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 June 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 August 18, 2009, the issuer had
240,834,095 shares of common stock outstanding, which includes 3,915,016 shares
of common stock currently held in escrow.





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










GLOBAL
CLEAN ENERGY HOLDINGS, INC.


For
the quarter ended June 30, 2009


FORM
10-Q





TABLE
OF CONTENTS





PART
      IITEM
      1.
                FINANCIAL
      STATEMENTS
                3ITEM
      2.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                19ITEM
      3.
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
                23ITEM
      4T.
                CONTROLS
      AND PROCEDURES
                23PART
      IIITEM
      1.
                LEGAL
      PROCEEDINGS
                23ITEM
      1A
                RISK
      FACTORS
                23ITEM
      2.
                UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                24ITEM
      3.
                DEFAULTS
      UPON SENIOR SECURITIES
                24ITEM
      4.
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                24ITEM
      5.
                OTHER
      INFORMATION
                24ITEM
      6.
                EXHIBITS
                25


2




PART
I




ITEM 1.
  FINANCIAL STATEMENTS.


GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (Unaudited)
  June
      30,
                          2009
                        
                        
                        December
      31,
                          2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                        
                        $
                        930,787
                        
                        
                        $
                        291,309Other
      current assets
                        
                        
                        41,959
                        
                        
                        
                        131,715Total
      Current Assets
                        
                        
                        972,746
                        
                        
                        
                        423,024PROPERTY
      AND EQUIPMENTLand
                        
                        
                        2,051,282
                        
                        
                        
                        2,051,282Plantation
      development costs
                        
                        
                        3,086,643
                        
                        
                        
                        2,117,061Plantation
      equipment
                        
                        
                        645,876
                        
                        
                        
                        509,037Office
      equipment
                        
                        
                        10,993
                        
                        
                        
                        10,9935,794,794
                        
                        
                        
                        4,688,373Less
      accumulated depreciation
                        
                        
                        (48,150
                        )
                        
                        
                        (22,296
                        )5,746,644
                        
                        
                        
                        4,666,077OTHER
      ASSETS
                        
                        
                        2,691
                        
                        
                        
                        2,691TOTAL
      ASSETS
                        
                        $
                        6,722,081
                        
                        
                        $
                        5,091,792LIABILITIES
      AND EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                        
                        $
                        2,187,970
                        
                        
                        $
                        1,890,999Accrued
      payroll and payroll taxes
                        
                        
                        1,382,644
                        
                        
                        
                        1,158,808Accrued
      interest payable
                        
                        
                        684,776
                        
                        
                        
                        522,097Accrued
      return on noncontrolling interest
                        
                        
                        339,704
                        
                        
                        
                        138,014Secured
      promissory note
                        
                        
                        475,000
                        
                        
                        
                        460,000Notes
      payable to shareholders
                        
                        
                        56,000
                        
                        
                        
                        56,000Convertible
      notes payable
                        
                        
                        193,200
                        
                        
                        
                        193,200Research
      and development obligation
                        
                        
                        2,598,880
                        
                        
                        
                        2,607,945Total
      Current Liabilities
                        
                        
                        7,918,174
                        
                        
                        
                        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 authorizedSeries
      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;227,966,322
      and 224,813,819 shares issued and outstanding,
respectively
                        
                        
                        17,702,092
                        
                        
                        
                        17,634,474Additional
      paid-in capital
                        
                        
                        4,041,321
                        
                        
                        
                        3,672,724Deficit
      accumulated prior to the development stage
                        
                        
                        (1,399,577
                        )
                        
                        
                        (1,399,577
                        )Deficit
      accumulated during the development stage
                        
                        
                        (27,862,431
                        )
                        
                        
                        (27,146,931
                        )Total
      Global Clean Energy Holdings, Inc. Stockholders' Deficit
                        
                        
                        (6,227,860
                        )
                        
                        
                        (5,948,575
                        )Noncontrolling
      interest
                        
                        
                        2,980,485
                        
                        
                        
                        1,962,022Total
      equity (deficit)
                        
                        
                        (3,247,375
                        )
                        
                        
                        (3,986,553
                        )TOTAL
      LIABILITIES AND EQUITY (DEFICIT)
                        
                        $
                        6,722,081
                        
                        
                        $
                        5,091,792
 
 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)
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
  From
      Inception ofthe
      Development StageFor
      the Three Months Ended
                                                  
                                                  
                                                  For
      the Six Months Ended
                                                  
                                                  
                                                  on
      November 20, 1991June
      30,
                                                  
                                                  
                                                  June
      30,
                                                  
                                                  
                                                  through2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  June
      30, 2009Revenue
                                                  
                                                  $
                                                  29,236
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  69,236
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  69,236Operating
      ExpensesGeneral
      and administrative
                                                  
                                                  
                                                  599,345
                                                  
                                                  
                                                  
                                                  503,886
                                                  
                                                  
                                                  
                                                  940,438
                                                  
                                                  
                                                  
