UNITED
STATES SECURITIES AND EXCHANGE


COMMISSION


Washington,
D.C. 20549





FORM
10-Q




(Mark
One)




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


For the
quarterly period ended June 30, 2010




OR




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




Commission
      file number
                0-12627





Global
      Clean Energy Holdings, Inc.(Exact
      name of registrant as specified in its
charter)




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





100
      W. Broadway, Suite 650Long
      Beach, California 90802(Address
      of principal executive
offices)





(310)
      641-4234(Registrant’s
      telephone number)(Former
      Name or Former Address, if Changed Since Last
  Report





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


Yes x     No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).


Yes  ̈    No
 ̈





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


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





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: As of August 1, 2010, the issuer
had 270,464,478 shares of common stock issued and outstanding.





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


Yes  ̈     No
x








GLOBAL CLEAN ENERGY
HOLDINGS, INC.




For
the quarter ended June 30, 2010




FORM
10-Q





TABLE
OF CONTENTS




PART
      I
                                        
                                        
                                        1ITEM
      1.  FINANCIAL STATEMENTS.
                                        
                                        
                                        1ITEM
      2. MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS.
                                        
                                        
                                        19ITEM
      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.
                                        
                                        
                                        26ITEM
      4.  CONTROLS AND PROCEDURES.
                                        
                                        
                                        26PART
      II
                                        
                                        
                                        26ITEM
      1.  LEGAL PROCEEDINGS.
                                        
                                        
                                        26ITEM
      1A. RISK FACTORS.
                                        
                                        
                                        27ITEM
      2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.
                                        
                                        
                                        27ITEM
      3.  DEFAULTS UPON SENIOR SECURITIES.
                                        
                                        
                                        27ITEM
      4.  RESERVED.
                                        
                                        
                                        27ITEM
      5.  OTHER INFORMATION
                                        
                                        
                                        27ITEM
      6.  EXHIBITS
                                        
                                        
                                        27


i





PART
I




ITEM
1.  FINANCIAL STATEMENTS.




GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 
 June 30,
                              
                              
                              December 31,2010
                              
                              
                              2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                              
                              $
                              1,093,935
                              
                              
                              $
                              833,584Accounts
      receivable
                              
                              
                              53,269
                              
                              
                              
                              146,730Inventory
                              
                              
                              97,964
                              
                              
                              
                              -Other
      current assets
                              
                              
                              125,757
                              
                              
                              
                              131,741Total
      Current Assets
                              
                              
                              1,370,925
                              
                              
                              
                              1,112,055PROPERTY
      AND EQUIPMENT
                              
                              
                              7,626,919
                              
                              
                              
                              6,441,489DEFERRED
      GROWING COST
                              
                              
                              553,928
                              
                              
                              
                              -OTHER
      NONCURRENT ASSETS
                              
                              
                              6,190
                              
                              
                              
                              2,691TOTAL
      ASSETS
                              
                              $
                              9,557,962
                              
                              
                              $
                              7,556,235LIABILITIES
      AND EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                              
                              $
                              1,711,047
                              
                              
                              $
                              2,117,573Accrued
      payroll and payroll taxes
                              
                              
                              1,763,624
                              
                              
                              
                              1,491,385Accrued
      interest payable
                              
                              
                              909,405
                              
                              
                              
                              853,811Accrued
      return on noncontrolling interest
                              
                              
                              978,776
                              
                              
                              
                              610,870Promissory
      notes
                              
                              
                              32,363
                              
                              
                              
                              509,232Notes
      payable to shareholders
                              
                              
                              292,844
                              
                              
                              
                              321,502Convertible
      notes payable
                              
                              
                              193,200
                              
                              
                              
                              193,200Total
      Current Liabilities
                              
                              
                              5,881,259
                              
                              
                              
                              6,097,573LONG-TERM
      LIABILITIESConvertible
      notes payable
                              
                              
                              567,000
                              
                              
                              
                              -Mortgage
      notes payable
                              
                              
                              2,793,934
                              
                              
                              
                              2,051,282Total
      Long Term Liabilities
                              
                              
                              3,360,934
                              
                              
                              
                              2,051,282EQUITY
      (DEFICIT)Global
      Clean Energy Holdings, Inc. equity (deficit)Preferred
      stock - $0.001 par value; 50,000,000 shares authorizedSeries
      B, convertible; 13,000 shares issued (aggregate
liquidationpreference
      of $1,300,000)
                              
                              
                              13
                              
                              
                              
                              13Common
      stock, $0.001 par value; 500,000,000 shares authorized;270,464,478
      and 236,919,079 shares issued and outstanding,
respectively
                              
                              
                              270,464
                              
                              
                              
                              236,919Additional
      paid-in capital
                              
                              
                              23,525,695
                              
                              
                              
                              22,998,907Accumulated
      deficit
                              
                              
                              (26,607,643
                              )
                              
                              
                              (26,308,143
                              )Accumulated
      other comprehensive loss
                              
                              
                              (7,663
                              )
                              
                              
                              (6,108
                              )Total
      Global Clean Energy Holdings, Inc. Stockholders' Deficit
                              
                              
                              (2,819,134
                              )
                              
                              
                              (3,078,412
                              )Noncontrolling
      interests
                              
                              
                              3,134,903
                              
                              
                              
                              2,485,792Total
      equity (deficit)
                              
                              
                              315,769
                              
                              
                              
                              (592,620
                              )TOTAL
      LIABILITIES AND EQUITY (DEFICIT)
                              
                              $
                              9,557,962
                              
                              
                              $
                              7,556,235
 
 The
accompanying notes are an integral part of these condensed unaudited
consolidated financial statements
  1
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 
 For the Three Months Ended
                            
                            
                            For the Six Months EndedJune 30,
                            
                            
                            June 30,2010
                            
                            
                            2009
                            
                            
                            2010
                            
                            
                            2009Revenue
                            
                            $
                            71,864
                            
                            
                            $
                            29,236
                            
                            
                            $
                            204,717
                            
                            
                            $
                            69,236Operating
      ExpensesGeneral
      and administrative
                            
                            
                            490,333
                            
                            
                            
                            599,345
                            
                            
                            
                            1,251,992
                            
                            
                            
                            940,438Plantation
      operating costs
                            
                            
                            174,430
                            
                            
                            
                            -
                            
                            
                            
                            449,438
                            
                            
                            
                            -Total
      Operating Expenses
                            
                            
                            664,763
                            
                            
                            
                            599,345
                            
                            
                            
                            1,701,430
                            
                            
                            
                            940,438Loss
      from Operations
                            
                            
                            (592,899
                            )
                            
                            
                            (570,109
                            )
                            
                            
                            (1,496,713
                            )
                            
                            
                            (871,202
                            )Other
      Income (Expenses)Interest
      income
                            
                            
                            22
                            
                            
                            
                            1
                            
                            
                            
                            27
                            
                            
                            
                            2Interest
      expense
                            
                            
                            (105,235
                            )
                            
                            
                            (82,016
                            )
                            
                            
                            (197,665
                            )
                            
                            
                            (163,525
                            )Gain
      on settlement of liabilities
                            
                            
                            405,530
                            
                            
                            
                            -
                            
                            
                            
                            600,802
                            
                            
                            
                            -Foreign
      currency transaction adjustments
                            
                            
                            38
                            
                            
                            
                            2,007
                            
                            
                            
                            (7,517
                            )
                            
                            
                            2,007Total
      Other Income (Expenses)
                            
                            
                            300,355
                            
                            
                            
                            (80,008
                            )
                            
                            
                            395,647
                            
                            
                            
                            (161,516
                            )Loss
      from Continuing Operations
                            
                            
                            (292,544
                            )
                            
                            
                            (650,117
                            )
                            
                            
                            (1,101,066
                            )
                            
                            
                            (1,032,718
                            )Income
      (Loss) from Discontinued Operations
                            
                            
                            36,026
                            
                            
                            
                            (182,063
                            )
                            
                            
                            60,873
                            
                            
                            
                            (21,315
                            )Net
      Loss
                            
                            
                            (256,518
                            )
                            
                            
                            (832,180
                            )
                            
                            
                            (1,040,193
                            )
                            
                            
                            (1,054,033
                            )Net
      Loss attributable to the noncontrolling interest
                            
                            
                            (339,396
                            )
                            
                            
                            (180,768
                            )
                            
                            
                            (740,693
                            )
                            
                            
                            (338,533
                            )Net
      Income (Loss) attributable to Global Clean EnergyHoldings,
      Inc.
                            
                            $
                            82,878
                            
                            
                            $
                            (651,412
                            )
                            
                            
                            (299,500
                            )
                            
                            $
                            (715,500
                            )Amounts
      attributable to Global Clean EnergyHoldings,
      Inc. common shareholders:Income
      (Loss) from Continuing Operations
                            
                            $
                            46,852
                            
                            
                            $
                            (469,349
                            )
                            
                            $
                            (360,373
                            )
                            
                            $
                            (694,185
                            )Income
      (Loss) from Discontinued Operations
                            
                            
                            36,026
                            
                            
                            
                            (182,063
                            )
                            
                            
                            60,873
                            
                            
                            
                            (21,315
                            )Net
      Income (Loss)
                            
                            $
                            82,878
                            
                            
                            $
                            (651,412
                            )
                            
                            $
                            (299,500
                            )
                            
                            $
                            (715,500
                            )Basic
      and Diluted Loss per Common Share:Income
      (Loss) from Continuing Operations
                            
                            $
                            0.0002
                            
                            
                            $
                            (0.0021
                            )
                            
                            $
                            (0.0014
                            )
                            
                            $
                            (0.0031
                            )Income
      (Loss) from Discontinued Operations
                            
                            
                            0.0001
                            
                            
                            
                            (0.0008
                            )
                            
                            
                            0.0002
                            
                            
                            
                            (0.0001
                            )Net
      Income (Loss)
                            
                            $
                            0.0003
                            
                            
                            $
                            (0.0029
                            )
                            
                            $
                            (0.0012
                            )
                            
                            $
                            (0.0032
                            )Basic
      and Diluted Weighted-Average Common Shares Outstanding
                            
                            
                            268,022,935
                            
                            
                            
                            226,654,728
                            
                            
                            
                            252,833,173
                            
                            
                            
