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 SeptemberJune 30, 20122013

 
OR
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
87-0407858
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 fileroNon-accelerated filero
    
Accelerated FileroSmaller reporting companyx
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of October 29, 2012,August 2, 2013, the issuer had 293,683,502333,683,502 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 September 30, 2012
FORM 10-Q

TABLE OF CONTENTS
PART I1
ITEM 1.FINANCIAL STATEMENTS.1
ITEM 2.MANAGEMENTS’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.18
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.22
ITEM 4.CONTROLS AND PROCEDURES.22
PART II23
ITEM 1.LEGAL PROCEEDINGS.23
ITEM 1A.RISK FACTORS.23
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.24
ITEM 3.DEFAULTS UPON SENIOR SECURITIES.24
ITEM 4.MINE SAFETY DISCLOSURES.24
ITEM 5.OTHER INFORMATION24
ITEM 6.EXHIBITS24

 
1
 



PART I
ITEM 1. FINANCIAL STATEMENTS.

 
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
       
  September 30,  December 31, 
  2012  2011 
       
ASSETS 
       
CURRENT ASSETS      
  Cash and cash equivalents $869,420  $676,780 
  Accounts receivable  3,394   2,279 
  Inventory  1,580   104,782 
  Other current assets  417,615   327,701 
      Total Current Assets  1,292,009   1,111,542 
         
PROPERTY AND EQUIPMENT, NET  14,137,685   11,905,182 
         
INVESTMENT HELD FOR SALE  303,953   291,031 
         
DEFERRED GROWING COST  4,238,909   2,780,871 
         
OTHER NONCURRENT ASSETS  11,455   10,814 
         
TOTAL ASSETS $19,984,011  $16,099,440 
         
LIABILITIES AND EQUITY (DEFICIT) 
         
CURRENT LIABILITIES        
  Accounts payable $1,536,383  $1,363,217 
  Accrued payroll and payroll taxes  1,011,913   1,046,763 
  Deferred revenue  63,535   152,732 
  Capital lease liability - current portion  53,411   56,257 
  Notes payable to shareholders  26,000   26,000 
  Convertible notes payable  -   193,200 
      Total Current Liabilities  2,691,242   2,838,169 
         
         
LONG-TERM LIABILITIES        
  Accrued interest payable  1,945,586   1,684,186 
  Accrued return on noncontrolling interest  4,394,762   2,907,678 
  Capital lease liability - long term portion  4,190   31,258 
  Convertible notes payable  567,000   567,000 
  Mortgage notes payable  5,110,189   5,110,189 
      Total Long Term Liabilities  12,021,727   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;        
293,683,502 and 285,062,812 issued and outstanding  293,683   285,062 
Additional paid-in capital  24,541,211   24,260,628 
Accumulated deficit  (26,877,863)  (26,662,294)
Accumulated other comprehensive loss  (44,019)  (21,996)
      Total Global Clean Energy Holdings, Inc. Stockholders' Deficit  (2,086,975)  (2,138,587)
  Noncontrolling interests  7,358,017   5,099,547 
    Total equity (deficit)  5,271,042   2,960,960 
         
TOTAL LIABILITIES AND EQUITY (DEFICIT) $19,984,011  $16,099,440 
         
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

1

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
             
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2012  2011  2012  2011 
             
Revenue $78,644  $109,758  $288,080  $165,558 
Subsidy Income  39,431   248,429   505,017   564,181 
Total Revenue  118,075   358,187   793,097   729,739 
                 
Operating Expenses                
  General and administrative  418,663   549,870   1,671,040   1,639,064 
  Write down of impaired long lived assets  526,953   -   526,953     
  Plantation operating costs  182,322   125,076   533,566   251,447 
                 
     Total Operating Expenses  1,127,938   674,946   2,731,559   1,890,511 
                 
Loss from Operations  (1,009,863)  (316,759)  (1,938,462)  (1,160,772)
                 
Other Income (Expenses)                
  Other income  25   29   82   77 
  Interest expense  (224,288)  (142,140)  (632,415)  (406,208)
  Gain on settlement of liabilities  80,817   -   595,290   - 
  Foreign currency transaction gain (loss)  84   37,173   (960)  39,613 
                 
    Net Other Income (Loss)  (143,362)  (104,938)  (38,003)  (366,518)
                 
Loss from Continuing Operations  (1,153,225)  (421,697)  (1,976,465)  (1,527,290)
                 
Income (Loss) from Discontinued Operations  1,698   22,468   -   (9,746)
                 
Net Loss  (1,151,527)  (399,229)  (1,976,465)  (1,537,036)
                 
Less Net Loss Attributable to the Noncontrolling Interest  (979,876)  (213,099)  (1,760,896)  (897,521)
                 
Net Income (Loss) attributable to Global Clean Energy Holdings, Inc. $(171,651) $(186,130) $(215,569) $(639,515)
                 
                 
Amounts attributable to Global Clean Energy                
  Holdings, Inc. common shareholders:                
    Income (Loss) from Continuing Operations $(173,349) $(208,598) $(215,569) $(629,769)
    Income (Loss) from Discontinued Operations  1,698   22,468   -   (9,746)
    Net Loss $(171,651) $(186,130) $(215,569) $(639,515)
                 
Basic Income (Loss) per Common Share:                
Income (Loss) from Continuing Operations $(0.0006) $(0.0007) $(0.0007) $(0.0023)
Income Loss from Discontinued Operations  0.0000   0.0001   -   (0.0000)
    Net Loss per Common Share $(0.0006) $(0.0007) $(0.0007) $(0.0023)
                 
Basic Weighted-Average Common Shares Outstanding  293,683,502   280,782,920   290,694,577   274,426,224 
                 
Diluted Income (Loss) per Common Share:                
Loss from Continuing Operations $(0.0006) $(0.0007) $(0.0007) $(0.0023)
Income Loss from Discontinued Operations  0.0000   0.0001   -   (0.0000)
    Net Loss per Common Share $(0.0006) $(0.0006) $(0.0007) $(0.0023)
                 
Diluted Weighted-Average Common Shares Outstanding  293,304,571   280,782,920   290,694,577   274,426,224 
      
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS 
  
  June 30,  December 31, 
  2013  2012 
  (unaudited)    
ASSETS 
       
CURRENT ASSETS      
  Cash and cash equivalents $656,084  $941,579 
  Accounts receivable  9,134   2,100 
  Inventory  426,205   1,564 
  Other current assets  185,648   298,586 
      Total Current Assets  1,277,071   1,243,829 
         
PROPERTY AND EQUIPMENT, NET  15,511,205   14,559,002 
         
INVESTMENT HELD FOR SALE  -   288,536 
         
DEFERRED GROWING COST  3,392,992   3,378,990 
         
INTANGIBLE ASSETS, NET  3,820,105   - 
         
OTHER NONCURRENT ASSETS  11,404   11,372 
         
TOTAL ASSETS $24,012,777  $19,481,729 
         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 
         
CURRENT LIABILITIES        
  Accounts payable and accrued expenses $3,600,812  $1,135,594 
  Accrued payroll and payroll taxes  1,137,382   1,018,894 
  Capital lease liability - current portion  17,057   42,829 
  Notes payable - current portion  49,358   60,800 
  Convertible notes payable  567,000   567,000 
      Total Current Liabilities  5,371,609   2,825,117 
         
         
LONG-TERM LIABILITIES        
  Accrued interest payable  2,569,518   2,121,787 
  Accrued return on noncontrolling interest  6,183,907   4,963,582 
  Notes payable - long term portion  1,341,642   40,200 
  Mortgage notes payable  5,110,189   5,110,189 
      Total Long Term Liabilities  15,205,256   12,235,758 
         
STOCKHOLDERS' 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;        
333,683,502 and 293,683,502 issued and outstanding  333,683   293,683 
Additional paid-in capital  25,552,579   24,588,022 
Accumulated deficit  (27,574,888)  (26,599,007)
Accumulated other comprehensive loss  (14,762)  (56,121)
      Total Global Clean Energy Holdings, Inc. Stockholders' Deficit  (1,703,375)  (1,773,410)
  Noncontrolling interests  5,139,287   6,194,264 
    Total equity (deficit)  3,435,912   4,420,854 
         
TOTAL LIABILITIES AND EQUITY (DEFICIT) $24,012,777  $19,481,729 
         
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements
 
 
 
2

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited) 
             
  For the Three Months Ended  For the Six Months Ended 
  June 30,  June 30, 
  2013  2012  2013  2012 
             
             
Revenue $15,460  $55,501  $103,940  $209,436 
Subsidy Income  33,368   -   50,515   465,586 
Total Revenue  48,828   55,501   154,455   675,022 
                 
Operating Expenses                
General and administrative  681,024   624,910   1,241,163   1,252,377 
Plantation operating costs  47,677   198,460   617,833   351,244 
                 
     Total Operating Expenses  728,701   823,370   1,858,996   1,603,621 
                 
Loss from Operations  (679,873)  (767,869)  (1,704,541)  (928,599)
                 
Other Income (Expenses)                
  Other income  4   48   23   57 
  Interest expense  (241,651)  (215,327)  (458,406)  (408,127)
  Gain on settlement of liabilities  -   -   -   514,473 
  Loss on Sale of Investment held for sale  (178,896)  -   (178,896)  - 
  Foreign currency transaction gain (loss)  -   (1,044)  515   (1,044)
                 
