Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 10, 2015 | |
Document and Entity Information: | ||
Entity Registrant Name | Global Clean Energy Holdings, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Trading Symbol | gceh | |
Amendment Flag | false | |
Entity Central Index Key | 748,790 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 339,187,545 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Entity Incorporation, Date of Incorporation | Nov. 20, 1991 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 158,893 | $ 238,485 |
Accounts receivable | 46,512 | 213,962 |
Inventory | 35,205 | 35,201 |
Other current assets | 46,465 | 37,580 |
Total Current Assets | 287,075 | 525,228 |
PROPERTY AND EQUIPMENT, NET | 5,852,280 | 13,834,255 |
INTANGIBLE ASSETS, NET | 3,543,804 | 3,727,724 |
OTHER NONCURRENT ASSETS | 5,320 | 5,744 |
TOTAL ASSETS | 9,688,479 | 18,092,951 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 3,330,003 | 3,651,606 |
Accrued payroll and payroll taxes | 1,309,056 | 1,249,815 |
Notes payable - current portion | 1,337,089 | 1,337,089 |
Convertible notes payable, net of debt discount | 637,000 | 697,000 |
Derivative Liability | 53,000 | 0 |
Total Current Liabilities | 6,666,148 | 6,935,510 |
LONG-TERM LIABILITIES | ||
Accrued interest payable | 5,066,216 | 4,166,607 |
Accrued return on noncontrolling interest | 12,140,304 | 10,101,080 |
Mortgage notes payable | 5,110,189 | 5,110,189 |
Total Long Term Liabilities | 22,316,709 | 19,377,876 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value; 50,000,000 shares authorized Series B, convertible; 13,000 shares issued and outstanding(aggregate liquidation preference of $1,300,000) | 13 | 13 |
Common stock, $0.001 par value; 500,000,000 shares authorized; 339,187,545 issued and outstanding | 339,188 | 339,187 |
Additional paid-in capital | 25,813,298 | 25,657,177 |
Accumulated deficit | (29,916,712) | (28,946,103) |
Accumulated other comprehensive loss | (121,829) | (66,586) |
Total Global Clean Energy Holdings, Inc. Stockholders' Deficit | (3,886,042) | (3,016,312) |
Noncontrolling interests | (15,408,336) | (5,204,123) |
Total Stockholders' Deficit | (19,294,378) | (8,220,435) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 9,688,479 | $ 18,092,951 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares | Sep. 30, 2015 | Mar. 31, 2015 |
Statement of Financial Position | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Series B issued | 13,000 | 13,000 |
Preferred Stock, liquidation preference | $ 1,300,000 | $ 1,300,000 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 339,187,545 | 339,187,545 |
Common Stock, shares outstanding | 339,187,545 | 339,187,545 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement | ||||
Revenue | $ 92,040 | $ 495,796 | $ 492,107 | $ 741,500 |
Subsidy Income | 284 | 153 | 1,246 | |
Total Revenue | 92,040 | 496,080 | 492,260 | 742,746 |
Operating Expenses | ||||
General and administrative | 397,064 | 535,031 | 1,444,187 | 1,610,697 |
Loss on disposal of fixed assets | 75,670 | 23,597 | 75,670 | 23,597 |
Write down of long lived assets | 6,671,892 | 6,671,892 | 0 | |
Plantation operating costs | 27,021 | 21,580 | 85,431 | 83,804 |
Total Operating Expenses | 7,171,647 | 580,208 | 8,277,180 | 1,718,098 |
Loss from Operations | (7,079,607) | (84,128) | (7,784,920) | (975,352) |
Other Income (Expenses) | ||||
Other income | 7 | 290 | 7 | 298 |
Interest expense | (302,701) | (293,236) | (918,661) | (895,220) |
Gain on settlement of liabilities | 270,323 | |||
Change in fair value of derivative | 9,000 | 27,000 | ||
Foreign currency transaction gain (loss) | 21 | 119 | 1,791 | 204 |
Other Expenses, Net | (293,673) | (292,827) | (619,540) | (894,718) |
Net Loss | (7,373,280) | (376,955) | (8,404,460) | (1,870,070) |
Less Net Loss Attributable to the Noncontrolling Interest | (6,745,046) | (387,627) | (7,433,851) | (1,205,007) |
Net Loss Attributable to Global Clean Energy Holdings, Inc. | $ (628,234) | $ 10,672 | $ (970,609) | $ (665,063) |
Basic and diluted Loss per Common Share: | ||||
Net Loss per Common Share | $ (0.001) | $ (0.001) | $ (0.003) | $ (0.001) |
Basic and diluted Weighted-Average Common Shares Outstanding | 339,187,545 | 339,187,545 | 339,187,545 | 339,187,545 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Activities | ||
Net Loss | $ (8,404,460) | $ (1,870,070) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Foreign currency transaction gain | (1,791) | (204) |
Gain on settlement of liabilities | (270,323) | |
Share-based compensation | 156,121 | 44,287 |
Write down of long lived assets | 6,671,892 | 0 |
Loss on disposal of fixed assets | 75,670 | 23,597 |
Depreciation and amortization | 261,072 | 556,913 |
Amortization of debt discount | 60,000 | |
Change in fair value of derivative | (27,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 190,579 | (91,327) |
Inventory | (1,228) | 2,756 |
Other current assets | (46,442) | (39,112) |
Accounts payable and accrued expenses | 805,158 | 735,188 |
Other noncurrent assets | (404) | 81 |
Net Cash Used in Operating Activities | (531,156) | (637,891) |
Investing Activities | ||
Plantation development costs | (224,161) | (330,795) |
Proceeds from sale of property and equipment | 283,704 | (3,412) |
Net Cash Provided by (Used in) Investing Activities | 59,543 | (334,207) |
Financing Activities | ||
Proceeds from issuance of preferred membership in GCE Mexico I, LLC | 429,743 | 952,435 |
Proceeds from notes payable | 130,000 | |
Payments on capital leases and notes payable | (1,175) | |
Net Cash Provided by Financing Activities | 429,743 | 1,081,260 |
Effect of exchange rate changes on cash | (37,722) | (12,241) |
Net change in Cash and Cash Equivalents | (79,592) | 96,921 |
Cash and Cash Equivalents at Beginning of Period | 238,485 | 216,531 |
Cash and Cash Equivalents at End of Period | 158,893 | 313,452 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | 18,550 | |
Cash paid for income tax | 5,388 | 1,029 |
Noncash Investing and Financing activities: | ||
Accrual of return on noncontrolling interest | 2,039,224 | 1,977,862 |
Write Down of debt and release of Fixed Assets | $ 190,500 | |
Estimated fair value of derivative liability | $ 79,000 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement | ||||
Net Loss | $ (7,373,280) | $ (376,955) | $ (8,404,460) | $ (1,870,070) |
Other comprehensive income (loss)- foreign currency translation adjustment | (1,212,557) | 48,062 | (1,216,123) | 93,947 |
Comprehensive Loss | (8,585,837) | (328,893) | (9,620,583) | (1,776,123) |
Add net loss attributable to the noncontrolling interest | 6,745,046 | 387,627 | 7,433,851 | 1,205,007 |
Add other comprehensive loss (income) attributable to noncontrolling interest | 1,160,880 | (116,599) | 1,160,880 | (124,117) |
Comprehensive Loss Attributable to Global Clean Energy Holdings, Inc. | $ (679,911) | $ (57,865) | $ (1,025,852) | $ (695,233) |
Note 1 - History and Basis of P
Note 1 - History and Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 1 - History and Basis of Presentation | Note 1 History and Basis of Presentation History Global Clean Energy Holdings, Inc.(the Company) is a U.S.-based, multi-national, energy agri-business focused on the development of non-food based bio-feedstocks. The Company was originally incorporated under the laws of the State of Utah on November 20, 1991. On July 19, 2010, the reincorporation of the company from a Utah corporation to a Delaware corporation was completed, as approved by shareholders. Principles of Consolidation The condensed consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc., its subsidiaries, and the variable interest entities of GCE Mexico I, LLC a Delaware limited liability company (GCE Mexico), and its Mexican subsidiaries (Asideros, Asideros 2 and Asideros 3). All significant intercompany transactions have been eliminated in consolidation. Generally accepted accounting principles require that if an entity is the primary beneficiary of a variable interest entity (VIE), the entity should consolidate the assets, liabilities and results of operations of the VIE in its consolidated financial statements. Global Clean Energy Holdings, Inc. considers itself to be the primary beneficiary of GCE Mexico, and its Mexican subsidiaries, and accordingly, has consolidated these entities since their formation beginning in April 2008, with the equity interests of the unaffiliated investors in GCE Mexico presented as Noncontrolling Interests in the accompanying condensed consolidated financial statements. Under ASC 810-10 the Primary Beneficiary is the party that has both of the following: 