                            225,739,359
 
 The
accompanying notes are an integral part of these condensed unaudited
consolidated financial statements
  2
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 For the Six Months EndedJune 30,2010
                    
                    
                    2009Cash
      Flows From Operating ActivitiesNet
      loss
                    
                    $
                    (1,040,193
                    )
                    
                    $
                    (1,054,033
                    )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesForeign
      currency transaction loss (gain)
                    
                    
                    68,390
                    
                    
                    
                    (12,399
                    )Gain
      on settlement of liabilities
                    
                    
                    (600,802
                    )
                    
                    
                    -Share-based
      compensation
                    
                    
                    60,333
                    
                    
                    
                    386,215Depreciation
                    
                    
                    112,116
                    
                    
                    
                    1,099Changes
      in operating assets and liabilitiesAccounts
      receivable
                    
                    
                    94,009
                    
                    
                    
                    -Inventories
                    
                    
                    (99,259
                    )
                    
                    
                    -Other
      current assets
                    
                    
                    10,891
                    
                    
                    
                    89,756Deferred
      growing costs
                    
                    
                    (561,246
                    )Accounts
      payable and accrued expenses
                    
                    
                    370,484
                    
                    
                    
                    496,707Net
      Cash Used in Operating Activities
                    
                    
                    (1,585,278
                    )
                    
                    
                    (92,655
                    )Cash
      Flows From Investing ActivitiesPurchase
      of land
                    
                    
                    (715,658
                    )
                    
                    
                    -Plantation
      development costs
                    
                    
                    (334,274
                    )
                    
                    
                    (754,714
                    )Purchase
      of property and equipment
                    
                    
                    (131,603
                    )
                    
                    
                    (136,839
                    )Net
      Cash Used in Investing Activities
                    
                    
                    (1,181,535
                    )
                    
                    
                    (891,553
                    )Cash
      Flows From Financing ActivitiesProceeds
      from issuance of common stock for cash
                    
                    
                    500,000
                    
                    
                    
                    50,000Proceeds
      from issuance of preferred membership in GCE Mexico I, LLC
                    
                    
                    1,700,382
                    
                    
                    
                    1,558,686Proceeds
      from notes payable
                    
                    
                    742,652
                    
                    
                    
                    15,000Payments
      on notes payable
                    
                    
                    (478,043
                    )
                    
                    
                    -Proceeds
      from convertible notes payable
                    
                    
                    567,000
                    
                    
                    
                    -Net
      Cash Provided by Financing Activities
                    
                    
                    3,031,991
                    
                    
                    
                    1,623,686Effect
      of exchange rate changes on cash
                    
                    
                    (4,827
                    )
                    
                    
                    -Net
      Increase in Cash and Cash Equivalents
                    
                    
                    260,351
                    
                    
                    
                    639,478Cash
      and Cash Equivalents at Beginning of Period
                    
                    
                    833,584
                    
                    
                    
                    291,309Cash
      and Cash Equivalents at End of Period
                    
                    $
                    1,093,935
                    
                    
                    $
                    930,787Supplemental
      Disclosures of Cash Flow Information:Cash
      paid for interest
                    
                    $
                    92,254
                    
                    
                    $
                    -Noncash
      Investing and Financing Activities:Cashless
      exercise of warrants
                    
                    
                    8,545
                    
                    
                    
                    -Accrual
      of return on noncontrolling interest
                    
                    
                    367,906
                    
                    
                    
                    201,690Plantation
      costs financed by accounts payable
                    
                    
                    32,497
                    
                    
                    
                    190,113Equipment
      depreciation capitalized to plantation development costs
                    
                    
                    -
                    
                    
                    
                    24,755Release
      of common Stock held in escrow
                    
                    
                    
                    
                    
                    
                    17,618
 
 The
accompanying notes are an integral part of these condensed unaudited
consolidated financial statements
  3
 
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
1 – History and Basis of Presentation
 
 History
 
 Medical
Discoveries, Inc. was incorporated under the laws of the State of Utah on
November 20, 1991. Effective as of August 6, 1992, the Company merged
with and into WPI Pharmaceutical, Inc., a Utah corporation (“WPI”), pursuant to
which WPI was the surviving corporation. Pursuant to the MDI-WPI merger, the
name of the surviving corporation was changed to Medical Discoveries, Inc.
(“MDI”).  MDI’s initial purpose was the research and development of an
anti-infection drug.  In 2005, MDI acquired the assets and business
associated with the SaveCream technology and carried on the research and
development of this drug candidate.  As discussed in Note 10, MDI made
the decision in 2007 to discontinue further development of its drug candidates
and sell the technologies.
 
 On
September 7, 2007, MDI entered into a share exchange agreement pursuant to which
it acquired all of the outstanding ownership interests in Global Clean Energy
Holdings, LLC, discussed further in Note 3. Global Clean Energy Holdings, LLC
was an entity that had certain trade secrets, know-how, business plans, term
sheets, business relationships, and other information relating to the start-up
of a business related to the cultivation and production of seed oil from the
seed of the Jatropha plant.  With this transaction, MDI commenced the
research and development of a business whose purpose will be providing feedstock
oil intended for the production of bio-diesel.
 
 On
January 29, 2008, a meeting of shareholders was held and, among other things,
the name Medical Discoveries, Inc. was changed to Global Clean Energy Holdings,
Inc. (the “Company”).
 
 Effective
April 23, 2008, the Company entered into a limited liability company agreement
to form GCE Mexico I, LLC (GCE Mexico) along with six unaffiliated
investors.  The Company owns 50% of the common membership interest of
GCE Mexico and five of the unaffiliated investors own the other 50% of the
common membership interest.  Additionally, a total of 1,000 preferred
membership units were issued to two of the unaffiliated
investors.  GCE Mexico owns a 99% interest in Asideros Globales
Corporativo (Asideros I) and a 99% interest in Asideros 2, entities organized
under the laws of Mexico, and the Company owns the remaining 1%
directly.  GCE Mexico was organized primarily to, among other things;
acquire land in Mexico through subsidiaries for the cultivation of the Jatropha
plant.
 
 On July
2, 2009, the Company acquired 100% of the equity interests of Technology
Alternatives, Limited (TAL), which has developed a farm in Belize for
cultivation of the Jatropha plant.  TAL has also developed a nursery
capable of producing Jatropha seedlings and rooted cuttings, and provides
technical advisory services for the propagation of the Jatropha
plant.
 
 On July
19, 2010, the Company completed a merger with a newly formed, wholly owned
subsidiary to reincorporate in the State of Delaware, which merger was approved
by the Company’s stockholders at an annual meeting of stockholders held on July
15, 2010.  As a result, the Company is now a corporation governed by
the laws of the State of Delaware.  In addition, the par value of the
company’s capital stock changed from no par to $0.001 per share.
 
 The Company formed
a wholly-owned subsidiary, Globales Energia Renewables (GER), under the
laws of Mexico.  The Company’s bio-fuels operations in Latin America
will be coordinated through this newly established subsidiary.
  4
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Global Clean Energy
Holdings, Inc., its subsidiaries, and the variable interest entities of GCE
Mexico, Asideros I, and Asideros 2. All significant intercompany transactions
have been eliminated in consolidation.
 
 Generally
accepted accounting principles require that if an entity is the primary
beneficiary of a variable interest entity (VIE), the entity should consolidate
the assets, liabilities and results of operations of the VIE in its consolidated
financial statements.  Global Clean Energy Holdings, Inc. considers
itself to be the primary beneficiary of GCE Mexico, Asideros I, and Asideros 2,
and accordingly, has consolidated these entities since their formation beginning
in April 2008, with the equity interests of the unaffiliated investors in GCE
Mexico presented as Noncontrolling Interests in the accompanying condensed
consolidated financial statements.
 
 Unaudited Interim Condensed
Consolidated Financial Statements
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations.  In the
opinion of management, all adjustments and disclosures necessary for a fair
presentation of these financial statements have been included and are of normal,
recurring nature.  These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company’s annual report on Form 10-K for the year ended December 31, 2009, as
filed with the Securities and Exchange Commission.  The results of
operations for the three months and six months ended June 30, 2010, may not be
indicative of the results that may be expected for the year ending December 31,
2010.
 
 Accounting for Agricultural
Operations
 
 All costs
incurred until the actual planting of the Jatropha Curcas plant are considered
development costs. Plantation development costs have been accumulated in the
balance sheet during the development period and are being accounted for in
accordance with accounting standards for agricultural producers and agricultural
cooperatives.  See further discussion on the accounting of plantation
development cost in Note 4.
 
 The
direct costs associated with each farm and the production of the Jatropha
revenue streams are deferred and accumulated as a noncurrent asset, deferred
growing costs. Once the trees have reached full maturity, estimated at four to
five years, the costs will be expensed based on the revenue streams generated
and recognized.  Other general costs without expected future benefits
are expensed when incurred.
  5
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 Income/Loss per Common
Share
 
 Income/Loss
per share amounts are computed by dividing income or loss applicable to the
common shareholders of the Company by the weighted-average number of common
shares outstanding during each period. Diluted income or loss per share amounts
are computed assuming the issuance of common stock for potentially dilutive
common stock equivalents.  All outstanding stock options, warrants,
convertible notes, convertible preferred stock, and common stock held in escrow
are currently antidilutive and have been excluded from the calculations of
diluted income or loss per share at June 30, 2010 and 2009, as
follows:
 June 30,2010
                      
                      
                      2009Convertible
      notes
                      
                      
                      19,028,671
                      
                      
                      
                      128,671Convertible
      preferred stock - Series B
                      
                      
                      11,818,181
                      
                      
                      
                      11,818,181Warrants
                      
                      
                      26,475,662
                      
                      
                      
                      29,742,552Compensation-based
      stock options and warrants
                      
                      
                      68,131,483
                      
                      
                      
                      59,859,083Common
      stock held in escrow
                      
                      
                      -
                      
                      
                      
                      3,915,016125,453,997
                      
                      
                      
                      105,463,503
 
 Fair Values of Financial
Instruments
 
 The
carrying amounts reported in the condensed consolidated balance sheets for
accounts receivable and accounts payable approximate fair value because of the
immediate or short-term maturity of these financial instruments.  The
carrying amounts reported for the various notes payable and the mortgage notes
payable approximate fair value because the underlying instruments are at
interest rates which approximate current market rates.
 
