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 AND EXCHANGE ACT OF
      1934





FOR THE
QUARTERLY PERIOD ENDED March 31, 2010





OR





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





COMMISSION
FILE NUMBER: 0-12627








GLOBAL
CLEAN ENERGY HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)




---



Utah
            
            87-0407858(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      Number)6033
      W. Century Blvd, Suite 895,
              Los
      Angeles, California 90045(Address
      of principal executive offices)(310)
      641-4234Issuer’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 o.





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 oNo
o





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 o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller reporting companyx





Indicate
the number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date: As of May 12, 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 o No x












GLOBAL
CLEAN ENERGY HOLDINGS, INC.


For
the quarter ended March 31, 2010


FORM
10-Q





TABLE
OF CONTENTS




PART
      IITEM
      1.
              FINANCIAL
      STATEMENTS
              1ITEM
      2.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
              18ITEM
      3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
              23ITEM
      4.
              CONTROLS
      AND PROCEDURES
              23PART
      IIITEM
      1.
              LEGAL
      PROCEEDINGS
              24ITEM
      1A.
              RISK
      FACTORS
              24ITEM
      2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
              24ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES
              24ITEM
      4.
              RESERVED
              24ITEM
      5.
              OTHER
      INFORMATION
              24ITEM
      6.
              EXHIBITS
              24









PART
I




ITEM
1.   FINANCIAL STATEMENTS.





GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 March
      31,
                  2010
                
                
                December
      31,
                  2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                1,226,535
                
                
                $
                833,584Accounts
      receivable
                
                
                165,482
                
                
                
                146,730Inventory
                
                
                47,412
                
                
                
                -Other
      current assets
                
                
                160,973
                
                
                
                131,741Total
      Current Assets
                
                
                1,600,402
                
                
                
                1,112,055PROPERTY
      AND EQUIPMENTLand
                
                
                2,910,010
                
                
                
                2,079,914Plantation
      development costs
                
                
                3,795,321
                
                
                
                3,633,288Plantation
      equipment
                
                
                881,854
                
                
                
                805,719Office
      equipment
                
                
                58,207
                
                
                
                33,4787,645,392
                
                
                
                6,552,399Less
      accumulated depreciation
                
                
                (169,853
                )
                
                
                (110,910
                )7,475,539
                
                
                
                6,441,489OTHER
      ASSETSDeferred
      growing costs
                
                
                257,657
                
                
                
                -Other
      noncurrent assets
                
                
                2,691
                
                
                
                2,691260,348
                
                
                
                2,691TOTAL
      ASSETS
                
                $
                9,336,289
                
                
                $
                7,556,235LIABILITIES
      AND EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                
                $
                2,003,071
                
                
                $
                2,117,573Accrued
      payroll and payroll taxes
                
                
                1,896,189
                
                
                
                1,491,385Accrued
      interest payable
                
                
                819,396
                
                
                
                853,811Accrued
      return on noncontrolling interest
                
                
                778,709
                
                
                
                610,870Promissory
      notes
                
                
                33,332
                
                
                
                509,232Notes
      payable to shareholders
                
                
                297,379
                
                
                
                321,502Convertible
      notes payable
                
                
                193,200
                
                
                
                193,200Total
      Current Liabilities
                
                
                6,021,276
                
                
                
                6,097,573LONG-TERM
      LIABILITIESConvertible
      notes payable
                
                
                567,000
                
                
                
                -Mortgage
      notes payable
                
                
                2,793,934
                
                
                
                2,051,282Total
      Long-Term Liabilities
                
                
                3,360,934
                
                
                
                2,051,282EQUITY
      (DEFICIT)Global
      Clean Energy Holdings, Inc. equity (deficit)Preferred
      stock - no par value; 50,000,000 shares authorizedSeries
      B, convertible; 13,000 shares issued (aggregate
liquidationpreference
      of $1,300,000)
                
                
                1,290,735
                
                
                
                1,290,735Common
      stock, no par value; 500,000,000 shares authorized;261,919,079
      and 236,919,079 shares issued and outstanding,
respectively
                
                
                18,381,147
                
                
                
                17,881,147Additional
      paid-in capital
                
                
                4,080,947
                
                
                
                4,063,957Accumulated
      deficit
                
                
                (26,690,521
                )
                
                
                (26,308,143
                )Accumulated
      other comprehensive loss
                
                
                (3,541
                )
                
                
                (6,108
                )Total
      Global Clean Energy Holdings, Inc. Stockholders' Deficit
                
                
                (2,941,233
                )
                
                
                (3,078,412
                )Noncontrolling
      interests
                
                
                2,895,312
                
                
                
