##### 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, 2011
 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
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART 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 6. ExhibitsSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 PART 1  FINANCIAL STATEMENTS
 Item 1. Financial Statements
 GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Development Stage Company)
 March 31,2011
    
    
    December 31, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    22,123
    
    
    $
    181,471Related party accounts receivable
    
    
    22,657
    
    
    
    4,783Deposits and other current assets
    
    
    68,128
    
    
    
    88,014Prepaid expenses
    
    
    147,704
    
    
    
    182,079Total current assets
    
    
    260,612
    
    
    
    456,347FIXED ASSETS:Land and improvements
    
    
    3,243,687
    
    
    
    3,243,687Buildings
    
    
    3,100,621
    
    
    
    3,100,621Plant and other equipment
    
    
    2,621,262
    
    
    
    2,626,140Accumulated depreciation
    
    
    (612,081
    )
    
    
    (566,525
    )Construction in progress
    
    
    12,837,833
    
    
    
    12,846,608Net fixed assets
    
    
    21,191,322
    
    
    
    21,250,531OTHER ASSETS:Deferred financing costs
    
    
    242,081
    
    
    
    264,998Other noncurrent assets
    
    
    1,446,136
    
    
    
    1,446,136Total assets
    
    $
    23,140,151
    
    
    $
    23,418,012LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current portion of notes payable
    
    $
    889,383
    
    
    $
    943,560Accounts payable
    
    
    2,043,033
    
    
    
    2,098,328Dividends payable
    
    
    
    
    
    
    172,056Accrued liabilities
    
    
    3,729,830
    
    
    
    3,498,207Convertible securities
    
    
    949,860
    
    
    
    1,001,622Total current liabilities
    
    
    7,612,106
    
    
    
    7,713,773NON-CURRENT LIABILITIES:Notes payable
    
    
    2,862,725
    
    
    
    2,886,947Redeemable debentures, net of discount of $26,930 and $29,558, respectively
    
    
    5,274,877
    
    
    
    5,272,249Total liabilities
    
    
    15,749,708
    
    
    
    15,872,969COMMITMENTS AND CONTINGENCIES (Note 10)STOCKHOLDERS EQUITY:Series A 8% convertible preferred stock, $.001 par value, $1,271 and
$1,220 stated value, respectively, 6,750 issued and outstanding,
liquidation preference of $8,576,345
    
    
    8,576,345
    
    
    
    8,232,234Series B convertible preferred stock, $.001 par value, $1,000 stated
value, 10,575 issued and outstanding, liquidation
preference of $10,575,000
    
    
    10,575,000
    
    
    
    10,575,000Common stock, $.001par value, 90,000,000 authorized shares, 22,138,876
issued each period and 23,374,594 and 22,601,504 outstanding,
respectively
    
    
    22,884
    
    
    
    22,139Additional paid-in capital
    
    
    89,943,430
    
    
    
    88,968,889Accumulated deficit prior to re-entering development stage
    
    
    (126,670,716
    )
    
    
    (126,670,716
    )Retained earnings during development stage
    
    
    25,505,698
    
    
    
    26,979,695Treasury stock, at cost, 22,412 shares
    
    
    (336,285
    )
    
    
    (336,285
    )Unearned common stock in KSOP, at cost, 15,200 shares
    
    
    (225,913
    )
    
    
    (225,913
    )Total stockholders equity
    
    
    7,390,443
    
    
    
    7,545,043Total liabilities and stockholders equity
    
    $
    23,140,151
    
    
    $
    23,418,012
 See accompanying notes to consolidated financial statements
 -1-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
AND THE PERIOD FROM JULY 1, 2010 (RE-ENTERING DEVELOPMENT STAGE) THROUGH
MARCH 31, 2011 (DEVELOPMENT STAGE COMPANY)
 From Re-enteringDevelopmentStageFor the Three Months
    
    
    July 1, 2010Ended March 31,
    
    
    through2011
    
    
    2010
    
    
    March 31, 2011COSTS AND EXPENSES:Project costs
    
    $
    203
    
    
    $
    4,065
    
    
    $
    (14,492
    )Depreciation expense
    
    
    47,588
    
    
    
    47,675
    
    
    
