UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-Q





(MARK
ONE)





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





FOR THE
QUARTERLY PERIOD ENDED September 30, 2009





OR





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





COMMISSION
FILE NUMBER: 0-12627








GLOBAL
CLEAN ENERGY HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)







Utah
            
            87-0407858(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      Number)





6033
      W. Century Blvd, Suite 895,
              Los
      Angeles, California 90045(Address
      of principal executive offices)(310)
      641-4234Issuer’s
      telephone number:








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





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





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 November 19, 2009, the issuer
had 236,919,079 shares of common stock 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 September 30, 2009


FORM
10-Q





TABLE
OF CONTENTS





PART
      IITEM
      1.
                    FINANCIAL
      STATEMENTS
                    1ITEM
      2.
                    MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                    18ITEM
      3.
                    QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
                    22ITEM
      4T.
                    CONTROLS
      AND PROCEDURES
                    22PART
      IIITEM
      1.
                    LEGAL
      PROCEEDINGS
                    22ITEM
      1A
                    RISK
      FACTORS
                    23ITEM
      2.
                    UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                    23ITEM
      3.
                    DEFAULTS
      UPON SENIOR SECURITIES
                    23ITEM
      4.
                    SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                    23ITEM
      5.
                    OTHER
      INFORMATION
                    23ITEM
      6.
                    EXHIBITS
                    23









PART
I




ITEM 1.
  FINANCIAL STATEMENTS.


GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (Unaudited)
  September 30,
                  
                  
                  December 31,2009
                  
                  
                  2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                  
                  $
                  848,511
                  
                  
                  $
                  291,309Accounts
      receivable
                  
                  
                  116,618
                  
                  
                  
                  -Other
      current assets
                  
                  
                  132,535
                  
                  
                  
                  131,715Total
      Current Assets
                  
                  
                  1,097,664
                  
                  
                  
                  423,024PROPERTY
      AND EQUIPMENTLand
                  
                  
                  2,525,193
                  
                  
                  
                  2,051,282Plantation
      development costs
                  
                  
                  3,511,873
                  
                  
                  
                  2,117,061Plantation
      equipment
                  
                  
                  818,176
                  
                  
                  
                  509,037Office
      equipment
                  
                  
                  21,016
                  
                  
                  
                  10,9936,876,258
                  
                  
                  
                  4,688,373Less
      accumulated depreciation
                  
                  
                  (64,043
                  )
                  
                  
                  (22,296
                  )6,812,215
                  
                  
                  
                  4,666,077OTHER
      ASSETS
                  
                  
                  2,691
                  
                  
                  
                  2,691TOTAL
      ASSETS
                  
                  $
                  7,912,570
                  
                  
                  $
                  5,091,792LIABILITIES
      AND EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                  
                  $
                  2,319,514
                  
                  
                  $
                  1,890,999Accrued
      payroll and payroll taxes
                  
                  
                  1,536,163
                  
                  
                  
                  1,158,808Accrued
      interest payable
                  
                  
                  766,638
                  
                  
                  
                  522,097Accrued
      return on noncontrolling interest
                  
                  
                  463,652
                  
                  
                  
                  138,014Secured
      promissory note
                  
                  
                  475,000
                  
                  
                  
                  460,000Notes
      payable to shareholders
                  
                  
                  317,517
                  
                  
                  
                  56,000Convertible
      notes payable
                  
                  
                  193,200
                  
                  
                  
                  193,200Research
      and development obligation
                  
                  
                  2,708,955
                  
                  
                  
                  2,607,945Total
      Current Liabilities
                  
                  
                  8,780,639
                  
                  
                  
                  7,027,063MORTGAGE
      NOTE PAYABLE
                  
                  
                  2,051,282
                  
                  
                  
                  2,051,282EQUITY
      (DEFICIT)Global
      Clean Energy Holdings, Inc. equity (deficit)Preferred
      stock - no par value; 50,000,000 shares authorized Series B, convertible;
      13,000 shares issued or subscribed (aggregate liquidation preference of
      $1,300,000)
                  
                  
                  1,290,735
                  
                  
                  
                  1,290,735Common
      stock, no par value; 500,000,000 shares authorized; 236,919,079 and
      224,813,819 shares issued and outstanding, respectively
                  
                  
                  17,881,147
                  
                  
                  
                  17,634,474Additional
      paid-in capital
                  
                  
                  4,056,303
                  
                  
                  
                  3,672,724Deficit
      accumulated prior to the development stage
                  
                  
                  (1,399,577
                  )
                  
                  
                  (1,399,577
                  )Deficit
      accumulated during the development stage
                  
                  
                  (28,056,909
                  )
                  
                  
                  (27,146,931
                  )Accumulated
      other comprehensive loss
                  
                  
                  (4,609
                  )
                  
                  
                  -Total
      Global Clean Energy Holdings, Inc. Stockholders' Deficit
                  
                  
                  (6,232,910
                  )
                  
                  
                  (5,948,575
                  )Noncontrolling
      interest
                  
                  
                  3,313,559
                  
                  
                  
                  1,962,022Total
      equity (deficit)
                  
                  
                  (2,919,351
                  )
                  
                  
                  (3,986,553
                  )TOTAL
      LIABILITIES AND EQUITY (DEFICIT)
                  
                  $
                  7,912,570
                  
                  
                  $
                  5,091,792
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements
  1
  GLOBAL CLEAN ENERGY HOLDINGS, INC. AND
SUBSIDIARIES
 (A
Development Stage Company)
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
  From Inception ofthe Development StageFor the Three Months Ended
                              
                              
                              For the Nine Months Ended
                              
                              
                              on November 20, 1991September 30,
                              
                              
                              September 30,
                              
                              
                              through2009
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              2008
                              
                              
                              September 30, 2009Revenue
                              
                              $
                              148,915
                              
                              
                              $
                              -
                              
                              
                              $
                              218,151
                              
                              
                              $
                              -
                              
                              
                              $
                              218,151Operating
      ExpensesGeneral
      and administrative
                              
                              
                              264,217
                              
                              
                              
                              345,499
                              
                              
                              
                              1,204,655
                              
                              
                              
                              1,360,410
                              
                              
                              
                              10,933,940Research
      and development
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              986,584264,217
                              
                              
                              
                              345,499
                              
                              
                              
                              1,204,655
                              
                              
                              
                              1,360,410
                              
                              
                              
                              11,920,524Loss
      from Operations
                              
                              
                              (115,302
                              )
                              
                              
                              (345,499
                              )
                              
                              
                              (986,504
                              )
                              
                              
                              (1,360,410
                              )
                              
                              
                              (11,702,373
                              )Other
      Income (Expenses)Unrealized
      gain on financial instrument
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              5,469
                              
                              
                              
                              4,722,632Interest
      income
                              
                              
                              2
                              
                              
                              
                              37
                              
                              
                              
                              4
                              
                              
                              
                              4,306
                              
                              
                              
                              66,919Interest
      expense
                              
                              
                              (82,035
                              )
                              
                              
                              (78,921
                              )
                              
                              
                              (245,560
                              )
                              
                              
                              (155,244
                              )
                              
                              
                              (1,717,579
                              )Interest
      expense from amortization of discount on secured promissory
      note
                              
                              
                              -
                              
                              
                              
                              (19,766
                              )
                              
                              
                              -
                              
                              
                              
                              (36,369
                              )
                              
                              
                              (286,369
                              )Foreign
      currency transaction adjustments
                              
                              
                              (2,101
                              )
                              
                              
                              -
                              
                              
                              
                              (94
                              )
                              
                              
                              -
                              
                              
                              
                              (94
                              )Gain
      on debt restructuring
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              2,524,787Other
      income
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              906,485Total
      Other Income (Expenses)
                              
                              
                              (84,134
                              )
                              
                              
                              (98,650
                              )
                              
                              
                              (245,650
                              )
                              
                              
                              (181,838
                              )
                              
                              
                              6,216,781Loss
      from Continuing Operations
                              
                              
                              (199,436
                              )
                              
                              
                              (444,149
                              )
                              
                              
                              (1,232,154
                              )
                              
                              
                              (1,542,248
                              )
                              
                              
                              (5,485,592
                              )Income
      (Loss) from Discontinued Operations
                              
                              
                              (161,126
                              )
                              
                              
                              250,782
                              
                              
                              
                              (182,441
                              )
                              
                              
                              6,432
                              
                              
                              
                              (22,698,850
                              )Net
      Loss
                              
                              
                              (360,562
                              )
                              
                              
                              (193,367
                              )
                              
                              
                              (1,414,595
                              )
                              
                              
                              (1,535,816
                              )
                              
                              
                              (28,184,442
                              )Net
      loss attributable to the noncontrolling interest
                              
                              
                              (166,084
                              )
                              
                              
                              (105,126
                              )
                              
                              
                              (504,617
                              )
                              
                              
                              (189,279
                              )
                              
                              
                              (819,732
                              )Net
      Loss attributable to Global Clean Energy Holdings, Inc.
                              