                2,485,792Total
      equity (deficit)
                
                
                (45,921
                )
                
                
                (592,620
                )TOTAL
      LIABILITIES AND EQUITY (DEFICIT)
                
                $
                9,336,289
                
                
                $
                7,556,235
  The
accompanying notes are an integral part of these condensed consolidated
financial statements
  1
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
  For
      the Three Months Ended
                March
      31,2010
              
              
              2009Revenue
              
              $
              132,236
              
              
              $
              40,000Operating
      ExpensesGeneral
      and administrative
              
              
              761,659
              
              
              
              341,093Plantation
      operating costs
              
              
              275,008
              
              
              
              -1,036,667
              
              
              
              341,093Loss
      from Operations
              
              
              (904,431
              )
              
              
              (301,093
              )Other
      Income (Expenses)Interest
      income
              
              
              622
              
              
              
              1Interest
      expense
              
              
              (92,430
              )
              
              
              (81,509
              )Gain
      on settlement of liabilities
              
              
              195,272
              
              
              
              -Foreign
      currency transaction adjustments
              
              
              (7,555
              )
              
              
              -Total
      Other Income (Expenses)
              
              
              95,909
              
              
              
              (81,508
              )Loss
      from Continuing Operations
              
              
              (808,522
              )
              
              
              (382,601
              )Income
      from Discontinued Operations
              
              
              24,847
              
              
              
              160,748Net
      Loss
              
              
              (783,675
              )
              
              
              (221,853
              )Net
      Loss attributable to the noncontrolling interest
              
              
              (401,297
              )
              
              
              (157,765
              )Net
      Loss attributable to Global Clean Energy Holdings, Inc.
              
              $
              (382,378
              )
              
              $
              (64,088
              )Amounts
      attributable to Global Clean Energy Holdings, Inc. common
      shareholders:Loss
      from Continuing Operations
              
              $
              (407,225
              )
              
              $
              (224,836
              )Income
      from Discontinued Operations
              
              
              24,847
              
              
              
              160,748Net
      Loss
              
              $
              (382,378
              )
              
              $
              (64,088
              )Basic
      and Diluted Loss per Common Share:Loss
      from Continuing Operations
              
              $
              (0.002
              )
              
              $
              (0.001
              )Income
      from Discontinued Operations
              
              
              0.000
              
              
              
              0.001Net
      Loss
              
              $
              (0.002
              )
              
              $
              -Basic
      and Diluted Weighted-Average Common Shares Outstanding
              
              
              237,474,635
              
              
              
              224,813,819
  The
accompanying notes are an integral part of these condensed consolidated
financial statements
  2
 
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  For
      the Three Months Ended
                March
      31,2010
              
              
              2009Cash
      Flows From Operating ActivitiesNet
      loss
              
              $
              (783,675
              )
              
              $
              (221,853
              )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesForeign
      currency transaction adjustments
              
              
              (17,292
              )
              
              
              (189,675
              )Gain
      on settlement of liabilities
              
              
              (195,272
              )
              
              
              -Share-based
      compensation
              
              
              16,990
              
              
              
              59,884Depreciation
              
              
              54,160
              
              
              
              549Changes
      in operating assets and liabilitiesAccounts
      receivable
              
              
              (13,675
              )
              
              
              (20,000
              )Inventory
              
              
              (46,170
              )
              
              
              -Other
      current assets
              
              
              (12,537
              )
              
              
              5,217Deferred
      growing costs
              
              
              (250,911
              )
              
              
              -Accounts
      payable and accrued expenses
              
              
              429,693
              
              
              
              350,620Net
      Cash Used in Operating Activities
              
              
              (818,689
              )
              
              
              (15,258
              )Cash
      Flows From Investing ActivitiesPurchase
      of land
              
              
              (715,658
              )
              
              
              -Plantation
      development costs
              
              
              (66,789
              )
              
              
              (487,661
              )Purchase
      of property and equipment
              
              
              (63,155
              )
              
              
              -Net
      Cash Used in Investing Activities
              
              
              (845,602
              )
              
              
              (487,661
              )Cash
      Flows From Financing ActivitiesProceeds
      from common stock for cash
              
              
              500,000
              
              
              
              -Proceeds
      from issuance of preferred membership in GCE Mexico I, LLC
              
              
              704,652
              
              
              
              1,071,278Proceeds
      from mortgage and note payable
              
              
              742,652
              
              
              
              15,000Payments
      on notes payable
              
              
              (477,016
              )
              
              
              -Proceeds
      from convertible notes payable
              
              
              567,000
              
              
              
