October 29, 2009
 
VIA FACSIMILE, U.S. MAIL AND EDGAR CORRESPONDENCE
 
Tia Jenkins
Senior Assistant Chief Accountant
Division of Corporation Finance
Mail Stop 3561
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
 
 
Re:
Global Clean Energy Holdings, Inc.
 
Form 10-K for the Fiscal Year Ended December 31, 2008
File No. 000-12627                                                      
 
Dear Ms. Jenkins:
 
This letter will respond to the Staff’s letter of comments, dated October 15, 2009, to Global Clean Energy Holdings, Inc. (“Company”) regarding additional comments to the Company’s above-referenced report. Our responses correspond to the numbers you placed adjacent to your comments.
 
Form 10-K for Fiscal Year Ended December 31, 2008
 
Report of Independent Registered Public Accounting Firm, page F-2
 
 1.           As the Staff has noted, the consolidated financial statements include the cumulative amounts from the inception of the development stage, in connection with the discontinuance of the bio-pharmaceutical operations. The cumulative information is now marked as “unaudited” and the associated audit report has been revised in accordance with the accommodation granted by the Commission. Please see the revised financial statements attached hereto as Exhibit A, which financial statements have been marked to show the changes we propose to make.
 
Bruce K. Nelson
Chief Financial Officer
  6033 W. Century Boulevard
  Suite 895
  Los Angeles, California  90045
  Telephone:  310.641.4234
  Email:  bnelson@gceholdings.com
  Web:   www.gceholdings.com
 
 

 
 
 
Notes to Consolidated Financial Statements
 
Note A- Organization and Significant Accounting Policies
 
Principles of Consolidation, page F-8
 
2.         As the Staff has noted, our analysis concluded that GCE Mexico and Asideros are variable interest entities. In the accompanying financial statements, the financial statements of GCE Mexico and Asideros are consolidated.  As has been explained in our previous correspondence to the Staff, the financial statements of Asideros had been included in our consolidated financial statements as originally filed.  We have clarified in Note A, Principles of Consolidation, that the Company is the primary beneficiary of Asideros and that the financial statements of Asideros have been consolidated in accordance with FIN46(R).   We have also clarified in Note A, Principles of Consolidation, that the Company is the primary beneficiary of GCE Mexico and that the financial statements of GCE Mexico have been consolidated in accordance with FIN46(R).   However, in response to the Staff’s comment, we point out that GCE Mexico has functioned as a pass-through entity in that the preferred members made their investment in GCE Mexico, and simultaneously GCE Mexico made its investment in Asideros.  At December 31, 2008, GCE Mexico has no assets apart from its investment in Asidero, no liabilities (except as discussed in the following sentence),  and no  contingent liabilities.  GCE Mexico has the obligation to pay a “preferred return” of 12% of their investment to the preferred members.  Based on the expectation that this obligation would be paid from distributable cash of the consolidated entity, when available, a liability was reported in the consolidated financial statements as originally filed.  At December 31, 2008, the amount of the “Accrued Return on Minority Interest” was $138,014.  In summary, all assets and liabilities of Asideros and GCE Mexico have been reported on a consolidated basis in the financial statements as originally filed.  We believe that in the footnotes to the accompanying consolidated financial statements, these factors have been clarified to better disclose a) the accounting for Asideros and GCE Mexico (that they are variable interest entities and have been consolidated); b) all assets and liabilities of the group; c) the nature of the operations of the group; and d) the rights and obligations of both the Company and of the Minority Interests.
 
Exhibits
 
3.            As requested, the operating agreement for GCE Mexico and the English translation of the Articles of Incorporation (and By-Laws) of Asideros are attached as Exhibits B and C.
 
*    *    *    *    *
 
As requested by the Staff, we hereby acknowledge that:
 
 
· 
This Company is responsible for the adequacy and accuracy of the disclosure in the filing;
 
 
· 
Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
 
 
· 
This Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
 
Please direct questions regarding this letter to the undersigned at (310) 641-4234.
 
Sincerely yours,
 
GLOBAL CLEAN ENERGY HOLDINGS,
INC.
 
