##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2007
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to .
 Commission File No. 001-33893
 GREENHUNTER ENERGY, INC.
  Delaware
    
    20-4864036(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 1048 Texan Trail, Grapevine, Texas 76051
   Title of each class
    
    Name of each exchange on which registeredCommon Stock ($.001 par value)
    
    American Stock Exchange
  o þ
 o þ
 þ o
 o
  o Large accelerated filer
    
    o Accelerated filer
    
    þ Non-accelerated filer
    
    o Smaller reporting company(Do not check if a smaller reporting company)
 o þ




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##### 



Table of Contents
 PART
IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    17Item 2.
    
    Properties
    
    
    27Item 3.
    
    Legal Proceedings
    
    
    28Item 4.
    
    Submission of Matters to a vote of Security Holders
    
    
    28PART
IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity  Securities
    
    
    28Item 6.
    
    Selected Financial Data
    
    
    29Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risks
    
    
    42Item 8.
    
    Financial Statements and Supplementary Data
    
    
    43Item 9.
    
    Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    43Item 9A(T).
    
    Controls and Procedures
    
    
    43Item 9B.
    
    Other Information
    
    
    43PART
IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    43Item 11.
    
    Executive Compensation
    
    
    49Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    52Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    53Item 14.
    
    Principal Accounting Fees and Services
    
    
    54PART
IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    54Amended and Restated Credit AgreementSubscription and Equity Transfer AgreementMaster Turbine Supply AgreementList of Subsidiaries




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Part I
 
 Item 1. Business
 Some of the information contained in this Description of Business may contain forward-looking
statements. Such statements can be identified by the use of forward-looking words such as may,
will, anticipate, expect, estimate, continue or other such words. These types of
statements discuss future expectations or contain projections or estimates. When considering such
forward-looking statements, investors should consider the risk factors set forth in the Risk
Factors section of this report. These risk factors and other unidentified factors could cause
actual results to differ materially from those contained in any forward-looking statement.
 Website Access to Reports
 www.greenhunterenergy.com
 Incorporation and Organization
    Business
   1




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
    
    Renewable energy and energy efficiency markets are becoming more global and enjoying
easier access to capital markets;
    
    Capital is generated from the venture investment community, the stock markets and
internal refinancing, signaling the sectors shift to a more mainstream status;
    
    Energy efficiency is a significant but largely invisible market, attracting increasing
attention as investors realize its important role in meeting rising energy demand; and
    
    Capital investors appear to be more closely aligned with industry proponents in their view
of anticipated growth.
   Biofuels
   Biodiesel basics
  2




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Traditional Biodiesel Production Process
   Triglycerides
  3




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Transesterification
    Glycerin
  Methanol
  Biodiesel Quality Standards
  4




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Feedstocks
    5




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Benefits of Biodiesel
  
    
    Biodiesel reduces by as much as 65% the emission of particulates, which are small
particles of solid combustion products. This can reduce cancer risks by up to 94% according
to testing sponsored by the Department of Energy.
    
    Biodiesel does produce the same or slightly more (up to 7% more) nitrogen oxide (NOx)
emissions than petrodiesel, but these emissions can be reduced through the use of catalytic
converters. As biodiesel contains no nitrogen, the increase in NOx emissions may be due to
the higher cetane rating of biodiesel as well as higher oxygen content, which allows it to
convert nitrogen from the atmosphere into NOx more rapidly. Properly designed and tuned
engines may eliminate this increase.
    
    Biodiesel has higher cetane rating than petrodiesel, and therefore ignites more rapidly
when injected into the engine. It also has the highest energy content (B100) of any
alternative fuel in its pure form.
    
    Biodiesel is twice as biodegradable as petroleum oils and is non-toxic. Tests sponsored
by the United States Department of Agriculture confirm biodiesel is less toxic than table
salt and biodegrades as quickly as sugar.
    
    In the United States, biodiesel is the only alternative fuel to have successfully
completed the Health Effects Testing requirements (Tier I and Tier II) of the Clean Air Act
(1990).
  
    
    Today, diesel engines can run most biodiesel blends with no modifications.
    
    Biodiesel does not need investments into new infrastructure. It can use the current
distribution and retail infrastructure.
    
    Biodiesel can be blended in any percentage with petrodiesel.
    
    Biodiesel has the highest energy content (BTU) of any alternative fuel.
    
    Harmful emissions (carbon monoxide, particulate matter and hydrocarbons) are reduced by
more than 50% compared with petrodiesel.
    
    Biodiesel is the only alternative fuel to pass Tier 1 and Tier 2 health effects testing
required by the Clean Air Act.
    
    Biodiesel has a positive energy balance.
  Market Acceptance of Biodiesel
   
    
    600 major fleets use biodiesel commercially.
    
    More than 850 retail filling stations offer biodiesel to the public.
 6




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
    
    Our federal government has mandated the use of 4 billion gallons of renewable fuel in
2006, growing to 7.5 billion gallons in 2012.
    
    Currently there are 171 plants either with producing biodiesel or being planned.
  
    
    Asia Pacific will overtake North America by 2010
    
    As economies mature, demand typically shifts from industrial use to transportation sectors
    
    U.S. is gasoline focused regarding fuels whereas Asia is diesel-focused (gas oil)
    
    Biodiesel will have far greater impact on road diesel balances than ethanol will have on
gasoline balances
 GreenHunter BioFuels, Inc. (formerly Channel Refining Corporation) Acquisition
   
    
    Feedstock can be delivered by either barge, truck, rail or
ship (across the channel)
    
    Distribution of finished product can be either shipped by barge, delivered through an
on-site truck terminal or possibly loaded onto bulk rail transport
    
    An existing dock is capable of unloading 30 thousand barrels at any one time
   
    
    35 thousand barrels of static storage
    
    2,800  7,500 barrels per day of processing ability
    
    Adequate water and power supplies
    
    Sophisticated chemical processing instrumentation and controls
    
    Additional processing equipment for market inefficiencies
    
    Ample expansion area for increased production capacity
    
    Ample open acreage for additional storage capacity
 GreenHunter Strategy for the GreenHunter BioFuels Plant
  7




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
    
    Design and convert the existing facility to an initial 105 million gallons per year
(mmgy) biodiesel refinery capable of utilizing multiple vegetable oil feedstocks and
animal fats.
    
    Install ample tankage for 700 thousand barrels of bulk storage capacity along
with the ability to acquire feedstock and sell finished product at opportune times.
    
    Maintain an approximate $0.50 per installed gallon capital cost. Management believes the
current market for competitors ranges from $1.10  $1.25 per installed gallon.
    
    Reduce exposure to commodity price risk through hedging strategies while maintaining
enough storage capacity to take advantage of market opportunities
with physical supply.
    
    Maintain cost control by self-performing as the general contractor in this project.
    
    Become the low cost producer of BQ-9000 certified biodiesel and biodiesel blends.
    
    Act to take advantage of the following federal/state tax incentives: Federal Biodiesel
Excise Tax Credit of $1.00/gallon for straight agri-biodiesel or $.01/percentage point of
agri-biodiesel in a petroleum based diesel blend.
    
    Process contaminated methanol into a commercial grade methanol product. GreenHunter
acquired a 45,000 bbl/month methanol processing tower which was located on the BioFuels
site from a third party. This tower is unique in that methanol represents approximately
8-10% of the cost of goods sold in the manufacturing and refining of biodiesel. We will
only utilize approximately 20% of the methanol towers total capacity. Therefore, it can
contribute to lower operating costs by allowing us to purchase contaminated methanol and
re-process it to a 99.85% methanol which can be used in the refining process at 40-50%
below the cost of pure methanol. In addition, we will have additional methanol capacity to
further process and sell to other biodiesel producers or support
additional GreenHunter Energy
refineries in the future. Very few other biodiesel producers in the
U.S. have their own on-site methanol
distillation tower.
    8




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Competitive Strengths
   
    
    We have substantially all of the necessary infrastructure in place to begin producing
biodiesel by the end of April 2008.
    
    The transportation infrastructure of barge, rail and truck provides maximum flexibility
to receive and ship products at the most economic cost.
    
    The ability to be both a producer and a terminal operator/blender provides significant
opportunistic advantages for feedstock acquisition and finished product sales.
    
    Our management team has substantial experience in both the oil and gas industry and
environmental business and have historically been the lower-cost producers in these
industries during their prior careers.
    
    We plan to have sufficient storage facilities to create hedging opportunities due to
control of physical product.
    
    The future refinery location has transportation infrastructure that is unique in the
biodiesel industry:
 a.
    
    Ability to bring in by barge or ship all raw materials either domestically or
internationally,b.
    
    Rail service for raw materials and finished product shipping on-site, andc.
    
    Major interstate within 5 miles.
  a.
    
    Located in one of the largest U.S. cities (Houston) which also has one of the highest rates
of diesel fuel use per capita in the United States;b.
    
    Provides the ability to ship finished product by barge to either domestic or international
destinations; andc.
    
