, 1998
and June 30, 1999 .................................................. 69,103 117,460
Additional paid-in capital ............................................ 21,366,619 23,127,528
Accumulated deficit ................................................... (19,356,005) (21,722,327)
------------ ------------
5,279,717 4,722,661
Notes receivable, common stock ........................................ -- (55,000)
------------ ------------
Total stockholders' equity ......................................... 5,279,717 4,667,661
------------ ------------
$ 17,406,759 $ 14,349,677
============ ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

3
<PAGE>

GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, June 30, May 31, June 30,
1998 1999 1998 1999
------------ ------------ ------------ ------------

<S> <C> <C> <C> <C>
Net sales .................................... $ 2,757,689 $ 4,053,549 $ 7,430,097 $ 12,239,161
Cost of sales ................................ 1,905,392 3,158,219 5,428,443 9,210,266
------------ ------------ ------------ ------------
Gross profit ................................. 852,297 895,330 2,001,654 3,028,895
------------ ------------ ------------ ------------
Operating expenses:
Research and development .................. 491,717 15,750 600,187 46,625
Selling, general and administrative ....... 1,371,095 670,708 2,917,478 2,588,718
------------ ------------ ------------ ------------
Total operating expenses ................ 1,862,812 686,458 3,517,665 2,635,343
------------ ------------ ------------ ------------
Operating profit (loss) ...................... (1,010,515) 208,872 (1,516,011) 393,552
------------ ------------ ------------ ------------
Other income (expense):
Interest and financing costs .............. (649,656) (131,097) (716,072)
Casualty loss ............................. -- -- -- (955,000)
Other, net ................................ 7,913 (2,592) 9,004 12,483
------------ ------------ ------------ ------------
Other (expense), net .................... (641,743) (133,689) (1,965,755) (1,658,589)
------------ ------------ ------------ ------------
Income (Loss) from continuing operations ..... (1,652,258) 75,183 (3,481,766) (1,265,037)
------------ ------------ ------------ ------------
Discontinued operations:
Loss from discontinued operations ......... (147,596) -- (643,479) (181,285)
Loss on disposal of discontinued operations -- -- (1,100,000) (920,000)
------------ ------------ ------------ ------------
(147,596) -- (1,743,479) (1,101,285)
------------ ------------ ------------ ------------
Net income (loss) ............................ $ (1,799,854) $ 75,183 $ (5,225,245) $ (2,366,322)
============ ============ ============ ============
Income (Loss)from continuing operations
per share - basic ........................ $ (0.32) $ 0.01 $ (1.16) $ (0.12)
Income (Loss) from discontinued operations
per share - basic ........................ (0.03) -- (0.21) (0.02)
Income (Loss) on disposal of discontinued
operations - basic ....................... -- -- (0.36) (0.08)
------------ ------------ ------------ ------------
Net income (loss) per share - basic .......... $ (0.35) $ 0.01 $ (1.73) $ (0.22)
============ ============ ============ ============

Weighted average shares outstanding .......... 5,115,158 11,625,091 3,014,473 10,653,117
============ ============ ============ ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

4
<PAGE>

GreenMan Technologies, Inc.
Consolidated Statement of Changes in Stockholders' Equity
Nine Months Ended June 30, 1999

<TABLE>
<CAPTION>
Notes
Preferred Stock Common Stock Additional Receivable
------------------- --------------------- Paid-in Accumulated Common
Shares Amount Shares Amount Capital Deficit Stock Total
------- ---------- ---------- -------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1998 . 320,000 $3,200,000 6,910,247 $ 69,103 $21,366,619 $(19,356,005) $ -- $ 5,279,717
Shares issued on conversion
of notes payable
and accrued interest ..... -- -- 3,001,110 30,011 882,655 -- -- 912,666
Fair value of conversion
discount on accrued
interest associated with
convertible notes payable -- -- -- -- 16,100 -- -- 16,100
Sale of common stock ........ -- -- 1,538,613 15,386 539,614 -- (55,000) 500,000
Stock issued for
services rendered ........ -- -- 50,000 500 24,500 -- -- 25,000
Shares purchased and retired -- -- (4,000) (40) (1,960) -- -- (2,000)
Shares issued in settlement
of lease obligations ..... -- -- 250,000 2,500 200,000 -- -- 202,500
Fair value of warrants
issued in settlement of
lease obligations under
SFAS No. 123 ............. -- -- -- -- 100,000 -- -- 100,000
Net loss for the nine
months ended June 30, 1999 -- -- -- -- -- (2,366,322) -- (2,366,322)
------- ---------- ---------- -------- ----------- ------------ -------- -----------
Balance, June 30, 1999 ...... 320,000 $3,200,000 11,745,970 $117,460 $23,127,528 $(21,722,327) $(55,000) $ 4,667,661
======= ========== ========== ======== =========== ============ ======== ===========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

5
<PAGE>

GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flow

<TABLE>
<CAPTION>
Nine Months Ended
May 31, June 30,
1998 1999
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................................... $(5,225,245) $(2,366,322)
Adjustments to reconcile net loss to net cash (used for) provided by
operating activities:
Amortization of deferred financing costs ................................... 1,099,657 306,304
Depreciation and amortization .............................................. 1,074,613 1,228,211
Common stock and warrants issued in settlement of lease obligations ........ -- 302,500
Loss on disposal of discontinued operations ............................. 1,100,000 920,000
Decrease (increase) in assets:
Accounts receivable .................................................... 657,112 (478,242)
Inventory .............................................................. 328,891 196,543
Insurance claim receivable ............................................. 2,120,284
Other current assets ................................................... 133,102 (4,164)
Deferred loan costs .................................................... (322,000) --
(Decrease) increase in liabilities:
Accounts payable ....................................................... (519,147) 190,367
Accrued expenses ....................................................... 445,910 (666,767)
----------- -----------
Net cash (used for) provided by operating activities ................ (1,227,107) 1,748,713
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment ......................................... (1,091,329) (1,116,297)
Refund on equipment ........................................................ 113,000 --
Deposit on equipment ....................................................... (3,000) --
Cash acquired on purchase of Cryopolymers Inc. ............................. 172,064 --
Proceeds on disposal of property and equipment and other assets ......... 810,000 16,451
Increase in other assets ................................................... (245,187) (118,758)
----------- -----------
Net cash (used for) provided by investing activities .................. (244,452) (1,218,604)
----------- -----------
Cash flows from financing activities:
Net advances under line of credit .......................................... 279,309 221,914
Net proceeds from convertible note payable ................................. 1,350,000 --
Repayment of notes payable ................................................. (4,980,899) (588,286)
Proceeds from notes payable ................................................ 3,511,379 524,228
Repayment of notes payable related parties ................................. (41,400) (4,956)
Principal payments on obligations under capital leases ..................... (904,393) (1,010,422)
Net proceeds on the sale of common stock ................................... 1,500,000 500,000
Net proceeds on exercise of common stock warrants .......................... 103,158 --
Repurchase of common stock ................................................. -- (2,000)
----------- -----------
Net cash provided by financing activities ................................ 817,154 (559,521)
----------- -----------
Net (decrease) increase in cash ................................................ (654,405) (29,412)
Cash and cash equivalents at beginning of period ............................... 835,367 161,215
----------- -----------
Cash and cash equivalents at end of period ..................................... $ 180,962 $ 131,803
=========== ===========

Supplemental cash flow information:
Machinery and equipment acquired under capital leases ........................ $ 2,771,876 $ --
Common stock issued upon conversion of notes payable and accrued interest .... 4,061,150 912,666
Interest paid ................................................................ 627,796 716,072
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

6
<PAGE>

GreenMan Technologies, Inc.
Consolidated Statements of Cash Flow
(Concluded)

Supplemental Schedule of Non-cash Investing and Financing Activities

On November 19, 1997, Company purchased all of the capital stock of
Cryopolymers, Inc. as follows:

Fair value of assets acquired $1,016,597
Fair value of liabilities assumed 341,597
----------
Fair value of net assets acquired 675,000
Common stock issued (744,000)
Value ascribed to warrants issued under SFAS No. 123 (31,000)
----------
Excess of cost over fair value of net assets $ 100,000
==========

See accompanying notes to unaudited condensed consolidated financial statements

7
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

1. Business

GreenMan Technologies, Inc. (the "Company" or "GreenMan") is in the
business of collecting, shredding and marketing scrap tires. The tire recycling
operations (the "Recycling Operations") are located in Jackson and
Lawrenceville, Georgia; Savage, Minnesota and Batesburg, South Carolina.

