Global Clean Energy Holdings, Inc. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2021

Commission file number:

000-12627

GLOBAL CLEAN ENERGY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		87-0407858
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2790 Skypark Drive, Suite 105 Torrance , California		90505
(Address of principal executive offices)		(Zip Code)

		(310) 641-4234
		(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x	Smaller reporting company	x

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes

The number of shares of the issuer’s Common Stock, par value $0.001 per share, outstanding as of November

, 2021 was 40,063,068.

Part I. FINANCIAL INFORMATION

Item1: Condensed Consolidated Financial Information	3

CONDENSED CONSOLIDATED BALANCE SHEETS	3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	4

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT	5

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	6

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures about Market Risk	37

Item 4. Controls and Procedures	37

Part II. OTHER INFORMATION

Item 1. Legal Proceedings	38

Item 1A. Risk Factors	38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3. Defaults upon Senior Securities	54

Item 4. Mine Safety Disclosures	54

Item 5. Other Information	54

Item 6. Exhibits	55

-2-

Part I. FINANCIAL INFORMATION

Item1: Condensed Consolidated Financial Information

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS	September 30, 2021			December 31, 2020
CURRENT ASSETS
Cash and cash equivalents	$	16,186,669		$	3,370,519
Accounts receivable, net		-			143,823
Restricted cash		2,327,814			12,943,222
Inventories		2,477,248			846,197
Prepaid expenses and other current assets		3,377,884			5,431,552
Total Current Assets		24,369,615			22,735,313

RESTRICTED CASH, net of current portion		25,227,161			22,668,984
DEBT ISSUANCE COSTS, NET		1,508,211			840,211
RIGHT-OF-USE ASSET		520,552			51,611
INTANGIBLE ASSETS, NET		7,197,842			4,180,746
GOODWILL		1,355,077			-
LONG TERM DEPOSITS		627,589			628,382
PROPERTY, PLANT AND EQUIPMENT, NET		275,793,504			138,972,675
ADVANCES TO CONTRACTORS		16,256,472			16,000,000

TOTAL ASSETS	$	352,856,023		$	206,077,922

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	55,956,303		$	22,597,951
Current portion of operating lease obligations		192,946			52,653
Notes payable including current portion of long-term debt, net		17,341,122			4,198,113
Convertible notes payable		1,000,000			1,697,000
Total Current Liabilities		74,490,371			28,545,717

LONG-TERM LIABILITIES
Operating lease obligations, net of current portion		327,978			-
Mandatorily redeemable equity instruments of subsidiary , at fair value (Class B Units)		18,054,857			5,123,000
Long-term debt, net		3,603,106			16,155,138
Senior credit facility, net		275,245,821			146,769,225
Asset retirement obligations, net of current portion		15,773,318			17,762,977
Environmental liabilities, net of current portion		18,728,988			20,455,938
TOTAL LIABILITIES		406,224,438			234,811,995
COMMITMENTS AND CONTINGENCIES (NOTE H)
STOCKHOLDERS' DEFICIT
Preferred stock - $0.001 par value; 50,000,000 shares authorized Series B, convertible; 0 and 13,000 shares issued and outstanding (aggregate liquidation preference of $1,300,000) , at September 30, 2021 and December 31, 2020 respectively		-			13
Common stock, $0.001 par value; 500,000,000 shares authorized; 40,063,068 and 35,850,089 shares issued and outstanding, at September 30,2021 and December 31, 2020 respectively		400,630			358,499
Additional paid-in capital		46,443,820			37,139,854
Accumulated deficit		(100,212,865	)		(66,232,439	)
Total Stockholders' Deficit		(53,368,415	)		(28,734,073	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	352,856,023		$	206,077,922

The accompanying notes are an integral part of these condensed consolidated financial statements

-3-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020
Revenue
Seed sales, net	$	(8,307	)	$	-		$	188,409		$	-
Cost of Goods Sold		(1,049	)		-			(137,515	)		-
Gross Profit (Loss)		(9,356	)		-			50,894			-

Operating Expenses
General and administrative		4,591,157			2,895,417			15,589,118			4,959,456
Facilities expense		3,180,394			1,618,013			9,732,562			2,393,296
Depreciation expense		34,825			45,708			88,541			72,739
Amortization expense		298,806			95,024			603,886			251,354
Total Operating Expenses		8,105,182			4,654,162			26,014,107			7,676,845

OPERATING LOSS		(8,114,538	)		(4,654,162	)		(25,963,213	)		(7,676,845	)

OTHER INCOME (EXPENSE)
Interest expense, net		(732,232	)		(773,420	)		(2,157,487	)		(1,712,593	)
Other income		15,393			-			83,759			512,363
Change in fair value of Class B Units		(2,849,573	)		-			(5,943,485	)		-
Change in fair value of derivative and finance charges related to derivative liability		-			-			-			5,476,000
Total Other Income (Expense), net		(3,566,412	)		(773,420	)		(8,017,213	)		4,275,770

NET LOSS	$	(11,680,950	)	$	(5,427,582	)	$	(33,980,426	)		(3,401,075	)
BASIC NET LOSS PER COMMON SHARE		(0.29	)		(0.15	)		(0.89	)		(0.10	)
DILUTED NET LOSS PER COMMON SHARE		(0.29	)		(0.15	)		(0.89	)		(0.10	)
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING		40,062,329			35,849,961			38,273,694			35,541,812
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING		40,062,329			35,849,961			38,273,694			35,541,812