    Net Other Income (Expenses)  (420,543)  (216,323)  (636,764)  105,359 
                 
Loss from Continuing Operations  (1,100,416)  (984,192)  (2,341,305)  (823,240)
                 
Gain (Loss) from Discontinued Operations  -   340   -   (1,698)
                 
Net Loss  (1,100,416)  (983,852)  (2,341,305)  (824,938)
                 
Less Net Loss Attributable to the Noncontrolling Interest  (362,538)  (580,969)  (1,365,424)  (781,019)
                 
Net Loss Attributable to Global Clean Energy Holdings, Inc. $(737,878) $(402,883) $(975,881) $(43,919)
                 
                 
Amounts attributable to Global Clean Energy                
  Holdings, Inc. common shareholders:                
Loss from Continuing Operations $(737,878) $(403,223) $(975,881) $(42,221)
Income (Loss) from Discontinued Operations  -   340   -   (1,698)
     Net Loss $(737,878) $(402,883) $(975,881) $(43,919)
                 
Basic Income (Loss) per Common Share:                
Loss from Continuing Operations $(0.0022) $(0.0014) $(0.0032) $(0.0001)
Loss from Discontinued Operations  -   -   -   - 
Net Loss per Common Share $(0.0022) $(0.0014) $(0.0032) $(0.0001)
                 
Basic Weighted-Average Common Shares Outstanding  333,683,502   293,304,571   301,683,502   289,183,691 
                 
Diluted Income (Loss) per Common Share:                
Income (Loss) from Continuing Operations $(0.0022) $(0.0014) $(0.0032) $0.0001 
Loss from Discontinued Operations  -   0.0000   -   - 
    Net Income (Loss) per Common Share $(0.0022) $(0.0014) $(0.0032) $0.0001 
                 
Diluted Weighted-Average Common Shares Outstanding  333,683,502   293,304,571   301,683,502   289,183,691 
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements 


GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
             
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2012  2011  2012  2011 
             
Net Loss $(1,151,527) $(399,229) $(1,976,465) $(1,537,036)
                 
Other comprehensive income - foreign currency                
 translation adjustment  990,579   (1,584,711)  1,064,067   (1,193,420)
                 
Comprehensive Loss  (160,948)  (1,983,940)  (912,398)  (2,730,456)
                 
Add net loss attributable to the noncontrolling interest  979,876   213,099   1,760,896   897,521 
                 
Less other comprehensive income (loss) attributable to noncontrolling interest  (1,017,240)  1,557,633   (1,086,090)  1,162,786 
                 
Comprehensive Loss Attributable to                
Global Clean Energy Holdings, Inc. $(198,312) $(213,208) $(237,592) $(670,149)
                 
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements

 
3


GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
(Unaudited)
For the Periods Ended September 30, 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 
Issuance of common stock          12,708,334   12,711   487,916               500,626 
Contributions from noncontrolling interests  -   -   -   -   -   -   -   4,780,156   4,780,156 
Exercise of Warrants  -   -   1,890,000   1,890   54,810   -   -   -   56,700 
Share-based compensation from issuance of options and compensation-based warrants
  -   -   -   -   69,858   -   -   -   69,858 
Accrual of preferential return for the noncontrolling interests
  -   -   -   -   -   -   -   (1,044,264)  (1,044,264)
Foreign currency translation gain (loss)  -   -   -   -   -   -   (30,634)  (1,162,786)  (1,193,420)
Net loss for the period ended September 30, 2011  -   -   -   -   -   (639,515)  -   (897,521)  (1,537,036)
                                     
Balance at September 30, 2011  13,000  $13   285,062,812  $285,065  $24,193,214  $(27,572,945) $(32,829) $5,917,530  $2,790,047 
                                     
                                     
                          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  -   -   -   -   -   -   -   4,420,360   4,420,360 
Issuance of common stock for cash  -   -   8,620,690   8,621   241,379   -   -   -   250,000 
Share-based compensation from issuance of options and compensation-based warrants
  -   -   -   -   39,204   -   -   -   39,204 
Accrual of preferential return for the noncontrolling interests
  -   -   -   -   -   -   -   (1,487,084)  (1,487,084)
Foreign currency translation gain (loss)  -   -   -   -   -   -   (22,023)  1,086,090   1,064,067 
Net loss for the year ended September 30, 2012  -   -   -   -   -   (215,569)  -   (1,760,896)  (1,976,465)
                                     
Balance at September 30, 2012  13,000  $13   293,683,502  $293,683  $24,541,211  $(26,877,863) $(44,019) $7,358,017  $5,271,042 
                                     
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
        
  For the Three Months Ended  For the Six Months Ended 
  June 30,  June 30, 
  2013  2012  2013  2012 
             
             
Net Loss $(1,100,416) $(983,852) $(2,341,305) $(824,938)
                 
Other comprehensive income (loss)- foreign currency                
 translation adjustment  (626,484)  1,125,032   262,100   73,490 
                 
Comprehensive Income (Loss)  (1,726,900)  141,180   (2,079,205)  (751,448)
                 
Add net loss attributable to the noncontrolling interest  362,538   580,969   1,365,424   781,019 
                 
Add other comprehensive loss (less income) attributable to noncontrolling interest  658,269   (1,112,584)  (220,741)  (68,848)
                 
Comprehensive Loss Attributable to                
Global Clean Energy Holdings, Inc. $(706,093) $(390,435) $(934,521) $(39,277)
                 
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements         

 
4

 
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) 
(Unaudited) 
For the six Months Ended June 30, 2012 and 2013 
                            
                    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  -   -   -   -   -   -   -   3,258,090   3,258,090 
Issuance of common stock for cash  -   -   8,620,690   8,621   241,379   -   -   -   250,000 
Share-based compensation from                                    
issuance of options and compensation-based warrants  -   -   -   -   53,850   -   -   -   53,850 
Accrual of preferential return for the noncontrolling interests
  -   -   -   -   -   -   -   (947,501)  (947,501)
Foreign currency translation gain (loss)  -   -   -   -   -   -   4,642   68,848   73,490 
Net Income (loss) for the six months ended June 30, 2012  -   -   -   -   -   (43,919)  -   (781,019)  (824,938)
                                     
Balance for the six months ended June 30, 2012  13,000  $13   293,683,502  $293,683  $24,555,857  $(26,706,213) $(17,354) $6,697,965  $4,823,951 
                                     
                                     
Balance at December 31, 2012  13,000  $13   293,683,502  $293,683  $24,588,022  $(26,599,007) $(56,121) $6,194,264  $4,420,854 
Contributions from noncontrolling interests  -   -   -   -   -   -   -   1,310,030   1,310,030 
Issuance of common stock  -   -   40,000,000   40,000   760,000   -   -   -   800,000 
Share-based compensation from                                    
issuance of options and compensation-based warrants  -   -   -   -   204,557   -   -   -   204,557 
Accrual of preferential return for the noncontrolling interests
  -   -   -   -   -   -   -   (1,220,324)  (1,220,324)
Foreign currency translation gain (loss)
  -   -   -   -   -   -   41,359   220,741   262,100 
Net Income (loss) for the six months ended June 30, 2013  -   -   -   -   -   (975,881)  -   (1,365,424)  (2,341,305)
                                     
Balance for the six months ended June 30, 2013  13,000  $13   333,683,502  $333,683  $25,552,579  $(27,574,888) $(14,762) $5,139,287  $3,435,912 
                                     
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited) 
  For the Nine Months Ended 
  September 30, 
  2012  2011 
Cash Flows From Operating Activities      
Net loss $(1,976,465) $(1,537,036)
Adjustments to reconcile net loss to net cash used in operating activities:        
  Foreign currency transaction gain  960   (39,613)
  Gain on settlement of liabilities  (595,290)  - 
  Share-based compensation  39,204   69,858 
  Write down of impaired assets  526,953   - 
  Depreciation  211,915   201,419 
  Changes in operating assets and liabilities:        
    Accounts receivable  (2,925)  (23,490)
    Inventory  109,808   (55,781)
    Other current assets  (52,942)  (352,003)
    Deferred growing costs  (1,257,539)  (1,459,705)
    Accounts payable and accrued expenses  795,655   501,093 
Deferred revenue  (89,197)  208,329 
Other noncurrent assets  (11,849)  9,497 
        Net Cash Used in Operating Activities  (2,301,712)  (2,477,432)
Cash Flows From Investing Activities        
  Purchase of land  -   (178,459)
  Plantation development costs  (1,902,838)  (2,127,735)
  Purchase of property and equipment  (256,455)  (221,258)
  Disposal of property and equipment  (1,637)  - 
        Net Cash Used in Investing Activities  (2,160,930)  (2,527,452)
Cash Flows From Financing Activities        
  Proceeds from issuance of common stock  250,000   500,000 
  Proceeds from exercise of warrants  -   56,700 
  Proceeds from issuance of preferred membership in GCE Mexico I, LLC  4,420,360   4,780,156 
  Proceeds from notes payable  -   562,685 
  Payments on capital leases and notes payable  (36,723)  (34,505)
       Net Cash Provided by Financing Activities  4,633,637   5,865,036 
Effect of exchange rate changes on cash  21,645   (212,781)
Net Increase in Cash and Cash Equivalents  192,640   647,371 
Cash and Cash Equivalents at Beginning of Period  676,780   1,096,618 
Cash and Cash Equivalents at End of Period $869,420  $1,743,989 
         