 Inventory
 
 The
inventory reported in the condensed consolidated balance sheets consists of
finished goods measured at the lower of cost or market.  The company
uses the FIFO (First in first out) valuation method for all
inventories.
 
 Foreign
Currency
 
 The
Company has current operations located in the United States, Mexico and
Belize.  During the quarter ended December 31, 2009, the Company
changed its functional currency for certain assets located in Mexico from the
U.S. dollar to the Mexican peso.  For these foreign operations, the
functional currency is the local country’s currency.  Consequently,
revenues and expenses of operations outside the United States of America are
translated into U.S. dollars using weighted average exchange rates, while assets
and liabilities of operations outside the United States of America are
translated into U.S. dollars using exchange rates at the balance sheet
date.  The effects of foreign currency translation adjustments are
included in equity (deficit) as a component of accumulated other comprehensive
loss in the accompanying condensed consolidated financial
statements.  Foreign currency transaction adjustments are included in
other income (expense) in the Company’s results of operations.
 
 Certain
foreign currency transactions related to the discontinued bio-pharmaceutical
business are primarily undertaken in Euros. Gains and losses arising on
translation or settlement of foreign currency denominated transactions or
balances are included in the determination of income or loss. Consequently,
certain foreign currency gains and losses have been included in income from
discontinued operations.
 
 The
Company has not entered into derivative instruments to offset the impact of
foreign currency fluctuations.
  6
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 Recently Issued Accounting
Standards
 
 In
October 2009, the FASB issued a new accounting standard which amends guidance on
accounting for revenue arrangements involving the delivery of more than one
element of goods and/or services. This standard addresses the unit of accounting
for arrangements involving multiple deliverables and removes the previous
separation criteria
that objective and reliable evidence of fair value of any undelivered item must
exist for the delivered item to be considered a separate unit of accounting.
This standard also addresses how the arrangement consideration should be
allocated to each deliverable. Finally, this standard expands disclosures
related to multiple element revenue arrangements. This standard is effective for
the Company beginning January 1, 2011. The adoption of this standard is not
expected to have a material impact on the Company’s condensed consolidated
financial statements.
 
 In
January 2010, the FASB issued new accounting guidance related to the disclosure
requirements for fair value measurements and provided clarification for existing
disclosures requirements. More specifically, this update will require an entity
to disclose separately (a) the amounts of significant transfers in and out of
Levels 1 and 2 fair value measurements and to describe the reasons for the
transfers; and (b) information about purchases, sales, issuances and
settlements to be presented separately (i.e. present the activity on a gross
basis rather than net) in the reconciliation for fair value measurements using
significant unobservable inputs (Level 3 inputs). This guidance clarifies
existing disclosure requirements for the level of disaggregation used for
classes of assets and liabilities measured at fair value and require disclosures
about the valuation techniques and inputs used to measure fair value for both
recurring and nonrecurring fair value measurements using Level 2 and
Level 3 inputs. The new disclosures and clarifications of existing
disclosures are effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosure requirements related to
the purchases, sales, issuances and settlements in the rollforward activity of
Level 3 fair value measurements. Those disclosure requirements are effective for
fiscal years beginning after December 15, 2010 and for interim periods
within those fiscal years. The Company adopted the new disclosures requirements
in the first quarter of fiscal 2010.  Other than requiring additional
disclosures, adoption of this guidance did not have and is not expected to have
a material impact on the Company’s condensed consolidated financial
statements.
 
 Note
2 – Going Concern Considerations
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.  The Company incurred a loss from continuing operations
applicable to its common shareholders of $360,373 and $928,733 during the
six-month period ended June 30, 2010 and during the year ended December 31,
2009, respectively, and has an accumulated deficit applicable to its common
shareholders of $26,607,643 at June 30, 2010.  The Company also used
cash in operating activities of $1,585,278 and $1,225,629 during the six-month
period ended June 30, 2010 and during the year ended December 31, 2009,
respectively.  At June 30, 2010, the Company has negative working
capital of $4,510,334 and a stockholders’ deficit attributable to its
stockholders of $2,819,134.  These factors raise substantial doubt
about the Company’s ability to continue as a going concern.
 
 The
Company commenced its new business related to the cultivation and production of
seed oil from the seed of the Jatropha plant in September
2007.  Management plans to meet its cash needs through various means
including securing financing, entering into joint ventures, and developing the
new business model.  In order to fund its new operations, the Company
has sold Series B preferred stock in the amount of $1,300,000, has issued a
secured promissory note with aggregate borrowings of $625,000, has received
$6,895,710 in capital contributions from the preferred membership interest in
GCE Mexico I, LLC, has issued mortgages in the total amount of $2,793,934 for
the acquisition of land, and has received proceeds of $650,000 from the sale of
common stock.  The Company is developing the new business operation to
participate in the rapidly growing bio-diesel industry.  The Company continues
to expect to be successful in this new venture, but there is no assurance that
its business plan will be economically viable.  The ability of the
Company to continue as a going concern is dependent on that plan’s success.
The condensed consolidated financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
  7
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
3 – Jatropha Business Venture
 
 Having
determined to discontinue its bio-pharmaceutical operations and dispose of the
related assets, the Company considered entering into a number of other
businesses that would enable it to be able to provide the shareholders with
future value.  The Company’s Board of Directors decided to develop a
business to produce and sell seed oils, including seed oils harvested from the
planting and cultivation of the Jatropha curcas plant, for
the purpose of providing feedstock oil intended for the generation of methyl
ester, otherwise known as bio-diesel (the “Jatropha Business”).  The
Company’s Board concluded that there was a significant opportunity to
participate in the rapidly growing biofuels industry, which previously was
mainly driven by high priced, edible oil-based feedstock.  In order to
commence its new Jatropha Business, the Company entered into various
transactions during September and October of 2007, including: (i) hired Richard
Palmer, an energy consultant, and a member of Global Clean Energy Holdings LLC
(“Global”) to act as its new President, Chief Operating Officer and future Chief
Executive Officer, (ii) engaged Mobius Risk Group, LLC, a Texas company engaged
in providing energy risk advisory services, to provide it with consulting
services related to the development of the Jatropha Business, (iii) acquired
certain trade secrets, know-how, business plans, term sheets, business
relationships, and other information relating to the cultivation and production
of seed oil from the Jatropha plant for the production of bio-diesel from
Global, and (iv) engaged Corporativo LODEMO S.A DE CV to assist with the
development of the Jatropha Business in Mexico.  Subsequent to
entering into these transactions, the Company identified certain real property
in Mexico it believed to be suitable for cultivating the Jatropha
plant.  During April 2008, the Company and six unaffiliated investors
formed GCE Mexico I, LLC (GCE Mexico) and Asideros Globales Corporativo
(Asideros I), a Mexican corporation.  Asideros I acquired the land in
Mexico for the cultivation of the Jatropha plant.  In July 2009, the
Company acquired Technology Alternatives Limited (TAL), which has developed a
farm in Belize for cultivation of the Jatropha plant and provides technical
advisory services for the propagation of the Jatropha plant.  In March
2010, the Company formed Asideros 2, a Mexican corporation, which has acquired
additional land in Mexico adjacent to the land acquired by Asideros
I.  All of these transactions are described in further detail in the
remainder of this note to these condensed consolidated financial
statements.
 
 Share Exchange
Agreement
 
 The
Company entered into a share exchange agreement (the Global Agreement) pursuant
to which the Company acquired all of the outstanding ownership interests in
Global Clean Energy Holdings, LLC, a Delaware limited liability company
(Global), on September 7, 2007 from Mobius Risk Group, LLC (Mobius) and from
Richard Palmer (Mr. Palmer).  Mr. Palmer owned a 13.33% equity
interest in Mobius and became the Company’s new President and Chief Operating
Officer in September 2007 and its Chief Executive Officer in December
2007.
 
 Mobius Consulting
Agreement
 
 Concurrent
with the execution of the Global Agreement, the Company entered into a
consulting agreement with Mobius pursuant to which Mobius agreed to provide
consulting services to the Company in connection with the Company’s new Jatropha
bio-diesel feedstock business. The Company engaged Mobius as a consultant to
obtain Mobius’ experience and expertise in the feedstock/bio-diesel market to
assist the Company and Mr. Palmer in developing this new line of operations for
the Company.  Mobius agreed to provide the following services to the
Company: (i) manage and supervise a contemplated research and development
program contracted by the Company and conducted by the University of Texas Pan
American regarding the location, characterization, and optimal economic
propagation of the Jatrophaplant; and (ii) assist
with the management and supervision of the planning, construction, and start-up
of plant nurseries and seed production plantations in Mexico, the Caribbean or
Central America.
  8
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The
original term of the agreement was twelve months.  The scope of work
under the agreement was completed in August 2008 and the agreement was
terminated.  Mobius supervised the hiring of certain staff to serve in
management and operations roles of the Company, or hired such persons to provide
similar services as independent contractors.  Mobius’ compensation for
the services provided under the agreement was a monthly retainer of
$45,000.  The Company also reimbursed Mobius for reasonable business
expenses incurred in connection with the services provided.  The
agreement contained customary confidentiality provisions with respect to any
confidential information disclosed to Mobius or which Mobius received while
providing services under the agreement.  The Company had recorded
liabilities to Mobius of $322,897 for accrued, but unpaid, compensation and
costs as of June 30, 2010 and December 31, 2009.  The Company disputes
the total of these charges and is currently in litigation with Mobius to resolve
this liability. Based on the Company’s evaluation of the claims made against the
Company, the basis for the claims, and the Company’s defenses and counterclaims,
management currently does not believe that the anticipated resolution of this
outstanding legal matter will have a material adverse effect on the Company’s
financial position or results of operations.  However, legal matters
are subject to inherent uncertainties and there exists the possibility that the
ultimate resolution of these matters could have a material adverse impact on the
Company’s financial position and the results of operations in the period in
which any such effect is recorded.
 