    142,841Selling, general and administrative
    
    
    1,125,539
    
    
    
    1,085,056
    
    
    
    4,392,869Loss on asset impairments
    
    
    
    
    
    
    160,824
    
    
    
    Total costs and expenses
    
    
    1,173,330
    
    
    
    1,297,620
    
    
    
    4,521,218OPERATING LOSS
    
    
    (1,173,330
    )
    
    
    (1,297,620
    )
    
    
    (4,521,218
    )OTHER INCOME (EXPENSE):Interest and other income
    
    
    4,851
    
    
    
    1,924,489
    
    
    
    863,356Interest, accretion and other expense
    
    
    (185,224
    )
    
    
    (166,794
    )
    
    
    1,337,566Unrealized gain (loss) on convertible securities
    
    
    51,762
    
    
    
    
    
    
    
    (949,860
    )Total other income (expense)
    
    
    (128,611
    )
    
    
    1,757,695
    
    
    
    1,251,062Income (loss) from continuing operations
    
    
    (1,301,941
    )
    
    
    460,075
    
    
    
    (3,270,156
    )Gain on disposal of discontinued operations
    
    
    
    
    
    
    
    
    
    
    33,055,388Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    (3,004,597
    )
    
    
    (3,771,559
    )Net Income (loss)
    
    
    (1,301,941
    )
    
    
    (2,544,522
    )
    
    
    26,013,673Preferred stock dividends
    
    
    (172,056
    )
    
    
    (156,060
    )
    
    
    (507,975
    )Net income (loss) to common stockholders
    
    $
    (1,473,997
    )
    
    $
    (2,700,582
    )
    
    $
    25,505,698Weighted average shares outstanding,Basic
    
    
    22,861,204
    
    
    
    22,101,861
    
    
    
    22,630,011Diluted
    
    
    22,861,204
    
    
    
    22,201,950
    
    
    
    22,630,011Basic and diluted earnings (loss) per share:Continuing operations
    
    $
    (0.06
    )
    
    $
    0.01
    
    
    $
    (0.16
    )Discontinued operations
    
    $
    
    
    
    $
    (0.13
    )
    
    $
    1.29Net income (loss) per share
    
    $
    (0.06
    )
    
    $
    (0.12
    )
    
    $
    1.13
 See accompanying notes to consolidated financial statements
 -2-




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GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE PERIOD FROM JULY 1, 2010 TO MARCH 31, 2011
(Development Stage Company)
 Additional
    
    
    Accumulated Deficit
    
    
    Accumulated Deficit During
    
    
    
    
    
    
    Unearned
    
    
    TotalSeries A
    
    
    Series B
    
    
    Common
    
    
    Paid in
    
    
    Prior to Re-entering
    
    
    Development Stage July 1,
    
    
    Treasury
    
    
    Shares in
    
    
    StockholdersPreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Capital
    
    
    Development Stage
    
    
    2010 - March 31, 2011
    
    
    Stock
    
    
    KSOP
    
    
    Equity (Deficit)BALANCE, July 1, 2010
    
    
    7,904,508
    
    
    
    10,575,000
    
    
    
    22,139
    
    
    
    88,043,038
    
    
    
    (126,670,716
    )
    
    
    
    
    
    
    (336,285
    )
    
    
    (225,913
    )
    
    
    (20,688,229
    )Transfer accumulated preferred dividends
to stated value
    
    
    327,726
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327,726Share based payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    925,851
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    925,851Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (335,919
    )
    
    
    
    
    
    
    
    
    
    
    (335,919
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,315,614
    
    
    
    
    
    
    
    
    
    
    
    27,315,614BALANCE, December 31, 2010
    
    $
    8,232,234
    
    
    $
    10,575,000
    
    
    $
    22,139
    
    
    $
    88,968,889
    
    
    $
    (126,670,716
    )
    
    $
    26,979,695
    
    
    $
    (336,285
    )
    
    $
    (225,913
    )
    
    $
    7,545,043Transfer accumulated preferred dividends
to stated value
    
    
    344,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344,111Share based payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230,286Issued shares of common stock and warrants for cash
    
    
    
    
    
    
    
    
    
    
    745
    
    
    
