##### 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 September 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 þDo 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
(Development Stage Company)
 September 30,
    
    
    December 31,2010
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    360,132
    
    
    $
    6,914,381Accounts receivable from related party
    
    
    339,433
    
    
    
    77,495Deposits and other current assets
    
    
    47,305
    
    
    
    53,686Prepaid expenses and other current assets
    
    
    111,041
    
    
    
    153,631Assets held in receivership  current
    
    
    
    
    
    
    2,743,247Total current assets
    
    
    857,911
    
    
    
    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
    
    
    (518,570
    )
    
    
    (516,837
    )Construction in progress
    
    
    12,029,298
    
    
    
    10,750,089Net fixed assets
    
    
    20,481,045
    
    
    
    19,498,762OTHER ASSETS:Assets held in receivership
    
    
    34,872,324
    
    
    
    37,387,073Power purchase agreement
    
    
    1,396,136
    
    
    
    300,000Deferred financing costs
    
    
    1,403,067
    
    
    
    1,690,004Other noncurrent assets
    
    
    150,000
    
    
    
    Total assets
    
    $
    59,160,483
    
    
    $
    68,818,279LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current portion of notes payable
    
    $
    734,288
    
    
    $
    169,541Accounts payable
    
    
    767,641
    
    
    
    1,710,503Dividends payable
    
    
    
    
    
    
    156,060Accrued liabilities
    
    
    4,546,490
    
    
    
    7,842,112Accrued interest on Series A Debentures
    
    
    3,155,124
    
    
    
    1,597,224Liabilities associated with assets held in receivership  current
    
    
    44,086,607
    
    
    
    43,843,016Total current liabilities
    
    
    53,290,150
    
    
    
    55,318,456NON-CURRENT LIABILITIES:Notes payable
    
    
    2,911,340
    
    
    
    2,983,045Nonrecourse redeemable series A debentures, net of discount of $714,673 and $1,007,039,
respectively
    
    
    20,319,475
    
    
    
    20,027,109Nonrecourse redeemable series B debentures, net of discount of $32,186 and $40,069, respectively
    
    
    5,269,622
    
    
    
    5,261,739Total liabilities
    
    
    81,790,587
    
    
    
    83,590,349COMMITMENTS AND CONTINGENCIES (Notes 11)STOCKHOLDERS DEFICIT:Series A 8% convertible preferred stock, $.001 par value, $1,220 and $1,125 stated value,
respectively, 6,750 issued and outstanding, liquidation preference of $8,232,234 and
$7,748,449, respectively
    
    
    8,232,234
    
    
    
    7,592,389Series 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 and 22,116,464
outstanding both periods
    
    
    22,139
    
    
    
    22,139Additional paid-in capital
    
    
    88,522,743
    
    
    
    87,273,376Accumulated deficit prior to re-entering development stage
    
    
    (126,670,716
    )
    
    
    (119,672,776
    )Accumulated deficit during development stage
    
    
    (2,749,306
    )
    
    
    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
    
    
    (22,630,104
    )
    
    
    (14,772,070
    )Total liabilities and stockholders deficit
    
    $
    59,160,483
    
    
    $
    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 AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
AND THE PERIOD FROM JULY 1, 2010 (RE-ENTERING DEVELOPMENT STAGE) THROUGH SEPTEMBER 30, 2010
(DEVELOPMENT STAGE COMPANY)
 From Re-enteringFor the Three Months
    
    
    For the Nine Months
    
    
    Development StageEnded September 30,
    
    
    Ended September 30,
    
    
    July 1, 2010 through2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    September 30, 2010COSTS AND EXPENSES:Hurricane repairs and losses (insurance proceeds)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (449,941
    )
    
    
    Project costs
    
    
    
    
    
    
    9,541
    
    
    
    4,065
    
    
    
    91,318
    
    
    
    Depreciation expense
    
    
    47,298
    
    
    
    48,670
    
    
    