    Provides the ability to economically access interstate pipelines to transport finished
product to major northeast U.S. markets.
 Sustainable Competitive Strategy
   9




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Ethanol
     Biopower
     10




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Mesquite Lake Resource Recovery Plant Acquisition
     
    
    Mesquite Lake has a new definitive power purchase agreement
that has been executed with Southern California
Edison. The agreement with Southern California Edison
contains the following major terms:
 
    
    Term of 15 years;
    
    Renewable energy source: biomass (treated manure and wood waste);
    
    Contract capacity 15 MW;
    
    Start up deadline: December 31, 2009 and
    
    Energy price received is a fixed price escalating annually.
 
    
    Mesquite Lake has executed an interconnect agreement with Imperial Irrigation District
and Southern California Edison.
    
    Project proximity to manure sourced from cattle yards in the Imperial Valley is ideal.
    
    Project qualifies for the Federal Production Tax Credit.
    
    Facility should be able to use multiple biomass fuel sources at a large variance of heat rates.
    
    Project will provide base load renewable power as opposed to intermittent power
provided by other forms of renewable power projects.
 
 11




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
    
    The current day replacement costs for an 18.5 MW biomass facility is approximately $2.1
million per MW ($38.85 million). GreenHunter Energy has acquired and is in the process of
refurbishing the facility at a cost of $1.1 million per MW ($20.18 million).
    
    The electrical infrastructure of the plant is in excellent operational shape.
    
    The power generation and distribution infrastructure of the plant is in very good
condition with a limited amount of overhaul needed.
    
    The original construction cost of plant in 1989 was $68 million.
 GreenHunter Energy Strategy for the Mesquite Lake Plant
  
    
    Find an optimal biomass fuel mix that will maximize profitability of the plant.
    
    Execute long term supply contracts with local biomass producers.
    
    Begin to produce our own biomass, investigate the possibility of planting a certain
type of tree that will ultimately make the facility a closed-loop biomass facility.
    
    Evaluate the feasibility of building an energy campus that includes solar power,
wind, a biodiesel refinery and possibly an ethanol plant around the existing site location.
 Competitive Strengths
  
    
    We acquired this asset for $2.8 million. The estimated cost to restart this facility is
$15 million, and a total cost (purchase price and a refurbishment) of $17.8 million, which
is less than 30% of the original cost dating back to 1989.
    
    We have a majority of all the necessary infrastructure in place to begin producing
electricity during the first quarter of 2009.
    
    We have a transmission interconnect in place.
    
    We have a new 15 year power purchase agreement executed with a major utility.
    
    We estimate our fuel source cost to be 10-25% below industry standard.
    
    This power plant is the only one of its kind in the US capable of utilizing 100% cow
manure to generate electricity.
  Wind Energy
   12




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Wind Energy Basics
 wind turbine
 rotor
 lift drag
 wind plant wind farm
   Current GreenHunter Energy Wind Projects
   Investment in MingYang
  13




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
    
    In 2008 Wind Energy will have the option to purchase up to 108 MW of turbines (1.5 MW
sized machines) for new projects in the United States.
    
    During 2009 through 2012, Wind Energy has the preferential right to purchase any
turbines to be exported by MingYang to North America.
    
    During 2008 through 2012, Wind Energy will have the right to purchase larger capacity
turbines if MingYang manufacturers such turbines.
    
    MingYang will provide maintenance services through a services agreement between the two
companies.
  Montana
 Golden Sunlight Wind Project, Jefferson County
 
    
    1,100 Acres under lease or renewal.
    
    Potential for 40 turbines (60 MW).
    
    Wind Strength: Measured monthly average of 15 MPH.
    
    1 Meteorological tower installed December 2005 and 1 Meteorological tower installed
January 2006 at 60 meter hub height.
 Kimmet Ranch Wind Project, Glacier County
 
    
    2,750 Acres under lease.
    
    Potential for 68 turbines (102 MW).
    
    Wind Strength: Measured monthly average of 18 MPH.
    
    Meteorological tower installed December 2005 at 60 meter hub height.
    
    Interconnection with 115kV transmission line and proposed 230kV Montana  Alberta Tie Line.
 Townsend Wind Project, Jefferson County
 
    
    5,500Acres under lease.
    
    Potential for 140 turbines (210 MW).
    
    Wind Strength: Measured monthly average of 10 MPH.
    
    Meteorological tower installed April 2006 at 60 meter hub height.
    
    Interconnection to proposed Townsend substation and proposed Northern Lights 500kV DC
line from Townsend to Las Vegas.
 Valley County Wind Project, Valley County
 
    
    20,000 Acres under lease.
    
    Potential for 50 turbines (75 MW).
 14




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
    
    Wind Strength: Measured monthly average of 18 MPH.
    
    3 Meteorological towers collecting wind data in four locations over a two year period
at hub heights of 40 meters and 60 meters.
    
    Interconnection to 161 kV WAPA transmission line upgradeable to 230kV, or to Colstrip
lines jointly with coal project, or with upgrades to WAPA lines to the east into North
Dakota and Minnesota.
 California
 Ocotillio Wind Project, Imperial County
 
    
    6,280 acres under lease.
    
    Seeking monitoring and testing ROW.
    
    Potential for 150 turbines (225 MW).
    
    1 Meteorological tower proposed for third quarter 2008.
 New Mexico
 Gerhardt Wind Project, Guadalupe County
 
    
    16,000 acres under lease.
    
    Potential for 200 turbines (300 MW).
    
    Wind Strength: Measured monthly average of 18 MPH.
    
    1 Meteorological tower installed on September 2005 at 60 meter hub height.
 Competition
  Solar Energy
     15




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Geothermal Energy
     Research and Development
  Employees
  16




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Item 1A. Risk Factors
 Risks associated with our business
 We have a limited operating history and our business may not be as successful as we envision.
  Our lack of diversification may increase our risk.
  We may not be able to effectively manage our acquisition and construction costs.
  We have debt that could adversely affect our financial health and prevent us from fulfilling
our obligations.
  We are dependent upon our key personnel.
  17




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We may not be able to meet our capital requirements.
  Risks Related to the Biodiesel Industry
 The biodiesel industry is highly dependent on a mix of legislation and regulation and any
changes in legislation or regulation could harm our business, results of operations and financial
condition.
    18




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Our operations are subject to various regulatory schemes and failure to comply with such
regulations could harm our business, results of operations and financial condition.
   19




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Our results of operations, financial condition and business outlook are highly dependent on
commodity prices, which are subject to significant volatility and uncertainty, and the availability
of supplies, so our results could fluctuate substantially.
     20




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Competition due to advances in alternative fuels may lessen the demand for biodiesel and
negatively impact our profitability.
  Adverse public opinions concerning the biodiesel industry in general could harm our business.
  
    
    public perception that biodiesel is produced from waste vegetable oil or other
lower-quality feedstocks, thereby resulting in lower quality fuel;
    
    public perception that the use of biodiesel will require excessive engine modifications,
or that engines running biodiesel will not reliably start in cold conditions;
    
    actual or perceived problems with biodiesel quality or performance; and
    
    concern that using biodiesel will void engine warranties.
  Risks Related To the Renewable Energy Industry
 Future Investments Limited Only to the Renewable Energy Industry.
  21




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Competition may impair our success.
  Regulation and Legislation on Renewable Energy.
  Volatility in Pricing for Renewable Energy.
   22




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Dependence on Wind Resource(s).
   Construction and Development Delays.
  Volatility in the Market Price of Electricity.
  23




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Licenses and Permits.
  Interconnection Agreements.
  Strict Liability for Toxic and Hazardous Materials; No Environmental Indemnity.
  Risks Relating to the Ownership of our Securities
 We may issue shares of our capital stock or debt securities to complete a business combination
or acquire assets, which would dilute the equity interest of our stockholders and could cause a
change in control of our ownership.
  24




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
    
    significantly dilute the equity interest of shareholders in our Company;
    
    subordinate the rights of holders of Common Stock if preferred stock is issued with
rights senior to those afforded to holders of our Common Stock;
    
    cause a change in control if a substantial number of our shares of Common Stock are
issued, which may affect, among other things, our ability to use our net operating loss
carry forwards, if any, and possibly result in the resignation or removal of some or all of
our present officers and directors; and
    
    adversely affect prevailing market prices for our Common Stock.
  
    
    default and foreclosure on our assets if our operating revenues after a business
combination or asset purchase were insufficient to pay our debt obligations;
    
    acceleration of our obligations to repay the indebtedness, even if we have made all
principal and interest payments when due, if the debt security contains covenants that
require the maintenance of certain financial ratios or reserves, or change of control
provisions, and any such covenant is breached without a waiver or renegotiation of that
covenant;
    
    our immediate payment of all principal and accrued interest, if any, if the debt
security is payable on demand; and
    
    our inability to obtain additional financing, if necessary, if the debt security
contains covenants restricting our ability to obtain additional financing while such
security is outstanding.
 Our ability to successfully effect a business combination and to be successful afterwards will
be totally dependent upon the efforts of our key personnel, and others who will be hired to manage
the acquired business and whom we would have only a limited ability to evaluate.
  Our officers and directors allocation of their time to other business interests could have a
negative impact on our ability to develop our renewable assets and consummate a business
combination.
  Our officers and directors may become affiliated with entities engaged in business activities
similar to our own and accordingly, may have conflicts of interest in determining which entity a
particular business opportunity should be presented to.
  25




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Because of our limited resources and the significant competition for business combination
opportunities, we may not be able to consummate an attractive business combination.
  We may be unable to obtain additional financing, if required, to complete a business
combination, asset purchase or to fund the operations and growth of the target business, which
could compel us to restructure the transaction or abandon a particular business combination or
asset purchase.
  We depend on key management personnel, and the loss of any of these individuals could have a
material adverse effect and make it more difficult to find a suitable company for a business
combination.
  In the event we cannot comply with the requirements of the Sarbanes-Oxley Act of 2002 or we
acquire a business that is unable to satisfy regulatory requirements relating to internal controls,
or if its internal controls over financial reporting are not effective, our business and our stock
price could suffer.
  26




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Our outstanding warrants may have an adverse effect on the market price of common stock and
make it more difficult to effect a business combination.
  We do not intend to pay dividends.
  Shareholders do not have preemptive rights and therefore are subject to dilution.
  