    744,255
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    745,000Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (172,056
    )
    
    
    
    
    
    
    
    
    
    
    (172,056
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,301,941
    )
    
    
    
    
    
    
    
    
    
    
    (1,301,941
    )BALANCE, March 31, 2011
    
    $
    8,576,345
    
    
    $
    10,575,000
    
    
    $
    22,884
    
    
    $
    89,943,430
    
    
    $
    (126,670,716
    )
    
    $
    25,505,698
    
    
    $
    (336,285
    )
    
    $
    (225,913
    )
    
    $
    7,390,443
 See accompanying notes to consolidated financial statements
 -3-




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GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
AND THE PERIOD FROM JULY 1, 2010 (RE-ENTERING DEVELOPMENT STAGE) THROUGH
MARCH 31, 2011 (DEVELOPMENT STAGE COMPANY)
 From Re-enteringDevelopment StageJuly 1,For the Three Months Ended March 31,
    
    
    2010 through2011
    
    
    2010
    
    
    March 31, 2011CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (1,301,941
    )
    
    $
    (2,544,522
    )
    
    $
    26,013,673Adjustments to reconcile net income (loss) to net
cash used in operating activities:Depreciation expense
    
    
    47,588
    
    
    
    995,690
    
    
    
    142,841Noncash stock compensation
    
    
    230,286
    
    
    
    682,565
    
    
    
    1,156,137Issue warrants on letter of guarantee
    
    
    
    
    
    
    69,111
    
    
    
    Amortization of deferred financing costs
    
    
    22,917
    
    
    
    255,484
    
    
    
    574,458Loss on asset impairments
    
    
    
    
    
    
    160,824
    
    
    
    Gain on sale of assets
    
    
    1,967
    
    
    
    
    
    
    
    (33,053,421
    )Accretion of discount
    
    
    2,628
    
    
    
    100,083
    
    
    
    170,308Unrealized loss (gain) from change in fair value
of convertible securities
    
    
    (51,762
    )
    
    
    
    
    
    
    949,860Changes in certain assets and liabilities:Accounts receivable
    
    
    (34,513
    )
    
    
    54,456
    
    
    
    (33,605
    )Inventory
    
    
    
    
    
    
    179,322
    
    
    
    Prepaid expenses
    
    
    54,261
    
    
    
    272,839
    
    
    
    22,160Accounts payable
    
    
    (55,295
    )
    
    
    (7,244,811
    )
    
    
    1,747,736Accrued liabilities
    
    
    240,399
    
    
    
    2,524,355
    
    
    
    1,503,249Deposits and other current assets
    
    
    
    
    
    
    
    
    
    
    110Net cash used in operating activities
    
    
    (843,465
    )
    
    
    (4,494,604
    )
    
    
    (806,494
    )CASH FLOWS FROM INVESTING ACTIVITIES:Change in restricted cash
    
    
    
    
    
    
    1,939,052
    
    
    
    48Proceeds from sale of assets
    
    
    
    
    
    
    9,500
    
    
    
    Additions to fixed assets
    
    
    
    
    
    
    (175,562
    )
    
    
    (1,799,148
    )Increase in other assets
    
    
    
    
    
    
    (1,196,136
    )
    
    
    50,000Net cash provided by (used in) investing activities
    
    
    
    
    
    
    576,854
    
    
    
    (1,749,100
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of common stock and warrants
    
    
    745,000
    
    
    
    
    
    
    
    745,000Increase in notes payable
    
    
    
    
    
    
    
    
    
    
    964,992Payment of notes payable
    
    
    (60,883
    )
    
    
    (76,334
    )
    
    
    (184,084
    )Payment of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    (275,802
    )Net cash provided by (used in) financing activities
    
    
    684,117
    
    
    
    (76,334
    )
    
    
    1,250,106CHANGE IN CASH
    
    
    (159,348
    )
    
    
    (3,994,084
    )
    
    
    (1,305,488
    )CASH, beginning of period
    
    
    181,471
    
    
    
    6,915,514
    
    
    
