UNITED
STATES SECURITIES AND EXCHANGE


COMMISSION


Washington,
D.C. 20549





FORM
10-Q




(Mark
One)




x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended September 30, 2010





OR




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




Commission
      file number
              0-12627


Global
Clean Energy Holdings, Inc.





(Exact
name of registrant as specified in its charter)





DELAWARE
            87-0407858(State
      or other jurisdiction of incorporation or
    organization)
            (IRS
      Employer Identification No.)




100 W.
Broadway, Suite 650
 Long
Beach, California 90802





(Address
of principal executive offices)




(310)
641-4234


(Registrant’s
telephone number)




(Former
Name or Former Address, if Changed Since Last Report





Indicate
by check mark whether the registrant (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 xNo  ̈





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





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.


Large
      accelerated filer
                 ̈
                Accelerated
      Filer
                 ̈Non-accelerated
      filer
                 ̈
                Smaller
      reporting company
                x





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: As of October 20, 2010, the issuer had
270,464,478 shares of common stock issued and outstanding.





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈Nox





GLOBAL CLEAN ENERGY
HOLDINGS, INC.




For
the quarter ended September 30, 2010




FORM
10-Q





TABLE
OF CONTENTS




PART
      I
                  
                  1ITEM
      1.  FINANCIAL STATEMENTS.
                  
                  1ITEM
      2.   MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS.
                  
                  20ITEM
      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.
                  
                  26ITEM
      4.  CONTROLS AND PROCEDURES.
                  
                  27PART
      II
                  
                  27ITEM
      1.  LEGAL PROCEEDINGS.
                  
                  27ITEM
      1A.   RISK FACTORS.
                  
                  27ITEM
      2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.
                  
                  27ITEM
      3.  DEFAULTS UPON SENIOR SECURITIES.
                  
                  27ITEM
      4.  RESERVED.
                  
                  27ITEM
      5.  OTHER INFORMATION
                  
                  27ITEM
      6.  EXHIBITS
                  
                  27


i


PART
I




ITEM
1.  FINANCIAL STATEMENTS.


GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 
 September
      30,
                  
                  
                  December
      31,2010
                  
                  
                  2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                  
                  $
                  1,086,324
                  
                  
                  $
                  833,584Accounts
      receivable
                  
                  
                  29,757
                  
                  
                  
                  146,730Inventory
                  
                  
                  161,173
                  
                  
                  
                  -Other
      current assets
                  
                  
                  140,460
                  
                  
                  
                  131,741Total
      Current Assets
                  
                  
                  1,417,714
                  
                  
                  
                  1,112,055PROPERTY
      AND EQUIPMENT
                  
                  
                  8,128,451
                  
                  
                  
                  6,441,489DEFERRED
      GROWING COST
                  
                  
                  925,628
                  
                  
                  
                  -OTHER
      NONCURRENT ASSETS
                  
                  
                  8,761
                  
                  
                  
                  2,691TOTAL
      ASSETS
                  
                  $
                  10,480,554
                  
                  
                  $
                  7,556,235LIABILITIES
      AND EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                  
                  $
                  1,744,333
                  
                  
                  $
                  2,117,573Accrued
      payroll and payroll taxes
                  
                  
                  1,761,644
                  
                  
                  
                  1,491,385Accrued
      interest payable
                  
                  
                  1,058,597
                  
                  
                  
                  853,811Accrued
      return on noncontrolling interest
                  
                  
                  1,199,811
                  
                  
                  
                  610,870Promissory
      notes
                  
                  
                  31,681
                  
                  
                  
                  509,232Capital
      lease liability
                  
                  
                  7,586
                  
                  
                  
                  -Notes
      payable to shareholders
                  
                  
                  292,844
                  
                  
                  
                  321,502Convertible
      notes payable
                  
                  
                  193,200
                  
                  
                  
                  193,200Total
      Current Liabilities
                  
                  
                  6,289,696
                  
                  
                  
                  6,097,573LONG-TERM
      LIABILITIESLong
      term capital lease liability
                  
                  
                  88,905
                  
                  
                  
                  -Convertible
      notes payable
                  
                  
                  567,000
                  
                  
                  
                  -Mortgage
      notes payable
                  
                  
                  2,793,934
                  
                  
                  
                  2,051,282Total
      Long Term Liabilities
                  
                  
                  3,449,839
                  
                  
                  
                  2,051,282EQUITY
      (DEFICIT)Preferred
      stock - $0.001 par value; 50,000,000 shares authorized Series B,
      convertible; 13,000 shares issued (aggregate liquidation preference of
      $1,300,000)
                  
                  
                  13
                  
                  
                  
                  13Common
      stock, $0.001 par value; 500,000,000 shares authorized; 270,464,478 and
      236,919,079 shares issued and outstanding, respectively
                  
                  
                  270,464
                  
                  
                  
                  236,919Additional
      paid-in capital
                  
                  
                  23,561,004
                  
                  
                  
                  22,998,907Accumulated
      deficit
                  
                  
                  (26,889,930
                  )
                  
                  
                  (26,308,143
                  )Accumulated
      other comprehensive loss
                  
                  
                  (5,600
                  )
                  
                  
                  (6,108
                  )Total
      Global Clean Energy Holdings, Inc. Stockholders' Deficit
                  
                  
                  (3,064,049
                  )
                  
                  
                  (3,078,412
                  )Noncontrolling
      interests
                  
                  
                  3,805,068
                  
                  
                  
                  2,485,792Total
      equity (deficit)
                  
                  
                  741,019
                  
                  
                  
                  (592,620
                  )TOTAL
      LIABILITIES AND EQUITY (DEFICIT)
                  
                  $
                  10,480,554
                  
                  
                  $
                  7,556,235
 
 The
accompanying notes are an integral part of these condensed unaudited
consolidated financial statements
  1
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 
 For
      the Three Months Ended
                      
                      
                      For
      the Nine Months EndedSeptember 30,
                      
                      
                      September 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Revenue
                      
                      $
                      169,653
                      
                      
                      $
                      148,915
                      
                      
                      $
                      374,370
                      
                      
                      $
                      218,151Operating
      ExpensesGeneral
      and administrative
                      
                      
                      654,336
                      
                      
                      
                      264,217
                      
                      
                      
                      1,906,328
                      
                      
                      
                      1,204,655Plantation
      operating costs
                      
                      
                      30,986
                      
                      
                      
                      -
                      
                      
                      
                      480,424
                      
                      
                      
                      -Total
      Operating Expenses
                      
                      
                      685,322
                      
                      
                      
                      264,217
                      
                      
                      
                      2,386,752
                      
                      
                      
                      1,204,655Loss
      from Operations
                      
                      
                      (515,669
                      )
                      
                      
                      (115,302
                      )
                      
                      
                      (2,012,382
                      )
                      
                      
                      (986,504
                      )Other
      Income (Expenses)Interest
      income
                      
                      
                      37
                      
                      
                      
                      2
                      
                      
                      
                      64
                      
                      
                      
                      4Interest
      expense
                      
                      
                      (164,702
                      )
                      
                      
                      (82,035
                      )
                      
                      
                      (362,367
                      )
                      
                      
                      (245,560
                      )Gain
      on settlement of liabilities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      600,802
                      
                      
                      
                      -Foreign
      currency transaction adjustments
                      
                      
                      25,139
                      
                      
                      
                      (2,101
                      )
                      
                      
                      17,622
                      
                      
                      
                      (94
                      )Total
      Other Income (Expenses)
                      
                      
                      (139,526
                      )
                      
                      
                      (84,134
                      )
                      
                      
                      256,121
                      
                      
                      
                      (245,650
                      )Loss
      from Continuing Operations
                      
                      
                      (655,195
                      )
                      
                      
                      (199,436
                      )
                      
                      
                      (1,756,261
                      )
                      
                      
                      (1,232,154
                      )Income
      (Loss) from Discontinued Operations
                      
                      
                      (39,778
                      )
                      
                      
                      (161,126
                      )
                      
                      
                      21,095
                      
                      
                      
                      (182,441
                      )Net
      Loss
                      
                      
                      (694,973
                      )
                      
                      
                      (360,562
                      )
                      
                      
                      (1,735,166
                      )
                      
                      
                      (1,414,595
                      )Net
      Loss Attributable to the Noncontrolling Interest
                      
                      
                      (412,686
                      )
                      
                      
                      (166,084
                      )
                      
                      
                      (1,153,379
                      )
                      
                      
                      (504,617
                      )Net
      Loss attributable to Global Clean Energy Holdings, Inc.
                      
                      $
                      (282,287
                      )
                      
                      $
                      (194,478
                      )
                      
                      $
                      (581,787
                      )
                      
                      $
                      (909,978
                      )Amounts attributable to Global
      Clean Energy Holdings, Inc. common
      shareholders:Loss
      from Continuing Operations
                      
                      $
                      (242,509
                      )
                      
                      $
                      (33,352
                      )
                      
                      $
                      (602,882
                      )
                      
                      $
                      (727,537
                      )Income
      (Loss) from Discontinued Operations
                      
                      
                      (39,778
                      )
                      
                      
                      (161,126
                      )
                      
                      
                      21,095
                      
                      
                      
                      (182,441
                      )Net
      Loss
                      
                      $
                      (282,287
                      )
                      
                      $
                      (194,478
                      )
                      
                      $
                      (581,787
                      )
                      
                      $
                      (909,978
                      )Basic
      and Diluted Loss per Common Share:Income
      (Loss) from Continuing Operations
                      
                      $
                      (0.0009
                      )
                      
                      $
                      (0.0001
                      )
                      
                      $
                      (0.0023
                      )
                      
                      $
                      (0.0032
                      )Income
      (Loss) from Discontinued Operations
                      
                      
                      (0.0001
                      )
                      
                      
                      (0.0007
                      )
                      
                      
                      0.0001
                      
                      
                      
                      (0.0008
                      )Net
      Loss per Common Share
                      
                      $
                      (0.0010
                      )
                      
                      $
                      (0.0008
                      )
                      
                      $
                      (0.0022
                      )
                      
                      $
                      (0.0040
                      )Basic
      and Diluted Weighted-Average Common Shares Outstanding
                      
                      
                      270,464,478
                      
                      
                      
                      236,724,454
                      
                      
                      
                      258,774,858
                      
                      
                      
                      229,441,296
 
 The
accompanying notes are an integral part of these condensed unaudited
consolidated financial statements
  2
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 For
      the Nine Months EndedSeptember 30,2010
                  
                  
                  2009Cash
      Flows From Operating ActivitiesNet
      loss
                  
                  $
                  (1,735,166
                  )
                  
                  $
                  (1,414,595
                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Foreign
      currency transaction loss (gain)
                  
                  
                  (21,056
                  )
                  
                  
                  115,170Gain
      on settlement of liabilities
                  
                  
                  (600,802
                  )
                  
                  
                  -Share-based
      compensation
                  
                  
                  95,642
                  
                  
                  
                  401,197Depreciation
                  
                  
                  172,838
                  
                  
                  
                  1,649Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  118,360
                  
                  
                  
                  (116,618
                  )Inventory
                  
                  
                  (157,231
                  )
                  
                  
                  -Other
      current assets
                  
                  
                  (50,117
                  )
                  
                  
                  (49,392
                  )Deferred
      growing costs
                  
                  
                  (902,984
                  )
                  
