UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________________
FORM
10-K/A
Amendment No. 1
______________________
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ANNUAL REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31,
2009
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o
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TRANSITION REPORT UNDER SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from ______ to
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Commission
file number: 0-12627
GLOBAL
CLEAN ENERGY HOLDINGS, INC.
(Exact
name of Small Business Issuer as specified in its charter)
______________________
Utah
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87-0407858
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
Number)
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6033 W. Century Blvd, Suite 895,
Los Angeles, California 90045
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(Address
of principal executive offices)
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(310)
641-4234
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Issuer’s
telephone number:
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Securities
registered under Section 12(b) of the Act: None.
Securities
registered under Section 12(g) of the Act: Common Stock, no par
value.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No þ
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 during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).
Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein and, will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. 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
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
(Do
not check if a smaller reporting company)
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Smaller
reporting company þ
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes o No þ
The
aggregate market value of the common stock held by non-affiliates of the
registrant as of June 30, 2009 (the last business day of the registrant’s most
recently completed second fiscal quarter) was approximately
$2,249,027.
The
outstanding number of shares of common stock as of March 24, 2010 was
236,919,079.
Documents incorporated by
reference: None
EXPLANATORY
NOTE
We are
filing this amendment (this “Amendment No. 1”) to our Annual Report on Form 10-K
for the year ended December 31, 2009 (our “2009 Annual Report”) for the sole
purpose of filing Exhibit 23.1, the Consent Of Independent Registered Public
Accounting Firm, which was accidentally omitted from the 2009 Annual Report that
was filed earlier today.
This
Amendment No. 1 does not update or amend the disclosures contained in the Annual
Report.
Table
of Contents
Form
10-K
Page
PART
I
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1
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ITEM
1.
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BUSINESS.
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1
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ITEM
1A
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RISK
FACTORS
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11
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ITEM
1B.
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UNRESOLVED
STAFF COMMENTS.
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19
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ITEM
2.
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PROPERTIES.
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19
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ITEM
3.
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LEGAL
PROCEEDINGS.
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19
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ITEM
4
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RESERVED
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PART
II
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20
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ITEM
5.
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MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS, AND ISSUER
PURCHASES OF EQUITY SECURITIES.
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ITEM
6.
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SELECTED
FINANCIAL DATA.
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21
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ITEM
7.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
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21
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ITEM
7A.
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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25
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ITEM
8.
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FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
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25
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ITEM
9.
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
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25
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ITEM
9A(T)
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CONTROLS
AND PROCEDURES.
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25
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ITEM
9B.
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OTHER
INFORMATION
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27
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PART
III
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27
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ITEM
10
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DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
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27
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ITEM
11.
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EXECUTIVE
COMPENSATION.
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29
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ITEM
12.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
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33
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ITEM
13.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
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34
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ITEM
14.
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PRINCIPAL
ACCOUNTING FEES AND SERVICES.
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35
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PART
IV
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35
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ITEM
15.
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EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.
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35
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DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
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 biofuels market, any projections of
revenues or other financial items, any statements of the plans and objectives of
management for future operations, any statements concerning proposed new
products or services, any statements regarding future economic conditions or
performance, and any statements of assumptions underlying any of the
foregoing. All Forward-Looking Statements included in this document
are made as of the date hereof and are based on information available to us as
of such date. We assume no obligation to update any Forward-Looking
Statement. In some cases, Forward-Looking Statements can be
identified by the use of terminology such as “may,” “will,” “expects,” “plans,”
“anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,”
or the negative thereof or other comparable terminology. Although we
believe that the expectations reflected in the Forward-Looking Statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the Forward-Looking Statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
the Forward-Looking Statements. Future financial condition and
results of operations, as well as any Forward-Looking Statements are subject to
inherent risks and uncertainties, including any other factors referred to in our
press releases and reports filed with the Securities and Exchange
Commission. All subsequent Forward-Looking Statements attributable to
the company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements. Additional factors that may
have a direct bearing on our operating results are described under “Risk
Factors” and elsewhere in this report.
Introductory
Comment
Throughout
this Annual Report on Form 10-K, the terms “we,” “us,” “our,” and “our
company” refer to Global Clean Energy Holdings, Inc., a Utah corporation
formerly known as Medical Discoveries, Inc., and, unless the context indicates
otherwise, also includes our wholly-owned subsidiary, MDI Oncology, Inc., a
Delaware corporation; Global Clean Energy Holdings LLC, a wholly-owned Delaware
limited liability company; and Technology Alternative, Limited, a wholly-owned
subsidiary formed under the laws of Belize. 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, in which we own 50% of the common membership interests.
Global
Clean Energy Holdings, Inc. is not related to, or affiliated in any manner with
“Global Clean Energy, Inc.” Readers are cautioned to confirm the
entity that they are evaluating or in which they are making an investment before
completing any such investment.
PART
I
Summary
Overview
Global
Clean Energy Holdings, Inc. (“GCEH”) is a Los Angeles-based energy agri-business
focused on the development of non-food based bio-fuel feedstock. GCEH
has full service in-house development and operations capabilities, which it
provides for its own energy farms as well as farms it operates via joint
venture arrangements. With international experience and capabilities in
eco-friendly bio-fuel feedstock management, cultivation, production and
distribution, GCEH is well suited to scale its business.
GCEH is
focusing on the commercialization of oil and biomass derived from the seeds of
Jatropha curcas
(“Jatropha”) - a native non-edible plant indigenous to many tropical and
sub-tropical regions of the world, including Mexico, the Caribbean and Central
America. Jatropha oil is a high-quality plant oil used as a direct
replacement for fossil fuels or as feedstock for the production of high quality
bio-diesel or green diesel, which is a direct replacement for jet
fuel. The residual material derived from the oil extraction process
is called press cake, which is a high-quality biomass that can be used as a
replacement for a number of fossil fuels.
Jatropha
trees require less water and fertilizer than many conventional crops, and can be
grown on land that is not suitable for the production of food. Jatropha oil is
very high quality plant oil that is particularly well suited for the production
of bio-diesel and “green diesel.” Without post processing, Jatropha
oil can be used as a direct replacement for diesel and other fossil
fuels. Bio-diesel is a diesel-equivalent, and green diesel is a jet
fuel-equivalent; both are processed fuels derived from biological sources (such
as plant oils), which can be used as a replacement for fossil based fuels in
diesel engines, jet engines or other fuel oil based combustion
equipment.
Our
business plan and current principal business activities include the planting,
cultivation, harvesting and processing of Jatropha to generate plant based oils
and biomass for use as replacements for fossil fuels. Our strategy is
to leverage our Jatropha based bio-fuels knowledge, experience and capabilities
through the following means:
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Own
and operate Jatropha farms for our own account. We currently
own and operate two such Jatropha farms, one in Belize and one in
Mexico.
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Own,
operate and manage Jatropha farms through joint ownership agreements. We
currently operate two farms under joint ownership arrangements: the first
farm, located in Mexico, comprises 5,149 acres; the second farm consisting
of 3,700 acres was acquired in March 2010 (also in Mexico). The
first farm is fully planted, and we expect to have the second farm
substantially planted by the end of
2010.
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Provide
Jatropha farm development and management services to third party owners of
Jatropha farms.
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Provide
turn-key Franchise Operations for individuals and/or companies that wish
to immediately establish Jatropha farms in suitable geographical
areas.
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In
addition to generating revenues from the sale of non-food based plant oils and
biomass, we plan to monetize the carbon credits from the farms we own and
manage. Under the 1997 Kyoto Protocol, a worldwide carbon credit
trading market has been established where sellers sell their excess carbon
credits and buyers purchase the carbon credits they need to meet their
greenhouse gas reduction requirements. Our farm activities are
anticipated to generate a significant amount of carbon credits that we plan to
sell to third parties.
We are
engaged in research and development activities concerned with optimizing the
quality of our Jatropha yields, reducing operating costs and improving our
production capacity and efficiency. Specifically, our research activities focus
on (i) optimizing genetic development (i.e., the quality of the Jatropha
plants), (ii) optimizing agronomic development (i.e., soil conditions optimal
for Jatropha cultivation), and (iii) improving agricultural technologies
relating to the care and custody of the Jatropha plant, and the processing of
resulting products. We continue our research and development efforts toward the
improved commercialization of Jatropha at our test facilities in Mexico and
Belize and our commercial farm in Mexico. We are also engaged in a
joint research and development effort with a leading U.S. plant sciences
university to conduct plant biology and molecular genetic (genomic) research for
the development of improved varieties, and optimal germination and cultivation
techniques for Jatropha. We operate a state-of-the-art plant and soil science
Field Research Center at our farm in Mexico where we have over 20 selected
(improved) varieties under development.
Organizational
History
This
company was incorporated under the laws of the State of Utah on November 20,
1991. In 2007, the Company decided to change the course of its
business and focus their efforts and resources on the emerging alternative
energy fuels business. In order to be successful in this industry, we
decided to acquire the intellectual property and expertise needed to develop and
manage our new business.
In
connection with our efforts to commence our alternative energy business, on
September 7, 2007, we entered into a share and exchange agreement where we
acquired Global Clean Energy Holdings, LLC, a Delaware limited liability company
(“Global LLC”). Global LLC was a company that owned certain trade
secrets, know-how, business plans and relationships relevant to the cultivation
and production of Jatropha, for the purpose of providing feedstock oil intended
for the production of bio-diesel and green diesel and the production of biomass
as a fossil fuel replacement. Richard Palmer and Mobius Risk Group, LLC, a Texas
limited liability company were the sole owners of the outstanding equity
interests of Global LLC.
In
exchange for all of the outstanding ownership interests in Global LLC, we issued
63,945,257 shares of our common stock to Richard Palmer and
Mobius. The shares issued to Mr. Palmer and Mobius in the acquisition
of Global LLC represented 35% of our outstanding shares of common stock
immediately after the acquisition. Approximately 43% of the foregoing
shares were issued as restricted shares, subject to forfeiture in the event that
certain specified performance milestones are not achieved. As of
December 31, 2009, all of the restricted shares issued to Richard Palmer have
been released. Similarly, as of December 31, 2009, all of the
restricted shares issued to Mobius have been released, except for 3,915,016
shares that have been forfeited.
In order
to obtain the technical and management expertise necessary to maximize the
assets and expertise we acquired, we also entered into an employment agreement
with Richard Palmer to be the Company’s Chief Executive Officer.
Until
2007, we were a developmental-stage bio-pharmaceutical company engaged in the
research and development of pharmaceutical products. In 2005, through
a wholly owned subsidiary, we acquired certain pharmaceutical intellectual
properties related to the treatment and reduction of breast cancer tumors from
the liquidation estate of Savetherapeutics, A.G. in Germany. Early in
2007, our Board of Directors determined that we could no longer fund the
development of our drug candidates and that we could not obtain additional
funding for our drug development activities. In 2009, we entered into
an agreement for the sale of our legacy pharmaceutical assets to an unaffiliated
German company. In consideration for these assets, we received total
cash payments of 350,000 Euros ($518,655). The buyer also assumed and
agreed to pay $ 2,779,856 of our liabilities that we had incurred in connection
these legacy assets and agreed to pay us up to 2,000,000 Euros ($2,725,167) in
royalty payments from the future sale or licensing of products manufactured
using the legacy pharmaceutical assets. We will receive royalties if,
and only to the extent that, such assets are ever commercialized. However, no
assurance can be made whether or not the commercialization will ever be achieved
and that any of this royalty payment will ever be received.
Our
principal executive offices are located at 6033 W. Century Blvd, Suite 895, Los
Angeles, California 90045, and our current telephone number at that address is
(310) 641-4234. In 2008 we changed our name to “Global Clean Energy
Holdings, Inc.” to reflect our energy agricultural business. 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 Securities and Exchange Commission. Our Internet website and the information
contained therein, or connected thereto, are not and are not intended to be
incorporated into this Annual Report on Form 10-K.
Recent
Developments
On March
30, 2010, the Company entered into a Stock Purchase Agreement with two
accredited investors pursuant to which we issued and sold 25,000,000 shares of
our common stock at a price of $0.02 per share, for an aggregate purchase price
of $500,000.
In March
2010, through our existing joint venture, we acquired approximately 3,700 acres
of additional land that is contiguous to our existing 5,149-acre farm for the
development of second Jatropha farm. We expect that this land will be
substantially prepared and planted by the end of 2010. For additional
information about this second Mexican farm, see “Item 2 – Properties,”
below.
Business
Operations
We are an
energy agri-business with international development and operations
capabilities. We maintain in-house staff for the development,
management, cultivation, production and distribution of plant-based feedstock
used to offset fossil fuels. Our business plan and current principal
business activities include the planting, cultivation, harvesting and processing
of Jatropha to generate seed oils and biomass for use in the bio-fuels industry,
including the production of bio-diesel and green diesel. Our vision
and strategy is to grow and expand our farming and processing business to the
level where economies of scale and our methods of operations allow us to
generate significant profits without the need of subsidies. The processes and
procedures we employ to plant and cultivate Jatropha for our business are being
continually refined in order to produce a “best practices” of Jatropha farm
operations. By focusing on improving our Jatropha operations and the technology
we apply to our operations, we plan to operate economically sustainable Jatropha
farms (i.e. without use of subsidies), which can replace fossil fuels at a cost
below US$42 per barrel or $1.00 per gallon. By continuing to invest
in leading edge genetic and agronomic (soil) research and development, we are
confident that we will develop high-yielding Jatropha trees that deliver
renewable energy feedstock into the market at very competitive
prices.
Our
strategy is to leverage our farming and energy knowledge, experience and
capabilities through the following means:
Company Owned Farms - We have
two farms that are classified as “Company Owned” farms; one in Belize and one in
Mexico. The Belizean farm is located in Teakettle, Cayo,
Belize. It is located on riverfront property that we own. The farm
has an operating nursery capable of producing high quality seedling and rooted
cuttings. The older trees are producing fruit and seeds. The seeds
are of propagation quality and command a premium price in the
market. The second farm is located in Tebec, Mexico, which is
approximately 10 kilometers south of Merida, Mexico. It is located on
leased land. The Tebec farm is our oldest research and development
center, which has been in operations for almost four years, where we have
propagated dozens of varieties of Jatropha, collected from all over the world,
including Mexico, Central America, Africa, India, Southeast Asia, Indonesia,
South America and the Caribbean. The Tebec farm is fully irrigated and provides
a perfect research area for the propagation of Jatropha on marginal
land.
For
additional information regarding our operations on farms that we own, see
“Jatropha Farming Operations—Belize,” below.
Partnership Farms Owned Via Joint
Ventures. We currently own two farms through joint venture
arrangements with third party financing sources. Our farm in Mexico
is our largest farm with approximately 5,149 acres of land near Tizimin,
Mexico. The entire farm has been prepared and planted with almost 4.0
million Jatropha trees. All the necessary roads and other support
infrastructure have been developed on the farm. In addition, we have acquired
and installed seed oil extraction equipment on-site to extract oil from the
harvested seeds. We are currently in production and “crude Jatropha
oil” (CJO) and biomass are now being produced on site. Sales up to this point
have primarily consisted of seeds for propagation, and oil and biomass for
testing by potential customers, although we anticipate that we will eventually
sell CJO and biomass in commercial quantities from this farm.
In March
2010 we acquired approximately 3,700 acres of additional land that is contiguous
to this farm for the development of our second farm. We expect that
this land will be substantially prepared and planted by the end of
2010.
For additional
information regarding our joint venture operations, see “Jatropha Farming
Operations—Tizimin--Mexico Farm,” below.