 Item 2. Properties
   27




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a vote of Security Holders
  Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    Equity Compensation Plan InformationNumber of securitiesremaining available forfuture issuance underNumber of securities to
    
    
    Weighted-average
    
    
    equitybe issued upon exercise
    
    
    exercise price of
    
    
    compensation plansof outstanding options,
    
    
    outstanding options,
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by security holders
    
    
    
    
    
    
    
    
    
    
    Equity compensation plans not approved by security
holders
    
    
    4,031,500
    
    
    $
    5.60
    
    
    
    Total
    
    
    4,031,500
    
    
    $
    5.60
    
    
    
    
 Recent Sales of Unregistered Securities
   28




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Item 6. Selected Financial Data
  For the years ended December 312007
    
    2006
    
    2005
    
    2004
    
    2003Operating resultsRevenues
    
    $
    1,052,743
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Material and freight
    
    
    307,211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating expenses
    
    
    451,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Project costs
    
    
    276,505
    
    
    
    1,016,931
    
    
    
    1,087,642
    
    
    
    715,706
    
    
    
    40,800General and administrative(b)
    
    
    11,783,113
    
    
    
    676,881
    
    
    
    357,327
    
    
    
    223,054
    
    
    
    1,585Operating loss(b)
    
    
    (11,884,301
    )
    
    
    (1,728,500
    )
    
    
    (1,454,482
    )
    
    
    (942,570
    )
    
    
    (42,385
    )Net loss(b)
    
    
    (12,034,342
    )
    
    
    (1,760,195
    )
    
    
    (1,454,210
    )
    
    
    (942,570
    )
    
    
    (42,385
    )Preferred dividends
    
    
    (1,657,671
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss to common stockholders(b)
    
    $
    (13,692,013
    )
    
    $
    (1,760,195
    )
    
    $
    (1,454,210
    )
    
    $
    (942,570
    )
    
    $
    (42,385
    )Net loss per common share
    
    $
    (0.80
    )
    
    $
    (0.12
    )
    
    $
    (0.10
    )
    
    $
    (0.06
    )
    
    $
    (0.00
    )
 29




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For the years ended December 312007
    
    2006
    
    2005
    
    2004
    
    2003Balance sheet (end of period)Cash and cash equivalents
    
    $
    18,750,394
    
    
    $
    64,786
    
    
    $
    36,461
    
    
    $
    13,305
    
    
    $
    13,415Property and equipment, net
    
    
    32,668,032
    
    
    
    114,040
    
    
    
    109,451
    
    
    
    40,341
    
    
    
    Total assets
    
    
    59,497,285
    
    
    
    698,308
    
    
    
    632,781
    
    
    
    101,506
    
    
    
    13,415Long-term debt
    
    
    16,716,738
    
    
    
    2,851,259
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    
    21,097,191
    
    
    
    3,333,505
    
    
    
    326,146
    
    
    
    291,661
    
    
    
    Preferred Stock
    
    
    12,500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total stockholders equity (deficit)
    
    $
    38,400,094
    
    
    $
    (2,635,197
    )
    
    $
    (306,635
    )
    
    $
    (190,155
    )
    
    $
    13,415
 
 (a)
    
    On April 13, 2007, we acquired 100% of the capital stock of CRC, a specialty chemical
manufacturer for cash of $6.6 million, notes payable of $1.6 million and 450,000 shares of
common stock with a value of $2.1 million. The period ended December 31, 2007 includes CRCs
operations beginning April 14, 2007.(b)
    
    We issued 4,031,500 common stock options to employees and directors during 2007 valued at
$6.3 million.(c)
    
    During 2007, we issued $12.5 million in Series A 8% Convertible Preferred Stock along with
1,250,000 common stock warrants pertaining to the preferred which were valued at $950 thousand
and treated as a preferred stock dividend. We also paid $708 thousand in cash dividends on the
Convertible Preferred Stock.(d)
    
    We purchased an 18.5 mega watt (nameplate capacity) biomass plant for $1.4 million in cash
and 300,000 shares of our common stock, valued at $1.4 million, during 2007. In addition we
acquired a power purchase agreement connected with the plant for 500,000 shares of our common
stock valued at $2.3 million.(e)
    
    In November 2007 we acquired real estate including two office buildings for use as our
headquarters for $3.7 million, financed in part by a loan of $3.1 million from a bank.(f)
    
    During 2007, we issued $7.3 million of 10% Series A Senior Secured Redeemable Debentures for
net proceeds of $6.6 million.(g)
    
    During December 2007, we entered into a credit agreement with a bank which provides a $38.5
million term loan facility and a $5 million working capital facility in connection with the
construction of our biodiesel plant in Houston, Texas. At December 31, 2007 the total amount
outstanding on the term and working capital portions of the credit was $1.7 million and none,
respectively.(h)
    
    During 2007 we issued 3,509,118 shares of our common stock in private placements of
securities to accredited investors, along with 2,807,834 warrants to purchase our common stock
at a weighted average exercise price of $10.52 per share. Proceeds from these private
placements were approximately $29.1 million, net of selling costs. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis provides information which management believes is
relevant to an assessment and understanding of our financial condition and results of operations.
The discussion contains forward-looking statements that involve risks and uncertainties (see
Forward-Looking Statements above). Actual events or results may differ materially from those
indicated in such forward-looking statements. The discussion should be read in conjunction with the
financial statements and accompanying notes included herewith.
 Overview
   30




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##### Table of Contents



BioFuels
    BioPower
  Wind Energy
   31




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##### Table of Contents



Results of Operations
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006:
  Biofuels Revenues and Operating Costs
  Wind Energy Operating Costs
  Depreciation Expense
  General and Administrative Expense
  32




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##### Table of Contents



Operating Loss
  Other Income and Expense
  Net Loss
  Year Ended December 31, 2006 Compared to Year Ended December 31, 2005:
 Revenues
  Operating Costs
  33




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##### Table of Contents



Depreciation Expense
  General and Administrative Expense
  Operating Loss
  Other Income and Expense
  Net Loss
  Liquidity and Capital Resources
 Cash Flow and Working Capital
  Financing Activities
 Notes Payable
   34




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##### Table of Contents



Convertible Debt
  10% Series A Senior Secured Redeemable Debentures
  Preferred Stock, Common Stock and Common Stock Warrants to Institutional Investors
    35




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##### Table of Contents



Private Placements of Common Stock and Common Stock Warrants
    Common Stock Issued for acquisition of Channel Refining Corporation
  Common Stock Issued for acquisition of Biomass Plant and Power Purchase Agreement
  Employee Stock Options
  36




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##### Table of Contents



Nonrecourse Term Loan and Working Capital Loan
  Prospective Sources of Bank Financing and Other Capital Resources
  Investing Activities and Future Requirements
 Capital Expenditures
  Forecast
  BioFuels
  37




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##### Table of Contents



BioPower
  Wind Energy and MingYang Investment
  Obligations Under Material Contracts
  Consulting Agreement with Chateau
  Master Wind Turbine Supply Contract with MingYang
  Investment in MingYang
  Weaknesses and Uncertainties that May Affect our Financial Condition
  38




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##### Table of Contents



39




---



##### Table of Contents



Critical Accounting Policies and Other
   Project Costs
  Fair Value of Financial Instruments
  Revenue recognition
  Stock-Based Compensation.
  Impairments
 40




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##### Table of Contents



Asset Retirement Obligations
  Recent Accounting Pronouncements
 Accounting for Uncertainty in Income
TaxesAn Interpretation of FASB Statement No. 109
    41




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##### Table of Contents



Contractual Obligations and Commercial Commitments
  Payments Due by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    1 year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsContractual Obligations:Fixed-rate long-term debt(a)
    
    
    5,011,385
    
    
    
    
    
    
    
    4,236,385
    
    
    
    775,000
    
    
    
    Fixed-rate interest payments(a)
    
    
    1,007,391
    
    
    
    407,389
    
    
    
    557,502
    
    
    
    42,500
    
    
    