                                                  1,014,911
                                                  
                                                  
                                                  
                                                  10,669,723Research
      and development
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  986,584599,345
                                                  
                                                  
                                                  
                                                  503,886
                                                  
                                                  
                                                  
                                                  940,438
                                                  
                                                  
                                                  
                                                  1,014,911
                                                  
                                                  
                                                  
                                                  11,656,307Loss
      from Operations
                                                  
                                                  
                                                  (570,109
                                                  )
                                                  
                                                  
                                                  (503,886
                                                  )
                                                  
                                                  
                                                  (871,202
                                                  )
                                                  
                                                  
                                                  (1,014,911
                                                  )
                                                  
                                                  
                                                  (11,587,071
                                                  )Other
      Income (Expenses)Unrealized
      gain on financial instrument
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  5,469
                                                  
                                                  
                                                  
                                                  4,722,632Interest
      income
                                                  
                                                  
                                                  1
                                                  
                                                  
                                                  
                                                  406
                                                  
                                                  
                                                  
                                                  2
                                                  
                                                  
                                                  
                                                  4,269
                                                  
                                                  
                                                  
                                                  66,917Interest
      expense
                                                  
                                                  
                                                  (82,016
                                                  )
                                                  
                                                  
                                                  (61,293
                                                  )
                                                  
                                                  
                                                  (163,525
                                                  )
                                                  
                                                  
                                                  (76,323
                                                  )
                                                  
                                                  
                                                  (1,635,544
                                                  )Interest
      expense from amortization of discounton secured promissory
      note
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (16,603
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (16,603
                                                  )
                                                  
                                                  
                                                  (286,369
                                                  )Foreign
      currency transaction adjustments
                                                  
                                                  
                                                  2,007
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,007
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,007Gain
      on debt restructuring
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,524,787Other
      income
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  906,485Total
      Other Income (Expenses)
                                                  
                                                  
                                                  (80,008
                                                  )
                                                  
                                                  
                                                  (77,490
                                                  )
                                                  
                                                  
                                                  (161,516
                                                  )
                                                  
                                                  
                                                  (83,188
                                                  )
                                                  
                                                  
                                                  6,300,915Loss
      from Continuing Operations
                                                  
                                                  
                                                  (650,117
                                                  )
                                                  
                                                  
                                                  (581,376
                                                  )
                                                  
                                                  
                                                  (1,032,718
                                                  )
                                                  
                                                  
                                                  (1,098,099
                                                  )
                                                  
                                                  
                                                  (5,286,156
                                                  )Income
      (Loss) from Discontinued Operations
                                                  
                                                  
                                                  (182,063
                                                  )
                                                  
                                                  
                                                  8,960
                                                  
                                                  
                                                  
                                                  (21,315
                                                  )
                                                  
                                                  
                                                  (244,350
                                                  )
                                                  
                                                  
                                                  (22,537,724
                                                  )Net
      Loss
                                                  
                                                  
                                                  (832,180
                                                  )
                                                  
                                                  
                                                  (572,416
                                                  )
                                                  
                                                  
                                                  (1,054,033
                                                  )
                                                  
                                                  
                                                  (1,342,449
                                                  )
                                                  
                                                  
                                                  (27,823,880
                                                  )Net
      loss attributable to the noncontrolling interest
                                                  
                                                  
                                                  (180,768
                                                  )
                                                  
                                                  
                                                  (84,153
                                                  )
                                                  
                                                  
                                                  (338,533
                                                  )
                                                  
                                                  
                                                  (84,153
                                                  )
                                                  
                                                  
                                                  (653,648
                                                  )Net
      Loss attributable to Global Clean EnergyHoldings,
      Inc.
                                                  
                                                  
                                                  (651,412
                                                  )
                                                  
                                                  
                                                  (488,263
                                                  )
                                                  
                                                  
                                                  (715,500
                                                  )
                                                  
                                                  
                                                  (1,258,296
                                                  )
                                                  
                                                  
                                                  (27,170,232
                                                  )Preferred
      stock dividend from beneficialconversion
    feature
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (692,199
                                                  )Net
      Loss Applicable to Common Shareholders
                                                  
                                                  $
                                                  (651,412
                                                  )
                                                  
                                                  $
                                                  (488,263
                                                  )
                                                  
                                                  $
                                                  (715,500
                                                  )
                                                  
                                                  $
                                                  (1,258,296
                                                  )
                                                  
                                                  $
                                                  (27,862,431
                                                  )Amounts
      attributable to Global Clean EnergyHoldings, Inc. common
      shareholders:Loss
      from Continuing Operations
                                                  
                                                  $
                                                  (469,349
                                                  )
                                                  
                                                  $
                                                  (497,223
                                                  )
                                                  
                                                  $
                                                  (694,185
                                                  )
                                                  
                                                  $
                                                  (1,013,946
                                                  )
                                                  
                                                  $
                                                  (4,632,508
                                                  )Income
      (Loss) from Discontinued Operations
                                                  