1. The power to make decisions regarding the activities that most significantly impact the success of the VIE, and 2. The obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE. When multiple parties make decisions over different activities of the entity, only the party with power to direct the activities that most significantly impacts the entity's economic performance will have satisfied the first condition. Global Clean Energy Holdings, Inc. has the power to direct the most significant activities of GCE Mexico and its subsidiaries, as these rights were specifically granted to Global Clean Energy Holdings, Inc. under the GCE Mexicos Operating Agreement (the LLC Agreement). Global Clean Energy Holdings, Inc. satisfies the second condition because as owner of a 50.5% profits interest, Global Clean Energy Holdings, Inc. is expected to receive the benefits or the largest amounts of profits allocated by GCE Mexico. GCEH ownes 1% of Asideros 1, Asideros 2 and Asideros 3, and the balance is owned by GCE Mexico. Accordingly, we own 50.5% of Asideros 1, Asideros 2 and Asideros 3 either directly or through our common membership interest in GCE Mexico. The partners right to receive a preferred return on their investment does not qualify as a right to receive residual returns of GCE Mexico. The guidance also states that in a multi-tiered legal-entity structure, a reporting entity should generally begin its evaluation at the lowest-level entity. Each entity within the structure should then be evaluated on a consolidated basis. The attributes and variable interests of the underlying consolidated entities become those of the parent company upon consolidation. GCE Mexico holds, directly, 99% of the voting interest in the subsidiaries pursuant to the Agency Agreement. GCEHs rights as Manager of GCE Mexico and as the sole Director of the subsidiaries enables GCEH to conclude that these powers, together with the 50% membership interest in GCE Mexico, gives Global Clean Energy Holdings, Inc. a controlling financial interest and therefore is the primary beneficiary. GCE MEXICO I, LLC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2015 2014 (Unaudited) ASSETS CURRENT ASSETS (1) 148,541 86,979 PROPERTY AND EQUIPMENT, NET 5,703,335 13,377,936 OTHER NONCURRENT ASSETS 2,694 3,118 TOTAL ASSETS $5,854,570 $13,468,033 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES 373,744 281,369 LONG-TERM LIABILITIES 21,984,456 19,124,134 TOTAL LIABILITIES $22,358,200 $19,405,503 The accompanying notes are an integral part of these condensed unaudited consolidated financial statements (1) Includes cash of $105,790 and $86,979 at September 30, 2015 and December 31, 2014, respectively, which is included in the Companys consolidated financial statements, but is used only for the operations of GCE Mexico. Unaudited Interim Condensed Consolidated Financial Statements The accompanying (a) condensed consolidated Balance Sheet at December 31, 2014 has been derived from audited statements and (b) unaudited condensed consolidated financial statements as of September 30, 2015 and 2014 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included and are of normal, recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission. The results of operations for the nine months ended September 30, 2015, may not be indicative of the results that may be expected for the year ending December 31, 2015. Accounting for Agricultural Operations All costs incurred until the actual planting of the Jatropha Curcas plant are capitalized as plantation development costs, and are included in Property and Equipment on the balance sheet. Plantation development costs are being accumulated in the balance sheet during the development period and are accounted for in accordance with accounting standards for Agricultural Producers and Agricultural Cooperatives. The direct costs associated with each farm and the production of the Jatropha revenue streams have been deferred and accumulated as a noncurrent asset, Deferred Growing Costs, on the balance sheet. These costs will be recognized as a Cost of Good Sold in the period the revenue is recognized. Other general costs without expected future benefits are expensed when incurred. Inventory The Company uses the FIFO valuation method for its inventories, which consist almost entirely of finished goods. The Company records no inventories above their acquisition costs. There were no losses related to the valuation of inventory during the nine months ended September 30, 2015. Income/Loss per Common Share Income/Loss per share amounts are computed by dividing income or loss applicable to the common shareholders of the Company by the weighted-average number of common shares outstanding during each period. Diluted income or loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents. The number of dilutive warrants and options is computed using the treasury stock method, whereby the dilutive effect is reduced by the number of treasury shares the Company could purchase with the proceeds from exercises of warrants and options. The following instruments are currently antidilutive and have been excluded from the calculations of diluted income or loss per share at September 30, 2015 and 2014, as follows: September 30, 2015 2014 Convertible notes and accrued interest 24,700,000 23,500,000 Convertible preferred stock - Series B 11,818,181 11,818,181 Warrants 3,083,332 3,083,332 Compensation-based stock options and warrants 92,470,222 72,645,311 132,071,735 111,046,824 Revenue Recognition Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the sellers price to the buyer is fixed or determinable; collectability is reasonably assured; and title and the risks and rewards of ownership have transferred to the buyer. Value added taxes collected on revenue transactions are excluded from revenue and are included in accounts payable until remittance to the taxation authority. Jatropha and Camelina biofuel revenue - The Companys long-term primary source of revenue currently is expected to be crude Jatropha oil and Camelina oil. Revenue will be recognized net of sales or value added taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognized when there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. For the nine months ended September 30, 2015, the Company had no material Jatropha or Camelina biofuel revenue. Advisory services revenue - The Company provides development and management services to other companies regarding their bio-fuels and/or feedstock-Jatropha development operations, on a fee for services basis. The advisory services revenue is recognized upon completion of the work in accordance with each advisory contract. Agricultural subsidies revenue - the Company receives agricultural subsidies from the Mexican government to supplement the farm development and planting of new trees. Due to the uncertainty of these payments, the revenue is recognized when the payments are received. We recognize these funds as revenue due to these payments being disbursed to supplement the Companys income and not as direct payments for any specified farming expense. For the nine months ended September 30, 2015, the Company had no material subsidies revenue. Fair Value of Financial Instruments The carrying amounts reported in the consolidated balance sheets for accounts receivable and payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the various notes payable and the mortgage notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. See Note 8 for additional information regarding assets measured at fair value on a nonrecurring basis and Note 9 for measurements on a recurring basis. Derivative Liabilities The Company evaluates debt instruments, stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entitys Own Equity . The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. The Company has issued notes with embedded conversion features. Certain of the embedded conversion features contain price protection or anti-dilution features that result in these instruments being treated as derivatives. Accordingly, the Company has estimated the fair value of these embedded conversion features to settle outstanding contracts using Black-Scholes. The Company uses level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities. Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial statements include a) those assumed in determining the valuation of common stock, warrants, derivative liabilities and stock options, b) estimated useful lives of plantation equipment and plantation development costs, and c) undiscounted future cash flows for purpose of evaluating possible impairment of long-term assets. It is at least reasonably possible that the significant estimates used will change within the next year. Foreign Currency During both 2014 and 2015, the Company had operations located in the United States, Mexico, and Dominican Republic. For these foreign operations, the functional currency is the local countrys currency. Consequently, revenues and expenses of operations outside the United States of America are translated into U.S. dollars using weighted average exchange rates, while assets and liabilities of operations outside the United States of America are translated into U.S. dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are included in equity (deficit) as a component of accumulated other comprehensive loss in the accompanying condensed consolidated financial statements. Foreign currency transaction adjustments are included in other income (expense) in the Companys results of operations. The Company has not entered into derivative instruments to offset the impact of foreign currency fluctuations. Stock Based Compensation The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. Comprehensive Income In June 2011, the FASB issued authoritative guidance requiring entities to report components of other comprehensive income in either a single continuous statement or in two separate, but consecutive statements of net income and other comprehensive income. The company has included a condensed consolidated statement of comprehensive income for the three and nine months ended September 30, 2015 and 2014. New Accounting Guidelines The Company has reviewed all the recent accounting pronouncements issued to date of the issuance of these consolidated financial statements, and does not believe any of these pronouncements will have a material impact on the Companys consolidated financial statements. |
Note 2 - Going Concern Consider
Note 2 - Going Concern Considerations | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 2 - Going Concern Considerations | Note 2 Going Concern Considerations The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying condensed consolidated financial statements, the Company incurred net losses applicable to its common shareholders of $970,609 and $665,063 for the nine months ended September 30, 2015, and 2014, respectively, and has an accumulated deficit applicable to its common shareholders of approximately $30,000,000 at September 30, 2015. The Company also used cash in operating activities of approximately $531,000 and $638,000 during the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015, the Company has negative working capital of approximately $6,400,000. These factors raise substantial doubt about the Companys ability to continue as a going concern. The Company commenced its business related to the cultivation and production of oil from the seed of the Jatropha plant in September 2007 and Camelina in March 2013. Management plans to meet its cash needs through various means including securing financing, entering into joint ventures, and developing the current business model. In order to fund its operations, the Company has to date received approximately $22,560,000 in capital contributions from the preferred membership interest in GCE Mexico I, LLC (GCE Mexico) and has issued mortgages in the total amount of $5,110,189 for the acquisition of land. The Company is developing the business operation to participate in the growing bio-diesel industry. While the Company expects to be successful in its ventures, there is no assurance that its business plan will be economically viable. The ability of the Company to continue as a going concern is dependent on that plans success. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Note 3 - Property and Equipment
Note 3 - Property and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 3 - Property and Equipment | Note 3 Property and Equipment Property and equipment are as follows: September 30, December 31, 2015 2014 Land $3,453,409 $3,994,647 Plantation development costs 2,000,861 9,638,425 Plantation equipment 891,637 1,366,258 Office equipment 98,047 103,770 Total cost 6,443,954 15,103,100 Less accumulated depreciation (591,674) (1,268,845) Property and equipment, net $5,852,280 $13,834,255 Depreciation expense was approximately $133,000 and $151,000 for the nine months ended September 30, 2015 and 2014 respectively. Commencing in June 2008, Asideros I purchased certain equipment for purposes of rapidly clearing the land, preparing the land for planting, and actually planting the Jatropha trees. The Company has capitalized farming equipment and costs related to the development of land for farm use in accordance with generally accepted accounting principles for accounting by agricultural producers and agricultural cooperatives. Plantation equipment is depreciated using the straight-line method over estimated useful lives of 5 to 15 years. Depreciation expense has been capitalized as part of plantation development costs through the date that the plantation becomes commercially productive. The initial plantations were deemed to be commercially productive on October 1, 2009, at which date the Company commenced the depreciation of plantation development costs over estimated useful lives of 10 to 35 years, depending on the nature of the development. Developments and other improvements with indefinite lives are capitalized and not depreciated. Other developments that have a limited life and intermediate-life plants that have growth and production cycles of more than one year are being depreciated over their useful lives once they are placed in service. The land, plantation development costs, and plantation equipment are located in Mexico. During the quarter ended September 30, 2015, the Company entered into negotiations with a third party related to the potential sale of its farming operations in Mexico. Based on these negotiations, the Company has determined that the recoverability of certain of its capitalized costs were impaired. Accordingly, the Company recorded an impairment charge of approximately $6,700,000 based on the expected proceeds from the transaction. In connection with such transactions, the Company expects that it will also be able to eliminate all of the debt attributed to the Joint Venture Entity of approximately $12,000,000 (balances as of September 30, 2015) based on discussions with its joint venture partner. |
Note 4 - Intangible Assets
Note 4 - Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 4 - Intangible Assets | Note 4 Intangible Assets In March 2013, the Company purchased certain intangible assets related to the commercial production of Camelina. The intangible assets include three patents and the related intellectual property associated with these patents. These intangible assets acquired have an expected useful life of 17 years and are carried at cost less any accumulated amortization and any impairment losses. Amortization is calculated using the straight-line method to allocate the cost of the intangible assets over their estimated useful lives of 17 years. Any future costs associated with the maintenance of these patents with indefinite lives will be capitalized and not amortized. The Intangible Assets as of the year ended September 30, 2015 is shown in the following table: September 30, December 31, 2015 2014 Intangible Assets 4,168,841 $4,168,841 Less accumulated amortization (625,037) (441,117) Intangible Assets, net $3,543,804 $3,727,724 Amortization expense was approximately $184,000 for both the nine months ended September 30, 2015 and 2014. |
Note 5 - Debt