                              
                              (194,478
                              )
                              
                              
                              (88,241
                              )
                              
                              
                              (909,978
                              )
                              
                              
                              (1,346,537
                              )
                              
                              
                              (27,364,710
                              )Preferred
      stock dividend from beneficial conversion feature
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (692,199
                              )Net
      Loss Applicable to Common Shareholders
                              
                              $
                              (194,478
                              )
                              
                              $
                              (88,241
                              )
                              
                              $
                              (909,978
                              )
                              
                              $
                              (1,346,537
                              )
                              
                              $
                              (28,056,909
                              )Amounts
      attributable to Global Clean Energy Holdings, Inc. common
      shareholders:Loss
      from Continuing Operations
                              
                              $
                              (33,352
                              )
                              
                              $
                              (339,023
                              )
                              
                              $
                              (727,537
                              )
                              
                              $
                              (1,352,969
                              )
                              
                              $
                              (4,665,860
                              )Income
      (Loss) from Discontinued Operations
                              
                              
                              (161,126
                              )
                              
                              
                              250,782
                              
                              
                              
                              (182,441
                              )
                              
                              
                              6,432
                              
                              
                              
                              (22,698,850
                              )Net
      Loss
                              
                              $
                              (194,478
                              )
                              
                              $
                              (88,241
                              )
                              
                              $
                              (909,978
                              )
                              
                              $
                              (1,346,537
                              )
                              
                              $
                              (27,364,710
                              )Basic
      and Diluted Loss per Common Share:Loss
      from Continuing Operations
                              
                              $
                              (0.000
                              )
                              
                              $
                              (0.001
                              )
                              
                              $
                              (0.003
                              )
                              
                              $
                              (0.007
                              )Income
      (Loss) from Discontinued Operations
                              
                              $
                              (0.001
                              )
                              
                              $
                              0.001
                              
                              
                              $
                              (0.001
                              )
                              
                              $
                              0.000Net
      loss
                              
                              $
                              (0.001
                              )
                              
                              $
                              (0.000
                              )
                              
                              $
                              (0.004
                              )
                              
                              $
                              (0.007
                              )Basic
      and Diluted Weighted-Average Common Shares Outstanding
                              
                              
                              236,724,454
                              
                              
                              
                              222,036,041
                              
                              
                              
                              229,441,296
                              
                              
                              
                              202,660,451
  The
accompanying notes are an integral part of these condensed consolidated
financial statements
  2
  GLOBAL CLEAN ENERGY HOLDINGS, INC. AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  From Inception ofthe Development StageFor the Nine Months Ended
                                
                                
                                on November 20, 1991September 30,
                                
                                
                                through2009
                                
                                
                                2008
                                
                                
                                September 30, 2009Cash
      Flows From Operating ActivitiesNet
      loss
                                
                                $
                                (1,414,595
                                )
                                
                                $
                                (1,535,816
                                )
                                
                                $
                                (28,184,442
                                )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesForeign
      currency transaction loss (gain)
                                
                                
                                115,170
                                
                                
                                
                                (33,076
                                )
                                
                                
                                365,192Gain
      on debt restructuring
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (2,524,787
                                )Share-based
      compensation for services, expenses, litigation, and research and
      development
                                
                                
                                401,197
                                
                                
                                
                                307,139
                                
                                
                                
                                13,115,377Commitment
      for research and development obligation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,378,445Depreciation
                                
                                
                                1,649
                                
                                
                                
                                815
                                
                                
                                
                                140,680Reduction
      of escrow receivable from research and development
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                272,700Unrealized
      loss (gain) on financial instrument
                                
                                
                                -
                                
                                
                                
                                (5,469
                                )
                                
                                
                                (4,722,632
                                )Interest
      expense from amortization of discount on secured promissory
      note
                                
                                
                                -
                                
                                
                                
                                36,369
                                
                                
                                
                                286,369Reduction
      of legal costs
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (130,000
                                )Write-off
      of subscriptions receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                112,500Impairment
      loss on assets
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                9,709Gain
      on disposal of assets, net of losses
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (228,445
                                )Write-off
      of receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                562,240Note
      payable issued for litigation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                385,000Changes
      in operating assets and liabilitiesAccounts
      receivable
                                
                                
                                (116,618
                                )
                                
                                
                                -
                                
                                
                                
                                (124,147
                                )Other
      current assets
                                
                                
                                (49,392
                                )
                                
                                
                                (29,362
                                )
                                
                                
                                (181,107
                                )Accounts
      payable and accrued expenses
                                
                                
                                823,271
                                
                                
                                
                                614,576
                                
                                
                                
                                5,843,597Net
      Cash Used in Operating Activities
                                
                                
                                (239,318
                                )
                                
                                
                                (644,824
                                )
                                
                                
                                (12,623,751
                                )Cash
      Flows From Investing ActivitiesPlantation
      development costs
                                
                                
                                (1,191,767
                                )
                                
                                
                                (1,472,960
                                )
                                
                                
                                (3,288,460
                                )Purchase
      of property and equipment
                                
                                
                                (266,658
                                )
                                
                                
                                (518,903
                                )
                                
                                
                                (1,006,895
                                )Proceeds
      from disposal of assets
                                
                                
                                12,624
                                
                                
                                
                                -
                                
                                
                                
                                322,624Change
      in deposits
                                
                                
                                -
                                
                                
                                
                                (2,691
                                )
                                
                                
                                (53,791
                                )Cash
      acquired in acquisition of Technology Alternatives,
Limited
                                
                                
                                2,532
                                
                                
                                
                                -
                                
                                
                                
                                2,532Issuance
      of note receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (313,170
                                )Payments
      received on note receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                130,000Net
      Cash Used in Investing Activities
                                
                                
                                (1,443,269
                                )
                                
                                
                                (1,994,554
                                )
                                
                                
                                (4,207,160
                                )Cash
      Flows From Financing ActivitiesProceeds
      from common stock, preferred stock, and warrants for cash
                                
                                
                                50,000
                                
                                
                                
                                75,000
                                
                                
                                
                                11,474,580Proceeds
      from issuance of preferred membership in GCE Mexico I, LLC
                                
                                
                                2,204,063
                                
                                
                                
                                1,649,713
                                
                                
                                
                                4,619,214Contributed
      equity
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                131,374Proceeds
      from notes payable and related warrants
                                
                                
                                15,000
                                
                                
                                
                                250,000
                                
                                
                                
                                1,961,613Payments
      on notes payable
                                
                                
                                -
                                
                                
                                
                                (50,000
                                )
                                
                                
                                (951,287
                                )Proceeds
      from convertible notes payable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                571,702Payments
      on convertible notes payable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (98,500
                                )Net
      Cash Provided by Financing Activities
                                
                                
                                2,269,063
                                
                                
                                
                                1,924,713
                                
                                
                                
                                17,708,696Effect
      of exchange rate changes on cash
                                
                                
                                (29,274
                                )
                                
                                
                                -
                                
                                
                                
                                (29,274
                                )Net
      Increase (Decrease) in Cash and Cash Equivalents
                                
                                
                                557,202
                                
                                
                                
                                (714,665
                                )
                                
                                
                                848,511Cash
      and Cash Equivalents at Beginning of Period
                                
                                
                                291,309
                                
                                
                                
                                805,338
                                
                                
                                
                                -Cash
      and Cash Equivalents at End of Period
                                
                                $
                                848,511
                                
                                
                                $
                                90,673
                                
                                
                                $
                                848,511Supplemental
      Disclosures of Cash Flow Information:Cash
      paid for interest
                                
                                $
                                -
                                
                                
                                $
                                12,823Noncash
      Investing and Financing Activities:Reclassification
      of financial instrument to permanent equity
                                
                                $
                                -
                                
                                
                                $
                                2,161,045Acquisition
      of land in exchange for mortgage note payable
                                
                                
                                -
                                
                                
                                
                                2,051,282Exchange
      of Series A preferred stock for common stock
                                
                                
                                -
                                
                                
                                
                                514,612Release
      of common stock held in escrow
                                
                                
                                17,618
                                
                                
                                
                                493,292Accrual
      of return on noncontrolling interest
                                
                                
                                325,638
                                
                                
                                
                                67,983Plantation
      costs financed by accounts payable
                                
                                
                                204,388
                                
                                
                                
                                -Equipment
      depreciation capitalized to plantation development costs
                                
                                
                                38,052
                                
                                
                                
                                -Issuance
      of common stock for net assets of Technology Alternatives,
      Limited
                                
                                
                                179,055
                                
                                
                                
                                -Issuance
      of warrants in satisfaction of accounts payable
                                
                                
                                -
                                
                                
                                
                                124,565
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements
  3
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
1 – History and Basis of Presentation
 
 History
 
 Medical
Discoveries, Inc. was incorporated under the laws of the State of Utah on
November 20, 1991. Effective as of August 6, 1992, the Company merged
with and into WPI Pharmaceutical, Inc., a Utah corporation (“WPI”), pursuant to
which WPI was the surviving corporation. Pursuant to the MDI-WPI merger, the
name of the surviving corporation was changed to Medical Discoveries, Inc.
(“MDI”).  MDI’s initial purpose was the research and development of an
anti-infection drug known as MDI-P.
 