Jatropha Farm Development and
Management Services. The company currently
provides development and management services to unaffiliated companies and
individuals who are planning the development and implementation of Jatropha
farms. These services are provided on a fee-for-service basis and
generally begin with feasibility studies, and are often followed by management
contracts that provide us with the ability to develop and operate these farms on
a go-forward basis. During the fiscal year ended December 31, 2009,
we provided such services in connection with three planned Jatropha projects
worldwide. Our plan is to substantially increase the level of
development and management services that we provide as a means of generating
near-term revenue and profits, and to allow us to fund the continued expansion
of our technical services team.
Contract Jatropha Farms. We
have established a strategy and the processes to allow us to contract the
farming operation on non-company owned farms, which are near our core farms, to
third party farmers. The farmers will farm their own land under our direct
supervision, utilizing our “best practices” Jatropha cultivation processes with
the support of our technical services team of agri-business professionals. This program will allow
us to expand our business while still ensuring success. We have not
yet entered into any agreements under this format.
Franchise Jatropha Farms. The
Company has established a program for offering franchise operations for Jatropha
Farms. This program consists of all of the necessary programs and procedures to
establish and operate a Jatropha farm profitably. The program also entails
establishing and providing methods to obtain all necessary equipment and
supplies. The Company is in discussions with several parties, but as of this
filing, no franchise agreements have been executed.
Our core
activities consist of planting, cultivating, harvesting and processing of
Jatropha feedstock to generate seed oils and biomass for use in the bio-fuels
industry, including the production of bio-diesel and other high value
bio-fuels. Bio-diesel is a diesel-equivalent, processed fuel derived
from biological sources (such as plant oils), which can be used in diesel
engines and as a replacement for fuel oil. The term “bio-fuels” refers to a
range of biological based fuels including bio-diesel, green diesel, synthetic
diesel, ethanol and biomass, most of which have environmental benefits that are
the major driving force for their introduction. Using bio-fuels instead of
fossil fuels reduces net emissions of carbon dioxide and other green house
gases, which are associated with global climate change. Bio-fuels further the
concept of energy independence and environmental responsibility, while
generating new jobs. This creates social, environmental and economic
gain from the production, distribution and end use of bio-fuels. As the world
consumes larger volumes of fossil fuels, and further depletes the supplies of
such fossil fuels, alternate sources of energy need to be developed to support
both developed and developing economies.
In
addition to producing and selling feedstock to generate seed oils and biomass
for use as bio-diesel, we also plan to generate carbon credits under the 1997
Kyoto Protocol to the United Nations Framework Convention on Climate Change,
which carbon credits we can sell to third parties. This Kyoto
Protocol has created a worldwide carbon credit trading market where sellers sell
their excess carbon credits and buyers purchase the carbon credits they need to
meet their greenhouse gas reduction requirements. Our plantation
activities are anticipated to generate a significant amount of such carbon
credits that we plan to sell to third parties.
We have
identified the Jatropha
curcas plant as our primary feedstock for producing bio-diesel and other
bio-fuels. The Jatropha plant is a perennial tree that produces an inedible
fruit with large seeds containing a high percentage of high quality inedible
oil. The entire fruit, including the seeds, has excellent properties
necessary for the production of bio-fuels or as a direct replacement for fossil
fuels. Our plan is to utilize the entire fruit of the Jatropha plant
for bio-fuel production, including the oils produced from the fruit, as well as
the hull, seed cover, seed oil and seed cake (press cake).
We have
identified strategic locations in North America, the Caribbean, Central America
and South America ideally suited to our Jatropha planting, cultivation,
harvesting and processing activities. These locations have been
selected for a number of key strategic reasons, including proximity to large
ports for logistics purposes, relatively stable democratic governments,
favorable trade agreements with the United States, low-cost land, reasonably
priced labor, favorable weather conditions and acceptable soil
conditions. As described below, to date we have acquired farm
properties in the Yucatan, Mexico, and in Teakettle, Belize, on which we have
commenced planting Jatropha. Further, as described
below, we maintain a 75-acre facility in Tebec – Mexico, where we conduct
research and development activities focusing on plant genetics, soil sciences,
plant breeding and other related activities. We are also in the
process of acquiring additional farms in the Yucatan on which to plant Jatropha
and currently anticipate that we will double our land holdings in Mexico during
the current 2010 fiscal year. We continue to study and identify
optimal Jatropha varieties, as well as ideal growth conditions, in order to
maximize our output of Jatropha fruit and seed oil.
Our
business plan also includes the expansion of our seed oil extracting facility in
which we extract the “crude Jatropha oil” (“CJO”) from the Jatropha seed, and
collect the remaining biomass for sale to interested buyers. We have
not yet identified a location for the expanded seed oil extracting facility;
however, we plan to locate the facility relatively close to the ultimate end
user of the biomass in order to minimize the costs and logistics of transporting
the biomass to prospective buyers.
We
anticipate that our primary focus will continue to be in the feedstock oil
market, and we will continue expanding our operations, primarily in the areas of
planting, harvesting and sale of feedstock oil to end users in the energy
industry for production of bio-diesel and other bio-fuels. In the
short term, as we develop our Jatropha farms and prepare for our initial
large-scale harvest of Jatropha seeds, we expect to generate short-term revenues
through the sale of Jatropha seeds for germination, through forward sale
contracts for feedstock oil and biomass to be produced at our facilities,
through the forward sale of carbon offset credits and through our development
and management services. We are also having active discussion with
firms that have a non-fuel use for Jatropha oil for such things as the
production of candles, “green chemicals” and “green
plastics.” Although we may engage in such ancillary sales,
sales for these purposes are not expected to constitute a major source of future
revenues.
Our
board, management, employees, partners, technical advisors and consultants are
senior energy, agricultural and business professionals with extensive experience
in the energy and bio-fuels market, the production of bio-diesel, in the
renewable energy sector in general, in agriculture and in general
business. Accordingly, we have the resident expertise to
provide development and management services to other companies
regarding their bio-fuels and/or feedstock development operations, on a fee for
services basis. As described below, we currently provide such
bio-fuel consulting services in locations that are not directly competitive to
our existing or planned sites.
Jatropha
Farming Operations
Tizimin – Mexico
Farm. Effective April 23, 2008, we entered into a limited
liability company agreement for GCE Mexico I, LLC, a Delaware limited liability
company (“GCE
LLC”), with six other unaffiliated investors. GCE LLC was
organized primarily to acquire 2,000 hectares (approximately 5,149 acres) of
land, directly or through subsidiaries, located in Tizimin, 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 bio-diesel 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 this
Jatropha farm. In March 2010, GCE LLC acquired approximately 3,700 acres of
additional land that is contiguous to our existing 5,149-acre farm for the
development of a second Jatropha farm. GCE LLC acquired each of the
Jatropha farms through a Mexican subsidiary in which GCE LLC owns a 99%
interest, and we own a 1% interest.
Since the
acquisition of the approximately 2,000 hectares of uncultivated land, we have
developed a commercial seedling and cutting nursery on the site, and all of the
land has now been cleared and improved and planted. We have completed
planting on all the land that we plan to plant on this site except the areas
under the nursery which will be planted once the nursery is no longer needed for
seedling or rooted cutting production. We maintain a series of biological
corridors and conservation areas on this land to protect the local species of
flora and fauna. All the necessary roads and other infrastructure have been
developed on the farm. In addition, we have acquired specialty
equipment to improve the rate of land preparation and planting on the Jatropha
farm. We have begun harvesting seeds from the Jatropha trees that we
planted at this farm in 2008 and early 2009, which we are using for our own
expansion; we are selling the balance of these seeds to third parties for
propagation. We anticipate that the first material harvest of this
farm will occur in the third quarter of 2010, and that we will, at that time,
commence extraction of commercial quantities of Jatropha oil from the harvested
fruit (seeds).
We
currently own 50% of the issued and outstanding common membership units of GCE
LLC. The remaining 50% in common membership units were issued to the
third party investors. (This company and the other members of GCE LLC
holding the common membership units are collectively referred to as “Common
Members.”) Through March 31, 2010, our investors (the “Preferred
Members”) have contributed a total of $6,643,000 to GCE LLC. The Preferred
Members will continue to fund the ongoing operation in accordance with the
approved annual budgets provided by management. This funding will continue until
the Jatropha farm generates adequate funds to sustain operations, which is
expected to occur by the end of calendar year 2010. The Preferred Members are
entitled to a preferential return on their investment.
The two
Preferred Members also directly funded the purchase by GCE LLC of the
approximately 5,149 acres of land in the State of Yucatan in Mexico by making a
$2,051,282 loan to pay the purchase price of that land. The land was
acquired in the name of GCE LLC’s Mexico subsidiary and is secured by a mortgage
in the amount of $2,051,282 in favor of the Preferred Members. The
mortgage bears interest at the rate of 12% per annum, and interest is required
to be paid quarterly. However, GCE LLC has agreed that interest shall
accrue until such time as there is sufficient cash flow to pay all accrued
interest. The entire mortgage, including any unpaid interest, is due
April 23, 2018.
GCE LLC
is managed under the supervision of a board of directors comprising four
members, two of whom we have appointed, and two of whom were appointed by the
Preferred Members. However, as the manager of the joint venture, GCEH
manages the day-to-day operations of GCE LLC and the operations in
Mexico.
Belize. On
July 2, 2009, we closed a Stock
Purchase Agreement with the four shareholders of Technology Alternatives
Limited, a company formed under the laws of Belize (“TAL”), pursuant to which we agreed to
purchase all of the issued and outstanding shares of TAL. As a
result, we acquired an existing Jatropha farm in subtropical Belize, Central America, which currently is producing Jatropha.
In connection with the
acquisition, certain payables to the former shareholders of TAL were
renegotiated and converted into promissory notes in the aggregate principal
amount of $516,139 Belize Dollars (US $268,036 based on exchange rates in effect
at July 2, 2009 and US $265,502 based on exchange rates in effect at December
31, 2009). These notes payable to shareholders were interest free
through September 30, 2009, and then bear interest at 8% per annum through the
maturity date. The notes are secured by a mortgage on the land and
related improvements. The notes, plus any related accrued interest,
were originally due on December 29, 2009, but the due date has been extended to
June 28, 2010.
The
Belizean farm is located in Teakettle, Cayo, Belize. It comprises
approximately 400 acres of prime land with approximately 1.0 mile of river
frontage. The farm has an operating nursery capable of producing high quality
seedling and rooted cuttings. The farm has been planted in four stages over the
past three years with a derivative of the Cape Verde variety of Jatropha that
was further developed in the Caribbean and imported into Belize. The
Jatropha trees are of varying ages and have been planted in a number of
configurations to promote maximum growth and to further develop planting,
inter-cropping and automated harvesting techniques. The older trees
are all producing fruit and seeds. The seeds are of propagation
quality and command a premium price in the market. We are currently selling the
seeds produced at this location for propagation.
Mexico Research
Facility. The Company established a 75-acre research facility close to
our Mexican corporate offices in Merida. The purpose of the facility is to
gather and maintain a Jatropha genetic bank for breeding stock to optimize our
research efforts in conjunction with a leading US plant sciences university. The
goal is to develop an improved variety of Jatropha that yield larger quantities
of seeds, higher oil content per seed and higher resistance to cold climates,
pests and diseases. This will support our state-of-the-art field research center
at our farm near Tizimin.
Principal
Products
The Jatropha curcas plant will
continue to be our primary agricultural focus for the foreseeable future. The
Jatropha plant is a perennial, inedible tree, and all of its by-products can be
used for fuel and biomass energy production. It is a very efficient
tree that produces high quality seed oil and high-energy content
biomass. We expect our principal products to include the bio-fuels
oil feedstock and biomass derived from the cultivation and processing of the
Jatropha plant. In addition, we expect to generate revenues from the
sale of carbon credits earned from our agricultural operations.
Bio-fuels
Oil Feedstock
The
feedstock oil needed for the production of bio-diesel and green diesel that is
currently available on the market today is primarily supplied from edible plant
seed oils including soy, canola (rapeseed) and palm. There are other
types of feedstock utilized including animal fats and recycled cooking grease,
but they make up a small portion of the market supply. Our primary
source of bio-fuels feedstock will be from the oil produced from the Jatropha
plant. One advantage of the Jatropha plant is that its oil and meal
is inedible, and the cultivation of the plant, which will primarily be for use
in the bio-fuels industry, does not compete for resources with other crops grown
primarily for food consumption.
Biomass
Feedstock
The
Jatropha plant produces a fruit (about the size of a walnut) containing three
large seeds that contain 32%-38% oil content by weight. The non-oil
components of the fruit, which represents 62-68% of the total fruit, contains
high energy biomass (carbon values) that is an excellent source of feedstock for
a number of energy producing processes including direct combustion,
gasification, power production, and cellulostic ethanol (alcohol) production.
Fifty percent of the energy in the Jatropha seed resides in the
biomass.
Carbon
Credits
Bio-fuels
production and use is a very effective means to reduce both local and global
pollution from emissions that cause climate change. Growing trees and
plants that sequester carbon from the atmosphere and burning bio-fuels offset
the production of greenhouse gasses resulting from the consumption of petroleum
or other fossil-based fuels. Many bio-fuels produce less pollution,
including fewer quantities of CO2, NOx, SOx and PM10. Through the
1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change
(Kyoto Protocol), signatory countries are required to reduce their overall
greenhouse gas emissions or carbon footprint. As of November 2007,
174 parties are signatories to and have ratified the Kyoto
Protocol. The United States of America is not a signatory to the
Kyoto Protocol. Signatory countries require local industry and other
local energy end-users to either reduce their greenhouse gas emissions, or
purchase greenhouse gas emission credits (carbon credits). This
requirement has created a worldwide “Carbon Credit Trading Market” where sellers
sell their excess carbon credits and buyers purchase the carbon credits they
need to meet their greenhouse gas reduction requirements. The
development of agricultural-based energy projects may produce carbon credits
through the sequestration (storing) of carbon by the growing of trees and
plants, or by the offset of other sequestered carbon. Selling
carbon credits represents potential additional revenue that will help to offset
capital requirements for our plantation and other development
activities.
In our
case, Certified Emission Reductions (CERs) may be generated through Clean
Development Mechanism projects in non-Annex 1 nations, which include Mexico, the
Caribbean, Central and South America. Our current business plan
contemplates the cultivation of multiple 20,000-hectare Jatropha energy
farms. Assuming full maturity of a 20,000-hectare Jatropha farm, we
have calculated that we will generate more than 250,000 metric tons of sellable
carbon credits annually. This will come from the offset of use of
fossil fuels. If we include the potential to use the Jatropha trees
as a carbon sink, we estimate this will increase the sellable carbon credits to
over 350,000 metric tons per year.
Technology
We do not
currently possess any patentable technology relating to our operations in the
feedstock and bio-fuels market. However, we are currently engaged in research
and development activities concerned with optimizing the quality of our Jatropha
yields, reducing operating costs and improving our production capacity and
efficiency. These research and development activities currently
consist of plant biology and molecular genetic research, and are being conducted
primarily through joint development activities with a leading U.S. plant and
molecular sciences university. We continue to develop our procedures
and Intellectual Property (IP) Sustainable Energy Farming
Systems. It is expected that patentable technologies will
result from our research activities; however, there can be no assurance that
patentable technologies will be developed, or if they are developed, that we
would be the sole owners of such patents.
Any
technology we develop will be in three main categories: (i) plant and soil
sciences, (ii) agricultural development, and (iii) material processing and end
use applications. Such technologies developed are expected to assist
in reducing costs, improving efficiency and allowing us to move the products
higher in value creation.
Market
According
to Organization of Oil Exporting Countries (“OPEC”) and the US Department of
Energy’s Energy Information Administration (“EIA”) estimates, the world demand
for crude oil in 2008 was approximately 87.09 million barrels per day, with
approximately 25% of that demand being diesel and fuel oil (distillate fuel
oil). This equates to a global consumption of distillate fuel oil of
approximately 21.8 million barrels per day, or 334.3 billion gallons per
year. At a 5% blend with bio-diesel, the world market for
bio-diesel exceeds 16.7 billion gallons per year.