    141,803
    
    
    
    178,179
    
    
    
    47,298Selling, general and administrative
    
    
    1,719,035
    
    
    
    1,314,414
    
    
    
    3,756,622
    
    
    
    4,865,253
    
    
    
    1,719,035Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    160,824
    
    
    
    1,651,161
    
    
    
    Total costs and expenses
    
    
    1,766,333
    
    
    
    1,372,625
    
    
    
    4,063,314
    
    
    
    6,335,970
    
    
    
    1,766,333OPERATING LOSS
    
    
    (1,766,333
    )
    
    
    (1,372,625
    )
    
    
    (4,063,314
    )
    
    
    (6,335,970
    )
    
    
    (1,766,333
    )OTHER INCOME (EXPENSE):Interest and other income
    
    
    729,910
    
    
    
    95,334
    
    
    
    2,865,688
    
    
    
    120,103
    
    
    
    729,910Interest, accretion and other expense
    
    
    (790,334
    )
    
    
    (888,891
    )
    
    
    (2,369,630
    )
    
    
    (2,487,592
    )
    
    
    (790,334
    )Total other income (expense)
    
    
    (60,424
    )
    
    
    (793,557
    )
    
    
    496,058
    
    
    
    (2,367,489
    )
    
    
    (60,424
    )Loss from continuing operations
    
    
    (1,826,757
    )
    
    
    (2,166,182
    )
    
    
    (3,567,256
    )
    
    
    (8,703,459
    )
    
    
    (1,826,757
    )Gain (loss) on sale of discontinued operations
    
    
    
    
    
    
    (88,363
    )
    
    
    
    
    
    
    460,666
    
    
    
    Income (loss) from discontinued operations,
net of taxes
    
    
    (758,686
    )
    
    
    (1,121,673
    )
    
    
    (5,696,205
    )
    
    
    1,041,845
    
    
    
    (758,686
    )Net Loss
    
    
    (2,585,443
    )
    
    
    (3,376,218
    )
    
    
    (9,263,461
    )
    
    
    (7,200,948
    )
    
    
    (2,585,443
    )Preferred stock dividends
    
    
    (163,863
    )
    
    
    (146,750
    )
    
    
    (483,785
    )
    
    
    (619,722
    )
    
    
    (163,863
    )Net loss to common stockholders
    
    $
    (2,749,306
    )
    
    $
    (3,522,968
    )
    
    $
    (9,747,246
    )
    
    $
    (7,820,670
    )
    
    
    (2,749,306
    )Weighted average shares outstanding, basic and
diluted
    
    
    22,500,492
    
    
    
    22,097,434
    
    
    
    22,393,763
    
    
    
    21,447,349
    
    
    
    22,400,492Basic earnings (loss) per share:Continuing operations
    
    $
    (0.09
    )
    
    $
    (0.11
    )
    
    $
    (0.18
    )
    
    $
    (0.43
    )
    
    $
    (0.09
    )Discontinued operations
    
    
    (0.03
    )
    
    
    (0.05
    )
    
    
    (0.26
    )
    
    
    0.07
    
    
    
    (0.03
    )Net loss per share
    
    $
    (0.12
    )
    
    $
    (0.16
    )
    
    $
    (0.44
    )
    
    $
    (0.36
    )
    
    $
    (0.12
    )
 See accompanying notes to consolidated financial statements
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GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS DEFICIT
FOR THE PERIOD FROM JANUARY 1, 2010 TO SEPTEMBER 30, 2010
(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 - September 30, 2010
    
    
    Stock
    
    
    KSOP
    
    
    DeficitBALANCE, 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
    
    
    639,845
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    639,845Share based payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,180,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,180,256Issued 100,000 warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,111Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319,922
    )
    
    
    (163,863
    )
    
    
    
    
    
    
    
    
    
    
    (483,785
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,678,018
    )
    
    
    (2,585,443
    )
    
    
    
    
    
    
    
    
    