    1,327,611CASH,end of period
    
    $
    22,123
    
    
    $
    2,921,430
    
    
    $
    22,123Cash paid for interest
    
    $
    123,682
    
    
    $
    665,632
    
    
    $
    944,354
 See accompanying notes to consolidated financial statements
 -4-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Organization and Nature of Operations
    Development Stage Company
  Nature of Operations
   Current Plan of Operations and Ability to Operate as a Going Concern
   -5-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Income or Loss Per Share
   For the Three Months Ended March 31,2011
    
    2010Income
    
    Shares *
    
    Income
    
    Shares *Income (loss) from continuing operations
    
    $
    (1,301,941
    )
    
    
    
    
    
    $
    460,075
    
    
    
    Less: Preferred stock dividends
    
    
    (172,056
    )
    
    
    
    
    
    
    (156,060
    )
    
    
    Earnings available to common stockholders
    
    $
    (1,473,997
    )
    
    
    22,861,204
    
    
    $
    304,015
    
    
    
    22,101,861Basic income (loss) per common share
    
$
    (0.06
    )
    
    
    
    
    
$
    0.01Earnings available to common stockholders
    
    $
    (1,473,997
    )
    
    
    22,861,204
    
    
    $
    304,015
    
    
    
    22,101,861Dilutive Securities:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,089Diluted
    
    $
    (1,473,997
    )
    
    
    22,861,204
    
    
    $
    304,015
    
    
    
    22,201,950Diluted income (loss) per common share
    
    
    (0.06
    )
    
    
    
    
    
    
    0.01
 
 *
    
    Weighted-average common shares outstanding -6-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  March 31,2011
    
    2010Stock options
    
    
    7,076,500
    
    
    
    7,399,832Warrants
    
    
    5,347,548
    
    
    
    6,351,745Convertible debentures
    
    
    5,798,851
    
    
    
    21,109,548Preferred Stock
    
    
    3,958,602
    
    
    
    2,990,902Total
    
    
    22,181,501
    
    
    
    37,852,027
 Note 2. Fair Value of Financial Instruments
  
    
    Level 1  Quoted prices (unadjusted) for identical assets or liabilities in active markets
    
    Level 2  Quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are not active; and
model-derived valuations whose inputs or significant value drivers are observable
    
    Level 3  Significant inputs to the valuation model are unobservable
  Fair value measurements on a recurring basisMarch 31, 2011Level 1
    
    
    Level 2
    
    
    Level 3Convertible securities
    
    $
    
    
    
    $
    
    
    
    $
    949,860Total liabilities at fair value
    
    $
    
    
    
    $
    
    
    
    $
    949,860
 Fair value measurements on a recurring basisDecember 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3Convertible securities
    
    $
    
    
    
    $
    
    
    
    $
    1,001,622Total liabilities at fair value
    
    $
    
    
    
    $
    
    
    
    $
    1,001,622
 Note 3. Discontinued Operations
  -7-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  March 31, 2010Sales and other revenues from discontinued operations
    
    $
    243,394Operating expenses from discontinued operations
    
    
    (2,339,835
    )Other expense from discontinued operations
    
    
    (908,156
    )Net income (loss) from discontinued operations
    
    $
    (3,004,597
    )
 Note 4. Impairments
  Note 5. Notes Payable
  Long-Term Debt:Note payable due November 31, 2017, 5.7%
    
    $
    2,958,707Note payable to related party due December 31, 2011, 10%
    
    
    749,440Notes payable due between April 28, 2011 and July 1, 2011, rates from 7.0% to 9.9%
    
    
    43,9619% Series B Senior Secured Redeemable Debentures due on various dates ranging from September 30, 2013 to February 28, 2014, net of $26,930 discount
    
    
    5,274,8779,026,985Less: current portion
    
    
    (889,383
    )Total Long-Term Debt
    
    $
    8,137,602
 Note Payable to Related Party
  Note 6. Stockholders Equity
  Preferred
    
    Common
    
    TreasuryStock
    
    Stock
    
    Stock
    
    KSOP
    
    WarrantsDecember 31, 2010
    
    
    17,325
    
    
    
    22,138,876
    
    
    
    22,412
    
    
    
    15,200
    
    
    
    5,443,911Issue common stock and warrants for cash
    
    
    
    
    
    
    745,000
    
    
    
    
    
    
    
    
    
    
    
