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 September 30, 2008





OR




 ̈ 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)
      641-4234**


Issuer’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 x No  ̈ .





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





Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated
                filer ̈
            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 November 11, 2008, the issuer
      had 239,306,317 shares of common stock outstanding, which includes 4,567,519
      shares of common stock currently held in escrow.




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act): Yes  ̈ No x





**GLOBAL
      CLEAN ENERGY HOLDINGS, INC.**


**For
      the quarter ended September 30, 2008**


**FORM
      10-Q**





**TABLE
      OF CONTENTS**





**PART
                I**ITEM
                1.
            FINANCIAL
                STATEMENTS
            1ITEM
                2.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            19ITEM
                3.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
            26ITEM 4T.
            CONTROLS
                AND PROCEDURES
            26**PART
                II**27ITEM
                1.
            LEGAL
                PROCEEDINGS
            27ITEM
                1A
            RISK
                FACTORS
            27ITEM
                2.
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            27ITEM
                3.
            DEFAULTS
                UPON SENIOR SECURITIES
            27ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            27ITEM
                5.
            OTHER
                INFORMATION
            27ITEM
                6.
            EXHIBITS
            27





**PART
      I**





**ITEM
      1.**  **FINANCIAL
      STATEMENTS** .


**GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **(Unaudited)**
 
 **September 30,**
              
              **December 31,****2008**
              
              **2007****ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              90,673
              
              $
              805,338Subscription
                  receivable
              
              
              -
              
              
              75,000Other
                  current assets
              
              
              80,435
              
              
              51,073**Total
                  Current Assets**
              
              
              171,108
              
              
              931,411**PROPERTY
                  AND EQUIPMENT**Land
              
              
              2,051,282
              
              
              -Plantation
                  development costs
              
              
              1,791,860
              
              
              308,777Plantation
                  equipment
              
              
              509,037
              
              
              -Office
                  equipment
              
              
              10,993
              
              
              1,1274,363,172
              
              
              309,904Less
                  accumulated depreciation
              
              
              (11,501
              )
              
              (563
              )4,351,671
              
              
              309,341**OTHER
                  ASSETS**
              
              
              2,691
              
              
              -**TOTAL
                  ASSETS**
              
              $
              4,525,470
              
              $
              1,240,752**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              1,477,740
              
              $
              1,243,877Accrued
                  payroll and payroll taxes
              
              
              1,064,434
              
              
              950,971Accrued
                  interest payable
              
              
              443,072
              
              
              300,651Accrued
                  return on minority interest
              
              
              67,983
              
              
              -Secured
                  promissory note
              
              
              450,000
              
              
              250,000Notes
                  payable to shareholders
              
              
              56,000
              
              
              56,000Convertible
                  notes payable
              
              
              193,200
              
              
              193,200Financial
                  instrument
              
              
              -
              
              
              2,166,514Current
                  liabilities associated with assets held for sale
              
              
              3,081,158
              
              
              3,113,970**Total
                  Current Liabilities**
              
              
              6,833,587
              
              
              8,275,183**MORTGAGE
                  NOTE PAYABLE**
              
              
              2,051,282
              
              
              -**MINORITY
                  INTEREST**
              
              
              1,392,451
              
              
              -**STOCKHOLDERS'
                  DEFICIT**Preferred
                  stock - no par value; 50,000,000 shares authorizedSeries
                  A, convertible; zero and 28,928 shares issued and outstanding,
                  respectively (aggregate liquidation preference of $0 and $2,892,800,
                  respectively)
              
              
              -
              
              
              514,612Series
                  B, convertible; 13,000 shares issued or subscribed (aggregate liquidation
                  preference of $1,300,000)
              
              
              1,290,735
              
              
              1,290,735Common
                  stock, no par value; 500,000,000 shares authorized; 222,036,041
                  and
                  174,838,967 shares issued and outstanding, respectively
              
              
              17,534,474
              
              
              16,526,570Additional
                  paid-in capital
              
              
              3,608,424
              
              
              1,472,598Deficit
                  accumulated prior to the development stage
              
              
              (1,399,577
              )
              
              (1,399,577
              )Deficit
                  accumulated during the development stage
              
              
              (26,785,906
              )
              
              (25,439,369
              )**Total
                  Stockholders' Deficit**
              
              
              (5,751,850
              )
              
              (7,034,431
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT**
              
              $
              4,525,470
              
              $
              1,240,752
 
 The
        accompanying notes are an integral part of these financial
        statements.
  1
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(Unaudited)**
 
 **From Inception of****the Development Stage****For the Three Months Ended**
              
              **For the Nine Months Ended**
              
              **on November 20, 1991****September 30,**
              
              **September 30,**
              
              **through****2008**
              
              **2007**
              
              **2008**
              
              **2007**
              
              **September 30, 2008**Operating
                  ExpensesGeneral
                  and administrative
              
              $
              345,499
              
              $
              564,268
              
              $
              1,360,410
              
              $
              919,273
              
              $
              9,260,968Research
                  and development
              
              
              -
              
              
              986,584
              
              
              -
              
              
              986,584
              
              
              986,584Loss
                  from Operations
              
              
              (345,499
              )
              
              (1,550,852
              )
              
              (1,360,410
              )
              
              (1,905,857
              )
              
              (10,247,552
              )Other
                  Income (Expenses)Unrealized
                  gain (loss) on financial instrument
              
              
              -
              
              
              (1,735,102
              )
              
              5,469
              
              
              (1,520,482
              )
              
              4,722,632Interest
                  income
              
              
              37
              
              
              124
              
              
              4,306
              
              
              394
              
              
              66,911Interest
                  expense
              
              
              (78,921
              )
              
              (11,501
              )
              
              (155,244
              )
              
              (27,252
              )
              
              (1,392,793
              )Interest
                  expense from amortization of discount on secured promissory
                  note
              
              
              (19,766
              )
              
              (58,673
              )
              
              (36,369
              )
              
              (58,673
              )
              
              (286,369
              )Gain
                  on debt restructuring
              
              
              -
              
              
              90,000
              
              
              -
              
              
              90,000
              
              
              2,524,787Other
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              906,485Total
                  Other Income (Expenses)
              
              
              (98,650
              )
              
              (1,715,152
              )
              
              (181,838
              )
              
              (1,516,013
              )
              
              6,541,653Loss
                  from Continuing Operations BeforeMinority
                  Interest in Net Loss
              
              
              (444,149
              )
              
              (3,266,004
              )
              
              (1,542,248
              )
              
              (3,421,870
              )
              
              (3,705,899
              )Minority
                  interest in net loss
              
              
              105,126
              
              
              -
              
              
              189,279
              
              
              -
              
              
              189,279Loss
                  from Continuing Operations
              
              
              (339,023
              )
              
              (3,266,004
              )
              
              (1,352,969
              )
              
              (3,421,870
              )
              
              (3,516,620
              )Income
                  (Loss) from Discontinued Operations (net of gain on disposal of
                  MDI-P of
                  $258,809 in 2007)
              
              
              250,782
              
              
              (60,501
              )
              
              6,432
              
              
              (355,305
              )
              
              (22,577,087
              )Net
                  Loss
              
              
              (88,241
              )
              
              (3,326,505
              )
              
              (1,346,537
              )
              
              (3,777,175
              )
              
              (26,093,707
              )Preferred
                  stock dividend from beneficial conversion feature
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (692,199
              )Net
                  Loss Applicable to Common Shareholders
              
              $
              (88,241
              )
              $
              (3,326,505
              )
              $
              (1,346,537
              )
              $
              (3,777,175
              )
              $
              (26,785,906
              )Basic
                  and Diluted Loss per Common Share:Loss
                  from Continuing Operations
              
              $
              (0.00
              )
              $
              (0.03
              )
              $
              (0.01
              )
              $
              (0.03
              )Income
                  (Loss) from Discontinued Operations
              
              $
              0.00
              
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )Net
                  loss
              
              $
              (0.00
              )
              $
              (0.03
              )
              $
              (0.01
              )
              $
              (0.03
              )Basic
                  and Diluted Weighted-Average CommonShares
                  Outstanding
              
              
              222,036,041
              
              
              129,802,551
              
              
              202,660,451
              
              
              122,214,575
 
 The
        accompanying notes are an integral part of these financial
        statements.
  2
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 
 **From Inception of****the Development Stage****For the Nine Months Ended**
              
              **on November 20, 1991****September 30,**
              
              **through****2008**
              
              **2007**
              
              **September 30, 2008****Cash Flows From Operating Activities**Net
                  loss
              
              $
              (1,346,537
              )
              $
              (3,777,175
              )
              $
              (26,093,707
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activitiesForeign
                  currency transaction loss (gain)
              
              
              (33,076
              )
              
              199,296
              
              
              324,315Gain
                  on debt restructuring
              
              
              -
              
              
              (90,000
              )
              
              (2,524,787
              )Share-based
                  compensation for services, expenses, litigation,and research and
                  development
              
              
              307,139
              
              
              1,516,268
              
              
              12,649,880Commitment
                  for research and development obligation
              
              
              -
              
              
              -
              
              
              2,378,445Depreciation
              
              
              815
              
              
              10,438
              
              
              138,481Reduction
                  of escrow receivable from research and development
              
              
              -
              
              
              -
              
              
              272,700Unrealized
                  loss (gain) on financial instrument
              
              
              (5,469
              )
              
              1,520,482
              
              
              (4,722,632
              )Interest
                  expense from amortization of discount on secured promissory
                  note
              
              
              36,369
              
              
              58,673
              
              
              286,369Minority
                  interest in net loss
              
              
              (189,279
              )
              
              -
              
              
              (189,279
              )Reduction
                  of legal costs
              
              
              -
              
              
              -
              
              
              (130,000
              )Write-off
                  of subscriptions receivable
              
              
              -
              
              
              -
              
              
              112,500Impairment
                  loss on assets
              
              
              -
              
              
              -
              
              
              9,709Gain
                  on disposal of assets, net of losses
              
              
              -
              
              
              (258,809
              )
              