    
    (9,263,461
    )BALANCE, September 30, 2010
    
    $
    8,232,234
    
    
    $
    10,575,000
    
    
    $
    22,139
    
    
    $
    88,522,743
    
    
    $
    (126,670,716
    )
    
    $
    (2,749,306
    )
    
    $
    (336,285
    )
    
    $
    (225,913
    )
    
    $
    (22,630,104
    )
 See accompanying notes to consolidated financial statements
 -3-




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##### Table of Contents



GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
AND THE PERIOD FROM JULY 1, 2010 (RE-ENTERING DEVELOPMENT STAGE) THROUGH SEPTEMBER 30, 2010
(DEVELOPMENT STAGE COMPANY)
 From Re-entering Development Stage July 1,For the Nine Months Ended September 30,
    
    
    2010 through September 30,2010
    
    
    2009
    
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (9,263,461
    )
    
    $
    (7,200,948
    )
    
    $
    (2,585,443
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Depreciation expense
    
    
    1,721,785
    
    
    
    3,209,969
    
    
    
    47,298Noncash stock compensation
    
    
    1,180,256
    
    
    
    184,000
    
    
    
    479,705Issue warrants on letter of guarantee
    
    
    69,111
    
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    1,394,637
    
    
    
    990,066
    
    
    
    168,360Non-cash asset impairment
    
    
    160,824
    
    
    
    1,651,161
    
    
    
    Noncontrolling interest
    
    
    
    
    
    
    (59,256
    )
    
    
    Gain on sale of assets
    
    
    
    
    
    
    (450,924
    )
    
    
    Accretion of discount
    
    
    300,249
    
    
    
    338,758
    
    
    
    100,083Changes in certain assets and liabilities:Accounts receivable
    
    
    (212,060
    )
    
    
    4,435,688
    
    
    
    (240,699
    )Inventory
    
    
    179,322
    
    
    
    5,547,453
    
    
    
    Prepaid and other expense
    
    
    543,168
    
    
    
    (92,560
    )
    
    
    79,646Accounts payable
    
    
    (7,037,977
    )
    
    
    (5,360,525
    )
    
    
    472,344Accrued liabilities
    
    
    4,627,292
    
    
    
    2,174,142
    
    
    
    1,159,551Deposits
    
    
    110
    
    
    
    
    
    
    
    110Net cash
provided by (used in) operating activities
    
    
    (6,336,744
    )
    
    
    5,367,024
    
    
    
    (319,045
    )CASH FLOWS FROM INVESTING ACTIVITIES:Change in restricted cash
    
    
    2,018,765
    
    
    
    (4,232,392
    )
    
    
    48Proceeds from sale of assets
    
    
    9,775
    
    
    
    4,356,468
    
    
    
    Additions to fixed assets
    
    
    (1,287,132
    )
    
    
    (734,804
    )
    
    
    (981,707
    )Increase in other assets
    
    
    (1,246,136
    )
    
    
    (348,270
    )
    
    
    (50,000
    )Net cash used in investing activities
    
    
    (504,728
    )
    
    
    (958,998
    )
    
    
    (1,031,659
    )CASH FLOWS FROM FINANCING ACTIVITIES:Gross proceeds from redeemable debenture issuance
    
    
    
    
    
    
    1,711,892
    
    
    
    Increase in notes payable
    
    
    666,340
    
    
    
    298,323
    
    
    
    610,492Payment of notes payable
    
    
    (198,473
    )
    
    
    (6,154,901
    )
    
    
    (46,623
    )Payment of deferred financing costs
    
    
    (180,644
    )
    
    
    (175,451
    )
    
    
    (180,644
    )Net cash provided by (used in) financing activities
    
    
    287,223
    
    
    
    (4,320,137
    )
    
    
    383,225CHANGE IN CASH
    
    
    (6,554,249
    )
    
    
    87,889
    
    
    
    (967,479
    )CASH, beginning of period
    
    
    6,914,381
    
    
    