/s/  BRUCE NELSON
Bruce Nelson,
Chief Financial Officer
 
Bruce K. Nelson
Chief Financial Officer
  6033 W. Century Boulevard
  Suite 895
  Los Angeles, California  90045
  Telephone:  310.641.4234
  Email:  bnelson@gceholdings.com
  Web:   www.gceholdings.com
 
 

 


Enclosures
 
cc:
Mr. Richard Palmer (w/enclosures)
Mr. David Walker (w/enclosures)
Mr. Scott Gilderman,CPA (w/enclosures)
Mr. Craig Allen, CPA(w/enclosures)
Mr. Mark Andersen, CPA (w/enclosures)
Ms. Alawna Echols , CPA (w/enclosures)
Istvan Benko, Esq. (w/enclosures)
 
Bruce K. Nelson
Chief Financial Officer
  6033 W. Century Boulevard
  Suite 895
  Los Angeles, California  90045
  Telephone:  310.641.4234
  Email:  bnelson@gceholdings.com
  Web:   www.gceholdings.com
 
 

 
 
CERTIFIED PUBLIC ACCOUNTANTS
AND
BUSINESS CONSULTANTS
5 Triad Center, Suite 750
Salt Lake City, UT 84180-1128
Phone: (801) 532-2200
Fax: (801) 532-7944
www.hbmcpas.com
Registered with the Public Company
Accounting Oversight Board
 
A Member of the Forum of Firms
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Global Clean Energy Holdings, Inc.
Los Angeles, CA

We have audited the accompanying consolidated balance sheets of Global Clean Energy Holdings, Inc. and subsidiaries (a development stage company) as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Global Clean Energy Holdings, Inc. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company is a development stage enterprise previously engaged in developing bio-pharmaceutical research and currently developing bio-diesel fuels.  As discussed in Note B to the financial statements, the stockholders’ deficit and the operating losses since inception raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note B.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.



/s/ HANSEN, BARNETT & MAXWELL, P.C.
HANSEN, BARNETT & MAXWELL, P.C.
 
Salt Lake City, Utah
April 14, 2009
 
 

 

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS MEDICAL DISCOVERIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS

   
December 31,
   
December 31,
 
   
2008
   
2007
 
             
ASSETS
 
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 291,309     $ 805,338  
Subscription receivable
    -       75,000  
Other current assets
    131,715       51,073  
Total Current Assets
    423,024       931,411  
                 
PROPERTY AND EQUIPMENT
               
Land
    2,051,282       -  
Plantation development costs
    2,117,061       308,777  
Plantation equipment
    509,037       -  
Office equipment
    10,993       1,127  
      4,688,373       309,904  
Less accumulated depreciation
    (22,296 )     (563 )
      4,666,077       309,341  
                 
OTHER ASSETS
    2,691       -  
                 
TOTAL ASSETS
  $ 5,091,792     $ 1,240,752  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
                 
CURRENT LIABILITIES
               
Accounts payable
  $ 1,890,999     $ 1,656,292  
Accrued payroll and payroll taxes
    1,158,808       950,971  
Accrued interest payable
    522,097       300,651  
Accrued return on minority interest
    138,014       -  
Secured promissory note
    460,000       250,000  
Notes payable to shareholders
    56,000       56,000  
Convertible notes payable
    193,200       193,200  
Research and development obligation
    2,607,945       2,701,555  
Financial instrument
    -       2,166,514  
Total Current Liabilities
    7,027,063       8,275,183  
                 
MORTGAGE NOTE PAYABLE
    2,051,282       -  
                 
MINORITY INTEREST
    1,962,022       -  
                 
STOCKHOLDERS' DEFICIT
               
Preferred stock - no par value; 50,000,000 shares authorized
               
Series A, convertible; zero and 28,928 shares issued and outstanding, respectively (aggregate liquidation preference of $0 and $2,892,800, respectively)
    -       514,612  
Series B, convertible; 13,000 shares issued or subscribed (aggregate liquidation preference of $1,300,000)
    1,290,735       1,290,735  
Common stock, no par value; 500,000,000 shares authorized; 224,813,819 and 174,838,967 shares issued and outstanding, respectively
    17,634,474       16,526,570  
Additional paid-in capital
    3,672,724       1,472,598  
Deficit accumulated prior to the development stage
    (1,399,577 )     (1,399,577 )
Deficit accumulated during the development stage
    (27,146,931 )     (25,439,369 )
Total Stockholders' Deficit
    (5,948,575 )     (7,034,431 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 5,091,792     $ 1,240,752  
 
