¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Yes $156,453,000. 42,223,933. INFORMATION Midwest States are evaluating similar programs to help meet their long-term emissions reduction targets. In addition, Canada will also represent an important market as it implements its own LCFS program starting in 2022. Europe also has several established renewable fuels programs. broad claims for genome editing specific mutations in a gene present in all plants, including Camelina, to confer higher yield, tolerance to stress, and longer shelf life. meal. nameplate volume. described above. In order to finance the costs of the Our Senior Credit Facility is fully utilized at $337.6 million and our Mezzanine Credit Facility is fully funded by GCEH at $67.4 million to BKRF HCB, LLC, a wholly-owned subsidiary of GCEH. Taiwanese parent company of CTCI. This license is a one-time fee for up to 15,000 BPD of production, and is approximately $1.8 million, of which $1.4 million has been paid as of March 31, 2022. On February 23, 2022 the COMA was terminated and replaced with a simplified agreement. We anticipate that we need between 840,000 and 1.4 million acres of Camelina RFS2. uncertainties described below. and Industry number other risks, including: its operational and expansion needs, and for possible distributions to its stockholders. Facility, our senior lenders could declare an event of default and accelerate the payment obligations of the senior secured loan restrict our ability to incur additional indebtedness or engage in transactions shares. some or all of any investment in our shares. our common stock. We unable to maintain compliance with these Nasdaq requirements, our common stock will be delisted from the Nasdaq Capital Market. common stock. In addition, as of March 31, 2022, we had twelve holders of record who owned shares of our Series C Preferred Stock. C Preferred. In the event that we fail to pay the quarterly dividend or otherwise default under the terms of the Series C Preferred, the dividend rate will increase to 20%. MOU was completed. On December 21, 2021, the Senior Lenders funded $12.0 million of the Bridge Loan and on January 7, 2022 the balance of $8.0 million was funded. The Senior Credit Facility. full funding of $67.4 million. reporting unit. 2020. General and administrative expenses also increased in part as a result of the additional corporate and facility expenses related to the two new subsidiaries (ATI and CCE) that the Company acquired in 2021, and to the new corporate office and research facility that SusOils leased in Great Falls, Montana, in 2021. These additional general and administrative expenses will increase in 2022 as these expenses are borne for an entire year. 2020. renewable fuels refinery which we expect in the second half of 2022. negative cash flow. Renewable Fuels Refinery. Renewable Fuels Refinery. Renewable Fuels Refinery, we intend to pursue raising additional debt or equity funding. Although we have identified possible sources for some or all of the additional capital, we do not currently have commitments from any third parties to provide us with the additional capital. In the event that we do not obtain the necessary additional bridge financing, we will have to revise our short-term operating plans, reduce our anticipated investments in camelina production and in infrastructure improvements, and otherwise reduce our operating expenses. No assurance can be given that these short-term cash flow adjustments will be successful. assess or predict, the significant impact that these developments have had on the global financial markets, on the costs of raw materials we need, and on our own stock trading price, could reduce our ability to access additional capital, which would negatively impact our short-term and longer-term liquidity. Salary Paid ($) Bonus Paid ($) Stock ($) Option ($)(2) All Other ($) Total ($) 5,000,000 687,500 181,964 0 312,500 93,750 $0.200 $0.165 $0.035 01/14/24 04/09/24 09/16/23 Year Matter Consolidation statements for the prior period to conform with current presentation. events or circumstances indicate a likely impairment. respectively which have been classified as long-term liabilities as of December 31, 2021 and December 31, 2020, respectively. contractor incurred, which were nominal for the years ended December 31, 2021 and December 31, 2020. Additionally, as further described below, the Company recognized a liability for a warrant commitment to its Senior Lenders as part of a debt modification included in its executed Amendment No.6 to its Senior Credit Facility, which is reported at fair value. The Senior Credit Facility is a long-term fixed rate debt instrument which has a carrying amount that is December 31, 2020. December 31, 2020: described in Note B. The Company is progressing its Bakersfield Renewables Fuels Refinery retooling project and is on track to achieve its initial revenues from the production and sale of renewable diesel in the second half of 2022. The Company believes that liquidity provided to BKRF HCB, LLC under the Senior Credit Facility and the Mezzanine Credit Facility, together with the funds available under the Series C Preferred Financing (described further below) should be sufficient to fund our projected capital expenditures and operating expenses at the Bakersfield Renewable Fuels Refinery until the Bakersfield Renewable Fuels Refinery becomes operational. However, because of the uncertainty around the cost of change orders to the refinery, the impact of the loss of revenues from the refinery arising from the unexpected delay in the completion of construction, and the amount and timing of certain credits due to us, we now believe that we will need additional capital to fund certain of our liquidity requirements. In addition, our financial commitments during the next twelve months include a fixed payment obligation that arose from the settlement of a derivative contract that we amended on April 20, 2020, which requires us to pay $20.2 million in six equal monthly payments of $3.375 million beginning in May 2022 from the cash generated by the refinery’s operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the time the financial statements are issued. are not convertible into shares of our common stock. as follows: at December 31, 2020: Facility and Bridge Loan: In May, 2021, the Company entered into new insurance policies to replace the policies that were expiring in May 2021. The Company paid 8.5% of the total premiums and financed the balance at a 3.85% annual interest rate. The Company is obligated to make 11 equal monthly payments totaling approximately $0.5 million beginning in June 2021. On February 23, 2022, the Company amended Mr. Palmer's note to extend the term to the latter of 2 years to February 23, 2024 or upon the redemption of the Series C Preferred shares. The convertible note will only bear interest at 5% per annum beginning as of February 23, 2022 and the total number of shares that the note can be converted into is a maximum of 7,616,305. 2021: date with changes recognized in other income/expense. upon the tender of lost certificate documentation by the holders. Stock. A summary of the option award activity in 2021 and awards outstanding at December 31, 2021 (includes 100,000, 17,975,714 and 1,571,806 options under the 2010 Equity Incentive Plan, the non-plan and the 2020 Plan, respectively) is as follows: common stock. The warrants have an exercise price of $6.25 per share, a five-year term and are fully vested. If the warrants are exercised, the Company will receive additional proceeds of $124,000. On May 19, 2021 we notified our original EPC firm that we were terminating the EPC Agreement, effective immediately. The cumulative billing on the EPC contract through June 30, 2021 was $63.2 million. The 2 major subcontracts for the Bakersfield Renewable Fuels Refinery were entirety, with prejudice.
incorporation or organization)
Identification Number)
Torrance, California 90505Issuer’snumber:number,
including area code)oþoþþoþo☐ Accelerated filer ☐Non-accelerated filer ☒Smaller reporting company☒☐oooþ2020,2021, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates (based on the closing sale price of the registrant’s Common Stock on the OTCQB VentureOTCQX Market, and for the purpose of this computation only, on the assumption that all of the Registrant’s directors and officers and any 10% or greater stockholders are affiliates), was approximately $20,591,000.20212022, was 37,436,875. NoneDISCLOSURESTATEMENTS“Forward-Looking Statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.forward-looking statements. All statements other than statements of historical fact are “Forward-Looking Statements”forward looking statements for purposes of these provisions, including: our plansincluding statements about the timing and cost to convertcomplete the conversion of our Bakersfield oil refinery into a renewable fuels refinery and to thereafter to operate that refinery for the production of renewable fuels; our plans for large scale cultivation of Camelina as a nonfood basednonfood-based feedstock forand its use at our Bakersfield renewable fuels refinery; our plans to expand Global Clean Energy Holdings’ Camelina operations beyond North America; forecasts and projections of costs, revenues or other financial items; statementsthe availability, future price and volatility of feedstocks and other inputs; the plans and objectives of management for future operations; changes in governmental programs, policymaking and requirements or encouraged use of biofuels or renewable fuels; statements concerning proposed new products or services; any statements regarding the timing and cost of the retooling of the Bakersfield refinery; the anticipated size of future Camelina production; statements regarding future conditions in the U.S. biofuels and renewable fuels market; our current and future indebtedness and our compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements; and any statements of assumptions underlying any of the foregoing. All Forward-Looking Statementsforward-looking statements included in this document are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any Forward-Looking Statement.forward-looking statement, whether as a result of new information, future events or otherwise. In some cases, Forward-Looking Statementsforward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof, or other comparable terminology. Although we believe that the expectations reflected in the Forward-Looking Statementsforward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the Forward-Looking Statementsforward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the Forward-Looking Statements.forward-looking statements, including not to occur at all. Future financial condition and results of operations, as well as any Forward-Looking Statementsforward-looking statements, are subject to inherent risks and uncertainties including any other factors referred to in our reports that we file with the Securities and Exchange Commission. All subsequent Forward-Looking Statementsforward-looking statements attributable to this company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.includeinclude: (i) Sustainable Oils, Inc., a Delaware corporation that conducts breeding and owns proprietary rights to various Camelina varieties and operates our Camelina business; (ii) GCE Holdings Acquisitions, LLC and its fourfive Delaware limited liability companiescompany subsidiaries that were formed to finance and own, directly or indirectly, ownour Bakersfield Renewable Fuels, LLC., andLLC, a Delaware limited liability subsidiary that owns the Bakersfield Renewable Fuels Refinery; (iii) GCE Operating Company, LLC, our subsidiary that operates our Bakersfield, California biorefinery.In addition torenewable fuels refinery, and employs various personnel throughout the entities associated with the operationsCompany; (iv) Agribody Technologies, Inc., our Delaware subsidiary that owns and oversees aspects of our Bakersfield refinery, weplant science programs; and (v) Camelina Company Espana, S.L., our Spanish subsidiary that develops proprietary Camelina varieties and leads our business expansion opportunities in Europe and South America. We also own several foreign inactive subsidiaries.Global Clean Energy Holdings, Inc. GCEHGlobal Clean Energy Holdings, Inc. (“GCEH”)company that is vertically integrated from farmproduction. We contract directly with farmers to finished fuels. We differentiate ourselves by owning assets that anchor both ends of the cost and value chain, from plant sciences development, farming of plants for feedstocks,grow our ultra-low carbon, nonfood, proprietary Camelina crop on fallow land to the refining and distribution ofprocess at our own renewable diesel and other renewable products. Our upstream assets consist of a portfolio of intellectual properties that we have developed over 14 years related to nonfood based crops that are dedicated to the production of renewable fuels. Our intellectual property includes patents in plant genetics, agronomics and cultivation know-how, and a number of strategic and targeted regulatory approvals. Our downstream business consists of afuels refinery in Bakersfield, California (the “Bakersfield Biorefinery”Renewable Fuels Refinery”). Once online in the second half of 2022, the 15,000 barrels per day (“BPD”) thatfacility will sell up to its full production capacity of renewable diesel (“RD”) for a minimum of five years to ExxonMobil Oil Corporation (“ExxonMobil”) through a pair of long-term supply agreements.currently being refurbishedto be one economically viable solution in reducing global greenhouse gas (“GHG”) emissions via sustainable, more environmentally friendly alternatives to conventional petroleum-based fuels. The three pillars of sustainability — environmental, social, and economic — anchor our business philosophy. Through the implementation of these principals across our vertically integrated asset platform, we seek to drive long-term stakeholder value while creating a positive impact on food security by easing the demand on food crops for fuel production. By creating additive feedstock volume into an undersupplied market, our platform positions us as a biorefinery,globally scalable solution to the “Foodmarketingin the future, sustainable aviation fuel (“SAF”). By eliminating intermediaries and distribution agreementsleveraging a vertically integrated model, we should maintain significant control of the full value chain which allows us to produce highly sustainable, low cost, high margin and ultra-low carbon finished fuels.that we willvalue chain: (i) our upstream operations, anchored in plant and soil science, develop and produce a patented, low cost, proprietary, nonfood-based crop for use in our downstream operations; (ii) our midstream operations efficiently handle, aggregate, store, and transport feedstock to our downstream operations; and (iii) our downstream operations process and convert feedstock into drop-in renewable fuels at our Bakersfield Biorefinery . Renewable Fuels Refinery. By eliminating intermediaries and leveraging a vertically integrated model, we have unparalleled control throughout the value chain to maximize margin generation through operational and logistical efficiencies while simultaneously minimizing feedstock costs and our GHG footprint.
-1- have contractedyields a U.S. Food and Drug Administration-approved protein-rich meal for supplementing animal feed, similar to canola or soybean meal. Sales of Camelina meal will aid in economically subsidizing Camelina oil, generating further cost savings to finished fuels. The market for protein meal in the usewestern United States is roughly 4 million tons per year (“MMTPY”), which is supplied primarily from the Midwest United States. The livestock industry in California’s San Joaquin Valley, which has among the largest concentrations of key midstream assetscattle and dairy producers in the United States, imports all its 1 MMTPY of protein meal from out of state, creating a substantial opportunity for our local meal production. Our Camelina meal is non-transgenic (“non-GMO”), commanding a premium in addition to the separation, handling, consolidation, storage, and transportationbenefits of the California regional basis.based feedstock which will be used invarieties have been approved by the U.S. Environmental Protection Agency (“EPA”) under the Renewable Fuels Standard (“RFS”) to produce both D4 (biomass-based diesel) and D5 (advanced biofuel) Renewable Identification Numbers (“RINs”) under the Renewable Fuels Standard (“RFS2”). We have also been granted a first-of-its-kind feedstock-only LCFS pathway by the California Air Resources Board (“CARB”) for the production of renewable fuels produced from our proprietary Camelina varieties. The pathway only applies to our U.S. Patent and Trademark Office-registered seed varieties — as of today, no other Camelina seed or oil can produce LCFS compliant fuel. Because our Camelina-based biofuels do not result in ILUC emissions, we anticipate full compliance with the European Union Renewable Energy Directive 2018/2001 (“RED II”), a series of European Union sustainability and GHG emission criteria for bioliquids used in transport. Additionally, our proprietary Camelina and certain operations were previously certified by the Roundtable on Sustainable Biomaterials (“RSB”), a global, multi-stakeholder independent organization that drives the development of a bio-based and circular economy on a global scale through sustainability solutions, certification, and collaborative partnerships.-2- Bakersfield Biorefinery. This integrated farm-to-fuel platformCARB approves treating Camelina meal similarly to Distillers Dried Grains with Solubles (“DDGS”) in ethanol with a credit, our finished product’s CI score could decrease to approximately 7, by reducing it an additional 16.5 gCO2e/MJ, yielding additional LCFS credits worth nearly $0.26 per gallon.
core differentiatorManagement estimate and has yet to be approved by CARB.-3- our peer group.Our strategy has beenrefinery production and 40.5% originated from natural gas plants. The majority of this, 334 MMGal, was sourced from refinery production in California. Most of the propane imported to California for consumption was sourced from natural gas plants, 113 MMGal, with over half of the imported volume sourced from Canada. The availability of a consistent since we began our biofuels business in 2007; control the full vertical integrationsupply of our supply chain from development and cultivation of ultra-low carbon nonfood based feedstocks,renewable propane will be relatively new to the production and sale of the ultra-low carbon finished renewable fuel products. By sourcing our feedstocks directly from farmers, we control the quality and priority of production, eliminate the intermediaries and produceCalifornia market.true “cost-based” feedstock that is not subject to the supply limitations and uncertainties or the market volatility of food based feedstocks. As part of our business strategy, we have entered into strategic agreements along the entire supply chain, from plant genetics, crop production, transportation and logistics to the sale of our self-produced finished renewable fuel products. This strategy allows us to rapidly scale our business. One of our primary strategic partnerships is with ExxonMobil Oil Corporation, which provides us access to ExxonMobil’s world-wide wholesale and retail markets, to monetize the fuels produced at our Bakersfield Biorefinery.The greatest challenge to the wide adoptionnational policy requiring a certain volume of renewable fuels isto replace or reduce the limited availabilityquantity of the plant oilspetroleum-based transportation fuels, heating oil, or jet fuel. Renewable fuels generate tradeable RINs credits that refineries and animal fats thatimporters of diesel (known as obligated parties) are the feedstock of renewable fuels. The feedstock represents between 75%required to purchase to offset their production emissions. RD generates 1.7 D4 biomass-based diesel RINs per gallon, where naphtha generates 1.5 D5 advanced biofuel RINs, and 85% of the cost of fuel production with the vast majority of all biofuelsliquified petroleum gas (“LPG”) generates 1.1 D5 advanced biofuel RINs. While RD generates D4 RINs when produced from soy, D5 RINs for coproducts are not generated when produced from soy.finite supplymarket-based incentive program intended to reduce the CI of food-based plant oils and grains,transportation fuels within the state of California. Rather than a set credit per gallon like the RFS, the CI score of a fuel is assessed individually with one LCFS credit representing one metric ton of CO2. CARB sets a CI benchmark for fuels, which decreases annually, creating compliance requirements. To meet these compliance requirements, obligated parties such as cornrefiners of gasoline, diesel, and jet fuel, purchase tradeable LCFS credits generated by renewable fuels to offset their deficits. RD and its co-products are all eligible to participate in the LCFS program.ethanol,a federal income tax credit of $1.00 per gallon of pure biodiesel or soybean oil or animal fats for biodiesel, renewable diesel produced or renewable jet fuel. Our business model increasesblended. Since its inception, the total volume of feedstocks availableBTC has been extended or retroactively applied every year. It is currently active through 2022.market, which we will use in our own refinery, thereby reducing our costs. By utilizing our self-produced feedstock we will not be required to compete with other refineries for the finite amountnear-term. For example, Washington State recently passed legislation mandating an LCFS program by 2023, while New York, New Mexico, Minnesota, and a number of other food-based feedstocks.-4- -5- our wholly ownedAgribody Technologies, Inc. (“ATI”) and Camelina Company Espana, S.L. (“CCE”). These three entities provide a full spectrum of Camelina plant science agricultural subsidiary,activities including breeding, intellectual property development, defense and our renewable fuels production facility (the Bakersfield Biorefinery) that is owned by our Bakersfield Renewable Fuels, LLC subsidiary.1industry leadingindustry-leading portfolio of intellectual property, regulatory approvals and deployment experience for novelelite varieties of Camelina sativa (“Camelina”).Camelina. SusOils is engaged in the breeding and development of new andnovel enhanced varieties of Camelina intended to advance key agronomic genotype and phenotype attributes of the crop. SusOils currently holds 18four issued U.S. patents, orsix pending patent applications, and six Plant Variety Protection Certificate applications. SusOils was also granted a first-of-its-kind feedstock-only pathway by the California Air Resources Board (“CARB”) for the production of renewable fuels under the Low Carbon Fuel Standard (“LCFS”) produced from its proprietary Camelina varieties. No other Camelina-based feedstock has been approved by CARB under LCFS.We are currently farmingenhancedefforts to improve our proprietary varieties of Camelina which will be refined into renewable diesel (“RD”)and develop only non-bioengineered Camelina varieties. ATI owns 15 issued U.S. patents related to the use of bioengineered and non-bioengineered genome editing technologies to increase yield and other renewable fuels at our Bakersfield Biorefinery. The RD will be sold through our relationshipsustainability traits in Camelina and many other crops. ATI was recently issued a key utility patent with ExxonMobil Oil Corporation.a fast-growing, low inputheadquartered in Madrid, was acquired in December 2021. CCE owns 11 proprietary Camelina varieties and maintains an active plant breeding program with more than 600 Camelina accessions and varieties that enable the sustainable introduction of Camelina in different crop traditionally grownrotations without displacing any primary crops. CCE is Europe’s largest Camelina crop innovator and seed producer. CCE has extensive experience in rotation with wheatCamelina production along the complete value chain, having supplied sustainable and other row crops.certified Camelina allows farmers to improve total farm economics through better overall asset utilization. As a dryland farmed rotational crop,oil for aviation biofuel production and Camelina does not displace food or create indirect land use change, which makes it unique as an ultra-low carbon intensity feedstock.awholly-owned GCEH wholly-owned subsidiary which owns Bakersfield Renewable Fuels, LLC (“BKRF”). BKRF’s crude oil refinery is being retooled and refurbished into a biorefineryrenewable fuels refinery, which is expected to be completed in earlythe second half of 2022. Once complete, the Bakersfield BiorefineryRenewable Fuels Refinery will produce renewable diesel from both SusOils’ proprietary Camelina as well as a traditional slate of renewable feedstocks such as vegetable oils, waste fats, and greases. TheWhen completed, the Bakersfield BiorefineryRenewable Fuels Refinery will be the largest renewable fuels facility in the western United States, the second largest in the entire United States, and, once Camelina is the primary feedstock, the largest in the country that produces renewable fuels from nonfood feedstocks. Our integrated farm-to-fuel supply chain differentiates us from most other biorefinery companies in the market today. 
