Global Clean Energy Holdings, Inc. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Global Clean Energy Holdings, Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Global Clean Energy Holdings, Inc.	ex321.htm
EX-31.1 - EXHIBIT 31.1 - Global Clean Energy Holdings, Inc.	ex311.htm
EX-10.1 - EXHIBIT 10.1 - Global Clean Energy Holdings, Inc.	ex101.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 March 31, 2012

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

Commission file number 0-12627

Global Clean Energy Holdings, Inc.

Exact name of registrant as specified in its charter)

DELAWARE

State or other jurisdiction of incorporation

87-0407858

(IRS Employer Identification No.)

100 West Broadway, Suite 650

Long Beach, California 90802

(Address of principal executive offices)

(310) 641-4234

Former Name or Former Address, 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 90 days. Yes x No o

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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer	o	Non-accelerated filer	o

Accelerated Filer	o	Smaller reporting company	x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of April 26, 2012, the issuer had 293,683,502 shares of common stock issued and outstanding.

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

GLOBAL CLEAN ENERGY HOLDINGS, INC.

For the quarter ended March 31, 2012

FORM 10-Q

TABLE OF CONTENTS

PART I			1

	ITEM 1.	FINANCIAL STATEMENTS.	1

	ITEM 2.	MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	14

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	18

	ITEM 4.	CONTROLS AND PROCEDURES.	18

PART II			18

	ITEM 1.	LEGAL PROCEEDINGS.	18

	ITEM 1A.	RISK FACTORS.	18

	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	19

	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	19

	ITEM 4.	MINE SAFETY DISCLOSURES.	19

	ITEM 5.	OTHER INFORMATION	19

	ITEM 6.	EXHIBITS	19

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS.

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	2012			2011

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	1,018,289		$	676,780
Accounts receivable		308			2,279
Inventory		137,249			104,782
Other current assets		377,084			327,701
Total Current Assets		1,532,930			1,111,542

PROPERTY AND EQUIPMENT, NET		13,296,411			11,905,182

INVESTMENT HELD FOR SALE		297,133			291,031

DEFERRED GROWING COST		3,412,206			2,780,871

OTHER NONCURRENT ASSETS		11,457			10,814

TOTAL ASSETS	$	18,550,137		$	16,099,440

LIABILITIES AND EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	1,367,583		$	1,363,217
Accrued payroll and payroll taxes		1,071,312			1,046,763
Deferred revenue		-			152,732
Capital lease liability - current portion		59,949			56,257
Notes payable to shareholders		26,000			26,000
Convertible notes payable		-			193,200
Total Current Liabilities		2,524,844			2,838,169


LONG-TERM LIABILITIES
Accrued interest payable		1,550,812			1,684,186
Accrued return on noncontrolling interest		3,361,676			2,907,678
Capital lease liability - long term portion		22,925			31,258
Convertible notes payable		567,000			567,000
Mortgage notes payable		5,110,189			5,110,189
Total Long Term Liabilities		10,612,602			10,300,311

EQUITY (DEFICIT)
Preferred stock - $0.001 par value; 50,000,000 shares authorized
Series B, convertible; 13,000 shares issued (aggregate liquidation
preference of $1,300,000)		13			13
Common stock, $0.001 par value; 500,000,000 shares authorized;
285,062,812 issued and outstanding		285,062			285,062
Additional paid-in capital		24,277,632			24,260,628
Accumulated deficit		(26,303,330	)		(26,662,294	)
Accumulated other comprehensive loss		(4,909	)		(21,996	)
Total Global Clean Energy Holdings, Inc. Stockholders' Deficit		(1,745,532	)		(2,138,587	)
Noncontrolling interests		7,158,223			5,099,547
Total equity (deficit)		5,412,691			2,960,960

TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	18,550,137		$	16,099,440

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended
	March 31,
	2012			2011

Revenue	$	153,935		$	88,224
Subsidy Income		465,586			172,000
Total Revenue		619,521			260,224

Operating Expenses
General and administrative		627,467			570,529
Plantation operating costs		172,437			108,231

Total Operating Expenses		799,904			678,760

Loss from Operations		(180,383	)		(418,536	)

Other Income (Expenses)
Other income		19,662			19
Interest expense		(192,800	)		(139,796	)
Gain on settlement of liabilities		514,473			-
Foreign currency transaction gain		-			2,440

Net Other Income (Loss)		341,335			(137,337	)

Income (Loss) from Continuing Operations		160,952			(555,873	)

Loss from Discontinued Operations		(2,038	)		(22,793	)

Net Income (Loss)		158,914			(578,666	)

Less Net Loss Attributable to the Noncontrolling Interest		200,050			374,190

Net Income (Loss) attributable to Global Clean Energy Holdings, Inc.	$	358,964		$	(204,476	)


Amounts attributable to Global Clean Energy
Holdings, Inc. common shareholders:
Income (Loss) from Continuing Operations	$	361,002		$	(181,683	)
Income (Loss) from Discontinued Operations		(2,038	)		(22,793	)
Net Income (Loss)	$	358,964		$	(204,476	)

Basic Income (Loss) per Common Share:
Income (Loss) from Continuing Operations	$	0.0013		$	(0.0007	)
Income (Loss) from Discontinued Operations		(0.0000	)		(0.0001	)
Net Income(Loss) per Common Share	$	0.0013		$	(0.0008	)

Basic Weighted-Average Common Shares Outstanding		285,062,812			270,464,478

Diluted Income (Loss) per Common Share:
Income (Loss) from Continuing Operations	$	0.0012		$	(0.0007	)
Income (Loss) from Discontinued Operations		(0.0000	)		(0.0001	)
Net Income(Loss) per Common Share	$	0.0012		$	(0.0008	)

Diluted Weighted-Average Common Shares Outstanding		308,586,480			270,464,478
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

	For the Three Months Ended
	March 31,
	2012			2011

Net Income (Loss)	$	158,914		$	(578,666	)

Other Comprehensive Income - foreign currency
translation adjustment		1,198,522			296,394

Comprehensive Income (loss)		1,357,436			(282,272	)

Add net loss attributable to the noncontrolling interest		200,050			374,190

Less other comprehensive income attributable to noncontrolling interest		(1,181,435	)		(296,799	)

Comprehensive Income (Loss) attributable to
Global Clean Energy Holdings, Inc.	$	376,051		$	(204,881	)

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
For the Periods Ended March 31, 2011 and 2012

														Accumulated
									Additional					Other			Non-
	Series B				Common stock				Paid in		Accumulated			Comprehensive			controlling
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Interests			Total


Balance at December 31, 2010		13,000	$	13		270,464,478	$	270,464	$	23,580,630	$	(26,933,430	)	$	(2,195	)	$	4,241,945		$	1,157,427

