GreenShift Corporation - Investors

Investors

Management Update - October 1, 2018

TO SHAREHOLDERS OF GREENSHIFT CORPORATION:

We’re working on our filings as we finalize restructuring agreements with our lenders. While we’re targeting year-end to get everything done, our reports will be delayed if execution of the restructuring agreements is delayed. If that occurs, it will be to mitigate the risk of dilution.

We regret any confusion that may cause. Transparency is obviously a legitimate concern. It has been almost two years since our last filing, and I empathize with the impact. There would be no void to fill with speculation if there was no void to fill. That said, bringing our filings current carries an immediate risk of dilution from lenders that can be expected to convert their debt into stock as soon as they can deposit, clear, and sell our shares - before the Federal Circuit’s decision, before we make progress building value again, and before buyers come to the table.

The stakes couldn’t be more material. We have about 30 million shares outstanding. Full conversion of our legacy debt at $0.10 per share would increase our outstanding stock by more than 160 million shares. That amount obviously increases as the price decreases; for example, to 1.6 billion shares at $0.01 per share, 16 billion shares at $0.001 per share, and 160 billion shares at $0.0001 per share. Worse, that last price is our par value, and it’s the trigger point at which we would be forced to gut ourselves by completing yet another reverse split to comply with our loan agreements. It wouldn’t take much selling to drive the price down to that level. Getting current would just start a fire and news would add the fuel. You’d get increased transparency, but you’d also get to watch your investments burst into flame and burn to ash; and, once we got current, there would be little that we could do to protect you without breaching our debt agreements. I’m not going to allow any of that to happen. Not again.

New shareholders may not appreciate the context. We attempted a production-centric model between 2005 and 2008, prior to issuance of our patents; one in which we partnered with and provided incentives to our clients that included inherent protections for us by paying for and integrating our production assets into participating plants. We had more than a third of the industry signed up. GE’s December 2008 Agreement to invest about $50 million into that model was intended to be a prelude to an industry-wide rollout of COES under GE’s ecomagination initiative. It was a company-maker. The WSJ even had an article drafted on the deal. It was waiting for release when GE breached our agreements in March 2009, ghosting us after a year of due diligence, negotiation, and documentation. The only explanation we were given was that Immelt had shut down outside investments because GE’s credit rating was at risk after their stock had caved. Nevertheless, we had used most of our liquidity to honor our client and vendor commitments, and to keep construction on schedule in reliance on GE’s agreement to fund. Refinancing to replenish our working capital with another source in time was impossible. The crash had just hit full swing. Our backup sources were all struggling to meet their own needs. Banks and funds were shutting down. The stench of panic was everywhere. We ran out of cash. Our business collapsed.

We received our first notices of allowance weeks later, but we had over $110 million in debt and a fraction of our prior revenue. Some argued that bankruptcy was necessary, and it probably was, but we obviously didn’t file. It would’ve wiped everyone out. Lenders. Shareholders. Employees. Families. Everyone. That wasn’t much of a choice as far as I was concerned. So, we hunkered down and weathered the storm. We slashed everything, tapped into savings, and raised what we could from friends and family. We struck expensive deals with hard money lenders when that wasn’t enough. We preserved our core assets and we rebuilt our business, returning to profitability by 2012. Most of the $94 million in debt that we eliminated by 2017 was achieved by liquidating assets and using as much of our cash as we could afford to commit. The rest was paid with stock.

We have two kinds of lenders. Related party lenders are comprised of friends and family, and, while they expect their interests to remain protected with liens and intercreditor agreements, they have always been flexible with their funding and repayment terms. The bulk of their investments were provided after the crash, during the recession when our survival was at constant risk and capital from other sources was limited and ridiculously expensive. They care about repayment, but I personally guaranteed each of their loans, and they agreed to let us to pay over time, in alignment with the shared long-term success of all of our stakeholders. In contrast, unaffiliated third party lenders have no special relationships or interests in our business. All of their debt originated before the crash, and the balances were vastly more than our cash flows alone could service, let alone before returning to profitability. Their agreements consequently included terms that allow them to accelerate payment in parallel to our cash payments by directly converting their debt into stock without our involvement or consent. They also have the right to force us to complete as many reverse splits as they need to continue converting and selling stock until they are fully paid.

The dilutive effect of those agreements has haunted us for a decade, through five painful reverse stock splits that undercut our stock ten billion times. The dilution has been beyond staggering. It’s an irreparable scar, a deformity that we endured for having the temerity to survive. It’s shameful to me despite the circumstances and absence of alternatives. It’s a cross that I and we will forever bear, regardless of how our story ends. We disclosed the implications and risks in our filings, for whatever good that did, and I openly vowed for many years to shut it down as soon as I could.

