##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended March 31, 2008
 o
    
    Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Transition Period from  to
 Commission File Number 001-33893
 GREENHUNTER ENERGY, INC.
  Delaware
    
    20-4864036(State or other jurisdiction of
    
    (IRS employer identification No.)incorporation or organization)
 (Address of principal executive offices)(Zip Code)
 (Registrants telephone number including area code)
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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TABLE OF CONTENTS  PART 1  FINANCIAL STATEMENTSItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RisksItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Risk FactorsItem 3. Unregistered Sales of Equity Securities and Use of ProceedsItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. Exhibits and Reports on Form 8-KSecond Amended and Restated Credit Agreement    Table of Contents  
 PART 1  FINANCIAL STATEMENTS
 
 Item 1. Financial Statements
 GREENHUNTER ENERGY, INC.
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    11,718,928
    
    
    $
    18,750,394Restricted cash
    
    
    16,507,790
    
    
    
    Accounts receivable
    
    
    140,599
    
    
    
    118,709Inventory
    
    
    77,590
    
    
    
    23,947Prepaid expenses
    
    
    1,315,772
    
    
    
    513,712Total current assets
    
    
    29,760,679
    
    
    
    19,406,762FIXED ASSETS:Land and improvements
    
    
    2,868,837
    
    
    
    2,868,837Buildings
    
    
    3,243,838
    
    
    
    3,209,737Methanol distillation system
    
    
    2,252,292
    
    
    
    2,252,292Plant and other equipment
    
    
    12,150,129
    
    
    
    11,557,689Automobiles
    
    
    256,580
    
    
    
    Accumulated depreciation
    
    
    (251,039
    )
    
    
    (162,632
    )Construction in progress
    
    
    28,778,298
    
    
    
    12,942,109Net fixed assets
    
    
    49,298,935
    
    
    
    32,668,032OTHER ASSETS:Power purchase agreement
    
    
    2,310,000
    
    
    
    2,310,000Deferred financing costs
    
    
    3,164,754
    
    
    
    2,729,226Deposits and other noncurrent assets
    
    
    4,542,393
    
    
    
    2,383,265Total assets
    
    $
    89,076,761
    
    
    $
    59,497,285LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current portion of notes payable
    
    $
    23,305
    
    
    $
    Current portion of notes payable, nonrecourse
    
    
    4,481,609
    
    
    
    166,890Accounts payable
    
    
    1,534,885
    
    
    
    2,334,926Accrued liabilities
    
    
    3,363,994
    
    
    
    1,878,637Total current liabilities
    
    
    9,403,793
    
    
    
    4,380,453NOTES PAYABLE,net of unamortized discount of $0 and $282,453, respectively
    
    
    3,134,202
    
    
    
    4,750,054NOTES PAYABLE,nonrecourse
    
    
    25,395,787
    
    
    
    1,502,009CONVERTIBLE NOTE PAYABLE
    
    
    3,136,385
    
    
    
    3,136,38510% Series A REDEEMABLE DEBENTURES
    
    
    10,279,430
    
    
    
    7,328,290COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred stock, $.001 par value, 10,000,000 authorized shares, Series A
8% convertible preferred, $1,000 par value, 12,500 issued and
outstanding
    
    
    12,500,000
    
    
    
    12,500,000Common
stock, $.001par value, 90,000,000 authorized shares, 19,884,350 and 19,759,173 issued, respectively
    
    
    19,885
    
    
    
    19,759Additional paid-in capital
    
    
    51,400,732
    
    
    
    43,771,708Accumulated deficit
    
    
    (26,171,033
    )
    
    
    (17,891,373
    )Unearned common stock in KSOP, at cost (1,200 and 0 shares, respectively)
    
    
    (22,420
    )
    
    
    Total stockholders equity
    
    
    37,727,164
    
    
    
    38,400,094Total liabilities and stockholders equity
    
    $
    89,076,761
    
    
    $
    59,497,285
 -1-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 MARCH 31,2008
    