              -Net
      Cash Provided by Financing Activities
              
              
              2,037,288
              
              
              
              1,086,278Effect
      of exchange rate changes on cash
              
              
              19,954
              
              
              
              -Net
      Increase in Cash and Cash Equivalents
              
              
              392,951
              
              
              
              583,359Cash
      and Cash Equivalents at Beginning of Period
              
              
              833,584
              
              
              
              291,309Cash
      and Cash Equivalents at End of Period
              
              $
              1,226,535
              
              
              $
              874,668Supplemental
      Disclosures of Cash Flow Information:Cash
      paid for interest
              
              $
              83,398
              
              
              $
              -Noncash
      Investing and Financing Activities:Accrual
      of return on noncontrolling interest
              
              
              167,839
              
              
              
              93,523Plantation
      costs financed by accounts payable
              
              
              -
              
              
              
              50,383Equipment
      depreciation capitalized to plantation development costs
              
              
              -
              
              
              
              10,539
 
 The
accompanying notes are an integral part of these condensed 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 will be providing 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 provides
technical advisory services for the propagation of the Jatropha
plant.
 
 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.
 
 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.
  4
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited 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 ended March 31, 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. 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. Other general costs without expected future
benefits are expensed when incurred.
 
 Loss per Common
Share
 
 Loss per
share amounts are computed by dividing loss applicable to the common
shareholders of the Company by the weighted-average number of common shares
outstanding during each period. Diluted 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, convertible preferred stock, and common stock held in escrow are
currently antidilutive and have been excluded from the calculations of diluted
loss per share at March 31, 2010 and 2009, as follows:
 
 March
      31,2010
              
              
              2009Convertible
      notes
              
              
              19,028,671
              
              
              
              128,671Convertible
      preferred stock - Series B
              
              
              11,818,181
              
              
              
              11,818,181Warrants
              
              
              31,632,552
              
              
              
              29,742,552Compensation-based
      stock options and warrants
              
              
              73,459,083
              
              
              
              52,159,083Common
      stock held in escrow
              
              
              -
              
              
              
              4,567,519135,938,487
              
              
              
              98,416,006
  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.
  5
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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 June
2009, the FASB issued changes to the accounting for variable interest
entities.  These changes require a qualitative approach to identifying
a controlling financial interest in a variable interest entity (VIE), and
require ongoing assessment of whether an entity is a VIE and whether an interest
in a VIE makes the holder the primary beneficiary of the VIE. These changes are
effective for annual reporting periods beginning after November 15, 2009.
These changes did not have a material impact on the Company’s current
consolidated financial statements.  However, these changes could
impact the accounting for controlling financial interests in a VIE that the
Company currently includes in its consolidated financial statements or that the
Company may acquire in the future.
 
 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.
 
 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 $407,225 and $928,733 during the three-month period
ended March 31, 2010 and during the year ended December 31, 2009, respectively,
and has an accumulated deficit applicable to its common shareholders of
$26,690,521 at March 31, 2010.  The Company also used cash in
operating activities of $818,689 and $1,225,629 during the three-month period
ended March 31, 2010 and during the year ended December 31, 2009,
respectively.  At March 31, 2010, the Company has negative working
capital of $4,420,874 and a stockholders’ deficit attributable to its
stockholders of $2,941,233.  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
$5,899,980 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.
  6
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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.
 
 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 and Mr. Palmer are considered related parties to the
Company.  Global is an entity that has 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, for the purpose
of providing feedstock oil intended for the production of
bio-diesel.
  7
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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
bio-diesel 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.  The scope of work
under the agreement was completed in August 2008 and the agreement was
terminated.  Mobius supervised the hiring of certain staff to serve in
management and operations roles of the Company, or hired such persons to provide
similar services as independent contractors.  Mobius’ compensation for
the services provided under the agreement was a monthly retainer of
$45,000.  The Company also reimbursed Mobius for reasonable business
expenses incurred in connection with the services provided.  The
agreement contained customary confidentiality provisions with respect to any
confidential information disclosed to Mobius or which Mobius received while
providing services under the agreement.  The Company owed Mobius
$322,897 for accrued, but unpaid, compensation and costs as of March 31, 2010
and December 31, 2009.  The Company disputes the total of these
charges and is in discussions 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.
 
