GeoBio Energy, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - CERTIFICATION OF OUR CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - GeoBio Energy, Inc.	exhibit31-1.htm
EX-10.32 - STOCK PURCHASE AGREEMENT OF MOODY CONSTRUCTION & SONS, INC. - GeoBio Energy, Inc.	exhibit10-32.htm
EX-32.1 - CERTIFICATION OF OUR CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - GeoBio Energy, Inc.	exhibit32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2010

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number :

333-67174

	GEOBIO ENERGY, INC.
(Exact name of registrant as specified in its charter)

Colorado		84-1153946
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

802 Windy Ridge Lane SE, Atlanta, GA		30339
(Address of principal executive offices)		(Zip Code)

	206-838-9715
(Registrant’s telephone number, including area code)

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. Yes x No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer  Accelerated filer  Non-accelerated filer  Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x

As of February 8, 2011, approximately 7,526,000 shares of the registrant’s common stock were outstanding.

GEOBIO ENERGY, INC.

(A DEVELOPMENT STAGE COMPANY)

FORM 10-Q

INDEX

Part I	Financial Information		Page

	Item 1	Unaudited Financial Statements:
		Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and
		September 30, 2009…………………………………………………………………………………………………............	3

		Condensed Consolidated Statements of Operations
		(unaudited) for the three months and six months ended June 30, 2010
		and 2009 and for the period from inception
		to June 30, 2010.....……………………………………………………………………………...……….……….............	4

		Condensed Consolidated Statement of Stockholders’ Equity (Deficit) (unaudited)
		for the period from inception to June 30, 2010......……………………………………..………...................................	5

		Condensed Consolidated Statements of Cash Flows (unaudited) for the three
		months ended June 30, 2010 and 2009 and for the
		period from inception to June 30, 2010......………………………………………………………….............................	6

		Notes to Condensed Consolidated Financial Statements (unaudited) ……...................................................................	7

	Item 2	Management’s Discussion and Analysis of Financial Condition
		and Results of Operations………………………………………………………………………………………...............	23

	Item 4	Controls and Procedures…………………………………………………………………………………………….............	28

Part II	Other Information

	Item 1	Legal Proceedings……………………………………………………………………………………………........................	29

	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds…………………………….……….................................	29

	Item 3	Defaults Upon Senior Securities………………………………………………………………………………....................	30

	Item 4	Submission of Matters to a Vote of Security Holders…………………………………………………............................	30

	Item 5	Other Information…………………………………………………………………………………………….……................	30

	Item 6	Exhibits………………………………………………………………………………………………………………………...	30

Signatures……………………………………………………………………………………………………………………………………….......			31

GEOBIO ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31,			September 30,
	2010			2010
	(in thousands, except share and per share amounts)
ASSETS
Current Assets
Cash	$	-		$	-
Prepaid expenses		100			100
Total current assets		100			100
Total assets	$	100		$	100

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses	$	1,372		$	2,041
Convertible notes payable, net of discount of $10 and $0, respectively		834			78
Notes payable		106			106
Notes payable to related parties		342			51
Advances		258			252
Total current liabilities		2,912			2,528

Commitments and contingencies
Stockholders' Equity (Deficit)
Preferred stock and additional paid-in-capital, $0.001 par value: 100,000,000 shares authorized;
30,000,000 shares designated as Series A at both December 31, 2010 and September 30,
2010; 27,100,000 and 27,500,000 issued and outstanding at December 31, 2010 and
September 30, 2010, respectively		109			110
Common stock and additional paid-in capital, $0.001 par value: 1,000,000,000 and
25,000,000,000 shares authorized, respectively; 5,286,240 and 2,304,420 issued and
outstanding at December 31, 2010 and September 30, 2010, respectively		23,858			22,724
Deficit accumulated during the development stage		(26,779	)		(25,262	)
Total stockholders' equity (deficit)		(2,811	)		(2,428	)
Total liabilities and stockholders' equity (deficit)	$	100		$	100

See Notes to Condensed Consolidated Financial Statements

GEOBIO ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

							From Inception (November 1, 2004) Through December 31, 2010
	For the three months ended December 31,
	2010			2009
	(in thousands, except share and per share amounts)
	(in thousands, except share and per share amounts)

Sales	$	-		$	-		$	12
Cost of sales		-			-			54
Gross profit (loss)		-			-			(42	)

Operating Expenses
Selling and marketing		-			-			193
Research and development		-			-			103
General and administrative		1,437			185			23,383
Depreciation and amortization		-			-			185
Impairment		-			-			1,585
Total operating expenses		1,437			185			25,449
Loss from operations		(1,437	)		(185	)		(25,491	)
Interest expense		(80	)		(175	)		(1,288	)
Net loss	$	(1,517	)	$	(360	)	$	(26,779	)
Net loss per common share - basic and diluted	$	(0.51	)	$	(1.10	)
Shares used in computing net loss per share -
basic and diluted		2,958,967			326,780



See Notes to Consolidated Financial Statements

GEOBIO ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

	Preferred Stock and Additional Paid-In-Capital						Common Stock and Additional Paid-In Capital					Deficit Accumulated During Development Stage
	Shares			Amount			Shares			Amount		Deficit Accumulated During Development Stage			Total
	(in thousands, except share and per share amounts)
At inception November 1, 2004		-		$	-			364		$	-	$	-		$	-
Sale of common stock at $0.50 per pre-split share		-			-			14			-		-			-
Net loss		-			-			-			-		(1	)		(1	)
Balance December 31, 2004		-			-			378			-		(1	)		(1	)
Sale of common stock at $0.50 per pre-split share		-			-			14			-		-			-
Net loss		-			-			-			-		(51	)		(51	)
Balance December 31, 2005		-			-			392			-		(52	)		(52	)
Sale of common stock at $0.50 per pre-split share		-			-			3			-		-			-
Return and cancellation of common stock in exchange for two former subsidiaries		-			-			(30	)		-		-			-
Common stock share from reverse split		-			-			1			-		-			-
Issuance of common stock upon conversion of note payable		-			-			273			507		-			507
Common stock issued to former Member of Domestic Energy Partners LLC (DEP)																-
contributed to DEP in exchange for cash and property		-			-			955			291		-			291
Issuance of common stock in merger		-			-			3,955			-		-			-
Net loss		-			-			-			-		(422	)		(422	)
Balance September 30, 2006		-			-			5,549			798		(474	)		324
Issuance of common stock warrants and related repricing per agreement		-			-			-			48		-			48
Discount for beneficial conversion feature		-			-			-			14		-			14
Sale of units in private placement, net		-			-			69			679		-			679
Issuance of units in exchange for goods and services		-			-			13			135		-			135
Issuance of warrants for consulting services and director compensation		-			-			-			576		-			576
Net loss		-			-			-			-		(2,367	)		(2,367	)
Balance September 30, 2007		-			-			5,631			2,250		(2,841	)		(591	)
Issuance of common stock on conversion of note payable		-			-			8			220		-			220
Common stock received from DEP in exchange for property and liabilities		-			-			(2,592	)		-		-			-
Issuance of common stock and warrants to consultants for services		-			-			3,223			15,821		-			15,821
Issuance of common stock for extension of due-date for note payable		-			-			23			75		-			75
Issuance of common stock to an employee for amounts owed		-			-			37			60		-			60
Issuance of common stock to a former note holder in settlement of a dispute		-			-			82			135		-			135
Issuance of common stock for acquisition of GeoAlgae Technology Inc.		-			-			1,069			1,469		-			1469
Issuance of warrants to officer		-			-			-			130		-			130
Net loss		-			-			-			-		(18,481	)		(18,481	)
Balance September 30, 2008		-			-			7,481			20,160		(21,322	)		(1,162	)
Issuance of common stock and warrants to consultant for services		-			-			182			53		-			53
Beneficial conversion feature of convertible debt		-			-			-			733		-			733
Stockholder payment of expenses on behalf of the Company		-			-			-			24		-			24
Issuance of preferred stock in settlement of accounts payable		5,000,000			20			-			-		-			20
Issuance of common stock on conversion of convertible liabilities		-			-			254,946			199		-			199
Issuance of common stock pursuant to cashless exercise of warrant		-			-			819			-		-			-
Net loss		-			-			-			-		(1,188	)		(1,188	)
Balance September 30, 2009		5,000,000			20			263,428			21,169		(22,510	)		(1,321	)
Issuance of common stock on conversion of convertible liabilities		-			-			114,546			118		-			118
Issuance of preferred stock to officer and consultant for services		22,500,000			90			-			-		-			90
Issuance of common stock to board member and consultant for services		-			-			113,637			62		-			62
Issuance of common stock upon conversion of notes payable		-			-			1,812,809			801					801
Stockholder contributions and payment of expenses on behalf of the Company		-			-			-			401		-			401
Beneficial conversion feature of convertible liabilities		-			-			-			173		-			173
Net loss		-			-			-			-		(2,752	)		(2,752	)
Balance September 30, 2010		27,500,000			110			2,304,420			22,724		(25,262	)		(2,428	)
Issuance of common stock on conversion of convertible liabilities		-			-			581,820			65		-			65
Beneficial conversion feature of convertible liabilities		-			-			-			75		-			75
Conversion of preferred stock to common stock		(400,000	)		(1	)		400,000			1		-			-
Stockholder contributions and payment of expenses on behalf of the Company		-			-			-			53					53
Issuance of common stock to officer and consultant for services		-			-			2,000,000			940		-			940
Net loss		-			-			-			-		(1,517	)		(1,517	)
		27,100,000		$	109			5,286,240		$	23,858	$	(26,779	)	$	(2,812	)



