##### 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, 2009
 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 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RisksItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 6. Exhibits and Reports on Form 8-KSIGNATURESEX-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
 June 30, 2009
    
    
    December 31, 2008ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    31,409
    
    
    $
    676,636Restricted cash
    
    
    3,998,651
    
    
    
    342,653Accounts receivable, net of allowance of $203,678 and $542,965, respectively
    
    
    7,441,289
    
    
    
    4,475,670Inventory
    
    
    847,751
    
    
    
    6,137,780Prepaid expenses and other current assets
    
    
    1,232,658
    
    
    
    943,135Assets held for sale  current
    
    
    
    
    
    
    53,555Total current assets
    
    
    13,551,758
    
    
    
    12,629,429FIXED ASSETS:Land and improvements
    
    
    4,732,095
    
    
    
    5,394,866Buildings
    
    
    3,100,621
    
    
    
    3,100,621Plant and other equipment
    
    
    47,748,978
    
    
    
    45,521,460Accumulated depreciation
    
    
    (4,989,069
    )
    
    
    (2,855,250
    )Construction in progress
    
    
    10,696,899
    
    
    
    11,934,854Net fixed assets
    
    
    61,289,524
    
    
    
    63,096,551OTHER ASSETS:Assets held for sale
    
    
    
    
    
    
    4,887,945Deferred financing costs
    
    
    3,170,346
    
    
    
    3,720,893Other noncurrent assets
    
    
    7,968,922
    
    
    
    9,404,152Total assets
    
    $
    85,980,550
    
    
    $
    93,738,970LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current portion of notes payable
    
    $
    307,662
    
    
    $
    507,102Current portion of notes payable, nonrecourse
    
    
    42,433,584
    
    
    
    6,761,417Accounts payable
    
    
    13,350,748
    
    
    
    16,020,538Dividends payable
    
    
    225,639
    
    
    
    250,000Accrued liabilities
    
    
    5,560,543
    
    
    
    5,254,965Liabilities associated with assets held for sale
    
    
    
    
    
    
    2,224,447Total current liabilities
    
    
    61,878,176
    
    
    
    31,018,469NON-CURRENT LIABILITIES:Notes payable
    
    
    3,029,879
    
    
    
    3,062,642Notes payable, nonrecourse, less current portion
    
    
    
    
    
    
    36,738,583Redeemable debentures, net of discount of $1,247,274 and $1,485,006, respectively
    
    
    25,088,682
    
    
    
    23,139,057Liabilities associated with assets held for sale, non-current
    
    
    
    
    
    
    74,319Total long-term liabilities
    
    
    28,118,561
    
    
    
    63,014,601COMMITMENTS AND CONTINGENCIES (Notes 6, 12, & 13)STOCKHOLDERS DEFICIT:Series A 8% convertible preferred stock, $.001 par value, $1,040 and $1,000
stated value, respectively, 6,750 and 12,500 issued and outstanding,
respectively
    
    
    7,220,000
    
    
    
    12,500,000Series B convertible preferred stock, $.001 par value, $1,000 stated value,
10,575 issued and outstanding
    
    
    10,575,000
    
    
    
    10,575,000Common
stock, $.001 par value, 90,000,000 authorized shares, 22,138,876 and
20,988,876 issued, respectively
    
    
    22,139
    
    
    
    20,989Additional paid-in capital
    
    
    87,014,177
    
    
    
    81,100,216Accumulated deficit
    
    
    (107,776,266
    )
    
    
    (103,478,564
    )Treasury stock, at cost, 44,436 shares
    
    
    (678,538
    )
    
    
    (678,538
    )Noncontrolling interest in consolidated subsidiaries
    
    
    (166,786
    )
    
    
    (107,290
    )Unearned common stock in KSOP, at cost, 15,200 shares
    
    
    (225,913
    )
    
    
    (225,913
    )Total stockholders deficit
    
    
    (4,016,187
    )
    