  
Supplemental Disclosures of Cash Flow Information:        
Cash paid for interest $30,764  $56,755 
Noncash Investing and Financing activities:        
   Accrual of return on noncontrolling interest $1,487,084  $1,044,264 
   Shares issued for services  -   13,125 
      
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements



GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited) 
  For the six months ended 
  June 30, 
  2013  2012 
Cash Flows From Operating Activities      
Net loss $(2,341,305) $(824,938)
Adjustments to reconcile net loss to net cash used in operating activities:        
  Foreign currency transaction gain  (515)  1,044 
  Gain on settlement of liabilities  -   (514,473)
  Share-based compensation  204,557   53,850 
  Write down of deferred growing cost  6,656   - 
  Write down of long lived assets  15,000   - 
  Loss on sale of investment held for sale  178,896   - 
  Depreciation and amortization  227,081   134,393 
  Changes in operating assets and liabilities:        
    Accounts receivable  (3,000)  (68,712)
    Inventory  5,503   (30,737)
    Other current assets  48,096   (76,473)
    Deferred growing costs  -   (810,819)
    Accounts payable and accrued expenses  571,765   432,536 
Deferred revenue  -   (152,732)
Other noncurrent assets  6,627   (3,324)
        Net Cash Used in Operating Activities  (1,080,639)  (1,860,384)
Cash Flows From Investing Activities        
  Plantation development costs  (789,435)  (1,042,200)
  Purchase of property and equipment  (3,118)  (217,824)
  Proceeds from sale of property and equipment  187,212   - 
        Net Cash Used in Investing Activities  (605,341)  (1,260,024)
Cash Flows From Financing Activities        
  Proceeds from issuance of common stock  -   250,000 
  Proceeds from issuance of preferred membership in GCE Mexico I, LLC  1,310,030   3,258,090 
  Payments on capital leases and notes payable  (31,937)  (23,229)
       Net Cash Provided by Financing Activities  1,278,093   3,484,861 
Effect of exchange rate changes on cash  122,392   (80,630)
Net change in Cash and Cash Equivalents  (285,495)  283,823 
Cash and Cash Equivalents at Beginning of Period  941,579   676,780 
Cash and Cash Equivalents at End of Period $656,084  $960,603 
         
  
Supplemental Disclosures of Cash Flow Information:        
Cash paid for interest $1,282  $30,764 
Noncash Investing and Financing activities:        
   Accrual of return on noncontrolling interest $1,220,324  $947,501 
Acquisitions:      - 
Intangible assets and equipment acquired $4,077,765   - 
Inventory acquired  430,141   - 
Other current assets assumed  260   - 
Other current liabilities assumed  (2,408,066)  - 
Net assets acquired $2,100,100     
Notes payable issued $(1,300,000)  - 
Common stock issued $(800,000)  - 
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements        


6
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements




Note 1 – History and Basis of Presentation

History

Global Clean Energy Holdings, Inc. is a U.S.-based, multi-national, energy agri-business focused on the development of non-food based bio-feedstocks.

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 fuelsmarket. 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, 2011,2012, as filed with the Securities and Exchange Commission.  The results of operations for the ninesix months ended SeptemberJune 30, 2012,2013, may not be indicative of the results that may be expected for the year ending December 31, 2012.2013.

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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 beare accounted for in accordance with

7
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


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.

Profit/Income/Loss per Common Share

Profit/Income/Loss per share amounts are computed by dividing profitincome or loss applicable to the common shareholders of the Company by the weighted-average number of common shares outstanding during each period. Diluted profitincome or loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents.  The number of dilutive warrants and options is computed using the treasury stock method, whereby the dilutive effect is reduced by the number of treasury shares the Company could purchase with the proceeds from exercises of warrants and options.  As of June 30, 2013 and 2012, all convertible instruments were anti-dilutive.

All outstanding stock options, warrants, convertible notes, and convertible preferred stockThe following instruments are currently antidilutive and have been excluded from the calculations of diluted profitincome or loss per share at SeptemberJune 30, 20122013 and 2011,2012, as follows:
 
 September 30,  June 30, 
 2012  2011  2013  2012 
            
Convertible notes  18,900,000   19,028,671   18,900,000   18,900,000 
Convertible preferred stock - Series B  11,818,181   11,818,181   11,818,181   11,818,181 
Warrants  24,585,662   24,585,662   24,585,662   24,585,662 
Compensation-based stock options and warrants  57,981,483   70,181,483   69,208,483   74,481,483 
  113,285,326   125,613,997   124,512,326   129,785,326 
 
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.

8
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

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.
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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.

Impairment of Long-Lived Assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assets exceeds the fair value of the assets. At September 30, 2012, the Company reviewed its long-lived assets and determined the Deferred Growing Cost and Plantation Development Costs were impaired. See Note 10 for details.
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 a condensed consolidated statement of comprehensive income for the three and nine months ended September 30, 2012 and 2011.

Note 2 – 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 incurred losses from continuing operations applicable to its common shareholders of $1,976,465$2,341,305 and of $1,537,036$823,240 for the nine-monthssix-months ended SeptemberJune 30, 2013, and June 30, 2012, and  September 30, 2011 respectively, and has an accumulated deficit applicable to its common shareholders of $26,877,863$27,574,888 at SeptemberJune 30, 2012.2013.  The Company also used cash in operating activities of $2,301,712$1,080,639 and $2,477,432$1,860,384 during the nine-month periodssix-month period ended SeptemberJune 30, 2013 and June 30, 2012, and September 30, 2011, respectively.  At SeptemberJune 30, 2012,2013, the Company has negative working capital of $1,399,233$4,094,539 and a stockholders’ deficit attributable to its stockholders of $2,086,975.$1,703,375.  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 to date received $18,360,628$20,870,733 in capital contributions from the preferred membership interest in GCE Mexico I, LLC and(“GCE Mexico”), 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.  TheWhile the Company continues to expectexpects to be successful in this new venture, but there is no assurance that its business plan will be economically viable.  The ability of the Company to continue as a going concern is dependent on that plan’s success. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 3 – 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.  During 2008, GCE MexicoMexico’s subsidiary acquired the land in Mexico for the cultivation of the Jatropha plant.  In July 2009, the Company acquired TAL, whichTechnology Alternatives, Limited (“TAL”), a company formed under the laws of Belize that had developed a farm in Belize for cultivation of the Jatropha plant and provided technical advisory services for the propagation of the Jatropha plant.  In March 2010, the Company formed Asideros 2, a Mexican corporation, which has acquired additional land in Mexico adjacent to the land acquired by Asideros.Asideros 1. All of these transactions are described in further detail in Note 1 above and in the remainder of the notes.
8

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.

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 September 30, 2012 and December 31, 2011.  However, the Company disputes these charges, and the additional amounts that Mobius claims that it is owed.  As a result, in April 2010 Mobius filed a complaint against the Company in the United States District Court Southern District of Texas Houston Division, alleging that that the Company breached its agreement with Mobius.

LODEMO Agreement

On October 15, 2007, the Company entered into a service agreement with Corporativo LODEMO S.A DE CV, a Mexican corporation (the LODEMO Group), to provide services related to the establishment, development, and day-to-day operations of the Company’s Jatropha Business in Mexico.  The Company had agreed to pay the LODEMO Group a fixed fee per year of $60 per hectare of land planted and maintained with minimum payments based on 10,000 hectares of developed land, to follow a planned planting schedule. The Agreement had a 20-year term but could  be terminated or modified earlier by the Company under certain circumstances. In June 2009, the scope of

9
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


work previously performed by LODEMO was reduced and modified based upon certain labor functions being provided internally by the Company and by Asideros, the Company’s Mexican subsidiary, on a go-forward basis.  This agreement was cancelled in 2009.  As of SeptemberJune 30, 20122013 and as of December 31, 2011,2012, the Company’s financial statementstatements reflect that it owes the LODEMO Group $251,500 for accrued, but unpaid, compensation and cost.  The Company disputes the total of these charges and is currentlyhas been in discussions with LODEMO to resolve this liability.
9

GCE Mexico I, LLC and Subsidiaries

GCE Mexico was organized primarily to facilitate the acquisition of the initial 5,000 acres of farm land (the Jatropha Farm) in the State of Yucatan in Mexico to be used primarily for the (i) cultivation of Jatropha curcas, (ii) the marketing and sale of the resulting fruit, seeds, or pre-processed crude Jatropha oil, whether as biodiesel, feedstock, biomass or otherwise, and (iii) the sale of carbon value, green fuel value, or renewable energy credit value (and other similar environmental attributes) derived from activities at the Jatropha Farm.

Under the LLC Agreement,GCE Mexico’s operating agreement, as amended (the “LLC Agreement”), the Company owns 50% of the issued and outstanding common membership units of GCE Mexico.  The remaining 50% of the common membership units was initially issued to five of the Investors.investors.  The Company and the other owners of the common membership interest were not required to make capital contributions to GCE Mexico.

