UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10Q
 
(Mark One)
 
   
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarter ended June 30, 2010
 
or
   
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from            to 
 
Commission File Number: 0-30303
 
GLOBAL CLEAN ENERGY, INC.
(Exact name of Registrant as specified in its charter)
     
Maryland
 
84-1522846
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
  6040 Upshaw Suite 105, Humble, Texas 77396
 (Address of principal executive offices)
 
  (281) 441-2538
 (Registrant’s telephone number, including area code)
 
          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 þ 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes þ 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. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated file o
 
Smaller reporting company þ
       
(Do not check if a smaller reporting company)
   
 
          Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
 
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on June 30 2010,  was $908,007 (based on the closing price of the registrant’s common stock on that date).  Shares of the registrant’s common stock held by each officer and director and each person who owns more than 5% of the outstanding common stock of the Registrant have been excluded in that such  persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock outstanding as of. August 5, 2010  is 38,803,721.
 
 
 
 
 
GLOBAL CLEAN ENERGY, INC.
REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010

CONTENTS

PART I – FINANCIAL INFORMATION
4
Item 1. Financial Statements
4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
8
Item 3. Quantitative and Qualitative Disclosures About Market Risk
9
Item 4T.  Controls and Procedures
9
PART II – OTHER INFORMATION
10
Item 1. Legal Proceedings
10
Item 1A. Risk Factors
10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
10
Item 3. Defaults Upon Senior Securities
10
Item 5. Other Information
10
Item 6. Exhibits
11

i
 
 
 
 
 
FORWARD-LOOKING STATEMENTS
 
This report contains forward-looking statements and information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others:

·  
the availability and adequacy of our cash flow to meet our requirements;
 
·  
economic, competitive, demographic, business and other conditions in our local and regional markets;
 
·  
changes or developments in laws, regulations or taxes in the renewable energy industries;
 
·  
actions taken or not taken by third-parties, including our competitors, as well as legislative, regulatory, judicial and other governmental authorities;
 
·  
competition in the renewable energy industry;
 
 
2
 
 
·  
the failure to obtain or loss of any license or permit;
 
·  
the cyclical nature of the energy industry, and therefore any downturns in this cyclical industry could adversely affect operations;
 
·  
the energy-related industry that we service is heavily regulated and the costs associated with such regulated industries increases the costs of doing business;
 
·  
the ability to carry out our business plan and to manage our growth effectively and efficiently;
 
·  
the failure to manage any foreign exchange risk adequately;
 
·  
a general economic downturn or a downturn in the securities markets; and
 
·  
risks and uncertainties described in the “Risk Factors” section or elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
 
Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. All written and oral forward-looking statements attributable to us or persons acting on our behalf subsequent to the date of this Quarterly Report are expressly qualified in their entirety by the foregoing risks and those set forth in the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

When used in this report, the terms “GLOBAL CLEAN ENERGY,” “Company,” “GCE,” “we,” “our” and “us” refer to Global Clean Energy, Inc. , unless the context suggests otherwise.
 
 
3
 
 
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBAL CLEAN ENERGY, INC.
Balance Sheet (Unaudited)

   
June 30, 2010
   
Dec. 31, 2009
 
             
ASSETS
           
             
Current assets:
           
Cash
 
$
         1685
   
$
3,280
 
Accounts Receivable – Valleyfield
   
   190,010
     
101,094
 
                 
Sub-Total
   
   191,695
     
104,374
 
                 
Other Assets:
               
Cyclonic Dredging Pump Rights and Patent
   
   450,000
     
450,000
 
Hybrid Gasification Rights and Patent
   
1,000,000
     
1,000,000
 
                 
Total assets
 
$
1,641,695
   
$
1,554,374
 
                 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
Current liabilities:
               
Accrued compensation - officers, directors and consultants
   
  503,286
     
219,786
 
Accounts Payable
   
  351,314
     
317,979
 
Promissory Notes
   
  535,150
     
535,150
 
   
$
1,389,750
   
$
1,072,915
 
                 
Stockholders’ equity:
               
                 
Preferred stock; $.001 par value; authorized - 15,000,000 shares; issued – none
   
--
     
--
 
Common stock; $.001 par value; authorized - 300,000,000 shares; issued and outstanding – 38,803,721 shares
   
     38,803
     
36,628
 
Additional paid-in capital
   
2,738,281
     
      2,734,305
 
Accumulated deficit
   
(2,525,139
)
   
    (2,289,474
)
Total liabilities and stockholders’ equity
 
$
 1,641,695
   
$
1,554,374
 
 
See notes to financial statements.
 