Organizational History and Current Organizational StructureGCEH is incorporated in the State of Delaware. GCEH’s principal executive offices are located at 2790 Skypark Drive, Torrance, California, Los Angeles County, California 90505, and its current telephone number at that address is (310) 641-GCEH (4234). GCEH maintains a website at: www.gceholdings.com. GCEH’s annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to the Company are available on GCEH’s website and on the website of the Securities and Exchange Commission (“SEC”) at www.sec.gov. GCEH’s internet website and the information contained therein, or connected thereto, is not, and is not intended to be incorporated into this Annual Report.2SusOils Patent Applications. Since October 2020,filed seven additional patent applicationsthe right to appoint two directors to GCEH’s Board of Directors. The Certificate of Designations of the Series C Preferred Stock provides for mandatory redemption upon a Change of Control or Event of Default (as defined therein) and are not convertible into shares of our common stock.-6- -7- Office, consistingOffice-registered seed varieties. No other Camelina seed or oil can be used to produce LCFS compliant fuel. GCEH believes its newly developed patented varieties will also be approved by CARB.six utility patent applicationsour domestic and international business plan is to control the development and production of the underlying base materials, or feedstock, required to produce renewable diesel. In the U.S., production will be directed to our Bakersfield Renewable Fuels Refinery. Our goal is to use the feedstock oil produced from our enhanced proprietary varieties of Camelina as a significant component of the Bakersfield Renewable Fuels Refinery’s feedstock. In order to leverage available cultivation assets, we contract with numerous farmers for newthe planting of our certified Camelina seed, which will be used for Camelina grain production for either the current or future crop years. As of March 30, 2022, we have produced enough certified Camelina seed to plant over 220,000 acres in the U.S. utilizing our proprietary varieties of Camelina, and have certified seed for another 140,000 acres of seed outside the U.S. Although farmers in six Western U.S. states have commercially produced Camelina, our principal focus in the near term has been on the production of Camelina in Montana and Kansas.provisionalresearch and development team at our Montana facility, which has the expertise to fully engage in additional Camelina breeding and elite variety development. In November 2021, we also acquired Entira, an agriculture business and marketing consulting firm, to lead our Camelina agronomy team and to support SusOils’ efforts in plant science and grower development, education and support. Entira represented SusOils for several years prior to its acquisition.-8- application for improved Camelina plant oil useapplications that were filed in 2020 with the United States Patent and production. Since October 2020 SusOil has also applied for protectionTrademark Office (“USPTO”), and by applications filed in 2021 under the Plant Variety Protection Act (PVPA) for its six newAct. We continue our traditional breeding, genomics and genome editing Camelina research and development programs in an effort to improve the yields, oil composition, stress and herbicide tolerance, and other important agronomic characteristics of our elite Camelina varieties. TheseUnder current yields and normal weather patterns, we expect that the certified seed produced from one acre of our certified Camelina can plant between 200 to 230 acres of our enhanced varieties of Camelina grain. Based on our ongoing Camelina research and development efforts that both increase the yield and improve cultivation efficiencies, we expect that yields per acre will increase in the future, and that more Camelina oil will be extracted from its grain. Accordingly, although we have based our production estimates on the existing yields, we believe our Camelina yield conversion ratios will continue to improve over the next several years as new applicationsvarieties are commercially released.additionMontana, Kansas, Colorado and Washington.issued patents onvariety of SusOils or CCE Camelina that is planted), and under normal circumstances can range from an estimated 1,500 pounds per acre to 2,500 pounds per acre. In drought or stressful conditions, the average yield per acre could be significantly reduced. We anticipate that the yields in South America will be lower than those achieved in the U.S. due to soil conditions and farming practices. The following table is an approximation of the expected average amount of oil, meal, renewable diesel equivalents, and other intellectual properties owned by SusOils. See, “Item 1. Business—Technology and Patents,” below.Reverse Stock Split. As approved by its shareholders in November 2020, GCEH filed an amendment to its Certificate of Incorporationrenewable products that on March 26, 2021 implemented a 1-for-10 reverse stock split of GCEH’s Common Stock. As a result of the reverse stock split, each ten shares of GCEH’s issued and outstanding Common Stock were automatically combined and converted into one share of Common Stock, without any change in par valuecan be produced per share. As a result of the stock split,acre based on the number of sharespounds of Common Stock outstanding on March 26, 2021 decreased from approximately 374,367,000Camelina grain that an acre produces.-9- approximately 37,437,000. The reverse stock split only affected3.3 million barrels of feedstock and/or product. We are in the issued shares and did not change the total number of authorized shares. All Common Stock and per share information (other than par value) contained in this Annual Report has been adjusted to reflect the foregoing reverse stock split.OTCQB Venture Market. On December 29, 2020, GCEH was notified by the OTC Markets that the GCEH shares were approved for trading on the OTCQB Venture Market. Accordingly, since the beginning of this year, GCEH’s shares of common stock have been trading on the OTCQB Venture Market.Business Operations-StrategyThe Company’s overall business plan remains focused on the vertical integrationlater phases of the complete biofuels supply chain. The foundationreconstruction and conversion of this approach is to develop proprietary feedstock technology that sets us apart from the industry. Since the commencement of ourformer crude oil refinery into a renewable fuels business more than 14 years ago, refinery, with testing and the installation of some upgrades to existing infrastructure to be completed in mid-2022have been focused on the development and commercialization of feedstocks and feedstock-related intellectual property. Over the last three years we have been pursuing the final piece with the integration of a biorefinery. This integrated approach allows us nowcontrol our own feedstock cost and supply, produce additive feedstock volume into a structurally undersupplied market, and scale the business with margin protection and feedstock supply certainty.3A major factor limiting the adoption ofbegin commercial renewable fuels isrefinery operations in the limited availability second half of 2022.plant oilsrefinery was delayed primarily due to engineering, procurement and animal fats that areconstruction issues with ourfeedstock of renewable fuels. Currently, most biofuels are produced from a finite supply of food-based plant oils or grains, and from animal fats. Our strategy is to produce a non-food based oil from our proprietary varieties of Camelina that is purpose grown by our contracted farmers for use in our own biorefinery. By contracting with third party farmers to produce extra feedstock for use in our own refinery, we will have the ability to control the cost, quality and the quantity of mostworkstreams of the project. We also experienced inefficiencies and delays from contracted engineering firmsbe usedrenewable diesel utilizing Haldor Topsoe “HydroFlex'' technology were installed in the fall of 2021. We have upgraded the existing railroad track and related facilities at the Bakersfield Biorefinery.Our feedstock centric approach produces nonfood-based plant oilsRenewable Fuels Refinery to handle incoming feedstocks and have leased two electric railcar movers onsite in preparation of commercial operations.are derived from plants grown on fallow land. The production ofcan lower our Camelina feedstock does not limit or otherwise impact the production of food crops, but instead frees up land for food production that otherwise would be used to produce food crops (such as corn and soybeans) for biofuels.Our path forward includes the further development of our technology to produce greater volumes of purpose grown feedstock, improved genetics to increase overall yield per acre, and improved plant oil chemistry to enhance biorefinery efficiency. Our integrated biofuels platform combines our internal plant science research and development with collaborations with leading public academic institutions, private researchers, farmers and cooperative partnerships for crop production, and other strategic relationships for product sales and distribution.The integrated farm-to-fuel platform is data driven, scalable and a core differentiator from our peer group. Access to detailed data regarding all aspects of our farming process allows us to provide the data needed to certify the ultra-low carbon intensity ofand/or costs in our fuels. By utilizing big data analytics across all aspects ofoperations. We are working with our research and development, feedstock production, logistics, and processing (biorefining), we gain insights that provide opportunitiesutility provider to add a 10MW solar facility on site to improve efficienciesour economics and create other advantages compared to other feedstocks. Our focuslower our carbon footprint, and we expect construction on the solar facility to begin later in 2022. We are currently evaluating constructing certain agricultural processing facilities at our Bakersfield site after the renewable fuels refinery is to directly impactfully operational. Co-locating these processing units on the entire production process to reducesame site as the carbon intensity ofrenewable fuels refinery equipment will provide us with more control over our fuels, reducefeedstock processing costs and improve bottom line margins. The integrated and data driven platform will facilitate our goal of “Driving to Zero” across all areas of the business, in particular the carbon intensityscheduling of our fuels.To further dis-intermediatefeedstock deliveries. Being able to deliver and handle shuttle or unit-trains (which consists of approximately 110 to 120 rail cars) will improve efficiency and lower costs. Our midstream aggregation facilities are located along mainline BNSF railway lines that connect the market for biofuels, following initial start-upCamelina growing regions with the Bakersfield Renewable Fuels Refinery.our biorefinery, we plan to co-locate agricultural and alternative energy technologies within our over 500 acrerenewable feedstock into renewable diesel. Upon completion, the Bakersfield Biorefinery site by hosting both agricultural processing assets and biofuels production assets on the same site. When complete, this co-location strategy will be the first of its kind, allowing all the facilities to optimize operations, energy utilization, and logistics capacity directly in the market we serve. The co-location and integration of these systems should result in significant operating efficiencies, utility savings and other overall synergies across both the biorefinery and agricultural operations. Integrating these operationsRenewable Fuels Refinery is expected to lowerinitially produce an estimated 10,000 BPD of renewable diesel (420,000 gallons per day). At design capacity, the refinery is capable of producing approximately 210 million gallons per year of renewable diesel as well as other renewable co-products. We will need to make additional upgrades to the renewable fuels refinery in order to produce product at the maximum design capacity, as we will be hydrogen limited at initial startup. We are reviewing our cost of production while generatingoptions to increase the hydrogen capacity on site. Additionally, it is anticipated that the renewable fuels refinery can be expanded to increase the nameplate volume, and we expect to size any hydrogen expansion capacity to a higher value, lower carbon products.“Refinery“Renewable Fuels Refinery Acquisition”). As described elsewhere in this Annual Report, we and are currently retooling and upgradingrefurbishing the refinery’s existing infrastructure so it is capable of producing renewable diesel, a drop-in replacement for ultra-low sulfur diesel. The refinery will also produce renewable propane, renewable butane, and renewable naphtha. The Bakersfield Biorefinery is being developed to process up to approximately 15,000 barrels (630,000 gallons) per day of renewable feedstock into renewable diesel utilizing the Haldor Topsoe “HydroFlex” technology. At design capacity, the refinery is expected to produce approximately 210 million gallons per year of renewable dieselfacility as well as other renewable co-products.The Bakersfield refinery has over 80% of the equipment that is needed for the biorefinery on-site, including: a hydrogen plant; a hydrotreater; reactors; fired heaters; compressors; pumps; heat exchangers; and storage tanks capable of storing up to 2.7 million barrels of product. The site is fully permitted for grid power, natural gas, water treatment and disposal. The refinery also has in place much of the logistics the biorefinery will need, including a rail spur from the mainline of BNSF Railway Company’s freight railroad network, railcar facilities, pipelines and an 8-bay truck blending and loading rack. We are refurbishing or upgrading some of the equipment, including the hydrogen plant, equipment associated with the hydro-processing area, some of the storage tanks, and the automation controls. We are also making some infrastructure improvements to the rail system as well as the natural gas and other pipelines. In addition to improving and modernizing the existing equipment, we are also updating the reactors and adding additional process equipment for biorefining use. The engineering and construction of the project is expected to be completed in early 2022.4In connection with developing the new renewable fuels biorefinery, we licensed from Haldor Topsoe A/S certain proprietary processes, catalysts, and equipment designs for the hydroprocessing of natural feedstocks. We also engaged a national engineering, procurement and construction contracting firm as the primary contractor of the Bakersfield Biorefinery and other engineering firms for various refinery modifications.BiorefineryRenewable Fuels Refinery Acquisition and the development, construction, and operation of the refinery, we entered into two credit facilities pursuant to which we can borrow up to a maximumfor an aggregate amount of $365 million of financing (the “Financing Transaction”). Since the Financing Transaction, the lenders and the Company have increased the combined credit facilities by an additional $15$40 million to a total of $380$405 million.-10- BiorefineryRenewable Fuels Refinery Acquisition and Financing Transaction were completed through various subsidiaries of GCEH, each of which is currently directly or indirectly a wholly-owned or majority-owned subsidiary of GCEH. Our primary subsidiary, GCE Holdings Acquisitions, LLC (“GCE Acquisitions”), owns the Bakersfield BiorefineryRenewable Fuels Refinery through certain special purpose financing subsidiaries.Share Purchase Agreement and Effective as of April 29, 2019, GCE Acquisitions entered into a Share Purchase Agreement with Alon Paramount Holdings, Inc. (“Alon Paramount”) to purchase all of the issued and outstanding shares of Alon Bakersfield Property, Inc. (“ABPI”). ABPI was the owner of the Bakersfield refinery. We purchased the Bakersfield refinery for $40 million in cash. addition, at closing we granted Alon Paramount an option right valued at $5.5 million, and assumed $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. In connection with the Biorefinery Acquisition, we agreed to undertake certain cleanup activities at the refinery and provide a guaranty for liabilities arising from the cleanup. We obtained the funds used to pay the purchase price from funds we borrowed in the Financing Transaction described below.Concurrentlyconjunction with the closing of the BiorefineryRenewable Fuels Refinery Acquisition, GCEH and GCE Acquisitions entered into a Call Option Agreement with Alon Paramount pursuant to which GCEH granted to Alon Paramount an option to purchase from GCEH up to 33 1/3%33,333 units in GCE Acquisitions, currently representing 33% of the membership interests of GCE Acquisitions.interests. The interest acquired upon the exercise of the option is only a financial interest in the net cash flow distributed by GCE Acquisitions after all operating expenses are paid and after all payments and distributions are made to Senior Lenders (“Senior Lenders”) and Mezzanine Lenders. The option, if exercised, does not provide the holder with any rights to acquire or use any products produced by the Bakersfield Refinery, nor does it grant the holder any rights to manage the Bakersfield Refinery or any of our other related businesses, including our Camelina feedstock business. The option will expire on the 90th day after the refinery has commercially operated for 90 days at certain target production rates. UnderLenders (see,Biorefinery,Renewable Fuels Refinery, on May 4, 2020 through our newly formed special purpose subsidiaries we entered into a senior credit facilitySenior Credit Facility with a group of lenders (the “Senior Lenders”)Senior Lenders and a mezzanine credit agreementMezzanine Credit Agreement with mezzanine lenders (the “Mezzanine Lenders”).a group of Mezzanine Lenders. The senior credit agreement providesSenior Credit Facility provided us with a $300 million senior secured term loan facility, which amount hashad been increased to $313.2 million.$337.6 million as of December 20, 2021. The senior loanSenior Credit Facility bears interest at the rate of 12.5% per annum, payable quarterly, is secured by all of the assets of the borrowing subsidiaries (and by the equity interests and assets of the Bakersfield Biorefinery)Renewable Fuels Refinery), and matures on November 4, 2026. As of December 21, 2021, the full amount of $337.6 million had been funded to BKRF OCB, LLC.mezzanine credit agreement provides usSeries C Preferred offering, which was delayed past January 31, 2022, closed on February 23, 2022 with ExxonMobil and the Senior Lenders, and concurrently the Bridge Loan, and accrued interest, was paid in full.$65$67.4 million secured term loan facility, which has been increased to $66.8 million. The mezzanine loansfacility. Borrowings under the Mezzanine Credit Facility bear interest at the rate of 15.0% per annum on amounts borrowed, payable quarterly, provided that we may defer interest to the extent we do not have sufficient cash to pay the interest. In addition, as additional consideration for the senior and mezzanine loans, we have agreed to grantgranted the Senior Lenders and the Mezzanine Lenders an additional financial interest by issuing to them non-voting membership interests in BKRF HCB, LLC, our borrowing subsidiary. The mezzanine loansborrowings under the Mezzanine Credit Facility mature in November 2027. On February 23, 2022, the Mezzanine Lenders assigned their rights and obligations to GCEH, and GCEH extinguished the loan with the previous Mezzanine Lenders. GCEH then funded, to BKRF HCB, LLC, the full amount of the mezzanine availability of $67.4 million. GCEH funded this from the net proceeds from the sale of Series C Preferred stock on February 23, 2022 and this is an intercompany debt obligation. Accordingly, GCEH currently is the mezzanine lender, and any future cash distributions that previously would have been paid to the third-party Mezzanine Lenders will hereafter be paid to, and retained by GCEH. For additional information regarding the senior and mezzanine credit facilities,Mezzanine Credit Facility, see “5procurement and construction (“EPC”) agreement on April 30, 2020 with ARB, Inc. (“ARB”)firm pursuant to which ARB hasthis firm agreed to provide services for the engineering, procurement, construction,EPC start-up and testing of the Bakersfield Biorefinery, on a cost plus fee basis (subject to a guaranteed maximum price, subject to any increases for approved change orders). Effective May 7, 2020,Renewable Fuels Refinery. The agreement was assigned by GCE Acquisitions alsoto BKRF OCB, LLC, one of our indirect subsidiaries. BKRF OCB, LLC is the borrower under the Senior Credit Facility and BKRF HCB, LLC is the borrower under the Mezzanine Credit Facility and, combined, are the owners of the Bakersfield Renewable Fuels Refinery. The EPC contract with the original contractor was terminated, and on May 18, 2021 BKRF OCB, LLC and CTCI Americas, Inc., a Texas corporation (“CTCI”), entered into two other EPC agreementsa new Turnkey Agreement with a Guaranteed Maximum Price for the refurbishment and retoolingEPC of the Bakersfield Renewable Fuels Project (the “CTCI EPC Agreement”). CTCI Americas is a worldwide leading provider of reliable engineering, procurement and construction services, including for the refinery market. Under the CTCI EPC Agreement, CTCI has agreed to provide services to complete the engineering, procurement, construction, pre-commissioning, commissioning, start-up and testing of our renewable diesel production facility includingunder construction in Bakersfield, California. Under the infrastructure upgradesCTCI EPC Agreement, the construction of the Bakersfield Renewable Fuels Refinery had to be completed by no later than January 22, 2022. Thereafter, CTCI will be obligated to make certain payments to us. The obligations of CTCI have been guaranteed by CTCI Corporation, the rail spur and storage logistics, and the off-site work on the natural gas pipeline extension.-11- Biorefinery.Renewable Fuels Refinery. Concurrently with entering into the license agreement, on October 24, 2018, GCE Acquisitions also entered into an engineering agreement with the U.S. affiliate of Haldor Topsoe to have the hydroprocessing unit designed and built at the Bakersfield Biorefinery,Renewable Fuels Refinery, and a catalyst supply agreement for the purchase of the catalyst, with a design capacity of up to 15,000 barrels per day,BPD, to be used in the hydroprocessing unit. These agreements have been assigned to BKRF. The Haldor Topsoe license gives the Bakersfield BiorefineryRenewable Fuels Refinery the right to hydroprocess fats, oils and greases into renewable diesel, renewable propane and butane, and renewable naphtha.Product Off-Take AgreementWe have signedOur BKRF subsidiary is a binding Productparty to the Offtake Agreement (the “Offtake Agreement”) with ExxonMobil Oil Corporation pursuant to which ExxonMobil has committed to purchase 2.5 million barrels of renewable diesel per year (the “Committed(“Committed Volume”), and we will be obligated to sell these quantities of renewable diesel to ExxonMobil. The price of the renewable diesel to be sold to ExxonMobil under the contract is based on a combination of both a fixed price and variable price. ExxonMobil’s obligation to purchase renewable diesel will last for a period of five years following the date that the Bakersfield BiorefineryRenewable Fuels Refinery commences operations. ExxonMobil has the option to extend the initial five-yearfive year term for a second five-yearfive year term. Either party may terminate the Offtake Agreement if the Bakersfield BiorefineryRenewable Fuels Refinery does not meet certain production levels by certain milestone dates following the commencement of the Bakersfield Biorefinery’sRenewable Fuels Refinery’s operations.6Contentsrenewable diesel from our Bakersfield Renewable Fuels Refinery, and we are obligated to sell such additional amounts of renewable diesel to ExxonMobil. Renewable diesel sold to ExxonMobil under the TPA may be resold by ExxonMobil to third parties or used or consumed by ExxonMobil or any of its affiliates. ExxonMobil will pay us a price for the renewable diesel purchased under the TPA based on an agreed formula and additional payments based on ExxonMobil’s realized margin for downstream resales of the TPA renewable diesel based on a tiered formula that is subject to a floor. ExxonMobil has agreed to ensure that all such resales are consummated at fair market prices. The TPA has a five-year term. ExxonMobil has the option to extend the initial five-year term for a second five-year term. ExxonMobil’s exercise to extend the term of the TPA must be concurrently exercised with the extension for the Offtake Agreement. Biorefinery,Renewable Fuels Refinery, we formed GCE Operating Company, LLC, a new wholly-owned subsidiary of GCEH. On May 4, 2020, the Bakersfield BiorefineryRenewable Fuels Refinery entered into a Control, Operation and Maintenance Agreement (“COMA”) with GCE Operating Company, whereby GCE Operating Company willagreed to provide all necessary services required to supervise the construction of the Bakersfield BiorefineryRenewable Fuels Refinery and, after the completion of construction, to operate and maintain the Bakersfield Biorefinery.Renewable Fuels Refinery. The COMA may be terminated by either party at any time for any reason. GCE Operating Company will beis reimbursed for its services under the COMA.-12- thea primary biofuels feedstock that is used to produce renewable diesel at the Bakersfield Biorefinery. Sustainable Oils, Inc.,Renewable Fuels Refinery within a wholly-owned subsidiaryfew years. SusOils holds many of GCEH (“SusOils”), holds our Camelina intellectual properties and operates our Camelina business in the U.S. that supports GCEH’sour vertically integrated renewable fuels business. The shortage of feedstocks currently available for renewable fuels continues to create cost volatility that we believe can be hedged through SusOils’ purpose grownpurpose-grown Camelina crop deployment. This shortage, combined with the worldwide pressure towards limiting the use of food-based feedstocks for the production of fuel, will continue to increase the demand for additive and ultimately replacement nonfood-based feedstocks like SusOils’ Camelina oil. GCEH’s renewable fuels business is expected to benefit from the shifting sentiment against using food-based crops for fuel and in favor of increased use of nonfood ultra-low carbon feedstocks (such as Camelina). SusOils owns multiple issued and pending patents on enhanced varieties of Camelina. SusOils has agreed to provide Camelina oil based feedstock for use at the Bakersfield BiorefineryRenewable Fuels Refinery through a ten-year license agreement with BKRF. The SusOils license grants BKRF the limited right to process, refine, produce, market and sell Camelina oil biofuels that are derived from SusOils’s patented varieties of Camelina in North America. Under the license agreement, SusOils also grants the Bakersfield BiorefineryRenewable Fuels Refinery a non-exclusive, non-sublicensable, royalty-free license to use the name “Sustainable Oils” and the Sustainable Oils logo to identify its Camelina-based biofuelrenewable fuels as a product of SusOils’s proprietary Camelina varieties. SusOils will manage all the Camelina production operations and agricultural activities needed for the deployment of Camelina as a purpose grownpurpose-grown crop for the Bakersfield Biorefinery. Such activities include identifying and assisting farmers to grow the SusOils Camelina varieties.7based on the number of pounds$0.01125 per pound of SusOils Camelina oil used at the Bakersfield Biorefinery.Renewable Fuels Refinery. In the event that the Bakersfield BiorefineryRenewable Fuels Refinery does not purchase all of the Camelina produced for SusOils in any growing season, SusOils retains the right to market and sell any such excess Camelina. The license is a non-exclusive license, and SusOils will continue to have the right to produce its own crop independent of the Bakersfield Biorefinery.Camelina Farming OperationsSusOils has been the leader in the development and regulatory approval of Camelina for over a decade. SusOils currently is a wholly-owned subsidiary of GCEH. However, SusOils has issued a non-transferable warrant to a strategic partner for the purchase of 8% of SusOils’s outstanding capital stock. The warrant expires on June 1, 2021 and is exercisable for a purchase price of $20 million.In 2013, Camelina was approved as an advanced biofuel feedstock and was granted a pathway under the United States’ EPA Renewable Fuel Standard (RFS) program enabling it to produce D4 or D5 Renewable Identification Numbers (“RINs”) from biodiesel, renewable diesel, jet fuel, heating oil, naphtha and LPG. The EPA’s evaluation confirmed Camelina, and its co-products met the emissions reduction thresholds prescribed in 40 CFR § 80.1426 of the RFS. As a result of the approval, Camelina is at a competitive advantage over other oilseed crops with an RFS pathway.SusOils applied for and was granted a first-of-its-kind pathway from CARB in 2016. The feedstock-only approval applies to SusOils patented Camelina varieties only and must be combined with a biorefinery pathway like BKRF’s to produce a full well-to-wheels carbon intensity. When registered as a fuels pathway, Camelina-based renewable diesel’s carbon intensity is anticipated to be at or below that of other competitors.In 2020 SusOils commenced its commercial Camelina crop production and produced enough Camelina grower (certified) seed for the 2021 planned Camelina plantings. In 2020, SusOils also expanded its research acreage to approximately 1,500 acres. SusOils will control certified Camelina seed production and development, and has entered into business arrangements for the cultivation, production, storage and transportation of the Camelina feedstock. As of the date of this Annual Report, commercial production of Camelina grain and certified seed for the 2021 harvest is ongoing in Idaho, Montana, Kansas, Oregon and Colorado.SusOils owns the intellectual property and related know-how for Camelina cultivation. SusOils also is directly involved in the application and funding of various research programs related to improving the growing characteristics, oil content, yields and chemistry of Camelina.Camelina Certified Seed & Planned Acreage SummaryCalendar YearCertified Seed (contracted orplanned) AcerageTargeted Commercial Acreage20211,150 (under production)up to 110,000120222,200 -2,700 (planned)up to 250,0002 +Notes:1.The Company has enough certified seed for grain production for this number of acres.2.The Company has enough certified seed production acreage in 2021 for grain production for this number of acres in 2022.8The number of pounds of Camelina grain that can be produced per acre of farmland will vary based on a number of factors (including the variety of SusOils Camelina that is planted), and can range from an estimated 1,500 pounds per acre to 2,500 pounds per acre. The following table is an approximation of the expected average amount of oil, meal, renewable diesel equivalents, and other renewable products that can be produced per acre based on the number of pounds of Camelina grain that an acre produces.Metrics of Camelina Grain Produced to Renewable Products Grain Production per acre (lbs/acre)1 1,500 2,000 2,500 Oil produced per acre @ 40% (lbs/acre) 2 600 800 1,000 Oil produced per acre (gal/acre) 3 80 106 133 Meal Feed produced (lbs/acre) 4 870 1,160 1,450 Renewable Diesel Equiv. per acre (gal/acre)5 75 102 125 Other Renewable Products .(gal)6 Renewable Propane,/Butane & Naphtha 10.6 11.4 17.3 Notes:1.Assumes a range of 1,500-2,500 lbs of camelina oilseed (grain) produced2.Assumes ~40% seed oil content3.Assumes 7.5 lbs of Camelina Oil per gallon4.Assumes 58% biomass (meal) content includes a 2% processing loss5.Assumes an 94% feedstock to renewable diesel conversion6.Assumes an overall feedstock to total product conversion of 107%, less renewable diesel fractionOur goal is to significantly expand Camelina certified seed and grain production in 2021, 2022 and thereafter. Under current yields and normal weather patterns, we expect that the certified seed produced from one acre of certified Camelina can plant up to 200 to 230 acres of our enhanced varieties of Camelina grain. Prior to the 2021 growing season, we paid farmers to grow our Camelina on a per-planted acre basis. Currently, we sell our certified Camelina seed to the growers/farmers and we contract with them on a time sensitive, minimum stand basis and pay them on a per pound of harvested grain basis. We expect our revenues from Camelina seed sales in 2021 to exceed $1 million and to thereafter increase based on the increased acreage under production.Based on our on-going Camelina research and development efforts that both increase the yield and improve cultivation efficiencies, we expect that yields per acre will increase in the future, and that more Camelina oil will be extracted from the Camelina seed. Accordingly, although we have based our production estimates on the existing yield, we believe our Camelina yield conversion ratios will continue to improve over the next several years.9BiorefineryRenewable Fuels Refinery will produce renewable diesel as its primary product to be sold into the transportation sector. The design of the facility indicates that over 90% of the refined products produced at the refinery will be renewable diesel and the balance will be other renewable diesel co-products, such as renewable naphtha,propane, renewable propane,naphtha, and renewable butane.Biorefinery.Renewable Fuels Refinery. The feedstock oil needed to produce renewable jet, biodiesel, renewable diesel and hydrotreated vegetable oil (HVO) that is currently available on the market today is primarily supplied from edible seed oils, including soy, canola (rapeseed), sunflower and palm. There are other types of feedstock that can be converted into biofuels, like animal fats and recycled cooking grease. Until our Camelina production ramps up to significant levels, we will also produce renewable fuels at the Bakersfield BiorefineryRenewable Fuels Refinery from other seed oils, animal fats, recycled cooking grease and other types of feedstocks. However, our goal is to have Camelina oil produced from SusOils’SusOils’and CCE’s patented Camelina varieties become the primary source of our biofuels feedstock. The significant advantages of Camelina over other traditional oilseed crops are that it is ultra-low carbon and does not compete for resources with other crops grown primarily for food consumption. We expect to supply only 10%anticipate a minimal amount of the refinery’s feedstock requirement will be met with Camelina oil during the first production year (2022).2022 and 2023. The amount of Camelina oil used in the biorefineryrenewable fuels refinery is expected to significantly increase in later years as Camelina cultivation increases. The actual amount of Camelina oil that we will supply to the Bakersfield refinery in 2022 and thereafter will depend on the number of acres of Camelina planted in 2021, 2022 and thereafter. We will start our refinery production primarily using soybean oil or other organically derived feedstocks.sativa is a memberproduction annually to meet 100% of the mustard family, a distant relative to canola, and a relatively new and attractive entrant into the biofuels feedstock sector. Camelina plants are heavily branched, growing from one to three feet tall and have branched stems that become woody as they mature. As the reproductive cycle progresses, seed pods form which contain many relatively small, oily seeds. Because there is no seed dormancy in Camelina, it can be grown in multiple seasons and has a very short maturity curve.Camelina can produce seeds with relatively little water and can be harvested early. It is classified as a low input crop and can survive on low water/rainfall, and less fertilizer than many other crops. Camelina can be seeded and harvested with conventional farm equipment, making it a perfect rotation crop for farmers.Camelina seeds typically contain between 35-42% oil and are high in omega-3 fatty acids. This makes the oil very desirable for biofuels production. The meal left after the oil has been removed is a replacement option for livestock and poultry feed, competing directly with soy and canola meal.SusOils’ patented seed varieties perform reliably across a diverse range of agronomic settings and produce reliable yields, oil content, height, chemical composition as well as protein and fiber content.10(FDA)(“FDA”) as a livestock (animal) feed for cattle poultry and pigs.poultry. This provides additional revenue and reduces the net production cost of Camelina oil, further improving feedstock economics.