 LODEMO
Agreement
 
 On
October 15, 2007, the Company entered into a service agreement with Corporativo
LODEMO S.A DE CV, a Mexican corporation (the LODEMO Group).  The
Company had decided to initiate its Jatropha Business in Mexico, and had
identified parcels of land in Mexico to plant and cultivate
Jatropha.  In order to obtain all of the logistical and other services
needed to operate a large-scale farming and transportation business in Mexico,
the Company entered into the service agreement with the LODEMO Group, a
privately held Mexican company with substantial land holdings, significant
experience in diesel distribution and sales, liquids transportation, logistics,
land development and agriculture.
 
 Under the
supervision of the Company’s management, the LODEMO Group was responsible for
the establishment, development, and day-to-day operations of the Jatropha
Business in Mexico, including the extraction of the oil from the Jatropha seeds,
the delivery of the Jatropha oil to buyers, the purchase or lease of land in
Mexico, the establishment and operation of one or more Jatropha nurseries, the
clearing, planting and cultivation of the Jatropha fields, the harvesting of the
Jatropha seeds, the operation of the Company’s oil extraction facilities, and
the logistics associated with the foregoing.  The LODEMO Group was
responsible for identifying and acquiring the farmland. However, ownership of
the farmland or any lease thereto is held directly by the Company or by a
Mexican subsidiary of the Company.  The LODEMO Group was responsible
for hiring and the initial management of all necessary employees.  All
direct and budgeted costs of the Jatropha Business in Mexico were to be borne by
the Company or by its Mexican subsidiary or joint venture.
 
 The
LODEMO Group initially provided the foregoing and other necessary services for a
fee.  The Company had agreed to pay the LODEMO Group a fixed fee per
year of $60 per hectare of land planted and maintained with minimum payments
based on 10,000 hectares of developed land, to follow a planned planting
schedule. The Agreement has a 20-year term but could be terminated or modified
earlier by the Company under certain circumstances. In June 2009, the scope of
work previously performed by LODEMO was reduced and modified based upon certain
functions being provided internally by the Company and by Asideros I, the
Company’s Mexican subsidiary, on a go-forward basis.  Under this
agreement, the Company has paid the LODEMO Group or accrued $47,415 and $139,770
during the three months ended June 30, 2010 and 2009,
respectively.  The company has paid the Lodemo Group or accrued
$47,415 and $602,090 during the six months ended June 30, 2010 and 2009,
respectively, all of which was capitalized as plantation development
costs.  As of June 30, 2010 and December 31, 2009, the Company owed
the LODEMO Group $251,500 and $204,085, respectively, for accrued, but unpaid,
compensation and costs.
  9
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 GCE Mexico I, LLC, Asideros
1, and Asideros 2
 
 Effective
April 23, 2008, the Company entered into a limited liability company agreement
(“LLC Agreement”) to form GCE Mexico I, LLC, a Delaware limited liability
company (GCE Mexico), with six unaffiliated investors (collectively, the
Investors).  GCE Mexico was organized primarily to facilitate the
acquisition of approximately 5,000 acres of farm land (the Jatropha Farm) in the
State of Yucatan in Mexico to be used primarily for the (i) cultivation of Jatropha curcas, (ii) the
marketing and sale of the resulting fruit, seeds, or pre-processed crude
Jatropha oil, whether as biodiesel feedstock, biomass or otherwise, and (iii)
the sale of carbon value, green fuel value, or renewable energy credit value
(and other similar environmental attributes) derived from activities at the
Jatropha Farm.
 
 Under the
LLC Agreement, the Company owns 50% of the issued and outstanding common
membership units of GCE Mexico.  The remaining 50% of the common
membership units was issued to five of the Investors.  The Company and
the other owners of the common membership interest were not required to make
capital contributions to GCE Mexico.
 
 In
addition, two of the Investors agreed to invest in GCE Mexico through the
purchase of preferred membership units and through the funding of the purchase
of land in Mexico.  An aggregate of 1,000 preferred membership units
were issued to these two Investors who each agreed to make capital contributions
to GCE Mexico in installments and as required, funding the development and
operations of the Jatropha Farm.  The preferred members have made
capital contributions of $1,700,382 and $1,558,686 during the six-month periods
ended June 30, 2010 and 2009, respectively, and total contributions of
$6,895,710 received by GCE Mexico from these Investors since the execution of
the LLC Agreement.  The LLC Agreement calls for additional
contributions from the Investors, as requested by management and as required by
the operation in 2010 and the following years.  These Investors are
entitled to earn a preferential 12% per annum cumulative compounded return on
the cumulative balance of their preferred membership interest.  The
preferential return totaled $367,906 and $201,690 during the six-month periods
ended June 30, 2010 and 2009, respectively, and totaling $978,776 since the
execution of the LLC Agreement.
 
 The two
investors holding preferred membership units also directly funded the purchase
by Asideros I of approximately 5,000 acres of land in the State of Yucatan in
Mexico by the payment of $2,051,282.  The land was acquired in the
name of Asideros I and Asideros I issued a mortgage in the amount of $2,051,282
in favor of these two investors.  These two investors also directly
funded the purchase by Asideros 2 of approximately 3,700 acres of land adjacent
to the land owned by Asideros I by the payment of $742,652.  The land
was acquired in the name of Asideros 2 and Asideros 2 issued a mortgage in the
amount of $742,652 in favor of these two investors.  These mortgages
bear interest at the rate of 12% per annum, payable quarterly.  The
Board has directed that this interest shall continue to accrue until such time
as the Board determines that there is sufficient cash flow to pay all accrued
interest.  The initial mortgage, including any unpaid interest, is due
in April 2018.  The second mortgage, including any unpaid interest, is
due in February 2020.
 
 The net
income or loss of Asideros I and of Asideros 2 is allocated to its shareholders
based on their respective equity ownership, which is 99% to GCE Mexico and 1%
directly to the Company.  GCE Mexico has no operations separate from
its investments in Asideros I and Asideros 2.  According to the LLC
Agreement of GCE Mexico, the net loss of GCE Mexico is allocated to its members
according to their respective investment balances.  Accordingly, since
the common membership interest did not make a capital contribution, all of the
losses have been allocated to the preferred membership
interest.   The noncontrolling interest presented in the
accompanying condensed consolidated balance sheet includes the carrying value of
the preferred membership interests and of the common membership interests owned
by the Investors, and exclude any common membership interest in GCE Mexico held
by the Company.
  10
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 Technology Alternatives,
Limited
 
 On
October 29, 2008, the Company entered into a stock purchase agreement with the
shareholders of Technology Alternatives, Limited (TAL), a company formed under
the laws of Belize in Central America.  Subsequently, the terms and
conditions of the stock purchase agreement were modified prior to
closing.  The closing was primarily delayed to allow TAL to complete
all required conditions for the closing.  On July 2, 2009, all closing
requirements were completed and the Company consummated the stock purchase
agreement by issuing 8,952,757 shares of its common stock in exchange for 100%
of the equity interests of TAL.  TAL owns approximately 400 acres of
land and has developed a Jatropha farm in stages over the last three years for
the cultivation of the Jatropha plant.  TAL has also developed a
nursery capable of producing Jatropha seeds, seedlings and rooted
cuttings.  During 2009, TAL commenced selling seeds, principally to
GCE Mexico.  TAL also provides technical advisory services for the
propagation of the Jatropha plant.
 
 In
connection with the acquisition, certain payables to the former shareholders of
TAL were renegotiated and converted into promissory notes in the aggregate
principal amount of $516,139 Belize Dollars (US $268,036 based on exchange rates
in effect at July 2, 2009).  These notes payable to shareholders were
interest free through September 30, 2009, and then bear interest at 8% per annum
through the maturity date.  The notes are secured by a mortgage on the
land and related improvements.  The notes, plus any related accrued
interest, were originally due on December 29, 2009, but the due date had been
extended to June 28, 2010 and has subsequently been extended to January 1,
2011.  TAL and/or the Company may prepay the notes at any time without
penalty, and the Company is required to prepay the notes if and when it receives
future funding in an amount that, in the Company’s reasonable discretion, is
sufficient to permit the prepayment of the notes without adversely affecting the
Company’s operations or financial condition.
  Note
4 – Property and Equipment
 
 Property
and equipment are as follows:
 June 30,
                                
                                
                                December 31,2010
                                
                                
                                2009Land
                                
                                $
                                2,831,639
                                
                                
                                $
                                2,079,914Plantation
      development costs
                                
                                
                                4,033,744
                                
                                
                                
                                3,633,288Plantation
      equipment
                                
                                
                                905,146
                                
                                
                                
                                805,719Office
      equipment
                                
                                
                                80,287
                                
                                
                                
                                33,478Total
      cost
                                
                                
                                7,850,816
                                
                                
                                
                                6,552,399Less
      accumulated depreciation
                                
                                
                                (223,897
                                )
                                
                                
                                (110,910
                                )Property
      and equipment, net
                                
                                $
                                7,626,919
                                
                                
                                $
                                6,441,489
 
 Commencing
in June 2008, Asideros I purchased certain equipment for purposes of rapidly
clearing the land, preparing the land for planting, and actually planting the
Jatropha trees.  The Company has capitalized farming equipment and
costs related to the development of land for farm use in accordance with
generally accepted accounting principles for accounting by agricultural
producers and agricultural cooperatives.  Plantation equipment is
depreciated using the straight-line method over estimated useful lives of 5 to
15 years.  Depreciation expense has been capitalized as part of
plantation development costs through the date that the plantation becomes
commercially productive.  The initial plantations were deemed to be
commercially productive on October 1, 2009, at which date the Company commenced
the depreciation of plantation development costs over estimated useful lives of
10 to 35 years, depending on the nature of the
development.  Developments and other improvements with indefinite
lives are capitalized and not depreciated.  Other developments that
have a limited life and intermediate-life plants that have growth and production
cycles of more than one year are being depreciated over their useful lives once
they are placed in service.  The land, plantation development costs,
and plantation equipment are located in Mexico and in Belize.
  11
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
5 – Accrued Payroll and Payroll Taxes
 
 A
significant portion of accrued payroll and payroll taxes relates to unpaid
compensation for officers and directors who 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:
 June
      30,
                      
                      
                      December
      31,2010
                      
                      
                      2009Accrued
      payroll, vacation, and related payroll taxes for current
      officers
                      
                      $
                      1,089,335
                      
                      
                      $
                      570,726Former
      Chief Executive Officer, resigned 2007, including $500,000 under the
      Release and Settlement Agreement
                      