Could it have been less? Could we have spent less along the way? Perhaps, but not materially. We did our best to minimize the impact over the years in spite of what it may have seemed from afar. Unfortunately, the sheer magnitude of our pre-crash debt and the status and extended timing of our infringement matter frustrated all of our attempts until recently. We made some headway in 2015, but we simply didn’t have enough collateral or cash flow to refinance on terms with better sources that allowed us to eliminate the toxic conversion features. The Attis transaction was structured in part to resolve that circumstance, and documentation is finally underway, almost ten years to the month after we signed with GE.

We only have two practical options to prevent dilution without triggering multiple debt defaults until those agreements are signed: delay and silence. Issuance, deposit, and clearance of new shares is very difficult to accomplish if our filings aren’t current, and sales at rates which justify the effort are impossible without demand and liquidity – neither of which are viable if we’re not talking. If a tree falls in the woods and nobody is around to hear it, does it make a sound? Why bother converting debt and taking price risk if the conversion shares can’t be sold? We had used silence in the past to variable degrees of success to limit dilution that we couldn’t stop, but the combination of delay and silence has effectively chilled all conversions and dilution since 2016.

We have been vilified for dilution over the years. I’ve seen the comments. Some are fair. Some are irresponsible. While the right to question and criticize management is the prerogative of any shareholder, I take issue with fake news, invectives, and baseless accusations of impropriety. Such comments debase and lessen all of us. I’m disappointed in those that assert themselves in a public forum before reading our historical filings or asking basic questions to validate their assumptions. That’s especially irresponsible when their comments cause harm; such as when they state falsehoods that prospective shareholders believe, or that our adversaries happily subvert to malign our credibility, or that our clients and prospective partners see online.

The worst of it unsurprisingly involves me. My critics have cited the history of dilution (and reporting delays) out of context as proof that I am unethical, immoral, or worse, and, therefore, that GreenShift is somehow morally suspect by extension. Of course, none of that is true. I’ve never seen or heard anyone make the opposite points: that the chips were down and holding the line and repaying our debt instead of filing bankruptcy was the ethical and moral thing to do; that we had little choice thereafter but to watch the dilution as it occurred because our lenders had the power to issue stock to themselves; that discretion was always the better part of valor since the greatest good for our shareholders was best served by staying alive and preserving the technology; and that our only other option was to deliberately breach our debt agreements and split our resources to start a second war defending ourselves against multiple foreclosure actions (read: litigation, expense, bankruptcy, scorched earth, failure). We’ve been fighting a war of attrition since 2009. Against opponents with vastly superior resources. We need allies and partners, not enemies, and we need to pick our battles.

I have absolutely made my share of mistakes. I’m as flawed and fallible as anyone else, but I’m an honest man. I care about faith and family and doing the right thing, and I take my fiduciary duties very seriously. Our actions don’t remotely meet the standards of any form of wrongdoing. Anything stated to the contrary is utter nonsense. I would gladly open the floor in our next shareholder meeting to anything anyone wants to ask of me – in person, where everyone can be held accountable for words. I have always put GreenShift’s needs first, and I accept full responsibility for all of our actions and their consequences. I chose the financial partners that we got in bed with. I chose to take on $110 million in debt on the bet that the value of what we were building would be more than enough to repay it. I chose to stay out of bankruptcy and repay our debts when the sky fell and that bet failed. I chose to persevere and cut the deals we needed to survive and build value with our technologies. I chose to incur the cost of facing every insult and adversity that we resolved along the way. And I chose to delay filing the second I saw an opportunity to shut off the dilution (that wasn’t negligence, btw - it was intent, and I stand by my decision). GreenShift is in large part the product of my choices. Each of us has bled because of them. The dilution happened because of them. Only time will tell if I was right or wrong under the circumstances, if such concepts even matter at this point. However, as we stand here today, I will be the first to admit that one thing is crystal clear; I have failed to deliver value to our shareholders according to the only metric that matters after everything is said and done – our stock.

That doesn’t sit well with me. At all. It never did. It never will. So, no, I am not taking GreenShift private for that reason alone. I supported GreenShift and its team in every way I could through a decade of hell to build value. I contributed more than $15 million in cash over the years, plus another $8 million in investments (at cost) to facilitate completion of the Attis deal – in each case for no additional equity, debt, or any other form of consideration in return – to build value. We’re working on growth again to build value, both on our own and with Attis through our jointly-owned subsidiary. And we’re getting current and cleaning up our share structure (without splitting) specifically to allow our shareholders to participate in the value of whatever comes next. I won’t speak yet as to what that value is or may be, but it will be as much as I and we can make it. As I said this past summer, it’s high time that our shareholders had a chance to participate in the value that we created for so many others.