Contributions from noncontrolling interests		-		-		-		-		-		-			-			2,051,102			2,051,102
Issuance of common stock for cash		-		-		-		-		-		-			-			-			-
Exercise of Warrants		-		-		-		-		-		-			-			-			-
Issuance of common stock for services		-		-		-		-		-		-			-			-			-
Share-based compensation from issuance of options and compensation-based warrants		-		-		-		-		48,188		-			-			-			48,188
Accrual of preferential return for the
noncontrolling interests		-		-		-		-		-		-			-			(302,134	)		(302,134	)
Foreign currency translation gain (loss)		-		-		-		-		-		-			(405	)		296,799			296,394
Net income (loss) for the year ended December 31, 2011		-		-		-		-		-		(204,476	)		-			(374,190	)		(578,666	)

Balance at March 31, 2011		13,000	$	13		270,464,478	$	270,464	$	23,628,818	$	(27,137,906	)	$	(2,600	)	$	5,913,522		$	2,672,311


														Accumulated
									Additional					Other			Non-
	Series B				Common stock				Paid in		Accumulated			Comprehensive			controlling
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Interests			Total

Balance at December 31, 2011		13,000	$	13		285,062,812	$	285,062	$	24,260,628	$	(26,662,294	)	$	(21,996	)	$	5,099,547		$	2,960,960

Contributions from noncontrolling interests		-		-		-		-		-		-			-			1,531,290			1,531,290
Issuance of common stock for cash		-		-		-		-		-		-			-			-			-
Exercise of Warrants		-		-		-		-		-		-			-			-			-
Issuance of common stock for services		-		-		-		-		-		-			-			-			-
Share-based compensation from issuance of options and compensation-based warrants		-		-		-		-		17,004		-			-			-			17,004
Accrual of preferential return for the
noncontrolling interests		-		-		-		-		-		-			-			(453,999	)		(453,999	)
Foreign currency translation gain (loss)		-		-		-		-		-		-			17,087			1,181,435			1,198,522
Net income (loss) for the year ended March 31, 2012		-		-		-		-		-		358,964			-			(200,050	)		158,914

Balance at March 31, 2012		13,000	$	13		285,062,812	$	285,062	$	24,277,632	$	(26,303,330	)	$	(4,909	)	$	7,158,223		$	5,412,691

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	For the Three Months Ended
	March 31,
	2012			2011
Cash Flows From Operating Activities
Net Income (loss)	$	158,914		$	(578,666	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Foreign currency transaction gain		-			(2,440	)
Gain on settlement of liabilities		(514,473	)		-
Share-based compensation		17,004			48,188
Depreciation		68,743			66,241
Changes in operating assets and liabilities:
Accounts receivable		-			(11,008	)
Inventory		(23,010	)		(424	)
Other current assets		(37,655	)		(41,763	)
Deferred growing costs		(382,771	)		(493,774	)
Accounts payable and accrued expenses		202,837			119,918
Deferred revenue		(152,732	)		-
Net Cash Used in Operating Activities		(663,143	)		(893,728	)
Cash Flows From Investing Activities
Plantation development costs		(474,084	)		(606,558	)
Purchase of property and equipment		(85,583	)		(164,900	)
Net Cash Used in Investing Activities		(559,667	)		(771,458	)
Cash Flows From Financing Activities
Proceeds from issuance of preferred membership in GCE Mexico I, LLC		1,531,290			2,051,102
Payments on capital leases and notes payable		(12,206	)		(11,448	)
Net Cash Provided by Financing Activities		1,519,084			2,039,654
Effect of exchange rate changes on cash		45,235			20,671
Net Increase in Cash and Cash Equivalents		341,509			395,139
Cash and Cash Equivalents at Beginning of Period		676,780			1,096,618
Cash and Cash Equivalents at End of Period	$	1,018,289		$	1,491,757


Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	2,220		$	30,624
Noncash Investing and Financing activities:
Accrual of return on noncontrolling interest	$	453,999		$	302,135

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – History and Basis of Presentation

History

The company was originally incorporated under the laws of the State of Utah on November 20, 1991. Until 2007, the Company was a developmental-stage bio-pharmaceutical company engaged in the research, validation, and development of two drug candidates. In 2007, the Company decided to change its business and focus its efforts and resources on the emerging alternative energy fuels market. Accordingly, on September 7, 2007, we acquired certain trade secrets, know-how, business plans and relationships relevant to the cultivation and production of Jatropha. In 2008 we changed our name to “Global Clean Energy Holdings, Inc.” to reflect our energy agricultural business. In November 2009, we sold our remaining legacy bio-pharmaceutical assets to Curadis Gmbh.

On July 19, 2010, the reincorporation of the company from a Utah corporation to a Delaware corporation was completed, as approved by shareholders. In the reincorporation, each outstanding share of the company’s common stock was automatically converted into one share of common stock of the surviving Delaware corporation. In addition, the par value of the Company’s capital stock changed from no par per share to $0.001 per share. The effects of the change in par value have been reflected retroactively in the accompanying condensed consolidated financial statements and notes thereto for all periods presented. The effect of retroactively applying the par value of $0.001 per share resulted in reclassification of $17,409,660 of common stock and $1,290,722 of preferred stock as of December 31, 2008 to additional paid-in capital. The reincorporation did not result in any change in the company’s name, ticker symbol, CUSIP number, business, assets or operations. The management and Board of Directors of the company remained the same.

Principles of Consolidation

The consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc., its subsidiaries, and the variable interest entities of GCE Mexico, and its Mexican subsidiaries (Asideros, Asideros 2 and Asideros 3). All significant intercompany transactions have been eliminated in consolidation.

Generally accepted accounting principles require that if an entity is the primary beneficiary of a variable interest entity (VIE), the entity should consolidate the assets, liabilities and results of operations of the VIE in its consolidated financial statements. Global Clean Energy Holdings, Inc. considers itself to be the primary beneficiary of GCE Mexico, and it’s Mexican subsidiaries, and accordingly, has consolidated these entities since their formation beginning in April 2008, with the equity interests of the unaffiliated investors in GCE Mexico presented as Noncontrolling Interests in the accompanying condensed consolidated financial statements.

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included and are of normal, recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2012, may not be indicative of the results that may be expected for the year ending December 31, 2012.

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Accounting for Agricultural Operations

All costs incurred until the actual planting of the Jatropha Curcas plant are capitalized as plantation development costs, and are included in “Property and Equipment” on the balance sheet. Plantation development costs are being accumulated in the balance sheet during the development period and will be accounted for in accordance with accounting standards for Agricultural Producers and Agricultural Cooperatives. The direct costs associated with each farm and the production of the Jatropha revenue streams have been deferred and accumulated as a noncurrent asset, “Deferred Growing Costs”, on the balance sheet. Other general costs without expected future benefits are expensed when incurred

Revenue Recognition

Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the seller’s price to the buyer is fixed or determinable; collectability is reasonably assured; and title and the risks and rewards of ownership have transferred to the buyer. Value added taxes collected on revenue transactions are excluded from revenue and are included in accounts payable until remittance to the taxation authority.