See Notes to Condensed Consolidated Financial Statements

GEOBIO ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended December 31, 2010			For the Three Months Ended December 31, 2009			From Inception (November 1, 2004) through December 31, 2010
	(in thousands)
Cash Flows From Operating Activities
Net loss	$	(1,517	)	$	(360	)	$	(26,779	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		-			-			193
Amortization of debt discount		65			162			1,049
Non-cash stock-based compensation for consulting, director fees and other expenses		940			-			17,905
Non-cash expense for bad debt reserve and write-down of inventory		-			-			59
Loss of assets due to fire		-			-			50
Non-cash extension fee on note payable		-			-			75
Impairment of assets		-			-			1,585
Changes in operating assets and liabilities, excluding assets and liabilities
from acquisitions and dispositions:
Accounts receivable		-			-			(5	)
Inventory		-			-			(79	)
Prepaid expenses		-			-			(100	)
Employee advances		-			-			(6	)
Deposits		-			-			(6	)
Accounts payable and accrued expenses		459			141			3,709
Net cash used in operating activities		(53	)		(57	)		(2,350	)
Cash Flows From Investing Activity
Purchases of property and equipment		-			-			(477	)
Net cash used in investing activity		-			-			(477	)
Cash Flows From Financing Activities
Advances for Company expenses		-			-			542
Repayment of advances		-			-			(54	)
Stockholder contributions and payment of expenses on behalf of the Company		53			57			478
Borrowings on notes payable		-			-			555
Proceeds from sale of units in private placement		-			-			755
Borrowings on related party notes		-			-			551
Net cash provided by financing activities		53			57			2,827
Net Change In Cash		-			-			-
Cash, beginning of period		-			-			-
Cash, end of period	$	-		$	-		$	-

Supplemental Disclosure:
Cash paid for interest	$	-		$	-		$	-
Cash paid for income taxes	$	-		$	-		$	-
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Conversion of advances payable to related party to accounts payable	$	-		$	-		$	23
Common and preferred shares issued on conversion of liabilities	$	65		$	118		$	1,473
Conversion of accounts payable to notes payable	$	1,120		$	-		$	1,727
Beneficial conversion feature of convertible liabilities	$	75		$	118		$	981
Contribution of airplane and other assets by related party	$	-		$	-		$	139
Conversion of related party note payable and accrued interest to common stock	$	-		$	-		$	507
Conversion of contributions of cash and airplane by related party to common stock	$	-		$	-		$	291
Accrued financing fees for private placement	$	-		$	-		$	(76	)
Issuance of warrants as financing fee on private placement	$	-		$	-		$	(66	)
Contribution of inventory and assets in exchange for units	$	-		$	-		$	47
Non-cash adjustment of assets and liabilities due to disposition:
Disposition of inventory	$	-		$	-		$	36
Disposition of advances	$	-		$	-		$	6
Disposition of deposits	$	-		$	-		$	6
Disposition of property and equipment	$	-		$	-		$	409
Settlement of payroll obligations	$	-		$	-		$	(261	)
Settlement of related party payable and interest payable	$	-		$	-		$	(80	)
Issuance of common stock for note payable extension fee	$	-		$	-		$	(75	)

See Notes to Condensed Consolidated Financial Statements

GEOBIO ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended December 31, 2010

Note 1. Business and Organization

GeoBio Energy, Inc. (“GeoBio” or the “Company”) formerly known as Better Biodiesel, Inc., was incorporated in Colorado in November 1990. The Company was known as Mountain State Holdings, Inc., (“MSH”) until September 2006, when it was renamed in anticipation of a merger in September 2006, when it acquired all of the Member Units of Domestic Energy Partners, LLC, (“DEP”), a Utah limited liability corporation. The previous assets and liabilities of MSH were spun off to two stockholders in August 2006 in exchange for the return of common shares. At the time of the acquisition of DEP, the Company had no assets and no liabilities and 2,000,001 shares of common stock issued and outstanding carried at nil.

The merger of the Company and DEP was accounted for as a reverse merger. The assets and liabilities of DEP are presented in the condensed consolidated balance sheet at book value. The historical operations presented in our condensed consolidated statements of operations are those of DEP. On December 20, 2007, the Company entered into and closed an Asset Purchase, Settlement and Mutual Release Agreement with the former Members of DEP and effectively disposed of their interest in DEP.

In March 2008, we completed our Share Exchange with GeoAlgae Technologies, Inc. (“GeoAlgae”) and acquired GeoAlgae as a wholly owned subsidiary. GeoAlgae was a recently formed company and its net assets at the date of acquisition were nil. The entire purchase price was allocated to intangible assets which in total constituted a business plan. The intangible assets were subsequently deemed to be impaired. GeoAlgae is not currently an operating company.

As further discussed in Note 6, Stockholders’ Equity (Deficit), on December 1, 2010, we effected a decrease of our issued and outstanding common stock, in the form of a reverse stock-split, on a one-for-five thousand, five hundred basis (1:5,500) (the “Reverse Stock-Split”).

Both the Reverse Stock-Split and the Amendment to the Articles were approved in September 2010 by the consent of a majority of the voting capital stock of the Company.

All share and per share amounts included in the condensed consolidated financial statements have been adjusted retroactively to reflect the effects of the Reverse Stock-Split.

Acquisitions in Process

On November 30, 2010, we entered into an additional amendment to our Stock Purchase Agreement with Collins Construction, Inc. (“Collins”), dated March 30, 2010, previously amended on June 1, 2010, July 14, 2010 and on September 9, 2010 (the “Collins Stock Purchase Agreement”), for the purchase of 100% of the issued and outstanding capital stock of Collins (the “Amendment”). Under the November 30, 2010 Amendment, the parties agreed to extend the Closing Date from November 30, 2010 to the date that is 90 days following the date that Collins enters into a new Master Services Agreement with its major customer, or such earlier date if mutually agreed upon between the Company and Collins. This has not yet occurred.

The closing was originally scheduled to take place on or before June 1, 2010 (the “Closing Date”), with the Company having the right and option to extend the Closing Date until July 1, 2010 (the “Extended Closing Date”), in exchange for an additional, non-refundable down payment (the “Down Payment”) of $50,000. Under the June 1, 2010 amendment, we agreed, in exchange for extending the Closing Date to July 16, 2010, that the Down Payment would be treated as an additional payment of consideration, raising the total purchase price of Collins from (i) $8,000,000 in cash and (ii) a Five (5) year, 8% Subordinated Promissory Note in the amount of $2,500,000 to (i) $8,050,000 in cash and (ii) a Five (5) year, 8% Subordinated Promissory Note in the amount of $2,500,000. Under the July 14, 2010 Amendment, the parties agreed to extend the Closing Date to September 15, 2010, and under the September 9, 2010 Amendment, the parties agreed to further extend the Closing Date to November 30, 2010.

Collins, based in Colorado, is a civil construction company that primarily constructs sites and platforms for drilling and reclamation of the site locations following the drilling phase, as well as access roads to and from wells, reserve pits and production facility pads, in the Piceance Creek Basin. Its construction services occur primarily during the site construction and site completion or restoration life cycles of natural gas fields and oil wells.

