~~Table~~SECURITIES ofAND ~~Contents~~EXCHANGE COMMISSION

~~SECURITIES~~WASHINGTON, ~~AND~~D.C. ~~EXCHANGE COMMISSION~~20549

~~WASHINGTON,~~FORM ~~D.C. 20549~~8-K

~~FORM~~Current ~~8-K~~Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~Current~~Date ~~Report~~of ~~Pursuant~~report ~~to Section 13 or 15~~(d)Date of ~~the~~earliest ~~Securities~~event ~~Exchange~~reported): ~~Act~~June 15, ~~of 1934~~2007

~~Date~~Earth ~~of report (Date of earliest event reported): May 18~~Biofuels, ~~2007~~Inc.

~~Earth~~(Exact ~~Biofuels,~~Name ~~Inc.~~ of Registrant as Specified in Its Charter)

Delaware (~~Exact~~State ~~Name~~or ofOther ~~Registrant~~Jurisdiction asof ~~Specified in Its Charter~~Incorporation)

~~Delaware~~333-110249 (Commission File Number) 71-0915825 (I.R.S. Employer Identification No.)

~~(State~~3001 orKnox ~~Other~~Street, ~~Jurisdiction~~Suite 303 Dallas, Texas (Address of ~~Incorporation~~Principal Executive Offices) 75205 (Zip Code)

~~333~~(214) 389-~~110249~~ 9800 (~~Commission~~Registrant’s ~~File~~Telephone Number), ~~71-0915825~~Including ~~(I.R.S.~~Area ~~Employer Identification No.~~Code)

~~3001~~N/A (Former ~~Knox~~Name ~~Street,~~or ~~Suite~~Former ~~303 Dallas~~Address, ~~Texas~~if ~~(Address~~Changed ofSince ~~Principal~~Last ~~Executive Offices~~Report) ~~75205 (Zip Code)~~

~~(214) 389~~Check the appropriate box below if the Form 8-~~9800~~K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (~~Registrant’s~~17 ~~Telephone~~CFR ~~Number,~~230.425) ~~Including~~o ~~Area~~Soliciting ~~Code~~material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

~~N/A~~Item 1.01. Entry into a Material Definitive Agreement

On August 31, 2006, Earth Ethanol, Inc., (~~Former~~“Earth ~~Name~~Ethanol”), ora ~~Former~~Delaware ~~Address~~corporation and a wholly owned subsidiary of Earth Biofuels, ifInc., ~~Changed~~executed ~~Since~~a ~~Last~~Contribution ~~Report~~and Purchase Agreement by and between Earth Ethanol, HPS Development, L.L.C., a Louisiana limited liability company (“HPS”), and South Louisiana Ethanol, L.L.C., a Louisiana limited liability company (“SLE”). SLE owns a former ethanol production facility located on a site in Plaquemines Parish, Louisiana.

~~Check~~On ~~the~~December 15, ~~appropriate~~2006, ~~box below if~~ the ~~Form~~Company ~~8-K~~filed ~~filing~~an isaction ~~intended~~arising tofrom ~~simultaneously~~a ~~satisfy~~claim ~~the filing~~for ~~obligation~~breach of ~~the~~contract ~~registrant~~and default by SLE under ~~any~~the terms of the ~~following provisions:~~ agreement.

oOn ~~Written~~June 15, ~~communications~~2007, ~~pursuant~~the parties entered into a Consent Judgment and Settlement Agreement (“Settlement Agreement”) to ~~Rule~~resolve ~~425~~the ~~under~~disputes. Under the ~~Securities~~Settlement ~~Act~~Agreement, ~~(17~~HPS ~~CFR~~must ~~230~~pay Earth Ethanol $3 million by June 18, 2006 as an initial payment, and then on or before 30 days from the initial payment, HPS must pay Earth Ethanol an additional $1 million as a second payment.~~425)~~ Additionally, HPS delivered a promissory note payable to Earth Ethanol in the principal amount of $18 million, to be paid out of the cash flows of the SLE ethanol production facility in Plaquemines Parish, Louisiana, repayments beginning no later than August 31, 2008.

oAny breach ~~Soliciting~~of ~~material~~HPS’ ~~pursuant~~obligations will entitle Earth Ethanol to equitable ~~Rule~~relief ~~14a-12~~or ~~under~~other ~~the~~remedies ~~Exchange~~for ~~Act~~such ~~(17~~breach ~~CFR~~including ~~240~~recovery of damages.~~14a-12)~~

oFor ~~Pre-commencement~~further ~~communications~~information ~~pursuant~~in toaccordance ~~Rule~~with ~~14d-2(b)~~Item 1.01, ~~under~~please ~~the~~reference ~~Exchange~~exhibit ~~Act (17 CFR 240~~99.~~14d-2(b))~~1.