    Nonrecourse Fixed-rate long-term debt(b)
    
    
    2,211,763
    
    
    
    335,796
    
    
    
    1,280,651
    
    
    
    595,316
    
    
    
    Variable-rate long-term debt(c)
    
    
    5,036,719
    
    
    
    205,448
    
    
    
    745,827
    
    
    
    506,948
    
    
    
    3,578,49610% Series A Secured Redeemable Debentures(d)
    
    
    10,937,795
    
    
    
    741,247
    
    
    
    2,223,741
    
    
    
    7,972,807
    
    
    
    Wind turbine agreement(e)
    
    
    30,159,000
    
    
    
    30,159,000
    
    
    
    
    
    
    
    
    
    
    
    Consulting agreement
    
    
    1,666,000
    
    
    
    392,000
    
    
    
    1,176,000
    
    
    
    98,000
    
    
    
    Operating leases
    
    
    1,360,747
    
    
    
    62,905
    
    
    
    155,637
    
    
    
    103,472
    
    
    
    1,038,733Total Contractual Obligations
    
    
    57,390,800
    
    
    
    32,303,785
    
    
    
    10,375,743
    
    
    
    10,094,043
    
    
    
    4,617,229
 
 (a)
    
    Excludes effect of discount recorded on issuance of debt or
accretion of this discount over life of the debt.(b)
    
    Assumes quarterly payments beginning 9/30/2008 at 10.25%
interest.(c)
    
    Assumes 6.4% interest (7.25% prime minus 85 basis points) over
the life of the note with principal payments, amortized on 25 year schedule,
beginning January 20, 2009 and the remainder of the balance of the loan
ballooning November 30, 2017.(d)
    
    Assumes 10% interest payments over their 5 year term.(e)
    
    Assumes purchase of 22 turbines at 10 million Chinese RMB each,
using exchange rate in effect at December 31, 2007 Off-Balance Sheet Arrangements
  
 Item 7A Quantitative and Qualitative Disclosures About Market Risks
  Commodity Price Risk
  Foreign Currency Exchange Risk
  42




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##### Table of Contents



Interest Rate Risk
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A(T). Controls and Procedures
  
 Item 9B. Other Information
  Part III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  Name
    
    Age
    
    Positions and Offices HeldGary C. Evans
    
    
    50
    
    
    Chairman and Chief Executive OfficerMichael K. Studer
    
    
    50
    
    
    Director, President and Chief Operating OfficerRenato T. Bertani
    
    
    54
    
    
    DirectorStuart W. Ray
    
    
    63
    
    
    DirectorJames R. Sasser
    
    
    71
    
    
    DirectorRonald H. Walker
    
    
    70
    
    
    DirectorRobert Zahradnik
    
    
    54
    
    
    DirectorMorgan F. Johnston
    
    
    47
    
    
    Senior Vice President, General Counsel, and
SecretaryDavid S. Krueger
    
    
    58
    
    
    Vice President and Chief Financial Officer
 43




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##### Table of Contents



Gary C. Evans  Chairman and Chief Executive Officer
    Michael K. Studer  Director, President and Chief Operating Officer
   Renato T. Bertani  Director
   44




---



##### Table of Contents



Stuart W. Ray  Director
     Senator James R. Sasser  Director
    45




---



##### Table of Contents



Ronald H. Walker  Director
      Robert Zahradnik  Director
   46




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##### Table of Contents



Morgan F. Johnston  Senior Vice President, General Counsel, and Secretary
   David S. Krueger  Vice President and Chief Financial Officer
   Corporate Governance.
  47




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##### Table of Contents



Code of Conduct and Ethics
  
    
    ethical handling of actual or apparent conflicts of interest;
    
    full fair and accurate and timely disclosure in filings with the Securities and Exchange
Commission and other public disclosures;
    
    compliance with the law and other regulations;
    
    protection of the Companys assets;
    
    insider trading policies; and
    
    prompt internal reporting of violations of the codes.
  Section 16(a) Beneficial Ownership Reporting Compliance
  48




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Item 11. Executive Compensation
 Summary Compensation Table
  Salary
    
    All Other Compensation
    
    TotalName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)Gary C. Evans   CEO*
    
    
    2007
    
    
    
    151,166
    
    
    
    
    
    
    
    151,1662006
    
    
    
    
    
    
    
    
    
    
    
    Michael K. Studer 
    
    
    2007
    
    
    
    142,619
    
    
    
    
    
    
    
    142,619President / COO*
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    Morgan F. Johnston   Sr.
    
    
    2007
    
    
    
    141,723
    
    
    
    
    
    
    
    141,723Vice President, General
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    Counsel and Secretary *David S. Krueger  Vice
    
    
    2007
    
    
    
    143,910
    
    
    
    
    
    
    
    143,910President and CFO**
    
    
    2006
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Charles R. Rittenberry,
    
    
    2006
    
    
    
    171,386
    
    
    
    
    
    
    
    171,386CEO of CRC***
 
 *
    
    Mr. Evans, Mr. Studer and Mr. Johnston did not become employed by GreenHunter Energy, Inc.
until March 1, 2007. Mr. Evans annual salary for 2007 was $200,000, Mr. Studers annual
salary for 2007 was $200,000 and Mr. Johnstons annual salary for 2007 was $175,000. Mr.
Evans, Mr. Studer, Mr. Johnston and Mr. Krueger are the only current officers of GreenHunter
Energy, Inc.**
    
    Mr. Krueger became employed by GreenHunter Energy, Inc. on May 10, 2006. Mr. Kruegers annual
salary for 2007 was $150,000.***
    
    Mr. Rittenberry ceased being an officer of BioFuels on April 13, 2007. Outstanding Equity Awards at Fiscal Year-End
  Percent of total optionsNumber of Securities
    
    granted to employees inName
    
    underlying options granted
    
    fiscal year
    
    Exercise Price ($/sh)*
    
    Expiration DateGary C. Evans, CEO
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Michael K. Studer ,
    
    
    2,250,000
    
    
    
    64
    %
    
    
    5.00
    
    
    May 5, 2017President and COOMorgan F. Johnston,
    
    
    500,000
    
    
    
    14
    %
    
    
    5.00
    
    
    May 5, 2017Sr. Vice President,
General Counsel and
SecretaryDavid S. Krueger ,
    
    
    550,000
    
    
    
    15
    %
    
    
    5.00
    
    
    May 5, 2017Vice President and
CFO
 
 *
    
    There was no public market for our common shares on the date of grant of the option. Accordingly,
the amounts set out in this column
are based upon the fair market value per common share as estimated by us as at the date of grant of
the option, which was $5.00. 49




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##### Table of Contents



Compensation Discussion and Analysis
 Principles used to determine the nature and amount of remuneration
  
    
    provide competitive remuneration to attract, motivate and retain high caliber directors
and executives with appropriate skills and experience;
    
    remunerate with a mix of short and long term components;
    
    remunerate executives according to individual performance through cash bonuses; and
    
    link executive remuneration to stockholder value through stock options and/or grants.
  
    
    milestones achieved by us;
    
    share price;
    
    free cash flow per share;
    
    earnings per share; and
    
    actual as compared to budgeted financial results.
  
    
    base pay;
    
    short-term performance incentives in the form of cash bonuses; and
    
    long-term incentives through participation in employee stock option grants.
   Base pay
  50




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##### Table of Contents



Short-term incentives  Cash bonuses
  
    
    promote the growth, profitability and expense control necessary to accomplish corporate
strategic long-term plans;
    
    encourage superior results by providing a meaningful incentive; and
    
    support teamwork among employees.
  Long-term incentives  Options and Grants
  
    
    link each participants remuneration to our long-term success through the appreciation of
stock price;
    
    align the interests of our officers with the interests of our stockholders, by linking
the long-term value of the compensation to stockholder returns;
    
    provide annual grants of options that are market competitive; and
    
    improve our ability to attract and retain officers.
   Compensation Committee Report
  
 51




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##### Table of Contents



Director Compensation
 Changein PensionFees
    
    
    
    
    
    
    
    
    
    
    
    
    
    Value andEarned
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    Nonqualifiedor Paid
    
    Stock
    
    Option
    
    Incentive Plan
    
    Deferred
    
    All Otherin Cash
    
    Awards
    
    Awards
    
    Compensation
    
    Compensation
    
    Compensation
    
    TotalName
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    Earnings
    
    ($)
    
    ($)Renato T. Bertani
    
    
    13,328
    
    
    
    
    
    
    
    41,587
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,915Stuart W. Ray
    
    
    2,739
    
    
    
    
    
    
    
    15,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,097Ronald H. Walker
    
    
    9,356
    
    
    
    
    
    
    
    22,142
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,498Robert Zahradnik
    
    
    2,602
    
    
    
    
    
    
    
    15,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,960
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
   Name of Beneficial
    
    Amount and Nature ofTitle of Class
    
    Owner
    
    Beneficial Ownership(1)
    
    Percent of Class(8)Common Stock
    
    Gary C. Evans
    
    
    15,363,276
    (2)
    
    
    74.7Common Stock
    
    Michael K. Studer
    
    
    2,382,000
    (3)
    