The accompanying notes are an integral part of these condensed consolidated financial statements

-4-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS'

DEFICIT

(Unaudited)

	Preferred Stock Series B Convertible Preferred Stock				Common Stock				Additional Paid in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Beginning Balance at Dec. 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		-		-		-		-		25,614		-			25,614
Exercise of stock options		-		-		817,732		8,177		63,419		-			71,596
Net income		-		-		-		-		-		5,438,024			5,438,024
Ending Balance at Mar. 31, 2020		13,000	$	13		35,220,675	$	352,206	$	31,348,398	$	(50,244,240	)	$	(18,543,623	)
Share-based compensation from issuance of options and compensation-based warrants		-		-		-		-		155,186		-			155,186
Exercise of stock options		-		-		629,286		6,293		12,907		-			19,200
Option grants for investment in subsidiaries		-		-		-		-		5,477,677		-			5,477,677
Net loss		-		-		-		-		-		(3,411,517	)		(3,411,517	)
Ending Balance at Jun. 30, 2020		13,000	$	13		35,849,961	$	358,499	$	36,994,168	$	(53,655,757	)	$	(16,303,077	)
Share-based compensation from issuance of options and compensation-based warrants		-		-		-		-		9,138		-			9,138
Net loss		-		-		-		-		-		(5,427,582	)		(5,427,582	)
Ending Balance at Sep. 30, 2020		13,000	$	13		35,849,961	$	358,499	$	37,003,306	$	(59,083,339	)	$	(21,721,521	)

	Preferred Stock Series B Convertible Preferred Stock						Common Stock				Additional Paid in			Accumulated
	Shares			Amount			Shares		Amount		Capital			Deficit			Total
Beginning Balance at Dec. 31, 2020		13,000		$	13			35,850,089	$	358,499	$	37,139,854		$	(66,232,439	)	$	(28,734,073	)
Share-based compensation from issuance of options and compensation-based warrants		-			-			-		-		102,000			-			102,000
Shares issued upon reverse split to avoid fractional shares		-			-			1,793		19		(19	)		-			-
Conversion of note payable to shares		-			-			1,586,786		15,868		460,168			-			476,036
Net loss		-			-			-		-		-			(8,221,174	)		(8,221,174	)
Ending Balance at Mar. 31, 2021		13,000		$	13			37,438,668	$	374,386	$	37,702,003		$	(74,453,613	)	$	(36,377,211	)
Share-based compensation from issuance of options and compensation-based warrants		-			-			-		-		154,244			-			154,244
Exercise of stock options		-			-			60,978		610		8,734			-			9,344
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
Net loss		-			-			-		-		-			(14,078,302	)		(14,078,302	)
Ending Balance at Jun. 30, 2021		-		$	-			40,061,714	$	400,616	$	46,248,263		$	(88,531,915	)	$	(41,883,036	)
Share-based compensation from issuance of options and compensation-based warrants		-			-			-		-		194,076			-			194,076
Exercise of stock options		-			-			1,354		14		1,481			-			1,495
Net loss		-			-			-		-		-			(11,680,950	)		(11,680,950	)
Ending Balance at Sep. 30, 2021		-		$	-			40,063,068	$	400,630	$	46,443,820		$	(100,212,865	)	$	(53,368,415	)

The accompanying notes are an integral part of these condensed consolidated financial statements

-5-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited

)

	For the nine months ended September 30,
	2021			2020
Operating Activities
Net Loss	$	(33,980,426	)	$	(3,401,075	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		450,320			189,938
Depreciation and amortization		692,427			324,093
Accretion of asset retirement obligations		735,000			-
Gain on settlement of liabilities		-			(512,363	)
Change in fair value of derivative liability		-			(5,476,000	)
Change in fair value of Class B Units		5,943,485			-
Amortization of discount on fixed payment obligation		1,860,141			-
Amortization of debt issuance costs		-			1,300,679
Changes in operating assets and liabilities:
Accounts receivable		143,823			-
Inventories		(1,631,051	)		-
Prepaid expenses		2,053,668			(1,967,623	)
Deposits and other assets		793			(1,943,588	)
Accounts payable and accrued liabilities		4,417,515			8,240,024
Asset retirement obligations		(2,724,659	)		-
Environmental liabilities		(1,726,950	)		-
Lease liabilities and assets		(670	)		-
Net Cash Used in Operating Activities		(23,766,584	)		(3,245,915	)
Investing Activities:
Cash paid for the Bakersfield Biorefinery		-			(36,500,000	)
Cash received as part of acquisition of Agribody Technologies, Inc.		263,755			-
Intangible assets		(186,982	)		-
Property , plant , and equipment and advances to contractors		(106,240,316	)		(37,414,766	)
Net Cash Used in Investing Activities		(106,163,543	)		(73,914,766	)
Financing Activities:
Proceeds received from exercise of stock options		10,839			90,796
Payments on notes payable and long-term debt		(2,970,481	)		(5,242,617	)
Borrowings on other notes		1,240,317			-
Issuance of common stock for cash		3,100,000			-
Payments on debt issuance costs		-			(4,218,211	)
Borrowings on Senior Credit Facility		133,308,370			126,457,016
Net Cash Provided by Financing Activities		134,689,046			117,086,984