 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 provided the foregoing and other necessary services for a fee
primarily based on the number of hectares of Jatropha under
cultivation.  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. In June 2009, the
scope of work previously performed by LODEMO was reduced and modified based upon
certain labor functions being provided internally by the Company and by Asideros
I, the Company’s Mexican subsidiary, on a go-forward basis.  Under
this agreement, the Company has paid the LODEMO Group or accrued $462,320 during
the three months ended March 31, 2009, all of which was capitalized as
plantation development costs.  As of March 31, 2010 and December 31,
2009, the Company owed the LODEMO Group $204,085 for accrued, but unpaid,
compensation and costs.
  8
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 GCE Mexico I, LLC, Asideros
Globales Corporativo, 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, to fund the development and
operations of the Jatropha Farm.  The preferred members have made
capital contributions of $704,652 and $1,071,278 during the three-month periods
ended March 31, 2010 and 2009, respectively, and totaling contributions of
$5,899,980 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 $167,839 and $93,523 during the three-month periods
ended March 31, 2010 and 2009, respectively, and totaling $778,709 since the
execution of the LLC Agreement.
 
 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 excludes any common membership interest in GCE Mexico held
by the Company.
  9
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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 has been
extended to June 28, 2010.  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.
 
 Note
4 – Property and Equipment
 
 Property
and equipment are as follows:
 March
      31,
              
              
              December
      31,2010
              
              
              2009Land
              
              $
              2,910,010
              
              
              $
              2,079,914Plantation
      development costs
              
              
              3,795,321
              
              
              
              3,633,288Plantation
      equipment
              
              
              881,854
              
              
              
              805,719Office
      equipment
              
              
              58,207
              
              
              
              33,478Total
      cost
              
              
              7,645,392
              
              
              
              6,552,399Less
      accumulated depreciation
              
              
              (169,853
              )
              
              
              (110,910
              )Property
      and equipment, net
              
              $
              7,475,539
              
              
              $
              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.
  10
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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:
 
 March
      31,
              
              
              December
      31,2010
              
              
              2009Accrued
      payroll, vacation, and related payroll taxes for current
      officers
              
              $
              1,061,730
              
              
              $
              570,726Former
      Chief Executive Officer, resigned 2007, including $500,000 under the
      Release and Settlement Agreement
              
              
              570,949
              
              
              
              570,949Other
      former officers and directors
              
              
              225,000
              
              
              
              311,200Accrued
      payroll taxes on accrued compensation to former officers and
      directors
              
              
              38,510
              
              
              
              38,510Accrued
      payroll and payroll taxes
              
              $
              1,896,189
              
              
              $
              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 have 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.
 
 11
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 Note
6 – Debt
 
 Promissory
Notes
 
 Mercator Momentum Fund
III
 
 In order
to fund ongoing operations pending closing of the sale of the SaveCream Assets,
the Company entered into a loan agreement with, and issued a promissory note in
favor of, Mercator Momentum Fund III, L.P. (Mercator) in September
2007.  At that time, Mercator, along with two other affiliates, owned
all of the issued and outstanding shares of the Company’s Series A Convertible
Preferred Stock, and was considered a related party to the
Company.  The loan was secured by a lien on all of the assets of the
Company.  Under the loan agreement, interest was originally payable on
the loan at a rate of 12% per annum, payable monthly.  Pursuant to the
loan agreement, the original amount to be available under the credit facility
was $1,000,000 and was due in December 2007.
 
 Between
September 2007 and December 2009, there were various modifications to the loan
agreement that resulted in various extensions and modifications of the interest
rate.  During that period of time, Mercator advanced a total of
$625,000 to the Company, of which $150,000 was repaid prior to December 31,
2009, leaving a balance of $475,000 at that date, with interest accruing at
10.68%.  In March 2010, the Company used substantially all of the
proceeds received from the sale of the convertible promissory notes to repay, in
full, the  balance of this note, plus accrued interest of
$81,909.
 
 Bank
Loan
 
 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 March 31, 2010 is $64,583 Belize Dollars (US $33,332
based on exchange rates in effect at March 31, 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
$31,000 and $56,000 at March 31, 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 $45,692 and $85,541 at March 31, 2010 and December
31, 2009, respectively.
 
 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 $266,379 based on exchange rates in effect at
March 31, 2010 and US $265,502 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 has been extended to June
28, 2010.
  12
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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 March 31, 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 $277,701 and $271,983 at March 31,
2010 and December 31, 2009, respectively.
 