 On
March 22, 2005, MDI formed MDI Oncology, Inc., a Delaware corporation, as a
wholly-owned subsidiary to acquire and operate the assets and business
associated with the Savetherapeutics transaction.  With this
transaction, MDI acquired the SaveCream technology and carried on the research
and development of this drug candidate.  As discussed in Note 9, MDI
made the decision in 2007 to discontinue further development of these two drug
candidates and sell these 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) a corporation newly 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
Asideros 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 is developing a farm in Belize for
cultivation of the Jatropha plant.  TAL has also developed a nursery
capable of producing Jatropha seedlings and rooted cuttings, and provides
technical advisory services for the propagation of the Jatropha
plant.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Global Clean Energy
Holdings, Inc., its subsidiaries, and the variable interest entities of GCE
Mexico and Asideros. 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 and Asideros, and
accordingly, has consolidated these entities since April 2008, with the equity
interests of the unaffiliated investors in GCE Mexico presented as
Noncontrolling Interests in the accompanying consolidated financial
statements.
  4
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Unaudited Interim
Consolidated Financial Statements
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations.  In the
opinion of management, all adjustments and disclosures necessary for a fair
presentation of these financial statements have been included and are of normal,
recurring nature.  These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company’s annual report on Form 10-K for the year ended December 31, 2008, as
filed with the Securities and Exchange Commission.  The results of
operations for the three months and nine months ended September 30, 2009, may
not be indicative of the results that may be expected for the year ending
December 31, 2009.
 
 Loss per Common
Share
 
 Loss per
share amounts are computed by dividing loss applicable to the common
shareholders of the Company by the weighted-average number of common shares
outstanding during each period. Diluted loss per share amounts are computed
assuming the issuance of common stock for potentially dilutive common stock
equivalents.  All outstanding stock options, warrants, convertible
notes, convertible preferred stock, and common stock held in escrow are
currently antidilutive and have been excluded from the calculations of diluted
loss per share at September 30, 2009 and 2008, as follows:
  September 30,2009
                    
                    
                    2008Convertible
      notes
                    
                    
                    128,671
                    
                    
                    
                    128,671Convertible
      preferred stock - Series B
                    
                    
                    11,818,181
                    
                    
                    
                    11,818,181Warrants
                    
                    
                    29,742,552
                    
                    
                    
                    29,742,552Compensation-based
      stock options and warrants
                    
                    
                    60,859,083
                    
                    
                    
                    51,459,083Common
      stock held in escrow
                    
                    
                    -
                    
                    
                    
                    4,567,519102,548,487
                    
                    
                    
                    97,716,006
 
 Fair Values of Financial
Instruments
 
 The
carrying amounts reported in the consolidated balance sheets for accounts
payable and the research and development obligation 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 note payable approximate fair value because the
underlying instruments are at interest rates which approximate current market
rates.
 
 Foreign
Currency
 
 The
Company has operations located in Mexico and Belize.  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
balance sheets.
  5
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Subsequent
Events
 
 The
Company has evaluated subsequent events through November 20, 2009, the date
these condensed consolidated financial statements were issued.  See
Note 10 to these condensed consolidated financial statements for a description
of events occurring subsequent to September 30, 2009.
 
 Recently Issued Accounting
Standards
 
 During
the quarter ended September 30, 2009, the Company adopted changes issued by
the Financial Accounting Standards Board (FASB) to the authoritative hierarchy
of GAAP. These changes establish the FASB Accounting Standards Codification
(Codification) as the source of authoritative accounting principles recognized
by the FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with GAAP. Rules and interpretive releases of
the Securities and Exchange Commission (SEC) under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. The
FASB will no longer issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue
Accounting Standards Updates. Accounting Standards Updates will not be
authoritative in their own right as they will only serve to update the
Codification. These changes and the Codification itself do not change GAAP.
Other than the manner in which new accounting guidance is referenced, the
adoption of these changes had no impact on our financial
statements.
 
 In May
2009, the FASB issued new accounting guidance on subsequent events. The
objective of this guidance is to establish general standards of accounting for
and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. This new
accounting guidance was effective for interim and annual periods ending after
June 15, 2009. The impact of adopting this new guidance had no effect on
our financial statements.
 
 In June
2009, the FASB issued changes to the accounting for variable interest
entities.  These changes require a qualitative approach to identifying
a controlling financial interest in a variable interest entity (VIE), and
requires ongoing assessment of whether an entity is a VIE and whether an
interest in a VIE makes the holder the primary beneficiary of the VIE. These
changes are effective for annual reporting periods beginning after
November 15, 2009. These changes are not expected to have an immediate
impact on our current financial statements.  However, these changes
could impact the future accounting for the VIEs that we currently consolidate
and would impact the accounting for controlling financial interests in any VIE
that we may acquire in the future.
 
 In August
2009, the FASB issued new accounting guidance to provide clarification on
measuring liabilities at fair value when a quoted price in an active market is
not available. This guidance became effective for us on October 1, 2009. We
adopted this guidance on October 1, 2009, and it had no material impact on our
financial statements.
 
 Note
2 – Going Concern Considerations
 
 The
accompanying unaudited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  The
Company incurred a net loss applicable to its common shareholders of $909,978
and $1,707,562 during the nine-month period ended September 30, 2009 and the
year ended December 31, 2008, respectively, and has incurred losses applicable
to its common shareholders since inception of the development stage of
$28,056,909.  The Company also used cash in operating activities of
$239,318 and $1,004,670 during the nine-month period ended September 30, 2009
and the year ended December 31, 2008, respectively.  At September 30,
2009, the Company has negative working capital of $7,682,975 and a stockholders’
deficit attributable to its stockholders of $6,232,910.  These factors
raise substantial doubt about the Company’s ability to continue as a going
concern.
  6
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The
Company discontinued its former bio-pharmaceutical business during the quarter
ended March 31, 2007.  Management plans to meet its cash needs through
various means including selling assets that include, but are not limited to, its
former bio-pharmaceutical business, securing financing, entering into joint
ventures, and developing a new business model.  In order to fund its
new operations related to the cultivation of the Jatropha plant, the Company
sold Series B preferred stock during the quarter ended December 31, 2007 in the
amount of $1,300,000, issued a secured promissory note under which the Company
has borrowings of $475,000, and has received $4,619,214 in capital contributions
from the preferred membership interest in GCE Mexico I, LLC. The Company is
developing a new business operation to participate in the rapidly growing
bio-diesel industry.  The Company continues to expect to be successful
in this new venture, but there is no assurance that its business plan will be
economically viable.  The ability of the Company to continue as a
going concern is dependent on that plan’s success. The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
 
 Note
3 – Jatropha Business Venture
 
 Having
agreed to discontinue its bio-pharmaceutical operations and dispose of the
related assets, the Company considered entering into a number of other
businesses that would enable it to be able to provide the shareholders with
future value.  The Company’s Board of Directors decided to develop a
business to produce and sell seed oils, including seed oils harvested from the
planting and cultivation of the Jatropha curcas plant, for
the purpose of providing feedstock oil intended for the generation of methyl
ester, otherwise known as bio-diesel (the “Jatropha Business”).  The
Company’s Board concluded that there was a significant opportunity to
participate in the rapidly growing biofuels industry, which previously was
mainly driven by high priced, edible oil-based feedstock.  In order to
commence its new Jatropha Business, the Company entered into various
transactions during September and October of 2007, including: (i) hired Richard
Palmer, an energy consultant, and a member of Global Clean Energy Holdings LLC
(“Global”) to act as its new President, Chief Operating Officer and future Chief
Executive Officer, (ii) engaged Mobius Risk Group, LLC, a Texas company engaged
in providing energy risk advisory services, to provide it with consulting
services related to the development of the Jatropha Business, (iii) acquired
certain trade secrets, know-how, business plans, term sheets, business
relationships, and other information relating to the cultivation and production
of seed oil from the Jatropha plant for the production of bio-diesel from
Global, and (iv) engaged Corporativo LODEMO S.A DE CV to assist with the
development of the Jatropha Business in Mexico.  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), a Mexican corporation.  Asideros has acquired the land in
Mexico for the cultivation of the Jatropha plant.  In July 2009, the
Company acquired Technology Alternatives Limited (TAL), which is developing a
farm in Belize for cultivation of the Jatropha plant and provides technical
advisory services for the propagation of the Jatropha plant.  All of
these transactions are described in further detail in the remainder of this note
to the consolidated financial statements.
 