              (228,445
              )Write-off
                  of receivable
              
              
              -
              
              
              -
              
              
              562,240Note
                  payable issued for litigation
              
              
              -
              
              
              -
              
              
              385,000Changes
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              -
              
              
              -
              
              
              (7,529
              )Other
                  current assets
              
              
              (29,362
              )
              
              (66,031
              )
              
              (80,435
              )Accounts
                  payable and accrued expenses
              
              
              614,576
              
              
              604,571
              
              
              4,832,588Net
                  Cash Used in Operating Activities
              
              
              (644,824
              )
              
              (282,287
              )
              
              (12,024,587
              )**Cash
                  Flows From Investing Activities**Plantation
                  development costs
              
              
              (1,472,960
              )
              
              -
              
              
              (1,781,737
              )Purchase
                  of property and equipment
              
              
              (518,903
              )
              
              (29,250
              )
              
              (740,237
              )Proceeds
                  from disposal of assets
              
              
              -
              
              
              310,000
              
              
              310,000Change
                  in deposits
              
              
              (2,691
              )
              
              -
              
              
              (53,791
              )Issuance
                  of note receivable
              
              
              -
              
              
              -
              
              
              (313,170
              )Payments
                  received on note receivable
              
              
              -
              
              
              -
              
              
              130,000Net
                  Cash Provided by (Used in) Investing Activities
              
              
              (1,994,554
              )
              
              280,750
              
              
              (2,448,935
              )**Cash
                  Flows From Financing Activities**Proceeds
                  from common stock, preferred stock, and warrants for cash
              
              
              75,000
              
              
              -
              
              
              11,324,580Proceeds
                  from issuance of preferred membership in GCE Mexico I, LLC
              
              
              1,649,713
              
              
              -
              
              
              1,649,713Contributed
                  equity
              
              
              -
              
              
              -
              
              
              131,374Proceeds
                  from notes payable and related warrants
              
              
              250,000
              
              
              250,000
              
              
              1,936,613Payments
                  on notes payable
              
              
              (50,000
              )
              
              -
              
              
              (951,287
              )Proceeds
                  from convertible notes payable
              
              
              -
              
              
              -
              
              
              571,702Payments
                  on convertible notes payable
              
              
              -
              
              
              -
              
              
              (98,500
              )Net
                  Cash Provided by Financing Activities
              
              
              1,924,713
              
              
              250,000
              
              
              14,564,195**Net
                  Increase (Decrease) in Cash and Cash Equivalents**
              
              
              (714,665
              )
              
              248,463
              
              
              90,673**Cash
                  and Cash Equivalents at Beginning of Period**
              
              
              805,338
              
              
              47,658
              
              
              -**Cash
                  and Cash Equivalents at End of Period**
              
              
              90,673
              
              
              296,121
              
              
              90,673**Supplemental
                  Disclosures of Cash Flow Information:**Cash
                  paid for interest
              
              $
              12,823
              
              $
              -Noncash
                  Investing and Financing Activities:Reclassification
                  of financial instrument to permanent equity
              
              $
              2,161,045
              
              $
              -Acquisition
                  of land in exchange for mortgage note payable
              
              
              2,051,282
              
              
              -Exchange
                  of Series A preferred stock for common stock
              
              
              514,612
              
              
              -Release
                  of common stock held in escrow
              
              
              493,292
              
              
              -Issuance
                  of warrants in satisfaction of accounts payable
              
              
              124,565
              
              
              -Accrual
                  of return on minority interest
              
              
              67,983
              
              
              -
 
 The
        accompanying notes are an integral part of these financial
        statements.
  3
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **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 know as MDI-P.
 
 On
        March 22, 2005, MDI formed MDI Oncology, Inc., a Delaware corporation, as a
        wholly-owned subsidiary to acquire and operate the assets and business
        associated with the Savetherapeutics transaction. With this transaction,
        MDI
        acquired the SaveCream technology and carried on the research and development
        of
        this drug candidate. MDI made the decision in 2007 to discontinue further
        development of these two drug candidates and sell these
        technologies.
 
 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”).
 
 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, 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.
 
 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, a corporation newly organized under the laws of Mexico (Asideros),
        and the Company owns the remaining 1% directly. Commencing in April 2008,
        the
        Company has consolidated the financial statements of GCE Mexico and Asideros
        with its financial statements. The ownership interests of the six unaffiliated
        investors in GCE Mexico is presented as Minority Interest in the accompanying
        consolidated financial statements. GCE Mexico was organized primarily to,
        among
        other things, acquire land in Mexico through Asideros for the cultivation
        of the
        Jatropha plant.
 
 *Unaudited
        Interim 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-KSB for the year ended December 31, 2007, as filed with the
        Securities and Exchange Commission. The results of operations for the three
        months and nine months ended September 30, 2008, may not be indicative of
        the
        results that may be expected for the year ending December 31,
        2008.
  4
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 *Loss
        per Common Share*
 
 Loss
        per
        share amounts are computed by dividing loss applicable to common shareholders
        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 September 30, 2008 and 2007, as
        follows:
 
 September 30,2008
              
              2007Convertible
                  notes
              
              
              128,671
              
              
              128,671Convertible
                  preferred stock - Series A
              
              
              -
              
              
              57,856,000Convertible
                  preferred stock - Series B
              
              
              11,818,181
              
              
              -Warrants
              
              
              29,742,552
              
              
              35,279,494Compensation-based
                  stock options and warrants
              
              
              51,459,083
              
              
              41,883,000Common
                  stock held in escrow
              
              
              4,567,519
              
              
              27,405,11197,716,006
              
              
              162,552,276
 
 *Recently
        Issued Accounting Standards*
 
 In
        September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
        No.
        157, *Fair
        Value Measurements* (SFAS
        157). SFAS 157 defines fair value, establishes a framework for measuring
        fair
        value in generally accepted accounting principles, and expands disclosures
        about
        fair value measurements. This statement is effective for the Company’s fiscal
        year beginning January 1, 2008 for financial assets and liabilities and January
        1, 2009 for non-financial assets and liabilities. The adoption of SFAS 157
        for
        financial assets and liabilities on January 1, 2008 did not have a material
        impact on the Company’s consolidated financial statements. The Company is
        currently evaluating the impact of SFAS 157 for non-financial assets and
        liabilities, if any, on the reporting of its financial position and results
        of
        operations.
 
 In
        February 2007, the FASB issued SFAS No. 159, *The
        Fair Value Option for Financial Assets and Financial
        Liabilities* –
        including an amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 allows
        measurement at fair value of eligible financial assets and liabilities that
        are
        not otherwise measured at fair value. If the fair value option for an eligible
        item is elected, unrealized gains and losses for that item shall be reported
        in
        current earnings at each subsequent reporting date. SFAS 159 also establishes
        presentation and disclosure requirements designed to draw comparison between
        the
        different measurement attributes the Company elects for similar types of
        assets
        and liabilities. The Company adopted SFAS 159 effective January 1, 2008,
        but did
        not elect to fair value any of the eligible assets or liabilities. Therefore,
        the adoption of SFAS 159 did not have any impact on its financial position
        or
        results of operations.
  5
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 In
          December 2007, the FASB issued SFAS No. 141 (revised 2007), *Business
          Combinations* (SFAS
          141(R)), which replaces SFAS 141, *Business
          Combinations* .
          SFAS
          141(R) retains the underlying concepts of SFAS 141 in that all business
          combinations are still required to be accounted for at fair value under
          the
          acquisition method of accounting, but SFAS 141(R) changed the method of
          applying
          the acquisition method in a number of significant aspects. Acquisition
          costs
          will generally be expensed as incurred; noncontrolling interests will be
          valued
          at fair value at the acquisition date; in-process research and development
          will
          be recorded at fair value as an indefinite-lived intangible asset at the
          acquisition date; restructuring costs associated with a business combination
          will generally be expensed subsequent to the acquisition date; and changes
          in
          deferred tax asset valuation allowances and income tax uncertainties after
          the
          acquisition date generally will affect income tax expense. SFAS 141(R)
          is
          effective on a prospective basis for all business combinations for which
          the
          acquisition date is on or after the beginning of the first annual period
          subsequent to December 15, 2008, with the exception of the accounting for
          valuation allowances on deferred taxes and acquired tax contingencies.
          SFAS
          141(R) amends SFAS 109 such that adjustments made to valuation allowances
          on
          deferred taxes and acquired tax contingencies associated with acquisitions
          that
          closed prior to the effective date of SFAS 141(R) would also apply the
          provisions of SFAS 141(R). Early adoption is not permitted. The Company
          is
          currently evaluating the effects, if any, that SFAS 141(R) may have on
          our
          financial statements. The Company does not expect that it will have any
          immediate effect on our financial statements, however, the revised standard
          will
          govern the accounting for any future business combinations that the Company
          may
          enter into.
  In
        December 2007, the FASB issued SFAS No. 160, *Noncontrolling
        Interests in Consolidated Financial Statements—an amendment of ARB No. 51* (SFAS
        160). This statement is effective for fiscal years, and interim periods within
        those fiscal years, beginning on or after December 15, 2008, with earlier
        adoption prohibited. This statement requires the recognition of a noncontrolling
        interest (minority interest) as equity in the consolidated financial statements
        and separate from the parent’s equity. The amount of net income attributable to
        the noncontrolling interest will be included in consolidated net income on
        the
        face of the income statement. It also amends certain of ARB No. 51’s
        consolidation procedures for consistency with the requirements of SFAS
        141(R) *.* This
        statement also includes expanded disclosure requirements regarding the interests
        of the parent and its noncontrolling interest. The Company is currently
        evaluating this new statement. Based on the current consolidated financial
        statements, if SFAS 160 were effective, the minority interest in the
        consolidated balance sheet would be presented as noncontrolling interest
        in
        Owners’ Equity (Deficit), the minority interest in net loss would be included in
        consolidated net loss in the consolidated statement of operations, and the
        footnotes would include expanded disclosure regarding the ownership interests
        of
        the Company and of the noncontrolling interests.
 