    676,636
    
    
    
    1,327,611CASH,end of period
    
    $
    360,132
    
    
    $
    764,525
    
    
    $
    360,132Cash paid for interest
    
    $
    893,774
    
    
    $
    2,330,971
    
    
    $
    893,774NONCASH TRANSACTIONS:Issue treasury shares for payment of services
    
    $
    
    
    
    $
    36,560
    
    
    $
    
 See accompanying notes to consolidated financial statements
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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Development Stage Company)
 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.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
    Income or Loss Per Share
   September 30,2010
    
    
    2009Stock options
    
    
    7,076,500
    
    
    
    6,900,831Warrants
    
    
    6,351,745
    
    
    
    6,251,745Convertible debentures
    
    
    31,283,251
    
    
    
    13,491,845Preferred Stock
    
    
    3,056,447
    
    
    
    2,928,478
 -6-




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Note 2. Recently Issued 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
 Note 3. Discontinued Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    Operating expenses from discontinued operations
    
    
    (180
    )
    
    
    (215,832
    )Other income from discontinued operations
    
    
    725,000
    
    
    
    725,348Net loss from discontinued operations
    
    $
    724,820
    
    
    $
    509,516
  - 7 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    Operating expenses from discontinued operations
    
    
    (1,925
    )
    
    
    (61,080
    )Other income from discontinued operations
    
    
    
    
    
    
    Minority Interest Income
    
    
    
    
    
    
    12,474Net loss from discontinued operations
    
    $
    (1,925
    )
    
    $
    (48,606
    )
   Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    Operating expenses from discontinued operations
    
    
    (17,476
    )
    
    
    (84,651
    )Other income from discontinued operations
    
    
    
    
    
    
    Minority Interest Income
    
    
    12,234
    
    
    
    59,256Net loss from discontinued operations
    
    $
    (5,242
    )
    
    $
    (25,395
    )
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Sales and other revenues from discontinued operations
    
    $
    
    
    
    $
    403,686
    
    
    $
    319,170
    
    
    $
    5,310,779Operating expenses from discontinued operations
    
    
    (171,215
    )
    
    
    (2,395,855
    )
    
    
    (3,747,432
    )
    
    
    (3,531,734
    )Other expense from discontinued operations
    
    
    (587,471
    )
    
    
    152,842
    
    
    
    (2,267,943
    )
    
    
    (1,172,715
    )Net income (loss) from discontinued operations
    
    $
    (758,686
    )
    
    $
    (1,839,327
    )
    
    $
    (5,696,205
    )
    
    $
    606,330
 Note 4. Impairments
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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Note 5. Notes Payable
  Long-Term Debt:Note payable to related party due 11/30/2010, 10%
    
    
    600,000Note payable due November 31, 2017, 5.7%
    
    
    3,005,088Note payable due February 15, 2011, 5.75%
    
    
    40,540Nonrecourse 10% Series A Redeemable Debentures, net of $714,673
discount
    
    
    20,319,475Nonrecourse 8% Series B Redeemable Debentures, net of $32,186 discount
    
    
    5,269,62229,234,725Less: current portion
    
    
    (734,288
    )Total Long-Term Debt
    
    $
    28,500,437
 Notes Payable  Nonrecourse
  Nonrecourse10% Series A Senior Secured Redeemable Debentures
  Note Payable to Related Party
  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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000September 30, 2010
    
    
    17,325
    
    
    
    22,138,876
    
    
    
    22,412
    
    
    
    15,200
    
    
    
    6,351,745
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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Preferred Stock
  Common Stock
   Common Stock Warrants
  Note 7. Share-Based Compensation
 s
  Common Stock Options
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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
   Weighted
    
    
    AggregateNumber of
    
    
    average Exercise
    
    
    Intrinsic Value*Shares
    
    
    Price
    
    
    ($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
    
    
    5,222,831
    
    
    $
    7.63
    
    
    $
    
 
 *
    
    The Aggregate Intrinsic Value was calculated using the September 30, 2010 stock
price of $0.76.  Number of
    