-13- greenhouse gas (GHG)GHG reductions and associated climate change mitigation. With the exception of a carbon tax, GHG reduction schemes utilize tradable credits that represent the reduction of a certain amount of carbon dioxide equivalent (COnonfood basednonfood-based crops like Camelina. Camelina is grown on fallow rotational land or in other formats that do not displace food crops. The land used is fallow or otherwise unsuitable for food crop production.production at that time of year. The result is an avoidance of the controversial food versus fuel tradeoff currently hampering certain feedstocks development. This distinction between food and nonfood is critical as regulated markets mature and policies shift to discourage the conversion of food into fuel.renewable fuel standard (RFS)RFS mandates that a certain volume of biofuels are blended into the fuel supply every year. In California, the low carbon fuel standard (LCFS)LCFS requires regulated parties to reduce the overall emissions of their fuels to a predefined ceiling. In both cases, renewable fuel producers generate tradable compliance instruments, which represent either a volume of fuel or a set amount of CORenewable Identification Numbers (RINs)RINs under the Renewable Fuels Standard (RFS2).California (CARB)CARB approved a first-of-its-kind feedstock-only pathway for SusOils’ patented Camelina oil.oil to qualify under the LCFS. The pathway only applies to SusOils’ USU.S. Patent and Trademark Office-registered seed varieties - novarieties. No other Camelina seed or oil can be used to produce LCFS compliant fuel. The Company believes its newly developed patented varieties will also be approved by CARB. At a cumulative carbon intensity (CI)CI of 7.58 g/MJ, our processed and renewable fuels can be produced at less than 2024 CI, before any CI credits for the meanmeal are applied. The result is that fuel producers and obligated parties in California can meet their LCFS emissions reduction requirements with significantly less fuel that would otherwise be required using traditional feedstocks like soybean oil (53 g/MJ). LCFS credits are generated based upon the carbon intensityCI of the underlying fuel, which means Camelina-based fuels will generate significantly more value per gallon than any other virgin oil-based fuel. By example, if the LCFS credit price is $200 /MT$200/MT of carbon, Camelina biofuels can produce more than $1.00 more per gallon than soybean-based fuel.11Contentsinternal combustion passenger vehicles by 2035. This order does not negatively impact our product as it applies to the sale of gasoline powered cars, not to renewable liquid fuels like renewable diesel. Renewable diesel targets the large scale diesel truck transportation market and is a critical component of California’s efforts to reduce greenhouse gas emissions,Camelina Sativaa Camelina plant cell.seeds. SusOils recently filed sevensix additional utility patent applications with the U.S. Patent and Trademark Office. These new patent applications include six utility patent applicationsOffice for new varieties of Camelina, and a provisional patent application for improved Camelina plant oil use and production. SusOil has also applied for protection with the U.S. Department of Agriculture (“USDA”) under the Plant Variety Protection Act (PVPA)(“PVPA”) for itsthese six new Camelina varieties.-14- considered using previously usednonfood basednonfood-based feedstock for renewable fuels. See, “Other Renewable Fuels - Jatropha Curcas,” below. We have not yet patented any technology relating to our Jatropha operations.operations, which we ceased in 2015. However, we have developed considerable know-how, trade secrets, and proprietary processes and procedures for farm development and operations management, and we own certain intellectual property related to the genetics of the Jatropha trees that were selectively bred and propagated by GCEHthe Company in its earlier Latin American operations.soil sciences,genome editing, (ii) agricultural technology and procedure development,agronomy, and (iii) material processing and end use applications. Such technologies are expected to assist in reducing costs and environmental impacts, improving efficiency, reducing carbon intensityCI and allowing us to improve the value creation of our products.2019,2020, almost 700 million gallons (MMGal)600 MMGal of renewable diesel was consumed in California, compared to approximately 900969 MMGal in the United States; most of the remaining renewable diesel is consumed in Oregon under its Clean Fuels Program. Domestic production accounted for roughly 533 MMGal and 500842 MMGal and foreign imports accounted for 435 MMGal and 420468 MMGal in 2020 and 2019,2021, respectively, most of foreign supply originated in Singapore. Domestic production is forecasted to increase significantly during the next five years as projects representing over two billion gallons per year of capacity have been announced by various companies; however, we only expect a portion of these projects to actually come online.fossilpetroleum diesel, the total potential market is represented by the sum of biodiesel, renewable diesel, and fossilpetroleum diesel consumption by the transportation sector, which was almost 4,0003,600 MMGal for California in 2019.2020. The United States transportation sector consumed 4745 billion gallons in 2019.2020. Canada will also represent an important market as it implements its own LCFS program.SusOils’our Camelina grain is processed, it is separated into neat plant oil and biomass, , the latter of which is a protein rich animal feed supplement similar to canola or soybean meal. An additional benefit of our animal feed is that it is non-GMO (non-genetically modified).non-GMO. The market for protein meal in the western United States is roughly 174 MMTPY (million tons per year), which is supplied primarily from interiorMidwestern states that grow soybeans for protein and extract row crops like soybeans.oil extraction. The livestock industry in California’s San Joaquin Valley, which has among the largest concentrations of cattle and dairy producers in the US,United States, imports virtually all its portion of California’s 5.71 MMTPY of protein meal from outside its borders.out of state, creating a substantial opportunity for our local meal production. Domestic productionuse of protein meal is estimated to be 125 MMTPY, which does not include imports from other parts of the world.12Life-cycleLife cycle analyses consistently show that using biofuels produced in modern facilities results in net reductions of greenhouse gas compared to using fossil fuel-based petroleum equivalents. These life-cyclelife cycle analyses include the well-to-wheel energy equivalent of farming and production of biomass, including harvesting, conversion, transportation and utilization. Biofuels help nations achieve their goals of reducing carbon emissions and reducing importation of foreign oil. They burn cleanly in vehicle engines and reduce emissions of unwanted products, particularly unburned hydrocarbons, carbon monoxide and particulate matter. These characteristics contribute to improvements in local air quality and all associated health benefits.nonfood based inediblenonfood-based biofuel feedstocks to allow a number of companies to successfully compete worldwide. In particular, we note that we are the only U.S.-based public companyIt is our goal to be an industry leader in producing nonfood basednonfood-based inedible oils for the production of biofuels, and we are the only company with full regulatory approval for its crop, which gives us a unique competitive advantage over many foreign competitors when competing in the U.S.Other Renewable Fuels—Jatropha CurcasIn 2008, we launched our first commercial venture to produce low carbon nonfood based feedstocks for renewable fuels by developing Jatropha curcas (“Jatropha”), a non-edible plant indigenous to many tropical and subtropical regions of the world, including Mexico. During the next seven years, we acquired three farms in Mexico, comprising just under 15,000 acres, and planted over eight million Jatropha trees, consisting of over 20 varieties of Jatropha trees from around the world on the farms. In 2012 GCEH filed for an EPA Pathway for Jatropha, and in 2015 the U.S. Environmental Protection Agency issued a pathway for Jatropha oil that allows Jatropha oil to be used as a feedstock for advanced biofuels, qualifying it to generate RINs under the Renewable Fuels Standard (RFS2)-15- Although we harvested significant quantities of Jatropha fruit and seed from our Mexico Jatropha farms, many of the Jatropha varieties were susceptible to diseases, as a result of which the harvests did not meet our long term requirements for operating a commercial Jatropha only seed energy farm. As a result, we decided to pursue the commercialization of Camelina as our primary biofuel feedstock and, in December 2015, we sold our three Mexican farms. Although we sold the Mexico farms, we retained all of the rights to Jatropha varieties that we developed as well as retaining all of our other intellectual property rights to develop biofuels from Jatropha. Although we continue to believe in Jatropha as a commercially viable feedstock for producing renewable fuels, we currently are not actively pursuing any Jatropha-related projects. However, we continue to own the Jatropha-related intellectual properties that we previously developed.Employees.2021,2022, we had 58125 full time employees, of whom 50108 were located at our Bakersfield Biorefineryin the United States and eight17 were located at our corporate office.in Spain. As of March 31, 2021,2022, we also engaged 23approximately 42 full or part-time contract employees and consultants. All ofconsultants in the employees who are located at the Bakersfield Biorefinery are employed by GCE Operating Company, LLC, the wholly-owned subsidiary of GCEH that operates the Bakersfield Biorefinery under the COMA. United States. We anticipate that we will have to hire additional employees atdomestically in the Bakersfield Biorefinery in thenear future to support our operational needs. We consider our relations with our employees to be good.13ContentsDelaware. GCEH’s principal executive offices are located at 2790 Skypark Drive, Suite 105, Torrance, California, Los Angeles County, California 90505, and its current telephone number at that address is (310) 641-GCEH (4234). GCEH maintains a website at:ITEM 1ARISK FACTORSThemay not betogether with other information in this Annual Report on Form 10-K and our other filings with the only ones relating toSEC, before making investment decisions regarding our company. Additional risks that we currently believe are immaterial may also impairstock. If any of the following events actually occur, our business, operations. Our business,operating results, prospects or financial conditionscondition could be materially and future prospects andadversely affected. This could cause the trading price of our common stock to decline and you may lose all or part of your investment. Moreover, the risks described below are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business, operating results, prospects or financial condition.be harmeddiffer materially from those anticipated in the forward-looking statements as a result of any of these risks. Investors should also refer tospecific factors, including the other information contained or incorporated by reference in this Annual Report on Form 10-K, including our financial statementsrisks and related notes, and our other filings from time to time with the Securities and Exchange Commission.Biorefinery. Renewable Fuels Refinery. We may experience time delays, unforeseen expenses, increased capital costs, and other complications while developing the Bakersfield Biorefinery,Renewable Fuels Refinery, which complications could delay the commencement of revenue-generating activities and increase our development costs.We have entered into a binding turnkey agreement with guaranteed maximum price for the engineering, procurement and construction the Bakersfield Biorefinery. The engineering and construction of the Bakersfield Biorefinery is expected to be completed, and is thereafter expected to commence operations in the first quarter of 2021. Although our primary contractors have agreed to complete the construction of the Bakersfield BiorefineryRenewable Fuels Refinery has been delayed, and the project currently is still under construction. Based on the schedule provided to us by our primary contractor, the Bakersfield Renewable Fuels Refinery is currently projected to be completed in the second half of 2022. While our primary contractor has agreed to complete the Bakersfield Renewable Fuels Refinery within a specified period at a maximum price to us, the construction of these kinds ofsuch facilities is inherently subject to the risks ofsuch as unforeseen required change orders, regulatory issues, cost overruns and delays. In addition,Delays beyond the scope of the project has changed, which may also contribute to a delay in the completion of the project. Delays in the development beyond ourcontractor’s estimated timelines, or amendments or change orders to theunexpected construction contract,costs, could increase the cost of completion beyond the amounts that we have budgeted.maximum price in our construction agreement or beyond our budgeted costs. Furthermore, while we believe that we currently hold all necessary thematerial environmental, regulatory, construction and zoning permissions that we needpermits for the construction and start-up of the Bakersfield Biorefinery,Renewable Fuels Refinery, no assurance can be given that we will not be required to obtain additional regulatory and land use approvals, which additional regulatory approvals maycould also delay the commencement of operations of the Bakersfield BiorefineryRenewable Fuels Refinery or increase its development costs. If for any reason we are unable to construct and commission the Bakersfield BiorefineryRenewable Fuels Refinery within the financial and timing requirements, our business and our expected operating results, cash flows and liquidity could be materially and adversely affected.diesel biorefinery.fuels refinery. Accordingly, we havethe Company has no history from which an investoryou can reliably evaluate our business and prospects.biorefinery.refinery. Prior to the acquisition ofacquiring the Bakersfield Biorefinery,Renewable Fuels Refinery, we were an energy agri-business company focused on the development ofdeveloping our ultra-low carbon nonfood basednonfood-based feedstocks for renewable fuels and chemicals in the U.S.,United States, Mexico and the Caribbean. Our near-term growth strategy depends on our ability to successfully operate the Bakersfield BiorefineryRenewable Fuels Refinery and to provide the Bakersfield Biorefineryit with sufficient feedstocks, particularly Camelina that is grown for the Bakersfield Biorefinery by third party farmers. However, we have no history of owning, developing, constructing or operating a renewable fuels refinery. As a result, our prior operating history and our historical financial statements may not be a reliable basis for evaluating our business prospects or the future value of our Common Stock. We cannot give you anycommon stock. There is no assurance that we will be able to implement our strategy in the manner we expect, if at all, or achieve our internal business projections, or that our assumptions regarding the operations of the Bakersfield BiorefineryRenewable Fuels Refinery or the Camelina feedstock production will be accurate. Our limited operating history also means that we may have to develop and implement various alternate policies and procedures related to Bakersfield Biorefinery’sRenewable Fuels Refinery’s development and future operations, to our feedstock supply chain, and to other matters.14-16- BiorefineryRenewable Fuels Refinery and to source Camelina and other feedstocks in a cost-effective manner. Our business strategy relies on numerous assumptions whichand these assumptions are subject to significant economic, competitive, regulatory and operational uncertainties, contingencies and risks, many of which are beyond our control. Our future ability to execute our business strategy is uncertain and unproven, and it can be expected that one or more of our assumptions will prove to be incorrect and that we will face unanticipated events and circumstances that may adversely affect our business. Among the factors that could have a material adverse effect on our ability to implement our strategy and achieve our targets are the following:Biorefinery on time;●inability to complete the construction of the Bakersfield BiorefineryRenewable Fuels RefineryBiorefinery,Renewable Fuels Refinerythird partythird-party Camelina cultivation operations at the expected costcosts and in the projected time frame;enter into profitable energy-related transactions as partenroll a sufficient number of our biofuels sales and trading operations, andfarmers to optimally price and manage position, performance and counterparty risks;grow Camelina in to fulfill forecasted Camelina feedstock requirements;licensed proprietary technologyCamelina varieties to performproduce the amount and quality of grain as expected; and future governmental laws and regulations affecting the energy markets in general, and the renewable energy markets in particular;AOil Corporation,, ExxonMobil has agreed to purchase 2.5 million barrels of renewable diesel per year from the Bakersfield BiorefineryRenewable Fuels Refinery for a period of five years following the date that the Bakersfield BiorefineryRenewable Fuels Refinery commences operations. We have also entered into a Term Purchase Agreement with ExxonMobil haswhere we granted ExxonMobil the optionright to extendpurchase the initial five-year term.renewable diesel produced at the Bakersfield Renewable Fuels Refinery in excess of the amount of renewable diesel that we sell to ExxonMobil under the Offtake Agreement. Either party may terminate the Offtake Agreement if the Bakersfield BiorefineryRenewable Fuels Refinery does not meet certain production levels by the end of the first and second six-month periods following the commencement of the Bakersfield Biorefinery’sRenewable Fuels Refinery’s operations. In addition, ExxonMobil can also terminate the Offtake Agreement if the construction of the biorefineryrenewable fuels refinery is not completed by a specified date. In addition,October 15, 2022. Termination of the Offtake Agreement will result in termination of the OfftakeTerm Purchase Agreement and could constitute an event of default under the credit agreementsour Senior Credit Facility that provideprovides us with $380$337.6 million of financing from our Senior Lenders and Mezzanine Lenders.financing. Our obligations under the credit agreements are secured by a security interest in all of the assets at the Bakersfield BiorefineryRenewable Fuels Refinery and by all of the assets and ownership interests of our subsidiaries that ownsdirectly or indirectly own the Bakersfield Biorefinery.15-17- Biorefinery.The constructionBiorefineryRenewable Fuels Refinery has been outsourced to a primary contractorCTCI under a guaranteed maximum price engineering, procurement and construction (EPC) contract,the CTCI EPC Agreement, but certain other contractors have also been engaged by us to, among other things, construct and refurbish railroad tracks through the Bakersfield BiorefineryRenewable Fuels Refinery and to install underground pipelines. Our business strategy is highly dependent on our contractors’ performance under their agreements with us. Our contractors’ ability to perform successfully under their contracts is dependent on a number of factors, including their ability to:Biorefinery Renewable Fuels RefineryAlthough our primaryBiorefinery,Renewable Fuels Refinery, and any liquidated damages that we receive may not be sufficient to cover the damages that we suffer as a result of any such delay or impairment. Furthermore, we may have disagreements with our contractors about different elements of the construction process, which could lead to the assertion ofthem asserting rights and remedies under their contracts and potentially increase the cost of the projectour costs or result in a contractor’s unwillingness to perform further work on the project. If any contractor is unable or unwilling to perform according to the negotiated terms and timetable of its respective agreement for any reason or terminates its agreement, we would be required to engage a substitute contractor. Any of the foregoing eventscontractor, which would likely result in significant project delays and increased costs.-18- incur significant costs complying with environmental laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.We believeencounter difficulties in integrating the businesses or facilities we acquire, including any international businesses that we currently hold the requisite regulatory approvals to construct and to thereafter operate the Bakersfield Biorefinery. Although we have implemented safety procedures for the operation of the Bakersfield Biorefinery and the disposal of waste products to comply with these laws and regulations, we cannot be sure that our safety measures are compliant or capable of eliminating the risk of accidental injury or contamination from the use, generation, manufacture, or disposal of hazardous materials. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our insurance coverage. There can be no assurance that violations of environmental, health and safety laws will not occur as a result of human error, accident, equipment failure or other causes.16Compliance with applicable environmental laws and regulations may be expensive, and the failure to comply with past, present or future laws could result in the imposition of fines, regulatory oversight costs, third party property damage, product liability and personal injury claims, investigation and remediation costs, the suspension of production, or a cessation of operations. Environmental laws could become more stringent over time, requiring us to change our operations, or imposing greater compliance costs and increasing risks and penalties associated with violations, which could impair our research, development or production efforts and harm our business. Similarly, our business may be harmed if existing initiatives to further reduce emissions of greenhouse gases, which improve the competitiveness of renewable fuels relative to petrochemicals, do not become legally enforceable requirements, or if existing legally enforceable requirements relating to greenhouse gases are amended or repealedacquire in the future. The costscomplying with environmental, healthour business plan, we intend to acquire businesses that enhance or supplement our renewable fuels refinery and safety lawsCamelina production operations. In 2021, we acquired three companies that added Camelina specific patents, agronomy support and/or Camelina-experienced personnel. We may face significant challenges in integrating these businesses or any other businesses or facilities, including other refineries, that we acquire, and regulations and any claims concerning noncompliance,we may not realize the benefits anticipated from such acquisitions. Our integration of acquisitions involves a number of risks, including:liability with respectbusinesses outside the United States. Any such foreign acquisitions will, in addition to contamination in the future could haveforegoing risks, also be subject to a material adverse effect on our financial condition or operating results.-19- BiorefineryRenewable Fuels Refinery operations and Camelina feedstock businesses involve complex operations spanning a variety of disciplines that require a management team and employee workforce that is knowledgeable in the many areas necessary for our operations. While we have been successful in attracting certain experienced, skilled professionals to our company, we will have to identify, attract and retain a significant number of additional employees once the Bakersfield BiorefineryRenewable Fuels Refinery is operational and the Camelina cultivation expands to our projected levels. FailureOur inability to hire thenecessary qualified employees that we will need could affect the operations and the future profitability of theour Bakersfield Biorefinery’sRenewable Fuels Refinery and our Camelina operations. We are also heavily dependent upon certain of our current senior executives and upon certain key independent contractors and advisors for supervising the construction of the Bakersfield Biorefinery,Renewable Fuels Refinery, the operations of the Bakersfield Biorefinery,Renewable Fuels Refinery, and the implementation of our Camelina cultivation and production plan. The lossLoss of thesesuch key employees and contractors could have a significant detrimental impact on the development and initial operations of the Bakersfield BiorefineryRenewable Fuels Refinery, on our Camelina research and development program, and on the implementation of our Camelina cultivation operations. Hiring, training and successfully integrating qualified personnel into our operation is a lengthy and expensive process. The market for qualified personnel is very competitive because of the limited number of people available with the necessary skills to operate a renewable diesel refinery, to successfully source feedstock, to continue our camelina development program, and to commercialize the renewable fuels that the Bakersfield BiorefineryRenewable Fuels Refinery is designed to produce. If we are not able to attract and retain the necessary personnel to accomplishachieve our business objectives, we may experience staffing constraints that will adversely affect our future operations.plan ofBakersfield Renewable Fuels Refinery operations of our Bakersfield Biorefinery is the use of Camelina oil that is derived from our patented varieties of Camelina as one of the principal feedstocks at the Bakersfield Biorefinery.Renewable Fuels Refinery. We currently have three issued U.S. utility patents for varieties of Camelina as well as another issued U.SU.S. utility patent directed to methods for improving the Camelina oil. We have also filed seven additional utility patent applications, including applications for another six Camelina plant varieties and anothera patent application directed to methods for improving Camelina oil, in order to enhance our patent position. Weand applications for another six Camelina plant varieties (which varieties are also covered by six applications that we have additionally filed for protection under the Plant Variety Protection Act (PVPA)(“PVPA”)). We have acquired patents in our acquisition of ATI and CCE, and certain of those patents can enhance our existing intellectual property for our six new Camelina varieties.Camelina. Interpreting the scope and validity of patents and success in prosecuting patent applications involves complex legal and factual questions, and the issuance, scope, validity and enforceability of a patent cannot be predicted with any certainty. Patents issued to us may be challenged, invalidated or circumvented. In addition,Accordingly, we cannot be certain that any of our patent applications will result in issued patents, or if issued, we cannot be certain of the validity and/or enforceability of any newly issued patents. Moreover, we cannot be sure that any of our or patent rights will be broad enough in scope to provide commercial advantage and prevent circumvention. We believe thatcircumvention, nor do our enhanced, patented varieties of Camelina will produce larger Camelina harvests per acre of cultivated land, and that the Camelina seeds harvested from these patented varieties have beneficial properties for the production of Camelina feedstock oil. However, our patents do not give us the exclusive right to cultivate other varieties of Camelina norCamelina. Our patents do our patentsnot limit the right of others to use the oil from such other Camelina varieties as a biofuels feedstock. No assurance can be given that other biofuel producers will not imitate our business plan and use Camelina as a biofuel feedstock, nor do our existing patent rights prevent others from competing with us and developing substantially similar business plans.17third party farmers, and on factors affecting agricultural operations in general.don’tdo not own or control any farms or farmland on which we can grow our patented varieties of Camelina. Accordingly, we are wholly dependent upon third party farmers to plant, cultivate, harvest and store the Camelina that we plan to use as feedstock for the production of renewable diesel at the Bakersfield Biorefinery,Renewable Fuels Refinery, and possiblepossibly elsewhere. Our ability to obtain the amount of Camelina that we propose to use as feedstock at the Bakersfield BiorefineryRenewable Fuels Refinery therefore is dependent upon our ability to recruit a sufficient number of farmers to grow Camelina for us, to enter into mutually acceptable financial and other arrangements with the farmers that we recruit, and for those farmers to successfully grow, harvest and deliver that Camelina to us. While we have identified a number of farmers and several farm cooperatives that have expressed an interest in producing Camelina in accordance with our proposed arrangements, as of the date of this Annual Reporthereof we have not entered into a sufficient number of agreements with farmers for the production of the amount of Camelina grain that we have planned for in the Bakersfield Biorefinery.Renewable Fuels Refinery. Accordingly, no assurance can be given that we will be able to develop and thereafter maintain the farming, storage and delivery arrangements necessary to produce the quantities of Camelina that we plan to use at the Bakersfield Biorefinery.Renewable Fuels Refinery. In addition to the risks associated with enrolling farmers in our proposed Camelina production operations, the results of those farming operations may be adversely affected by numerous factors over which we have little or no control and that are inherent in farming, including adverse weather (including but not limited to drought)(e.g., floods and storms, severe heat, frost, and hail), changes in growing conditions, crop diseases or pest infestations. Extreme drought conditions have recently occurred across much of the Western U.S., including in the states in which our Camelina is planted and disease problems,is expected to be planted. These conditions may negatively impact our ability to produce the amount of Camelina that we are currently planning to produce for our Bakersfield Renewable Fuels Refinery. Changing weather patterns and climatic conditions, such as global warming, have added to the unpredictability and frequency of natural disasters and have created additional uncertainty. The recent conflict between Russia and Ukraine has significantly increased the cost of fertilizer and other inputs used to grow Camelina, which may further negatively impact our camilina operations. Our Camelina operations will also be subject to any new government regulations regarding farming and the marketing of agricultural products.-20- -21- -22- -23- -24- Our Financial Mattersany meaningful revenues until the Bakersfield BiorefineryRenewable Fuels Refinery commences commercial operations.BiorefineryRenewable Fuels Refinery and to the development of our Camelina cultivation operations. We do not expect to generate material revenues if any, until after the Bakersfield BiorefineryRenewable Fuels Refinery has commenced commercial operations, which is not expectedcurrently scheduled to occur until earlyin the second half of 2022. We will incur significant net losses and significant capital expenditures through the commercial completion of development ofthe Bakersfield Biorefinery.Renewable Fuels Refinery. Any delays beyond the expected development periodconstruction completion date for the Bakersfield BiorefineryRenewable Fuels Refinery would prolong, and could increase the level of, our operating losses. Neither we nor our affiliates have previously ever managed the construction, operation or maintenance of a renewable diesel facility.$10.6$51.4 million and $11.8$10.6 million during the years ended December 31, 20202021 and 2019,2020, respectively. As of December 31, 2020,2021, we had an accumulated deficit of $66.2$117.6 million. Our Bakersfield Biorefinery will be under construction until early 2022 and will not be generating any revenues during its construction phase. Accordingly, we do notWe expect to generate revenues from the operations of the Bakersfield Biorefinery in 2021. We also expect to spend over $250 millionincur significant additional expenses between the filing of this Annual Reportdate hereof and the endcommencement of 2021commercial operations on the development and construction of the Bakersfield Biorefinery,Renewable Fuels Refinery, on pre-operational and start-up costs, on our debt service obligations, on our upstream feedstock development operating costs, and on general and administrative expenses. Furthermore, we do not expect to generate significantany revenues until the Bakersfield Biorefinery becomes operational in 2022, and we expect to incur significant losses and negative cash flows until the Bakersfield BiorefineryRenewable Fuels Refinery is fully operational for some periodin the second half of time.2022. No assurance can be given that the Bakersfield BiorefineryRenewable Fuels Refinery and our related Camelina operations will be profitable once the Bakersfield BiorefineryRenewable Fuels Refinery does commence operations in early 2022.18AgreementsFacility and our other financing arrangementsthe Series C Preferred shares will significantly limit the amount of cash that is available to GCEH and our stockholders.seniorSenior Credit Facility and mezzanine creditMezzanine Credit Facility agreements we can borrowhave borrowed an aggregate of $380 million of financing.$405 million. The senior loanSenior Credit Facility bears interest at the rate of 12.5% per annum, and the mezzanine loans willMezzanine Loans bear interest at the rate of 15.0% per annum on amounts borrowed. Effective February 23, 2022, GCEH replaced the mezzanine lenders by assuming and funding the $67.4 million mezzanine loan on February 23, 2022 to BKRF HCB, LLC on the same financial terms as in effect for the original mezzanine lenders. Accordingly, all future payments that would otherwise have been made to the third party mezzanine lenders will now be paid to GCEH by BKRF HCB, LLC. However, the Senior Credit Facility remains outstanding with third party lenders, and the terms of that credit facility will continue to significantly limit the amount of cash available to the Company and its stockholders. The senior loan and mezzanine loans matureSenior Credit Facility matures in November 2026 and 2027, respectively.2026. In addition to the loan repayment obligations under both the senior loan and mezzanine loans, one ofSenior Credit Facility, BKRF HCB, LLC, our Bakersfield Biorefinery holding company subsidiaries,borrowing subsidiary, has issued membership interests to both the Senior Lenders (Class B Units) and to the Senior Lenders and will issue membership interestsGCEH (Class C Units) toin its capacity as the Mezzanine Lenders.new mezzanine lender. The Class B Units and Class C Units membership interests provide the holders of the Class B and Class C Units with preferential right to 25% of cash distribution rightsdistributions available from the operations of the Bakersfield Renewable Fuels Refinery, which distributions have priority over the Class A Units and Class C Units owned by GCEH. Under the two Credit Agreements and the limited liability agreement of the financing subsidiary, any excess cash from operations that the Bakersfield BiorefineryRenewable Fuels Refinery generates will first be used to make the debt service payments under the seniorSenior Credit Facility and mezzanine loans,Mezzanine Credit Facility, and then any excess cash available after making those loan payments will be allocated among the holders of the Class A, Class B and Class C Units. The holders of the Class B Units are entitled to receive quarterly distributions of 25% of the Bakersfield Biorefinery’sRenewable Fuels Refinery’s free cash flow until the senior lendersSenior Lenders have received (collectively, from these cash distributions plus principal and interest on the senior loans)Senior Credit Facility) an amount equal to a 2X2.0x multiple of invested capital (“MOIC”MOIC''), or two times the amount of the senior loans.Senior Credit Facility. Since we expect that the Senior Lenders will lend us $313.2have fully funded their $337.6 million loan obligation, the Senior Lenders will have preferential rights to receive a total of up to $626$675 million, and under certain circumstances for a limited period, an additional 5% of the free cash flow. The cash available for distribution after payment of the Class B Units 25% allocation will be divided by the holders of the Class C Units and the Class A Units. The holders of the Class C Units will be entitled to receive 80.0% of cash distributionsAccordingly, until the Mezzanine Lenders have received cumulative payments (cash distributions plus principal and interests on the mezzanine loans) equal to 2.0x MOIC, which percentage decreases to 65.0% (after they have received 3.0x MOIC), 50.0% (after they have received 4.0x MOIC) and 30.0% of all cash distributions thereafter. As a result of the large debt payment obligations and the foregoing preferential cash distribution allocations to the holders of the Class B and Class C Units,November 2027, the amount of cash available for distribution to GCEH and our stockholders from the operation of the Bakersfield Renewable Fuels Refinery will be significantly reduced. Accordingly, evenreduced by terms of the senior credit agreement and the Class B Units.