                  
                  -Accounts
      payable and accrued expenses
                  
                  
                  638,888
                  
                  
                  
                  823,271Net
      Cash Used in Operating Activities
                  
                  
                  (2,441,628
                  )
                  
                  
                  (239,318
                  )Cash
      Flows From Investing ActivitiesPurchase
      of land
                  
                  
                  (715,658
                  )
                  
                  
                  -Plantation
      development costs
                  
                  
                  (609,260
                  )
                  
                  
                  (1,191,767
                  )Purchase
      of property and equipment
                  
                  
                  (183,011
                  )
                  
                  
                  (266,658
                  )Proceeds
      from disposal of assets
                  
                  
                  -
                  
                  
                  
                  12,624Cash
      acquired in acquisition of Technology Alternatives,
Limited
                  
                  
                  -
                  
                  
                  
                  2,532Net
      Cash Used in Investing Activities
                  
                  
                  (1,507,929
                  )
                  
                  
                  (1,443,269
                  )Cash
      Flows From Financing ActivitiesProceeds
      from issuance of common stock for cash
                  
                  
                  500,000
                  
                  
                  
                  50,000Proceeds
      from issuance of preferred membership in GCE Mexico I, LLC
                  
                  
                  2,817,722
                  
                  
                  
                  2,204,063Proceeds
      from notes payable
                  
                  
                  742,652
                  
                  
                  
                  15,000Payments
      on notes payable
                  
                  
                  (478,726
                  )
                  
                  
                  -Proceeds
      from convertible notes payable
                  
                  
                  567,000
                  
                  
                  
                  -Net
      Cash Provided by Financing Activities
                  
                  
                  4,148,648
                  
                  
                  
                  2,269,063Effect
      of exchange rate changes on cash
                  
                  
                  53,649
                  
                  
                  
                  (29,274
                  )Net
      Increase in Cash and Cash Equivalents
                  
                  
                  252,740
                  
                  
                  
                  557,202Cash
      and Cash Equivalents at Beginning of Period
                  
                  
                  833,584
                  
                  
                  
                  291,309Cash
      and Cash Equivalents at End of Period
                  
                  $
                  1,086,324
                  
                  
                  $
                  848,511Supplemental
      Disclosures of Cash Flow Information:Cash
      paid for interest
                  
                  $
                  157,581
                  
                  
                  $
                  -Noncash
      Investing and Financing Activities:Cashless
      exercise of warrants
                  
                  
                  8,545
                  
                  
                  
                  -Accrual
      of return on noncontrolling interest
                  
                  
                  588,941
                  
                  
                  
                  325,638Plantation
      costs financed by accounts payable
                  
                  
                  32,497
                  
                  
                  
                  204,388Equipment
      depreciation capitalized to plantation development costs
                  
                  
                  -
                  
                  
                  
                  38,052Release
      of common Stock held in escrow
                  
                  
                  -
                  
                  
                  
                  17,618Issuance
      of common stock for net assets of Technology Alternatives,
    Ltd
                  
                  
                  -
                  
                  
                  
                  179,055Equipment
      purchase for debt
                  
                  
                  103,195
                  
                  
                  
                  -
 
 The
accompanying notes are an integral part of these condensed unaudited
consolidated financial statements
  3
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
1 – History and Basis of Presentation
 
 History
 
 Medical
Discoveries, Inc. was incorporated under the laws of the State of Utah on
November 20, 1991. Effective as of August 6, 1992, the Company merged
with and into WPI Pharmaceutical, Inc., a Utah corporation (“WPI”), pursuant to
which WPI was the surviving corporation. Pursuant to the MDI-WPI merger, the
name of the surviving corporation was changed to Medical Discoveries, Inc.
(“MDI”).  MDI’s initial purpose was the research and development of an
anti-infection drug.  In 2005, MDI acquired the assets and business
associated with the SaveCream technology and carried on the research and
development of this drug candidate.  As discussed in Note 10, MDI made
the decision in 2007 to discontinue further development of its drug candidates
and sell the technologies.
 
 On
September 7, 2007, MDI entered into a share exchange agreement pursuant to which
it acquired all of the outstanding ownership interests in Global Clean Energy
Holdings, LLC, discussed further in Note 3 Global Clean Energy Holdings, LLC was
an entity that had certain trade secrets, know-how, business plans, term sheets,
business relationships, and other information relating to the start-up of a
business related to the cultivation and production of seed oil from the seed of
the Jatropha plant.  With this transaction, MDI commenced the research
and development of a business whose purpose is to provide feedstock oil intended
for the production of bio-diesel.
 
 On
January 29, 2008, a meeting of shareholders was held and, among other things,
the name Medical Discoveries, Inc. was changed to Global Clean Energy Holdings,
Inc. (the “Company”).
 
 Effective
April 23, 2008, the Company entered into a limited liability company agreement
to form GCE Mexico I, LLC (GCE Mexico) along with six unaffiliated
investors.  The Company owns 50% of the common membership interest of
GCE Mexico and five of the unaffiliated investors own the other 50% of the
common membership interest.  Additionally, a total of 1,000 preferred
membership units were issued to two of the unaffiliated
investors.  GCE Mexico owns a 99% interest in Asideros Globales
Corporativo (Asideros I) and a 99% interest in Asideros 2, entities organized
under the laws of Mexico, and the Company owns the remaining 1%
directly.  GCE Mexico was organized primarily to, among other things;
acquire land in Mexico through subsidiaries for the cultivation of the Jatropha
plant.
 
 On July
2, 2009, the Company acquired 100% of the equity interests of Technology
Alternatives, Limited (TAL), which has developed a farm in Belize for
cultivation of the Jatropha plant.  TAL has also developed a nursery
capable of producing Jatropha seedlings and rooted cuttings, and provided
technical advisory services for the propagation of the Jatropha
plant.
 
 On July
19, 2010, the reincorporation of the company from a Utah corporation to a
Delaware corporation was completed, as approved by shareholders. In the
reincorporation, each outstanding share of the company’s common stock was
automatically converted into one share of common stock of the surviving Delaware
corporation. In addition, the par value of the Company’s capital stock changed
from no par per share to $0.001 per share.  The effects of the change
in par value have been reflected retroactively in the accompanying condensed
consolidated financial statements and notes thereto for all periods
presented.  The effect of retroactively applying the par value of
$0.001 per share resulted in reclassification of $17,644,228 of common stock and
$1,290,722 of preferred stock as of December 31, 2009 to additional paid-in
capital.  The reincorporation did not result in any change in the
company’s name, ticker symbol, CUSIP number, business, assets or operations. The
management and Board of Directors of the company remained the same.
  Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Global Clean Energy
Holdings, Inc., its subsidiaries, and the variable interest entities of GCE
Mexico, Asideros I, and Asideros 2. All significant intercompany transactions
have been eliminated in consolidation.
  4
 
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Generally
accepted accounting principles require that if an entity is the primary
beneficiary of a variable interest entity (VIE), the entity should consolidate
the assets, liabilities and results of operations of the VIE in its consolidated
financial statements.  Global Clean Energy Holdings, Inc. considers
itself to be the primary beneficiary of GCE Mexico, Asideros I, and Asideros 2,
and accordingly, has consolidated these entities since their formation beginning
in April 2008, with the equity interests of the unaffiliated investors in GCE
Mexico presented as Noncontrolling Interests in the accompanying condensed
consolidated financial statements.
 
 Unaudited Interim Condensed
Consolidated Financial Statements
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations.  In the
opinion of management, all adjustments and disclosures necessary for a fair
presentation of these financial statements have been included and are of normal,
recurring nature.  These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company’s annual report on Form 10-K for the year ended December 31, 2009, as
filed with the Securities and Exchange Commission.  The results of
operations for the three months and nine months ended September 30, 2010, may
not be indicative of the results that may be expected for the year ending
December 31, 2010.
 
 Accounting for Agricultural
Operations
 
 All costs
incurred until the actual planting of the Jatropha Curcas plant are capitalized
as plantation development costs, and are included in “Property and Equipment” on
the balance sheet. Plantation development costs are being accumulated in the
balance sheet during the development period and will be accounted for in
accordance with accounting standards for Agricultural Producers and Agricultural
Cooperatives. The direct costs associated with each farm and the production of
the Jatropha revenue streams have been deferred and accumulated as a noncurrent
asset, “Deferred Growing Costs”, on the balance sheet. Other general costs
without expected future benefits are expensed when incurred.
 
 Profit/Loss per Common
Share
 
 Profit/Loss
per share amounts are computed by dividing profit or loss applicable to the
common shareholders of the Company by the weighted-average number of common
shares outstanding during each period. Diluted profit or loss per share amounts
are computed assuming the issuance of common stock for potentially dilutive
common stock equivalents.  All outstanding stock options, warrants,
convertible notes, and convertible preferred stock are currently antidilutive
and have been excluded from the calculations of diluted profit or loss per share
at September 30, 2010 and 2009, as follows:
 
 September 30,2010
                      
                      
                      2009Convertible
      notes
                      
                      
                      19,028,671
                      
                      
                      
                      128,671Convertible
      preferred stock - Series B
                      
                      
                      11,818,181
                      
                      
                      
                      11,818,181Warrants
                      
                      
                      26,475,662
                      
                      
                      
                      29,742,552Compensation-based
      stock options and warrants
                      
                      
                      69,031,483
                      
                      
                      
                      60,859,083126,353,997
                      
                      
                      
                      102,548,487
  5
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Fair Values of Financial
Instruments
 
 The
carrying amounts reported in the condensed consolidated balance sheets for
accounts receivable and accounts payable approximate fair value because of the
immediate or short-term maturity of these financial instruments.  The
carrying amounts reported for the various notes payable and the mortgage notes
payable approximate fair value because the underlying instruments are at
interest rates which approximate current market rates.
 
 Inventory
 
 The
inventory reported in the condensed consolidated balance sheets consists of
finished goods measured at the lower of cost or market.  The company
uses the FIFO (First in first out) valuation method for all
inventories.
 
 Foreign
Currency
 
 The
Company has current operations located in the United States, Mexico and
Belize.  During the quarter ended December 31, 2009, the Company
changed its functional currency for certain assets located in Mexico from the
U.S. dollar to the Mexican peso.  For these foreign operations, the
functional currency is the local country’s currency.  Consequently,
revenues and expenses of operations outside the United States of America are
translated into U.S. dollars using weighted average exchange rates, while assets
and liabilities of operations outside the United States of America are
translated into U.S. dollars using exchange rates at the balance sheet
date.  The effects of foreign currency translation adjustments are
included in the deficit as a component of accumulated other comprehensive loss
in the accompanying condensed consolidated financial
statements.  Foreign currency transaction adjustments are included in
other income (expense) in the Company’s results of operations.
 
 Certain
foreign currency transactions related to the discontinued bio-pharmaceutical
business are primarily undertaken in Euros. Gains and losses arising on
translation or settlement of foreign currency denominated transactions or
balances are included in the determination of income or loss. Consequently,
certain foreign currency gains and losses have been included in income from
discontinued operations.
 
 The
Company has not entered into derivative instruments to offset the impact of
foreign currency fluctuations.
 