Until closure in January 1998, the Company also operated an injection
molding operation (the "Molding operation") located in Malvern, Arkansas. In
August 1998, the Company's Louisiana crumb rubber processing facility was
severely damaged by a fire which necessitated the closure of the operation. In
March 1999, the Company decided to discontinue operations at its wholly-owned
subsidiary, DuraWear Corporation ("DuraWear") and in June 1999 sold
substantially all of DuraWear's assets and liabilities to a third party.
DuraWear manufactured, installed and marketed a diverse range of abrasive
resistant ceramic and polymer products.

On June 30, 1997, the Company acquired as wholly owned subsidiaries, all
of the capital stock of BFI Tire Recyclers of Minnesota, Inc. ("BTM") and BFI
Tire Recyclers of Georgia, Inc. ("BTG"), both of which were wholly-owned
subsidiaries of Browning-Ferris Industries, Inc. and are in the scrap tire
collection and processing business. BTM and BTG have been renamed GreenMan
Technologies of Minnesota, Inc. ("GMTM") and GreenMan Technologies of Georgia,
Inc. ("GMTG"), respectively.

On November 19, 1997, the Company acquired as a wholly owned subsidiary,
all of the capital stock of Cryopolymers, Inc., ("Cryopolymers") a processor of
scrap tire chips into crumb rubber located in St. Francisville, Louisiana.
Cryopolymers has been renamed GreenMan Technologies of Louisiana, Inc. ("GMTL").
GMTL ceased processing operations in August 1998 due to a fire and GMTL's
facility was completely closed in December 1998.

On September 4, 1998, the Company acquired all of the scrap tire
collection and processing assets of United Waste Service, Inc. ("United"), a
wholly owned subsidiary of Republic Services, Inc. The two recycling operations
are located in Lawrenceville, Georgia and Batesburg, South Carolina. The
Lawrenceville operation was assumed by GMTG. The Batesburg operation has been
incorporated as GreenMan Technologies of South Carolina, Inc. ("GMTSC").

2. Basis of Presentation

The consolidated financial statements include the results of the Company,
GMTM and GMTG for all periods presented, GMTL since November 19, 1997 and GMTSC
since September 4, 1998. All significant intercompany accounts and transactions
are eliminated in consolidation.

The Company discontinued operations at the Malvern, Arkansas molding
operation effective January 1998. Management adopted a formal plan to dispose of
the facility on January 31, 1998. Management adopted a formal plan to dispose of
DuraWear in March 1999 and in June 1999 sold substantially all of DuraWear's
assets to a third party. As a result, the consolidated financial statements of
the Company were restated to reflect the operating results of the discontinued
operations as a separate line item for all periods presented.

The financial statements are unaudited and should be read in conjunction
with the financial statements and notes thereto for the transition period ended
September 30, 1998 included in the Company's Form 10-KSB/A-1. 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 ("SEC")
rules and regulations, although the Company believes 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 the opinion of
management, 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.

8
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

3. Change in Fiscal Year

On June 24,1998, the Board of Directors of the Company adopted a change of
its fiscal year-end from May 31 of each year to September 30. Accordingly,
during the first full year of the newly adopted fiscal period, quarterly results
for the periods ended December 1998, March 1999 and June 1999 will be compared
to prior fiscal periods ended November 1997, February 1998 and May 1998
respectively. Management believes there are no significant factors which would
negatively impact the comparability of the information or trends reflected.

4. Net Income (Loss) Per Share

Basic earnings per share represents income available to common stock
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 potential 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 the Company relate to outstanding
stock options and warrants, (determined using the treasury stock method)
convertible debt, and preferred stock. The assumed conversion of outstanding
dilutive stock options and warrants would increase the shares outstanding but
would not require an adjustment to income as a result of the conversion. For all
loss periods presented, options, warrants, convertible debt and preferred stock
were anti-dilutive and excluded from the net loss per share computation.

All share and per share data in the financial statements have been
adjusted to give retroactive effect to a reverse split of the Company's Common
Stock pursuant to which each five shares of Common Stock then outstanding were
converted into one share. The reverse split became effective on March 23, 1998.

5. Acquisition of Subsidiaries

On June 30, 1997, the Company acquired, as wholly owned subsidiaries, all
of the capital stock of BFI Tire Recyclers of Minnesota, Inc. ("BTM") and BFI
Tire Recyclers of Georgia, Inc. ("BTG"), both of which were wholly-owned
subsidiaries of Browning-Ferris Industries, Inc. and are in the scrap tire
collection and processing business. BTM and BTG were renamed GreenMan
Technologies of Minnesota, Inc. ("GMTM") and GreenMan Technologies of Georgia,
Inc. ("GMTG"), respectively. The Company agreed to pay $5,331,516 for all of the
outstanding capital stock of GMTM and GMTG of which $650,000 was paid as a
deposit and the balance of $4,681,516 was financed by a short-term note, at an
interest rate of 10% from BFI. The acquisition has been accounted for by the
purchase method of accounting, and accordingly, the net assets and results of
operations of GMTM and GMTG are included in the consolidated financial
statements since the date of acquisition.

On November 19, 1997, the Company acquired as a wholly owned subsidiary
all of the outstanding common stock of Cryopolymers Inc., (renamed GreenMan
Technologies of Louisiana, Inc. or "GMTL") a privately-held crumb rubber
producer located in St. Francisville, Louisiana. The purchase price consisted of
(1) 153,402 shares of common stock (then valued at $744,000); (2) warrants to
purchase 240,000 shares of common stock exercisable commencing April 1, 1998 for
period of five years at prices ranging from $15.00 to $35.00 per share; and (3)
additional warrants to purchase 20,000 shares of common stock exercisable at
$4.85 per share for a period of five years and vesting over a two-year period.
The Company has determined the total purchase price to be $775,000 based upon
the value of the common stock and a $31,000 value ascribed to the warrants to
purchase 260,000 shares of common stock at varying prices. The acquisition has
been accounted for as a purchase and accordingly, the operations of GMTL are
included in the consolidated financial statements since November 19, 1997.

Goodwill was recorded as the total consideration paid by the Company
exceeded the fair value of the net assets acquired by $100,000. In August 1998,
GMTL's facility was severely damaged by a fire which necessitated the closure of
the operation. As a result, the remaining goodwill balance was expensed as of
September 30, 1998.

9
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

5. Acquisition of Subsidiaries - (Continued)

On September 4, 1998, the Company acquired all of the scrap tire
collection and processing assets of United Waste Service, Inc. ("United"), a
wholly owned subsidiary of Republic Services, Inc. The Company paid $4,050,000
for the acquired assets in the form of $850,000 in cash and $3,200,000 of
preferred stock. The preferred stock is convertible into the Company's common
stock beginning in February 2001 based upon the higher of the trailing 15 day
average closing bid (as defined) prices prior to the conversion date or the
average of the closing bid prices during the period from September 3, 1998 to
February 3, 2001. The 320,000 shares of Class B convertible preferred stock have
a liquidation value of $10 per share. Simultaneous with the acquisition, the
Company entered into an equipment financing agreement with Heller Financial Inc.
which provided the $850,000 for the transaction. The acquired assets are located
in Lawrenceville, Georgia (reported as an operating division of GMTG) and
Batesburg, South Carolina (incorporated as GreenMan Technologies, of South
Carolina, Inc. "GMTSC") .The acquisition has been accounted for as a purchase
and accordingly, the operations are included in the consolidated financial
statements since September 4, 1998. Goodwill was recorded as the total
consideration paid by the Company exceeded the fair value of the net assets
acquired by $2,015,000.