On October 5, 2010, we entered into and closed an equity purchase agreement (the “Magna Purchase Agreement”) to purchase 100% of the issued and outstanding equity interests of Magna Energy Services, LLC (“Magna”). Under the Magna Purchase Agreement, the parties agreed to a total purchase price of up to $3.2 million (the “Purchase Price Consideration”), which Purchase Price Consideration shall be adjustable, and based in significant part, upon Magna’s stated 12-month trailing earnings before interest, taxes, depreciation and amortization (“EBITDA”) as of August 31, 2010 (the “Stated 12-Month EBITDA”), of $833,349.

The Purchase Price Consideration shall be adjustable downward, in the event that the verifiable 12-month trailing EBITDA determined as of December 31, 2010, is lower than Magna’s stated 12-Month EBITDA by more than 10%, proportionally to the EBITDA short-fall (the “EBITDA Adjustment”). Completion of the acquisition of Magna is subject to meeting certain terms and conditions of the Magna Purchase Agreement, including our delivery of the Purchase Price Consideration, which is payable as follows:

(i)	A cash deposit of $100,000, as a non-refundable down payment (the “Down Payment”) on, and credit toward, the Purchase Price Consideration within ten (10) days following the October 5, 2010 closing date of the Magna Purchase Agreement, which we have not yet paid;

(ii)

8% Promissory Notes to the principals of Magna with a total face value of $3.1 million with maturity dates of December 31, 2010 (the “Take-Out Notes”). The Take-Out Notes shall be prorated for any required EBITDA Adjustment, as determined on December 31, 2010. We have not delivered the Take Out Notes, and the parties remain in discussions regarding the form and delivery of the Purchase Price Consideration; and

(iii)

Certain current managers of Magna shall receive employment agreements to remain employed on a full time basis for three years following payment of the Take-Out Notes.

Additionally, the Magna Purchase Agreement requires that Magna have Working Capital of $350,000 upon payment of the Take-Out Notes. If at the retirement of the Take-Out Notes the Working Capital is less than $350,000, then we shall reduce the Take-Out Notes by the amount of the difference. Excess Working Capital shall be distributed to the sellers of Magna.

Magna, its principals and management also pledge and agree not to compete with the business of Magna, nor within Magna’s industry anywhere in the following states for a period of five (5) years; Colorado, Utah, Arizona, New Mexico, and Wyoming.

Completion of the Magna Purchase Agreement is also conditioned upon our receipt of acceptable results of environmental surveys of Magna’s assets, including a “Phase I” Environmental Survey. This has not yet occurred.

Magna, located in Aztec, New Mexico, sells and applies environmentally acceptable chemical blends used to maintain, clean and improve the operating efficiency of natural gas and oil wells. Magna provides technical solutions that enhance productivity and well efficiency. Magna’s chemical-blend composites are customized to the needs of the client, based on samples taken from the specific wells to be serviced, and enable targeted treatments to resolve various problems inherent in “in-stream” production.

On February 4, 2011, we entered into an equity purchase agreement (the “Moody Purchase Agreement”) to purchase 100% of the issued and outstanding equity interests of Moody Construction & Sons, Inc. (“Moody”). Under the Moody Purchase Agreement, the parties agreed to a total purchase price equal to the product of (a) the earnings before interest, taxes, depreciation and amortization of Moody for the trailing 12-months prior to the closing date of the acquisition (the “Closing TTM EBITDA”) multiplied by (b) a factor of 3.5 (“Moody Purchase Price”), which shall be payable on the closing date as follows:

(i)	66.67% of the Purchase Price shall be payable in cash; and

(ii)

33.33% of the Purchase Price shall be payable in our common stock at a per share price equal to the lesser of (a) the volume-weighted average closing-trading price per share of our common stock for the ten trading days immediately prior to the February 4, 2011 entry into the Moody Purchase Agreement and the ten trading days immediately following February 4, 2011 or (b) $0.55 per share.

We will also pay additional consideration based upon Moody’s performance during the two years following the closing of the acquisition, including:

(i)

98% of any increase in Moody’s TTM EBITDA above the Closing TTM EBITDA for the 12 months following closing date (“Year-1 TTM EBITDA”), 50% of which shall be payable in cash, 50% in our common stock at a per share price equal to the lesser of (a) the volume-weighted average closing-trading price per share of our common stock for the ten trading days immediately prior to the February 4, 2011 entry into the Moody Purchase Agreement and the ten trading days immediately following February 4, 2011 or (b) $0.55 per share; and

(ii)

17.5% of any increase in Moody’s TTM EBITDA above the Year-1 TTM EBITDA for the period that 12 through 24 months following closing date, payable 100% in our common stock of at a per share price equal to the lesser of (a) the volume-weighted average closing-trading price per share of our common stock for the ten trading days immediately prior to the February 4, 2011 entry into the Moody Purchase Agreement and the ten trading days immediately following February 4, 2011 or (b) $0.55 per share.

We will also pay a cash deposit of $50,000, payable within 30 days following the February 4, 2011 entry into the Moody Purchase Agreement, which shall be refundable during the initial 60-day due diligence period that commenced upon entry into the Moody Purchase Agreement, and which shall become a non-refundable down payment on, and credit toward, the Purchase Price should we determine the results of our due diligence to be satisfactory and continue to pursue the acquisition of Moody.

Under the Moody Purchase Agreement, we also agreed to provide the current President and CEO of Moody with a 3-year employment contract to remain President and CEO of Moody. Moody’s current principals and management also pledge and agree not to compete with the business of Moody, nor within Moody’s industry anywhere in the following states for a period of five (5) years: Colorado, New Mexico, Utah, Arizona, Wyoming, Idaho, Montana and North Dakota.

The closing date is of the Moody Purchase Agreement is within 90 days following the February 4, 2011 entry into Moody Purchase Agreement, and is subject to our provision of the Purchase Price consideration and satisfactory due diligence, which shall include, among other things, Moody’s audited financial statements, which shall be provided at Moody’s initial expense, but reimbursable to the sellers of Moody upon closing of the acquisition, and other customary covenants.

Moody is a Colorado-based civil contractor servicing the oil and natural gas drilling and production industry in the Piceance Creek Basin of Colorado.

We expect to complete the acquisitions of Moody, Collins and Magna during the second quarter of 2011, subject to receipt of financing for the purchases.

Note 2. Going Concern

We have prepared our condensed consolidated financial statements assuming that we will continue as a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. As of December 31, 2010, we had a deficit accumulated during the development stage of approximately $26.8 million and expect to incur additional losses in the future. Our working capital deficit was approximately $2.8 million as of December 31, 2010 and we have no cash. These conditions raise substantial doubt about our ability to continue as a going concern.

We have funded our losses primarily through sales of common stock and warrants in private placements and borrowings from related parties and other investors. The further development of our business will require capital. Our current cash levels are not sufficient to enable us to execute our business strategy, which includes the acquisitions of Moody, Collins and Magna, which require significant cash payments. We require additional financing to satisfy our near-term working capital requirements. Our operating expenses will also consume a material amount of our cash resources. Company management intends to raise additional debt and equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be obtained in sufficient amounts necessary to meet our needs. In the event that we cannot obtain additional funds, on a timely basis or our operations do not generate sufficient cash flow, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment. We are actively seeking to raise additional capital through the sale of shares of our capital stock to institutional investors and through strategic investments, including convertible bridge loans. If management deems necessary, we might also seek additional loans from related parties or others. However, there can be no assurance that we will be able to consummate any of these transactions, or that these transactions will be consummated on a timely basis or on terms favorable to us. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

Note 3. Summary of Critical Accounting Policies and Recently Issued Accounting Standards

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, DEP (through the date of disposition in December 2007) and GeoAlgae, and all intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles for complete financial statements. The accompanying unaudited financial information should be read in conjunction with the audited financial statements, including the notes thereto, as of and for the year ended September 30, 2010, included in our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the interim period ended December 31, 2010 are not necessarily indicative of the results for the year ending September 30, 2011 or for any future period.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

Basic and diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share excludes the effect of common stock equivalents (stock options, convertible debentures and warrants) since such inclusion in the computation would be anti-dilutive.

The following numbers of potential common shares have been excluded (as of December 31), in thousands:

	December 31,		December 31,
	2010		2009

Series A Preferred Stock		27,100		5,000
Convertible debentures		500		1,651
Total		27,600		6,651

In March 2008, we entered into a note payable with Tatum, LLC (“Tatum”) in settlement of approximately $28,000 then owed to Tatum for employment related consulting services previously recorded in accounts payable. The note payable is convertible at any time into shares of our common stock at the lesser of $4,125 per share or the 10-day volume weighted average of the closing bid and ask prices of our common stock. We have stated the amount in the table above at a conversion price of $4,125 per share.