 Recently Issued Accounting
Standards
 
 In
October 2009, the FASB issued a new accounting standard which amends guidance on
accounting for revenue arrangements involving the delivery of more than one
element of goods and/or services. This standard addresses the unit of accounting
for arrangements involving multiple deliverables and removes the previous
separation criteria that objective and reliable evidence of fair value of any
undelivered item must exist for the delivered item to be
considered a separate unit of accounting. This standard also addresses how the
arrangement consideration should be allocated to each deliverable. Finally, this
standard expands disclosures related to multiple element revenue arrangements.
This standard is effective for the Company beginning January 1, 2011. The
adoption of this standard is not expected to have a material impact on the
Company’s consolidated financial statements.
 
 In
January 2010, the FASB issued new accounting guidance related to the disclosure
requirements for fair value measurements and provided clarification for existing
disclosures requirements. More specifically, this update will require an entity
to disclose separately (a) the amounts of significant transfers in and out of
Levels 1 and 2 fair value measurements and to describe the reasons for the
transfers; and (b) information about purchases, sales, issuances and
settlements to be presented separately (i.e. present the activity on a gross
basis rather than net) in the reconciliation for fair value measurements using
significant unobservable inputs (Level 3 inputs). This guidance clarifies
existing disclosure requirements for the level of disaggregation used for
classes of assets and liabilities measured at fair value and requires
disclosures about the valuation techniques and inputs used to measure fair value
for both recurring and nonrecurring fair value measurements using Level 2
and Level 3 inputs. The new disclosures and clarifications of existing
disclosures are effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosure requirements related to
the purchases, sales, issuances and settlements in the rollforward activity of
Level 3 fair value measurements. Those disclosure requirements are effective for
fiscal years beginning after December 15, 2010 and for interim periods
within those fiscal years. The Company adopted the new disclosure requirements
in the first quarter of fiscal 2010.  Other than requiring additional
disclosures, adoption of this guidance did not have and is not expected to have
a material impact on the Company’s condensed consolidated financial
statements.
  6
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
2 – Going Concern Considerations
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.  As shown in the accompanying consolidated financial
statements, the Company incurred a loss from continuing operations applicable to
its common shareholders of $602,822 and $928,733 during the nine-month period
ended September 30, 2010 and during the year ended December 31, 2009,
respectively, and has an accumulated deficit applicable to its common
shareholders of $26,889,930 at September 30, 2010.  The Company also
used cash in operating activities of $2,441,628 and $1,225,629 during the
nine-month period ended September 30, 2010 and during the year ended December
31, 2009, respectively.  At September 30, 2010, the Company has
negative working capital of $4,871,892 and a stockholders’ deficit attributable
to its stockholders of $3,064,049.  These factors raise substantial
doubt about the Company’s ability to continue as a going concern.
 
 The
Company commenced its new business related to the cultivation and production of
seed oil from the seed of the Jatropha plant in September
2007.  Management plans to meet its cash needs through various means
including securing financing, entering into joint ventures, and developing the
new business model.  In order to fund its new operations, the Company
has sold Series B preferred stock in the amount of $1,300,000, has issued a
secured promissory note with aggregate borrowings of $625,000, has received
$8,013,050 in capital contributions from the preferred membership interest in
GCE Mexico I, LLC, has issued mortgages in the total amount of $2,793,934 for
the acquisition of land, and has received proceeds of $650,000 from the sale of
common stock.  The Company is developing the new business operation to
participate in the rapidly growing bio-diesel industry.  The Company
continues to expect to be successful in this new venture, but there is no
assurance that its business plan will be economically viable.  The
ability of the Company to continue as a going concern is dependent on that
plan’s success. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
 
 Note
3 – Jatropha Business Venture
 
 Having
determined to discontinue its bio-pharmaceutical operations and dispose of the
related assets, the Company considered entering into a number of other
businesses that would enable it to be able to provide the shareholders with
future value.  The Company’s Board of Directors decided to develop a
business to produce and sell seed oils, including seed oils harvested from the
planting and cultivation of the Jatropha curcas plant, for
the purpose of providing feedstock oil intended for the generation of methyl
ester, otherwise known as bio-diesel (the “Jatropha Business”).  The
Company’s Board concluded that there was a significant opportunity to
participate in the rapidly growing biofuels industry, which previously was
mainly driven by high priced, edible oil-based feedstock.  In order to
commence its new Jatropha Business, the Company entered into various
transactions during September and October of 2007, including: (i) hired Richard
Palmer, an energy consultant, and a member of Global Clean Energy Holdings LLC
(“Global”) to act as its new President, Chief Operating Officer and future Chief
Executive Officer, (ii) engaged Mobius Risk Group, LLC, a Texas company engaged
in providing energy risk advisory services, to provide it with consulting
services related to the development of the Jatropha Business, (iii) acquired
certain trade secrets, know-how, business plans, term sheets, business
relationships, and other information relating to the cultivation and production
of seed oil from the Jatropha plant for the production of bio-diesel from
Global, and (iv) engaged Corporativo LODEMO S.A DE CV to assist with the
development of the Jatropha Business in Mexico.  Subsequent to
entering into these transactions, the Company identified certain real property
in Mexico it believed to be suitable for cultivating the Jatropha
plant.  During April 2008, the Company and six unaffiliated investors
formed GCE Mexico I, LLC (GCE Mexico) and Asideros Globales Corporativo
(Asideros I), a Mexican corporation.  Asideros I acquired the land in
Mexico for the cultivation of the Jatropha plant.  In July 2009, the
Company acquired Technology Alternatives Limited (TAL), which has developed a
farm in Belize for cultivation of the Jatropha plant and provides technical
advisory services for the propagation of the Jatropha plant.  In March
2010, the Company formed Asideros 2, a Mexican corporation, which has acquired
additional land in Mexico adjacent to the land acquired by Asideros I. All of
these transactions are described in further detail in the remainder of this note
to these condensed consolidated financial statements.
  7
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Share Exchange
Agreement
 
 The
Company entered into a share exchange agreement (the Global Agreement) pursuant
to which the Company acquired all of the outstanding ownership interests in
Global Clean Energy Holdings, LLC, a Delaware limited liability company
(Global), on September 7, 2007 from Mobius Risk Group, LLC (Mobius) and from
Richard Palmer (Mr. Palmer).  Mr. Palmer owned a 13.33% equity
interest in Mobius and became the Company’s new President and Chief Operating
Officer in September 2007 and its Chief Executive Officer in December
2007.
 
 Mobius Consulting
Agreement
 
 Concurrent
with the execution of the Global Agreement, the Company entered into a
consulting agreement with Mobius pursuant to which Mobius agreed to provide
consulting services to the Company in connection with the Company’s new Jatropha
biofuel feedstock business. The Company engaged Mobius as a consultant to obtain
Mobius’ experience and expertise in the feedstock/bio-diesel market to assist
the Company and Mr. Palmer in developing this new line of operations for the
Company.  Mobius agreed to provide the following services to the
Company: (i) manage and supervise a contemplated research and development
program contracted by the Company and conducted by the University of Texas Pan
American regarding the location, characterization, and optimal economic
propagation of the Jatrophaplant; and (ii) assist
with the management and supervision of the planning, construction, and start-up
of plant nurseries and seed production plantations in Mexico, the Caribbean or
Central America.
 
 The
original term of the agreement was twelve months.  Under the
agreement, Mobius was required to supervise the hiring of certain staff to serve
in management and operations roles of the Company, or to hire such persons to
provide similar services to the company as independent
contractors.  Mobius’ compensation for the services provided under the
agreement was a monthly fee of $45,000.  The Company also
reimbursed Mobius for reasonable business expenses incurred in connection with
the services provided.  The Company terminated the agreement in July
2008, with the termination to become effective August 2008.  The
Company had recorded liabilities to Mobius of $322,897 for accrued, but unpaid,
compensation and costs as of September 30, 2010 and December 31,
2009.  However, the Company disputes these charges, and the additional
amounts that Mobius claims that it is owed, and is currently in litigation with
Mobius to resolve this liability.
 
 LODEMO
Agreement
 
 On
October 15, 2007, the Company entered into a service agreement with Corporativo
LODEMO S.A DE CV, a Mexican corporation (the LODEMO Group).  The
Company had decided to initiate its Jatropha Business in Mexico, and had
identified parcels of land in Mexico to plant and cultivate
Jatropha.  In order to obtain all of the logistical and other services
needed to operate a large-scale farming and transportation business in Mexico,
the Company entered into the service agreement with the LODEMO Group, a
privately held Mexican company with substantial land holdings, significant
experience in diesel distribution and sales, liquids transportation, logistics,
land development and agriculture.
  8
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Under the
supervision of the Company’s management, the LODEMO Group was responsible for
the establishment, development, and day-to-day operations of the Jatropha
Business in Mexico, including the extraction of the oil from the Jatropha seeds,
the delivery of the Jatropha oil to buyers, the purchase or lease of land in
Mexico, the establishment and operation of one or more Jatropha nurseries, the
clearing, planting and cultivation of the Jatropha fields, the harvesting of the
Jatropha seeds, the operation of the Company’s oil extraction facilities, and
the logistics associated with the foregoing.  The LODEMO Group was
responsible for identifying and acquiring the farmland. However, ownership of
the farmland or any lease thereto is held directly by the Company or by a
Mexican subsidiary of the Company.  The LODEMO Group was responsible
for hiring and the initial management of all necessary employees.  All
direct and budgeted costs of the Jatropha Business in Mexico were to be borne by
the Company or by its Mexican subsidiary or joint venture.
 
 The
LODEMO Group initially provided the foregoing and other necessary services for a
fee.  The Company had agreed to pay the LODEMO Group a fixed fee per
year of $60 per hectare of land planted and maintained with minimum payments
based on 10,000 hectares of developed land, to follow a planned planting
schedule. The Agreement has a 20-year term but may be terminated or modified
earlier by the Company under certain circumstances. The scope of work that was
suppose to be performed by LODEMO was reduced and modified, and the Company,
through its Mexican subsidiary, took over these functions from LODEMO on a
go-forward basis.  Under this modified agreement, the Company has paid
the LODEMO Group or accrued $14,275 during the three-months period ended
September 30, 2009 and $616,365 during the nine months ended September 30,
2009,  all of which was capitalized as plantation development
costs.  This agreement was cancelled in 2009.  As of
September 30, 2010 the Company owed the LODEMO Group $251,500 for accrued, but
unpaid, compensation and costs and $204,085 as of December 31,
2009.
 
 GCE Mexico I, LLC, Asideros
1, and Asideros 2
 
 Effective
April 23, 2008, the Company entered into a limited liability company agreement
(“LLC Agreement”) to form GCE Mexico I, LLC, a Delaware limited liability
company (GCE Mexico), with six unaffiliated investors (collectively, the
Investors).  GCE Mexico was organized primarily to facilitate the
acquisition of approximately 5,000
acres of farm land (the Jatropha Farm) in the State of Yucatan in Mexico to be
used primarily for the (i) cultivation of Jatropha curcas, (ii) the
marketing and sale of the resulting fruit, seeds, or pre-processed crude Jatropha
oil, whether as biodiesel feedstock, biomass or otherwise, and (iii) the sale of
carbon value, green fuel value, or renewable energy credit value (and other
similar environmental attributes) derived from activities at the Jatropha
Farm.
 
 Under the
LLC Agreement, the Company owns 50% of the issued and outstanding common
membership units of GCE Mexico.  The remaining 50% of the common
membership units was issued to five of the Investors.  The Company and
the other owners of the common membership interest were not required to make
capital contributions to GCE Mexico.
 