U.S. distillate fuel oil consumption for
2005 was 4.12 million barrels per day, which equates to over 60 billion
gallons of diesel and fuel oil consumed annually. At a 5% bio-diesel
blend, the US bio-diesel market is over 3 billion gallons per year, which market
we expect will continue to grow.
In 2004,
U.S. bio-diesel refineries produced approximately 30 million gallons of neat
(100%) bio-diesel fuel. In 2005, U.S. refineries produced approximately 75
million gallons, in 2006 approximately 250 million gallons were sold, in 2007
450 million gallons were sold and in 2008, due to increased feedstock costs, US
refinery production was below 25% of its 1.5 billion capacity.
Our
primary market is the direct sale of Jatropha feedstock oil for bio-diesel
production and biomass energy production, and the sale of carbon credits we
generate from our agricultural operations. Our primary customers are
refiners of bio-diesel. We estimate that there are approximately 165
bio-diesel plants in the United States alone, which can utilize up to 100% of
our crude or refined Jatropha oil. However, we expect to generate our
highest revenues and greatest margins from customers who have logistical
capacity on a water port accessible from the Gulf of Mexico. This
will reduce redundant transportation costs and allow us to ship large quantities
economically. These customers have historically paid a higher price
for feedstock oil, since the majority of feedstock oil supplies have been
shipped from the Midwestern United States. We anticipate that our key
customer profile will include well-financed, low-cost bio-diesel
refiners.
Oil made
from the seeds of the Jatropha plant has also recently been tested as an
aviation fuel supplement by a number of airlines, including Air New Zealand,
Japan Airlines, and Continental Airlines. The ability of Jatropha oil to replace
kerosene-based jet fuel is being studied to reduce the aviation world's
dependence on high-pollution crude oil.
As our
business develops, we expect to utilize some distributors for sale of the
Jatropha feedstock oil and the biomass by-products that we will
produce.
Environmental
Impact
Bio-fuels,
including bio-diesel, have environmental benefits that are a major driving force
for their introduction. Using bio-fuels instead of fossil fuels
reduces net emissions of carbon dioxide and other greenhouse gasses, which are
associated with global climate change. Bio-fuels are produced from
renewable plant resources that “recycle” the carbon dioxide created when
bio-fuels are consumed. Life-cycle analyses consistently show that
using bio-fuels produced in modern facilities results in net reductions of
greenhouse gas carbon emissions compared to using fossil fuel-based petroleum
equivalents. These life-cycle analyses include the total energy
requirements for the farming and production of the biomass resource, as well as
harvesting, conversion and utilization. Bio-fuels help nations
achieve their goals of reducing carbon emissions. Bio-fuels burn
cleanly in vehicle engines and reduce emissions of unwanted products,
particularly unburned hydrocarbons and carbon monoxide. These
characteristics contribute to improvements in local air quality. In a
life-cycle study published in October 2002, entitled “A Comprehensive Analysis
of Bio-diesel Impacts on Exhaust Emissions, 2002,” the U.S. Environmental
Protection Agency (“EPA”) analyzed bio-diesel produced from virgin soy oil,
rapeseed (canola) and animal fats. The study concluded that the
emission impact of bio-diesel potentially increased NOx emissions slightly while
significantly reducing other major emissions.
Competition
Although
there are a number of producers of bio-fuels, few are utilizing non-edible oil
feedstock for the production of bio-diesel. The following table
lists the companies we are aware of that are cultivating Jatropha for the
production of bio-diesel:
Valero
|
Invested
in a Australian Jatropha farming operation and has entered into offtake
agreement s to purchase the resultant CJO.
|
Van
Der Horst Corporation (Singapore)
|
Building
a 200,000-tpy bio-diesel plant in Juron Island in Singapore that will
eventually be supplied with Jatropha from plantations it operates in
Cambodia and China, and possible new plantations in India, Laos and
Burma.
|
Mission
Biofuels (Australia)
|
Hired
Agro Diesel of India to manage a 100,000-heactare Jatropha plantation, and
a contract-farming network in India to feed its Malaysian and Chinese
bio-diesel refineries. Mission Biofuels has raised in excess of
$80 million to fund its operations.
|
D1
Oils (UK)
|
As
of June 2007, together with its partners, D1 Oils has planted or obtained
rights to offtake from a total approximately 172,000 hectares of Jatropha
under cultivation worldwide. D1’s Jatropha plantations are
located in Saudi Arabia, Cambodia, Ghana, Indonesia, the Philippines,
China, India, Zambia, South Africa and Swaziland. In June 2007,
D1 Oils and British Petroleum entered into a 50:50 joint venture to plant
up to an additional 1 million hectares of Jatropha
worldwide. British Petroleum funded the first £31.75 million of
the Joint Venture’s working capital requirements through a purchase of D1
Oils equity, and the total Joint Venture funding requirement is
anticipated to be £80 million over the next five years.
|
NRG
Chemical Engineering (UK)
|
Signed
a $1.3 billion deal with state-owned Philippine National Oil Co. in May
2007. NRG Chemical will own a 70% stake in the joint venture,
which will involve the construction of a bio-diesel refinery, two ethanol
distilleries and a $600 million investment in Jatropha plantations that
will cover over 1 million hectares, mainly on the islands of Palawan and
Mindanao.
|
Note: 1 hectare = 2.47
acres
|
We
believe there is sufficient global demand for alternative non-edible bio-fuel
feedstock to allow a number of companies to successfully compete
worldwide. In particular, we note that we are the only U.S.-based
public company producer of non-edible oil feedstock for the production of
bio-diesel, which gives us a unique competitive advantage over many foreign
competitors when competing in the U.S.
The price
basis for our non-edible oil and biomass feedstock will be equivalent to other
edible seed oil and biomass feedstock. We have not found any
substantial effort towards the production of any other non-edible oil worldwide
that could compete with Jatropha. With the growing demand for
feedstock, and the high price of oil and bio-fuels, we anticipate that we will
be able to sell our Jatropha oil and biomass feedstock
profitability.
Employees.
As of
December 31, 2009, we had 163 full time employees, contract employees and
consultants. As business levels require and as capital resources permit, we will
hire full-time employees to fulfill these functions. Neither this
company, nor any of our subsidiaries is a party to any collective bargaining
agreements.
An
investment in our securities involves a high degree of risk. You
should carefully consider the risks described below before deciding to invest in
or maintain your investment in our company. The risks described below
are not intended to be an all-inclusive list of all of the potential risks
relating to an investment in our securities. If any of the following
or other risks actually occur, our business, financial condition or operating
results and the trading price or value of our securities could be materially and
adversely affected.
Risks
Related To Our Business
We
have operated at a loss and will likely continue to operate at a loss in
2010.
We have
operated at a loss since our inception. We incurred a net loss of
$1,708,000 for the year ended December 31, 2008, had an accumulated deficit of
approximately $26,308,000, and a working capital deficit of approximately
$4,986,000 as of December 31, 2009. Although we had net income for
the fiscal year ended December 31, 2009 of $2,238,000, that net income was
solely the result of a $3,299,000 gain that we recognized due to our sale of our
SaveCream legacy medical asset. In addition, most of the gain we
recognized from the sale of the SaveCream asset resulted from the liabilities
that were released or assumed. In 2009, we incurred a loss from
continuing operations of $2,226,000. We are likely to continue to
incur losses unless and until we are able to generate significantly more
revenues from the sale of Jatropha products, the sale of carbon credits, or fees
from development and management activities. Although we anticipated
that our revenues from these sources will significantly increase during 2010 and
thereafter, no assurance can be given that these revenues will be sufficient to
generate net income in the future. Losses have had, and will continue
to have an adverse effect on our stockholders’ equity and working capital.
Because of the numerous risks and uncertainties associated with our Jatropha
operations, we are unable to predict when we may become profitable, if at
all. If we do not become profitable or are unable to maintain future
profitability, the market value of our common stock will be adversely
affected.
It
is not certain that we will have sufficient funds available to us to fund all of
our operating expenses for 2010 and thereafter.
As of
March 31, 2010, we believe that we will have sufficient cash available, and
sufficient anticipated future revenues, to fund our anticipated working capital
needs through 2010. However, our current liabilities still
significantly exceed our current assets, and the amount of revenues that we
expect to generate in 2010 from our Jatropha operations and other sources may
not be sufficient to fund all of our working capital needs. In fiscal
2009, our sources of cash included reimbursement payments we received from GCE
Mexico I, LLC, and management consulting fees we received for services we
provided to third parties. In addition, we generated limited revenues
from the sale of Jatropha seeds cultivated during fiscal 2009. While
we expect to begin to generate additional revenues from the Jatropha crop to be
harvested from our Tizimin farm during fiscal 2010 and thereafter, those
revenues in 2010 will first be applied to our farm operating expenses, then, if
there is any excess, to a return of our joint ventures’ investment in these
farms. Accordingly, we will not generate any revenues from our farm
operations in 2010 that we can use to pay our current liabilities or to fund any
capital expenditures for expansion. In addition, it is uncertain that
any additional sources of cash (i.e., overhead reimbursement payments from our
joint ventures, Jatropha sales from our Belize farm, and development and
management fees) will be adequate to cover our operating expenses. In
order to fund our long-term operations, we will have to complete a combination
of the following: (i) enter into additional joint venture arrangements with
third party investors interested in our Jatropha business, (ii) negotiate
forward carbon credit sales agreements, and (iii) consummate future delivery
Jatropha oil and/or biomass purchase contracts, (iv) sell and increasing amount
of seeds for propagation from our Mexican and Belizean farms, and (v) provide
fee-based development and management services and franchise services to third
parties for farm development and management services.
We
may need significant additional capital in order to fund our expansion and the
implementation of our business plan, which we may be unable to
obtain. If we do not receive additional funding, we may not be able
to achieve our business plan of further developing our bio-fuels business and we
may even be forced to reduce our future operations.
In
addition to generating funds to cover our operating expenses, we will need a
significant amount of additional funding in order to acquire and operate
additional Jatropha farms and to otherwise implement our bio-fuels operations in
accordance with our business plan. Our capital requirements for
expanding our operations will be significant, and we do not currently have any
of the funds that we expect to need for these purposes. Accordingly,
we will need to obtain a significant amount of additional capital to continue to
fund our operating expenses and to expand our Jatropha business. We
have not identified the sources for the additional financing that we will
require, and we do not have commitments from any third parties to provide this
financing. Certain investors may be unwilling to invest in our
securities since we are traded on the OTC Bulletin Board and not on a national
securities exchange, particularly if there is only limited trading in our common
stock on the OTC Bulletin Board at the time we seek financing. There
is no assurance that sufficient funding through a financing will be available to
us at acceptable terms or at all. Historically, we have
raised capital through the issuance of debt and equity
securities. However, given the risks associated with a new and
untested bio-fuels business, the risks associated with our common stock (as
discussed below), the worldwide financial crisis that has severely affected the
capital markets, and our status as a small, unknown public company, we expect in
the near future, we will have a great deal of difficulty raising capital through
traditional financing sources. Therefore, we cannot guarantee that we
will be able to raise capital, or if we are able to raise capital, that such
capital will be in the amounts needed. Our failure to raise capital,
when needed, and in sufficient amounts, will severely impact our ability to
develop our Jatropha bio-fuels business. Any additional funding that
we obtain in an equity or convertible debt financing is likely to reduce the
percentage ownership of the company held by our existing security
holders. The amount of this dilution may be substantial if the
trading price of our common stock is low at the time of any financing from its
current levels. There can be no assurance that financing will be
available in amounts or on terms acceptable to us, if at all. If we
are unable to obtain the needed additional funding, we will have to reduce or
even totally discontinue our operations, which would result in a total loss to
all of our shareholders.
We
have limited operating history in the feedstock and bio-diesel industries, which
makes it difficult to evaluate our financial position and our business
plan.
Until
2007, we were a development stage bio-pharmaceutical company. During
2007, we terminated our operations as a bio-pharmaceutical company and commenced
our current feedstock and biofuels operations. Since then, we have
focused our efforts on developing the Jatropha Business, including, among other
things, acquiring our own Jatropha farms, and cultivating Jatropha plants for
the subsequent production and sale of Jatropha seeds, oil and
biomass. Because our operations thus far have concentrated on growing
our Jatropha business, and because the trees in our recently planted farms have
not yet matured to the stage where they can produce large commercial quantities
of seeds, we have had limited sales of Jatropha seeds, oil and by-products to
date. Thus, we have little operating history as a feedstock/biofuels
company on which a decision to invest in our company can be
based. The future of our company currently is dependent upon our
ability to successfully harvest, market and sell the Jatropha products that we
expect will be generated by the end of 2010 and thereafter, and to otherwise
implement our business plan in the Jatropha business. While we
believe that our business plan, if implemented as conceived, will make our
company successful in the long term, we have limited operating history against
which we can test our plans and assumptions, and therefore cannot evaluate the
likelihood of success.
Our
Jatropha Business is a new and highly risky business that has not been conducted
on a similar scale in North America.
Our
business plan calls for a large scale planting and harvesting of Jatropha
plants, primarily outside of the United States, and for the subsequent
production and sale of Jatropha oil (and other Jatropha byproducts) for use as a
bio-fuel in Mexico and in the United States. In addition to all of
the risks normally associated with developing a new line of business, we will be
subject to certain risks unique to our Jatropha bio-fuels business, including
the large scale production of plants that have not heretofore been grown in
large scale farms in Mexico, logistical issues related to the oil and biomass
produced at such farms, market acceptance, uncertain pricing of our products,
developing governmental regulations, and the lack of an established market for
our products.
Our
business could be significantly impacted by changes in government regulations
over energy policy.
Our
planned operations and the properties we intend to cultivate are subject to a
wide variety of federal, provincial and municipal laws and regulations,
including those governing the use of land, type of development, use of water,
use of chemicals for fertilizer, pesticides, export or import of various
materials including plants, oil, use of biomass, handling of materials, labor
laws, storage handling of materials, shipping, and the health and safety of
employees. As such, the nature of our operations exposes us to the risk of
claims with respect to such matters and there can be no assurance that material
costs or liabilities will not be incurred in connection with such
claims. In addition, these governmental regulations, both in the
United States and in the foreign countries in which we may conduct our business,
may restrict and hinder our operations and may significantly raise our cost of
operations. Any breach by our company of such legislation may also
result in the suspension or revocation of necessary licenses, permits or
authorizations, civil liability and the imposition of fines and penalties, which
would adversely affect our ability to operate and our financial
condition.
Further,
there is no assurance that the laws, regulations, policies or current
administrative practices of any government body, organization or regulatory
agency in the United States or any other jurisdiction, will not be changed,
applied or interpreted in a manner which will fundamentally alter the ability of
our company to carry on our business. The actions, policies or regulations, or
changes thereto, of any government body or regulatory agency, or other special
interest groups, may have a detrimental effect on our company. Any or all of
these situations may have a negative impact on our operations.
Our
future growth is dependent upon strategic relationships within the feedstock and
bio-diesel industries. If we are unable to develop and maintain such
relationships, our future business prospects could be significantly
limited.
Our
future growth will generally be dependent on relationships with third parties,
including alliances with feedstock oil and bio-diesel processors and
distributors. In addition, we will likely rely on third parties to
oversee the operations and cultivation of the Jatropha plants in our non-U.S.
properties. Accordingly, our success will be significantly dependent
upon our ability to establish successful strategic alliances with third parties
and on the performance of these third parties. These third parties
may not regard their relationship with us as important to their own business and
operations, and there is no assurance that they will commit the time and
resources to our joint projects as is necessary, or that they will not in the
future reassess their commitment to our business. Furthermore, these
third parties may not perform their obligations as agreed. In the
event that a strategic relationship is discontinued for any reason, our
business, results of operations and financial condition may be materially
adversely affected.