Jatropha oil revenue - The Company’s primary source of revenue will be crude Jatropha oil. Revenue will be recognized net of sales or value added taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognized when there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Advisory services revenue - The Company provides development and management services to other companies regarding their bio-fuels and/or feedstock-Jatropha development operations, on a fee for services basis. The advisory services revenue is recognized upon completion of the work in accordance with the separate contract.

Agricultural subsidies revenue - the Company receives agricultural subsidies from the Mexican government. Due to the uncertainty of these payments, the revenue is recognized when the payments are received.

New Accounting Guidelines

In June 2011, the FASB issued authoritative guidance requiring entities to report components of other comprehensive income in either a single continuous statement or in two separate, but consecutive statements of net income and other comprehensive income. The company has included on its financial statements comprehensive income with this quarter ended March 31, 2012.

Note 2 - Earnings per share information

Profit/Loss per Common Share

Profit/Loss per share amounts are computed by dividing profit or loss applicable to the common shareholders of the Company by the weighted-average number of common shares outstanding during each period. Diluted profit or loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents.

	For the Three Months Ended
	March 31,
	2012		2011
Net Income (loss)	$	358,964	$	(204,476	)

Basic Weighted-Average Common Shares Outstanding		285,062,812		270,464,478
Effect of dilutive securities
Warrants		14,078,448		-
Options		9,445,220		-
Diluted Weighted-Average Common Shares Outstanding		308,586,480		270,464,478

Basic Income (loss) Per Common Share
Net Income (loss)		0.0013		(0.0008	)
Diluted Income (loss) Per Common Share
Net Income (loss)		0.0012		(0.0008	)

The Following stock options, warrants, convertible notes, and convertible preferred stock are currently antidilutive and have been excluded from the calculations of diluted profit or loss per share at March 31, 2012 and 2011, as follows:

	March 31,
	2012		2011

Convertible notes		18,900,000		19,028,671
Convertible preferred stock - Series B		11,818,181		11,818,181
Warrants		10,507,214		26,475,662
Compensation-based stock options and warrants		65,036,263		68,831,483
		106,261,658		126,153,997

Note 3 – Going Concern Considerations

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company generated income from continuing operations applicable to its common shareholders of $160,952 for the three-months ended March 31, 2012 and a loss of $778,544 during the year ended December 31, 2011. The Company has an accumulated deficit applicable to its common shareholders of $26,303,330 at March 31, 2012. The Company also used cash in operating activities of $663,143 and $2,933,448 during the three-month period ended March 31, 2012 and for the year ended December 31, 2011, respectively. At March 31, 2012, the Company has negative working capital of $991,914 and a stockholders’ deficit attributable to its stockholders of $1,745,532. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company commenced its new business related to the cultivation and production of oil from the seed of the Jatropha plant in September 2007. Management plans to meet its cash needs through various means including securing financing, entering into joint ventures, and developing the current business model. In order to fund its new operations, the Company has received $15,471,558 in capital contributions from the preferred membership interest in GCE Mexico I, LLC, and has issued mortgages in the total amount of $5,110,189 for the acquisition of land. The Company is developing the new business operation to participate in the rapidly growing bio-diesel industry. The Company continues to expect to be successful in this new venture, but there is no assurance that its business plan will be economically viable. In order to fund its new operations, the Company entered into an agreement with investors in order to form GCE Mexico I, LLC. These investors have made capital contributions as preferred members in GCE Mexico I, LLC equal to $15,471,558, and have loaned GCE Mexico I, LLC $5,110,189 which was used to fund the acquisition of land owned by the Asideros entities. The capital contributions provided by the investors fund the ongoing costs of developing and operating the Asideros farms, and also fund a portion of the Company’s overhead. However, the assets (including cash) belonging to GCE Mexico I, LLC and the Asideros entities can not be used by the Company to settle its obligations. As of March 31, 2012, the Company reports Cash and Cash Equivalents of $1,018,289, however this includes $884,087 that is allocable to GCE Mexico, I, LLC and the Asideros entities. The ability of the Company to continue as a going concern is dependent on the Company’s ability to generate new sources of revenues and to attract new equity investors. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 4 – Jatropha Business Venture

The Company entered into the bio-fuels business in 2007 by acquiring certain trade secrets, know-how, business plans, term sheets, business relationships, and other information relating to the cultivation and production of seed oil from the Jatropha plant for the production of bio-diesel, and by entering into certain employment agreements and property management agreements. Subsequent to entering into these transactions, the Company identified certain real property in Mexico it believed to be suitable for cultivating the Jatropha plant.

Table of Contents

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Share Exchange Agreement

The Company entered into a share exchange agreement (the Global Agreement) pursuant to which the Company acquired all of the outstanding ownership interests in Global Clean Energy Holdings, LLC, a Delaware limited liability company (Global), on September 7, 2007 from Mobius Risk Group, LLC (Mobius) and from Richard Palmer (Mr. Palmer). Mr. Palmer owned a 13.33% equity interest in Mobius and became the Company’s new President and Chief Operating Officer in September 2007 and its Chief Executive Officer in December 2007.

Mobius Consulting Agreement

Concurrent with the execution of the Global Agreement, the Company entered into a consulting agreement with Mobius pursuant to which Mobius agreed to provide consulting services to the Company in connection with the Company’s new Jatropha biofuel feedstock business. The Company engaged Mobius as a consultant to obtain Mobius’ experience and expertise in the feedstock/bio-diesel market to assist the Company and Mr. Palmer in developing this new line of operations for the Company. Mobius agreed to provide the following services to the Company: (i) manage and supervise a contemplated research and development program contracted by the Company and conducted by the University of Texas Pan American regarding the location, characterization, and optimal economic propagation of the Jatropha plant; and (ii) assist with the management and supervision of the planning, construction, and start-up of plant nurseries and seed production plantations in Mexico, the Caribbean or Central America.

The original term of the agreement was twelve months. Under the agreement, Mobius was required to supervise the hiring of certain staff to serve in management and operations roles of the Company, or to hire such persons to provide similar services to the company as independent contractors. Mobius’ compensation for the services provided under the agreement was a monthly retainer of $45,000. The Company also reimbursed Mobius for reasonable business expenses incurred in connection with the services provided. The Company terminated the agreement in July 2008, with the termination to become effective August 2008. The Company had recorded liabilities to Mobius of $322,897 for accrued, but unpaid, compensation and costs as of March 31, 2012 and December 31, 2011. However, the Company disputes these charges, and the additional amounts that Mobius claims that it is owed, and is currently in litigation with Mobius to resolve this liability.