 13
 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 March 31, 2010 and
2009, and the changes during the three months then ended is presented in the
following table:
 Total
      Global Clean Energy Holdings, Inc. stockholders' equity
      (deficit)
              
              
              Noncontrolling
      interest
              
              
              Total
      equity (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
              
              
              -
              
              
              
              704,652
              
              
              
              704,652Share-based
      compensation
              
              
              16,990
              
              
              
              -
              
              
              
              16,990Accrual
      of preferential return for the noncontrolling interest
              
              
              -
              
              
              
              (167,839
              )
              
              
              (167,839
              )Net
      loss
              
              
              (382,378
              )
              
              
              (401,297
              )
              
              
              (783,675
              )Other
      comprehensive income
              
              
              2,567
              
              
              
              274,004
              
              
              
              276,571Balance
      at March 31, 2010
              
              $
              (2,941,233
              )
              
              $
              2,895,312
              
              
              $
              (45,921
              )
  Total
      Global Clean Energy Holdings, Inc. stockholders' equity
      (deficit)
              
              
              Noncontrolling
      interest
              
              
              Total
      equity (deficit)Balance
      at December 31, 2008
              
              $
              (5,948,575
              )
              
              $
              1,962,022
              
              
              $
              (3,986,553
              )Capital
      contribution from noncontrolling interest
              
              
              -
              
              
              
              1,071,278
              
              
              
              1,071,278Share-based
      compensation
              
              
              59,884
              
              
              
              -
              
              
              
              59,884Accrual
      of preferential return for the noncontrolling interest
              
              
              -
              
              
              
              (93,523
              )
              
              
              (93,523
              )Net
      loss
              
              
              (64,088
              )
              
              
              (157,765
              )
              
              
              (221,853
              )Balance
      at March 31, 2009
              
              $
              (5,952,779
              )
              
              $
              2,782,012
              
              
              $
              (3,170,767
              )
  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.
  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 three months ended March 31, 2010 to
acquire 12,000,000 shares of the Company’s common stock to the Company’s Chief
Executive Officer.  Additionally, during the three months ended March
31, 2009, the Company issued compensation-based warrants to purchase 250,000
shares of common stock to a law firm.  No stock options were granted
during the three months ended March 31, 2009.  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.
  14
 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 March 31, 2010, and
changes during the three months then ended is presented in the following
table:
 
 Shares
                Under
                Option
              
              
              Weighted
                Average
                Exercise
                Price
              
              Weighted
                Average
                Remaining
                Contractual
                Life
              
              Aggregate
                Intrinsic
                ValueOutstanding
      at December 31, 2009
              
              
              61,209,083
              
              
              $
              0.03Granted
              
              
              12,250,000
              
              
              
              0.02Expired
              
              
              -
              
              
              
              -Outstanding
      at March 31, 2010
              
              
              73,459,083
              
              
              
              0.03
              
              5.9
      years
              
              $
              -Exercisable
      at March 31, 2010
              
              
              60,896,583
              
              
              $
              0.03
              
              5.1
      years
              
              $
              -
  At March
31, 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
three months ended March 31, 2010 was $0.0081.  The weighted-average
assumptions used for the stock options granted and compensation-based warrants
issued during the three months ended March 31, 2010 were risk-free interest rate
of 3.6%, volatility of 155%, expected life of 9.9 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 March 31, 2010 closing
price of $0.008 per share.
 
 Share-based
compensation from all sources recorded during the three months ended March 31,
2010 and 2009 was $16,990 and $59,884, respectively, and is reported as general
and administrative expense in the accompanying condensed consolidated statements
of operations.  As of March 31, 2010, there is approximately $96,000
of unrecognized compensation cost related to stock-based payments that will be
recognized over a weighted average period of approximately 0.7
years.
 
 Stock
Warrants
 
 A summary
of the status of the warrants outstanding at March 31, 2010, and changes during
the three months then ended is presented in the following table:
 
 Shares
                Under
                Warrant
              
              
              Weighted
                Average
                Exercise
                PriceOutstanding
      at December 31, 2009
              
              
              29,742,552
              
              
              $
              0.01Issued
              
              
              1,890,000
              
              
              
              0.03Expired
              
              
              -
              
              
              
              -Outstanding
      at March 31, 2010
              
              
              31,632,552
              
              
              $
              0.02
 
 15
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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
 
 Prior to
2007, the Company was a developmental-stage bio-pharmaceutical company engaged
in the research, validation, development and ultimate commercialization of two
drugs known as MDI-P and SaveCream.  The Board evaluated the value of
its developmental stage drug candidates and in March 2007, the Board determined
that the best course of action was to discontinue further development of these
drug candidates and sell these technologies.  MDI-P was a drug
candidate being developed as an anti-infective treatment for bacterial
infections, viral infections and fungal infections.  In August 2007,
the Company sold the MDI-P related assets.  SaveCream was a drug
candidate that the Company was developing to reduce breast cancer
tumors.  From March of 2007 through July of 2008, the Company entered
into various agreements with Eucodis Pharmaceuticals Forschungs und Entwicklungs
GmbH, an Austrian company (Eucodis) related to the sale of the SaveCream
assets.  Eucodis entered into a binding letter of intent in March 2007
and later entered into a sale and purchase agreement in July
2007.  The sale and purchase agreement was approved by the Company’s
shareholders in January 2008.  Ultimately, all discussions and
agreements with Eucodis were terminated in July 2008 due to their inability to
obtain their own financing and their failure to close the
sale.  Eucodis has since ceased 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.
 