A
significant decline in the price of oil could have an adverse impact in our
profitability.
Our
success is dependent in part upon the historic high price of crude oil and on
the high price of seed oils that are currently used to manufacture
bio-diesel. A significant decline in the price of either crude oil or
the alternative seed oils will have a direct negative impact on our financial
performance.
There
are risks associated with conducting our business operations in foreign
countries, including political and social unrest.
To date,
we have acquired farms in Mexico and Belize. We expect that most, if
not all, of our future agricultural operations will also be primarily located in
foreign countries, particularly in Mexico. Accordingly, we are
subject to risks not typically associated with ownership of U.S. companies and
therefore should be considered more speculative than investments in the
U.S.
For
example, Mexico is a developing country that has experienced a range of
political, social and economic difficulties over the last decade. Our operations
could be affected in varying degrees by political instability, social unrest and
changes in government regulation relating to foreign investment, the biofuels
industry, and the import and export of goods and services. Operations may also
be affected in varying degrees by possible terrorism, military conflict, crime,
fluctuations in currency rates and high inflation.
In
addition, Mexico has a nationalized oil company, and there can be no assurance
that the government of Mexico will continue to allow our business and our assets
to compete in any way with their interests. Our operations could be adversely
affected by political, social and economic unrest in Mexico, Belize and any
other foreign countries in which we commence agricultural
operations.
We
plan to grow rapidly and our inability to keep up with such growth may adversely
affect our profitability.
We plan
to grow rapidly and significantly expand our operations. We currently
have a very small staff and few resources. If we succeed in
significantly expanding our operations, our growth may place a significant
strain on our management team and other company resources. We will
not be able to implement our business strategy in a rapidly evolving market
without effective planning and management processes. We have a short
operating history and have not implemented sophisticated managerial, operational
and financial systems and controls. If we grow significantly, we will
have to manage multiple relationships with various strategic partners, including
suppliers, distributors, and other third parties. To manage the
expected growth of our operations and personnel, we will have to significantly
supplement our existing managerial, financial and operational staff, systems,
procedures and controls. We may be unable to supplement and complete,
in a timely manner, the improvements to our systems, procedures and controls
necessary to support our future operations, and consequently our operations will
not function effectively. In addition, our management may be unable
to hire, train, retain, motivate and manage required personnel, or successfully
identify, manage and exploit existing and potential market
opportunities. As a result, our business and financial condition may
be adversely affected.
Our
business will not be diversified because we will be primarily concentrated in
one industry. As a consequence, we may not be able to adapt to
changing market conditions or endure any decline in the bio-diesel
industry.
We expect
our business will be substantially dependent upon the success of Jatropha as a
bio-fuel. Accordingly, we expect that virtually all of our revenues
will be derived from some form of Jatropha (either from the sales of feedstock
oil harvested from our Jatropha farms, the bio-diesel production and sales of
Jatropha oil, the sale of carbon credits produced from Jatropha farms, and the
development and management services related to the cultivation and production of
Jatropha plants and bio-fuel). We do not have any other lines of
business or other sources of revenue to rely upon if the Jatropha business does
not become viable and if we are unable to produce and sell feedstock oil and
bio-diesel, or if the markets for such products decline. Our lack of
diversification means that we may not be able to adapt to changing market
conditions or to withstand any significant decline in the bio-diesel
industry.
Reductions
in the price of bio-diesel, and decreases in the price of petroleum-based fuels
could affect the price of our feedstock, resulting in reductions in our
revenues.
Historically,
bio-diesel prices have been highly correlated to the Ultra Low Sulfur (“ULS”)
diesel prices. Increased volatility in the crude oil market has an
effect on the stability and long-term predictability of ULS diesel, and hence
the biofuels prices in the domestic and international markets. Crude oil prices
are impacted by wars and other political factors, economic uncertainties,
exchange rates and natural disasters. A reduction in petroleum-based
fuel prices may have an adverse effect on bio-diesel prices and could apply
downward pressure on feedstock, affecting revenues and profits in the feedstock
industry, which could adversely affect our financial condition.
There
are several agreements and relationships that remain to be negotiated, executed
and implemented which will have a critical impact on our operations, expenses
and profitability.
Assuming
that we obtain the necessary funds, directly or through future joint ventures,
to acquire and develop additional Jatropha farms in Mexico or elsewhere, we will
have to enter into numerous agreements, documents and relationships with the
owners of the land and the providers of various services. All
of these agreements and arrangements remain to be negotiated, executed and
implemented, including agreements relating to the construction of our proposed
seed processing plant and other support facilities for our Jatropha plantation
in Mexico. In some cases, the parties with whom we would need to
establish a relationship have yet to be identified. Our expectations
regarding the likely terms of these agreements and relationships could vary
greatly from the terms of any agreement or relationship that may eventually be
executed or established. If we are unable to enter into these
agreements or relationships on satisfactory terms, or if revisions or amendments
to existing terms become necessary, the purchase and cultivation of additional
land, or the construction of our proposed seed processing plant and the
commencement of our related operations could be delayed. In such an
event, our expenses could be increased and our ability to achieve profitability
could be adversely affected.
Delays
due to, among others, weather, labor or material shortages, permitting or zoning
delays, or opposition from local groups, may hinder our ability to commence
operations in a timely manner.
We could
incur delays in the implementation of our plans to plant and harvest Jatropha,
or our plans for the construction of support facilities, due to permitting or
zoning delays, opposition from local groups, adverse weather conditions, labor
or material shortages, or other causes. In addition, changes in
political administrations at the federal, state or local level that result in
policy changes towards the large scale cultivation of Jatropha, or towards
biofuels in general, could result in delays in our business plan
timetable. Any such delays could adversely affect our ability to
fully commence operations and generate revenues.
We
may be unable to locate suitable properties and obtain the development rights
needed to build and expand our business.
Our
business plan focuses on identifying and developing agricultural properties
(farms, nurseries, etc.) for the production of biofuels
feedstock. The availability of land for this activity is a key
element of our projected revenue generation. Our ability to acquire
appropriate land in the future is uncertain and we may be required to delay
planting, which may create unanticipated costs and delays. In the
event that we are not successful in identifying and obtaining rights on suitable
land for our agricultural and processing facilities, our future prospects for
profitability will likely be affected, and our financial condition and resulting
operations may be adversely affected.
Technological
advances in feedstock oil production methods in the bio-diesel industry could
adversely affect our ability to compete and the value of your
investment.
Technological
advances could significantly decrease the cost of producing feedstock oil and
biofuels. There is significant research and capital being invested in
identifying more efficient processes, and lowering the cost of producing
feedstock oil and biofuels. We expect that technological advances in
feedstock oil/biofuel production methods will continue to occur. If
improved technologies become available to our competitors, they may be able to
produce feedstock oil, and ultimately biofuels, at a lower cost than
us. If we are unable to adopt or incorporate technological advances
into our operations, our ability to compete effectively in the
feedstock/biofuels market may be adversely affected, which in turn will affect
our profitability.
The
development of alternative fuels and energy sources may reduce the demand for
biofuels, resulting in a reduction in our profitability.
Alternative
fuels, including a variety of energy alternatives to biofuels, are continually
under development. Technological advances in fuel-engines and exhaust system
design and performance could also reduce the use of biofuels, which would reduce
the demand for bio-diesel. Further advances in power generation technologies,
using cleaner hydrocarbon based fuels, fuel cells and hydrogen are actively
being researched and developed. If these technological advances and
alternatives prove to be economically feasible, environmentally superior and
accepted in the marketplace, the market for biofuels could be significantly
diminished or replaced, which would adversely affect our financial
condition.
Our
ability to hire and retain key personnel and experienced consultants will be an
important factor in the success of our business and a failure to hire and retain
key personnel may result in our inability to manage and implement our business
plan.
We are
highly dependent upon our management, and on Richard Palmer (our Chief Executive
Officer) in particular. The loss of the services of any of our
management personnel may impair management's ability to operate our company or
our ability to locate and develop new Jatropha farms. We have not
purchased key man insurance on any of our officers, which insurance would
provide us with insurance proceeds in the event of their
death. Without key man insurance, we may not have the financial
resources to develop or maintain our business until we could replace such
individuals or to replace any business lost by the death of such
individuals. We may not be able to attract and retain the necessary
qualified personnel. If we are unable to retain or to hire qualified
personnel as required, we may not be able to adequately manage and implement our
business.
Our
operating costs could be higher than we expect, and this could reduce our future
profitability.
In
addition to general economic conditions, market fluctuations and international
risks, significant increases in operating, development and implementation costs
could adversely affect our company due to numerous factors, many of which are
beyond our control. These increases could arise for several reasons,
such as:
|
·
|
Increased
cost for land acquisition;
|
|
·
|
Increased
unit costs of labor for nursery, field preparation and
planting;
|
|
·
|
Increased
costs for construction of
facilities;
|
|
·
|
Increased
transportation costs for required nursery and field
workers;
|
|
·
|
Increased
costs of supplies and sub-contacted labor for preparing of land for
planting;
|
|
·
|
Increase
costs for irrigation, soil conditioning, soil maintenance;
or
|
|
·
|
Increased
time for planting and plant care and
custody.
|
In
addition, our Jatropha farm operations will also subject us to ongoing
compliance with applicable governmental regulations, including those governing
land use, water use, pollution control, worker safety and health and welfare and
other matters. We may have difficulty complying with these
regulations and our compliance costs could increase
significantly. Increases in operating costs would have a negative
impact on our operating income, and could result in substantially decreased
earnings or a loss from our operations, adversely affecting our financial
condition.
Fluctuations
in the Mexican peso to U.S. dollar exchange rate may adversely affect our
reported operating results.
The
Mexican peso is the primary operating currency for our current business
operations while our financial results are reported in U.S.
dollars. Because our costs will be primarily denominated in pesos, a
decline in the value of the dollar to the peso could negatively affect our
actual operating costs in U.S. dollars, and our reported results of
operations. We do not currently engage in any currency hedging
transactions intended to reduce the effect of fluctuations in foreign currency
exchange rates on our results of operations. We cannot guarantee that
we will enter into any such currency hedging transactions in the future or, if
we do, that these transactions will successfully protect us against currency
fluctuations.
Our
future profitability is dependent upon many natural factors outside of our
control. If these factors do not produce favorable results our future
business profitability could be significantly affected.
Our
future profitability is mainly dependent on
the production output from our agricultural operations. There are
many factors that can effect growth and fruit production of the Jatropha plant
including weather, nutrients, pests and other natural enemies of the
plant. Many of these are outside of our direct control and could be
devastating to our operations.
Risks
Relating to Our Common Stock
Our
stock is thinly traded, so you may be unable to sell your shares at or near the
quoted bid prices if you need to sell a significant number of your
shares.
The
shares of our common stock are thinly-traded on the OTC Bulletin Board, meaning
that the number of persons interested in purchasing our common shares at or near
bid prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of factors,
including the fact that we are a small company which is relatively unknown to
stock analysts, stock brokers, institutional investors and others in the
investment community that generate or influence sales volume, and that even if
we came to the attention of such persons, they tend to be risk-averse and would
be reluctant to follow an unproven, early stage company such as ours or purchase
or recommend the purchase of our shares until such time as we became more
seasoned and viable. As a consequence, there may be periods of
several days or more when trading activity in our shares is minimal or
non-existent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without
an adverse effect on share price. We cannot give you any assurance
that a broader or more active public trading market for our common shares will
develop or be sustained, or that current trading levels will be
sustained. Due to these conditions, we can give you no assurance that
you will be able to sell your shares at or near bid prices or at all if you need
money or otherwise desire to liquidate your shares.
Our
existing directors, officers and key employees hold a substantial amount of our
common stock and may be able to prevent other shareholders from influencing
significant corporate decisions.
As of
March 24, 2010, our directors and executive officers beneficially owned
approximately 11% of our outstanding common stock. These
shareholders, if they act together, may be able to direct the outcome of matters
requiring approval of the shareholders, including the election of our directors
and other corporate actions such as:
|
·
|
our
merger with or into another
company;
|
|
·
|
a
sale of substantially all of our assets;
and
|
|
·
|
amendments
to our articles of incorporation.
|
The
decisions of these shareholders may conflict with our interests or those of our
other shareholders.
The
market price of our stock may be adversely affected by market
volatility.
The
market price of our common stock is likely to be volatile and could fluctuate
widely in response to many factors, including:
|
·
|
fluctuation
in the world price of crude oil;
|
|
·
|
market
changes in the biofuels industry;
|
|
·
|
government
regulations affecting renewable energy businesses and
users;
|
|
·
|
actual
or anticipated variations in our operating
results;
|
|
·
|
our
success in meeting our business goals and the general development of our
proposed operations;
|
|
·
|
general
economic, political and market conditions in the U.S. and the foreign
countries in which we plan to operate;
and
|
|
·
|
the
occurrence of any of the risks described in this Annual
Report.
|
Obtaining
additional capital though the sale of common stock will result in dilution of
shareholder interests.
We plan to raise additional funds in the
future by issuing additional shares of common stock or other securities, which
may include securities such as convertible debentures, warrants or preferred
stock that are convertible into common stock. Any such sale of common
stock or other securities will lead to further dilution of the equity ownership
of existing holders of our common stock. Additionally, the existing
options, warrants and conversion rights may hinder future equity offerings, and
the exercise of those options, warrants and conversion rights may have an
adverse effect on the value of our stock. If any such options,
warrants or conversion rights are exercised at a price below the then current
market price of our shares, then the market price of our stock could decrease
upon the sale of such additional securities. Further, if any such
options, warrants or conversion rights are exercised at a price below the price
at which any particular shareholder purchased shares, then that particular
shareholder will experience dilution in his or her
investment.
We
are unlikely to pay dividends on our common stock in the foreseeable
future.
We have never declared or paid dividends
on our stock. We currently intend to retain all available funds and any future
earnings for use in the operation and expansion of our business. We do not
anticipate paying any cash dividends in the foreseeable future, and it is
unlikely that investors will derive any current income from ownership of our
stock. This means that your potential for economic gain from ownership of our
stock depends on appreciation of our stock price and will only be realized by a
sale of the stock at a price higher than your purchase
price.
Trading
of our stock may be restricted by the Securities and Exchange Commission's penny
stock regulations, which may limit a shareholder's ability to buy and sell our
stock.
The
Securities and Exchange Commission has adopted regulations which generally
define “penny stock” to be any equity security that has a market price less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Our securities are covered by the penny stock
rules, which impose additional sales practice requirements on broker-dealers who
sell to persons other than established customers and “accredited
investors”. The term “accredited investor” refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document in a form prepared by the
Securities and Exchange Commission, which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS.
|
Not applicable.
Executive
Offices. Currently, we operate out of offices located at 6033
W. Century Blvd, Suite 895, Los Angeles, California 90045. Our leased
offices consist of 1,495 square feet and are leased at a monthly rate of $ 1.80
per sq. ft. on a month-by-month basis.
Tizimin Farms. As
of March 31,2010, we own the following two Jatropha farms through our GCE Mexico
I, LLC joint venture:
1. Our
first farm consists of seven separate parcels of land collectively representing
2,084 hectares (approximately 5,149 acres). We purchased these
parcels in 2008. The farm is located approximately 12 miles northeast
of Tizimin, Yucatan, Mexico and is approximately 110 miles from Merida and the
port of Progresso, and 75 miles from Cancun. Irrigation systems have
been installed in test areas of the farm. All of the land has been
improved and we have completed planting on all of the planned
farmland. We financed the purchase of this farm through a
mortgage loan in the amount of $2,051,282, which bears interest at a rate of 12%
per annum.