On December 31, 2008, accounts payable due to Otto Law Group, a related party, were assigned to certain other parties, and we entered into convertible promissory notes in aggregate principal amount of $160,000, convertible into shares of our common stock at the lesser of a conversion price of $0.55 per share or the over the counter bulletin board price of our common stock on the date of conversion, bearing interest at 10% per annum from the interest accrual date of the notes, which were dated from January 7, 2010 to February 17, 2010. The notes were dated with an effective date of December 31, 2008 and were convertible as of that date and thus have been included in the table above as of December 31, 2009. During the three months ended March 31, 2010, all of these convertible notes were converted into 290,910 shares of our common stock at their stated conversion rate. The amounts in the table above at December 31, 2009 are stated at the stated conversion price of $0.55.

On December 31, 2008, accounts payable due to Otto Law Group, a related party, were assigned to certain other related parties, and we entered into convertible promissory notes in aggregate principal amount of $324,000, convertible into shares of our common stock at the lesser of a conversion price of $0.28 per share or the over the counter bulletin board price of our common stock on the date of conversion, bearing interest at 10% per annum from the interest accrual date of the notes, which were dated from April 6, 2010 to June 22, 2010. The notes were dated with an effective date of December 31, 2008 and were convertible as of that date and thus have been included in the table above as of December 31, 2009. During May through July 2010, certain of these convertible notes were converted into approximately 1,140,000 shares of our common stock at their stated conversion rate. The amounts in the table above at December 31, 2009 are stated at the stated conversion price of $0.28.

On July 23, 2009, accounts payable due to Otto Law Group, a related party, were assigned to a stockholder of the Company, and we entered into a convertible promissory note in aggregate principal amount of $50,000, convertible into shares of our common stock at the lesser of a conversion price of $0.28 per share or the over the counter bulletin board price of our common stock on the date of conversion, bearing interest at 10% per annum from the interest accrual date of the note, which was dated July 23, 2010. The note was dated with an effective date of July 23, 2009 and thus has been included in the table above as of December 31, 2009. In August 2010, this convertible note was converted into 181,820 shares of our common stock at its stated conversion rate. The amounts in the table above at December 31, 2009 are stated at the stated conversion price of $0.28.

The shares potentially issuable under our convertible bridge loan agreement with CKNS Capital Group LLC, as amended in January 2011, are included in the table above at December 31, 2010 at the conversion price of $0.10. See Notes Payable, Note 5.

The shares potentially issuable under our convertible promissory note with Otto Law Group, a related party, are not included in the table above as the number of shares issuable on conversion is not determinable as of the date of this filing. The note is convertible into shares of our common stock at a conversion rate to be mutually agreed upon by the holder and the Company on the date the holder elects to convert.

See further discussion regarding notes payable at Note 5 and warrants at Note 6.

Fair Value of Financial Instruments

The carrying value of accounts payable and accrued expenses, advances payable – related parties and current notes payable approximate their fair value because of the short-term nature of these instruments.

Recent Accounting Developments

In January 2010, the Financial Accounting Standards Board (“FASB”) issued an amendment improving disclosures about fair value measurements. This new guidance requires some new disclosures and clarifies existing disclosure requirements about fair value measurements, and is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of this guidance did not have a material impact on our financial statements.

Note 4. Related Party Transactions

Otto Law Group

David M. Otto, a principal at The Otto Law Group, is a stockholder of the Company. We recorded approximately $272,000 and $130,000 and $2,307,000 in legal fees to The Otto Law Group for the three months ended December 31, 2010 and 2009 and for the period from inception to December 31, 2010 as general and administrative expenses.

In November 2010, we entered into promissory notes with Otto Law Group in the aggregate principal amount of $125 and $2,315 at an interest rate of 10% per annum, due on or before November 18, 2011 and November 29, 2011, respectively.

On December 22, 2010, accounts payable in the aggregate amount of $1,045,093 due to Otto Law Group, a related party, were converted into two promissory notes in the aggregate amount, each due on or before December 22, 2011. The first note, in the principal amount of $289,480, bears interest at a rate of 10% per annum. The second note, in the principal amount of $755,613, bears interest at a rate of 12% per annum and is convertible into shares of our common stock at a conversion rate to be mutually agreed upon by the holder and the Company on the date the holder elects to convert. The default rate of interest for both notes is 18%.

In December 2010, accounts payable due to Otto Law Group were assigned to a company owned by a stockholder of the Company and we entered into convertible promissory notes in principal amount of $50,000. In December 2010, $40,000 in principal amount of the convertible promissory note was converted into 400,000 shares of common stock at the stated conversion rate of $0.10.

As of December 31, 2010 and September 30, 2010, approximately $12,500 and $877,000 in fees to Otto Law Group were unpaid.

Lance Miyatovich

On October 8, 2010, Mr. Miyatovich submitted his resignation from our board of directors and resigned as President and Chief Executive Officer, having previously served in those capacities since his appointment on September 23, 2009. At both December 31, 2010 and September 30, 2010, we owed Mr. Miyatovich approximately $205,000 in accrued salary, which was included in accounts payable and accrued expenses in the condensed consolidated balance sheets.

Related Party Advances

As of December 31, 2010, related party advances and accrued interest totaled approximately $76,000. All of these related party advances bear interest at 8% per annum and together with the related accrued interest of approximately $7,000 are included in advances payable. We also received an aggregate of approximately $174,000 from certain other parties in the form of advances and which are also included in Advances in the accompanying condensed consolidated balance sheets, together with accrued interest of approximately $8,000. We intend to repay the advances. See Note 9, Subsequent Events.

Employment Agreements

On October 8, 2010, John L. Sams and David M. Coloris were appointed to our board of directors. Also on October 8, 2010, Mr. Sams was appointed as President and Chief Executive Officer, Joseph J. Titus was appointed as Chief Operating Officer and Mr. Daniel was appointed as Senior V.P. of Corporate Development and Finance.

John Sams – On March 31, 2010, we entered into an employment letter with John Sams pursuant to which Mr. Sams accepted the position of Chief Executive Officer of the Company at an annual salary of $300,000, commencing on the effective date of March 31, 2010. He will also be entitled to an annual target bonus of 50% of his annual base salary, up to a maximum of two times the target bonus, at the discretion of the compensation committee of the board of directors based on his and the Company’s performance over the year. Mr. Sams will also be entitled to an incentive option grant, representing not less than 6.5% of the fully diluted shares at the time of capitalization, issuable upon the completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing. Of the total issuable, 25% will be issuable and vest upon completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing, with the remaining 75% issued the month following the completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing and vesting over a 36-month period. The options have a 7 year term, commencing on the completion of the $20 million financing. The strike price of the options will be set at fair market value, or the price of the $20 million financing. At December 31, 2010 and September 30, 2010, we owed Mr. Sams approximately $156,900 and $91,800, respectively, in accrued salary, which was included in accounts payable and accrued expenses in the condensed consolidated balance sheets.

Joseph Titus –On March 31, 2010, we entered into an employment letter with Joseph Titus pursuant to which Mr. Titus accepted the position of Chief Operating Officer of the Company upon closing of the transactions relating to the acquisition of companies in the natural gas and oil industries, at an annual salary of $225,000, which commences on the effective date of March 31, 2010. While no acquisition was completed during the year ended September 30, 2010, the parties remain under the agreement that he will enter into a new, formal agreement upon the completion of such transaction, and shall be entitled to an annual target bonus of 50% of his annual base salary, up to a maximum of two times the target bonus, at the discretion of the compensation committee of the board of directors based on his and the Company’s performance over the year. Mr. Titus will also be entitled to an incentive option grant, representing not less than 2.5% of the fully diluted shares at the time of capitalization, issuable upon the completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing. Of the total issuable, 25% will be issuable and vest upon completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing, with the remaining 75% issued the month following the completion of the Company’s reverse stock split, conversion of preferred stock, and approximately $20 million financing and vesting over a 36-month period. The options have a 7 year term, commencing on the completion of the $20 million financing. The strike price of the options will be set at fair market value, or the price of the $20 million financing. At December 31, 2010 and September 30, 2010, we owed Mr. Titus approximately $133,000 and $76,800, respectively, in accrued salary, which was included in accounts payable and accrued expenses in the condensed consolidated balance sheets.

