Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 31, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-12627 | ||
Entity Registrant Name | Global Clean Energy Holdings, Inc. | ||
Entity Central Index Key | 0000748790 | ||
Entity Tax Identification Number | 87-0407858 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 2790 Skypark Drive | ||
Entity Address, Address Line Two | Suite 105 | ||
Entity Address, Address Line Three | Torrance | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 90505 | ||
City Area Code | (310) | ||
Local Phone Number | 641-4234 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 20,591,000 | ||
Entity Common Stock, Shares Outstanding | 37,436,875 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 3,370,519 | $ 457,331 |
Accounts receivable | 143,823 | |
Restricted cash | 12,943,222 | |
Inventory | 846,197 | 22,942 |
Investment in farming activities | 404,258 | |
Prepaid expenses and other current assets | 5,027,294 | |
Total Current Assets | 22,735,313 | 480,273 |
RESTRICTED CASH, net of current portion | 22,668,984 | |
DEBT ISSUANCE COSTS | 840,211 | 500,000 |
RIGHT-OF-USE ASSET | 51,611 | 82,450 |
INTANGIBLE ASSETS, NET | 4,180,746 | 2,501,592 |
LONG TERM DEPOSITS | 628,382 | 3,253,253 |
PROPERTY, PLANT AND EQUIPMENT, NET | 138,972,675 | 2,588,441 |
ADVANCES TO CONTRACTORS | 16,000,000 | |
TOTAL ASSETS | 206,077,922 | 9,406,009 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 22,597,951 | 5,568,128 |
Lease liabilities | 52,653 | 82,882 |
Notes payable including current portion of long-term debt, net | 4,198,113 | 1,369,856 |
Convertible notes payable | 1,697,000 | 1,697,000 |
Derivative Liability | 24,767,000 | |
Total Current Liabilities | 28,545,717 | 33,484,866 |
LONG-TERM LIABILITIES | ||
Mandatorily redeemable equity instruments of subsidiary | 5,123,000 | |
Long-term debt, net | 16,155,138 | |
Long-term debt, net (credit facility) | 146,769,225 | |
Asset retirement obligations, net of current portion | 17,762,977 | |
Environmental liabilities, net of current portion | 20,455,938 | |
TOTAL LIABILITIES | 234,811,995 | 33,484,866 |
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; 35,850,089 and 34,402,943 shares issued and outstanding, respectively | 358,499 | 344,029 |
Additional paid-in capital | 37,139,854 | 31,259,365 |
Accumulated deficit | (66,232,439) | (55,682,264) |
Total Stockholders' Deficit | (28,734,073) | (24,078,857) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 206,077,922 | $ 9,406,009 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock, shares issued | 13,000 | 13,000 |
Preferred Stock, shares outstanding | 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 | 35,850,089 | 34,402,943 |
Common Stock, shares outstanding | 35,850,089 | 34,402,943 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | ||
Operating Expenses | ||
General and administrative | 7,972,776 | 3,061,580 |
Facilities expense | 3,233,961 | |
Depreciation expense | 118,447 | |
Amortization of intangible assets | 251,354 | 245,226 |
Prelliminary stage acquisition costs | 1,625,834 | |
Other operating expenses | 111,497 | |
Total Operating Expenses | 11,688,035 | 4,932,640 |
Operating Loss | (11,688,035) | (4,932,640) |
Other Income (Expenses) | ||
Other income (expense), net | 3,551 | |
Interest expense, net | (2,832,398) | (439,479) |
Gain in derecognition of derivative liabilities | 512,363 | 2,430,300 |
Gain on settlement of liabilities | (2,430,300) | |
Change in fair value of Class B Units | (2,021,656) | |
Change in fair value of derivative and finance charges related to derivative liability | 5,476,000 | (8,850,000) |
Total Other Income (Expense) | 1,137,860 | (6,859,179) |
NET LOSS | $ (10,550,175) | $ (11,791,819) |
BASIC AND DILUTED LOSS PER COMMON SHARE: | ||
Net loss per common share | $ (0.30) | $ (0.34) |
BASIC WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 35,619,270 | 34,278,971 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) - USD ($) | Preferred StockSeries B Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance at Dec. 31, 2018 | $ 13 | $ 341,529 | $ 30,669,220 | $ (43,890,445) | $ (12,879,683) |
Beginning Balance, Shares at Dec. 31, 2018 | 13,000 | 34,152,943 | |||
Share-based compensation from issuance of options and compensation-based warrants | 577,645 | 577,645 | |||
Exercise of stock options | $ 2,500 | 12,500 | 12,500 | ||
Exercise of stock options, Shares | 250,000 | ||||
Net Loss | (11,791,819) | (11,791,819) | |||
Ending Balance at Dec. 31, 2019 | $ 13 | $ 344,029 | 31,259,365 | (55,682,264) | (24,078,857) |
Ending Balance, Shares at Dec. 31, 2019 | 13,000 | 34,402,943 | |||
Share-based compensation from issuance of options and compensation-based warrants | 326,486 | 326,486 | |||
Exercise of stock options | $ 14,470 | 76,326 | 90,796 | ||
Exercise of stock options, Shares | 1,447,017 | ||||
Option grants for investment in subsidiaries | 5,477,677 | 5,477,677 | |||
Net Loss | (10,550,175) | (10,550,175) | |||
Ending Balance at Dec. 31, 2020 | $ 13 | $ 358,499 | $ 37,139,854 | $ (66,232,439) | $ (28,734,073) |
Ending Balance, Shares at Dec. 31, 2020 | 13,000 | 35,849,960 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Activities | ||
Net Loss | $ (10,550,175) | $ (11,791,819) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 326,486 | 577,645 |
Depreciation and amortization | 360,375 | 246,932 |
Accretion of asset retirement obligations | 652,000 | |
Gain on settlement of liabilities | (512,363) | (2,430,300) |
Change in fair value of derivative liability | (5,476,000) | 8,850,000 |
Change in fair value of Class B Units | 2,021,656 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (143,823) | |
Inventories | (823,255) | |
Farming activities | (404,258) | |
Prepaid expenses | (702,612) | |
Deposits and other assets | (875,129) | |
Accounts payable and accrued expenses, interest and compensation | 12,430,823 | 2,099,394 |
Asset retirement obligations | (135,000) | |
Environmental liabilities | (694,999) | |
Lease liabilities and assets | 610 | |
Accrued compensation and related liabilities | 979,520 | 586,046 |
Other Operating Activities | (24,390) | 431 |
Net Cash Used in Operating Activities | (4,525,664) | (2,447,717) |
Investing Activities | ||
Pre-acquisition costs and deposit on refinery acquisition | (5,836,441) | |
Cash paid for acquisition of Alon Bakersfield Property, Inc. | (36,500,000) | |
Advances to contractors, net | (16,000,000) | |
Property plant and equipment | (45,569,854) | |
Net Cash Used in Investing Activities | (98,069,854) | (5,836,441) |
Financing Activities | ||
Proceeds received from derivative forward contract | 4,000,000 | |
Proceeds received from exercise of stock options | 90,796 | 15,000 |
Payments on notes payable and long-term debt | (5,976,689) | |
Long-term debt (credit facility) | 151,430,016 | |
Payments on debt issuance costs | (500,000) | |
Net Cash Provided by Financing Activities | 141,120,912 | 3,515,000 |
Net Change in Cash, Cash Equivalents and Restricted Cash | 38,525,394 | (4,769,158) |
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 457,331 | 5,226,489 |
Cash, Cash Equivalents and Restricted Cash at End of Period | 38,982,725 | 457,331 |
Supplemental Disclosures of Cash Flow Information | ||
Cash Paid for Interest | 7,989,794 | |
Cash Paid for Income Tax |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE A – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Description of Business Global Clean Energy Holdings, Inc., a Delaware corporation, and its wholly owned subsidiaries (collectively, the “Company”, “we”, “us” or “our”) is a U.S.-based integrated agricultural-energy biofuels company that holds assets across feedstocks and plant genetics, agronomics, cultivation, and regulatory approvals, commercialization, and downstream biorefining and storage. The Company is focused on the development and refining of nonfood-based bio-feedstocks and has a proprietary investment in camelina sativa (“Camelina”), a fast growing, low input and ultra-low carbon intensity crop used as a feedstock for renewable fuels. The Company holds its Camelina assets (including all related intellectual property related rights and approvals) and operates its Camelina business through its subsidiary, Sustainable Oils Inc., a Delaware corporation. In 2018 and 2019 the Company pursued the acquisition of a crude oil refinery in Bakersfield, California with the objective of retrofitting it to produce renewable diesel from Camelina and other nonfood feedstocks. On May 7, 2020 the Company completed the acquisition of the targeted refinery (the “Bakersfield Biorefinery”). The Bakersfield Biorefinery is owned by Bakersfield Renewable Fuel, LLC, an indirect subsidiary of Global Clean Energy Holdings, Inc. The retrofitting of the refinery commenced promptly after the acquisition. The engineering and construction of the project is expected to be completed in early 2022 based on our engineering, procurement and construction contract with a substantial completion date of January 22, 2022. We feel confident that we will achieve that date or soon thereafter within the first quarter of 2022. It is a construction project and with all construction projects there are always risks. The contractor has daily liquidated penalties if they are late. After necessary start-up procedures and testing is complete, we expect production to be approximately 10,000 barrels per day (420,000 gallons per day). We expect to maintain that level at least through the first year of production. The Company has entered into a product offtake agreement with a major oil company for the purchase by the oil company of the majority of the renewable diesel to be produced at the Bakersfield Biorefinery. See Note B - Basis of Presentation and Liquidity which describes the offtake agreement in more detail. Basis of Presentation The accompanying consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc., and its subsidiaries, and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). References to the “ASC” hereafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board (“FASB”) as the source of authoritative US GAAP. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made to the consolidated financial statements. Per Share Information On March 26, 2021, the Company effected a one-for-ten reverse stock split. All common stock and per share information (other than par value) contained in these financial statements and footnotes have been adjusted to reflect the foregoing reverse stock split. Prior to the reverse stock split the Company had 358,499,606 shares outstanding and immediately after the stock split the Company had 35,850,089 shares outstanding. The Company issued additional shares after the reverse stock split and the outstanding shares as of March 30, 2021 was 37,436,875. Restricted Cash In accordance with the Company’s senior credit agreement (see Note E - Debt), the Company is required to advance the calculated interest expense on its borrowings at the time of such borrowings to the estimated commercial operational date of the Bakersfield Biorefinery. This interest is deposited into a designated account and the appropriate amount is paid to the lender at the end of each quarter. Additionally, the construction funds are deposited into its own designated account and deposited from that designated account into the Bakersfield Renewable Fuel, LLC account only upon approval by the lender to pay for specific construction, facility and related costs . These two accounts are restricted and not directly accessible by the Company for general use, although these funds are assets of the Company. The Company estimates how much of this cash is likely to be capitalized into the Bakersfield Biorefinery project in the form of a long-term asset, and distinguishes this amount as long-term. The Company makes this determination based on its budget, recent and near-term invoicing, and internal projections. Cash and Cash Equivalents; Concentration of Credit Risk The Company considers all highly liquid debt instruments maturing in three months or less to be cash equivalents. The Company maintains cash and cash equivalents at high quality financial institutions. However, deposits exceed the federally insured limits. At December 31, 2020, the Company had approximately $38 million in uninsured cash. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation of office equipment is computed using the straight-line method over estimated useful lives of 3 to 5 years. Refinery assets and buildings are depreciated using the straight-line method over estimated useful lives of 5 to 25 years, however, the refinery will not begin to be depreciated until its retrofitting has been completed and it is ready for operations. Normal maintenance and repair items are charged to operating costs and are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and gain or loss on disposition is reflected in the statement of operations. Interest on borrowings related to the retrofitting of the Bakersfield Biorefinery is being capitalized, which will continue until the refinery is available for commercial use. During the year ended December 31, 2020, $10.2 million of interest has been capitalized, and is included in property and equipment, net on the accompanying December 31, 2020 balance sheet. Long-Lived Assets In accordance with U.S. GAAP for the impairment or disposal of long-lived assets, the carrying values of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the aggregate of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the year ended December 31, 2020 and 2019, there were no impairment losses recognized on long-lived assets. Pre-Acquisition Costs We began capitalizing pre-acquisition costs once we determined that the acquisition of the Bakersfield Biorefinery project was probable, which was in April 2019 when both the Bakersfield Biorefinery purchase agreement and the product offtake agreement were signed. We capitalized those costs that were directly identifiable with the specific property and those costs that would be capitalized if the property were already acquired. Upon the acquisition of the Bakersfield Biorefinery, these capitalized pre-acquisition costs, which totaled $3.2 million, were reclassified to property and equipment. For the full year of 2019 and for the year 2020 up to and including the Bakersfield Biorefinery acquisition date of May 7, 2020, we capitalized $2.6 million and $0.6 million of pre-acquisition costs, respectively. Upon acquisition of the refinery, on May 7, 2020, we reclassified the accumulated pre-acquisition costs of $3.2 million to property, plant and equipment. See Note C - Property and Equipment, included herein. Debt Issuance Costs During 2018, we signed a letter of intent to acquire our Bakersfield Refinery. The acquisition of the refinery and the related $365 million of financing to fund the retrofit closed in May 2020. In connection with financing the refinery, we incurred $0.5 