 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 ended March 31, 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.
 
 16
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 Note
11 – Subsequent Events
 
 Appointment of Director and
Grant of Common Stock Option
 
 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.
 
 Cashless Exercise of Common
Stock Warrants
 
 On April
26, 2010, the Company received a notice for the exercise of warrants to purchase
10,403,095 shares of 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.




17




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 “we,” “us,” “our,” and “our
company” refer to Global Clean Energy Holdings, Inc., a Utah corporation
formerly known as Medical Discoveries, Inc., and, unless the context indicates
otherwise, also includes our wholly-owned subsidiary, MDI Oncology, Inc., a
Delaware corporation; Global Clean Energy Holdings LLC, a wholly-owned Delaware
limited liability company; and Technology Alternative, Limited, a wholly-owned
subsidiary formed under the laws of Belize.  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 own 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.”  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 Los Angeles-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 a high-quality plant oil used as a direct
replacement for fossil fuels or as feedstock for the production of high quality
bio-diesel or green diesel, which is a direct replacement for jet
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.




18




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 bio-diesel and “green diesel.”  Without post processing, Jatropha
oil can be used as a direct replacement for diesel and other fossil
fuels.  Bio-diesel is a diesel-equivalent, and green diesel 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.  We currently
      own and operate two such Jatropha farms, one in Belize and one in
      Mexico.




·
            Own,
      operate and manage Jatropha farms through joint ownership agreements. We
      currently operate two farms under joint ownership arrangements: the first
      farm, located in Mexico, comprises 5,149 acres; the second farm consisting
      of 3,700 acres was acquired in March 2010 (also in Mexico).  The
      first farm is fully planted, and we expect to have the second farm
      substantially planted by the end of
2010.




·
            Provide
      Jatropha farm development and management services to third party owners of
      Jatropha farms.




·
            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.  Our farm activities are
anticipated to generate a significant amount of carbon credits that we plan to
sell to third parties.




We are
also engaged in research and development activities concerned with optimizing
the quality of our Jatropha yields, reducing operating costs and improving our
production capacity and efficiency. Specifically, our research activities focus
on (i) optimizing genetic development (i.e., the quality of the Jatropha
plants), (ii) optimizing agronomic development (i.e., soil conditions optimal
for Jatropha cultivation), and (iii) improving agricultural technologies
relating to the care and custody of the Jatropha plant, and the processing of
resulting products. We continue our research and development efforts toward the
improved commercialization of Jatropha at our test facilities in Mexico and
Belize and our commercial farm in Mexico.  We are also engaged in a
joint research and development effort with a leading U.S. plant sciences
university to conduct plant biology and molecular genetic (genomic) research for
the development of improved varieties, and optimal germination and cultivation
techniques for Jatropha. We operate a state-of-the-art plant and soil science
Field Research Center at our farm in Mexico where we have over 20 selected
(improved) varieties under development.




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 their 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 entered into a share and exchange agreement where we
acquired Global Clean Energy Holdings, LLC, a Delaware limited liability company
(“Global LLC”).  Global LLC was a company that owned certain trade
secrets, know-how, business plans and relationships relevant to the cultivation
and production of Jatropha, for the purpose of providing feedstock oil intended
for the production of bio-diesel and green diesel and the production of biomass
as a fossil fuel replacement. Richard Palmer and Mobius Risk Group, LLC
(“Mobius”), a Texas limited liability company, were the sole owners of the
outstanding equity interests of Global LLC.




19




In
exchange for all of the outstanding ownership interests in Global LLC, we issued
a total of 63,945,257 shares (“Restricted Shares”) of our common stock to
Richard Palmer and Mobius.  As of December 31, 2009, all of the
Restricted Shares have been released, except for 3,915,016 shares that have been
forfeited.   In order to obtain the technical and management
expertise necessary to maximize the assets and expertise we acquired, we also
entered into an employment agreement with Richard Palmer to be the Company’s
Chief Executive Officer.   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.