Douglas Daniel – On March 31, 2010, we entered into an employment letter with Douglas Daniel pursuant to which Mr. Daniel accepted the position of Senior Vice President Corporate Development of the Company at an annual salary of $225,000, commencing on the effective date of March 31, 2010. He will also be entitled to an annual target bonus of 50% of his annual base salary, up to a maximum of two times the target bonus, at the discretion of the compensation committee of the board of directors based on his and the Company’s performance over the year. Mr. Daniel will also be entitled to an incentive option grant, representing not less than 2.5% of the fully diluted shares at the time of capitalization, issuable upon the completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing. Of the total issuable, 25% will be issuable and vest upon completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing, with the remaining 75% issued the month following the completion of the Company’s Reverse Stock-Split, conversion of preferred stock, and approximately $20 million financing and vesting over a 36-month period. The options have a 7 year term, commencing on the completion of the $20 million financing. The strike price of the options will be set at fair market value, or the price of the $20 million financing. At December 31, 2010 and September 30, 2010, we owed Mr. Daniel approximately $139,800 and $83,500, respectively, in accrued salary, which was included in accounts payable and accrued expenses in the condensed consolidated balance sheets.

Preferred Stock Conversions

In December 2010, Mr. Otto converted 400,000 shares of Series A Preferred stock to 400,000 shares of our common stock on a 1:1 basis.

Common Stock Issuances

In December 2010, we issued 1,000,000 shares of our common stock to each of John Sams and David Coloris for executive consulting services valued at $940,000 based on the closing price of our common stock on the date of grant and the expense was recorded to general and administrative expense in the three months ended December 31, 2010 as the shares were fully vested as of that date and not forfeitable.

Note 5. Notes Payable

At December 31, 2010 and September 30, 2010, notes payable were comprised of the following (in thousands):

	December 31,		September 30,
	2010		2010
10% Convertible note payable due to CKNS Capital Group,
LLC, due 7/12/11	$	50	$	50
Convertible note payable due to Tatum, in default, 13.5% per
annum		28		28
10% Convertible notes, due to ValueCorp, Inc., due 12/1/11,
net of discount of $10 and $0, respectively		-		-
12% Convertible note payable to Otto Law Group, due 12/22/11		756		-
6% Note payable to Baer (formerly Sausalito), in default		106		106
Related Party Promissory Notes
8% Promissory note payable to Grandview Capital, due 1/22/11		15		15
8% Promissory note payable to Otto Law Group, due 1/22/11		15		15
8% Promissory note payable to David M. Otto, due 3/23/11		20		20
8% Promissory note payable to Otto Capital, due 9/30/11		1		1
10% Promissory note payable to Otto Law Group, due 11/29/11		2		-
10% Promissory note payable to Otto Law Group, due 12/22/11		289		-

	$	1,282	$	235

Baer (formerly Sausalito) Note Payable

Our $100,000 note payable to Sausalito Capital Partners (a shareholder of the Company) which we originally executed in February 2007 is in default. The interest rate on the note payable is 6% per annum. Principal and accrued interest were due at the earlier of November 14, 2008 or within two days of the Company completing a private placement of at least $3.0 million. A warrant to purchase one (1) share of our common stock was issued to the investor in connection with the execution of the note. The warrant was granted with an initial exercise price of $27,500 per share, valued at $17,000 and expensed over the life of the note payable as interest expense. The warrant expired in February 2009.

Tatum Convertible Note Payable

As of the date of this filing, our note payable agreement with Tatum, LLC (“Tatum”) is in default and carries a default interest rate of 13.5% per annum. The note payable was due at the earlier of one year or a financing of at least $1.5 million and carried an interest rate of 10% compounded annually. At the election of Tatum, the note payable is convertible at any time into shares of our common stock at the lesser of $4,125 per share or the 10 day volume weighted average of the closing bid and ask prices.

Other Convertible Notes Payable

In October 2010, accounts payable due to Otto Law Group, a related party, were assigned to certain other parties, and we entered into convertible promissory notes in aggregate principal amount of $25,000, convertible into shares of our common stock at $0.14 per share, bearing interest at 10% per annum from the interest accrual date of the notes, which were dated from October 8, 2010 to October 26, 2010. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded was $25,000. During the three months ended December 31, 2010, all of these convertible notes were converted into shares of our common stock at their stated conversion rate. During the three months ended December 31, 2010, we recorded amortization of the beneficial conversion feature of $25,000 as interest expense.

In December 2010, accounts payable due to Otto Law Group, a related party, were assigned to Value Corp, Inc., and we entered into convertible promissory notes in aggregate principal amount of $50,000, convertible into shares of our common stock at $0.10 per share, bearing interest at 10% per annum from the interest accrual date of the notes, which were dated December 1, 2010. The notes are due December 1, 2011 unless previously converted and the default rate of interest is 18%. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded was $50,000, which is being amortized as interest expense through maturity. During the three months ended December 31, 2010, principal amounting to $40,000 was converted into 400,000 shares of our common stock. During the three months ended December 31, 2010, we recorded amortization of the beneficial conversion feature of $40,000 as interest expense.

Related Party Promissory Notes

In January 2010, we entered into a promissory note with Otto Law Group, a related party, in the principal amount of $15,000 at an interest rate of 8% per annum, due on or before January 22, 2011. The default rate of interest is 10%.

In January 2010, we entered into a promissory note with Grandview Capital, a stockholder, in the principal amount of $15,000 at an interest rate of 8% per annum, due on or before January 22, 2011. The default rate of interest is 10%.

In March 2010, we entered into a promissory note with David M. Otto, a former director of the Company, in the principal amount of $20,000 at an interest rate of 8% per annum, due on or before March 23, 2011. The default rate of interest is 10%.

In September 2010, we entered into promissory notes with Otto Capital, a related party, in the principal amount of $1,000 at an interest rate of 8% per annum, due on or before September 30, 2011.

In November 2010, we entered into promissory notes with Otto Law Group, a related party, in the aggregate principal amount of $125 and $2,315 at an interest rate of 10% per annum, due on or before November 18, 2011 and November 29, 2011, respectively.

CKNS Capital Group, LLC Convertible Bridge Loan

In May 2010, we entered into an agreement with CKNS Capital Group, LLC, pursuant to which CKNS Capital Group, LLC purchased two units, at a purchase price of $25,000 per unit, each consisting of (i) a six-month 10% convertible debenture in the principal amount of $25,000 convertible into the principal securities sold in our next capital financing (the “Principal Securities”) defined as a capital financing as not less than $14 million (“Capital Financing”). In January 2011, the CKNS Bridge Loan agreement was amended and the instrument was replaced with a 10% convertible promissory note with a conversion price of $0.10 per share, due July 12, 2011.

Note 6. Stockholders’ Equity (Deficit)

Preferred Stock

On June 9, 2009, we amended our articles of incorporation to increase the number of authorized shares of preferred stock from 5,000,000 shares of no par value preferred stock to 100,000,000. On January 20, 2010, we further amended our articles of incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 25,000,000,000, and we increased the number of shares of preferred stock which are designated as Series A Preferred from 10,000,000 to 30,000,000.

This class of stock is a “blank check” class in that the rights of such stock would be established at the time of its issuance.

On June 9, 2009, 10,000,000 shares of our preferred stock were designated as Series A Convertible Preferred Stock, par value of $0.001 per share. The holders of the Series A Convertible Preferred Stock are entitled to 1,000 votes per one (1) share of stock held. The Series A Convertible Preferred Stock is convertible at the stockholder’s option into shares of our common stock on the basis of 1:1. Holders of the Series A Convertible Preferred Stock have liquidation preference over holders of common stock in the event of liquidation, dissolution or winding up.

On June 8, 2009, $10,000 of the accounts payable outstanding to The Otto Law Group, a related party, was assigned to a former member of our board of directors, David M. Otto, who then presented the debt to the Company for the purposes of cancelling the debt in exchange for the purchase of 2,500,000 shares of our Series A Preferred Stock. In addition, on June 8, 2009, $10,000 of accounts payable to our former CEO, Mr. Gary De Laurentiis, was also converted into 2,500,000 shares of our Series A Preferred Stock.

On January 25, 2010, we issued 10,000,000 shares of our Series A Preferred stock to David M. Otto, a former director, for management consulting services valued at $40,000, and 12,500,000 shares of our Series A Preferred stock to Lance Miyatovich, our former President and Chief Executive Officer for executive consulting services valued at $50,000. The value assigned to these shares was recorded to general and administrative expense during the year ended September 30, 2010.