See Notes to Consolidated Financial Statements
 

 

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS MEDICAL DISCOVERIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS

               
From Inception of
 
               
the Development Stage
 
   
For the Years Ended
   
on November 20, 1991
 
   
December 31,
   
through
 
   
2008
   
2007
   
December 31, 2008
 
               
(Unaudited)
 
Operating Expenses
                 
General and administrative
  $ 1,828,727     $ 2,949,885     $ 9,729,285  
Research and development
    -       986,584       986,584  
                         
Loss from Operations
    (1,828,727 )     (3,936,469 )     (10,715,869 )
                         
Other Income (Expenses)
                       
Unrealized gain (loss) on financial instrument
    5,469       (147,636 )     4,722,632  
Interest income
    4,310       4,441       66,915  
Interest expense
    (234,470 )     (51,929 )     (1,472,019 )
Interest expense from amortization of discount on secured promissory note
    (36,369 )     (250,000 )     (286,369 )
Gain on debt restructuring
    -       485,137       2,524,787  
Other income
    -       -       906,485  
                         
Total Other Income (Expenses)
    (261,060 )     40,013       6,462,431  
                         
                         
Loss from Continuing Operations Before Minority Interest in Net Loss
    (2,089,787 )     (3,896,456 )     (4,253,438 )
                         
Minority interest in net loss
    315,115       -       315,115  
                         
Loss from Continuing Operations
    (1,774,672 )     (3,896,456 )     (3,938,323 )
                         
Income (Loss) from Discontinued Operations (net of gain on disposal of MDI-P of $258,809 in 2007)
    67,110       (518,428 )     (22,516,409 )
                         
Net Loss
    (1,707,562 )     (4,414,884 )     (26,454,732 )
                         
                         
Preferred stock dividend from beneficial conversion feature
    -       -       (692,199 )
                         
Net Loss Applicable to Common Shareholders
  $ (1,707,562 )   $ (4,414,884 )   $ (27,146,931 )
                         
Basic and Diluted Loss per Common Share:
                       
Loss from Continuing Operations
  $ (0.009 )   $ (0.029 )        
Income (Loss) from Discontinued Operations
  $ 0.001     $ (0.004 )        
                         
Net loss
  $ (0.008 )   $ (0.033 )        
                         
Basic and Diluted Weighted-Average Common Shares Outstanding
    207,895,116       134,707,205          

See Notes to Consolidated Financial Statements

 

 

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS MEDICAL DISCOVERIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Period From November 20, 1991 (Date of Inception of the Development Stage) through December 31, 2008

                                             
Accumulated
   
Deficit
             
                                             
Deficit
   
Accumulated
             
                                       
Additional
   
Prior to
   
During the
   
Escrow/
       
   
Preferred Stock – Series A
   
Preferred Stock – Series B
   
Common stock
   
Paid in
   
Development
   
Development
   
Subscription
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Stage
   
Receivables
   
Total
 
                                                                   
Balance at October 31, 1991
    -     $ -       -     $ -       1,750,000     $ 252,997     $ -     $ (1,482,514 )   $ -     $ -     $ (1,229,517 )
                                                                                         
Restatement for reverse acquisition of  WPI Pharmaceutical, Inc. by Medical Discoveries, Inc.
    -       -       -       -       -       (252,997 )     -       252,997       -       -       -  
                                                                                         
Shares issued in merger of WPI Pharmaceutical, Inc.
                                                                                       
Medical Discoveries, Inc., $0.01 per share
    -       -       -       -       10,000,000       135,000       -       (170,060 )     -       -       (35,060 )
                                                                                         