oItem 9.01 ~~Pre-commencement~~Financial ~~communications~~Statements ~~pursuant~~and ~~to Rule 13e-4(c) under the Exchange Act (17 CFR 240~~Exhibits.~~13e-4(c))~~

~~TABLE~~ (d) Exhibits. OFThe ~~CONTENTS~~following exhibit is being filed herewith:

	Item 4.02. Non-Reliance on Previously Issued Financial Statements and a Related Audit Report and Completed Interim Reviews.
	Item 4.02 (b)
	Item 9.01Exhibits.
SIGNATURES
Letter to the Registrant's Board of Directors

99.1 Consent Judgment and Settlement Agreement, dated June 15, 2007

~~Table of Contents~~SIGNATURES

~~Item 4.02.~~ Pursuant ~~Non-Reliance~~to onthe ~~Previously~~requirements ~~Issued~~of ~~Financial~~the ~~Statements~~Securities ~~and~~Exchange aAct ~~Related~~of ~~Audit~~1934, ~~Report~~the registrant has duly ~~and~~caused ~~Completed~~this ~~Interim~~report ~~Reviews~~to be signed on its behalf by the undersigned hereunto duly authorized.

(a) On May 18, and May 31, 2007, the registrant’s Chief Executive Officer and Chief Financial Officer, in consultation with the Board of Directors and the registrant’s independent registered public accounting firm, concluded that the previously issued financial statements contained in the registrant’s Quarterly Reports on Forms 10-QSB for the interim quarterly reports as of June 30, 2006, September 30, 2006, and March 31, 2007, and the annual report as of December 31, 2006, should not be relied upon because of errors in those financial statements and that the registrant would restate these financial statements to make the necessary accounting corrections.


	Earth Biofuels, Inc. (Registrant)
Date: July 5, 2007	By:	/s/ Dennis G. McLaughlin, III
		Dennis G. McLaughlin, III,
		Chief Executive Officer

The Chief Executive Officer and Chief Financial Officer of the registrant have discussed with Malone & Bailey, PC, its independent registered public accounting firm, the matters disclosed in this current report on Form 8-K pursuant to this item 4.02(a). In general these changes are regarding prior share based (non-cash) compensation which was subsequently determined should be expensed rather than deferred, and computations regarding interest expense on convertible debts. The changes are set forth in more detail below.

Forms 10-QSB for the Quarters Ended June 30, 2006 and September 30, 2006 respectively

Share Based Compensation

The financial statements as of the dates referred to above have been restated to adjust for the accounting of certain share based transactions under Statement of Financial Accounting Standards No. 123R, “Share-Based Payments” and EITF 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. Earth Biofuels, Inc.(the “Company”) determined that it will be necessary to restate its previously-issued financial statements contained in it’s Quarterly Reports on Form 10-QSB for the quarters ended June 30, 2006, and September 30, 2006. Share based compensation related to shares issued for non-employees were previously reported as deferred and were being amortized over the life of the contract. The Company measures all share-based payments, including grants of employee stock options, using a fair-value based method in accordance with Statement of Financial Accounting Standards No. 123R, “Share-Based Payments.” Earth also determined the measurement date for share based transactions with non-employees according to the terms of EITF 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. Earth measured fair value of equity instruments using the stock price and other measurement assumptions as of the earlier of either of the date at which a commitment for performance by the counterparty to earn the equity instruments is, or the date at which the counterparty’s performance is complete. Subsequently however, it was determined that the date at which the commitments for performance by the Company’s non-employees to earn the equity instruments had in fact occurred before the date at which the counterparty’s performance was complete. As such, the Company is expensing the amounts reported as deferred compensation for the quarters ended June 30, 2006, and September 30, 2006. There were no amounts reported as deferred compensation in the Company’s year end filing of its 10KSB as of December 31, 2006.

The following table sets forth a reconciliation of previously reported and restated “Prepaid Expenses and Other Current Assets”, “Compensation expenses, including share based compensation,” “Net (loss)”, “Net loss per common share: Basic and Diluted” and “Accumulated deficit” for the Three and Six months Ended June 30, 2006.