The following unaudited proforma financial information summarizes the
consolidated results of operations of the Company and the subsidiaries as if the
acquisitions had occurred at the beginning of fiscal year ended May 31, 1998.
The unaudited proforma information is not necessarily indicative of the results
of operations that would have occurred had the purchase been made at the
beginning of the fiscal year or of future results of operations of the combined
companies.

Three Months Nine Months
Ended Ended
May 31, 1998 May 31, 1998
------------ ------------
Revenue $4,033,859 $11,258,607
Net Loss From Continuing Operations (957,553) (2,681,137)
Net Loss (1,746,892) (5,066,359)
Net Loss per Weighted Average Share (0.34) (1.68)

6. Insurance Claim Receivable on Casualty Loss

In August 1998, GMTL's facility was damaged by a fire which necessitated
the closure of the operation. The Company does not intend to rebuild in St.
Francisville, Louisiana and does not plan to re-establish crumb rubber
processing capabilities at this time.

Under the terms of GMTL's $3,000,000 property insurance policy, the
insurance company paid $2,050,000 towards the insured loss. The remaining
$950,000 may be paid if the Company can demonstrate, to the insurance company's
satisfaction, that the Company has invested at least $3,000,000 (replacement
policy limit) in alternative tire recycling equipment that satisfies the
replacement requirements of the insurance policy. There can be no assurance that
this will be the case or that the Company will ever receive the additional
insurance proceeds. In January 1999, the Company submitted a proposal to the
insurance company, which would allow GMT to receive the remaining funds due
under the policy. The Company will recognize the remaining $950,000 of insurance
proceeds when it has received such funds from the insurance company and has
replaced the damaged property. As a result of the closure of GMTL, management
wrote down all GMTL assets to their estimated net realizable value and accrued
for all remaining estimated fire related costs at September 30, 1998 resulting
in a casualty loss of $1,450,000. In April 1999, the Company received
approximately $200,000 from the insurance company associated with its business
interruption policy.

10
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

6. Insurance Claim Receivable on Casualty Loss- (Continued)

On December 31, 1998 the Company reached an agreement in principle with
the lessor of GMTL's cryogenic equipment whereby the lessor agreed to forgive
$500,000 of capital lease obligations in return for a $500,000 payment when the
Company received the actual cash value ("ACV") payment from the insurance
company. The lessor agreed to execute a 10-year note payable with the Company
for the remaining capital lease balance of $1,600,000. The note would bear
interest at 10% per annum and be payable in monthly payments of $21,144
including interest and principal starting in June 1999. The Company recorded
this forgiveness of debt as other income for the period ended September 30,
1998. The Company, however, subsequently received correspondence from attorneys
for the lessor purporting to terminate the lease restructuring and demanding
payment of the original lease buyout of approximately $3,100,000. The lessor
also sought an additional $400,000 for cryogenic rubber recycling equipment the
lessor contended was purchased on behalf of the Company.

On May 14, 1999, the Company and the lessor reached a settlement whereby
the lessor agreed to assign to the Company all interest in and to any additional
insurance proceeds to be received as a result of the August 21, 1998 fire;
transfer ownership to the Company of certain additional cryogenic rubber
recycling equipment purchased by the lessor on behalf of the Company; and
withdraw from all legal proceedings against the Company. In return, the Company
(1) paid the lessor $1,700,000 of escrowed insurance proceeds; (2) executed a
$1,100,000 sixty month note payable, bearing interest at 7.75% with monthly
payments of $7,553 and a balloon payment due May 2004; (3) issued 250,000 shares
of common stock (valued at $202,500); (4) issued immediately exercisable
warrants to purchase 450,000 shares of common stock (value ascribed at $100,000)
for period of ten years at $ .81 per share and (5) paid all fees associated with
the settlement agreement. The Company determined the total settlement to equal
$3,255,000 resulting in an additional casualty loss of $955,000 which was
recorded at March 31, 1999. The $1,100,000 note payable is personally guaranteed
by four officers of the Company and may be prepaid prior to December 31, 1999 at
a $200,000 discount. The Company has pledged the common stock of GMTSC as
collateral to the four officers for their personal guarantee. The Company is
currently marketing the additional cryogenic rubber equipment to potential
purchasers.

7. Inventory

Inventory consists of the following:
September
30, 1998
---------
Raw materials ............................... $ 8,517
Work in process ............................. 19,552
Finished goods .............................. 200,968
--------
$229,037
========

All inventory is associated with DuraWear and was sold to a third
party in June 1999.

8. Property, Plant and Equipment

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
September 30, June 30, Estimated Useful
1998 1999 Lives
------------- ----------- ----------------
<S> <C> <C> <C>
Land ................................... $ 879,162 $ 655,377
Buildings .............................. 2,561,924 1,647,545 5-25 years
Machinery and equipment ................ 4,007,240 4,564,928 3-20 years
Furniture and fixtures ................. 91,564 88,023 3-7 years
Motor vehicles ......................... 2,699,498 3,000,034 3-10 years
----------- -----------
10,239,388 9,955,907
Less accumulated depreciation
and amortization (1,112,815) (1,796,695)
----------- -----------
Property, plant and equipment (net) $ 9,126,573 $ 8,159,212
=========== ===========
</TABLE>

11
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

9. Discontinued Operations

In January 1998, the Company discontinued operations at its Malvern,
Arkansas facility (the "Facility"). The Facility was previously engaged in
providing injection molding manufacturing services.

Management adopted a formal plan to dispose of the Facility on January 31,
1998. As a result, the Company recorded a loss on disposal of the Facility of
$1,100,000 and wrote down the Facility's net assets to their estimated fair
market value. The consolidated financial statements of the Company were restated
to reflect the net operating results of the Facility as a separate line item for
all periods presented. The Company reported a loss from discontinued operations
associated with the Facility for the nine months ended May 31, 1998 of $513,920.
In July 1998, the Company disposed of the remaining assets and converted
$300,000 of capital lease obligations into a $300,000, convertible note payable
that bears interest at the rate of 10% per annum. The note is payable in 36
monthly payments of $9,680 and is convertible into shares of the Company's
common stock at the holder's option, at $1.38 per share. As of June 30, 1999,
the note is in default and the note holder has commenced legal proceedings to
collect all amounts due. The note bears interest at the rate of 18% per annum
from and after an event of default. The Company has classified the note as a
current liability and is in negotiations with the note holder to rectify the
default. At September 30, 1998 and June 30, 1999, the Company had approximately
$246,000 and $109,000, respectively of the Facility's net obligations remaining
which are included in accrued expenses. The Company is currently negotiating
payment terms with the remaining creditors, but has not reached settlement with
such creditors.

In March 1999, the Company decided to discontinue operations at its
DuraWear subsidiary in order to eliminate continued operating losses and focus
efforts on the Company's core business of tire recycling. Management adopted a
formal plan to dispose of DuraWear on March 31, 1999 (the "Measurement Date").
As a result, the Company recorded an estimated loss on disposal of DuraWear of
$920,000 and wrote down DuraWear's net assets to their estimated fair market
value at March 31, 1999. On June 14, 1999, the Company sold substantially all
the assets of DuraWear to a third party. Pursuant to the terms of the agreement,
the third party paid $16,451 for substantially all assets and liabilities of
DuraWear, excluding land and buildings, which were retained by the Company
subject to the existing mortgage. In order to obtain a release from the mortgage
holder of it's security interest in the assets sold, the Company was required to
reduce the outstanding principal balance by $8,193 and an officer of the Company
was required to provide a personal guarantee. The third party also executed a
one year lease for use of the land and buildings retained by the Company at a
monthly rental of $4,500. The lease automatically renews for an additional two
(2) one year terms unless notice of non-renewal is given by the third party at
least ninety days prior to the end of the term. The Company has granted the
third party an option to purchase the land and buildings for $850,000 during the
term of the lease.