On December 13, 2010, Mr. Otto converted 400,000 shares of Series A Preferred stock to 400,000 shares of our common stock on a 1:1 basis.

Common Stock

On March 31, 2009, we amended our articles of incorporation to increase the number of authorized shares of common stock from 200,000,000 shares to 500,000,000 shares. Then, on June 9, 2009, we further amended our articles of incorporation to increase the number of authorized shares of common stock from 500,000,000 to 5,000,000,000. On January 20, 2010, we further amended our articles of incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 25,000,000,000. On December 1, 2010, we effected an amendment to our Articles of Incorporation (the “Articles”) to decrease the authorized common stock by 24 billion shares of common stock for a resulting aggregate total of 1 billion authorized shares of common stock (the “Amendment to the Articles”).

Common Stock Reverse Split

On December 1, 2010, we effected a decrease of our issued and outstanding common stock, in the form of a reverse stock-split, on a one-for-five thousand, five hundred basis (1:5,500) (the “Reverse Stock-Split”).

Both the Reverse Stock-Split and the Amendment to the Articles were approved in September 2010 by the consent of a majority of the voting capital stock of the Company.

As discussed in Note 1, all share and per share amounts included in the condensed consolidated financial statements have been adjusted retroactively to reflect the effects of the Reverse Stock-Split.

Common Stock Issuances — In January 2009, we issued 819 shares pursuant to the exercise of a warrant on a cashless basis. In July 2010, we entered into an additional agreement with Vitello Capital Ltd., the successor in interest to 18KT-TV Communications, whereby we issued Vitello Capital Ltd. 109,091 shares of our common stock, valued at $0.55 per share, for prior investor relations services.

In January 2009, $11,000 of accounts payable due to a related party was converted into 455 shares of our common stock pursuant to an agreement at a conversion rate of $24.75. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $11,000 was recorded as interest expense in the year ended September 30, 2009.

In February 2009, $12,000 of accounts payable due to a related party was converted into 455 shares of our common stock pursuant to an agreement at a conversion rate of $27.50. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $12,000 was recorded as interest expense in the year ended September 30, 2009.

During the three months ended March 31, 2009, an additional aggregate of $1,500 of accounts payable due to Otto Law Group, a related party, were assigned to related parties and was converted to 2,788 shares of our common stock at a conversion rate of $0.55. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $1,500 was recorded as interest expense in the year ended September 30, 2009.

In May and June 2009, we issued an aggregate of 2,728 shares of our common stock upon conversion of accounts payable to related parties of $15,000 at a conversion rate of $5.50 and 10,000 shares of our common stock upon conversion of accounts payable to related parties of approximately $28,000 at a conversion rate of $2.75. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $43,000 was recorded as interest expense in the three months ended June 30, 2009.

During the year ended September 30, 2009, an additional aggregate of $46,000 of accounts payable to related parties was converted to 83,431 shares of our common stock at a conversion rate of $0.55. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $46,000 was recorded as interest expense in the year ended September 30, 2009.

In July 2009, we issued 155,091 shares of our common stock upon conversion of accounts payable to related parties of $85,000 at a conversion rate of $0.55. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $85,000 was recorded as interest expense in the year ended September 30, 2009.

In October 2009, we issued 25,455 shares of our common stock upon conversion of accounts payable to related parties of $28,000 at a conversion rate of $1.10, and 12,728 shares of shares of our common stock upon conversion of accounts payable to related parties of $9,800 at a conversion rate of $0.77. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liabilities of $37,800 was recorded as interest expense in the year ended September 30, 2010.

In November 2009, we issued 12,728 shares of our common stock upon conversion of accounts payable to related parties of $14,000 at a conversion rate of $1.10, and 12,728 shares of shares of our common stock upon conversion of accounts payable to related parties of $9,800 at a conversion rate of $0.77. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liabilities of $23,800 was recorded as interest expense in the year ended September 30, 2010.

In December 2009, we issued 50,910 shares of our common stock upon conversion of accounts payable to related parties of $56,000 at a conversion rate of $1.10. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liabilities of $56,000 was recorded as interest expense in the year ended September 30, 2010.

On December 31, 2008, accounts payable due to Otto Law Group, a related party, were assigned to certain other related parties, and we entered into convertible promissory notes in aggregate principal amount of $160,000. During the year ended September 30, 2010, all of these notes were converted to 290,910 shares of our common stock at their stated conversion price of $0.55 per share.

On December 31, 2008, accounts payable due to Otto Law Group, a related party, were assigned to certain other related parties, and we entered into convertible promissory notes in aggregate principal amount of $324,000. During the year ended September 30, 2010, an aggregate of $212,000 of these convertible notes were converted into approximately 770,910 shares of our common stock at their stated conversion rate.

On December 31, 2008, accounts payable due to Otto Law Group, a related party, were assigned to certain other related parties, and we entered into convertible promissory notes in aggregate principal amount of $324,000. In July 2010, an aggregate of approximately $101,500 of these convertible notes were converted into approximately 369,091 shares of our common stock at their stated conversion rate.

On July 23, 2009, accounts payable due to Otto Law Group, a related party, were assigned to a stockholder of the Company, and we entered into a convertible promissory note in aggregate principal amount of $50,000. In August 2010, this convertible note was converted into 181,820 shares of our common stock at its stated conversion rate.

In August 2010, the $223,000 convertible bridge loan due to BNA Capital Holdings LLC was converted into 82 shares of our common stock in accordance with its stated conversion rate.

On September 20, 2010, accounts payable due to Otto Law Group, a related party, were assigned to a stockholder of the Company, and we entered into a convertible promissory note in aggregate principal amount of $55,000. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $55,000 was recorded as interest expense in the year ended September 30, 2010. On September 29, 2010, the note was converted to 200,000 shares of our common stock at its stated conversion price of $0.28 per share.

In October 2010, accounts payable due to Otto Law Group, a related party, were assigned to another party and we entered into convertible promissory notes in aggregate principal amount of $25,000. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability of $25,000 was recorded as interest expense in the three months ended December 31, 2010. These promissory notes were converted in October 2010 into 181,820 shares at their stated conversion rate of $0.14.

In December 2010, accounts payable due to Otto Law Group, a related party, were assigned to a company owned by a stockholder of the Company and we entered into convertible promissory notes in principal amount of $50,000. The intrinsic value (the market value of the stock less the conversion price multiplied by the number of shares to be issued upon conversion) of the conversion feature was well in excess of the principal balance of the liability. However, the amount of the beneficial conversion feature to be recorded is limited to the principal amount of the liability, and thus, the beneficial conversion feature recorded related to the convertible liability was $50,000. In December 2010, $40,000 in principal amount of the convertible promissory note was converted into 400,000 shares of common stock at the stated conversion rate of $0.10. We recorded amortization of the beneficial conversion feature of $40,000 as interest expense for the three months ended December 31, 2010.

Stock Incentive Plans — In August 2002, we established the 2002 Equity Incentive Plan (the “Equity Incentive Plan”), authorizing 228 shares of our common stock for the grant of incentive and non-qualified stock options stock options, as well as restricted stock awards.

Stock Options —Under the Equity Incentive Plan, we had granted options to purchase 19 shares of our common stock at an exercise price of $14,575 per share, with a fair value totaling $219,000, to a member of our board of directors. On October 31, 2007, the former board member, Steve Nordaker, resigned his board seat. At the time of his resignation, seven (7) options were vested and 12 options were forfeited as they were not vested. The options expire on June 19, 2017. The intrinsic value of these options at December 31, 2010 is nil based on the $0.52 closing market price of our common stock on that date.

Warrants — At December 31, 2010 and September 30, 2010, there were warrants outstanding for the purchase of 434 shares of our common stock with a weighted average exercise price of $4,561.11. Warrants to purchase 111 and 13 shares of our common stock at an exercise price of $14,575 and $11,000 per share, respectively, are exercisable until June 2012 and a warrant to purchase 1 share of our common stock at an exercise price of $11,000 per share is exercisable until February 2013. Warrants to purchase 131 shares of our common stock at an exercise price of $935 per share are exercisable until March 2013. Warrants to purchase 182 shares of our common stock at an exercise price of $715 per share are exercisable until May 2018.