 Share Exchange
Agreement
 
 The
Company entered into a share exchange agreement (the Global Agreement) pursuant
to which the Company acquired all of the outstanding ownership interests in
Global Clean Energy Holdings, LLC, a Delaware limited liability company
(Global), on September 7, 2007 from Mobius Risk Group, LLC (Mobius) and from
Richard Palmer (Mr. Palmer).  Mr. Palmer owns a 13.33% equity interest
in Mobius and became the Company’s new President and Chief Operating Officer in
September 2007 and its Chief Executive Officer in December
2007.  Mobius and Mr. Palmer are considered related parties to the
Company.  Global is an entity that has certain trade secrets,
know-how, business plans, term sheets, business relationships, and other
information relating to the start-up of a business related to the cultivation
and production of seed oil from the seed of the Jatropha plant, for the purpose
of providing feedstock oil intended for the production of
bio-diesel.
  7
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Mobius Consulting
Agreement
 
 Concurrent
with the execution of the Global Agreement, the Company entered into a
consulting agreement with Mobius pursuant to which Mobius agreed to provide
consulting services to the Company in connection with the Company’s new Jatropha
bio-diesel feedstock business. The Company engaged Mobius as a consultant to
obtain Mobius’ experience and expertise in the feedstock/bio-diesel market to
assist the Company and Mr. Palmer in developing this new line of operations for
the Company.  Mobius agreed to provide the following services to the
Company: (i) manage and supervise a contemplated research and development
program contracted by the Company and conducted by the University of Texas Pan
American regarding the location, characterization, and optimal economic
propagation of the Jatrophaplant; and (ii) assist
with the management and supervision of the planning, construction, and start-up
of plant nurseries and seed production plantations in Mexico, the Caribbean or
Central America.
 
 The
original term of the agreement was twelve months.  The scope of work
under the agreement was completed in August 2008 and the agreement was
terminated.  Mobius supervised the hiring of certain staff to serve in
management and operations roles of the Company, or hired such persons to provide
similar services as independent contractors.  Mobius’ compensation for
the services provided under the agreement was a monthly retainer of
$45,000.  The Company also reimbursed Mobius for reasonable business
expenses incurred in connection with the services provided.  The
agreement contained customary confidentiality provisions with respect to any
confidential information disclosed to Mobius or which Mobius received while
providing services under the agreement.  Under this agreement, the
Company paid Mobius or accrued $144,144 during the three months ended September
30, 2008, all of which was capitalized as plantation development costs pursuant
to generally accepted accounting principles.  For the nine months
ended September 30, 2008, the Company paid Mobius or accrued $437,279, of which
$42,155 was expensed as compensation to Mobius and $395,124 was capitalized as
plantation development costs.
 
 LODEMO
Agreement
 
 On
October 15, 2007, the Company entered into a service agreement with Corporativo
LODEMO S.A DE CV, a Mexican corporation (the LODEMO Group).  The
Company had decided to initiate its Jatropha Business in Mexico, and had
identified parcels of land in Mexico to plant and cultivate
Jatropha.  In order to obtain all of the logistical and other services
needed to operate a large-scale farming and transportation business in Mexico,
the Company entered into the service agreement with the LODEMO Group, a
privately held Mexican company with substantial land holdings, significant
experience in diesel distribution and sales, liquids transportation, logistics,
land development and agriculture.
 
 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 will be borne by
the Company or by its Mexican subsidiary or joint venture.
  8
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The
LODEMO Group provided the foregoing and other necessary services for a fee
primarily based on the number of hectares of Jatropha under
cultivation.  The Company had agreed to pay the LODEMO Group a fixed
fee per year of $60 per hectare of land planted and maintained with minimum
payments based on 10,000 hectares of developed land, to follow a planned
planting schedule. The Agreement has a 20-year term but may be terminated or
modified earlier by the Company under certain circumstances. In June 2009, the
scope of work previously performed by LODEMO was reduced and modified based upon
certain labor functions being provided internally by the Company and by
Asideros, the Company’s Mexican subsidiary, on a go-forward
basis.  Under this modified agreement, the Company paid the LODEMO
Group or accrued $14,275 and $208,168 during the three-month periods ended
September 30, 2009 and 2008, respectively, all of which was capitalized as
plantation development costs pursuant to generally accepted accounting
principles.  The Company paid the LODEMO Group or accrued $616,365 and
$878,612 during the nine months ended September 30, 2009 and 2008,
respectively.  As of September 30, 2009, the Company owed $204,388 of
plantation development costs to the LODEMO Group.  As of December 31,
2008, the Company had prepaid $98,159 of plantation development costs to the
LODEMO Group.
 
 GCE Mexico I, LLC and
Asideros Globales Corporativo
 
 Effective
April 23, 2008, the Company entered into a limited liability company agreement
(“LLC Agreement”) to form GCE Mexico I, LLC, a Delaware limited liability
company (GCE Mexico), with six unaffiliated investors (collectively, the
Investors).  GCE Mexico was organized primarily to facilitate the
acquisition of approximately 5,000 acres of farm land (the Jatropha Farm) in the
State of Yucatan in Mexico to be used primarily for the (i) cultivation of Jatropha curcas, (ii) the
marketing and sale of the resulting fruit, seeds, or pre-processed crude
Jatropha oil, whether as biodiesel feedstock, biomass or otherwise, and (iii)
the sale of carbon value, green fuel value, or renewable energy credit value
(and other similar environmental attributes) derived from activities at the
Jatropha Farm.
 
 Under the
LLC Agreement, the Company owns 50% of the issued and outstanding common
membership units of GCE Mexico.  The remaining 50% of the common
membership units was issued to five of the Investors.  The Company and
the other owners of the common membership interest were not required to make
capital contributions to GCE Mexico.
 
 In
addition, two of the Investors agreed to invest in GCE Mexico through the
purchase of preferred membership units and through the funding of the purchase
of land in Mexico.  An aggregate of 1,000 preferred membership units
were issued to these two Investors who each agreed to make capital contributions
to GCE Mexico in installments and as required, to fund the development and
operations of the Jatropha Farm.  As of September 30, 2009, total
capital contributions of $4,619,214 have been 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 2009 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 two
investors holding preferred membership units also directly funded the purchase
of approximately 5,000 acres of land in the State of Yucatan in Mexico by the
payment of $2,051,282.  The land was acquired in the name of Asideros
and Asideros issued a mortgage in the amount of $2,051,282 in favor of these two
investors.  The mortgage bears interest at the rate of 12% per annum,
payable quarterly.  The Board has directed that 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 entire
mortgage, including any unpaid interest, is due April 23, 2018.
  9
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The net
income or loss of Asideros 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 investment in
Asideros.  According to the LLC Agreement of GCE Mexico, the net loss
of GCE Mexico (composed solely of its share of the operating results of
Asideros) 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 consolidated balance sheet includes the carrying
value of the preferred membership interests and of the common membership
interests owned by the Investors, and excludes any common membership interest in
GCE Mexico held by the Company.
 
 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 been developing a Jatropha farm in stages over the last three years
for the cultivation of the Jatropha plant.  TAL has also developed a
nursery capable of producing Jatropha seeds, seedlings and rooted
cuttings.  During 2009, TAL has commenced selling seeds, principally
to GCE Mexico.  TAL also provides technical advisory services for the
propagation of the Jatropha plant.
 
 On the
closing date, the common stock issued to acquire TAL was valued at $179,055, or
$0.02 per share.  The Company’s preliminary evaluation of the fair
value of net assets acquired consists of the following:
 
 Assets:Cash
                                  
                                  $
                                  2,532Land
                                  
                                  
                                  485,724Plantation
      development costs
                                  
                                  
                                  81,189Plantation
      equipment
                                  
                                  
                                  61,543Office
      equipment
                                  
                                  
                                  2,246Total
      Assets
                                  
                                  
                                  633,234Liabilities:Accounts
      payable
                                  
                                  
                                  26,434Accrued
      compensation
                                  
                                  
                                  30,629Payable
      to Global Clean Energy
                                  
                                  
                                  129,080Notes
      payable to shareholders
                                  
                                  
                                  268,036Total
      Liabilities
                                  
                                  
                                  454,179Net
      assets acquired
                                  
                                  $
                                  179,055
 
 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, are due on December 29, 2009.  TAL and/or the Company may
prepay the notes at any time without penalty, and the Company is required to
prepay the notes if and when it receives future funding in an amount that, in
the Company’s reasonable discretion, is sufficient to permit the prepayment of
the notes without adversely affecting the Company’s operations or financial
condition.
  10
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 The
preliminary evaluation of the fair value of net assets acquired is subject to
change as management completes the evaluation of the fair value of land and
plantation development costs, as well as the completeness of liabilities
assumed.  Since TAL has been developing its plantation since its
inception, its revenues and results of operations have not been
significant.  Accordingly, supplemental pro forma information of
combined revenue and results of operations have not been presented.
 