Note 5 - Debt | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 5 - Debt | Note 5 Debt Notes Payable to Shareholders Included in notes payable on the accompanying condensed consolidated balance sheet, the Company has notes payable to certain shareholders in the aggregate amount of $26,000 at September 30, 2015 and 2014. The notes originated in 1999, bear interest at 12%, are unsecured, and are currently in default. Accrued interest on the notes totaled $58,081 and $54,970, respectively at September 30, 2015 and 2014, respectively. Convertible Notes Payable In March 2010, the Company entered into a securities purchase agreement with the preferred members of GCE Mexico pursuant to which the Company issued senior unsecured convertible promissory notes (the Convertible Notes) in the original aggregate principal amount of $567,000 and warrants to acquire an aggregate of 1,890,000 shares of the Companys common stock. The Convertible Notes mature on the earlier of (i) March 16, 2012, or (ii) upon written demand of payment by the note holders following the Companys default thereunder. The maturity date of the Convertible Notes have been extended until September 15, 2016. Interest accrues on the convertible notes at a rate of 5.97% per annum, and is payable quarterly in cash, in arrears, on each year anniversary of the issuance of the convertible notes. The Company may at its option, in lieu of paying interest in cash, pay interest by delivering a number of unregistered shares of its common stock equal to the quotient obtained by dividing the amount of such interest by the arithmetic average of the volume weighted average price for each of the five consecutive trading days immediately preceding the interest payment date. At any time following the first anniversary of the issuance of the Convertible Notes, at the option of the note holders, the outstanding balance thereof (including unpaid interest) may be converted into shares of the Companys common stock at a conversion price equal to $0.03. The conversion price may be adjusted in connection with stock splits, stock dividends and similar events affecting the Companys capital stock. The convertible notes rank senior to all other indebtedness of the Company, and thereafter will remain senior or pari passu with all accounts payable and other similar liabilities incurred by the Company in the ordinary course of business. The Company may not prepay the convertible notes without the prior consent of the holders of the Convertible Notes. In January 2014, the Company entered into a securities purchase agreement with certain third party investors pursuant to which the Company issued senior unsecured contingently convertible promissory notes (the Convertible Notes 2) an aggregate principal amount of $130,000 and warrants to acquire an aggregate of 1,083,332 shares of the Companys common stock. Interest accrues on the Convertible Notes 2 at a rate of 8% per annum, and is payable quarterly in cash, in arrears, on each year anniversary of the issuance of the convertible notes. At any time following the first anniversary of the issuance of the Convertible Notes, at the option of the note holders, the outstanding balance thereof (including unpaid interest) may be converted into shares of the Sustainable Oils common stock at a conversion price equal to $1.448, subject to adjustment based on Sustainable Oils receiving alternative consideration from another investor. The conversion price may be adjusted in connection with stock splits, stock dividends and similar events affecting the Sustainable Oilss capital stock. The relative fair value of the warrants was considered insignificant. Based on the down round feature in the conversion terms, such embedded conversion feature resulted in a derivative liability and a corresponding debt discount in the amount of $80,000 to be recorded (See Note 9). The Company is amortizing the debt discount over the life of the corresponding convertible promissory notes through December 31, 2015. The amortization of the debt discount for these derivative instruments was $59,500 for nine months ended September 30, 2015. Mortgage Notes Payable The investors holding the preferred membership units of GCE Mexico also directly funded the purchase by Asideros I of approximately 5,000 acres of land in the State of Yucatan in Mexico by the payment of $2,051,282, The land was acquired in the name of Asideros I, and Asideros I issued a mortgage in the amount of $2,051,282 in favor of the two original investors. These two investors also directly funded the purchase by Asideros 2 of approximately 4,500 acres, and a second parcel by Asideros 2 of approximately 600 acres of land adjacent to the land owned by Asideros by the total payment of $963,382. The land was acquired in the name of Asideros 2 and Asideros 2 issued mortgages in the amount of $963,382 in favor of these two investors. These mortgages bear interest at the rate of 12% per annum, payable quarterly. The parties have agreed to accrue the interest until such time as the Board determines that there is sufficient cash flow to pay all accrued interest. The initial mortgage, including any unpaid interest, is due in April 2018. The second mortgage, including any unpaid interest, is due in February 2020. In October 2011, the two original investors also directly funded the purchase by Asideros 3 of approximately 5,600 acres for a total $2,095,525. The land was acquired in the name of Asideros 3 and Asideros 3 issued mortgages in the amount of $2,095,525 in favor of these two investors. These mortgages bear interest at the rate of 12% per annum, payable quarterly. The Board has directed that this interest shall continue to accrue until such time as the Board determines that there is sufficient cash flow to pay all accrued interest. The initial mortgage, including any unpaid interest, is due in October 2021. In November 2012, one of the two holders of the preferred membership interests acquired all of the ownership interests of the other member. Accordingly, all of the foregoing obligations are now owed to the sole holder of GCE Mexicos preferred membership interests. Promissory Notes Payable In March 2013, the Company issued a secured promissory note in the principal amount of $1,300,000 to Targeted Growth, Inc. for certain Camelina assets. The purchase occurred concurrently with the acquisition of Sustainable Oils, Inc.. The note bears an interest rate of ten percent (10.0%) per annum, and is payable upon the earlier of the following: (a) to the extent of 35.1% of, and on the third business day after, the receipt by the Company of any Qualified Funding; or (b) September 13, 2014. In December 2014, the Company amended the note by (i) making the note due and payable on demand, and (ii) by returning to the holder the certain Camelina assets to Targeted Growth, Inc. at the book value of $190,500, that previously constituted as collateral for the repayment of the note. |
Note 6 - Equity (deficit)
Note 6 - Equity (deficit) | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 6 - Equity (deficit) | Note 6 - Equity (Deficit) The preferred members have made capital contributions of approximately $430,000 and $952,000 during the nine months ended September 30, 2015 and 2014, respectively. The LLC Agreement calls for additional contributions from the investor, as requested by management and as required by the operation in 2015 and the following years. The holder of the preferred membership interest is entitled to earn a preferential 12% per annum cumulative compounded return on the cumulative balance of the preferred membership interest. The preferential return increased by $2,039,224, and $1,977,862 during the nine months ended September 30, 2015 and 2014, respectively, and totals $12,140,304 at September 30, 2015. |
Note 7 - Stock Options and Warr
Note 7 - Stock Options and Warrants | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 7 - Stock Options and Warrants | Note 7 Stock Options and Warrants Stock Options and Compensation-Based Warrants The Company has an incentive stock option plan wherein 40,000,000 shares of the Companys common stock are reserved for issuance thereunder. A summary of the status of options and compensation-based warrants at September 30, 2014, and changes during the nine months then ended is presented in the following table: Weighted Weighted Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at December 31, 2014 64,945,311 0.01 3.3 years $- Granted 32,624,911 0.01 Exercised - Forfeited (4,000,000) 0.02 - Expired (1,100,000) 0.02 - Outstanding at September 30, 2015 92,470,222 0.015 3.2 years $68,959 Vested and Exercisable at September 30, 2015 61,127,970 $0.02 2.6 years $- The fair value of stock option grants and compensation-based warrants is estimated on the date of grant or issuance using the Black-Scholes option pricing model. Options to purchase 32,624,911 shares of common stock were issued in the nine months ended September 30, 2015 and 3,700,000 in the nine months ended September 30, 2014. The weighted average fair value of stock options issued during the nine months ended September 30, 2015 and 2014 as $0.018 and $.011, respectively. The weighted-average assumptions used for the stock options granted and compensation-based warrants issued during the nine months ended September 30, 2015 and 2014 were risk-free interest rate of 1.18% and 1.75%, volatility of 114% and 175%, expected life of 5 years, and dividend yield of zero. The expected life of stock options represents the period of time that the stock options granted are expected to be outstanding prior to exercise. The expected