    
    (294,100
    )Total liabilities and stockholders deficit
    
    $
    85,980,550
    
    
    $
    93,738,970
 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 302009
    
    
    2008
    
    
    2009
    
    
    2008REVENUE:Product sales
    
    $
    1,521,673
    
    
    $
    186,375
    
    
    $
    4,378,575
    
    
    $
    316,152Terminal revenues
    
    
    195,802
    
    
    
    281,733
    
    
    
    362,821
    
    
    
    329,733Processing revenue
    
    
    
    
    
    
    
    
    
    
    165,697
    
    
    
    Total revenue
    
    
    1,717,475
    
    
    
    468,108
    
    
    
    4,907,093
    
    
    
    645,885COSTS AND EXPENSES (RECOVERIES):Cost of sales and services
    
    
    2,064,586
    
    
    
    1,038,294
    
    
    
    7,483,793
    
    
    
    1,189,799Hurricane repairs and losses (insurance proceeds)
    
    
    (9,340,979
    )
    
    
    
    
    
    
    (10,835,557
    )
    
    
    Project costs
    
    
    69,913
    
    
    
    119,902
    
    
    
    196,946
    
    
    
    194,234Depreciation expense
    
    
    1,082,617
    
    
    
    98,739
    
    
    
    2,146,065
    
    
    
    187,146Selling, general and administrative
    
    
    1,385,936
    
    
    
    5,849,201
    
    
    
    5,583,146
    
    
    
    13,666,182Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    1,651,161
    
    
    
    Total costs and expenses (recoveries)
    
    
    (4,737,927
    )
    
    
    7,106,136
    
    
    
    6,225,554
    
    
    
    15,237,361OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS
    
    
    6,455,402
    
    
    
    (6,638,028
    )
    
    
    (1,318,461
    )
    
    
    (14,591,476
    )OTHER INCOME (EXPENSE):Interest and other income
    
    
    73,244
    
    
    
    180,997
    
    
    
    109,889
    
    
    
    468,747Interest, accretion and other expense
    
    
    (1,554,341
    )
    
    
    (615,612
    )
    
    
    (3,009,379
    )
    
    
    (979,574
    )Total other income (expense)
    
    
    (1,481,097
    )
    
    
    (434,615
    )
    
    
    (2,899,490
    )
    
    
    (510,827
    )Income (loss) from continuing operations
before noncontrolling interest
    
    
    4,974,305
    
    
    
    (7,072,643
    )
    
    
    (4,217,951
    )
    
    
    (15,102,303
    )Noncontrolling Interest
    
    
    15,895
    
    
    
    
    
    
    
    59,496
    
    
    
    Income (loss) from continuing operations
    
    
    4,990,200
    
    
    
    (7,072,643
    )
    
    
    (4,158,455
    )
    
    
    (15,102,303
    )Gain (loss) on sale of discontinued operations
    
    
    (309,725
    )
    
    
    
    
    
    
    549,029
    
    
    
    Loss from discontinued operations, net of taxes
    
    
    (5,649
    )
    
    
    
    
    
    
    (215,304
    )
    
    
    Net Income (Loss)
    
    
    4,674,826
    
    
    
    (7,072,643
    )
    
    
    (3,824,730
    )
    
    
    (15,102,303
    )Preferred stock dividends
    
    
    (225,639
    )
    
    
    (250,000
    )
    
    
    (472,972
    )
    
    
    (500,000
    )Net income (loss) to common stockholders
    
    $
    4,449,187
    
    
    $
    (7,322,643
    )
    
    $
    (4,297,702
    )
    
    $
    (15,602,303
    )Basic earnings (loss) per share:Income (loss) from continuing operations
    
    $
    0.22
    
    
    $
    (0.37
    )
    
    $
    (0.22
    )
    
    $
    (0.79
    )Income (loss) from discontinued operations
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    0.02
    
    
    $
    Net income (loss) per share
    
    $
    0.21
    
    
    $
    (0.37
    )
    
    $
    (0.20
    )
    
    $
    (0.79
    )Diluted earnings (loss) per share:Income (loss) from continuing operations
    
    $
    0.13
    
    
    $
    (0.37
    )
    
    $
    (0.22
    )
    
    $
    (0.79
    )Income (loss) from discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    0.02
    