                                                  
                                                  (182,063
                                                  )
                                                  
                                                  
                                                  8,960
                                                  
                                                  
                                                  
                                                  (21,315
                                                  )
                                                  
                                                  
                                                  (244,350
                                                  )
                                                  
                                                  
                                                  (22,537,724
                                                  )Net
      Loss
                                                  
                                                  $
                                                  (651,412
                                                  )
                                                  
                                                  $
                                                  (488,263
                                                  )
                                                  
                                                  $
                                                  (715,500
                                                  )
                                                  
                                                  $
                                                  (1,258,296
                                                  )
                                                  
                                                  $
                                                  (27,170,232
                                                  )Basic
      and Diluted Loss per Common Share:Loss
      from Continuing Operations
                                                  
                                                  $
                                                  (0.002
                                                  )
                                                  
                                                  $
                                                  (0.002
                                                  )
                                                  
                                                  $
                                                  (0.003
                                                  )
                                                  
                                                  $
                                                  (0.005
                                                  )Income
      (Loss) from Discontinued Operations
                                                  
                                                  $
                                                  (0.001
                                                  )
                                                  
                                                  $
                                                  0.000
                                                  
                                                  
                                                  $
                                                  (0.000
                                                  )
                                                  
                                                  $
                                                  (0.002
                                                  )Net
      loss
                                                  
                                                  $
                                                  (0.003
                                                  )
                                                  
                                                  $
                                                  (0.002
                                                  )
                                                  
                                                  $
                                                  (0.003
                                                  )
                                                  
                                                  $
                                                  (0.007
                                                  )Basic
      and Diluted Weighted-Average CommonShares
      Outstanding
                                                  
                                                  
                                                  226,654,728
                                                  
                                                  
                                                  
                                                  210,893,426
                                                  
                                                  
                                                  
                                                  225,739,359
                                                  
                                                  
                                                  
                                                  192,866,196
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements
  4
 
 GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  From
      Inception ofthe
      Development StageFor
      the Six Months Ended
                                
                                
                                on
      November 20, 1991June
      30,
                                
                                
                                through2009
                                
                                
                                2008
                                
                                
                                June
      30, 2009Cash
      Flows From Operating ActivitiesNet
      loss
                                
                                $
                                (1,054,033
                                )
                                
                                $
                                (1,342,449
                                )
                                
                                $
                                (27,823,880
                                )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesForeign
      currency transaction loss (gain)
                                
                                
                                (12,399
                                )
                                
                                
                                244,350
                                
                                
                                
                                237,623Gain
      on debt restructuring
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (2,524,787
                                )Share-based
      compensation for services, expenses, litigation,and
      research and development
                                
                                
                                386,215
                                
                                
                                
                                246,790
                                
                                
                                
                                13,100,395Commitment
      for research and development obligation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,378,445Depreciation
                                
                                
                                1,099
                                
                                
                                
                                266
                                
                                
                                
                                140,130Reduction
      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 securedpromissory
      note
                                
                                
                                -
                                
                                
                                
                                16,603
                                
                                
                                
                                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
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (7,529
                                )Other
      current assets
                                
                                
                                89,756
                                
                                
                                
                                20,050
                                
                                
                                
                                (41,959
                                )Accounts
      payable and accrued expenses
                                
                                
                                496,707
                                
                                
                                
                                553,649
                                
                                
                                
                                5,517,033Net
      Cash Used in Operating Activities
                                
                                
                                (92,655
                                )
                                
                                
                                (266,210
                                )
                                
                                
                                (12,477,088
                                )Cash
      Flows From Investing ActivitiesPlantation
      development costs
                                
                                
                                (754,714
                                )
                                
                                
                                (1,259,502
                                )
                                
                                
                                (2,851,407
                                )Purchase
      of property and equipment
                                
                                
                                (136,839
                                )
                                
                                
                                (296,411
                                )
                                
                                
                                (877,076
                                )Proceeds
      from disposal of assets
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                310,000Change
      in deposits
                                
                                
                                -
                                
                                
                                
                                (12,691
                                )
                                
                                
                                (53,791
                                )Issuance
      of note receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (313,170
                                )Payments
      received on note receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                130,000Net
      Cash Used in Investing Activities
                                
                                
                                (891,553
                                )
                                
                                
                                (1,568,604
                                )
                                
                                
                                (3,655,444
                                )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
                                
                                
                                1,558,686
                                
                                
                                
                                957,191
                                
                                
                                
                                3,973,837Contributed
      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
                                
                                
                                1,623,686
                                
                                
                                
                                1,232,191
                                
                                
                                
                                17,063,319Net
      Increase (Decrease) in Cash and Cash Equivalents
                                
                                
                                639,478
                                
                                
                                
                                (602,623
                                )
                                
                                
                                930,787Cash
      and Cash Equivalents at Beginning of Period
                                
                                
                                291,309
                                
                                
                                
                                805,338
                                
                                
                                