Balance at November 20, 1991 (Date of Inception of Development Stage)
    -       -       -       -       11,750,000       135,000       -       (1,399,577 )     -       -       (1,264,577 )
                                                                                         
Issuance of common stock for:
                                                                                       
Cash
                                                                                       
1992 - $0.50 per share
    -       -       -       -       200,000       100,000       -       -       -       -       100,000  
1992 - $1.50 per share
    -       -       -       -       40,000       60,000       -       -       -       -       60,000  
1993 - $0.97 per share
    -       -       -       -       542,917       528,500       -       -       -       -       528,500  
1994 - $1.20 per share
    -       -       -       -       617,237       739,500       -       -       -       -       739,500  
1995 - $0.67 per share
    -       -       -       -       424,732       283,200       -       -       -       -       283,200  
1996 - $0.66 per share
    -       -       -       -       962,868       635,000       -       -       -       (60,000 )     575,000  
1997 - $0.43 per share
    -       -       -       -       311,538       135,000       -       -       -       60,000       195,000  
1998 - $0.29 per share
    -       -       -       -       2,236,928       650,000       -       -       -       -       650,000  
1999 - $0.15 per share
    -       -       -       -       13,334       2,000       -       -       -       -       2,000  
2001 - $0.15 per share
    -       -       -       -       660,000       99,000       -       -       -       -       99,000  
2003 - $0.04 per share
    -       -       -       -       20,162,500       790,300       -       -       -       -       790,300  
2004 - $0.09 per share
    -       -       -       -       20,138,024       1,813,186       -       -       -       -       1,813,186  
2005 - $0.18 per share
    -       -       -       -       1,922,222       281,926       -       -       -       -       281,926  
Services and Interest
                                                                                       
1992 - $0.50 per share
    -       -       -       -       500,000       250,000       -       -       -       -       250,000  
1993 - $0.51 per share
    -       -       -       -       251,450       127,900       -       -       -       -       127,900  
1993 - $0.50 per share
    -       -       -       -       800,000       400,000       -       -       -       -       400,000  
1994 - $1.00 per share
    -       -       -       -       239,675       239,675       -       -       -       -       239,675  
1995 - $0.39 per share
    -       -       -       -       4,333,547       1,683,846       -       -       -       (584,860 )     1,098,986  
1996 - $0.65 per share
    -       -       -       -       156,539       101,550       -       -       -       -       101,550  
1997 - $0.29 per share
    -       -       -       -       12,500       3,625       -       -       -       -       3,625  
1998 - $0.16 per share
    -       -       -       -       683,000       110,750       -       -       -       -       110,750  
1999 - $0.30 per share
    -       -       -       -       100,000       30,000       -       -       -       -       30,000  
2001 - $0.14 per share
    -       -       -       -       1,971,496       284,689       -       -       -       -       284,689  
2002 - $0.11 per share
    -       -       -       -       2,956,733       332,236       -       -       -       -       332,236  
2003 - $0.04 per share
    -       -       -       -       694,739       43,395       -       -       -       -       43,395  
2004 - $0.06 per share
    -       -       -       -       1,189,465       66,501       -       -       -       -       66,501  
2005 - $0.18 per share
    -       -       -       -       104,167       11,312       -       -       -       -       11,312  
2006 - $0.18 per share
    -       -       -       -       435,556       78,400       -       -       -       -       78,400  
Conversion of Debt
                                                                                       
1996 - $0.78 per share
                                    239,458       186,958       -       -       -       -       186,958  
1997 -  $0.25 per share
    -       -       -       -       100,000       25,000       -       -       -       -       25,000  
1998 - $0.20 per share
    -       -       -       -       283,400       56,680       -       -       -       -       56,680  
2002 - $0.03 per share
    -       -       -       -       17,935,206       583,500       -       -       -       -       583,500  
2004 - $0.07 per share
    -       -       -       -       9,875,951       650,468       -       -       -       -       650,468  
Conversion of preferred stock to common stock, 2006
    (7,580 )     (8,722 )     -       -       10,242,424       8,722       -       -       -       -       -  
Other Issuances
                                                                                       