                      
                      570,949
                      
                      
                      
                      570,949Other
      former officers and directors
                      
                      
                      77,750
                      
                      
                      
                      311,200Accrued
      payroll taxes on accrued compensation to former officers and
      directors
                      
                      
                      25,590
                      
                      
                      
                      38,510Accrued
      payroll and payroll taxes
                      
                      $
                      1,763,624
                      
                      
                      $
                      1,491,385
 
 On August
31, 2007, the Company entered into a Release and Settlement Agreement with Judy
Robinett, the Company’s then-current Chief Executive Officer.  Under
the agreement, Ms. Robinett agreed to, among other things, assist the Company in
the sale of its legacy assets and complete the preparation and filing of the
delinquent reports to the Securities and Exchange Commission.  Under
the agreement, Ms. Robinett agreed to (i) forgive her potential right to receive
$1,851,805 in accrued and unpaid compensation, un-accrued and pro-rata bonuses,
and severance pay and (ii) the cancellation of stock options to purchase
14,000,000 shares of common stock at an exercise price of $0.02 per
share.  In consideration for her services, the forgiveness of the
foregoing cash payments, the cancellation of the stock options, and settlement
of other issues, the Company agreed, among other things, to pay Ms. Robinett
$500,000 upon the receipt of the cash payment under the agreement to sell the
SaveCream Assets to Eucodis Pharmaceuticals Forschungs und Entwicklungs GmbH
(Eucodis).  Pursuant to this agreement, Ms. Robinett resigned on
December 21, 2007.  Despite the Company’s efforts, the sale to Eucodis
was never completed and Eucodis has since ceased
operations.  Accordingly, the conditions precedent to make the
$500,000 payment from the Eucodis proceeds described above has not been
fulfilled, i.e., the Company’s sale of the SaveCream Assets to Eucodis did not
occur.  Furthermore, the Company subsequently sold the SaveCream
Assets to an unaffiliated third party on November 16, 2009.
 
 Note
6 – Debt and Commitments
 
 Promissory
Notes
 
 Mercator Momentum Fund
III
 
 In order
to fund ongoing operations pending closing of the sale of the SaveCream Assets,
the Company entered into a loan agreement with, and issued a promissory note in
favor of, Mercator Momentum Fund III, L.P. (Mercator) in September
2007.  At that time, Mercator, along with two other affiliates, owned
all of the issued and outstanding shares of the Company’s Series A Convertible
Preferred Stock, and was considered a related party to the
Company.  The loan was secured by a lien on all of the assets of the
Company.  Under the loan agreement, interest was originally payable on
the loan at a rate of 12% per annum, payable monthly.  Pursuant to the
loan agreement, the original amount to be available under the credit facility
was $1,000,000 and was due in December 2007.
  12
 
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Between
September 2007 and December 2009, there were various modifications to the loan
agreement that resulted in various extensions and modifications of the interest
rate.  During that period of time, Mercator advanced a total of
$625,000 to the Company, of which $150,000 was repaid prior to December 31,
2009, leaving a balance of $475,000 at that date, with interest accruing at
10.68%.  In March 2010, the Company used substantially all of the
proceeds received from the sale of the convertible promissory notes to repay, in
full, the  balance of this note, plus accrued interest of
$81,909.
 
 Bank
Loan
 
 In
October 2009, a bank loaned TAL $67,800 Belize Dollars (US $35,554 based on
exchange rates in effect on the date of the note).  The note bears
interest at 13% per annum, is unsecured, and is due on demand.  The
balance of the note at June 30, 2010 is $62,598 Belize Dollars (US $32,363 based
on exchange rates in effect at June 30, 2010).  The balance of the
note at December 31, 2009 was $66,548 Belize Dollars (US $34,232 based on
exchange rates in effect at December 31, 2009).
 
 Notes Payable to
Shareholders
 
 The
Company has notes payable to certain shareholders in the aggregate amount of
$26,000 and $56,000 at June 30, 2010 and December 31, 2009,
respectively.  The notes originated between 1997 and 1999, bear
interest at 12%, are unsecured, and are currently in default.  Accrued
interest on the notes totaled $41,705 and $85,541 at June 30, 2010 and December
31, 2009, respectively.
 
 As more
fully disclosed in Note 3 to these condensed consolidated financial statements,
the Company has promissory notes to the former shareholders of TAL in the amount
of $516,139 Belize dollars (US $266,844 based on exchange rates in effect at
June 30, 2010 and US $265,502 based on exchange rates in effect at December 31,
2009).  These notes payable to shareholders were interest free through
September 30, 2009, and then bear interest at 8% per annum through the maturity
date.  The notes are secured by a mortgage on the land and related
improvements.  The notes, plus any related accrued interest, were
originally due on December 29, 2009, but the due date had been extended to June
28, 2010 and subsequently extended to January 1, 2011.
 
 Convertible Notes
Payable
 
 In March
2010, the Company entered into a securities purchase agreement with the
preferred members of GCE Mexico pursuant to which the Company issued senior
unsecured convertible promissory notes in the original aggregate principal
amount of $567,000 and warrants to acquire an aggregate of 1,890,000 shares of
the Company’s common stock.  The Convertible Notes mature on the
earlier of (i) March 16, 2012, or (ii) upon written demand of payment by the
note holders following the Company’s default thereunder. The maturity date of
the Convertible Notes may be extended by written notice made by the note holders
at any time prior to March 16, 2012.  Interest accrues on the
convertible notes at a rate of 5.97% per annum, and is payable quarterly in
cash, in arrears, on each three-month anniversary of the issuance of the
convertible notes.  The Company may at its option, in lieu of paying
interest in cash, pay interest by delivering a number of unregistered shares of
its common stock equal to the quotient obtained by dividing the amount of such
interest by the arithmetic average of the volume weighted average price for each
of the five consecutive trading days immediately preceding the interest payment
date.  At any time following the first anniversary of the issuance of
the Convertible Notes, at the option of the note holders, the outstanding
balance thereof (including unpaid interest) may be converted into shares of the
Company’s common stock at a conversion price equal to $0.03.  The
conversion price may be adjusted in connection with stock splits, stock
dividends and similar events affecting the Company’s capital
stock.  The convertible notes rank senior to all other indebtedness of
the Company, and thereafter will remain senior or pari passu with all accounts
payable and other similar liabilities incurred by the Company in the ordinary
course of business. The Company may not prepay the convertible notes without the
prior consent of the Investors.
  13
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The
warrants have an exercise price of $0.03 per share and the exercise price of the
warrants may be adjusted in connection with stock splits, stock dividends and
similar events affecting the Company’s capital stock.  The warrants
expire on March 16, 2013. The fair value of the warrants was immaterial,
accordingly, all of the proceeds from the issuance of the debt were allocated to
the Convertible Notes.  The Company used substantially all of the
proceeds received from the sale of the convertible promissory notes to repay, in
full, an outstanding promissory note in the amount of $475,000, plus accrued
interest of $81,909.
 
 The
Company has other convertible notes payable to certain individuals in the
aggregate amount of $193,200 at June 30, 2010 and December 31,
2009.  The notes originated in 1996, bear interest at 12%, are
unsecured, and are currently in default.  Each $1,000 note is
convertible into 667 shares of the Company’s common stock.  Accrued
interest on the convertible notes totaled $283,480 and $271,983 at June 30, 2010
and December 31, 2009, respectively.
 
 Lease
Commitment
 
 During
June 2010, the Company entered into a new two-year and two month lease agreement
with average monthly payments including prescribed common area fees of $3,400,
with a 3% annual increase in lease payments.
 
 The table
below is a summary of future minimum lease payments as of June 30,
2010.
 
 2010
                      
                      $
                      17,0002011
                      
                      
                      41,5002012
                      
                      
                      24,500Total
      minimum lease payments
                      
                      $
                      83,000
 
 Settlement of
Liabilities
 
 The
Company has negotiated the settlement of liabilities carried on the condensed
consolidated balance sheet and has recorded significant gains.  The
gain on settlement of liabilities for the three months and the six months ended
June 30, 2010, was $405,530 and $600,802, respectively. There was no gain on
settlement of liabilities for the comparable period in 2009. This gain was
primarily from the settlement of historic liabilities primarily incurred by
prior management in connection with our discontinued pharmaceutical operations
that have been on our records for several years.
  14
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
7 – Changes in Equity (Deficit)
 
 A summary
of the composition of Equity (Deficit) of the Company at June 30, 2010 and 2009,
and the changes during the six months then ended is presented in the following
table:
 Total Global CleanHoldings, Inc.stockholders'
                    
                    
                    Noncontrolling
                    
                    
                    Total equityequity (deficit)
                    
                    
                    interest
                    
                    
                    (deficit)Balance
      at December 31, 2009
                    
                    $
                    (3,078,412
                    )
                    
                    $
                    2,485,792
                    
                    
                    $
                    (592,620
                    )Issuance
      of common stock
                    
                    
                    500,000
                    
                    
                    
                    -
                    
                    
                    
                    500,000Capital
      contribution from noncontrolling interest
                    
                    
                    -
                    
                    
                    
                    1,700,382
                    
                    
                    
                    1,700,382Share-based
      compensation
                    
                    
                    60,333
                    
                    
                    
                    -
                    
                    
                    
                    60,333Accrual
      of preferential return for the noncontrolling interest
                    
                    
                    -
                    
                    
                    
                    (367,906
                    )
                    
                    
                    (367,906
                    )Net
      loss
                    
                    
                    (299,500
                    )
                    
                    
                    (740,693
                    )
                    
                    
                    (1,040,193
                    )Other
      comprehensive loss
                    
                    
                    (1,555
                    )
                    
                    
                    57,328
                    
                    
                    
                    55,773Balance
      at June 30, 2010
                    
                    $
                    (2,819,134
                    )
                    
                    $
                    3,134,903
                    
                    
                    $
                    315,769
 
 Total Global CleanHoldings, Inc.stockholders'
                    
                    
                    Noncontrolling
                    
                    
                    Total equityequity (deficit)
                    
                    
                    interest
                    
                    
                    (deficit)Balance
      at December 31, 2008
                    
                    $
                    (5,948,575
                    )
                    
                    $
                    1,962,022
                    
                    
                    $
                    (3,986,553
                    )Issuance
      of common stock
                    
                    
                    50,000
                    
                    
                    
                    -
                    
                    
                    
                    50,000Capital
      contribution from noncontrolling interest
                    
                    
                    -
                    
                    
                    
                    1,558,686
                    
                    
                    
                    1,558,686Share-based
      compensation
                    
                    
                    386,215
                    
                    
                    
                    -
                    
                    
                    
                    386,215Accrual
      of preferential return for the noncontrolling interest
                    
                    
                    -
                    
                    
                    
                    (201,690
                    )
                    
                    
                    (201,690
                    )Net
      loss
                    
                    
                    (715,500
                    )
                    
                    
                    (338,533
                    )
                    
                    
                    (1,054,033
                    )Balance
      at June 30, 2009
                    
                    $
                    (6,227,860
                    )
                    
                    $
                    2,980,485
                    
                    
                    $
                    (3,247,375
                    )
 
 Common
Stock
 
 On March
30, 2010 the Company entered into a stock purchase agreement whereby the Company
agreed to issue and sell 25,000,000 shares of the Company’s common stock at a
price of $0.02 per share, for an aggregate purchase price of $500,000, which was
paid in cash.
 
