Note 1 - History and Basis of Presentation (Policies) |
12 Months Ended | ||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||
| Policies | |||||||||||||||||||||||||
| Principles of Consolidation |
Principles of Consolidation
The consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc., its subsidiaries. In the year ended December 31, 2014, the consolidated financial statements included the variable interest entities (VIE) of GCE Mexico I, LLC a Delaware limited liability company ("GCE Mexico"), and its Mexican subsidiaries (Asideros, Asideros 2 and Asideros 3). Since the Company sold the three farms held in Mexico on December 2, 2015, the operations of these subsidiaries were ceased as of the year ended December 31, 2015, and consolidation is no longer necessary for this previously classified VIE, GCE Mexico and subsidiaries (See Note2). All significant intercompany transactions have been eliminated in consolidation. |
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| Accounting For Agricultural Operations |
Accounting for Agricultural Operations
All costs incurred until the actual planting of the Jatropha Curcas plant was capitalized as plantation development costs, and was included in "Property and Equipment" on the balance sheet. Plantation development costs were being accumulated in the balance sheet during the development period and was accounted for in accordance with accounting standards for Agricultural Producers and Agricultural Cooperatives. Other general costs without expected future benefits are expensed when incurred. |
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| Cash and Cash Equivalents |
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. |
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| Inventories |
Inventory
The Company uses the FIFO valuation method for its inventories. The Company's inventory consists of certified Camelina seeds to be used or sold for the production of Camelina feedstock. The Company records no inventories above their acquisition costs. There was no losses during the years ended December 31, 2015 and December 31, 2014. |
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| Concentration of Credit Risk |
Concentration of Credit Risk
At December 31, 2015 and 2014, the Company had no cash and cash equivalents in excess of federally-insured limits. The Company has maintained its cash balances at what management considers to be high credit-quality financial institutions. |
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| Accounts Receivable |
Accounts Receivable
The Company extends credit to its customers based on credit evaluations of such customers. The Company does not obtain collateral to secure its accounts receivable. The Company evaluates its accounts receivable on a regular basis for collectability and provides for an allowance for potential credit losses as deemed necessary. At December 31, 2015, the Company determined that no allowance for doubtful accounts was necessary and recorded approximately $142,000 in allowances at December 31, 2014.
For the years ended December 31, 2015 and 2014, one customer accounted for approximately 93% and 99% of total revenues, and 83% and 98% of accounts receivable, respectively. |
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| Property and Equipment |
Property and Equipment
Substantially all property and equipment was related to plantation costs and related equipment to cultivate the Jatropha Curcas plant. Property and equipment was stated at cost. Depreciation of office equipment is computed using the straight-line method over estimated useful lives of 3 to 5 years. Plantation equipment was depreciated using the straight-line method over estimated useful lives of 5 to 15 years. Depreciation of plantation equipment was capitalized as part of plantation development costs through the date that the plantation becomes commercially productive. Plantation development costs was accumulated in the balance sheet during the development period and was being accounted for in accordance with generally accepted accounting principles, in the united states, for agricultural producers and agricultural cooperatives. The initial plantations were depreciated over the estimated useful lives of 10 to 35 years, depending on the nature of the development. Developments and other improvements with indefinite lives were capitalized and not depreciated. Other developments that had a limited life and intermediate-life plants that have growth and production cycles of more than one year are depreciated over their respective lives once they were placed in service. During 2015, the Company had land, plantation development costs, and plantation equipment located in Mexico and the Dominican Republic.
Except for costs incurred during the development period of the plantation, normal maintenance and repair items were charged to costs and expensed as incurred. During the development period, maintenance, repairs, and depreciation of plantation equipment have been capitalized as part of the plantation development costs. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and gain or loss on disposition is reflected in results of operations. |
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| Impairment of Long-Lived Assets |
Impairment of Long-Lived Assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assets exceeds the fair value of the assets. At December 31, 2015, the Company reviewed its long-lived assets and determined there was no related impairment.