Note 7. Commitments and Contingencies

Stanton Chase

During the period under this quarterly report, in October 2010, Stanton Chase International (“Stanton Chase”) served notice of its action filed against the Company in the Supreme Court State of New York, New York Count, Index No. 112613/10, seeking $65,250 in executive consulting fees, which Stanton Chase claims is owed pursuant to a contract between the parties for an executive management search. The Company disputes the demand based on the fact the company never entered into a contract with Stanton Chase nor was aware of any work provided on its behalf nor was any management personnel ever identified by Stanton Chase for the Company. The Company intends to dispute the matter and challenge the lawsuit (if it is served on the Company) on the grounds of lack of jurisdiction. Without having been served with the lawsuit, answered, or conducted discovery, it is not possible to evaluate the likelihood of success in this matter at this time, and we have not included any part of the asserted claim in our accounts payable and accrued expenses on the condensed consolidated balance sheets as of December 31, 2010 or September 30, 2010.

TanOak Litigation

On May 11, 2010, the Company filed a complaint against its former accountants, TanOak Partners, LLC, Chris Wain and Paul Spencer (collectively, “TanOak”), in King County Superior Court (Geobio Energy, Inc. v. TanOak Partners, LLC, Chris Wain and Paul Spencer, Case Number 10-2-17135-5 SEA), for breach of TanOak’s engagement contract, breach of the covenant of good faith and fair dealing, violation of fiduciary duties, self-dealing and fraudulent misrepresentation/inducement. TanOak filed an answer and counterclaim on June 3, 2010, claiming fraud, breach of contract and breach of the covenant of good faith and fair dealing. Neither Geobio nor TanOak specified damages in their complaint or counterclaim, and both sides moved for monetary damages as well as for declaratory judgment regarding the validity of employment agreements of Chris Wain and Paul Spencer. The case is currently in discovery and the trial date is set for October 24, 2011. The Company intends to pursue the lawsuit vigorously. We have not made any accrual related to future litigation outcomes as of December 31, 2010 or September 30, 2010.

Goodrich Capital, LLC

In January 2010, we entered into an agreement with Goodrich Capital, LLC, for strategic planning, financial and management consulting services in exchange for a non-refundable cash fee of $50,000, creditable against cash fees earned upon closing a transaction as follows: a cash fee of $1.6 million based upon the total capital raise with respect to all financing transactions of $20 million, with the minimum amount payable for all financing transactions being $400,000 (assuming a $5.0 million capital raise). In addition, warrants are issuable to Goodrich Capital in the form of an equity closing fee, fully vested at the time of issuance, to purchase a number of shares of our common stock equal to 5% of the equity issued in such transaction, determined on an as-converted basis. The strike price of the warrants will be equal to the share price of the instruments issued in the transaction and have a term of 10 years from the date of issuance. Under the terms of the agreement, we paid Goodrich Capital $30,000 in the second quarter of 2010. In March 2010, the agreement with Goodrich Capital, LLC was amended. The remaining obligation under the amended agreement, which was terminated pursuant to the amendment, represents $13,500 in fees and expenses and is included in accounts payable and accrued expenses as of December 31, 2010 and September 30, 2010 in the accompanying condensed consolidated balance sheets.

Note 8. Income Taxes

We continue to record a valuation allowance in the full amount of deferred tax assets since realization of such tax benefits has not been determined by our management to be more likely than not. At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year, and the rate so determined is used in providing for income taxes on a current year-to-date basis. The difference between the expected provision or benefit computed using the statutory tax rate and the recorded provision or benefit of zero, is primarily due to the estimated change in valuation allowance more likely to result due to taxable losses anticipated for the applicable fiscal year.

Note 9. Subsequent Events

Conversion of Series A Preferred Stock to Common Stock

In January 2011 and February 2011, an aggregate of 1,250,000 and 850,000 shares of Series A Preferred stock were converted to 1,250,000 and 850,000 shares of our common stock, respectively, on a 1:1 basis.

Related Party Advances

In January 2011, we issued 140,000 shares of our common stock for forbearance of advances totaling approximately $140,000.

Convertible Promissory Note

In January 2011, we entered into a promissory note in the principal amount of $25,000 at an interest rate of 10% per annum, due on or before July 12, 2011. The default rate of interest is 18%.

CKNS Capital Group, LLC Convertible Bridge Loan

In January 2011, the CKNS Bridge Loan agreement was amended and the instrument was replaced with a 10% convertible promissory note with a conversion price of $0.10 per share, due July 1, 2011. See Note 5, Notes Payable.

Moody Purchase Agreement

(i)	66.67% of the Purchase Price shall be payable in cash; and

(ii)

We will also pay additional consideration based upon Moody’s performance during the two years following the closing of the acquisition, including:

(i)

(ii)

Moody is a Colorado-based civil contractor servicing the oil and natural gas drilling and production industry in the Piceance Creek Basin of Colorado.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements contained herein may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, an amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to future events or our financial performance, and involve certain known and unknown risks, uncertainties and other factors, including those identified below, which may cause our or our industry’s actual or future results, levels of activity, performance or achievements to differ materially from those expressed or implied by any forward-looking statements or from historical results. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The following factors, among others, could cause our or our industry’s future results to differ materially from historical results or those anticipated: 1) our limited operating history; (2) our ability to pay down existing debt; (3) our ability to protect and defend our proprietary technology; (4) our ability to secure and retain management capable of managing growth; (5) our ability to raise necessary financing to execute our business plan; (6) potential litigation with our shareholders, creditors and/or former or current investors; (7) our ability to comply with all applicable federal, state and local government and international rules and regulations; and (8) other factors over which we have little or no control. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and stock price. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and stock price. Additional factors that would cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in our filings with the Securities and Exchange Commission, including those factors discussed under the caption “Forward-Looking Statements” in our most recent Annual Report on Form 10-K, as may be supplemented or amended from time to time, which we urge investors to consider. We have no duty to update, supplement or revise any forward-looking statements after the date of this report or to conform them to actual results, new information, future events or otherwise. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes appearing elsewhere in this Report.

Overview

On November 30, 2010, we entered into an amendment to our Stock Purchase Agreement with Collins Construction, Inc. (“Collins”), dated March 30, 2010, previously amended on June 1, 2010, July 14, 2010 and on September 9, 2010 (the “Collins Stock Purchase Agreement”), for the purchase of 100% of the issued and outstanding capital stock of Collins (the “Amendment”). Under the November 30, 2010 Amendment, the parties agreed to extend the Closing Date from November 30, 2010 to the date that is 90 days following the date that Collins enters into a new Master Services Agreement with its major customer, or such earlier date if mutually agreed upon between the Company and Collins. This has not yet occurred.

(i)	A cash deposit of $100,000, as a non-refundable down payment (the “Down Payment”) on, and credit toward, the Purchase Price Consideration within ten (10) days following the October 5, 2010 closing date of the Magna Purchase Agreement, which we have not yet paid;

(ii)

(iii)

Certain current managers of Magna shall receive employment agreements to remain employed on a full time basis for three years following payment of the Take-Out Notes.

(i)	66.67% of the Purchase Price shall be payable in cash; and

(ii)

We will also pay additional consideration based upon Moody’s performance during the two years following the closing of the acquisition, including:

(i)

(ii)

Moody is a Colorado-based civil contractor servicing the oil and natural gas drilling and production industry in the Piceance Creek Basin of Colorado.

We expect to complete the acquisitions of Moody, Collins and Magna during the second quarter of 2011, subject to receipt of financing for the purchases.

Liquidity, Going Concern and Capital Resources

We have funded our losses primarily through sales of common stock and warrants in private placements and borrowings from related parties and other investors. The further development of our business will require capital. Our current cash levels are not sufficient to enable us to execute our business strategy, which includes the acquisitions of Moody, Collins and Magna which require significant cash payments. We require additional financing to satisfy our near-term working capital requirements. Our operating expenses will also consume a material amount of our cash resources. Company management intends to raise additional debt and equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be obtained in sufficient amounts necessary to meet our needs. In the event that we cannot obtain additional funds, on a timely basis or our operations do not generate sufficient cash flow, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment. We are actively seeking to raise additional capital through the sale of shares of our capital stock to institutional investors and through strategic investments, including convertible bridge loans. If management deems necessary, we might also seek additional loans from related parties or others. However, there can be no assurance that we will be able to consummate any of these transactions, or that these transactions will be consummated on a timely basis or on terms favorable to us. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

Discussion of Cash Flows

We used cash of approximately $53,000 and $57,000 in our operating activities in the three months ended December 31, 2010 and 2009, respectively. Cash used in operating activities relates primarily to funding net losses, partially offset by share-based payments of consulting fees, director fees, and other expenses and the net change in operating assets and liabilities. We expect to use cash for operating activities in the foreseeable future as we continue our operating activities.