 In
        March
        2008, the FASB issued SFAS No. 161, *Disclosures
        about Derivative Instruments and Hedging Activities, an amendment of FASB
        Statement No. 133* (SFAS
        161). SFAS 161 requires enhanced disclosures about an entity’s derivative and
        hedging activities. Entities will be required to provide enhanced disclosures
        about: (a) how and why an entity uses derivative instruments; (b) how derivative
        instruments and related hedge items are accounted for under SFAS No. 133
        and its
        related interpretations; and (c) how derivative instruments and related hedge
        items affect an entity’s financial position, financial performance and cash
        flows. The provisions of SFAS 161 are effective January 1, 2009. The Company
        is
        currently evaluating the impact of SFAS 161 on its financial
        statements.
  6
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 **Note
        2** – **Going
        Concern Considerations**
 
 The
        accompanying unaudited consolidated financial statements have been prepared
        assuming that the Company will continue as a going concern. The Company incurred
        a net loss applicable to common shareholders of $1,346,537 and $4,414,884
        during
        the nine-month period ended September 30, 2008 and the year ended December
        31,
        2007, respectively, and has incurred losses applicable to common shareholders
        since inception of the development stage of $26,785,906. The Company also
        used
        cash in operating activities of $644,824 and $709,278 during the nine-month
        period ended September 30, 2008 and the year ended December 31, 2007,
        respectively. At September 30, 2008, the Company has negative working capital
        of
        $6,662,479 and a stockholders’ deficit of $5,751,850. Those factors raise
        substantial doubt about the Company’s ability to continue as a going concern.
 
 The
        Company discontinued its former bio-pharmaceutical business during the quarter
        ended March 31, 2007. Management plans to meet its cash needs through various
        means including selling assets related to its former bio-pharmaceutical
        business, securing financing, entering into joint ventures, and developing
        a new
        business model. In order to fund its new operations related to the cultivation
        of the Jatropha plant, the Company sold Series B preferred stock during the
        quarter ended December 31, 2007 in the amount of $1,300,000 and issued a
        secured
        promissory note under which the Company has current borrowings of $450,000.
        The
        Company is developing a new business operation to participate in the rapidly
        growing bio-diesel industry. The Company continues to expect to be successful
        in
        this new venture, but there is no assurance that its business plan will be
        economically viable. The ability of the Company to continue as a going concern
        is dependent on that plan’s success. The financial statements do not include any
        adjustments that might be necessary if the Company is unable to continue
        as a
        going concern.
 
 **Note
        3 – Jatropha Business Venture**
 
 Having
        agreed 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. Since entering into these transactions, the Company has
        identified certain real property in Mexico it believes to be suitable for
        cultivating the Jatropha plant. During April 2008, the Company entered into
        a
        limited liability company agreement to form GCE Mexico I, LLC (GCE Mexico).
        Through Asideros Globales Corporativo (Asideros), a Mexican corporation of
        which
        GCE Mexico holds a 99% equity interest, land has been acquired in Mexico
        for the
        cultivation of the Jatropha plant. All of these transactions are described
        in
        further detail in the remainder of this note to the consolidated financial
        statements.
  7
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 **Share
        Exchange Agreement**
 
 The
        Company entered into a share exchange agreement (the Global Agreement) pursuant
        to which the Company acquired all of the outstanding ownership interests
        in
        Global Clean Energy Holdings, LLC, a Delaware limited liability company
        (Global), on September 7, 2007 from Mobius Risk Group, LLC (Mobius) and from
        Richard Palmer (Mr. Palmer). Mr. Palmer owns a 13.33% equity interest in
        Mobius
        and, as described further in this Note, 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.
 
 **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
        Jatropha ** plant;
        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
        term
        of the agreement was twelve months and the scope of work under the agreement
        has
        been completed. 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. Under this agreement, the Company has paid Mobius or accrued $144,114
        during the three months ended September 30, 2008, all of which was capitalized
        as plantation development costs pursuant to AICPA Statement of Position 85-3, *Accounting
        by Agricultural Producers and Agricultural Cooperatives* .
        For the
        nine months ended September 30, 2008, the Company has paid Mobius or accrued
        $437,279, of which $42,155 was expensed as compensation to Mobius and $395,124
        was capitalized as plantation development costs.
 
 **LODEMO
        Agreement**
 
 On
        October 15, 2007, the Company entered into a service agreement with Corporativo
        LODEMO S.A DE CV, a Mexican corporation (the LODEMO Group). The Company had
        decided to initiate its Jatropha Business in Mexico, and had identified parcels
        of land in Mexico to plant and cultivate Jatropha. In order to obtain all
        of the
        logistical and other services needed to operate a large-scale farming and
        transportation business in Mexico, the Company entered into the service
        agreement with the LODEMO Group, a privately held Mexican company with
        substantial land holdings, significant experience in diesel distribution
        and
        sales, liquids transportation, logistics, land development and agriculture.
  8
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 Under
        the
        supervision of the Company’s management and Mobius, the LODEMO Group is
        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. Although the
        LODEMO
        Group is responsible for identifying and acquiring the farmland, ownership
        of
        the farmland or any lease thereto will be held directly by the Company or
        by a
        Mexican subsidiary of the Company. The LODEMO Group will be responsible for
        hiring and managing all necessary employees. All direct and budgeted costs
        of
        the Jatropha Business in Mexico will be borne by the Company.
 
 The
        LODEMO Group will provide the foregoing and other necessary services for
        a fee
        primarily based on the number of hectares of Jatropha under cultivation.
        The
        Company has 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 earlier by the Company under certain
        circumstances. The LODEMO Group will also potentially receive incentive
        compensation for controlling costs below the annual budget established by
        the
        parties, production incentives for increased yield and a sales commission
        for
        biomass sales. Under this agreement, the Company has paid the LODEMO Group
        or
        accrued $208,168 during the three months ended September 30, 2008, all of
        which
        was capitalized as plantation development costs pursuant to AICPA Statement
        of
        Position 85-3, *Accounting
        by Agricultural Producers and Agricultural Cooperatives* .
        During
        the nine months ended September 30, 2008, the Company has paid the LODEMO
        Group
        or accrued $878,612, all of which has been capitalized as plantation development
        costs.
 
 **GCE
        Mexico I, LLC**
 
 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 acquire 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 approximately $4.2 million
        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 have agreed to make
        capital contributions to GCE Mexico of up to $2,232,624, in installments
        and as
        required, to fund the development and operations of the Jatropha Farm. Shortly
        after entering into the LLC Agreement, the preferred members made an initial
        capital contribution of $957,191 toward the development of the Jatropha Farm.
        Additional capital contributions of $692,522 and $765,438 have been received
        by
        GCE Mexico from these Investors in July 2008 and October 2008, respectively.
        The
        agreement calls for additional contributions from the Investors over and
        above
        the initial capital contributions, as requested by management and as required
        by
        the operation. These Investors are entitled to earn a preferential 12% per
        annum
        cumulative compounded return on the cumulative balance of their preferred
        membership interest.
  9
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 These
        investors also directly funded the purchase 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 and Asideros issued a mortgage in the amount
        of
        $2,051,282 in favor of these two Investors. The mortgage bears interest at
        the
        rate of 12% per annum, payable quarterly. The Board has directed that his
        interest shall continue to accrue until such time as the Board determines
        that
        there is sufficient cash flow to pay all accrued interest. The entire mortgage,
        including any unpaid interest, is due April 23, 2018.
 
 Since
        the
        acquisition of the land, approximately 1,050 acres have have been improved
        so
        far, 180 acres have been planted, and roads and other infrastructure have
        been
        developed on the farm. Furthermore, heavy equipment is now in place that
        will
        greatly facilitate rapid improvement and planting.
 
 According
        to the LLC Agreement, the net loss of GCE Mexico is allocated to the members
        according to the 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 Minority Interest presented
        in the accompanying 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. Accordingly, the Minority Interest is composed of the following
        elements at September 30, 2008:
 
 Capital
                  contribution from preferred membership interest
              
              $
              1,649,713Allocation
                  of net loss of GCE Mexico to the preferred membership
                  interest
              
              
              (189,279
              )Accrual
                  of preferential return for the preferred membership
                  interest
              
              
              (67,983
              )Investment
                  of common membership interest held by other Investors, excluding
                  the
                  Company
              
              
              -**Minority
                  Interest**
              
              $
              1,392,451
  10
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 **Note
        4 – Property** **and
        Equipment**
 
 Property
        and equipment are as follows:
 
 **September 30,**
              
              **December 31,****2008**
              
              **2007**Land
              
              $
              2,051,282
              
              $
              -Plantation
                  development costs
              
              
              1,791,860
              
              
              308,777Plantation
                  equipment
              
              
              509,037
              
              
              -Office
                  equipment
              
              
              10,993
              
              
              1,127Total
                  cost
              
              
              4,363,172
              
              
              309,904Less
                  accumulated depreciation
              
              
              (11,501
              )
              
              (563
              )**Property
                  and equipment, net**
              
              $
              4,351,671
              
              $
              309,341
 
 The
        Company has capitalized farming equipment and costs related to the development
        of land for plantation use in accordance with AICPA
        Statement of Position 85-3, *Accounting
        by Agricultural Producers and Agricultural Cooperatives* . Plantation
        development costs are not currently being depreciated. Upon completion of
        the
        plantation development, those costs will be depreciated over the useful life
        of
        the related asset. The plantation development costs are located in
        Mexico.
 
 Commencing
        in June 2008, GCE Mexico has purchased certain equipment for purposes of
        rapidly
        clearing the land, preparing the land for planting, and actually planting
        the
        Jatropha trees.
 