GCE Mexico I, LLC and Subsidiaries

The net income or loss of the Mexican subsidiaries is allocated to its shareholders based on their respective equity ownership, which is 99% to GCE Mexico and 1% directly to the Company. GCE Mexico has no operations separate from its investments in the Mexican subsidiaries. According to the LLC Agreement of GCE Mexico, the net loss of GCE Mexico is allocated to its members according to their respective investment balances. Accordingly, since the common membership interest did not make a capital contribution, all of the losses have been allocated to the preferred membership interest. The noncontrolling interest presented in the accompanying condensed consolidated balance sheets includes the carrying value of the preferred membership interests and of the common membership interests owned by the Investors, and excludes any common membership interest in GCE Mexico held by the Company.

Technology Alternatives, Limited

On October 29, 2008, the Company entered into a stock purchase agreement with the shareholders of TAL, a company formed under the laws of Belize in Central America. Subsequently, the terms and conditions of the stock purchase agreement were modified prior to closing. The closing was primarily delayed to allow TAL to complete all required conditions for the closing. On July 2, 2009, all closing requirements were completed and the Company consummated the stock purchase agreement by issuing 8,952,757 shares of its common stock in exchange for 100% of the equity interests of TAL. TAL owns approximately 400 acres of land and has developed a Jatropha farm in stages over the last three years for the cultivation of the Jatropha plant. TAL developed a nursery capable of producing Jatropha seeds, seedlings and rooted cuttings. During 2009, TAL commenced selling seeds, principally to GCE Mexico.

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GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

In connection with the acquisition, certain payables to the former shareholders of TAL were renegotiated and converted into promissory notes in the aggregate principal amount of $516,139 Belize Dollars (US $268,036 based on exchange rates in effect at July 2, 2009). These notes payable to shareholders were interest free through September 30, 2009, and then bear interest at 8% per annum through the maturity date. The notes are secured by a mortgage on the land and related improvements. The notes are secured by a mortgage on the land and related improvements. The notes, plus any related accrued interest, were due on July 15, 2011 and have been extended until August 15, 2012.

During 2010, the Company ceased the TAL operations. The assets are reported as Investment Held for Sale.

Note 5 - Investment Held for Sale

As all of TAL’s nursery capabilities have since been transferred to the Company’s other operations in Tizimin, Mexico and the Company is in the process of selling the land. The net assets have been reclassified as Investment Held for Sale at March 31, 2012 and at December 31, 2011; the promissory notes are netted against the net assets. The Net Assets, measured at fair value as of March 31, 2012 were $565,473 Belize Dollars (US $297,133 based on exchange rates in effect at March 31, 2012).

Note 6 – Property and Equipment

Property and equipment are as follows:

	March 31,			December 31,
	2012			2011

Land	$	4,588,456		$	4,217,604
Plantation development costs		7,888,809			6,945,617
Plantation equipment		1,370,301			1,199,503
Office equipment		114,414			110,031

Total cost		13,961,980			12,472,755
Less accumulated depreciation		(665,569	)		(567,573	)

Property and equipment, net	$	13,296,411		$	11,905,182

Commencing in June 2008, Asideros I purchased certain equipment for purposes of rapidly clearing the land, preparing the land for planting, and actually planting the Jatropha trees. The Company has capitalized farming equipment and costs related to the development of land for farm use in accordance with generally accepted accounting principles for accounting by agricultural producers and agricultural cooperatives. Plantation equipment is depreciated using the straight-line method over estimated useful lives of 5 to 15 years. Depreciation expense has been capitalized as part of plantation development costs through the date that the plantation becomes commercially productive. The initial plantations were deemed to be commercially productive on October 1, 2009, at which date the Company commenced the depreciation of plantation development costs over estimated useful lives of 10 to 35 years, depending on the nature of the development. Developments and other improvements with indefinite lives are capitalized and not depreciated. Other developments that have a limited life and intermediate-life plants that have growth and production cycles of more than one year are being depreciated over their useful lives once they are placed in service. The land, plantation development costs, and plantation equipment are located in Mexico and in Belize.

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GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 7 – Accrued Payroll and Payroll Taxes

A significant portion of accrued payroll and payroll taxes relates to unpaid compensation for officers and directors that are no longer affiliated with the Company. Accrued payroll taxes will become due upon payment of the related accrued compensation.

Accrued payroll and payroll taxes are composed of the following:

	March 31,		December 31,
	2012		2011

Accrued payroll, vacation, and related payroll taxes
for current officers	$	990,495	$	965,946
Other former officers and directors		77,750		77,750
Accrued payroll taxes on accrued compensation to
former officers and directors		3,067		3,067

Accrued payroll and payroll taxes	$	1,071,312	$	1,046,763

Note 8 – Debt

Notes Payable to Shareholders

The Company has notes payable to certain shareholders in the aggregate amount of $26,000 at March 31, 2012 and December 31, 2011. The notes originated between 1997 and 1999, bear interest at 12%, are unsecured, and are currently in default. Accrued interest on the notes totaled $55,725 and $46,415 at March 31, 2012 and December 31, 2011, respectively.

As more fully disclosed in Note 3 the Company has promissory notes to the former shareholders of TAL in the amount of $526,462 Belize dollars, (US $276,634 based on exchange rates in effect at March 31, 2012), including capitalized interest of $10,322 Belize Dollars. These notes payable to shareholders were interest free through September 30, 2009, and then bear interest at 8% per annum through the maturity date. The notes are secured by a mortgage on the land and related improvements. The promissory notes matured on July 15, 2011, and were extended to August 15, 2012.

Convertible Notes Payable

In March 2010, the Company entered into a securities purchase agreement with the preferred members of GCE Mexico pursuant to which the Company issued senior unsecured convertible promissory notes in the original aggregate principal amount of $567,000 and warrants to acquire an aggregate of 1,890,000 shares of the Company’s common stock. The Convertible Notes mature on the earlier of (i) March 16, 2012, or (ii) upon written demand of payment by the note holders following the Company’s default thereunder. The maturity date of the Convertible Notes may be extended by written notice made by the note holders at any time prior to March 16, 2012. These notes have been extended to September 2013. Interest accrues on the convertible notes at a rate of 5.97% per annum, and is payable quarterly in cash, in arrears, on each three-month anniversary of the issuance of the convertible notes. The Company may at its option, in lieu of paying interest in cash, pay interest by delivering a number of unregistered shares of its common stock equal to the quotient obtained by dividing the amount of such interest by the arithmetic average of the volume weighted average price for each of the five consecutive trading days immediately preceding the interest payment date. At any time following the first anniversary of the issuance of the Convertible Notes, at the option of the note holders, the outstanding balance thereof (including unpaid interest) may be converted into shares of the Company’s common stock at a conversion price equal to $0.03. The conversion price may be adjusted in connection with stock splits, stock dividends and similar events affecting the Company’s capital stock. The convertible notes rank senior to all other indebtedness of the Company, and thereafter will remain senior or pari passu with all accounts payable and other similar liabilities incurred by the Company in the ordinary course of business. The Company may not prepay the convertible notes without the prior consent of the Investors.

