Edgar Filing: GREENMAN TECHNOLOGIES INC

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 December 31, 2003 Commission File Number 1-13776
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GreenMan Technologies, Inc.
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(Exact name of small business issuer as specified in its charter)

Delaware 71-0724248
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(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
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----------------------------------------------------
(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 February 1, 2004
Common Stock, $.01 par value: 16,061,939 shares

GreenMan Technologies, Inc.
Form 10-QSB
Quarterly Report
December 31, 2003

Table of Contents

PART I - FINANCIAL INFORMATION Page
----

Item 1. Financial Statements (*)

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

Unaudited Consolidated Statements of Operations for the three
months ended December 31, 2003 and 2002 4

Unaudited Consolidated Statement of Changes in Stockholders'
Equity for the three months ended December 31, 2003 5

Unaudited Consolidated Statements of Cash Flows for the three
months ended December 31, 2003 and 2002 6

Notes to Unaudited Condensed Consolidated Financial Statements 7-9

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10-17

Item 3. Controls and Procedures 18

PART II - OTHER INFORMATION

Item 2. Changes in Securities 19

Item 5. Certification Under Sarbanes-Oxley Act 19

Item 6. Exhibits and Reports on Form 8-K 19

Signatures 20

* 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

December 31, September 30,
2003 2003
------------ ------------

ASSETS
Current assets:
Cash and cash equivalents .................................... $ 346,534 $ 990,745
Accounts receivable, trade, less allowance for doubtful
accounts of $154,580 and $148,031 as of December 31,
2003 and September 30, 2003 ................................ 3,461,200 3,368,435
Insurance claim receivable ................................... -- 634,172
Note receivable officers ..................................... 182,601 179,172
Product inventory ............................................ 316,484 112,419
Other current assets ......................................... 1,138,581 1,119,872
------------ ------------
Total current assets ...................................... 5,445,400 6,404,815
------------ ------------
Property, plant and equipment, net ............................. 10,942,203 11,249,706
------------ ------------
Other assets:
Deferred loan costs .......................................... 199,014 221,931
Goodwill, net ................................................ 3,413,894 3,413,894
Customer relationship intangibles, net ....................... 231,725 234,875
Deferred income taxes ........................................ 270,000 270,000
Other ........................................................ 595,973 299,699
------------ ------------
Total other assets ........................................ 4,710,606 4,440,399
------------ ------------
$ 21,098,209 $ 22,094,920
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, current ....................................... $ 4,062,792 $ 3,748,663
Convertible notes payable .................................... 220,774 --
Accounts payable ............................................. 3,560,755 4,350,643
Accrued expenses, other ...................................... 1,053,595 1,384,652
Notes payable related parties, current ....................... 1,095,000 520,000
Obligations under capital leases, current .................... 405,606 423,228
------------ ------------
Total current liabilities ................................. 10,398,522 10,427,186
Notes payable, related parties, non-current portion .......... 475,000 975,000
Notes payable, non-current portion ........................... 5,369,178 5,726,958
Obligations under capital leases, non-current portion ........ 1,899,918 1,986,827
------------ ------------
Total liabilities ......................................... 18,142,618 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,
16,061,939 shares issued and outstanding at December 31,
2003 and September 30, 2003 ................................ 160,619 160,619
Additional paid-in capital ................................... 28,932,228 28,778,002
Accumulated deficit .......................................... (26,092,256) (25,914,673)
Notes receivable, common stock ............................... (45,000) (45,000)
------------ ------------
Total stockholders' equity ................................ 2,955,591 2,978,948
------------ ------------
$ 21,098,209 $ 22,094,920
============ ============