    
    10.7Common Stock
    
    Renato T. Bertani
    
    
    
    
    
    
    Common Stock
    
    Stuart W. Ray
    
    
    
    
    
    
    Common Stock
    
    James R. Sasser
    
    
    
    
    
    
    Common Stock
    
    Ronald H. Walker
    
    
    
    
    
    
    Common Stock
    
    Robert Zahradnik
    
    
    
    
    
    
    Common Stock
    
    Morgan F. Johnston
    
    
    555,000
    (4)
    
    
    2.7Common Stock
    
    David S. Krueger
    
    
    605,000
    (5)
    
    
    3.0Common Stock
    
    Investment Hunter, LLC
    
    
    15,187,276
    (6)
    
    
    74.5Common Stock
    
    West Coast Opportunity Fund, LLC
    
    
    4,267,500
    (7)
    
    
    18Common Stock
    
    All officers and directors as a group (9 persons named above)
    
    
    18,487,276
    
    
    
    78
 
 1
    
    Beneficial Ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with respect to
securities. Each of the beneficial owners listed below has direct ownership of and sole voting
power and investment power with respect to the shares of GreenHunters common stock.2
    
    Consists of 14,560,000 shares held directly by Investment Hunter, LLC, 176,000 common stock
purchase options at an exercise price of $18.91 per share and 627,276 shares to be issued upon
conversion of a promissory note in the principal amount of $2,851,259 to common equity held by
Investment Hunter LLC as of December 31, 2007. Gary C. Evans owns 100% of the capital stock
of Investment 52




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##### Table of Contents



Hunter, LLC.3
    
    Consists of 2,250,000 common stock purchase options at an exercise price of $5.00 per share
and 132,000 common stock purchase options at an exercise price of $18.91 per share.4
    
    Consists of 500,000 common stock purchase options at an exercise price of $5.00 per share and
55,000 common stock purchase options at an exercise price of $18.91 per share.5
    
    Consists of 550,000 common stock purchase options at an exercise price of $5.00 per share and
55,000 common stock purchase options at an exercise price of $18.91 per share.6
    
    Consists of 570,252 shares to be issued upon conversion of a promissory note in the principal
amount of $2,851,259 held by Investment Hunter LLC.7
    
    Consists of 11,750,000 shares of Series A Preferred Stock convertible into 2,350,000 shares
of common stock and 1,447,500 shares of common stock exercisable pursuant to common stock
purchase warrants. Paul J. Orfalea, Lance W. Helfert and R. Atticus Lowe have shared voting
and investment control over the securities held by West Coast Opportunity Fund, LLC.8
    
    A total of 19,759,173 shares of GreenHunter Energys Common Stock are considered to be
outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner below, any options
exercisable or securities convertible into common within 60 days have been included in the
denominator. 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
 Transactions with Related Persons .
    
    
    the nature of the relationships among the parties;
    
    the materiality of the transaction to the company;
    
    the related persons interest in the transaction; and
    
    the benefit of the transaction to the related person and to the company.
   53




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##### Table of Contents



Item 14. Principal Accounting Fees and Services
 For the Year Ended December 31,2007
    
    
    2006Audit (a)
    
    $
    79,501
    
    
    $
    15,000Tax preparation fees
    
    
    10,576
    
    
    
    7,643All other fees (b)
    
    
    40 078
    
    
    
    2,550TOTAL
    
    $
    130,155
    
    
    $
    25,193
 
 (a)
    
    Includes fees paid to Hein & Associates for the audit of BioFuels
financial statements in association with the BioFuels acquisition during 2007.(b)
    
    Includes fees paid to Hein & Associates for the review of
financial information filed in our Form 10.  Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
  PageAudited Consolidated Financial Statements of GreenHunter Energy, Inc.Independent Auditors Report
    
    
    F-1Balance Sheets at December 31, 2007 and 2006
    
    
    F-2Statements of Operations for the years ended December 31, 2007, 2006 and 2005
    
    
    F-3Statements of Changes in Stockholders and Members Equity (Deficit) for the years ended December 31, 2007, 2006 and 2005
    
    
    F-4Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005
    
    
    F-5Notes to Financial Statements
    
    
    F-6
 54




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##### Table of Contents



ExhibitNumber
    
    Exhibit Title3.1*
    
    Certificate of Incorporation3.2*
    
    Amendment to the Certificate of Incorporation3.3*
    
    Bylaws4.1*
    
    Certificate of Designations of 2007 Series A 8% Convertible Preferred Stock4.2*
    
    Form of Warrant Agreement by and between GreenHunter Energy, Inc. and West Coast Opportunity Fund, LLC4.3*
    
    Form of Warrant Agreement by and between GreenHunter Energy, Inc. and certain accredited investors10.1*
    
    Stock Purchase Agreement dated February 2007 among Channel Refining Corporation, GreenHunter Energy, Inc. and
certain selling shareholders10.2*
    
    Amendment No. 1 to Stock Purchase Agreement dated February 2007 among Channel Refining Corporation, GreenHunter
Energy, Inc. and certain selling shareholders10.3*
    
    Purchase and Sale Agreement, dated May 14, 2007 between GreenHunter Energy, Inc. and Chateau Energy, Inc. regarding
acquisition of power purchase agreement10.4*
    
    Purchase and Sale Agreement, dated May 14, 2007 between GreenHunter Energy, Inc. and Chateau Energy, Inc. regarding
acquisition of Mesquite Lake Resource Recovery Facility10.5*
    
    Consulting Agreement dated May 14, 2007 between GreenHunter Energy, Inc. and Chateau Energy, Inc.10.6*
    
    Registration rights agreement, dated March 9, 2007 between GreenHunter Energy, Inc. and certain institutional
investors10.7*
    
    Registration rights agreement, dated April 13, 2007 between GreenHunter Energy, Inc. and certain selling shareholders10.8*
    
    Investor rights agreement, dated May 14, 2007 between GreenHunter Energy, Inc. and Chateau Energy, Inc.10.9*
    
    Form of subordinated promissory note of GreenHunter BioFuels, Inc.10.10*
    
    Form of Power Purchase Agreement with Southern California Edison, dated December 21, 2006.10.11
    
    Amended and Restated Credit Agreement dated as of March 7, 2008 among GreenHunter BioFuels Inc., WestLB AG New York
Branch as the administrative agent, WestLB New York Branch as the LC Issuing Bank and the Lenders Party to the
Amended and Restated Credit Agreement from time to time10.12
    
    Subscription and Equity Transfer Agreement between GreenHunter Energy, Inc. and MingYang Wind Power Technology Co.
LTD. et al., dated November 28, 200710.13
    
    Master Turbine Supply Agreement between GreenHunter Energy, Inc. and MingYang Wind Power Technology Co. LTD. et al.,
dated November 28, 200721.1
    
    Subsidiaries of the registrant
 
 *
    
    Incorporated by reference to the Companys Form 10, dated October 19, 2007
    
    Filed herewith 55




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##### Table of Contents



SIGNATURES
  GreenHunter Energy, Inc.Date: March 31, 2008
    By:
    /s/ Gary C. EvansChief Executive Officer  Signature
    
    Title
    
    Date/s/ Gary C. Evans

Gary C. Evans
    
    Chairman, and
Chief Executive Officer
    
    March 31, 2008/s/ Michael K. Studer

Michael K. Studer
    
    Director, President and
Chief Operating Officer
    
    March 31, 2008/s/ Morgan F. Johnston

Morgan F. Johnston
    
    Sr. Vice President, General Counsel
and Secretary
    
    March 31, 2008/s/ David S. Krueger

David S. Krueger
    
    Vice President and
Chief Financial Officer
    
    March 31, 2008/s/ Renato T. Bertani

Renato T. Bertani
    
    Director
    
    March 31, 2008/s/ Stuart W. Ray

Stuart W. Ray
    
    Director
    
    March 31, 2008/s/ Ronald H. Walker

Ronald H. Walker
    
    Director
    
    March 31, 2008
 56




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##### Table of Contents



INDEPENDENT AUDITORS REPORT
 
    HEIN & ASSOCIATES LLP
 
 F-1




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##### Table of Contents



GREENHUNTER ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
 DECEMBER 312007
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    18,750,394
    
    
    $
    64,786Accounts receivable
    
    
    118,709
    
    
    
    Inventory
    
    
    23,947
    
    
    
    Prepaid expenses
    
    
    513,712
    
    
    
    179,482Total current assets
    
    
    19,406,762
    
    
    
    244,268FIXED ASSETS:Land and improvements
    
    
    2,868,837
    
    
    
    Buildings
    
    
    3,209,737
    
    
    
    Methanol distillation system
    
    
    2,252,292
    
    
    
    Plant and other equipment
    
    
    11,557,689
    
    
    
    158,045Accumulated depreciation
    
    
    (162,632
    )
    
    
    (44,005
    )Construction in progress
    
    
    12,942,109
    
    
    
    Net fixed assets
    
    
    32,668,032
    
    
    
    114,040OTHER ASSETS:Power purchase agreement
    
    
    2,310,000
    
    
    