 In
addition, two of the Investors agreed to invest in GCE Mexico through the
purchase of preferred membership units and through the funding of the purchase
of land in Mexico.  An aggregate of 1,000 preferred membership units
were issued to these two Investors who each agreed to make capital contributions
to GCE Mexico in installments and as required, funding the development and
operations of the Jatropha Farm.  The preferred members have made
capital contributions of $1,117,340 and $645,377 during the three-month periods
ended September 30, 2010 and 2009, respectively, and total contributions of
$8,013,050 received by GCE Mexico from these Investors since the execution of
the LLC Agreement.  The LLC Agreement calls for additional
contributions from the Investors, as requested by management and as required by
the operation in 2010 and the following years.  These Investors are
entitled to earn a preferential 12% per annum cumulative compounded return on
the cumulative balance of their preferred membership interest.  The
preferential return totaled $221,035 and $123,948 during the three-month periods
ended September 30, 2010 and 2009, respectively, and totaling $1,199,811 since
the execution of the LLC Agreement.
  9
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The two
investors holding preferred membership units also directly funded the purchase
by Asideros I of approximately 5,000 acres of land in the State of Yucatan in
Mexico by the payment of $2,051,282.  The land was acquired in the
name of Asideros I and Asideros I issued a mortgage in the amount of $2,051,282
in favor of these two investors.  These two investors also directly
funded the purchase by Asideros 2 of approximately 3,700 acres of land adjacent
to the land owned by Asideros I by the payment of $742,652.  The land
was acquired in the name of Asideros 2 and Asideros 2 issued a mortgage in the
amount of $742,652 in favor of these two investors.  These mortgages
bear interest at the rate of 12% per annum, payable quarterly.  The
Board has directed that this interest shall continue to accrue until such time
as the Board determines that there is sufficient cash flow to pay all accrued
interest.  The initial mortgage, including any unpaid interest, is due
in April 2018.  The second mortgage, including any unpaid interest, is
due in February 2020.
 
 The net
income or loss of Asideros I and of Asideros 2 is allocated to its shareholders
based on their respective equity ownership, which is 99% to GCE Mexico and 1%
directly to the Company.  GCE Mexico has no operations separate from
its investments in Asideros I and Asideros 2.  According to the LLC
Agreement of GCE Mexico, the net loss of GCE Mexico is allocated to its members
according to their respective investment balances.  Accordingly, since
the common membership interest did not make a capital contribution, all of the
losses have been allocated to the preferred membership
interest.   The noncontrolling interest presented in the
accompanying condensed consolidated balance sheet includes the carrying value of
the preferred membership interests and of the common membership interests owned
by the Investors, and exclude any common membership interest in GCE Mexico held
by the Company.
 
 Technology Alternatives,
Limited
 
 On
October 29, 2008, the Company entered into a stock purchase agreement with the
shareholders of Technology Alternatives, Limited (TAL), a company formed under
the laws of Belize in Central America.  Subsequently, the terms and
conditions of the stock purchase agreement were modified prior to
closing.  The closing was primarily delayed to allow TAL to complete
all required conditions for the closing.  On July 2, 2009, all closing
requirements were completed and the Company consummated the stock purchase
agreement by issuing 8,952,757 shares of
its common stock in exchange for 100% of the equity interests of
TAL.  TAL owns approximately 400 acres of land and has developed a
Jatropha farm in stages over the last three years for the cultivation of the
Jatropha plant.  TAL has also developed a nursery capable of producing
Jatropha seeds, seedlings and rooted cuttings.  During 2009, TAL has
commenced selling seeds, principally to GCE Mexico.  TAL also provides
technical advisory services for the propagation of the Jatropha
plant.
 
 In
connection with the acquisition, certain payables to the former shareholders of
TAL were renegotiated and converted into promissory notes in the aggregate
principal amount of $516,139 Belize Dollars (US $268,036 based on exchange rates
in effect at July 2, 2009).  These notes payable to shareholders were
interest free through September 30, 2009, and then bear interest at 8% per annum
through the maturity date.  The notes are secured by a mortgage on the
land and related improvements.  The notes, plus any related accrued
interest, were originally due on December 29, 2009, but the due date had been
extended to June 28, 2010 and has subsequently been extended to January 1,
2011.  TAL and/or the Company may prepay the notes at any time without
penalty, and the Company is required to prepay the notes if and when it receives
future funding in an amount that, in the Company’s reasonable discretion, is
sufficient to permit the prepayment of the notes without adversely affecting the
Company’s operations or financial condition.
  10
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
4 – Property and Equipment
 
 Property
and equipment are as follows:
  September
      30,
                            
                            
                            December
      31,2010
                            
                            
                            2009Land
                            
                            $
                            2,896,696
                            
                            
                            $
                            2,079,914Plantation
      development costs
                            
                            
                            4,367,224
                            
                            
                            
                            3,633,288Plantation
      equipment
                            
                            
                            1,068,783
                            
                            
                            
                            805,719Office
      equipment
                            
                            
                            85,376
                            
                            
                            
                            33,478Total
      cost
                            
                            
                            8,418,079
                            
                            
                            
                            6,552,399Less
      accumulated depreciation
                            
                            
                            (289,628
                            )
                            
                            
                            (110,910
                            )Property
      and equipment, net
                            
                            $
                            8,128,451
                            
                            
                            $
                            6,441,489
 
 Commencing
in June 2008, Asideros I purchased certain equipment for purposes of rapidly
clearing the land, preparing the land for planting, and actually planting the
Jatropha trees.  The Company has capitalized farming equipment and
costs related to the development of land for farm use in accordance with
generally accepted accounting principles for accounting by agricultural
producers and agricultural cooperatives.  Plantation equipment is
depreciated using the straight-line method over estimated useful lives of 5 to
15 years.  Depreciation expense has been capitalized as part of
plantation development costs through the date that the plantation becomes
commercially productive.  The initial plantations were deemed to be
commercially productive on October 1, 2009, at which date the Company commenced
the depreciation of plantation development costs over estimated useful lives of
10 to 35 years, depending on the nature of the
development.  Developments and other improvements with indefinite
lives are capitalized and not depreciated.  Other developments that
have a limited life and intermediate-life plants that have growth and production
cycles of more than one year are being depreciated over their useful lives once
they are placed in service.  The land, plantation development costs,
and plantation equipment are located in Mexico and in Belize.
 
 Note
5 – Accrued Payroll and Payroll Taxes
 
 A
significant portion of accrued payroll and payroll taxes relates to unpaid
compensation for officers and directors that are no longer affiliated with the
Company.  Accrued payroll taxes will become due upon payment of the
related accrued compensation.  Accrued payroll and payroll taxes are
composed of the following:
  11
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 September
      30,
                    
                    
                    December
      31,2010
                    
                    
                    2009Accrued
      payroll, vacation, and related payroll taxes for current
      officers
                    
                    $
                    1,087,355
                    
                    
                    $
                    570,726Former
      Chief Executive Officer, resigned 2007, including $500,000 under the
      Release and Settlement Agreement
                    
                    
                    570,949
                    
                    
                    
                    570,949Other
      former officers and directors
                    
                    
                    77,750
                    
                    
                    
                    311,200Accrued
      payroll taxes on accrued compensation to former officers and
      directors
                    
                    
                    25,590
                    
                    
                    
                    38,510Accrued
      payroll and payroll taxes
                    
                    $
                    1,761,644
                    
                    
                    $
                    1,491,385
 
 On August
31, 2007, the Company entered into a Release and Settlement Agreement with Judy
Robinett, the Company’s then-current Chief Executive Officer.  Under
the agreement, Ms. Robinett agreed to, among other things, assist the Company in
the sale of its legacy assets and complete the preparation and filing of the
delinquent reports to the Securities and Exchange Commission.  Under
the agreement, Ms. Robinett agreed to (i) forgive her potential right to receive
$1,851,805 in accrued and unpaid compensation, un-accrued and pro-rata bonuses,
and severance pay and (ii) the cancellation of stock options to purchase
14,000,000 shares of common stock at an exercise price of $0.02 per
share.  In consideration for her services, the forgiveness of the
foregoing cash payments, the cancellation of the stock options, and settlement
of other issues, the Company agreed to, among other things, to pay Ms. Robinett
$500,000 upon the receipt of the cash payment under the agreement to sell the
SaveCream Assets to Eucodis Pharmaceuticals Forschungs und Entwicklungs GmbH
(Eucodis).  Pursuant to this agreement, Ms. Robinett resigned on
December 21, 2007.  Despite the Company’s efforts, the sale to Eucodis
was never completed and Eucodis has since ceased
operations.  Accordingly, the conditions precedent to make the
$500,000 payment from the Eucodis proceeds described above has not been
fulfilled, i.e., the Company’s sale of the SaveCream Assets to Eucodis did not
occur.  Furthermore, the Company subsequently sold the SaveCream
Assets to an unaffiliated third party on November 16, 2009.
 
 Note
6 – Debt
 
 Promissory
Note
 
 In
October 2009, a bank loaned TAL $67,800 Belize Dollars (US $35,554 based on
exchange rates in effect on the date of the note).  The note bears
interest at 13% per annum, is unsecured, and is due on demand.  The
balance of the note at September 30, 2010 is $61,279 Belize Dollars (US $31,681
based on exchange rates in effect at September 30, 2010).  The balance
of the note at December 31, 2009 was $66,548 Belize Dollars (US $34,232 based on
exchange rates in effect at December 31, 2009).
 
 Notes Payable to
Shareholders
 
 The
Company has notes payable to certain shareholders in the aggregate amount of
$26,000 and $56,000 at September 30, 2010 and December 31, 2009,
respectively.  The notes originated between 1997 and 1999, bear
interest at 12%, are unsecured, and are currently in default.  Accrued
interest on the notes totaled $42,492 and $85,541 at September 30, 2010 and
December 31, 2009, respectively.
  12
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 As more
fully disclosed in Note 3 to these condensed consolidated financial statements,
the Company has promissory notes to the former shareholders of TAL in the amount
of $516,139 Belize dollars (US $266,844 based on exchange rates in effect at
September 30, 2010 and US $266,844 based on exchange rates in effect at December
31, 2009).  These notes payable to shareholders were interest free
through September 30, 2009, and then bear interest at 8% per annum through the
maturity date.  The notes are secured by a mortgage on the land and
related improvements.  The notes, plus any related accrued interest,
were originally due on December 29, 2009, but the due date had been extended to
June 28, 2010 and subsequently extended to January 1, 2011.
 
 Convertible Notes
Payable
 
 In March
2010, the Company entered into a securities purchase agreement with the
preferred members of GCE Mexico pursuant to which the Company issued senior
unsecured convertible promissory notes in the original aggregate principal
amount of $567,000 and warrants to acquire an aggregate of 1,890,000 shares of
the Company’s common stock.  The Convertible Notes mature on the
earlier of (i) March 16, 2012, or (ii) upon written demand of payment by the
note holders following the Company’s default thereunder. The maturity date of
the Convertible Notes may be extended by written notice made by the note holders
at any time prior to March 16, 2012.  Interest accrues on the
convertible notes at a rate of 5.97% per annum, and is payable quarterly in
cash, in arrears, on each three-month anniversary of the issuance of the
convertible notes.  The Company may at its option, in lieu of paying
interest in cash, pay interest by delivering a number of unregistered shares of
its common stock equal to the quotient obtained by dividing the amount of such
interest by the arithmetic average of the volume weighted average price for each
of the five consecutive trading days immediately preceding the interest payment
date.  At any time following the first anniversary of the issuance of
the Convertible Notes, at the option of the note holders, the outstanding
balance thereof (including unpaid interest) may be converted into shares of the
Company’s common stock at a conversion price equal to $0.03.  The
conversion price may be adjusted in connection with stock splits, stock
dividends and similar events affecting the Company’s capital
stock.  The convertible notes rank senior to all other indebtedness of
the Company, and thereafter will remain senior or pari passu with all accounts
payable and other similar liabilities incurred by the Company in the ordinary
course of business. The Company may not prepay the convertible notes without the
prior consent of the Investors.
 