-25- Bakersfield Biorefinery’s operations generate significant profits,shares of Series C Preferred after the second anniversary of issuance, the Corporation Redemption Price is an amount equal to two times the initial purchase price, as adjusted. The payments of the 15% dividend and the Corporation Redemption Price will significantly reduce the amount of cash available to GCEH from the Bakersfield Biorefinery will be very limitedCompany while the Series C Preferred shares are outstanding for at least five years.BiorefineryRenewable Fuels Refinery subsidiaries are subject to various restrictions under the Senior Credit Agreements,Facility, and substantially all of the assets of the Bakersfield BiorefineryRenewable Fuels Refinery subsidiaries are held as security under the terms of our credit agreements. If we are unable to comply with the restrictions and covenants in our Senior Credit Agreements.senior and mezzanine credit agreements$337.6 million Senior Credit Facility are secured by a security interest in all of the assets of the BKRF,Bakersfield Renewable Fuels Refinery, and by all of the assets and securities issued by the limited-purpose, wholly-owned indirect subsidiaries of the Company.Company that are parties to the Senior Credit Facility loan. The two credit agreements containagreement of the Senior Credit Facility, as amended to date, contains certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Senior Loans,Credit Facility, failure to comply with covenants within specified time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. In addition, on March 26, 2021 we amended the two credit agreements to require GCEH to establish an additional cash reserve of at least $35 million for BKRF. Our inability to raise at least $35 million within the time limits specifiedOn several occasions in the amendments, andpast we have failed to properly fundfully comply with all of the new contingency reserve will constituterequirements of the Senior Credit Facility, as amended. While the Senior Lenders have not previously declared an event of default underand have waived our prior non-compliance with certain of the twosenior credit agreements.facility covenants, no assurance can be given that we will be able to fully comply with all of the senior credit agreement provisions in the future, or if we fail to remain in compliance, that the senior lenders will not declare an event of default. A breach of any of the covenants under either of the Senior Credit Facility credit agreementsagreement could result inpermit the senior lenders to declare an event of default. Cross-default provisions in the two credit agreements mean that an event of default under one of the credit agreements will trigger an event of default under the other credit agreement. Upon the occurrence of an event of default under any of our debt agreements, the credit agreement, the senior lenders could elect to declare allthe entire outstanding debt underbalance of the credit agreementsSenior Credit Facility to be immediately due and payable, we could be forced to enter into unfavorable amendments to the senior credit agreement, could be required to pay additional fees and costs, and the secured lenders could foreclose against all of the Bakersfield Biorefinery’sRenewable Fuels Refinery’s assets and the ownership interests of the various subsidiaries. A foreclosure could result in the loss of our primary assetrefinery and our refining business, and we could be forced into bankruptcy or liquidation.19Contentsthe Certificate of Designation of the Series C Preferred could result in the change of control of our Board of Directors.agreements governing our indebtedness placeshares of Series C Preferred that we sold to ExxonMobil and certain other institutional investors in the February 2022 private placement were issued under a Certificate of Designations of Series C Preferred Stock (the “Certificate of Designations”) that we filed with the Delaware Secretary of State. The Certificate of Designations contains numerous restrictions on us, such as our ability to amend our charter documents, to incur certain additional indebtedness, to issue certain securities, to hire or terminate certain executive officers, to adopt or modify annual operating budgets, or to increase the size of our Board. If we breach any of the terms of the Certificate of Designations, or if we fail to redeem all of the shares of the Series C Preferred by the fifth anniversary of the issuance of those shares, provided that ExxonMobil still owns any shares of Series C Preferred, ExxonMobil will have the right to appoint a majority of the directors on our Board of Directors. Accordingly, if a violation of the Certificate of Designation occurs, including our failure to redeem the Series C Preferred, ExxonMobil will have the ability to control this Company.subsidiaries, reducing operationalSeries C Preferred, all of which could materially and financing flexibilityadversely affect our financial condition and creating default risks.including but not limited to, the two credit agreements thatand our subsidiaries entered into on May 4, 2020,Series C Preferred contain covenants that place restrictions on us and our subsidiaries. The credit agreements and the Series C Preferred Certificate of Designations restrict among other things, us and our subsidiaries’ ability to:●-26-Ownership of Our Common StockCommon Stock.Common Stockcommon stock is traded on the OTCQB VentureOTCQX Best marketplace, an inter-dealer, over-the-counter market that provides significantly less liquidity than national securities exchanges, such as The Nasdaq Stock Market.result,consequence, there is currently a limited public trading market for our securities.common stock. We cannot assure you that a regular trading market will develop or that if developed, will be sustained. If an active trading market does not develop, youour stockholders may have difficulty selling yourtheir shares of Common Stockcommon stock at an attractive price, or at all, which willcould result in the loss of your investment.stockholdersstockholders’ deficit.stockholdersstockholders’ deficit of $28.7 million and $60.6 million as of December 31, 2020.2020, and December 31, 2021, respectively. Additionally, we had a negative working capital of $5.8$81.7 million (which includes current short-term restricted cash of $12.9$8.0 million) at December 31, 2020.2021. We had long-term restricted cash of $12.5 million as of December 31, 2021 that is excluded from our working capital calculation. Our negative stockholders’s equity, history of losses and our negative working capital position could negatively impact the value of your shares.NASDAQNasdaq Capital Market or any other securities exchange.intend to seek a possibledo not currently satisfy the listing of our Common Stock on onerequirements of the NASDAQ markets.Nasdaq Capital Market.any of those trading platforms or any otherthat stock exchange and that our application will be approved. We do not currently comply with certain Nasdaq listing standards, including in particular the minimum stockholder’s equity requirements. Further, there can be no assurances that, if listed on the Nasdaq Capital Market, we will be able to remain in compliance with the Nasdaq Stock Market LLC’s listing standards or if we do later fail to comply and subsequently regain compliance with Nasdaq’s listing requirements, that we will be able to maintain acontinue to comply with the applicable listing of the Common Stock on either of those or any other stock exchange. There are no assurances that an active market for our shares will develop even ifstandards. If we are listed on a NASDAQ market.(1)(i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and (2)(ii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. In addition, we are only required to provide two years of audited financial statements in our SEC reports. We cannot predict if investors will find our Common Stockcommon stock less attractive because we may rely on these exemptions. If some investors find our Common Stockcommon stock less attractive as a result, there may be a less active trading market for our Common Stockcommon stock and our stock price may be more volatile. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controlcontrols over financial reporting until we are no longer a “smaller reporting company”.company.” We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal controls in the future.20We have no plans to pay dividends.To date, we have paid no cash dividends on our Common Stock. For the foreseeable future, any earnings generated from our operations will be retained for use in our business and not to pay dividends.-27- Common Stockcommon stock trades at a price of less than $5.00 per share while we are still traded on a market other than a national exchange, our Common Stockcommon stock will be subject to the SEC’s penny stock rules. Penny stocks generally are equity securities with a price of less than $5.00. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our Common Stockcommon stock and may affect your ability to resell our Common Stock.effectivelyeffec20202021, we had several material weaknesses in our financial reporting, these consisted of 1)(i) ineffective controls over period end financial disclosure and reporting processes, including timeliness, 2) we recorded material adjustmentsnot timely performing certain reconciliations and completeness and accuracy of those reconciliations, lack of effectiveness of controls over accurate accounting and financial reporting and reviewing the underlying financial elements, and lack of approval of adjusting journal entries, (ii) insufficient controls around the identification and review of certain technical accounting matters and related entries performed by insufficient staffing of adequate accounting resources and without appropriate technical knowledge and expertise, iii) inadequate segregation of duties in various key processes including the information technology control environment, iv) lack of documentation of policies and procedures and insufficient controls and reviews related to cybersecurity, security access and configuration including user access, and change management around the valuation of our asset retirement obligation, environmental liabilitiesinformation technology control environment, and our mandatorily redeemable equity instruments, and 3) wev) have not performed a risk assessment and mapped our accounting processes to control objectives.have recently implemented aare in the process of implementing changes to our system of internal control over financial reporting. However, we cannot assure you that, when fully implemented, our policies and procedures will adequately mitigate our existing weaknesses or that we will not, in the future, identify other areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.21Common Stockcommon stock may continue to be volatile.Common Stockcommon stock may be highly volatile because, among other reasons, investors are unfamiliar with our operations and financial condition. You should consider an investment in our common stock to be risky, and you should invest in our common stock only if you can withstand a significant loss and wide fluctuations in the market value of your investment. In addition, if the market for shares of companies in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management. Lastly, we recently acquired the Bakersfield Biorefinery,Renewable Fuels Refinery in May 2020 and are currently retooling and converting the former crude oil refinery into a renewable diesel refinery, and expect to borrow up to $380 million to fund the foregoing purchase and conversion. However,fuels refinery. Since we dowill not expect to generate revenues until the construction of the Bakersfield BiorefineryRenewable Fuels Refinery is completed. These factors may lead tocompleted, which we anticipate in the second half of 2022, our stock price will not be based on quantifiable investment criteria used by certain investors in valuing shares. As a result, the uncertainty and speculation aboutof our future operations and profitability which could result in theinvestor speculation and in increased volatility in our stock price. There are other factors that may materially affect the market price our Common Stock that are beyond our control, such as analyst research reports, conditions or trends in the renewable fuels industry, or sales of our Common Stock by some of our larger stockholders. These factors may materially adversely affect the market price of our Common Stock, regardless of our performance. In addition, public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our Common Stock.Because our directors and executive officers are among our largest stockholders, they can exert significant control over our business and affairs and have actual or potential interests that may depart from those of investors.5,644,964approximately 6,150,000 shares (or 15.1%14.6% of our outstanding voting shares), and options and convertible notes to purchase anapproximately 25,401,000 additional 24,915,981 shares as of MarchDecember 31, 2021. Additionally, ExxonMobil and our Senior Credit Facility lenders hold warrants to purchase 25,047,723 of our shares, and ExxonMobil has certain other rightsCommon Stock.common stock. The interests of such persons may differ from the interests of our other stockholders, including purchasers of our securities. As a result, in addition to their influence as members of our Board of Directors or as executive officers, such persons will have significant influence over and control all corporate actions requiring stockholder approval, irrespective of how the Company’s other stockholders, including purchasers in the future financings, may vote, including the following actions:-28- Common Stockcommon stock which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.determinedas our Board of Directors may from time to time by the Board of Directors.determine. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue Preferred Stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the Common Stock.common stock. In the event of issuance, the Preferred Stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any additional shares of Preferred Stock, there can be no assurance that the Company will not do so in the future.22Contentsour Common Stock.ITEM 1B.UNRESOLVED STAFF COMMENTS.-29-OurWe lease our corporate offices are located at 2790 Skypark Drive, Suite 105, Torrance, California 90505. These offices, consisting of approximately 1,296 square feet, are leased under a lease that expires on July 31, 2022.Bakersfield Biorefinery(Bakersfield Renewable Fuels Refinery) street address of the Bakersfield BiorefineryRenewable Fuels Refinery is 6451 Rosedale Highway, Bakersfield, California. The site has hosted a crude oil refinery for approximately 85 years. The Bakersfield Biorefinery,Renewable Fuels Refinery, consisting of three areas designated as Areas 1, 2 and 3, has a total acreage of approximately 607 acres. Areas 1 and 2 are contiguous and can be accessed from Rosedale Highway, while Area 3 (approximately 83 acres) is located about two miles north of Areas 1 and 2. The Bakersfield Renewable Fuels Refinery is located primarily within Area 2, and the Westside Parkway abuts the south side of Area 2. The renewable diesel biorefinery will be located primarily within Area 2. Area 3 is currently not in use as part of the biorefineryrenewable fuels refinery project. Rail tracks pass through Areas 1 and 2. The Bakersfield BiorefineryRenewable Fuels Refinery is adjacent to a major highway that provides access to the interstate highway system. The biorefineryrenewable fuels refinery is also connected to the existing pipeline network in the San Joaquin Valley.contains a substantial amountat which we conduct our crop development research. The lease provides for monthly lease payments of equipment that$18,531, which amounts will increase by 3% annually, and grants SusOils an option to purchase the Company intends to use in its renewable diesel operations, including newfacility for $4,500,000 less all net lease and refurbished equipment and vessels to receive, store, process, and refine pre-treated camelina oil, soybean oil and other waste fats, oils and greases. We are refurbishing some of the equipment, including the hydrogen plant, equipment associated with the hydro-processing area, some of the storage tanks, and the upgrading automation controls. We are also making some infrastructure improvementsoption payments SusOils has made prior to the rail system andoption exercise date. In order to maintain the natural gas and other pipelines. In addition, wepurchase option, SusOils will have to make annual option payments of $186,000.updating the reactors used for biorefining, adding specialized catalysts and some additional process equipment.ITEM 3.LEGAL PROCEEDINGS.C & C Properties, Inc., et al. Bakersfield Renewable Fuels, LLC, formerly Alon Bakersfield Property, Inc., (the “Company”) is a party to an action titled C & C Properties, Inc., et al. v. Shell Pipeline Company, et al., Nos. 19-17463, 19-17464, 19-7601, pending in the United States Court of Appeals for the Ninth Circuit. The underlying case involved the validity of an easement for a natural gas pipeline held by the Company through a series of assignments on land located in Kern County, California, that was acquired by plaintiffs and whether the Company was required to relocate the pipeline after written demand from the plaintiffs. The Company ultimately voluntarily removed the alleged offending pipeline.In June 2019, the jury found for the plaintiffs and, as against the Company and Paramount, awarded damages in the amountat Camino de la Carrera, 11-nave 11, 28140 Fuente el Saz, Madrid, Spain. CCE rents its offices, consisting of approximately $0.7 million for trespass7,000 square feet of office, warehouse and approximately $6 million for benefits obtained from trespass. These defendants filed a $8.4 million supersedeas bond in August 2019.In a post-trial order entered in November 2019, the court, among other rulings, deemed the awardresearch & development space. The lease, which can be terminated by either party on three months’ notice, requires CCE to make monthly lease payments of trespass damages improper, reduced the judgment against the Company and Paramount Petroleum Corporation (a parent company of Alon Bakersfield in 2019) by the approximately $0.7 million in trespass damages, and amended the judgment to award approximately $0.9 million in attorneys’ fees to plaintiffs. The court denied the plaintiffs’ request for prejudgment interest. In January 2020, the court awarded the plaintiffs approximately $30,000 in costs.The defendants filed a notice of appeal in December 2019, appealing the case from the United States District Court for the Eastern District of California to the United States Court of Appeals for the Ninth Circuit. The plaintiffs filed a notice of appeal several days later. Appellate briefing is nearing completion, and oral argument is expected in the second half of 2021, with a decision to follow later in the year or in 2022.23Under the Share Purchase Agreement, Alon Paramount agreed to assume and be liable for (and to indemnify, defend, and save BKRF harmless from) this litigation.euro 2,100 (plus VAT). In addition to the foregoing agreementthese offices, CCE also rents three nearby warehouses that it uses to hold BKRF harmless from the C & C Properties litigation,store and clean its Camelina seeds. The aggregate monthly rent for these three other facilities is euro 3,600 per month (plus VAT). $8.4 million supersedeas bond has been posted asrent of $1,500 per month.surety45 acres undeveloped parcel of land in Havre, Montana for future infrastructure expansion. The site is located adjacent to pay any final judgment (after appeals). Allother grain storage facilities and a BNSF railroad spur. feesproceedings, see Note J of Notes to Consolidated Financial Statements included in Item 8 of this matterAnnual Report on Form 10-K.being paid by Paramount Petroleum Corporation.Wood Warren & Co Securities, LLC On August 24, 2020 Wood Warren & Co Securities, LLC filed a complaint in the Superior Court of California, Alameda County, against GCE Holdings Acquisitions, LLC titled “Wood Warren & Co Securities, LLC vs. GCE Holdings Acquisitions, LLC” (Case No. RG 20072242). The complaint alleges that GCE Holdings Acquisitions, LLC breached that certain Consulting Agreement, dated October 8, 2019, by failing to pay Wood Warren & Co Securities, LLC certain fees that Wood Warrant claims it has earned under the Consulting Agreement. Wood Warren & Co Securities, LLC has asked the court for an award of $1.2 million. GCE Holdings Acquisitions, LLC filed an answer to the complaint on October 14, 2020. GCE Holdings Acquisitions, LLC is investigating the allegations contained in the complaint and is unable to predict the outcome. GCE Holdings Acquisitions, LLC intends to vigorously defend this matter. The court has not yet set a trial date for the matter.From time to time, we may become a party to legal actions and complaints arisingoutstanding which arose in the ordinary course of business. Other thanIn the foregoing arbitration proceedings, asopinion of management, the dateamount of this Annual Report weultimate liability, if any, with respect to these actions, will not have no legal proceedings pending.ITEM 4.MINE SAFETY DISCLOSURES.-30-Not applicable.PARTART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.Prior to December 29, 2020 was quotedis traded on the OTC Pink marketplace under the symbol “GCEH”. Since December 29, 2020 the Common Stock has been quoted on the OTCQB VentureOTCQX Best Market under the symbol “GCEH”. As a result of the March 26, 2021 1-for-10 reverse stock split, GCEH’s trading symbol has been temporarily changed to “GCEHD” until April 26, 2021.As of March 31, 2021, there were approximately 37,437,000 shares of Common Stock outstanding. Immediately prior to the reverse stock split, there were 374,367,458 shares of Common Stock outstanding. As of that date,December 31, 2021, GCEH had 1,511 1,560 holders of record of our Common Stock stockholders of record (excluding stockholders who hold shares in “streetname”“Street name”).notnever declared or paid any cash dividends on our Common Stock to dateor any other securities. We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate that we will paypaying cash dividends in the foreseeable future. Any paymentPayment of future cash dividends, on Common Stock in the futureif any, will be dependent uponat the amountdiscretion of funds legally available, our earnings, if any,the board of directors after considering various factors, including our financial condition, ouroperating results, current and anticipated capital requirements and other factors that the Board of Directors may think are relevant. However, we currently intend for the foreseeable future to follow a policy of retaining all of our earnings, if any, to finance the development and expansion of our business and, therefore, do not expect to pay any dividends on Common Stock in the foreseeable future.2413,000145,000 shares of Series B ConvertibleC Preferred, Stock (the “Series B Shares”).each of which was issued at an original issuance price of $1,000 per share. Under the terms of the Series B shares, no dividends are required to be paid to holders of the Series B Shares. However, the CompanyC Preferred, we may not declare pay or set aside any dividends on shares ofor make any distributions to any class or series of GCEH’s capital stock, (other than dividends onincluding our Common Stock, until all shares of Common Stock payablethe Series C Preferred have been redeemed in shares of Common Stock) unless thefull. BC Preferred are entitled to receive cash dividends at a rate of 15%, payable quarterly; provided, however, until March 31, 2024 we may elect not to pay some or all of the accrued dividends in cash, in which case the unpaid dividends shall accrue and be added to the original issuance price of the shares shall first receive, or simultaneously receive, an equal dividend on each outstanding share of Series B shares.-31- 2020:Plan Category Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options,
Warrants and
Rights Weighted-
Average
Exercise Price
of
Outstanding
Options,
Warrants and
Rights Number of
Securities
Remaining Available for
Future
Issuance under
Equity
Compensation
Plans (Excluding
Securities
Reflected in
the First
Column)Equity compensation plans approved by security holders 2020 Equity Incentive Plan 1,054,500 $ 0.844 945,000 Equity compensation plans approved by security holders 2010 Equity Incentive Plan 100,000 0.533 — Equity compensation plans not approved by security holders Non-Qualified Stock Options (1) 18,075,714 $ 0.191 N/A Total 19,230,214 — —
Securities to be
Issued upon
Exercise of
Outstanding
Options,
Warrants and
Rights
Average
Exercise Price
of
Outstanding
Options,
Warrants and
Rights
Securities
Remaining
Available for
Future
Issuance under
Equity
Compensation
Plans (Excluding
Securities
Reflected in
the First
Column)20192021 that have not previously been reported in a Current Report on Form 8-K.8-K or a Quarterly Report on Form 10-Q. Each issuance of the shares listed below was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) of the act applicable to a transaction by an issuer not involving a public offering of securities. No underwriter was involved in the issuance of the shares.a.On January 2, 2020 and January 28, 2020, GCEH issued 667,732 and 100,000 shares of Common Stock, respectively, to a consultant upon the exercise of two non-qualified stock options. The options were granted as payment for services rendered to the Company.b.On January 2, 2020, GCEH issued 50,000 shares of Common Stock to a director of GCEH upon his exercise of a non-qualified stock option.c.On May 6, 2020, GCEH issued 554,286 shares of Common Stock to its Executive Vice President upon the exercise of a non-qualified stock option and an incentive stock option.25Contentscommon stock in full payment of five separate notes, both principal and accrued interest, for a combined value of approximately $308,943 or $5.75 per share.d.On May 29, 2020, GCEH issued 75,000 shares of Common Stock to one of its attorneys upon the exercise of a non-qualified stock option. The option was granted to the attorney in January 2018 as partial payment for legal services rendered to the Company.e.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).ITEM 6.SELECTED FINANCIAL DATA.-32-Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K.ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Since 2013 theassets.assets since 2013. Between July 2018, the date that we entered into a letter of intent for the purchase of the Bakersfield Biorefinery,Renewable Fuels Refinery, and the closing of the purchase of the Bakersfield BiorefineryRenewable Fuels Refinery in May 2020, we were exclusively engaged in completing the purchase of the refinery and in obtaining the financing necessary to purchase and retool the Bakersfield BiorefineryRenewable Fuels Refinery into a renewable fuels facility. Accordingly, our principal expenses during 2019 andin 2020 until we purchased the Bakersfield BiorefineryRenewable Fuels Refinery in May 2020 consisted of general and administrative expenses and costs incurred to obtain the financing required to purchase and retool the Bakersfield Biorefinery.Renewable Fuels Refinery. After the purchase of the Bakersfield BiorefineryRenewable Fuels Refinery on May 7, 2020, both our operating expenses and our capital expenditures increased significantly.Biorefinery,Renewable Fuels Refinery, we did not generate any operating revenues in either 2019 or 2020.2020 nor 2021 other than a minimal amount of Camelina seed sales in 2021. In order to fund our operating expenses during these periods,prior to May 2020, we obtained $6$10 million under a derivative contract (the “Derivative Contract”) that we entered into with a commodity trading company late in October 2018. In2018 and modified in October 2019 we modified the Derivative Contract, entered into a new Derivative Contract, and received another $4 million in cash.2019. The Derivative Contract was further amended in 2020 and replaced by a fixed payment obligation that requires the Company to make total payments of $24.8 million, consisting of the $4.5 million payment we made in June 2020, and six equal monthly installment payments that are due beginning in May 2022. The cash that we received from the Derivative Contract was used to fund our operating costs, our due diligence costs, our pre-acquisition costs, the purchase price down payment/deposit for the Bakersfield Biorefinery,Renewable Fuels Refinery, our consulting and legal fees associated with the acquisition, and our payments to key vendors and suppliers.Biorefinery.Renewable Fuels Refinery. The total amount of cash consideration paid for the refinery was $40 million and the total amount of all consideration and assumed liabilities was $89.4 million. In order to fund the purchase price of the Bakersfield BiorefineryRenewable Fuels Refinery and the currently on-going conversion of the facility into a renewable diesel refinery, in May 2020 we also entered into a $300 million senior loan facilitySenior Credit Facility and a $65 million mezzanine loan facility. In November 2020 we added a total of $15 million to ourMezzanine Credit Facility. The Senior Credit Facility and Mezzanine Credit Facility have been amended so that the credit facilities whereby as of December 31, 2020 our senior loan facility was $313.2available under the Senior Credit Facility now is $337.6 million and our mezzanine loan facility was $66.8the credit available under the Mezzanine Credit Facility between GCEH and BKRF HCB, LLC is now is $67.4 million. We are currently converting the Bakersfield BiorefineryRenewable Fuels Refinery from a crude oil refinery into a biorefinery,renewable fuels refinery, and we do not expect to commence our proposed biofuelrenewable fuels refinery operations until earlythe second half of 2022. Therefore, we do not anticipate generating revenues from the operations of the Bakersfield BiorefineryRenewable Fuels Refinery until later in 2022. Through December 31, 2021,we have invested approximately $350 million in the first halfacquisition and retooling of 2022.26Contentsland in Havre, Montana, on which the Company plans to build a grain storage and rail loading facility. These changes affected the Company’s operations and financial condition in 2021 and will continue to impact the Company’s future operations and financial results.biorefinery,renewable fuels refinery, our newly formed special purpose subsidiaries (collectively, “Loan Parties”) entered into two credit facilities, the terms of which will materially impact our future cash flow and results of operations.Biorefinery.Renewable Fuels Refinery. The Senior Lenders consist of Orion Energy Partners, L.P., GCM Grosvenor and Voya Investment Management. Orion Energy Partners TP Agent, LLC acts as administrative agent for the Senior Lenders. The Senior Lenders have revised the terms of the senior credit agreementSenior Credit Facility to increase the amount available thereunder by $13.2 million. Asto $337.6 million as of December 31, 2020,20, 2021 and as of December 21, 2021, we had borrowed $151.5the full $337.6 million. On December 20, 2021, GCEH entered into a binding Memorandum of Understanding (“MOU”) with ExxonMobil whereby ExxonMobil would purchase $125.0 million of Series C Preferred. Concurrently, the Senior Lenders committed to make an additional Bridge Loan of $20.0 million senior credit facility.senior loanSeries C Preferred offering closed on February 23, 2022 with ExxonMobil and the Senior Lenders, and concurrently, the Bridge Loan, and accrued interest, was paid in full. Also, on December 20, 2021, the Company entered into an amendment to the Senior Credit Facility whereby GCEH agreed to issue to the Senior Lenders five-year warrants covering 5,017,008 shares of common stock of GCEH at the closing of the Series C Financing (Warrant Commitment Liability”). The Warrant Commitment Liability was in consideration for i) the 1%, or $4.1 million, consent premium payable from an earlier amendment to the Senior and Mezzanine Credit Facilities, ii) the Bridge Loan, and iii) as additional creditor fees for forbearance to the Senior Lenders and Mezzanine Lenders. The warrants have an exercise price of $2.25 per share and were issued on February 23, 2022 to the Senior Lenders, and the Senior Lenders purchased $20 million of the Series C Preferred.-33- senior loansSenior Credit Facility is due at maturity, provided that we must offer to prepay the senior loans with any proceeds of asset dispositions, borrowings other than permitted borrowings, proceeds from damage or losses at the refinery, and excess net cash flow. We have the right to prepay the senior loan in whole or in part with the payment of a prepayment premium. As additional consideration for the senior loans, certain of the Loan Parties issued membership interests to the Senior Lenders, which membership interests may provide the Senior Lenders with certain limited cash distributions (see below).senior loans areSenior Credit Facility is secured by all of the assets of the applicable Loan Parties (including its membership interests in BKRF and the Bakersfield Biorefinery)Renewable Fuels Refinery). The senior loans mature on November 4, 2026. The Senior Lenders have a right to accelerate the maturity date of the senior loans if, among other reasons, the retooling and repurposing of the Bakersfield BiorefineryRenewable Fuels Refinery is not substantially complete by MarchAugust 31, 2022 (subject to extension for up to 90 days under certain circumstances), and the Bakersfield Biorefinery’sRenewable Fuels Refinery’s production does not meet certain project milestones by dates specified dates inunder the senior credit agreement.Biorefinery.Renewable Fuels Refinery. The second credit facilityMezzanine Credit Facility has been amended to increase the amountprovide $67.4 million of credit available to us thereunder by $1.8 million.as of February 23, 2022. The Mezzanine Lenders, for whom Orion Energy Partners TP Agent, LLC acts as administrative agent, consist of Orion Energy Partners, L.P., GCM Grosvenor and Voya Investment Management. We have not drawn down onOn February 23, 2022, the credit facilityMezzanine Lenders assigned the Mezzanine Credit Facility and its rights to the Class C Units (see below) to GCEH, and GCEH subsequently fully funded the $67.4 million mezzanine loan. Accordingly, as of February 23, 2022 all Mezzanine Lenders have been replaced by GCEH, and GCEH hereafter is entitled to all of the date of this Annual Report.Thepayments required to be made under the mezzanine loans bearand all of the distributions payable to the holder of the Class C Units. on amounts borrowed, payable quarterly, provided that we may defer interest to the extent we don’t not have sufficient cash to pay the interest, such deferred interest being added to principal. As additional consideration for the mezzanine loans, we have agreed to issue membership interest to the Mezzanine Lenders, now GCEH, in certain of the Loan Parties,BKRF HCB, LLC, which interests will bewere issued at such times as advances are made underon February 23, 2022 upon the mezzanine loans (see below).flow.flow. We have the right to prepay the loan in whole or in part with the payment of a prepayment premium. The mezzanine loans are secured by the assets of the applicable Loan Parties. The Mezzanine Lenders have a right to accelerate the maturity date of the mezzanine loans upon the occurrence of an event of default. Events of default include, in addition to customary events of default, the change of control of a loan party and any default under the senior credit agreement.seniorSenior Credit Facility and mezzanine credit agreements,the Mezzanine Credit Facility, we agreed to grant the seniorSenior Lenders and mezzanine lenders certainGCEH, upon the assignment from the original Mezzanine Lenders, membership interests in one of the Loan Parties,seniorSenior Lenders and mezzanine lendersGCEH with an interest in excess cash flows from the Bakersfield Biorefinery’sRenewable Fuels Refinery’s operations. These membership interests provide the lendersSenior Lenders and GCEH with an indirect financial interest in the Bakersfield Biorefinery.Renewable Fuels Refinery. Other than certain limited approval rights, we have the right to manage the Loan Parties and the refinery, and the lenders have no voting rights. These membership interests are to be issued under the BKRF HCB, LLC Amended and Restated Limited Liability Company Agreement (the “BKRF Mezz Borrower LLC Agreement”). The BKRF Mezz Borrower LLC Agreement provides for three classes of membership interests (Units): (i) Class A Units, all of which are held by GCE Acquisitions, andLLC are draw senior credit facility,Senior Credit Facility (fully issued as of December 21, 2021) and (iii) Class C Units that are reserved forissuance to funding ofLenders and will beCredit Facility (fully issued if/when we borrow under the mezzanine credit facility.27BiorefineryRenewable Fuels Refinery and (ii) the date the Senior Lenders have received two times the loan amount under the credit facility (the “Termination Date”), the Senior Lenders, as holders of the Class B Units, are entitled to receive quarterly distributions of 25% of the free cash flow until the Senior Lenders have received (collectively, from these cash distributions plus principal and interest on the senior loans) an amount equal to a 2X multiple of invested capital (“MOIC”), or two times the amount of the senior loans, for a total of up to $626.4$674.8 million, and, if the Termination Date has not occurred, thereafter quarterly distributions of 5% of the free cash flow until the Termination Date. See Note E to the consolidated financial statements for additional details regarding the credit facility.Under-34- the Mezzanine Lenders, as holders of the Class C Units areGCEH is entitled to receive out of the distributions by BKRF Mezz Borrower not paid to the Class B Members, the following:the Mezzanine Lenders haveGCEH has received cumulative payments (distributions and principal and interests on the $67.5 million mezzanine loans)loan) equal to 2.0X MOIC;the Mezzanine Lenders haveGCEH has received cumulative payments equal to 3.0X MOIC;the Mezzanine Lenders haveGCEH has received cumulative payments equal to 4.0X MOIC;the Mezzanine Lenders haveGCEH has received cumulative payments equal to 99.0X MOIC.seniorSenior Credit AgreementFacility and mezzanine loanthe Mezzanine Credit AgreementFacility were entered into on May 4, 2020 in order to fund the acquisition, development and construction of the Bakersfield Biorefinery.Renewable Fuels Refinery. Since the two credit agreements were entered into, the scope of the Bakersfield BiorefineryRenewable Fuels Refinery has both changed and expanded to include additional capabilities and equipment, which changes have affected certain of the assumptions made regarding the cost of installing, developing and constructing the Bakersfield Biorefinery.Renewable Fuels Refinery. Accordingly, effective March 26, 2021, the Loan Parties entered into Amendment No. 3 to the Credit Agreement to more accurately reflect the updated scope and cost estimates of the Bakersfield Biorefinery and to establish a contingency reserve account to fund the costs of the additional capabilities and equipment and to fund possible cost overruns. Concurrently, BKRF HCB, LLC, BKRF HCP, LLC and the Mezzanine Lenders entered into Consent No. 2 And Amendment No. 2 To Credit Agreement. Under these two amendments, the borrowers (our BKRF OCB, LLC and BKRF HCB, LLC subsidiaries) agreed to establish an additional cash reserve of at least $35 million, which cash reserve would be used at the direction of the administrative agent to fund project costs (including the cost of development, design, engineering, procurement, construction, installation, equipping, completion, start-up, and operation) 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 administrative agent, be used to first make a $5 million principal payment on the senior loan, and any remaining funds will be returned to GCEH.