See accompanying notes to unaudited condensed consolidated financial statements

GreenMan Technologies, Inc.
Unaudited Consolidated Statements of Operations

Three Months Ended
December 31,
2003 2002
----------- -----------
Net sales .................................. $ 7,798,750 $ 7,963,457
Cost of sales .............................. 6,659,941 6,580,184
----------- -----------
Gross profit ............................... 1,138,809 1,383,273
----------- -----------
Operating expenses:
Selling, general and administrative ..... 1,068,241 1,379,315
----------- -----------
Total operating expenses .............. 1,068,241 1,379,315
----------- -----------
Operating profit ........................... 70,568 3,958
----------- -----------
Other income (expense):
Interest and financing costs,net ........ (354,796) (369,953)
Casualty income, net .................... 112,766 --
Other, net .............................. (6,121) 10,974
----------- -----------
Other (expense), net .................. (248,151) (358,979)
----------- -----------

Net loss before income taxes ............... (177,583) (355,021)
(Provision) for income taxes ............... -- (550)
----------- -----------
Net loss ................................... $ (177,583) $ (355,571)
=========== ===========

Net loss per share - basic and diluted ..... $ (.01) $ (.02)
=========== ===========

Weighted average shares outstanding -
basic and diluted ........................ 16,061,939 15,676,479
=========== ===========

See accompanying notes to unaudited condensed consolidated financial statements.

GreenMan Technologies, Inc.
Unaudited Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended December 31, 2003

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

Net (loss) for the quarter ended

December 31, 2003 -- -- -- (177,583) -- (177,583)
---------- -------- ----------- ------------ -------- ----------

Balance, December 31, 2003 16,061,939 $160,619 $28,932,228 $(26,092,256) $(45,000) $2,955,591
========== ======== =========== ============ ======== ==========

See accompanying notes to unaudited condensed consolidated financial statements.

GreenMan Technologies, Inc.
Unaudited Consolidated Statements of Cash Flow

Three Months Ended
December 31,
2003 2002
--------- ----------

Cash flows from operating activities:
Net loss ........................................................................... $(177,583) $ (355,571)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation ....................................................................... 541,216 548,542
Loss on disposal of property, plant and equipment .................................. 5,099 6,200
Amortization ....................................................................... 27,764 26,230
Decrease (increase) in assets:
Accounts receivable .............................................................. (92,765) 530,059
Insurance claim receivable ....................................................... 634,172 --
Product inventory ................................................................ (204,065) (197,175)
Other current assets ............................................................. (18,709) 69,337
(Decrease) increase in liabilities:
Accounts payable ................................................................. (789,888) (170,794)
Accrued expenses ................................................................. (331,057) 116,982
--------- ----------
Net cash (used for) provided by operating activities ........................... (405,816) 573,810
--------- ----------
Cash flows from investing activities:
Purchase of property and equipment ................................................. (240,509) (727,947)
Increase in notes receivable, officers ............................................. (3,429) (3,429)
Decrease (increase) in other assets ................................................ (201,907) 15,390
--------- ----------
Net cash used for investing activities ......................................... (445,845) (715,986)
--------- ----------
Cash flows from financing activities:
Deferred financing costs ........................................................... (94,367) (6,021)
Proceeds from notes payable ........................................................ 239,257 767,920
Proceeds from notes payable, related parties ....................................... 75,000 --
Proceeds from convertible notes payable ............................................ 375,000 --
Net advances under line of credit .................................................. 187,873 146,576
Repayment of notes payable ......................................................... (470,781) (399,130)
Principal payments on obligations under capital leases ............................. (104,532) (82,389)
Cash received upon exercise of stock options ....................................... -- 10,200
Net proceeds on sale of common stock ............................................... -- 50,000
--------- ----------
Net cash provided by financing activities ...................................... 207,450 487,156
--------- ----------
Net increase (decrease) in cash ....................................................... (644,211) 344,980
Cash and cash equivalents at beginning of period ...................................... 990,745 780,497
--------- ----------
Cash and cash equivalents at end of period ............................................ $ 346,534 $1,125,477
========= ==========

Supplemental cash flow information:
Machinery and equipment acquired under capital leases ............................... $ -- $ 101,623
Conversion discount on convertible notes payable .................................... 154,266 --
Interest paid ....................................................................... 323,760 350,451
Taxes paid .......................................................................... -- 550

See accompanying notes to unaudited condensed consolidated financial statements

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
December 31, 2003

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 Income (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 months ended December 31, 2003 and 2002, 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. We estimate that losses
sustained as a result of the fire amounted to approximately $390,000 excluding
business interruption losses, and before considering insurance recoveries.