 Engagement of Investment
Banking Firm
 
 On June
29, 2009, the Company engaged the services of Mercanti Securities, LLC,
(“Mercanti”), to assist in the raising of additional capital on a joint venture
basis. These funds will be used to establish additional Jatropha farms primarily
on the Yucatan peninsula in Mexico. As compensation for this engagement,
Mercanti or its designate were granted five year warrants to purchase 7,700,000
common shares of the Company at $ 0.0325 per share. In addition, Mercanti would
receive a cash success fee equal to 7.5% of the aggregate gross proceeds of any
equity placement and an additional 7.5% of the aggregate gross proceeds of any
equity placement payable in warrants.
 
 Note
4 – Property and Equipment
 
 Property
and equipment are as follows:
 
 September 30,
                    
                    
                    December 31,2009
                    
                    
                    2008Land
                    
                    $
                    2,525,193
                    
                    
                    $
                    2,051,282Plantation
      development costs
                    
                    
                    3,511,873
                    
                    
                    
                    2,117,061Plantation
      equipment
                    
                    
                    818,176
                    
                    
                    
                    509,037Office
      equipment
                    
                    
                    21,016
                    
                    
                    
                    10,993Total
      cost
                    
                    
                    6,876,258
                    
                    
                    
                    4,688,373Less
      accumulated depreciation
                    
                    
                    (64,043
                    )
                    
                    
                    (22,296
                    )Property
      and equipment, net
                    
                    $
                    6,812,215
                    
                    
                    $
                    4,666,077
 
 Commencing
in June 2008, Asideros 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.  Plantation equipment is
depreciated using the straight-line method over estimated useful lives of 5 to
15 years and is currently being capitalized as part of plantation development
costs.  Plantation development costs are not currently being
depreciated.  Upon completion of the plantation development,
development costs having a limited life and intermediate-life plants that have
growth and production cycles of more than one year will be depreciated over the
useful lives of the related assets.  The land, plantation development
costs, and plantation equipment are located in Mexico and in
Belize.
  11
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
5 – Accrued Payroll and Payroll Taxes
 
 A
substantial portion of accrued payroll and payroll taxes relates to unpaid
compensation for officers and directors that are no longer affiliated with the
Company.  Accrued payroll taxes will become due upon payment of the
related accrued compensation.  Accrued payroll and payroll taxes are
composed of the following:
 
 
 September 30,
                        
                        
                        December 31,2009
                        
                        
                        2008Former
      Chief Executive Officer, resigned 2007, including $500,000 under the
      Release and Settlement Agreement
                        
                        $
                        570,949
                        
                        
                        $
                        570,949Other
      former officers and directors
                        
                        
                        311,200
                        
                        
                        
                        311,200Accrued
      payroll taxes on accrued compensation to former officers and
      directors
                        
                        
                        38,510
                        
                        
                        
                        38,510Accrued
      payroll, vacation, and related payroll  taxes for current
      officers
                        
                        
                        615,504
                        
                        
                        
                        238,149Accrued
      payroll and payroll taxes
                        
                        $
                        1,536,163
                        
                        
                        $
                        1,158,808
 
 On August
31, 2007, the Company entered into a Release and Settlement Agreement with Judy
Robinett, the Company’s then-current Chief Executive Officer.  Under
the agreement, Ms. Robinett agreed to, among other things, assist the Company in
the sale of its legacy assets and complete the preparation and filing of the
delinquent reports to the Securities and Exchange Commission.  Under
the agreement, Ms. Robinett agreed to (i) forgive her potential right to receive
$1,851,805 in accrued and unpaid compensation, un-accrued and pro-rata bonuses,
and severance pay and (ii) the cancellation of stock options to purchase
14,000,000 shares of common stock at an exercise price of $0.02 per
share.  In consideration for her services, the forgiveness of the
foregoing cash payments, the cancellation of the stock options, and settlement
of other issues, the Company agreed to, among other things, to pay Ms. Robinett
$500,000 upon the receipt of the cash payment under the agreement to sell the
SaveCream Assets to Eucodis Pharmaceuticals Forschungs und Entwicklungs GmbH
(Eucodis).  Pursuant to this agreement, Ms. Robinett resigned on
December 21, 2007.    Eucodis has since ceased
operations.  Further, as indicated in Note 10 to these condensed
consolidated financial statements, the Company entered into an agreement to sell
the SaveCream Assets to an unaffiliated third party on November 16,
2009.  Accordingly, it is unlikely that the condition precedent
described above, i.e., the Company’s sale of the SaveCream Assets to Eucodis,
will occur.
 
 Note
6 – Secured Promissory Note
 
 In order
to fund ongoing operations pending closing of the sale of the SaveCream Assets,
the Company entered into a loan agreement with, and issued a promissory note in
favor of, Mercator Momentum Fund III, L.P. (Mercator) in
September 2007.  At that time, Mercator, along with two other
affiliates, owned all of the issued and outstanding shares of the Company’s
Series A Convertible Preferred Stock.  Late in 2008, Mercator was
dissolved and the promissory note was distributed to the former limited partners
of Mercator.  During the three months ended March 31, 2009, the note
holders agreed to extend the due date of the note to July 2009 in exchange for
increasing the principal balance of the note by $15,000 and increasing the
interest rate by 2%.  At September 30, 2009, the principal balance of
the note is $475,000 and the note bears interest at 10.68%.  This note
has been further extended under the same terms until January 31,
2010.  The loan is secured by a lien on all of the assets of the
Company.
  12
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
7 – Changes in Equity (Deficit)
 
 A summary
of the composition of Equity (Deficit) of the Company at September 30, 2009 and
2008, and the changes during the nine months then ended is presented in the
following table:
 
 Total GlobalClean
                            Holdings,Inc.
                            stockholders'
                            equity (deficit)
                          
                          
                          Noncontrolling
                            interest
                          
                          
                          Total equity
                            (deficit)Balance
      at December 31, 2008
                          
                          $
                          (5,948,575
                          )
                          
                          $
                          1,962,022
                          
                          
                          $
                          (3,986,553
                          )Issuance
      of common stock
                          
                          
                          229,055
                          
                          
                          
                          -
                          
                          
                          
                          229,055Capital
      contribution from noncontrolling interest
                          
                          
                          -
                          
                          
                          
                          2,204,063
                          
                          
                          
                          2,204,063Share-based
      compensation
                          
                          
                          401,197
                          
                          
                          
                          -
                          
                          
                          
                          401,197Accrual
      of preferential return for the noncontrolling interest
                          
                          
                          -
                          
                          
                          
                          (325,638
                          )
                          
                          
                          (325,638
                          )Net
      loss
                          
                          
                          (909,978
                          )
                          
                          
                          (504,617
                          )
                          
                          
                          (1,414,595
                          )Accumulated
      other comprehensive loss
                          
                          
                          (4,609
                          )
                          
                          
                          (22,271
                          )
                          
                          
                          (26,880
                          )Balance
      at September 30, 2009
                          
                          $
                          (6,232,910
                          )
                          
                          $
                          3,313,559
                          
                          
                          $
                          (2,919,351
                          )Total GlobalClean
                            Holdings,Inc.
                            stockholders'
                            equity (deficit)
                          
                          
                          Noncontrolling
                            interest
                          
                          
                          Total equity
                            (deficit)Balance
      at December 31, 2007
                          
                          $
                          (7,034,431
                          )
                          
                          $
                          -
                          
                          
                          $
                          (7,034,431
                          )Reclassification
      of financial instrument to equity
                          
                          
                          2,161,045
                          
                          
                          
                          -
                          
                          
                          
                          2,161,045Capital
      contribution from noncontrolling interest
                          
                          
                          -
                          
                          
                          
                          1,649,713
                          
                          
                          
                          1,649,713Share-based
      compensation
                          
                          
                          307,139
                          
                          
                          
                          -
                          
                          
                          
                          307,139Accrual
      of preferential return for the noncontrolling interest
                          
                          
                          -
                          
                          
                          
                          (67,983
                          )
                          
                          
                          (67,983
                          )Issuance
      of warrants in satisfaction of accounts payable and  amendment
      of note payable
                          
                          
                          160,934
                          
                          
                          
                          -
                          
                          
                          
                          160,934Net
      loss
                          
                          
                          (1,346,537
                          )
                          
                          
                          (189,279
                          )
                          
                          
                          (1,535,816
                          )Balance
      at September 30, 2008
                          
                          $
                          (5,751,850
                          )
                          
                          $
                          1,392,451
                          
                          
                          $
                          (4,359,399
                          )
 
 Financial
Instrument
 
 Prior to
January 29, 2008, the Company was unable to guarantee that there would be enough
shares of authorized common stock to settle certain “freestanding instruments”
arising from warrants attached to convertible preferred stock or other
sources.  Accordingly, the warrants were measured at their fair value
and recorded as a liability in the financial statements characterized as a
“Financial Instrument”.  As of January 29, 2008, the fair value of
this liability was recorded at $2,161,045.  On January 29, 2008, the
shareholders of the Company approved an increase in the number of authorized
shares of common stock from 250 million to 500 million.  Consequently,
as the result of this amendment to the Company’s Articles of Incorporation, the
Company was then able to settle all ‘freestanding
instruments”.  Accordingly, the Company reclassified the liability,
characterized in the financial statements as “Financial Instrument” to permanent
equity in January 2008.
  13
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Common
Stock
 
 During
the three months ended June 30, 2009, the Company issued 2,500,000 shares of
stock for $50,000, or $0.02 per share.  Additionally, as further
described in Note 3 to these condensed consolidated financial statements, the
Company issued 8,952,757 shares of its common stock in exchange for 100% of the
equity interests of Technology Alternatives, Limited.
 
