BASIS OF PRESENTATION AND LIQUIDITY
|12 Months Ended
Dec. 31, 2020
|Notes to Financial Statements
|BASIS OF PRESENTATION AND LIQUIDITY
NOTE B – BASIS OF PRESENTATION AND LIQUIDITY
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company incurred losses from continuing operations applicable to its common stockholders of $10.6 million and $11.8 million during the years ended December 31, 2020 and 2019, respectively, and has an accumulated deficit applicable to its common stockholders of $66.2 million, at December 31, 2020. The Company incurred operating losses of $12.2 million and $4.9 million during the years ended December 31, 2020 and 2019, respectively. At December 31, 2020, the Company had working capital of negative $5.8 million (which includes current restricted cash of $12.9 million) and a stockholders’ deficit of $28.7 million.
On May 4, 2020, a group of lenders agreed to provide a $300 million senior secured term loan facility to BKRF OCB, LLC, one of Global Clean Energy Holdings, Inc.’s subsidiaries, to enable that subsidiary to acquire the equity interests of Bakersfield Renewable Fuels, LLC and to pay the anticipated costs of the retooling of the Bakersfield Biorefinery owned by Bakersfield Renewable Fuels, LLC. Concurrently with the senior credit facility, a group of mezzanine lenders also agreed to provide a $65 million secured term loan facility to be used to pay the costs of repurposing and starting up the Bakersfield biorefinery. Although the funds provided by the senior and mezzanine lenders may only be used for the Bakersfield Biorefinery and servicing these debt obligations, since the Company shares facilities and personnel, Global Clean Energy Holdings, Inc. will realize a reduction in certain of its operating expenses. The Company believes that these cost savings, plus the Company’s other financial resources, including its ability to raise additional funds and the exercise of an outstanding warrant, should be sufficient to fund the Company’s operations through the start-up of the Bakersfield Biorefinery. See “Note E - Debt.” On October 12, 2020, the group of lenders agreed to lend up to an additional $15 million for the Bakersfield Biorefinery and a portion to the Company’s upstream Camelina production business. This additional amount increased the amount available under the senior credit facility to $313.2 million and the mezzanine credit facility to $66.8 million, for a total of $380 million. At the time of this filing there are no commitments of additional capital.As disclosed in Note J - Subsequent Events, regarding the amended credit facility agreement, we plan on raising additional funds in public or private financing transactions to add a cash reserve for the completion and start-up operations of the Bakersfield Biorefinery and other corporate purposes.
In April of 2019, the Company executed a binding Product Offtake Agreement (the “Offtake Agreement”) with ExxonMobil Oil Corporation (“Purchaser”) pursuant to which Purchaser has committed to purchase of 105 million gallons per year of renewable diesel annually from the Bakersfield Biorefinery (with a right to purchase higher volumes as available), and the Company has committed to sell these quantities of renewable diesel to Purchaser. The Purchaser’s obligation to purchase renewable diesel will last for a period of five years following the date that the Bakersfield Biorefinery commences commercial operations. The Purchaser has the option to extend the initial five-year term. Either party may terminate the Offtake Agreement if the Bakersfield Biorefinery does not meet certain production levels by certain milestone dates following the commencement of the Bakersfield Biorefinery’s operations.