The consolidated financial statements of the Company have been restated to
reflect the net operating results of DuraWear as a separate line item ("Loss
from discontinued operations") for all periods presented. The Company reported a
loss from discontinued operations associated with DuraWear for the three months
ended May 31, 1998 of $147,596 and $129,559 for the nine months ended May 31,
1998 and a loss from discontinued operations of $181,285, for the nine months
ended June 30, 1999. At September 30, 1998 and June 30, 1999 DuraWear's assets
totaled $1,979,493 and $712,185, respectively, and represented 11% and 5% of
consolidated assets.

12
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

10. Convertible Notes Payable

December 1997 Debentures

In December 1997, the Company entered into securities purchase agreements
(the "Debenture Agreements") with two investors (the "Debenture Holders") and
pursuant thereto, the Company issued debentures in the aggregate principal
amount of $1,600,000 (the "Initial Debentures") and immediately exercisable
two-year warrants to purchase 32,000 shares of Common Stock at an exercise price
of $3.13 per share. Each Initial Debenture bears interest at 8% and is due
December 15, 2000. The Initial Debentures are convertible at the election of the
holder at any time commencing upon the earlier to occur of (i) the effective
date of the registration statement covering the shares issuable upon conversion
of the Debentures, or (ii) 60 days following the date of issuance at a
conversion price equal to the lower of the average closing bid prices on the
five trading days preceding the date of the closing of the December Offering or
75% of the average closing bid prices on the five trading days preceding the
date of the conversion of the Debentures. The Debentures automatically convert
into shares of common stock upon maturity. The Company also issued immediately
exercisable two-year warrants to purchase 32,000 shares of common stock at an
exercise price of $3.13 per share to the placement agent.

The net proceeds from the December Offering were approximately $1,350,000
after deducting commissions and expenses of approximately $250,000. The Company
used $750,000 of the proceeds to paydown the outstanding loan payable to BFI for
the purchase of GMTM and GMTG. The Company recorded a deferred charge of
approximately $533,000 associated with the 25% discount from market to be
realized upon conversion of the Debentures. The Company also recorded deferred
financing costs of $32,000 in connection with the issuance of warrants to
purchase 64,000 shares of common stock to the investors and placement agents in
accordance with SFAS No. 123.

Pursuant to the Debenture Agreements, the Debenture Holders have agreed to
purchase up to an additional $2,000,000 in the aggregate of debentures
("Additional Debentures") in multiple tranches during 12 months following the
effective date of the registration statement covering the shares issuable upon
conversion of the Debentures. Each tranche shall be for the purchase of between
$75,000 and $175,000 in Additional Debentures and may be completed at the
election of the Company subject to certain conditions. Each Additional Debenture
shall bear similar terms to the Initial Debentures including the issuance of
warrants per Additional Debenture to both the Debenture Holders and the
placement agent. The Additional Debentures are convertible at the holders
option, within two days of issuance. Pursuant to the terms of the Debenture
Agreements, the Company is obligated to borrow at least $1,000,000 in Additional
Debentures or the Company must provide the Debenture Holders As of June 30,
1999, all of the Initial Debentures and accrued interest have been converted
into shares of common stock. The Company has notified the Debenture Holders that
it will not borrow the remaining $550,000 of the commitment and will issue the
additional warrants.

The Company issued $450,000 of Additional Debentures during the period
ended September 30, 1998 and immediately exercisable two-year warrants to
purchase 27,000 shares of Common Stock at an exercise price ranging from $1.17
to $2.41 per share. The Company also issued immediately exercisable two year
warrants to purchase 27,000 shares of common stock at an exercise prices ranging
from $1.17 to $2.41 per share to the placement agent. The Company recorded a
deferred charge of approximately $150,000 associated with the 25% discount from
market to be realized upon conversion of the Additional Debentures. The Company
also recorded deferred financing costs of $54,000 in connection with the
issuance of warrants to purchase 54,000 shares of common stock to the investors
and placement agents in accordance with SFAS No. 123. During the period fo
October to December 1998, $192,500 of Additional Debentures and $15,734 of
accrued interest were converted into 731,288 shares of common stock. During
January 1999, the remaining $257,500 of Additional Debentures and $27,039 of
accrued interest were converted into 874,465 shares of common stock.

The deferred charges have been amortized over the estimated life of the
Initial and Additional Debentures Amortization and interest expense for the nine
months ended June 30, 1999 was $332,494.

13
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

11. Letter of Intent

On June 1, 1998, the Company signed a letter of intent to acquire all of
the capital stock of Mac's Tire Recyclers ("Mac's") a privately-held tire
recycler located in Saltillo, Mississippi. The Company operated the Mac's
facility for the period from June 1, 1998 until April 16, 1999 under a
management agreement (the "management agreement"). The management agreement
provides for the Company to earn a management fee equal to 90% of the net income
of Mac's before depreciation and income taxes. The Company recognized no income
under this agreement for the quarter ended June 30, 1999 and $36,000 for the
nine months ended June 30, 1999. At June 30, 1999, the Company has an accounts
receivable from Mac's of approximately $150,995, which represents accrued
management fees. The management agreement term expired on April 16, 1999 and
accordingly, the Company is no longer managing Mac's operations. Based upon due
diligence, both parties have agreed not to proceed with the acquisition.

12. Capital Leases

In October 1997, the Company entered into a fifteen-year cryogenic
equipment lease agreement. Under the terms of the agreement, GMTL was paying
$25,500 per month plus an additional $100,000 of bonus rent per year for the
first six years of the agreement. The bonus rents were payable in the Company's
common stock with the number of shares determined using the closing bid price of
the common stock on each December 31. The lease was classified as a capital
lease at May 31, 1998 with an equipment value of $2,771,876. As a result of the
August 21, 1998 fire at GMTL, the leased cryogenic equipment was destroyed. On
December 31, 1998 the company reached an agreement in principle with the lessor
of GMTL's cryogenic equipment whereby the lessor agreed to forgive $500,000 of
capital lease obligations in return for a $500,000 payment when the Company
receives the additional payment from the insurance company. The lessor agreed to
execute a 10-year note payable with the Company for the remaining capital lease
balance of $1,600,000. The note will bear interest at 10% per annum and is
payable in monthly payments of $21,144 including interest starting in June 1999.
The Company has recorded this forgiveness of debt as other income for the period
ended September 30,1998. The Company, however, subsequently received
correspondence from attorneys for the lessor purporting to terminate the lease
restructuring and demanding payment of the original lease buyout of
approximately $3,100,000. The lessor also sought an additional $400,000 for
cryogenic rubber recycling equipment the lessor contended was purchased on
behalf of the Company. On May 14, 1999, the Company and the lessor reached a
settlement whereby the lessor agreed to assign to the Company all interest in
and to any additional insurance proceeds to be received as a result of the
August 21, 1998 fire; transfer ownership of the additional cryogenic rubber
recycling equipment to the Company; and withdraw from all legal proceedings
against the Company. In return, the Company paid the lessor (1) $1,700,000 of
escrowed insurance proceeds; (2) executed a $1,100,000 sixty month note payable,
bearing interest at 7.75% with monthly payments of $7,553 and a balloon payment
due May 2004; (3) issued 250,000 shares of common stock (valued at $202,500);
(4) issued immediately exercisable warrants to purchase 450,000 shares of common
stock (value ascribed at $100,000) for period of ten years at $.81 per share and
(5) paid all fees associated with the settlement agreement. The Company
determined the total settlement to equal $3,255,000 resulting in an additional
casualty loss of $955,000 which was recorded at March 31,1999. The $1,100,000
note payable is personally guaranteed by four officers of the Company and may be
prepaid prior to December 31, 1999 at a $200,000 discount. The Company has
pledged the common stock of GMTSC as collateral to the four officers for their
personal guarantee. The Company has assigned a value of $200,000 to the
cryogenic rubber recycling equipment and is currently marketing the equipment to
potential purchasers.