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GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The warrants have been exercised in the quarter ending March 31, 2011 and the proceeds from that purchase were used for general corporate purposes. All of the proceeds from the issuance of the original debt were allocated to the Convertible Notes. The Company used substantially all of the proceeds received from the sale of the convertible promissory notes to repay, in full, an outstanding promissory note in the amount of $475,000, plus accrued interest of $81,909.

Mortgage Notes Payable

Two investors holding the preferred membership units of GCE Mexico also directly funded the purchase by Asideros I of approximately 5,000 acres of land in the State of Yucatan in Mexico by the payment of $2,051,282. The land was acquired in the name of Asideros I and Asideros I issued a mortgage in the amount of $2,051,282 in favor of these two investors. These two investors also directly funded the purchase by Asideros 2 of approximately 4,500 acres, and a second parcel by Asideros 2 of approximately 600 acres of land adjacent to the land owned by Asideros I by the total payment of $963,382. The land was acquired in the name of Asideros 2 and Asideros 2 issued mortgages in the amount of $963,382 in favor of these two investors. These mortgages bear interest at the rate of 12% per annum, payable quarterly. The Board has directed that this interest shall continue to accrue until such time as the Board determines that there is sufficient cash flow to pay all accrued interest. The initial mortgage, including any unpaid interest, is due in April 2018. The second mortgage, including any unpaid interest, is due in February 2020.

In October 2011, these two investors also directly funded the purchase by Asideros 3 of approximately 5,600 acres for a total $2,095,525. The land was acquired in the name of Asideros 3 and Asideros 3 issued mortgages in the amount of $2,095,525 in favor of these two investors. These mortgages bear interest at the rate of 12% per annum, payable quarterly. The Board has directed that this interest shall continue to accrue until such time as the Board determines that there is sufficient cash flow to pay all accrued interest. The initial mortgage, including any unpaid interest, is due in October 2021.

Settlement of Liabilities

The Company has settled certain liabilities previously carried on the consolidated balance sheet, which settlements resulted in significant gains. The total gain on settlement of liabilities for the three months ended March 31, 2012 was $514,473 and the year ended December 31, 2011 was $1,024,076. This gain was primarily from the settlement or expiration of historic liabilities primarily incurred by prior management in connection with the discontinued pharmaceutical operations that had been on the Company’s records for several years. In addition, the Company determined that certain liabilities had been extinguished with the passage of time for collection under the laws.

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GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 9 – Stock Options and Warrants

Stock Options and Compensation-Based Warrants

On July 19, 2010, the stockholders approved the 2010 Stock Incentive Plan. The granting of options and other stock awards is an important incentive tool for the Company’s employees, officers and directors. The 2010 Plan provides a means by which employees, directors and consultants of the Company may be given an opportunity to benefit from increases in the value of our common stock, and to attract and retain the services of such persons. All of our employees, directors and consultants are eligible to participate in the 2010 Plan. The total number of shares of common stock which may be offered, or issued as restricted stock or on the exercise of options or Stock Appreciation Rights (SARs) under the Plan shall not exceed twenty million (20,000,000) shares of common stock. The shares subject to an option or SAR granted under the Plan that expire, terminate or are cancelled unexercised shall become available again for grants under this Plan. If shares of restricted stock awarded under the Plan are forfeited to the Company or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan. Where the exercise price of an option is paid by means of the optionee’s surrender of previously owned shares of common stock or the Company’s withholding of shares otherwise issuable upon exercise of the option as may be permitted herein, only the net number of shares issued and which remain outstanding in connection with such exercise shall be deemed “issued” and no longer available for issuance under this Plan. No eligible person shall be granted options or other awards during any twelve-month period covering more than Five Hundred Thousand (500,000) shares of common stock.

No income tax benefit has been recognized for share-based compensation arrangements. The Company has recognized plantation development costs totaling $124,565 related to a liability that was satisfied by the issuance of warrants in 2008. Otherwise, no share-based compensation cost has been capitalized in the condensed consolidated balance sheet.

A summary of the status of options and compensation-based warrants at March 31, 2012, and changes during the three months then ended is presented in the following table:

						Weighted
				Weighted		Average
	Shares			Average		Remaining	Aggregate
	Under			Exercise		Contractual	Intrinsic
	Option			Price		Life	Value

Outstanding at December 31, 2011		74,731,483		$	0.03	4.7 years	$	192,033
Granted		-			-
Exercised		-			-			-
Expired		(250,000	)		0.10

Outstanding at March 31, 2012		74,481,483			0.03	4.4 years	$	206,882


Exercisable at March 31, 2012		55,156,483		$	0.03	2.9 years	$	186,807

At March 31, 2012, options to acquire 80,000 shares of common stock have no stated contractual life. The fair value of other stock option grants and compensation-based warrants is estimated on the date of grant or issuance using the Black-Scholes option pricing model. No options or warrants were issued in the three-month periods ended March 31, 2012 and 2011. The expected life of stock options represents the period of time that the stock options granted are expected to be outstanding prior to exercise. The expected volatility is based on the historical price volatility of the Company’s common stock. The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related stock options. The dividend yield represents anticipated cash dividends to be paid over the expected life of the stock options. The intrinsic values are based on a March 31, 2012 closing price of $0.022 per share.

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GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Share-based compensation from all sources recorded during the three months ended March 31, 2012 and 2011 was $17,004 and $48,188, respectively, and is reported as general and administrative expense in the accompanying condensed consolidated statements of operations. As of March 31, 2012, there is approximately $173,532 of unrecognized compensation cost related to stock-based payments that will be recognized over a weighted average period of approximately .92 years.

Stock Warrants

A summary of the status of the warrants outstanding at March 31, 2012, and changes during the three months then ended is presented in the following table:

			Weighted		Weighted
	Shares		Average		Average	Aggregate
	Under		Exercise		Remaining	Intrinsic
	Warrant		Price		Contractual Life	Value


Outstanding at December 31, 2011		24,585,662	$	0.01	1.75 years	$	457,550


Issued		-		-
Exercised		-		-		$	-
Expired		-		-

Outstanding at March 31, 2012		24,585,662	$	0.01	1.50 years	$	314,184

Note 10 - Discontinued Operations

Pursuant to accounting rules for discontinued operations, the Company has classified all gain, revenue and expense related to the operations, assets, and liabilities of its bio-pharmaceutical business as discontinued operations. For the three-month period ended March 31, 2012 and year ended December 31, 2011, Income from Discontinued Operations consists of the foreign currency transaction gains related to current liabilities associated with the discontinued operations that are denominated in Euros.

Note 11 – Subsequent Events

In April 2012 the Company issued 8,620,690 shares, at a share price of $.029 per share, to an accredited investor for cash proceeds paid to the Company of $250,000. The proceeds from this sale were used for general corporate purposes.