    
    $
    Net income (loss) per share
    
    $
    0.13
    
    
    $
    (0.37
    )
    
    $
    (0.20
    )
    
    $
    (0.79
    )
 See accompanying notes to consolidated financial statements
 - 2 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE PERIOD FROM JANUARY 1, 2009 TO JUNE 30, 2009
 Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unearned
    
    
    TotalSeries A
    
    
    Series B
    
    
    Common
    
    
    Paid in
    
    
    Noncontrolling
    
    
    Accumulated
    
    
    Treasury
    
    
    Shares in
    
    
    EquityPreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Capital
    
    
    Interest
    
    
    Deficit
    
    
    Stock
    
    
    KSOP
    
    
    (Deficit)BALANCE, January 1, 2009
    
    $
    12,500,000
    
    
    $
    10,575,000
    
    
    $
    20,989
    
    
    $
    81,100,216
    
    
    $
    (107,290
    )
    
    $
    (103,478,564
    )
    
    $
    (678,538
    )
    
    $
    (225,913
    )
    
    $
    (294,100
    )Transfer accumulated preferred dividends to stated value
    
    
    484,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    484,000Issue 42,797 warrants on Series B Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    942
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    942Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,836
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,836Conversion of 5,750 preferred shares into 1,150,000 common shares
    
    
    (5,764,000
    )
    
    
    
    
    
    
    1,150
    
    
    
    5,776,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,333Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (472,972
    )
    
    
    
    
    
    
    
    
    
    
    (472,972
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,496
    )
    
    
    (3,824,730
    )
    
    
    
    
    
    
    
    
    
    
    (3,884,226
    )BALANCE, June 30, 2009
    
    $
    7,220,000
    
    
    $
    10,575,000
    
    
    $
    22,139
    
    
    $
    87,014,177
    
    
    $
    (166,786
    )
    
    $
    (107,776,266
    )
    
    $
    (678,538
    )
    
    $
    (225,913
    )
    
    $
    (4,016,187
    )
 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
 SIX MONTHS ENDED JUNE 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,824,730
    )
    
    $
    (15,102,303
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    2,146,065
    
    
    
    187,146Noncash stock compensation
    
    
    136,836
    
    
    
    8,075,291Amortization of deferred financing costs
    
    
    688,498
    
    
    
    143,427Non-cash asset impairment
    
    
    1,651,161
    
    
    
    Noncontrolling interest
    
    
    (59,496
    )
    
    
    Gain on sale of assets
    
    
    (539,967
    )
    
    
    (74,677
    )Accretion of discount
    
    
    238,675
    
    
    
    85,399Changes in certain assets and liabilities:Accounts receivable
    
    
    (2,600,069
    )
    
    
    (317,329
    )Inventory
    
    
    5,290,029
    
    
    
    (14,016,066
    )Prepaid and other expense
    
    
    (292,440
    )
    
    
    (2,336,743
    )Accounts payable
    
    
    (4,044,650
    )
    
    
    (953,468
    )Accrued liabilities
    
    
    354,468
    
    
    
    3,918,646Net cash used in operating activities
    
    
    (855,620
    )
    
    
    (20,390,677
    )CASH FLOWS FROM INVESTING ACTIVITIES:Change in restricted cash
    
    
    (3,655,998
    )
    
    
    (591,971
    )Proceeds from sale of assets
    
    
    4,349,448
    
    
    
    87,517Additions to fixed assets
    
    
    (706,951
    )
    
    
    (34,947,945
    )Increase in other assets
    
    
    (45,931
    )
    
    
    (5,325,218
    )Net cash used in investing activities
    
    
    (59,432
    )
    
    
    (40,777,617
    )CASH FLOWS FROM FINANCING ACTIVITIES:Gross proceeds from stock and warrant issuance
    
    
    
    
    
    
    99,375Loan common stock to KSOP
    
    
    
    
    
    
    (77,854
    )Commissions and fees paid on stock issuance
    
    
    
    
    
    
    (3,045
    )Gross proceeds from redeemable debenture issuance
    
    
    1,711,892
    
    
    
    13,705,858Increase in notes payable
    
    
    221,560
    
    
    