    
    2007REVENUE:Methanol sales
    
    $
    129,777
    
    
    $
    Terminal leasing
    
    
    48,000
    
    
    
    Total revenue
    
    
    177,777
    
    
    
    COSTS AND EXPENSES:Material and freight
    
    
    112,755
    
    
    
    Operating expenses
    
    
    38,750
    
    
    
    Project costs
    
    
    74,332
    
    
    
    98,565Depreciation expense
    
    
    88,407
    
    
    
    8,032General and administrative (including stock
compensation expense of $5,652,358 and $0 ,
respectively)
    
    
    7,816,981
    
    
    
    356,133Total costs and expenses
    
    
    8,131,225
    
    
    
    462,730OPERATING LOSS
    
    
    (7,953,448
    )
    
    
    (462,730
    )OTHER INCOME (EXPENSE):Interest and other income
    
    
    287,750
    
    
    
    13,067Interest, accretion and other expense
    
    
    (363,962
    )
    
    
    (71,281
    )Total other income (expense)
    
    
    (76,212
    )
    
    
    (58,214
    )Net loss
    
    
    (8,029,660
    )
    
    
    (520,944
    )Dividends on preferred stock
    
    
    (250,000
    )
    
    
    (200,959
    )Net loss to common stockholders
    
    $
    (8,279,660
    )
    
    $
    (721,903
    )Weighted average shares outstanding, basic and diluted
    
    
    19,823,254
    
    
    
    15,000,055Net loss per share
    
    $
    (0.42
    )
    
    $
    (0.05
    )
 -2-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 FOR THE PERIOD FROM DECEMBER 31, 2007 TO MARCH 31, 2008
 Additional
    
    
    
    
    
    
    UnearnedPreferred
    
    
    Common
    
    
    Paid in
    
    
    Accumulated
    
    
    Shares in
    
    
    TotalStock
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    KSOP
    
    
    EquityBALANCE, December 31, 2007
    
    $
    12,500,000
    
    
    $
    19,759
    
    
    $
    43,771,708
    
    
    $
    (17,891,373
    )
    
    $
    
    
    
    $
    38,400,094Registration fees paid on common shares
    
    
    
    
    
    
    
    
    
    
    (2,429
    )
    
    
    
    
    
    
    
    
    
    
    (2,429
    )Issue 117,998 shares for note payable exchange
    
    
    
    
    
    
    118
    
    
    
    1,874,871
    
    
    
    
    
    
    
    
    
    
    
    1,874,989Employer match of 5,512 shares to KSOP
    
    
    
    
    
    
    6
    
    
    
    104,226
    
    
    
    
    
    
    
    
    
    
    
    104,232Loan of 1,200 shares of common stock to KSOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,420
    )
    
    
    (22,420
    )Cash dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250,000
    )
    
    
    
    
    
    
    (250,000
    )Stock compensation including the issuance of 1,667 shares
    
    
    
    
    
    
    2
    
    
    
    5,652,356
    
    
    
    
    
    
    
    
    
    
    
    5,652,358Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,029,660
    )
    
    
    
    
    
    
    (8,029,660
    )BALANCE,March 31, 2008
    
    $
    12,500,000
    
    
    $
    19,885
    
    
    $
    51,400,732
    
    
    $
    (26,171,033
    )
    
    $
    (22,420
    )
    
    $
    37,727,164
 -3-




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GREENHUNTER ENERGY, INC.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 MARCH 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (8,029,660
    )
    
    $
    (520,944
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    88,407
    
    
    
    8,032Noncash stock compensation
    
    
    5,652,358
    
    
    
    Amortization of deferred financing costs
    
    
    48,231
    
    
    
    Accretion of discount
    
    
    10,917
    
    
    
    Changes in certain assets and liabilities, net of acquisition effect:Accounts receivable
    
    
    (21,890
    )
    
    
    (29,018
    )Inventory
    
    
    (53,643
    )
    
    
    Prepaid and other expense
    
    
    (1,014,674
    )
    
    
    11,184Accounts payable
    
    
    (800,041
    )
    
    
    (133,382
    )Accrued liabilities
    
    
    (1,242,590
    )
    