 The
warrants have an exercise price of $0.03 per share and the exercise price of the
warrants may be adjusted in connection with stock splits, stock dividends and
similar events affecting the Company’s capital stock.  The warrants
expire on March 16, 2013. The fair value of the warrants was immaterial,
accordingly, all of the proceeds from the issuance of the debt were allocated to
the Convertible Notes.  The Company used substantially all of the
proceeds received from the sale of the convertible promissory notes to repay, in
full, an outstanding promissory note in the amount of $475,000, plus accrued
interest of $81,909.
 
 The
Company has other convertible notes payable to certain individuals in the
aggregate amount of $193,200 at September 30, 2010 and December 31,
2009.  The notes originated in 1996, bear interest at 12%, are
unsecured, and are currently in default.  Each $1,000 note is
convertible into 667 shares of the Company’s common stock.
 Accrued
interest on the convertible notes totaled $289,324 and $271,983 at September 30,
2010 and December 31, 2009, respectively.
 
 Lease
Commitment
 
 During
June 2010, the Company entered into a new two-year and two month lease agreement
with average monthly payments including prescribed common area fees of $3,400,
with a 3% annual increase in lease payments.
  13
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Future
minimum lease payments under operating lease obligations as of September 30,
2010 were as follows:
 Year
      EndingDecember 31,2010
                    
                    $
                    10,2002011
                    
                    
                    41,5002012
                    
                    
                    24,500Operating
      Lease Payable
                    
                    $
                    76,200
 
 Plantation
equipment recorded under the two capital leases is included in “property and
equipment” and amounted to $77,396 at September 30, 2010.  As the
assets were purchased at the end of the period, no amortization was recorded as
of September 30, 2010.  Depreciation of the capitalized asset will be
computed on the straight-line basis over the lease term and will be included in
depreciation expense.  Imputed interest on the lease is 13.25% with
principal and interest due in equal monthly installments of $1,309 each, or
$2,618 combined.  The balance of the leases payable as of September
30, 2010 was $77,396 and is due to be paid in full by October 2013.
 
 Transportation
equipment recorded under a capital lease is included in “property and equipment”
and amounted to $19,095 at September 30, 2010.  As the assets were
purchased at the end of the period, no amortization was recorded as of September
30, 2010.  Depreciation of the capitalized asset will be computed on
the straight-line basis over the lease term and will be included in depreciation
expense.   Imputed interest on the lease is 14.50%,with principal
and interest due in monthly installments of $784.  The balance of the
lease payable as of September 30, 2010 was $19,095 and is due to be paid in full
in 30 equal monthly installments, or by March 2013.
 
 Future
minimum lease payments under capital lease obligations as of September 30, 2010
were as follows:
 Year
      EndingDecember 31,2010
                    
                    $
                    7,5862011
                    
                    
                    40,8142012
                    
                    
                    40,8142013
                    
                    
                    27,739116,954Less
      amount representing interest
                    
                    
                    (20,463
                    )Capital
      Lease Payable
                    
                    $
                    96,491
 
 Settlement of
Liabilities
 
 The
Company has negotiated the settlement of liabilities carried on the condensed
consolidated balance sheet and has recorded significant gains.  The
gain on settlement of liabilities for the nine months ended September 30, 2010
was $600,802.  There was no gain on settlement of liabilities for the
comparable period in 2009. This gain was primarily from the settlement of
historic liabilities primarily incurred by prior management in connection with
the discontinued pharmaceutical operations that have been on the Company’s
records for several years.
  14
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
7 – Changes in Equity (Deficit)
 
 A summary
of the composition of Equity (Deficit) of the Company at September 30, 2010 and
2009, and the changes during the nine months then ended is presented in the
following table:
 Total
      Global CleanHoldings,
      Inc.stockholders'
                  
                  
                  Noncontrolling
                  
                  
                  Total
      equityequity (deficit)
                  
                  
                  interest
                  
                  
                  (deficit)Balance
      at December 31, 2009
                  
                  $
                  (3,078,412
                  )
                  
                  $
                  2,485,792
                  
                  
                  $
                  (592,620
                  )Issuance
      of common stock
                  
                  
                  500,000
                  
                  
                  
                  -
                  
                  
                  
                  500,000Capital
      contribution from noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  2,817,722
                  
                  
                  
                  2,817,722Share-based
      compensation
                  
                  
                  95,642
                  
                  
                  
                  -
                  
                  
                  
                  95,642Accrual
      of preferential return for the noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  (588,941
                  )
                  
                  
                  (588,941
                  )Net
      loss
                  
                  
                  (581,787
                  )
                  
                  
                  (1,153,379
                  )
                  
                  
                  (1,735,166
                  )Other
      comprehensive loss
                  
                  
                  508
                  
                  
                  
                  243,874
                  
                  
                  
                  244,382Balance
      at September 30, 2010
                  
                  $
                  (3,064,049
                  )
                  
                  $
                  3,805,068
                  
                  
                  $
                  741,019
 
 Total
      Global CleanHoldings,
      Inc.stockholders'
                  
                  
                  Noncontrolling
                  
                  
                  Total
      equityequity (deficit)
                  
                  
                  interest
                  
                  
                  (deficit)Balance
      at December 31, 2008
                  
                  $
                  (5,948,575
                  )
                  
                  $
                  1,962,022
                  
                  
                  $
                  (3,986,553
                  )Issuance
      of common stock
                  
                  
                  229,055
                  
                  
                  
                  -
                  
                  
                  
                  229,055Capital
      contribution from noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  2,204,063
                  
                  
                  
                  2,204,063Share-based
      compensation
                  
                  
                  401,197
                  
                  
                  
                  -
                  
                  
                  
                  401,197Accrual
      of preferential return for the noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  (325,638
                  )
                  
                  
                  (325,638
                  )Net
      loss
                  
                  
                  (909,978
                  )
                  
                  
                  (504,617
                  )
                  
                  
                  (1,414,595
                  )Accumulated
      other comprehensive loss
                  
                  
                  (4,609
                  )
                  
                  
                  (22,271
                  )
                  
                  
                  (26,880
                  )Balance
      at September 30, 2009
                  
                  $
                  (6,232,910
                  )
                  
                  $
                  3,313,559
                  
                  
                  $
                  (2,919,351
                  )
 
 Common
Stock
 
 On March
30, 2010 the Company entered into a stock purchase agreement whereby the Company
agreed to issue and sell 25,000,000 shares of the Company’s common stock at a
price of $0.02 per share, for an aggregate purchase price of $500,000, which was
paid in cash.
  15
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
8 – Stock Options and Warrants
 
 Stock Options and
Compensation-Based Warrants
 
 The
Company has two incentive stock option plans wherein 24,000,000 shares of
the Company’s common stock are reserved for issuance there under. As further
explained in Note 9 to these condensed consolidated financial statements, the
Company granted stock options during the nine months ended September 30, 2010 to
acquire 12,000,000 shares of the Company’s common stock to the Company’s Chief
Executive Officer.  The Company granted stock options during the nine
months ended September 30, 2009 to acquire 1,000,000 shares of the Company’s
common stock to non-employee directors.  These options are exercisable
at $0.02 per share, vest monthly
over ten months starting August 31, 2009, and expire July 3,
2014.  During the nine months ended September 30, 2009, the Company
also issued compensation-based stock warrants to an investment banking firm to
acquire 7,700,000 shares of the Company’s common stock at $0.0325 per
share.  Additionally, during the nine months ended September 30, 2010,
the Company issued compensation-based warrants to purchase 250,000 shares of
common stock to a law firm.   Effective April 1, 2010, the
Company appointed Martin Wenzel to its board of directors.  Mr. Wenzel
was granted an option to purchase 500,000 shares of the Company’s common stock
at an exercise price of $0.01 per share.  The option vests over ten
equal monthly installments commencing May 1, 2010 and expires on April 1,
2015.
 
 On July
19, 2010, the stockholders approved the 2010 Stock Incentive Plan. The granting
of options and other stock awards is an important incentive tool for the
Company’s employees, officers and directors. The 2010 Plan provides a means by
which employees, directors and consultants of the Company may be given an
opportunity to benefit from increases in the value of our common stock, and to
attract and retain the services of such persons.  All of our
employees, directors and consultants are eligible to participate in the 2010
Plan. The total number of shares of common stock which may be offered, or issued
as restricted stock or on the exercise of options or Stock Appreciation Rights
(SARs) under the Plan shall not exceed twenty million (20,000,000) shares of
common stock.  The shares subject to an option or SAR granted under
the Plan that expire, terminate or are cancelled unexercised shall become
available again for grants under this Plan.  If shares of restricted
stock awarded under the Plan are forfeited to the Company or repurchased by the
Company, the number of shares forfeited or repurchased shall again be available
under the Plan.  Where the exercise price of an option is paid by
means of the optionee’s surrender of previously owned shares of common stock or
the Company’s withholding of shares otherwise issuable upon exercise of the
option as may be permitted herein, only the net number of shares issued and
which remain outstanding in connection with such exercise shall be deemed
“issued” and no longer available for issuance under this Plan.  No
eligible person shall be granted options or other awards during any twelve-month
period covering more than Five Hundred Thousand (500,000) shares of common
stock.
 
 On August
17, 2010, the Board of Directors approved the adoption of the 2010 Stock
Incentive Plan, and directed management to issue 900,000 share options to
certain consultants in the United States and certain employees in Mexico. These
options shall vest over the next 12 to 24 months and have an exercise price of
$0.04 per share.
 