                                -Cash
      and Cash Equivalents at End of Period
                                
                                $
                                930,787
                                
                                
                                $
                                202,715
                                
                                
                                $
                                930,787Supplemental
      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
                                
                                
                                201,690
                                
                                
                                
                                21,377Plantation
      costs financed by accounts payable
                                
                                
                                190,113
                                
                                
                                
                                -Equipment
      depreciation capitalized to plantation development costs
                                
                                
                                24,755
                                
                                
                                
                                -
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements
  5
  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. The ownership interests of the
six unaffiliated investors in GCE Mexico is presented as noncontrolling interest
in the accompanying consolidated financial statements. The Company has
consolidated the financial statements of Asideros with its financial statements
since the inception of Asideros in April 2008.
  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 six
months ended June 30, 2009, may not be indicative of the results that may be
expected for the year ending December 31, 2009.
  6
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Loss per Common
Share
 
 Loss per
share amounts are computed by dividing loss applicable to 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 June 30, 2009 and 2008, as follows:
  June
      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
                    
                    
                    59,859,083
                    
                    
                    
                    49,383,000Common
      stock held in escrow
                    
                    
                    3,915,016
                    
                    
                    
                    4,567,519105,463,503
                    
                    
                    
                    95,639,923
 
 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.
  Recently Issued Accounting
Standards
 
 In April
2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, which
provides additional guidance for estimating fair value in accordance with SFAS
No. 157. This FSP states that a significant decrease in the volume and
level of activity for the asset or liability when compared with normal market
activity is an indication that transactions or quoted prices may not be
determinative of fair value because there may be increased instances of
transactions that are not orderly in such market conditions. Accordingly,
further analysis of transactions or quoted prices is needed, and a significant
adjustment to the transactions or quoted prices may be necessary to estimate
fair value. This FSP was effective for us beginning April 1, 2009. The
adoption of this FSP did not have a material impact on our consolidated
financial statements.
  In April
2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments, which requires disclosures about the fair value
of our financial instruments for which it is practicable to estimate that value,
whether recognized or not recognized in the balance sheets, in the interim
reporting periods as well as in the annual reporting periods. In addition, the
FSP requires disclosures of the methods and significant assumptions used to
estimate the fair value of those financial instruments. This FSP was effective
for us beginning April 1, 2009. The adoption of this FSP did not have a
material impact on our consolidated financial statements.
  In April
2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments,which establishes a new method of
recognizing and reporting other-than-temporary impairments of debt securities
and requires additional disclosures related to debt and equity securities. This
FSP does not change existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities. This FSP was effective
for us beginning April 1, 2009. The adoption of this FSP did not have a
material impact on our consolidated financial statements.
  7
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 In April
2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R). SFAS No. 167 requires 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. SFAS
No. 167 is effective for annual reporting periods beginning after
November 15, 2009. We do not expect adoption to have a material impact on
our consolidated financial statements.
  In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles, SFAS No. 168 identifies the FASB Accounting Standards
Codification as the authoritative source of generally accepted accounting
principles in the United States. Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under federal securities laws are also
sources of authoritative GAAP for SEC registrants. SFAS No. 168 is
effective for financial statements issued for interim and annual periods ending
after September 15, 2009. We do not expect adoption to have a material
impact on our consolidated financial statements.
 
 Note
2 – Going Concern Considerations
 
 The
accompanying unaudited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company incurred
a net loss applicable to its common shareholders of $715,500 and $1,707,562
during the six-month period ended June 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 $27,862,431. The
Company also used cash in operating activities of $92,655 and $1,004,670 during
the six-month period ended June 30, 2009 and the year ended December 31, 2008,
respectively. At June 30, 2009, the Company has negative working capital of
$6,945,428 and a stockholders’ deficit attributable to its stockholders of
$6,227,860. These factors raise substantial doubt about the Company’s ability to
continue as a going concern.
  The
Company discontinued its former bio-pharmaceutical business during the quarter
ended March 31, 2007. Management plans to meet its cash needs through various
means including selling assets 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 $3,973,837 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.
 
 8
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 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. 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.
  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 has paid Mobius or accrued $149,341 during the three months ended June
30, 2008, of which $19,831 was expensed as compensation to Mobius and $129,510
was capitalized as plantation development costs pursuant to AICPA Statement of
Position 85-3, Accounting by
Agricultural Producers and Agricultural Cooperatives. For the six months
ended June 30, 2008, the Company has paid Mobius or accrued $293,165, of which
$42,155 was expensed as compensation to Mobius and $251,010 was capitalized as
plantation development costs.
  9
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 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 is or will be
responsible for the establishment, development, and day-to-day operations of the
Jatropha Business in Mexico, including the extraction of the oil from the
Jatropha seeds, the delivery of the Jatropha oil to buyers, the purchase or
lease of land in Mexico, the establishment and operation of one or more Jatropha
nurseries, the clearing, planting and cultivation of the Jatropha fields, the
harvesting of the Jatropha seeds, the operation of the Company’s oil extraction
facilities, and the logistics associated with the foregoing. Although the LODEMO
Group is responsible for identifying and acquiring the farmland, ownership of
the farmland or any lease thereto will be held directly by the Company or by a
Mexican subsidiary of the Company. The LODEMO Group will be responsible for
hiring and managing all necessary employees. All direct and budgeted costs of
the Jatropha Business in Mexico will be borne by the Company.
 