    
    10,959Net cash used in operating activities
    
    
    (5,362,585
    )
    
    
    (653,169
    )CASH FLOWS FROM INVESTING ACTIVITIES:Change in restricted cash
    
    
    (16,507,790
    )
    
    
    Commissions paid on acquisitions
    
    
    
    
    
    
    (25,000
    )Additions to fixed assets
    
    
    (13,276,551
    )
    
    
    (7,397
    )Increase in non-current deposits
    
    
    (2,159,128
    )
    
    
    (1,066,847
    )Net cash used in investing activities
    
    
    (31,943,469
    )
    
    
    (1,099,244
    )CASH FLOWS FROM FINANCING ACTIVITIES:Gross proceeds from stock and warrant issuance
    
    
    
    
    
    
    9,701,441Loan common stock to KSOP
    
    
    (22,420
    )
    
    
    Commissions and fees paid on stock issuance
    
    
    (2,429
    )
    
    
    (2,839
    )Gross proceeds from redeemable debenture issuance
    
    
    2,951,140
    
    
    
    Increase in nonrecourse notes payable
    
    
    35,456,497
    
    
    
    71,281Payment of nonrecourse notes payable
    
    
    (7,248,011
    )
    
    
    Payment of deferred financing costs
    
    
    (610,189
    )
    
    
    Preferred dividends paid in cash
    
    
    (250,000
    )
    
    
    Net cash provided by financing activities
    
    
    30,274,588
    
    
    
    9,769,883CHANGE IN CASH
    
    
    (7,031,466
    )
    
    
    8,017,470CASH, beginning of period
    
    
    18,750,394
    
    
    
    71,111CASH,end of period
    
    $
    11,718,928
    
    
    $
    8,088,581Cash paid for interest
    
    $
    275,712
    
    
    $
    NONCASH TRANSACTIONS:KSOP company match in stock
    
    $
    104,233Noncash preferred dividends
    
    $
    
    
    
    $
    200,959
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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Note 1. Managements Representation
    Nature of Operations
     -5-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Note 2. Recently Issued Accounting Standards
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an Amendment of FASB Statement No. 115
   Note 3. Liquidity and Continued Operations
  -6-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Note 4. Acquisitions
 BioFuels
 Business
Combinations
  Total Purchase Price:Fair value of 450,000 shares of GreenHunter common stock
    
    $
    2,079,000Fair value of 117,998 shares of GreenHunter common stock
exchanged for notes payable originally issued at acquisition
    
    
    1,875,000Cash consideration
    
    
    6,772,342Total
    
    $
    10,726,342Net Preliminary Purchase Price Allocation:Net purchase price
    
    $
    10,726,342Historical net assets acquired
    
    
    (419,146
    )Excess purchase price
    
    
    10,307,196Adjustment 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
    
    
    (8,452,341
    )Amortization of discount on notes payable to interest expense
    
    
    (61,570
    )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
   -7-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
  Wind Energy
  Note 5. Inventories
  Finished goods
    
    $
    13,133Raw materials
    
    
    64,457$
    77,590
 Note 6. Notes Payable
  Long-Term Debt:Note payable due November 31, 2017, 4.4%
at March 31, 2008
    
    $
    3,157,507Non-recourse construction loan facility, 6.71% at
March 31, 2008
    
    
    29,877,39610% Subordinated convertible note due December 31, 2009
    
    
    3,136,38510% Series A Senior Secured Redeemable Debentures
    
    
    10,279,43046,450,718Less current portion
    
    
    (4,504,914
    )Total Long-Term Debt
    
    $
    41,945,804
 -8-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Notes Payable
  Notes Payable  Nonrecourse
  Subordinated Convertible Note Payable to Related Party
  10% Series A Senior Secured Redeemable Debentures
   -9-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
  Note 7. Income or Loss Per Common Share
  Note 8. Stockholders Equity
  Preferred
    
    CommonStock
    
    Stock
    
    KSOP
    
    WarrantsDecember 31, 2007
    
    
    12,500
    
    
    