 
4
 
 
GLOBAL CLEAN ENERGY, INC.
Statements of Operations (Unaudited)
 
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Revenue
    110,966           $ 157,570        
Costs and expenses:
                           
Compensation - officers, directors and consultants
    281,805       23,750     $ 304,864     $ 23,750  
Professional fees
    29,780       6,000       42,518       39,288  
                                 
General and administrative
    27,739               38,919       8,758  
                                 
Interest and bank charges
    63       20       63       20  
                                 
Net loss applicable to common shareholders
    (228,601 )     (29,770 )   $ (228,794 )   $ (71,816 )
                                 
Basic and diluted net loss per common share
    **       **       **       **  
                                 
Weighted average number of common shares outstanding
    38,803,721       25,378,721       38,803,721       25,378,721  
 
** Less than $(.01) per share
 
See notes to financial statements.
 
 
5
 
 
GLOBAL CLEAN ENERGY, INC.
Statements of Cash Flows (Unaudited)
 
   
Six Months Ended
 
   
June 30,
 
   
2010
   
2009
 
             
Cash flows from operating activities:
  $ 157,570        
Net loss
  $ (228,794 )     (71,816 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Common stock issued for services and acquisition
            1,000,000  
Changes in operating assets and liabilities:
               
Accounts Payable
    351,314       187,928  
Accrued compensation - officers, directors and consultants
    503,286       75,000  
Other accrued expenses
               
Net cash used in operating activities
    163,864       (29,770 )
                 
Cash flows from investing activities:
               
Purchases of equipment
               
Net cash used in investing activities
               
                 
Cash flows from financing activities:
               
Proceeds from promissory note
            25,500  
Repayment of promissory note
               
Net cash provided by financing activities
            25,500  
                 
Net increase in cash
    (1595 )     (41,316 )
Cash at beginning of year
    3280       45,858  
Cash at end of period
    1685       4,542  
                 
Supplemental disclosure of cash flow information:
               
Common stock issued for services and acquisition
            1,000,000  
 
See notes to financial statements.
 
 
6
 
 
GLOBAL CLEAN ENERGY, INC.
Notes to Financial Statements (Unaudited)
 
1.  Basis of Presentation
 
The accompanying unaudited condensed financial statements of the Company should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission (the “SEC ”). The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“ GAAP ”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2009 consolidated balance sheet information was derived from the audited consolidated financial statements as of that date.
 
 
7
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS OVERVIEW

Global Clean Energy, Inc. is a cleantech corporation developing and marketing proprietary technology in waste to energy management.  Our focus is organic waste recovery.  We have developed two complementary technologies to salvage and reform waste from a variety of sources to produce a variety of clean energy byproducts.  We believe that we are well-positioned to exploit fully the opportunities presented by the government policies and programs that are setting the agenda for the alternative energy industry.  We are at the forefront of global initiatives to reduce greenhouse gas emissions and lower the dependency in North America and Europe on imported oil and natural gas, having proprietary and innovative technologies for clean coal and renewable energy and international partners in business, university, consulting and engineering.

Our Mission
 
R.E.S.C.U.E™ -- Reforming Environmental Salvage into Clean Usable Energy

Global Clean Energy Inc., in collaboration with Concordia University and Cascades Engineering, a division of Cascades Canada Inc., one of Canada’s largest paper manufacturers, have spent four years researching and developing technology to recover and reform synthetic fuel from waste containing a wide variety of carbon byproducts.   The result was the filing of two proprietary patents:

 
·
the AirPump™ that utilizes Vortex technology to efficiently separate waste and recover carbon from extracted material; and
 
·
a hybrid steam gasifier, the G2G Steam Reformer, a world’s first in gasification technology.

Both technologies, with accomplished proof-of-concept, constitute the foundation of GCE’s mission: to produce clean energy by clean, sustainable methods and lead an industrial revolution in waste management and disposal.

We are focused on global markets, energy and environmental concerns.  To accomplish our projects, we are supported by engineering, procurement, construction and research partners. These business relationships form the core of our ability to design, develop and supply technology for a wide-range of applications. In this regard, GCE is engaged in and currently accepting orders for projects: which can benefit from mid-range (5 to 100 megawatt equivalent) converted energy production; and which can benefit from the use of our proprietary AirPump™.

What begin as a search for best of breed technologies to convert waste and biomass into clean renewable energy has evolved and expanded into five areas of active business development:

 
·
research and development of new technologies;
 
·
international joint-ventures to develop waste-to-energy projects;
 
·
offering technology and services for environmental ash cleanup operations;
 
·
expanding into renewable energy production; and
 
·
seeking public financing for projects in the green energy sector.