13. Common Stock Transactions

In October 1998, the Company commenced a private offering of common stock
in an effort to raise up to $500,000 in gross proceeds (the offering was
subsequently increased to $1,000,000 in March 1999). As of June 30, 1999, the
Company has sold shares of unregistered common stock to investors including
officers and directors of the Company (the "Investors") for approximately
$555,000 of net proceeds. In January 1999, the Company advanced $55,000 to two
officers of the Company under an 8.5% secured loan agreement with both principal
and interest due January 2002. The proceeds were used to participate in the
private placement and the loans are secured by 191,637 shares of the Company's
common stock owned by the officers. The Company granted the Investors piggy-back
registration rights to register the common stock. The Investors have agreed not
to sell or transfer the shares for a period of at least twelve months after
issuance.

14
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

13. Common Stock Transactions - (Continued)

In January 1999, the Company executed a two-year investment banking and
corporate financing agreement with Schneider Securities Inc. ("Schneider"). In
exchange for services to be provided by Schneider, the Company agreed to (1) pay
Schneider $25,000 per year, (2) issue Schneider 50,000 shares of unregistered
common stock which are subject to an eighteen month lock-up agreement, (3) issue
Schneider warrants to purchase 150,000 shares of common stock exercisable
commencing in January 2000 for period of five years at prices ranging from $1.00
to $1.50 per share and (4) issue Schneider warrants to purchase 100,000 shares
of common stock exercisable commencing in January 2001 for period of five years
at prices ranging from $2.00 to $2.50 per share.

14. Market for Common Stock

On October 29, 1998, the Company received notice from the NASDAQ Stock
Market, Inc. ("NASDAQ") stating that the Company's common stock would be
delisted from NASDAQ if, in the ninety day period ended January 29, 1999, the
Company could not demonstrate compliance with NASDAQ's $1.00 minimum bid price
for ten consecutive trading days. As of January 29, 1999, the Company had not
regained full compliance with the minimum bid price requirement and requested an
oral appeal to NASDAQ's Listing and Hearing Review Committee. On March 26, 1999,
the Company also received notice from NASDAQ stating that the Company had
violated marketplace rules regarding shareholder approval in connection with the
September 1998 acquisition of the scrap tire collection and processing assets of
United Waste Service, Inc. ("United").

On April 9, 1999 the Company attended a hearing of the Listing and Hearing
Review Committee and requested an extension of time in order to comply with the
$1.00 minimum bid requirement. The Company also provided documentation
substantiating its contention that the Company did not violate the NASDAQ
marketplace rules in regards to the United acquisition.

On April 12, 1999, the Company received notice from NASDAQ requesting
additional information to substantiate the Company's ability to sustain
compliance with continued listing requirements in light of the Company's going
concern opinion received at September 30, 1998.

On July 7, 1999, NASDAQ notified the Company that as a result of
noncompliance with the $1.00 minimum bid requirement and NASDAQ's contention
that the Company had violated marketplace rules regarding the United
acquisition, the Company' Securities would no longer be listed on NASDAQ's Small
Cap Market System effective July 7, 1999. Effective July 8, 1999, the Company's
common stock and warrants began trading on the Over the Counter Bulletin Board
and continue to trade on the Boston Stock Exchange. The Company filed an appeal
with NASDAQ requesting a review of the decision and a reinstatement of the
Company's securities on the NASDAQ Small Cap Market. In August 1999, the Company
received notice from the Nasdaq Listing and Hearing Review Council that its
appeal would be considered and the decision will be reviewed in January 2000.

There can be no assurance, however, that the Company's appeal will be
successful and that its securities reinstated on NASDAQ's Small Cap Market. The
Company's management anticipates that the absence of the listing on NASDAQ's
Small Cap Market for the Company's common stock may have a material adverse
effect on the market for, and potentially the market price of, the Company's
common stock.

15. Segment Information

The Company's principal business is collecting, shredding and marketing of
scrap tires to be used as feedstock for tire derived fuel ("TDF"), civil
engineering projects and/or for further processing into crumb rubber. In March
1999, the Company decided to discontinue operations at it's industrial materials
subsidiary in order to eliminate continued operating losses and focus efforts on
the Company's core business of tire recycling.

15
<PAGE>

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
June 30, 1999

16. Crumb Rubber Modification Technology Agreement

In August 1998, the Company entered into a license agreement with a
privately-held company ("licensor") under which it acquired the exclusive rights
and license to use a series of four proprietary technologies (the
"technologies") to be developed for use in the asphalt industry. In connection
with this license the Company was required to pay $150,000 over a twelve month
period and issued warrants to purchase shares of common stock of the Company.

In April 1999, the Company and the licensor agreed to terminate the August
1998 license agreement. In return for payments made to date ($85,000), the
Company received assignment of two developed technologies for crumb rubber
modification. The licensor also returned the warrants.

16
<PAGE>

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 the Company's Form
10-KSB/A-1 filed for the transition period ended September 30, 1998.

All share and per share data in this Form 10-QSB have been adjusted to
give retroactive effect to a reverse split of the Company's Common Stock
pursuant to which each five shares of Common Stock then outstanding were
converted into one share. The reverse split became effective on March 23, 1998.

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.

Overview

GreenMan Technologies, Inc. (the "Company" or "GreenMan") is in the
business of collecting, shredding and/or marketing of scrap tires. The tire
recycling operations (the "Recycling Operations") are located in Jackson and
Lawrenceville, Georgia; Savage, Minnesota and Batesburg, South Carolina.

Until closure in January 1998, the Company also operated an injection
molding operation (the "Molding operation") located in Malvern, Arkansas. In
August 1998, the Company's Louisiana crumb rubber processing facility was
severely damaged by a fire which necessitated the closure of the operation. In
March 1999, the Company decided to discontinue operations at its wholly-owned
subsidiary, DuraWear Corporation ("DuraWear") and in June 1999 sold
substantially all of DuraWear's assets to a third party. DuraWear manufactured,
installed and marketed a diverse range of abrasive resistant ceramic and polymer
products.

In January 1998, the Company closed its Molding operations in order to
eliminate continued operating losses. The Molding operations were previously
engaged in providing injection molding manufacturing services to customer
specifications in the production of plastic and thermoplastic rubber parts.
Management believes that third party contract manufacturers could provide the
Company with equivalent injection molding capability at equal or less cost on an
as-needed basis should there be a necessity to meet market demands in the
future.

In June 1998, the Company signed a letter of intent to acquire all of the
capital stock of Mac's Tire Recyclers ("Mac's") a privately-held tire recycler
located in Saltillo, Mississippi. The Company operated the Mac's facility from
June 1, 1998 until April 16, 1999 under a management agreement (the "management
agreement"). The management agreement provides for the Company to earn a
management fee equal to 90% of the net income of Mac's before depreciation and
income taxes. The management agreement term expired on April 16, 1999 and
accordingly, the Company is no longer managing Mac's operations. Based upon due
diligence, both parties have agreed not to proceed with the acquisition.