 Pursuant
to the share exchange agreement to acquire Global Clean Energy Holdings, LLC in
September 2007, 13,702,555 shares of common stock had been held in escrow
pending the achievement of certain “Market Capitalization
Milestones”.  As of September 7, 2009, the deadline for achieving the
milestones, 3,915,016 shares  were still being held in escrow pending
the achievement of the milestones.  The Company failed to meet the
remaining milestones by September 7, 2009, and accordingly, these remaining
shares have been forfeited and returned to the Company for
cancellation.
 
 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.  The
Company granted stock options during the nine months ended September 30, 2008 to
acquire 4,500,000 shares of the Company’s common stock to the new Executive
Vice-President and Chief Financial Officer.  Additionally, during the
nine months ended September 30, 2008, the Company issued compensation-based
warrants to purchase 2,076,083 shares of common stock in satisfaction of
outstanding accounts payable totaling $124,565.  The Company granted
stock options during the nine months ended September 30, 2009 to acquire
1,000,000 shares of the Company’s common stock to non-employee
directors.  These options are exercisable at $0.02 per share, vest
monthly over ten months starting August 31, 2009, and expire July 3,
2014.  During the nine months ended September 30, 2009, the Company
also issued compensation-based stock warrants to an investment banking firm to
acquire 7,700,000 shares of the Company’s common stock at $0.0325 per
share.  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 balance sheet.
 
 A summary
of the status of options and compensation-based warrants at September 30, 2009,
and changes during the nine months then ended is presented in the following
table:
 
 WeightedWeighted
                                
                                AverageShares
                                
                                
                                Average
                                
                                Remaining
                                
                                AggregateUnder
                                
                                
                                Exercise
                                
                                Contractual
                                
                                IntrinsicOption
                                
                                
                                Price
                                
                                Life
                                
                                ValueOutstanding
      at December 31, 2008
                                
                                
                                52,159,083
                                
                                
                                $
                                0.03Granted
                                
                                
                                8,700,000
                                
                                
                                
                                0.03Expired
                                
                                
                                -
                                
                                
                                
                                -Outstanding
      at September 30, 2009
                                
                                
                                60,859,083
                                
                                
                                $
                                0.03
                                
                                
                                5.6
      years
                                
                                $
                                210,761Exercisable
      at September 30, 2009
                                
                                
                                59,959,083
                                
                                
                                $
                                0.03
                                
                                
                                5.6
      years
                                
                                $
                                210,761
  14
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 At
September 30, 2009, options to acquire 80,000 shares of common stock have no
stated contractual life.  The fair value of other stock option grants
and compensation-based warrants is estimated on the date of grant or issuance
using the Black-Scholes option pricing model.  The weighted-average
fair value of stock options granted and compensation-based warrants issued
during the nine months ended September 30, 2009 was $0.014.  The
weighted-average assumptions used for the stock options granted and
compensation-based warrants issued during the nine months ended September 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 weighted-average fair
value of stock options granted during the nine months ended September 30, 2008
was $0.042.  The weighted-average assumptions used for these options
granted during the nine months ended September 30, 2008 were risk-free interest
rate of 2.4%, volatility of 127%, expected life of 5.2 years, and dividend yield
of zero.  The assumptions employed in the Black-Scholes option pricing
model include the following.  The expected life of stock options
represents the period of time that the stock options granted are expected to be
outstanding prior to exercise. The expected volatility is based on the
historical price volatility of the Company’s common stock. The risk-free
interest rate represents the U.S. Treasury constant maturities rate for the
expected life of the related stock options. The dividend yield represents
anticipated cash dividends to be paid over the expected life of the stock
options.
 
 Effective
April 22, 2009, the Board of Directors approved the following changes in
compensation for the members of the board of directors and for the executive
officers:
 ·
              Options
      will be granted to each non-employee member of the Board of Directors to
      purchase 500,000 shares of the Company’s common stock commencing July 1,
      2009 and annually thereafter on July 1 of each successive
      year.  The exercise price of the options will be at fair market
      value, as determined by the closing price of the Company’s common stock on
      the day prior to the grant.  The options will have a term of
      five years until expiration.  The options will vest and become
      exercisable in equal monthly
installments.
 
 ·
              Approved
      the release of 652,503 shares of common stock to Richard Palmer, the
      Company’s Chief Executive Officer.  These shares were previously
      part of the shares from the share exchange agreement to acquire Global
      Clean Energy Holdings, LLC in September 2007 that were being held in
      escrow pending the achievement of certain market-related
      milestones.  Mr. Palmer was also awarded the immediate vesting
      of options to purchase twelve million shares of the Company’s common stock
      previously granted.  These options were originally granted under
      the employment agreement with Mr. Palmer in September 2007 with vesting
      originally contingent upon the achievement of certain
      market-capitalization milestones.  The exercise price of these
      options remained unchanged at $0.03 per share and the term remained
      unchanged at five years from the date of
  employment.
 
 ·
              Approved
      the immediate vesting of options to purchase 2.5 million shares of the
      Company’s common stock held by Bruce Nelson, the Company’s Chief Financial
      Officer.  These options were originally granted under the
      employment agreement with Mr. Nelson in March 2008 with vesting originally
      contingent upon the achievement of certain market-capitalization
      milestones.  The exercise price of these options remained
      unchanged at $0.05 per share and the term remained unchanged at five years
      from the date of employment.
 
 ·
              Approved
      the immediate vesting of options to purchase an additional one million
      shares of the Company’s common stock held by Mr. Nelson.  These
      options were originally granted under the employment agreement with Mr.
      Nelson in March 2008 with vesting scheduled for June 2009 through March
      2010.  The exercise price of these options remained unchanged at
      $0.05 per share and the term remained unchanged at five years from the
      date of employment.
  15
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 These
modifications accelerated the vesting of the affected options and accelerated
the release of the affected common stock held in escrow, which resulted in the
acceleration of the recognition of the remainder of share-based compensation
related to these options and common stock held in escrow.  Share-based
compensation recorded during the three months and nine months ended September
30, 2009 were $14,982 and $401,197, respectively, and is included in general and
administrative expense.  Share-based compensation recorded during the
three months and nine months ended September 30, 2008 were $60,349 and $307,139,
respectively, and is included in general and administrative
expense.  As of September 30, 2009, there is approximately $13,000 of
unrecognized compensation cost related to stock-based payments that will be
recognized over a weighted average period of approximately 0.7
years.
 
 Stock
Warrants
 
 A summary
of the status of the warrants outstanding at September 30, 2009, and changes
during the nine months then ended is presented in the following
table:
 
 WeightedShares
                    
                    
                    AverageUnder
                    
                    
                    ExerciseWarrant
                    
                    
                    PriceOutstanding
      at December 31, 2008
                    
                    
                    29,742,552
                    
                    
                    $
                    0.01Issued
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at September 30, 2009
                    
                    
                    29,742,552
                    
                    
                    $
                    0.01
 
 Note
9 – 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
is 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.
 
 The
Company has engaged investment banking firms over the past two years find a
buyer for the SaveCream asset. However, the recent contraction of the capital
markets has negatively impacted the abilities for several potential purchasers
to consummate a purchase. The Company terminated all engagement of investment
banking firms assisting in the sale of the asset. The Company has continued to
seek interested parties through its previous relationships in the pharmaceutical
industry since 2007. On November 16, 2009 the Company entered into a sales
agreement with a new, unaffiliated European buyer regarding the SaveCream asset.
The new potential buyer was identified without the assistance of an investment
banking firm. A further explanation of this transaction is detailed in Note 10
to these condensed consolidated financial statements.
  16
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Pursuant
to accounting rules for discontinued operations, the Company has classified all
revenue and expense related to the operations, assets, and liabilities of its
bio-pharmaceutical business as discontinued operations.  For all
periods prior to March 2007, the Company has reclassified all revenue and
operating expenses to discontinued operations, except for estimated general
corporate overhead, because all of its operations related to the discontinued
technologies.  For the three months and nine months ended September
30, 2009 and 2008, the Income (Loss) from Discontinued Operations principally
consists of foreign currency transaction gains and losses related to current
liabilities associated with the discontinued operations that are denominated in
euros.  The Company has not recorded any gain or loss through
September 30, 2009 associated with the planned sale of the SaveCream
assets.
 