volatility is based on the historical price volatility of the Companys common stock. The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related stock options. The dividend yield represents anticipated cash dividends to be paid over the expected life of the stock options. The aggregate intrinsic values is based on a September 30, 2015 closing price of $0.007 per share. Share-based compensation from all sources recorded during the nine months ended September 30, 2015 and 2014 was approximately $156,000 and $44,000, respectively, and is reported as general and administrative expense in the accompanying condensed consolidated statements of operations. As of September 30, 2015, there is approximately $139,000 of unrecognized compensation cost related to stock-based payments that will be recognized over a weighted average period of approximately 2.15 years. Stock Warrants A summary of the status of the warrants outstanding at September 30, 2015, and changes during the nine months ended is presented in the following table: Weighted Weighted Weighted Shares Average Average Aggregate Under Exercise Remaining Intrinsic Warrant Price Contractual life Value Outstanding at December 31, 2014 3,083,332 0.0117 6.31 years $- Issued - Exercised - Expired - Outstanding and exercisable at September 30, 2015 3,083,332 0.0117 5.34 years $- |
Note 8 - Impairment of Assets a
Note 8 - Impairment of Assets and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 8 - Impairment of Assets and Fair Value Measurements | Note 8 Impairment of assets and fair value measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established by generally accepted accounting principles which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 3 Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Fair value is used on a nonrecurring basis to measure certain assets when applying lower of cost or fair value accounting or when adjusting carrying values. Fair value is also used when evaluating impairment on certain assets, including deferred growing costs and property and equipment. The Company has recognized approximately $6,700,000 and $0 in impairment charges for the nine months ended September 30, 2015 and 2014, respectively. (See note 3) |
Note 9 - Derivative Liabilities
Note 9 - Derivative Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 9 - Derivative Liabilities | Note 9 Derivative Liabilities The Company applies the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entitys own stock. The standard applies to any freestanding financial instrument or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entitys own common stock. The Company has estimated the fair value of these embedded conversion features to settle outstanding contracts using Black-Scholes using the following assumptions: · Expected volatility is based primarily on historical volatility of the Company. Historical volatility was computed using weekly pricing observations for recent periods. The Company believes this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants and embedded conversion features. The Company currently have no reason to believe that future volatility over the expected remaining life of these embedded conversion features is likely to differ materially from historical volatility. · The expected life is based on the remaining term of the warrants and embedded conversion features. · The risk-free interest rate is based on U.S. Treasury securities consistent with the remaining term of the embedded conversion features. During the nine months ended September 30, 2015, the Company issued an aggregate of $130,000 in principal of convertible notes payable at an interest rate of 8% (See Note 6). Such convertible notes contained embedded conversion features in the Companys own stock and have resulted in an initial derivative liability value and a debt discount of $79,000 being recorded by the Company. During the nine months ended September 30, 2015, the Company recorded other income of $27,000, related to the change in fair value of the embedded conversion features which is included in change in fair value of derivative liabilities in the accompanying condensed consolidated statements of operations. The following table presents the embedded conversion features which have no observable market data and are derived using Black-Scholes measured at fair value on a recurring basis, using Level 3 inputs, as of September 30, 2015: Annual dividend yield 0% Expected live (years 1 - 0.75 Risk-free interest rate 0.21% - 0.23% Expected volatility 113% The level 3 carrying value as of September 30, 2015: Embedded Conversion Features $53,000 The following table presents the changes in fair value of our warrants and embedded conversion features measured at fair value on a recurring basis for the nine months ended September 30, 2015: Balance as of January 1, $- Issuance of warrants and embedded conversion features 80,000 Change in fair value (27,000) Balance as of September 30, $53,000 |
Note 1 - History and Basis of16
Note 1 - History and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc., its subsidiaries, and the variable interest entities of GCE Mexico I, LLC a Delaware limited liability company (GCE Mexico), and its Mexican subsidiaries (Asideros, Asideros 2 and Asideros 3). All significant intercompany transactions have been eliminated in consolidation. Generally accepted accounting principles require that if an entity is the primary beneficiary of a variable interest entity (VIE), the entity should consolidate the assets, liabilities and results of operations of the VIE in its consolidated financial statements. Global Clean Energy Holdings, Inc. considers itself to be the primary beneficiary of GCE Mexico, and its Mexican subsidiaries, and accordingly, has consolidated these entities since their formation beginning in April 2008, with the equity interests of the unaffiliated investors in GCE Mexico presented as Noncontrolling Interests in the accompanying condensed consolidated financial statements. Under ASC 810-10 the Primary Beneficiary is the party that has both of the following: 1. The power to make decisions regarding the activities that most significantly impact the success of the VIE, and 2. The obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE. When multiple parties make decisions over different activities of the entity, only the party with power to direct the activities that most significantly impacts the entity's economic performance will have satisfied the first condition. Global Clean Energy Holdings, Inc. has the power to direct the most significant activities of GCE Mexico and its subsidiaries, as these rights were specifically granted to Global Clean Energy Holdings, Inc. under the GCE Mexicos Operating Agreement (the LLC Agreement). Global Clean Energy Holdings, Inc. satisfies the second condition because as owner of a 50.5% profits interest, Global Clean Energy Holdings, Inc. is expected to receive the benefits or the largest amounts of profits allocated by GCE Mexico. GCEH ownes 1% of Asideros 1, Asideros 2 and Asideros 3, and the balance is owned by GCE Mexico. Accordingly, we own 50.5% of Asideros 1, Asideros 2 and Asideros 3 either directly or through our common membership interest in GCE Mexico. The partners right to receive a preferred return on their investment does not qualify as a right to receive residual returns of GCE Mexico. The guidance also states that in a multi-tiered legal-entity structure, a reporting entity should generally begin its evaluation at the lowest-level entity. Each entity within the structure should then be evaluated on a consolidated basis. The attributes and variable interests of the underlying consolidated entities become those of the parent company upon consolidation. GCE Mexico holds, directly, 99% of the voting interest in the subsidiaries pursuant to the Agency Agreement. GCEHs rights as Manager of GCE Mexico and as the sole Director of the subsidiaries enables GCEH to conclude that these powers, together with the 50% membership interest in GCE Mexico, gives Global Clean Energy Holdings, Inc. a controlling financial interest and therefore is the primary beneficiary. GCE MEXICO I, LLC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2015 2014 (Unaudited) ASSETS CURRENT ASSETS (1) 148,541 86,979 PROPERTY AND EQUIPMENT, NET 5,703,335 13,377,936 OTHER NONCURRENT ASSETS 2,694 3,118 TOTAL ASSETS $5,854,570 $13,468,033 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES 373,744 281,369 LONG-TERM LIABILITIES 21,984,456 19,124,134 TOTAL LIABILITIES $22,358,200 $19,405,503 The accompanying notes are an integral part of these condensed unaudited consolidated financial statements (1) Includes cash of $105,790 and $86,979 at September 30, 2015 and December 31, 2014, respectively, which is included in the Companys consolidated financial statements, but is used only for the operations of GCE Mexico. |