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ITEM 2. MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Report, including any documents which may be incorporated by reference into this Report, contains “Forward-Looking Statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “Forward-Looking Statements” for purposes of these provisions, including our plans to cultivate, produce and market non-food based feedstock for applications in the bio-fuels market, any projections of revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All Forward-Looking Statements included in this document are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any Forward-Looking Statement. In some cases, Forward-Looking Statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the Forward-Looking Statements contained herein are reasonable, there can be no assurance that such expectations or any of the Forward-Looking Statements will prove to be correct, and actual results could differ materially from those projected or assumed in the Forward-Looking Statements. Future financial condition and results of operations, as well as any Forward-Looking Statements are subject to inherent risks and uncertainties, including any other factors referred to in our press releases and reports filed with the Securities and Exchange Commission. All subsequent Forward-Looking Statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may have a direct bearing on our operating results are described under “Risk Factors” and elsewhere in this report.

Introductory Comment

Throughout this Quarterly Report on Form 10-Q, the terms “GCEH,” “we,” “us,” “our,” and “our company” refer to Global Clean Energy Holdings, Inc., a Delaware corporation (which used to be a Utah corporation until July 19, 2011), formerly known as Medical Discoveries, Inc., and, unless the context indicates otherwise, also includes all of this company's U.S. and foreign wholly-owned subsidiaries through which this company conducts certain of its operations. To the extent applicable, depending on the context of the disclosure, the terms “we,” “us,” “our,” and “our company” may also include GCE Mexico I, LLC, a Delaware limited liability company that we manage, and in which we own 50% of the common membership interests.

Global Clean Energy Holdings, Inc. is not related to, or affiliated in any manner with “Global Clean Energy, Inc.”, an unaffiliated public company. Readers are cautioned to confirm the entity that they are evaluating or in which they are making an investment before completing any such investment.

Overview

Global Clean Energy Holdings, Inc. (“GCEH”) is a California-based energy agri-business focused on the development of non-food based bio-fuel feedstock. GCEH is focusing on the commercialization of oil and biomass derived from the seeds of Jatropha curcas (“Jatropha”) - a native non-edible plant indigenous to many tropical and sub-tropical regions of the world, including Mexico, the Caribbean and Central America. Jatropha oil is high-quality plant oil used as a direct replacement for fossil fuels or as feedstock for the production of high quality first and second generation biofuels like bio-diesel, renewable diesel or bio-jet, which are direct replacements for diesel fuel and jet fuel.

Our business plan and current principal business activities include the planting, cultivation, harvesting and processing of Jatropha to generate plant based oils and biomass for use as replacements for fossil fuels. Our strategy is to leverage our agricultural operations management experience and specifically our Jatropha based bio-fuels knowledge, experience and capabilities through the following means:

·	Own and operate Jatropha farms for our own account.

Own, operate and manage Jatropha farms through joint ownership agreements. We currently operate two farms located in Mexico under joint ownership arrangements: the first farm comprises 5,149 acres; the second farm, consisting of 3,700 acres. The first farm is fully planted. We completed planting the second farm by the end of March 2012. In 2011, through our joint venture, we have also acquired approximately 5,600 acres that is located in Mexico near our other two farms. We intend to commence developing this land into a third Jatropha farm later in 2012.

·	Provide Jatropha farm development and management services to third party owners of Jatropha farms. We currently provide such development and advisory services with respect to Jatropha farms located in the Caribbean, Mexico, Central America and Africa, and plan to expand this initiative.

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·	Provide turnkey franchise operations for individuals and/or companies that wish to establish Jatropha farms in suitable geographical areas.

In addition to generating revenues from the sale of non-food based plant oils and biomass, our goal is to monetize the carbon credits from the farms we own and manage. Under the 1997 Kyoto Protocol, a worldwide carbon credit trading market has been established where sellers sell their excess carbon credits and buyers purchase the carbon credits they need to meet their greenhouse gas reduction requirements. We have commenced the certification process necessary to sell carbon credits. However, to date, we have not yet made any carbon credit sales.

Organizational History/Current Operations

This company was originally incorporated under the laws of the State of Utah on November 20, 1991. In 2007, we entered the bio-fuels business. On July 19, 2010, we changed our state of incorporation to the State of Delaware.

Our bio-fuels operations in Latin America are managed through our wholly owned subsidiary in Mexico, Globales Energia Renovables. Our principal farming operations are conducted on two farms, consisting of an aggregate of 8,849 acres located near the town of Tizimin in the State of Yucatan, Mexico. The following is a summary of certain factors relevant to an understanding of the operations of the Tizimin farms:

The Jatropha plants in a portion of the first 5,149 acre farm in Mexico have now matured sufficiently to produce seeds. The trees that were initially planted after we commenced operations in Mexico in October 2009 are now starting to mature. As a result, we anticipate that harvests of Jatropha seeds will commence and increase in 2012 and thereafter, increasing our future revenues from our Mexican operations.

Our Mexican operations are eligible for agricultural and other subsidies provided to certain farming operations by the federal government of Mexico. To date we have received a total of $1,388,000 in governmental subsidy payments, with additional amounts expected to be received later in 2012. These subsidies are spent in Mexico and help defray some of the initial start-up costs that we have incurred in establishing these farms.

3.	We continue to operate two nurseries for new Jatropha trees in the Tizimin Mexico area, which provide seedlings for our new farm and any additional farms that we acquire or develop in the future. We can also sell seedlings from these nurseries to other Jatropha farmers or developers.

4.	Fruit and seed handling, oil extraction facilities, germplasm resources, and livestock (sheep) capabilities are all being expanded in anticipation of our growing Jatropha operations. Oil extraction facilities are currently located on-site and we expect to relocate them to a new industrial site.

Our Mexican farms are being developed for the purpose of producing feedstock for bio-fuels from Jatropha seeds. However, our development and cultivation of these farms has also enabled us to generate ancillary revenues from these operations. For example, we have received revenue from the sale of biomass (waste wood removed from our farms as the land is prepared for Jatropha planting), sales of sheep that graze on our lands and control weeds, and the sale of the presscake from the Jatropha seeds which remains after oil extraction.

6.	Total capital paid for land and expenses and operations, since inception, for the two operating farms in the Tizimin area (through March 31, 2012) was $15,471,558.

In 2011 we entered into a services agreement to provide advisory services related to the development of a Jatropha farm in the Caribbean. In the quarter ended March 31, 2012, we recognized $153,935 of farm advisory revenues from the services related to the Caribbean development. In connection with providing these services, we leased approximately five hectares of land in the Caribbean to develop a research farm to provide these Jatropha development and evaluation services, in anticipation of a larger development for this same customer. We have also provided advisory services for companies related to potential use of Jatropha farming and the use of the products in the United States, South America and Africa.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported assets, liabilities, sales and expenses in the accompanying financial statements. Critical accounting policies are those that require the most subjective and complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain.