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
December 31, 2003

5. Management's Plans For Raising Additional Capital

As of December 31, 2003, we have incurred cumulative losses of $26,092,256,
and have a working capital deficiency of $4,953,122 at December 31, 2003. We
understand that our continued existence is dependent on our ability to achieve
profitable status on a sustainable basis and 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 and Georgia locations, and
have reconfigured our Wisconsin location to substantially reduce operating costs
and maximize our return on assets. In addition, we have implemented and/or are
in the process of implementing the following actions:

1. Private Placement of Investment Units

In December 2003, we commenced a private offering of investment units (the
"Units") to accredited investors through an investment bank in an effort to
raise up to $3,000,000 (which may be increased to up to $3,500,000 to cover
over-allotments, if any). 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 each closing of the offering. The warrants are
exercisable at any time between the sixth month and the fifth year after the
date of issuance at an exercise price equal to 105% of the closing bid price of
our common stock on the day preceding the applicable closing. The sale of these
Units is exempt from registration under the Securities Act pursuant to Rule 506
of Regulation D and Section 4(2) of the Securities Act. We have agreed to use
our best efforts to register the shares of common stock, and the shares issuable
upon exercise of the warrants, for resale under the Securities Act. No
assurances can be given that such offering will be successful.

If 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.

2. Related Party Notes Payable

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 similar terms.

3. Convertible Note Payable

In December 2003, we entered into a note purchase agreement (the "Note
Agreement") with an accredited investor (the "Note 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 (the "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 the Note
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.

GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
December 31, 2003

6. Property, Plant and Equipment

Property, plant and equipment consists of the following:

December 31, September 30, Estimated
2003 2003 Useful Lives
----------- ----------- ------------

Land .......................................... $ 504,346 $ 504,346
Buildings ..................................... 2,812,816 2,704,693 10-20 years
Machinery and equipment ....................... 9,613,153 9,526,045 5-10 years
Furniture and fixtures ........................ 284,484 284,484 3-5 years
Motor vehicles ................................ 5,937,460 5,904,050 3-10 years
----------- -----------
19,152,259 18,923,618
Less accumulated depreciation
and amortization (8,210,056) (7,673,912)
----------- -----------
Property, plant and equipment, net $10,942,203 $11,249,706
=========== ===========

7. 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
December 31, December 31,
2003 2002
--------- ---------

Net loss as reported ................................. $(177,583) $(355,571)
Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects ........ (19,845) (37,192)
--------- ---------
Pro forma net loss ................................... $(197,428) $(392,763)
========= =========

Earnings per share:
Basic - as reported .............................. $ (0.01) $ (0.02)
========= =========
Basic - pro forma ................................ $ (0.01) $ (0.02)
========= =========

7. Subsequent Events

As of December 31, 2003, 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.

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 December 31, 2003 Compared to the Three Months ended
December 31, 2002

Net sales for the three months ended December 31, 2003 were $7,798,750, a
2% decrease, compared to last year's net sales of $7,963,457, which included
approximately $524,000 of net sales associated with our majority owned joint
venture which was divested on April 1, 2003 and approximately $57,000 of net
sales associated with a kiln relationship terminated during fiscal 2003. We
processed over 8.1 million passenger tire equivalents during the three months
ended December 31, 2003, compared to approximately 8 million passenger tire
equivalents during the quarter ended December 31, 2002

Overall end product sales increased to 25% of consolidated revenues during
the quarter ended December 31, 2003, compared to 19% for the same period last
year. The 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 December 31, 2003. The overall quality of revenue
(revenue per passenger tire equivalent) benefited from increased tire volumes
and end product sales, which partially offset an 10% reduction in tipping fees
resulting from lower tipping fees in certain markets.