Our
principal executive offices are located at 6033 W. Century Blvd, Suite 895, Los
Angeles, California 90045, and our current telephone number at that address is
(310) 641-4234.  In 2008 we changed our name to “Global Clean Energy
Holdings, Inc.” to reflect our energy agricultural business. 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.




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 considered development costs. Plantation development
costs have been accumulated in the balance sheet during the development period
and are being accounted for in accordance with accounting standards for
agricultural producers and agricultural cooperatives.  The direct
costs associated with each farm and the producing of Jatropha revenue streams
have been deferred and accumulated as an asset. Other general costs without
expected future benefits are being 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, dated December 31,
2009.  However, we do not believe that there are any alternative
methods of accounting for our operations that would have a material affect on
our financial statements.




Results
Of Operations




In 2007
the Company’s Board of Directors determined to discontinue our prior
bio-pharmaceutical operations.  The Company continued as a
“Development Stage Enterprise” as the Jatropha farms were being established.
Commencing on October 1, 2009, we commenced our planned bio-fuels operations and
the Company ceased being a development stage enterprise.




20




Revenues and
Gross Profit.  We continued to achieve our planned operations
and revenue in the first quarter of 2010. We discontinued our prior
bio-pharmaceutical operations in 2007.  In September 2007, we
commenced operations in our new bio-fuels Jatropha business, and achieved
revenues from the sale of bio-fuel products and services in late 2009. During
the three months ended March 31, 2010, we recognized revenue of $132,236, as
compared to $40,000 in revenue for the same period in 2009. This revenue is from
the provision of bio-fuel advisory services and the sale of Jatropha seeds for
seed propagation purposes.  The Jatropha plants that we planted during
the past two years are now maturing and will, this year, start producing
commercial quantities of fruit that can be harvested.  Accordingly, we
anticipate that revenues generated from our farms during the remainder of 2010
and thereafter in the future will significantly exceed the amount of revenues
generated from our Jatropha business to date.  In addition, our goal
is to increase our Jatropha farm advisory consulting business, which is expected
to further increase our future revenues.




Operating
Expenses.  Our general and administrative expenses related to
our continuing operations for the three months ended March 31, 2010, were
$761,659 compared to $341,093 for the three months ended March 31,
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 from fiscal 2009 to fiscal 2010 is principally the
result of increased employee bonuses and outside services costs associated with
our growing operations.




For the
three months ended March 31, 2010, we recorded Plantation Operating Costs of
$275,008 from the first quarter operations of the Tizimin and Belize farms.
There were no Plantation Operating Costs recognized in the three months ended
March 31, 2009. During the three months ended March 31, 2009, the Company was
still a “Developmental Stage Enterprise”, and all costs were recorded
accordingly.




Other Income/
Expense and Net Loss.  Interest expense increased from $81,509
for the three months ended March 31, 2009 to $92,430 for the three months ended
March 31, 2010.  The increase in interest expense is primarily
attributable to the increase in interest-bearing debt, principally related to a
new mortgage for acquired farm land, new convertible notes, and new notes with
shareholders from the acquisition of Technology Alternatives,
Ltd.  The new mortgage totaled $742,652 and accrues interest at the
rate of 12% per year and has been outstanding for approximately one
month.  The new notes to shareholders have been outstanding since July
2, 2009 and bear interest at 8%.




During
the quarter ended March 31, 2010, the Company has entered into negotiations with
certain creditors to settle certain liabilities that have been on the records
for several years.  In connection with these settlements, the Company
has realized a gain on the settlements totaling $195,272.




As a
result of the significant increase in our general and administrative costs and
the addition of Plantation Operating Costs related to our new Belize farm, our
net loss increased from $220,000 for the quarter ending March 31, 2009 to
$784,000 for the quarter ending March 31, 2010.  A substantial portion
of our revenues and expenses are derived from our GCE Mexico I, LLC operations
in Mexico.  Since we only own approximately 50% of GCE Mexico I, LLC,
$401,000 of our net losses are attributable to the other parties to that joint
venture.  As a result, net losses attributable to this company for the
2010 fiscal quarter were $382,000.




Liquidity
And Capital Resources




As of
March 31, 2010, we had $1,226,535 in cash and had a working capital deficit of
$4,420,874, as compared with $833,584 in cash and a working capital deficit of
$4,985,518 as of December 31, 2009. Since our inception, we have financed our
operations primarily through private sales of equity and debt financing and by
entering into joint venture relationships with third party financing
sources. In order to fund our short-term working capital needs, we will
have to obtain additional funding.  Most of the cash reflected on our
balance sheet is reserved for the operation of GCE Mexico I, LLC and our
Jatropha farms.  Accordingly, most of those funds are not available to
fund our general and administrative or other corporate operating expenses or to
repay outstanding indebtedness. Outstanding indebtedness at March 31, 2010
totaled $9,382,210. 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.