million of debt issuance costs in 2019 and $6.6 million of debt issuance costs during 2020 related to acquisition of the Bakersfield Biorefinery. Debt issuance costs are amortized over the term of the loan as interest: however, as such interest relates to retrofitting of the refinery, these costs will be capitalized as part of the refinery until the refinery is placed in service. The amortization of the debt issuance costs that are not capitalized is recorded as interest expense. At December 31, 2019, certain unamortized debt issuance costs are presented on the balance sheet as deferred costs. However, upon the closing of the Bakersfield Biorefinery acquisition and as of December 31, 2020, these costs were reclassified as a direct deduction from the carrying amount of the debt liability of the financing to the extent that we borrow on the credit agreements. See Note E - Debt for more detail on the financing. Accounts Payable and Accrued Liabilities For presentation purposes, accounts payable and accrued liabilities have been combined. As of December 31, 2020 and 2019, accounts payable and accrued liabilities consists of: 2020 2019 Accounts payable $ 9,724,136 $ 501,931 Accrued compensation and related liabilities 3,034,688 2,055,167 Accrued interest payable 2,093,649 1,734,527 Other accrued expenses 3,146,478 1,276,503 Current portion of asset retirement obligations 3,716,000 — Current portion of environmental liabilities 883,000 — $ 22,597,951 $ 5,568,128 Derecognition of Liabilities The Company reviews its liabilities, including but not limited to, accounts payable, notes payable, accrued expenses, accrued liabilities and other legal obligations for a determination of the legal enforcement or settlement of these obligations. Upon conclusive evidence that an obligation may be extinguished, has expired, is discharged, is cancelled, or otherwise no longer legally exists, then the Company will derecognize the respective liability on its balance sheet. In 2019 the Company derecognized $2.4 million of previously outstanding liabilities upon concluding that these were no further legal obligations. These amounts are included in gain on settlement of liabilities in the 2019 statement of operations. Asset Retirement Obligations The Company recognizes liabilities which represent the fair value of a legal obligation to perform asset retirement activities, including those that are conditional on a future event, when the amount can be reasonably estimated. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value. We have asset retirement obligations with respect to our Bakersfield Biorefinery due to various legal obligations to clean and/or dispose of these assets at the time they are retired. However, the majority of these assets can be used for extended and indeterminate periods of time provided that they are properly maintained and/or upgraded. It is our practice and intent to continue to maintain these assets and make improvements based on technological advances. A portion of these obligations relate to the required cleanout of hydrocarbons previously used in the pipeline and terminal tanks. In order to determine the fair value of the obligations management must make certain estimates and assumptions including, among other things, projected cash flows, a credit-adjusted risk-free rate and an assessment of market conditions that could significantly impact the estimated fair value of the asset retirement obligations. We believe the estimates selected, in each instance, represent our best estimate of future outcomes, but the actual outcomes could differ from the estimates selected. We estimate our escalation rate at 3.33% and our discount factor ranges from 3.62% in year one to 7.26% in year twenty, with the weighted average discount rate being 5.0%. See Note I - Commitments and Contingencies more detail on environmental liabilities, which are accounted for separately from asset retirement obligations. The following table provides a reconciliation of the changes in asset retirement obligations during 2020. 2020 Asset retirement obligations - beginning of year $ — Additions related to acquisition of refinery 21,901,977 Disbursements (135,000 ) Accretion 652,000 Revised obligation estimates (940,000 ) Asset retirement obligations - end of year $ 21,478,977 The amount shown includes $3.7 million which has been classified as current liabilities and included in accounts payable and accrued liabilities and $17.8 million in long term liabilities. Advances to Contractors Upon the acquisition of the Bakersfield Biorefinery, the Company advanced $20.1 million to its primary engineering, procurement and construction contractor. These funds are credited against future invoices in accordance with an agreed schedule. As of December 31, 2020, the funds advance has been reduced to $16.0 million. Income Taxes The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and the carryforward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of general and administrative expense. Revenue Recognition The Company recognizes revenue in accordance with ASC 606 using the following five-step model: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue. The Company did not recognize any revenues during the years ended December 31, 2020 and 2019. The Company is engaged in contracting with farmers to grow camelina grain that will be processed into oil for use in Bakersfield Biorefinery. The Company will recognize revenues upon the sale of its patented camelina seed to the farmers and also for the crushed camelina meal that it plans to sell to third party livestock and poultry operators. Based upon the Company’s Product Offtake Agreement (see Note B - Basis of Presentation and Liquidity), the Company expects to recognize revenue from the sale of biofuel beginning in 2022. Research and Development Research and development costs are charged to operating expenses when incurred. Fair Value Measurements and Fair Value of Financial Instruments As of December 31, 2020 and December 31, 2019, the carrying amounts of the Company’s financial instruments that are not reported at fair value in the accompanying consolidated balance sheets, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to their short-term nature. The Company’s derivative liability related to its derivative forward contract for Ultra Low Sulfur Diesel (see below) and mandatorily redeemable equity instruments of subsidiary are reported at fair value. U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1— Quoted prices for identical instruments in active markets; Level 2— Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As reported for December 31, 2019, the Company had a derivative liability of $24.8 million related to a forward contract that also included a call option. The notional amount of the forward contract related to gallons of the commodity, Ultra Low Sulfur Diesel. Under the terms of the contract the Company was obligated to pay the equivalent of the notional amount multiplied by the market price of Ultra Low Sulfur Diesel at the settlement dates; however, the call option of the contract capped the market price of Ultra Low Sulfur Diesel. In March 2020, the Company settled the derivative contract by replacing the derivative contract with a fixed payment obligation that required a payment of $5.5 million due on April 30, 2020 and six equal payments beginning in October 2021 totaling $17.6 million. The Company recognized $5.5 million of income from the decrease in fair value on the derivative contract from January 1, 2020 through March 19, 2020 and also recognized a gain of $512,000 on the derecognition of the derivative contract. The fixed payment obligation was amended in April 2020. Under the amendment, the amended fixed payment obligation, required the Company to pay a total of $24.8 million, including a payment of $4.5 million by the Company in June 2020, and six equal installment payments beginning in 2022 totaling $20.3 million. The fair value of the derivative forward contract reported at December 31, 2019, and in March 2020, just prior to its derecognition,was primarily based upon the notional amount and the forward strip market prices of Ultra Low Sulfur Diesel and was reduced by the fair value of the call option. The forward strip market prices are observable. However, to determine the fair value of the call option, Company used the Black’s 76 option pricing model. As a result, the contract as a whole is included in the Level 3 of the fair value hierarchy. The Company’s mandatorily redeemable equity instruments of its subsidiary are also measured at fair value on a recurring basis. See Note E - Debt for more information. The derivative liability discussed herein was derecognized in the first quarter of 2020, and the Company had no derivative liabilities in the quarters ending June 30, 2020, September 30, 2020 and December 31, 2020 respectively. The following presents changes in the derivative liability for the years ended December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Beginning Balance $ 24,767,000 $ 11,917,000 New contract/contract additions — 4,000,000 Conversion to note payable (19,291,000 ) — Change in fair value recognized in earnings (5,476,000 ) 8,850,000 Ending Balance $ — $ 24,767,000 Carrying Value Total Fair Value Quoted prices in active markets for identical assets - Level 1 Significant other observable inputs - Level 2 Significant unobservable inputs - Level 3 Liabilities Mandatorily redeemable equity instruments of subsidiary $ 5,123,000 $ 5,123,000 $ — $ — $ 5,123,000 The following presents changes in the mandatorily redeemable equity instruments of subsidiary (Class B Units) through December 31, 2020: Beginning Balance $ — New unit issuances 3,101,344 Change in fair value recognized in earnings 2,021,656 Ending Balance $ 5,123,000 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) valuation of common stock, warrants, and stock options, b) the estimates assumed in determining the value of the derivative transactions, c) estimated useful lives of equipment and intangible assets, d) the estimated costs to remediate or clean-up the refinery site, and the inflation rate, credit-adjusted risk-free rate and timing of payments to calculate the asset retirement obligations, e) the estimated costs to remediate or clean-up identified environmental liabilities, f) the estimated future cash flows and the various metrics required to establish a reasonable estimate of the value of the Class B Units, and g) the allocation of the acquisition price of the Bakersfield Biorefinery to the various assets acquired. It is at least reasonably possible that the significant estimates used will change within the next year. Income/Loss per Common Share Income/Loss per share amounts are computed by dividing income or loss applicable to the common stockholders 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 dilutes income of loss per share at December 31, 2019 and 2020, as follows: Year Ended Year Ended Convertible notes and accrued interest 10,319,152 9,879,439 Convertible preferred stock - Series B 1,181,818 1,181,818 Compensation-based stock options and warrants 19,230,214 19,902,732 Stock Based Compensation The Company recognizes compensation expenses 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. However, in the case of awards with accelerated vesting, the amount of compensation expense recognized at any date will be based upon the portion of the award that is vested at that date. 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. Subsequent Events The Company has evaluated subsequent events through the date these consolidated financial statements were filed. See Note J - Subsequent Events, below for a description of events occurring subsequent to December 31, 2020. Recently Issued Accounting Statements Credit Losses In June 2016, the FASB issued a new standard on measurement of credit losses. The standard introduces a new "expected loss" impairment model that applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables and other financial assets. Entities are required to estimate expected credit losses over the life of financial assets and record an allowance against the assets’ amortized cost basis to present them at the amount expected to be collected. The new standard is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company does not expect the adoption of this new standard to materially impact the Company’s consolidated financial statements. |
BASIS OF PRESENTATION AND LIQUI
BASIS OF PRESENTATION AND LIQUIDITY | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
BASIS OF PRESENTATION AND LIQUIDITY | NOTE B – BASIS OF PRESENTATION AND LIQUIDITY The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company incurred losses from continuing operations applicable to its common stockholders of $10.6 million and $11.8 million during the years ended December 31, 2020 and 2019, respectively, and has an accumulated deficit applicable to its common stockholders of $66.2 million, at December 31, 2020. The Company incurred operating losses of $12.2 million and $4.9 million during the years ended December 31, 2020 and 2019, respectively. At December 31, 2020, the Company had working capital of negative $5.8 million (which includes current restricted cash of $12.9 million) and a stockholders’ deficit of $28.7 million. On May 4, 2020, a group of lenders agreed to provide a $300 million senior secured term loan facility to BKRF OCB, LLC, one of Global Clean Energy Holdings, Inc.’s subsidiaries, to enable that subsidiary to acquire the equity interests of Bakersfield Renewable Fuels, LLC and to pay the anticipated costs of the retooling of the Bakersfield Biorefinery owned by Bakersfield Renewable Fuels, LLC. Concurrently with the senior credit facility, a group of mezzanine lenders also agreed to provide a $65 million secured term loan facility to be used to pay the costs of repurposing and starting up the Bakersfield biorefinery. Although the funds provided by the senior and mezzanine lenders may only be used for the Bakersfield Biorefinery and servicing these debt obligations, since the Company shares facilities and personnel, Global Clean Energy Holdings, Inc. will realize a reduction in certain of its operating expenses. The Company believes that these cost savings, plus the Company’s other financial resources, including its ability to raise additional funds and the exercise of an outstanding warrant, should be sufficient to fund the Company’s operations through the start-up of the Bakersfield Biorefinery. See “Note E - Debt.” On October 12, 2020, the group of lenders agreed to lend up to an additional $15 million for the Bakersfield Biorefinery and a portion to the Company’s upstream Camelina production business. This additional amount increased the amount available under the senior credit facility to $313.2 million and the mezzanine credit facility to $66.8 million, for a total of $380 million. At the time of this filing there are no commitments of additional capital.As disclosed in Note J - Subsequent Events, regarding the amended credit facility agreement, we plan on raising additional funds in public or private financing transactions to add a cash reserve for the completion and start-up operations of the Bakersfield Biorefinery and other corporate purposes. In April of 2019, the Company executed a binding Product Offtake Agreement (the “Offtake Agreement”) with ExxonMobil Oil Corporation (“Purchaser”) pursuant to which Purchaser has committed to purchase of 105 million gallons per year of renewable diesel annually from the Bakersfield Biorefinery (with a right to purchase higher volumes as available), and the Company has committed to sell these quantities of renewable diesel to Purchaser. The Purchaser’s obligation to purchase renewable diesel will last for a period of five years following the date that the Bakersfield Biorefinery commences commercial operations. The Purchaser has the option to extend the initial five-year term. Either party may terminate the Offtake Agreement if the Bakersfield Biorefinery does not meet certain production levels by certain milestone dates following the commencement of the Bakersfield Biorefinery’s operations. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE C –PROPERTY, PLANT AND EQUIPMENT On May 7, 2020 through its subsidiary BKRF OCB, LLC, the Company purchased all of the outstanding equity interests of Alon Bakersfield Property, Inc. a company that owned a refinery in Bakersfield, California from Alon Paramount Holdings, Inc. (“Alon Paramount”) for a total consideration of $89.4 million (excluding acquisition costs). Immediately prior to the purchase, Alon Bakersfield Property Inc. was converted into a limited liability company and renamed as “Bakersfield Renewable Fuels, LLC.” The Company is now retooling the acquired refinery into a biorefinery. In accordance with ASC Topic 805, Business Combinations The total consideration for the purchase of the Bakersfield Biorefinery was $89.4 million, and consisted of $40 million of cash, an option right valued at $5.5 million granted to the seller, and an assumption of $43.9 million of liabilities. The liabilities assumed consist of $21.9 million of asset retirement obligations (ARO) and $22 million of other environmental remediation liabilities. These liabilities are the estimated costs of clean-up, remediation and associated costs of the acquired assets in accordance with current regulations. The option right was valued using various inputs, including a volatility of 116%, a risk free rate of 0.14% and a marketability discount of 25%. The total consideration of the purchase was allocated to the asset categories acquired based upon their relative fair value, except that the fair value of the asset retirement obligations were allocated to the specific assets to which they relate to. The Company made a preliminary analysis of its ARO and environmental remediation liabilities based on the documentation received in the acquisition. As of December 31, 2020, the Company re-analyzed these liabilities in detail and determined that its actual ARO and environmental remediation liabilities were substantially lower based on a more thorough analysis of actual cost data, recent work completed, and the Company’s estimates of the work necessary to fulfill its obligations and timing of the work to be performed. The combined ARO and environmental liabilities were originally determined to be $74.7 million which resulted in an acquisition cost of $120.2 million. The following summarizes this revised allocation of the purchase price and also the reclassification of the pre-acquisition costs: Asset Category Capitalized Costs Allocated Pre- Total Capitalized Property, Plant and Equipment Land $ 7,584,961 — $ 7,584,961 Buildings 2,053,570 — 2,053,570 Refinery 77,845,201 3,222,449 81,067,650 Intangible Assets 1,921,082 — 1,921,082 Total $ 89,404,814 $ 3,222,449 $ 92,627,263 Property, plant and equipment as of December 31, 2020 and December 31, 2019 are as follows: December 31, 2020 December 31, 2019 Land $ 7,584,961 — Office Equipment 61,078 61,078 Buildings 2,053,570 — Refinery Equipment 86,019,130 — Construction in Process 33,212,695 2,588,441 Construction period interest 10,220,766 — Total Cost $ 139,152,200 2,649,519 Less accumulated depreciation (179,525 ) (61,078 ) Property, plant and equipment, net $ 138,972,675 2,588,441 Depreciation expense for property, plant and equipment was approximately $118,447 for the year ended December 31, 2020. There was no depreciation for the year ended December 31, 2019. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
INTANGIBLE ASSETS | NOTE D – INTANGIBLE ASSETS The Company holds certain patents, intellectual property and rights related to the development of Camelina as a biofuels feedstock and continues to incur costs related to patent license fees and patent applications for Camelina sativa plant improvements. These patents 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 over their remaining patent life. The termination dates of our earliest patents will begin to occur in 2029. Any future costs associated with the maintenance of these patents and patent and registration costs for any new patents that are essential to our business will be capitalized and amortized over the life of the patent once issued. Upon the Company’s acquisition of the Bakersfield Biorefinery, the Company acquired necessary permits for the operation of the facility. The permit cost of $1.9 million is amortized on a straight-line basis over 15 years. The patent license assets as of the year ended December 31, 2020 and 2019 is shown in the following table: December 31 2020 2019 Patent license fees $ 4,442,553 $ 4,187,902 Refinery permits 1,921,082 — Less accumulated amortization (2,182,889 ) (1,686,310 ) Intangible Assets, Net $ 4,180,746 $ 2,501,592 Amortization expense for intangible assets was approximately $150,000 and $245,000 for the years ended December 31, 2020 and 2019, respectively. The estimated amortization expense for the next five years is expected to be approximately $390,000 annually. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
DEBT | NOTE E – DEBT The table below summarizes our notes payable and long-term debt at year end 2020 and 2019: December 31 2020 2019 Notes Payable Senior credit facility $ 153,405,569 $ — Fixed payment obligation, net of discount of $4,094,863 16,155,138 — Other notes - current 4,198,113 4,426,767 173,758,820 4,426,767 Less: unamortized debt issuance costs (6,636,344 ) — Subtotal 167,122,476 4,426,767 Convertible Notes Payable Convertible note payable to executive officer 1,000,000 1,000,000 Other convertible notes payable 697,000 697,000 Subtotal 1,697,000 1,697,000 Total $ 168,819,476 $ 6,123,767 Credit Facilities On May 4, 2020, in order to fund the purchase of the Bakersfield Renewable Fuels, LLC, BKRF OCB, LLC, a subsidiary of the Company, entered into a senior secured credit agreement with a group of lenders (the “Senior Lenders”) pursuant to which the Senior Lenders agreed to provide a $300 million senior secured term loan facility to BKRF OCB (which was increased to $313.2 million in November 2020) to pay the costs of the retooling the Bakersfield Biorefinery. The senior loan bears interest at the rate of 12.5% per annum, payable quarterly, provided that the borrower may defer up to 2.5% interest to the extent it does not have sufficient cash to pay the interest, such deferred interest being added to principal. The principal of the senior loans matures in November 2026, provided that BKRF OCB, LLC must offer to prepay the senior loans with any proceeds of such asset dispositions, borrowings other than permitted borrowings, proceeds from losses, and excess net cash flow. BKRF OCB, LLC may also prepay the senior loan in whole or in part with the payment of a prepayment premium. As additional consideration for the senior loans, the Senior Lenders are issued Class B Units in BKRF HCP, LLC, an indirect parent company of BKRF OCB, LLC, as the Company draws on the facility. As of December 31, 2020, 151.5 million Class B Units have either been issued or are issuable, and the aggregate fair value of such units on the date of their issuances totaled approximately $3.1 million which were recorded as debt issuance costs. The aggregate fair value of the earned units as of December 31, 2020 was approximately $5.1 million. The fair value of such units are remeasured at each new issuance and at each quarter end. It is expected that the fair value will increase as the Company continues to de-risk the project through ongoing retooling activities. The senior loans are secured by all the assets of BKRF OCB, LLC (including its membership interests in Bakersfield Renewable Fuels, LLC), all the outstanding membership interest in BKRF OCB, LLC, and all the assets of Bakersfield Renewable Fuels, LLC. The credit facility contains certain covenants, and as of December 31, 2020, the Company was in material compliance with all the covenants, and the amendment executed in March 2021 corrected all deficiencies such that the Company is in full compliance as of the amendment date. On May 4, 2020, BKRF HCB, LLC, the indirect parent of BKRF OCB, LLC, entered into a credit agreement with a group of mezzanine lenders who agreed to provide a $65 million secured term loan facility (which was increased to 66.8 million in November 2020) to be used to pay the costs of repurposing and starting up the Bakersfield Biorefinery. As of March 31, 2021, BKRF HCB, LLC has not drawn down on the credit facility. The mezzanine loans bear interest at the rate of 15.0% per annum on amounts borrowed, payable quarterly, provided that the borrower may defer up to 2.5% interest to the extent it does not have sufficient cash to pay the interest, such deferred interest being added to principal. As additional consideration for the mezzanine loans, the mezzanine lenders will be issued Class C Units in BKRF HCP, LLC at such times as advances are made under the mezzanine loans. The mezzanine loans will be secured by all the assets of BKRF HCP, LLC, including all the outstanding membership interest in BKRF HCB, LLC. The mezzanine loans mature in November 2027. At December 31, 2020, the Company had incurred approximately $0.8 million of debt issuance costs related to this credit agreement. Fixed Payment Obligation As described in Note A, under “Fair Value of Financial Instruments”, the Company amended a derivative forward contract during the quarter ended March 31, 2020, with the counterparty. The amendment terminated the derivative forward contract and replaced it with a fixed payment obligation. Under the terms of the fixed payment obligation, the Company agreed to pay the counterparty a total of $23.1 million, which included a payment of $5.5 million in April 2020, and six equal installment payments in 2022 totaling $17.6 million Other Notes Payable Included in “other notes” as of December 31, 2020, in the above table, is a note, that is due upon demand related to the Company’s business activities prior to 2019, in the principal amount of $1.3 million and an interest rate of 18% per annum. Also, included in other notes above, is a note payable that was used to finance the Company’s insurance policies. Upon the acquisition of the Bakersfield Biorefinery in May 2020, the Company purchased numerous insurance contracts to cover its corporate, ownership and construction risks primarily to provide financial protection against various risks and to satisfy certain lender requirements. The Company paid 35% of the total premiums and financed the balance at 3.8% annual interest rate. The Company is obligated to make seventeen equal monthly payments totaling approximately $4.5 million beginning in July 2020. The insurance policies cover various periods from 12 to 60 months. As of December 31, 2020, the Company had eleven payments remaining for a total of $2.9 million. Convertible Note Payable to Executive Officer On October 16, 2018, Richard Palmer, the Company’s Chief Executive Officer and President, entered into a new employment agreement with the Company and concurrently agreed to defer $1 million of his accrued salary and bonus for two years. In order to evidence the foregoing deferral, the Company and Mr. Palmer entered into a $1 million convertible promissory note (the “Convertible Note”). The Convertible Note accrues simple interest on the outstanding principal balance of the note at the annual rate of five percent (5%) and became due and payable on October 15, 2020, its maturity date. Under its existing credit agreements, the Company is restricted from paying Mr. Palmer’s loan and, accordingly, is currently in default under the Convertible Note. The Company accrued interest expense on this note in 2020 and 2019 of $50,000 and $50,000 respectively. As of year-end 2020 and 2019 the Company had recorded accrued interest payable of $110,411 and $60,411, respectively. Under the Convertible Note, Mr. Palmer has the right, exercisable at any time until the Convertible Note is fully paid, to convert all or any portion of the outstanding principal balance and accrued and unpaid interest into shares of Common Stock at an exercise price of $0.154 per share. Convertible Notes Payable The Company has several notes that are convertible into the Company or the Company’s subsidiaries shares at different prices: from $0.03 per share into the parent company’s stock and up to $1.48 per share into a subsidiary’s common stock. These notes are past due their original maturity date and they continue to accrue interest at varying rates, from 8% to 10%. On a combined basis, as of December 31, 2020 the principal amount of these notes is $0.7 million. The following table summarizes the minimum required payments of notes payable and long-term debt as of December 31, 2020: Year Required Minimum Payments 2021 $ 4,895,114 2022 21,250,000 2023 — 2024 — 2025 — Thereafter 153,405,569 Total $ 179,555,683 Class B Units of Subsidiary Issued to Lenders As described above, during the year ended December 31, 2020, the Company issued 126.5 million Class B Units of its subsidiary, BKRF HCB, LLC, to its Senior Lenders, and in addition, another 25 million Class B Units are issuable to the Senior Lenders. Therefore, at December 31, 2020, issued and issuable Class B Units totaled 151.5 million. To the extent that there is distributable cash, the Company is obligated to make certain distribution payments to holders of Class B Units, and after the distributions reach a certain limit the units will no longer require further distributions and will be considered fully redeemed. The Class B unit holders may receive a portion of the distributable cash, as defined under the Credit Agreement, available to BKRF HCB, LLC, but generally only up to 25% of the available cash after the required interest and principal payments, operating expenses and ongoing capital requirements have been paid. Such payments may commence once the Bakersfield Biorefinery begins operations and will continue through the later of five years after operations of the refinery begins or until the cumulative distributions reach a certain threshold defined in the operating agreement of BKRF HCB, LLC. The Company has estimated the aggregate amount of distributions to the Class B Unit holders (upon the total amount under the credit facility to be drawn) may range from $4 million to as much as $174 million, provided that the aggregate total payments (including distributions to the Class B Units, all interest and principal payments) to the Senior Lenders cannot exceed two times the amount of the borrowings under the Credit Agreement, or approximately $626 million. As of December 31, 2020, the Company has valued the liability based on the estimated fair value for the Class B Unit distributions at approximately $5.1 million. The fair value is largely based on the present value of the expected distributions that will be made to the Class B Unit holders, which consider various risk factors, including a market risk premium, project size, the uniqueness and age of the refinery, the volatility of the feedstock and refinery inputs, operational costs, environmental costs and compliance, effective tax rates, illiquidity of the units, etc. As completion of retrofitting the refinery progresses, the fair value is expected to increase, and further increases in fair value are expected when the refinery becomes operational and begins generating revenues. For accounting purposes, these Class B Units are considered to be mandatorily redeemable and have been classified as liabilities in the accompanying December 31, 2020 balance sheet and are remeasured at fair value at the end of each reporting period. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE F – STOCKHOLDERS’ EQUITY Common Stock The Company issued a total of 250,000 and 1,447,017 shares of common stock related to the exercise of stock options in 2020 and 2019, respectively. Series B Preferred Stock On November 6, 2007, the Company sold a total of 13,000 shares of Series B Convertible Preferred Stock (“Series B Shares”) to two investors for an aggregate purchase price of $1.3 million, less offering costs of $9,265. Each share of the Series B Shares has a stated value of $100. The Series B Shares may, at the option of each holder, be converted at any time or from time to time into shares of the Company’s common stock at the conversion price then in effect. The number of shares into which one Series B Share shall be convertible is determined by dividing $100 per share by the conversion price then in effect. The initial conversion price per share for the Series B Shares is $0.11, which is subject to adjustment for certain events, including stock splits, stock dividends, combinations, or other recapitalizations affecting the Series B Shares. Each holder of Series B Shares is entitled to the number of votes equal to the number of shares of the Company’s common stock into which the Series B Shares could be converted on the record date for such vote, and has voting rights and powers equal to the voting rights and powers of the holders of the Company’s common stock. No dividends are required to be paid to holders of the Series B shares. However, the Company may not declare, pay or set aside any dividends on shares of any class or series of the Company’s capital stock (other than dividends on shares of our common stock payable in shares of common stock) unless the holders of the Series B shares shall first receive, or simultaneously receive, an equal dividend on each outstanding share of Series B shares. In the event of any liquidation, dissolution or winding up of the Company, the holders of the Series B Preferred Stock shall be entitled to receive, prior to any distribution to the holders of the Common Stock, an amount equal to $100 per share, or $1.3 million in the aggregate, plus an amount equal to any dividends declared and unpaid with respect to each such share. |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
STOCK OPTIONS AND WARRANTS | NOTE G – STOCK OPTIONS AND WARRANTS 2010 Stock Plan In 2010, the Company’s Board of Directors adopted the Global Clean Energy Holdings, Inc. 2010 Equity Incentive Plan (the “2010 Plan”) wherein 2,000,000 shares of the Company’s common stock were reserved for issuance thereunder. Options and awards granted to new or existing officers, directors, employees, and non-employees vest ratably over a period as individually approved by the Board of Directors generally over four years, but not in all cases. The 2010 Plan provides for a three-month exercise period of vested options upon termination of service. The exercise price of options granted under the 2010 Plan is equal to the fair market value of the Company’s common stock on the date of grant. Options issued under the 2010 Plan have a maximum term of ten years for exercise and may be exercised with cash consideration or through a cashless exercise in which the holder forfeits a portion of the award in exchange for shares of common stock of the remaining portion of the award. As of December 31, 2019, there were no shares available for future option grants under the 2010 Plan. The 2010 Plan expired in April 2020 and was replaced with the 2020 Equity Incentive Plan. The Company’s Board of Directors has granted stock options to certain officers, directors, employees, and non-employees, which options were not part of the 2010 Plan or any other formal equity incentive plan. 2020 Stock Plan In April 2020, the Company’s Board of Directors adopted the Global Clean Energy Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) wherein 2,000,000 shares of the Company’s common stock were reserved for issuance thereunder. Options and awards granted to new or existing officers, directors, employees, and non-employees vest ratably over a period as individually approved by the Board of Directors generally over three years, but not in all cases. The 2020 Plan provides for a three-month exercise period of vested options upon termination of service. The exercise price of options granted under the 2020 Plan is equal to the fair market value of the Company’s common stock on the date of grant. Options issued under the 2020 Plan have a maximum term of ten years for exercise and may be exercised with cash consideration or through a cashless exercise in which the holder forfeits a portion of the award in exchange for shares of common stock of the remaining portion of the award. As of December 31, 2020, there were 965,500 shares available for future option grants under the 2020 Plan. During the fiscal years ended December 31, 2019 and 2020, the Company granted the following stock options under the 2020 Plan and outside of the 2020 Plan: 2019: On January 15, 2019, the Company granted its Executive Vice President a five-year non-qualified stock option to purchase 5 million shares of Common Stock at an exercise price of $0.20, subject to the Company’s achievement of certain market capitalization goals. On June 21, 2019 the Company entered into a Board Advisor Agreement with a prospective Board member (who subsequently became a member of the Board of Directors). As compensation for his services under the Board Advisor Agreement, the Board granted to this Director a non-qualified stock option to purchase up to 50,000 shares of the Company’s common stock, which option has an exercise price of $0.80 (based on the closing market price), a five year term, and the following vesting schedule: (i) Options to purchase 12,500 shares vested immediately as of the date grant, and (ii) options to purchase 12,500 additional shares vested on each of September 20, 2019, December 20, 2019 and March 20, 2020. The Board also granted to this prospective Director a second non-qualified stock option to purchase up to 50,000 shares of the Company’s common stock, which option has an exercise price of $0.80, a five-year term, and would vest if/when this prospective Director joins the Board of Directors of the Company, provided that this prospective Director is appointed to the Board during the term of the Board Advisor Agreement. This appointment occurred in May 2020. On June 21, 2019, the Company granted its Executive Vice President a five-year non-qualified stock option to purchase 950,000 shares and a five-year incentive stock option for 50,000 shares both at an exercise price of $0.165. The options vests at 25% at issuance and the balance over 36 months. On July 1, 2019, the Company granted its Chairman of the Board a five-year non-qualified stock option to purchase 50,000 shares of Common Stock at an exercise price of $0.65. The options vest monthly over one year beginning on the grant date. On July 5, 2019 the Company granted to a consultant a five-year non-qualified stock option to purchase 500,000 shares of Common Stock at an exercise price of $0.90. The option vesting is conditional upon the Company consummating its contemplated acquisition by March 31, 2020 and upon such acquisition will vest at one-third upon closing and one-third each on the first and second anniversary of closing. 2020: On April 24, 2020, the Company granted a non-qualified stock option to purchase 500,000 shares of Common Stock to a consultant at an exercise price of $0.90. The option has a five-year term and vests at one-third at the closing of the Bakersfield Biorefinery, one-third at ninety days after closing and the remaining one-third on January 5, 2021. On May 4, 2020, the Company granted a non-qualified stock option to purchase 150,000 shares of Common Stock to a consultant at an exercise price of $0.41. The option has a five-year term and vests at one-seventh at the closing of each month in 2020 beginning on June 30, 2020. On May 7, 2020, the Company granted non-qualified stock options to purchase a) 87,500 shares of Common Stock to three different consultants and b) 100,000 shares of Common Stock to two Directors. The options have a five-year term and an exercise price of $0.66. The options to Directors vested immediately and 75,000 of the options to consultants vested immediately and the remaining 12,500 options which vest quarterly over three years beginning on June 30, 2020. The Company also granted 565,500 incentive stock options to employees at an exercise price of $.66 with 35,500 shares vesting quarterly over two years beginning on June 30, 2020 and 530,000 shares vesting quarterly over three years beginning on June 30, 2020. On May 18, 2020, the Company granted an incentive stock option to purchase 100,000 shares of Common Stock to the Company’s Chief Financial Officer at an exercise price of $0.932. The option has a five-year term and vests quarterly over three years beginning on June 30, 2020. On July 9, 2020, the Company granted incentive stock options to employees to purchase 39,000 shares of Common Stock at an exercise price of $0.833. The option has a five year term and vests quarterly over three years beginning on September 30, 2020. On October 15, 2020, the Company granted an incentive stock option to employees to purchase 5,000 shares of Common Stock at an exercise price of $1.373. The option has a five-year term and vests quarterly over three years beginning on December 31, 2020. On October 29, 2020, the Company granted incentive stock options to employees to purchase 7,500 shares of Common Stock at an exercise price of $1.75. The option has a five-year term and vests quarterly over three years beginning on December 31, 2020. A summary of the option award activity and awards outstanding at December 31, 2020 is as follows: Shares Weighted Weighted Aggregate Outstanding at December 31, 2019 19,902,732 0.16 3.6 years 14,360,463 Granted 1,554,500 0.75 — — Exercised (1,447,017 ) 0.06 — — Forfeited (600,000 ) 0.753 — — Expired (180,000 ) 0.10 — — Outstanding at December 31, 2020 19,230,214 0.16 3.9 years 30,044,649 Vested and exercisable at December 31, 2020 17,913,083 $ 0.16 2.9 years $ 28,160,815 The fair value of stock option grants with only continued service conditions for vesting is estimated on the grant date using a Black-Scholes option pricing model. The Company estimates the fair value of stock options that have both service and market conditions on the grant date using a lattice model. The following table illustrates the assumptions used in estimating the fair value of options granted during the periods presented: For the Years Ended December 31, 2020 2019 Expected Term (in Years) 3 to 5 2 to 5 Volatility 85 % 123 % Risk Free Rate 1.3 % 2.8 % Dividend Yield 0 % 0 % Suboptimal Exercise Factor (1) n/a 1.3 Exit Rate Pre-vesting (2) n/a 0 % Exit Rate Post-vesting (3) n/a 0 % Aggregate Grant Date Fair Value $ 533,538 $ 326,644 (1) The suboptimal exercise factor estimates the value realized by the holder upon exercise of the option and the estimated point at which an option holder would exercise an in-the-money option. The Company estimated the suboptimal factor based on the holder realizing a pre-tax profit of $50,000. Used for lattice model purposes only. (2) Assumed forfeiture rate for market condition option awards prior to vesting. Used for lattice model purposes only. (3) Assumed expiration or forfeiture rate for market condition option awards after vesting. Used for lattice model purposes only. During the years ended December 31, 2020 and 2019 the Company granted 200,000 and 6.1 million options, respectively, to related parties that have both, or either, requisite service conditions and market conditions. The 2020 share option grants were awarded 100,000 (50,000 each) to its two independent directors and 100,000 to the Company’s CFO. The 2019 share option awards includes 100,000 (50,000 each) to its two independent directors, and a 1 million award to its EVP. The requisite service period for the market condition options of 5 million shares granted to its EVP during 2019 was three years and the options vest in three tranches: 28% of the award vests when the market cap exceeds $7 million for a thirty-day period; 33% of the award vests when the market cap exceeds $15 million for a thirty-day period; and 40% of the award vests when the market cap exceeds $25 million for a thirty-day period. As of May 31, 2019, all of the outstanding market condition awards issued during 2019 were fully vested. As of December 31, 2020, 125,000 of the options granted in 2020 were vested and 5,787,000 of the options granted in 2019 were vested. For the years ended December 31, 2020, and 2019 the Company recognized stock compensation expenses related to stock option awards of $326,486 and $577,645, respectively. The Company recognizes all stock-based compensation in general and administrative expenses in the accompanying consolidated statements of operations. As of December 31, 2020, there was approximately $312,000 of unrecognized compensation cost related to option awards that will be recognized over the remaining service period of approximately 3.0 years. Stock Purchase Warrants and Option Rights As of December 31, 2020 and 2019 there were no outstanding warrants to purchase shares of Global Clean Energy Holdings, Inc. In 2020, the Company issued, to a party interested in Camelina development, a non-transferable warrant for an 8% interest in its subsidiary, Sustainable Oils, Inc. The warrant’s aggregate exercise price is $20 million and the warrant expires on June 1, 2021. At the time of issuance, the fair value of the warrant was deemed to be immaterial. Concurrently with the closing of the Bakersfield Biorefinery, GCEH, through its subsidiary, GCE Acquisitions, issued an option right to the seller of the refinery to purchase up to 33 1/3% of the membership interests of GCE Acquisitions. The fair value of the option right on the date of issuance was $5.5 million and expires at ninety days after the refinery meets certain operational criteria. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE H – INCOME TAXES Income taxes are provided for temporary differences between financial and tax bases of assets and liabilities. The following is a reconciliation of the amount of benefit that would result from applying the federal statutory rate to pre-tax loss with the benefit from income taxes for the years ended December 31, 2020 and 2019: The components of deferred tax assets and liabilities are as follows at December 31, 2020 and 2019, using a combined deferred income tax rate of 28% for 2019 and 2020: The provisions for income taxes for the years ended December 31, 2020 and 2019 are as follows: 2020 2019 Current: Federal $ (4,778,000 ) $ (265,000 ) State (2,206,000 ) (123,000 ) Deferred: Federal 2,246,000 (1,992,000 ) State 1,037,000 (920,000 ) Change in Valuation Allowance 3,701,000 3,300,000 Provision for income taxes $ — $ — A reconciliation of the federal statutory tax rate to the effective tax rate is as follows: 2020 2019 Federal statutory rate 21 % 21 % State, net of federal tax benefit 6.98 % 6.98 % Change in valuation allowance (28 )% (28 )% Effective tax rate $ — $ — At December 31, 2020 and 2019 the deferred income tax assets consisted of the following: 2020 2019 Deferred tax assets: $ 18,264,000 $ 14,563,000 Less: Valuation Allowance (18,264,000 ) (14,563,000 ) Net deferred income taxes $ — $ — Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The majority of the balance is due deferred compensation, share based payments, the fair value of derivatives, and to continued losses resulting in NOL carryforwards, which may not be realized in future periods. As such, the Company has recorded a 100% valuation allowance against the deferred tax assets. At December 31, 2020 and 2019 the deferred income tax assets consisted of the following temporary differences: 2020 2019 Net operating losses $ 15,513,000 $ 8,530,000 Share based compensation 361,000 269,000 Accrued payroll 1,238,000 1,632,000 Accrued interest 586,000 — Derivative liability — 4,132,000 Mandatorily redeemable equity instruments of subsidiary 566,000 — Total deferred tax assets 18,264,000 14,563,000 Less: Valuation allowance (18,264,000 ) (14,563,000 ) $ — $ — At December 31, 2020 and 2019, the Company has federal net operating loss carryforwards of approximately: 2020 2019 Net operating losses $ 46,109,000 $ 21,152,000 Inasmuch as it is not possible to determine when or if the net operating losses will be utilized, a valuation allowance has been established to offset the benefit of the utilization of the net operating losses. As of December 31, 2020, the Company had available net operating losses of approximately $46.1 million which can be utilized to offset future earnings of the Company. The utilization of the net operating losses is dependent upon the tax laws in effect at the time such losses can be utilized. Certain loss carryforwards begin to expire in 2021 and a portion may be used indefinitely. Should the Company experience a significant change of ownership, the utilization of net operating losses could be reduced. The Company and its subsidiaries file tax returns in the U.S. Federal jurisdiction and, in the state of California. The Company is no longer subject to U.S. federal tax examinations for tax years before and including December 31, 2016. The Company is no longer subject to examination by state tax authorities for tax years before and including December 31, 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE I – COMMITMENTS AND CONTINGENCIES Employment Agreements President and Chief Executive Officer. On October 16, 2018, the Company and the CEO entered into an Executive Employment Agreement (the “2018 Employment Agreement”). The 2018 Employment Agreement runs through October 15, 2023 and compensates the CEO at an annual base salary of $300,000 per year. Upon the closing of the acquisition of the Company’s Bakersfield, California, refinery on May 7, 2020 the Company and the CEO amended the 2018 Employment Agreement to increase the CEO’s annual base salary to $350,000, effective immediately. Under the 2018 Employment Agreement, the CEO’s target annual bonus amount is 50% of the CEO’s base salary, subject to the Board’s discretion to increase the amount of the bonus or adjust the performance criteria. Under the 2018 Employment Agreement, the Company granted the CEO a five-year non-qualified stock option (“Option”) to purchase 11 million shares of Common Stock at an exercise price of $0.154, subject to the Company’s achievement of certain market capitalization goals. Under the Option, Mr. Palmer vests, and can exercise the Option, with respect to 3 million shares when the Company’s market capitalization first reaches $7 million, another 4 million shares vest under the Option when the Company’s market capitalization reaches $15 million, and 4 million shares vest when the Company’s market capitalization first reaches $25 million. The term “market capitalization” is defined in the 2018 Employment Agreement to mean the product of the number of shares of Common Stock issued and outstanding at the time market capitalization is calculated, multiplied by the average closing price of the Common Stock for the 30 consecutive trading days prior to the date of calculation as reported on the principal securities trading system on which the Common Stock is then listed for trading, including the OTC Pink marketplace, the NASDAQ Stock Market, or any other applicable stock exchange. Upon termination, the CEO is entitled to twelve months of severance payments, but if the termination is “for cause”, as defined in the 2018 Employment Agreement, there is no severance payment. Executive Vice President - Development & Regulatory Affairs (the “EVP”). Effective January 15, 2019, the Company entered into a three-year employment agreement with its EVP which agreement was amended on May 7, 2020. Under the employment agreement, the EVP is paid an annual base salary of $310,000 and is entitled to receive an annual bonus of up to 50% of his annual base salary if the EVP meets certain performance targets. Upon termination the EVP is entitled to four months of severance payments, but if the termination is “for cause”, as defined in the EVP’s employment agreement, there is no severance payment. Under the EVP’s employment agreement, the Company granted the EVP a five-year non-qualified stock option to purchase 5 million shares of Common Stock at an exercise price of $0.20, subject to the Company’s achievement of certain market capitalization goals. The foregoing option vest in three tranches when the Company’s market capitalization reached $7 million, $15 million, and $25 million. Chief Financial Officer. On May 20, 2020, the Company entered into an at-will employment agreement with its Vice President of Finance and Chief Financial Officer. Under the employment agreement, the CFO is paid an annual base salary of $225,000 per year. He is also entitled to a discretionary annual bonus, in an amount up to 25% of his annual salary, based on the Company’s performance. Upon joining the Company, the CFO was granted an incentive stock option to purchase 100,000 shares of Common Stock at an exercise price of $0.932. The option has a five-year term and vest over three years. The Company does not have an established severance plan, and therefore the CFO is not entitled to any severance upon termination. Engineering, Procurement and Construction Contract On April 30, 2020, GCE Acquisitions entered into an Engineering, Procurement and Construction Agreement with a national engineering firm pursuant to which this firm agreed to provide services for the engineering, procurement, construction, start-up and testing of the Bakersfield Biorefinery. The agreement, which was assigned by GCE Acquisitions to BKRF OCB, LLC, the borrower under the senior credit facility, provides for this engineering firm to be paid on a cost-plus fee basis subject to a guaranteed maximum price of $201.4 million, subject to increase for approved change orders. As of December 31, 2020, the remaining balance of the contract was approximately $163 million. Environmental Remediation Liabilities The Company recognizes its asset retirement obligation and environmental liabilities in accordance with ASC 410-30, and has estimated such liabilities as of its acquisition date. It is the Company’s policy to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Environmental liabilities represent the current estimated costs to investigate and remediate contamination at our properties. This estimate is based on internal and third-party assessments of the extent of the contamination, the selected remediation technology and review of applicable environmental regulations, typically considering estimated activities and costs for 20 years, and up to 30 years if a longer period is believed reasonably necessary. Accruals for estimated costs from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study and include, but are not limited to, costs to perform remedial actions and costs of machinery and equipment that are dedicated to the remedial actions and that do not have an alternative use. Such accruals are adjusted as further information develops or circumstances change. We discount environmental liabilities to their present value if payments are fixed and determinable. However, as the timing and amount of these costs were undeterminable as of December 31, 2020, these costs have not been discounted. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized. Changes in laws and regulations and actual remediation expenses compared to historical experience could significantly impact our results of operations and financial position. We believe the estimates selected, in each instance, represent our best estimate of future outcomes, but the actual outcomes could differ from the estimates selected. At December 31, 2020, accrued environmental liability costs totaled $21.3 million of which $0.9 million have been classified as current liabilities. Leases On May 1, 2019, the Company amended its office lease to extend the lease term to July 31, 2022. The table below represents the amounts due through the end of the lease term. Operating Year Ending Minimum Less: Discount December 31, Payments Less: Discount Obligation 2021 $ 35,681 $ 3,124 $ 32,557 2022 21,174 1,079 20,095 Total $ 56,855 $ 4,203 $ 52,652 Legal On May 7, 2020 through BKRF OCB, LLC, one of the Company’s indirect subsidiaries, the Company purchased all of the outstanding equity interests of Bakersfield Renewable Fuels, LLC from Alon Paramount Holdings, Inc. (“Alon Paramount”) for total consideration of $89.4 million, including $40 million in cash and assumption of liabilities of $43.9 million. Bakersfield Renewable Fuels, LLC owns an oil refinery in Bakersfield, California that the Company is retooling into a biorefinery. In connection with the acquisition, BKRF OCB, LLC agreed to undertake certain cleanup activities at the refinery and provide a guarantee for liabilities arising from the cleanup. The Company has assumed significant environmental and clean-up liabilities associated with the purchase of the Bakersfield Refinery. Bakersfield Renewable Fuels, LLC, formerly Alon Bakersfield Property, Inc., is one of the parties to an action pending in the United States Court of Appeals for the Ninth Circuit. In June 2019, the jury awarded the plaintiffs approximately $6.7 million against Alon Bakersfield Property, Inc. and Paramount Petroleum Corporation (a parent company of Alon Bakersfield Property, Inc. at the time of the award in 2019). Under the agreements pursuant to which we purchased Bakersfield Renewable Fuels, LLC (Alon Bakersfield Property, Inc.) Alon Paramount agreed to assume and be liable for (and to indemnify, defend, and save Bakersfield Renewable Fuels harmless from) this litigation. In addition, Paramount Petroleum has posted a bond to cover this judgment amount. All legal fees in this matter are being paid by Alon Paramount. As Paramount Petroleum Corporation and the Company are jointly and severally liable for the judgement, and Paramount Petroleum Corporation has agreed to absorb all of the liability and has posted a bond to cover the judgement amount, no loss has been accrued by the Company with respect to this matter. In August 2020, a complaint was filed against GCE Holdings Acquisitions, LLC for a claimed breach of a certain consulting agreement. The claim is for $1.2 million. On October 14, 2020, GCE Holdings Acquisitions, LLC filed an answer and denied all allegations in the complaint. The Company does not believe that the ultimate resolution of this matter will have a material effect on its financial statements, and no loss has been accrued regarding this claim. In the ordinary course of business, the Company may face various claims brought by third parties and the Company may, from time to time, make claims or take legal actions to assert the Company’s rights, including intellectual property rights, contractual disputes and other commercial disputes. Any of these claims could subject the Company to litigation. Management believes the outcomes of currently pending claims will not likely have a material effect on the Company’s consolidated financial position and results of operations. Indemnities and Guarantees In addition to the indemnification provisions contained in the Company’s organization documents, the Company generally enters into separate indemnification agreements with the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s directors or officers, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessor in connection with its facility lease for certain claims arising from the use of the facility. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets. COVID-19 In December 2019, a novel strain of coronavirus diseases (“COVID-19”) was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. The extent of COVID-19’s effect on the Company’s operational and financial performance is ongoing but the Company believes that this particular pandemic is not likely to be materially disruptive to its future plans and targeted date of beginning commercial operations. The Company has implemented strict protocols on its on-site workforce and continues to monitor the potential impacts to its business. The Company expects that the future impacts due to COVID-19 is likely to be non-disruptive to its ongoing business. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE J – SUBSEQUENT EVENTS On March 26, 2021, the Company completed the reverse stock split of its common stock at a ratio of 1-for-10. The reverse stock split was approved by the stockholders at the Company’s annual meeting of stockholders in November of 2020. All share amounts and conversion prices included in these financial statements have been retroactively adjusted for this reverse stock-split. On March 26, 2021, we issued 1,586,786 shares of the Company’s common stock to the holder of a convertible promissory note upon the conversion of the entire outstanding balance, principal and accrued interest, of that note ($470,115). On March 29, 2021, the Company drew approximately $31 million under its Senior Credit Facility to fund its ongoing refurbishing activities of the Bakersfield Biorefinery, cash interest due and current operations. The total amount drawn under the facility as of March 31, 2021 is approximately $182.5 million. Effective March 26, 2021, the Company and its senior lender entered into Amendment No. 3 to the Credit Agreement to, among other things, establish a contingency reserve account to fund the costs of the additional capabilities and equipment and to fund possible cost overruns at the Bakersfield Biorefinery. Concurrently, the Company and the mezzanine lenders entered into Consent No. 2 And Amendment No. 2 To Credit Agreement to amend the $65 million mezzanine credit facility. Under these two amendments we agreed to establish an additional cash reserve of at least $35,000,000, which cash reserve would be used at the direction of the agent for the lenders to fund project costs of the Bakersfield Biorefinery to the extent that such costs exceed the amounts available under the two credit agreements. Funds remaining in the additional reserve account after the completion of the Bakersfield Biorefinery will, with the approval of the lenders’ agent, be used to first make a $5 million principal payment on the senior loan, and any remaining funds will be returned to us. In order to fund the new $35 million contingency cash reserve, the two amendments to the credit agreements provide that we will raise no less than $35 million by July 31, 2021 and that we will deposit at least $35 million into the new Bakersfield Biorefinery cash reserve account. The Credit Agreement amendments contemplate that the $35 million will be raised in a public or private financing transaction and, in connection therewith, that we will enter into an agreement with a placement agent or underwriter, or that we will file a registration statement with the SEC by April 30, 2021. As consideration for the amendments to the two credit agreements, we agreed to pay to each senior and mezzanine lender an amendment and consent premium equal to 1.00% of the aggregate commitments and loans of such lender. The fee is payable in the same securities that we may issue in connection with raising the $35 million cash reserve. If we fund the $35 million cash reserve other than through a financing transaction, we will pay the 1% lenders’ premium in shares of our common stock or in cash. |
ORGANIZATION AND SIGNIFICANT _2
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Global Clean Energy Holdings, Inc., a Delaware corporation, and its wholly owned subsidiaries (collectively, the “Company”, “we”, “us” or “our”) is a U.S.-based integrated agricultural-energy biofuels company that holds assets across feedstocks and plant genetics, agronomics, cultivation, and regulatory approvals, commercialization, and downstream biorefining and storage. The Company is focused on the development and refining of nonfood-based bio-feedstocks and has a proprietary investment in camelina sativa (“Camelina”), a fast growing, low input and ultra-low carbon intensity crop used as a feedstock for renewable fuels. The Company holds its Camelina assets (including all related intellectual property related rights and approvals) and operates its Camelina business through its subsidiary, Sustainable Oils Inc., a Delaware corporation. In 2018 and 2019 the Company pursued the acquisition of a crude oil refinery in Bakersfield, California with the objective of retrofitting it to produce renewable diesel from Camelina and other nonfood feedstocks. On May 7, 2020 the Company completed the acquisition of the targeted refinery (the “Bakersfield Biorefinery”). The Bakersfield Biorefinery is owned by Bakersfield Renewable Fuel, LLC, an indirect subsidiary of Global Clean Energy Holdings, Inc. The retrofitting of the refinery commenced promptly after the acquisition. The engineering and construction of the project is expected to be completed in early 2022 based on our engineering, procurement and construction contract with a substantial completion date of January 22, 2022. We feel confident that we will achieve that date or soon thereafter within the first quarter of 2022. It is a construction project and with all construction projects there are always risks. The contractor has daily liquidated penalties if they are late. After necessary start-up procedures and testing is complete, we expect production to be approximately 10,000 barrels per day (420,000 gallons per day). We expect to maintain that level at least through the first year of production. The Company has entered into a product offtake agreement with a major oil company for the purchase by the oil company of the majority of the renewable diesel to be produced at the Bakersfield Biorefinery. See Note B - Basis of Presentation and Liquidity which describes the offtake agreement in more detail. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc., and its subsidiaries, and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). References to the “ASC” hereafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board (“FASB”) as the source of authoritative US GAAP. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made to the consolidated financial statements. |
Per Share Information | Per Share Information On March 26, 2021, the Company effected a one-for-ten reverse stock split. All common stock and per share information (other than par value) contained in these financial statements and footnotes have been adjusted to reflect the foregoing reverse stock split. Prior to the reverse stock split the Company had 358,499,606 shares outstanding and immediately after the stock split the Company had 35,850,089 shares outstanding. The Company issued additional shares after the reverse stock split and the outstanding shares as of March 30, 2021 was 37,436,875. |
Restricted Cash | Restricted Cash In accordance with the Company’s senior credit agreement (see Note E - Debt), the Company is required to advance the calculated interest expense on its borrowings at the time of such borrowings to the estimated commercial operational date of the Bakersfield Biorefinery. This interest is deposited into a designated account and the appropriate amount is paid to the lender at the end of each quarter. Additionally, the construction funds are deposited into its own designated account and deposited from that designated account into the Bakersfield Renewable Fuel, LLC account only upon approval by the lender to pay for specific construction, facility and related costs . These two accounts are restricted and not directly accessible by the Company for general use, although these funds are assets of the Company. The Company estimates how much of this cash is likely to be capitalized into the Bakersfield Biorefinery project in the form of a long-term asset, and distinguishes this amount as long-term. The Company makes this determination based on its budget, recent and near-term invoicing, and internal projections. |
Cash and Cash Equivalents; Concentration of Credit Risk | Cash and Cash Equivalents; Concentration of Credit Risk The Company considers all highly liquid debt instruments maturing in three months or less to be cash equivalents. The Company maintains cash and cash equivalents at high quality financial institutions. However, deposits exceed the federally insured limits. At December 31, 2020, the Company had approximately $38 million in uninsured cash. |
Property and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation of office equipment is computed using the straight-line method over estimated useful lives of 3 to 5 years. Refinery assets and buildings are depreciated using the straight-line method over estimated useful lives of 5 to 25 years, however, the refinery will not begin to be depreciated until its retrofitting has been completed and it is ready for operations. Normal maintenance and repair items are charged to operating costs and are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and gain or loss on disposition is reflected in the statement of operations. Interest on borrowings related to the retrofitting of the Bakersfield Biorefinery is being capitalized, which will continue until the refinery is available for commercial use. During the year ended December 31, 2020, $10.2 million of interest has been capitalized, and is included in property and equipment, net on the accompanying December 31, 2020 balance sheet. |
Long-Lived Assets | Long-Lived Assets In accordance with U.S. GAAP for the impairment or disposal of long-lived assets, the carrying values of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the aggregate of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the year ended December 31, 2020 and 2019, there were no impairment losses recognized on long-lived assets. |
Pre-Acquisition Costs | Pre-Acquisition Costs We began capitalizing pre-acquisition costs once we determined that the acquisition of the Bakersfield Biorefinery project was probable, which was in April 2019 when both the Bakersfield Biorefinery purchase agreement and the product offtake agreement were signed. We capitalized those costs that were directly identifiable with the specific property and those costs that would be capitalized if the property were already acquired. Upon the acquisition of the Bakersfield Biorefinery, these capitalized pre-acquisition costs, which totaled $3.2 million, were reclassified to property and equipment. For the full year of 2019 and for the year 2020 up to and including the Bakersfield Biorefinery acquisition date of May 7, 2020, we capitalized $2.6 million and $0.6 million of pre-acquisition costs, respectively. Upon acquisition of the refinery, on May 7, 2020, we reclassified the accumulated pre-acquisition costs of $3.2 million to property, plant and equipment. See Note C - Property and Equipment, included herein. |
Debt Issuance Costs | Debt Issuance Costs During 2018, we signed a letter of intent to acquire our Bakersfield Refinery. The acquisition of the refinery and the related $365 million of financing to fund the retrofit closed in May 2020. In connection with financing the refinery, we incurred $0.5 million of debt issuance costs in 2019 and $6.6 million of debt issuance costs during 2020 related to acquisition of the Bakersfield Biorefinery. Debt issuance costs are amortized over the term of the loan as interest: however, as such interest relates to retrofitting of the refinery, these costs will be capitalized as part of the refinery until the refinery is placed in service. The amortization of the debt issuance costs that are not capitalized is recorded as interest expense. At December 31, 2019, certain unamortized debt issuance costs are presented on the balance sheet as deferred costs. However, upon the closing of the Bakersfield Biorefinery acquisition and as of December 31, 2020, these costs were reclassified as a direct deduction from the carrying amount of the debt liability of the financing to the extent that we borrow on the credit agreements. See Note E - Debt for more detail on the financing. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities For presentation purposes, accounts payable and accrued liabilities have been combined. As of December 31, 2020 and 2019, accounts payable and accrued liabilities consists of: 2020 2019 Accounts payable $ 9,724,136 $ 501,931 Accrued compensation and related liabilities 3,034,688 2,055,167 Accrued interest payable 2,093,649 1,734,527 Other accrued expenses 3,146,478 1,276,503 Current portion of asset retirement obligations 3,716,000 — Current portion of environmental liabilities 883,000 — $ 22,597,951 $ 5,568,128 |
Derecognition of Liabilities | Derecognition of Liabilities The Company reviews its liabilities, including but not limited to, accounts payable, notes payable, accrued expenses, accrued liabilities and other legal obligations for a determination of the legal enforcement or settlement of these obligations. Upon conclusive evidence that an obligation may be extinguished, has expired, is discharged, is cancelled, or otherwise no longer legally exists, then the Company will derecognize the respective liability on its balance sheet. In 2019 the Company derecognized $2.4 million of previously outstanding liabilities upon concluding that these were no further legal obligations. These amounts are included in gain on settlement of liabilities in the 2019 statement of operations. |
Asset Retirement Obligations | Asset Retirement Obligations The Company recognizes liabilities which represent the fair value of a legal obligation to perform asset retirement activities, including those that are conditional on a future event, when the amount can be reasonably estimated. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value. We have asset retirement obligations with respect to our Bakersfield Biorefinery due to various legal obligations to clean and/or dispose of these assets at the time they are retired. However, the majority of these assets can be used for extended and indeterminate periods of time provided that they are properly maintained and/or upgraded. It is our practice and intent to continue to maintain these assets and make improvements based on technological advances. A portion of these obligations relate to the required cleanout of hydrocarbons previously used in the pipeline and terminal tanks. In order to determine the fair value of the obligations management must make certain estimates and assumptions including, among other things, projected cash flows, a credit-adjusted risk-free rate and an assessment of market conditions that could significantly impact the estimated fair value of the asset retirement obligations. We believe the estimates selected, in each instance, represent our best estimate of future outcomes, but the actual outcomes could differ from the estimates selected. We estimate our escalation rate at 3.33% and our discount factor ranges from 3.62% in year one to 7.26% in year twenty, with the weighted average discount rate being 5.0%. See Note I - Commitments and Contingencies more detail on environmental liabilities, which are accounted for separately from asset retirement obligations. The following table provides a reconciliation of the changes in asset retirement obligations during 2020. 2020 Asset retirement obligations - beginning of year $ — Additions related to acquisition of refinery 21,901,977 Disbursements (135,000 ) Accretion 652,000 Revised obligation estimates (940,000 ) Asset retirement obligations - end of year $ 21,478,977 The amount shown includes $3.7 million which has been classified as current liabilities and included in accounts payable and accrued liabilities and $17.8 million in long term liabilities. |