17
<PAGE>

On September 4, 1998, the Company acquired all of the scrap tire
collection and processing assets of United Waste Service, Inc. ("United"), a
wholly owned subsidiary of Republic Services, Inc.. The two recycling operations
are located in Lawrenceville, Georgia and Batesburg, South Carolina. The
Lawrenceville operations were previously an operating division of GMTG but were
consolidated with ongoing Jackson, Georgia operations in February 1999. The
Batesburg operation has been incorporated as GreenMan Technologies of South
Carolina, Inc. ("GMTSC"). The Company completed the filing of Form 8-K for the
United acquisition in April 1999. As a result of its delay in such filing, the
Company is ineligible to register securities using SEC Form S-3 until April
2000.

Results of Operations

Three Months ended June 30, 1999 Compared to the Three Months ended May 31, 1998

Net sales for the three months ended June 30, 1999 were $4,053,549 as
compared to $2,757,689 for the three months ended May 31, 1998. The increase of
$1,295,860 or 47% was primarily attributable to processing over 1.8 million more
tires during the three months ended June 30, 1999 as a result of significant
internal growth and the September 1998 acquisition of the United assets.

Gross profit for the three months ended June 30, 1999 was $895,330 or 22%
of net sales as compared to $852,297 or 31% of net sales for the three months
ended May 31, 1998. The lower than average gross profit during the third quarter
was attributable to equipment maintenance problems experienced at GMTSC during
the quarter resulting in increased processing and transportation costs as GMTSC
tires were transferred to GMTGA for processing. In August 1999, GMTSC executed a
long term lease for new processing equipment which the Company believes will
eliminate the excessive equipment maintenance/downtime and high transfer/
transportation costs experienced by GMTSC. The decrease in gross profit was also
attributable to increased disposal and subcontracting costs associated with
consolidating the Georgia based United assets into GMTG which was concluded in
August 1999.

Research and development expenditures were $15,750 for the three months
ended June 30, 1999 as compared to $491,717 for the three months ended May 31,
1998. The decrease is due to the fact that during the prior period, the Company
expended a significant effort in the area of crumb rubber research and
development. The effort resulted in the June 1998 Federal Highway Administration
certification of the Company's crumb rubber modification technology for eventual
use in the asphalt industry.

Selling, general and administrative expenses were $670,708 for the three
months ended June 30, 1999, or 17% of sales as compared to $1,371,095 or 50% of
sales, for the three months ended May 31, 1998.

As a result of the foregoing, the Company had an operating profit of
$208,872 for the three months ended June 30, 1999 as compared to an operating
loss of $1,010,515 for three months ended May 31, 1998.

Interest and financing costs for the three months ended June 30, 1999
decreased by $518,559 to $131,097 due to decreased interest and amortization of
the financing costs associated with the issuance of convertible debentures.

The Company earned net income of $75,183 or $0.01 per share for the three
months ended June 30, 1999 as compared to a net loss of $1,799,854 or $0.35 per
share for the three months ended May 31, 1998.

Results of Operations

Nine Months ended June 30, 1999 Compared to the Nine Months ended May 31, 1998

Net sales for the nine months ended June 30, 1999 were $12,239,161 as
compared to $7,430,097 for the nine months ended May 31, 1998. The increase of
$4,809,064 or 65% was attributable to processing approximately 14 million more
tires during the nine months ended June 30, 1999 as a result of significant
internal growth and the September 1998 acquisition of the United assets.

Gross profit for the nine months ended June 30, 1999 was $3,028,895 or 25%
of net sales as compared to $2,001,654 or 27% of net sales for the nine months
ended May 31, 1998. The impact of the increased nine month volume was offset by
a lower than average gross profit during the second and third quarters as a
result of equipment maintenance problems experienced at GMTSC during the
quarters resulting in increased processing and transportation costs as GMTSC
tires were transferred to GMTGA for processing. In August 1999, GMTSC executed a
long term lease for new processing equipment which the Company believes will
eliminate the excessive equipment maintenance/downtime and high
transfer/transportation costs experienced by GMTSC. The

18
<PAGE>

decrease was also attributable to increased disposal and subcontracting costs
associated with consolidating the Georgia based United assets into GMTG which
was concluded in August 1999.

Research and development expenditures were $46,625 for the nine months
ended June 30, 1999 as compared to $600,187 for the nine months ended May 31,
1998. The decrease is due to the fact that during the prior period, the Company
expended a significant effort in the area of crumb rubber research and
development. The effort resulted in the June 1998 Federal Highway Administration
certification of the Company's crumb rubber modification technology for eventual
use in the asphalt industry.

Selling, general and administrative expenses were $2,588,718 for the nine
months ended June 30, 1999, or 21% of sales as compared to $2,917,478 or 39% of
sales, for the nine months ended May 31, 1998.

As a result of the foregoing, the Company had an operating profit of
$393,552 for the nine months ended June 30, 1999 as compared to an operating
loss of $1,516,011 for the nine months ended May 31, 1998.

Interest and financing costs for the nine months ended June 30, 1999
decreased by $1,258,687 to $716,072 for the nine months ended June 30, 1999 due
to decreased interest and amortization of the financing costs associated with
the issuance of convertible debentures. The Company recorded an additional
$955,000 casualty loss in March 1999 associated with GMTL's August 1998 fire and
the litigation that ensued therefrom.

The $1,101,285 loss from discontinued operations for the nine months ended
June 30, 1999, includes a $181,285 loss from discontinued operations and a
$920,000 loss on disposal of discontinued operations associated with DuraWear,
the Company's industrial materials subsidiary. The loss from discontinued
operations for the nine months ended May 31, 1998 includes a $513,920 loss from
discontinued operations and a $1,100,000 loss on disposal of discontinued
operations associated with the closure of the Company's injection molding
operations in January 1998 and a $129,559 loss from discontinued operations
associated with DuraWear.

The Company had a net loss of $2,366,322 or $0.22 per share for the nine
months ended June 30, 1999 as compared to a net loss of $5,225,245 or $1.73 per
share for the nine months ended May 31, 1998.

Liquidity and Capital Resources

Since its inception, the Company has satisfied its capital requirements
through the sale of common and preferred stock and debt securities to investors,
loans from affiliated and unaffiliated lenders, the acquisition of machinery and
equipment through capital leases and notes payable, and the issuance of common
stock and common stock options and warrants in lieu of cash for services
rendered.

On February 5, 1998, GMTM and GMTG collectively secured a $5.0 million
asset-based credit facility (the "Credit Facility") from Heller Financial Inc.
("Heller"). The Credit Facility consisted of: (i) $1,400,000 of three year term
notes secured by the real estate of GMTM and GMTG, payable in monthly principal
installments of $23,333 plus interest at prime plus 1.75% and a balloon payment
of $583,380 due in February 2001; (ii) $1,900,000 of three year term notes
secured by the machinery and equipment of GMTM and GMTG, payable in monthly
principal installments of $31,667, with interest at prime plus 1.75% and a
balloon payment of $791,620 due in February 2001 and (iii) a working capital
line of credit of up to $1,700,000 secured by the eligible accounts receivable,
as defined, of GMTM and GMTG. The line of credit bears interest at prime plus
1.5%.

The Company used the proceeds from the Credit Facility, to repay the
balance of $3,906,071, including interest, due under the short-term note payable
to BFI for the purchase of GMTM and GMTG. The Company also incurred
approximately $322,000 of deferred loan costs associated with securing the
Credit Facility. These deferred charges are being amortized over the life of the
term notes.

On September 4, 1998, Heller provided GMTG an additional $850,000 term
note secured by the machinery and equipment of GMTG and payable in monthly
principal installments of $14,667, with interest at prime plus 1.75% and a
balloon payment of $439,324 due in February 2001. GMTG used the proceeds for the
United acquisition. In connection with the loan, Heller reduced the working
capital line of credit from $1,700,000 to $1,079,000.

In May 1999, the Company was notified that Heller had sold the loans
comprising the Credit Facility to Fremont Financial Corporation. There have been
no modifications to the existing terms of the Credit Facility as a result of the
sale.