    47,383,772Payment of notes payable
    
    
    (1,525,676
    )
    
    
    (7,363,182
    )Payment of deferred financing costs
    
    
    (137,951
    )
    
    
    (1,713,512
    )Preferred dividends paid in cash
    
    
    
    
    
    
    (500,000
    )Net cash provided by financing activities
    
    
    269,825
    
    
    
    51,531,412CHANGE IN CASH
    
    
    (645,227
    )
    
    
    (9,636,882
    )CASH, beginning of period
    
    
    676,636
    
    
    
    18,750,394CASH,end of period
    
    $
    31,409
    
    
    $
    9,113,512Cash paid for interest
    
    $
    1,790,871
    
    
    $
    812,521NONCASH TRANSACTIONS:KSOP company match in stock
    
    $
    
    
    
    $
    104,233Warrants issued on debentures
    
    $
    
    
    
    $
    1,677,622Notes payable exchanged for stock
    
    $
    
    
    
    $
    1,874,989
 See accompanying notes to consolidated financial statements
 - 4 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2009
 Note 1. Organization and 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, 2009
     Nature of Operations
     - 6 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2009
      Income or Loss Per Share
   - 7 -




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GREENHUNTER ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)  FOR THE SIX MONTHS ENDED JUNE 30, 2009
 For the Three Months Ended June 30,2009
    
    2008Income
    
    Shares *
    
    Income
    
    Shares *Income (loss) from continuing
operations
    
    $
    4,990,200
    
    
    
    
    
    
    $
    (7,072,643
    )Less: Preferred stock dividends
    
    
    (225,639
    )
    
    
    
    
    
    
    (250,000
    )Earnings available to common
stockholders
    
    $
    4,764,561
    
    
    
    21,296,822
    
    
    $
    (7,322,643
    )
    
    
    19,885,486Basic income (loss) per common
share
    
    $
    0.22
    
    
    
    
    
    
    $
    (0.37
    )Earnings available to common
stockholders
    
    $
    4,764,561
    
    
    
    21,296,822
    
    
    $
    (7,322,643
    )
    
    
    19,885,486Dilutive Securities:Stock options
    
    
    
    
    
    
    45,580
    
    
    
    
    
    
    
    Debentures
    
    
    487,170
    
    
    
    16,835,836
    
    
    
    
    
    
    
    Preferred stock
    
    
    225,639
    
    
    
    2,854,000
    
    
    
    
    
    
    
    Diluted
    
    $
    5,477,370
    
    
    
    41,032,238
    
    
    $
    (7,322,643
    )
    
    
    19,885,486Diluted income (loss) per
common share
    
    
    0.13
    
    
    
    
    
    
    
    (0.37
    )
 
 *
    
    Weighted-average common shares outstanding For the Six Months Ended June 30,2009
    
    2008Income
        
    Shares *
    
    Income
    
    Shares *Income (loss) from continuing
operations
    
    $
    (4,158,455
    )
    
    
    
    
    
    $
    (15,102,303
    )Less: Preferred stock dividends
    
    
    (472,972
    )
    
    
    
    
    
    
    (500,000
    )Earnings available to common
stockholders
    
    $
    (4,631,427
    )
    
    
    21,116,920
    
    
    $
    (15,602,303
    )
    
    
    19,854,370Basic income (loss) per common
share
    
    $
    (0.22
    )
    
    
    
    
    
    $
    (0.79
    )Earnings available to common
stockholders
    
    $
    (4,631,427
    )
    
    
    21,116,920
    
    
    $
    (15,602,303
    )
    
    
    19,854,370Dilutive Securities:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    (4,631,427
    )
    
    
    21,116,920
    
    
    $
    (15,602,303
    )
    
    
    19,854,370Diluted income (loss) per
common share
    
    
    (0.22
    )
    
    
    
    
    
    
    (0.79
    )
 
 *
    
    Weighted-average common shares outstanding Note 2. Recently Issued Accounting Standards
 Business Combinations
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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, 2009
  Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Disclosures about Derivative Instruments and
Hedging Activities
 The Hierarchy of Generally Accepted Accounting
Principles
 Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entitys Own Stock
 Equity Method Investment Accounting Considerations
  - 9 -