 Note
8 – Stock Options and Warrants
 
 Stock Options and
Compensation-Based Warrants
 
 The
Company has two incentive stock option plans wherein 24,000,000 shares of
the Company’s common stock are reserved for issuance there under. As further
explained in Note 9 to these condensed consolidated financial statements, the
Company granted stock options during the six months ended June 30, 2010 to
acquire 12,000,000 shares of the Company’s common stock to the Company’s Chief
Executive Officer.  Additionally, during the six months ended June 30,
2010, the Company issued compensation-based warrants to purchase 250,000 shares
of common stock to a law firm.  Effective April 1, 2010, the Company
appointed Martin Wenzel to its board of directors.  Mr. Wenzel was
granted an option to purchase 500,000 shares of the Company’s common stock at an
exercise price of $0.01 per share.  The option vests over ten equal
monthly installments commencing May 1, 2010 and expires on April 1,
2015.  During the six months ended June 30, 2009, the Company issued
compensation-based stock warrants to an investment banking firm to acquire
7,700,000 shares of the Company’s common stock at $0.0325 per share.No
income tax benefit has been recognized for share-based compensation
arrangements.  The Company has recognized plantation development costs
totaling $124,565 related to a liability that was satisfied by the issuance of
warrants in 2008.  Otherwise, no share-based compensation cost has
been capitalized in the condensed consolidated balance sheet.
  15
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 A summary
of the status of options and compensation-based warrants at June 30, 2010, and
changes during the six months then ended is presented in the following
table:
 
 WeightedWeighted
                                
                                AverageShares
                                
                                
                                Average
                                
                                Remaining
                                
                                AggregateUnder
                                
                                
                                Exercise
                                
                                Contractual
                                
                                IntrinsicOption
                                
                                
                                Price
                                
                                Life
                                
                                ValueOutstanding
      at December 31, 2009
                                
                                
                                61,209,083
                                
                                
                                $
                                0.03Granted
                                
                                
                                12,750,000
                                
                                
                                
                                0.02Exercised
                                
                                
                                (5,827,600
                                )
                                
                                
                                0.01Expired
                                
                                
                                -
                                
                                
                                
                                -Outstanding
      at June 30, 2010
                                
                                
                                68,131,483
                                
                                
                                
                                0.03
                                
                                5.5 years
                                
                                $
                                1,174,201Exercisable
      at June 30, 2010
                                
                                
                                55,581,483
                                
                                
                                $
                                0.04
                                
                                4.6
      years
                                
                                $
                                886,826
 
 At June
30, 2010, options to acquire 80,000 shares of common stock have no stated
contractual life.  The fair value of other stock option grants and
compensation-based warrants is estimated on the date of grant or issuance using
the Black-Scholes option pricing model.  The weighted-average fair
value of stock options granted and compensation-based warrants issued during the
six months ended June 30, 2010 was $0.0081.  The weighted-average
assumptions used for the stock options granted and compensation-based warrants
issued during the six months ended June 30, 2010 were risk-free interest rate of
3.6%, volatility of 155%, expected life of 9.9 years, and dividend yield of
zero.  The weighted-average assumptions used for the
compensation-based warrants issued during the six months ended June 30, 2009
were risk-free interest rate of 2.5%, volatility of 150%, expected life of 5.0
years, and dividend yield of zero. The assumptions employed in the Black-Scholes
option pricing model include the following.  The expected life of
stock options represents the period of time that the stock options granted are
expected to be outstanding prior to exercise. The expected volatility is based
on the historical price volatility of the Company’s common stock. The risk-free
interest rate represents the U.S. Treasury constant maturities rate for the
expected life of the related stock options. The dividend yield represents
anticipated cash dividends to be paid over the expected life of the stock
options.  The intrinsic values are based on a June 30, 2010 closing
price of $0.0425 per share.
 
 Share-based
compensation from all sources recorded during the three months and six months
ended June 30, 2010 was $43,343 and $60,333, respectively, and is reported as
general and administrative expense in the accompanying condensed consolidated
statements of operations.  Share-based compensation from all sources
recorded during the three months and six months ended June 30, 2009 was $326,331
and $386,215, respectively, and is reported as general and administrative
expense.  As of June 30, 2010, there is approximately $57,000 of
unrecognized compensation cost related to stock-based payments that will be
recognized over a weighted average period of approximately 0.6
years.
  16
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Stock
Warrants
 
 A summary
of the status of the warrants outstanding at June 30, 2010, and changes during
the six months then ended is presented in the following table:
 
 WeightedShares
                      
                      
                      AverageUnder
                      
                      
                      ExerciseWarrant
                      
                      
                      PriceOutstanding
      at December 31, 2009
                      
                      
                      29,742,552
                      
                      
                      $
                      0.01Issued
                      
                      
                      1,890,000
                      
                      
                      
                      0.03Exercised
                      
                      
                      (4,575,495
                      )
                      
                      
                      0.01Expired
                      
                      
                      (581,395
                      )
                      
                      
                      0.13Outstanding
      at June 30, 2010
                      
                      
                      26,475,662
                      
                      
                      
                      0.01
 
 On April
26, 2010, the Company received a notice for the exercise of 4,575,495
financing-based warrants and 5,827,600 compensation-based warrants to
acquire  common stock on a cashless basis.  The warrants
were exercisable at $0.01 per share.  The Company issued 8,545,399
shares of its common stock to the entity as a result of the cashless
exercise.
 
 Note
9 – Employment Agreement
 
 On March
16, 2010, the Company and Richard Palmer, the Company’s Chief Executive Officer,
entered into an amendment of Mr. Palmer’s employment agreement originally
entered into in September 2007.  Pursuant to the amendment, the
Company extended the term of Mr. Palmer’s employment as the Company’s President,
Chief Executive Officer and Chief Operating Officer for an additional two years
through September 30, 2012.  Thereafter, the term of employment shall
automatically renew for successive one-year periods unless otherwise terminated
by either party 90 days before the renewal period. In connection with the
amendment, the Company granted Mr. Palmer an option to purchase up to 12,000,000
shares of the Company’s common stock at an exercise price of $0.02, subject to
the Company’s achievement of certain market capitalization
goals.  According to the terms of the option, the option to purchase
up to 6,000,000 shares vests when the Company’s market capitalization first
reaches $30 million and the option to purchase the other 6,000,000 shares vests
when the Company’s market capitalization first reaches $60
million.  The option expires on March 16, 2020, ten years after the
date of amendment.  The remaining terms of the original employment
agreement remain in effect.
 
 Note
10 – Discontinued Operations
 
 Prior to
2007, the Company was a developmental-stage bio-pharmaceutical company engaged
in the research, validation, development and ultimate commercialization of two
drugs known as MDI-P and SaveCream.  The Board evaluated the value of
its developmental stage drug candidates and in March 2007, the Board determined
that the best course of action was to discontinue further development of these
drug candidates and sell these technologies.  MDI-P was a drug
candidate being developed as an anti-infective treatment for bacterial
infections, viral infections and fungal infections.  In August 2007,
the Company sold the MDI-P related assets.  SaveCream was a drug
candidate that the Company was developing to reduce breast cancer
tumors.  From March of 2007 through July of 2008, the Company entered
into various agreements with Eucodis Pharmaceuticals Forschungs und Entwicklungs
GmbH, an Austrian company (Eucodis) related to the sale of the SaveCream
assets.  Eucodis entered into a binding letter of intent in March 2007
and later entered into a sale and purchase agreement in July
2007.  The sale and purchase agreement was approved by the Company’s
shareholders in January 2008.  Ultimately, all discussions and
agreements with Eucodis were terminated in July 2008 due to their inability to
obtain their own financing and their failure to close the
sale.  Eucodis has since ceased operations.
  17
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 On
November 16, 2009, Global Clean Energy Holdings, Inc. and its subsidiary, MDI
Oncology, Inc., entered into a Sale and Asset Purchase Agreement with Curadis
Gmbh, an unaffiliated German company, for the sale and of substantially all of
the intellectual property associated with the patents, patent applications,
pre-clinical study data and ancillary clinical trial data concerning the
SaveCream asset.  The closing occurred on December 22,
2009.  The SaveCream asset had no carrying value on the consolidated
balance sheet of the Company.  In connection with the sale, the
Company recognized a gain of $3,298,511 during the fourth quarter of 2009,
consisting of cash received of $518,655, the assumption of a research and
development obligation with a carrying value of $2,758,350 (1,850,000 Euros),
and the assumption of accounts payable of $21,506.  Should the
pharmaceutical product ever be commercialized, the entire transaction will be
valued at 4.2 million Euros. Although management is hopeful that the
pharmaceutical product will be commercialized, no assurance can be given if or
when any additional consideration or cash will be provided to the Company after
the closing. If additional consideration or cash is received, the Company will
recognize additional gain at that time.  The Company will hold a
security interest in the sold assets until the final two million Euro payment is
made, if ever.
 