Current Projects

Salaberry-de-Valleyfield, Québec –

On December 9, 2009, the City of Salaberry-de-Valleyfield announced field testing of our gasification technology to convert MSW and industrial waste to synthetic gas and biodiesel.  A portion of the funding from this initiative came from the Canadian government through the Green Municipal Fund of the Federation of Canadian Municipalities.

This project is designed to significantly reduce the amount of waste the city sends to landfill and to generate substantial savings on transportation and disposal of waste.  We expect that ongoing collaboration between us and the city will also result in a new source of biodiesel to fuel some City installations and municipal vehicles at a reduced energy cost.
 
 
8
 
 
The first phase of the project was successful as the G2G gasifier technology was proven as it was able to produce syngas from municipal solid waste, industrial and construction waste, plastics, rubber, coal, and organic waste.
The tests were carried by Janory Capital Corporation on a contract basis. The gas collection and modifications to the gasifier were conducted by JR Mechanique of Salaberry de Valleyfield. The gases were analyzed at CanmetENERGY a division of Natural Resources Canada, Government of Canada.

Phase Two of the project will gasify 5,000 metric tons of MSW per year.  The company plans to work with CanMet Energy on the design of the Phase II unit as they have been working for over 20 years on gasification through steam reformation and have much to offer GCE. As well as have construction and installation of the Phase II unit to be done with JR Mecanique and experts in piping and manufacturing of heavy industrial equipment.

Phase Three will establish a regional MSW sorting centre including construction of a gasification plant capable of processing 30,000 metric tons of waste per year, or more depending on the feedstock.

This venture affords us a unique opportunity to advance our research and development in an industrial park with an endless supply and variety of feedstock.  And it functions as a prototype for the future of MSW management which is still being defined by an evolution of government policy.
 
Salaberry-de-Valleyfield’s need for small-scale, local energy production accurately mirrors the needs of other municipalities and offers a valuable opportunity to demonstrate how gasification works and how local biofuel production can be incorporated into future public works and urban planning projects.

We believe that a functional 125 mtpd gasification plant has enormous commercial potential.  Beyond managing MSW, generated on average in developed countries of 1 ton per person per year, the same gasifier can be commissioned for uses in any energy reformation application involving carbon-rich feedstock, including turning coal into natural gas.

RESULTS OF OPERATIONS

We had revenue during the three month and six month periods ended June 30, 2010 of $ 46,604  and $110,966 from our Valleyfield project.

During the three and six-month period ended June 30, 2010 we incurred a net loss of $193 and $228,601 respectively. The increase in loss was almost entirely due to increased consultant costs as the Valleyfield project was ramping up.  During the quarter ended June 30, 2010, we paid compensation and professional fees of $347,382, of which $141,000 are accruals.  Also during the quarter ended June 30, 2010, we paid general and administrative expenses of $13,919.

Liquidity and Capital Resources

As of  June 30, 2010, we had $1,685 in cash and $1,389,750 in current liabilities.  For the six months ended June 30, 2010, we used $163,927 of cash in operating activities.  Total assets were $1,641,695 at June 30, 2010.  The Company in the quarter received  $157,570 in revenue from its’ Valleyfield project and has a receivable from such project in the amount of  $190,010.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4T.  Controls and Procedures

(a) Disclosure Controls and Procedures
 
 
9
 
 
(a) Management’s Report on Internal Control over Financial Reporting. Under the supervision and with the participation of our senior management, consisting of our chief executive officer and our chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective as of the Evaluation Date.

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Specifically, our internal control over financial reporting includes those policies and procedures that:

 
·
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
 
 
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations by our management and/or directors; and
 
 
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
 
Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on this evaluation under the COSO Framework, management concluded that our internal control over financial reporting was effective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

None.

Item 3. Defaults upon Senior Securities

None.
 
Item 5. Other Information

None.
 
 
10
 
 
Item 6. Exhibits

Exhibits:
 
31.1+   
Chief Executive Officer's Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2+   
Chief Financial Officer's Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1+ 
Chief Executive Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2+ 
Chief Financial Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
________________
+ Filed Herewith
 
 
11
 
 
SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GLOBAL CLEAN ENERGY, INC.
 
       
Date:  August 13, 2010
By:
/s/ Earl Azimov      
 
 
Earl Azimov, President & Chief Executive Officer
       
       
Date:  August 13, 2010
By:
/s/ Kenneth S. Adessky   
 
 
Kenneth S. Adessky, Chief Financial Officer
     
 
 
12
 
 
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