Net Change in Cash, Cash Equivalents and Restricted Cash		4,758,919			39,926,303
Cash, Cash Equivalents and Restricted Cash at Beginning of Period		38,982,725			457,331
Cash, Cash Equivalents and Restricted Cash at End of Period	$	43,741,644		$	40,383,634

Supplemental Disclosures of Cash Flow Information
Cash Paid for Interest		20,329,760			-
Cash Paid for Income Tax		-			-

The accompanying notes are an integral part of these condensed consolidated financial statements

-6-

upplemental Noncash Investing and Financing Activities

	For the nine months ended September 30,
	2021		2020
Supplemental Disclosures of Noncash Investing and Financing Activities
Issued options in Global Clean Energy Acquisitions subsidiary	$	-	$	5,468,900
Assumed asset retirement obligations		-		21,901,977
Assumed environmental liabilities		-		22,033,937
Conversion of derivative liability of $19.3 million into a fixed payment obligation with fair value of $18.8 million for a gain on derecognition of derivative liability		-		512,363
Issued warrants to a third-party for equity in Sustainable Oils, Inc.		-		8,777
Financed insurance premiums with note payable		-		4,315,905
Debt discount related to Class B units issued to lender		5,943,485		-
Accrued debt issuance costs related to amendment to Senior Credit Facility		3,132,000		-
Accrued debt issuance costs related to amendment to Mezzanine Credit Facility		668,000		-
Issued 1,640,509 shares for conversion of several notes payable and accrued interest		784,925		-
Issued 830,526 shares to acquire Agribody Technologies, Inc, in connection the Company recognized $5 million of net assets including intangible assets and goodwill of $4.9 million. See Note A for further details.		5,000,000		-
In-kind interest added to principal balance of Senior Credit Facility		3,912,099		983,693
Amounts included in accounts payable and accrued liabilities for purchases of property, plant, and equipment		25,345,484		8,996,960
Capitalized interest included in property, plant, and equipment		20,126,261		5,461,540

The accompanying notes are an integral part of these condensed consolidated financial statements

-7-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE A — ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Global Clean Energy Holdings, Inc., a Delaware corporation, and its wholly owned subsidiaries (collectively, the “Company”, “we”, “us” or “our”) is a U.S.-based integrated agricultural-energy biofuels company that holds assets across feedstocks and plant genetics, agronomics, cultivation, and regulatory approvals, commercialization, and downstream biorefining and storage. The Company is focused on the development and refining of nonfood-based bio-feedstocks and has an investment in several proprietary varieties of Camelina Sativa (“Camelina”), a fast growing, low input and ultra-low-carbon intensity crop used as a feedstock for renewable fuels. The Company holds its Camelina assets (including all related intellectual property related rights and approvals) and operates its Camelina business through its subsidiary, Sustainable Oils Inc., (“Susoils”) a Delaware corporation.

On May 7, 2020 the Company purchased a crude oil refinery in Bakersfield, California with the objective of retrofitting it to produce renewable diesel from Camelina and other non-food feedstocks (the “Bakersfield Biorefinery”). The Bakersfield Biorefinery is owned by Bakersfield Renewable Fuels, LLC, (“BKRF”) an indirect wholly-owned subsidiary of Global Clean Energy Holdings, Inc. The retrofitting of the refinery commenced promptly after the acquisition and is scheduled to be completed in early 2022. After necessary start-up procedures and testing are complete, we expect production to be approximately 10,000 barrels per day (420,000 gallons per day). Although the Bakersfield Biorefinery will have a nameplate capacity of 15,000 barrels per day, we do not expect to produce more than 10,000 barrels per day for at least the first year of production. The Company has entered into both a product offtake agreement and a term purchase agreement with a major oil company for the purchase by the oil company of all, or substantially all, of the renewable diesel to be produced at the Bakersfield Biorefinery for the first five years of production. See Note B - Basis of Presentation and Liquidity which describes the offtake agreement in more detail

Basis of Presentation

The accompanying condensed consolidated balance sheet of the Company at December 31, 2020, has been derived from audited

consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the

United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements as of September

30, 2021 and for the three months and nine months ended September 30, 2021 and 2020, have been prepared in accordance with U.S.

GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do

not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in

conjunction with the audited consolidated financial statements and related notes to the financial statements included in the Company’s

Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the U.S. Securities and Exchange Commission

(“SEC”).

the

opinion of the Company’s management, all material adjustments (consisting of normal recurring adjustments)

considered necessary for a fair presentation have been made to the unaudited condensed and consolidated financial statements.

The

unaudited

condensed

consolidated

financial

statements

include

all

material

adjustments

(consisting

all

normal

accruals)

necessary

make the condensed consolidated financial statements not misleading as required by Regulation S-X Rule 10-01. Operating results for

the three months and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the

year

ended

December

31,

2021

any

future

periods.

The accompanying condensed consolidated financial statements include the accounts of Global Clean Energy Holdings, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Acquisitions

On April 15, 2021, the Company acquired Agribody Technologies, Inc., (“ATI”) a private agricultural biotechnology company. The transaction was accomplished by acquiring a 100% controlling interest in ATI in an all-stock transaction for a total

fair

value of approximately $5 million. In consideration for the shares of ATI, the Company issued 830,526 shares of common stock at an approximate fair value of $6.02 per share. The primary reason for the combination was to leverage the expertise of ATI to speed the development of novel camelina varieties for Susoils. The Company hired the founder of ATI and will continue to monetize the pre-acquisition ATI

rev

nue

contracts.