    19,759,173
    
    
    
    
    
    
    
    2,807,834Issue 117,998 shares for note payable exchange
    
    
    
    
    
    
    117,998
    
    
    
    
    
    
    
    Employer match of 5,512 shares to KSOP
    
    
    
    
    
    
    5,512
    
    
    
    
    
    
    
    Issue 1,667 shares as stock compensation
    
    
    
    
    
    
    1,667
    
    
    
    
    
    
    
    Loan 1,200 shares to KSOP
    
    
    
    
    
    
    (1,200
    )
    
    
    1,200
    
    
    
    March 31, 2008
    
    
    12,500
    
    
    
    19,883,150
    
    
    
    1,200
    
    
    
    2,807,834
 Preferred
Stock
  Common Stock
  KSOP
  -10-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Note 9. Stock-Based Compensation
 Share-based Payment
   Number of options issued
    
    2,669,500Weighted average stock price
    
    $18.78Weighted average exercise price
    
    $18.13Weighted average expected life (a)
    
5.56 yearsWeighted average expected volatility (b)
    
    28.8%Weighted average risk free interest rate
    
    2.9%Weighted average dividend yield
    
    Weighted average fair value of each stock option
    
    $6.46
 
 (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 energy businesses.  Number
    
    
    Weighted
    
    
    Aggregateof
    
    
    average
    
    
    Intrinsic Value*Shares
    
    
    Exercise Price
    
    
    ($000's)Outstanding
 Beginning of Year
    
    
    4,031,500
    
    
    $
    5.60
    
    
    
    Issued
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    2,669,500
    
    
    $
    18.13
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    Outstanding  End of Period
    
    
    6,701,000
    
    
    $
    10.60
    
    
    $
    61,345,520Exercisable   End of Period
    
    
    3,971,000
    
    
    $
    6.64
    
    
    $
    52,043,640
 
 *
    
    The Aggregate Intrinsic Value was calculated using the March 31, 2008 stock price
of $19.75. -11-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
  Number of
    
    Weighted Average
    
    Number ofOptions
    
    Remaining Contractual
    
    ExercisableExercise Price
    
    
    
    Outstanding
    
    Life (Years)
    
    Options$
    5.00
    
    
    
    
    
    3,500,000
    
    
    
    9.13
    
    
    
    3,500,000$
    7.50
    
    
    
    
    
    100,000
    
    
    
    9.52
    
    
    
    $
    10.00
    
    
    
    
    
    615,000
    
    
    
    9.68
    
    
    
    $
    12.00
    
    
    
    
    
    26,500
    
    
    
    9.78
    
    
    
    $
    12.50
    
    
    
    
    
    10,000
    
    
    
    9.67
    
    
    
    $
    16.70
    
    
    
    
    
    1,500
    
    
    
    9.85
    
    
    
    $
    17.76
    
    
    
    
    
    100,000
    
    
    
    9.87
    
    
    
    20,000$
    18.00
    
    
    
    
    
    50,000
    
    
    
    9.95
    
    
    
    $
    18.91
    
    
    
    
    
    2,298,000
    
    
    
    9.88
    
    
    
    451,000
 Note 10. Related Party Transactions
   Note 11. Segment Data
     -12-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE THREE MONTHS ENDED MARCH 31, 2008
    March 31, 2008UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    177,777
    
    
    $
    177,777Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    74,332
    
    
    
    151,505
    
    
    
    225,837Depreciation expense
    
    
    38,148
    
    
    
    
    
    
    
    9,564
    
    
    
    40,695
    
    
    
    88,407General and administrative
    
    
    6,760,060
    
    
    
    123,787
    
    
    
    253,413
    
    
    
    679,721
    
    
    
    7,816,981Operating income (loss)
    
    
    (6,798,208
    )
    
    
    (123,787
    )
    
    
    (337,309
    )
    
    
    (694,144
    )
    
    
    (7,953,448
    )Other income and expense
    
    
    (128,056
    )
    
    
    
    
    
    
    887
    
    
    
    50,957
    
    
    
    (76,212
    )Net Income (Loss)
    