 **Note
        5 – Accrued Payroll and Payroll Taxes**
 
 Accrued
        payroll and payroll taxes principally relate 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:
 
 **September 30,**
              
              **December 31,****2008**
              
              **2007**Former
                  Chief Executive Officer, resigned 2007, including $500,000 under
                  the
                  Release and Settlement Agreement
              
              $
              570,949
              
              $
              583,332Other
                  former Officers and Directors
              
              
              311,200
              
              
              311,200Accrued
                  payroll taxes on accrued compensation to former officers and
                  directors
              
              
              38,510
              
              
              38,510Accrued
                  payroll, vacation, and related payroll taxes for current
                  officers
              
              
              143,775
              
              
              17,929**Accrued
                  payroll and payroll taxes**
              
              $
              1,064,434
              
              $
              950,971
 
 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.
        Pursuant to this agreement, Ms. Robinett resigned on December 21, 2007.
  11
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 **Note
        6 – Secured Promissory Note**
 
 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 is considered a related party to the Company. The loan
        is
        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, Mercator made available to the Company a secured term
        credit facility in principal amount of $1,000,000. The promissory note initially
        was due and payable on December 14, 2007. As of December 13, 2007, the Company
        owed Mercator $250,000 under the loan. Mercator agreed to extend the maturity
        date of the $250,000 to February 21, 2008. In March, 2008, the loan was paid
        down to $200,000 and the maturity date was extended to June 21, 2008. In
        May
        2008, the Company and Mercator entered into an amendment to the loan agreement,
        whereby, Mercator loaned the Company and additional $250,000 increasing the
        outstanding balance to $450,000. In connection with the amendment, the interest
        rate was reduced to 8.68% and the due date was extended to August 19, 2008.
        The
        maturity date has subsequently been further extended to January 13, 2009.
        Additionally, as part of the amendment, the Company issued Mercator a two-year
        warrant to purchase 581,395 shares of common stock at $0.129 per share.
 
 The
        proceeds of $250,000 resulting of the amendment of the loan agreement have
        been
        allocated between the promissory note and the warrant based on the relative
        fair
        value of each instrument. The fair value of the warrant was estimated on
        the
        date of issuance using the Black-Scholes option pricing model. The assumptions
        used for valuing the warrant were risk-free interest rate of 2.4%, volatility
        of
        168%, expected life of 2.0 years, and dividend yield of zero. The allocation
        resulted in a $36,369 discount to the promissory note, which has been amortized
        as additional interest over the period from May 19, 2008 through the original
        extended due date of August 19, 2008 under the amendment.
 
 **Note
        7 – Financial Instrument**
 
 The
        conversion feature of the Series A Convertible Preferred Stock had more of
        the
        attributes of an equity instrument than of a liability instrument, and thus
        was
        not considered a derivative. However, at the time of issuance, the Company
        was
        unable to guarantee that there would be enough shares of authorized common
        stock
        to settle other “freestanding instruments.” Accordingly, all of the warrants
        attached to the convertible preferred stock were measured at their fair value
        and recorded as a liability in the financial statements characterized as
        a
“Financial Instrument”. For these same reasons, all other warrants and options
        outstanding on March 11, 2005 or issued during the remainder of 2005 and
        through
        2007 (except for stock options issued to employees) were measured at their
        fair
        value and recorded as additional liability in the financial statements. As
        of
        December 31, 2007, the fair value of this liability was recorded at $2,166,514.
  12
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 For
        the
        period from December 31, 2007 through January 29, 2008, the fair value of
        this
        liability decreased by $5,469 resulting in a balance of $2,161,045. On January
        29, 2008, the shareholders of the Company approved an increase in the number
        of
        authorized shares of common stock from 250 million to 500 million. Consequently,
        as the result of this amendment to the Company’s Articles of Incorporation, the
        Company is now able to settle all ‘freestanding instruments”. Accordingly, the
        Company reclassified the liability, characterized in the accompanying financial
        statements as “Financial Instrument”, in the amount of $2,161,045, to permanent
        equity in January 2008.
 
 **Note
        8 – Common and Preferred Stock**
 
 **Stock
        Exchange Agreement**
 
 Effective
        April 18, 2008, the Company entered into an exchange agreement ( the Exchange
        Agreement) with Mercator Momentum Fund, L.P., Mercator Momentum Fund III,
        L.P.,
        and Monarch Pointe Fund, Ltd. (collectively, the MAG Funds), comprising all
        of
        the holders of the Company’s Series A Convertible Preferred Stock (the Series A
        Stock). Pursuant to the Exchange Agreement, the MAG Funds agreed to exchange
        28,927 shares of the Series A Stock, constituting all of the issued and
        outstanding shares of the Series A Stock, for an aggregate of 28,927,000
        shares
        of the Company’s common stock. The exchange ratio was determined by dividing the
        $100 purchase price of the preferred shares by $0.10 per share of common
        stock.
 
 Prior
        to
        the Exchange Agreement, the Series A Stock had been convertible at a price
        equal
        to 75% of the “Market Price”, as defined in the Certificate of Designations of
        Preferences and Rights of the Series A Stock. The conversion price could
        not
        exceed $0.1967 and had a conversion price floor of $0.05. On April 18, 2008,
        the
        closing price of the Company’s common stock was $0.10 and the “Market Price”
would have been $0.045 per share. In connection with the Exchange Agreement,
        the
        Company agreed to waive the limitation that the MAG Funds could not own more
        that 9.99% of the Company’s outstanding common stock as a concession for the MAG
        Funds agreeing to a conversion price that was more favorable to the Company.
 
 **Release
        of Shares Held in Escrow**
 
 Under
        the
        Global Agreement, 27,405,111 shares of common stock were held in escrow by
        the
        Company, subject to forfeiture in the event that certain specified performance
        and market-related milestones were not achieved. Upon the satisfaction, from
        time to time, of the operational and market capitalization condition milestones,
        the restricted shares were to be released by the Company from escrow and
        delivered to the buyers in accordance with the terms and conditions of the
        Global Agreement. With the acquisition of the land for the Jatropha Farm
        in
        April 2008, the operational milestones were satisfied under the Global
        Agreement. Consequently, 13,702,556 shares of common stock being held in
        escrow
        have been released to the former owners of Global Clean Energy Holdings,
        LLC.
 
 During
        May 2008, the second market-related milestones under the Global Agreement
        were
        satisfied, which resulted in the release of 4,567,518 shares of common stock
        being held in escrow. Previously, during the three months ended December
        31,
        2007, the first market-related milestones were satisfied, which also resulted
        in
        the release of 4,567,518 shares of common stock being held in escrow. There
        are
        4,567,519 shares of common stock held in escrow at September 30, 2008, which
        will be released upon the satisfaction of the third market-related
        milestones.
  13
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 **Note
        9 – Stock Options and Warrants**
 
 The
        Company has two incentive stock option plans wherein 24,000,000 shares of
        the Company’s common stock are reserved for issuance thereunder. As more fully
        described in Note 10, the Company granted stock options during the nine months
        ended September 30, 2008 to acquire 4,500,000 million shares of the Company’s
        common stock. Additionally, during the nine months ended September 30, 2008,
        the
        Company issued compensation-based warrants to purchase 2,076,083 shares of
        common stock in satisfaction of outstanding accounts payable totaling $124,565.
        These warrants are exercisable at $0.01 per share and expire five years from
        the
        date of issuance. No income tax benefit has been recognized for share-based
        compensation arrangements. The Company has recognized plantation development
        costs totaling $124,565 related to the liability that was satisfied by the
        issuance of warrants in 2008. Otherwise, no share-based compensation cost
        has
        been capitalized in the balance sheet.
 
 A
        summary
        of the status of options and compensation-based warrants at September 30,
        2008,
        and changes during the nine months then ended is presented in the following
        table:
 
 **Weighted****Weighted**
              
              **Average****Shares**
              
              **Average**
              
              **Remaining**
              
              **Aggregate****Under**
              
              **Exercise**
              
              **Contractual**
              
              **Intrinsic****Option**
              
              **Price**
              
              **Life**
              
              **Value**Outstanding
                  at January 1, 2008
              
              
              44,883,000
              
              $
              0.03Granted
              
              
              6,576,083
              
              
              0.04Expired
              
              
              -
              
              
              -Outstanding
                  at September 30, 2008
              
              
              51,459,083
              
              $
              0.03
              
              
              6.7
                  years
              
              $
              852,282Exercisable
                  at September 30, 2008
              
              
              35,459,083
              
              $
              0.03
              
              
              7.7
                  years
              
              $
              732,282
 
 At
        September 30, 2008, options to acquire 80,000 shares of common stock have
        no
        stated contractual life. Compensation-based warrants issued in satisfaction
        of
        accounts payable have been recorded at the amount of the accounts payable.
        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 such stock options granted
        during the nine months ended September 30, 2008 was $0.042. The weighted-average
        assumptions used for these options granted during the nine months ended
        September 30, 2008 were risk-free interest rate of 2.4%, volatility of 127%,
        expected life of 5.2 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.
  14
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 Share-based
        compensation from all sources recorded during the three months and nine months
        ended September 30, 2008 were $60,349 and $307,139, respectively. Share-based
        compensation from all sources for the three months and nine months ended
        September 30, 2007 were $1,224,268 and $1,516,268, respectively. Share-based
        compensation has been included in the accompanying Consolidated Statements
        of
        Operations as follows:
 
 **Period Reported**
              
              **General and**
                **Administrative**
                **Expense**
              
              **Research and**
                **Development**
                **Expense**
              
              **Loss from**
                **Discontinued**
                **Operations**
              
              **Total**Three
                  months ended September 30, 2008
              
              $
              60,349
              
              $
              -
              
              $
              -
              
              $
              60,349Nine
                  months ended September 30, 2008
              
              
              307,139
              
              
              -
              
              
              -
              
              
              307,139Three
                  months ended September 30, 2007
              
              
              237,684
              
              
              986,584
              
              
              -
              
              
              1,224,268Nine
                  months ended September 30, 2007
              
              
              412,884
              
              
              986,584
              
              
              116,800
              
              $
              1,516,268
 
 As
        of
        September 30, 2008, there is approximately $346,000 of unrecognized compensation
        cost related to stock-based payments that will be recognized over a weighted
        average period of approximately 1.8 years.
 