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 were amended on several occasions, and the borrowers agreedamount of credit available under both the Senior Credit Facility and Mezzanine Credit Facility was increased to $337.6 million and $67.4 million, respectively.each senior and mezzanine lender an amendment and consent premium equalachieve these targeted debt balances to 1.00%the extent there is available cash under the specific calculations required in the Senior Credit Facility. Irrespective of the aggregate commitmentscash available from the Bakersfield Renewable Fuels Refinery operations, the full amount of the loan matures and loans of such lender. The fee is payable in the same securities that we may issue in connection with raisingdue on November 4, 2026. Additionally, the $35 million cash reserve. If we fundreserve requirement from Amendment No. 3 was eliminated by Amendment No. 8 in conjunction with the $35 million cash reserve other than through a financing transaction, we will paySeries C Preferred Financing.1% lenders’ premium in sharesSenior Credit Facility was further amended to permit the Loan Parties to defer up to 3.50% per annum of our common stock or in cash. Thethe interest until the earlier of September 30, 2022 and the final completion of the retooling of the Bakersfield Renewable Fuels Refinery, with all deferred interest being added to principal. In addition, effective as of February 23, 2022, the parties agreed to various amendments to the representations and warranties, affirmative and negative covenants and events of default in the senior Credit Agreementloan facility, including (i) the Company’s loan subsidiaries may enter into working capital facilities in an amount of up to $125 million without the Senior Lenders’ consent, and mezzanine loan Credit Agreement also require the borrowersCompany agreed to provide certain updated financial statementsuse its commercially reasonable efforts to enter into a permitted working capital facility on or before June 30, 2022; (ii) the retooling of the Bakersfield Renewable Fuels Refinery must be substantially complete by August 31, 2022 (subject to extension for up to 90 days as described above); and budgets, and amend other provisions(iii) the final completion of those agreements, including procedures to approve project change orders, and updates to our feedstock execution plan, the rail development milestones, and gas supply milestones.28.Bakersfield Biorefineryrefinery 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 theseWe also have obligations relaterelated to the required cleanout of hydrocarbons previously used in the pipeline and terminal tanks. tanksthe 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.. -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 accrueaccrues 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.sites where we have environmental exposure. This estimate is based on internal and third-party assessments of the extent of the contamination, the selected remediation technologymethodology and review of applicable environmental regulations, typically considering estimated activities and costs for 2015 years, and up to 30 years if a longer period is believed reasonably necessary. Such estimates require judgment with respect to costs, time frame and extent of required remedial and clean-up activities. 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 andor reliably determinable. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized.Capitalization-35- Pre-Acquisition Costs.Class B Units -capitalizes its pre-acquisition costs once management determines that it is probable thatclassifies the projectClass B units as mandatorily redeemable financial instruments in accordance with ASC 480. The Company has elected to record these financials at fair value pursuant to the fair value option in ASC 825-10. At each borrowing the Company will occur. Probability is determinedinitially recognize the Class B Unit liability based on (i) whether management, having the requisite authority, has implicitly or explicitly authorized and committedissuance date fair value with an offset to funding the acquisition or constructiondiscount on the Senior Credit Agreement. The Company remeasures their Class B Units at fair value at each reporting date with changes recognized in other income/expense.specific asset, (ii)future event.financial resources are available consistent with such authorization, and (iii)fair value of consideration over the ability exists to meetfair value of identifiable net assets acquired. Goodwill is allocated at the necessary local and other governmental regulations. Cost capitalization occurs whendate of the event is probable, but priorbusiness combination.startvalue of construction. We capitalize those costs thatthe expected synergies to be derived from combining the operations of the businesses we acquire including the value of the acquired workforce. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets may include, but are directly identifiable with the specific property and those costs that would be capitalized if the property were already acquired. We expense general and administrative and overhead costs and costs, including payroll, that would be considered support functions.Derecognition of Liabilities. The Company reviews its liabilities, including but not limited to, accounts payable, notes payable, accrued expenses, accrued liabilitiesfuture expected cash flows from acquired customers acquired technology, and other legal obligations, fortrade names from a determinationmarket participant perspective, useful lives and discount rates. Management’s estimates of the legal enforcement or settlement of an obligation. Upon conclusive evidence that an obligation mayfair value are based upon assumptions believed to be extinguished, has expired, is discharged, cancelled or otherwise no longer legally exists, then the Company will derecognize the respective liability on the Company’s balance sheet.29Derivative Commodity Instruments. The Company has used derivative commodity instrumentsreasonable, but which are inherently uncertain and unpredictable and, as a meansresult, actual results may differ from estimates. It is possible that the judgments and estimates described above could change in future periods.generating cashgoodwill and acquired intangible assets. We test for its effortsimpairment on an annual basis as of December 31, or more frequently if a significant event or circumstance indicates impairment. We also evaluate the estimated remaining useful lives of acquired intangible assets for changes in procuringcircumstances that warrant a refinery to fulfill its business plan. The Company may use such instruments in the future to manage its exposures for its feedstocks or end products. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. While the Company may deliver refined products from the refinery in the future, at this time these derivative contracts are not considered normal sales contracts. The results of our derivative activities were materialrevision to the company’s financial position, resultsremaining periods of operations or cash flows in 2018 and 2019. The Company’s risk management practices and its compliance with policies are reviewed byamortization. For purposes of assessing potential impairment of goodwill, we estimate the Company’s Board of Directors. Derivatives beyond those designated as normal purchase and normal sale contracts are recorded at fair value on the Consolidated Balance Sheet with resulting gains and losses reflected in income. Fair values are derived principally from published market quotes and other independent third-party quotes. The change in fair value of Company’s derivative commodity instruments in 2019 was materialthe reporting unit, based on our market capitalization, and compare this amount to the Company’s results of operations. The company does not currently hold any derivative commodity instruments.Recoverability of Intangible Assets. The Company invests in the development of various plant-based feedstocks for conversion to fuel as part of its core business plan and mandate. The Company has purchased patents and associated know-how that relate directly to the development and growing of Camelina. The Company invests in the ongoing development of Camelina through research and additional patents as breakthroughs occur. The Company capitalizes all of its patent expenses and amortizes these costs over a 17-year period in conjunction with the life of the patent protection. We evaluate the carrying costs of these assets on a periodic basis and will impair such value if deemed necessary. As of 2019, no impairment is necessary and the carrying value of our intellectual property (intangible assets) remainsthe reporting unit. If we determine that the carrying value of the reporting unit exceeds its fair value, an impairment charge would be required. We have determined that we operate as one reporting unit and may first assess qualitative factors to determine whether the existence of events or circumstances indicate that an impairment test on goodwill is required. The Company internally monitors business and market conditions for evidence of triggering events for goodwill and acquired intangible assets. Such events or changes in circumstances include, but are not limited to, a significant decrease in the fair value of the underlying asset or asset group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, an accumulation of costs and resources in excess of the original expectation, or a significant change in the operations of the acquired assets or use of an asset or asset group. Changes in these estimates and assumptions could materially affect the determination of fair value and expected economic generator going forward.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.Certain other critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note 1 to the Consolidated Financial Statements included in this Annual Report. However, we do not believe that there are any alternative methods of accountinggoodwill impairment for our operations that would have a material effect on our financial statements.-36- during the fiscal year ended December 31, 2019 (“fiscal 2019”) and until May 7, 2020 our activities were devoted solely to the acquisition and financing of the Bakersfield Biorefinery.Renewable Fuels Refinery. Since our acquisition of the Bakersfield BiorefineryRenewable Fuels Refinery on May 7, 2020, we have been engaged in converting and repositioning the former crude oil refinery into a biorefineryrenewable fuels refinery and in further developing our Camelina feedstock production supply chain. Accordingly, in fiscal 20192020 and the fiscal year ended December 31, 20202021 (“fiscal 2020”2021”) we did not engage in any activities that generated current revenues, except for a minimal amount of certified seed sales, and, as a result, we had no operating revenues in fiscal 20202021 or fiscal 2019.2020 from the renewable fuels refinery operations. The Bakersfield BiorefineryRenewable Fuels Refinery currently is being retooled and converted from a crude oil refinery into a biorefineryrenewable fuels refinery and is not expected to commence operations until earlythe second half of 2022. Therefore, we do not anticipate generating revenues from the operations of the Bakersfield BiorefineryRenewable Fuels Refinery until 2022.30$5.6$17.2 million, or 181%215%, from $3.1 million in fiscal 2019 to $8.0 million in fiscal 2020.2020 to $25.2 million in fiscal 2021. This increase was due to higher payroll costs (we have hired over 5060 new employees since May 6, 2020)in 2021, many of whom are engaged in the construction and operations of the Bakersfield Renewable Fuels Refinery), higher accounting and professional fees, higher insurance, information technology services and general office expenses arising from the ownership of the Bakersfield Biorefinery.Renewable Fuels Refinery. We expect that our general and administrative expenses will continue to increase in 20212022 as the development of the refinery progresses, and expenses will further increase once the Bakersfield BiorefineryRenewable Fuels Refinery is fully operational. Facility expenses primarily consist of maintenance costs to keep the Bakersfield assets, purchased in May 2020, in an operational mode and expenses normally related to the operations of a refinery. The 20202021 facility expense was $3.2$14.5 million, with no comparable expensean increase of $11.2 million as compared to $3.3 million in 2019.20192020 and fiscal 20202021 interest expenses consisted of accrued and paid interest of $0.4$2.8 million and $2.3$2.9 million, respectively. Interest expense inIn fiscal 2019 represented interest accrued from2020 we had $2.1 million of promissory notes outstanding. However, in May 2020 we entered into the $300 million senior loan and the $65 million mezzanine loan. As of December 31, 2020 we borrowedoutstanding as well as $151.5 million borrowed under our Senior Credit Facility. For fiscal 2021, we had $2.7 million in promissory notes outstanding and had a balance of $337.6 million borrowed from the senior credit facility.Senior Credit Facility. Accordingly, our interest expense in fiscal 2020 representsfor these years represent interest accrued and paid on thethese amounts borrowed, including the senior credit facility. During 2021 we expect to use all or substantially all of the credit available to us under these two facilities and, accordingly, weborrowed. We expect that our interest expenses will significantly increase as the outstanding principal balancescompany utilizes mezzanine financing to continue the construction of the credit facilities increase. While the amount of interest that we have to pay under the two credit facilities will increase, the applicable portion ofBakersfield Renewable Fuels Refinery. Applicable construction period interest costs will be capitalized into the project under the guidance of the current accounting standards.and Class B Units, and Finance Charges and Warrant Commitment Liabilityunder which we recorded an initial $15.1 million liability associated with opening the derivative position. In 2018 we received $6 million in cash from the derivative transaction and recorded a decrease in the derivative liability, which resulted in $3.2 million of income. However, on December 31, 2019 the value of the derivative liability increased to $24.8 million, which after receiving $4 million in cash, resulted in a charge of $8.9 million, and a change of $12.1 million during the year. We modified the terms of the derivative in October of 2019 and received $4 million in cash from the transaction.made amendments through 2020. As part of the Derivative Contract, we recorded a gain from the change in fair value of the derivative of $5.5 million in 2020 andas it was converted to a finance charge of $8.9 million in 2019.fixed payment. In May 2020 we entered into a senior loan credit facilitySenior Credit Facility whereby we issued equity units in a subsidiary. We record these units at their fair value when they are issued or become issuable, and we remeasure the fair value of these units at the end of each reporting period. As of December 31, 20202021 we determined that the fair value of the liability of the mandatorily redeemable instruments to be $5.1$21.6 million, which was an increase in fair value of $2$6.1 million, which was charged to other expenses .expenses. This compared to a charge of $2.0 million in 2020 for these equity units. In 2021, we also recognized a charge of $3.2 million related to our obligation to issue warrants to our Senior Lenders. The fair value of these warrants increased by $3.2 million from December 20, 2021, the date of our obligation, to December 31, 2021. We had no comparable expense related to thechange in fair value of Class B units in 2019.20202021 we incurred an operating loss of $12.2$40.7 million, an increase of $7.3$29.0 million from our operating loss of $4.9$11.7 million in 2019.2020. Our operating loss increased because of the substantial increase in our general and administrative expenses (including facilities costs), the costs related to the retooling of the Bakersfield Biorefinery,Renewable Fuels Refinery, and our activities in developing the Camelina farming operations and feedstock program. Our total net loss for the year 20202021 was $10.6$51.4 million, a decreasean increase of $1.2$40.8 million or 10%385% compared to the $11.8$10.6 million loss in 2019.2020. Our net loss for 20202021 increased over 20192020 primarily due to a reduction inour full year work effort retooling the derivative fair value liability of $5.5 million, a gain onrefinery and our expanded activities at the derivative revaluation of $0.5 millionrefinery, our expanding feedstock program, acquisition integration efforts and an expense of $2 million due toincreased charges from the change in fair value of both our Class B units. These gains offset the higher generalunits and administrative costs incurred in 2020.Warrant Commitment Liability for an increased charge of $7.3 million. We expect to continue to incur losses in 2021 while2022 until we begin operations at our biorefinery is under construction and therefore not operational.20192021, we had approximately $23.4 million of cash on hand, of which $2.9 million was short-term unrestricted cash, $8.0 million was short-term restricted cash and $12.5 million was long-term restricted cash. As of December 31, 2020 we had approximately $0.5 million and $40$39 million of cash, including $35.6of which $3.4 was short-term unrestricted cash, $12.9 million ofwas short-term restricted cash of whichand $22.7 million is considered aswas long-term asrestricted cash. Long-term restricted cash represents cash that cash is more than likelywe expect to be spentspend on the construction projectof the Bakersfield Renewable Fuels Refinery and which expenditures will be capitalized, intoand such amount cannot be used for general corporate purposes. Short-term restricted cash represents cash that we expect to spend on the project as spent.operations of the Bakersfield Renewable Fuels Refinery and which expenditures will not be capitalized, and such amount cannot be used for general corporate purposes. On December 31, 20202021 we had working capital of negative $5.8$81.7 million andcompared to negative working capital of $33$5.8 million at the end of fiscal 2019.Our efforts to acquire the Bakersfield refinery commenced in early 2018. Our operating costs, including the costs of the professionals that we engaged, exceeded our capital resources. Accordingly, on October 15, 2018, we entered into a derivative contract with a commodities trading company whereby we received $6 million of cash in exchange for a contract for ultra-low sulfur diesel to be settled beginning in July of 2020. This contract created a net fair value liability of $15.1 million. The purpose of this contract was to obtain the cash the Company needed to pursue the acquisition of the Bakersfield Biorefinery. Because of a delay in completing the purchase of the Bakersfield Biorefinery, we had to unwind the original derivative contract on October 29, 2019 and enter into a new derivative transaction whereby we received an additional cash payment of $4 million. The new derivative contract was amended again on April 20, 2020 and calls for a cash payment of $4.5 million in June 2020 (that we paid) and six equal monthly payments of $3.375 million beginning in May 2022. This payment stream is scheduled to coincide around the commencement of operations and the resulting cash flow of the Bakersfield Biorefinery.31-37- BiorefineryRenewable Fuels Refinery is currently being retooled and converted from a crude oil refinery into a biofuelsrenewable fuels refinery. The construction of the Bakersfield BiorefineryRenewable Fuels Refinery is expected to be completed, and production of renewable fuel products at the Bakersfield BiorefineryRenewable Fuels Refinery is expected to commence commercial operations in earlythe second half of 2022. UntilBased on our existing agreements for the sale of renewable diesel and other renewable products that the Bakersfield Biorefinery isRenewable Fuels Refinery will produce, once the Bakersfield Renewable Fuels Refinery becomes fully operational, we will not generate any refinery operating revenues. We anticipate that we will generate some revenues in 2021 from salessufficient cash to fund all of Camelina seed, although such revenues are not expected to be significant. Duringour operating expenses. However, until the construction phase of the biorefinery,Bakersfield Renewable Fuels Refinery commences production, we will continue to incur material operating expenses without generating any refinery operating revenues and, accordingly, we will continue to incur significant operating costs and capital expenditures to upgrade the existing equipment and facilities. The expenses that we expect to incur include, among others, the purchase of new biorefinery equipment, the payments to our contractors under the various engineering, procurement and construction agreements that we entered into, the costs of maintaining the existing facility during the construction phase, paying licensing fees, the costs of upgrading the refinery’s rail line and certain pipelines, and making interest and other payments under our senior and mezzanine credit facilities.Biorefinery,Renewable Fuels Refinery, converting the existing refinery into a biorefinery,renewable refinery, and paying all operating expenses during the preoperational period, in May 2020 weour BKRF OCB, LLC subsidiary entered into a $300 million seniorthe secured term loan facilitySenior Credit Facility with the Senior Lenders andunder which, as of December 31, 2021, we have borrowed $337.6 million. Also, in 2020 our BKRF HCB, LLC subsidiary entered into a $65 million secured term loan facilityMezzanine Credit Facility with the Mezzanine Lenders. Our senior and mezzanine lenders have alsoLenders under which we most recently had the ability to borrow up to $67.4 million. On December 20, 2021, our Senior Lenders agreed to make an additional $15provide a Bridge Loan of up to $20 million, available to us, if requested, to develop the Bakersfield Refinery and our Camelina feedstock program. Asof which $12 million was funded as of December 31, 2020, we have borrowed $151.5 million2021, to provide working capital until our contemplated preferred share financing with ExxonMobil and the Senior Lenders could be completed. On February 23, 2022 GCEH assumed all of the rights and obligations of the Mezzanine Lenders under the senior credit facility, of which approximately $45Mezzanine Credit Facility, and accordingly loaned $67.4 million was unspentto BKRF HCB, LLC as of the end of 2020. We borrowed approximately $31 million in March 2021lender under the Mezzanine Credit Facility. Accordingly, GCEH now is the mezzanine lender to BKRF HCB, LLC. The proceeds from the Senior Credit Facility and the Mezzanine Credit Facility have been, and will continue to be used to fund the retoolingpre-operational expenses and the capital costs of the Bakersfield Biorefinery and ongoing operations. As of the date of this Annual Report, we have not yet utilized the mezzanine credit facility or the additional $15 million of available credit the senior and mezzanine lenders have made available to us.senior loanSenior Credit Facility bears interest at the rate of 12.5% per annum, payable quarterly. No principalPrincipal payments are required to be made under the senior loan until maturity.Senior Credit Facility beginning after the Bakersfield Renewable Fuels Refinery has commercial operations. The senior loanSenior Credit Facility matures on November 4, 2026. The mezzanine loan will bearMezzanine Credit Facility bears interest at the rate of 15.0% per annum, on amounts borrowed, payable quarterly, provided that weBKRF HCB, LLC may defer up to 2.5% interest to the extent we doBKRF HCB, LLC does not have sufficient cash to pay the interest (any deferred interest will be added to principal). Principal ofBorrowings under the mezzanine loans isMezzanine Credit Facility are due at maturity.maturity in November 2027. As additional consideration, for the senior loans and mezzanine loans, the senior lendersSenior Lenders were issued Class B units (and the mezzanine lenders will be issuedUnits. The Class CB Units when we borrow under the mezzanine loans)represent membership interest in our subsidiary, that indirectly ownsBKRF HCB, LLC and entitle the Bakersfield Biorefinery.holders thereof to preferential cash distributions. The Class B and C Units will not affect our liquidity until the Bakersfield BiorefineryRenewable Fuels Refinery commences operations, which is expected in the second half of 2022. However, since the holders of the Class B and C Units will be entitled to certain priority cumulative cash distributions, if any, that may be made in the future from the operations of the Bakersfield Biorefinery,Renewable Fuels Refinery, distributions made on behalf of the Class B and C Units will reduce the amount of distributions that we may be entitled to receive in the future from the operations of the Bakersfield Biorefinery.internal projections of our future operating expenses, we anticipated that the $380$405 million availableprovided to usBKRF HCB, LLC under the seniorSenior Credit Facility and mezzanine loans (including the supplemental $15 million)Mezzanine Credit Facility, together with the funds available under the Series C Financing would be sufficient to fund our projected capital expenditures and operating expenses at the Bakersfield BiorefineryRenewable Fuels Refinery until the Bakersfield BiorefineryRenewable Fuels Refinery becomes operational. However, because of the scopeuncertainty around the cost of change orders to the refinery, the impact of the loss of revenues from the refinery arising from the unexpected delay in the completion of construction, and the amount and timing of certain credits due to us, we now believe that we will need additional capital to fund certain of our liquidity requirements.BiorefineryRenewable Fuels Refinery has both changedbeen delayed, and expandedproduction at the refinery is now not expected to include additional capabilities and equipment, which changes may increasecommence until the costsecond half of installing, developing and constructing2022. The delay in the commencement of production at the Bakersfield Biorefinery. In orderRenewable Fuels Refinery will result in a loss of anticipated revenues. As a result, we currently expect that we will need additional funds to meet the Company’s projected commitments over the next twelve months. Our financial commitments during the next twelve months include a fixed payment obligation that arose from the settlement of a derivative contract that we amended on April 20, 2020, which requires us to pay $20.2 million in six equal monthly payments of $3.375 million beginning in May 2022 from the cash generated by the refinery’s operations. Since the Bakersfield Renewable Fuels Refinery will not be prepared for cost overruns,operational and we will not generate revenues when the payments under the derivative contract are required to begin in May 2022, we have agreedinitiated discussions with our senior and mezzanine lendersthe holder of this unsecured obligation to establish a $35 million contingency reserve by July 31, 2021 to fund any cost overruns. See “Item 9B. Other Information.” We currently do not havedefer the funds to establishrepayment of this obligation until the contingency reserve and will, therefore, have to raise this amount through a public or private sale of our securities.refinery’s operations commence. No assurance can be given that we will be able to raise the funds by July 31, 2021,renegotiate this obligation on terms acceptable to us, or at all. A portion of GCEH’s corporate overhead has been fundedsenior and mezzanine loan advances, which advances GCEH has agreed to pay todelayed commencement of the Bakersfield Biorefinery.-38- successful and timely development and construction of our biorefinery and the future commercialization of the renewable fuel products that we intend to produce at the Bakersfield Biorefinery.Renewable Fuels Refinery. In order to ensure that we have a buyer for the renewable diesel produced at our biorefinery,renewable refinery, we have entered into an offtake agreementthe Offtake Agreement with ExxonMobil Oil Corporation. Under that agreement,under which ExxonMobil has agreed to purchase a minimum of 105 million gallons per year of renewable diesel from the Bakersfield BiorefineryRenewable Fuels Refinery for a period of five years following the date that the Bakersfield BiorefineryRenewable Fuels Refinery commences commercial operations, with the right to acquire additional volumes.operations. The price of the renewable diesel to be sold to ExxonMobil under the contractOfftake Agreement is based on a combination of both a fixed price and a variable price. We have also entered into the Term Purchase Agreement with ExxonMobil under which ExxonMobil has the right to purchase the additional renewable diesel that is not sold to ExxonMobil under the Offtake Agreement. The revenues we expect to receive under the offtake agreement,Offtake Agreement once the Bakersfield Renewable Fuels Refinery is fully operational, together32BiorefineryRenewable Fuels Refinery will be able to produce renewable diesel from various renewable feedstocks, such as Camelina oil produced from our patented Camelina varieties, soybean oil, used cooking oil, inedible animal fat, and other vegetable oils. We believe that one of our strategic advantages is that a significant portion of the feedstock expected to be used at our biorefineryrenewable refinery will be Camelina oil derived from the Camelina grain produced by third party farmers for the Bakersfield BiorefineryRenewable Fuels Refinery using our patented Camelina varieties. However, we anticipate that we will need additional funding for general corporate purposes, and to grow our certified Camelina seeds, to enter into agreements with farmers, and to otherwise ramp up the cultivation and production of Camelina. AsIn addition, we will also have to purchase significant amounts of feedstock from which we will produce renewable diesel, which purchase price we may have to pay in advance. Our goal is to fund the foregoing feedstock purchase and production costs through a feedstock supply credit line we expect to obtain from one or more commercial financial institutions. Based on our current Camelina production expectations and the projected costs of purchasing feedstock, we expect that we will have to obtain a line of credit for $100 million to $125 million. Any such line of credit is expected to be secured by the feedstock that we purchase and by the accounts receivables generated from our renewable diesel sales.datenewly issued securities could include certain rights that would adversely affect our stockholders’ rights. Furthermore, if these new securities are convertible or are accompanied by the issuance of this report,warrants to purchase shares of our common stock, our current stockholders may experience substantial dilution. There can be no assurance that we have only secured limited funding for our Camelina production plans. Although we are currentlywill be successful in discussions with certain agri-finance companies, other strategic partners, our existing lenders, and possible third party investors forraising debt or equity financing for our Camelina operations and corporate purposes, no assurance can be given that we will obtain the necessary funds,funding or that if we do obtainany such funding, that the terms under which we obtain such fundingfinancing will be beneficialavailable, available on favorable or acceptable terms, or in the amounts needed. Additionally, while the potential economic impact brought on by the current geopolitical developments, including the Russian invasion of Ukraine and the continuing impacts of the coronavirus pandemic are difficult to us.ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.and filed and included following the signature pageas a part of this Annual Report on Form 10-K.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.Effective January 1, 2021 Hall & Company Certified Public Accountants10-K, and Consultants, Inc. (“Hall & Company”), the Company’s independent registered public accounting firm, merged with and into Macias, Gini & O’Connell, LLC (“MGO”). In the merger, Hall & Company’s audit operations and the professional staff of Hall & Company joined MGO as employees of MGO. Accordingly, effective January 8, 2021, Hall & Company resigned as the Company’s independent registered public accounting firm and MGO became the Company’s independent registered public accounting firm. This change in the Company’s independent registered public accounting firm was approvedare incorporated herein by the Company’s Board of Directors on January 8, 2021.The principal accountant’s reports of Hall & Company on the financial statements of the Company as of and for the years ended December 31, 2019, 2018, 2017, and 2016 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.During the years ended December 31, 2019, 2018, 2017, and 2016, and through January 8, 2021, there were no disagreements with Hall & Company on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to Hall & Company’s satisfaction would have caused it to make reference thereto in connection with its reports on the financial statements for such years. During the fiscal years ended December 31, 2019, 2018, 2017, and 2016, and during the period from the end of the most recently audited fiscal year through January 8, 2021, there were no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K.During the years ended December 31, 2019, 2018, 2017, and 2016, and through January 8, 2021, the Company did not consult with MGO with respect to any of (i) the application of accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or an event of the type described in Item 304(a)(1)(v) of Regulation S-K.33Table of ContentsTEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A.CONTROLS AND PROCEDURES.-39-We maintain disclosure that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer (the “Certifying Officers”), as appropriate, to allow timely decisions regarding required disclosures.In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide reasonable assurance only of achieving the desired control objectives, and management necessarily is required to apply its judgment in weighing the costs and benefits of possible new or different controls and procedures. Limitations are inherent in all control systems, so no evaluation of controls can provide absolute assurance that all control issues and any fraud within the company have been detected.Reporting,Reporting.” below. We have takenare taking the additional remedial steps to address the material weaknesses in our disclosure controls and procedures as set forth below under “Management’s Plan for Remediation of Material Weaknesses.” Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of its published consolidated financial statements.2019.2021. Management based its assessment on the framework set forth in Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013) in conjunction with SEC Release No. 33-8810 entitled “Commission Guidance Regarding Management’s Report on Internal Control Over Financial Reporting Under Section 13(a) or 15(d) of the Securities and Exchange Commission” (17 CFR PART 241). Because of the material weaknesses described below, management concluded that the Company’s ICFR was not effective as of December 31, 2020:2021:period endperiod-end financial disclosure and reporting processes, including not timely performing certain reconciliations and the completeness and accuracy of those reconciliations, lack of effectiveness of controls over accurate accounting and financial reporting and reviewing the underlying financial statement elements, and lack of approval of adjusting journal entries. This deficiency also resulted-40- books not being closed on a timely basis.various key processes including the information technology control environment.In completing the closingour 2020 financial statements, we recorded material adjustmentsdocumentation of policies and procedures and insufficient controls and reviews related to cybersecurity, security access and configuration including user access, and change management around the valuation of asset retirement obligations and environmental liabilities and mandatorily redeemable equity instruments. These adjustments were the result of rigorous reviews at year end. However, we note these adjustments also represent corrections to these items being misstated earlier in the year due to a lack of a rigorous review when they were initially recorded.information technology control environment.The Company has34BiorefineryRenewable Fuels Refinery had minimal controls in place when it was purchased in May 2020, and as of December 31, 20202021 the Company had not completed its implementation of all the internal controls and procedures. The Company is taking measures to remediate these deficiencies.has takenis in the process of taking, or plans to take, the following actions, and continues to be engaged in, making necessary changes and improvements to its internal control system to address the material weaknessweaknesses in ICERICFR described above. These actions include:(a)has hiredis in the process of hiring additional financial and accounting personnel who are experienced in U.S. GAAP financial reporting, including additional personnel in the Company’s newly established accounting department.reporting. The Company is evaluating its accounting personnel to remediate the identified weaknesses;(b) has purchased and installed a new financial reporting and accounting system and is implementing more robust financial reporting, accounting and management controls over its accounting and financial reporting functions at all of its facilities. The Company is evaluating its necessary approval control procedures;controls including approval of adjusting journal entries;(c)necessary independent valuation expertsCompany in improving its internal control over financial reporting, as well to valueassist with technical accounting matters. The Company is evaluating the Company’s asset retirement obligations, environmental liabilities and/or certain financial instruments.recommendations put forth by the consultants.2020,2021, we enhanced the reporting structure of our accounting system, and began the implementation of other financial reporting tools. Other than these changes, there were no other changes in our internal control over financial reporting that occurred during the quarter ended December 31, 20202021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B.OTHER INFORMATIONIssuance of Shares: 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).35PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.The following table sets forth the name, age and position held by each of GCEH’s current executive officers and directors as of March 31, 2021. Directors are elected for a period of one year and thereafter serve until the next annual meeting at which their successors are duly elected by the stockholders.