Our investing activities used no cash in the three months ended December 31, 2010 and 2009, respectively.

Our financing activities provided cash of approximately $53,000 and $57,000 in the three months ended December 31, 2010 and 2009, respectively, due to stockholder contributions and payment of expenses on behalf of the Company.

Notes in Default

Our principal sources of funding to-date have been private placements of our common stock and warrants and notes payable. As of the date of this filing, our $100,000 note payable from Sausalito Capital Partners (a shareholder of the Company) which we originally executed in February 2007 is in default. The interest rate on the note payable is 6% per annum. Principal and accrued interest were due at the earlier of November 14, 2008 or within two days of the Company completing a private placement of at least $3.0 million. A warrant to purchase 1 share of our common stock was issued to the investor in connection with the execution of the note. The warrant was granted with an initial exercise price of $27,500 per share, valued at $17,000 and expensed over the life of the note payable as interest expense. The warrant expired in February 2009.

As of the date of this filing, our note payable agreement with Tatum, LLC (“Tatum”) is in default and carries a default interest rate of 13.5% per annum. The note payable was due at the earlier of one year or a financing of at least $1.5 million and carried an interest rate of 10% compounded annually. At the election of Tatum, the note payable is convertible at any time into shares of our common stock at the lesser of $4,125.00 per share or the 10 day volume weighted average of the closing bid and ask prices.

Recent Financing Activities

Summary

We are dependent on existing cash resources and external sources of financing to meet our working capital needs. Current sources of liquidity are insufficient to provide for budgeted and anticipated working capital requirements. We will therefore be required to seek additional financing to satisfy our working capital requirements. No assurances can be given that such capital will be available to us on acceptable terms, if at all. In addition to equity financing and strategic investments, we may seek additional related party loans. If we are unable to obtain any such additional financing or if such financing cannot be obtained on terms acceptable to us, we may be required to delay or scale back our operations, which would adversely affect our ability to generate future revenues and may force us to curtail or cease our operating activities. These conditions give rise to substantial doubt about our ability to continue as a going concern. Our ability to expand operations and generate additional revenue and our ability to obtain additional funding will determine our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Results of Operations

In the three months ended December 31, 2010 and 2009, we incurred net losses of approximately $1,517,000 and $360,000, respectively.

Revenues and Cost of Sales. We had no revenues or cost of sales in the three months ended December 31, 2010 and 2009.

Operating Expenses. Operating expenses increased to $1,437,000 in the three months ended December 31, 2010, from $185,000 in the three months ended December 31, 2009, due primarily to the following:

·	Legal fees were $272,000 in the current three month period compared with $130,000 in the prior comparable period due to acquisition-related activities and financing efforts.

·	Non-stock-based executive compensation was $40,000 in the prior year three month period compared to $187,000 in the current year three month period due to additional executive staff in the current year.

Interest Expense. Interest expense decreased from $175,000 in the prior year to $80,000 in the current year, due primarily to decreased amortization of the beneficial conversion feature related to convertible liabilities.

Off-Balance Sheet Arrangements

As of December 31, 2010, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Disclosure Controls and Procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of senior management, including Mr. Sams, our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our CEO/CFO concluded that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act. As previously reported under Item 9A in our Annual Report on Form 10-K for the year ended September 30, 2010 (the “Annual Report”), we had numerous deficiencies in our disclosures controls as of September 30, 2010. In the Annual Report we described the remediation efforts we have begun to undertake in order to correct such deficiencies. As of December 31, 2010, the deficiencies described in the Annual Report still existed since the remediation efforts had not yet been fully implemented as of such date.

(b) Internal Control over Financial Reporting. There have been no changes in our internal controls over financial reporting or in other factors during the fiscal quarter ended December 31, 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date we carried out our most recent evaluation. As previously reported in Item 9A of the Annual Report, we had numerous material weaknesses in our internal control over financial reporting as of September 30, 2010. In the Annual Report we described the remediation efforts we have begun to undertake in order to correct such material weaknesses. As of December 31, 2010, the material weaknesses described in the Annual Report still existed since the remediation efforts had not yet been fully implemented as of such date.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following sets forth certain information for all securities we sold during the quarter ended December 31, 2010 without registration under the Securities Act of 1933, as amended (the “Securities Act”), other than those sales previously reported in a Current Report on Form 8-K:

In October 2010, accounts payable due to Otto Law Group were assigned to another party and we entered into convertible promissory notes in aggregate principal amount of $25,000. These promissory notes were converted in October 2010 into 181,820 shares at their stated conversion rate of $0.14.In December 2010, we issued 1,000,000 shares of our common stock to each of John Sams and David Coloris for executive consulting services valued at $940,000 based on the closing price of our common stock on the date of grant and the expense was recorded to general and administrative expense in the three months ended December 31, 2010 as the shares were fully vested as of that date and not forfeitable.

On December 13, 2010, Mr. Otto converted 400,000 shares of Series A Preferred stock to 400,000 shares of our common stock on a 1:1 basis.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the periods ended December 31, 2010.

ITEM 5. OTHER INFORMATION

Subsequent to the quarter ended December 31, 2010, we sold the following securities without registration under the Securities Act of 1933, as amended:

On January 12, 2011, Lance Miyatovich converted 400,000 shares of Series A Preferred Stock in exchange for 400,000 shares of common stock issued to Mr. Miyatovich, and David M. Otto converted 400,000 shares of Series A Preferred Stock in exchange for 400,000 shares of common stock issued to Mr. Otto. Also on January 12, 2011, David M. Otto assigned a total of 450,000 shares of Series A Preferred Stock to unrelated parties, which was immediately converted into 450,000 shares of our common stock.

On February 1, 2011, David M. Otto assigned a total of 750,000 shares of Series A Preferred Stock to unrelated parties, which was immediately converted into 750,000 shares of common stock of the company. On February 2, 2011, Lance Miyatovich assigned a total of 100,000 shares of Series A Preferred Stock to an unrelated party, which was immediately converted into 100,000 shares of our common stock.

In January 2011, we issued 140,000 shares of our common stock for forbearance of advances totaling approximately $140,000.

In January 2011, we entered into a promissory note in the principal amount of $25,000 at an interest rate of 10% per annum, due on or before July 12, 2011. The default rate of interest is 18%.

In exchange for the cancellation of a $50,000.00 subscription agreement for a convertible debenture and warrants by CKNS Capital Group, LLC (“CKNS”) during May 2010, we issued a 10% Convertible Promissory Note in the amount of $50,000.00, with a maturity date of July 12, 2011, convertible at CKNS’s option into common stock of the company at $0.10 per share.

On February 4, 2011, we entered into the Moody Purchase Agreement, as detailed in the Management Discussion and Analysis, in Item 2, above.

ITEM 6. EXHIBITS

The exhibits required by this item are listed on the Exhibit Index attached hereto.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: February 22, 2011 GEOBIO ENERGY, INC.

By: /s/ John Sams

Chief Executive Officer, Chief Financial Officer,

and Principal Accounting Officer

EXHIBIT INDEX

Exhibit No.		Description of Exhibit

10.29		Stock Purchase Agreement of Magna Energy Services, LLC dated October 5, 2010, incorporated by reference to the Form 10-K filed January 13, 2011.

10.30		Amendment to Magna Stock Purchase Agreement dated October 29, 2010, incorporated by reference to the Form 10-K filed January 13, 2011.

10.31		Amendment No. 4 to Stock Purchase Agreement of Collins Construction, Inc., dated November 30, 2010, incorporated by reference to the Form 10-K filed January 13, 2011.

10.32		Stock Purchase Agreement of Moody Construction & Sons, Inc., dated February 4, 2011, filed herewith.

31.1		Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.10		Press Release Dated October 8, 2010, incorporated by reference to the Company’s Form 8-K filed October 13, 2010.

99.11		Press Release Dated October 8, 2010, incorporated by reference to the Company’s Form 8-K filed October 13, 2010.

99.12		Press Release Dated December 1, 2010, incorporated by reference to the Company’s Form 8-K filed December 1, 2010.

99.13		Press Release Dated February 7, 2011, incorporated by reference to the Company’s Form 8-K filed February 7, 2011.

GeoBio Energy, Inc. - FORM 10-Q - February 22, 2011

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GeoBio Energy, Inc. Reports