2. In
March 2010, we purchased approximately 3,700 acres of additional land that is
contiguous to our first farm. We have commenced preparing this
farmland for Jatropha plantation and expect that the new farm will be fully
planted by the end of 2010. We financed the purchase of this farm
thought a mortgage loan in the amount of $742,652. That loan bears
interest at a rate of 12% per annum.
Belize Farm. We currently own
and manage a Jatropha farm in Belize comprising approximately 160 hectares
(approximately 400 acres), with about one mile of river frontage. The
farm is located in Teakettle, Cayo. The farm is currently cultivated and
produces Jatropha seeds that we have used for planting on our Mexico farms, and
sold to third parties. Please see the discussion under “Item 1 –
Business – Jatropha Farming
Operations – Belize” for additional details
concerning our Jatropha farm operations in Belize.
Tebec Farm. We currently lease a 75-acre
farm approximately 15
kilometers south of Merida, Mexico. The farm is used primarily
for plant and soil science research and development activities. We have fully
developed and planted this farm with many varieties of Jatropha
curcas from all over the
world. The
farm is fully irrigated and is managed by our in-house staff. The plants in this
farm vary in age, the oldest being planted almost four years
ago.
ITEM
3.
|
LEGAL
PROCEEDINGS.
|
We may
occasionally become subject to legal proceedings and claims that arise in the
ordinary course of our business. It is impossible for us to predict with any
certainty the outcome of pending disputes, and we cannot predict whether any
liability arising from pending claims and litigation will be material in
relation to our consolidated financial position or results of
operations.
PART
II
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS, AND ISSUER
PURCHASES OF EQUITY SECURITIES.
|
Prior to
February 6, 2008, our common stock was traded on the OTC Bulletin Board under
the symbol “MLSC.” In connection with the change of our corporate
name, our trading symbol was changed to “GCEH” on February 29,
2008. The following table sets forth the range of closing prices for
our common stock for the quarters indicated. Such quotations reflect
inter-dealer prices, without retail mark-ups, markdowns or commissions, and may
not represent actual transactions.
Fiscal
Year Ended December 31, 2008
|
|
High
Bid
|
|
Low
Bid
|
First
Quarter
|
|
$
.050
|
|
$
.025
|
Second
Quarter
|
|
$
.120
|
|
$
.045
|
Third
Quarter
|
|
$
.072
|
|
$
.030
|
Fourth
Quarter
|
|
$
.050
|
|
$
.020
|
Fiscal
Year Ended December 31, 2009
|
|
High
Bid
|
|
Low
Bid
|
First
Quarter
|
|
$
.038
|
|
$
.015
|
Second
Quarter
|
|
$
.030
|
|
$
.010
|
Third
Quarter
|
|
$
.022
|
|
$
.010
|
Fourth
Quarter
|
|
$
.028
|
|
$
.010
|
Shareholders
As of
March 31, 2010, there were approximately 1,500 holders of record of our
common stock, not including any persons who hold their stock in “street
name.”
Dividends
We have
not paid any dividends on our common stock to date and do not anticipate that we
will pay dividends in the foreseeable future. Any payment of cash
dividends on our common stock in the future will be dependent upon the amount of
funds legally available, our earnings, if any, our financial condition, our
anticipated capital requirements and other factors that the Board of Directors
may think are relevant. However, we currently intend for the
foreseeable future to follow a policy of retaining all of our earnings, if any,
to finance the development and expansion of our business and, therefore, do not
expect to pay any dividends on our common stock in the foreseeable
future.
Securities
Authorized For Issuance Under Equity Compensation Plans
The
following table contains information regarding our equity compensation plans as
of December 31, 2009
Plan
Category
|
Number
of Securities to be Issued upon Exercise of Outstanding Options, Warrants
and Rights
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding Securities Reflected in the First
Column)
|
Equity
compensation plans approved by security holders
|
|
|
|
1993 Incentive Plan
(1)
|
3,383,000
|
$0.13
|
--
|
2002 Stock Incentive
Plan
|
19,700,000
|
$0.04
|
300,000
|
Equity
compensation plans not approved by security holders
Options
|
1,350,000
|
$0.02
|
|
Warrants
|
66,518,635
|
$0.02
|
|
|
|
|
|
Total
|
90,951,635
|
|
300,000
|
(1) The
1993 Incentive Plan has expired and no additional options or awards can be
granted under this plan.
Recent
Issuances Of Unregistered Securities
We did
not issue any unregistered securities during the three-month period ended
December 31, 2009 that were not previously reported in a Current Report on Form
8-K.
Repurchase
of Shares
We did
not repurchase any of its shares during the fourth quarter of the fiscal year
covered by this report.
ITEM
6.
|
SELECTED
FINANCIAL DATA.
|
Not
applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC
Regulation S-K.
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
Overview
Until
recently, this company was a developmental stage company. In October 2009, the
Company achieved two milestones:
|
o
|
The
substantial completion of the planting of all Jatropha trees on our
primary 5,000-acre farm.
|
|
o
|
The
commencement of sales and revenues.
|
Consequently,
management has determined that the Company has commenced its planned principal
operations and it is appropriate to discontinue reporting as a development stage
company. Until 2007, we were a bio-pharmaceutical company engaged in
the research and development of two potential drug candidates. In
2007, we decided to discontinue the development of our two drug candidates,
decided to sell our two drug technologies, and decided to commence a new
business as a renewable alternative energy source company. As a
result, the “Results of Operations” section below contains a description of the
results of the new bio-fuels business that we are currently
conducting. The results of operations of the business that we no
longer intend to pursue have been characterized as discontinued
operations.
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.
Development Stage
Enterprise. Until October 1, 2009, we were a development stage
company as defined under generally accepted accounting
principles. Accordingly, all losses accumulated since inception had
been considered as part of our development stage activities.
Operational
Company. Starting on October 1, 2009, the commencement of our
planned principal operations indicated that we were no longer subject to the
provisions as defined by the Financial Accounting Standards Board’s
(“FASB”), Accounting Standards
Codification Topic 915 “Development Stage Entities.” Our financial
therefore are presented as an operational company.
Agricultural
Producer. All costs incurred until the actual planting of the
Jatropha Curcas plant are considered development costs. Plantation development
costs are being accumulated in the balance sheet during the development period
and have been accounted for in accordance with generally accepted accounting
principles for agricultural producers and agricultural
cooperatives.
Certain
other critical accounting policies, including the assumptions and judgments
underlying them, are disclosed in the Note A to the Consolidated Financial
Statements included in this Annual Report. However, we do not believe
that there are any alternative methods of accounting for our operations that
would have a material affect on our financial statement.
Results
Of Operations
In 2007
the Board of Directors determined to discontinue our prior bio-pharmaceutical
operations. Pursuant to accounting rules for discontinued operations,
we have classified all revenue and expense, except general corporate overhead,
for 2009 and prior periods related to the operations and sale of our
bio-pharmaceutical business as discontinued operations. Commencing on October 1,
2009, we commenced our planned operations and our financials since that date
will be presented as an operational company.
Revenues and
Gross Profit. We achieved our planned operations and revenue
in the forth quarter of 2009. We discontinued our prior bio-pharmaceutical
operations in March 2007. In September 2007, we commenced operations
in our new bio-fuels Jatropha business, and achieved revenues from the sale of
bio-fuel products and services in late 2009. During the fiscal year
ended December 31, 2009 (“fiscal 2009”), we recognized revenue of $373,060
related to our current operations. This revenue is primarily from the
provision of bio-fuel development and management services and the sale of
Jatropha seeds for seed propagation purposes. On December 22, 2009,
we consummated the sale of our legacy medical assets by selling all patents,
rights, and data associated with our remaining legacy pharmaceutical
assets. The purchase price that our buyer paid for these assets
consisted of 350,000 Euros in cash, the assumption of $2,758,350 (1,850,000
Euros) of obligations, and a revenue sharing arrangement to pay us up to
2,000,000 Euros if and when such legacy pharmaceutical assets are ever
commercialized. In connection with the sale, we recognized a gain of
$3,298,511, consisting of cash received of $518,655, the assumption of a
research and development obligation with a carrying value of $2,758,350
(1,850,000 Euros), and the assumption of accounts payable of
$21,506. We did not generate any revenues in 2008.
Operating
Expenses. Our general and administrative expenses related to
our continuing operations for the year ended December 31, 2009, were $1,520,000
compared to $1,830,000 for the year ended December 31, 2008. General
and administrative expense principally includes officer compensation; outside
services, such as legal, accounting, and consulting expenses; share-based
compensation; and other general expenses such as insurance, occupancy costs,
travel, etc. The net reduction in general and administrative expenses
from fiscal 2008 to fiscal 2009 is principally the result of a reduction in
legal, accounting and other outside service expenses of $328,000. For the year
ended December 31, 2009, we recorded Plantation Operating costs of $739,000 from
the fourth quarter operations of the Tizimin and Belize farms because we were,
during that fiscal quarter, an operational company. We did not incur
any such expenses in 2008. Please see the discussions above under
“Development Stage Enterprise” for further discussion on how we ceased being a
development stage enterprise because our planned principal operations commenced
and because we began generating revenue from our planned
operations.
Other Income/
Expense and Net Loss. In connection with the amendment
of a secured promissory note and issuance of additional warrants to the
noteholder during the year ended December 31, 2008, we recorded an additional
discount of $36,000. This additional discount was amortized as
“interest expense from amortization of discount on secured promissory note” over
the extended term of the loan from May 19, 2008 through August 19,
2008. Interest expense increased from $235,000 for the year ended
December 31, 2008 to $334,000 for the year ended December 31,
2009. The increase in interest expense is primarily attributable to
interest on a mortgage on land purchased in Mexico during April
2008. The mortgage is in the amount of $2,051,000 and accrues
interest at the rate of 12% per year. The increase in interest
expense is primarily due to the fact that this note was outstanding for all of
2009, compared to eight months of 2008. The increase in interest
expense is also attributable to the increase in the principal balance of the
secured promissory note during 2009.
In March
2010, we issued a $567,000 convertible debenture that bears interest at a rate
of 5.97% per annum, and obtained a $742,652 mortgage loan in connection with the
acquisition of additional farmland in Mexico. This additional
mortgage bears interest at a rate of 12 % per annum. As a result of
the foregoing, we anticipate that our interest expense in 2010 will increase
compared to 2009.
In fiscal
2008 we recognized income from discontinued operations of $67,000, compared to
an income from discontinued operations $3,167,000 for the current fiscal year
2009. The gain from discontinued operations for the year ended
December 31, 2008 principally relates to foreign currency exchange rate gains on
liabilities associated with our former business that are denominated in
euros. However, the material gain in 2009 is related to the gain of
$3.2million recognized on sale of the SaveCream asset on December 22,
2009.
For
fiscal 2009, we incurred a loss from continuing operations of $2,226,000
compared to a loss from continuing operations of $2,090,000 in the prior fiscal
year. However, as a result of the one-time gain of $3,299,000 that we
recognized on sale of the SaveCream asset on December 22, 2009, we had net
income of $2,238,000 in fiscal 2009, compared to a net loss of $1,708,000 in
fiscal 2008.
Liquidity
And Capital Resources
As of
December 31, 2009 we had $834,000 in cash and a working capital deficit of
$4,986,000, as compared with $291,000 in cash and a working capital deficit of
$6,604,000 at December 31, 2008. Outstanding indebtedness at December 31, 2009
totaled $8,149,000. The existence of the foregoing working capital deficit and
liabilities is expected to negatively impact our ability to obtain future equity
or debt financing and the terms on which such additional financing, if
available, can be obtained. In March 2010, we obtained a $567,000 unsecured
convertible loan from two accredited investors, which funds we used to repay in
full an outstanding secured loan. In addition, in March 2010, we
raised $500,000 from the sale of common stock to two accredited
investors. Although we also purchased 3,700 acres of additional
farmland in Mexico in March 2010, the purchase of that land was financed through
funds raised through our GCE Mexico joint venture and a $742,562 mortgage
loan. As a result, the purchase of the land did not negatively impact
our current liquidity. Based on the funds we have on March 31,
2010 and the proceeds we expect to receive during this year, we believe that we
will have sufficient funds to pay our administrative and other operating
expenses during 2010. However, we do not have sufficient cash to
repay all of our current liabilities should we be required to do
so.
Since our
inception, we have financed our operations primarily through private sales of
equity and debt financing. In order to fund our short-term working
capital needs, we will have to obtain additional funding. With the
exceptions of the cash proceeds from the sale of our legacy medical asset,
virtually all of the cash reflected on our balance sheet is reserved for the
operation of GCE Mexico and our Jatropha farms. Accordingly, most of
those funds are not available to fund our general and administrative or other
operating expenses.
Our
ability to continue to fund our liquidity and working capital needs will be
dependent upon our ability to generate revenues from our existing farm
operations and our on-going development and management activities. On
December 22, 2009 we sold all of our patents, rights, and data associated with
our remaining legacy pharmaceutical assets for 350,000 Euros, the assumption of
certain obligations, and a revenue sharing arrangement that could result in our
receiving up to 2,000,000 Euros in the future if the buyer of those assets
completes the development of the assets and commercializes a product based
thereon. In connection with the sale, we recognized a gain of
$3,298,511, consisting of cash received of $518,655, the assumption of a
research and development obligation with a carrying value of $2,758,350
(1,850,000 Euros), and the assumption of accounts payable of
$21,506. If such legacy pharmaceutical assets are ever commercialized
by the buyer and we receive the entire 2,000,000 Euro payment, the entire
transaction would be valued at approximately 4.2 million Euros. No
assurance can be given if or when the development of those assets will be
completed, if a commercial product will be produced and marketed, and if any
additional consideration or cash will be paid to us in the
future. However, as collateral for any future payments that may be
payable to us, we will continue to maintain a security interest in such assets
until the final 2,000,000 Euro payment is made, if ever. Although the
sale of the legacy medical assets generated significant income, we only received
350,000 Euros ($518,655), much of which has, to date, been used to finance our
immediate working capital needs and to retire a limited amount of historic
liabilities.
In order
to fund ongoing operations, in September 2007 we obtained a secured loan that,
during 2009, had an outstanding principal balance of $475,000 as of July 13,
2009. In August 2009, the maturity date of this loan was again
extended, this time to January 31, 2010. The principal of this loan,
and accrued interest of $81,909, was repaid in March 2010 from the $567,000
unsecured loans that we obtained in March 2010, and therefore, the secured
promissory notes were repaid and all liabilities associated with this loan were
extinguished.
Our
business plan calls for significant infusion of additional capital to establish
additional Jatropha farms in Mexico and other locations. Because of our negative
working capital position, we currently do not have the funds necessary to
acquire and cultivate additional farms solely for our own
account. However, we have purchased the larger farms that we now own
in Mexico through our GCE Mexico I, LLC joint venture that we previously
established with third parties. In order to purchase additional
Jatropha farms, or to acquire or build facilities to process our Jatropha oil,
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. The formation and funding of the GCE Mexico I, LLC was the first
of a series of planned transactions to expand our Jatropha operations. Under GCE
Mexico I, LLC, our 5,149-acre farm in Tizimin, Mexico was recently expanded by
the acquisition of approximately 3,700 additional acres. Effective July 2, 2009,
we purchased all of the outstanding capital stock of Technology Alternatives
Limited, a company formed under the laws of Belize (“TAL”), from its four
shareholders. TAL owns and operates a 400-acre farm in subtropical
Belize, Central America, which currently is producing Jatropha. TAL
also has been performing plant science research and has been providing technical
advisory services for propagation of Jatropha for a number of
years. Under the Stock Purchase Agreement, as amended, in
consideration for the purchase of all of the shares of TAL, (i) promissory notes
were issued by TAL to the four former owners as evidence of its indebtedness to
them in the aggregate amount of $516,139 Belize Dollars (US $268,036 based on
exchange rates in effect at July 2, 2009), and (ii) an aggregate of 8,952,757
unregistered shares of our common stock were issued to the four former
owners. The entire outstanding balance of the promissory notes will
mature on June 28, 2010. Since the TAL promissory notes is secured by
a mortgage on the 400 acre farm, our failure to pay this note upon its maturity
could result in the loss of that farm and our investment in the Belizean
Jatropha farm. Without raising additional cash (through the sale of
our securities, the sale or carbon credits, or strategic arrangements), we will
not be able to effect our new business plan in the Jatropha business and will
have to further reduce our operations, revise our business plan, and may
either/or temporarily or permanently cease operations.