Advances to Contractors | Advances to Contractors Upon the acquisition of the Bakersfield Biorefinery, the Company advanced $20.1 million to its primary engineering, procurement and construction contractor. These funds are credited against future invoices in accordance with an agreed schedule. As of December 31, 2020, the funds advance has been reduced to $16.0 million. |
Income Taxes | Income Taxes The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and the carryforward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of general and administrative expense. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606 using the following five-step model: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue. The Company did not recognize any revenues during the years ended December 31, 2020 and 2019. The Company is engaged in contracting with farmers to grow camelina grain that will be processed into oil for use in Bakersfield Biorefinery. The Company will recognize revenues upon the sale of its patented camelina seed to the farmers and also for the crushed camelina meal that it plans to sell to third party livestock and poultry operators. Based upon the Company’s Product Offtake Agreement (see Note B - Basis of Presentation and Liquidity), the Company expects to recognize revenue from the sale of biofuel beginning in 2022. |
Research and Development | Research and Development Research and development costs are charged to operating expenses when incurred. |
Fair Value Measurements and Fair Value of Financial Instruments | Fair Value Measurements and Fair Value of Financial Instruments As of December 31, 2020 and December 31, 2019, the carrying amounts of the Company’s financial instruments that are not reported at fair value in the accompanying consolidated balance sheets, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to their short-term nature. The Company’s derivative liability related to its derivative forward contract for Ultra Low Sulfur Diesel (see below) and mandatorily redeemable equity instruments of subsidiary are reported at fair value. U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1— Quoted prices for identical instruments in active markets; Level 2— Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As reported for December 31, 2019, the Company had a derivative liability of $24.8 million related to a forward contract that also included a call option. The notional amount of the forward contract related to gallons of the commodity, Ultra Low Sulfur Diesel. Under the terms of the contract the Company was obligated to pay the equivalent of the notional amount multiplied by the market price of Ultra Low Sulfur Diesel at the settlement dates; however, the call option of the contract capped the market price of Ultra Low Sulfur Diesel. In March 2020, the Company settled the derivative contract by replacing the derivative contract with a fixed payment obligation that required a payment of $5.5 million due on April 30, 2020 and six equal payments beginning in October 2021 totaling $17.6 million. The Company recognized $5.5 million of income from the decrease in fair value on the derivative contract from January 1, 2020 through March 19, 2020 and also recognized a gain of $512,000 on the derecognition of the derivative contract. The fixed payment obligation was amended in April 2020. Under the amendment, the amended fixed payment obligation, required the Company to pay a total of $24.8 million, including a payment of $4.5 million by the Company in June 2020, and six equal installment payments beginning in 2022 totaling $20.3 million. The fair value of the derivative forward contract reported at December 31, 2019, and in March 2020, just prior to its derecognition,was primarily based upon the notional amount and the forward strip market prices of Ultra Low Sulfur Diesel and was reduced by the fair value of the call option. The forward strip market prices are observable. However, to determine the fair value of the call option, Company used the Black’s 76 option pricing model. As a result, the contract as a whole is included in the Level 3 of the fair value hierarchy. The Company’s mandatorily redeemable equity instruments of its subsidiary are also measured at fair value on a recurring basis. See Note E - Debt for more information. The derivative liability discussed herein was derecognized in the first quarter of 2020, and the Company had no derivative liabilities in the quarters ending June 30, 2020, September 30, 2020 and December 31, 2020 respectively. The following presents changes in the derivative liability for the years ended December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Beginning Balance $ 24,767,000 $ 11,917,000 New contract/contract additions — 4,000,000 Conversion to note payable (19,291,000 ) — Change in fair value recognized in earnings (5,476,000 ) 8,850,000 Ending Balance $ — $ 24,767,000 Carrying Value Total Fair Value Quoted prices in active markets for identical assets - Level 1 Significant other observable inputs - Level 2 Significant unobservable inputs - Level 3 Liabilities Mandatorily redeemable equity instruments of subsidiary $ 5,123,000 $ 5,123,000 $ — $ — $ 5,123,000 The following presents changes in the mandatorily redeemable equity instruments of subsidiary (Class B Units) through December 31, 2020: Beginning Balance $ — New unit issuances 3,101,344 Change in fair value recognized in earnings 2,021,656 Ending Balance $ 5,123,000 |
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) valuation of common stock, warrants, and stock options, b) the estimates assumed in determining the value of the derivative transactions, c) estimated useful lives of equipment and intangible assets, d) the estimated costs to remediate or clean-up the refinery site, and the inflation rate, credit-adjusted risk-free rate and timing of payments to calculate the asset retirement obligations, e) the estimated costs to remediate or clean-up identified environmental liabilities, f) the estimated future cash flows and the various metrics required to establish a reasonable estimate of the value of the Class B Units, and g) the allocation of the acquisition price of the Bakersfield Biorefinery to the various assets acquired. It is at least reasonably possible that the significant estimates used will change within the next year. |
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 stockholders 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 dilutes income of loss per share at December 31, 2019 and 2020, as follows: Year Ended Year Ended Convertible notes and accrued interest 10,319,152 9,879,439 Convertible preferred stock - Series B 1,181,818 1,181,818 Compensation-based stock options and warrants 19,230,214 19,902,732 |
Stock Based Compensation | Stock Based Compensation The Company recognizes compensation expenses 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. However, in the case of awards with accelerated vesting, the amount of compensation expense recognized at any date will be based upon the portion of the award that is vested at that date. 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. |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the date these consolidated financial statements were filed. See Note J - Subsequent Events, below for a description of events occurring subsequent to December 31, 2020. |
Recently Issued Accounting Statements | Recently Issued Accounting Statements Credit Losses In June 2016, the FASB issued a new standard on measurement of credit losses. The standard introduces a new "expected loss" impairment model that applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables and other financial assets. Entities are required to estimate expected credit losses over the life of financial assets and record an allowance against the assets’ amortized cost basis to present them at the amount expected to be collected. The new standard is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company does not expect the adoption of this new standard to materially impact the Company’s consolidated financial statements. |
ORGANIZATION AND SIGNIFICANT _3
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | As of December 31, 2020 and 2019, accounts payable and accrued liabilities consists of: 2020 2019 Accounts payable $ 9,724,136 $ 501,931 Accrued compensation and related liabilities 3,034,688 2,055,167 Accrued interest payable 2,093,649 1,734,527 Other accrued expenses 3,146,478 1,276,503 Current portion of asset retirement obligations 3,716,000 — Current portion of environmental liabilities 883,000 — $ 22,597,951 $ 5,568,128 |
Schedule of Asset Retirement Obligations | The following table provides a reconciliation of the changes in asset retirement obligations during 2020. 2020 Asset retirement obligations - beginning of year $ — Additions related to acquisition of refinery 21,901,977 Disbursements (135,000 ) Accretion 652,000 Revised obligation estimates (940,000 ) Asset retirement obligations - end of year $ 21,478,977 |
Schedule of changes in derivative liability | The following presents changes in the derivative liability for the years ended December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Beginning Balance $ 24,767,000 $ 11,917,000 New contract/contract additions — 4,000,000 Conversion to note payable (19,291,000 ) — Change in fair value recognized in earnings (5,476,000 ) 8,850,000 Ending Balance $ — $ 24,767,000 Carrying Value Total Fair Value Quoted prices in active markets for identical assets - Level 1 Significant other observable inputs - Level 2 Significant unobservable inputs - Level 3 Liabilities Mandatorily redeemable equity instruments of subsidiary $ 5,123,000 $ 5,123,000 $ — $ — $ 5,123,000 The following presents changes in the mandatorily redeemable equity instruments of subsidiary (Class B Units) through December 31, 2020: Beginning Balance $ — New unit issuances 3,101,344 Change in fair value recognized in earnings 2,021,656 Ending Balance $ 5,123,000 |
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 dilutes income of loss per share at December 31, 2019 and 2020, as follows: Year Ended Year Ended Convertible notes and accrued interest 10,319,152 9,879,439 Convertible preferred stock - Series B 1,181,818 1,181,818 Compensation-based stock options and warrants 19,230,214 19,902,732 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Allocation of the Purchase Price | The following summarizes this revised allocation of the purchase price and also the reclassification of the pre-acquisition costs: Asset Category Capitalized Costs Allocated Pre- Total Capitalized Property, Plant and Equipment Land $ 7,584,961 — $ 7,584,961 Buildings 2,053,570 — 2,053,570 Refinery 77,845,201 3,222,449 81,067,650 Intangible Assets 1,921,082 — 1,921,082 Total $ 89,404,814 $ 3,222,449 $ 92,627,263 |
Schedule of Property, Plant and Equipment | Property, plant and equipment as of December 31, 2020 and December 31, 2019 are as follows: December 31, 2020 December 31, 2019 Land $ 7,584,961 — Office Equipment 61,078 61,078 Buildings 2,053,570 — Refinery Equipment 86,019,130 — Construction in Process 33,212,695 2,588,441 Construction period interest 10,220,766 — Total Cost $ 139,152,200 2,649,519 Less accumulated depreciation (179,525 ) (61,078 ) Property, plant and equipment, net $ 138,972,675 2,588,441 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
Schedule of patent license assets | The patent license assets as of the year ended December 31, 2020 and 2019 is shown in the following table: December 31 2020 2019 Patent license fees $ 4,442,553 $ 4,187,902 Refinery permits 1,921,082 — Less accumulated amortization (2,182,889 ) (1,686,310 ) Intangible Assets, Net $ 4,180,746 $ 2,501,592 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt | |
Schedule of notes payable and long-term debt | The table below summarizes our notes payable and long-term debt at year end 2020 and 2019: December 31 2020 2019 Notes Payable Senior credit facility $ 153,405,569 $ — Fixed payment obligation, net of discount of $4,094,863 16,155,138 — Other notes - current 4,198,113 4,426,767 173,758,820 4,426,767 Less: unamortized debt issuance costs (6,636,344 ) — Subtotal 167,122,476 4,426,767 Convertible Notes Payable Convertible note payable to executive officer 1,000,000 1,000,000 Other convertible notes payable 697,000 697,000 Subtotal 1,697,000 1,697,000 Total $ 168,819,476 $ 6,123,767 |
Schedule of minimum required payments of notes payable and long-term debt | The following table summarizes the minimum required payments of notes payable and long-term debt as of December 31, 2020: Year Required Minimum Payments 2021 $ 4,895,114 2022 21,250,000 2023 — 2024 — 2025 — Thereafter 153,405,569 Total $ 179,555,683 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Summary of option award activity and awards outstanding | A summary of the option award activity and awards outstanding at December 31, 2020 is as follows: Shares Weighted Weighted Aggregate Outstanding at December 31, 2019 19,902,732 0.16 3.6 years 14,360,463 Granted 1,554,500 0.75 — — Exercised (1,447,017 ) 0.06 — — Forfeited (600,000 ) 0.753 — — Expired (180,000 ) 0.10 — — Outstanding at December 31, 2020 19,230,214 0.16 3.9 years 30,044,649 Vested and exercisable at December 31, 2020 17,913,083 $ 0.16 2.9 years $ 28,160,815 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table illustrates the assumptions used in estimating the fair value of options granted during the periods presented: For the Years Ended December 31, 2020 2019 Expected Term (in Years) 3 to 5 2 to 5 Volatility 85 % 123 % Risk Free Rate 1.3 % 2.8 % Dividend Yield 0 % 0 % Suboptimal Exercise Factor (1) n/a 1.3 Exit Rate Pre-vesting (2) n/a 0 % Exit Rate Post-vesting (3) n/a 0 % Aggregate Grant Date Fair Value $ 533,538 $ 326,644 (1) The suboptimal exercise factor estimates the value realized by the holder upon exercise of the option and the estimated point at which an option holder would exercise an in-the-money option. The Company estimated the suboptimal factor based on the holder realizing a pre-tax profit of $50,000. Used for lattice model purposes only. (2) Assumed forfeiture rate for market condition option awards prior to vesting. Used for lattice model purposes only. (3) Assumed expiration or forfeiture rate for market condition option awards after vesting. Used for lattice model purposes only. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Income Taxes Tables Abstract | |