19
<PAGE>

In December 1997, the Company entered into securities purchase agreements
(the "Debenture Agreements") with two investors (the "Debenture Holders") and
pursuant thereto, the Company issued Debentures in the aggregate principal
amount of $1,600,000 (the "Initial Debentures") and immediately exercisable
two-year warrants to purchase 32,000 shares of Common Stock at an exercise price
of $3.13 per share. Each Initial Debenture bears interest at 8% and is due
December 15, 2000. The Initial Debentures are convertible at the election of the
holder at any time commencing upon the earlier to occur of (i) the effective
date of the registration statement covering the shares issuable upon conversion
of the Debentures, or (ii) 60 days following the date of issuance at a
conversion price equal to the lower of the average closing bid prices on the
five trading days preceding the date of the closing of the December Offering or
75% of the average closing bid prices on the five trading days preceding the
date of the conversion of the Debentures. The Debentures automatically convert
into shares of common stock upon maturity. The Company also issued immediately
exercisable two-year warrants to purchase 32,000 shares of common stock at an
exercise price of $3.13 per share to the placement agent. The net proceeds from
the December Offering were approximately $1,350,000 after deducting commissions
and expenses of approximately $250,000. The Company paid $750,000 from the
proceeds to BFI towards the outstanding loan payable for the purchase of GMTM
and GMTG.

Pursuant to the Debenture Agreements, the Debenture Holders agreed to
purchase up to an additional $2,000,000 in the aggregate of Debentures
("Additional Debentures") in multiple tranches during 12 months following the
effective date of the registration statement covering the shares issuable upon
conversion of the Debentures. Each tranche shall be for the purchase up to
$175,000 or greater if mutually agreed upon in Additional Debentures and may be
completed at the election of the Company subject to certain conditions. Each
Additional Debenture shall bear similar terms to the Initial Debentures
including the issuance of warrants per Additional Debenture to both the
Debenture Holders and the placement agent. The Additional Debentures are
convertible at the holders option, within two days of issuance. Pursuant to the
terms of the Debenture Agreements, the Company is obligated to borrow at least
$1,000,000 in Additional Debentures or the Company must provide the Debenture
Holders and placement agents warrants to purchase an additional 40,000 shares of
Common Stock in the aggregate. The Company notified the Debenture Holders that
it will not borrow the remaining $550,000 of the commitment and will issue the
additional warrants.

During June and August 1998, the Company issued Additional Debentures in
the aggregate principal amount of $450,000 and immediately exercisable two-year
warrants to purchase 27,000 shares of Common Stock at an exercise prices ranging
from $2.41 to $1.17 per share. The net proceeds from the Additional Debentures
were approximately $371,500 after deducting commissions and expenses of
approximately $78,500.

United Acquisition

On September 4, 1998, the Company acquired all of the scrap tire
collection and processing assets of United Waste Service, Inc. ("United"), a
wholly owned subsidiary of Republic Services, Inc. The Company paid $4,050,000
for the acquired assets in the form of $850,000 in cash and $3,200,000 of
preferred stock. The preferred stock is convertible into the Company's common
stock beginning in February 2001 based upon the higher of the trailing 15 day
average closing bid (as defined) prices prior to the conversion date or the
average of the closing bid prices during the period from September 3, 1998 to
February 3, 2001. The 320,000 shares of Class B convertible preferred stock have
a liquidation preference of $10 per share. Simultaneous with the acquisition,
the Company entered into an equipment financing agreement with Heller Financial
Inc., which provided the $850,000 for the transaction. The acquired assets are
located in Lawrenceville, Georgia (reported as an operating division of GMTG)
and Batesburg, South Carolina (incorporated as GreenMan Technologies, of South
Carolina, Inc. "GMTSC"). The acquisition has been accounted for as a purchase
and accordingly, the operations are included in the consolidated financial
statements since September 4, 1998. Goodwill was recorded as the total
consideration paid by the Company exceeded the fair value of the net assets
acquired by $2,015,000.

The Company completed the filing of Form 8-K for the United acquisition in
April 1999. As a result, of its delay in filing such Form 8-K, the Company is
ineligible to register securities using SEC Form S-3 until April 2000 and is
subject to certain penalties.

Private Offering of Common Stock

In October 1998, the Company commenced a private offering of common stock
in an effort to raise up to $500,000 in gross proceeds. The offering was
subsequently increased to $1,000,000 in March 1999. As of March

20
<PAGE>

31, 1999, the Company has sold shares of unregistered common stock to investors
including officers and directors of the Company (the "Investors") for
approximately $555,000 of net proceeds. In January 1999, the Company advanced
$55,000 to two officers of the Company under an 8.5% secured loan agreement with
both principal and interest due January 2002. The proceeds were used to
participate in the private placement and the loans are secured by 191,637 shares
of the Company's common stock owned by the officers. The Company granted the
Investors piggy-back registration rights to register the common stock. The
Investors have agreed not to sell or transfer the shares for a period of at
least twelve months after issuance

At June 30, 1999, the Company had cash of $131,803, a working capital
deficit of $2,513,192, net capital of $4,667,661 and accumulated losses of
$21,722,327.

Based on the Company's operating plans management believes that the
available working capital together with revenues from operations, the sale of
common stock pursuant to the October 1998 private placement, the purchase of
equipment through lease financing arrangements and the remaining availability
under the Heller Credit Facility, should be sufficient to meet the Company's
cash requirements through fiscal 1999. Management has identified and is
currently evaluating several immediate financing alternatives which would
enhance the Company's position and is 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 the
Company is unable to obtain additional financing, its ability to aggressively
grow the business could be materially and adversely affected and the Company may
be required to adjust its operating plans accordingly.

Factors Affecting Future Results

The Company's revenue and operating results may fluctuate from quarter to
quarter and from year to year due to a combination of factors, including (i) the
delisting of the Company's securities from the NASDAQ Small Cap Stock Market and
the effect on the market for, and potentially the market price of, the Company's
common stock (ii) the Company's ability to realize the remaining $950,000
amounts due under its property insurance policy in conjunction with the fire at
GMTL; (iii) the Company's ability to repay the $1,100,000 note due the cryogenic
equipment lessor and other amounts due the remaining creditors of GMTL and the
Company's closed injection molding operation; (iv) the Company's ability to
obtain additional financing at acceptable terms to fund continued internal
growth (v) the impact of the Company's ongoing merger and acquisition
activities; and (vi) general economic conditions. The Company's plans and
objectives are based on assumptions that it will be successful in receiving
additional financing to fund future growth and that there will be no material
adverse change in the Company's operations or business.

Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, competitive and market conditions, all of
which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. As a result, there can be no assurance that
the Company will be able to achieve or sustain profitability on a quarterly or
annual basis. In light of the significant uncertainties inherent in the
Company's business, forward-looking statements made in this report should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.

Year 2000 Date Conversion

Many computer software systems, as well as certain hardware and equipment
utilizing date-sensitive information, were configured to use a two-digit date
field, which will preclude them from properly recognizing dates in the year
2000. The inability to properly recognize date-sensitive information in the year
2000 could render systems inoperable or cause them to incorrectly process
operational or financial information.

The Company has hired GraVoc Associates, Inc. to assess and replace its
office PC's which are not year 2000 compatible during calendar 1999. The Company
is in the process of obtaining written confirmation that all software is year
2000 compatible. The amounts anticipated to be charged to expense related to the
year 2000 computer compliance modifications, have not been and are not expected
to be material to the Company's financial position, results of operations or
cash flows.

In addition, machinery and equipment often use or are controlled or
monitored by electronic devices that contain embedded microchips. Such machinery
and equipment could be rendered partially or totally inoperable if embedded
microchips are date-sensitive and do not properly recognize the year 2000.