 The
LODEMO Group provides the foregoing and other necessary services for a fee
primarily based on the number of hectares of Jatropha under cultivation. The
Company has agreed to pay the LODEMO Group a fixed fee per year of $60 per
hectare of land planted and maintained with minimum payments based on 10,000
hectares of developed land, to follow a planned planting schedule. The Agreement
has a 20-year term but may be terminated earlier by the Company under certain
circumstances. The LODEMO Group will also potentially receive incentive
compensation for controlling costs below the annual budget established by the
parties, production incentives for increased yield and a sales commission for
biomass sales. Under this agreement, the Company has paid the LODEMO Group or
accrued $139,770 and $567,961 during the three-month periods ended June 30, 2009
and 2008, respectively, all of which was capitalized as plantation development
costs pursuant to AICPA Statement of Position 85-3, Accounting by Agricultural Producers
and Agricultural Cooperatives. The Company has paid the LODEMO Group or
accrued $602,090 and $670,444 during the six months ended June 30, 2009 and
2008, respectively. As of June 30, 2009, the Company owed $190,113 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.
  In June
2009, the scope of work previously performed by LODEMO was modified based upon
certain labor functions being provided internally by the Company and by Asideros
on a go-forward basis. The Company and LODEMO are currently in discussions
regarding the appropriate compensation to be provided to LODEMO for services
provided each month.
  10
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 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. Total capital contributions of $3,973,837 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.
 
 According
to the LLC Agreement, the net loss of GCE Mexico is allocated to the members
according to the investment balances. Accordingly, since the common membership
interest did not make a capital contribution, all of the losses have been
allocated to the preferred membership interest. The 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.
  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.
  11
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
4 – Property and Equipment
 
 Property
and equipment are as follows:
 
 June
      30,
                    
                    
                    December
      31,2009
                    
                    
                    2008Land
                    
                    $
                    2,051,282
                    
                    
                    $
                    2,051,282Plantation
      development costs
                    
                    
                    3,086,643
                    
                    
                    
                    2,117,061Plantation
      equipment
                    
                    
                    645,876
                    
                    
                    
                    509,037Office
      equipment
                    
                    
                    10,993
                    
                    
                    
                    10,993Total
      cost
                    
                    
                    5,794,794
                    
                    
                    
                    4,688,373Less
      accumulated depreciation
                    
                    
                    (48,150
                    )
                    
                    
                    (22,296
                    )Property
      and equipment, net
                    
                    $
                    5,746,644
                    
                    
                    $
                    4,666,077
 
 The
Company has capitalized farming equipment and costs related to the development
of land for farm use in accordance with AICPA Statement of Position 85-3, Accounting by Agricultural Producers
and Agricultural Cooperatives. Plantation equipment is depreciated using
the straight-line method over estimated useful lives of 5 to 15 years 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.
  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 land, plantation development costs, and plantation equipment
are located in Mexico.
 
 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:
 
 June
      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 toformer
      officers and directors
                            
                            
                            38,510
                            
                            
                            
                            38,510Accrued
      payroll, vacation, and related payroll taxesfor
      current officers
                            
                            
                            461,985
                            
                            
                            
                            238,149Accrued
      payroll and payroll taxes
                            
                            $
                            1,382,644
                            
                            
                            $
                            1,158,808
  12
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 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. Pursuant to this
agreement, Ms. Robinett resigned on December 21, 2007.
 
 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 June 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.
  13
  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 June 30, 2009 and 2008,
and the changes during the six 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
                  
                  
                  50,000
                  
                  
                  
                  -
                  
                  
                  
                  50,000Capital
      contribution from noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  1,558,686
                  
                  
                  
                  1,558,686Share-based
      compensation
                  
                  
                  386,215
                  
                  
                  
                  -
                  
                  
                  
                  386,215Accrual
      of preferential return for the noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  (201,690
                  )
                  
                  
                  (201,690
                  )Net
      loss
                  
                  
                  (715,500
                  )
                  
                  
                  (338,533
                  )
                  
                  
                  (1,054,033
                  )Balance
      at June 30, 2009
                  
                  $
                  (6,227,860
                  )
                  
                  $
                  2,980,485
                  
                  
                  $
                  (3,247,375
                  )
  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
                  
                  
                  -
                  
                  
                  
                  957,191
                  
                  
                  
                  957,191Share-based
      compensation
                  
                  
                  246,790
                  
                  
                  
                  -
                  
                  
                  
                  246,790Accrual
      of preferential return for the noncontrolling interest
                  
                  
                  -
                  
                  
                  
                  (21,377
                  )
                  
                  
                  (21,377
                  )Issuance
      of warrants in connection with amendment of note payable
                  
                  
                  36,369
                  
                  
                  
                  -
                  
                  
                  
                  36,369Net
      loss
                  
                  
                  (1,258,296
                  )
                  
                  
                  (84,153
                  )
                  
                  
                  (1,342,449
                  )Balance
      at June 30, 2008
                  
                  $
                  (5,848,523
                  )
                  
                  $
                  851,661
                  
                  
                  $
                  (4,996,862
                  )
 
 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.
  14
  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.
 