-8-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES

ONTINUED)

Below is a table that shows the fair value of assets acquired and liabilities assumed by the Company as a result of the transaction:

Assets	As of April 15, 2021
Cash	$	263,755
Property, plant, and equipment		185,445
Patents		3,450,000
Trade name		90,000
Goodwill		1,355,077
Liabilities
Accounts payable and accrued liabilities		(344,277	)
Total fair value of net assets acquired		5,000,000
Less: Cash acquired		(263,755	)
Total fair value of consideration transferred, net of cash acquired	$	4,736,245

Per Share Information

On March 26, 2021, the Company effected a one-for-ten reverse stock split. All common stock and per share information (other than par value) contained in these condensed consolidated financial statements and footnotes have been adjusted to reflect the foregoing reverse stock split. Prior to the reverse stock split the Company had 358,499,606

common

shares outstanding and immediately after the stock split the Company had 35,850,089

common

shares outstanding. The Company issued additional

common

shares after the reverse stock split and the outstanding

common

shares as of November 1

, 2021 was 40,063,068.

Restricted Cash

In accordance with the Company’s Senior Credit Facility agreement (see Note E - Debt), the Company is required to advance the calculated interest expense on its borrowings at the time of such borrowings to the estimated commercial operational date of the Bakersfield Biorefinery. This interest is deposited into a designated account and the appropriate amount is paid to the lenders 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 BKRF account only upon approval by the lenders to pay for specific construction, facility and related costs. These two accounts are restricted and not directly accessible by the Company for general use, although these funds are assets of the Company. The Company estimates how much of this cash is likely to be capitalized into the Bakersfield Biorefinery project in the form of a long-term asset, and classifies this amount as long-term. The Company makes this determination based on its budget, recent and near-term invoicing, and internal projections

Cash and Cash Equivalents; Concentration of Credit Risk

The Company considers all highly liquid debt instruments maturing in three months or less to be cash equivalents. The Company

maintains cash and cash equivalents at high quality financial institutions. However, deposits exceed the federally insured limits. At

September

30,

2021,

the

Company

had

approximately

$42.6

million

uninsured

cash.

-9-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES

(CONTINUED)

Inventories

Inventories currently consist of Camelina seeds, grain, meal, and oil. Inventories are valued at the lower of cost or net realizable value. Cost is determined based on standard cost. There were no lower of cost or market adjustments made to the inventory values reported as of September 30, 2021 and December 31, 2020.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation of office equipment and 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.

wever, 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 statement of operations. Interest on borrowings related to the retrofitting of the Bakersfield Biorefinery is being capitalized, which will continue until the refinery is available for commercial use. During the three months ended September 30, 2021 and September 30, 2020, $8.2 million and $3.9 million, respectively, of interest was capitalized and is included in property, plant and equipment, net. During the nine months ended September 30, 2021, $20.1 million and $5.5 million, respectively, of interest was capitalized and is included in property, plant and equipment, net, for a total of $30.3 million of capitalized interest for the project.

Long-Lived Assets

In accordance with U.S. GAAP for the impairment or disposal of long-lived assets, the carrying values of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the aggregate of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the three and nine months ended September 30, 2021 and 2020, there were no impairment losses recognized on long-lived assets.

Indefinite Lived Assets

The Company has two assets, goodwill and trade name, that are indefinite-lived assets. Goodwill represents the excess of the fair value of consideration over the fair value of identifiable net assets acquired. Goodwill is allocated at the date of the business combination. Goodwill is not amortized, but is tested for impairment annually on December 31 of each year or more frequently if events or changes in circumstances indicate the asset may be impaired. The trade name the Company acquired as part of the transaction with

ATI

is an identified intangible asset. Trade names are not amortized and instead are tested annually for impairment, or more frequently if events or circumstances indicate a likely impairment.

Debt Issuance Costs

The acquisition of the refinery and the related $365 million of financing to fund the retrofit closed in May 2020. In connection with financing the refinery, we incurred approximately $

7.1

million of debt issuance costs as of the date of the closing. Debt issuance costs are amortized over the term of the loan as interest: however, as such interest relates to retrofitting of the refinery, these costs are being capitalized as part of the refinery until the refinery is placed in service. The amortization of the debt issuance costs that are not capitalized is recorded as interest expense. At September 30, 2021 and December 31, 2020, unamortized debt issuance costs related to the Senior Credit Facility are classified as a direct deduction from the carrying amount of the credit facility; however, unamortized debt issuance costs related to the Mezzanine Credit Facility are presented on the balance sheets as an asset as there have not been any borrowings on the Mezzanine Credit Facility. See Note E - Debt for more detail on the financing.