    745,000Warrants expired during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (841,363
    )March 31, 2011
    
    
    17,325
    
    
    
    22,883,876
    
    
    
    22,412
    
    
    
    15,200
    
    
    
    5,347,548
 -8-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Preferred Stock
   Common Stock
   Common Stock Warrants
    Note 7. Share-Based Compensation
 s
  Common Stock Options
  -9-




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GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     Weighted
    
    
    AggregateNumber of
    
    
    average Exercise
    
    
    Intrinsic Value*Shares
    
    
    Price
    
    
    ($000s)Outstanding  Beginning of Year
    
    
    7,076,500
    
    
    $
    5.95
    
    
    
    Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    Outstanding  End of Period
    
    
    7,076,500
    
    
    $
    5.95
    
    
    
    Exercisable  End of Period
    
    
    5,358,997
    
    
    $
    7.86
    
    
    $
    
 
 *
    
    The Aggregate Intrinsic Value was calculated using the
March 31, 2011 stock price of $0.89.  Number of
    
    Weighted AverageOptions
    
    Remaining Contractual
    
    Number ofExercise Price
    
    Outstanding
    
    Life (Years)
    
    Exercisable Options$
    0.97
    
    
    
    100,000
    
    
    
    7.68
    
    
    
    33,333$
    1.41
    
    
    
    500,000
    
    
    
    8.21
    
    
    
    $
    1.96
    
    
    
    1,725,000
    
    
    
    7.91
    
    
    
    574,999$
    5.00
    
    
    
    3,247,000
    
    
    
    5.63
    
    
    
    3,247,000$
    7.50
    
    
    
    33,333
    
    
    
    6.01
    
    
    
    33,333$
    10.00
    
    
    
    243,333
    
    
    
    6.16
    
    
    
    243,333$
    10.12
    
    
    
    2,500
    
    
    
    7.03
    
    
    
    1,666$
    12.00
    
    
    
    6,500
    
    
    
    6.24
    
    
    
    6,500$
    13.66
    
    
    
    3,000
    
    
    
    6.76
    
    
    
    3,000$
    17.76
    
    
    
    40,000
    
    
    
    6.37
    
    
    
    40,000$
    18.00
    
    
    
    16,667
    
    
    
    6.45
    
    
    
    16,667$
    18.91
    
    
    
    1,099,167
    
    
    
    6.38
    
    
    
    1,099,166$
    19.75
    
    
    
    13,333
    
    
    
    6.55
    
    
    
    13,333$
    20.64
    
    
    
    25,000
    
    
    
    6.69
    
    
    
    25,000$
    22.75
    
    
    
    21,667
    
    
    
    6.62
    
    
    
    21,6677,076,500
    
    
    
    
    
    
    
    5,358,997
 Share Awards
  -10-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Note 8. Related Party Transactions
   Note 9. Segment Data
    For the Three Months Ended March 31, 2011UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    
    
    
    
    
    
    
    
    203
    
    
    
    203Depreciation expense
    
    
    47,588
    
    
    
    
    
    
    
    
    
    
    
    47,588Selling, general and administrative
    
    
    1,060,556
    
    
    
    64,983
    
    
    
    
    
    
    
    1,125,539Operating loss
    
    
    (1,108,144
    )
    
    
    (64,983
    )
    
    
    (203
    )
    
    
    (1,173,330
    )Other expense
    
    
    (128,611
    )
    
    
    
    
    
    
    
    
    
    
    (128,611
    )Loss from continuing operations
    
    $
    (1,236,755
    )
    
    $
    (64,983
    )
    
    $
    (203
    )
    
    $
    (1,301,941
    )Total Assets
    
    $
    4,168,268
    
    
    $
    18,969,246
    
    
    $
    2,637
    
    
    $
    23,140,151Capital Expenditures
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 -11-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the Three Months Ended March 31, 2010UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    
    
    
    
    
    
    
    
    4,065
    
    
    
    4,065Depreciation expense
    
    
    47,675
    
    
    
    
    
    
    
    
    
    
    
    47,675Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    160,824
    
    
    
    160,824Selling, general and administrative
    
    
    1,552,208
    
    
    
    (474,103
    )
    
    
    6,951
    
    
    
    1,085,056Operating income (loss)
    