In addition, two of the Investorsinvestors agreed to invest in GCE Mexico through the purchase of preferred membership units and through the funding of the purchase of land in Mexico.  An aggregate of 1,000 preferred membership units were issued to these two Investorsinvestors who each agreed to make capital contributions to GCE Mexico in installments and as required, fund the development and operations of the Jatropha Farm.  In November 2012, one of the two investors transferred 100% of the interest to the other investor.  The preferred members have made capital contributions of $4,420,360$1,310,030 and $4,780,156$3,258,090 during the nine-month periodssix months ended SeptemberJune 30, 20122013 and 2011,June 30, 2012, respectively, and total contributions of $18,360,628$20,870,733 have been received by GCE Mexico from these Investorsinvestors since the execution of the LLC Agreement.  The LLC Agreement calls for additional contributions from the Investors,investors, as requested by management and as required by the operation in 20112013 and the following years.  These Investors areThe holder of the preferred membership interest is entitled to earn a preferential 12% per annum cumulative compounded return on the cumulative balance of theirthe preferred membership interest.  The preferential return increased $1,487,084,$1,220,324, and $1,044,264$947,501 during the nine-month periodssix months ended SeptemberJune 30, 20122013 and 2011,June 30, 2012, respectively, and totals $4,394,762$6,183,907 since the execution of the LLC Agreement.

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 on 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 parties agree that interst would 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.

The net income or loss of the six Mexican subsidiaries that own the Mexico farms is allocated to itsthe shareholders based on their respective equity ownership, whichownership; 99% of the equity of each subsidiary is 99% toowned by GCE Mexico and 1% directly tois owned by 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.

10


Technology Alternatives, Limited

On  October 29, 2008,July 9, 2009, the Company entered into apurchased 100% of the stock purchase agreement with the shareholders of TAL,Technology Alternatives, Limited (“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 developedthat was used as a Jatropha farmfarm.  The land was sold 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, principallyMay 2013.

10
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to GCE Mexico.Unaudited Condensed Consolidated Financial Statements


In connection with the acquisition, certain payablesthe Company issued promissory notes to the former shareholders of TAL were renegotiated and converted into promissory notes in the aggregate principal amount of $516,139$526,462 Belize dollars, including capitalized interest of $10,322 Belize Dollars (US $268,036$280,170 based on exchange rates in effect at July 2, 2009).on the funding date of May 17, 2013), These notes payable to shareholders were interest free through September 30, 2009, and then bearaccrued interest at 8% per annum through the maturity date.annum.  The notes arewere secured by a mortgage on the land and related improvements. The holders agreed to accept $195,747 USD as payment in full for all of their secured interest when the land was sold on May 17, 2013 at a discounted sales price of $395,000 USD.  The unpaid principal balance of $84,422 of the notes, plus any related accrued interest were dueof $28,078, was forgiven by the shareholders and written off by the Company.  The related gain on August 15, 2012. The holdersforgiveness is included in Loss on Sale of these notes have not yet declared a formal default and have not taken any action to foreclose. The holders of the loans have previously voluntarily agreed to extend the maturity date of these loans to the August 15, 2012 maturity date.

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

Note 4 - Investment Held for Sale

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 September 30, 2012 and at December 31, 2011;on the promissory notes are netted against the net assets. The Net Assets, asstatement of September 30, 2012 were $565,473 Belize Dollars (US $303,953 based on exchange rates in effect at September 30, 2012).operations.


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Note 54 – Property and Equipment

Property and equipment are as follows:
 September 30,  December 31,  June 30,  December 31, 
 2012  2011  2013  2012 
            
Land $4,587,313  $4,217,604  $4,558,125  $4,539,314 
Plantation development costs  8,478,489   6,945,617   10,152,896   9,229,638 
Plantation equipment  1,552,797   1,199,503   1,714,644   1,546,971 
Office equipment  109,018   110,031   109,752   108,598 
                
Total cost  14,727,617   12,472,755   16,535,417   15,424,521 
Less accumulated depreciation  (589,932)  (567,573)  (1,024,212)  (865,518)
                
Property and equipment, net $14,137,685  $11,905,182  $15,511,205  $14,559,002 
 
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

11
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


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 MexicoMexico.

Note 5 – Intangible Assets
In March 2013, the Company purchased certain intangible assets as part of the acquisition of Sustainable Oils, LLC.  See further discussion on acquisition in Note 10.  The intangible assets include three patents and in Belize.  During the period we recognizedrelated intellectual property associated with these patents.  These intangible assets acquired have an expected useful life of 17 years and are carried at cost less any accumulated amortization and any impairment loss related to the fair value of Plantation Development Cost and Deferred Growing Cost.  See Note 10 below.losses.

 
12
the intangible assets  over their estimated useful lives of 17 years.  Any future costs associated with the maintenance of these patents with indefinite lives will be capitalized and not amortized.
 
Note 6 – 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:
  September 30,  December 31, 
  2012  2011 
       
Accrued payroll, vacation, and related payroll  taxes      
  for current officers $1,011,913  $965,946 
Other former officers and directors  -   77,750 
Accrued payroll taxes on accrued compensation to        
  former officers and directors  -   3,067 
         
Accrued payroll and payroll taxes $1,011,913  $1,046,763 
Note 7 – Debt

Notes Payable to Shareholders

TheIncluded in notes payable on the accompanying consolidated balance sheet, the Company has notes payable to certain shareholders in the aggregate amount of $26,000 at SeptemberJune 30, 20122013 and December 31, 2011.2012.  The notes originated between 1997 andin 1999, bear interest at 12%, are unsecured, and are currently in default.  Accrued interest on the notes totaled $65,726 and $46,415$49,540 at SeptemberJune 30, 20122013 and December 31, 2011,2012, respectively.

As more fully disclosed in Note 43 the Company hashad issued promissory notes to the former shareholders of TAL in the aggregate amount of $526,462 Belize dollars, (US $282,983$268,630 based on exchange rates in effect at September 30,December 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 arewere secured by a mortgage on the land and related improvements.  The notes, plus any related accrued interest,improvements, all of which were duesold on August 15, 2012.May 17, 2013 at a discounted price of $395,000.  The holders agreed to accept $195,747 as payment in full for these mortgage notes when the land was sold on May 17, 2013.  The balance of these$84,422 in notes have not yet declaredpayable was forgiven by the holders and written off.

Convertible Notes Payable

In March 2010, the Company entered into a formal defaultsecurities 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 have not taken any actionwarrants to foreclose. The holdersacquire an aggregate of 1,890,000 shares of the loans have previously voluntarily agreed to extendCompany’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 these loansthe 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 nine-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 August 15, 2012quotient 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

12
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


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.

Mortgage Notes Payable

TwoThe 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 thesethe two original 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 parties have agreed to accrue the interest 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.
13

In October 2011, thesethe two original 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.

In November 2012, one of the two holders of the preferred membership interests acquired all of the ownership interests of the other member.  Accordingly, all of the foregoing obligations are now owed to the sole holder of GCE Mexico’s preferred membership interests.

Promissory Notes Payable

In March 2013, the Company issued a secured promissory note in the principal amount of $1,300,000 to Targeted Growth, Inc. as part of the acquisition of Sustainable Oils, LLC.  The note bears an interest rate of ten percent (10.0%) per annum, and is payable upon the earlier of the following: (a) to the extent of 35.1% of, and on the third business day after, the receipt by the Company of any Qualified Funding; or (b) September 13, 2014 (the “Maturity Date”).  The term “Qualified Funding” means all equity funding in excess of the $800,000, in the aggregate, received by the Company, its subsidiary or an affiliate after the date hereof for its Camelina business.

Settlement of Liabilities

The Company has settled certain liabilities previously carried on the consolidated balance sheet, which settlements resulted in significant gains. The totalgains from the extinguishment of liabilities. There was no gain on settlement of liabilities for the ninesix months ended SeptemberJune 30, 20122013, but there was $595,290. Thisa gain of $514,473 for the six months ended June 30, 2012. The gain in 2012 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.operations. In addition, the Company determined thatwrote off certain liabilities that had been extinguished with the passage of time for collection under theapplicable statutues of limitation laws.

Common Stock
13
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

 
On April 25, 2011 an accredited investor in the Company exercised a Warrant for 945,000 shares at $.03 per share for net cash proceeds paid to the Company of $28,350. The proceeds from this sale were used for general corporate purposes.
Note 7 - Common Stock
On May 31, 2011 an accredited investor in the Company exercised a Warrant for 945,000 shares at $.03 per share for net cash proceeds paid to the Company of $28,350. The proceeds from this sale were used for general corporate purposes.

In April 2012,March 2013, the Company issued 40,000,000 shares, to an accredited investor at a price of $.03$.02 per share for cash proceeds paidas partial considertion of the business purchase that included certain assets, patents, and other intellectual property and rights related to the Companydevelopment of $250,000. The proceeds from this sale were used for general corporate purposes.Camelina sativa as a biofuels feedstock that it acquired.

Note 8 – Stock Options and Warrants

Stock Options and Compensation-Based Warrants

The Company has threean incentive stock option plansplan wherein 44,000,00020,000,000 shares of the Company’s common stock are reserved for issuance there under.thereunder.

On July 19, 2010,Additionally, Richard Palmer, 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 consultantsPresident of the Company may be given an opportunityhas been granted stock options to benefit from increases inpurchase 12,000,000 shares of the value of ourCompany’s 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 withholdingachievement 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.
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certain market capitalization goals.