 **Stock
        Warrants**
 
 A
        summary
        of the status of the warrants outstanding at September 30, 2008, and changes
        during the nine months then ended is presented in the following
        table:
  **Weighted****Shares**
              
              **Average****Under**
              
              **Exercise****Warrant**
              
              **Price**Outstanding
                  at January 1, 2008
              
              
              31,033,379
              
              $
              0.022Issued
              
              
              581,395
              
              $
              0.129Expired
              
              
              (1,872,222
              )
              $
              0.180Outstanding
                  at September 30, 2008
              
              
              29,742,552
              
              $
              0.015
 
 **Note
        10 – Employment Agreement**
 
 On
        March
        20, 2008, the Company entered into an employment agreement with Bruce K.
        Nelson
        pursuant to which the Company hired Mr. Nelson to serve as its Executive
        Vice-President and Chief Financial Officer effective April 1, 2008. The initial
        term of employment commenced March 20, 2008 and continues through March 20,
        2010. Thereafter, the term of employment shall automatically renew for
        successive one-year periods unless otherwise terminated in accordance with
        the
        employment agreement.
 
 Mr.
        Nelson’s compensation package includes a base salary of $175,000, subject to
        annual increases based on the Consumer Price Index for the immediately preceding
        12-month period, and a bonus payment based on Mr. Nelson’s satisfaction of
        certain performance criteria established by the compensation committee of
        the
        Company’s Board of Directors. The bonus amount in any fiscal year will not
        exceed 100% of Mr. Nelson’s base salary. Mr. Nelson is eligible to participate
        in the Company’s employee stock option plan and other benefit
        plans.
 
 The
        Company granted Mr. Nelson an option (the Initial Option) to acquire up to
        2,000,000 shares of the Company’s common stock at an exercise price of $0.05.
        The Initial Option vests in tranches of 500,000 shares after 90 days, nine
        months, fifteen months, and two years of the employment term. The Initial
        Option
        expires after 10 years. The Company also granted Mr. Nelson an option (the
        Performance Option) to acquire up to 2,500,000 shares of the Company’s common
        stock at an exercise price of $0.05, subject to the Company’s achievement of
        certain market capitalization goals. The Performance Option expires after
        five
        years.
  15
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 The
        Company may terminate Mr. Nelson’s employment on the first anniversary of the
        employment term, provided that the Company pays Mr. Nelson three (3) months
        salary if such termination is without “cause”. If Mr. Nelson’s employment is
        terminated by the Company without “cause” or by Mr. Nelson for “good reason”
prior to the first anniversary of the employment term, Mr. Nelson will be
        entitled to receive severance payments including (i) an amount equal to his
        unpaid salary through the first anniversary of the employment term, (ii)
        50% of
        the target bonus in effect on the date of termination, and (iii) 50% of the
        Performance Option shall vest. If Mr. Nelson’s employment is terminated by the
        Company without “cause” or by Mr. Nelson for “good reason” after the first
        anniversary of the employment term, Mr. Nelson will be entitled to receive
        severance payments including (i) an amount equal to his unpaid salary through
        the end of the second year of the employment agreement, and (ii) 100% of
        Initial
        Option shall vest, to the extent not already vested.
  **Note
        11 – Discontinued Operations**
 
 During
        the three months ended March 31, 2007, the Board of Directors determined
        that it
        could no longer fund the development of its drug candidates and could not
        obtain
        additional funding for these drug candidates. The Board evaluated the value
        of
        its developmental stage drug candidates. 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.
 
 **Plan
        to Sell Former Business**
 
 On
        March
        8, 2007, the Company entered into a binding letter of intent with Eucodis
        Pharmaceuticals Forschungs und Entwicklungs GmbH, an Austrian company (Eucodis),
        regarding their intent to proceed with the evaluation, negotiation, and
        execution of a sale and purchase agreement related to certain assets of the
        Company. On July 6, 2007, the Company entered into a sale and purchase agreement
        (the Asset Sale Agreement) with Eucodis, pursuant to which Eucodis agreed
        to
        acquire certain assets of the Company in consideration for a cash payment
        and
        the assumption by Eucodis of certain indebtedness of the Company. The assets
        to
        be acquired by Eucodis pursuant to the Asset Sale Agreement included all
        of the
        Company’s right, title and interest in all patents, patent applications, United
        States and foreign regulatory files and data ,
        pre-clinical study data and anecdotal clinical trial data concerning SaveCream.
        In addition, at the closing of the sale, the Company was to assign to Eucodis
        all of its right, title and interest in a co-development agreement with Eucodis,
        dated as of July 29, 2006, related to the co-development and licensing of
        SaveCream (including the intellectual property rights acquired in connection
        with that development) and their rights under certain
        other contracts relating to SaveCream. The
        sale
        to Eucodis was scheduled to close at the end of January 2008 after the Company’s
        shareholders approved the sale. On January 29, 2008, the shareholders of
        the
        Company approved the transaction. Shortly before the scheduled closing, Eucodis
        informed the Company that it was unable to complete the transaction as agreed
        because it had insufficient funds and needed to obtain additional financing.
  16
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 The
        Company thereafter commenced discussions with Eucodis regarding the possibility
        of obtaining financing and possibly deferring the closing of the sale. However,
        as of February 27, 2008, Eucodis still had not obtained sufficient financing
        to
        complete its purchase of the SaveCream technology. Accordingly, on February
        27,
        2008, the Company delivered to Eucodis a letter formally notifying Eucodis
        that
        the Asset Agreement had been terminated. On February 29, 2008, Eucodis informed
        the Company that (i) it was completing an agreement for financing, which
        financing would provide Eucodis with sufficient funds to purchase the SaveCream
        assets for the purchase price, and substantially on the terms set forth in
        the
        Asset Sale Agreement, and (ii) that it still desired to complete the transaction
        contemplated by the Asset Sale Agreement. On February 29, 2008, the Company
        prepared a letter agreement again agreeing to sell the SaveCream assets to
        Eucodis on substantially the terms set forth in the Asset Sale Agreement
        (as
        amended). Under the letter agreement, the sale to Eucodis was scheduled to
        occur
        at such time as Eucodis completed its financing, but in no event later than
        April 30, 2008. As of April 30, 2008, Eucodis had not completed its financing,
        therefore, the Asset Sale Agreement, as amended by the Letter Agreement,
        terminated on its own terms. The Company continued discussions with Eucodis
        and
        explored other potential purchasers of SaveCream. All discussions and agreements
        with Eucodis were terminated in July 2008 due to their inability to obtain
        their
        own pending financing. As a result of the failed funding of Eucodis they
        were
        forced to cease their operations. However, the principal of Eucodis has agreed
        to continue to work with the Company in connection with the sale of the
        Company’s legacy assets.
 
 The
        Company has engaged an investment banking firm to expedite the sale of the
        SaveCream asset. The Company is currently in discussions with several interested
        parties. However, the recent contraction of the capital markets has negatively
        impacted the abilities for several potential purchasers to consummate a
        purchase. Although, management is taking steps to market and sell the SaveCream
        assets to potential buyers, no assurance can be given that this sale will
        actually be completed in the near future, or ever.
 
 **Accounting
        for Discontinued Operations**
 
 Pursuant
        to accounting rules for discontinued operations, the Company has classified
        all
        revenue and expense related to the operations of its bio-pharmaceutical business
        as discontinued operations. For all periods prior to March 2007, the Company
        has
        reclassified all revenue and operating expenses to discontinued operations,
        except for estimated general corporate overhead, because all of its operations
        related to the discontinued technologies. For the three months and nine months
        ended September 30, 2008, the “Income (Loss) from Discontinued Operations”
substantially consists of the foreign currency transaction income (loss)
        related
        to Current Liabilities Associated with Assets Held for Sale that are denominated
        in euros. The assets that were under contract to be sold to Eucodis have
        no
        carrying value in the accompanying balance sheet, while the liabilities that
        were to be assumed in the planned sale have been segregated in the accompanying
        balance sheets and are characterized as Current Liabilities Associated with
        Assets Held for Sale. The Company has not recorded any gain or loss through
        September 30, 2008 associated with the planned sale of the SaveCream assets.
        The
        following table presents the main classes of assets and liabilities associated
        with the discontinued business.
  17
  **GLOBAL
        CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES**
 **FORMERLY
        KNOWN AS MEDICAL DISCOVERIES, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Unaudited Condensed Consolidated Financial Statements**
 
 **September 30,**
              
              **December 31,****2008**
              
              **2007**Assets:
              
              $
              -
              
              $
              -Liabilities:Current
                  liabilities:Accounts
                  payable
              
              $
              408,777
              
              $
              412,415Research
                  and development obligation
              
              
              2,672,381
              
              
              2,701,555$
              3,081,158
              
              $
              3,113,970
 
 **Note
        12 – Subsequent Event**
 
 **Acquisition
        of Jatropha Farm in Belize**
 
 On
        October 29, 2008, the Company entered into a Stock Purchase Agreement with
        the
        four shareholders of Technology Alternatives Limited (TAL), a company formed
        under the Laws of Belize. The former shareholders are unaffiliated persons
        residing in the United Kingdom. Pursuant to the Stock Purchase Agreement,
        the
        Company acquired 100% of the issued and outstanding shares of TAL, thereby
        making TAL a wholly-owned subsidiary of the Company. In consideration for
        the
        shares of TAL, the Company issued to the selling shareholders an aggregate
        of
        12,702,757 unregistered shares of the Company’s common stock.
  TAL
        owns
        and operates a 400 acre farm in subtropical Belize, Central America, that
        currently is producing Jatropha. TAL has also been performing plant science
        research and has been providing technical advisory services for propagation
        of
        Jatropha for a number of years.
 