-10-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES

ONTINUED)

Accounts Payable and Accrued Liabilities

For presentation purposes, accounts payable and accrued liabilities have been combined. As of September 30, 2021 and December 31, 2020, accounts payable and accrued liabilities consists of:

	As of September 30, 2021		As of December 31, 2020
Accounts payable	$	14,845,855	$	9,724,136
Accrued compensation and related liabilities		3,358,408		3,034,688
Accrued interest payable		1,782,358		2,093,649
Accrued construction costs		25,345,484		-
Other accrued liabilities		4,623,331		3,146,478
Current portion of asset retirement obligations		4,478,948		3,716,000
Current portion of environmental liabilities		1,521,918		883,000
	$	55,956,302	$	22,597,951

Asset Retirement Obligations

The Company recognizes liabilities which represent the fair value of a legal obligation to perform asset retirement activities, including those that are conditional on a future event, when the amount can be reasonably estimated. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value. We have asset retirement obligations with respect to our Bakersfield Biorefinery due to various legal obligations to clean and/or dispose of these assets at the time they are retired. However, the majority of these assets can be used for extended and indeterminate periods of time provided that they are properly maintained and/or upgraded. It is our practice and intent to continue to maintain these assets and make improvements based on technological advances. $

13.8

million of these obligations relate to the required cleanout of hydrocarbons previously used in the refinery’s pipelines and terminal tanks over the next 4 years. 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.

We estimate our escalation rate at 3.33% and our discount factor ranges from 3.62% in year one to 7.26% in year twenty, with the weighted average discount rate being 5.0%. See Note H - Commitments and Contingencies for more detail on environmental liabilities, which are accounted for separately from asset retirement obligations.

The following table provides a reconciliation of the changes in asset retirement obligations for the nine months ended September 30, 2021 and the year ended December 31, 2020

	Nine months ended September 30, 2021			Year ended December 31, 2020
Asset retirement obligations - beginning of period	$	21,478,977		$	-
Additions related to acquisition of refinery		-			21,901,977
Disbursements		(1,961,711	)		(135,000	)
Accretion		735,000			652,000
Revised obligation estimates		-			(940,000	)
Asset retirement obligations - end of period	$	20,252,266		$	21,478,977

-11-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES

(CONTINUED)

The amounts shown as of September 30, 2021 and December 31, 2020, include $

4.5

million

d $

3.7

million, respectively, which have been classified as current liabilities and included in accounts payable and accrued liabilities and $

15.8

million and $

17.8

million, respectively which have been classified as long term liabilities as of September 30, 2021 and December 31, 2020, respectively.

Advances to Contractors

Upon the acquisition of the Bakersfield Biorefinery, the Company advanced $20.1 million to its primary construction contractor for invoices to be billed against the Guaranteed Maximum Price for the Engineering, Procurement and 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. As of June 30, 2021, the $20.1

million advanced to the initial primary construction contractor has been reduced to zero and a new advance has been made to the new primary construction contractor in the amount of $17.8 million. As of September 30, 2021, reductions of $

1.5

million to the contractor advance have been made, resulting in $

16.3

million reflected as advance to contractor as of September 30, 2021.

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.

The Company has recorded a

100

% valuation allowance against the deferred tax assets as of September 30, 2021 and December 31, 2020.

Revenue Recognition

The Company recognizes revenue in accordance

with ASC 606,

Revenue From Contracts With Customers

, using the following five-step model:

(1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue. The Company recognized $

0.0

million in revenues during the quarter ended September 30, 2021 and had no comparable sales in the quarter ended September 30, 2020. The Company recognized $

0.2

million in revenues during the nine months ended September 30, 2021 and had no comparable sales in the nine months ended September 30, 2020. The Company is engaged in contracting with farmers to grow camelina grain that will be processed into oil for use in Bakersfield Biorefinery. The Company will recognize revenues upon the sale of its patented camelina seed to the farmers and also for the crushed camelina meal that it plans to sell to third party livestock and poultry operators. Based upon the Company’s Product Offtake Agreement (see Note B - Basis of Presentation and Liquidity), the Company expects to recognize revenue from the sale of biofuel beginning in 2022.

Research and Development

Research and development costs are charged to operating expenses when incurred, which were nominal for the three and nine months ended September 30, 2021 and September 30, 2020.

Fair Value Measurements and Fair Value of Financial Instruments

As of September 30, 2021 and December 31, 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, cash equivalents

and restricted cash, accounts receivable, accounts payable, and accrued liabilities, the Senior Credit Facility, and the convertible note payable to the executive officer approximate their fair value due to their short-term nature. The Company’s Class B Units are reported at fair value.

U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair-value hierarchy:

-12-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES (CONTINUED)

Level 1— Quoted prices for identical instruments in active markets;

Level 2— Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

On December 31, 2019, the Company had a derivative liability of $

24.8

million related to a forward contract that also included a call option. The notional amount of the forward contract related to gallons of the commodity, Ultra Low Sulfur Diesel. Under the terms of the contract the Company was obligated to pay the equivalent of the notional amount multiplied by the market price of Ultra Low Sulfur Diesel at the settlement dates; however, the call option of the contract capped the market price of Ultra Low Sulfur Diesel.

In March of 2020, the Company settled the derivative contract by agreeing 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 derivative forward contract was amended again in April 2020. Under the amendment, the contract was replaced with a fixed payment obligation, whereby the Company agreed to pay the counterparty a total of $

24.8

million, which included a payment of $4.5 million that the Company paid in June 2020, and six equal installment payments beginning in May 2022 totaling $

20.3

million.

The fair value of the derivative forward contract 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, the Company used the Black-76 option pricing model, a variation of the Black-Scholes option pricing model. As a result, the contract as a whole is included in the Level 3 of the fair value hierarchy.

The Company’s Class B Units are also measured at fair value on a recurring basis. See Note E - Debt for more information

The derivative liability discussed herein was derecognized in the first quarter of 2020, and the Company had no derivative liabilities at

September

30,

2021

and

December

31,

2020.