 Pursuant
to accounting rules for discontinued operations, the Company has classified all
gain, revenue and expense related to the operations, assets, and liabilities of
its bio-pharmaceutical business as discontinued operations.  For the
three and six months ended June 30, 2010 and 2009, Income (Loss) from
Discontinued Operations consists of the foreign currency transaction gains or
losses related to current liabilities associated with the discontinued
operations that are denominated in Euros.
 
 Note
11 – Subsequent Events
 
 On July
19, 2010, the majority of the stockholders of the Company voted to change its
state of incorporation from Utah to Delaware.  In addition, the par
value of the Company’s capital stock changed from no par to $0.001 per
share.  The effects of the change in par value have been reflected
retroactively in the accompanying condensed consolidated financial statements
and notes thereto for all periods presented.  The effect of
retroactively applying the par value of $0.001 per share resulted in a
reclassification of $17,644,228 of common stock and $1,290,722 of preferred
stock as of December 31, 2009 to additional paid-in capital.
 
 Also on
July 19, 2010, the stockholders approved the 2010 Stock Incentive Plan. The
granting of options and other stock awards is an important incentive tool for
the Company’s employees, officers and directors. The 2010 Plan provides a means
by which employees, directors and consultants of the Company may be given an
opportunity to benefit from increases in the value of our common stock, and to
attract and retain the services of such persons.  All of our
employees, directors and consultants are eligible to participate in the 2010
Plan. The total number of shares of common stock which may be offered, or issued
as restricted stock or on the exercise of options or SARs (Stock Appreciation
Rights) under the Plan shall not exceed twenty million (20,000,000) shares of
common stock.  The shares subject to an option or SAR granted under
the Plan that expire, terminate or are cancelled unexercised shall become
available again for grants under this Plan.  If shares of restricted
stock awarded under the Plan are forfeited to the Company or repurchased by the
Company, the number of shares forfeited or repurchased shall again be available
under the Plan.  Where the exercise price of an option is paid by
means of the optionee’s surrender of previously owned shares of common stock or
the Company’s withholding of shares otherwise issuable upon exercise of the
option as may be permitted herein, only the net number of shares issued and
which remain outstanding in connection with such exercise shall be deemed
“issued” and no longer available for issuance under this Plan.  No
eligible person shall be granted options or other awards during any twelve-month
period covering more than five hundred thousand (500,000) shares of common
stock
  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 bio-fuels market, any projections of
revenues or other financial items, any statements of the plans and objectives of
management for future operations, any statements concerning proposed new
products or services, any statements regarding future economic conditions or
performance, and any statements of assumptions underlying any of the
foregoing.  All Forward-Looking Statements included in this document
are made as of the date hereof and are based on information available to us as
of such date.  We assume no obligation to update any Forward-Looking
Statement.  In some cases, Forward-Looking Statements can be
identified by the use of terminology such as “may,” “will,” “expects,” “plans,”
“anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,”
or the negative thereof or other comparable terminology.  Although we
believe that the expectations reflected in the Forward-Looking Statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the Forward-Looking Statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
the Forward-Looking Statements.  Future financial condition and
results of operations, as well as any Forward-Looking Statements are subject to
inherent risks and uncertainties, including any other factors referred to in our
press releases and reports filed with the Securities and Exchange
Commission.  All subsequent Forward-Looking Statements attributable to
the company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements.  Additional factors that may
have a direct bearing on our operating results are described under “Risk
Factors” and elsewhere in this report.




Introductory
Comment




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




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




Overview




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




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


19





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




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




·
            Own
      and operate Jatropha farms for our own account.  We currently
      own and operate three such Jatropha farms, one in Belize and two in
      Mexico.




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




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




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




In
addition to generating revenues from the sale of non-food based plant oils and
biomass, we plan to monetize the carbon credits from the farms we own and
manage.  Under the 1997 Kyoto Protocol, a worldwide carbon credit
trading market has been established where sellers sell their excess carbon
credits and buyers purchase the carbon credits they need to meet their
greenhouse gas reduction requirements.  Our farm activities are
anticipated to generate a significant amount of carbon credits that we plan to
sell to third parties.




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




Organizational
History




This
company was incorporated under the laws of the State of Utah on November 20,
1991.  Until 2007, we were a developmental-stage bio-pharmaceutical
company engaged in the research, validation, and development of two drug
candidates. In 2007, the Company decided to change the course of its business
and focus its efforts and resources on the emerging alternative energy fuels
business.  In order to be successful in this industry, we decided to
acquire the intellectual property and expertise needed to develop and manage our
new business.   Accordingly, on September 7, 2007, we entered
into a share and exchange agreement where we acquired Global Clean Energy
Holdings, LLC, a Delaware limited liability company (“Global
LLC”).  Global LLC was a company that owned certain trade secrets,
know-how, business plans and relationships relevant to the cultivation and
production of Jatropha, for the purpose of providing feedstock oil intended for
the production of bio-diesel and green diesel and the production of biomass as a
fossil fuel replacement. Richard Palmer and Mobius Risk Group, LLC (“Mobius”), a
Texas limited liability company, were the sole owners of the outstanding equity
interests of Global LLC.


20





In
exchange for all of the outstanding ownership interests in Global LLC, we issued
a total of 63,945,257 shares (“Restricted Shares”) of our common stock to
Richard Palmer and Mobius.  As of December 31, 2009, all of the
Restricted Shares have been released, except for 3,915,016 shares that have been
forfeited.   In order to obtain the technical and management
expertise necessary to maximize the assets and expertise we acquired, we also
entered into an employment agreement with Richard Palmer to be the Company’s
Chief Executive Officer.   In 2008 we changed our name to “Global
Clean Energy Holdings, Inc.” to reflect our energy agricultural
business.  For a comprehensive description of our business operations,
please refer to the discussion included in “Item 1 – Business” of our Annual
Report on Form 10-K for the year ended December 31, 2009, as filed with the
Securities and Exchange Commission.




On July
19, 2010, the Company completed a merger with a newly formed, wholly owned
subsidiary to reincorporate in the State of Delaware, which merger was approved
by the Company’s stockholders at an annual meeting of stockholders held on July
15, 2010.  As a result, the Company is now a corporation governed by
the laws of the State of Delaware.  However, the business, directors
and executive officers of the Company remain unchanged.




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




Our
bio-fuels operations in Latin America will be coordinated through our Globales
Energia Renewables subsidiary in Mexico.  Although we also operate a
400-hectare farm in Belize, our principal farming operations currently are
conducted on our two joint venture farms, consisting of an aggregate of 8,849
hectares located in the Tizimin region of the Yucatan in Mexico.  The
following is a summary of certain factors relevant to an understanding of the
operations of the Tizimin farms:




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




2.
            Although
      some of our Jatropha trees will produce a commercial harvest of seeds
      later this year, the amount of this initial harvest is expected to be
      lower than previously anticipated do to the late rainy season and poor
      soil conditions in some harvested sections of the Tizimin
      farms.




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


21





4.
            We
      are now operating two nurseries for new Jatropha trees in the Tizimin
      area, which will improve our ability to plant and cultivate the remaining
      portions of our second farm and any additional farms that we may acquire
      in the future.




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




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




7.
            Total
      capital for expenses and operations, since inception, for the two farms in
      the Tizimin area (through June 30, 2010) have been below budget and total
      approximately $7.7 million for the first farm and $1 million for the
      second farm. All funding has to date been provided by the investing
      partners of the two joint ventures that own the two Tizimin
      farms.  These investment partners will have a priority right to
      revenues generated from these two
farms.




Critical
Accounting Policies




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




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




Agricultural
Producer.  All costs incurred until the actual planting of the
Jatrophaplant are
considered development costs. Plantation development costs have been accumulated
in the balance sheet during the development period and are being accounted for
in accordance with accounting standards for agricultural producers and
agricultural cooperatives.  The direct costs associated with each farm
in connection with the producing of Jatropha revenue streams have been deferred
and accumulated as an asset. Other general costs without expected future
benefits are being expensed when incurred.




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




Results
of Operations




In 2007,
we discontinued our prior bio-pharmaceutical operations, and instead decided to
focus our efforts and business resources in the emerging alternative energy
fuels business.  As a result, as we established and developed our
Jatropha business operations, we operated as a “development stage enterprise”
under applicable accounting rules and standards. In late 2009, we commenced our
planned bio-fuels operations and ceased being categorized as a development stage
enterprise.


22





Revenues and Gross
Profit.  Since we commenced our bio-fuels energy business in
2007, we have been primarily engaged in acquiring, clearing, planting and
otherwise preparing our two farms for future harvests of Jatropha
seeds.  As a result, we have not yet generated revenues from the
larger scale commercialization of Jatropha.  Now that our Jatropha
trees are starting to mature, we anticipate that we will commence generating
revenues from these sources in late 2010 and thereafter in 2011.  We
continued to achieve our planned operations in the second quarter of
2010.  In late 2009, we began generating revenues from the limited
sale of our bio-fuel products and from Jatropha-related consulting services that
we provide to third parties.  We currently provide consulting services
to large enterprises that intend to develop larger Jatropha farms for the
production of bio-diesel for their own uses.  These third party farms
will not directly compete with our existing operations.  We anticipate
that revenues from these consulting services will constitute the largest source
of our revenues in 2010 and possibly thereafter until our Tizimin farms become
fully operational.




During
the three months and six months ended June 30, 2010, we recognized revenues of
$71,864 and $204,717, respectively, as compared with $29,236 and $69,236,
respectively, for the same period in 2009. The Jatropha plants that we have
planted over the last two years are maturing and starting to produce commercial
quantities of Jatropha fruit that can be harvested for sale.  The
increase in revenues compared with the same period in 2009 is the result of
revenues generated from the sale of our Jatropha farm products, and an increase
in our Jatropha farm advisory services to third parties, from which we generate
additional revenue streams.  Revenues from such advisory services in
the three and six month periods of 2010 were $33,054 and $154,774,
respectively.  We did not provide any such advisory services in
2009.




Operating Expenses. Our
general and administrative expenses related to our continuing operations for the
three months and the six months ended June 30, 2010, were $490,333 and
$1,251,992, respectively, compared to $599,345 and $ 940,438, respectively, for
the same period in 2009.  General and administrative expense
principally includes officer compensation; outside services, such as legal,
accounting, and consulting expenses; share-based compensation; and other general
expenses such as insurance, occupancy costs, travel, etc.  The net
decrease in general and administrative expenses for the three months ended June
30, 2010, compared to the prior year was principally the result of a decrease in
share-based compensation of $282,988, net of an increase in the cost of outside
services for legal, accounting, and consulting services. The net increase in
outside services costs for the six months ended June 30, 2010, was principally
the result of an increase in the cost of consulting services associated with our
growing operations.