On March
16, 2010, we issued $567,000 of unsecured convertible promissory notes to two
investors. The convertible notes mature on the earlier of (i)
March 16, 2012, and (ii) upon written demand of payment by the investors
following our default thereunder. The maturity date of the convertible notes may
be extended by written notice made by the Investors at any time prior to March
16, 2012. Interest accrues on the convertible notes at a rate of
5.97% per annum, and is payable quarterly in cash, in arrears, on each
three-month anniversary of the issuance of the convertible
notes. However, we have the right, exercisable at our option, in lieu
of paying interest in cash, to pay interest by delivering a number of
unregistered shares of our common stock equal to the quotient obtained by
dividing the amount of such interest by the arithmetic average of the volume
weighted average price (VWAP) 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
holders of these convertible notes, the outstanding balance thereof (including
accrued and unpaid interest thereon) may be converted into shares of our 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 our capital stock. As of March 16, 2010, the convertible notes rank
senior to all other indebtedness, and thereafter will remain senior or pari
passu with all accounts payable and other similar liabilities incurred by us in
the ordinary course of business. We may not prepay the convertible
notes without the prior consent of the note holders. Virtually all of
the proceeds from these convertible notes were used to fully repay outstanding
secured loans that had matured and were due and payable.
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
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Not
applicable to a “smaller reporting company.”
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
|
Financial
Statements are referred to in Item 15, listed in the Index to Financial
Statements and filed and included elsewhere herein as a part of this Annual
Report on Form 10-K.
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
None.
ITEM 9A(T).
|
CONTROLS
AND PROCEDURES.
|
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures which are designed to ensure that
the information required to be disclosed in the reports it files or submits
under the Securities Exchange Act of 1934 (as amended, the “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 the Chief Executive Officer and the Chief Financial
Officer (“Certifying Officers”), to allow timely decisions regarding required
financial disclosures.
In
connection with the preparation of this Annual Report, our Certifying Officers
evaluated the effectiveness of management’s disclosure controls and procedures,
as of December 31, 2009, in accordance with Rules 13a-15(b) and 15d-15(b) of the
Exchange Act. Based on that evaluation, the Certifying Officers
concluded that management’s disclosure controls and procedures were not
effective as of December 31, 2009.
Material
Weakness in Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rule 15d-15(f) under the
Exchange Act, and for assessing the effectiveness of internal control over
financial reporting.
Internal
control over financial reporting is intended to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States. Internal control
over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets, (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States and that our receipts and expenditures are being made only
in accordance with authorizations of our management and directors, and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisitions, use, or disposition of our assets that could have a
material effect on our financial statements.
Management,
with the participation of our principal executive and financial officers,
conducted an evaluation of the effectiveness of our internal control over
financial reporting, as of December 31, 2009, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that
evaluation, management concluded that, as of December 31, 2009, our internal
control over financial reporting was not effective.
Based on
our evaluation of our internal control over financial reporting in our Mexico
and Belize subsidiaries we have determined that we currently have inadequate
controls over the accounting functions in these foreign
subsidiaries. Management has taken the following steps, and is
implementing the following new controls to improve both of these
deficiencies:
|
·
|
The
Company has hired a senior accountant (a certified public accountant) to
assist the Company in its accounting functions and to monitor, on a full
time basis, the financial reporting of the Company’s foreign
operations.
|
|
·
|
The
Company has purchased and is currently implementing a company-wide
enterprise resource planning software program. This software is
anticipated to be fully operational after the second quarter of 2010, and
will permit the integration of financial and operational data from all
entities under the management of the Company. All operations throughout
the world will be integrated into the
system.
|
Our Board
of Directors believes that, with the exception of the issues identified relating
to our operations in Mexico and Belize, our system of internal controls,
disclosure controls and procedures are adequate to provide reasonable assurance
that the information required to be disclosed in the our interim and annual
reports is recorded, processed, summarized, and accurately reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our Board of Directors, the Audit Committee,
management, including our certifying officers, as appropriate, to allow for
timely decisions regarding required disclosure based closely on the definition
of “disclosure controls and procedures” in Rule 13a-15(e). The Audit
Committee cannot be certain that the Company’s remediation efforts will
sufficiently cure management’s identified material financial reporting
weaknesses. Furthermore, the Audit Committee has not tested the
operating effectiveness of the remediated controls, since the process is not yet
complete. However, because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues, if any, within our company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple errors or
mistakes.
This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the
SEC that permit us to provide only management’s report in this annual
report.
Changes
in Internal Control Over Financial Reporting
During
the fourth quarter of the fiscal year ended December 31, 2009, the Company
completed certain improvements to its internal control over financial
reporting. The remedial actions included hiring a senior accountant
to help with the Company’s accounting transactions and implementing a new
enterprise resource planning accounting system that integrates all of the
accounting functions of the Company’s operations (including its operations in
Mexico and Belize). The new enterprise resource planning software has
not yet been fully implemented and tested to determine that all material
weaknesses have been remediated.
ITEM 9B.
|
OTHER
INFORMATION
|
On March
30, 2010, the Company entered into a Stock Purchase Agreement with two
accredited investors pursuant to which we on March 31, 2010, sold 25,000,000
shares (“Shares”) of our common stock at a price of $0.02 per share, for an
aggregate purchase price of $500,000. The Shares were not registered
under the Securities Act of 1933, as amended (the “Act”) and were issued
and sold in reliance upon the exemption from registration contained in
Section 4(2) of the Act and Regulation D promulgated
thereunder.
A copy of the Stock Purchase Agreement
is filed as Exhibit 10.23 to this Annual Report on Form 10-K for the fiscal year
ended December 31, 2009. The summary of the Stock Purchase Agreement,
set forth above is qualified by reference to such exhibit.
PART
III
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE.
|
The
following table sets forth the name, age and position held by each of our
executive officers and directors. Directors are elected for a period
of one year and thereafter serve until the next annual meeting at which their
successors are duly elected by the stockholders.
Name
|
Age
|
Position
|
|
|
|
David
R. Walker
(1)
|
65
|
Chairman
of the Board
|
Richard
Palmer
|
49
|
President,
Chief Executive Officer and Director
|
Bruce
Nelson
|
55
|
Chief
Financial Officer
|
Mark
A. Bernstein, Ph.D.
(1)
|
56
|
Director
|
(1)
|
Member
of our Audit Committee
|
Business
Experience and Directorships
The
following describes the backgrounds of current executive officers and
directors. Our Board of Directors has determined that Mr. Walker and
Dr. Bernstein are independent directors as defined in the Nasdaq rules governing
members of boards of directors.
David R.
Walker
David R.
Walker joined the Board of Directors on May 2, 1996, and was appointed
Chairman of the Board of Directors on May 10, 1998. He has served as
Chairman of the Audit Committee since its establishment in 2001. For
over 20 years, Mr. Walker has been the General Manager of Sunheaven
Farms, the largest onion growing and packing entity in the State of
Washington. In the capacity of General Manager, Mr. Walker
performs the functions of a traditional chief financial
officer. Mr. Walker holds a Bachelor of Arts degree in economics
from Brigham Young University with minors in accounting and
finance.
Richard
Palmer
Richard
Palmer was appointed as our President and Chief Operating Officer in September
2007, and been a member of the Board of Directors since September 2007. Mr.
Palmer became our Chief Executive Officer on December 21, 2007. Mr.
Palmer has over 25 years of hands-on experience in the energy field, holding
senior level management positions with a number of large engineering,
development, operations and construction companies. He is a co-founder of Mobius
Risk Group, LLC, an energy risk advisory services consulting company, and was a
principal and Executive Vice President of that consulting company from January,
2002 until September 2007. From 1997 to 2002, Mr. Palmer was a Senior Director
at Enron Energy Services. Prior thereto, from 1995 to 1996 Mr. Palmer was a Vice
President of Bentley Engineering, and a Senior Vice President of Southland
Industries from 1993 to 1996. Mr. Palmer received his designation as a Certified
Energy Manager in 1999, holds two Business Management Certificates from
University of Southern California’s Business School, and is an active member of
both the American Society of Plant Biologists and the International Tropical
Farmers Association.
Mark A.
Bernstein
Mark A. Bernstein, Ph.D., joined our Board of Directors on
June 30, 2008. Dr. Bernstein is
current a teaching professor at The University of Southern California (USC)
where he also serves as the Managing Director of USC’s Energy
Institute. Dr. Bernstein is an internationally recognized expert on
energy policy and alternative energy technologies. Dr. Bernstein was
awarded a Ph.D. in Energy Management and Policy from the University of
Pennsylvania, holds a Masters degree in Mathematics from Ohio State University,
and a B.A. from State University of New York at Albany.
Bruce
Nelson
Bruce Nelson was appointed as our Chief
Financial Officer in March 2008. Prior to commencing his
relationship with the Company, Mr. Nelson served as Chief Financial Officer of
US Modular, a private technology company located in Irvine,
California. From April 2002 through February 2007, Mr. Nelson served
as Chief Financial Officer of netGuru, Inc., a NASDAQ-listed global engineering
software and IT service company. Prior to netGuru, Mr. Nelson founded and
operated Millennium Information Technologies from 1997 to 2002. From 1992 to
1997 he served as President and CFO of Comprehensive Weight Management, a
national healthcare service provider. From 1985 to 1991 he served as Treasurer
of Comprehensive Care Corporation, a NYSE listed national healthcare provider.
Mr. Nelson served as a U.S. Naval Officer after graduating from the University
of Southern California, majoring in finance. He holds a MBA degree
from Bryant University in Smithfield, R.I. He has also served on the board of
directors of two commercial banks, a NASDAQ-listed technology company, and a
privately held specialty hospital.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers and
directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the
SEC. Executive officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file.
Based
solely on information provided to us by our officers and our review of copies of
reporting forms received by us, we believe that during fiscal year ended
December 31, 2009, our current officers and directors complied with the filing
requirements under Section 16(a).
Code
of Ethics
Our Board
of Directors has adopted a code of ethics that applies to our principal
executive officers, principal financial officer or controller, or persons
performing similar functions (“Code of Ethics”). A copy
of our Code of Ethics will be furnished without charge to any person upon
written request. Requests should be sent to: Secretary,
Global Clean Energy Holdings, Inc. 6033 W. Century Blvd., #895 Los Angeles,
California 90045.
Board
Committees
Our Board
of Directors has an Audit Committee, but does not currently have a Compensation
Committee or a Nominating Committee.
The Audit
Committee meets periodically with management and with our independent registered
public accounting firm to, among other things, review the results of the annual
audit and quarterly reviews and discuss the financial statements. The
audit committee also hires the independent registered public accounting firm,
and receives and considers the accountant’s comments as to controls, adequacy of
staff and management performance and procedures. The Audit Committee
is also authorized to review related party transactions for potential conflicts
of interest. During the fiscal year ended December 31, 2009, Mr.
Walker and Dr. Bernstein constituted all of the members of the Audit
Committee. Both Mr. Walker and Dr. Bernstein are non-employee
directors and independent as defined under the Nasdaq Stock Market’s listing
standards. Mr. Walker has significant knowledge of financial matters,
and our Board has designated Mr. Walker as the “audit committee financial
expert” of the Audit Committee. The Audit Committee met four times
during fiscal 2008, and four times during fiscal 2009 in connection with this
Annual Report and our Quarterly Reports on Form 10-QSB. The Audit
Committee operates under a formal charter that governs its duties and
conduct.
ITEM
11.
|
EXECUTIVE
COMPENSATION.
|
Summary
Compensation Table.
The
following table set forth certain information concerning the annual and
long-term compensation for services rendered to us in all capacities for the
fiscal years ended December 31, 2009 and 2008 of all persons who served as our
principal executive officer and principal financial officer during the fiscal
year ended December 31, 2009. No other executive officers earned
annual compensation during the fiscal year ended December 31, 2009 that exceeded
$100,000. The principal executive officer and the other named
officers are collectively referred to as the “Named Executive
Officers.”
Summary
Compensation Table
Name
and
Principal
Position
|
|
Fiscal
Year Ended 12/31
|
|
Salary
Paid or Accrued
($)
|
|
Bonus
Paid or Accrued
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)(4)
|
|
|
All
Other Compensation
($)
|
|
Total
($)
|
Richard
Palmer
|
|
2009
|
|
250,000
|
|
0
|
|
_____(1)
|
|
0
|
|
|
23,400
|
|
273,400
|
|
|
2008
|
|
250,000
|
|
--
|
|
--
|
|
--
|
|
|
23,400
|
|
273,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
Nelson(1)
|
|
2009
|
|
175,000
|
|
0
|
|
_____(3)
|
|
0
|
|
|
10,000
|
|
185,000
|
|
|
2008
|
|
145,833(2)
|
|
--
|
|
--
|
|
189,000
|
|
|
10,000
|
|
344,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Richard
Palmer became the registrant’s Chief Executive Officer December 21,
2007. Under our employment agreement with Mr. Palmer, we
granted Mr. Palmer an incentive option to purchase up to 12,000,000 shares
of our common stock at an exercise price of $0.03, subject to our
achievement of certain market capitalization goals. As of April
2009, 12,000,000 of these options remained unvested. In April 2009, our
Board of Directors agreed to agreed to fully vest all of the 12,000,000
shares under the option.
|
(2)
|
Mr.
Nelson became our Chief Financial Officer and Secretary on April 1,
2008. Accordingly, the amounts reflected in this table reflect
compensation paid or accrued for Mr. Nelson during this partial
year.
|
(3)
|
Under
our employment agreement with Mr. Nelson, we granted Mr. Nelson an
incentive option to purchase up to 4,500,000 shares of our common stock at
an exercise price of $0.05, which shares vest over the course of the
employment agreement and upon achievement of certain
milestones. As of April 2009, 3,500,000 of these options
remained unvested. In April 2009, our Board of Directors agreed
to fully vest all of the remaining 3,500,000 options. The
amounts included in this table reflect the value of the fully vested
options.
|
(4)
|
This
column represents the aggregate grant date fair value of option awards
computed in accordance with FASB ASC Topic 718, excluding the effect of
estimated forfeitures related to service-based vesting
conditions. For additional information on the valuation
assumptions with respect to the option grants, refer to Note J of our
financial statements in this Annual Report. These amounts do
not correspond to the actual value that will be recognized by the named
executives from these awards.
|
Stock
Option Grants
The
following table sets forth information as of December 31, 2009, concerning
unexercised options, unvested stock and equity incentive plan awards for the
executive officers named in the Summary Compensation Table.
OUTSTANDING
EQUITY AWARDS AT YEAR ENDED DECEMBER 31, 2009
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
Richard
Palmer
|
6,000,000
|
|
|
0.03
|
8/20/2012
|
|
|
|
|
|
6,000,000
|
|
|
0.03
|
8/20/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
Nelson
|
500,000
|
|
|
0.05
|
3/20/2018
|
|
|
|
|
|
500,000
|
|
|
0.05
|
3/20/2018
|
|
|
|
|
|
500,000
|
|
|
0.05
|
3/20/2018
|
|
|
|
|
|
500,000
|
|
|
0.05
|
3/20/2018
|
|
|
|
|
|
1,250,000
|
|
|
0.05
|
3/20/2013
|
|
|
|
|
|
1,250,000
|
|
|
0.05
|
3/20/2013
|
|
|
|
|
Director
Compensation.