    Weighted Average
    
    Number ofOptions
    
    Remaining Contractual
    
    ExercisableExercise Price
    
    Outstanding
    
    Life (Years)
    
    Options$    .97
    
    100,000
    
    8.68
    
    33,333$  1.41
    
    500,000
    
    9.21
    
    $  1.96
    
    1,725,000
    
    8.91
    
    574,999$  5.00
    
    3,247,000
    
    6.63
    
    3,247,000$  7.50
    
    33,333
    
    7.01
    
    33,333$10.00
    
    243,333
    
    7.16
    
    210,000$10.12
    
    2,500
    
    8.03
    
    833$12.00
    
    6,500
    
    7.24
    
    6,000$13.66
    
    3,000
    
    7.76
    
    3,000$17.76
    
    40,000
    
    7.37
    
    40,000$18.00
    
    16,667
    
    7.45
    
    16,667$18.91
    
    1,099,167
    
    7.38
    
    997,666$19.75
    
    13,333
    
    7.55
    
    13,333$20.64
    
    25,000
    
    7.69
    
    25,000$22.75
    
    21,667
    
    7.62
    
    21,667
 Share Awards
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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
  WeightedAverage GrantNumber of
    
    
    Date Fair ValueShares
    
    
    per ShareUnvested  Beginning of Year
    
    
    100,000
    
    
    $
    1.87Granted
    
    
    139,736
    
    
    
    1.10Cancelled
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Vested
    
    
    (139,736
    )
    
    
    1.10Unvested  End of Period
    
    
    100,000
    
    
    $
    1.87
 Note 8. Related Party Transactions
     Note 9. Segment Data
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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
  For the Three Months Ended September 30, 2010UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALDepreciation expense
    
    
    47,298
    
    
    
    
    
    
    
    
    
    
    
    47,298Selling, general and administrative
    
    
    1,329,281
    
    
    
    386,854
    
    
    
    2,900
    
    
    
    1,719,035Operating loss
    
    
    (1,376,579
    )
    
    
    (386,854
    )
    
    
    (2,900
    )
    
    
    (1,766,333
    )Other income and (expense)
    
    
    (755,661
    )
    
    
    445,237
    
    
    
    250,000
    
    
    
    (60,424
    )Income (loss) from continuing operations
    
    $
    (2,132,240
    )
    
    $
    58,383
    
    
    $
    247,100
    
    
    $
    (1,826,757
    )Total Assets
    
    $
    5,702,782
    
    
    $
    18,295,087
    
    
    $
    290,290
    
    
    $
    24,288,159Capital Expenditures
    
    $
    
    
    
    $
    958,986
    
    
    $
    
    
    
    $
    958,986
 For the Three Months Ended September 30, 2009UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    
    
    
    
    
    
    
    
    9,541
    
    
    
    9,541Depreciation expense
    
    
    43,081
    
    
    
    
    
    
    
    5,589
    
    
    
    48,670Selling, general and administrative
    
    
    870,201
    
    
    
    346,296
    
    
    
    97,917
    
    
    
    1,314,414Operating income (loss)
    
    
    (913,282
    )
    
    
    (346,296
    )
    
    
    (113,047
    )
    
    
    (1,372,625
    )Other income and (expense)
    
    
    (704,110
    )
    
    
    
    
    
    
    (89,447
    )
    
    
    (793,557
    )Loss from continuing operations
    
    $
    (1,617,392
    )
    
    $
    (346,296
    )
    
    $
    (202,494
    )
    
    $
    (2,166,182
    )Total Assets
    
    $
    14,191,934
    
    
    $
    15,366,842
    
    
    $
    449,784
    
    
    $
    30,008,560Capital Expenditures
    
    $
    
    
    
    $
    2,417
    
    
    $
    
    
    