The following is the recorded fair value of the Class B Units as of September 30, 2021:

	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
Class B Units as of September 30, 2021	$	18,054,857	$	18,054,857	$	-	$	-	$	18,054,857

The following is the recorded fair value of the Class B Units as of December 31, 2020:

	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
Class B Units as of December 31, 2020	$	5,123,000	$	5,123,000			$	5,123,000

-13-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES (CONTINUED)

The following presents changes in the Class B Units through the three months and nine months ended September 30, 2021:

	Three months ended September 30, 2021		Nine months ended September 30, 2021
Beginning Balance	$	12,623,420	$	5,123,000
New unit issuances		2,581,864		6,988,372
Change in fair value recognized in earnings		2,849,573		5,943,485
Ending Balance	$	18,054,857	$	18,054,857

The

following

presents

changes

the

Class

Units

through

the

three

months

and

nine

months

ended

September

30,

2020:

		Three months ended September 30, 2020		Nine months ended September 30, 2020
Beginning Balance	$	939,000	$	-
New unit issuances		537,000		1,476,000
Change in fair value recognized in earnings		-		-
Ending Balance	$	1,476,000	$	1,476,000

Estimates

Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial statements include a) valuation of common stock, warrants, and stock options, b) estimated useful lives of equipment and intangible assets, 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, d) the estimated costs to remediate or clean-up identified environmental liabilities, e) the estimated future cash flows and the various metrics required to establish a reasonable estimate of the value of the Class B Units issued to the Company’s lenders under the credit agreement, and f) the allocation of the acquisition price of

ATI

. to the various assets acquired. It is reasonably possible that the significant estimates used will change within the next year.

Income/Loss per Common Share

Income/Loss per share amounts are computed by dividing income or loss applicable to the common stockholders of the Company by the weighted-average number of common shares outstanding during each period. Diluted income or loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents. The number of dilutive warrants and options is computed using the treasury stock method, whereby the dilutive effect is reduced by the number of treasury shares the Company could purchase with the proceeds from exercises of warrants and options.

The following table presents instruments that were anti-dilutive for the nine months ended September 30, 2021 and September 30, 2020 that were excluded from diluted earnings per share as they would have been antidilutive:

		Nine months ended September 30, 2021		Nine months ended September 30, 2020
Convertible notes and accrued interest	$	7,453,968	$	10,214,164
Convertible preferred stock - Series B		-		1,181,819
Stock options and warrants		19,468,704		19,317,714

-14-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE

—

ORGANIZATION

AND

SIGNIFICANT

ACCOUNTING

POLICIES (CONTINUED)

Stock Based Compensation

The Company recognizes compensation expenses for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. However, in the case of awards with accelerated vesting, the amount of compensation expense recognized at any date will be based upon the portion of the award that is vested at that date. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04,

Reference Rate Reform

(Topic 848). This ASU was issued in response to concerns about structural risks of interbank offer rates, and particularly the discontinuation of the London Interbank Offered Rate (“LIBOR”). These rates are used globally by all types of entities for a variety of purposes. ASU 2020-04 provides guidance to companies with optional expedients for contract modifications under Topics 310, 470, 842, and 815-15, excluded components of certain hedging relationships, fair value hedges, and cash flow hedges, as well as certain exceptions, which are intended to help ease the potential accounting burden associated with transitioning away from these reference rates. ASU 2021-01 clarifies certain optional expedients and exceptions for contract modifications and hedge accounting. Companies have the option to immediately apply the ASU. However, the guidance will only be available for a limited time (generally through December 31, 2022). The Company is currently evaluating the impact of adopting this new accounting standard, but does not expect it to have a material impact on its consolidated condensed financial statements and related disclosures.

In October 2021, the FASB issued ASU 2021-08,

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

(Topic 805). This ASU amends ASC 805 to require acquiring entities in a business combination to recognize and measure contract assets and contract liabilities using the revenue recognition guidance under ASC T

opic

606. This differs from current GAAP rules where an acquirer generally recognizes these items at fair value on the date of acquisition. ASU 2021-08 is effective for financial statements issued for fiscal years beginning after December 15, 2022, however early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of this standard, but does not expect it to have a material impact on its consolidated condensed financial statements and related disclosures.

Subsequent Events

The

Company

has

evaluated

subsequent

events

through

the

date

these

condensed

consolidated

financial

statements

were

available

issued.

Where

applicable,

the

notes

to these condensed consolidated financial statements have been updated to discuss all

significant

subsequent

events

which

have

occurred.

-15-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 $34.0 million during the nine months ended September 30, 2021, and has an accumulated deficit of $100.2 million at September 30, 2021. At September 30, 2021, the Company had working capital of

negative

$50.1 million (which includes current restricted cash of $2.3 million) and a stockholders’ deficit of $53.4 million. The Company is progressing its Bakersfield Biorefinery retooling project and is on track to achieve its initial revenues from the production and sale of renewable diesel in early 2022.

Additionally, the Company must fund the $35 million contingency cash reserve account (described further in Note E) by November 19, 2021. The Company is not able to fund the $35 million reserve account absent an amendment or additional debt and/or equity financing. 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. Management plans to close on an additional debt and/or equity financing in the short-term and believes that transaction is probable of closing. Therefore, management believes their plan alleviates the substantial doubt.