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 consolidatedtheconsolidated balance sheet.

A summary of the status of options and compensation-based warrants at SeptemberJune 30, 2012,2013, and changes during the periodsix months then ended is presented in the following table:

      Weighted         Weighted   
    Weighted Average       Weighted Average   
 Shares  Average Remaining Aggregate  Shares  Average Remaining Aggregate 
 Under  Exercise Contractual Intrinsic  Under  Exercise Contractual Intrinsic 
 Option  Price Life Value  Option  Price Life Value 
                    
Outstanding at December 31, 2011  74,731,483  $0.03  4.7 years $192,033 
          
Outstanding at December 31, 2012  68,608,483  $0.02  4.3 years $- 
             
Granted  1,000,000   0.04        3,450,000   0.01      
Exercised  -   -    -   -   -      
Forfeited  (4,500,000)  0.04        (350,000)  0.01      
Expired  (13,250,000)  0.03        (2,500,000)  0.04      
                          
Outstanding at September 31, 2012  57,981,483   0.03  4.2 years $29,497 
Outstanding at June 30, 2013  69,208,483   0.01  5.0 years $87,537 
                          
             
Exercisable at September 31, 2012  40,968,983  $0.03  3.3 years $29,297 
Exercisable at June 30, 2013  42,725,983  $0.03 2.9 years  45,045 
 
At SeptemberJune 30, 2012,2013, 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.   No3,450,000 options or warrants were issued in the nine-monthsix-month period ended SeptemberJune 30, 20122013 and 1,350,000none in the six-month period ended 2012. The weighted average fair value of stock options were issued during the ninesix months ended SeptemberJune 30, 2011.2013 as $0.15.  The weighted-average assumptions used for the stock options granted and compensation-based warrants issued during the six months ended June 30, 2013 were risk-free interest rate of 0.77%, volatility of 181%, expected life of 5.0 years, and dividend yield of zero. 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 SeptemberJune 30, 20122013 closing price of $0.010$0.0134 per share.

Share-based compensation from all sources recorded during the ninesix months ended SeptemberJune 30, 2013 and 2012 was $204,557 and 2011 was $39,204 and $69,858,$53,850, respectively, and is reported as general and administrative expense in the accompanying

14
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


condensed consolidated statements of operations.  As of SeptemberJune 30, 2012,2013, there is approximately $31,359$15,627 of unrecognized compensation cost related to stock-based payments that will be recognized over a weighted average period of approximately 1.2 year..27 years.
 
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Stock Warrants

A summary of the status of the warrants outstanding at SeptemberJune 30, 2012,2013, and changes during the six months then ended is presented in the following table:

    Weighted Weighted       Weighted Weighted   
 Shares  Average Average Aggregate  Shares  Average Average Aggregate 
 Under  Exercise Remaining Intrinsic  Under  Exercise Remaining Intrinsic 
 Warrant  Price Contractual Life Value  Warrant  Price Contractual Life Value 
                    
                    
Outstanding at December 31, 2011  24,585,662  $0.01 1.75 years $457,550 
Outstanding at December 31, 2012  24,585,662  $0.01 .75 years $- 
                          
                          
Issued  -   -        -   -      
Exercised  -   -   $-   -   -   $- 
Expired  -   -        -   -      
                          
Outstanding at September 30, 2012  24,585,662  $0.01 1.00 years $45,755 
Outstanding at June 30, 2013  24,585,662  $0.01 .25 years $314,184 
 
Note 9 - 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 nine-month periodsix-month periods ended SeptemberJune 30, 20122013 and year ended December 31, 2011,2012, Income from Discontinued Operations consists of the foreign currency transaction gains or losses related to current liabilities associated with the discontinued operations that are denominated in Euros.

Note 10 – Impairment- Acquisition of assetsCamelina Assets and fair value measurementsSustainable Oils
 
Fair value
15
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


On March 13, 2013, the Company completed a business purchase that included certain assets, patents, and other intellectual property and rights related to the development of Camelina sativa as a biofuels feedstock (the “Camelina Assets”) from Targeted Growth, Inc., a Washington based crop biotechnology company focused on developing products with enhanced yield and improved quality for the agriculture and energy industries.  Also on March 13, 2013, we purchased all of the membership interests of Sustainable Oils, LLC, (SusOils) a Delaware limited liability company, from Targeted Growth, Inc. and the other, minority owner of that limited liability company.  SusOils is defined asa company that, since 2007, has been engaged in the exchange pricedevelopment, production and commercialization of Camelina-based biofuels and FDA approved animal feed.  Substantially all of the Camelina Assets were previously owned by SusOils and used in SusOils’ operations.
The Camelina Assets include: three issued U.S. patents on Camelina Sativa varieties; a substantial portfolio of other intellectual property assets, all of the Seller’s intellectual property related to the research, development, breeding and/or genetic development of Camelina; germplasm; licenses, consents, permits, variances, certifications and approvals granted by any governmental agencies relating to Camelina operations; machines, equipment, tractors and vehicles used in Camelina operations; the name “Sustainable Oils” and the Sustainable Oils logo; and certain trade secrets, know-how, and technical data.
We currently intend to operate our Camelina business through a new subsidiary. We intend to capitalize that would be receivednew subsidiary with the Sustainable Oils intellectual properties and operating assets that we recently purchased. In order to fund the operations and expansion of the Camelina operations, we intend to raise additional capital through the sale of debt or equity in the newly formed Camelina subsidiary. Sustainable Oils’ operations have been headquartered in Bozeman, Montana. We intend to continue to conduct our Camelina operations in Montana. Accordingly, in March 2013, we entered into a sublease with Targeted Oils, Inc., to sublease a portion of Targeted Growth’s research facilities and administrative offices in Bozeman, Montana.
We paid for an asset or paidthe Camelina Assets by issuing to transferTargeted Growth, Inc. (i) a liability (an exit price)secured promissory note in the principal or most advantageous marketamount of $1,300,000 (the “Promissory Note” – see note 6 for more details) and (ii) an aggregate of 40,000,000 shares of our common stock.  Of the 40,000,000 shares, 4,000,000 shares will be held by an escrow agent for 15 months following the closing for the asset or liability in an orderly transaction betweenpurpose of providing a partial security to support the indemnity provisions of the purchase agreement.  The 40,000,000 shares were valued at the market participantsprice on the measurement date. To measure fair value, a hierarchy has been established by generally accepted accounting principles which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure theMarch 14, 2013.
The fair value of assets and liabilities as follows:the consideration transferred to Targeted Growth, Inc. is in the following table:
 
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Investment in Sustainable Oils   
Notes Payable to Targeted Growth $1,300,000 
Cash (paid out)  100 
Common stock issued  40,000 
Additional paid in capital  760,000 
  $2,100,100 

 
Level 2 – Observable inputs other than Level 1 including quoted pricesThe purchase price for similarthe Sustainable Oils, LLC membership interests was $100.  Sustainable Oils’ assets include 295,000 pounds of “certified” Camelina seeds that we intend to sell to farmers this year and/or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data.next year
 
Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

As of September 30, 2012 and 2011, the Company does not have any assets or liabilities measured at fair value on a recurring basis.

Fair value is used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values.  Fair value is also used when evaluating impairment on certain assets, including deferred growing costs and property and equipment.
 
16
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements


for the production of Camelina feedstock.  The liabilities of Sustainable Oils include an approximately $2.3 million liability to UOP LLC, which is secured by a lien on the three patents we acquired as part of the Camelina Assets.  The foregoing debt owed to UOP LLC will remain a direct obligation of SusOils and not of this company.
 
The following is a tabular presentationamounts recognized as of the acquisition date for each major class of assets measured at fairacquired and liabilities assumed are as follows:
  Fair Values at 
  Acquisition 
  Date 
 Prepaids and other assets $260 
 Inventory  430,141 
 Intangible Assets  3,887,265 
 Equipment  190,500 
 Accounts Payable to UOP  (2,286,727)
 Commitment for field testing  (79,000)
 Other accounts payable and accrued liabilities  (42,339)
 Total net assets of Sustainable Oils $2,100,100 
The value on a nonrecurring basis along withof the level within the hierarchy in which the fair value measurement fallsacquired identifiable intangible assets of $3,887,265 has been recorded as of September 30, 2012 :the acquisition date of March 13, 2013 pending completion of the valuation process.
 