 Note
8 – Stock Options and Warrants
 
 The
Company has two incentive stock option plans wherein 24,000,000 shares of
the Company’s common stock are reserved for issuance there under. The Company
granted stock options during the six months ended June 30, 2008 to acquire
4,500,000 million shares of the Company’s common stock to the new Executive
Vice-President and Chief Financial Officer. During the six months ended June 30,
2009, the Company issued compensation-based stock warrants to an investment
banking firm to acquire 7,700,000 shares of the Company’s common stock at
$0.0325 per share. No income tax benefit has been recognized for share-based
compensation arrangements. The Company has recognized plantation development
costs totaling $124,565 related to a liability that was satisfied by the
issuance of warrants in 2008. Otherwise, no share-based compensation cost has
been capitalized in the balance sheet.
  A summary
of the status of options and compensation-based warrants at June 30, 2009, and
changes during the six months then ended is presented in the following
table:
  WeightedWeighted
                            
                            AverageShares
                            
                            
                            Average
                            
                            Remaining
                            
                            AggregateUnder
                            
                            
                            Exercise
                            
                            Contractual
                            
                            IntrinsicOption
                            
                            
                            Price
                            
                            Life
                            
                            ValueOutstanding
      at December 31, 2008
                            
                            
                            52,159,083
                            
                            
                            $
                            0.03Granted
                            
                            
                            7,700,000
                            
                            
                            
                            0.03Expired
                            
                            
                            -
                            
                            
                            
                            -Outstanding
      at June 30, 2009
                            
                            
                            59,859,083
                            
                            
                            $
                            0.03
                            
                            5.8
      years
                            
                            $
                            105,380Exercisable
      at June 30, 2009
                            
                            
                            59,684,083
                            
                            
                            $
                            0.03
                            
                            5.8
      years
                            
                            $
                            105,380
 
 At June
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
compensation-based warrants issued during the six months ended June 30, 2009 was
$0.013. The weighted-average assumptions used for the compensation-based
warrants issued during the six months ended June 30, 2009 were risk-free
interest rate of 2.5%, volatility of 150%, expected life of 5.0 years, and
dividend yield of zero. The weighted-average fair value of stock options granted
during the six months ended June 30, 2008 was $0.042. The weighted-average
assumptions used for these options granted during the six months ended June 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:
  15
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 ·
              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.
 
 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 six months ended June 30, 2009
were $326,331 and $386,215, respectively, and is included in general and
administrative expense. Share-based compensation recorded during the three
months and six months ended June 30, 2008 were $167,081 and $246,790,
respectively, and is included in general and administrative expense. As of June
30, 2009, there is approximately $10,000 of unrecognized compensation cost
related to stock-based payments that will be recognized during the three months
ending September 30, 2009.
  16
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Stock
Warrants
 
 A summary
of the status of the warrants outstanding at June 30, 2009, and changes during
the six 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 June 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. However, the principal officer of Eucodis has agreed to continue to work
with the Company in connection with the sale of the Company’s legacy
assets.
 
 The
Company has engaged investment banking firms to expedite the sale of the
SaveCream asset. The Company continues to seek interested parties that may
purchase the asset. However, the recent contraction of the capital markets has
negatively impacted the abilities for several potential purchasers to consummate
a purchase. Although, management is continuing to take steps to market and sell
the SaveCream assets to potential buyers, no assurance can be given that this
sale will actually be completed in the near future, or ever. Due to the
inability of the investment bankers to facilitate a sales transaction of the
asset, the Company has terminated the engagement of the investment banking
firms.
  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 six months ended June 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 June 30, 2009 associated with the planned sale of the SaveCream
assets.
  17
  GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Unaudited Condensed Consolidated Financial Statements
 