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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, 2009
  Note 3. Discontinued Operations
   Sales and other revenues from discontinued operations
    
    $
    Operating expenses from discontinued operations
    
    
    (215,652
    )Other income from discontinued operations
    
    
    348Net loss from discontinued operations
    
    $
    (215,304
    )
 Note 4. Impairments
  Note 5. Inventories
  Finished goods
    
    $
    196,721Work in process
    
    
    736,846Raw materials
    
    
    821,222Valuation allowance
    
    
    (907,038
    )$
    847,751
 Note 6. Notes Payable
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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, 2009
 Long-Term Debt:Note payable due February 2, 2010, 6.1%
    
    $
    221,560Note payable due November 31, 2017, 5.7%
    
    
    3,115,981Non-recourse construction facility, 7.0% at June 30, 2009
    
    
    32,433,584Non-recourse working capital line of credit, 7.0% at June 30,
2009
    
    
    10,000,00010% Series A Senior Secured Redeemable Debentures, net of
$1,201,950 discount
    
    
    19,832,1989% Series B Senior Secured Redeemable Debentures, net of
$45,324 discount
    
    
    5,256,48470,859,807Less: current portion
    
    
    (42,741,246
    )Total Long-Term Debt
    
    $
    28,118,561
 Note Payable
  Non-recourse Notes Payable
   10% Series A Senior Secured Redeemable Debentures (Nonrecourse to GreenHunter Energy)
  9% Series B Senior Secured Redeemable Debentures(Nonrecourse to GreenHunter Energy)
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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, 2009
 Note 7. Stockholders Equity
  Preferred
    
    Common
    
    TreasuryStock
    
    Stock
    
    Stock
    
    KSOP
    
    WarrantsDecember 31, 2008
    
    
    23,075
    
    
    
    20,988,876
    
    
    
    44,436
    
    
    
    15,200
    
    
    
    6,208,948Conversion of Series A Preferred Shares
    
    
    (5,750
    )
    
    
    1,150,000Issue warrants on 9% Series B Redeemable Debentures issuances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,797June 30, 2009
    
    
    17,325
    
    
    
    22,138,876
    
    
    
    44,436
    
    
    
    15,200
    
    
    
    6,251,745
 Preferred Stock
     Common Stock Warrants
  Note 9. Stock-Based Compensation
 Share-based Payment,
 - 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, 2009
    Number
    
    
    Weighted
    
    
    Aggregateof
    
    
    average
    
    
    Intrinsic Value*Shares
    
    
    Exercise Price
    
    
    ($000s)Outstanding  Beginning of
Year
    
    
    5,629,500
    
    
    $
    9.88
    
    
    
    Granted
    
    
    100,000
    
    
    $
    .97
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    722,169
    
    
    $
    14.67
    
    
    
    Outstanding  End of Period
    
    
    5,007,331
    
    
    $
    8.99
    
    
    
    Exercisable   End of Period
    
    
    4,474,995
    
    
    $
    8.39
    
    
    $
    
 
 *
    
    The Aggregate Intrinsic Value was calculated using the June 30, 2009 stock price
of $2.04.  Number of
    
    Weighted Average
    
    Number ofOptions
    
    Remaining Contractual
    
    ExercisableExercise Price
    
    
    
    Outstanding
    
    Life (Years)
    
    Options$
    .97
    
    
    
    
    
    100,000
    
    
    
    9.93
    
    
    
    $
    5.00
    
    
    
    
    
    3,247,000
    
    
    
    7.88
    
    
    
    3,247,000$
    7.50
    
    
    
    
    
    33,333
    
    
    
    8.27
    
    
    
    33,333$
    10.00
    
    
    
    
    
    248,333
    
    
    
    8.41
    
    
    
    171,665$
    10.12
    
    
    
    
    
    10,000
    
    
    
    9.28
    
    
    
    $
    12.00
    
    
    
    
    
    6,500
    
    
    
    8.49
    
    
    
    5,500$
    13.66
    
    
    
    
    
    3,000
    
    
    