Gross profit for the quarter ended December 31, 2003 was $1,138,809 or 15%
of net sales, compared to $1,383,273 or 17% of net sales for quarter ended
December 31, 2002. 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 management estimates to exceed
$223,000, net of business interruption insurance reimbursement.

Selling, general and administrative expenses for the quarter ended December
31, 2003 decreased $311,074 to $1,068,241 or 14% of net sales, compared to
$1,379,315 or 17% of net sales for the quarter ended December 31, 2002. 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 profit for the quarter ended
December 31, 2003 increased $66,610 to $70,568, compared to an operating profit
of $3,958 for the quarter ended December 31, 2002.

Interest and financing costs for the quarter ended December 31, 2003
decreased $15,000 to $355,000, compared to $370,000 for the quarter ended
December 31, 2002. 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.

As a result of the foregoing, our net loss for the quarter ended December
31, 2003 decreased $177,988 or 50% to $177,583 or $.01 per basic share, compared
to a net loss of $355,571 or $.02 per basic share for quarter ended December 31,
2002.

Liquidity and Capital Resources

As of December 31, 2003, we had $346,534 in cash and cash equivalents and a
working capital deficiency of $4,953,122. 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 2003 and 2002
as they affect our liquidity. During the quarter ended December 31, 2003, net
cash used for operating activities was $405,816 which reflects a reduction in
accounts payable and accrued expenses of $1,120,945 in the aggregate, a $204,065
increase in product inventory, which is typical as we enter our seasonally
slower fiscal second quarter, an increase in other current assets of $18,709,
reflecting increased prepaid expenses and parts inventories and a net loss from
operations. Positively impacting cash flows for the quarter ended December 31,
2003 was depreciation, amortization, and the receipt of $842,045 of insurance
proceeds. During the quarter ended December 31, 2002, net cash provided by
operating activities was $573,810. Cash flows during this period were positively
impacted by depreciation, amortization and a $530,059 decrease in accounts
receivable and negatively impacted by a decrease in accounts payable and an
increase in product inventory.

Net cash used for investing activities was $445,845 and $715,986 during the
quarters ended December 31, 2003 and 2002, respectively. These amounts represent
significant investments made for the purchase of property and equipment to
increase capacity and efficiencies at several of our operating locations.

Net cash provided by financing activities was $207,450 and $487,156 during
the quarters ended December 31, 2003 and 2002, respectively. 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. Several of these
initiatives are described below.

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 reduces 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. We estimate the internalization of crumb
rubber feedstock supply and production via our new processing equipment will
eliminate over $250,000 in annual transportation costs by eliminating the need
to source crumb rubber feedstock from our other locations. 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. During the quarter ended December 31, 2003, we incurred an
additional $95,000 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.

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.

If 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.

Repurchase of Class B Convertible Preferred Stock

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 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 December 31, 2003,
seven payments totaling $62,729 were past due and we have received a waiver of
default from RSLP through March 31, 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 ($161,746 at December 31, 2003).

Related Party Notes Payable

Convertible Note Payable

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 five consecutive quarters and may need additional
working capital, which if not received, may force us to curtail operations.

We have experienced five 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.

In March 2003, a portion of our Georgia facility and several pieces of equipment
were damaged by fire; as a result we have experienced increased disposal costs
and reduced product revenue in Georgia.

On March 31 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 Vice
President of Operations and 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 December 31, 2003, we have options and warrants to purchase
approximately 4,004,794 shares of common stock currently outstanding in addition
to $750,000 of convertible promissory notes. These notes are convertible into
approximately 850,000 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

(a) Evaluation of disclosure controls and procedures. As of the end of the
period covered by this report, our principal executive officer and principal
financial officer have concluded that our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act")) are effective to ensure that information required to
be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION

Item 2. Changes in Securities

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 10.1 $75,000 Promissory Note issued by GreenMan
Technologies, Inc. to Maurice E. Needham dated
October 22, 2003.

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 January 7, 2004, covering
Item 5 ("Other Information") and Item 9 ("Regulation FD
Disclosure"). Our press releases dated December 17, 2003 and January
5, 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