Unaudited Interim Condensed Consolidated Financial Statements | Unaudited Interim Condensed Consolidated Financial Statements The accompanying (a) condensed consolidated Balance Sheet at December 31, 2014 has been derived from audited statements and (b) unaudited condensed consolidated financial statements as of September 30, 2015 and 2014 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included and are of normal, recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission. The results of operations for the nine months ended September 30, 2015, may not be indicative of the results that may be expected for the year ending December 31, 2015. |
Accounting For Agricultural Operations | Accounting for Agricultural Operations All costs incurred until the actual planting of the Jatropha Curcas plant are capitalized as plantation development costs, and are included in Property and Equipment on the balance sheet. Plantation development costs are being accumulated in the balance sheet during the development period and are accounted for in accordance with accounting standards for Agricultural Producers and Agricultural Cooperatives. The direct costs associated with each farm and the production of the Jatropha revenue streams have been deferred and accumulated as a noncurrent asset, Deferred Growing Costs, on the balance sheet. These costs will be recognized as a Cost of Good Sold in the period the revenue is recognized. Other general costs without expected future benefits are expensed when incurred. |
Inventory | Inventory The Company uses the FIFO valuation method for its inventories, which consist almost entirely of finished goods. The Company records no inventories above their acquisition costs. There were no losses related to the valuation of inventory during the nine months ended September 30, 2015. |
Income/loss Per Common Share | Income/Loss per Common Share Income/Loss per share amounts are computed by dividing income or loss applicable to the common shareholders of the Company by the weighted-average number of common shares outstanding during each period. Diluted income or loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents. The number of dilutive warrants and options is computed using the treasury stock method, whereby the dilutive effect is reduced by the number of treasury shares the Company could purchase with the proceeds from exercises of warrants and options. The following instruments are currently antidilutive and have been excluded from the calculations of diluted income or loss per share at September 30, 2015 and 2014, as follows: September 30, 2015 2014 Convertible notes and accrued interest 24,700,000 23,500,000 Convertible preferred stock - Series B 11,818,181 11,818,181 Warrants 3,083,332 3,083,332 Compensation-based stock options and warrants 92,470,222 72,645,311 132,071,735 111,046,824 |
Revenue Recognition | Revenue Recognition Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the sellers price to the buyer is fixed or determinable; collectability is reasonably assured; and title and the risks and rewards of ownership have transferred to the buyer. Value added taxes collected on revenue transactions are excluded from revenue and are included in accounts payable until remittance to the taxation authority. Jatropha and Camelina biofuel revenue - The Companys long-term primary source of revenue currently is expected to be crude Jatropha oil and Camelina oil. Revenue will be recognized net of sales or value added taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognized when there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. For the nine months ended September 30, 2015, the Company had no material Jatropha or Camelina biofuel revenue. Advisory services revenue - The Company provides development and management services to other companies regarding their bio-fuels and/or feedstock-Jatropha development operations, on a fee for services basis. The advisory services revenue is recognized upon completion of the work in accordance with each advisory contract. Agricultural subsidies revenue - the Company receives agricultural subsidies from the Mexican government to supplement the farm development and planting of new trees. Due to the uncertainty of these payments, the revenue is recognized when the payments are received. We recognize these funds as revenue due to these payments being disbursed to supplement the Companys income and not as direct payments for any specified farming expense. For the nine months ended September 30, 2015, the Company had no material subsidies revenue. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reported in the consolidated balance sheets for accounts receivable and payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the various notes payable and the mortgage notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. See Note 8 for additional information regarding assets measured at fair value on a nonrecurring basis and Note 9 for measurements on a recurring basis. |
Derivative Liabilities | Derivative Liabilities The Company evaluates debt instruments, stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entitys Own Equity . The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. The Company has issued notes with embedded conversion features. Certain of the embedded conversion features contain price protection or anti-dilution features that result in these instruments being treated as derivatives. Accordingly, the Company has estimated the fair value of these embedded conversion features to settle outstanding contracts using Black-Scholes. The Company uses level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities. |
Estimates | Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial statements include a) those assumed in determining the valuation of common stock, warrants, derivative liabilities and stock options, b) estimated useful lives of plantation equipment and plantation development costs, and c) undiscounted future cash flows for purpose of evaluating possible impairment of long-term assets. It is at least reasonably possible that the significant estimates used will change within the next year. |
Foreign Currency | Foreign Currency During both 2014 and 2015, the Company had operations located in the United States, Mexico, and Dominican Republic. For these foreign operations, the functional currency is the local countrys currency. Consequently, revenues and expenses of operations outside the United States of America are translated into U.S. dollars using weighted average exchange rates, while assets and liabilities of operations outside the United States of America are translated into U.S. dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are included in equity (deficit) as a component of accumulated other comprehensive loss in the accompanying condensed consolidated financial statements. Foreign currency transaction adjustments are included in other income (expense) in the Companys results of operations. The Company has not entered into derivative instruments to offset the impact of foreign currency fluctuations. |
Stock Based Compensation | Stock Based Compensation The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. |
Comprehensive Income | Comprehensive Income In June 2011, the FASB issued authoritative guidance requiring entities to report components of other comprehensive income in either a single continuous statement or in two separate, but consecutive statements of net income and other comprehensive income. The company has included a condensed consolidated statement of comprehensive income for the three and nine months ended September 30, 2015 and 2014. |
New Account Guidelines | New Accounting Guidelines The Company has reviewed all the recent accounting pronouncements issued to date of the issuance of these consolidated financial statements, and does not believe any of these pronouncements will have a material impact on the Companys consolidated financial statements. |
Note 1 - History and Basis of17
Note 1 - History and Basis of Presentation: Principles of Consolidation: GCE Mexico LLC And Subsidiaries: Condensed Consolidated Balance Sheets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