For the
three months and six months ended June 30, 2010, we recorded Plantation
Operating Costs of $174,430 and $449,438, respectively, from the operations of
the Tizimin and Belize farms. There were no Plantation Operating Costs
recognized in the three months and six months ended June 30, 2009, as the
Company was still a developmental stage entity.




Other Income/Expense. The
principal component of Other Income/Expense for the current period is Gain on
Settlement of Liabilities.  Gain on Settlement of liabilities for the
three months and the six months ended June 30, 2010, was $405,530 and $600,802,
respectively. There was no Gain on Settlement of liabilities for the comparable
period in 2009. This gain was primarily from the settlement of historic
liabilities primarily incurred by prior management in connection with our
discontinued pharmaceutical operations that have been on our records for several
years.




Interest
expense increased for the three months ended June 30, 2010 to $105,235 from
$82,016 for the three months ended June 30, 2009. Interest expense for the six
months ended June 30, 2010 was $197,665 as compared to $163,525 for the same
six-month period in 2009. This increase in interest expense is primarily due to
the increase in debt associated with the acquisition of additional land for our
farm operations in Tizimin, Mexico.




Income (Loss) from Discontinued
Operations.  During the three months and six months ended June
30, 2010, we recognized a gain from discontinued operations of $36,026 and
$60,873, respectively, compared to loss from discontinued operations of $182,063
and $21,315 for the comparable period in 2009. The income or loss from
discontinued operations for the three months and six months ended June 30, 2010
and 2009 principally relates to foreign currency exchange rate gains or losses
on liabilities associated with our former business, which are denominated in
euros.


23





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




Net income/loss attributable to
Global Clean Energy Holdings, Inc. The Company recorded income of $82,878
for the three month ended June 30, 2010, as compared to a loss of $651,412 for
the same three-month period in 2009. For the six months ended June 30, 2010 the
net loss was $299,500, as compared to a loss of $715,500 for the six months
ended June 30, 2009.




Liquidity
and Capital Resources




As of
June 30, 2010, we had $1,093,935 in cash and had a working capital deficit of
$4,510,334, as compared with $833,584 in cash and a working capital deficit of
$4,985,518 as of December 31, 2009.  However, substantially all of our
cash balances represent funds provided to us by the Investors for the operations
of the Tizimin farms owned by Asideros 1 and Asideros 2 and, therefore, are not
available to us for our working capital or other purposes, and are not available
to us to reduce our legacy indebtedness.  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 from the sale of additional securities or from
an increase in operating revenues.  Outstanding indebtedness at June
30, 2010 totaled $9,242,193. The existence of the foregoing working capital
deficit and liabilities is expected to negatively impact our ability to obtain
future equity or debt financing and the terms on which such additional
financing, if available, can be obtained.




On
November 16, 2009, we entered into a new definitive agreement for the sale of
all patents, rights, and data associated with our remaining legacy
pharmaceutical assets for 350,000 Euros, and a revenue sharing arrangement to
pay up to 2,000,000 Euros to the Company should such legacy pharmaceutical
assets ever be commercialized. This transaction was completed on December 22,
2009. In connection with the sale, the Company has recognized a gain of
$3,298,511, consisting of cash received of $518,655, the assumption of research
and development obligations with a carrying value of $2,758,350, and the
assumption of accounts payable of $21,506. If such legacy pharmaceutical assets
were ever commercialized by the buyer, the entire transaction would be valued at
4.2 million Euros (as of the date of the sale). Although we are hopeful that the
legacy pharmaceutical assets will be commercialized, no assurance can be given
if or when any additional cash will be provided to the Company from the
pharmaceutical assets that we sold. We will continue to maintain a security
interest in such assets until the final 2,000,000 Euro payment is made, if ever.
Cash proceeds received on December 22, 2009, in connection with the sale of the
legacy pharmaceutical assets were used to finance our immediate working capital
needs and to retire certain limited historic liabilities.




To date,
we have funded our operations from loans we have obtained, from the proceeds of
the sale of equity and debt securities of the Company, and from the management
fees we have received from commercial clients and GCE Mexico I,
LLC.  Recently we have also commenced generating cash from Jatropha
related consulting services that we currently provide to third
parties.  We anticipate that we will continue to generate such
consulting services in the near term, and that such consulting fees fund our
immediate, short-term working capital needs.  However, we do not have
sufficient cash in hand to continue our current operations through the end of
the fiscal year and we may need to raise funds in the future in order to
continue to operate.  In addition, 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, in order to increase our farm
ownership and operations, we will have to obtain significant additional capital
through the sale of equity and/or debt securities, the forward sale of Jatropha
oil and carbon offset credits, and from other financing activities, such as
strategic partnerships and joint ventures. The formation and funding of the GCE
Mexico I, LLC was the first of a series of planned transactions to expand our
Jatropha operations. Under GCE Mexico I, LLC, our 5,150-acre farm in Tizimin,
Mexico was recently expanded by the acquisition of approximately 3,700
additional acres.


24





Effective
July 2, 2009, we purchased all of the outstanding capital stock of Technology
Alternatives Limited, a company formed under the laws of Belize (“TAL”), from
its four shareholders.  TAL owns and operates a 400-acre farm in
subtropical Belize, Central America, which currently is producing
Jatropha.  TAL also has been performing plant science research and has
been providing technical advisory services for propagation of Jatropha for a
number of years.  Under the Stock Purchase Agreement, as amended, in
consideration for the purchase of all of the shares of TAL, (i) promissory notes
were issued by TAL to the four former owners as evidence of its indebtedness to
them in the aggregate amount of $516,139 Belize Dollars (US $268,036 based on
exchange rates in effect at July 2, 2009), and (ii) an aggregate of 8,952,757
unregistered shares of our common stock were issued to the four former
owners.  The maturity date of the promissory notes has been extended
through January 1, 2011. Since the TAL promissory notes are secured by a
mortgage on the 400-acre farm, our failure to pay these notes upon their
maturity could result in the loss of that farm and our investment in the
Belizean Jatropha farm.




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




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




On March
30, 2010, we entered into a stock purchase agreement with two accredited
investors, pursuant to which we issued and sold 25,000,000 shares of our common
stock at a price of $0.02 per share, for aggregate proceeds of
$500,000.  The Shares were not registered under the Securities Act of
1933, as amended, and were issued and sold in reliance upon the exemption from
registration contained in Section 4(2) of the Act and Regulation D
promulgated thereunder.  Proceeds from the sale and issuance of the
Shares were used to retire outstanding indebtedness.




We have
submitted an application for funding to the Overseas Private Investment
Corporation, (“OPIC”). OPIC was
established as an agency of the United States government in 1971, and, among
other goals, the agency helps U.S. businesses invest overseas, fosters economic
development in new and emerging markets and complements the private sector in
managing risks associated with foreign direct investment. The Company is making
application to OPIC for up to $15 million for funding the expansion of our
existing Jatropha farms in Mexico. However, the Company can make no assurance
when, if ever, such funding will be made available. We are anticipating an
approval or denial to our application in the third or fourth quarter of
2010.  If approved, we would expect the first of the funding within
three months of final
approval.


25





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




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




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




ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.




Not
applicable.




ITEM
4.  CONTROLS AND PROCEDURES.




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




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




PART
II




ITEM
1.  LEGAL PROCEEDINGS.




On April
12, 2010, Mobius Risk Group, LLC (“Mobius”) filed a complaint against the
Company in the United States District Court Southern District of Texas Houston
Division, alleging that the Company breached that certain Services Agreement,
dated April 30, 2007, between Mobius and the Company.  Under the
Services Agreement, Mobius was required to provide professional services in
connection with growing, producing, manufacturing, and selling seed
oils.  As permitted by the Services Agreement, the Company terminated
the Services Agreement on July 11, 2008.  In its complaint, Mobius has
alleged that the Company failed to pay Mobius a total of
$551,178.  The Company has disputed the Mobius claim, and has asserted
a counter claim against Mobius for direct damages sustained by the Company from
the lack of performance of Mobius under the terms of the Service Agreement.
Furthermore, the Company has also filed a counterclaim for breach of fiduciary
duty against Eric Melvin, the CEO of Mobius and a former member of the Company’s
Board of Directors, for conduct arising from his prior position as a director of
the Company.




On July
13, 2010, Dee Burgess, a former consultant of Medical Discoveries, Inc. (the
name of our company until changed in connection with our new Jatropha business),
filed a complaint against the Company in the Third Judicial District Court,
State of Utah. The complaint alleges that Ms. Burgess is owed $80,000 for
services allegedly provided to the Company in 2004, 2005, and
2006.  The Company has not yet been served with the
complaint.


26





Based on
the Company’s evaluation of the claims made against the Company, the basis for
the claims, and the Company’s defenses and counterclaims, management currently
does not believe that the anticipated resolution of these two outstanding legal
matters will have a material adverse effect on the Company’s financial position
or results of operations.  However, legal matters are subject to
inherent uncertainties and there exists the possibility that the ultimate
resolution of these matters could have a material adverse impact on the
Company’s financial position and the results of operations in the period in
which any such effect is recorded.




ITEM
1A.   RISK FACTORS.




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




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




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




On April
26, 2010, the Company received a notice for the exercise of 4,575,495
financing-based warrants and 5,827,600 compensation-based warrants to acquire
common stock on a cashless basis.  The warrants were exercisable at
$0.01 per share.  The Company issued 8,545,399 shares of its common
stock to the entity as a result of the cashless exercise.




ITEM
3.  DEFAULTS UPON SENIOR SECURITIES.




None.




ITEM
4.  RESERVED.




None.




ITEM
5.  OTHER INFORMATION




None.




ITEM
6.  EXHIBITS




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


27


SIGNATURES




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




Dated:         August
      12, 2010
                  GLOBAL
      CLEAN ENERGY HOLDINGS, INC.By:
                  /s/ BRUCE K.
    NELSONBruce
      K. NelsonChief
      Financial
Officer


28