 Note
10 – Subsequent Event
 
 Acquisition of Jatropha Farm
in Belize
 
 On
October 29, 2008, the Company entered into a Stock Purchase Agreement with the
four shareholders of Technology Alternatives Limited (TAL), a company formed
under the Laws of Belize. TAL owns and operates a 400 acre farm in subtropical
Belize, Central America, which is currently producing Jatropha. TAL has also
been performing plant science research and has been providing technical advisory
services for propagation of Jatropha for a number of years.
  The
shareholders of TAL are unaffiliated persons residing in the United Kingdom.
Pursuant to the Stock Purchase Agreement, the Company will acquire 100% of the
issued and outstanding shares of TAL for common stock in the Company, thereby
making TAL a wholly-owned subsidiary of the Company. On July 2, 2009, the
Company consummated the acquisition of TAL by issuing 8,952,757 shares of its
common stock in exchange for all of the outstanding shares of TAL.
  The
selling shareholders had previously made loans to TAL to fund its operations. As
of October 29, 2008 in the transaction originally contemplated by the Stock
Purchase Agreement, the remaining outstanding balance of these loans, in the
aggregate, was determined to be $453,611. To reflect the current value of TAL,
these notes were reduced to $303,611 at closing. At the closing, the promissory
notes evidencing these loans were replaced by new promissory notes issued by TAL
to the selling shareholders. The new notes have the following terms: (i)
Interest free for 90 days; (ii) Interest accrues at an annual rate of 8% per
annum commencing on the 91st day after the issuance of the notes; (iii) Interest
accrues until maturity; (iv) The entire remaining unpaid balance of the notes is
due and payable six months following the consummation of the transaction; (v)
TAL and/or the Company may prepay the notes at any time without penalty, and the
Company is required to prepay the notes if and when it receives future funding
in an amount that, in the Company’s reasonable discretion, is sufficient to
permit the prepayment of the notes without adversely affecting the Company’s
operations or financial condition. The new notes are secured by the deed of
legal mortgage on the 400 acre farm owned by TAL. Accordingly, in the event that
TAL defaults under the notes, the selling shareholders will have the right to
foreclose on the 400 acre Jatropha farm.
  18




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




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




Introductory
Comment




Throughout
this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “our
company,” and “Company” refer to Global Clean Energy Holdings, Inc., a Utah
corporation, and, unless the context indicates otherwise, also includes the
following subsidiaries: (i) MDI Oncology, Inc., a Delaware corporation, (ii)
Global Clean Energy Holdings LLC, a Delaware limited liability company, and
(iii) Asideros Globales Corporativo, a corporation organized under the laws of
Mexico. Effective July 2, 2009, Global Clean Energy Holdings, Inc. purchased all
of the capital stock of Technology Alternatives Limited.  Since the
foregoing acquisition was consummated after the last day of the June 30, 2009
fiscal quarter, no financial information of Technology Alternatives Limited is
included in this report.





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.


19




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. We are currently
still trying to sell our SaveCream technologies and other medical
technologies.




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 June 30, 2009, contributed $3,973,837 to the capital of the 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.


20


Critical
Accounting Policies





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States require management to make estimates and
assumptions that affect the reported assets, liabilities, sales and expenses in
the accompanying financial statements. Critical accounting policies are those
that require the most subjective and complex judgments, often employing the use
of estimates about the effect of matters that are inherently uncertain. We are a
development stage company as defined by the Financial Accounting Standards
Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 7,
“Accounting and Reporting by Development Stage Enterprises.” Accordingly, all
losses accumulated since inception have been considered as part of our
development stage activities. Certain other critical accounting policies,
including the assumptions and judgments underlying them, are disclosed in the
Note A to the Consolidated Financial Statements included in our annual report on
Form 10-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.





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, but 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 late
2009.  During the three months and six months ended June 30, 2009, we
recognized revenue of $29,000 and $69,000 under a bio-fuel consulting services
agreement.  We did not recognize any revenues during the three months
or the six months ended June 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 some 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 six months ended June 30, 2009, were $599,000 and $940,000,
respectively, compared to $504,000 and $1,015,000 for the three months and the
six months ended June 30, 2008, respectively.  General and
administrative expense principally includes officer compensation; outside
services, such as legal, accounting, and consulting expenses; share-based
compensation; and other general expenses such as insurance, occupancy costs,
travel, etc.  The net increase in general and administrative expenses
for the three months ended June 30, 2009 compared to the prior year was $95,000
and was principally the result of an increase in share-based compensation of
$159,000, net of a reduction in the cost of outside services for legal,
accounting, and consulting services of $21,000, a reduction in salaries and
related taxes of $26,000, and a reduction in travel costs of $11,000. The net
reduction in general and administrative expenses for the six months ended June
30, 2009 was $74,000 and was principally the result of a reduction in the cost
of outside services for legal, accounting, and consulting services of $165,000,
a reduction in salaries and related taxes of $31,000, and a reduction in travel
costs of $19,000, net of an increase in share-based compensation of
$139,000.





Other Income/ Expense. The
principal component of Other Income/Expense is interest
expense.  Interest expense for the three months and the six months
ended June 30, 2009, were $82,000 and $164,000, respectively, compared to
$61,000 and $76,000 for the three months and the six months ended June 30, 2008,
respectively.  The increase in interest expense 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 six months ended June
30, 2009, we recognized loss from discontinued operations of $182,000 and
$21,000, respectively, compared to income from discontinued operations of $9,000
for the three months ended June 30, 2008 and loss from discontinued operations
of $244,000 for the six months ended June 30, 2008.  The income or
loss from discontinued operations for the three months and six months ended June
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 $3,974,000
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.  Accordingly, we own 50.5% of
Asideros either directly, or through our common membership interest in GCE
Mexico.  As such, our consolidated financial statements include the
accounts of 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.


