##### 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 June 30, 2010
 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 
incorporation or organization)
    
    (IRS employer identification No.)
 (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 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
 December 31,June 30, 2010
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,327,611
    
    
    $
    6,914,381Accounts receivable from related party
    
    
    98,734
    
    
    
    77,495Deposits and other current assets
    
    
    97,287
    
    
    
    53,686Prepaid expenses and other current assets
    
    
    140,815
    
    
    
    153,631Assets held in receivership  current
    
    
    
    
    
    
    2,743,247Total current assets
    
    
    1,664,447
    
    
    
    9,942,440FIXED ASSETS:Land and improvements
    
    
    3,243,687
    
    
    
    3,243,687Buildings
    
    
    3,100,621
    
    
    
    3,100,621Plant and other equipment
    
    
    2,626,009
    
    
    
    2,921,202Accumulated depreciation
    
    
    (471,273
    )
    
    
    (516,837
    )Construction in progress
    
    
    11,047,640
    
    
    
    10,750,089Net fixed assets
    
    
    19,546,684
    
    
    
    19,498,762OTHER ASSETS:Assets held in receivership
    
    
    34,872,324
    
    
    
    37,387,073Power purchase agreement
    
    
    1,396,136
    
    
    
    300,000Deferred financing costs
    
    
    1,390,783
    
    
    
    1,690,004Other noncurrent assets
    
    
    100,000
    
    
    
    Total assets
    
    $
    58,970,374
    
    
    $
    68,818,279LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current portion of notes payable
    
    $
    148,185
    
    
    $
    169,541Accounts payable
    
    
    270,976
    
    
    
    6,449,956Dividends payable
    
    
    163,863
    
    
    
    156,060Accrued liabilities
    
    
    4,253,497
    
    
    
    4,174,299Accrued interest on Series A Debentures
    
    
    2,629,270
    
    
    
    525,584Liabilities associated with assets held in receivership  current
    
    
    43,768,316
    
    
    
    43,843,016Total current liabilities
    
    
    51,234,107
    
    
    
    55,318,456NON-CURRENT LIABILITIES:Notes payable
    
    
    2,935,482
    
    
    
    2,983,045Nonrecourse redeemable series A debentures, net of discount of
$812,128 and $1,007,039, respectively
    
    
    20,222,020
    
    
    
    20,027,109Nonrecourse redeemable series B debentures, net of discount of
$34,813 and $40,069, respectively
    
    
    5,266,994
    
    
    
    5,261,739Total long-term liabilities
    
    
    28,424,496
    
    
    
    28,271,893COMMITMENTS AND CONTINGENCIES (Notes 11)STOCKHOLDERS DEFICIT:Series A 8% convertible preferred stock, $.001 par value, $1,171
and $1,125 stated value, respectively, 6,750 issued and
outstanding, liquidation preference of $8,068,371 and
$7,748,449, respectively
    
    
    7,904,508
    
    
    
    7,592,389Series B convertible preferred stock, $.001 par value, $1,000
stated value, 10,575 issued and outstanding
    
    
    10,575,000
    
    
    
    10,575,000Common stock, $.001par value, 90,000,000 authorized shares,
22,138,876 issued and 22,116,464 outstanding, liquidation preference
of $10,575,000
    
    
    22,139
    
    
    
    22,139Additional paid-in capital
    
    
    88,043,038
    
    
    
    87,273,376Accumulated deficit
    
    
    (126,670,716
    )
    
    
    (119,672,776
    )Treasury 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 deficit
    
    
    (20,688,229
    )
    
    
    (14,772,070
    )Total liabilities and stockholders deficit
    
    $
    58,970,374
    
    
    $
    68,818,279
 See accompanying notes to consolidated financial statements
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##### Table of Contents



GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 302010
    
    
    2009
    
    
    2010
    
    
    2009COSTS AND EXPENSES (RECOVERIES):Hurricane repairs and losses (insurance proceeds)
    
    
    
    
    
    
    (449,941
    )
    
    
    
    
    
    
    (449,941
    )Project costs
    
    
    