On May 4, 2020, a group of lenders agreed to provide a $300 million senior secured term loan facility to BKRF OCB, LLC, a wholly-owned subsidiary of Global Clean Energy Holdings, Inc., to enable that subsidiary to acquire the equity interests of BKRF and to pay the anticipated costs of the retooling of the Bakersfield Biorefinery owned by BKRF (the “Senior Credit Facility”). 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, (the “Mezzanine Credit Facility”). Although the cash provided by the senior and Mezzanine Lenders may only be used for the Bakersfield Biorefinery and servicing these debt obligations, Global Clean Energy Holdings, Inc. will nevertheless, realize a reduction in certain of its operating and general and administrative expenses as the Company shares certain personnel and related costs. The Company believes that these cost savings, plus the Company’s other financial resources, including, but not limited to, equity sales, sale and leaseback opportunities, financing or leasing arrangements for equipment or assets, etc., should be sufficient to fund the Company’s operations through the start-up of the Bakersfield Biorefinery, at which point the Company will begin to generate positive operating cash flow which should be enough to fund operations and liabilities through at least the term of the product offtake agreement discussed below. See “Note E - Debt”. In November 2020, the Company’s Senior Credit Facility and Mezzanine Credit Facility were increased by a total of $15 million for the Bakersfield Biorefinery and the Company’s upstream Camelina operations.

In April 2019, the Company entered into a binding Product Offtake Agreement (the “Offtake Agreement”) with ExxonMobil Oil Corporation (“ExxonMobil”) pursuant to which ExxonMobil has committed to purchase 2.5 million barrels 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 ExxonMobil. ExxonMobil’s obligation to purchase renewable diesel will last for a period of five years following the date that the Bakersfield Biorefinery commences commercial operations. ExxonMobil 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.

In April 2021, BKRF entered into a Term Purchase Agreement (“TPA”) with ExxonMobil under which ExxonMobil has the right to purchase additional quantities of renewable diesel from our Bakersfield Biorefinery, and the Company is obligated to sell such additional amounts of renewable diesel to ExxonMobil. Under the Offtake Agreement, signed in 2019, ExxonMobil committed to purchase 2.5 million barrels of renewable diesel per year (the “Committed Volume”) from the Bakersfield Biorefinery. However, the Bakersfield Biorefinery is designed to produce more than the Committed Volume. Under the TPA, ExxonMobil has the exclusive right to purchase all renewable diesel produced in excess of the Committed Volume that we sell to ExxonMobil under the Offtake Agreement. The Company also agreed to transfer title to ExxonMobil of the Renewable Identification Numbers (“RINs”) allocated to the quantities of renewable diesel purchased under the TPA. In the event that ExxonMobil does not purchase all of the renewable diesel that it can under the TPA and, as a result, our inventory levels exceed certain specified levels, the Company can sell that extra inventory to third parties. ExxonMobil will pay us a price for the renewable diesel purchased under the TPA based on a tiered formula reflecting the margins realized by ExxonMobil from its downstream resales of the TPA renewable diesel. The TPA has a five-year term. ExxonMobil has the option to extend the initial five-year term for a second five-year term if it elects to extend the Offtake Agreement.

Under both agreements, we retain 100% of the co-products, which include renewable naphtha, renewable propane and renewable butane. The Company is pursuing sales contracts for these products

-16-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE C – PROPERTY, PLANT AND EQUIPMENT

On May 7, 2020, through its wholly-owned subsidiary BKRF OCB, LLC, the Company purchased all of the outstanding equity

interests

Alon

Bakersfield

Property,

Inc.

company that owned a crude oil refinery in Bakersfield, California, from Alon

Paramount

Holdings,

Inc.

(“Alon

Paramount”)

for

total

fair

value

$89.4

million

(excluding

acquisition

costs).

Immediately

prior

the

purchase,

Alon

Bakersfield

Propert

y I

nc.

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. In accordance with ASC

Topic 805,

Business Combinations

, the Company determined that the purchase is an asset purchase and not a business combination

based

the

following

substantially

all

the

fair

value

the

gross

assets

acquired

concentrated

single

identifiable

asset

group, b)

the existing crude oil 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 Biorefinery 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.

The total fair value of consideration for the purchase of the Bakersfield Biorefinery was $89.4 million, which consisted of $40.0 million of cash, an option right to acquire a 33% equity interest in GCE Acquisitions granted to the seller that was valued at $5.5 million, and an assumption of $43.9 million of liabilities. The liabilities assumed consist of $21.9 million of asset retirement obligations (ARO) and $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%. The total consideration of the purchase was allocated to the asset categories acquired based upon their relative fair values, except that the fair value of the asset retirement obligations was allocated to the specific assets to which they relate.

The following summarizes this allocation of the fair 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 Acquisition
Property 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

-17-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE C – PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Property, plant, and equipment as of September 30, 2021 and December 31, 2020 are as follows:

	September 30, 2021			December 31, 2020
Land	$	7,584,961		$	7,584,961
Office Equipment		62,506			61,078
Buildings		2,053,570			2,053,570
Refinery and Industrial Equipment		86,066,002			86,019,130
Transportation Equipment		136,237			-
Construction in Process		149,811,267			33,212,695
Construction Period Interest		30,347,027			10,220,766
Total Cost	$	276,061,570		$	139,152,200
Less Accumulated Depreciation		(268,066	)		(179,525	)
Property, plant and equipment, net	$	275,793,504		$	138,972,675

Depreciation expense for property and equipment was approximately $35,000 and $46,000 for the three months ended September 30, 2021 and September 30, 2020, respectively and $