 No income
tax benefit has been recognized for share-based compensation
arrangements.  The Company has recognized plantation development costs
totaling $124,565 related to a liability that was satisfied by the issuance of
warrants in 2008.  Otherwise, no share-based compensation cost has
been capitalized in the condensed consolidated balance sheet.
  16
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 A summary
of the status of options and compensation-based warrants at September 30, 2010,
and changes during the nine months then ended is presented in the following
table:
 
 WeightedWeighted
                          
                          AverageShares
                          
                          
                          Average
                          
                          Remaining
                          
                          AggregateUnder
                          
                          
                          Exercise
                          
                          Contractual
                          
                          IntrinsicOption
                          
                          
                          Price
                          
                          Life
                          
                          ValueOutstanding
      at December 31, 2009
                          
                          
                          61,209,083
                          
                          
                          $
                          0.03Granted
                          
                          
                          13,650,000
                          
                          
                          
                          0.02Exercised
                          
                          
                          (5,827,600
                          )
                          
                          
                          0.01Expired
                          
                          
                          -
                          
                          
                          
                          -Outstanding
      at September 30, 2010
                          
                          
                          69,031,483
                          
                          
                          
                          0.03
                          
                          5.3 years
                          
                          $
                          554,367Exercisable
      at September 30, 2010
                          
                          
                          55,581,483
                          
                          
                          $
                          0.04
                          
                          4.3 years
                          
                          $
                          400,267
 
 At
September 30, 2010, options to acquire 80,000 shares of common stock have no
stated contractual life.  The fair value of other stock option grants
and compensation-based warrants is estimated on the date of grant or issuance
using the Black-Scholes option pricing model.  The weighted-average
fair value of stock options granted and compensation-based warrants issued
during the nine months ended September 30, 2010 was $0.0096.  The
weighted-average assumptions used for the stock options granted and
compensation-based warrants issued during the six months ended September 30,
2010 were risk-free interest rate of 3.46%, volatility of 156%, expected life of
9.4 years, and dividend yield of zero.  The assumptions employed in
the Black-Scholes option pricing model include the following.  The
expected life of stock options represents the period of time that the stock
options granted are expected to be outstanding prior to exercise. The expected
volatility is based on the historical price volatility of the Company’s common
stock. The risk-free interest rate represents the U.S. Treasury constant
maturities rate for the expected life of the related stock options. The dividend
yield represents anticipated cash dividends to be paid over the expected life of
the stock options.  The intrinsic values are based on a September 30,
2010 closing price of $0.032 per share.
 
 Share-based
compensation from all sources recorded during the three months and nine months
ended September 30, 2010 was $35,306 and $95,642, respectively, and is reported
as general and administrative expense in the accompanying condensed consolidated
statements of operations.  Share-based compensation from all sources
recorded during the three months and nine months ended September 30, 2009 was
$14,982 and $401,197, respectively, and is reported as general and
administrative expense.  As of September 30, 2010, there is
approximately $54,000 of unrecognized compensation cost related to stock-based
payments that will be recognized over a weighted average period of approximately
0.9 years.
  17
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Stock
Warrants
 A summary
of the status of the warrants outstanding at September 30, 2010, and changes
during the nine months then ended is presented in the following
table:
  WeightedShares
                    
                    
                    AverageUnder
                    
                    
                    ExerciseWarrant
                    
                    
                    PriceOutstanding
      at December 31, 2009
                    
                    
                    29,742,552
                    
                    
                    $
                    0.01Issued
                    
                    
                    1,890,000
                    
                    
                    
                    0.03Exercised
                    
                    
                    (4,575,495
                    )
                    
                    
                    0.01Expired
                    
                    
                    (581,395
                    )
                    
                    
                    0.13Outstanding
      at September 30, 2010
                    
                    
                    26,475,662
                    
                    
                    
                    0.01
 
 On April
26, 2010, the Company received a notice for the exercise of 4,575,495
financing-based warrants and 5,827,600 compensation-based warrants to
acquire  common stock on a cashless basis. The warrants were
exercisable at $0.01 per share.  The Company issued 8,545,399 shares
of its common stock to the entity as a result of the cashless
exercise.
 
 Note
9 – Employment Agreement
 
 On March
16, 2010, the Company and Richard Palmer, the Company’s Chief Executive Officer,
entered into an amendment of Mr. Palmer’s employment agreement originally
entered into in September 2007.  Pursuant to the amendment, the
Company extended the term of Mr. Palmer’s employment as the Company’s President,
Chief Executive Officer and Chief Operating Officer for an additional two years
through September 30, 2012.  Thereafter, the term of employment shall
automatically renew for successive one-year periods unless otherwise terminated
by either party 90 days before the renewal period. In connection with the
amendment, the Company granted Mr. Palmer an option to purchase up to 12,000,000
shares of the Company’s common stock at an exercise price of $0.02, subject to
the Company’s achievement of certain market capitalization
goals.  According to the terms of the option, the option to purchase
up to 6,000,000 shares vests when the Company’s market capitalization first
reaches $30 million and the option to purchase the other 6,000,000 shares vests
when the Company’s market capitalization first reaches $60
million.  The option expires on March 16, 2020, ten years after the
date of amendment.  The remaining terms of the original employment
agreement remain in effect.
 
 Note
10 - Discontinued Operations
 
 On
November 16, 2009, Global Clean Energy Holdings, Inc. and its subsidiary, MDI
Oncology, Inc., entered into a Sale and Asset Purchase Agreement with Curadis
Gmbh, an unaffiliated German company, for the sale and of substantially all of
the intellectual property associated with the patents, patent applications,
pre-clinical study data and ancillary clinical trial data concerning the
SaveCream asset.  The closing occurred on December 22,
2009.  The SaveCream asset had no carrying value on the consolidated
balance sheet of the Company.  In connection with the sale, the
Company recognized a gain of $3,298,511 during the fourth quarter of 2009,
consisting of cash received of $518,655, the assumption of a research and
development obligation with a carrying value of $2,758,350 (1,850,000 Euros),
and the assumption of accounts payable of $21,506.  Should the
pharmaceutical product ever be commercialized, the entire transaction will be
valued at 4.2 million Euros. Although management is hopeful that the
pharmaceutical product will be commercialized, no assurance can be given if or
when any additional consideration or cash will be provided to the Company after
the closing. If additional consideration or cash is received, the Company will
recognize additional gain at that time.  The Company will hold a
security interest in the sold assets until the final two million Euro payment is
made, if ever.
  18
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Pursuant
to accounting rules for discontinued operations, the Company has classified all
gain, revenue and expense related to the operations, assets, and liabilities of
its bio-pharmaceutical business as discontinued operations.  For the
three months and nine months ended September 30, 2010 and 2009, Income from
Discontinued Operations consists of the foreign currency transaction gains
related to current liabilities associated with the discontinued operations that
are denominated in Euros.
 
 Note
11 – Subsequent Events
 
 On
October 27, 2010 a wholly owned subsidiary of our joint venture, GCE Mexico I,
LLC, received the first grant from the Mexican Federal Government of
approximately $368,451 USD under the 2009 Forestry Commission Program for
Jatropha Curcas. This grant is to be used to offset the cost of GCE Mexico’s
farm operations in Mexico. We anticipate receiving an additional $76,530 USD
under this program,and we anticipate receiving at least $96,414 USD from the
2010 Forestry Commission Program for Jatropha Curcas.
  19


ITEM
2.   MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.




This
Report, including any documents which may be incorporated by reference into this
Report, contains “Forward-Looking Statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  All statements other than
statements of historical fact are “Forward-Looking Statements” for purposes of
these provisions, including our plans to cultivate, produce and market non-food
based feedstock for applications in the bio-fuels market, any projections of
revenues or other financial items, any statements of the plans and objectives of
management for future operations, any statements concerning proposed new
products or services, any statements regarding future economic conditions or
performance, and any statements of assumptions underlying any of the
foregoing.  All Forward-Looking Statements included in this document
are made as of the date hereof and are based on information available to us as
of such date.  We assume no obligation to update any Forward-Looking
Statement.  In some cases, Forward-Looking Statements can be
identified by the use of terminology such as “may,” “will,” “expects,” “plans,”
“anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,”
or the negative thereof or other comparable terminology.  Although we
believe that the expectations reflected in the Forward-Looking Statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the Forward-Looking Statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
the Forward-Looking Statements.  Future financial condition and
results of operations, as well as any Forward-Looking Statements are subject to
inherent risks and uncertainties, including any other factors referred to in our
press releases and reports filed with the Securities and Exchange
Commission.  All subsequent Forward-Looking Statements attributable to
the company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements.  Additional factors that may
have a direct bearing on our operating results are described under “Risk
Factors” and elsewhere in this report.




Introductory
Comment




Throughout
this Quarterly Report on Form 10-Q, the terms “GCEH,” “we,” “us,” “our,” and
“our company” refer to Global Clean Energy Holdings, Inc., a Delaware
corporation (which used to be a Utah corporation until July 19, 2010), formerly
known as Medical Discoveries, Inc., and, unless the context indicates otherwise,
also includes: (i) MDI Oncology, Inc., a Delaware corporation, and a
wholly-owned subsidiary; (ii) Global Clean Energy Holdings LLC, a wholly-owned
Delaware limited liability company; (iii) Technology Alternative, Limited, a
wholly-owned subsidiary formed under the laws of Belize; and (iv) Globales
Energia Renewables, a wholly-owned subsidiary formed under the laws of
Mexico.  To the extent applicable, depending on the context of the
disclosure, the terms ““we,” “us,” “our,” and “our company” may also include GCE
Mexico I, LLC a Delaware limited liability company, in which we manage and own
approximately 50% of the common membership interests.




Global
Clean Energy Holdings, Inc. is not related to, or affiliated in any manner with
“Global Clean Energy, Inc.”, an unaffiliated public
company.   Readers are cautioned to confirm the entity that they
are evaluating or in which they are making an investment before completing any
such investment.




Overview




Global
Clean Energy Holdings, Inc. (“GCEH”) is a California-based energy agri-business
focused on the development of non-food based bio-fuel feedstock.  GCEH
has full service in-house development and operations capabilities, which it
provides for its own energy farms as well as farms it operates via joint venture
arrangements. With international experience and capabilities in eco-friendly
bio-fuel feedstock management, cultivation, production and distribution, GCEH is
well suited to scale its business.




GCEH is
focusing on the commercialization of oil and biomass derived from the seeds of
Jatropha curcas
(“Jatropha”) - a native non-edible plant indigenous to many tropical and
sub-tropical regions of the world, including Mexico, the Caribbean and Central
America.  Jatropha oil is high-quality plant oil used as a direct
replacement for fossil fuels or as feedstock for the production of high quality
first and second generation biofuels like bio-diesel, bio-jet or renewable
diesel, which are  direct replacements for jet fuel and diesel
fuel.  The residual material derived from the oil extraction process
is called press cake, which is a high-quality biomass that can be used as a
replacement for a number of fossil fuels.


20


Jatropha
trees require less water and fertilizer than many conventional crops, and can be
grown on land that is not suitable for the production of food. Jatropha oil is
very high quality plant oil that is particularly well suited for the production
of first and second generation biofuels.  Without post processing,
Jatropha oil can be used as a direct replacement for diesel and other fossil
fuels in many applications.  Bio diesel and renewable fuel is a
diesel-equivalent, and bio-jet is a jet fuel-equivalent; both are processed
fuels derived from biological sources (such as plant oils), which can be used as
a replacement for fossil based fuels in diesel engines, jet engines or other
fuel oil based combustion equipment.




Our
business plan and current principal business activities include the planting,
cultivation, harvesting and processing of Jatropha to generate plant based oils
and biomass for use as replacements for fossil fuels.  Our strategy is
to leverage our Jatropha based bio-fuels knowledge, experience and capabilities
through the following means:




·
            Own
      and operate Jatropha farms for our own
account.




·
            Own,
      operate and manage Jatropha farms through joint ownership agreements. We
      currently operate two farms located in Mexico under joint ownership
      arrangements: the first farm comprises 5,149 acres; the second farm,
      consisting of 3,700 acres, was acquired in March 2010.  The
      first farm is fully planted and is expected to produce its first
      commercial quantities of Jatropha seeds by the end of 2010.  We
      anticipate that the second farm will substantially planted by the end of
      February 2011.




·
            Provide
      Jatropha farm development and management services to third party owners of
      Jatropha farms. We plan to greatly expand this initiative in the next 12
      months.