    
    
    
    46,136
    
    
    
    4,065
    
    
    
    81,777Depreciation expense
    
    
    46,830
    
    
    
    63,244
    
    
    
    94,505
    
    
    
    129,509Selling, general and administrative
    
    
    825,836
    
    
    
    688,061
    
    
    
    2,037,587
    
    
    
    3,550,839Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    160,824
    
    
    
    1,651,161Total costs and expenses (recoveries)
    
    
    872,666
    
    
    
    347,500
    
    
    
    2,296,981
    
    
    
    4,963,345OPERATING LOSS
    
    
    (872,666
    )
    
    
    (347,500
    )
    
    
    (2,296,981
    )
    
    
    (4,963,345
    )OTHER INCOME (EXPENSE):Interest and other income
    
    
    211,289
    
    
    
    6,013
    
    
    
    2,135,778
    
    
    
    24,769Interest, accretion and other expense
    
    
    (789,193
    )
    
    
    (802,403
    )
    
    
    (1,579,296
    )
    
    
    (1,598,701
    )Total other income (expense)
    
    
    (577,904
    )
    
    
    (796,390
    )
    
    
    556,482
    
    
    
    (1,573,932
    )Loss from continuing operations
    
    
    (1,450,570
    )
    
    
    (1,143,890
    )
    
    
    (1,740,499
    )
    
    
    (6,537,277
    )Gain (loss) on sale of discontinued operations
    
    
    
    
    
    
    (309,725
    )
    
    
    
    
    
    
    549,029Income (loss) from discontinued operations, net of
taxes
    
    
    (2,682,926
    )
    
    
    6,128,441
    
    
    
    (4,937,519
    )
    
    
    2,163,518Net Income (Loss)
    
    
    (4,133,496
    )
    
    
    4,674,826
    
    
    
    (6,678,018
    )
    
    
    (3,824,730
    )Preferred stock dividends
    
    
    (163,862
    )
    
    
    (225,639
    )
    
    
    (319,922
    )
    
    
    (472,972
    )Net income (loss) to common stockholders
    
    $
    (4,297,358
    )
    
    $
    4,449,187
    
    
    $
    (6,997,940
    )
    
    $
    (4,297,702
    )Weighted average shares outstanding, basic and diluted
    
    
    22,373,261
    
    
    
    21,296,822
    
    
    
    22,239,515
    
    
    
    21,116,920Basic and
diluted earnings (loss) per share:Loss from continuing operations
    
    $
    (0.07
    )
    
    $
    (0.06
    )
    
    $
    (0.09
    )
    
    $
    (0.33
    )Earnings (loss) from discontinued operations
    
    $
    (0.12
    )
    
    $
    0.27
    
    
    $
    (0.22
    )
    
    $
    0.13Net earnings (loss) per share
    
    $
    (0.19
    )
    
    $
    0.21
    
    
    $
    (0.31
    )
    
    $
    (0.20
    )
 See accompanying notes to consolidated financial statements
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GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 2010 TO JUNE 30, 2010
 Additional
    
    
    
    
    
    
    
    
    
    
    Unearned
    
    
    TotalSeries A
    
    
    Series B
    
    
    Common
    
    
    Paid in
    
    
    Accumulated
    
    
    Treasury
    
    
    Shares in
    
    
    EquityPreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    KSOP
    
    
    (Deficit)BALANCE, January 1, 2010
    
    $
    7,592,389
    
    
    $
    10,575,000
    
    
    $
    22,139
    
    
    $
    87,273,376
    
    
    $
    (119,672,776
    )
    
    $
    (336,285
    )
    
    $
    (225,913
    )
    
    $
    (14,772,070
    )Transfer accumulated preferred dividends to
stated value
    
    
    312,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312,119Share based payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700,551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700,551Issued 100,000 warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,111Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319,922
    )
    
    
    
    
    
    
    
    
    
    
    (319,922
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,678,018
    )
    
    
    
    
    
    
    
    
    