21




Our
ability to continue to fund our liquidity and working capital needs will be
dependent upon certain transactions.  On November 16, 2009, we entered
into a new definitive agreement for the sale of all patents, rights, and data
associated with our remaining legacy pharmaceutical assets for 350,000 Euros,
and a revenue sharing arrangement to pay up to 2,000,000 Euros to the Company
should such legacy pharmaceutical assets ever be commercialized. This
transaction was completed on December 22, 2009. In connection with the sale, the
Company has recognized a gain of $3,298,511, 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. If such legacy pharmaceutical assets were ever
commercialized by the buyer, the entire transaction would be valued at 4.2
million Euros. Although we are hopeful that the legacy pharmaceutical assets
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. 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 have been
used to finance the Company’s immediate working capital needs and to retire
certain liabilities.




In order
to fund ongoing operations, in September 2007 we entered into a short-term loan
agreement with Mercator Momentum Fund III, L.P.
(“Mercator”).  Pursuant to the loan agreement, Mercator advanced
$350,000 to the Company, of which $200,000 remained outstanding in May
2008.  On May 19, 2008, the loan agreement was modified to accrue
interest at an interest rate of 8.68% per annum, Mercator advanced an additional
$250,000, and the amount available under that facility was changed to $450,000.
This loan was secured by a first priority lien on our
assets.   In connection with this amendment Mercator was granted
a new warrant to purchase 581,395 shares of common stock (calculated by dividing
$75,000 by 130% of the closing price of the stock when exercised) at a price of
$0.129 per share.  In January 2009, Mercator dissolved and distributed
the loan to its limited partners who currently control the loan.  The
loan amount was increased to $475,000, and the maturity date was extended to
July 13, 2009.  In August 2009, the maturity date of this loan was
again extended, this time to January 31, 2010.  The entire principal
balance of this loan, and accrued net interest of $81,909, was repaid during the
first quarter of 2010, and all cash liabilities associated with this loan have
been extinguished.




Our
business plan calls for significant infusion of additional capital to establish
additional Jatropha farms 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.  Accordingly, 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, which currently is producing Jatropha.  TAL
also has been performing plant science research and has been providing technical
advisory services for propagation of Jatropha for a number of
years.  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 entire outstanding balance of the promissory notes will
mature on June 28, 2010.  Since the TAL promissory notes is secured by
a mortgage on the 400 acre farm, our failure to pay this note upon its maturity
could result in the loss of that farm and our investment in the Belizean
Jatropha farm. 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 effect our new business plan in the Jatropha business and will
have to further reduce our operations, revise our business plan, and may
either/or temporarily or permanently cease operations.




22




On March
16, 2010, the Company 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 the Company’s default thereunder.  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 (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 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. As of March 16, 2010, 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. Virtually all of the proceeds
from these Convertible Notes were used to fully repay the Mercator note
previously mentioned.




On March
30, 2010, the Company entered into a Stock Purchase Agreement with two (2)
accredited investors, pursuant to which we issued and sold 25,000,000 shares
(“Shares”) of the Company’s common stock at a price of $0.02 per share, for an
aggregate purchase price of $500,000.    As a result of the
receipt of the proceeds from the sale of the Shares and other on-going revenues
(primarily advisory service fees), we have sufficient cash on hand to continue
our operations for at least the next few months.  However, unless our
operating revenues significantly increase, we do not have sufficient cash on
hand to fund all of our projected working capital needs for the next twelve
months.  Therefore, unless we either (i) increase our revenues or (ii)
obtain additional financing from the sale of securities or by entering into
other joint venture relationships, 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.




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.




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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.




We may
occasionally become subject to legal proceedings and claims that arise in the
ordinary course of our business. It is impossible for us to predict with any
certainty the outcome of pending disputes, and we cannot predict whether any
liability arising from pending claims and litigation will be material in
relation to our consolidated financial position or results of
operations.


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 March 31, 2010 that were not previously reported in a
Current Report on Form 8-K.




ITEM 3.   DEFAULTS UPON SENIOR
SECURITIES.




None.




ITEM 4.   RESERVED.




None.




ITEM 5.   OTHER INFORMATION





None.





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





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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.




GLOBAL
      CLEAN ENERGY HOLDINGS, INC.Date:
      May 14, 2010
            By:
            /s/
      BRUCE K. NELSONBruce
      K. Nelson
              Chief
      Financial Officer




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