TEM 9B OTHER INFORMATION NameAgePositionDavid R. Walker (1)76Chairman of the BoardRichard Palmer60President, Chief Executive Officer, and DirectorMartin Wenzel63DirectorNoah Verleun38Executive Vice President-Development & Regulatory AffairsRalph Goehring64Vice President-Finance, and Chief Financial Officer,(1)-41-Member of our Audit CommitteeMr. Palmer and Mr. Goehring also serve asPresident, Chief Executive Officer and asAnnual Meeting of Stockholders to be filed with the Chief Financial Officer, respectively, of all of the Company’s principal subsidiaries.Business Experience and DirectorshipsThe following describes the backgrounds of current executive officers and directors. Mr. Walker and Mr. Wenzel are independent directors as defined in the Nasdaq rules governing members of boards of directors.David R. WalkerDavid R. Walker joined the Board of Directors in May 1996 and was appointed Chairman of the Board of Directors in May 1998. He has served as Chairman of the Audit Committee since 2001. Mr. Walker has been retired since July, 2016. From 1976 until his retirement in July 2016, Mr. Walker was the General Manager of Sunheaven Farms, the largest onion growing and packing entity in the State of Washington. In the capacity of General Manager, Mr. Walker performed the functions of a traditional chief financial officer. Mr. Walker holds a Bachelor of Arts degree in economics from Brigham Young University with minors in accounting and finance.The Board believes that Mr. Walker’s experience regarding the operation and management of large-scale agricultural farms and his experience as a financial officer are valuable resources to our Board in formulating business strategy, addressing business opportunities and resolving operational issues that arise from time to time.Richard PalmerRichard Palmer was appointed as our President and Chief Operating Officer in September 2007 and has been a member of the Board of Directors since September 2007. Mr. Palmer became our Chief Executive Officer in December 2007. Prior to joining the Company in 2007, Mr. Palmer was a co-founder of Mobius Risk Group, LLC, an energy risk advisory services consulting company that was formed in January 2002 and was a principal and Executive Vice President of that consulting company until September 2007. From 1997 to 2002, Mr. Palmer was a Senior Director at Enron Energy Services. Prior thereto, from 1995 to 1996 Mr. Palmer was a Vice President of Bentley Engineering, and a Senior Vice President of Southland Industries from 1993 to 1996. Mr. Palmer received his designation as a Certified Energy Manager in 1999, holds two Business Management Certificates from University of Southern California’s Business School,SEC no later than April 30, 2022 and is an active memberincorporated herein by reference.bothStockholders to be filed with the American Society of Plant Biologists, and the Union of Concerned Scientists. Mr. Palmer is Trustee & President of the Center for Sustainable Energy Farming (CFSEF), a non-profit research institute dedicated to sustainable communities, fueled by socially responsible clean energy. In February 2013, Mr. Palmer joined the RSB Services Foundation’s Board of Directors and held the Chairman role fromSEC no later than April until December 2013. RSB Services acted as the implementing entity of the Roundtable on Sustainable Biofuels (RSB) sustainability certification until December 2013.Over the last 27 years, Mr. Palmer has held senior level management positions with a number of large engineering, development, operations and construction companies, and, as a result, he has garnered a wealth of experience in the energy field. Mr. Palmer’s experience is important to the development and execution of the Company’s business plan. Mr. Palmer is the only member of management who serves as a director of the Company.36Martin WenzelMartin Wenzel was appointed to the Board of Directors on May 7, 2020. Mr. Wenzel previously served on the Board from April 2010 until the end of 2014. Until his appointment as a director, Mr. Wenzel served as an advisor to the Board pursuant to that certain Board Advisor Agreement, dated June 21, 2019.Martin Wenzel has been an Executive Vice President for Heorot Power Holdings since June 2016. Prior to joining Heorot Power Holdings, Mr. Wenzel served as Executive Vice President for Beowulf Energy from July 2012 to June 2016. Prior to his work at Beowulf, he was appointed as the President and Chief Executive Officer for Colorado Energy Management (2007-2012.) Mr. Wenzel was the Senior Vice President (Sales and Marketing) of Miasole Inc., a producer of solar cell products. Mr. Wenzel was President and Chief Executive Officer of Alpha Energy LLC from 2001-2004. He currently is a member of the Board of the Directors for ION Clean Energy, a carbon capture technology company based in Colorado. Mr. Wenzel holds an Executive MBA from Columbia Business School, a Master’s degree in Systems Management from The University of Southern California, and a Bachelor’s degree in Engineering and Management from the U.S. Naval Academy.Mr. Wenzel was chosen to serve as a director on the Board because of his extensive background in the energy industry, including over 30, years of developing, financing, constructing and operating energy projects and marketing energy commodities in the U.S. and internationally.Noah VerleunNoah Verleun was appointed as the Company’s Senior Vice President in January 2019 and as our Executive Vice President of Development & Regulatory Affairs in May 2020. He has held various roles across the organization since 2010. Prior to joining the Company, Mr. Verleun worked for JP Morgan PWM, Rockefeller University in its office of investments and OC&C Strategy Consultants in London. He received a Bachelor of Science degree in Economics and a Master of Public Policy degree from the University of Southern California.Ralph GoehringRalph Goehring joined the Company on May 20, 2020 and was appointed Vice President-Finance and Chief Financial Officer on July 10, 2020. From 2010 until his appointment to GCEH, Mr. Goehring was the Chief Executive Officer and majority owner of SandDollar Financial LLC, a company that provided accounting and financial reporting services to energy related firms. From 1987 until 2008, Mr. Goehring worked at Berry Petroleum Company, first as Manager of Tax (1987-1992), and thereafter as Chief Financial Officer (1992-2008). Prior to joining Berry Petroleum Company, Mr. Goehring was a Senior Tax Accountant at Arthur Andersen & Co. Mr. Goehring holds a Bachelor of Business Administration degree from the University of California, Berkeley,2022 and is a CPA.37TableTEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSContentsCompliance with Section 16(a) of the Exchange ActSection 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities,Stockholders to file reports of ownership and changes in ownershipbe filed with the SEC. Executive officers, directorsSEC no later than April 30, 2022 and greater than 10% stockholders areis incorporated herein by reference.SEC regulations to furnish us with copies of all Section 16(a) forms they file.Based solely on information provided to us bythis item will be contained in our officers and directors and our review of copies of reporting forms received by us, we believe that during the fiscal year ended December 31, 2020, our officers and directors failed to timely file the following forms under Section 16(a): Ralph Goehring failed to timely file a Form 3 upon his appointment as the Company’s Chief Financial Officer and Noah Verleun failed to timely file a Form 3 upon his appointment as an executive officer of GCEH, and thereafter failed to file a Form 4 upon the exercise of certain optionsDefinitive Proxy Statement for the purchaseAnnual Meeting of shares of Common Stock.Code of EthicsOur Board of Directors has adopted a revised code of ethics that applies to our principal executive officers, principal financial officer or controller, or persons performing similar functions. Our code of ethics and business conduct is available on our website at www.gceholdings.com. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider itStockholders to be a part of this Annual Report.Adherence to ESG principles.We believe that (i) our impact onfiled with the environment, (ii) how we manage our relationships with employees, suppliers, customersSEC no later than April 30, 2022 and the communities in which we operate, and (iii) the accountability of our leadership to our stockholders are important to our stockholders and the success of business. We believe that our business goal of reducing the carbon intensity of transportation fuels and reducing greenhouse gases is a key component of our environmental, social and governance (“ESG”) program. Our workforce is critical to our success, and we are committed to fostering a culture of safety, diversity and inclusion that makes our employees feel safe, empowered and engaged. We plan to report how we oversee and manage ESG factors material to our business.38Table of ContentsTEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICESBoard CommitteesOur Board of Directors has an Audit Committee, but does not currently have a Compensation Committee or a Nominating Committee.Audit Committee. Our Audit Committee operates pursuant to a written charter. Among other things, the Audit Committee is responsible for:●reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;●hiring our independent registered public accounting firm, and coordinating the oversight and review of the adequacy of our internal control over financial reporting with both management and the independent registered public accounting firm; and●reviewing and, if appropriate, approving all transactions between our company or its subsidiaries and any related party.Because the Board of Directors currently only has three directors, only one of whom is independent according to Nasdaq Stock Market rules, as of the date of this Annual Report David Walker is the sole member of the Audit Committee. The Board expects to appoint additional members to the Board of Directors, including additional members of the Audit Committee, in the near future. Mr. Walker has significant knowledge of financial matters, and our Board has designated Mr. Walker as the “audit committee financial expert” of the Audit Committee.Nominating Committee. GCEH does not currently maintain a nominating committee. Rather, all of the directors on the Company’s Board of Directors at any given time participate in identifying qualified director nominees and recommending such personsinformation required to be nominated for election to the Board at each annual meeting ofdisclosed by this item will be contained in our stockholders. As a result, our Board has not found it necessary to have a separate nominating committee. However, the Board may form a nominating committeeDefinitive Proxy Statement for the purposeAnnual Meeting of nominating future director candidates.Compensation Committee. GCEH does not currently have a compensation committee. All of GCEH’s directors participate in determining the compensation of our executive officers and non-employee directors. As a result, the Board has not found it necessaryStockholders to have a separate compensation committee.In determining the compensation of any executive officer or non-employee director, the full Board (excluding the executive officer or non-employee director whose compensation is being determined) will consider such factors as they deem appropriate in developing competitive compensation standards aimed at attracting and retaining qualified management personnel and directors. Some of these factors may include, but are not limited to, the level of compensation paid to senior executives and directors at businesses and other organizations of comparable size and industry, and the specific experience and expertise of any particular executive officer or non-employee director relative to the experience and expertise of other executive officers and non-employee directors. Our Board meets at least once a year to review and consider the current compensation of our executive officers and non-employee directors, and if appropriate, adjust the current levels of such compensation.39ITEM 11.EXECUTIVE COMPENSATION.Summary Compensation Table.Summary of Cash and Other Compensation. The following table sets forth compensation for services rendered in all capacities to the Company: (i) for each person who served as the Company’s Chief Executive Officer at any time during the past fiscal year, (ii) for the two most highly compensated executive officers, other than our Chief Executive Officer, who was employedbe filed with the Company on December 31, 2020SEC no later than April 30, 2022 and who earned over $100,000 during the fiscal year ended December 31, 2020, and (iii) for up to two other executive officers who earned over $100,000 during the December 31, 2020 fiscal year but were no longer employed with the Company on December 31, 2020 (the foregoing executives areis incorporated herein collectively referred to as the “Named Executive Officers”).Summary Compensation TableName and
Principal Position Fiscal
Year
Ended
12/31
or Accrued
or Accrued
Awards
Awards
Compensation Richard Palmer 2020 332,740 175,000 — — 21,089 528,829 President and Chief Executive Officer 2019 300,000 350,000 — — — 650.000 Ralph Goehring Chief Financial Officer (1) 2020 138,750 — — 52,694 25,810 217,254 Noah Verleun 2020 263,397 155,000 18,294 436,691 Executive Vice President 2019 176,538 (3) — — 245,317 — 421,855 (1)Mr. Goehring joined the Company on May 20, 2020 and was appointed as the Company’s Chief Financial Officer on July 10, 2020.(2)Amounts represent the aggregate grant date fair value of awards computed in accordance with ASC Topic 718, excluding the effects of any estimated forfeitures. For assumptions used in determining grant date fair market value, refer to Note G of Notes to the Financial Statements included in this Annual Report. The amounts reported for these options may not represent the actual economic values that our Named Executive Officers will realize from these options as the actual value realized will depend on our performance, stock price and their continued employment.(3)Mr. Verleun was appointed as GCEH’s Senior Vice President in January 2019 and as GCEH’s Executive Vice President-Development & Regulatory Affairs in May 2020.Option GrantsMr. Goehring was granted an option to purchase 100,000 shares of the Company’s common stock under the Company’s 2020 Equity Incentive Plan, which options (i) have an exercise price of $0.932 (equal to the closing market price on the date prior to the first day of Mr. Goehring’s employment with the Company), (ii) have a five year term, and (iii) vest in twelve equal quarterly installments commencing with the fiscal quarter ending June 30, 2020.Holdings of Previously Awarded EquityThe following table sets forth information as of December 31, 2020, concerning unexercised options, unvested stock and equity incentive plan awards for our Named Executive Officers.40OUTSTANDING EQUITY AWARDS AT YEAR ENDED DECEMBER 31, 2020 Option Awards Name Number of
Securities
Underlying
Unexercised
Options
(#)
ExercisableNumber of
Securities
Underlying
Unexercised
Options
(#) UnexercisableEquity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options
(#)Option Exercise
Price
($)Option Expiration
Date Richard Palmer 11,000,000 0 — $0.154 10/15/23 Ralph Goehring 25,000 75,000 — $0.932 05/18/25 Noah Verleun —
—
—Director Compensation.Pursuant to GCEH’s director compensation policy, in 2019 and 2020 each non-employee director earned $24,000 per year for serving on the Board, and was entitled to an annual grant of options to acquire 50,000 shares of Common Stock. Directors who are employed by the Company as officers or employees are not entitled to any compensation for serving on the Board of Directors. Dave Walker, the Chairman of the Board, served as only non-employee director in 2019 and in 2020 until Martin Wenzel was appointed on May 7, 2020. Until his appointment as a director, Mr. Wenzel served as an advisor to the Board pursuant to a 2019 Board Advisor Agreement. Under the Board Advisor Agreement, Mr. Wenzel was granted a five-year non-qualified stock option to purchase 50,000 shares at an exercise price of $0.80 per share, which option automatically vested upon Mr. Wenzel’s appointment to the Board. The following table sets forth information concerning the compensation paid to Messrs. Walker and Wenzel in each 2019 and 2020 for services rendered as a director. Richard Palmer, who has served as a director and as our President and Chief Executive Officer was not compensated for his services as a director; his compensation as an officer is described above in the Summary Compensation Table.DIRECTOR COMPENSATION FOR FISCAL YEARS 2020 and 2019Name Fees
Earned or
Paid in
CashStock
AwardsOption
Awards(1)(2)All Other
CompensationTotal David R. Walker 2020 $24,000 — $22,065 — $46,065 2019 $24,000 — $23,427 — $47,427 Martin Wenzel 2020 $15,550 — $22,065(3) — $37,615 Total $63,550 — $67,557 — $131,107 (1)This column represents the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the option grants, refer to Note 8 of our financial statements in this Annual Report. These amounts do not correspond to the actual value that will be recognized by the named directors from these awards.(2)Pursuant to the company’s director compensation, each non-employee director is entitled to an annual grant of options to acquire 50,000 shares.(3)Excludes the five-year non-qualified stock option to purchase 50,000 shares that Mr. Wenzel was granted in 2019 as an advisor to the Board, which option automatically vested upon Mr. Wenzel’s appointment to the Board.41Employment AgreementsRichard Palmer. On October 16, 2018, GCEH and Mr. Palmer entered into a new Executive Employment Agreement (the “2018 Employment Agreement”) that replaced the 2014 Employment Agreement. Under the 2018 Employment Agreement, Mr. Palmer agreed to serve as the Company’s President and Chief Executive Officer through October 15, 2023 at an annual base salary of $300,000 per year. Upon the closing of the Acquisition, on May 7, 2020 GCEH and Mr. Palmer amended the 2018 Employment Agreement to increase Mr. Palmer’s annual base salary to $350,000, effective immediately. Under the 2018 Employment Agreement, Mr. Palmer is entitled to receive an annual bonus if he meets certain performance targets. The target annual bonus amount is 50% of Mr. Palmer’s base salary, subject to the Board’s discretion to increase the amount of the bonus or adjust the performance criteria. If Mr. Palmer’s employment is terminated as a result of his death or disability, or by him for “Good Reason” as defined in the 2018 Employment Agreement, in addition to receiving a payment of all outstanding sums due and owing to him at the time of separation, GCEH is required to pay Mr. Palmer (or his estate) an amount equal to twelve (12) months of Mr. Palmer’s then-current base salary in the form of salary continuation, plus payment of Mr. Palmer’s and his family’s medical insurance premiums. If Mr. Palmer’s employment is terminated for death or disability, Mr. Palmer or his estate will also be entitled to retain any stock options that have vested as of the date of termination.Under the 2018 Employment Agreement, the Company agreed to grant, and did grant, Mr. Palmer 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, the Option would vest with respect to 4 million shares when the Company’s market capitalization first reaches $7 million, another 4 million shares would vest when the Company’s market capitalization reaches $15 million, and 3 million shares would vest when the Company’s market capitalization first reaches $25 million. The Company’s market capitalization has exceeded each of the foregoing levels and, accordingly, the Option has fully vested.Noah Verleun. Effective January 15, 2019, the Company entered into a three-year employment agreement with Noah Verleun, the Company’s Executive Vice President, which agreement was amended on May 7, 2020. Under the employment agreement, Mr. Verleun is currently 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 Mr. Verleun meets certain performance targets. In order to be eligible to receive a bonus, Mr. Verleun must be employed by the Company on the last day of the year in which the bonus is earned. If Mr. Verleun’s employment is terminated by him for “Good Reason” as defined in the Verleun Agreement, in addition to receiving a payment of all outstanding sums due and owing to him at the time of separation, the Company is required to pay Mr. Verleun (or his estate) an amount equal to four months of Mr. Verleun’s then-current base salary in the form of salary continuation, plus payment of Mr. Verleun’s and his family’s medical insurance premiums. If Mr. Verleun’s employment is terminated for death or disability, Mr. Verleun or his estate shall be entitled to the same four month’s salary, and he will be entitled to retain any stock options that have vested as of the date of termination.Under Mr. Verleun’s employment agreement, the Company agreed to grant, and did grant, Mr. Verleun a five-year non-qualified stock option to purchase 5 million shares of Common Stock at an exercise price of $0.2, subject to the Company’s achievement of certain market capitalization goals. The foregoing option was scheduled to vest in three tranches when the Company’s market capitalization reached $7 million, $15 million, and $25 million. The Company’s market capitalization has exceeded each of the foregoing levels and, accordingly, Mr. Verleun’s options to purchase the foregoing 5 million shares have fully vested.42Ralph Goehring. On May 20, 2020, the Company hired Ralph Goehring as GCEH’s Vice President Finance and Chief Financial Officer. Mr. Goehring is an at-will employee. In addition to his duties as an officer of GCEH, Mr. Goehring also will be responsible for financial and accounting matters for BKRF and the other entities affiliated with BKRF. Mr. Goehring annual base salary is $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 GCEH, Mr. Goehring was granted an incentive stock option to purchase 100,000 shares of Common Stock under GCEH’s 2020 Equity Incentive Plan. The foregoing options have an exercise price of $0.932 (the closing trading price on the day prior to the date that his employment commenced), a five-year term, and vest over three years.Amended & Restated Non-Solicitation And Confidentiality Agreements. As a condition to the Senior Lenders entering into Credit Agreements, Mr. Palmer and Mr. Verleun entered into substantially identical Amended & Restated Non-Solicitation And Confidentiality Agreements (the “Non-Solicitation And Confidentiality Agreements”) with BKRF Owner. Under the Non-Solicitation And Confidentiality Agreements, both Mr. Palmer and Mr. Verleun each individually agreed that, during the period that they are employed by GCEH or any of GCEH’s subsidiaries or affiliates that are involved in the production of renewable diesel, they will not, directly or indirectly, (i) solicit, divert or take away any customers, clients, offtake parties, business acquisition or other business opportunity of the Company related to the production of renewable diesel in the U.S., (ii) contact or solicit (other than through general advertising or solicitations not targeted at the Company’s employees), with respect to hiring, or knowingly hire any employee or consultant of the Company or any person employed or engaged as a service provider by the Company at any time during the 12-month period immediately preceding the termination of their employment, (iii) induce, advise or encourage any employee or consultant of the Company to leave his or employment or engagement with the Company, or (iv) induce any distributor or supplier (including, without limitation, suppliers of feedstocks, consumables, equipment, or construction services), customer, client, or other counterparty of the Company to terminate or modify its relationship with the Company. However, nothing in the Non-Solicitation And Confidentiality Agreements is intended to prevent either Mr. Palmer or Mr. Verleun from engaging in, or otherwise being involved in, the development, production, cultivation, distribution, storage, marketing and sale of renewable fuel feedstocks, including Camelina, or the ownership of an equity or profits interest in any entity engaged in renewable fuel feedstock development, production, cultivation, distribution, storage, marketing and sale.Under the Non-Solicitation And Confidentiality Agreements, each of Mr. Palmer and Mr. Verleun agreed not make any sale, transfer or other disposition of any equity interests that they may own in GCEH or any of its subsidiaries (including any shares of Common Stock or options that they may own) until the Senior Lenders have received a certain cumulative amount of distributions under Amended and Restated Limited Liability Company Agreement of BKRF Mezzanine Borrower; unless (x) such sale, transfer or disposition is for estate planning purposes to an entity that is and remains in their control or (y) all of the cash proceeds from any such sale, transfer or disposition are used to pay costs and expenses (specifically including amounts needed to purchase any Common Stock in GCEH or to cover any resultant tax liabilities) incurred in connection with the exercise of options to purchase such Common Stock in GCEH.Change of Control ArrangementsThe Company has no change of control payment agreements in effect.2010 Equity Incentive PlanOn May 13, 2010, our Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”) pursuant to which the Board of Directors reserved an aggregate of 2,000,000 shares of Common Stock for future issuance. The 2010 Plan was approved by our stockholders at the Annual Meeting of Stockholders held in November 2010. The 2010 Plan provided for awards of incentive stock options, non-qualified stock options, and stock appreciation rights. At the time that the 2010 Plan expired on May 12, 2020, options for the issuance of all 2,000,000 shares authorized by the 2010 Plan had been granted. As of December 31, 2020, 100,000 options were outstanding under the 2010 Plan and, since the 2010 Plan has expired, no additional awards may be made under the 2010 Plan.432020 Equity Incentive PlanOn April 10, 2020, GCEH’s Board of Directors adopted the “Global Clean Energy Holdings, Inc. 2020 Equity Incentive Plan” (the “2020 Plan”) pursuant to which the Board of Directors reserved an aggregate of 2,000,000 shares of Common Stock for future issuance. The 2020 Plan was approved by the Company’s stockholders on November 17, 2020 at GCEH’s annual meeting of stockholders. As of December 31, 2020, GCEH has issued options to purchase 1,054,000 shares under the 2020 Plan. Except with respect to awards then outstanding, unless sooner terminated, the 2020 Plan will expire on April 9, 2030, and no further awards may be granted after that date.Types of AwardsThe 2020 Plan provides for the following types of awards: incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards, performance cash awards, and other stock-based awards. We refer to these stock awards collectively as the stock awards or awards.EligibilityStock awards may be granted under the 2020 Plan to employees (including officers) and consultants of the Company or our affiliates, and to members of our Board of Directors. Pursuant to applicable tax law, we may grant incentive stock options only to our employees (including officers) and employees of our affiliates.Annual Compensation to Non-Employee Directors; Limitation on Annual Stock Awards to ParticipantsThe 2020 Plan provides that the compensation payable by us to a non-employee director for services performed as a non-employee director, including, without limitation, the grant date value (determined under U.S. generally accepted accounting principles) of awards, cash retainers, committee fees and other compensation, shall not exceed $500,000 in the aggregate during any calendar year. Furthermore, the 2020 Plan provides that a maximum of 100,000 shares of our common stock subject to options and other stock awards may be granted to any non-employee director during any calendar year. The 2020 Plan also provides that no officer, employee or consultant may be granted stock awards covering more than 500,000 shares of our common stock during any calendar year pursuant to stock options, stock appreciation rights and other stock awards.AdministrationThe 2020 Plan is administered by our Board of Directors, which may in turn delegate authority to administer the 2020 Plan to a committee. Our Board of Directors may determine the recipients, numbers and types of stock awards to be granted, and terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to the limitations set forth below, our Board also determines the fair market value applicable to a stock award and the exercise price of stock options and stock appreciation rights granted under the 2020 Plan.If the administration of the 2020 Plan is delegated to a newly formed Compensation Committee by the Board of Directors, that Compensation Committee shall be comprised of at least two directors, each of whom is (1) a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (2) an “independent director” under applicable rules of The NASDAQ Stock Market LLC, including the independence rules of such stock exchange relating to compensation committee members. The 2020 Plan also permits delegation to one or more officers of the ability to determine the recipients, number of shares and types of stock awards (to the extent permitted by law) to be granted to employees other than our officers, subject to a maximum limit on the aggregate number of shares subject to stock awards that may be granted by such officers.44Stock Available for AwardsThe total number of shares of our common stock reserved for issuance under the 2020 Plan will consist of 2,000,000 shares (the “Share Reserve”). The shares of common stock subject to stock awards granted under the 2020 Plan that expire, are forfeited because of a failure to vest, or otherwise terminate without being exercised in full will return to the Share Reserve and be available for issuance under the 2020 Plan. However, any shares that are withheld to satisfy tax requirements or that are used to pay the exercise or purchase price of a stock award will not return to the 2020 Plan.Appropriate adjustments will be made to the Share Reserve, to the limit on the number of shares that may be issued as incentive stock options, to the limit on the number of shares that may be awarded to any one person in any calendar year and to outstanding awards in the event of any change in our common stock without the receipt of consideration by GCEH through reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, spin-off, split-off, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, other than the conversion of convertible securities.RepricingThe 2020 Plan expressly provides that, without the approval of our stockholders, the Compensation Committee may not provide for either the cancellation of underwater stock options or stock appreciation rights outstanding under the 2020 Plan in exchange for the grant of new awards, or the amendment of outstanding stock options or stock appreciation rights to reduce their exercise price.Dividends and Dividend EquivalentsThe 2020 Plan provides that (1) no dividends or dividend equivalents may be paid with respect to any shares of our common stock subject to an award before the date that such shares have vested, (2) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable award agreement (including, without limitation, any vesting conditions), and (3) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date, if any, such shares are forfeited to or repurchased by us due to a failure to meet any vesting conditions under the terms of the applicable award agreement.Terms of OptionsA stock option is the right to purchase shares of our common stock at a fixed exercise price during a specified period of time. Stock option grants may be incentive stock options or nonstatutory stock options. Each option is evidenced by a stock option agreement. The Board of Directors determines the terms of a stock option including the exercise price, the form of consideration paid on exercise, the vesting schedule, restrictions on transfer and the term of the option.Generally, the exercise price of a stock option may not be less than 100% of the fair market value of the stock subject to the option on the date of grant. Options granted under the 2020 Plan will vest at the rate specified in the option agreement.45The term of an option granted under the 2020 Plan will be determined by the Board of Directors, but may not exceed ten years. The Board of Directors will determine the time period, including the time period following a termination of an optionholder’s continuous service relationship with us or any of our affiliates, during which an optionholder has the right to exercise a vested option. Unless the terms of an optionholder’s stock option agreement provide otherwise, if an optionholder’s continuous service relationship with us, or any of our affiliates, ceases for any reason other than disability or death, the optionholder may generally exercise any vested options for a period of three months following the cessation of service. Unless otherwise provided in the option agreement, if an optionholder’s service relationship with us, or any of our affiliates, ceases due to disability or death, or an optionholder dies within a certain period following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of eighteen months in the event of disability and eighteen months in the event of death. The Board of Directors has discretion to extend the term of any outstanding option and to extend the time period during which a vested option may be exercised following a termination of continuous service. The Board of Directors also has discretion to accelerate the vesting of an option or a stock appreciation right following a participant’s termination of continuous service or to provide in an award agreement for continued vesting of an option or a stock appreciation right following a termination of continuous service.Acceptable forms of consideration for the purchase of our common stock issued under the 2020 Plan may include cash, payment pursuant to a “cashless” exercise program developed under Regulation T as promulgated by the Federal Reserve Board, common stock owned by the participant, payment through a net exercise feature, or other approved forms of legal consideration.Generally, an optionholder may not transfer a stock option other than by will or the laws of descent and distribution or pursuant to a domestic relations order. However, to the extent permitted under the terms of the applicable stock option agreement, an optionholder may designate a beneficiary who may exercise the option following the optionholder’s death.Tax Limitations on Incentive Stock OptionsThe aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to incentive stock options that are exercisable for the first time by an optionholder during any calendar year under all of our stock plans may not exceed $100,000. The options or portions of options that exceed this limit are generally treated as nonstatutory stock options. All of the shares authorized under the 2020 Plan may be granted as incentive stock options. No incentive stock option may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied:●The option exercise price must be at least 110% of the fair market value of the stock subject to the option on the date of grant; and●The term of any incentive stock option award must not exceed five years from the date of grant.Terms of Restricted Stock AwardsRestricted stock awards are awards of shares of our common stock. Each restricted stock award is evidenced by an award agreement that sets forth the terms and conditions of the award. A restricted stock award may be granted in consideration for cash, the recipient’s services performed, or to be performed, for us or an affiliate of ours or other form of legal consideration. Shares of our common stock acquired under a restricted stock award may be subject to forfeiture in accordance with the vesting schedule determined at the time of grant. Rights to acquire shares of our common stock under a restricted stock award may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement.Terms of Restricted Stock Unit AwardsA restricted stock unit is a right to receive stock or cash (or a combination of cash and stock) equal to the value of a share of stock at the end of a set period. No stock is issued at the time of grant. Each restricted stock unit award is evidenced by an agreement that sets forth the terms and conditions of the award. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule determined at grant. When a participant’s continuous service with us or any of our affiliates terminates for any reason, the unvested portion of the restricted stock unit award will be forfeited unless otherwise provided in the restricted stock unit award agreement.46Terms of Stock Appreciation RightsStock appreciation rights will be granted pursuant to a stock appreciation rights agreement. Each stock appreciation right is denominated in common stock share equivalents. The Board of Directors determines the strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our common stock on the date of grant. A stock appreciation right granted under the 2020 Plan vests at the rate specified in the stock appreciation right agreement as determined by the Board of Directors.When a stock appreciation right is exercised, the holder is entitled to an amount equal to the product of (1) the excess of the per share fair market value of our common stock on the date of exercise over the strike price, multiplied by (2) the number of shares of common stock with respect to which the stock appreciation right is exercised. We may pay the amount of the appreciation in cash or shares of our common stock or a combination of both.The Board of Directors determines the term of stock appreciation rights granted under the 2020 Plan, up to a maximum of ten years. Unless the terms of an optionholder’s stock option agreement provide otherwise, if a participant’s continuous service with us, or any of our affiliates, ceases for any reason other than disability or death, the participant may generally exercise any vested stock appreciation right for a period of three months following the cessation of service. If a participant’s service relationship with us, or any of our affiliates, ceases due to disability or death, or a participant dies within a certain period following cessation of service, the participant or a beneficiary may generally exercise any vested stock appreciation right for a period of eighteen months in the event of disability and eighteen months in the event of death. The Board of Directors has discretion to extend the term of any outstanding stock appreciation right and to extend the time period during which a vested stock appreciation right may be exercised following a termination of continuous service.Terms of Performance AwardsThe 2020 Plan provides for the grant of performance stock awards and performance cash awards. A performance award may vest or be exercised upon achievement of pre-determined performance goals during a specified period. A performance award may also require the completion of a specified period of continuous service. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be determined by the Board of Directors.Terms of Other Stock AwardsThe Board of Directors may grant other forms of stock awards that are valued in whole or in part by reference to the value of GCEH common stock. Subject to the provisions of the 2020 Plan, the Board of Directors has the authority to determine the persons to whom and the dates on which such other stock awards will be granted, the number of shares of common stock (or cash equivalents) to be subject to each award, and other terms and conditions of such awards. Such awards may be granted either alone or in addition to other stock awards granted under the 2020 Plan. Such other forms of stock awards may be subject to vesting in accordance with a vesting schedule determined at grant.47Corporate Transactions; Changes in ControlCorporate Transaction. In the event of certain significant corporate transactions, the Board of Directors has the discretion to take one or more of the following actions with respect to outstanding stock awards under the 2020 Plan:●Arrange for assumption, continuation, or substitution of a stock award by a surviving or acquiring entity (or its parent company);●Arrange for the assignment of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award to the surviving or acquiring corporation (or its parent company);●Accelerate the vesting and exercisability of a stock award followed by the termination of the stock award;●Arrange for the lapse of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award; and●Arrange for the surrender of a stock award in exchange for a payment equal to the excess of (1) the value of the property the holder of the stock award would have received upon the exercise of the stock award, over (2) any exercise price payable by such holder in connection with such exercise.The Board of Directors need not take the same action for each stock award.For purposes of the 2020 Plan, a corporate transaction will be deemed to occur in the event of (1) the consummation of a sale of all or substantially all of our consolidated assets, (2) the consummation of a sale of at least 90% of our outstanding securities, (3) the consummation of a merger or consolidation in which we are not the surviving corporation, or (4) the consummation of a merger or consolidation in which we are the surviving corporation but shares of our outstanding common stock are converted into other property by virtue of the transaction.Change in Control. A stock award may be subject to additional acceleration of vesting and exercisability upon or after specified change in control transactions (as defined in the 2020 Plan), as provided in the stock award agreement or in any other written agreement between us or any affiliate and the participant.Duration, Suspension, Termination and Amendment of the 2020 PlanThe Board of Directors may suspend or terminate the 2020 Plan at any time. Unless sooner terminated by our Board of Directors, the 2020 Plan shall automatically terminate on April 9, 2030, which is the day before the tenth anniversary of the date the 2020 Plan was adopted by the Board of Directors. No awards may be granted under the 2020 Plan while the 2020 Plan is suspended or after it is terminated.The Board of Directors may amend the 2020 Plan at any time. However, no amendment or termination of the plan will adversely affect any rights under awards already granted to a participant unless agreed to by the affected participant. Furthermore, without stockholder approval, the Board of Directors does not have the right or authority (1) to increase the aggregate number of shares of common stock (including upon the exercise of incentive stock options) that may be issued under the 2020 Plan, other than in connection with specified capitalization adjustments such as stock splits and stock dividends and the other transactions described above under “Stock Available for Awards,” (2) to amend the provisions in the 2020 Plan relating to a prohibition on the repricing of stock awards, (3) to amend the 2020 Plan in any respect that requires stockholder approval under applicable stock exchange rules, or (4) to amend the 2020 Plan in any respect that requires stockholder approval under the Internal Revenue Code of 1986, as amended (the “Code”), or any other applicable law.48Tax WithholdingThe Board of Directors may require a participant to satisfy any federal, state, local, or foreign tax withholding obligation relating to a stock award by (1) causing the participant to tender a cash payment, (2) withholding shares of common stock from the shares of common stock issued or otherwise issuable to the participant in connection with the award, (3) withholding cash from an award settled in cash or from other amounts payable to the participant, or (4) by other method set forth in the award agreement.U.S. Federal Income Tax ConsequencesThe following is a summary of the principal United States federal income tax consequences to participants and the Company with respect to participation in the 2020 Plan. The summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. The 2020 Plan is not qualified under the provisions of Section 401(a) of the Code, and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the satisfaction of our tax reporting obligations.Incentive Stock OptionsThe 2020 Plan provides for the grant of stock options that qualify as “incentive stock options,” as defined in Section 422 of the Code. Under the Code, an optionholder generally is not subject to ordinary income tax upon the grant or exercise of an incentive stock option. If the optionholder holds a share received on the exercise of an incentive stock option for more than two years from the date the option was granted and more than one year from the date the option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the holder’s tax basis in that share will be long-term capital gain or loss.If, however, an optionholder disposes of a share acquired on exercise of an incentive stock option before the end of the required holding period, which is referred to as a disqualifying disposition, the optionholder generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date the incentive stock option was exercised over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the option, the amount of ordinary income recognized by the optionholder will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.We will not be allowed an income tax deduction with respect to the grant or exercise of an incentive stock option or the disposition of a share acquired on exercise of an incentive stock option after the required holding period. If there is a disqualifying disposition of a share, however, we will generally be allowed an income tax deduction in an amount equal to the taxable ordinary income realized by the optionholder, subject to the provisions of Section 162(m) of the Code summarized below.Nonstatutory Stock OptionsGenerally, there is no taxation upon the grant of a nonstatutory stock option if the option is granted with an exercise price equal to, or greater than, the fair market value of the underlying stock on the grant date. On exercise, an optionholder will recognize ordinary income equal to the excess, if any, of the fair market value on the date of exercise of the stock over the exercise price. Generally, the optionholder’s tax basis in those shares will be equal to their fair market value on the date of exercise of the option, and the optionholder’s capital gain holding period for those shares will begin on that date. Subject to the provisions of Section 162(m) of the Code, we will generally be entitled to an income tax deduction equal to the taxable ordinary income realized by the optionholder.49Restricted StockGenerally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days of his or her receipt of the stock award, to recognize ordinary income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient in exchange for the stock. The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.Subject to the provisions of Section 162(m) of the Code, we will generally be entitled to an income tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.Restricted Stock UnitsGenerally, no taxable income is recognized upon receipt of a restricted stock unit award. The recipient will recognize ordinary income in the year in which the shares subject to that unit are actually issued to the participant (or cash in lieu of shares is delivered to the recipient) in an amount equal to the fair market value of the shares on the date of delivery. Subject to the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we generally will be entitled to an income tax deduction equal to the amount of taxable ordinary income recognized by the recipient.Stock Appreciation RightsGenerally, stock appreciation rights are subject to similar tax rules as nonstatutory stock options. This means that, generally, no taxable income is realized upon the receipt of a stock appreciation right. Upon exercise of the stock appreciation right, the fair market value of the shares (or cash in lieu of shares) received, less any strike price paid for such shares, is recognized as ordinary income to the recipient in the year of such exercise. Subject to the provisions of Section 162(m) of the Code, we will generally be entitled to an income tax deduction equal to the amount of taxable ordinary income recognized by the participant.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.The following table sets forth certain information regarding beneficial ownership of Common Stock as of March 31, 2021 by (a) each person known by us to own beneficially 5% or more of each class of our outstanding voting shares (i.e. Common Stock and our Series B Preferred Stock), (b) each of our named executive officers listed in the Summary Compensation Table and each of our directors and (c) all executive officers and directors of GCEH as a group. As of March 31, 2021, there were 37,436,875 shares of Common Stock issued and outstanding. As of the same date, there were 13,000 shares of our Series B Preferred Stock issued and outstanding, which shares of preferred stock were convertible into an aggregate of 1,181,818 shares of Common Stock. Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with respect to all the shares beneficially owned by them.50Name and Address of Beneficial Owner (1) Shares Beneficially
Owned (2) Percent
of Class of
Common Stock Preferred Stock: Corporativo LODEMO S.A DE CV
Calle 18, #201-B x 23 y 25,
Colonias Garcia Gineres, C.P. 97070
Merida, Yucatan, Mexico 909,099 (3) 2.4 % Greenrock Capital Holdings LLC
10531 Timberwood Circle, Suite D
Louisville, Kentucky 40223 272,728 (4) .* Common Stock: Pacific Sequoia Holdings LLC
250 University Avenue, Palo Alto, CA 94301 4,000,000 (5) 10.7 % Roll Energy Investments LLC
11444 West Olympic Boulevard, 10th Floor
Los Angeles, California 90064 3,309,450 8.8 % Michael Zilkha
1001 McKinney, Suite 1900
Houston TX 77002 5,238,355 14.0 % Directors/Named Executive Officers: Richard Palmer 23,123,672 (6) 41.4 % David R. Walker 340,354 (7) * Martin Wenzel 100,000 (8) * Noah Verleun 7,026,086 (9) 16 % Ralph Goehring 33,333 (8) * All Named Executive Officers and Directors as a group (5 persons) 30,623,445 (10) 49.1 % *Less than 1%(1)Unless otherwise indicated, the business address of each person listed is c/o Global Clean Energy Holdings, Inc., 2790 Skypark Drive, Torrance, California, 90505.(2)For purposes of this table, shares of Common Stock are considered beneficially owned if the person directly or indirectly has the sole or shared power to vote or direct the voting of the securities or the sole or shared power to dispose of or direct the disposition of the securities. Shares of Common Stock are also considered beneficially owned if a person has the right to acquire beneficial ownership of the shares upon exercise or conversion of a security within 60 days of March 31, 2021.(3)Consists of 909,091 shares of Common Stock that may be acquired upon the conversion of shares of Series B Preferred Stock. Corporativo LODEMO, controlled by Emilio Alberto Loret, owns 10,000 shares of our Series B Preferred Stock, which represents 76.92% of the issued and outstanding shares of that class of securities.(4)Consists of 272,728 shares of Common Stock that may be acquired upon the conversion of shares of Series B Preferred Stock. Greenrock, controlled by Chad Middledorf, owns 3,000 shares of our Series B Preferred Stock, which represents 23.08% of the issued and outstanding shares of that class of securities.(5)Based on information disclosed in a Schedule 13G jointly filed with the SEC on February 1, 2019 by Pacific Sequoia Holdings LLC (“PSH”), Jeffrey S. Skoll, and GrowthWorks Canadian Fund Ltd. (“GWC”), according to which PSH, Mr. Skoll and GWC share voting and dispositive control over the shares. Jeffrey S. Skoll, as the indirect sole member of PSH, may be deemed to share the power to direct the voting or disposition of the shares on behalf of PSH. The address of PSH and Jeffrey S. Skoll is 250 University Avenue, Palo Alto, CA 94301. The address of GWC is McCarthy Tétrault LLP, Box 48, Suite 5300, Toronto Dominion Bank Tower, Toronto, ON M5K 1E6.(6)Includes 7,345,148 shares that may be acquired upon the conversion of the principal balance, plus all accrued interest, under an outstanding convertible promissory note, and 11,000,000 shares that may be acquired upon the exercise of currently exercisable options.(7)Includes 250,000 shares that may be acquired upon the exercise of options that were vested as of March 31, 2021.(8)Consists of shares that may be acquired upon the exercise of options.(9)Includes 6,250,000 shares that may be acquired upon the exercise of currently exercisable options.(10)Includes (i) 17,633,333 shares that may be acquired upon the exercise of currently exercisable options, and (ii) 7,345,148 shares that may be acquired upon the conversion of the principal balance, plus all accrued interest, under an outstanding convertible promissory note.51ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.Certain Relationships and Related TransactionsMartin Wenzel was appointed to the Board of Directors on May 7, 2020. Until his appointment as a director, Mr. Wenzel served as an advisor to the Board pursuant to that certain Board Advisor Agreement, dated June 21, 2019. Under the Board Advisor Agreement, Mr. Wenzel was granted a five-year non-qualified stock option to purchase 50,000 shares, which option automatically vested upon Mr. Wenzel’s appointment to the Board. The foregoing options have an exercise price of $0.80 per share.Director IndependenceCommon Stock is quoted on the OTCQB Venture Market. The OTCQB Venture Market does not maintain any standards regarding the “independence” of the directors on GCEH’s Board of Directors, and we are not otherwise subject to the requirements of any national securities exchange or an inter-dealer quotation system with respect to the need to have a majority of our directors be independent.In the absence of such requirements, we have elected to use the definition for “director independence” under the Nasdaq Stock Market’s listing standards, which defines an “independent director” as “a person other than an officer or employee of us or its subsidiaries or any other individual having a relationship, which in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” The definition further provides that, among others, employment of a director by us (or any parent or subsidiary of ours) at any time during the past three years is considered a bar to independence regardless of the determination of our Board of Directors.Our Board of Directors has determined that Mr. Walker, a non-employee director, is an independent director as defined in the Nasdaq rules relating to director independence. In addition, the Board believes that Mr. Wenzel is an independent director under Nasdaq’s rules. Although Mr. Wenzel served as an advisor to the Board in 2019 and 2020, his sole compensation for such services consisted of the grant of options having a value of less than $120,000. While Mr. Wenzel is independent for the purposes of serving on the Board, he is not eligible to serve as an independent director on the Company’s Audit Committee.52ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.Hall & Company Certified Public Accountants and Consultants, Inc. (“Hall & Company”) has served as the Company’s independent registered public accounting firm since 2014, Effective January 1, 2021, Hall & Company merged with and into Macias, Gini & O’Connell, LLC (“MGO”), and Hall & Company’s audit operations and the professional staff of Hall & Company joined MGO. Accordingly, since January 8, 2021 MGO has been the Company’s independent registered public accounting firm. Aggregate fees billed to us by Hall & Company and MGO with respect to our 2019 and 2020 fiscal years were as follows: 2019 2020 Audit Fees $ 220,000 $ 165,000 Audit-Related Fees — — Tax Fees — — All Other Fees — 2,650 Total $ 220,000 $ 167,650 In accordance with the SEC’s definitions and rules, “audit fees” are fees that the Company paid for professional services for the audit of our consolidated financial statements included in our Form 10-K, and review of financial statements included in its quarterly reports on Form 10-Q and for services that are normally provided in connection with regulatory filings. “Audit-related fees” represent fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of financial statements and that are not reported under the “audit fees” category. “Tax fees” are fees for tax compliance, tax advice and tax planning.During the periods covered by this Form 10-K, the Company’s Audit Committee only had one member. Because of the size of the Board and a one-member Audit Committee, all of the audit-related services and other services described in the above table were pre-approved by our Board, including the sole member of the Audit Committee.53ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.(a)The following documents are filed as part of this Annual Report: Schedule.Schedules. All consolidated financial statement schedules are omitted because they are not applicable or the amounts are immaterial, not required, or the required information is presented in the Consolidated Financial Statements of the Company attached hereto following the signature page of the Annual Report.10.2-42- 545510.22-43- 56-44- 23.2-45- 20202021 and 2019,2020, formatted in XBRL (eXtensible Business Reporting Language): (1) Balance Sheets as of December 31, 20202021 and 2019;2020; (2) Statements of Income for the years ended December 31, 20202021 and 2019;2020; (3) Statements of Shareholders’ Equity for the years ended December 31, 20202021 and 2019;2020; (4) Statements of Cash Flows for the years ended December 31, 20202021 and 2019;2020; and (5) Notes to Financial Statements. ITEM 16. FORM 10-K SUMMARY-46-None.5712, 20214-47- 12, 20214, 202212, 20214, 2022-48- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID Number 248) F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID Number 324) F-3 /s/ DAVID WALKERCONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2021 AND 2020Chairman, the Board of DirectorsApril 12, 2021F-4David Walker CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020F-5 /s/ MARTIN WENZELCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020DirectorApril 12, 2021F-6Martin Wenzel 58F-1F-1 F-2 and the related consolidated statements of operations, changes in stockholders’ deficit,equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.MattersF-2$42.8$38.2 million. Evaluating environmental remediation liabilities and asset retirement obligations involve a great amount of judgement regarding the extent of contamination, the nature and extent of required cleanup efforts under existing environmental regulations, the duration and effectiveness of the chosen remedial strategy, and changes in environmental regulations. The Company uses engineering studies, historical experience and other factors to identify and evaluate remediation alternatives and their related costs in determining the estimated environmental and asset retirement obligations.thatwho assisted in (1) assessing the Company’s environmental specialist’s qualifications, and (2) evaluating the management’s assessment of their environmental remediation liabilities and asset retirement obligations.million, depending on numerous factors.million. For accounting purposes, these mandatorily redeemable equity instruments have been classified as liabilities. At December 31, 2020, the aggregate fair value of these mandatorily redeemable equity instruments totaled $5.1 million.thatwho assisted in reviewing the management specialist’s valuation and assessing: 1) that their valuation complies with prevailing professional standards and accepted valuation methodology; 2) that the valuation procedures and methods used have been applied correctly; and 3) that the underlying data, inputs and computations are accurate, and the resulting conclusion regarding fair value is reasonable./s/ Macias Gini & O’Connell LLPF-3Report of Independent Registered Public Accounting FirmBoard of directors and ShareholdersGlobal Clean Energy Holdings, Inc., and SubsidiariesOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheet of Global Clean Energy Holdings, Inc., and Subsidiaries (the "Company") as of December 31, 2019, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no opinion.Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion./s/ Hall & CompanyWe have served as the Company’s auditor since 2015Irvine, CAOctober 6, 2020F-3 F-4 As of December 31, 2020 2019 ASSETS 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 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 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable and accrued liabilities $ 22,597,951 $ 5,568,128 Lease liabilities 52,653 82,882 Notes payable 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 The accompanying notes are an integral part of these financial statementsF-5GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2020 2019 REVENUE $ — $ — OPERATING EXPENSES General and Administrative 7,972,776 3,061,580 Facilities expense 3,233,961 — Depreciation 118,447 — Amortization of intangible assets 251,354 245,226 Preliminary 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 (EXPENSE) Other income (expense), net 3,551 — Interest expense, net (2,832,398 ) (439,479 ) Gain in derecognition of derivative liabilities 512,363 — 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 ) Other Income (Expense), Net 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 The accompanying notes are an integral part of these financial statements ) ) F-6GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)For the Years Ended December 31, 2020 and 2019 Additional Series B Common Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance at December 31, 2018 13,000 $ 13 34,152,943 $ 341,529 $ 30,669,220 $ (43,890,445 ) $ (12,879,683 ) Share-based compensation from issuance of options and compensation-based warrants — — — — 577,645 — 577,645 Exercise of stock options — — 250,000 2,500 12,500 — 15,000 Net loss for the year ended December 31, 2019 — — — — — (11,791,819 ) (11,791,819 ) Balance at December 31, 2019 13,000 $ 13 34,402,943 $ 344,029 $ 31,259,365 $ (55,682,264 ) $ (24,078,857 ) Share-based compensation from issuance of options and compensation-based warrants — — — — 326,486 — 326,486 Exercise of stock options — — 1,447,017 14,470 76,326 — 90,796 Option grants for investment in subsidiaries — — — — 5,477,677 — 5,477,677 Net loss for the year ended December 31, 2020 — — — — — (10,550,175 ) (10,550,175 ) Balance at December 31, 2020 13,000 $ 13 35,849,960 $ 358,499 $ 37,139,854 $ (66,232,439 ) $ (28,734,073 ) The accompanying notes are an integral part of these financial statementsF-7GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2020 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 — Other operating activities — 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 (4,423,211 ) (500,000 ) Net Cash Provided by Financing Activities 141,120,912 3,515,000 Net Change in Cash and Cash Equivalents 38,525,394 (4,769,158 ) Cash and Cash Equivalents and Restricted Cash at Beginning of Period 457,331 5,226,489 Cash and 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 — — Supplemental Non-cash Investing and Financing Activities: During the year ended December 31, 2020, in connection with the Company’s purchase of Alon Properties, Inc., in addition to the cash paid, the Company assumed asset retirement obligations and environmental liabilities of $43.9 million, and issued options with a fair value of $5.5M. The purchase included the acquisition of property and equipment of $87.5 million and intangible assets of $1.9 million.During the year ended December 31, 2020, the Company converted a derivative liability of $19.3 million into a fixed payment obligation with a fair value of $18.8 million, and thereby recognized a gain on derecognition of the derivative liability of $0.5 million.During the year ended December 31, 2020, the Company issued warrants to a third-party to purchase an equity interest in its subsidiary, Sustainable Oils, Inc., which had a fair value of approximately $9,000.During the year ended December 31, 2020, the Company financed its insurance premiums with a note payable of $4.3 million.During the year ended December 31, 2020, the Company converted $2.0 million of accrued interest on its credit agreement to additional principal.During the year ended December 31, 2020, the Company capitalized $4.4 million related to payment of in-kind interest and amortization of debt discount and debt issuance. At year end December 31, 2020, the Company had issued and issuable 151.5 million Class B Units which had a fair value of $3.1 million.F-8F-4 TableLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES ) Contentsthese consolidated financial statementsF-5 Common Stock Accumulated Shares Amount Shares Amount Capital Deficit Interests Total 13,000 $ 13 34,402,943 $ 344,029 $ 31,259,365 $ (55,682,264 ) $ - $ (24,078,857 ) Share-based compensation from issuance of options and compensation-based warrants - - - - 326,486 - - 326,486 Exercise of stock options - - 1,447,017 14,470 76,326 - - 90,796 Option grants for investment in subsidiaries - - - - 8,777 - 5,468,900 5,477,677 Net loss - - - - - (10,550,175 ) - (10,550,175 ) 13,000 $ 13 35,850,089 $ 358,499 $ 31,670,954 $ (66,232,439 ) $ 5,468,900 $ (28,734,073 ) Shares issued upon reverse split to avoid fractional shares - - 1,793 19 (19 ) - - - Share-based compensation from issuance of options and compensation-based warrants - - - - 691,821 - - 691,821 Shares issued to employees - - 139,164 1,392 766,976 - - 768,368 Exercise of stock options - - 112,432 1,125 10,880 - - 12,005 Conversion of note payable to shares - - 1,586,786 15,868 460,168 - - 476,036 Purchase of Agribody Technologies, Inc. - - 830,526 8,305 4,991,695 - - 5,000,000 Conversion of Series B Preferred to Common (13,000 ) (13 ) 1,181,819 11,818 (11,805 ) - - - Conversion of convertible notes - - 53,723 537 308,352 - - 308,889 Issuance of common stock for cash - - 496,000 4,960 3,095,040 - - 3,100,000 Purchase of Entira, Inc - - 407,150 4,071 2,459,236 - - 2,463,307 Purchase of Camelina Company Espana SL 1,353,951 13,540 6,698,922 - - 6,712,462 Net loss - - - - - (51,415,508 ) - (51,415,508 ) - - 42,013,433 $ 420,134 $ 51,142,220 $ (117,647,947 ) $ 5,468,900 $ (60,616,693 ) F-6 F-7 F-8 –— ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIESwholly ownedwholly-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 proprietaryan investment in camelinaseveral proprietary varieties ofultra-low carbonultra-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., (“SusOils”) a Delaware corporation.In 2018 and 2019 References in this document to “GCEH” refer only to Global Clean Energy Holdings, Inc.pursued the acquisition ofpurchased 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 refineryfeedstocks (the “Bakersfield Biorefinery”Renewable Fuels Refinery''). The Bakersfield BiorefineryRenewable Fuels Refinery is owned by Bakersfield Renewable Fuel,Fuels, LLC, (''BKRF”) an indirect wholly-owned subsidiary of Global Clean Energy Holdings, Inc. The retrofitting of the refinery commenced promptly after the acquisition. The engineeringacquisition and construction of the project is expectedscheduled to be completed in early 2022 based on our engineering, procurement and construction contract with a substantial completion datethe second half of January 22, 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 isare complete, we expect production to be approximately 10,000 barrels per day (420,000WeAlthough the Bakersfieldmaintain that levelproduce more than 10,000 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 - Liquidity which describes the offtake agreement in more detail.BasisPrinciples of PresentationGlobal Clean Energy Holdings, Inc.,GCEH. 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 USU.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation. Inopinionyear ended December 31, 2021, we identified a classification error within the total stockholders’ deficit section of the consolidated balance sheet as of December 31, 2020management, all material adjustments (consistingquarterly unaudited interim condensed consolidated financial statements. The selling entity holding the call option has not exercised their right as of normal recurring adjustments) considered necessary for a fair presentationDecember 31, 2021.towithin the consolidated financial statements. 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.senior credit agreementSenior Credit Facility (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. lenderlenders 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, LLCBKRF account only upon approval by the lenderlenders to pay for specific construction, facility and related costs .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 Biorefinerydistinguishesclassifies this amount as long-term. The Company makes this determination based on its budget, recent and near-term invoicing, and internal projections.F-9GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2020,2021, the Company had approximately $38$22.3 million in uninsured cash.F-9 isand transportation equipment are 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,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, plant and equipment sold or otherwise retired are removed from the accounts and any gain or loss on disposition is reflected in the statementstatements of operations. Interest on borrowings related to the retrofitting of the Bakersfield Biorefinery yearyears ended December 31, 2021 and December 31, 2020, $30.0 million and $10.2 million, respectively, of interest has beenwas capitalized and is included in property, plant and equipment, net, onfor a total of $40.2 million of capitalized interest for the accompanying December 31, 2020 balance sheet.Long-Livedproject.20202022019,202losses recognized on long-lived assets.Pre-Acquisition CostsWe began capitalizing pre-acquisition costs once we determined that the acquisition of the Bakersfield Biorefinery projectand, therefore, no additional testing was probable, which was in April 2019 when both the Bakersfield Biorefinery purchase agreementneeded.the product offtake agreement were signed. We capitalized those costs that were directly identifiable with the specific property and those costs that would be capitalizedinstead are tested annually for impairment, or more frequently 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.During 2018, we signed a letter of intentacquire our Bakersfield Refinery. The acquisition of the refinery and thefinancing related $365 million of financing to fund the retrofit closed in May 2020. In connection with financing the refinery, we incurred $0.5 millioncosts of debt issuance costs in 2019 and $6.6 million of debt issuance costs during 2020 related to acquisition ofretrofitting the Bakersfield Biorefinery. Debt issuance costsRenewable Fuels Refinery and are amortized over the term of the loan as interest:interest under the effective interest method: however, as such interest primarily relates to retrofitting of the refinery, these costs will beare being capitalized as part of the refinery until the renewable fuels refinery is placed in service. The amortization of the debt issuance costs that are not capitalized isare recorded as interest expense. At December 31, 2019, certain2021 and December 31, 2020, unamortized debt issuance costs related to the Senior Credit Facility and Bridge Loan (see Note E) 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 reclassifiedclassified as a direct deduction from the carrying amount of theeach credit facility; however, unamortized debt liability of the financingissuance costs related to the extent that we borrowMezzanine Credit Facility are presented on the credit agreements.balance sheets as an asset as there have not been any borrowings on the Mezzanine Credit Facility at December 31. 2021. See Note E - Debt for more detail on the financing.F-10F-10 –— ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Accounts Payable and For presentation purposes, accounts payable and accrued liabilities have been combined. 20202021 and 2019, accounts payable andDecember 31, 2020, 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 LiabilitiesThe 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.Accrued compensation and related liabilities Accrued interest payable Accrued construction costs Other accrued liabilities Current portion of asset retirement obligations Current portion of environmental liabilities Biorefinery 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, timing of such 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.IH - Commitments and Contingencies for more detail on environmental liabilities, which are accounted for separately from asset retirement obligations.duringfor years ended December 31, 2021 and December 31, 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 Year ended December 31,