    Deferred financing costs
    
    
    2,729,226
    
    
    
    Other non-current assets
    
    
    2,383,265
    
    
    
    340,000Total assets
    
    $
    59,497,285
    
    
    $
    698,308LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIES:Current portion of notes payable, nonrecourse
    
    $
    166,890
    
    
    $
    Accounts payable
    
    
    2,334,926
    
    
    
    302,246Accrued liabilities
    
    
    1,878,637
    
    
    
    180,000Total current liabilities
    
    
    4,380,453
    
    
    
    482,246NON-CURRENT LIABILITIES:Notes payable, net of unamortized discount of $282,453
    
    
    4,750,054
    
    
    
    Notes payable, nonrecourse, less current portion
    
    
    1,502,009
    
    
    
    10% Series A redeemable debentures
    
    
    7,328,290
    
    
    
    Subordinated convertible note payable to related party
    
    
    3,136,385
    
    
    
    2,851,259Total long-term liabilities
    
    
    16,716,738
    
    
    
    2,851,259COMMITMENTS AND CONTINGENCIES (Notes 6 and 11)STOCKHOLDERS EQUITY:Preferred stock, $.001 par value, 10,000,000 authorized shares,
Series A 8% convertible preferred, $1,000 par value, 12,500 and 0
issued and outstanding, respectively
    
    
    12,500,000
    
    
    
    Common stock, $.001par value, 90,000,000 authorized shares,
19,759,173 and 15,000,055 issued and outstanding, respectively
    
    
    19,759
    
    
    
    15,000Additional paid-in capital
    
    
    43,771,708
    
    
    
    1,549,163Accumulated deficit
    
    
    (17,891,373
    )
    
    
    (4,199,360
    )Total stockholders equity (deficit)
    
    
    38,400,094
    
    
    
    (2,635,197
    )Total liabilities and stockholders equity (deficit)
    
    $
    59,497,285
    
    
    $
    698,308
 F-2




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##### Table of Contents



GREENHUNTER ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 YEARS ENDED DECEMBER 31,2007
    
    
    2006
    
    
    2005REVENUE:Methanol sales
    
    $
    340,716
    
    
    $
    
    
    
    $
    Fuel oil sales
    
    
    616,458
    
    
    
    
    
    
    
    Processing revenue
    
    
    95,569
    
    
    
    
    
    
    
    Total revenue
    
    
    1,052,743
    
    
    
    
    
    
    
    COSTS AND EXPENSES:Material and freight
    
    
    307,211
    
    
    
    
    
    
    
    Operating expenses
    
    
    451,588
    
    
    
    
    
    
    
    Project costs
    
    
    276,505
    
    
    
    1,016,931
    
    
    
    1,087,642Depreciation expense
    
    
    118,627
    
    
    
    34,688
    
    
    
    9,513General and administrative (including stock
option expense of $6,321,321in 2007)
    
    
    11,783,113
    
    
    
    676,881
    
    
    
    357,327Total costs and expenses
    
    
    12,937,044
    
    
    
    1,728,500
    
    
    
    1,454,482OPERATING LOSS
    
    
    (11,884,301
    )
    
    
    (1,728,500
    )
    
    
    (1,454,482
    )OTHER INCOME (EXPENSE):Interest and other income
    
    
    373,027
    
    
    
    487
    
    
    
    272Interest, accretion and other expense
    
    
    (523,068
    )
    
    
    (32,182
    )
    
    
    Total other income (expense)
    
    
    (150,041
    )
    
    
    (31,695
    )
    
    
    272Net loss
    
    
    (12,034,342
    )
    
    
    (1,760,195
    )
    
    
    (1,454,210
    )Dividends on preferred stock
    
    
    (1,657,671
    )
    
    
    
    
    
    
    Net loss to common stockholders
    
    $
    (13,692,013
    )
    
    $
    (1,760,195
    )
    
    $
    (1,454,210
    )Weighted average shares outstanding, basic
and diluted
    
    
    17,082,684
    
    
    
    14,590,141
    
    
    
    14,560,000Net loss per share
    
    $
    (0.80
    )
    
    $
    (0.12
    )
    
    $
    (0.10
    )
 F-3




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##### Table of Contents



GREENHUNTER ENERGY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS AND MEMBERS EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 2005 TO DECEMBER 31, 2007
 Additional
    
    
    
    
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    Paid in
    
    
    Member
    
    
    Accumulated
    
    
    EquityStock
    
    
    Stock
    
    
    Capital
    
    
    Contributions
    
    
    Deficit
    
    
    (Deficit)BALANCE,January 1, 2005
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    795,800
    
    
    $
    (984,955
    )
    
    $
    (189,155
    )Members contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,950,000
    
    
    
    
    
    
    
    1,950,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,454,210
    )
    
    
    (1,454,210
    )BALANCE,December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,745,800
    
    
    
    (2,439,165
    )
    
    
    306,635Members contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,948,000
    
    
    
    
    
    
    
    1,948,000Buyout of members interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309,125
    )
    
    
    
    
    
    
    (309,125
    )Conversion of member equity to debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,820,000
    )
    
    
    
    
    
    
    (2,820,000
    )Reverse merger
    
    
    
    
    
    
    15,000
    
    
    
    1,549,163
    
    
    
    (1,564,675
    )
    
    
    
    
    
    
    (512
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,760,195
    )
    
    
    (1,760,195
    )BALANCE, December 31, 2006
    
    
    
    
    
    
    15,000
    
    
    
    1,549,163
    
    
    
    
    
    
    
    (4,199,360
    )
    
    
    (2,635,197
    )Issue 12,500 preferred shares in private placement
    
    
    12,500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,500,000Issue 450,000 common shares to acquire GreenHunter BioFuels, Inc.
    
    
    
    
    
    
    450
    
    
    
    2,078,550
    
    
    
    
    
    
    
    
    
    
    
    2,079,000Issue 500,000 common shares to acquire power purchase agreement
    
    
    
    
    
    
    500
    
    
    
    2,309,500
    
    
    
    
    
    
    
    
    
    
    
    2,310,000Issue 300,000 common shares for fees on biomass plant acquisition
    
    
    
    
    
    
    300
    
    
    
    1,385,700
    
    
    
    
    
    
    
    
    
    
    
    1,386,000Issue 2,807,834 common stock warrants in private placement of
preferred and common stock
    
    
    
    
    
    
    
    
    
    
    3,717,308
    
    
    
    
    
    
    
    (950,000
    )
    
    
    2,767,308Issue 4,131,500 common stock options to employees
    
    
    
    
    
    
    
    
    
    
    6,321,321
    
    
    
    
    
    
    
    
    
    
    
    6,321,321Issue 3,448,168 common shares in private placement
    
    
    
    
    
    
    3,448
    
    
    
    27,442,260
    
    
    
    
    
    
    
    
    
    
    
    27,445,708Issue 60,950 shares for commissions on investments and private
placements
    
    
    
    
    
    
    61
    
    
    
    499,939
    
    
    
    
    
    
    
    
    
    
    
    500,000Commission and fees paid on private placement of common shares
    
    
    
    
    
    
    
    
    
    
    (1,532,033
    )
    
    
    
    
    
    
    
    
    
    
    (1,532,033
    )Cash dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (707,671
    )
    
    
    (707,671
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,034,342
    )
    
    
    (12,034,342
    )BALANCE,December 31, 2007
    
    $
    12,500,000
    
    
    $
    19,759
    
    
    $
    43,771,708
    
    
    $
    
    
    
    $
    (17,891,373
    )
    
    $
    38,400,094
 F-4




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##### Table of Contents



GREENHUNTER ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 years ended december 312007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (12,034,342
    )
    
    $
    (1,760,195
    )
    
    $
    (1,454,210
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation expense
    
    
    118,627
    
    
    
    34,688
    
    
    
    9,513Noncash stock compensation
    
    
    6,321,321
    
    
    
    
    
    
    
    Accretion of discount on notes payable
    
    
    77,809
    
    
    
    
    
    
    
    Changes in certain assets and liabilities, net of
acquisition effect:Accounts receivable
    
    
    (54,153
    )
    
    
    
    
    
    
    Inventory
    
    
    129,615
    
    
    
    
    
    
    
    Prepaid expenses
    
    
    (252,511
    )
    
    
    (46,299
    )
    
    
    (98,010
    )Accounts payable
    
    
    1,571,373
    
    
    
    176
    
    
    
    34,485Accrued liabilities
    
    
    1,878,635
    
    
    
    31,259
    
    
    
    Net cash used in operating activities
    
    
    (2,243,626
    )
    
    
    (1,740,371
    )
    
    
    (1,508,222
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from asset sales
    
    
    40,000
    
    
    
    
    
    
    
    Acquisition of CRC, net of cash acquired
    
    
    (6,648,071
    )
    
    
    
    
    
    
    Acquisition of Mesquite Lake
    
    
    (1,426,566
    )
    
    
    
    
    
    
    Other additions to property
    
    
    (19,256,314
    )
    
    
    (59,304
    )
    
    
    (78,623
    )Increase in deposits
    
    
    (1,543,375
    )
    