For the Three
and Six months	As Reported for the						As Restated for the			As Reported for the						As Restated
Ended	Three Months Ended			Amount of			Three Months Ended			Six Months Ended			Amount of			for the Six Months
June 30, 2006	June 30, 2006			Adjustment			June 30, 2006			June 30, 2006			Adjustment			Ended June 30, 2006
Prepaid expenses and other current assets	$	1,935,619			(1,687,099	)	$	248,521		$	1,935,619			(1,687,099	)	$	248,521
Compensation, including share based compensation	$	5,348,690			1,687,099		$	7,035,789		$	9,964,640			1,687,099		$	11,651,739
Net loss from operations		($9,676,551	)		(1,687,099	)		($11,363,650	)		($16,156,885	)		(1,687,099	)		($17,843,984	)
Net Loss		($12,883,686	)		(1,687,099	)		($14,570,785	)		($19,364,020	)		(1,687,099	)		($21,051,119	)
Net loss per common share: Basic and Diluted		($0.07	)		(.01	)		($0.08	)		($0.11	)		(.01	)		($0.12	)
Accumulated deficit		N/A			N/A			N/A			($29,873 791	)		(1,687,099	)		($31,560,890	)

The following table sets forth a reconciliation of previously reported and restated “Prepaid Expenses and Other Current Assets”, “Compensation expenses, including share based compensation,” “Net Income (loss)”, “Net income (loss) per common share: Basic and Diluted” and “Accumulated deficit” for the three and nine months ended September 30, 2006.

For the Three																As Restated
and Nine Months	As Reported for the						As Restated for the			As Reported for the						for the Nine Months
Ended	Three Months Ended			Amount of			Three Months Ended			Nine Months Ended			Amount of			Ended September 30,
September 30, 2006	September 30, 2006			Adjustment			September 30, 2006			September 30, 2006			Adjustment			2006
Prepaid expenses and other current assets	$	20,506,719			(19,791,215	)	$	715,504		$	20,506,719			(19,791,215	)	$	715,504
Compensation, including share based compensation	$	8,093,976			18,104,116		$	26,198,092		$	19,515,791			19,791,215		$	39,307,006
Net income (loss) from operations		($12,705,431	)		(18,104,116	)		($30,809,547	)		($28,862,239	)		(19,791,215	)		($48,653,454	)
Net income (loss)	$	3,426,077			(18,104,116	)		($14,678,039	)		($15,937,866	)		(19,791,215	)		($35,729,081	)
Net income (loss) per common share: Basic and Diluted	$	0.02			(.05	)		($0.07	)		($0.09	)		(0.10	)		($0.19	)
Accumulated deficit		N/A			N/A			N/A			($26,447 637	)		(19,791,215	)		($46,238,852	)

In addition, there was no impact on net cash flows from operations and changes in cash and cash equivalents for the above periods.

Form 10-KSB for the Year Ended December 31, 2006

Interest Expense

The financial statements noted above have been restated to adjust the accounting for interest accruals and related interest expense. Earth Biofuels, Inc.(the “Company”) determined that it will be necessary to restate its previously-issued financial statements contained in it’s Annual Report on Form 10-KSB for the year ended December 31, 2006. The Company has been involved in renegotiations regarding its Securities Purchase Agreements dated July 24, 2006, totaling $52.5 million, and August 11, 2006, totaling $1.1 million. In connection with the ongoing renegotiations regarding the Securities Purchase Agreements Earth did not make the first quarterly interest payments due October 1, 2006, or register the underlying securities within 30 days from closing in accordance with the agreements. Prior to the filing of the Company’s first quarter 2007 report, the Company had reason to believe that an agreement was reached whereby all interest and registration penalties (additional penalties due to late interest payments and late registration of securities) would be waived, in lieu of a redemption premium of 20%, shorter maturity dates, and agreements to sell specific investments in order to repay amounts due. In addition, it was the opinion of management that there were substantial defenses for the late charges and penalties in the event of litigation. As such, the Company accrued interest and related interest expense according to the forbearance terms. It has been determined subsequent to the filing of the Company’s first quarter 2007 report, that an agreement has not yet been reached on the forbearance, and as such, the Company has restated its annual report to include interest and registration penalties according to the original Securities Purchase Agreements dated July 24, 2006 and August 11, 2006, respectively.

The following table sets forth a reconciliation of previously reported and restated “Accrued Interest Payable”, “Interest Expense” and “Accumulated deficit” for the year ended December, 31, 2006.