    9.01
    
    
    
    3,000$
    17.76
    
    
    
    
    
    100,000
    
    
    
    8.62
    
    
    
    50,000$
    18.00
    
    
    
    
    
    16,667
    
    
    
    8.70
    
    
    
    16,667$
    18.91
    
    
    
    
    
    1,107,498
    
    
    
    8.63
    
    
    
    887,830$
    19.75
    
    
    
    
    
    13,333
    
    
    
    8.81
    
    
    
    13,333$
    20.02
    
    
    
    
    
    25,000
    
    
    
    8.97
    
    
    
    $
    20.64
    
    
    
    
    
    75,000
    
    
    
    8.94
    
    
    
    25,000$
    22.75
    
    
    
    
    
    21,667
    
    
    
    8.87
    
    
    
    21,667
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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, 2009
 Note 10. Related Party Transactions
  Note 11. Segment Data
       - 14 -




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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, 2009
 For the Three Months Ended June 30, 2009UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,717,475
    
    
    $
    1,717,475Total Operating Costs
(recoveries)
    
    
    (449,941
    )
    
    
    27,753
    
    
    
    42,160
    
    
    
    (6,826,452
    )
    
    
    (7,206,480
    )Depreciation expense
    
    
    46,456
    
    
    
    
    
    
    
    22,233
    
    
    
    1,013,928
    
    
    
    1,082,617Selling, general and
administrative
    
    
    204,764
    
    
    
    236,735
    
    
    
    246,832
    
    
    
    697,605
    
    
    
    1,385,936Operating income (loss)
    
    
    198,721
    
    
    
    (264,488
    )
    
    
    (311,225
    )
    
    
    6,832,394
    
    
    
    6,455,402Other income and (expense)
    
    
    (796,730
    )
    
    
    339
    
    
    
    
    
    
    
    (684,706
    )
    
    
    (1,481,097
    )Income (loss) from continuing
operations before
noncontrolling interest
    
    $
    (598,009
    )
    
    $
    (264,149
    )
    
    $
    (311,225
    )
    
    $
    6,147,688
    
    
    $
    4,974,305Total Assets
    
    $
    13,902,030
    
    
    $
    15,333,569
    
    
    $
    1,302,464
    
    
    $
    55,442,487
    
    
    $
    85,980,550Capital Expenditures
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    348,986
    
    
    $
    348,986
 Quarter EndedFor the Three Months Ended June 30, 2008UnallocatedCorporate
    
    
    BioPower
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    468,108
    
    
    $
    468,108Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    119,902
    
    
    
    1,038,294
    
    
    
    1,158,196Depreciation expense
    
    
    42,813
    
    
    
    
    
    
    
    10,942
    
    
    
    44,984
    
    
    
    98,739Selling, general and
administrative
    
    
    4,198,603
    
    
    
    183,763
    
    
    
    301,212
    
    
    
    1,165,623
    
    
    
    5,849,201Operating income (loss)
    
    
    (4,241,416
    )
    
    
    (183,763
    )
    
    
    (432,056
    )
    
    
    (1,780,793
    )
    
    
    (6,638,028
    )Other income and (expense)
    
    
    (522,613
    )
    
    
    
    
    
    
    (3,727
    )
    
    
    91,725
    
    
    
    (434,615
    )Loss from continuing
operations before
noncontrolling interest
    
    $
    (4,764,029
    )
    
    $
    (183,763
    )
    
    $
    (435,783
    )
    
    $
    (1,689,068
    )
    
    $
    (7,072,643
    )Total Assets
    
    $
    23,817,787
    
    
    $
    7,336,027
    
    
    $
    703,740
    
    
    $
    77,179,756
    
    
    $
    109,037,310Capital Expenditures
    
    $
    99,440
    
    
    $
    1,206,003
    
    
    $
    121,631
    
    
    $
    20,244,321
    
    
    $
    21,671,395
 - 15 -




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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, 2009
 For the Six Months Ended June, 2009UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,907,093
    
    
    $
    4,907,093Total Operating Costs
(recoveries)
    
    
    (449,941
    )
    
    
    28,309
    
    
    
