Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2020
Disclosure Text Block [Abstract]  



2020 Equity incentive Plan


On April 10, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (“2020 Plan”) pursuant to which the Board of Directors reserved an aggregate of 20,000,000 shares of Common Stock for future issuance. The 2020 Plan became effective on April 10, 2020. As of November 30, 2020, options for the purchase of 7,170,000 shares have been granted under the 2020 Plan to attract and retain the necessary personnel to meet the Company’s objectives. The 2020 Plan will expire on April 9, 2030, and no further awards may be granted after such date. The 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. Stock awards may be granted under the 2020 Plan to employees (including officers) and consultants of the Company or affiliates, and to members of the Company’s Board of Directors.


During the third quarter ended September 30, 2020 the Company granted stock options for the purchase of a total of 390,000 shares of Common Stock under the 2020 Plan, of which 390,000 were to employees.


A summary of the option award activity in 2020 and awards outstanding at September 30, 2020 is as follows:


        Weighted   Average    
    Shares   Average   Remaining   Aggregate
    Under   Exercise   Contractual   Intrinsic
    Option   Price   Life (Years)   Value
Outstanding at December 31, 2019     199,027,315       0.016       3.6     $ 14,360,463  
Granted     15,420,000       0.074                  
Exercised     (14,470,172 )     0.006                  
Forfeited     (5,000,000 )     0.090               —    
Expired     (1,800,000 )     0.010               —    
Outstanding at September 30, 2020     193,177,143       0.021       3.3     $ 30,655,019  
Vested and exercisable at September 30, 2020     179,537,771       0.019       3.2     $ 28,895,537  


The fair value of stock option grants with only continued service conditions for vesting is estimated on the grant date using a Black-Scholes option pricing model. The following table illustrates the assumptions used in estimating the fair value of options granted during the periods presented: 


    Quarter ended September 30, 2020   Nine months ended September 30, 2020
Expected Term (in Years)     2 to 5       2 to 5  
Volatility     85 %     85 %
Risk Free Rate     1.4 %     1.4 %
Dividend Yield     0 %     0 %
Suboptimal Exercise Factor (1)     1.3       1.3  
Exit Rate Pre-vesting (2)     0 %     0 %
Exit Rate Post-vesting (3)     0 %     0 %
Aggregate Grant Date Fair Value   $ 21,380     $ 504,257  


(1) The suboptimal exercise factor estimates the value realized by the holder upon exercise of the option and the estimated point at which an option holder would exercise an in-the-money option. The Company estimated the suboptimal factor based on the holder realizing a pre-tax profit of $500,000. 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.


For the quarters ended September 30, 2020 and 2019, the Company recognized approximate stock compensation expenses related to stock option awards for the quarters ended September 30, 2020 and 2019 of $9,000 and $74,000 respectively, and for the nine months ended September 30, 2020 and September 30, 2019 of $190,000 and $578,000, respectively. The Company recognizes all stock-based compensation in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of September 30, 2020, there was approximately $358,000 of unrecognized compensation cost related to option awards that will be recognized over the remaining service period of approximately 3.3 years.


Stock Purchase Warrants and Call Option


In 2020, the Company issued, to a party interested in Camelina development, a non-transferable warrant for the purchase of an approximately eight-percent interest in its subsidiary, Sustainable Oils, Inc. for approximately $20 million. The warrant expires on June 1, 2021. The Company determined the fair value of the warrants to be approximately $9,000.


Concurrently with the closing of the acquisition of Bakersfield Renewable Fuels, LLC in May 2020, the Company entered into a Call Option Agreement with the seller, Alon Paramount, pursuant to which the Company granted to Alon Paramount an option to purchase from Global Clean Energy Holdings, Inc. up to 33 1/3% of the membership interests of a subsidiary that indirectly owns Bakersfield Renewable Fuels, LLC. The option exercise price is based on the cash purchase price that the Company paid for Bakersfield Renewable Fuels, LLC. The foregoing option can be exercised by Alon Paramount until the 90th day after the refinery meets certain operational criteria. Upon the exercise of the option, Alon Paramount will be allocated its share of the refinery’s assets and liabilities and profits and losses. Bakersfield Renewable Fuels, LLC is also responsible for all of the environmental liabilities and clean up costs associated with the Bakersfield Refinery.