    Fair Value of Measurements at Reporting 
  September 30, Date Using 
Description 2012 Level 1Level 2 Level 3 
  $4,238,909    $4,238,909 
Deferred Growing Cost  8,478,489     8,478,489 
Plantation Development Cost $12,717,398    $12,717,398 

The Company performed an analysisamounts of long-lived assetsSustainable Oils, LLC 's revenue and has identified 313 hectares (773 acres) considered to be fallow based onearnings included in the following conditionCompany’s consolidated income statement for the six months ended June 30, 2013, and the pro forma revenue and earnings of the trees: no vegetative growth forcombined entity had the age of the trees, bad origins, bad land preparation,acquisition date been January 1, 2013 and no resistance to fungus.   The treesJanuary 1, 2012, are not expected to produce a yield or generate any future revenues.   As such, the Company has identified the costs associated with these hectares originally capitalized as Plantation Development Cost and Deferred Growing Cost, which capitalized costs are not expected to be recoverable, and has recognized the following impairment charges for the period ended September 30, 2012.follows:
 
Deferred growing costs with a carrying value of $4,310,038 were written down
  Revenue  Net Earnings (Losses) 
Actual March. 13 2013 - June 30, 2013 $5,776  $(174,489)
         
2013 Supplemental pro forma from $154,455  $(975,881)
January 1 - June 30, 2013        
         
2012 Supplemental pro forma from $3,477,764  $9,179 
January 1 - June 30, 2012        
The cost incurred related to the fair valueacquisition of $4,238,909 resultingSustainable Oils, LLC includes approximately $21,500 in an impairment chargelegal and $6,000 in valuation fees.
The foregoing pro forma data is subject to various assumptions and estimates, and is presented for informational purposes only. This pro forma data does not purport to represent or be indicative of $71,129, which was included in net loss for the period. The Company estimated the fair value of these assets using the income based approach considering the cash flowsconsolidated operating results that would have been reported had the transaction been completed as described herein, and the data should not be obtainedtaken as a resultindicative of distribution of product tied to those deferred growing costs. The income based approach utilizes unobservable inputs. Due to the use of unobservable inputs, we classify the fair value of these growing areas within Level 3.future consolidated operating results.
 
Plantation development costs (included in property and equipment), which had a carrying value of $8,934,313 were written down to the fair value of $8,478,489, resulting in an impairment charge of $455,824, which was included in net loss for the period.   The Company estimated the fair value of these assets using the income based approach considering the cash flows that would be obtained as a result of the production and distribution of product in areas of continued production. The income based approach utilizes unobservable inputs. Due to the use of unobservable inputs, we classify the fair value of these growing areas within Level 3.

There was no impairment charge and no related nonrecurring fair value measurement, for the period ended September 30, 2011.

 
17
 
 
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 the date and amount of our Jatropha or Camelina harvests, forecasts regarding our 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.interests, and our new wholly owned subsidiary, Sustainable Oils, LLC, a Delaware limited liability company, as well as our other subsidiaries.

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-basedU.S.-based, multi-national, energy agri-business focused on the development of non-food based bio-fuel feedstock. GCEH is focusingbio-feedstocks.  We have full service in-house development and operations capabilities, which we provide support to our own energy farms and to third parties.  With international experience and capabilities in eco-friendly biofuel feedstock management, cultivation, production and distribution, we believe that we are well suited to scale our existing business.

Since 2007, our business focus has been on the commercialization of oilnon-food based oilseed plants and biomass derived frombiomass.  We began with the seedsdevelopment of farms growing 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.  On March 13, 2013, we acquired certain assets, patents, and other intellectual property and rights related to the development of Camelina sativa as a biofuels feedstock, and all of the issued and outstanding limited liability company interests in Sustainable Oils, LLC, a Delaware limited liability company.  As a result of the acquisition of Sustainable Oils, LLC and its operating assets, our biofuels operations have expanded into the development of Camelina sativa (“Camelina”) – an annual plant from the brassica family traditionally grown in northerly regions of the United States, Europe and Asia.  We have focused on these two plants primarily because we feel they are complementary to one another, have the potential to produce oil seed crops economically, they generally require less water and fertilizer than many conventional crops, and can be grown on land that is normally unsuitable for food production or is fallow or idle due to crop rotation.  Both Jatropha and Camelina oil isare high-quality plant oiloils used as a direct replacementsubstitutes for fossil fuels orand as feedstock for the production of high quality firstbiofuels and second generation biofuels like bio-diesel,other bio-based products.  Both crops have been tested and proven to be highly desirable feedstocks capable of being converted into ASTM approved fuels. The term “biofuels” refers to a range of biological based fuels including bio-kerosene (a.k.a bio-jet fuel) biodiesel, renewable diesel, or bio-jet,green diesel, synthetic diesel and biomass, most of which have environmental benefits that are the major driving force for their adoption. Using biofuels instead of fossil fuels reduces net emissions of carbon dioxide and other green-house gases, which are direct replacements for diesel fuelassociated with global climate change.  Both Jatropha and jet fuel.  While all of our agricultural activities currently involveCamelina oil can also be used as a chemical feedstock to replace fossil and non-food based products that use edible oils in their manufacturing or production process.  The residual material derived from the productionoil extraction process is called press-cake or meal, which in the case of Jatropha is a high-quality biomass that has been proven and tested as a replacement for a number of fossil-based feedstocks, fossil fuels and other high value products such as renewable charcoal, fertilizers, and animal feed. Camelina  meal is high in Omega3 and has already been approved by the FDA as a livestock (animal) feed or enhancement in the future we plan to produce biofuels from other feedstocks, such as camelina sativa.United States.
18

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

·  Own and operate biofuel energy farms for our own account.
·  Own, operate and manage energy farms throughin a joint ownership agreements.venture (JV) with either strategic partners or financial investors.  We currently operate twoown three Jatropha farms located in Mexico under such joint ownership arrangements:
·  Contract with third party farmers (such as wheat and barley farmers) for the first farm comprises 5,149 acres;farming of significant acreage of Camelina sativa on their idle land which is in rotation with their other crops in the second farm, consistingUnited States and many parts of 3,700 acres. The first farm is fully planted. We completed plantingEurope.
·  Produce and sell certified Camelina seed based upon our patented, high-yielding elite varieties to farmers in the second farm by the end of March 2012.  In 2011, through our joint venture, we have also acquired approximately 5,600 acres of additional land that is located in Mexico near our other two farms.  As of this date, these additional acres have not been developed.  Depending on the results of our first two farms, we may develop this additional land.United States and internationally.
·  Provide energy farm development and management services to third party owners of biofuel energy farms. We currently provide such developmentfarms and to non-energy farmers looking to utilize energy crops in rotation or inter-cropped with their existing crops.  Provide advisory services with respect to a Jatropha farm located infarmers wishing to certify their farms under international sustainability or carbon certification standards, specifically the Caribbean, Mexico, Central AmericaRoundtable on Sustainable Biomaterials (RSB) and Africa, and we plan to expand this initiative.Gold Standard Verified Emission Reductions (GS-VERs)
·  Provide turnkey franchise operations for individuals and/or companies that wish to establish purpose specific energy farms in suitable geographical areas.

 
The development of agricultural-based energy projects, like plant oil and related biomass, may produce carbon credits through the sequestration (storing) of carbon and the displacement of fossil-based fuels.  Accordingly, in addition to generating revenues from the sale of non-food based plant oils and biomass, we are seeking to certify our farms, where practical to generate and monetize carbon credits.  See, “Business-Carbon Credits,” below.
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Organizational History/Current OperationsHistory

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 ourthe state of our incorporation from Utah to Delaware.  Our principal executive offices are located at 100 W. Broadway, Suite 650, Long Beach, Los Angeles County, California 90802, and our current telephone number at that address is (310) 641-GCEH (4234).  We maintain a website at: www.gceholdings.com.  Our annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to this company are available on our website as soon as we electronically file those documents with, or otherwise furnish them to, the State of Delaware.Securities and Exchange Commission.  Our Sustainable Oils subsidiary also maintains a website at www.susoils.com.  Our Internet websites and the information contained therein, or connected thereto, are not and are not intended to be incorporated into the Annual Report on Form 10-K at December 31, 2012 or into this quarterly report on Form 10-Q.
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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:

1.  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 before the end 2012 and increase thereafter.
2.  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 a seedling nursery 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 this nursery to other Jatropha farmers or developers.
4.  Fruit and seed handling, seed storage, oil extraction facilities, germplasm resources, and livestock (sheep) capabilities are all being expanded in anticipation of our growing Jatropha operations. We have recently leased land in Tizimin where we will expand our oil extraction capabilities to support our expected harvests commencing the end of this year, and beyond.
5.  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, expenses and operations, since inception, for the two operating farms in the Tizimin area (through September 30, 2012) is $23,471,000.
7.  In 2012 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 September 30, 2012, we recognized $65,000 of farm advisory revenues from the services related to the Caribbean development. In connection with providing these services, we leased a parcel 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.
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Agricultural Producer. All costs incurred untilincluding 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.

Certain other critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note A1 to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2011.2012.

Results of Operations

Revenues. During the three and nine-month periodsix months ended SeptemberJune 30, 20122013 we recognized revenue of $118,075$48,828 and $793,097,$154,455, respectively, as compared with $358,187$55,501 and $729,739$675,022 for the same periods in 2011.2012. The revenues that we generated in 2013 and 2012 were derived from Camelina product sales and 2011Jatropha related advisory services we rendered to third parties. Most of our 2012 revenues represented (i)  agricultural subsidies received from Mexican governmental agencies ($465,586) (ii) fees for Jatropha related advisory services we rendered to third parties, (ii) agricultural subsidies received from Mexican governmental agencies, and (iii) sales of Jatropha oil and Jatropha seeds and other products (waste wood, Jatropha seed husks, etc.).  Revenues during the three-monthsix-month period ended SeptemberJune 30, 20122013 decreased by $240,112$520,567 from the comparable 20112012 fiscal quarterperiod because we only received $39,431$50,515 in agricultural subsidies from the Mexican government in the current fiscal quarter,period, compared to $248,429$465,586 of such subsidies in the same quarterperiod last year.   The increase in revenues for the nine-month period ended September 30, 2012 compared withAdditionally, advisory revenue decreased $105,496 from the same period in 2011 is primarily2012.  Revenues received from agricultural subsidies and from the resultsale of $288,000 of advisory revenue that we realizedJatroha products are paid to our GCE Mexico I, LLC subsidiary and are used in the September 30, 2012 fiscal quarter, offset by a decrease in government subsidies. its operations.