    168,637
    
    
    
    (2,901,823
    )
    
    
    (3,154,818
    )Depreciation expense
    
    
    94,296
    
    
    
    
    
    
    
    46,104
    
    
    
    2,005,665
    
    
    
    2,146,065Loss on asset impairments
    
    
    1,651,161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,651,161Selling, general and
administrative
    
    
    2,621,351
    
    
    
    399,711
    
    
    
    530,047
    
    
    
    2,032,037
    
    
    
    5,583,146Operating income (loss)
    
    
    (3,916,867
    )
    
    
    (428,020
    )
    
    
    (744,788
    )
    
    
    3,771,214
    
    
    
    (1,318,461
    )Other income and (expense)
    
    
    (1,581,736
    )
    
    
    7,878
    
    
    
    (75
    )
    
    
    (1,325,557
    )
    
    
    (2,899,490
    )Income (loss) from continuing
operations before
noncontrolling interest
    
    $
    (5,498,603
    )
    
    $
    (420,142
    )
    
    $
    (744,863
    )
    
    $
    2,445,657
    
    
    $
    (4,217,951
    )Total Assets
    
    $
    13,902,030
    
    
    $
    15,333,569
    
    
    $
    1,302,464
    
    
    $
    55,442,487
    
    
    $
    85,980,550Capital Expenditures
    
    $
    2,463
    
    
    $
    (12,825
    )
    
    $
    
    
    
    $
    717,313
    
    
    $
    706,951
 For the Six Months Ended June 30, 2008UnallocatedCorporate
    
    
    BioMass
    
    
    Wind Energy
    
    
    BioFuels
    
    
    TOTALTotal Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    645,885
    
    
    $
    645,885Total Operating Costs
    
    
    
    
    
    
    
    
    
    
    194,234
    
    
    
    1,189,799
    
    
    
    1,384,033Depreciation expense
    
    
    80,961
    
    
    
    
    
    
    
    20,506
    
    
    
    85,679
    
    
    
    187,146Selling, general and
administrative
    
    
    10,958,663
    
    
    
    307,550
    
    
    
    554,625
    
    
    
    1,845,344
    
    
    
    13,666,182Operating income (loss)
    
    
    (11,039,624
    )
    
    
    (307,550
    )
    
    
    (769,365
    )
    
    
    (2,474,937
    )
    
    
    (14,591,476
    )Other income and (expense)
    
    
    (650,669
    )
    
    
    
    
    
    
    (2,840
    )
    
    
    142,682
    
    
    
    (510,827
    )Loss from continuing
operations before
noncontrolling interest
    
    $
    (11,690,293
    )
    
    $
    (307,550
    )
    
    $
    (772,205
    )
    
    $
    (2,332,255
    )
    
    $
    (15,102,303
    )Total Assets
    
    $
    23,817,787
    
    
    $
    7,336,027
    
    
    $
    703,740
    
    
    $
    77,179,756
    
    
    $
    109,037,310Capital Expenditures
    
    $
    463,713
    
    
    $
    1,214,448
    
    
    $
    160,764
    
    
    $
    33,109,021
    
    
    $
    34,947,946
 Note 12. Commitments and Contingencies
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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, 2009
  Orion
 et al,
  Bioversel
   Jacob Stern
   Crown Engineering
   - 17 -




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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, 2009
 Gavilon
   Steel Painters, Bridgefield Electrical Services, and Quality Contract Services
  Shamrock Gulf
  Note 13. Subsequent Events
     - 18 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
 