 Note
10 – Subsequent Event
 
 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, a 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
“SaveCream”, a developmental topical aromatase inhibitor cream.
 
 The
agreement calls for the payment of 350,000 Euros at closing and a revenue
sharing arrangement to pay up to two million Euros to the Company should the
pharmaceutical products ever be commercialized. In connection with the
agreement, the Company received a deposit of 50,000 Euros. The closing is
scheduled to occur prior to year end. Curadis Gmbh will also assume certain
liabilities of the Company. 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. The
Company will hold a security interest in the sold assets until the final two
million Euro payment is made, if ever.
  17




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




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




Introductory
Comment




Throughout
this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “our
company,” and “Company” refer to Global Clean Energy Holdings, Inc., a Utah
corporation, and, unless the context indicates otherwise, also includes the
following subsidiaries: (i) MDI Oncology, Inc., a Delaware corporation, (ii)
Global Clean Energy Holdings LLC, a Delaware limited liability company, (iii)
Asideros Globales Corporativo, a corporation organized under the laws of Mexico,
and (iv) Technology Alternatives Limited, a company formed under the laws of
Belize.





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




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




Organizational
History




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




18


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




Transition
to new Business




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




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




On July
6, 2007, we entered into an agreement with Eucodis to sell SaveCream, and on
January 29, 2008, our shareholders approved the sale of the SaveCream asset to
Eucodis. However, Eucodis was unable to complete the purchase of the assets, and
our agreement to sell the SaveCream assets to Eucodis expired.




Having
decided to dispose of the foregoing assets, our Board decided to develop a
business in the alternative energy market as a producer of biofuels.
Accordingly, our new goal is to produce and sell seed oils, including seeds oils
harvested from the planting and cultivation of Jatropha curcas plant, for
the purpose of providing feedstock oil used for the generation of methyl ester,
otherwise known as bio-diesel (the “Jatropha Business”). In connection with
commencing our new Jatropha Business, effective September 7, 2007, we (i) hired
Richard Palmer, an energy consultant, and a member of Global Clean Energy
Holdings LLC (“Global LLC”) to act as the our new President, Chief Operating
Officer and future Chief Executive Officer, (ii) engaged Mobius Risk Group, LLC,
a Texas company engaged in providing energy risk advisory services, to provide
us with consulting services related to the development of the Jatropha Business,
and (iii) acquired certain trade secrets, know-how, business plans, term sheets,
business relationships, and other information relating to the cultivation and
production of seed oil from the Jatropha plant for the production of bio-diesel
from Global LLC.




Effective
April 23, 2008, we entered into a limited liability company agreement (“LLC
Agreement”) for GCE Mexico I, LLC, a Delaware limited liability company (“GCE
Mexico”), with six other unaffiliated persons (collectively, “Unaffiliated
Members”).  GCE Mexico was organized primarily to acquire
approximately 5,000 acres of farm land (the “Jatropha Farm”) in the State of
Yucatan in Mexico to be used primarily for the (i) cultivation of Jatropha curcas, (ii) the
marketing and sale of the resulting fruit, seeds, or pre-processed crude
Jatropha oil, whether as biodiesel feedstock, biomass or otherwise, and (iii)
the sale of carbon value, green fuel value, or renewable energy credit value
(and other similar environmental attributes) derived from activities at the
Jatropha Farm.




Under the
LLC Agreement, we own 50% of the issued and outstanding common membership units
of GCE Mexico. The remaining 50% in common membership units were issued to the
Unaffiliated Members. In addition, an aggregate of 1,000 preferred membership
units were issued to two Unaffiliated Members (“Preferred Members”) who have,
through September 30, 2009, contributed $4,619,214 to the capital of GCE
Mexico.  The Preferred Members are entitled to earn a preferential 12%
per annum cumulative compounded return on the balance of their preferred
membership interest.  The capital contributions have been used to fund
the development and operations of the Jatropha Farm. We are not required to make
capital contributions to GCE Mexico.





On July
2, 2009, we finalized and closed on a Stock Purchase Agreement with the four
shareholders of Technology Alternatives Limited, a company formed under the laws
of Belize (“TAL”), pursuant to which we agreed to purchase all of the issued and
outstanding shares of TAL.





Critical
Accounting Policies




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States require management to make estimates and
assumptions that affect the reported assets, liabilities, sales and expenses in
the accompanying financial statements. Critical accounting policies are those
that require the most subjective and complex judgments, often employing the use
of estimates about the effect of matters that are inherently uncertain. We are a
development stage company as defined by generally accepted accounting
principles. Accordingly, all losses accumulated since inception have been
considered as part of our development stage activities. Certain other critical
accounting policies, including the assumptions and judgments underlying them,
are disclosed in the Note A to the Consolidated Financial Statements included in
our annual report on Form 10-K filed for the fiscal year ended December 31,
2008. However, we do not believe that there are any alternative methods of
accounting for our operations that would have a material affect on our financial
statements.


19


Results
of Operations





In 2007 the Board of Directors
determined to discontinue our prior bio-pharmaceutical
operations.  Pursuant to accounting rules for discontinued operations,
we have classified all revenue and expense, except general corporate overhead,
for 2009, 2008 and prior periods related to the operations of our
bio-pharmaceutical business as discontinued operations.





Revenues and Gross
Profit.  We are still a development stage company and have not
had significant revenues from our operations or reached the level of our planned
operations.  We discontinued our prior bio-pharmaceutical operations
in March 2007.  In September 2007, we commenced operations in our new
bio-fuels Jatropha business; however, we are still in the pre-development
agricultural stage of our operations and, therefore, do not anticipate
generating significant revenues from the sale of bio-fuel products until the
fourth quarter of 2009.  During the three months and nine months ended
September 30, 2009, we recognized revenue of $149,000 and $218,000 principally
under a bio-fuel consulting services agreement.  We did not recognize
any revenues during the three months or the nine months ended September 30,
2008.  We are, however, attempting to generate cash from the forward
sale of carbon credits, the sale of future oil delivery contracts, the sale of
Jatropha seeds for seed propagation purposes, and by providing additional
bio-fuel consulting services.





Operating Expenses. Our
general and administrative expenses related to our continuing operations for the
three months and the nine months ended September 30, 2009, were $264,000 and
$1,205,000, respectively, compared to $345,000 and $1,360,000 for the three
months and the nine months ended September 30, 2008,
respectively.  General and administrative expenses principally include
officer compensation; third-party 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 September 30,
2009 compared to the prior year was $81,000 and was principally the result of a
decrease in share-based compensation of $45,000, and a reduction of $41,000 in
expenses incurred to third-party legal and consulting service providers. The net
reduction in general and administrative expenses for the nine months ended
September 30, 2009 was $156,000 and was principally the result of a reduction of
$225,000 in expenses incurred to third-party legal, accounting and consulting
service providers, and a reduction in travel costs of $17,000, net of an
increase in share-based compensation of $94,000.





Other Income/ Expense. The
principal component of Other Income/Expense is interest
expense.  Interest expense for the three months and the nine months
ended September 30, 2009, were $82,000 and $246,000, respectively, compared to
$79,000 and $155,000 for the three months and the nine months ended September
30, 2008, respectively.  The increase in interest expense for the nine
months ended September 30, 2009 is primarily attributable to interest on a
mortgage on land purchased in Mexico during April 2008.  The mortgage
is in the amount of $2,051,000 and accrues interest at the rate of 12% per
year.





Income (Loss) from Discontinued
Operations.  During the three months and nine months ended
September 30, 2009, we recognized loss from discontinued operations of $161,000
and $182,000, respectively, compared to income from discontinued operations of
$251,000 and $6,000 for the three months and nine months ended September 30,
2008, respectively.  The income or loss from discontinued operations
for the three months and nine months ended September 30, 2009 and 2008
principally relates to foreign currency exchange rate gains or losses on
liabilities associated with our former business that are denominated in
euros.





Net loss attributable to the
noncontrolling 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.  Two of the Investors have invested $4,619,000
in exchange for preferred membership units of GCE Mexico.  The
proceeds from the preferred membership units have been used to fund the
operations of Asideros Globales Corporativo (Asideros), who has acquired land in
Mexico and is developing our Jatropha farm there.  Asideros is owned
99% by GCE Mexico and 1% by us directly.  GCE Mexico and
Asideros  are variable interest entities.  We consider
Global Clean Energy Holdings, Inc. to be the primary beneficiary of GCE Mexico
and Asideros.  As such, our consolidated financial statements include
the accounts of GCE Mexico and Asideros.  Under the LLC Agreement, the
net loss allocated from Asideros 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 noncontrolling 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.