    
    (6,678,018
    )BALANCE, June 30, 2010
    
    $
    7,904,508
    
    
    $
    10,575,000
    
    
    $
    22,139
    
    
    $
    88,043,038
    
    
    $
    (126,670,716
    )
    
    $
    (336,285
    )
    
    $
    (225,913
    )
    
    $
    (20,688,229
    )
 See accompanying notes to consolidated financial statements
 -3-




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GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months Ended June 30,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (6,678,018
    )
    
    $
    (3,824,730
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    1,674,487
    
    
    
    2,146,065Noncash stock compensation
    
    
    700,551
    
    
    
    136,836Issue warrants on letter of guarantee
    
    
    69,111
    
    
    
    Amortization of deferred financing costs
    
    
    1,226,277
    
    
    
    688,498Non-cash asset impairment
    
    
    160,824
    
    
    
    1,651,161Noncontrolling interest
    
    
    
    
    
    
    (59,496
    )Gain on sale of assets
    
    
    
    
    
    
    (539,967
    )Accretion of discount
    
    
    200,166
    
    
    
    238,675Changes in certain assets and liabilities:Accounts receivable
    
    
    28,639
    
    
    
    (2,600,069
    )Inventory
    
    
    179,322
    
    
    
    5,290,029Prepaid and other expense
    
    
    463,522
    
    
    
    (292,440
    )Accounts payable
    
    
    (7,510,321
    )
    
    
    (4,044,650
    )Accrued liabilities
    
    
    3,467,741
    
    
    
    354,468Net cash used in operating activities
    
    
    (6,017,699
    )
    
    
    (855,620
    )CASH FLOWS FROM INVESTING ACTIVITIES:Change in restricted cash
    
    
    2,018,717
    
    
    
    (3,655,998
    )Proceeds from sale of assets
    
    
    9,775
    
    
    
    4,349,448Additions to fixed assets
    
    
    (305,425
    )
    
    
    (706,951
    )Increase in other assets
    
    
    (1,196,136
    )
    
    
    (45,931
    )Net cash provided by (used in) investing activities
    
    
    526,931
    
    
    
    (59,432
    )CASH FLOWS FROM FINANCING ACTIVITIES:Gross proceeds from redeemable debenture issuance
    
    
    
    
    
    
    1,711,892Increase in notes payable
    
    
    55,848
    
    
    
    221,560Payment of notes payable
    
    
    (151,850
    )
    
    
    (1,525,676
    )Payment of deferred financing costs
    
    
    
    
    
    
    (137,951
    )Net cash provided by (used in) financing activities
    
    
    (96,002
    )
    
    
    269,825CHANGE IN CASH
    
    
    (5,586,770
    )
    
    
    (645,227
    )CASH, beginning of period
    
    
    6,914,381
    
    
    
    676,636CASH,end of period
    
    $
    1,327,611
    
    
    $
    31,409Cash paid for interest
    
    $
    729,376
    
    
    $
    1,790,871
 See accompanying notes to consolidated financial statements
 -4-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2010
 Note 1. Organization and Nature of Operations
    Nature of Operations
   Current Plan of Operations and Ability to Operate as a Going Concern
    - 5 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
        Income or Loss Per Share
   June 30,2010
    
    2009Stock options
    
    
    7,076,500
    
    
    
    5,007,331Unvested and unissued stock awards
    
    
    206,842
    
    
    
    Warrants
    
    
    6,351,745
    
    
    
    6,251,745Convertible debentures
    
    
    27,507,141
    
    
    
    16,835,836Preferred Stock
    
    
    2,990,902
    
    
    
    2,854,000
 Note 2. Recently Issued Accounting Standards
 Consolidation Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities.
 Improving Disclosures about Fair Value
Measurements
 - 6 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
  Amendments to Certain Recognition and
Disclosure Requirements Subsequent Events
 Note 3. Discontinued Operations
   Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    Operating expenses from discontinued operations
    
    
    (5,649
    )
    
    
    (215,652
    )Other income from discontinued operations
    
    
    
    
    
    
    348
    )Net loss from discontinued operations
    
    $
    (5,649
    )
    