During the quarter ended September 30, 2015, the Company entered into negotiations with a third party related to the potential sale of its farming operations in Mexico. Based on these negotiations, the Company determined that the recoverability of certain of its capitalized costs were impaired. Accordingly, the Company recorded an impairment charge of approximately $6,700,000 based on the original expected proceeds from the transaction. |
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| Income Taxes |
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases 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. |
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| Income/Loss Per Common Share |
Income/Loss per Common Share
Income/Loss per share amounts are computed by dividing income or loss applicable to the common shareholders of the Company by the weighted-average number of common shares outstanding during each period. Diluted income or loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents. The number of dilutive warrants and options is computed using the treasury stock method, whereby the dilutive effect is reduced by the number of treasury shares the Company could purchase with the proceeds from exercises of warrants and options.
The following instruments are currently antidilutive and have been excluded from the calculations of diluted income or loss per share at December 31, 2015, as follows:
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| Revenue Recognition |
Revenue Recognition
Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the seller's price to the buyer is fixed or determinable; collectability is reasonably assured; and title and the risks and rewards of ownership have transferred to the buyer. Value added taxes collected on revenue transactions are excluded from revenue and are included in accounts payable until remittance to the taxation authority.
Jatropha and Camelina biofuel revenue - The Company's long-term primary source of revenue currently is expected to be be the sale of seeds from elite lines of Jatropha and/or Camelina used for propagation and the sale of Jatropha oil and biomass in the form of charcoal and/or animal feed. Revenue will be recognized net of sales or value added taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognized when there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. For the year ended December 31, 2015, the Company had no significant Jatropha or Camelina biofuel revenue.
Advisory services revenue - The Company provides development and management services to other companies regarding their bio-fuels and/or feedstock-Jatropha development operations, on a fee for services basis. The advisory services revenue is recognized upon completion of the work in accordance with each advisory contract.
Agricultural subsidies revenue - the Company received agricultural subsidies from the Mexican government which supplemented the farm development and planting of trees. Due to the uncertainty of these payments, the revenue was recognized when the payments are received. We recognized those funds as revenue was due to these payments being disbursed to supplement the Company's income and not as direct payments for any specified farming expense. |
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| Fair Value of Financial Instruments |
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for accounts receivable and payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the various notes payable and the mortgage note payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. See note 9 for additional information regarding assets measured at fair value on a nonrecurring basis. |
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| Estimates |
Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial statements include a) those assumed in determining the valuation of common stock, warrants, and stock options, b) estimated useful lives and recoverability of plantation equipment and plantation development costs, and c) undiscounted future cash flows for purpose of evaluating possible impairment of long lived assets. It is at least reasonably possible that the significant estimates used will change within the next year. |
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| Foreign Currency |
Foreign Currency
During 2015, the Company had operations located in the United States, Mexico and Dominican Republic. For these foreign operations, the functional currency is the local country's currency. Consequently, revenues and expenses of operations outside the United States of America are translated into U.S. dollars using weighted average exchange rates, while assets and liabilities of operations outside the United States of America are translated into U.S. dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are included in equity (deficit) as a component of accumulated other comprehensive loss in the accompanying consolidated financial statements. Foreign currency transaction adjustments are included in other income (expense) in the Company's results of operations.
The Company has not entered into derivative instruments to offset the impact of foreign currency fluctuations. |
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| Stock Based Compensation |
Stock Based Compensation
The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. The Company recorded stock based compensation expense related to equity instruments granted as general and administrative expenses in the accompanying consolidated statements of operations. |
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| Derivative Liabilities |
Derivative Liabilities
The Company evaluates debt instruments, stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity's Own Equity . The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.
The Company has issued notes with embedded conversion features. Certain of the embedded conversion features contain price protection or anti-dilution features that result in these instruments being treated as derivatives. Accordingly, the Company has estimated the fair value of these embedded conversion features to settle outstanding contracts using Black-Scholes. The Company uses level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities. |
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| New Account Guidelines |
New Account Guidelines
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern". The amendments in this update provide guidance in U.S. GAAP about management's responsibilities to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The main provision of the amendments are for an entity's management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management's evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the consolidated financial statements are issued. When management identifies conditions or events that raise substantial doubt about an entity's ability to continue as a going concern, the entity should disclose information that enables users of the consolidated financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity's ability to continue as a going concern (before consideration of management's plans); (2) management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations; and (3) management's plans that alleviated substantial doubt about the entity's ability to continue as a going concern or management's plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. The amendments in this update are effective for interim and annual reporting periods after December 15, 2015 and early application is permitted. The Company is currently assessing this guidance for future implementation. |
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