    
    
    
    
    
    (340,000
    )Net cash used in investing activities
    
    
    (28,834,326
    )
    
    
    (59,304
    )
    
    
    (418,623
    )CASH FLOWS FROM FINANCING ACTIVITIES:Gross proceeds from stock and warrant issuances
    
    
    42,713,016
    
    
    
    
    
    
    
    Commissions and fees paid on stock issuances
    
    
    (1,532,033
    )
    
    
    
    
    
    
    Gross proceeds from redeemable debenture issuance
    
    
    7,328,290
    
    
    
    
    
    
    
    Increase in notes payable
    
    
    4,826,406
    
    
    
    
    
    
    
    Payment of notes payable
    
    
    (205,000
    )
    
    
    
    
    
    
    Payment of buyout obligation
    
    
    (180,000
    )
    
    
    (120,000
    )
    
    
    Increase in convertible notes payable
    
    
    285,126
    
    
    
    
    
    
    
    Payment of advance from previous affiliate
    
    
    (35,459
    )
    
    
    
    
    
    
    Payment of deferred financing costs
    
    
    (2,729,115
    )
    
    
    
    
    
    
    Preferred dividends paid in cash
    
    
    (707,671
    )
    
    
    
    
    
    
    Member contributions
    
    
    
    
    
    
    1,948,000
    
    
    
    1,950,000Net cash provided by financing activities
    
    
    49,763,560
    
    
    
    1,828,000
    
    
    
    1,950,000INCREASE IN CASH
    
    
    18,685,608
    
    
    
    28,325
    
    
    
    23,155CASH, beginning of period
    
    
    64,786
    
    
    
    36,461
    
    
    
    13,306CASH,end of period
    
    $
    18,750,394
    
    
    $
    64,786
    
    
    $
    36,461Cash paid for interest
    
    $
    199,514
    
    
    $
    
    
    
    $
    NONCASH TRANSACTIONS:Property acquired for stock
    
    $
    3,465,000
    
    
    $
    
    
    
    $
    Property acquired for notes payable, net of discount
    
    $
    1,639,738
    
    
    $
    
    
    
    $
    Power purchase agreement acquired for stock
    
    $
    2,310,000
    
    
    $
    
    
    
    $
    Noncash preferred dividends
    
    $
    950,000
    
    
    $
    
    
    
    $
    Commissions paid in common stock
    
    $
    500,000
    
    
    $
    
    
    
    $
    Liability related to buyout of member interest
    
    $
    
    
    
    $
    180,000
    
    
    $
    Conversion of member equity to debt
    
    $
    
    
    
    $
    2,820,000
    
    
    $
    
 F-5




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##### Table of Contents



NOTE 1. Organization And Nature Of Operations
   Nature of Operations
   Note 2. Principles of Consolidation and Basis of Presentation
  Note 3. Summary of Significant Accounting Policies
 Use of Estimates
  F-6




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##### Table of Contents



Cash and Cash Equivalents
  Inventories
  Property, Plant and Equipment
  Computer and office equipment
    
    5 to 7 yearsPlant equipment
    
    10 to 20 yearsLand improvements
    
    15 yearsBuildings
    
    31 years
   Other Non-Current Assets
  Impairments
  F-7




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##### Table of Contents



Asset Retirement Obligations
 Accounting for Asset
Retirement Obligations
 Repairs and Maintenance
  Revenue recognition
  Stock-Based Compensation
 Share-based Payment
 Income Taxes
 Accounting for Income Taxes,
 F-8




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##### Table of Contents



2007
    
    
    2006Deferred tax assetsStart-up costs
    
    $
    888,414
    
    
    $
    408,442Project costs
    
    
    1,057,447
    
    
    
    963,436Stock option expense
    
    
    2,149,249
    
    
    
    Net operating loss carryover
    
    
    1,988,119
    
    
    
    636,676Total deferred tax assets
    
    
    6,083,229
    
    
    
    2,008,554Deferred tax liabilities
    
    
    5,355
    
    
    
    5,355Total deferred taxes
    
    
    6,077,874
    
    
    
    2,003,199Less: Valuation allowance
    
    
    (6,077,874
    )
    
    
    (2,003,199
    )Net deferred taxes
    
    $
    
    
    
    $
    
 Income or Loss Per Common Share
  Note 4. Recently Issued Accounting Standards
 Accounting for Uncertainty in Income
TaxesAn Interpretation of FASB Statement No. 109
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an Amendment of FASB Statement No. 115
 F-9




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##### Table of Contents



ccounting
for Registration Payment Arrangements Accounting for Contingencies.
  Note 5. Liquidity and Continued Operations
  Note 6. Acquisitions
 BioFuels
 Business
Combinations
  F-10




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##### Table of Contents



Total Purchase Price:Fair value of 450,000 shares of GreenHunter common stock
    
    $
    2,079,000Cash consideration
    
    
    6,647,342Notes payable (net of discount of $360,262)
    
    
    1,639,738Total
    
    $
    10,366,080Net Preliminary Purchase Price Allocation:Net purchase price
    
    $
    10,366,080Historical net assets acquired
    
    
    (419,146
    )Excess purchase price
    
    
    9,946,934Adjustment of land to fair market value
    
    
    (1,656,924
    )Adjustment of inventory to fair market value
    
    
    (136,361
    )Adjustment of equipment and infrastructure to fair market value
    
    
    (8,153,649
    )Excess purchase price
    
    $
    Historical net assets acquired were as follows:Current assets
    
    $
    162,746Property, plant and equipment, net
    
    
    981,915Current liabilities
    
    
    (576,765
    )Liabilities owed to GreenHunter
    
    
    (148,750
    )Historical net assets acquired
    
    $
    419,146
     BioPower
  F-11




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##### Table of Contents



Wind Energy
   Pro Forma Financial Information
  
 Year Ended
    
    
    Year EndedDecember 31, 2007
    
    
    December 31, 2006Total operating revenues
    
    $
    1,597,637
    
    
    $
    1,866,936Operating costs and expenses
    
    
    7,519,711
    
    
    
    4,095,495Employee stock option expense
    
    
    6,321,321
    
    
    
    Total operating costs and expenses
    
    
    13,841,032
    
    
    
    4,095,495Operating loss
    
    
    (12,243,395
    )
    
    
    (2,228,559
    )Other income and (expense)
    
    
    (121,116
    )
    
    
    (247,567
    )Net loss
    
    
    (12,364,511
    )
    
    
    (2,476,126
    )Dividends on preferred stock
    
    
    (1,949,671
    )
    
    
    (1,950,000
    )Net loss to common stockholders
    
    $
    (14,314,182
    )
    
    $
    (4,426,126
    )Net loss per common share, basic and diluted
    
    $
    (0.77
    )
    
    $
    (0.25
    )
 F-12




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##### Table of Contents



Note 7. Inventories
  Finished goods
    
    $
    15,576Raw materials
    
    
    8,371$
    23,947
 Note 8. Notes Payable
  Long-Term Debt:
 Notes payable net of unamortized discount of $282,453,
due December 31, 2013, 5%
    
    $
    1,592,547Note payable due November 31, 2017, 6.4%
at December 31, 2007
    
    
    3,157,507Non-recourse construction loan facility, 10.25% at
December 31, 2007
    
    
    1,668,89910%
Subordinated convertible note due December 31, 2009
    
    
    3,136,38510% Series A Senior Secured Redeemable Debentures
    
    
    7,328,29016,883,628Less current portion
    
    
    (166,890
    )Total Long-Term Debt
    
    $
    16,716,738
  2008
    
    
    166,8902009
    
    
    3,820,2332010
    
    
    787,1952011
    
    
    749,044Thereafter
    
    
    11,642,719$
    17,166,081
 Notes Payable
   F-13




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##### Table of Contents



Notes Payable  Nonrecourse
    Subordinated Convertible Note Payable to Related Party
    10% Series A Senior Secured Redeemable Debentures
  F-14




---



##### Table of Contents



Note 9. Stockholders Equity
  Preferred
    
    
    CommonStock
    
    
    Stock
    
    
    WarrantsIssue common shares for Reverse Merger
    
    
    
    
    
    
    15,000,055
    
    
    
    December 31, 2006
    
    
    
    
    
    
    15,000,055
    
    
    
    Issue preferred shares in private placement
    
    
    12,500Issue common shares to acquire GreenHunter BioFuels, Inc.
    