    $
    (215,304
    )
   Three Months
    
    
    Six MonthsEnded June
    
    
    Ended June30, 2009
    
    
    30, 2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    Operating expenses from discontinued operations
    
    
    (11,910
    )
    
    
    (59,155
    )Other income from discontinued operations
    
    
    
    
    
    
    Minority Interest Income
    
    
    3,587
    
    
    
    12,473Net loss from discontinued operations
    
    $
    (8,323
    )
    
    $
    (46,682
    )
  - 7 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
  Three Months
    
    
    Six MonthsJune Ended
    
    
    Ended June30, 2009
    
    
    30, 2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    Operating expenses from discontinued operations
    
    
    (17,582
    )
    
    
    (67,175
    )Other income from discontinued operations
    
    
    
    
    
    
    Minority Interest Income
    
    
    12,307
    
    
    
    47,022Net loss from discontinued operations
    
    $
    (5,275
    )
    
    $
    (20,153
    )
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Sales and other revenues from discontinued
operations
    
    $
    75,776
    
    
    $
    1,717,475
    
    
    $
    319,170
    
    
    $
    4,907,093Operating expenses (recoveries) from
discontinued operations
    
    
    (1,363,077
    )
    
    
    5,114,919
    
    
    
    (3,576,217
    )
    
    
    (1,135,879
    )Other expense from discontinued operations
    
    
    (1,395,625
    )
    
    
    (684,706
    )
    
    
    (1,680,472
    )
    
    
    (1,325,557
    )Net income (loss) from discontinued operations
    
    $
    (2,682,926
    )
    
    $
    6,147,688
    
    
    $
    (4,937,519
    )
    
    $
    2,445,657
 Note 4. Impairments
  Note 5. Notes Payable
  Long-Term Debt:Note payable due November 31, 2017, 5.7%
    
    
    3,027,820Note payable due February 15, 2011, 5.75%
    
    
    55,847Nonrecourse 10% Series A Redeemable Debentures, net of $812,128
discount
    
    
    20,222,020Nonrecourse 8% Series B Redeemable Debentures, net of $34,813 discount
    
    
    5,266,99428,572,681Less: current portion
    
    
    (148,185
    )Total Long-Term Debt
    
    $
    28,424,496
 Notes Payable  Nonrecourse
  - 8 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
   Nonrecourse10% Series A Senior Secured Redeemable Debentures
  Note 6. Stockholders Equity
  Preferred
    
    
    Common
    
    
    TreasuryStock
    
    
    Stock
    
    
    Stock
    
    
    KSOP
    
    
    WarrantsDecember 31, 2009
    
    
    17,325
    
    
    
    22,138,876
    
    
    
    22,412
    
    
    
    15,200
    
    
    
    6,251,745Issuance of 100,000 common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000June 30, 2010
    
    
    17,325
    
    
    
    22,138,876
    
    
    
    22,412
    
    
    
    15,200
    
    
    
    6,351,745
 Preferred Stock
  Common Stock
  Common Stock Warrants
  Note 7. Share-Based Compensation
 s
 - 9 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
 Common Stock Options
     Weighted average
    
    
    Aggregate IntrinsicNumber of Shares
    
    
    Exercise Price
    
    
    Value* ($000s)Outstanding  Beginning of Year
    
    
    7,399,832
    
    
    $
    5.93
    
    
    
    Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    (323,332
    )
    
    
    9.28
    
    
    
    Outstanding  End of Period
    
    
    7,076,500
    
    
    $
    5.95
    
    
    
    Exercisable   End of Period
    
    
    4,647,832
    
    
    $
    8.57
    
    
    $
    
 
 *
    
    The Aggregate Intrinsic Value was calculated using the June 30, 2010 stock price of $0.92.  Weighted AverageRemainingNumber of Options
    
    Contractual Life
    
    Number ofExercise Price
    
    Outstanding
    
    (Years)
    
    Exercisable Options$.97
    
    
    100,000
    
    
    
    8.93
    
    
    
    33,333$1.41
    
    
    500,000
    
    
    
    9.46
    
    
    