GCE Mexico LLC And Subsidiaries: Condensed Consolidated Balance Sheets | GCE MEXICO I, LLC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2015 2014 (Unaudited) ASSETS CURRENT ASSETS (1) 148,541 86,979 PROPERTY AND EQUIPMENT, NET 5,703,335 13,377,936 OTHER NONCURRENT ASSETS 2,694 3,118 TOTAL ASSETS $5,854,570 $13,468,033 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES 373,744 281,369 LONG-TERM LIABILITIES 21,984,456 19,124,134 TOTAL LIABILITIES $22,358,200 $19,405,503 The accompanying notes are an integral part of these condensed unaudited consolidated financial statements (1) Includes cash of $105,790 and $86,979 at September 30, 2015 and December 31, 2014, respectively, which is included in the Companys consolidated financial statements, but is used only for the operations of GCE Mexico. |
Note 1 - History and Basis of18
Note 1 - History and Basis of Presentation: Income/loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following instruments are currently antidilutive and have been excluded from the calculations of diluted income or loss per share at September 30, 2015 and 2014, as follows: September 30, 2015 2014 Convertible notes and accrued interest 24,700,000 23,500,000 Convertible preferred stock - Series B 11,818,181 11,818,181 Warrants 3,083,332 3,083,332 Compensation-based stock options and warrants 92,470,222 72,645,311 132,071,735 111,046,824 |
Note 3 - Property and Equipme19
Note 3 - Property and Equipment: Schedule of Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Property and Equipment | Property and equipment are as follows: September 30, December 31, 2015 2014 Land $3,453,409 $3,994,647 Plantation development costs 2,000,861 9,638,425 Plantation equipment 891,637 1,366,258 Office equipment 98,047 103,770 Total cost 6,443,954 15,103,100 Less accumulated depreciation (591,674) (1,268,845) Property and equipment, net $5,852,280 $13,834,255 |
Note 4 - Intangible Assets_ Sch
Note 4 - Intangible Assets: Schedule of Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Intangible Assets | The Intangible Assets as of the year ended September 30, 2015 is shown in the following table: September 30, December 31, 2015 2014 Intangible Assets 4,168,841 $4,168,841 Less accumulated amortization (625,037) (441,117) Intangible Assets, net $3,543,804 $3,727,724 |
Note 7 - Stock Options and Wa21
Note 7 - Stock Options and Warrants: Summary of The Status of Options and Compensation-based Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Summary of The Status of Options and Compensation-based Warrants | A summary of the status of options and compensation-based warrants at September 30, 2014, and changes during the nine months then ended is presented in the following table: Weighted Weighted Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at December 31, 2014 64,945,311 0.01 3.3 years $- Granted 32,624,911 0.01 Exercised - Forfeited (4,000,000) 0.02 - Expired (1,100,000) 0.02 - Outstanding at September 30, 2015 92,470,222 0.015 3.2 years $68,959 Vested and Exercisable at September 30, 2015 61,127,970 $0.02 2.6 years $- |
Note 7 - Stock Options and Wa22
Note 7 - Stock Options and Warrants: Schedule of Stock Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Stock Warrants | A summary of the status of the warrants outstanding at September 30, 2015, and changes during the nine months ended is presented in the following table: Weighted Weighted Weighted Shares Average Average Aggregate Under Exercise Remaining Intrinsic Warrant Price Contractual life Value Outstanding at December 31, 2014 3,083,332 0.0117 6.31 years $- Issued - Exercised - Expired - Outstanding and exercisable at September 30, 2015 3,083,332 0.0117 5.34 years $- |
Note 9 - Derivative Liabiliti23
Note 9 - Derivative Liabilities: Schedule of Changes in Fair Value of Warrants and Embedded Conversion Features (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Changes in Fair Value of Warrants and Embedded Conversion Features | The following table presents the changes in fair value of our warrants and embedded conversion features measured at fair value on a recurring basis for the nine months ended September 30, 2015: Balance as of January 1, $- Issuance of warrants and embedded conversion features 80,000 Change in fair value (27,000) Balance as of September 30, $53,000 |
Note 1 - History and Basis of24
Note 1 - History and Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Details | |
Entity Incorporation, Date of Incorporation | Nov. 20, 1991 |
Note 1 - History and Basis of25
Note 1 - History and Basis of Presentation: Principles of Consolidation (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Equity Method Investment, Additional Information | GCE Mexico holds, directly, 99% of the voting interest in the subsidiaries pursuant to the Agency Agreement. GCEH’s rights as Manager of GCE Mexico and as the sole Director of the subsidiaries enables GCEH to conclude that these powers, together with the 50% membership interest in GCE Mexico, gives Global Clean Energy Holdings, Inc. a controlling financial interest and therefore is the primary beneficiary. |
Asideros 1 | |
Equity Method Investment, Ownership Percentage | 50.50% |
Asideros 2 | |
Equity Method Investment, Ownership Percentage | 50.50% |
Asideros 3 | |
Equity Method Investment, Ownership Percentage | 50.50% |
Note 1 - History and Basis of26
Note 1 - History and Basis of Presentation: Principles of Consolidation: GCE Mexico LLC And Subsidiaries: Condensed Consolidated Balance Sheets (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
CURRENT ASSETS | $ 287,075 | $ 525,228 |
PROPERTY AND EQUIPMENT, NET | 5,852,280 | 13,834,255 |
OTHER NONCURRENT ASSETS | 5,320 | 5,744 |
TOTAL ASSETS | 9,688,479 | 18,092,951 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
CURRENT LIABILITIES | 6,666,148 | 6,935,510 |
LONG-TERM LIABILITIES | 22,316,709 | 19,377,876 |
GCE Mexico LLC and Subsidiaries | ||
ASSETS | ||
CURRENT ASSETS | 148,541 | 86,979 |
PROPERTY AND EQUIPMENT, NET | 5,703,335 | 13,377,936 |
OTHER NONCURRENT ASSETS | 2,694 | 3,118 |
TOTAL ASSETS | 5,854,570 | 13,468,033 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
CURRENT LIABILITIES | 373,744 | 281,369 |
LONG-TERM LIABILITIES | 21,984,456 | 19,124,134 |
TOTAL LIABILITIES | 22,358,200 | 19,405,503 |
Cash | $ 105,790 | $ 86,979 |
Note 1 - History and Basis of27
Note 1 - History and Basis of Presentation: Income/loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 132,071,735 | 111,046,824 |
Convertible Debt Securities | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 24,700,000 | 23,500,000 |
Convertible Preferred Stock - Series B | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 11,818,181 | 11,818,181 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,083,332 | 3,083,332 |
Compensation Based Stock Options and Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 92,470,222 | 72,645,311 |
Note 2 - Going Concern Consid28
Note 2 - Going Concern Considerations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Details | |||||
Net loss from operations attributable to common shareholders | $ (628,234) | $ 10,672 | $ (970,609) | $ (665,063) | |
Accumulated deficit | (29,916,712) | (29,916,712) | $ (28,946,103) | ||
Net Cash Used in Operating Activities | (531,156) | $ (637,891) | |||
Working Capital | $ (6,400,000) | (6,400,000) | |||
Capital Contributions from the Preferred Membership Interest | 22,560,000 | ||||
Mortgages Issued for Land Acquisition | $ 5,110,189 |
Note 3 - Property and Equipme29
Note 3 - Property and Equipment: Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Property Plant and Equipment, Gross | $ 6,443,954 | $ 15,103,100 |
Less accumulated depreciation | (591,674) | (1,268,845) |
Land | ||
Property Plant and Equipment, Gross | 3,453,409 | 3,994,647 |
Plantation Development Costs | ||
Property Plant and Equipment, Gross | 2,000,861 | 9,638,425 |
Plantation Equipment | ||
Property Plant and Equipment, Gross | 891,637 | 1,366,258 |
Office Equipment | ||
Property Plant and Equipment, Gross | $ 98,047 | $ 103,770 |
Note 3 - Property and Equipme30
Note 3 - Property and Equipment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Depreciation | $ 133,000 | $ 151,000 | ||
Impairment Charges | $ 6,671,892 | 6,671,892 | $ 0 | |
Accrued return on noncontrolling interest | $ 12,140,304 | $ 12,140,304 | $ 10,101,080 | |
Plantation Equipment | Minimum | ||||
Property, Plant and Equipment, Useful Life | 5 years | |||
Plantation Equipment | Maximum | ||||
Property, Plant and Equipment, Useful Life | 15 years | |||
Plantation Development Costs | Minimum | ||||
Property, Plant and Equipment, Useful Life | 10 years | |||
Plantation Development Costs | Maximum | ||||
Property, Plant and Equipment, Useful Life | 35 years |