·
            Provide
      turnkey Franchise Operations for individuals and/or companies that wish to
      immediately establish Jatropha farms in suitable geographical
      areas.




In
addition to generating revenues from the sale of non-food based plant oils and
biomass, we plan to monetize the carbon credits from the farms we own and
manage.  Under the 1997 Kyoto Protocol, a worldwide carbon credit
trading market has been established where sellers sell their excess carbon
credits and buyers purchase the carbon credits they need to meet their
greenhouse gas reduction requirements.  We have commenced the
certification process necessary to sell carbon credits, but have not yet made
any carbon credit sales.




Organizational
History




This
company was incorporated under the laws of the State of Utah on November 20,
1991.  Until 2007, we were a developmental-stage bio-pharmaceutical
company engaged in the research, validation, and development of two drug
candidates. In 2007, the Company decided to change the course of its business
and focus its efforts and resources on the emerging alternative energy fuels
business.  In order to be successful in this industry, we decided to
acquire the intellectual property and expertise needed to develop and manage our
new business.   Accordingly, on September 7, 2007, we acquired
Global Clean Energy Holdings, LLC, a Delaware limited liability company that
owned certain trade secrets, know-how, business plans and relationships relevant
to the cultivation and production of Jatropha.  In addition, at that
time, we hired Richard Palmer, our current Chief Executive
Officer.   In 2008 we changed our name to “Global Clean Energy
Holdings, Inc.” to reflect our energy agricultural business.  For a
comprehensive description of our business operations, please refer to the
discussion included in “Item 1 – Business” of our Annual Report on Form 10-K for
the year ended December 31, 2009, as filed with the Securities and Exchange
Commission.


21


On July
19, 2010, the Company completed a merger with a newly formed, wholly owned
subsidiary to reincorporate in the State of Delaware.  Our principal
executive offices are located at 100 W. Broadway, Suite 650, Long Beach, Los
Angeles County, California 90802, and our current telephone number at that
address is (310) 641-GCEH (4234).  We maintain a website at: www.gceholdings.com.  Our
annual reports, quarterly reports, current reports on Form 8-K and amendments to
such reports filed or furnished pursuant to section 13(a) or 15(d) of the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other
information related to this company are available on our website as soon as we
electronically file those documents with, or otherwise furnish them to, the
Securities and Exchange Commission. Our Internet website and the information
contained therein, or connected thereto, are not and are not intended to be
incorporated into this Quarterly Report on Form 10-Q.




Our
bio-fuels operations in Latin America are coordinated through our Globales
Energia Renewables, our wholly owned subsidiary in Mexico.  Our
principal farming operations are conducted on our two joint venture farms,
consisting of an aggregate of 8,849 acres located near the City of Tizimin in
the State of Yucatan,  Mexico.  The following is a summary
of certain factors relevant to an understanding of the operations of the Tizimin
farms:




1.
            The
      Jatropha trees which were planted on the Tizimin farm approximately two
      years ago are now flowering, and we expect to begin harvesting commercial
      quantities of Jatropha fruit late in the fourth quarter of 2010. As a
      result, we expect to generate our first revenues from the commercial sale
      of Jatropha seeds/oil by the end of 2010 or the beginning of 2011.
      Jatropha seeds can be harvested twice a year. Accordingly, as the trees
      that were planted during the past two years mature, our harvests of
      Jatropha seeds will increase, improving our future revenues from our
      Tizimin operations.




2.
            Although
      some of our Jatropha trees will produce a commercial harvest of seeds
      later this year, the amount of this initial harvest is expected to be
      lower than previously anticipated due to the late and long rainy season,
      which has delayed the flowering and fruiting in sections of the Tizimin
      farms that will be harvested first.




3.
            Our
      Tizimin operations are eligible for agricultural and other subsidies
      provided to certain farming operations by the federal government of
      Mexico.  We have applied for over $900,000 in subsidies, which,
      if granted, will be funded over the next 12 months.  In October
      2010, we received $368,000 as the first installment of the
      subsidy.  These subsidies will help defray some of the initial
      start-up costs that we have incurred in establishing these
      farms.




4.
            We
      continue to operate two nurseries for new Jatropha trees in the Tizimin
      area, which provide seedlings for our new farm and any additional farms
      that we acquire in the future.




5.
            Fruit
      and seed handling, oil extraction facilities, germplasm resources, and
      sheep herding capabilities are all being expanded in anticipation of our
      expanding Jatropha operations. Oil extraction facilities are expected to
      be located offsite of the present
farms.




6.
            Our
      Tizimin farms are being developed for the purpose of producing bio-fuels
      from Jatropha seeds. However, our development and cultivation of these
      farms has also enabled us to generate small amounts of ancillary revenues
      from these operations. For example, we now receive revenue from the sale
      of biomass (waste wood removed from our farms as the land is cleared for
      Jatropha planting), sales of sheep that graze on our lands and control
      weeds, and sale of the presscake from the Jatropha seeds that remain after
      oil extraction.




7.
            Total
      capital for expenses and operations, since inception, for the two farms in
      the Tizimin area (through September 30, 2010) was $8,013,050. All funding
      has to date been provided by the investing partners of the joint venture
      that owns both Tizimin farms.  These investment partners will
      have a priority right to receive revenues generated from these farms until
      their investment, plus a preferred return, have been
  paid.




We also
own a 400 acre Jatropha research farm in Belize.  The Belize farm
currently is inactive, and we are currently evaluating the future use and/or
disposition of this farm. Research efforts have now been centralized at our
farms near Tizimin, Mexico.


22


Critical
Accounting Policies




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States require management to make estimates and
assumptions that affect the reported assets, liabilities, sales and expenses in
the accompanying financial statements.  Critical accounting policies
are those that require the most subjective and complex judgments, often
employing the use of estimates about the effect of matters that are inherently
uncertain.




Operational
Company.  On October 1, 2009, we commenced our planned
principal operations, which indicated that we were no longer subject to the
accounting standards for accounting and reporting by development stage
enterprises.  Our financials therefore are presented for an
operational company.




Agricultural
Producer.All costs
incurred until the actual planting of the Jatropha Curcas plant are capitalized
as plantation development costs, and are included in “Property and Equipment” on
the balance sheet. Plantation development costs are being accumulated in the
balance sheet during the development period and will be accounted for in
accordance with accounting standards for Agricultural Producers and Agricultural
Cooperatives. The direct costs associated with each farm and the production of
the Jatropha revenue streams have been deferred and accumulated as a noncurrent
asset and are included in “Deferred Growing Costs” on the balance sheet. Other
general costs without expected future benefits are expensed when
incurred.


Certain
other critical accounting policies, including the assumptions and judgments
underlying them, are disclosed in Note A to the Consolidated Financial
Statements included in the Annual Report on Form 10-K for the fiscal year ended
December 31, 2009.  However, we do not believe that there are any
alternative methods of accounting for our operations that would have a material
effect on our financial statements.




Results
of Operations




Revenues and Gross
Profit.  During the three months and nine months ended Sept.
30, 2010, we recognized revenues of $169,653 and $374,370, respectively, as
compared with $148,915 and $218,151, respectively, for the same period in
2009.   The revenues that we generated in 2010 and 2009
represented fees for Jatropha related advisory services we rendered to third
parties and sales of Jatropha seeds and other products (waste wood, Jatropha
seed husks, etc.)  The Jatropha plants that we have planted over the
last two years are maturing and starting to produce commercial quantities of
Jatropha fruit that will be harvested later this year, or the beginning of 2011,
for sale.   The increase in revenues compared with the same period in
2009 is the result of an increase in our Jatropha farm advisory services to
third parties and, to a lesser extent, from revenues generated from the sale of
our Jatropha farm products.  Our goal is to increase the amount of
advisory services that we render to third parties in 2011.  In
addition, now that some of the Jatropha trees that we planted are maturing, we
anticipate that sales of Jatropha seeds will become a material source of
revenues for our Mexico operations commencing in 2011.




Operating Expenses.Our
general and administrative expenses related to the three months and the nine
months ended September 30, 2010, were $654,336 and $1,909,328, respectively,
compared to $264,217 and $1,204,655, respectively, for the same period in
2009.  General and administrative expense principally includes officer
compensation; outside services, such as legal, accounting, and consulting
expenses; share-based compensation; and other general expenses such as
insurance, occupancy costs, travel, etc.  The net increase in general and
administrative expenses for the three months ended September 30, 2010, compared
to the prior year was principally the result of a $254,000 increase of
administrative costs for the wholly owned subsidiaries of our joint venture, GCE
Mexico I, LLC.  As the operations have been expanded, the related
administrative staffing and other administrative costs have increased, along
with an increase in the cost of outside services for legal, accounting, and
consulting services at the corporate level.  The net increase in
outside services costs for the nine months ended September 30, 2010, was
principally the result of an increase in the cost of consulting services
associated with our growing operations.




For the
three months and nine months ended Sept. 30, 2010, we recorded Plantation
Operating Costs of $30,986 and $480,424, respectively, from the operations of
the farms. There were no Plantation Operating Costs recognized in the three
months and nine months ended Sept. 30, 2009, as the Company was still a
developmental stage entity.


23


Other Income/Expense. The
principal component of Other Income/Expense for the current three month period
is Interest Expense.  Interest Expense for the three months and the
nine months ended Sept. 30, 2010, was $164,702 and $362,367,
respectively.  Interest Expense for the three and nine months ended
Sept. 30, 2009 was $82,035 and $245,560. This increase in interest expense is
primarily due to the increase in debt associated with the acquisition of
additional land for our farm operations in Tizimin, Mexico.  We
currently own 8,850 acres of land in Mexico that is subject to interest bearing
mortgages, compared to 5,150 acres of such land owned in the third quarter of
2009.




Gain on
Settlement of Liabilities represents gains we realized by discharging historic
liabilities (most of which were incurred while this company operated as a
developmental-stage bio-pharmaceutical company) at less than the accrued amount
of such liabilities.  There was no Gain on Settlement of Liabilities
for the three months ended Sept. 30, 2010. However, for the Gain on Settlement
of liabilities for the nine months ended Sept. 30, 2010 was
$600,802.




Income (Loss) from Discontinued
Operations.  During the three months and nine months ended
Sept. 30, 2010, we recognized a loss from discontinued operations of $39,778 and
a gain of $21,095, respectively, compared to loss from discontinued operations
of $161,126 and $182,441 for the comparable period in 2009. The income or loss
from discontinued operations for the three months and nine months ended
September 30, 2010 and 2009 principally relates to foreign currency exchange
rate gains or losses on liabilities associated with our former
bio-pharmaceutical business, which are denominated in euros.




Net loss attributable to the
non-controlling interest.  Effective April 23, 2008, we entered
into a limited liability company agreement (“LLC Agreement”) to
form GCE Mexico I, LLC, a Delaware limited liability company (“GCE Mexico”), with
six unaffiliated investors (collectively, the “Investors”).  We
own 50% of the common membership interests of GCE Mexico and five of the
Investors own the other 50% of the common membership interests. The proceeds
from the sale of the preferred membership units, and from subsequent capital
contributions, have been used to fund the operations of Asideros Globales
Corporativo 1  (“Asideros 1”) and
Asideros 2 (“Asideros
2”), each of which have acquired the land in Mexico that constitutes our
Jatropha farms.  We own 1% of Asideros 1 and Asideros 2, and the
balance is owned by GCE Mexico.  Accordingly, we own 50.5% of Asideros
1 and Asideros 2 either directly or through our common membership interest in
GCE Mexico.  As such, our consolidated financial statements include
the accounts of both Asideros farm entities.  Under the LLC Agreement,
the net loss allocated from Asideros 1 and Asideros 2 to GCE Mexico is then
further allocated to the members of GCE Mexico according to the investment
balances.  Accordingly, since the common membership interest did not
make a capital contribution, all of the losses allocated to GCE Mexico have been
further allocated to the preferred membership interest.   The net
loss attributable to the non-controlling interest in the accompanying
Consolidated Statement of Operations represents the allocation of the net loss
of GCE Mexico I, LLC to the preferred membership interests.