Agricultural Producer. All costs incurred until the actual planting of Jatropha are capitalized as plantation development costs, and are included in “Property and Equipment” on the balance sheet. Plantation development costs are being accumulated in the balance sheet during the development period and will be accounted for in accordance with accounting standards for Agricultural Producers and Agricultural Cooperatives. The direct costs associated with each farm and the production of the Jatropha revenue streams have been deferred and accumulated as a noncurrent asset and are included in “Deferred Growing Costs” on the balance sheet. Other general costs without expected future benefits are expensed when incurred.

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Certain other critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note A to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Results of Operations

Revenues. During the three-month period ended March 31, 2012 we recognized revenue of $619,521 as compared with $260,224 for the same period in 2011. The revenues that we generated in 2012 and 2011 represented (i) fees for Jatropha related advisory services we rendered to third parties, (ii) subsidies from government agencies, and (iii) sales of Jatropha oil and Jatropha seeds and other products (waste wood, Jatropha seed husks, etc.). The increase in revenues compared with the same period in 2011 is the result of the receipt of government subsidies, an increase in our Jatropha farm advisory services to third parties and, increased revenues generated from the sale of our Jatropha farm products. Our goal is to increase the amount of advisory and management services that we render to third parties in 2012 and beyond. In addition, some of the Jatropha trees that we first planted three years ago are maturing, and we anticipate that sales of Jatropha seeds will become a material source of revenues for our Mexican operations.

General and Administrative Expenses. Our general and administrative expenses related to the three-month period ended March 31, 2012 were $627,467 compared to $570,529 for the same period in 2011. General and administrative expense principally includes officer compensation; outside services, such as legal, accounting, and consulting expenses; share-based compensation; and other general expenses such as insurance, occupancy costs, travel, etc. The net increase in general and administrative expenses for the three months ended March 31, 2012, compared to the prior year was principally the result of increased administrative staffing and other administrative costs related to, and as a result of the continuing expansion of operations of our Tizimin farms.

Plantation Operating Costs. For the three-month period and ended March 31, 2012, we recorded Plantation Operating Costs from the operations of the farms of $172,437, as compared with $108,231 in the same period in 2011. This increase is related to the expansion of operations

Other Income/Expense. The principal component of Other Income/Expense for the March 31, 2012 fiscal quarter was the $514,473 gain that we recognized from the settlement of liabilities. Gain on settlement of liabilities represents gains we realized by discharging historic liabilities (most of which were incurred while this company operated as a developmental-stage bio-pharmaceutical company) at less than the accrued amount of such liabilities. There was a gain of $514,473 due to the extinguishment of promissory notes and other obligations. Another significant component of Other Income/Expense for the current period is accrued mortgage interest. Interest expense for the three-month period ended March 31, 2012, was $192,800, compared to $139,796 for the three month period ended March 31, 2011, respectively. As of March 31, 2012, we owned approximately 15,000 acres of land in Mexico that is subject to interest bearing mortgages. Because we purchased additional land in the fourth quarter of 2011, we did not pay interest on the additional mortgages during the entire first quarter of 2011.

Income (Loss) from Discontinued Operations. During the three-month period ended March 31, 2012, we recognized a loss from discontinued operations of $2,038, compared to a loss from discontinued operations of $22,793 for the comparable period in 2011. The income or loss from discontinued operations for the three-month period ended March 31, 2012 and 2011 principally relates to foreign currency exchange rate gains or losses on liabilities associated with our former bio-pharmaceutical business, which are denominated in euros.

Net loss attributable to the non-controlling interest. Effective April 23, 2008, we entered into a limited liability company agreement to form GCE Mexico I, LLC, a Delaware limited liability company (“GCE Mexico”), with six investors (collectively, the “Investors”). GCE Mexico I acquired the two Mexican farms through two Mexico subsidiaries, referred to as Asideros 1 and Asideros 2. Under GCE Mexico I, LLC’s operating agreement, the net loss allocated from Asideros 1 and Asideros 2 to GCE Mexico I, LLC is then further allocated to the members of GCE Mexico I, LLC according to the investment balances. We own 50% of the common membership interests in GCE Mexico I, LLC. Accordingly, since the common membership interest did not make a direct capital contribution, all of the losses allocated to GCE Mexico have been further allocated to the preferred membership interest. The net loss attributable to the non-controlling interest in the accompanying Consolidated Statement of Operations represents the allocation of the net loss of GCE Mexico I, LLC to the preferred membership interests.

Net income/loss attributable to Global Clean Energy Holdings, Inc. The Company recorded net income of $358,964 for the three-month period ending March 31, 2012, as compared to a net loss of $204,476 for the three month period in 2011. We will continue to accrue interest on the mortgages that encumber the Tizimin, Mexico, farms. Although we anticipate that revenues from both our Jatropha operations and our advisory services will increase, we are unable to forecast if, or when such revenues will exceed our operating expenses.

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Liquidity and Capital Resources

As of March 31, 2012, we had $1,018,289 in cash or cash equivalents and had a working capital deficit of $991,914, as compared with $676,780 in cash and a working capital deficit of $1,726,627 as of December 31, 2011. Only $98,524 of our cash/cash equivalent balances as of March 31, 2012 represent funds to be used for general corporate purposes, with the remaining balance anticipated to be used in the operations of the Tizimin, Mexico farms owned by that joint venture. As a result, the GCE Mexico I, LLC funds will not be available to us for our working capital or other purposes, and are not available to us to reduce our indebtedness. In order to fund our short-term working capital needs, we will have to obtain additional funding from the sale of additional securities, additional borrowings, or from an increase in operating revenues. Outstanding indebtedness at March 31, 2012 totaled $13,137,446. The existence of the foregoing working capital deficit and liabilities is expected to negatively impact our ability to obtain future equity or debt financing and the terms on which such additional financing, if available, can be obtained.

To date, we have funded our corporate overhead and other public company costs and expenses from (i) the sale of securities, (ii) monthly payments we receive from our GCE Mexico I, LLC joint venture, and (iii) fees we receive for providing Jatropha related advisory services to third parties. During the three-month period ended March 31, 2012, we received overhead reimbursements of $84,531 from GCE Mexico I, LLC. We anticipate that our overhead reimbursements for the balance of the current fiscal year will continue at no less than the foregoing rate. In April 2012, we raised $250,000 from the sale of share of our common stock (at a price of $0.03 per share). In addition, we anticipate that that we will continue to receive advisory service fees in the near term. The amount of cash on hand and the anticipated cash receipts from GCE Mexico and the advisory service clients will not, however, be sufficient to fund our working capital needs for the next twelve months. Furthermore, we do not have sufficient financial resources to fund our business plan (which includes the purchase of our own Jatropha farms and other capital outlays). Accordingly, unless we enter into additional advisory service agreements or otherwise receive cash proceeds (see the description regarding the sale of the Belize property below), we will have to obtain additional funding from the sale of our securities to fund our cash needs. No assurance can be given that we will be able to raise additional capital or that such additional capital will be on terms favorable to the company and its shareholders.