	As Reported						As Restated
	For the Year Ended						For the Year Ended
	December 31, 2006			Amount of Adjustment			December 31, 2006
Description	($ in 000‘s)			($ in 000‘s)			($ in 000‘s)
Accrued interest payable	$	7,337			4,607		$	11,944
Interest expense		($18,369	)		(4,607	)		($22,976	)
Total other income and (expense)	$	2,476			(4,607	)		($2,131	)
Total comprehensive loss		($63,362	)		(4,607	)		($67,969	)
Net loss per common share: Basic and Diluted		($0.33	)		(0.02	)		($0.35	)
Accumulated deficit		($74,965	)		(4,607	)		($79,572	)

In addition, there was no impact on net cash flows from operations and changes in cash and cash equivalents for the above periods.

Form 10-QSB for the quarter ended March 31, 2007

Interest Expense

The financial statements noted above have been restated to adjust the accounting for interest accruals and related interest expense. Earth Biofuels, Inc.(the “Company”) determined that it will be necessary to restate its previously-issued financial statements contained in it’s Quarterly Report on Form 10-QSB as of and for the Three month period ended March 31, 2007. The Company has been involved in renegotiations regarding its Securities Purchase Agreements dated July 24, 2006, totaling $52.5 million, and August 11, 2006, totaling $1.1 million. In connection with the ongoing renegotiations regarding the Securities Purchase Agreements Earth did not make the first quarterly interest payments due October 1, 2006, or register the underlying securities within 30 days from closing in accordance with the agreements. Prior to the filing of the Company’s first quarter 2007 report, the Company had reason to believe that an agreement was reached whereby all interest and registration penalties (additional penalties due to late interest payments and late registration of securities) would be waived, in lieu of a redemption premium of 20%, shorter maturity dates, and agreements to sell specific investments in order to repay amounts due. In addition, it was the opinion of management that there were substantial defenses for the late charges and penalties in the event of litigation. As such, the Company accrued interest and related interest expense according to the forbearance terms. It has been determined subsequent to the filing of the Company’s first quarter 2007 report that an agreement has not yet been reached on the forbearance, and as such, the Company has restated its quarterly

report to include interest and registration penalties according to the original Securities Purchase Agreements dated July 24, 2006 and August 11, 2006, respectively.

The following table sets forth a reconciliation of previously reported and restated “Accrued Interest Payable”, “Interest Expense” and “Accumulated deficit” as of and for the three month period ended March, 31, 2007.

	As Reported for the						As Restated for the
	Three Months Ended						Three Months Ended
	March 31, 2007			Amount of Adjustment			March 31, 2007
Description	($ in 000‘s)			($ in 000‘s)			($ in 000‘s)
Accrued interest payable	$	10,203			8,018		$	18,221
Interest expense		($8,106	)		(8,018	)		($16,124	)
Total other income and (expense)		($8,440	)		(8,018	)		($16,458	)
Net Income (loss)		($17,509	)		(8,018	)		($25,527	)
Net loss per common share: Basic and Diluted		($0.09	)		(0.04	)		($0.13	)
Accumulated deficit		($92,474	)		(8,018	)		($100,492	)

In addition, there was no impact on net cash flows from operations and changes in cash and cash equivalents for the above periods.

The Company will file amendments to each of the Forms 10-Q for the fiscal quarters ended June 30, 2006, September 30, 2006 and March 31, 2007, and Form 10-KSB for the year ended December 31, 2006, as soon as possible. The Company is working diligently to complete the restatement process as quickly as possible.

Item 4.02 (b)

(b) On May 18, 2007, the Earth Biofuels, Inc. (the “Company”) Audit Committee of its Board of Directors received a letter from its independent auditors, Malone & Bailey, PC advising that audit adjustments were made during their most recent audit for the Company’s 10KSB report that impact previously reported earnings. Specifically, the letter indicates that financial statements included in the Company’s Forms 10QSB as filed for the quarters ended June 30, 2006 and September 30, 2006 included errors related to share based compensation and should be restated.

Item 9.01Exhibits.

(d) Exhibits

EXHIBIT
NUMBER		DESCRIPTION
7.1		Letter from Malone & Bailey, PC dated May 18, 2007 to the registrant’s Board of Directors.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Earth Biofuels, Inc. (Registrant)
Date: June 13, 2007	By:	/s/ Dennis G. McLaughlin, III
		Dennis G. McLaughlin, III,
		Chief Executive Officer

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