Net income/loss attributable to
Global Clean Energy Holdings, Inc. The Company recorded net loss of
$282,287 for the three months ended September 30, 2010, as compared to a loss of
$194,478 for the same three-month period in 2009. For the nine months ended
September 30, 2010 the net loss was $581,787, as compared to a loss of $909,978
for the nine months ended September 30, 2009.




Liquidity
and Capital Resources




As of
September 30, 2010, we had $1,086,324 in cash or cash equivalents and had a
working capital deficit of $4,871,982, as compared with $833,584 in cash and a
working capital deficit of $4,985,518 as of December 31,
2009.  However, substantially all of our cash balances represent funds
provided to us by the investors for the operations of the Tizimin farms owned by
Asideros 1 and Asideros 2 and, therefore, are not available to us for our
working capital or other purposes, and are not available to us to reduce our
legacy indebtedness.  In order to fund our short-term working capital
needs, we will have to obtain additional funding from the sale of additional
securities or from an increase in operating revenues.  Outstanding
indebtedness at September 30, 2010 totaled $9,739,535.  The existence
of the foregoing working capital deficit and liabilities is expected to
negatively impact our ability to obtain future equity or debt financing and the
terms on which such additional financing, if available, can be
obtained.


24


On
October 27, 2010 a wholly owned subsidiary of our joint venture, GCE Mexico I,
LLC, received the first grant from the Mexican Federal Government of U.S.
$368,451 under Mexico’s 2009 Forestry Commission Program for Jatropha
Curcas.  This grant is being used to offset the costs of our Mexico
farm operations.  We anticipate receiving an additional U.S. $76,530
under this program.  We also have applied for and anticipate receiving
approximately U.S. $96,000 from Mexico’s 2010 Forestry Commission Program for
Jatropha Curcas.  These funds provide working capital to our Mexico
subsidiaries, but the funds cannot be used to defray GCEH’s operating
costs.




On
December 22, 2009, we sold all patents, rights, and data associated with our
legacy pharmaceutical assets for 350,000 Euros and a revenue sharing arrangement
that could pay up to 2,000,000 Euros should such legacy pharmaceutical assets
ever be commercialized by the buyer.  In connection with the sale, the
Company recognized a gain of $3,298,511, consisting of cash received of
$518,655, the assumption of research and development obligations with a carrying
value of $2,758,350, and the assumption of accounts payable of $21,506. If such
legacy pharmaceutical assets are ever commercialized by the buyer, the entire
transaction would be valued at 4.2 million Euros (as of the date of the
sale).  Although we are hopeful that the legacy pharmaceutical assets
will be commercialized, no assurance can be given if or when any additional cash
will be provided to the Company from the pharmaceutical assets that we
sold.  We will continue to maintain a security interest in such assets
until the final 2,000,000 Euro payment is made, if ever.  Cash
proceeds received on December 22, 2009, in connection with the sale of the
legacy pharmaceutical assets, were used to finance our immediate working capital
needs and to retire certain limited historic liabilities.




To date,
we have funded our operations from loans we have obtained, from the proceeds of
the sale of equity and debt securities of the Company, and from the management
fees we have received from commercial clients and GCE Mexico I,
LLC.  Recently we have also commenced generating cash from Jatropha
related consulting services that we currently provide to third
parties.  We anticipate that we will continue to generate such
consulting services in the near term, and that such consulting fees will fund
our immediate, short-term working capital needs.  However, we do not
have any long-term consulting agreements in place, nor do we have sufficient
cash in hand to continue our current operations through the next twelve
months.  Accordingly, we may need to raise funds in the future in
order to continue to operate.  Although we anticipated that revenues
from our Jatropha farms in Mexico will significantly increase in 2011 and
thereafter, net cash generated from those operations will first have to be used
to repay the capital contributed by the Investors (plus their preferred return),
for a combined total of $9,212,861 as of September 30, 2010.  As a
result, the improved operations of the Mexico farms will not produce short-term
cash for this Company that we can use for working capital purposes or for
additional Jatropha farms.  In addition, our business plan calls for
significant infusion of additional capital to establish additional Jatropha
farms that are owned for our own account in Mexico and other locations. Because
of our negative working capital position, we currently do not have the funds
necessary to acquire and cultivate additional farms for our own
account.  Accordingly, in order to increase our farm ownership and
operations, we will have to obtain significant additional capital through the
sale of equity and/or debt securities, the forward sale of Jatropha oil and
carbon offset credits, and from other financing activities, such as strategic
partnerships and joint ventures. The formation and funding of the GCE Mexico I,
LLC was the first of a series of planned transactions to expand our Jatropha
operations. Under GCE Mexico I, LLC, our 5,150-acre farm in Tizimin, Mexico was
recently expanded by the acquisition of approximately 3,700 additional
acres.




Effective
July 2, 2009, we purchased all of the outstanding capital stock of Technology
Alternatives Limited, a company formed under the laws of Belize (“TAL”), from
its four shareholders.  TAL owns and operates a 400-acre farm in
subtropical Belize, Central America.  The Belize farm currently is
inactive, and we are currently evaluating the future use and/or disposition of
this farm. Research efforts have now been centralized at our farms near Tizimin,
Mexico.




Under
the Stock Purchase Agreement, as amended, in consideration for the purchase of
all of the shares of TAL, (i) promissory notes were issued by TAL to the four
former owners as evidence of its indebtedness to them in the aggregate amount of
$516,139 Belize Dollars (US $268,036 based on exchange rates in effect at July
2, 2009), and (ii) an aggregate of 8,952,757 unregistered shares of our common
stock were issued to the four former owners.  The maturity date of the
promissory notes has been extended through January 1, 2011. Since the TAL
promissory notes are secured by a mortgage on the 400-acre farm, our failure to
pay these notes upon their maturity could result in the loss of that farm and
our investment in the Belizean Jatropha farm.


25


While we
have commenced negotiations with various third parties to obtain additional
funding from strategic partnerships and for the sale of carbon credits, no
assurance can be given that we will be able to enter into any agreements to
obtain funding, sell carbon credits or form additional strategic
partnerships.  Without raising additional cash (through the sale of
our securities, the sale or carbon credits, or strategic arrangements), we will
not be able to implement our business plan in the Jatropha business and may have
to reduce our current operations, revise our business plan to reduce the scope
of our planned operations.




On March
16, 2010, we issued $567,000 of convertible notes to two
investors.   The convertible notes mature on the earlier of (i)
March 16, 2012, and (ii) upon written demand of payment by the investors
following our default thereunder. The maturity date of these notes may be
extended by written notice made by the investors at any time prior to March 16,
2012.  Interest accrues on the convertible notes at a rate of 5.97%
per annum, and is payable quarterly in cash, in arrears, on each three-month
anniversary of the issuance of the notes.  We may, at our option, in
lieu of paying interest in cash, pay interest by delivering a number of
unregistered shares of our common stock equal to the quotient obtained by
dividing the amount of such interest by the arithmetic average of the volume
weighted average price (VWAP) for each of the five consecutive trading days
immediately preceding the interest payment date. At any time following the first
anniversary of the issuance of the convertible notes, at the option of the
investors, the outstanding balance thereof (including accrued and unpaid
interest thereon) may be converted into shares of our common stock at a
conversion price equal to $0.03.  The conversion price may be adjusted
in connection with stock splits, stock dividends and similar events affecting
our capital stock.  These convertible notes rank senior to all other
indebtedness of the Company, and will remain senior or pari passu with all
accounts payable and other similar liabilities incurred by the Company in the
ordinary course of business. We may not prepay the convertible notes without the
prior consent of the investors. Virtually all of the proceeds from the sale and
issuance of these notes were used to fully repay previous outstanding
indebtedness of the Company.




We have
submitted an application for funding to the Overseas Private Investment
Corporation, (“OPIC”), an agency of the United States government that helps U.S.
businesses invest overseas, fosters economic development in new and emerging
markets, and assists the private sector in managing risks associated with
foreign direct investment. The Company is applying to OPIC for up to $19 million
of loans to fund the expansion of our existing Jatropha farms in
Mexico.  However, the Company can make no assurance when, if ever,
such funding will be made available. We anticipate approval or denial of our
application in the fourth quarter of 2010.  If approved, we would expect
the initial funding within three months of final approval.




In the
absence of additional outside funding (including from OPIC, proceeds from the
sale of our securities or entering into other joint venture relationships), and
unless our operating revenues significantly increase, we do not expect to have
sufficient cash on hand to fund our projected working capital needs for the next
twelve months.  In such event, we may have to scale back our current
and proposed operations or take other actions to preserve our on-going
operations.




Inflation
and changing prices have had no effect on our continuing operations over our two
most recent fiscal years.




We have
no off-balance sheet arrangements as defined in Item 303(a) of Regulation
S-K.




ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.




Not
applicable.


26


ITEM
4.  CONTROLS AND PROCEDURES.




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that we file with, or submit
to, the Securities and Exchange Commission (the “SEC”) under the Securities
Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and that
such information is accumulated and communicated to our management, including
our chief executive and financial officers, as appropriate, to allow timely
decisions regarding required disclosure. As required by SEC Rule 13a-15(b), we
carried out an evaluation, under the supervision and with the participation of
our management, including our chief executive and financial officers, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report.  Based
on that evaluation, our chief executive and financial officers concluded that
our disclosure controls and procedures were effective as of the end of the
period covered by this report.




Based
upon our evaluation, we also concluded that there was no change in our internal
control over financial reporting during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.




PART
II




ITEM
1.  LEGAL PROCEEDINGS.




Not
applicable.




ITEM
1A.   RISK FACTORS.




Information
regarding risk factors appears under “Risk Factors” included in Item 1A, Part I,
and under Item 7, Management’s Discussion and Analysis of Financial Condition
and Results of Operations, of our Annual Report on Form 10-K for the year ended
December 31, 2009. There have been no material changes from the risk factors
previously disclosed in the above-mentioned periodic report.




ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.




We did
not issue any unregistered securities during the three-month period ended
September 30, 2010 that were not previously reported in a Current Report on Form
8-K.




ITEM
3.  DEFAULTS UPON SENIOR SECURITIES.




Not
applicable




ITEM
4.  REMOVED AND RESERVED.




ITEM
5.  OTHER INFORMATION




Not
applicable.




ITEM
6.  EXHIBITS




31.1
              Rule
      13a-14(a) Certification, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
              Rule
      13a-14(a) Certification, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 200232.2
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002


27


SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




Dated:          November
      10, 2010
              GLOBAL
      CLEAN ENERGY HOLDINGS, INC.By:
              /s/
      BRUCE
      K. NELSONBruce
      K. NelsonChief
      Financial Officer


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