    
    
    
    
    
    450,000Issue common shares to acquire power purchase agreement
    
    
    
    
    
    
    500,000Issue common shares for fees on biomass plant acquisition
    
    
    
    
    
    
    300,000Issue common shares in private placement
    
    
    
    
    
    
    3,448,168Issue common shares for commissions on investments and
private placements of common stock
    
    
    
    
    
    
    60,950Issue common stock warrants in private placement of preferred
and common stock
    
    
    
    
    
    
    
    
    
    
    2,807,834December 31, 2007
    
    
    12,500
    
    
    
    19,759,173
    
    
    
    2,807,834
 Preferred Stock
    F-15




---



##### Table of Contents



Common Stock
     Common Stock Warrants
  F-16




---



##### Table of Contents



Risk Free Interest Rate
    
    
    4.01
    %Expected Life (a)
    
    2 yearsExpected volatility (b)
    
    
    52
    %Dividend yield
    
    
    Weighted average fair value of each warrant
    
    $
    0.76
 
 (a)
    
    The warrants have a life of five years, but we expect to be able to force the
exercise of the warrants in two years.(b)
    
    The expected volatility of our common stock was estimated using an average of
volatilities of publicly traded companies in similar renewable energy businesses.   Risk Free Interest Rate
    
    
    3.2
    %Expected Life
    
    3 yearsExpected volatility (a)
    
    
    58
    %Dividend yield
    
    
    Weighted average fair value of each warrant
    
    $
    2.72
 
 (a)
    
    The expected volatility of our common stock was estimated using an average of
volatilities of publicly traded companies in similar renewable energy businesses. F-17




---



##### Table of Contents



2007Number
    
    Weightedof
    
    averageWarrants
    
    Exercise PriceOutstanding  Beginning of Year
    
    
    
    
    
    $
    Issued
    
    
    2,807,834
    
    
    
    10.52Exercised
    
    
    
    
    
    
    Redeemed
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding  End of Year
    
    
    2,807,834
    
    
    $
    10.52
 Note 10. Stock-Based Compensation
 Share-based Payment
    F-18




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##### Table of Contents



Valuation DateMay 2007
    
    September 2007
    
    December 2007Risk Free Interest Rate
    
    
    4.9
    %
    
    
    4.2
    %
    
    
    3.5
    %Expected Life (a)
    
    5 years
    
    
    6 years
    
    
    6 yearsExpected volatility (b)
    
    
    38
    %
    
    
    38
    %
    
    
    39
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value
of each stock option
    
    $
    1.76
    
    
    $
    3.98
    
    
    $
    5.00
 
 (a)
    
    As determined by the simplified method under Staff Accounting Bulletin 107.
The options have a life of ten years.(b)
    
    The expected volatility of our common stock was estimated using an average of
volatilities of publicly traded companies in similar renewable energy businesses.  2007AggregateNumber
    
    Weighted
    
    Intrinsicof
    
    average
    
    Value*Shares
    
    Exercise Price
    
    ($000s)Outstanding  Beginning of Year
    
    
    
    
    
    $
    Issued
    
    
    
    
    
    
    Granted
    
    
    4,031,500
    
    
    
    5.60Exercised
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    Outstanding  End of Year
    
    
    4,031,500
    
    
    
    5.60
    
    
    $
    20,318,760Exercisable   End of Year
    
    
    3,500,000
    
    
    $
    5.00
    
    
    $
    20,302,160
 
 *
    
    The Aggregate Intrinsic Value was calculated using the December 31, 2007 stock
price of $10.64.  Weighted AverageRemainingNumber of Options
    
    Contractual Life
    
    Number ofExercise Price
    
    
    
    Outstanding
    
    (Years)
    
    Exercisable Options$
    5.00
    
    
    
    
    
    3,500,000
    
    
    
    9.38
    
    
    
    3,500,000$
    7.50
    
    
    
    
    
    100,000
    
    
    
    9.76
    
    
    
    $
    10.00
    
    
    
    
    
    420,000
    
    
    
    9.84
    
    
    
    $
    12.00
    
    
    
    
    
    1,500
    
    
    
    9.91
    
    
    
    $
    12.50
    
    
    
    
    
    10,000
    
    
    
    9.92
    
    
    
    
 Note 11. Commitments and Contingencies
  F-19




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##### Table of Contents



Leases
   2008
    
    $
    62,9052009
    
    
    52,1652010
    
    
    51,7362011
    
    
    51,7362012 and thereafter
    
    
    1,142,205Total
    
    
    1,360,747
 Note 12. Related Party Transactions
   F-20




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##### Table of Contents



Note 13. Quarterly Financial Data
  2007First
    
    Second
    
    Third
    
    Fourth
    
    Total YearSales
    
    $
    
    
    
    $
    554,254
    
    
    $
    157,773
    
    
    $
    340,716
    
    
    $
    1,052,743Operating loss
    
    
    (462,729
    )
    
    
    (6,911,193
    )
    
    
    (98,546
    )
    
    
    (4,411,833
    )
    
    
    (11,884,301
    )Net loss
    
    
    (721,902
    )
    
    
    (7,881,811
    )
    
    
    (1,284,500
    )
    
    
    (3,803,800
    )
    
    
    (13,692,013
    )Net loss per share
    
    $
    (0.05
    )
    
    $
    (0.46
    )
    
    $
    (0.07
    )
    
    $
    (0.21
    )
    
    $
    (0.80
    )Weighted Average Shares
    
    
    15,111,166
    
    
    
    17,268,736
    
    
    
    17,750,055
    
    
    
    18,159,940
    
    
    
    17,082,684
 2006First
    
    Second
    
    Third
    
    Fourth
    
    Total YearSales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating loss
    
    $
    (446,275
    )
    
    $
    (498,123
    )
    
    $
    (317,331
    )
    
    $
    (466,770
    )
    
    $
    (1,728,499
    )Net loss
    
    $
    (446,148
    )
    
    $
    (498,748
    )
    
    $
    (317,537
    )
    
    $
    (497,762
    )
    
    $
    (1,760,195
    )Net loss per share
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.12
    )Weighted Average
Shares
    
    
    14,560,000
    
    
    
    14,560,000
    
    
    
    14,560,000
    
    
    
    14,679,580
    
    
    
    14,590,141
 Note 14. Segment Data
      F-21




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##### Table of Contents



2007UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,052,743
    
    
    $
    1,052,743Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    276,505
    
    
    
    758,799
    
    
    
    1,035,304Depreciation expense
    
    
    11,535
    
    
    
    
    
    
    
    32,128
    
    
    
    74,964
    
    
    
    118,627General and administrative
    
    
    10,655,019
    
    
    
    98,000
    
    
    
    388,761
    
    
    
    641,334
    
    
    
    11,783,114Operating income (loss)
    
    
    (10,666,554
    )
    
    
    (98,000
    )
    
    
    (697,394
    )
    
    
    (422,354
    )
    
    
    (11,884,302
    )Other income and expense
    
    
    (120,374
    )
    
    
    
    
    
    
    53,498
    
    
    
    (83,164
    )
    
    
    (150,040
    )Net Income (Loss)
    
    $
    (10,786,928
    )
    
    $
    (98,000
    )
    
    $
    (643,896
    )
    
    $
    (505,518
    )
    
    $
    (12,034,342
    )Total Assets
    
    $
    27,126,618
    
    
    $
    5,103,566
    
    
    $
    593,264
    
    
    $
    26,673,837
    
    
    $
    59,497,285Capital Expenditures
    
    $
    4,796,448
    
    
    $
    1,426,566
    
    
    $
    5,431
    
    
    $
    21,102,506
    
    
    $
    27,330,951
 2006UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    1,016,931
    
    
    
    
    
    
    
    1,016,931Depreciation expense
    
    
    
    
    
    
    
    
    
    
    34,688
    
    
    
    
    
    
    
    34,688General and administrative
    
    
    
    
    
    
    
    
    
    
    676,881
    
    
    
    
    
    
    
    676,881Operating income (loss)
    
    
    
    
    
    
    
    
    
    
    (1,728,500
    )
    
    
    
    
    
    
    (1,728,500
    )Other income and expense
    
    
    
    
    
    
    
    
    
    
    (31,695
    )
    
    
    
    
    
    
    (31,695
    )Net Income (Loss)
    
    $
    
    
    
    $
    
    
    
    $
    (1,760,195
    )
    
    $
    
    
    
    $
    (1,760,195
    )Total Assets
    
    $
    
    
    
    $
    
    
    
    $
    698,308
    
    
    $
    
    
    
    $
    698,308Capital Expenditures
    
    $
    
    
    
    $
    
    
    
    $
    59,304
    
    
    $
    
    
    
    $
    59,304
 2005UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    1,087,642
    
    
    
    
    
    
    
    1,087,642Depreciation expense
    
    
    
    
    
    
    
    
    
    
    9,513
    
    
    
    
    
    
    
    9,513General and administrative
    
    
    
    
    
    
    
    
    
    
    357,327
    
    
    
    
    
    
    
    357,327Operating income (loss)
    
    
    
    
    
    
    
    
    
    
    (1,454,482
    )
    
    
    
    
    
    
    (1,454,482
    )Other income and expense
    
    
    
    
    
    
    
    
    
    
    272
    
    
    
    
    
    
    
    272Net Income (Loss)
    
    $
    
    
    
    $
    
    
    
    $
    (1,454,210
    )
    
    $
    
    
    
    $
    (1,454,210
    )Total Assets
    
    $
    
    
    
    $
    
    
    
    $
    632,781
    
    
    $
    
    
    
    $
    632,781Capital Expenditures
    
    $
    
    
    
    $
    
    
    
    $
    78,623
    
    
    $
    
    
    
    $
    78,623
 Note 15. Subsequent Events
  F-22




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F-23