 The
        selling shareholders had previously made loans to TAL to fund the operations
        of
        TAL. As of the closing of the transaction contemplated by the Stock Purchase
        Agreement, the remaining outstanding balance of these loans, in the aggregate,
        was U.S. $453,611. At the closing, the promissory notes evidencing these
        loans
        were replaced by new promissory notes issued by TAL to the selling shareholders.
        The new notes have the following terms: (i) Interest free for 90 days; (ii)
        Interest accrues at an annual rate of 8% per annum commencing on the 91st
        day
        after the issuance of the notes; (iii) Interest is payable monthly in arrears;
        (iv) A minimum principal payment of $68,000 is payable during the first 90
        days
        of the notes; (v) The entire remaining unpaid balance of the notes is due
        and
        payable on the 180th day following the closing date; (vi) 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. The new notes are secured by the deed of legal mortgage on the
        400
        acre farm owned by TAL. Accordingly, in the event that TAL and/or the Company
        defaults under the notes, the selling shareholders will have the right to
        foreclose on the 400 acre Jatropha farm.
 
 The
        acquisition will be accounted for under the purchase method of accounting
        and
        the results of operations of TAL will be consolidated with the results of
        operations of the Company from the date of acquisition.
  18
 **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 biofuels market, any projections of revenues
      or other financial items, any statements of the plans and objectives of
      management for future operations, any statements concerning the proposed sale
      of
      our legacy medical asset, 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,” “our
      company,” and “Company” refer to Global Clean Energy Holdings, Inc., a Utah
      corporation, and, unless the context indicates otherwise, also includes the
      following subsidiaries: (i) MDI Oncology, Inc., a Delaware corporation, (ii)
      Global Clean Energy Holdings LLC, a Delaware limited liability company, (iii)
      GCE Mexico I, LLC, a Delaware limited liability company, and (iv) Asideros
      Globales Corporativo, a corporation organized under the laws of
      Mexico.




**Overview**  ****




Prior
      to
      2007, Global Clean Energy Holdings, Inc. was a developmental-stage
      bio-pharmaceutical company, known as Medical Discoveries, Inc., that was engaged
      in the research, validation and development of two drugs. As more fully
      described in this report, during 2007 our Board of Directors determined that
      we
      could no longer fund the development of our two drug candidates and could not
      obtain additional funding for these drug candidates. Accordingly, the Board
      decided to sell our two drug candidates and to develop a new business in the
      rapidly expanding business of renewable alternative energy sources. As a result,
      our future business plan, and our current principal business activities include
      the planting, cultivation, harvesting and processing of inedible plant feedstock
      to generate seed oils and biomass for use in the biofuels industry, including
      the production of bio-diesel.


19




**Organizational
      History**




This
      company was incorporated under the laws of the State of Utah on November 20,
      1991. Effective as of August 6, 1992, this company merged with and into WPI
      Pharmaceutical, Inc., a Utah corporation. Pursuant to merger, the name of this
      company was changed to Medical Discoveries, Inc. WPI was incorporated under
      the
      laws of the State of Utah on February 22, 1984 under the name Westport
      Pharmaceutical, Inc. On January 29, 2008, our shareholders approved the change
      of our corporate name, and on that date we amended our name to “Global Clean
      Energy Holdings, Inc.” to reflect our new focus on the bio-diesel alternative
      energy market.




On
      March
      22, 2005, we formed MDI Oncology, Inc., a Delaware corporation, as a wholly
      owned subsidiary to acquire certain breast cancer intellectual property assets
      from the liquidation estate of Savetherapeutics, A.G.




**Transition
      to new Business**




Until
      2007, we were a developmental-stage bio-pharmaceutical company engaged in the
      research, validation, and development of two drugs we referred to as MDI-P
      and
      SaveCream. Both of these drugs were under development, and had not been approved
      by the U.S. Food and Drug Administration (FDA). The total cost to develop these
      two drugs, and to receive the approval from the FDA, would have cost many
      millions of dollars and taken many more years.




Early
      in
      2007, our Board of Directors determined that we could no longer fund the
      development of our two drug candidates and that we could not obtain additional
      funding for these drug candidates. Our Board also evaluated the value of the
      SaveCream drug candidate that was being co-developed with Eucodis
      Pharmaceuticals Forschungs – und Entwicklungs GmbH, an Austrian company now
      known as Eucodis Pharmaceuticals GmbH (“Eucodis”), and the return we could
      expect for our shareholders, and determined that the highest value for this
      drug
      candidate could be realized through a sale of that drug candidate to Eucodis.
      Accordingly, our Board sought to maximize the return from these assets through
      their sale.




On
      July
      6, 2007, we entered into an agreement with Eucodis to sell SaveCream, and on
      January 29, 2008, our shareholders approved the sale of the SaveCream asset
      to
      Eucodis. However, Eucodis was unable to complete the purchase of the assets,
      and
      our agreement to sell the SaveCream assets to Eucodis has expired. We are
      currently still trying to sell our SaveCream technologies and other medical
      technologies. We have engaged the services of an investment-banking firm to
      assist us in this sales effort.




Having
      decided to dispose of the foregoing assets, our Board decided to develop a
      business in the alternative energy market as a producer of biofuels.
      Accordingly, our new goal is to produce and sell seed oils, including seeds
      oils
      harvested from the planting and cultivation of *Jatropha
      curcas* plant,
      for the purpose of providing feedstock oil used for the generation of methyl
      ester, otherwise known as bio-diesel (the “Jatropha Business”). In connection
      with commencing our new Jatropha Business, effective September 7, 2007, we
      (i)
      hired Richard Palmer, an energy consultant, and a member of Global Clean Energy
      Holdings LLC (“Global LLC”) to act as the our 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
      us with consulting services related to the development of the Jatropha Business,
      and (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 LLC.


20




Effective
      April 23, 2008, we entered into a limited liability company agreement (“LLC
      Agreement”) for GCE Mexico I, LLC, a Delaware limited liability company (“GCE
      Mexico”), with six other unaffiliated persons (collectively, “Unaffiliated
      Members”). GCE Mexico was organized primarily to acquire 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, we own 50% of the issued and outstanding common membership units
      of GCE Mexico. The remaining 50% in common membership units were issued to
      the
      Unaffiliated Members. In addition, an aggregate of 1,000 preferred membership
      units were issued to two Unaffiliated Members (“Preferred Members”) who have
      agreed to invest approximately $4.2 million 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 Unaffiliated Members who have agreed to make capital contributions to GCE
      Mexico of up to $2,232,624, in installments and as required, to fund the
      development and operations of the Jatropha Farm. We are not required to make
      capital contributions to GCE Mexico.




Shortly
      after entering into the LLC Agreement, the preferred members made an initial
      capital contribution of $957,191 toward the development of the Jatropha Farm.
      These Unaffiliated Members are entitled to earn a preferential 12% per annum
      cumulative compounded return on the balance of their preferred membership
      interest. These Unaffiliated Members also directly funded the purchase of
      approximately 5,000 acres of land in the State of Yucatan in Mexico by the
      payment of $2,051,282.




**Recent
      Developments.**




On
      October 29, 2008, the Company acquired all of the outstanding securities of
      Technology Alternatives Limited, a company formed under the Laws of Belize
      (“TAL”). Accordingly, TAL is now a wholly-owned subsidiary of our company. TAL
      owns and operates a 400 acre farm in subtropical Belize, Central America, that
      currently is producing Jatropha and has also been performing plant science
      research and has been providing technical advisory services for propagation
      of
      Jatropha. In consideration for the shares of TAL, we issued to the four sellers
      an aggregate of 12,702,757 unregistered shares of our common stock. The sellers
      had previously made loans to TAL to fund the operations of TAL. As of the
      closing of the acquisition, the remaining outstanding balance of these loans,
      in
      the aggregate, was U.S. $453,611. These loans obligate TAL to make a principal
      payment of $68,000 during the first 90 days following the closing and to repay
      the entire remaining unpaid balance of the Notes by the 180th day following
      the
      closing date. We have agreed to prepay these loans if and when we receive
      funding in an amount that, in our reasonable discretion, is sufficient to permit
      the prepayment of the loans without adversely affecting our operations or
      financial condition. The loans are secured by the deed of legal mortgage on
      the
      400 acre farm owned by TAL. Accordingly, in the event that TAL and/or this
      company default under the loans, the sellers will have the right to foreclose
      on
      the 400 acre Jatropha farm.





**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. We
      are a
      development stage company as defined by the Financial Accounting Standards
      Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 7,
“Accounting and Reporting by Development Stage Enterprises.” Accordingly, all
      losses accumulated since inception have been considered as part of our
      development stage activities. Certain other critical accounting policies,
      including the assumptions and judgments underlying them, are disclosed in the
      Note A to the Consolidated Financial Statements included in our annual report
      on
      Form 10-KSB filed for the fiscal year ended December 31, 2007. 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.


21


**Results
      of Operations**




We
      have
      not sold, and are still marketing for sale our prior bio-pharmaceutical
      operations. Pursuant to accounting rules for discontinued operations, we have
      classified all revenue and expense in the accompanying financial statements
      related to the operations of our bio-pharmaceutical business as “discontinued
      operations.” Since all of our operations prior to March 2007 related to the
      bio-pharmaceutical business, all of our revenue and expense, with the exception
      of estimated general corporate overhead, has been reclassified into “Income/Loss
      from Discontinued Operations” in the accompanying Condensed Consolidated
      Statements of Operations for all periods presented.