Schedule of Components of Income Tax Expense (Benefit) | The provisions for income taxes for the years ended December 31, 2020 and 2019 are as follows: 2020 2019 Current: Federal $ (4,778,000 ) $ (265,000 ) State (2,206,000 ) (123,000 ) Deferred: Federal 2,246,000 (1,992,000 ) State 1,037,000 (920,000 ) Change in Valuation Allowance 3,701,000 3,300,000 Provision for income taxes $ — $ — |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the federal statutory tax rate to the effective tax rate is as follows: 2020 2019 Federal statutory rate 21 % 21 % State, net of federal tax benefit 6.98 % 6.98 % Change in valuation allowance (28 )% (28 )% Effective tax rate $ — $ — |
Schedule of deferred income tax assets for temporary differences | At December 31, 2020 and 2019 the deferred income tax assets consisted of the following: 2020 2019 Deferred tax assets: $ 18,264,000 $ 14,563,000 Less: Valuation Allowance (18,264,000 ) (14,563,000 ) Net deferred income taxes $ — $ — |
Summary of Operating Loss Carryforwards | At December 31, 2020 and 2019 the deferred income tax assets consisted of the following temporary differences: 2020 2019 Net operating losses $ 15,513,000 $ 8,530,000 Share based compensation 361,000 269,000 Accrued payroll 1,238,000 1,632,000 Accrued interest 586,000 — Derivative liability — 4,132,000 Mandatorily redeemable equity instruments of subsidiary 566,000 — Total deferred tax assets 18,264,000 14,563,000 Less: Valuation allowance (18,264,000 ) (14,563,000 ) $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments And Contingencies | |
Schedule of Future Minimum Rental Payments for Operating Leases | The table below represents the amounts due through the end of the lease term. Operating Year Ending Minimum Less: Discount December 31, Payments Less: Discount Obligation 2021 $ 35,681 $ 3,124 $ 32,557 2022 21,174 1,079 20,095 Total $ 56,855 $ 4,203 $ 52,652 |
ORGANIZATION AND SIGNIFICANT _4
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Organization And Significant Accounting Policies | ||
Accounts payable | $ 9,724,136 | $ 501,931 |
Accrued compensation and related liabilities | 3,034,688 | 2,055,167 |
Accrued interest payable | 2,093,649 | 1,734,527 |
Other accrued expenses | 3,146,478 | 1,276,503 |
Current portion of asset retirement obligations | 3,716,000 | |
Current portion of environmental liabilities | 883,000 | |
Accounts Payable and Accrued Liabilities | $ 22,597,951 | $ 5,568,128 |
ORGANIZATION AND SIGNIFICANT _5
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure Organization And Significant Accounting Policies Details 2Abstract | ||
Asset retirement obligations - beginning of year | ||
Additions related to acquisition of refinery | 21,901,977 | |
Disbursements | (135,000) | |
Accretion | 652,000 | |
Revised obligation estimates | (940,000) | |
Asset retirement obligations - end of year | $ 21,478,977 |
ORGANIZATION AND SIGNIFICANT _6
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 24,767,000 | $ 11,917,000 |
New contract/contract additions | 4,000,000 | |
Conversion to note payable | (19,291,000) | |
(Decrease) increase in fair value recognized in earnings | (5,476,000) | 8,850,000 |
Ending balance | $ 24,767,000 |
ORGANIZATION AND SIGNIFICANT _7
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Mandatorily redeemable equity instruments of subsidiary | $ 5,123,000 | |
Mandatorily redeemable equity instruments of subsidiary, at fair value | 5,123,000 | |
Fair Value, Inputs, Level 1 [Member] | ||
Mandatorily redeemable equity instruments of subsidiary | ||
Fair Value, Inputs, Level 2 [Member] | ||
Mandatorily redeemable equity instruments of subsidiary | ||
Fair Value, Inputs, Level 3 [Member] | ||
Mandatorily redeemable equity instruments of subsidiary | $ 5,123,000 |
ORGANIZATION AND SIGNIFICANT _8
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 5) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Convertible notes and accrued interest | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 10,319,152 | 9,879,439 |
Convertible Preferred Stock - Series B | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,181,818 | 1,181,818 |
Compensation Based Stock Options and Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 19,230,214 | 19,902,732 |
ORGANIZATION AND SIGNIFICANT _9
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Mar. 26, 2021 | May 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 30, 2021 | Mar. 25, 2021 |
Capitalization of pre-acquisition costs | $ 3,200,000 | |||||
Stock based compensation | $ 326,486 | $ 577,645 | ||||
Common Stock, Shares Outstanding | 35,850,089 | 34,402,943 | ||||
Subsequent Event [Member] | ||||||
Reverse Stock Split | On March 26, 2021, the Company effected a one-for-ten reverse stock split. | |||||
Common Stock, Shares Outstanding | 35,850,089 | 37,436,875 | 358,499,606 | |||
Bakersfield Refinery | ||||||
Financing for retrofit | $ 365,000,000 | |||||
Office Equipment | Minimum | ||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||
Office Equipment | Maximum | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Refinery Assets and Buildings | Minimum | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Refinery Assets and Buildings | Maximum | ||||||
Property, Plant and Equipment, Useful Life | 25 years |
BASIS OF PRESENTATION AND LIQ_2
BASIS OF PRESENTATION AND LIQUIDITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Notes to Financial Statements | ||
Net Loss | $ 10,550,175 | $ 11,791,819 |
Accumulated deficit | 66,232,439 | 55,682,264 |
Operating Loss | 11,688,035 | 4,932,640 |
Working Capital | (5,800,000) | |
Restricted Cash | 12,943,222 | |
Stockholders' Deficit | $ 28,734,073 | $ 24,078,857 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property, plant and equipment, cost | $ 139,152,200 | $ 2,649,519 |
Less accumulated depreciation | (179,525) | (61,078) |
Property, plant and equipment, net | 138,972,675 | 2,588,441 |
Land | ||
Property, plant and equipment, cost | 7,584,961 | |
Office Equipment [Member] | ||
Property, plant and equipment, cost | 61,078 | |
Buildings | ||
Property, plant and equipment, cost | 2,053,570 | |
Refinery Assets and Buildings | ||
Property, plant and equipment, cost | 86,019,130 | |
Construction in Progress [Member] | ||
Property, plant and equipment, cost | 33,212,695 | 2,588,441 |
Construction Period Interest [Member] | ||
Property, plant and equipment, cost | $ 10,220,766 | |
Office Equipment | ||
Property, plant and equipment, cost | $ 61,078 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT (Details 2) | Dec. 31, 2020USD ($) |
Capitalized Costs Based on Acquisition Valuation | $ 89,404,814 |
Allocated Pre-Acquisition Costs | 3,222,449 |
Total Capitalized Costs on Acquisition | 92,627,263 |
Land | |
Capitalized Costs Based on Acquisition Valuation | 7,584,961 |
Allocated Pre-Acquisition Costs | |
Total Capitalized Costs on Acquisition | 7,584,961 |
Buildings | |
Capitalized Costs Based on Acquisition Valuation | 2,053,570 |
Allocated Pre-Acquisition Costs | |
Total Capitalized Costs on Acquisition | 2,053,570 |
Refinery Assets and Buildings | |
Capitalized Costs Based on Acquisition Valuation | 77,845,201 |
Allocated Pre-Acquisition Costs | 3,222,449 |
Total Capitalized Costs on Acquisition | 81,067,650 |
Intangible Assets | |
Capitalized Costs Based on Acquisition Valuation | 1,921,082 |
Allocated Pre-Acquisition Costs | |
Total Capitalized Costs on Acquisition | $ 1,921,082 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Intangible Assets, Net | $ 4,180,746 | $ 2,501,592 |
Patents [Member] | ||
Patent license fees | 4,442,552 | 4,187,902 |
Refinery permits | 1,921,082 | |
Less accumulated amortization | (2,182,889) | (1,686,310) |
Intangible Assets, Net | $ 4,180,746 | $ 2,501,592 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2013 | |
Notes to Financial Statements | |||
Expected useful life, patent | 17 years | ||
Amortization of intangible assets | $ 150,000 | $ 245,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - Chief Executive Officer and President - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Oct. 16, 2018 | |
Accrued salary and bonus | $ 1,000,000 | |
Convertible note payable | $ 1,000,000 | |
Debt conversion, description | The Company has several notes that are convertible into the Company or the Company’s subsidiaries shares at different prices: ranging from $0.03 per share into the parent company’s stock and up to $1.48 per share into a subsidiary’s common stock. | |
Interest rate, description | These notes are past due their original maturity date and they continue to accrue interest at varying rates, from 8% to 10%. | |
Derecognized outstanding liabilities | $ 700,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Two Investors - Series B Convertible Preferred Stock | Nov. 06, 2007USD ($)$ / sharesshares |
Preferres stock shares sold | shares | 13,000 |
Proceeds from sale of stock | $ | $ 1,300,000 |
Offering cost | $ | $ 9,265 |
Sale of stock price per share | $ / shares | $ 100 |
Conversion price per share | $ / shares | $ 0.11 |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details) - Option [Member] | 12 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
Options, Outstanding, Beginning Balance | shares | 19,902,732 |
Options, Granted | shares | 1,554,500 |
Options, Exercised | shares | (1,447,017) |
Options, Forfeited | shares | (600,000) |
Options, Expired | shares | (180,000) |
Options, Outstanding, Ending Balance | shares | 19,230,214 |
Options Exercisable | shares | 17,913,083 |
Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.016 |
Options, Granted, Weighted Average Exercise Price | $ / shares | 0.75 |
Options, Exercise, Weighted Average Exercise Price | $ / shares | 0.06 |
Options, Forfeited, Weighted Average Exercise Price | $ / shares | 0.753 |
Options, Expired, Weighted Average Exercise Price | $ / shares | 0.10 |
Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | 0.16 |
Options Exercisable, Exercise Price | $ / shares | $ 0.16 |
Options, Outstanding, Weighted Average Remaining Contractual Term | 3 years 7 months 6 days |
Options, Vested and Exercisable, Weighted Average Remaining Contractual Life | 2 years 10 months 24 days |
Options, Outstanding, Intrinsic Value, Beginning Balance | $ | $ 14,360,463 |
Options, Outstanding, Intrinsic Value, Ending Balance | $ | 30,044,649 |
Options Exercisable, Intrinsic Value | $ | $ 28,160,815 |
STOCK OPTIONS AND WARRANTS (D_2
STOCK OPTIONS AND WARRANTS (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Volatility | 85.00% | 123.00% | |
Risk free Rate | 1.30% | 2.80% | |
Dividend Yield | 0.00% | 0.00% | |
Suboptimal Exercise Factor | [1] | 0.00% | 130.00% |
Exit Rate Pre-Vesting | [2] | 0.00% | 0.00% |
Exit Rate Post Vesting | [3] | 0.00% | 0.00% |
Aggregate Grant Date Fair value | $ 533,538 | $ 326,644 | |
Minimum | |||
Expected Term (in Years) | 3 years | 2 years | |
Maximum | |||
Expected Term (in Years) | 5 years | 5 years | |
[1] | The suboptimal exercise factor estimates the value realized by the holder upon exercise of the option and the estimated point at which an option holder would exercise an in-the-money option. The Company estimated the suboptimal factor based on the holder realizing a pre-tax profit of $50,000. Used for lattice model purposes only. | ||
[2] | Assumed forfeiture rate for market condition option awards prior to vesting. Used for lattice model purposes only. | ||
[3] | Assumed expiration or forfeiture rate for market condition option awards after vesting. Used for lattice model purposes only. |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | ||
Federal | $ (4,778,000) | $ (265,000) |
State | (2,206,000) | (123,000) |
Deferred: | ||
Federal | 2,246,000 | (1,992,000) |
State | 1,037,000 | (920,000) |
Change in Valuation Allowance | 3,701,000 | 3,300,000 |
Provision for income taxes |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure Income Taxes Details 2Abstract | ||
Federal statutory rate | 21.00% | 21.00% |
State, net of federal tax benefit | 6.98% | 6.98% |
Change in valuation allowance | (28.00%) | (28.00%) |
Effective tax rate |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Disclosure Income Taxes Details 3Abstract | ||
Deferred tax assets: | $ 18,264,000 | $ 14,563,000 |
Less: Valuation Allowance | (18,264,000) | (14,563,000) |
Net deferred income taxes |
INCOME TAXES (Details 4)
INCOME TAXES (Details 4) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Disclosure Income Taxes Details 4Abstract | ||
Net operating losses | $ 15,513,000 | $ 8,530,000 |
Share based compensation | 361,000 | 269,000 |
Accrued payroll | 1,238,000 | 1,632,000 |
Accrued interest | 586,000 | |
Derivative liability | 4,132,000 | |
Mandatorily redeemable equity instruments of subsidiary | 566,000 | |
Total deferred tax assets | 18,264,000 | 14,563,000 |
Less: Valuation allowance | (18,264,000) | (14,563,000) |
Net deferred income taxes |
INCOME TAXES (Details 5)
INCOME TAXES (Details 5) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Disclosure Income Taxes Details 5Abstract | ||
Operating Loss Carryforwards | $ 46,109,000 | $ 21,152,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2020USD ($) |
2021 | $ 32,557 |
2022 | 20,095 |
Lease Liability | 52,652 |
Operating Lease Obligations [Member] | |
2021 | 35,681 |
2022 | 21,174 |
Lease Liability | 56,855 |
Discount [Member] | |
2021 | 3,124 |
2022 | 1,079 |
Lease Liability | $ 4,203 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | May 07, 2020 | Jan. 15, 2019 | Oct. 16, 2018 |
Chief Executive Officer | |||
Base Salary Amount | $ 300,000 | ||
Executive Vice President | |||
Options, Granted, Weighted Average Exercise Price | $ 0.0154 | $ 0.02 | |
Base Salary Amount | $ 350,000 | $ 310,000 | |
Non-qualified options, Granted | 110,000,000 | 50,000,000 | |
Options expire term | 5 years | 5 years | |
Options exercise, description | Under the Option, Mr. Palmer vests, and can exercise the Option, with respect to 30,000,000 shares when the Company’s market capitalization first reaches $7 million, another 40,000,000 shares vest under the Option when the Company’s market capitalization reaches $15 million, and 40,000,000 shares vest when the Company’s market capitalization first reaches $25 million | ||
Executive Vice President | Share-based Payment Arrangement, Tranche One [Member] | |||
Option vest | $ 7,000,000 | ||
Executive Vice President | Share-based Payment Arrangement, Tranche Two [Member] | |||
Option vest | 15,000,000 | ||
Executive Vice President | Share-based Payment Arrangement, Tranche Three [Member] | |||
Option vest | $ 25,000,000 |