In the short term, our goal is to increase the amount of advisory and management services that we render to third parties in order to generate revenues to fund our corporate working capital needs.needs, and to generate Camelina-related revenues from the Camelina business that we acquired in March 2013.  Our Camelina operations are expected to generate revenues from the sale of Camelina seeds, the sale of Camelina oil, and the sale of the Camelina biomass for use as feed for livestock.  In the longer term, our goal is to generate substantialsubstantially increase the revenues derived from the operations of our Jatropha treesfarms, to rapidly ramp up our Camelina operations by increasing the amount of Camelina acreage under plantation in North America, and to continue to generate fees from advisory services that we first planted three years ago, which trees are now maturing.render to third parties.  We anticipate that sales of Jatropha seeds will become a material source of revenues for the remainder of 2013 will increase significantly due to Camelina oil and seed sales we expect to realize from our Mexican operations.newly acquired Camelina business and the sale of renewable charcoal from the restart and  scale up of our biomass processing project in Mexico

General and Administrative Expenses. Our general and administrative expenses related to the three and nine-month periodssix months ended SeptemberJune 30, 20122013 were $418,663$681,025 and $1,671,040,$1,241,164, respectively, as compared to $549,870with $624,910 and $1,639,064 for the same periods in 2011.$1,252,377.  General and administrative expenseexpenses principally includesconsist of officer compensation;compensation, outside services such(such as legal, accounting, and consulting expenses;expenses), share-based compensation, and other general expenses such(such as insurance, occupancy costs and travel.  The increase in generaltravel).   General and administrative expenses for both the three months and nine months ended September 30, 2012, comparedare, however, expected to the same periods in 2011 was primarily theincrease as a result of our acquisition of the Camelina assets/business in March 2013.  In connection with operating the new Camelina operations, we have increased administrative staffingthe number of employees on our payroll, and other administrative costs reflecting the increaseshave subleased a facility in the scope of our Mexican operations .Bozeman, Montana.

Plantation (Farm) Operating Costs. For the three and nine-month periodssix months ended SeptemberJune 30, 2012,2013 we recorded Plantation Operating Costs from the operations of the farms of $182,322$47,677 and $533,566,$617,833 as compared with $125,076$198,460 and $251,447 in$351,244 for the same periods in 2011.2012.   The decrease in the second quarter was mostly related to a work force reduction, no new planting of Jatropha trees in Mexico and the scaling back of a portion of our operations.  However, the first quarter increased as compared to the related period in the prior year.  This increases were dueincrease was mostly related to increaseda one-time charge of $547,000 for severance costs which was also offset by the reduction in farming activities atcosts mentioned above.  We anticipate these costs will increase as we scale up our second Mexico farm.biomass operations in Mexico.

Other Income/Expense.  Interest expense for the three and nine-month periodssix months ended SeptemberJune 30, 2012,2013 increased to $224,288$241,651 and $632,415, respectively,$458,406 from $142,140$215,327 and $406,208 for the comparable three and nine month periods ended September 30, 2011.  As of September 30, 2012, we owned approximately 15,000 acres of land in Mexico that is subject to interest bearing mortgages.  As of September 30, 2011, we only owned approximately 8,850 acres of land that was subject to interest bearing mortgages.  Because we purchased the additional land$408,127  in the fourth quartersame periods in 2012 as a result of 2011, we did not pay interest on the additionallarger mortgages duringrelated to the first two quarters of 2011.  Another principal component of Other Income/Expense for the three and nine- month periods ended September 30, 2012 was $80,817 and $595,290 of gainthird farm 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.  We did not extinguish any other historical debts during any of the 2011 reported periods.acquired in October 2011.
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Income (Loss) from Discontinued Operations. No gains/losses from discontinued operations were recognized during the three and six months ended June 30, 2013.  During the threemonththree-month period ended SeptemberJune 30, 2012, we recognized a gain from discontinued operations of $1,698, compared to a gain from discontinued operations of $22,468$340 and for the comparable period in 2011.  For the nine-monthsix-month period ended SeptemberJune 30, 2012, we recognized no gain or loss from discontinued operations, compared to a loss from discontinued operations of $9,746 for the comparable period in 2011.$1,698. The income or loss from discontinued operations for the periods ended September 30, 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.
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Net loss attributable to the non-controlling interest.  Effective April 23, 2008, we entered into a limited liability company agreement to formOur Mexico farm operations are owned through GCE Mexico I, LLC, a Delaware limited liability company (“GCE Mexico”), with six investors (collectively,.  We own 50% of the “Investors”).common membership interests of GCE Mexico Iand one investor currently owns the other 50% of the common membership interests.  The proceeds from the sale of the preferred membership units, and from subsequent capital contributions, have been used to fund the operations of Asideros Globales Corporativo 1 (“Asideros 1”) and Asideros Globales Corporativo 2 (“Asideros 2”), each of which have acquired land in Mexico that, collectively, constitute our first two Jatropha farms.  Asideros Globales Corporativo 3 (“Asideros 3”) acquired our third farm in October 2011, but had no impact on the two Mexican farms through two Mexico subsidiaries, referred to asresults of our operations.  GCEH directly owns 1% of Asideros 1, Asideros 2 and Asideros 2.3, and the balance is owned by GCE Mexico.  Accordingly, we own 50.5% of Asideros 1, Asideros 2 and Asideros 3 either directly or through our common membership interest in GCE Mexico.  As such, our consolidated financial statements include the accounts of the Asideros farm entities.  Under GCE Mexico I, LLC’s operating agreement,Mexico’s LLC Agreement, the net loss allocated from Asideros 1 and Asideros 2these entities 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, but no preferred membership interests.  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. WeThe Company recorded net losses of $171,651$737,879 and $215,569$975,881 for the three and nine-month periods ending Septembersix months ended June 30, 2012,2013, respectively, as compared to a net losslosses of $186,130$402,883 and $639,515$43,919 for the comparable threeand ninethree-and six month periods in 2011.2012.  Our ability to generate net income in the future will depend upon the amount of advisory and management services that we render at the corporate level, and the amount of revenues generated from our Jatropha farms in Mexico, farms atand on the joint venture level.amount of revenues we generate from our new Camelina operations.  In addition to incurring farm operating expenses in Mexico for our Jatropha operations, we will continue to accrue significant interest expense on the mortgages that encumber the Tizimin, Mexico, farms.  Although we anticipate that we will generate new revenues from bothour Camelina operations and that revenues from our Jatropha farm operations and our advisory services will increase, we are unable to forecast if, or when such revenues will exceed our operating expenses.

Liquidity and Capital Resources

As of SeptemberJune 30, 2012,2013, we had $869,420$656,084 in cash or cash equivalents and had a working capital deficit of $1,399,234,$4,094,538, as compared with $676,780$941,579 in cash and a working capital deficit of $1,726,627$1,581,288 as of December 31, 2011.2012.  However, of the foregoing cash or cash equivalent balances held at SeptemberJune 30, 2012,2013, only $16,799$23,944 may be used for our general corporate purposes, with the remaining balance anticipated to be used in the operations of the Tizimin, Mexico farms owned by the GCE Mexico I, LLC joint venture.  As a result, the GCE Mexico I, LLC funds will not be available to us for our corporate 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 assets, the sale of additional securities, additional borrowings, or from an increase in operating revenues. Outstanding indebtedness at SeptemberJune 30, 20122013 totaled $14,712,969.$20,576,865. The existence of the foregoing working capital deficit and total current and long term 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.  We incurred losses from continuing operations of $1,976,465$1,100,417 and of $1,527,290$2,341,305 for the nine-monthsthree and six months ended SeptemberJune 30, 2012 and September 30, 2011 respectively,2013, and have an accumulated deficit applicable to its common shareholders of $26,877,863$27,574,888 at SeptemberJune 30, 2012.2013.  Because of the foregoing factors and our negative cash flow from operations, our auditors have concluded that there is a substantial doubt about our ability to continue as a going concern.

To date, we have funded our corporate overhead and other public company costs and expenses primarily from (i) the sale of debt and equity 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 nine-month period ended SeptemberJune 30, 2012,2013, we received overhead reimbursements of $281,770$115,634 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, in order to fund our working capital needs, we raised $250,000 from the sale of shares 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.term, although the amount of such fees will depend on our ability to enter into new service agreements.  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 in the near term ofor for the next twelve months.  Furthermore, we do not have sufficient financial resources to fund our business plan (which includes the purchase of our ownadditional biofuel farms and other capital outlays). Accordingly, unless we enter into additional advisory service agreements or otherwise receive cash proceeds, we will have to obtain additional funding in the near future from the sale of our securities or the sale of assets held for sale 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.
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Our business plan contemplates that we will significantly expand(i) continue to develop our Jatropha business and operations (including establishing additionalpossibly developing and cultivating our third Jatropha farm in Mexico), and (ii) diversify our biofuel energy crop revenues from new revenues generated by our new Camelina operations.