*Revenues
      and Gross Profit* .
      We are
      a development stage company, and have not had significant revenues from our
      operations or reached the level of our planned operations. We discontinued
      our
      prior bio-pharmaceutical operations during March 2007. In September 2007, we
      commenced operations in our new Jatropha business, but we are still are in
      the
      pre-development agricultural stage of our operations and, therefore, do not
      anticipate generating significant revenues from the sale of bio-fuel products
      until 2009. We are, however, attempting to generate cash in 2008 from the
      forward sale of carbon credits and possibly from future oil delivery contracts.
      In addition, in October 2008, we acquired a 400 acre Jatropha plantation and
      operation in Belize, which facility is expected to generate a small amount
      of
      revenues on a monthly basis in the future. As a development stage company,
      we
      have no recognized revenue in the three months or nine months ended September
      30, 2008.




*Operating
      Expenses* .
      Our
      general and administrative expenses related to continuing operations for the
      three months and the nine months ended September 30, 2008 were $345,499 and
      $1,360,410, respectively, compared to $564,268 and $919,273 for the three months
      and the nine months ended September 30, 2007. General and administrative
      expenses includes share-based compensation of $60,349 and $307,139 for the
      three
      months and the nine months ended September 30, 2008, respectively. For the
      three
      months and the nine months ended September 30, 2008, general and administrative
      expenses principally include expenses such as compensation paid to officers
      and
      employees, share-based compensation, insurance, director fees, accounting costs,
      legal costs, consulting expenses, payments for third-party services, and travel
      expenses incurred in connection with our Jatropha operations. For the three
      months and the nine months ended September 30, 2007, general and administrative
      expenses included general corporate overhead of $326,584 and $506,389,
      respectively, plus share-based compensation of $237,684 and $412,884,
      respectively. In 2007, general corporate overhead principally consisted of
      expenses such as director fees, accounting costs, certain legal costs, certain
      consulting expenses, and an allocation of our employees’ compensation as general
      corporate overhead. During 2007, other general and administrative expenses
      more
      directly related to the operation and disposal of our bio-pharmaceutical
      business were included in Income/Loss from Discontinued Operations.





During
      the three months and nine months ended September 30, 2008, we did not record
      any
      research and development cost in association with our new Jatropha business.
      Plantation development costs are being accumulated in the balance sheet during
      the development period and will be accounted for in accordance with Statement
      of
      Position 85-3, Accounting by Agricultural Producers and Agricultural
      Cooperatives. Plantation development costs are not currently being depreciated.
      Upon completion of the plantation development, those costs will be depreciated
      over the useful life of the related asset. For the three and nine months ended
      September 30, 2007, we have recorded research and development costs of $986,584
      related to the value of common stock issued in exchange for certain trade
      secrets, know-how, business plans, term sheets, business relationships, and
      other information in connection with the share exchange with Global Clean Energy
      Holdings, LLC.





*Other
      Income/Expense* .
      During
      the three months and the nine months ended September 30, 2007, we recorded
      $1,735,102 and $1,520,482, respectively, as unrealized loss on financial
      instrument. This non-cash loss is the result of the periodic revaluation of
      certain warrants classified as a liability in the financial statements because
      we were unable to guarantee that there would be enough shares of authorized
      common stock to settle “freestanding instruments.” Accordingly, all of the
      warrants attached to the convertible preferred stock resulting from the issuance
      of the Series A Convertible Preferred Stock entered into in October 2004 and
      March 2005, as well as other warrants and options outstanding on March 11,
      2005
      or issued during the remainder of 2005 and through 2007 (except for stock
      options issued to employees) were measured at their fair value and recorded
      as
      additional liability in the financial statements characterized as a “Financial
      Instrument.” For the period from December 31, 2007 through January 29, 2008, the
      fair value of this liability decreased by $5,469. On January 29, 2008, the
      shareholders of the Company approved an increase in the number of authorized
      shares of common stock from 250 million to 500 million. Consequently, we are
      now
      able to settle all ‘freestanding instruments” and reclassified the liability,
      characterized in the accompanying financial statements as “Financial
      Instrument”, in the amount of $2,161,045, as permanent equity in January 2008.





Interest
      income has not been significant in any of the periods covered by this report.
      Interest expense for the three months and nine months ended September 30, 2008
      was $78,921 and $155,244, respectively, compared to $11,501 and $27,252 for
      the
      three months and the nine months ended September 30, 2007, respectively. The
      increase during 2008 is primarily attributable to the new mortgage in the amount
      of $2,051,282 for the land purchase in Mexico in April 2008, and secondarily
      attributable to the borrowings under the secured promissory note commencing
      in
      September of 2007.





We
      have
      issued warrants in conjunction with the original issuance of our secured
      promissory note in September 2007 and with its extension in April 2008. As
      a
      result of the issuances of these warrants, we recorded discounts of $250,000
      and
      $36,369 in September 2007 and April 2008, respectively, against the notes.
      These
      discounts have been amortized over the terms of the corresponding notes, with
      the corresponding amortization of the discount being recorded as “interest
      expense from amortization of discount on secured promissory note”. For the three
      months and nine months ended September 30, 2008, the amortization of this
      discount has been $19,766 and $36,369, respectively. For the three months and
      nine months ended September 30, 2007, the amortization of this discount has
      been
      $58,673.


22


During
      August 2007, we sold our MDI-P asset for $310,000, realizing a gain of $258,809.
      In conjunction with this sale, a liability in the amount of $90,000 was
      extinguished due to the sale and recorded as “Gain on debt restructuring”. This
      liability was only payable if and when we received $1 million in cumulative
      license revenue from the MDI-P compound in any human indication. Due to the
      sale
      of MDI-P for less than $1 million, this liability was no longer owed and was
      written off.





*Minority
      Interest in Net Loss* .
      In
      April 2008, we acquired a 50% interest in GCE Mexico, I, LLC (GCE Mexico),
      a
      limited liability company that acquired and owns approximately 5,000 acres
      in
      Mexico. The Company is the manager of GCE Mexico. Under the limited liability
      company agreement, losses of GCE Mexico are allocated to the preferred
      membership interest. Accordingly, the losses of GCE Mexico in the amount of
      $105,126 and $189,279 for the three months and the nine months ended September
      30, 2008 have been presented as “Minority interest in net loss” in the
      accompanying Statement of Operations.





*Income
      (Loss) from Discontinued Operations* .
      Our
      Income or Loss from Discontinued Operations was income of $250,782 and $6,432
      for the three months and nine months ended September 30, 2008, respectively,
      compared to losses of $60,501 and $355,305 for the corresponding periods of
      2007. For the three months and the nine months ended September 30, 2008, the
      Income from Discontinued Operations substantially consists of the foreign
      currency transaction gain related to changes in the exchange rate on certain
      liabilities included in “Current Liabilities Associated with Assets held for
      Sale” that are denominated in euros. For the three months and the nine months
      ended September 30, 2007, the Loss from Discontinued Operations includes revenue
      of zero and $200,000, respectively, plus the gain on sale of the MDI-P asset
      in
      the amount of $258,809, reduced by expenses related to the operation and
      disposal of our bio-pharmaceutical business.


23


**Liquidity
      And Capital Resources**




As
      of
      September 30, 2008, we had $90,673 in cash and had a working capital deficit
      of
      $6,662,479. Since our inception, we have financed our operations primarily
      through private sales of equity and debt financing. In order to fund our
      short-term working capital needs, we will have to obtain additional funding.
      Although we have entered into agreements with two investors for the sale of
      $100,000 of our common stock by the end of November, 2008, we will have to
      obtain significantly more financing the near future to continue to operate
      and
      to carry out our business plan.




Our
      ability to fund our liquidity and working capital needs will be dependent upon
      certain potential transactions. As previously disclosed, the principal
      transaction that was expected to provide us with working capital was the sale
      of
      SaveCream, our remaining legacy pharmaceutical assets. In 2007 and again in
      2008, we entered into two agreements with Eucodis Pharmaceuticals GmbH
      (“Eucodis”) pursuant to which we agreed to sell our SaveCream asset to Eucodis
      for an aggregate of €4,007,534 (or approximately U.S. $6,331,503 based on the
      currency conversion rate in effect as of June 30, 2008). The closing of the
      sale
      to Eucodis was initially scheduled to occur in January 2008 and then again
      in
      April 2008. Unfortunately, Eucodis declared bankruptcy, the closing did not
      occur, and all discussions and agreements to sell the SaveCream assets to
      Eucodis were terminated. Accordingly, we have again commenced marketing that
      asset and, in connection therewith, have hired an investment banker. However,
      as
      of the date of this filing, we have not found a buyer for this medical asset,
      and no assurance can be given if or when we will be able to dispose of our
      remaining legacy asset. As previously disclosed, the sale of the SaveCream
      asset
      would have eliminated most of our outstanding liabilities and would have
      provided us with more than $2 million of working capital. As a result, the
      failure to sell our SaveCream asset has severely and negatively affected our
      liquidity.





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 and payable in May 2008. Interest under the loan agreement
      was payable on the loan at a rate of 12% per annum. 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. 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. Extensions to the maturity of this
      note were granted to the Company in August, October and November of 2008. This
      note is now scheduled to mature on January 13, 2009. The Company has agreed
      to
      increase the principal amount of the note by $10,000 as consideration for the
      granting of the extension of the maturity date. This loan is secured by a first
      priority lien on all of our assets. Accordingly, in the event that Mercator
      does
      not agree to extend the maturity date of this loan past the new maturity date,
      Mercator will have the right to foreclose on all of our assets, which would
      have
      a material adverse affect on our ability to continue our business plan and
      which
      may result in the closure of our operations.




To
      date,
      we have funded our operations from loans obtained from Mercator, from the
      proceeds of the sale of the $1,300,000 of Series B Convertible Preferred Stock
      in November 2007, and from management fees we have received from CGE Mexico
      I,
      LLC. However, we do not have sufficient cash to continue our current operations
      and will need to raise funds in the immediate future in order to continue to
      operate.