    $1.96
    
    
    1,725,000
    
    
    
    9.16
    
    
    
    $5.00
    
    
    3,247,000
    
    
    
    6.88
    
    
    
    3,247,000$7.50
    
    
    33,333
    
    
    
    7.27
    
    
    
    33,333$10.00
    
    
    243,333
    
    
    
    7.41
    
    
    
    210,000$10.12
    
    
    2,500
    
    
    
    8.28
    
    
    
    833$12.00
    
    
    6,500
    
    
    
    7.49
    
    
    
    6,000$13.66
    
    
    3,000
    
    
    
    8.01
    
    
    
    3,000$17.76
    
    
    40,000
    
    
    
    7.62
    
    
    
    40,000$18.00
    
    
    16,667
    
    
    
    7.70
    
    
    
    16,667$18.91
    
    
    1,099,167
    
    
    
    7.63
    
    
    
    997,666$19.75
    
    
    13,333
    
    
    
    7.81
    
    
    
    13,333$20.64
    
    
    25,000
    
    
    
    7.94
    
    
    
    25,000$22.75
    
    
    21,667
    
    
    
    7.87
    
    
    
    21,667
 Restricted Shares
 - 10 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
  WeightedAverage GrantNumber of
    
    
    Date Fair ValueShares
    
    

per
ShareUnvested  Beginning of Year
    
    
    100,000
    
    
    $
    1.87Granted
    
    
    106,842
    
    
    
    1.20Cancelled
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Vested
    
    
    (106,842
    )
    
    
    1.20Unvested  End of Period
    
    
    100,000
    
    
    $
    1.87
 Note 8. Related Party Transactions
    Note 9. Segment Data
    - 11 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
 For the Three Months Ended June 30, 2010UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALDepreciation expense
    
    
    46,830
    
    
    
    
    
    
    
    
    
    
    
    46,830Selling, general and administrative
    
    
    698,593
    
    
    
    121,726
    
    
    
    5,517
    
    
    
    825,836Operating loss
    
    
    (745,423
    )
    
    
    (121,726
    )
    
    
    (5,517
    )
    
    
    (872,666
    )Other income and (expense)
    
    
    (742,066
    )
    
    
    164,160
    
    
    
    2
    
    
    
    (577,904
    )Income (loss) from continuing operations
    
    $
    (1,487,489
    )
    
    $
    42,434
    
    
    $
    (5,515
    )
    
    $
    (1,450,570
    )Total Assets
    
    $
    6,919,166
    
    
    $
    17,142,530
    
    
    $
    36,254
    
    
    $
    24,097,950Capital Expenditures
    
    $
    4,638
    
    
    $
    170,524
    
    
    $
    
    
    
    $
    175,162
 For the Three Months Ended June 30, 2009UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    (449,941
    )
    
    
    27,753
    
    
    
    18,383
    
    
    
    (403,805
    )Depreciation expense
    
    
    46,456
    
    
    
    
    
    
    
    16,788
    
    
    
    63,244Selling, general and administrative
    
    
    204,764
    
    
    
    236,735
    
    
    
    246,562
    
    
    
    688,061Operating income (loss)
    
    
    198,721
    
    
    
    (264,488
    )
    
    
    (281,733
    )
    
    
    (347,500
    )Other income and (expense)
    
    
    (796,729
    )
    
    
    339
    
    
    
    
    
    
    
    (796,390
    )Loss from continuing operations
    
    $
    (598,008
    )
    
    $
    (264,149
    )
    
    $
    (281,733
    )
    
    $
    (1,143,890
    )Total Assets
    
    $
    13,902,030
    
    
    $
    15,333,569
    
    
    $
    469,625
    
    
    $
    29,705,224Capital Expenditures
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 For the Six Months Ended June 30, 2010UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    
    
    
    
    
    
    
    
    4,065
    
    
    
    4,065Depreciation expense
    
    
    94,505
    
    
    
    
    
    
    
    
    
    
    
    94,505Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    160,824
    
    
    
    160,824Selling, general and administrative
    
    
    2,377,496
    
    
    