    
    (1,599,883
    )
    
    
    474,103
    
    
    
    (171,840
    )
    
    
    (1,297,620
    )Other income and (expense)
    
    
    61,565
    
    
    
    1,696,130
    
    
    
    
    
    
    
    1,757,695Income (loss) from continuing operations
    
    $
    (1,538,318
    )
    
    $
    2,170,233
    
    
    $
    (171,840
    )
    
    $
    460,075Total Assets
    
    $
    8,625,340
    
    
    $
    17,022,061
    
    
    $
    38,936
    
    
    $
    25,686,337Capital Expenditures
    
    $
    4,638
    
    
    $
    170,524
    
    
    $
    
    
    
    $
    175,162
 Note 10. Commitments and Contingencies
 Bioversel, Inc
    Series A Debenture Holders, et al.
   Note 11. Subsequent Events
   -12-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  -13-




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##### Table of Contents



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, 2010 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
   Current Plan of Operations and Ability to Operate as a Going Concern
     BioMass
  -14-




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##### Table of Contents



Wind Energy
  Solar Energy
  Water Resource Management
    -15-




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##### Table of Contents



Results of Operations
 Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010:
 Depreciation Expense
  Selling, General and Administrative Expense
     Operating Income/Loss
    -16-




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##### Table of Contents



Other Income and Expense
  Preferred Stock Dividends
  Liquidity and Capital Resources
 Cash Flow and Working Capital
  Operating Activities
  Financing Activities
  Investing Activities and Future Requirements
 Capital Expenditures
  BioMass
  Obligations Under Material Contracts
  -17-




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##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risks
  Commodity Price Risk
  
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Bioversel, Inc
  -18-




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##### Table of Contents



Certain Series A Debenture Holders
   
 Item 6. Exhibits
 ExhibitNumber
    
    Exhibit Title3.1*
    
    Certificate of Incorporation3.2*
    
    Amendment to the Certificate of Incorporation3.3*
    
    Bylaws4.1***
    
    Amended and Restated 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 investors4.4***
    
    Certificate of Designations of 2008 Series B Convertible Preferred Stock10.1*
    
    Purchase and Sale Agreement, dated May 14, 2007 between GreenHunter Energy, Inc. and Chateau Energy,
Inc. regarding acquisition of Mesquite Lake Resource Recovery Facility10.2*
    
    Registration rights agreement, dated March 9, 2007 between GreenHunter Energy, Inc. and certain
institutional investors10.3*
    
    Registration rights agreement, dated April 13, 2007 between GreenHunter Energy, Inc. and certain
selling shareholders10.4**
    
    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 time10.5****
    
    First Amendment to 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 time10.6******
    
    Second amendment to 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
 -19-




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##### Table of Contents



ExhibitNumber
    
    Exhibit Titleas the LC Issuing Bank and the Lenders Party to the Amended and Restated Credit Agreement from
time to time10.7*****
    
    Third amendment to 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 time31.1 
    
    Certifications of the Chief Executive Officer.31.2 
    
    Certifications of the Chief Financial Officer.32.1 
    
    Certifications of the Chief Executive Officer provided pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 
    
    Certifications of the Chief Financial Officer provided pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference to the Companys Form 10, dated October 19, 2007**
    
    Incorporated by reference to the Companys Form 10-Q, dated May 15, 2008***
    
    Incorporated by reference to the Companys Form 8-K, dated August 21, 2008****
    
    Incorporated by reference to the Companys Form 8-K, dated June 25, 2009*****
    
    Incorporated by reference to the Companys Form 8-K, dated March 30, 2010******
    
    Incorporated by reference to the Companys Form 10-K, dated December 31,
2009
    
    Filed herewith -20-




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##### Table of Contents



SIGNATURES
  GreenHunter Energy, Inc.Date: May 16, 2011
    By:
    /s/ Gary C. EvansGary C. EvansChairman and Chief Executive OfficerDate: May 16, 2011
    By:
    /s/ David S. KruegerDavid S. KruegerVice President and Chief Financial OfficerDate: May 16, 2011
    By:
    /s/ Jonathan D. HoopesJonathan D. HoopesPresident and Chief Operating Officer -21-