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 additional 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 (previous called GCE LLC),
      as
      previously discussed, is the first of a series of such planned transactions.
      The
      acquisition of a 400 acre Jatropha farm in Belize in October of 2008 was the
      second step in the planned expansion of the Company’s Jatropha plantations.
      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 either/or
      temporarily or permanently cease operations.





On
      April
      29, 2008, we formed a joint venture, GCE Mexico I, LLC, that was funded with
      a
      $2,051,282 million loan to acquire approximately 5,000 acres of Jatropha farm
      land in Mexico. Operating and development funds of $957,271 (net of transaction
      costs) were also received by GCE Mexico I, LLC and were used to development
      the
      Jatropha Farm. Additional funds have and will be made available to GCE Mexico
      I,
      LLC through capital contributions from the Company’s joint venture
      partners.





On
      Oct.
      29, 2008 the Company acquired all of the issued and outstanding stock of
      Technology Alternatives Limited, a company formed under the Laws of
      Belize (“TAL”)
      that owns and operates an
      established and producing Jatropha farm in Belize. This farm is geographically
      close to our current GCE Mexico I, LLC operations in the Yucatan peninsula
      of
      Mexico. At the closing, the Company executed a Stock Purchase Agreement with
      the
      four shareholders of TAL. The sellers are unaffiliated persons residing in
      the
      United Kingdom. Pursuant to the Stock Purchase Agreement, the Company purchased
      from the sellers 100% of the issued and outstanding shares of TAL, thereby
      making TAL a wholly-owned subsidiary of the Company. In consideration for the
      shares of TAL, the Company issued to the four Sellers an aggregate of 12,702,757
      unregistered shares of the Company’s common stock.


24


The
      sellers of TAL had previously made loans to TAL to fund the operations. As
      of
      the closing of the transaction, the remaining outstanding balance of these
      loans, in the aggregate, was U.S. $453,611. At the closing, the promissory
      notes
      evidencing these loans were replaced by new promissory notes (the “Notes”)
      issued by TAL. The Notes have the following terms: (i) Interest free for 90
      days; (ii) Interest accrues at an annual rate of 8% per annum commencing on
      the
      91st day after the issuance of the Notes; (iii) Interest is payable monthly
      in
      arrears; (iv) A minimum principal payment of $68,000 is payable during the
      first
      90 days of the Notes; (v) The entire remaining unpaid balance of the promissory
      notes is due and payable on the 180th day following the closing date; (vi)
      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. The Notes are secured by the deed of legal
      mortgage on the 400 acre farm owned by TAL. Accordingly, in the event that
      TAL
      and/or the Company defaults under the Notes, the Sellers will have the right
      to
      foreclose on the 400 acre Jatropha farm.




We
      have
      no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation
      S-K.


25


**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK** .




Not
      applicable.





**ITEM
      4T. CONTROLS AND PROCEDURES.**




**Evaluation
      Of Disclosure Controls** .




Our
      management evaluated the effectiveness of our "disclosure controls and
      procedures" (as defined in the Securities Exchange Act of 1934 (Exchange Act)
      Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this
      quarterly report, as required by paragraph (b) of Exchange Act Rules 13a-15
      or
      15d-15.




Based
      on
      that evaluation, we have concluded that as of the end of the period covered
      by
      this quarterly report, our disclosure controls and procedures are effective
      at a
      reasonable assurance level in ensuring that information required to be disclosed
      by us in our reports is recorded, processed, summarized and reported within
      the
      required time periods. The foregoing conclusion is based, in part, on the fact
      that we are a small public company in the development stage of our new Jatropha
      Business, with no current revenues and only two employees, as of September
      30,
      2008. In addition, to date, we have outsourced all of our accounting and
      bookkeeping functions to a third-party accounting firm.




**Management's
      Report On Internal Control Over Financial Reporting** . ****




Our
      management is responsible for establishing and maintaining adequate internal
      control over our financial reporting. Internal control over financial reporting
      is a process to provide reasonable assurance regarding the reliability of our
      financial reporting for external purposes in accordance with generally accepted
      accounting principles. Internal control over financial reporting includes
      policies and procedures that: (i) pertain to maintaining records that, in
      reasonable detail, accurately and fairly reflect our transactions; (ii) provide
      reasonable assurance that transactions are recorded as necessary for preparation
      of our financial statements and that receipts and expenditures of company assets
      are made in accordance with management authorization; and (iii) provide
      reasonable assurance that unauthorized acquisition, use or disposition of
      company assets that could have a material effect on our financial statements
      would be prevented or detected on a timely basis. Because of its inherent
      limitations, internal control over financial reporting is not intended to
      provide absolute assurance that a misstatement of our financial statements
      would
      be prevented or detected.




As
      of the
      end of the period covered by this quarterly report, we have concluded that
      our
      internal controls over financial reporting are effective at a reasonable
      assurance level in ensuring that information required to be disclosed by us
      in
      our reports is recorded, processed, summarized and reported within the required
      time periods. The evaluation of our internal controls over financial reporting
      was based on the framework in Internal Control — Integrated Framework issued by
      the Committee of Sponsoring Organizations of the Treadway
      Commission.




*Limitations
      on the Effectiveness of Internal Controls* .
      Our
      management does not expect that our internal control over financial reporting
      will necessarily prevent all fraud and material error. Our internal controls
      over financial reporting are designed to provide reasonable assurance of
      achieving our objectives. We have concluded that our internal controls over
      financial reporting are effective at that reasonable assurance level. Further,
      the design of a control system must reflect the fact that there are resource
      constraints, and the benefits of controls must be considered relative to their
      costs. Because of the inherent limitations in all control systems, no evaluation
      of controls can provide absolute assurance that all control issues and instances
      of fraud, if any, within our company have been detected. These inherent
      limitations include the realities that judgments in decision-making can be
      faulty, and that breakdowns can occur because of simple error or mistake.
      Additionally, controls can be circumvented by the individual acts of some
      persons, by collusion of two or more people, or by management override of the
      internal control. The design of any system of controls also is based in part
      upon certain assumptions about the likelihood of future events, and there can
      be
      no assurance that any design will succeed in achieving its stated goals under
      all potential future conditions. Over time, control may become inadequate
      because of changes in conditions, or the degree of compliance with the policies
      or procedures may deteriorate.





*Changes
      in Internal Controls* .
      There
      was no change in the Company’s internal control over financial reporting during
      the three months ended September 30, 2008 that has materially affected, or
      is
      reasonably likely to materially affect, its internal control over financial
      reporting.


26


**PART
      II**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS** .




There
      have been no material developments with respect to any of the legal proceedings
      described in our previously filed Annual Report on Form 10-KSB.





**ITEM
      1A. RISK FACTORS.**





Information
      regarding risk factors appears under “Risk Factors” included in Item 1, and
“Item 6, Management’s Discussion and Analysis of Financial Condition and Results
      of Operations” of our Annual Report on Form 10-KSB for the year ended December
      31, 2007 as filed with the Securities and Exchange Commission. Except as set
      forth below, there have been no material changes from the risk factors
      previously disclosed in that Annual Report on Form 10-KSB.





***We
      will need to obtain additional funding in the near future or we may have to
      cease our operations.***





As
      of the
      date of the filing of this report, we only have sufficient cash available to
      fund our current operations until approximately the end of 2008. We are
      currently seeking additional funding from various sources and are considering
      certain strategic transactions and sales agreements that may provide us with
      the
      funds necessary to continue to operate and develop our Jatropha farms. However,
      we do not have any agreements in place for either additional funding or for
      any
      strategic transactions, and no assurance can be given that we will be able
      to
      obtain additional financing or enter into a strategic transaction. If we do
      not
      raise additional funds in the immediate future or otherwise protect our business
      and assets in a strategic transaction, we will have to consider filing for
      bankruptcy or otherwise liquidating our company. In either case, our
      shareholders will lose their investment in our securities.





***We
      may lose our newly acquired 400 acre Jatropha farm in Belize if we are unable
      to
      repay an outstanding U.S. $453,611 loan that is secured by a mortgage on the
      farm.***





On
      October 29, 2008, we acquired all of the outstanding capital stock of Technology
      Alternatives Limited, a company that owns
      and
      operates a 400 acre Jatropha farm in Belize. The Belizean Jatropha farm is
      encumbered by a mortgage that secures four loans, having an aggregate balance
      of
      U.S. $453,611. Unless a principal payment of $68,000 is made under these loans by the end of January
      2009, and unless the entire remaining unpaid balance of the loans is fully
      repaid, with interest, by the end of April 2009, we could lose the 400 acre
      farm
      in foreclosure. We currently do not have sufficient funds to repay these loans.
      Accordingly, unless we obtain additional funds from the sale of our securities,
      from the sale of some of our products, and/or from strategic transactions,
      we
      will lose our new Belizean farm, which loss will have a material negative affect
      on our plans to develop our Central American Jatropha operations. No assurance
      can be given that we will be able to raise the funds needed to repay the
      $453,611 loans on time.





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




None




**ITEM
      3.****DEFAULTS
      UPON SENIOR SECURITIES**.




None.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS** .




None.





**ITEM
      5.**  **OTHER
      INFORMATION**




None.




**ITEM
      6.**  **EXHIBITS**




10.1
            
            Stock
                Purchase Agreement, dated October 30, 2008, between the Global Clean
                Energy Holdings, Inc. and the four shareholders of Technology Alternatives
                Limited, a Belizean Company formed under the Laws of
                Belize*31.1
            
            Rule
                13a-14(a) Certification, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002 *31.2
            
            Rule
                13a-14(a) Certification, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002 *32.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002*32.2
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002*


27


**SIGNATURES**




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




GLOBAL
                CLEAN ENERGY HOLDINGS, INC.Date:
                November 13, 2008
            By:
            /s/Bruce
                K. NelsonBruce
                K. Nelson
              Chief
                Financial Officer


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