    $
    2,417
 For the Nine Months Ended September 30, 2010UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    
    
    
    
    
    
    
    
    4,065
    
    
    
    4,065Depreciation expense
    
    
    141,803
    
    
    
    
    
    
    
    
    
    
    
    141,803Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    160,824
    
    
    
    160,824Selling, general and administrative
    
    
    3,706,777
    
    
    
    34,477
    
    
    
    15,368
    
    
    
    3,756,622Operating income (loss)
    
    
    (3,848,580
    )
    
    
    (34,477
    )
    
    
    (180,257
    )
    
    
    (4,063,314
    )Other income and (expense)
    
    
    (2,059,471
    )
    
    
    2,305,527
    
    
    
    250,002
    
    
    
    496,058Income (loss) from continuing operations
    
    $
    (5,908,051
    )
    
    $
    2,271,050
    
    
    $
    69,745
    
    
    $
    (3,567,256
    )Total Assets
    
    $
    5,702,782
    
    
    $
    18,295,087
    
    
    $
    290,290
    
    
    $
    24,288,159Capital Expenditures
    
    $
    7,474
    
    
    $
    1,279,209
    
    
    $
    
    
    
    $
    1,286,683
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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 For the Nine Months Ended September 30, 2009UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    TOTALTotal Operating Costs
    
    
    (449,941
    )
    
    
    28,309
    
    
    
    63,009
    
    
    
    (358,623
    )Depreciation expense
    
    
    137,377
    
    
    
    
    
    
    
    40,802
    
    
    
    178,179Loss on asset impairments
    
    
    1,651,161
    
    
    
    
    
    
    
    
    
    
    
    1,651,161Selling, general and administrative
    
    
    3,491,552
    
    
    
    746,007
    
    
    
    627,694
    
    
    
    4,865,253Operating loss
    
    
    (4,830,149
    )
    
    
    (774,316
    )
    
    
    (731,505
    )
    
    
    (6,335,970
    )Other income and (expense)
    
    
    (2,285,845
    )
    
    
    7,878
    
    
    
    (89,522
    )
    
    
    (2,367,489
    )Loss from continuing operations
    
    $
    (7,115,994
    )
    
    $
    (766,438
    )
    
    $
    (821,027
    )
    
    $
    (8,703,459
    )Total Assets
    
    $
    14,191,934
    
    
    $
    15,366,842
    
    
    $
    449,784
    
    
    $
    30,008,560Capital Expenditures
    
    $
    2,463
    
    
    $
    (10,408
    )
    
    $
    
    
    
    $
    (7,945
    )
 Note 10. Commitments and Contingencies
    Crown Engineering
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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Note 11. Subsequent Events
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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 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
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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
   BioMass
      Wind Energy
  - 17 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Solar Energy
  Results of Operations
 Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009:
 Hurricane repairs and losses
  Depreciation Expense
  Selling, General and Administrative Expense
     Operating Income/Loss
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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Other Income and Expense
  Preferred Stock Dividends
  Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009:
 Wind Energy Project Costs
  Hurricane repairs and losses
  Depreciation Expense
  Loss on Asset Impairments
  Selling, General and Administrative Expense
     Operating Income/Loss
    - 19 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 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
  - 20 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 BioMass
  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
 - 21 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 Off-Balance Sheet Arrangements
  
 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
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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 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.
 23




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 ExhibitNumber
    
    Exhibit Title10.9*
    
    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 time10.11****
    
    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 24




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##### Table of Contents



SIGNATURES
  GreenHunter Energy, Inc.Date: November 15, 2010
    By:
    /s/ Gary C. EvansGary C. EvansChairman and Chief Executive OfficerDate: November 15, 2010
    By:
    /s/ David S. KruegerDavid S. KruegerVice President and Chief Financial OfficerDate: November 15, 2010
    By:
    /s/ Jonathan D. HoopesJonathan D. HoopesPresident and Chief Operating Officer 25