21





Liquidity And Capital
Resources




As of
June 30, 2009, we had $931,000 in cash, a working capital deficit of $6,945,000,
and over $9,969,000 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, those
proposed transaction were not consummated.  As a result, as of the
date of this filing, we have not found a buyer for this medical
asset.  The failure to sell our SaveCream asset has severely and
negatively affected our liquidity. Although we are continuing to market the
SaveCream asset to new potential purchasers, no assurance can be given if or
when we will be able to dispose of our remaining legacy asset.





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.  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.  This
loan is secured by a first priority lien on all of our
assets.  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 new maturity date, the holders of the note will have the right to
foreclose on all of our assets, which would have a material adverse affect on
our ability to continue our business plan and which may result in the closure of
our operations.





To date,
we have funded our operations from loans 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.





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 farm land in Mexico.  Operating and development funds of
$957,271 (net of transaction costs) were also received by GCE Mexico I, LLC and
were used to develop the Jatropha Farm.  GCE Mexico’s limited partners
have contributed a total of $3,974,000to GCE Mexico I, LLC
through June 30, 2009.  As the owner of common membership interests,
the Company is not required to make any capital contributions to GCE Mexico I,
LLC.


22





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, that 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, we delivered to the
four sellers (i) promissory notes in the aggregate amount of US $303,611, and
(ii) an aggregate of 8,952,757 unregistered shares of our common
stock.  The entire outstanding balance of the foregoing US $303,611
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.





ITEM
1A.  RISK FACTORS.





Information regarding risk factors
appears under “Risk Factors” included in Item 1, and “Item 6, Management’s
Discussion and Analysis of Financial Condition and Results of Operations” of our
Annual Report on Form 10-K for the year ended December 31, 2008 as filed with
the Securities and Exchange Commission.  Except as set forth below,
there have been no material changes from the risk factors previously disclosed
in that Annual Report on Form 10-K.


23


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




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




We
currently have outstanding a $475,000 short-term promissory notes that is
secured by a lien on all of this company’s assets.  Accordingly, a
default under the secured promissory note could result in the foreclosure of all
of our assets and the termination of our business.




We
currently have outstanding a $475,000 promissory note that is secured by a first
priority security interest on all of our assets.  As a result of the
extension that we recently received, the promissory note is now scheduled to
mature on January 31, 2010.   Failure to fully repay the
outstanding principal balance, plus all interest that accrues on that promissory
note, upon maturity could result in the acceleration of the promissory note and
the foreclosure of our assets.  If we are unable to repay the note in
full upon its maturity, or if we otherwise default under our obligations to the
holders of the promissory note, the holders of the promissory note will have the
right to foreclose on all of our assets, which would materially and adversely
affect our ability to continue our operations and could terminate our
existence.  We currently do not have sufficient funds to repay the
loan, and no assurance can be given that we will be able to repay the promissory
note as scheduled.




We may lose our newly acquired 400
acre Jatropha farm in Belize if we are unable to repay an outstanding U.S.
$303,611loan that is secured by a mortgage
on the farm.





Effective
July 2, 2009, we acquired all of the outstanding capital stock of Technology
Alternatives Limited, a company that owns and operates a 400 acre Jatropha farm
in Belize.  As part of the purchase price, we issued four loans that
have an aggregate balance of U.S. $303,611 and a maturity date of six months
following the closing of the transaction.  These loans are secured by
a first lien on the Belizean Jatropha farm.  We currently do not have
sufficient funds to repay these loans by their anticipated maturity
date.  Accordingly, unless we obtain additional funds from the sale of
our securities, from the sale of some of our products, and/or from strategic
transactions, we may lose our new Belizean farm when the four loans mature,
which loss will have a material negative affect on our plans to develop our
Central American Jatropha operations.  No assurance can be given that
we will be able to raise the funds needed to repay the $303,611
loans.




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




Effective
May 12, 2009 we issued 2,500,000 common shares to one investor for an investment
of $50,000. The foregoing shares were issued in reliance upon an exemption from
the registration requirements pursuant to Section 4(2) of the Securities Act of
1933, as amended.




Effective
July 2, 2009, we issued 8,952,757 shares of our Common Stock to the four
shareholders of Technology Alternatives Limited, a Belize company, in connection
with all of the issued and outstanding shares of Technology Alternatives
Limited.  The foregoing shares were issued in reliance upon an
exemption from the registration requirements pursuant to Section 4(2) of the
Securities Act of 1933, as amended.




ITEM 3.   DEFAULTS UPON SENIOR
SECURITIES .




None.




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




None.




ITEM 5.   OTHER INFORMATION




None.


24





ITEM 6.   EXHIBITS




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


25





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:
      August 19, 2009
                  By:
                  /s/
      Bruce K. NelsonBruce
      K. Nelson
                    Chief
      Financial
Officer


26