On April
22, 2009, our Board of Directors adopted a compensation policy for non-employee
directors (“Compensation
Policy”), effective as of July 1, 2009. Pursuant to the
Compensation Policy, non-employee directors will be entitled to receive the
following benefits, among others, in consideration for their services as
directors of the Company:
|
·
|
Monthly
cash payments of $2,000;
|
|
·
|
Annual
grants of non-qualified stock options to purchase up to 500,000 shares of
the Company’s common stock;
|
|
·
|
Participation
in the Company’s stock option plans;
and
|
|
·
|
Reimbursement
of certain expenses incurred in connection with attendance of meetings of
the Board and Board Committee.
|
The
following table sets forth information concerning the compensation paid to each
of our non-employee directors during fiscal 2009 for their services rendered as
directors. The compensation of Richard Palmer, who serves as a
director and as our President and Chief Executive Officer, is described above in
the Summary Compensation Table.
DIRECTOR
COMPENSATION FOR FISCAL YEAR 2009
Name
|
Fees
Earned or Paid in Cash
|
Stock
Awards
|
Option Awards(1)(2)
|
Non-Equity
Incentive Plan Compensation
|
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation
|
Total
|
|
|
|
|
|
|
|
|
David
R. Walker
|
12,000
|
|
$9,100
|
|
|
|
$21,100
|
Richard
Palmer
|
|
|
|
|
|
|
|
Mark
A. Bernstein, Ph.D.
|
$12,000
|
|
$9,100
|
|
|
|
$21,100
|
Total
|
$24,000
|
|
$18,200
|
|
|
|
$42,200
|
(1)
|
This
column represents the aggregate grant date fair value of option awards
computed in accordance with FASB ASC Topic 718, excluding the effect of
estimated forfeitures related to service-based vesting
conditions. For additional information on the valuation
assumptions with respect to the option grants, refer to Note J of our
financial statements in this Annual Report. These amounts do
not correspond to the actual value that will be recognized by the named
directors from these awards.
|
(2)
|
On
July 2, 2009 we granted a five-year non-qualified option to purchase
500,000 shares of the Company’s common stock at an exercise price of $0.02
per share to each of our non-employee directors, vesting, in ten monthly
installments, for their services as directors for the one-year period
commencing July 1, 2009
|
Employment
Agreements
Richard
Palmer. On September 7, 2007, we entered into an employment
agreement (the “Employment
Agreement”) with Richard Palmer pursuant to which we hired Mr. Palmer to
serve as our President and Chief Operating Officer. Mr. Palmer was
also appointed to serve as director on our Board of Directors to serve until the
next election of directors by our shareholders. Upon the resignation
of our prior Chief Executive Officer in December 2007, Mr. Palmer also became
our Chief Executive Officer.
Under the
Employment Agreement, we granted Mr. Palmer an incentive option to purchase up
to 12,000,000 shares of our common stock at an exercise price of $0.03 (the
trading price on the date the agreement was signed), subject to our achievement
of certain market capitalization goals. The option expires after five
years. As of April 22, 2009, all 12,000,000 shares under the option
remained unvested. On April 22, 2009, our Board of Directors approved
accelerating the vesting of all 12,000,000 unvested shares under the option, and
accelerated the release from escrow of 652,503 shares of restricted common stock
issuable to Mr. Palmer under the Global Agreement. As a result, on
that date, all of the restricted and escrowed shares were released to Mr.
Palmer.
In
addition, Mr. Palmer’s compensation package includes a base salary of $250,000,
and a bonus payment contingent on Mr. Palmer’s satisfaction of certain
performance criteria, which will not exceed 100% of Mr. Palmer’s base
salary. In the event that (i) we terminate Mr. Palmer’s employment
for reasons other than “cause” (as defined in the Employment Agreement to
include material breaches by him of the agreement, fraud, misappropriation of
funds or embezzlement), or if (ii) Mr. Palmer resigns because we breached the
Employment Agreement, we will be obligated to pay Mr. Palmer an amount equal to
one (1) times his then-current annual base salary plus fifty percent (50%) of
the target bonus in effect on the date of his termination. However,
if Mr. Palmer’s employment is terminated for death or disability, or if Mr.
Palmer resigns or is terminated for “cause,” he will not be entitled to receive
any severance payments or other post-employment benefits. The
original term of the Employment Agreement commenced September 1, 2007, and was
scheduled to expire on September 30, 2010.
On March
16, 2010, the Company and Richard Palmer entered into an amendment (the “Amendment”) to the
Employment Agreement. Pursuant to the Amendment, the Company extended the term
of Mr. Palmer’s employment for an additional two years, i.e., through September
30, 2012. Thereafter, the term of employment shall automatically
renew for successive one-year periods unless otherwise terminated. In connection
with the Amendment, the Company and Mr. Palmer entered into an option agreement
(“Option
Agreement”). Pursuant to the Option Agreement, the Company
granted Mr. Palmer a new option to acquire up to 12,000,000 shares of the
Company’s common stock at an exercise price of $0.02, subject to the Company’s
achievement of certain market capitalization goals. The new option
expires after ten (10) years.
Bruce
Nelson. On March 20, 2008, we entered into an employment
agreement with Bruce K. Nelson pursuant to which we hired Mr. Nelson to serve as
our Executive Vice-President and Chief Financial Officer effective April 1,
2008. Mr. Nelson’s employment agreement has an initial term of
employment that continues through March 20, 2010. Thereafter, the
term of employment shall automatically renew for successive one-year periods
unless otherwise terminated by us. The employment agreement was
automatically extended in March 2010 through March 20, 2011. We
agreed to pay Mr. Nelson a base salary of $175,000, subject to annual increases
based on the Consumer Price Index for the immediately preceding 12-month period,
and a bonus payment based on Mr. Nelson’s satisfaction of certain performance
criteria established by the compensation committee of our Board of
Directors. The bonus amount in any fiscal year will not exceed 100%
of Mr. Nelson’s base salary. Mr. Nelson is eligible to participate in
this company’s employee stock option plan and other benefit plans.
At the
time we employed Mr. Nelson, we granted him a ten-year option to acquire up to
2,000,000 shares of our common stock at an exercise price of $0.05 (the trading
price on the date the agreement was signed). These options vest in
tranches of 500,000 shares over the first two years of the employment
term. We also granted Mr. Nelson a five-year option to acquire up to
2,500,000 shares of our common stock at an exercise price of $0.05, if this
company meets certain market capitalization goals. As of April 22, 2009, options
to acquire up to 3,500,000 shares remained unvested pursuant to the terms of the
Company’s employment agreement with Mr. Nelson. On April 22, 2009,
our Board of Directors approved accelerating the vesting of all 3,500,000
unvested shares under the option.
In the
event that, commencing after March 20, 2009, (i) we terminate Mr. Nelson’s
employment for reasons other than “cause” (as defined in his employment
agreement to include material breaches by him of his employment agreement,
fraud, misappropriation of funds or embezzlement), or if (ii) Mr. Nelson resigns
because we breached his employment agreement, we will be obligated to pay Mr.
Nelson an amount equal to the
salary he would have received through the end of the term of his employment
agreement. However, if Mr. Nelson’s employment is terminated
for death or disability, or if Mr. Nelson resigns or is terminated for “cause,”
he will not be entitled to receive any severance payments or other
post-employment benefits.
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
|
The
following table sets forth certain information regarding beneficial ownership of
our common stock as of March 24, 2010 (a) by each person known by us to own
beneficially 5% or more of any class of our common stock, (b) by each of our
executive officers named in the Summary Compensation Table and each of our
directors and (c) by all executive officers and directors of this company as a
group. As of March 24, 2010, there were 236,919,079 shares of our
common stock issued and outstanding. Unless otherwise noted, we
believe that all persons named in the table have sole voting and investment
power with respect to all the shares beneficially owned by them.
Name
and Address of Beneficial Owner (1)
|
|
Shares
Beneficially Owned (2)
|
|
Percent
of
Class
|
Certain
Beneficial Owners:
|
|
|
|
|
Monarch
Pointe Fund, Ltd.
555
S. Flower St., Suite 4500
Los
Angeles, CA 90071
|
|
24,085,509
(3)
|
|
9.74%
|
Mobius
Risk Group, LLC
Three
Riverway, Suite 1700
Houston,
Texas 77056
|
|
50,895,204
|
|
21.48%
|
|
|
|
|
|
Directors/Named
Executive Officers:
|
|
|
|
|
Richard
Palmer
|
|
21,135,037
(4)
|
|
8.49%
|
Bruce
Nelson
|
|
4,500,000
(5)
|
|
1.86%
|
David
R. Walker
|
|
1,653,539
(6)
|
|
*
|
Mark
A. Bernstein
|
|
500,000
(7)
|
|
*
|
|
|
|
|
|
All
Named Executive Officers and Directors as a group (4
persons)
|
|
27,788,576
|
|
10.89%
|
* Less
than 1%
(1)
Unless otherwise indicated, the business address of each person listed is c/o
Global Clean Energy Holdings, Inc., 6033 W. Century Blvd, Suite 895, Los
Angeles, California.
(2) For
purposes of this table, shares are considered beneficially owned if the person
directly or indirectly has the sole or shared power to vote or direct the voting
of the securities or the sole or shared power to dispose of or direct the
disposition of the securities. Shares are also considered
beneficially owned if a person has the right to acquire beneficial ownership of
the shares within 60 days of March 24, 2010.
(3)
Includes 10,403,095 shares that may be acquired upon the exercise of currently
exercisable warrants. The warrants contain a provision the prevents
them from being exercised if such exercise would cause Monarch Pointe Fund, Ltd.
from owning more than 9.99% of our outstanding common stock.
(4) Includes 12,000,000 shares that may
be acquired upon the exercise of currently exercisable options. Mr. Palmer owns
13.33% of the outstanding membership interests of Mobius.
(5)
Includes 4,500,000 shares that may be acquired upon the exercise of currently
exercisable options.
(6)
Includes 1,250,000 shares that may be acquired upon the exercise of currently
exercisable options.
(7)
Includes 500,000 shares that may be acquired upon the exercise of currently
exercisable options.
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
|
|
Certain
Relationships And Related
Transactions
|
Loan
Agreement
In
September 2007 we entered into a loan and security agreement with Mercator
Momentum Fund III, L.P., a former affiliate of Monarch Pointe Fund, Ltd., which
is a major shareholder of the Company, pursuant to which Mercator agreed to make
available to us a secured term credit facility in the aggregate principal amount
of $1,000,000 (the “Loan”). As of December 31, 2009, the outstanding
principal balance of the Loan was $475,000, and the Loan was secured by a first
priority lien on all of our assets. In March 2010, we paid off the
outstanding balance of the Loan.
Our
common stock is traded on the OTC Bulletin Board under the symbol “GCEH.” The
OTC Bulletin Board electronic trading platform does not maintain any standards
regarding the “independence” of the directors on our company’s Board of
Directors, and we are not otherwise subject to the requirements of any national
securities exchange or an inter-dealer quotation system with respect to the need
to have a majority of our directors be independent.
In the
absence of such requirements, we have elected to use the definition for
“director independence” under the Nasdaq Stock Market’s listing standards, which
defines an “independent director” as “a person other than an officer or employee
of us or its subsidiaries or any other individual having a relationship, which
in the opinion of our Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director.” The
definition further provides that, among others, employment of a director by us
(or any parent or subsidiary of ours) at any time during the past three years is
considered a bar to independence regardless of the determination of our Board of
Directors.
Our Board
of Directors has determined that Mr. Walker and Dr. Bernstein are independent
directors as defined in the Nasdaq rules relating to director independence. Both
Mr. Walker and Dr. Bernstein are non-employee directors.
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES.
|
Audit
Fees
The
aggregate fees accrued by Hansen, Barnett & Maxwell. P.C. during the fiscal
year ended December 31, 2008 and 2009 for professional services for the audit of
our financial statements and the review of financial statements included in our
Forms 10-Q and SEC filings were $43,038 and $45,119, respectively.
Audit-Related
Fees
Hansen,
Barnett & Maxwell. P.C. did not provide and did not bill and it was not paid
any fees for, audit-related services in the fiscal years ended December 31, 2008
and 2009.
Tax
Fees
Hansen,
Barnett & Maxwell. P.C. did not provide, and did not bill and was not paid
any fees for, tax compliance, tax advice, and tax planning services for the
fiscal years ended December 31, 2008 and December 31, 2009.
All
Other Fees
Hansen,
Barnett & Maxwell. P.C. did not provide, and did not bill and were not paid
any fees for, any other services in the fiscal years ended December 31, 2008 and
2009.
Audit
Committee Pre-Approval Policies and Procedures
Consistent
with SEC policies, the Audit Committee charter provides that the Audit Committee
shall pre-approve all audit engagement fees and terms and pre-approve any other
significant compensation to be paid to the independent registered public
accounting firm. No other significant compensation services were
performed for us by Hansen, Barnett & Maxwell. P.C. during 2008 and
2009.
PART
IV
ITEM
15.
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.
|
Our
financial statements and related notes thereto are listed and included in this
Annual Report beginning on page F-1. The following documents
are furnished as exhibits to this Form 10-K. Exhibits marked with an asterisk
are filed herewith. The remainder of the exhibits previously have
been filed with the Commission and are incorporated herein by
reference.
Number
|
|
Exhibit
|
3.1
|
|
Amended
and Restated Articles of Incorporation of the Company (filed as Exhibit
3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by
reference).
|
3.2
|
|
Amended
Bylaws of the Company (filed as Exhibit 3.2 to the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 1994, and incorporated
herein by reference).
|
Number
|
|
Exhibit
|
4.1
|
|
Certificate
of Designations of Preferences and Rights of Series A Convertible
Preferred Stock of Medical Discoveries, Inc. (filed as Exhibit 4.1 to
Registration Statement No. 333-121635 filed on Form SB-2 on December
23, 2004, and incorporated herein by reference).
|
4.4
|
|
Amendment
to Certificate of Designations of Preferences and Rights of Series A
Convertible Preferred Stock of Medical Discoveries, Inc. (filed as Exhibit
4.2 to Registration Statement No. 333-121635 filed on Form SB-2 on
December 23, 2004, and incorporated herein by
reference).
|
4.5
|
|
Certificate
Of Designation of Preferences and Rights Series B Convertible Preferred
Stock of Medical Discoveries, Inc. (filed as Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed November 13, 2007, and incorporated
herein by reference)
|
10.1
|
|
2002
Stock Incentive Plan adopted by the Board of Directors as of July 11, 2002
(filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-QSB
for the quarter ended June 30, 2002, and incorporated herein by
reference).
|
10.2
|
|
Sale
and Purchase Agreement between Attorney Hinnerk-Joachim Müller as
liquidator of Savetherapeutics AG i.L. and Medical Discoveries, Inc.
regarding the purchase of the essential assets of Savetherapeutics AG i.L.