Jatropha Operations.  To date, revenues from our Jatropha farms that are owned and operated by us for our own accountlocated in Mexico have not been significant and other locations),have not met our expectations for various reasons, including weather conditions and possibly acquiring other biofuel feedstock projects. Althoughcultivation techniques.  We are currently addressing these issues and we anticipate that revenues from the Jatropha farms we currently own through our GCE Mexico I, LLC joint venture in Mexico will commenceincrease in later during2013 and become significant thereafter.  The operational expenses of the fourth quarterJatropha farms in Mexico are substantial and exceed the amount of 2012revenues that the farms are expected to generate from operations this year.  Our Partner in GCE Mexico has approved the 2013 operating budget and increase significantly thereafter,has committed to funding the cash requirements for the 2013 operating expenses of GCE Mexico.  Based on these assurances, we anticipate that we will have sufficient funds to operate our Mexico farms in 2013.  No assurance can, however, be given that the costs of operating the Mexico farms will not exceed our budget or that our GCE Mexico investor will, in fact, fund the budgeted amounts.

Even if operations of the three Jatropha farms owned through GCE Mexico improve this year as expected and, therefore, generate significant revenues, we do not project that any cash distributions will be made to Global Clean Energy Holdings, Inc. for several years.  Under our agreements with our GCE Mexico investors, all net cash generated from the Jatropha operations that are conducted through GCE Mexico must first be used to fund the operations of those operations will first have tofarms, and any excess must thereafter be used to repay the capital contributed by our joint venture investors (plus their preferred return), for a combined.  The total amount of $22,755,390capital and the preferred return that must be paid to our joint venture investors before funds are distributed to us currently is in excess of $27,054,640 as of SeptemberJune 30, 2012.2013.  As a result, the improving operations of the Mexico farms will not produce short-term cash for usor improve our liquidity, nor will the improving operations of the Mexico farms generate funds that we can use for our business plan, for working capital purposes, or for the acquisition of additional Jatropha or other biofuel feedstock farms.  Because of our negative working capital position, we currently do not have the funds necessary to acquire and cultivate additional Jatropha 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.

Camelina Operations.  In March 2013, we acquired the business and assets of Sustainable Oils, LLC, a company that has been engaged in developing Camelina products since 2007.  Sustainable Oils has generated over $20 million in revenues during the past three years, but has incurred a loss of approximately $5.8 million during that time.  The new Camelina operations will require a significant amount of additional cash to scale up its operations and to reach profitable operations.  Our goal is to operate the Camelina business that we acquired through a subsidiary, and to capitalize that subsidiary with the Sustainable Oils intellectual properties and operating assets that we recently purchased.  Furthermore, our goal is to fund the operations and expansion of the Camelina operations with new debt or equity that we intend to raise specifically for the Camelina subsidiary.  While we have been in discussions with a number of sources for the additional funding, we have not entered into any binding arrangements for the desired amount of new funding.  No assurance can be given that we will obtain the additional capital necessary to operate and grow our new Camelina operations.  In the event that we do not obtain the necessary amount of financing to properly operate and scale up our new Camelina operations, those operations are expected to continue to operate at a loss.  Without the additional funding, we may have to re-evaluate our planned Camelina operations.

As partial consideration for the Camelina assets that we purchased in March 2013, we issued a $1,300,000 promissory note.  The promissory note bears simple interest at the rate of ten percent (10.0%) per annum, and is payable upon the earlier of the following: (a) to the extent of 35.1% of, and on the third business day after a Qualified (equity) Funding; or (b) September 13, 2014.  The term “Qualified Funding” means all equity funding in excess of the $800,000, in the aggregate, received by us for our Camelina business.  Our obligations under the promissory note are secured by a first priority lien on certain tangible assets included in the purchase of the Camelina assets.  The promissory note is a full recourse obligation. If the holder of the promissory note has to pursue the collection of amounts due under the promissory note, the holder may not seize or take any action to collect any amounts due and owing against any of the Company’s assets (including its cash) related to a line of business other than the business of developing intellectual property and managing farming activities for the development of Camelina sativa used for biofuels feedstock.
 
 
 
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Effective July 2, 2009, we purchasedOther Potential Sources of Liquidity.  We currently own 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.  We recently sold the 400-acre farm which was owned by TAL in subtropical Belize, Central America. The Belize farm iswas inactive, and we are currently attempting to sellsold the farm.  In connection withland for $790,000 Belize Dollars (US$395,000) and paid off the purchase of all of the shares of TAL, we issued to the sellers, among other consideration,outstanding four promissory notes in the aggregate amount of $516,139$387,443 Belize Dollars (US $269,510 based on exchange rates in effect at October 29, 2012)$195,747), which promissory notes arewere secured by a mortgage on the 400-acre farm.  We had been carrying the Belizean farm as an investment property for more than a year.   The promissory notes matured on August 15, 2012 andproceeds of the sale are currently in default.  If we are able to sell the Belize farm 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 proceedsbeing used for our working capital purposes.  Since

We also expect to receive royalty payments from the legacy pharmaceutical assets we did not sellsold in 2009 to Curadis GmbH.  In February 2012, Curadis GmbH informed us that it has licensed certain of the Belize farm,technologies that we sold to it, and, as a result that we will have to askbe receiving a royalty of 4.5% of all net sales of products sold using the note-holders for an extension.  To date, the holderslicensed technology.  Certain of the TAL notes haveintellectual property that we sold to Curadis will revert to us if royalties from those assets do not declared a default and have not commenced any foreclosure proceedings.  No assurance can, however, be given that the holders of the TAL notes will continue to grant us additional time in which to sell the Belize farm and repay the note.exceed 300,000 euros by December 31, 2014.  In 2012 we received $24,921 from Curadis under this new licensing arrangement.

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 ownadditional Jatropha or other biofuel feedstock 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 materially scale back our current and proposed operations or take other actions to preserve our on-going operations.

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.
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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.

On April 12, 2010, Mobius Risk Group, LLC (“Mobius”) filedFrom time to time, the Company may become a complaint against usparty to other legal actions and complaints arising in the United States District Court Southern Districtordinary course of Texas Houston Division, alleging that we failed to pay Mobius a total of $551,178.  We have disputed the Mobius claim, and asserted a counter claim against Mobius. On November 2, 2012 the parties entered into a settlement agreement pursuant to which all claims were settled.  The casebusiness, although it is expected to be dismissednot currently involved in November 2012.  Under the settlement agreement, as payment in full we have agreed to issue to Mobius an unsecured promissory note for $75,000 paid over 22 months. Our past financials reflected a reserve of $322,897 against this complaint, which is no longer due, therefore we will recognize a gain in November 2012, which will have a positive effect on our 2012 year end financials.any such legal proceedings.

On July 13, 2010, Dee Burgess, a former consultant of Medical Discoveries, Inc. (the name of our company until changed in connection with our new Jatropha business), filed a complaint against the Company in the Third Judicial District Court, State of Utah. The complaint alleged that Ms. Burgess was owed $80,000 for services allegedly provided to the Company in 2004, 2005, and 2006.  We filed a counterclaim and in August 2012, the parties signed a Settlement Agreement and Release of All Claims, in which all claims filed by both parties were settled.  The case was formally dismissed in September 2012.  Neither party made any payments to the other party in connection with the settlement and dismissal. Our past financials reflected a reserve of $80,000 against this complaint, which is no longer due. Therefore we recognized  a gain in September 2012, which had a positive effect on our 2012, 3rd quarter financials.

There are no other legal proceeding pending.

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, 2011.2012.  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 $269,510 based on exchange rates in effect at October 29, 2012), which loans are secured by a lien on the 400-acre farm. We are currently attempting to sell this land in order to repay the loans and realize a gain on our investment. However, the promissory notes matured on August 15, 2012, and is currently in default.  We have not yet been able to sell the land. To date, the holders of the foregoing notes have not declared a default and have not taken any action to foreclose on the mortgage.  Accordingly, we intend to request  a further extension on the maturity date of the promissory notes.  If the holders of the notes do not grant us an extension on the maturity date, or if they declare a default on the notes, they could commence foreclosure proceedings against the land, which could result in the loss of the land and a loss on our investment.  No assurance can be given that the lenders will not commence foreclosure proceedings or that we will be able to obtain an extension on the maturity date of the notes.
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Agricultural Risks – General. Once the trees at our Mexico farms fully mature and produce commercial quantities of Jatropha seeds in the manner that we anticipate, the agricultural operations at our Mexico farms are expected to generate the largest portion of our future revenues.  AgricultureHowever, agriculture operations are subject to a wide variety of risks, includingand no assurance can be given that the Jatropha trees will develop in the manner we expect or that they will produce the fruit/seeds in the quantities that we anticipate.  Agricultural risks that could affect our Jatropha farms include delays in blooming of the plants, changes in 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, short term 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 pointover an extended period 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.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS
 
31.1Rule 13a-14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Link base
101.DEFXBRL Taxonomy Extension Definition Link base Document
101.LABXBRL Taxonomy Extension Label Link base Document
101.PREXBRL 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:  November 9, 2012August 5, 2013                                                                                            GLOBAL CLEAN ENERGY HOLDINGS, INC.


       By: /s/ RICHARD PALMER
       Chief Executive Officer and interim
Acting Chief Financial Officer

 
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