    $
    (6,926,264
    )
    
    $
    (123,787
    )
    
    $
    (336,422
    )
    
    $
    (643,187
    )
    
    $
    (8,029,660
    )Total Assets
    
    $
    22,274,217
    
    
    $
    5,117,232
    
    
    $
    578,947
    
    
    $
    61,106,365
    
    
    $
    89,076,761Capital Expenditures
    
    $
    364,273
    
    
    $
    8,445
    
    
    $
    39,133
    
    
    $
    12,864,700
    
    
    $
    13,276,551
 March 31, 2007UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    98,565
    
    
    
    
    
    
    
    98,565Depreciation expense
    
    
    
    
    
    
    
    
    
    
    8,032
    
    
    
    
    
    
    
    8,032General and administrative
    
    
    177,489
    
    
    
    
    
    
    
    178,644
    
    
    
    
    
    
    
    356,133Operating income (loss)
    
    
    (177,489
    )
    
    
    
    
    
    
    (285,241
    )
    
    
    
    
    
    
    (462,730
    )Other income and expense
    
    
    (58,214
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,214
    )Net Income (Loss)
    
    $
    (235,703
    )
    
    $
    
    
    
    $
    (285,241
    )
    
    $
    
    
    
    $
    (520,944
    )Total Assets
    
    $
    9,697,395
    
    
    $
    
    
    
    $
    108,755
    
    
    $
    
    
    
    $
    9,806,150Capital Expenditures
    
    $
    7,397
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,397
 Note 12. Subsequent Events
  -13-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis should be read in conjunction with our consolidated
financial statements and the notes associated with them contained in our Form 10-K for the year
ended December 31, 2007 and with the financial statements and accompanying notes included herein.
The discussion should not be construed to imply that the results contained herein will necessarily
continue into the future or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best present assessment
by our management. 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.
 Overview
   BioFuels
    -14-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
  BioPower
  Wind Energy
    -15-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Results of Operations
 Period Ended March 31, 2008 Compared to Period Ended March 31, 2007:
  Biofuels Revenues and Operating Costs
  Wind Energy Operating Costs
  Depreciation Expense
  General and Administrative Expense
    -16-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
   Operating Loss
  Other Income and Expense
  Net Loss
  Liquidity and Capital Resources
 Cash Flow and Working Capital
  -17-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
  Financing Activities
 Convertible Debt
  10% Series A Senior Secured Redeemable Debentures
  Nonrecourse Term Loan and Working Capital Loan
   Prospective Sources of Bank Financing and Other Capital Resources
  -18-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Other Debt and Equity Transactions Not Affecting Cash
 Common Stock Issued for Notes Payable
  Other Common Stock Transactions
  Employee Stock Options
  Debenture Warrants Issued to Debenture Holders
  Investing Activities and Future Requirements
 Capital Expenditures
  Forecast
  BioFuels
  -19-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
  BioPower
  Wind Energy and MingYang Investment
  Weaknesses and Uncertainties that May Affect our Financial Condition
     -20-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
      Critical Accounting Policies and Other
   -21-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
   Recent Accounting Pronouncements
 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
  -22-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risks
  Commodity Price Risk
  Foreign Currency Exchange Risk
   Interest Rate Risk
  
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  -23-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
  Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Risk Factors
  
 Item 3. Unregistered Sales of Equity Securities and Use of Proceeds
    
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  -24-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2008
 
 Item 6. Exhibits and Reports on Form 8-K
 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
    
    Second 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, 2007
 
 *
    
    Incorporated by reference to the Companys Form 10, dated October 19, 2007**
    
    Incorporated by reference to the Companys Form 10-K, dated March 31, 2008
    
    Filed herewith -25-




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##### Table of Contents



SIGNATURES
  GreenHunter Energy, Inc.Date: May 14, 2008
    By:
    /s/ Gary C. EvansGary C. EvansChairman, and Chief Executive OfficerDate: May 14, 2008
    By:
    /s/ David S. KruegerDavid S. KruegerVice President, and Chief Financial Officer -26-