2021 Year ended December 31,
2020Asset retirement obligations - beginning of period Additions related to acquisition of refinery Disbursements Accretion Revised obligation estimates Asset retirement obligations - end of period F-11 amountamounts shown includesas of December 31, 2021 and December 31, 2020, include $2.5 million and $3.7 million, respectively, which hashave been classified as current liabilities and included in accounts payable and accrued liabilities and $17.7 million and $17.8 million, in long term liabilities. Biorefinery,engineering, procurementconstruction contractor for invoices to be billed against the Guaranteed Maximum Price for the Engineering, Procurement and construction contractor.Construction (“EPC”) of the Bakersfield Renewable Fuels Project contract (“G-Max Contract”). These funds are credited against future invoices in accordance with an agreed schedule. In May 2021 we replaced our former contractor and entered into a new G-Max Contract with a new contractor.2020,2021, reductions of $7.8 million to the fundscontractor advance hashave been reduced made, resulting in $10.0 million reflected as advance$16.0 million.F-11GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)thethdid not recognize anyrecognized $0.2 million in revenues during the yearsyear ended December 31, 20202021 and 2019.had 0 comparable sales in the year ended December 31, 2020. The Company is engaged in contracting with farmers to grow camelinaCamelina grain that will be processed into oil for use in Bakersfield Biorefinery.patented camelinai) certified Camelina seed to the farmers and also forii) the crushed camelinaCamelina meal that it plans to sell to third partythird-party livestock and poultry operators.operators, and iii) any Camelina oil that is sold outside of the consolidated group. 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 beginningrenewable diesel and productsincurred.20202021 and December 31, 2019,2020, 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, and restricted cash, accounts receivable, accounts payable, and accrued liabilities, and the convertible note payable to the executive officer 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 subsidiaryClass B Units are reported at fair value.F-12 Company’sCompany's market assumptions. These two types of inputs have created the following fair-value hierarchy:As reported forreplacing the derivative contract with a fixed payment obligation that requiredagreeing to a payment of $5.5 million due on April 30, 2020 and six equal payments beginning in October of 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 obligationderivative forward contract was amended again in April 2020. Under the amendment, the amendedcontract was replaced with a fixed payment obligation, requiredwhereby the Company agreed to pay the counterparty a total of $24.8 million, includingwhich included a payment of $4.5 million bythat the Company paid in June 2020, and six equal installment payments beginning in May 2022 totaling $20.3 million.F-12ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)The fair value of2020, and the Company had 0 derivative forward contract reportedassets or liabilities at December 31, 2019,2021 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.mandatorily redeemable equity instruments of its subsidiaryClass B Units are also measured at fair value on a recurring basis. See Note E - Debt for more information.derivativeWarrant Commitment Liability was in consideration for i) the 1%, or $4.1 million, consent premium payable from an earlier amendment to the Senior and Mezzanine Credit Facilities, ii) the Bridge Loan, and iii) as additional creditor fees for forbearance to the Senior Lenders and Mezzanine Lenders. Such creditor fees were recorded as additional debt discount. The Company recognized a Warrant Commitment Liability as a freestanding instrument that is classified as a liability discussed hereinunder ASC 480, “derecognizedinitially recognized at fair value and is measured at fair value at each reporting date until settled with changes in fair value recognized in earnings in other income (expense).F-13 first quarterrecorded fair value of 2020,the Class B Units and the Company had no derivative liabilities in the quarters ending June 30, 2020, September 30, 2020Warrant Commitment31, 2020 respectively. 2020:
Value
in active
markets for
identical assets
- Level 1
other
observable
inputs - Level 2
unobservable
inputs - Level 3Liabilities Class B Units
active markets
for identical
assets - Level 1
other observable
inputs - Level 2
unobservable
inputs - Level 3Liabilities Class B Units derivative liabilityClass B Units for the years endedending December 31, 20202021 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 Year ended December 31,
2021 Year ended December 31,
2020 Beginning Balance New unit issuances Change in fair value recognized in earnings Ending Balance mandatorily redeemable equity instruments of subsidiary (Class B Units) throughWarrant Commitment Beginning Balance $ — New unit issuances 3,101,344 Change in fair value recognized in earnings 2,021,656 Ending Balance $ 5,123,000 Year ended December 31,
2021 Year ended December 31,
2020 Beginning Balance Change in fair value recognized in earnings Ending Balance F-14 the estimates assumed in determining the value of the derivative transactions, c) estimated useful lives of equipment and intangible assets, d)c) 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)d) the estimated costs to remediate or clean-up identified environmental liabilities, f)e) 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 allocationWarrant Commitment Liability issued to the Company’s lenders under the Senior Credit Facility, and f) the fair value of the acquisition priceconsideration for acquisitions and the fair value of the Bakersfield Biorefinery to the various assets acquired.acquired and liabilities assumed. It is at least reasonably possible that the significant estimates used will change within the next year.F-13GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)optionsconvertible notes and accrued interest 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.are currently antidilutivethat were excluded fromYear ended December 31,
2021 Year ended December 31,
2020 Convertible notes and accrued interest Convertible preferred stock - Series B Stock options and warrants calculations of dilutes income of loss per share at December 31, 2019 and 2020,warrants that will be issued to the Senior Lenders as follows: Year Ended
December 31, 2020 Year Ended
December 31, 2019 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 expensesexpense 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 EventsThe Company has evaluated subsequent events through the date these consolidated financial statements were filed. See Note J - Subsequent Events, below Forfeitures are accounted for a description of events occurring subsequent toas incurred.31, 2020.Recently Issued Accounting StatementsCredit LossesIn June 2016,18, 2019, the FASB issued ASU 2019-12, which affects general principles within ASC 740,new standard on measurementloss from continuing operations and income or a gain from other items, (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and (4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The ASU also will make changes to franchise tax recognition, consideration of credit losses. The standard introducesthe tax basis recognition of goodwill related to acquisitions, specify tax allocation to subsidiaries, reflecting a new "expected loss" impairment model that applieschange in tax law in the interim period, annual effective tax rate computation in the period of enactment, and changes to most financial assets measured at amortized costthe employee stock ownership plans and certain other instruments, including trade and other receivables and other financial assets. Entitiesinvestments. For public business entities, the amendments in ASU 2019-12 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, 20192020, and early adoption is permitted.interim periods within those fiscal years. Thedoesadoptedexpect the adoption of this new standard to materiallyhave a material impact on the Company’s consolidated financial statements.F-14F-15 F-16 –— BASIS OF PRESENTATION AND LIQUIDITY$10.6 million and $11.8$51.4 million during the yearsyear ended December 31, 2020 and 2019, respectively,2021, and has an accumulated deficit applicable to its common stockholders of $66.2$117.6 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.2021. At December 31, 2020,2021, the Company had working capital of negative $5.8$83.0 million (which includes current restricted cash of $12.9$8.0 million) and a stockholders’stockholders' deficit of $28.7$60.6 million.onea wholly-owned subsidiary of Global Clean Energy Holdings, Inc.’s subsidiaries,Bakersfield Renewable Fuels, LLCBKRF and to pay the anticipated costs of the retooling of the Bakersfield Biorefinery Bakersfield Renewable Fuels, LLC.BKRF (the “Senior Credit Facility”). Concurrently with the senior credit facility,Senior Credit Facility, a group of mezzanine lendersMezzanine 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. Althoughfunds provided byMOU, the seniorSenior Lenders expressed interest to also purchase $20 million of the contemplated preferred shares on the same terms as ExxonMobil. Additionally, the Senior Lenders committed to fund an additional $20.0 million (the “Bridge Loan”), under equivalent borrowing terms as the Senior Credit Facility, until the financing transaction contemplated under the MOU was completed. On December 21, 2021, the Senior Lenders funded $12.0 million of the Bridge Loan and mezzanine lenders may only be used foron January 7, 2022 the Bakersfield Biorefinerybalance of $8.0 million was funded. The Series C Preferred offering, which was delayed past January 31, 2022, closed on February 23, 2022, and servicing these debt obligations, sinceconcurrently the Bridge Loan, and accrued interest, was paid in full. Also, on December 20, 2021, the Company entered into an amendment to the Senior Credit Facility whereby GCEH committed to the Senior Lenders to issue warrants covering 5,017,008 shares facilitiesof common stock of GCEH at an exercise price to be determined based on a market pricing mechanism upon the completion of the Series C Financing for a term of five years from that date (the “Warrant Commitment Liability”). This warrant was in consideration for i) the consent premium payable from an earlier amendment to the Senior and personnel, Global Clean Energy Holdings, Inc. will realize a reduction in certainMezzanine Credit Facilities, 2) the Bridge Loan, and iii) the assignment of its operating expenses. The Company believes that these cost savings, plus the Company’s other financial resources, including its abilityMezzanine Credit Facility to raiseGCEHfundscreditor fees for forbearance to the Senior Lenders and Mezzanine Lenders.exercise of an outstanding warrant, should be sufficient to fund the Company’s operations through the start-upSenior Lenders purchased $20 million of the Bakersfield Biorefinery. See “Note E - Debt.” Series C Preferred.October 12, 2020, the groupFebruary 23, 2022, we sold 145,000 shares of lenders agreedour newly created Series C Preferred Stock (the “Series C Preferred”) and five-year warrants (the “GCEH Warrants”) to lendpurchase up to an aggregate of 18,547,723 (5,017,008 issued to settle the Warrant Commitment Liability) shares of our Common Stock at an exercise price of $2.25 per share to ExxonMobil Renewables LLC, an affiliate of ExxonMobil, and 11 other institutional investors (all of whom are also lenders under our existing Senior Credit Facility) for an aggregate purchase price of $145 million. As additional $15consideration for ExxonMobil’s investment, we also granted ExxonMobil Renewables LLC additional warrants (the “GCEH Tranche II Warrants”) to purchase up to 6.5 million for the Bakersfield Biorefineryshares of common stock at an exercise price per share of $3.75 until February 22, 2028, and a portionwarrant to acquire 33% (19,701,493 shares) of our SusOils subsidiary for $33 million ($1.675 per share) until February 22, 2027. The GCEH Warrants and GCEH Tranche II Warrants may be exercised for cash or by means of cashless exercise, however the GCEH Tranche II Warrants cannot be exercised until the earlier of (i) the date on which ExxonMobil extends the term of the five-year Offtake Agreement that we entered into with ExxonMobil effective April 10, 2019 (as amended), or (ii) a change of control, sale, or the dissolution of the Company. Under the Certificate of Designations of the Series C Preferred stock, the holders of the Series C Preferred stock are entitled to receive dividends at a rate of 15%; provided that, until March 31, 2024, we may elect not to pay some or all of the accrued dividends in cash, in which case the unpaid dividends shall accrue and be added 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 operationsoriginal issuance price of the Bakersfield Biorefineryshares of Series C Preferred. The shares of Series C Preferred have no voting rights, except as required by law, howeverother corporate purposes. of 2019, the Company executedentered into a binding Product Offtake Agreement (the “Offtake Agreement”) with ExxonMobil Oil Corporation (“Purchaser”ExxonMobil”) pursuant to which PurchaserExxonMobil has committed to purchase of 1052.5 million gallonsbarrels per year of renewable diesel annually from the Bakersfield Biorefinery (withPurchaser. The Purchaser’sExxonMobil. ExxonMobil’s obligation to purchase renewable diesel will last for a period of five years following the date that the Bakersfield Biorefinery The PurchaserExxonMobil has the option to extend the initial five-year term. Either party may terminate the Offtake Agreement if the Bakersfield BiorefineryRenewable Fuels Refinery does not meet certain production levels by certain milestone dates following the commencement of the Bakersfield Biorefinery’sRenewable Fuels Refinery’s operations.F-15F-17 F-18 –PROPERTY,– PROPERTY, PLANT AND EQUIPMENTconsiderationfair value 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 crude oil refinery into a biorefinery.that the existing crude oil basedoil-based (very high carbon) refinery is not able to produce renewable diesel (very low carbon) fuel, c) no refinery in the U.S. has been designed specifically around the plant oil feedstock extracted from Camelina seeds, thus the technical aspect is new and unique to the Bakersfield BiorefineryRenewable Fuels Refinery and d) the Company did not acquire an assembled workforce. Thus, the acquired asset group does not have the full inputs or substantive process to produce outputs and does not have any acquired revenue generating contractual arrangements.BiorefineryRenewable Fuels Refinery was $89.4 million, andwhich consisted of $40$40.0 million of cash, 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)(“ARO”) and $22$22.0 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%value,values, except that the fair value of the asset retirement obligations werewas 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. relate.revised allocation of the purchase pricefair value of the consideration and also the reclassification of the pre-acquisition costs:Asset Category Capitalized Costs
Based on
Acquisition
Valuation Allocated Pre-
Acquisition
Costs Total Capitalized
Costs on
AcquisitionProperty, 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 Capitalized Costs Based
on Acquisition Valuation Allocated Pre-Acquisition
Costs Total Capitalized Costs
on Acquisition Land Buildings Refinery F-19 20202021 and December 31, 20192020 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 December 31, 2021 December 31, 2020 Land Buildings plant and equipment was approximately $118,447$181,000 and $118,000 for the year ended December 31, 2020. There was no depreciation for the year ended2021 and December 31, 2019.F-16F-20 –- INTANGIBLE ASSETSCompany 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 licenseintangible assets as of the year ended December 31, 20202021 and 2019 isDecember 31,2020 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 December 31, 2021 December 31, 2020 Remaining
Weighted
Average Useful
Life Gross Carrying
Amount Accumulated
Amortization Gross Carrying
Amount Accumulated
Amortization Trade name - $ 90,000 $ - $ - $ - Patent licenses 8,188,315 2,831,088 4,442,553 2,092,160 Developed seed variant technology 5,679,500 - - - Refinery permits 1,921,082 275,813 1,921,082 90,729 Total $ 15,878,897 $ 3,106,901 $ 6,363,635 $ 2,182,889 expenseexpenses for intangible assets waswere approximately $150,000$924,000 and $245,000$251,000 for the years ended December 31, 2021 and December 31, 2020, and 2019, respectively.the next five years2022 through 202expected to be approximately $390,000 annually.Estimated Amortization
Expense 2022 2023 2024 2025 2026 Thereafter F-21 year end 2020December 31, 2021 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 December 31, 2021 December 31, 2020 Senior credit facility Fixed payment obligation Other notes Less: current portion of long-term debt Less: unamortized debt discount and issuance costs ) Subtotal Convertible Notes Payable Convertible note payable to executive officer Other convertible notes payable Subtotal FacilitiesLenders”Lenders'') pursuant to which the Senior Lenders agreed to provide a $300$300.0 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 bearsfacility. 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.Senior Credit Facility. The aggregate fair value of the earned units as of December 31, 2020 was approximately $5.1 million. TheClass B Units are initially recognized at fair value of such units are remeasuredand subsequently re-measured at each new issuance and at each quarter end. It is expected that the fair value will increase aseach reporting period with changes recognized in earnings. The Class B Units are discussed further below.continuesraises capital of $35 million prior 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 DecemberJuly 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.F-17F-22 NOTE E – DEBT (CONTINUED)credit agreementthe Mezzanine Credit Facility with a group of mezzanine lendersMezzanine 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.Renewable Fuels Refinery. Subsequently, the Mezzanine Credit Facility was increased to $67.4 million. As of MarchDecember 31, 2021, BKRF HCB, LLC has not drawn down on the credit facility.Mezzanine Credit Facility. The mezzanine loans bearMezzanine Credit Facility bears 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, suchinterest. Such deferred interest beingis added to principal. As additional consideration for the mezzanine loans,Mezzanine Credit Facility, the mezzanine lendersMezzanine Lenders will be issued Class C Units in BKRF HCP, LLC at such times as advances are made under the mezzanine loans.Mezzanine Credit Facility. The mezzanine loansMezzanine Credit Facility will be secured by all of the assets of BKRF HCP, LLC, including all of the outstanding membership interest in BKRF HCB, LLC. The mezzanine loans matureMezzanine Credit Facility matures in November 2027. At December 31, 2020,The MezzanineCompany had incurred approximately $0.8$67.4 million of debt issuance costs relatedloan under the Mezzanine Credit Facility to this creditBKRF HCB, LLC. Therefore, the Mezzanine Credit Facility between GCEH and BKRF HCB, LLC is now an intercompany creditor agreement.six6 equal installment payments in 2022 totaling $17.6 million. Under the subsequent revised terms of the fixed payment obligation in April 2020, the Company agreed to pay the counterparty a total of $24.8 million, which included a payment of $4.5 million in June 2020 (which equal installment payments beginning in AprilMay 2022. For financial reporting purposes, the fixed payment obligation has been recorded at the present value of future payments, using a discount rate of 14.8%.F-23 2020,2021, 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 BiorefineryRenewable Fuels Refinery 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.months beginning in May 2020. As of December 31, 2020,2021, the Company had elevennine payments remaining for a total of $2.9approximately $0.5 million. 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 payingrepaying Mr. Palmer’s loan and, accordingly, is currentlywas in default under the Convertible Note. The Company accrued interest expense of $50,000 on this note in 2020 and 2019 of $50,000 and $50,000 respectively. As of year-end 2020 and 2019 the year ended December 31, 2021. The Company had recorded accrued interest payable of $110,411approximately $160,000 and $60,411,$110,000 as of December 31, 2021 and December 31, 2020 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 the Company’s Common Stock at an exercise price of $0.154 per share.hashad several notes that arewere convertible into shares of the Company or the Company’s subsidiaries shares at different prices: ranging from $0.03$0.30 per share into the parent company’sCompany’s stock and up to $1.48 per share into a subsidiary’sSusoils’s common stock. These notes are past duehave passed their original maturity date and they continue to accrue interest at varying rates, from 8% to 10%. On March 26, 2021, we issued 1,586,786 shares of the Company’s common stock to the holder of a combined basis, asconvertible promissory note upon the conversion of the entire outstanding balance, principal and accrued interest, for that note. During June 2021, the Company paid the remaining notes and the accrued interest either by an agreed cash settlement or through the issuance of common shares at an agreed price of $5.75 per share. As of December 31, 2020 the principal amount of these2021, there are 0 remaining convertible notes is $0.7 million.F-18GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – DEBT (CONTINUED)2020:Year Required Minimum Payments 2021 $ 4,895,114 2022 21,250,000 2023 — 2024 — 2025 — Thereafter 153,405,569 Total $ 179,555,683 Year Required Minimum Payments 2022 2023 2024 2025 F-24 of Subsidiary Issued to Lenders126.5or had issuable 186.1 million and 151.5 million, respectively, 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 Senior Credit Agreement,Facility, 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 BiorefineryRenewable Fuels Refinery 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 Senior Credit Agreement,Facility, or approximately $626$675.2 million. As of December 31, 2020,2021, 337.6 million Class B Units have been issued and the aggregate fair value of such units on the date of their issuances totaled approximately $13.5 million which were recorded as debt discount. The aggregate fair value of the earned units as of December 31, 2021 was approximately $21.6 million.has valuedcontinues to de-risk the liability based on the estimated fair value for the Class B Unit distributions at approximately $5.1 million.project through ongoing retooling activities. 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.and the timing of the cash flows to the unit holders. The value assumes the completion of the refinery in the second half of 2022, annual volatility of 76. For accounting purposes, theseare considered to bemeet the definition of a mandatorily redeemable and have been classified as liabilities infinancial instrument under ASC 480 because BKRF HCB, LLC has an unconditional obligation to redeem the accompanying December 31, 2020 balance sheet and are remeasuredClass B Units by transferring assets at a specified time. Pursuant to ASC 825-10, the Company has elected the fair value option for the Class B Units. Accordingly, at each borrowing the Company will initially recognize the Class B Unit liability based on the issuance date fair value with an offset to the discount on the Senior Credit Agreement. The Company measures their Class B Units at fair value at the end of each reporting period.– -Thetotal250,000 the board of directors1,447,017employees, respectively.F-25 relatedand the new certificates were issued to the exerciseformer holders of the preferred stock options in 2020 and 2019, respectively.F-19GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE F – STOCKHOLDERS’ EQUITY (CONTINUED)may, at the option of each holder, be converted at any time or from time to timewere convertible into shares of the Company’s commonCommon Stock. As of June 30, 2021, the two holders of the shares of preferred stock attendered notices of conversion, and all of the conversion price then in effect. The number ofoutstanding 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 ofConvertible Preferred Stock were converted into 1,181,819 shares of the Company’s common stock into whichstock. As a result, effective as of June 30, 2021, the Company had 0 outstanding 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 BConvertible 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.Company’sCompany'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 or any other formal equity incentive plan.2020 Stock Plan2020,2021, there were 965,500390,178 shares available for future option grants under the 2020 Plan.fiscalyear ended December 31, 202120192021 and 2020, the Company grantedrecognized stock compensation expenses related to stock option awards of $692,000 and $326,000, respectively. The Company recognizes all stock-based compensation in general and administrative expenses in the following stock options underaccompanying consolidated statements of operations. As of December 31, 2021, there was approximately $436,000 of unrecognized compensation cost related to option awards that will be recognized over the 2020 Plan and outsideremaining service period of the 2020 Plan:F-20F-26 2019:On January 15, 2019,Company granted its Executive Vice President2010 or 2020 Plan. All of such options that were issued outside of the 2010 and 2020 Plans are fully vested, and 16 million options that were awarded to two of GCEH’s executive officers had 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)arrangement, 500,000 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 grantedwere issued to a consultant that had a five-year non-qualified stock optiontransaction success arrangement, and 1,175,714 options were awarded 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, 2020executive officer that had a merit arrangement 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 stock200,000 options to purchase a) 87,500 shares of Common Stock to three different consultants and b) 100,000 shares of Common Stockwere issued 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.F-21GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE G – STOCK OPTIONS AND WARRANTS (CONTINUED)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. Shares
Under Option Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
ValueOutstanding 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
Option
Exercise Price
Remaining
Contractual Life
(Years)
Value Outstanding at December 31, 2020 Granted Exercised ) Forfeited ) Expired Outstanding at December 31, 2021 Vested and exercisable at December 31, 2021 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 Expected Term (in Years) Volatility % Risk Free Rate % Dividend Yield % Aggregate Grant Date Fair Value (1)F-27The 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.F-22During 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. RightsAs of2020 and 2019 there were no outstanding2021, the Company issued warrants to investors that invested $3.1 million in a private transaction in April 2021 to purchase 19,840 shares of Global Clean Energy Holdings, Inc.8% approximatelySustainable Oils, Inc.Susoils, for approximately $20 million. The warrant’s aggregate exercise price is $20 million and the warrant expires onhad an expiration date of June 1, 2021. At the time of issuance, the fair2021, and was not exercised. The value of the warrant upon issuance was deemeddetermined 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 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 2020:20202021 and 20192020 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 $ — $ — F-23GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE H – INCOME TAXES (CONTINUED) 0 0 0 ) ) 0 0 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 $ — $ —
December 31,
December 31, )% The majorityManagement has assessed the realizability of deferred tax assets and has determined there is sufficient evidence that all of the balance is due deferred compensation, share based payments, the fair value of derivatives, and to continued losses resulting in NOL carryforwards, whichtax assets may not be realized in future periods.realized. As such, the Company has recorded a 100% valuation allowance against theassets.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 ) $ — $ — F-24F-28 2019,liabilities consisted of the following temporary differences:
December 31,
D 2020 2019 Net operating losses $ 46,109,000 $ 21,152,000 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.2020,2021, the Company had available net$46.1$71.8 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 ofin ownership, the utilization of net operating losses could be reduced.in the state of California. various states. 2016. 20172016.NOTE I – COMMITMENTS AND CONTINGENCIESEmployment AgreementsPresident and Chief Executive Officer. On October 16, 2018, the Company and the CEO entered into an Executive Employment Agreement (the “2018 Employment Agreement”)2016 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.F-25F-29 F-30
Technologies,
Inc. as of April
15, 2021
of November
17, 2021
Company
Espana, S.L. as
of December
20, 2021
Acquisitions as
of December
31, 2021 ) ) ) ) ) ) ) ) F-31 (CONTINUED)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.Biorefinery.Renewable Fuels Refinery. The agreement, which was assigned by GCE Acquisitions to BKRF OCB, LLC, the borrower under the senior credit facility,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,May 17, 2021, the remaining balance of the contract was approximately $163$151 million. 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 remediation 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 remediation 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, 2020,2021, 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 2021, accrued environmental remediation liability costs totaled $20.8 million of which $1.3 million have been classified as current liabilities. At December 31, 2020, accrued environmental liability costsliabilities totaled $21.3 million of which $0.9 million have been classified as current liabilities.LeasesOn 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 F-26GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE I – COMMITMENTS AND CONTINGENCIES (CONTINUED)LegalHoldings, Inc. (“Alon Paramount”) for a 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. Refinery.Bakersfield Renewable Fuels, LLC,F-32 F-33 December 31, 2021 2020 Operating lease cost $ 94,265 $ 32,557 Finance lease cost Amortization of leased assets 134,128 0 Interest on lease liabilities 15,872 0 $ 244,265 $ 32,557 December 31, 2021 2020 Operating leases 2.2 1.7 Financing leases 4.8 - Operating leases 1.00 % 6.63 % Financing leases 4.25 % 0 F-34 2022 $ 202,149 $ 223,484 2023 162,616 230,188 2024 121,962 237,094 2025 0 244,207 2026 0 3,527,965 Thereafter 0 0 486,727 4,462,938 (5,090 ) (916,995 ) $ 481,637 $ 3,545,943 F-35 Bakersfield Renewable Fuels, LLC (Alon Bakersfield Property, Inc.)BKRF, Alon Paramount agreed to assume and be liable for (and to indemnify, defend, and save Bakersfield Renewable Fuelshold BKRF harmless from) this litigation. In addition, Paramount Petroleum Corporation 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,judgment, and Paramount Petroleum Corporation has agreed to absorb all of the liability and has posted a bond to cover the judgementjudgment amount, no0 loss has been accrued by the Company with respect to this matter.was filedin the Superior Court of California, Alameda County, against GCEH Acquisitions titledclaimed 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 allegationscomplaint in the complaint. The Company does not believeSuperior Court of California, Los Angeles County, titledultimate resolutionCompany breached a promissory note in the principal sum of this matter will have$0.3 million. Roll sought $0.4 million for principal and interest as of December 4, 2020, plus prejudgment interest allegedly accruing thereafter. On or about May 12, 2021, the company wired $0.5 million as full settlement of the amount due. On or about June 7, 2021, the Company and Roll entered into a material effect onSettlement Agreement to fully resolve Roll’s claims, accepting the amount previously wired with 0 additional amounts due. On or about June 29, 2021, Roll dismissed the action in its financial statements, and no loss has been accrued regarding this claim.believes that this particular pandemic is not likelydid experience delays in certain products and materials, inflationary impact and particularly labor force related issues. However, we do expect to be materially disruptive to its future plans and targeted datecomplete the refurbishing of beginning commercial operations.ourisare not likely to be non-disruptivematerially disruptive to its ongoing business.F-27ContentsGLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE J – SUBSEQUENT EVENTSOn March 26, 2021,Ukraine by Russia is creating multiple, and likely significant, supply issues, including the Company completed the reverse stock splituse and transport of its common stock at a ratio of 1-for-10.energy. Natural gas, crude oil and certain raw materials pricing has increased significantly and are quite volatile, in addition to potential severe supply issues. We require certain feedstocks and energy inputs to be able to generate renewable diesel and other renewable products. 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 sharesextent of the Company’s common stockimpact of this major geo-political event and its repercussions are unknown and could have a material impact on our operations, cash flows, liquidity and capital resources. However, we expect that mostholder 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 sharesbuyers of our common stock or in cash.F-28F-36