 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, 2008 and with the financial statements and accompanying notes included herein.
The discussion should not be construed to imply that the results contained herein will necessarily
continue into the future or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best present assessment
by our management. The discussion contains forward-looking statements that involve risks and
uncertainties (see Forward-Looking Statements above). Actual events or results may differ
materially from those indicated in such forward-looking statements.
 Overview
   BioFuels
    - 19 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  BioMass
  Wind Energy
  Results of Operations
 Three
Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008:
 BioFuels Revenues
  BioFuels Costs of Sales and Services
  - 20 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
 Wind Energy Project Costs
  Hurricane repairs and losses
  Depreciation Expense
  Selling, General and Administrative Expense
      Operating Income/Loss
     - 21 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  Interest and Other Revenues
  Interest, Accretion and Other Expense
  Gain/Loss on Sale of Discontinued Operations
  Income/Loss from Continuing Operations
  Preferred Stock Dividends
  Net Income/Loss to Common Stockholders
  Six
Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008:
 BioFuels Revenues
  BioFuels Costs of Sales and Services
  - 22 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  Wind Energy Project Costs
  Hurricane repairs and losses
  Depreciation Expense
  Selling, General and Administrative Expense
      Operating Income/Loss
   - 23 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
    Interest and Other Revenues
  Interest, Accretion and Other Expense
  Gain on Sale of Discontinued Operations
  Loss from Continuing Operations
  Preferred Stock Dividends
  Net Loss to Common Stockholders
  Liquidity and Capital Resources   Cash Flow and Working Capital
  - 24 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  Operating Activities
   Financing Activities
  Notes Payable
   9% Series B Senior Secured Redeemable Debentures
  Nonrecourse Term Loan and Working Capital Loan
  - 25 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  Investing Activities and Future Requirements
 Capital Expenditures
  Forecast
  BioFuels
  BioMass
  Wind Energy
  Obligations Under Material Contracts
  Consulting Agreement with former owner of Mesquite Lake
  - 26 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
 Port Sutton
  Weaknesses and Uncertainties that May Affect our Financial Condition and Ability to Continue
as a Going Concern
      - 27 -




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GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
       - 28 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
    Critical Accounting Policies and Other
   Project Costs
  Fair Value of Financial Instruments
  Revenue recognition
  - 29 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  Stock-Based Compensation
 Share-Based Payments
 Impairments
  Asset Retirement Obligations
  Recent Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 - 30 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  Disclosures about Derivative Instruments and
Hedging Activities
 The Hierarchy of Generally Accepted Accounting
Principles
 Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entitys Own Stock
 Equity Method Investment Accounting Considerations
  Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risks
  - 31 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
  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
 Orion
 et al,
 - 32 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
   Bioversel
   Jacob Stern
   Crown Engineering
   Gavilon
   Steel Painters, Bridgefield Electrical Services, and Quality Contract Services
  Shamrock Gulf
  - 33 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  (c)Total Number ofShares Purchased
    
    (d)as Part of a
    
    Maximum NumberPublicly
    
    of Shares that May(a)
    
    (b)
    
    Announced
    
    Yet be RepurchasedTotal Number of
    
    Average Price Paid
    
    Repurchase
    
    Under the Plan orPeriod
    
    Shares Purchased
    
    per Share
    
    Program
    
    ProgramJanuary 1 through January 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    410,600February 1 through February 28, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    410,600March 1 through March 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    410,600April 1 through April 30, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    410,600May 1 through May 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    410,600June 1 through June 30, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    410,600
 - 34 -




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##### Table of Contents



GREENHUNTER ENERGY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2009
 
 Item 6. Exhibits and Reports on Form 8-K
 ExhibitNumber
    
    Exhibit Title3.1*
    
    Certificate of Incorporation3.2*
    
    Amendment to the Certificate of Incorporation3.3*
    
    Bylaws4.1****
    
    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 time10.11**
    
    Subscription and Equity Transfer Agreement between GreenHunter Energy, Inc. and MingYang Wind Power Technology Co.
LTD. et al., dated November 28, 200710.12**
    
    Master Turbine Supply Agreement between GreenHunter Energy, Inc. and MingYang Wind Power Technology Co. LTD. et al.,
dated November 28, 200710.13*****
    
    Amendment no. 1 to the 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-K, dated June 30, 2008***
    
    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
    
    Filed herewith - 35 -




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##### Table of Contents



SIGNATURES
  GreenHunter Energy, Inc.Date: August 13, 2009
    
    By:
    
    /s/ Gary C. Evans

Gary C. EvansChairman, President and Chief Executive OfficerDate: August 13, 2009
    
    By:
    
    /s/ David S. KruegerDavid S. KruegerVice President, and Chief Financial Officer
 - 36 -