20


Liquidity And Capital
Resources




As of
Sept. 30, 2009, we had $848,000 in cash, a working capital deficit of
$7,683,000, and over $10,830,000 of outstanding indebtedness.  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.





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.  Virtually all of
the cash reflected on our balance sheet is reserved for the operation of GCE
Mexico and our Jatropha Farm.  Accordingly, most of those funds are
not available to fund our general and administrative or other operating
expenses.




Our
ability to fund our liquidity and working capital needs will be dependent upon
certain potential transactions.  As previously disclosed, the
principal transaction that was expected to provide us with working capital was
the sale of SaveCream, our remaining legacy pharmaceutical
assets.  Although we had previously agreed to sell these assets in
2007 and 2008, those proposed transaction were not consummated. 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 at closing, and a revenue sharing arrangement to pay up to
2,000,000 Euros to the Company should such legacy pharmaceutical assets ever be
commercialized. We anticipate closing this transaction prior to year-end. The
acquiring entity will also assume certain liabilities of the Company. If such
legacy pharmaceutical assets were ever commercialized, the entire transaction
would be valued at 4.2 million Euros. Although we are hopeful that the legacy
pharmaceutical assets will be commercialized, no assurance can be given if or
when any additional consideration or cash will be provided to the Company after
the closing. We will continue to maintain a security interest in such assets
until the final 2,000,000 Euro payment is made, if ever. Cash proceeds received
at closing in connection with the sale of the legacy pharmaceutical assets will
be used to finance the Company’s immediate working capital needs.





In order
to fund ongoing operations, in September 2007 we entered into a short-term loan
agreement with Mercator Momentum Fund III, L.P.
(“Mercator”).  Pursuant to the loan agreement, Mercator advanced
$350,000 to the Company, of which $200,000 remained outstanding in May
2008.  On May 19, 2008, the loan agreement was modified to accrue
interest at an interest rate of 8.68% per annum, Mercator advanced an additional
$250,000, and the amount available under that facility was changed to $450,000.
This loan was secured by a first priority lien on our
assets.   In connection with this amendment Mercator was granted
a new warrant to purchase 581,395 shares of common stock (calculated by dividing
$75,000 by 130% of the closing price of the stock when exercised) at a price of
$0.129 per share.  In January 2009, Mercator dissolved and distributed
the loan to its limited partners who currently control the loan.  The
loan amount was increased to $475,000, and the maturity date was extended to
July 13, 2009.  In August 2009, the maturity date of this loan was
again extended, this time to January 31, 2010.  Accordingly, in the
event that this loan in not repaid by its maturity date on January 31, 2010, or
if the current holders of the promissory note evidencing the loan do not agree
to extend the maturity date of this loan past the current maturity date, the
holders of the note will have the right to foreclose on our assets, which would
have a material adverse affect on our ability to implement our business plan,
and may result in the cessation of our business operations.





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





Our
business plan calls for significant infusion of additional capital to establish
additional Jatropha farms in Mexico and other locations. Because of our negative
working capital position, we currently do not have the funds necessary to
acquire and cultivate additional farms.  Accordingly, we will have to
obtain significant additional capital through the sale of 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, as previously discussed, is
the first of a series of planned transactions to expand our Jatropha
operations.  Effective July 2, 2009, we acquired all of the shares of
capital stock of Technology Alternatives Limited, a company that owns a 400 acre
Jatropha farm in Belize.  This acquisition is the second step in the
planned expansion of the Company’s Jatropha plantations.  While we
have commenced negotiations with various third parties to obtain additional
funding from strategic partnerships and for the sale of carbon credits, no
assurance can be given that we will be able to enter into any agreements to
obtain funding, sell carbon credits or form additional strategic
partnerships.  Without raising additional cash (through the sale of
our securities, the sale or carbon credits, or strategic arrangements), we will
not be able to effect our new business plan in the Jatropha business and will
have to further reduce our operations, revise our business plan, and either/or
temporarily or permanently cease operations.




21


On April
29, 2008, we formed a new limited liability company, GCE Mexico I, LLC, that was
funded with a $2,051,282 million loan to acquire approximately 5,000 acres of
Jatropha farmland in Mexico.  Operating and development funds of
$957,271 (net of transaction costs) were also received by GCE Mexico I, LLC and
were used to develop the Jatropha Farm.  GCE Mexico’s limited partners
have contributed a total of $4,619,214to GCE Mexico I, LLC
through September 30, 2009.  As the owner of common membership
interests, the Company is not required to make any capital contributions to GCE
Mexico I, LLC.





Effective
July 2, 2009, we purchased all of the outstanding capital stock of Technology
Alternatives Limited, a company formed under the laws of Belize (“TAL”), from
its four shareholders.  TAL owns and operates a 400-acre farm in
subtropical Belize, Central America, which currently is producing
Jatropha.  TAL also has been performing plant science research and has
been providing technical advisory services for propagation of Jatropha for a
number of years.  Under the Stock Purchase Agreement, as amended, in
consideration for the purchase of all of the shares of TAL, (i) promissory notes
were issued by TAL to the four former owners as evidence of its indebtedness to
them in the aggregate amount of $516,139 Belize Dollars (US $268,036 based on
exchange rates in effect at July 2, 2009), and (ii) an aggregate of 8,952,757
unregistered shares of our common stock were issued to the four former
owners.  The entire outstanding balance of the promissory notes mature
six months following the consummation of the transaction.  We
currently do not have the funds to pay the full amount of the promissory note
that we delivered to the sellers of TAL.  Since the TAL promissory
notes is secured by a mortgage on the 400 acre farm, our failure to pay this
note upon its maturity could result in the loss of that farm and our investment
in the Belizean Jatropha farm.




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)(4) of Regulation
S-K.




ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.




Not
applicable.




ITEM
4T. 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.




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





22




ITEM
1A.  RISK FACTORS.





Information regarding risk factors
appears (i) under “Risk Factors” included in Item 1, and “Item 6, Management’s
Discussion and Analysis of Financial Condition and Results of Operations” of our
Annual Report on Form 10-K for the year ended December 31, 2008; and (ii) under
“Risk Factors” included in Item 1A of our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2009, as filed with the Securities and Exchange
Commission.  There have been no material changes from the risk factors
previously disclosed in the above-mentioned periodic reports.





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




None.




ITEM 3.   DEFAULTS UPON SENIOR
SECURITIES.




None.




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




None.




ITEM 5.   OTHER INFORMATION





On
November 16, 2009 Global Clean Energy Holdings, Inc. and our wholly-owned
subsidiary, MDI Oncology, Inc., entered into a Sale and Asset Purchase Agreement
with Curadis Gmbh, a German company, for the sale the intellectual property and
all contractual and other rights we acquired in March 2005 from
Savetherapeutics, including substantially all of the intellectual property
associated with the patents, patent applications, pre-clinical study data and
ancillary clinical trial data concerning “SaveCream”, a developmental topical
aromatase inhibitor cream.





The agreement with Curadis GmbH calls
for the payment of 350,000 Euros, 50,000 of which we have already received, and
the remaining 300,000 Euros due at closing, the assumption of certain
liabilities (including in particular our 1,850,000 Euro obligation to the
liquidator of Savetherapeutics), and a revenue sharing/royalty arrangement under
which Curadis has agreed to pay up to 2 million Euros from the sale of products
or from licensing fees received by Curadis.  These royalty
and  other payments will be payable only if and when any
pharmaceutical products are ever commercialized or licensed.  The
closing of the transaction is subject to certain conditions, including the
approval of the transaction by the liquidator or Savetherapeutics, and no
assurance can be given that the closing will occur.  The closing is
scheduled to occur prior to year end.  If any pharmaceutical products
are ever commercialized or licensed, and if as a result we receive the entire
2,000,000 Euro payment, the entire transaction will be valued at 4.2 million
Euros.  Although we are hopeful that some pharmaceutical products will
be commercialized from the technologies we sold to Curadis GmbH, no assurance
can be given if or when any additional consideration will be paid to the Company
after the closing.  As collateral for its contingent obligation to pay
us up to 2,000,000 Euros in royalties and other payments in the future from the
commercialization of the technology, Curadis has agreed to grant us a first lien
on the patents and other properties we may sell to Curadis.





ITEM 6.   EXHIBITS





10.1
                  Sale
      and Asset Purchase Agreement, dated November 16, 2009, between the
      Company, MDI Oncology, Inc., and Curadis Gmbh*31.1
                  Rule
      13a-14(a) Certification, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002*31.2
                  Rule
      13a-14(a) Certification, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002*32.1
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002*32.2
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002**Filed
      herewith




23


SIGNATURES




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




GLOBAL
      CLEAN ENERGY HOLDINGS, INC.Date:
      November 20, 2009
                  By:
                  /s/
      Bruce
      K. NelsonBruce
      K. Nelson
                    Chief
      Financial Officer




24