    (352,377
    )
    
    
    12,468
    
    
    
    2,037,587Operating income (loss)
    
    
    (2,472,001
    )
    
    
    352,377
    
    
    
    (177,357
    )
    
    
    (2,296,981
    )Other income and (expense)
    
    
    (1,303,810
    )
    
    
    1,860,290
    
    
    
    2
    
    
    
    556,482Income (loss) from continuing operations
    
    $
    (3,775,811
    )
    
    $
    2,212,667
    
    
    $
    (177,355
    )
    
    $
    (1,740,499
    )Total Assets
    
    $
    6,919,166
    
    
    $
    17,142,530
    
    
    $
    36,254
    
    
    $
    24,097,950Capital Expenditures
    
    $
    7,474
    
    
    $
    320,223
    
    
    $
    
    
    
    $
    327,697
 - 12 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2010
 For the Six Months Ended June 30, 2009UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    (449,941
    )
    
    
    28,309
    
    
    
    53,468
    
    
    
    (368,164
    )Depreciation expense
    
    
    94,296
    
    
    
    
    
    
    
    35,213
    
    
    
    129,509Loss on asset impairments
    
    
    1,651,161
    
    
    
    
    
    
    
    
    
    
    
    1,651,161Selling, general and administrative
    
    
    2,621,351
    
    
    
    399,711
    
    
    
    529,777
    
    
    
    3,550,839Operating loss
    
    
    (3,916,867
    )
    
    
    (428,020
    )
    
    
    (618,458
    )
    
    
    (4,963,345
    )Other income and (expense)
    
    
    (1,581,735
    )
    
    
    7,878
    
    
    
    (75
    )
    
    
    (1,573,932
    )Loss from continuing operations
    
    $
    (5,498,602
    )
    
    $
    (420,142
    )
    
    $
    (618,533
    )
    
    $
    (6,537,277
    )Total Assets
    
    $
    13,902,030
    
    
    $
    15,333,569
    
    
    $
    469,625
    
    
    $
    29,705,224Capital Expenditures
    
    $
    2,463
    
    
    $
    (12,825
    )
    
    $
    
    
    
    $
    (10,362
    )
 Note 10. Commitments and Contingencies
    Crown Engineering
    Note 11. Subsequent Events
  - 13 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
 
 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, 2009 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
    14




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
 BioMass
       Wind Energy
  Solar Energy
  15




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
 Results of Operations
 Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009:
 Wind Energy Project Costs
  Hurricane repairs and losses
  Depreciation Expense
  Selling, General and Administrative Expense
     Operating Income/Loss
     Other Income and Expense
  16




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
  Preferred Stock Dividends
  Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009:
 Wind Energy Project Costs
  Hurricane repairs and losses
  Depreciation Expense
  Loss on Asset Impairments
  Selling, General and Administrative Expense
     Operating Income/Loss
    17




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
  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
  18




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
 Obligations Under Material Contracts
     Recent Accounting Standards
 Consolidation Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities.
 Improving Disclosures about Fair Value
Measurements
 Amendments to Certain Recognition and
Disclosure Requirements Subsequent Events
 Off-Balance Sheet Arrangements
  19




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risks
  Commodity Price Risk
  Interest Rate 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
 Crown Engineering
   20




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
   
 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*
    
    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**
    
    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 time
 21




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2010
 ExhibitNumber
    
    Exhibit Title10.11****
    
    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 time10.12******
    
    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 as the LC Issuing Bank and the Lenders Party to the Amended and Restated Credit Agreement from
time to time10.13*****
    
    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 22




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##### Table of Contents



SIGNATURES
  GreenHunter Energy, Inc.Date: August 16, 2010
    By:
    /s/ Gary C. EvansGary C. EvansChairman and Chief Executive OfficerDate: August 16, 2010
    By:
    /s/ David S. KruegerDavid S. KruegerVice President and Chief Financial OfficerDate: August 16, 2010
    By:
    /s/ Jonathan D. HoopesJonathan D. HoopesPresident and Chief Operating Officer 23