(filed as Exhibit 2.1 to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, and incorporated herein by
reference).
|
10.3
|
|
Share
Exchange Agreement dated September 7, 2007 among Medical Discoveries,
Inc., Richard Palmer, and Mobius Risk Group, LLC (filed as Exhibit 2.2 to
the Company’s Current Report on Form 8-K filed September 17, 2007, and
incorporated herein by reference)
|
10.4
|
|
Definitive
Master Agreement dated as of July 29, 2006, by and between MDI Oncology,
Inc. and Eucodis Forschungs und Entwicklungs GmbH (filed as Exhibit 10.1
to the Company’s Current Report on Form 8-K filed August 3, 2006, and
incorporated herein by reference)
|
10.5
|
|
Loan
and Security Agreement, dated September 7, 2007, between Medical
Discoveries, Inc. and Mercator Momentum Fund III, L.P. (filed as Exhibit
10.1 to the Company’s Current Report on Form 8-K filed September 17, 2007,
and incorporated herein by reference).
|
10.6
|
|
Note
Amendment And Maturity Date Extension, dated January 12, 2009, between the
Company and Mercator Momentum Fund III, L.P.**
|
10.7
|
|
Consulting
Agreement dated September 7, 2007 between Medical Discoveries, Inc. and
Mobius Risk Group, LLC (filed as Exhibit 10.2 to the Company’s Current
Report on Form 8-K filed September 17, 2007, and incorporated herein by
reference)
|
10.8
|
|
Employment
Agreement dated September 7, 2007 between Medical Discoveries, Inc. and
Richard Palmer (filed as Exhibit 10.3 to the Company’s Current Report on
Form 8-K filed September 17, 2007, and incorporated herein by
reference)
|
10.9
|
|
Release
and Settlement Agreement dated August 31, 2007 between Medical
Discoveries, Inc. and Richard Palmer (filed as Exhibit 10.4 to the
Company’s Current Report on Form 8-K filed September 17, 2007, and
incorporated herein by reference)
|
10.10
|
|
Release
and Settlement Agreement, dated as of October 19, 2007, by and among the Company, on the
one hand, and Mercator Momentum Fund, LP, Monarch Pointe Fund,
Ltd., and Mercator Momentum Fund III, LP, on the other hand. (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 26,
2007, and incorporated herein by reference)
|
10.11
|
|
Form
of Warrant (filed as Exhibit 10.2 to the Company’s Current Report on Form
8-K filed October 26, 2007, and incorporated herein by
reference)
|
10.12
|
|
Securities
Purchase Agreement, dated as of November 6, 2007, by and among Medical
Discoveries, Inc. and the Purchasers (as defined therein) (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November
13, 2007, and incorporated herein by
reference)
|
Number
|
|
Exhibit
|
10.13
|
|
Employment
Agreement dated March 20, 2008 between Global Clean Energy Holdings, Inc.
and Bruce K. Nelson (filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed April 7, 2008, and incorporated herein by
reference)
|
10.14
|
|
Exchange
Agreement, effective April 18, 2008, by and between Global Clean Energy
Holdings, Inc., on the one hand, and Mercator Momentum Fund, L.P.,
Mercator Momentum Fund III, L.P., and Monarch Pointe Fund, Ltd. (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 24,
2008, and incorporated herein by reference)
|
10.15
|
|
Amendment
to Loan and Security Agreement, dated May 19, 2008, between Medical
Discoveries, Inc. and Mercator Momentum Fund III, L.P. (filed as Exhibit
10.18 to the Company’s Quarterly Report on Form 10-Q filed August 14,
2008, and incorporated herein by reference)
|
10.16
|
|
Stock
Purchase Agreement, dated October 30, 2008, between the Global Clean
Energy Holdings, Inc. and the four shareholders of Technology Alternatives
Limited, a Belizean Company formed under the Laws of Belize (filed as
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed
November 14, 2008, and incorporated herein by
reference)
|
10.17
|
|
Limited
Liability Company Agreement of GCE Mexico I, LLC, a Delaware Limited
Liability Company, dated April 23, 2008 (filed on December 31, 2009, as
Exhibit 10.17 to the Company’s Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2008, and incorporated herein by
reference)
|
10.18
|
|
Service
Agreement, dated October 15, 2007, between the Company and Corporativo
LODEMO S.A DE CV, a Mexican corporation (filed on December 31, 2009 as
Exhibit 10.18 to the Company’s Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2008, and incorporated herein by
reference)
|
10.19
|
|
Sale
and Asset Purchase Agreement, dated November 16, 2009, between Global
Clean Energy Holdings, Inc., MDI Oncology, Inc., and Curadis Gmbh (filed
as an Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q
filed on November 20, 2009, and incorporated herein by
reference)
|
10.20
|
|
Amendment
to Employment Agreement, dated March 16, 2010, between Global Clean Energy
Holdings, Inc. and Richard Palmer (filed as Exhibit 10.20 to the Company’s
Annual Report on Form 10-K filed on March 31, 2010, and incorporated
herein by reference)
|
10.21
|
|
Stock
Option Agreement, dated March 16, 2010, between Global Clean Energy
Holdings, Inc. and Richard Palmer (filed as Exhibit 10.21 to the
Company’s Annual Report on Form 10-K filed on March 31, 2010, and
incorporated herein by reference)
|
10.22
|
|
Securities
Purchase Agreement, dated March 16, 2010, between Global Clean Energy
Holdings, Inc. and certain investors named therein (including certain
exhibits thereto) (filed as Exhibit 10.22 to the Company’s Annual Report
on Form 10-K filed on March 31, 2010, and incorporated herein by
reference)
|
10.23
|
|
Stock
Purchase Agreement, dated March 30, 2010, between Global Clean Energy
Holdings, Inc. and certain investors named therein (filed as Exhibit 10.23
to the Company’s Annual Report on Form 10-K filed on March 31, 2010, and
incorporated herein by reference)
|
14.1
|
|
Medical
Discoveries, Inc. Code of Conduct
|
23
|
|
Consent
of Hansen, Barnett & Maxwell. P.C.*
|
31
|
|
Rule
13a-14(a) Certification, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 *
|
32
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.*
|
* Filed
herewith.
|
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.
|
GLOBAL
CLEAN ENERGY HOLDINGS, INC.
|
March
31, 2010
|
By:
|
/s/ BRUCE NELSON
|
|
|
|
|
|
Chief
Financial Officer
|
Index
to Financial Statements
|
Page |
|
|
Financial
Statements:
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-3
|
Consolidated
Statements of Operations for the years ended December 31, 2009 and
2008
|
F-4
|
Consolidated
Statements of Changes in Deficitfor the years ended December 31, 2008 and
2009
|
F-5
|
Consolidated
Statements of Cash Flowsfor the years ended December 31, 2009 and
2008
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7
|
|
|
HANSEN, BARNETT & MAXWELL,
P.C.
A
Professional Corporation
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
|
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 as of December 31, 2009 and 2008, and the
related consolidated statements of operations, changes in 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, 2009 and 2008, 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 has incurred
significant losses from current operations, used a substantial amount of cash to
maintain its operations and has a large working capital deficit. As discussed in
Note B to the financial statements, these factors 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.
As
discussed in Note A to the consolidated financial statements, effective January
1, 2009, the Company retrospectively changed its method of accounting for
noncontrolling interests.
HANSEN,
BARNETT & MAXWELL, P.C.
Salt Lake
City, Utah
March 31,
2010
GLOBAL
CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
833,584 |
|
|
$ |
291,309 |
|
Accounts
receivable
|
|
|
146,730 |
|
|
|
- |
|
Other
current assets
|
|
|
131,741 |
|
|
|
131,715 |
|
Total
Current Assets
|
|
|
1,112,055 |
|
|
|
423,024 |
|
|
|
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT
|
|
|
|
|
|
|
|
|
Land
|
|
|
2,079,914 |
|
|
|
2,051,282 |
|
Plantation
development costs
|
|
|
3,633,288 |
|
|
|
2,117,061 |
|
Plantation
equipment
|
|
|
805,719 |
|
|
|
509,037 |
|
Office
equipment
|
|
|
33,478 |
|
|
|
10,993 |
|
|
|
|
6,552,399 |
|
|
|
4,688,373 |
|
Less
accumulated depreciation
|
|
|
(110,910 |
) |
|
|
(22,296 |
) |
|
|
|
6,441,489 |
|
|
|
4,666,077 |
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
2,691 |
|
|
|
2,691 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
7,556,235 |
|
|
$ |
5,091,792 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND DEFICIT
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
2,117,573 |
|
|
$ |
1,890,999 |
|
Accrued
payroll and payroll taxes
|
|
|
1,491,385 |
|
|
|
1,158,808 |
|
Accrued
interest payable
|
|
|
853,811 |
|
|
|
522,097 |
|
Accrued
return on noncontrolling interest
|
|
|
610,870 |
|
|
|
138,014 |
|
Promissory
notes
|
|
|
509,232 |
|
|
|
460,000 |
|
Notes
payable to shareholders
|
|
|
321,502 |
|
|
|
56,000 |
|
Convertible
notes payable
|
|
|
193,200 |
|
|
|
193,200 |
|
Research
and development obligation
|
|
|
- |
|
|
|
2,607,945 |
|
Total
Current Liabilities
|
|
|
6,097,573 |
|
|
|
7,027,063 |
|
|
|
|
|
|
|
|
|
|
MORTGAGE
NOTE PAYABLE
|
|
|
2,051,282 |
|
|
|
2,051,282 |
|
|
|
|
|
|
|
|
|
|
DEFICIT
|
|
|
|
|
|
|
|
|
Global
Clean Energy Holdings, Inc. deficit
|
|
|
|
|
|
|
|
|
Preferred
stock - no par value; 50,000,000 shares authorized
|
|
|
|
|
|
|
|
|
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;
|
|
|
|
|
|
|
|
|
236,919,079
and 224,813,819 shares issued and outstanding,
respectively
|
|
|
17,881,147 |
|
|
|
17,634,474 |
|
Additional
paid-in capital
|
|
|
4,063,957 |
|
|
|
3,672,724 |
|
Accumulated
deficit
|
|
|
(26,308,143 |
) |
|
|
(28,546,508 |
) |
Accumulated
other comprehensive loss
|
|
|
(6,108 |
) |
|
|
- |
|
Total
Global Clean Energy Holdings, Inc. Stockholders' Deficit
|
|
|
(3,078,412 |
) |
|
|
(5,948,575 |
) |
Noncontrolling
interests
|
|
|
2,485,792 |
|
|
|
1,962,022 |
|
Total
deficit
|
|
|
(592,620 |
) |
|
|
(3,986,553 |
) |
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND DEFICIT
|
|
$ |
7,556,235 |
|
|
$ |
5,091,792 |
|
See Notes
to Consolidated Financial Statements
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Years Ended
|
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
373,060 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
1,516,395 |
|
|
|
1,828,727 |
|
Plantation
operating costs
|
|
|
738,759 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,255,154 |
|
|
|
1,828,727 |
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
(1,882,094 |
) |
|
|
(1,828,727 |
) |
|
|
|
|
|
|
|
|
|
Other
Income (Expenses)
|
|
|
|
|
|
|
|
|
Unrealized
gain on financial instrument
|
|
|
- |
|
|
|
5,469 |
|
Interest
income
|
|
|
41 |
|
|
|
4,310 |
|
Interest
expense
|
|
|
(334,313 |
) |
|
|
(234,470 |
) |
Interest
expense from amortization of discount
|
|
|
|
|
|
|
|
|
on
secured promissory note
|
|
|
- |
|
|
|
(36,369 |
) |
Foreign
currency transaction adjustments
|
|
|
(9,830 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
Other Income (Expenses)
|
|
|
(344,102 |
) |
|
|
(261,060 |
) |
|
|
|
|
|
|
|
|
|
Loss
from Continuing Operations
|
|
|
(2,226,196 |
) |
|
|
(2,089,787 |
) |
|
|
|
|
|
|
|
|
|
Income
from Discontinued Operations (including
|
|
|
|
|
|
|
|
|
gain
on disposal of SaveCream assets of $3,298,511
|
|
|
|
|
|
|
|
|
in
2009)
|
|
|
3,167,098 |
|
|
|
67,110 |
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
|
940,902 |
|
|
|
(2,022,677 |
) |
|
|
|
|
|
|
|
|
|
Net
loss attributable to the noncontrolling interest
|
|
|
1,297,463 |
|
|
|
315,115 |
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss) attributable to Global Clean
|
|
|
|
|
|
|
|
|
Energy
Holdings, Inc.
|
|
$ |
2,238,365 |
|
|
$ |
(1,707,562 |
) |
|
|
|
|
|
|
|
|
|
Amounts
attributable to Global Clean Energy
|
|
|
|
|
|
|
|
|
Holdings,
Inc. common shareholders:
|
|
|
|
|
|
|
|
|
Loss
from Continuing Operations
|
|
$ |
(928,733 |
) |
|
$ |
(1,774,672 |
) |
Income
from Discontinued Operations
|
|
|
3,167,098 |
|
|
|
67,110 |
|
Net
Income (Loss)
|
|
$ |
2,238,365 |
|
|
$ |
(1,707,562 |
) |
|
|
|
|
|
|
|
|
|
Basic
and Diluted Loss per Common Share:
|
|
|
|
|
|
|
|
|
Loss
from Continuing Operations
|
|
$ |
(0.004 |
) |
|
$ |
(0.009 |
) |
Income
from Discontinued Operations
|
|
$ |
0.014 |
|
|
$ |
0.001 |
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$ |
0.010 |
|
|
$ |
(0.008 |
) |
|
|
|
|
|
|
|
|
|
Basic
and Diluted Weighted-Average Common
|
|
|
|
|
|
|
|
|
Shares
Outstanding
|
|
|
231,326,107 |
|
|
|
207,895,116 |
|
|
|
|
|
|
|
|
|
|
See Notes
to Consolidated Financial Statements
|
CONSOLIDATED
STATEMENTS OF CHANGES IN DEFICIT
|
For
the Years Ended December 31, 2008 and
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Non-
|
|
|
|
|
|
|
Series
A
|
|
|
Series
B
|
|
|
Common
stock
|
|
|
Paid
in
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
controlling
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Loss
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2007
|
|
|
28,928 |
|
|
$ |
514,612 |
|
|
|
13,000 |
|
|
$ |
1,290,735 |
|
|
|
174,838,967 |
|
|
$ |
16,526,570 |
|
|
$ |
1,472,598 |
|
|
$ |
(26,838,946 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(7,034,431 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
instrument
to equity
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,161,045 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,161,045 |
|
Contributions
from preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
members
of GCE Mexico I, LLC
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,415,151 |
|
|
|
2,415,151 |
|
Exchange
of Series A preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
common stock
|
|
|
(28,928 |
) |
|
|
(514,612 |
) |
|
|
- |
|
|
|
- |
|
|
|
28,927,000 |
|
|
|
514,612 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at
$0.036 per share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,777,778 |
|
|
|
100,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
100,000 |
|
Issuance
of warrants in satisfaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
accounts payable and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amendment
of note payable
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160,934 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160,934 |
|
Share-based
compensation from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
issuance
of options
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
184,146 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
184,146 |
|
Amortization
of share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation
for common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
held
in escrow
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
187,293 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
187,293 |
|
Release
of escrowed shares upon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
satisfaction
of underlying milestones
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,270,074 |
|
|
|
493,292 |
|
|
|
(493,292 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Accrual
of preferential return for the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(138,014 |
) |
|
|
(138,014 |
) |
Net
loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,707,562 |
) |
|
|
- |
|
|
|
(315,115 |
) |
|
|
(2,022,677 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
13,000 |
|
|
|
1,290,735 |
|
|
|
224,813,819 |
|
|
|
17,634,474 |
|
|
|
3,672,724 |
|
|
|
(28,546,508 |
) |
|
|
- |
|
|
|
1,962,022 |
|
|
|
(3,986,553 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
from preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
members
of GCE Mexico I, LLC
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,780,177 |
|
|
|
2,780,177 |
|
Shares
issued for acquisition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology
Alternative, Ltd,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.02
per share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,952,757 |
|
|
|
179,055 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
179,055 |
|
Issuance
of common stock for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at
$0.02 per share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,500,000 |
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
Share-based
compensation from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
issuance
of options and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation-based
warrants
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
366,459 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
366,459 |
|
Amortization
of share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation
for common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
held
in escrow
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
42,392 |
|
|
|
- |
|
|
|
- |
|