Our business plan contemplates that we will significantly expand our Jatropha business and operations (including establishing additional Jatropha farms that are owned and operated by us for our own account in Mexico and other locations). Although we anticipate that revenues from the Jatropha farms we currently own through our GCE Mexico I, LLC joint venture in Mexico will commence in the second quarter of 2012 and increase significantly thereafter, net cash generated from those operations will first have to be used to repay the capital contributed by our joint venture investors (plus their preferred return), for a combined total of $18,833,234 as of March 31, 2012. As a result, the improving operations of the Mexico farms will not produce short-term cash for us that we can use for our business plan, for working capital purposes, or for the acquisition of additional Jatropha farms. Because of our negative working capital position, we currently do not have the funds necessary to acquire and cultivate additional farms for our own account. Accordingly, in order to increase our farm ownership and operations, we will have to obtain significant additional capital through the sale of equity and/or debt securities, the forward sale of Jatropha oil and carbon offset credits, and from other financing activities, such as strategic partnerships and joint ventures.

Effective July 2, 2009, we purchased all of the outstanding capital stock of Technology Alternatives Limited, a company formed under the laws of Belize (“TAL”), from its four shareholders. TAL owned and operated a 400-acre farm in subtropical Belize, Central America. The Belize farm is inactive, and we are currently attempting to sell the farm. In connection with the purchase of all of the shares of TAL, we issued to the sellers, among other consideration, promissory notes in the aggregate amount of $516,139 Belize Dollars (US $268,682 based on exchange rates in effect at May 4, 2012), which notes are secured by a mortgage on the 400-acre farm. The new maturity date of the promissory notes currently is August 15, 2012. If we are able to sell the Belize farm before August 15, 2012 at the approximate fair market value of that land, we will receive sufficient sale proceeds to repay the TAL notes in full and will also generate additional proceeds for our working capital purposes. No assurance can be given that we will be able to sell the Belize farm. If the farm is not sold by August 15, 2012, we will have to ask the noteholders for an extension or face possible foreclosure of the loans.

We presently do not have any available credit, bank financing or other external sources of liquidity. In the absence of additional outside funding (including proceeds from the sale of our securities, or entering into other joint venture relationships), we do not have the ability to expand our business or acquire our own Jatropha farms. If we issue additional equity or debt securities to fund our future capital needs, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. Should we not be able to increase the amount of revenues we receive from our advisory services and/or raise additional debt or equity funding, we will have to scale back our current and proposed operations or take other actions to preserve our on-going operations.

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On December 22, 2009, we sold all patents, rights, and data associated with our legacy pharmaceutical assets to Curadis GmbH for 350,000 Euros and a revenue sharing arrangement that could pay up to 2,000,000 Euros should such legacy pharmaceutical assets ever be commercialized by the buyer. In February 2012 Curadis GmbH informed us that it had licensed some of the ancillary patents and rights to an affiliated cosmetics company. As part of that licensing arrangement, Curadis GmbH paid us an up-front licensing fee of 15,000 Euros, and agreed to pay us a royalty of 4.5% of all net sales of products sold using the licensed technology. Curadis further agreed that if we do not receive royalty payments, on a cumulative basis, of 300,000 Euros under this cosmetics license by December 31, 2014, the licensed patents will be returned to us. Curadis has also informed us that it is hopeful that the other, non-cosmetics legacy pharmaceutical assets will be commercialized within the next two to three years. We will continue to maintain a security interest in such assets until such time as, if ever, we are paid a total of 2,000,000 Euros. While we anticipate that we will receive additional payments from Curadis under this new license, the amount and timing of such license payments are unknown and are not expected to significantly contribute in 2012 to our liquidity.

Inflation and changing prices have had no effect on our continuing operations over our two most recent fiscal years.

We have no off-balance sheet arrangements as defined in Item 303(a) of Regulation S-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with, or submit to, the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our chief executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive and financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our chief executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Based upon our evaluation, we also concluded that there was no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS.

Not applicable

ITEM 1A. RISK FACTORS.

Information regarding risk factors appears under “Risk Factors” included in Item 1A, Part I, and under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2011. Except as set forth below, there have been no material changes from the risk factors previously disclosed in the above-mentioned periodic report.

Foreclosure of Belizean Jatropha Farm. We currently owe the four former owners of our 400-acre farm in Belize, Central America, loans in the aggregate amount of $516,139 Belize Dollars (US $268,682 based on exchange rates in effect at May4, 2012), which loans are secured by a lien on the 400-acre farm. We are currently planning an orderly disposition of this land that will enable us to repay the loans and realize a gain on our investment. The promissory notes matured on July 15, 2011, and were extended to August 15, 2012.

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Agricultural Risks – General. Agricultural operations are expected to generate a large portion of our future revenues. Agriculture operations are subject to a wide variety of risks including product pricing due to variations in supply and demand, weather, disease, input costs and product yield.

The Company’s Agricultural Assets Are Concentrated and the Effects of Adverse Weather Conditions Can Be Magnified. The Company’s agricultural operations are concentrated in the center of the Yucatan peninsula, near Tizimin, Mexico. All of these areas are subject to occasional periods of drought, excess rain, flooding, and possible Hurricanes. Jatropha trees require water in different quantities at different times during the growth cycle. Accordingly, too much or too little water at any given point can adversely impact production. While the Company attempts to mitigate controllable weather risks through water management and variety selection, its ability to do so is limited. The Company’s operations in Mexico are also subject to the risk of hurricanes. Hurricanes have the potential to destroy crops and impact Jatropha production through the loss of fruit and destruction of trees either as a result of high winds or through the spread of windblown disease. Because our agricultural properties are located in relative close proximity to each other, the impact of adverse weather conditions may be magnified in the Company’s results of operations.

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

We did not sell any shares during the three-month period ended March 31, 2012. However, on April 4, 2012, we sold 8,620,690 shares of our common stock to an accredited investor at a price of $0.029 per share for cash proceeds of $250,000. The sale of the shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable

ITEM 5. OTHER INFORMATION

In accordance with the employment term sheet we entered into on November 16, 2011, Mr. Gregory S. Cardenas’ employment as our Executive Vice President and Chief Financial Officer was terminated. Richard Palmer, our Chief Executive Officer, has assumed the role as interim Chief Financial Officer until a new Chief Financial Officer is hired.

ITEM 6. EXHIBITS

10.1	Amended and Restated Limited Liability Company Agreement of GCE Mexico I, LLC, a Delaware Limited Liability Company, Amendment and Restatement March 28, 2011
31.1	Rule 13a-14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Link base
101.DEF	XBRL Taxonomy Extension Definition Link base Document
101.LAB	XBRL Taxonomy Extension Label Link base Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 7, 2012 GLOBAL CLEAN ENERGY HOLDINGS, INC.

By: /s/ RICHARD PALMER

Chief Executive Officer and interim

Chief Financial Officer

Global Clean Energy Holdings, Inc. - FORM 10-Q - May 8, 2012

Attached files

Global Clean Energy Holdings, Inc. Reports