21
<PAGE>

The Company is taking steps to identify year 2000 compliance issues that
may be created by customers, suppliers and financial institutions with whom the
Company does business. However, there can be no guarantee that the systems of
other entities will be converted timely.

The Company has initiated a process to (1) identify critical supplier and
customer related issues, (2) assess the year 2000 readiness of equipment located
at all of its operating facilities and (3) determine what contingency plans may
be required. At this time, the potential effects in the event that the Company
or third parties are unable to resolve year 2000 problems timely are not
determinable, however, the Company believes it will be able to resolve its own
year 2000 issues.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In February 1999, MAC Funding Corporation ("MAC") commenced an
action in the U.S. District Court for the District of Massachusetts
against the Company. The claim alleged that MAC is owed $315,000 (as
of December 31, 1998) plus interest accruing thereon, attorneys'
fees, and costs all as provided in a promissory note issued by the
Company to MAC dated July 1, 1998. The Company did not file a
defense to the claim as it does not believe it has any defense to
the claim and was noted in default by the court on April 29, 1999.
The Company expects that a motion for default judgement will be
sought by MAC in due course and will not oppose the motion for
default judgement except as to excessive amounts claimed, if any, by
MAC.

In November 1998, St. Francisville Industrial Part, Inc. ("SFIP")
commenced an action in the Twentieth Judicial District Court, Parish
of West Feliciana, State of Louisiana. The claim alleged that as a
result of the negligence of the Company or one of its affiliates, a
building which was being leased by GreenMan Technologies of
Louisiana, Inc., as successor in interest to a lease between SFIP
and Cryopolymers, Inc., burned and was damaged. SFIP is claiming
$275,000 for damage to the building, $230,500 for unpaid rent since
the date of the fire through December 31, 1998. The Company has not
yet filed a defense to this claim, but intends to do so. The Company
believes that it has valid defenses to these claims and intends to
defend vigorously.

In February 1999, Cryopolymers Leasing, Inc. ("CLI") commenced suit
against the Company, GMTL and Lexington Insurance Company seeking,
among other things, to set aside the December 31, 1998 agreement
concerning the cryogenic equipment lease, enforce the terms of an
agreement by the Company to purchase or lease certain additional
cryogenic rubber recycling equipment and for damages. On May 14,
1999, the Company and CLI reached a settlement of this suit whereby
the lessor agreed to assign to the Company all interest in and to
any additional insurance proceeds to be received as a result of the
August 21, 1998 fire; transfer ownership of the additional cryogenic
rubber recycling equipment to the Company; and withdraw from all
legal proceedings against the Company. In return, the Company agreed
to (1) pay the lessor $1,700,000 of escrowed insurance proceeds; (2)
execute a $1,100,000 sixty month note payable, bearing interest at
7.75% with monthly payments of $7,500 and a balloon payment due May
2004; (3) issue 250,000 shares of common stock (valued at $202,500);
(4) issue immediately exercisable warrants to purchase 450,000
shares of common stock (value ascribed at $100,000) for period of
ten years at $ .81 per share and (4) pay all fees associated with
the settlement agreement. The Company has determined the total
settlement to equal $3,255,000 resulting in an additional casualty
loss to be recorded at March 31, 1999 of $955,000. The $1,100,000
note payable is personally guaranteed by four officers of the
Company and may be prepaid prior to December 31, 1999 at a $200,000
discount. The Company has assigned a value of $200,000 to the
cryogenic rubber recycling equipment and is currently marketing the
equipment to potential purchasers.

Item 2. Changes in Securities

22
<PAGE>

None

Item 3. Defaults Upon Senior Securities

None

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

The Company conducted a Special Meeting in lieu of an Annual Meeting
of Stockholders on March 31, 1999. The matters considered at the
meeting were (1) election of five members of the Board of Directors;
(2) approval of an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of the
Company's Common Stock from 20,000,000 to 30,000,000; (3) approve an
increase in the shares of common stock authorized under the 1993
Stock Option Plan and (4) a proposal to ratify the selection of the
firm of Wolf & Company, P.C. as independent auditors for the fiscal
year ending September 30, 1999.

The results of each vote was as follows:

<TABLE>
<CAPTION>
Broker
For * Against Abstain* Non Votes
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Vote 1 - Election of five (5) members of the Board
of Directors.......................................... 5,683,871 -- 68,436 --
Vote 2 - Amendment to the Certificate of
Incorporation to increase the authorized number of
shares of Common Stock to 30,000,000 ................. 5,414,980 316,757 20,570 5,490,610
Vote 3 - Approve an increase to the authorized
shares under the 1993 Stock Option Plan .............. 5,383,004 324,746 44,557 --
Vote 4 - Proposal to ratify the selection of Wolf &
Company, P.C. as independent auditors for the
fiscal year ending September 30, 1999................. 5,707,161 21,280 23,866 --
</TABLE>

* Information reported for Vote 1 reflects the voting results for four
directors. Shareholders abstained from voting an additional 634,735 shares for
one director who was successfully elected to the Board of Directors. ......

Item 5. Other Information
None

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

(a) Exhibits

Exhibit 11 -- Statement regarding net loss per share.

Exhibit 27 -- Financial Data Schedule.

(b) Reports on Form 8-K
There were no reports filed during the three months
ended June 30, 1999.

23
<PAGE>

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

Signature Title(s) Date
--------- -------- ----

/s/ Robert H. Davis Chief Executive Officer, President August 16, 1999
------------------- and Director
Robert H. Davis

/s/ Charles E. Coppa Acting Chief Financial Officer, August 16, 1999
- --------------------- Treasurer and Secretary
Charles E. Coppa

24
<PAGE>

Exhibit 11

GreenMan Technologies, Inc.
Statement Regarding Net Loss per Share
June 30, 1999

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, June 30, May 31, June 30,
1998 1999 1998 1999
----------- ----------- ----------- ------------

<S> <C> <C> <C> <C>
Income (Loss) from continuing operations ... $(1,652,258) $ 75,183 $(3,481,766) $ (1,265,037)

Loss from discontinued operations .......... (147,596) -- (1,743,479) (1,101,285)
----------- ----------- ----------- ------------

Net income (loss) .......................... $(1,799,854) $ 75,183 $(5,225,245) $ (2,366,322)
=========== =========== =========== ============

Net income (loss) per share:

Continuing operations ...................... $ (0.32) $ 0.01 $ (1.16) $ (0.12)

Discontinued operations .................... (0.03) -- (0.57) (0.10)

Net income (loss) .......................... $ (0.35) $ 0.01 $ (1.73) $ (0.22)
----------- ----------- ----------- ------------

Weighted average shares outstanding ........ 5,115,158 11,625,091 3,014,473 10,653,117
=========== =========== =========== ============
</TABLE>

25
<PAGE>

<ARTICLE> 5
<LEGEND>
Exhibit 27

GreenMan Technologies, Inc.
Form 10-QSB
June 30, 1999

Financial Data Schedule
</LEGEND>

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 131,803
<SECURITIES> 0
<RECEIVABLES> 2,140,860
<ALLOWANCES> 51,706
<INVENTORY> 0
<CURRENT-ASSETS> 2,965,980
<PP&E> 9,955,907
<DEPRECIATION> 1,796,695
<TOTAL-ASSETS> 14,349,677
<CURRENT-LIABILITIES> 5,479,172
<BONDS> 4,202,844
0
3,200,000
<COMMON> 117,460
<OTHER-SE> 23,127,528
<TOTAL-LIABILITY-AND-EQUITY> 14,349,677
<SALES> 12,239,161
<TOTAL-REVENUES> 12,239,161
<CGS> 9,210,266
<TOTAL-COSTS> 2,635,343
<OTHER-EXPENSES> (942,517)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (716,072)
<INCOME-PRETAX> (1,265,037)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,265,037)
<DISCONTINUED> (1,101,285)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,366,322)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)

</TABLE>