Some of you might recall the vision we outlined for GreenShift’s integrated biorefinery plans before the crash. We outlined a series of iterative technology upgrades designed to collectively shift the efficiency and profitability of corn ethanol dramatically forward by extracting and refining co-products into an array of value-added renewable alternatives to fossil fuel-derived products. We targeted producer partnerships and planned to leverage our technological capabilities to acquire, upgrade, and use first generation production assets to produce more with less. We spoke of greenshifting the industry.

That vision is alive and well today, more so than ever. Attis’ plans are complimentary to everything we’ve ever done. They have been amassing a broad portfolio of biorefining technologies, and they’re working on some extremely exciting things, some of which build on and add to our technologies. Plastics. Adhesives. Drop-in fuels. Breakthroughs. All from biomass. We’re working together to build value through our joint venture, free of the constraints of our legacy debt and litigation, making more progress than we have in a decade. Imagine the effect of fully integrating COES and biodiesel into a single Attis-owned ethanol plant and you’ll get a sense of the starting point of our trajectory. Some of you participated in the latest Attis conference call. Those that didn’t should consider listening to the replay (access instructions below). The Attis roadmap and our shared opportunities for value creation have me and us excited and energized again, for the first time in many years. Developing those opportunities rank amongst our top priorities.

Our next steps are simple: stay focused, support Attis and our joint venture subsidiary, service our clients, continue to innovate, complete the restructuring, get and stay current, communicate, push through the appeal, make peace, acquire, diversify, grow … and build value for all of our stakeholders. Especially, and most importantly, for each of you.

I hope that the extent and candor of this update has been helpful in view of the filing delays. I look forward to our next communication, as well as a shareholder meeting as soon as we can. As always, thank you for your continued interest and support. Please feel free to email any questions you may have to my attention at kkreisler@greenshift.com.

Sincerely,
Kevin Kreisler
GreenShift Corporation

Attis Industries Inc., September 26, 2018, Conference Call

A replay of the call will be available through October 10, 2018. To listen to the replay, dial (877) 481-4010 (domestic) or (919) 882-2331 (international) and use replay ID 37601. The webcast replay will be available online through December 26, 2018, at: Attis Conference Call.

About GreenShift Corporation

GreenShift Corporation (“GreenShift”) develops and commercializes clean technologies that facilitate the more efficient use of natural resources. GreenShift primarily does so today in the U.S. ethanol industry, where it innovates and offers technologies that improve the profitability of licensed ethanol producers. GreenShift generates revenue by licensing its technologies to ethanol producers, and by providing its licensees with success-driven, value-added services and other solutions based upon its expertise, know-how, technologies, and patent position. GreenShift was founded on the belief that the first, best and most cost-effective way to achieve positive environmental change of any magnitude is to develop technology-driven economic incentives that motivate large groups of people and companies to make incremental environmental contributions that cumulate to catalyze disruptive environmental gains. GreenShift has done so once with its portfolio of patented corn oil extraction technologies. It intends to do so again. For more information, visit: www.greenshift.com.

Forward-Looking Statements

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “would” or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. These statements are subject to certain risks, uncertainties, and assumptions, including, but not limited to, risks and uncertainties relating to the Company's ability to develop, market and sell products based on its technology; the expected benefits and efficacy of the Company's products and technology; the availability of substantial additional funding for the Company to continue its operations and to conduct research and development; the Company's business, research, product development, regulatory approval, marketing and distribution plans and strategies; the ability of the Company to continue to meet its listing requirements; the ability of the Company to execute on a business plan that permits the technologies and innovations businesses to provide sufficient growth, revenue, liquidity and cash flows for sustaining the Company’s go-forward business, and the risks identified and discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the Securities and Exchange Commission (the “SEC”) on April 22, 2016 and the other documents the Company files with the SEC from time to time. There will be events in the future, however, that the Company is not able to predict accurately or control. The Company’s actual results may differ materially from the expectations that the Company describes in its forward-looking statements. Factors or events that could cause the Company’s actual results to differ materially may emerge from time to time, and it is not possible for the Company to accurately predict all of them. Any forward-looking statement made by the Company in this document speaks only as of the date on which the Company makes it. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.