Note 4 - Intangible Assets (Det
Note 4 - Intangible Assets (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Details | |
Finite-Lived Intangible Asset, Useful Life | 17 years |
Note 4 - Intangible Assets_ S32
Note 4 - Intangible Assets: Schedule of Intangible Assets (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Details | ||
Intangible Assets | $ 4,168,841 | $ 4,168,841 |
Less accumulated amortization | (625,037) | (441,117) |
Intangible Assets, net | $ 3,543,804 | $ 3,727,724 |
Note 5 - Debt (Details)
Note 5 - Debt (Details) | 9 Months Ended | ||||
Sep. 30, 2015USD ($)a$ / sharesshares | Sep. 30, 2014USD ($) | Jan. 31, 2014USD ($)shares | Mar. 31, 2013USD ($) | Mar. 31, 2010USD ($) | |
Amortization of debt discount | $ 60,000 | ||||
Write Down of debt and release of Fixed Assets | $ 190,500 | ||||
Notes Payable To Shareholder | |||||
Debt Instrument, Carrying Amount | $ 26,000 | 26,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||
Interest Payable, Current | $ 58,081 | $ 54,970 | |||
Convertible Debt Securities | Investor | |||||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ||||
Debt Instrument, Face Amount | $ 130,000 | ||||
Class of Warrant, Outstanding | shares | 1,083,332 | ||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 1.448 | ||||
Debt Instrument, Unamortized Discount | $ 79,000 | ||||
Amortization of debt discount | $ 59,500 | ||||
Convertible Debt Securities | GCE Mexico I LLC And Subsidiaries | |||||
Debt Instrument, Interest Rate, Stated Percentage | 5.97% | ||||
Debt Instrument, Face Amount | $ 567,000 | ||||
Class of Warrant, Outstanding | shares | 1,890,000 | ||||
Debt Instrument, Maturity Date, Description | The Convertible Notes mature on the earlier of (i) March 16, 2012, or (ii) upon written demand of payment by the note holders following the Company’s default thereunder. The maturity date of the Convertible Notes have been extended until September 15, 2016. | ||||
Debt Instrument, Interest Rate Terms | payable quarterly in cash, in arrears, on each year anniversary of the issuance of the convertible notes. The Company may at its option, in lieu of paying interest in cash, pay interest by delivering a number of unregistered shares of its common stock equal to the quotient obtained by dividing the amount of such interest by the arithmetic average of the volume weighted average price for each of the five consecutive trading days immediately preceding the interest payment date. | ||||
Asideros I | |||||
Debt Instrument, Face Amount | $ 2,051,282 | ||||
Debt Instrument, Maturity Date, Description | The initial mortgage, including any unpaid interest, is due in April 2018. | ||||
Area of Land | a | 5,000 | ||||
Payments to Acquire Land Held-for-use | $ 2,051,282 | ||||
Asideros 2 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||
Debt Instrument, Face Amount | $ 963,382 | ||||
Debt Instrument, Maturity Date, Description | The second mortgage, including any unpaid interest, is due in February 2020. | ||||
Payments to Acquire Land Held-for-use | $ 963,382 | ||||
Asideros 2 | Parcel 1 | |||||
Area of Land | a | 4,500 | ||||
Asideros 2 | Parcel 2 | |||||
Area of Land | a | 600 | ||||
Asideros 3 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||
Debt Instrument, Face Amount | $ 2,095,525 | ||||
Area of Land | a | 5,600 | ||||
Payments to Acquire Land Held-for-use | $ 2,095,525 | ||||
Debt Instrument, Maturity Date | Oct. 1, 2021 | ||||
Sustainable Oils LLC Acquisition | |||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||||
Debt Instrument, Face Amount | $ 1,300,000 | ||||
Debt Instrument, Maturity Date, Description | payable upon the earlier of the following: (a) to the extent of 35.1% of, and on the third business day after, the receipt by the Company of any Qualified Funding; or (b) September 13, 2014. | ||||
Write Down of debt and release of Fixed Assets | $ 190,500 |
Note 6 - Equity (deficit) (Deta
Note 6 - Equity (deficit) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Capital contributions by preferred partners | $ 429,743 | $ 952,435 |
Preferential Return | $ 12,140,304 | |
GCE Mexico I LLC And Subsidiaries | ||
Investors Preferential Return Rate | 12.00% | |
Investors Preferential Return Increase During Period | $ 2,039,224 | $ 1,977,862 |
Note 7 - Stock Options and Wa35
Note 7 - Stock Options and Warrants: Summary of The Status of Options and Compensation-based Warrants (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Details | |||
Options, Outstanding, Beginning Balance | 64,945,311 | ||
Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 0.01 | ||
Options, Outstanding, Weighted Average Remaining Contractual Term | 3 years 2 months 12 days | 3 years 3 months 18 days | |
Options, Outstanding, Intrinsic Value, Beginning Balance | $ 0 | ||
Options, Granted | 32,624,911 | 3,700,000 | |
Options, Granted, Weighted Average Exercise Price | $ 0.01 | ||
Options, Exercised | 0 | ||
Options, Forfeited | (4,000,000) | ||
Options, Forfeited, Weighted Average Exercise Price | $ 0.02 | ||
Options, Expired | (1,100,000) | ||
Options, Expired, Weighted Average Exercise Price | $ 0.02 | ||
Options, Outstanding, Ending Balance | 92,470,222 | 64,945,311 | |
Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 0.015 | $ 0.01 | |
Options, Outstanding, Intrinsic Value, Ending Balance | $ 68,959 | $ 0 | |
Options, Vested and Exercisable | 61,127,970 | ||
Options, Vested and Exercisable, Weighted Average Exercise Price | $ 0.02 | ||
Options, Vested and Exercisable, Weighted Average Remaining Contractual Life | 2 years 7 months 6 days | ||
Options, Vested and Exercisable, Aggregate Intrinsic Value | $ 0 |
Note 7 - Stock Options and Wa36
Note 7 - Stock Options and Warrants (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Options, Granted | 32,624,911 | 3,700,000 |
Options, Granted, Weighted Average Grant Date Fair Value | $ 0.018 | $ 0.011 |
Share Price | $ 0.007 | |
Share-based Compensation | $ 156,000 | $ 44,000 |
Compensation Cost Not yet Recognized, Stock Based Payments | $ 139,000 | |
Compensation Cost Not yet Recognized, Period for Recognition | 2 years 1 month 24 days | |
Employee Stock Option | ||
Fair Value Assumptions, Method Used | Black-Scholes option pricing model | |
Risk Free Interest Rate | 1.18% | 1.75% |
Expected Volatility Rate | 114.00% | 175.00% |
Expected Life | 5 years | |
Expected Dividend Yield | 0.00% |
Note 7 - Stock Options and Wa37
Note 7 - Stock Options and Warrants: Schedule of Stock Warrants (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Details | ||
Warrants, Outstanding, Beginning Balance | 3,083,332 | |
Warrants, Weighted Average Exercise Price, Beginning Balance | 0.0117 | |
Warrants, Weighted Average Remaining Contractual Life | 5 years 4 months 2 days | 6 years 3 months 22 days |
Warrants, Aggregate Intrinsic Value, Outstanding, Beginning Balance | $ 0 | |
Warrants, Issued | 0 | |
Warrants, Exercised | 0 | |
Warrants, Expired | 0 | |
Warrants, Outstanding, Ending Balance | 3,083,332 | 3,083,332 |
Warrants, Weighted Average Exercise Price, Ending Balance | 0.0117 | 0.0117 |
Warrants, Aggregate Intrinsic Value, Outstanding, Ending Balance | $ 0 | $ 0 |
Note 8 - Impairment of Assets38
Note 8 - Impairment of Assets and Fair Value Measurements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Details | |||
Impairment Charges | $ 6,671,892 | $ 6,671,892 | $ 0 |
Note 9 - Derivative Liabiliti39
Note 9 - Derivative Liabilities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Jan. 31, 2014 | |
Change in fair value of derivative | $ 9,000 | $ 27,000 | |
Embedded Conversion Features | $ 53,000 | ||
Embedded Conversion Features | |||
Fair Value Measurements, Valuation Techniques | Black-Scholes | ||
Annual dividend yield | 0.00% | ||
Expected volatility | 113.00% | ||
Embedded Conversion Features | Minimum | |||
Expected live (years) | 9 months | ||
Risk-free interest rate | 0.21% | ||
Embedded Conversion Features | Maximum | |||
Expected live (years) | 1 year | ||
Risk-free interest rate | 0.23% | ||
Convertible Debt Securities | Investor | |||
Debt Instrument, Face Amount | $ 130,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ||
Debt Instrument, Unamortized Discount | $ 79,000 |
Note 9 - Derivative Liabiliti40
Note 9 - Derivative Liabilities: Schedule of Changes in Fair Value of Warrants and Embedded Conversion Features (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Details | ||
Derivative Liability, beginning balance | $ 0 | |
Issuance of warrants and embedded conversion features | 80,000 | |
Change in fair value of derivative | $ (9,000) | (27,000) |
Derivative Liability, ending balance | $ 53,000 | $ 53,000 |