1993 -License - $0.50 share
    -       -       -       -       2,000,000       1,000,000       -       -       -       -       1,000,000  
1997 - Settlement of contract
    -       -       -       -       800,000       200,000       -       -       -       -       200,000  
1998 - Issuance of common stock from exercise of warrants, $0.001 per share
    -       -       -       -       200,000       200       -       -       -       -       200  
2000 - Reversal of shares issued
    -       -       -       -       (81,538 )     -       -       -       -       -       -  
Escrow and Subscription Receivables
                                                                                       
1996 - Common stock canceled -$0.34 per share
    -       -       -       -       (1,400,000 )     (472,360 )     -       -       -       472,360       -  
2000 - Issuance for escrow receivable -$0.09 per share
    -       -       -       -       5,500,000       500,000       -       -       -       (500,000 )     -  
2000 - Write-off of subscription receivable
    -       -       -       -       -       -       -       -       -       112,500       112,500  
2000 - Research and development costs
    -       -       -       -       -       -       -       -       -       115,400       115,400  
2001 - Research and development costs
    -       -       -       -       -       -       -       -       -       132,300       132,300  
2001 - Operating expenses
    -       -       -       -       -       -       -       -       -       25,000       25,000  
2004 - Termination of escrow agreement
    -       -       -       -       (2,356,200 )     (227,300 )     -       -       -       227,300       -  

(Continued)
 
See Notes to Consolidated Financial Statements

 

 
 
GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS MEDICAL DISCOVERIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - (Continued)
Period From November 20, 1991 (Date of Inception of the Development Stage) through December 31, 2008

                                             
Accumulated
   
Deficit
             
                                             
Deficit
   
Accumulated
             
                                       
Additional
   
Prior to
   
During the
   
Escrow/
       
   
Preferred Stock Series A
   
Preferred Stock - Series B
   
Common stock
   
Paid in
   
Development
   
Development
   
Subscription
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Stage
   
Receivables
   
Total
 
                                                                   
Balance carried forward
    (7,580 )   $ (8,722 )     -     $ -       117,749,868     $ 12,528,359     $ -     $ (1,399,577 )   $ -     $ -     $ 11,120,060  
                                                                                         
Exercise of Options and Warrants
                                                                                       
1997 -  $0.25 per share
    -       -       -       -       87,836       21,959       -       -       -       -       21,959  
1999 -  Waived option price  $0.14 per share
    -       -       -       -       170,000       24,000       -       -       -       -       24,000  
Value of Options Issued for Services
                                                                                       
1998
    -       -       -       -       -       2,336,303       -       -       -       -       2,336,303  
1999
    -       -       -       -       -       196,587       -       -       -       -       196,587  
2001
    -       -       -       -       -       -       159,405       -       -       -       159,405  
2002
    -       -       -       -       -       -       124,958       -       -       -       124,958  
2003
    -       -       -       -       -       -       295,000       -       -       -       295,000  
2004
    -       -       -       -       -       -       1,675,000       -       -       -       1,675,000  
2006
    -       -       -       -       -       -       67,350       -       -       -       67,350  
Other
                                                                                       
1994 – Cash contributed
    -       -       -       -       -       102,964       -       -       -       -       102,964  
1995 - Issuance of common stock option to satisfy debt restructuring
    -       -       -       -       -       20,000       -       -       -       -       20,000  
2004 - Issuance of preferred stock and warrants for cash
    12,000       523,334       -       -       350,000       68,845       477,821       -       -       -       1,070,000  
2004 - Convertible preferred stock beneficial conversion dividend
    -       -       -       -       -       -       692,199       -       (692,199 )     -       -  
2005 - Issuance of preferred stock and warrants for cash
    30,000       -       -       -       -       -       -       -       -       -       -  
2005 - Reclassification of warrants to a financial instrument
    -       -       -       -       -       -       (2,435,713 )     -       -       -       (2,435,713 )
Net loss from inception through December 31, 2006
    -       -       -       -       -       -       -       -       (20,332,286 )     -       (20,332,286 )
                                                                                         
Balance at December 31, 2006 (Unaudited)
    34,420       514,612       -       -       118,357,704       15,299,017       1,056,020       (1,399,577 )