89,000

and $

73,000

for the nine months ending September 30, 2021 and September 30, 2020, respectively

NOTE D - INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The Company holds certain patents, intellectual property and rights related to the development of Camelina as a biofuels feedstock and continues to incur costs related to patent license fees and patent applications for Camelina sativa plant improvements. In April of 2021, the Company acquired ATI primarily for its patent portfolio. The Company allocated approximately $3.5 million of the consideration to the patents held by ATI, which is included in our patent assets below and subject to amortization. Our patents generally have an expected useful life of approximately 20 years and are carried at cost less any accumulated amortization and any impairment losses. The Company also allocated $90,000 of the acquisition of ATI to its trade name. The ATI tradename is a non-amortizable intangible asset with an indefinite life subject to any future impairment losses. Amortization is calculated using the straight-line method over their remaining patent life. The termination dates of our patents range from 2022 through 2040. 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.

-18-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE D - INTANGIBLE ASSETS AND GOODWILL (CONTINUED)

The

intangible

assets

September

30,

2021

and

December

31,

2020

shown

the

following

table:

	September 30, 2021			December 31, 2020
Non-amortizable Intangible Assets
Trade Name	$	90,000		$	-
Amortizable Intangible Assets
Patent licenses		7,973,535			4,442,553
Refinery permits		1,921,082			1,921,082
Less accumulated amortization		(2,786,775	)		(2,182,889	)
Intangible Assets, Net	$	7,197,842		$	4,180,746

Amortization expense for intangible assets were approximately $320,000 and $95,000 for the three months ended September 30, 2021 and September 30, 2020, respectively

and $699,000 and $251,000 for the nine months ending September 30, 2021 and September 30, 2020, respectively.

The estimated intangible asset amortization expense for the remainder of 2021 through 2027 and thereafter is as follows:

	Estimated Amortization Expense
October 1, 2021 through December 31, 2021	$	320,126
2022		1,113,118
2023		855,987
2024		726,135
2025		625,644
2026		610,359
2027 and Thereafter		2,946,473
Total	$	7,197,842

-19-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE E – DEBT

The

table

below

summarizes

our

notes

payable

and

long-term

debt

September

30,

2021

and

December

31,

2020:

		September 30, 2021			December 31, 2020
Notes Payable
Senior credit facility	$	290,626,038		$	153,405,569
Fixed payment obligation		20,250,000			20,250,000
Other notes		2,928,949			4,198,113
		313,804,987			177,853,682


Less: current portion of long-term debt		(17,341,122	)		(4,198,113	)
Less: unamortized debt discount and issuance costs		(17,614,939	)		(10,731,206	)
Subtotal		278,848,927			162,924,363

Convertible Notes Payable
Convertible note payable to executive officer		1,000,000			1,000,000
Other convertible notes payable		-			697,000
Subtotal		1,000,000			1,697,000

Total	$	279,848,927		$	164,621,363

Credit Facilities

On May 4, 2020, in order to fund the purchase of BKRF, BKRF OCB, LLC, a subsidiary of the Company, entered into the Senior Credit Facility with a group of lenders (the “Senior Lenders”) pursuant to which the Senior Lenders agreed to provide a $300 million senior secured term loan facility to BKRF OCB (which was increased to $313.2 million in November 2020) to pay the costs of the retooling the Bakersfield Biorefinery. The Senior Credit Facility bears interest at the rate of 12.5% per annum, payable quarterly, provided that the borrower may defer up to 2.5% interest to the extent it does not have sufficient cash to pay the interest, with such deferred interest being added to principal. The principal of the Senior Credit Facility matures in November 2026, provided that BKRF OCB, LLC must offer to prepay the Senior Credit Facility with any proceeds of such asset dispositions, borrowings other than permitted borrowings, proceeds

from condemnation, damages, or other events of loss, and

excess net cash flow. BKRF OCB, LLC may also prepay the Senior Credit Facility in whole or in part with the payment of a prepayment premium. As additional consideration for the Senior Credit Facility, the Senior Lenders are issued Class B Units in BKRF HCP, LLC, an indirect parent company of BKRF OCB, LLC, as the Company draws on the Senior Credit Facility. As of September 30, 2021, 284.8 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 $10.1 million which were recorded as debt discount. The aggregate fair value of the earned units as of September 30, 2021 was approximately $18.1 million. The fair value of such units is remeasured at each new issuance and at each quarter end. The fair value of these Class B units on the date of issuance is recorded as a liability with an offsetting adjustment to debt discount. During the nine months ended September 30, 2021, $3.1 million of these costs were recognized. It is expected that the fair value will change based on relevant factors influencing future cash flows. The Senior Credit Facility is secured by all the assets of BKRF OCB, LLC (including its membership interests in BKRF), all the outstanding membership interest in BKRF OCB, LLC, and all the assets of BKRF. In March 2021, the Company and the Senior Lenders amended the credit agreements to address and remedy certain covenants of which the Company was not in full compliance, thereby bringing the Company into full compliance with all covenants as of the amendment date. As part of that amendment, the Company agreed to pay the Senior Lenders a 1% fee of the total available credit available under the Senior Credit Facility and the Mezzanine Credit Facility. Based on the credit available under the two facilities, the fee was $3.8 million and may be paid in common stock.

-20-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE E – DEBT (CONTINUED)

Effective March 26, 2021, the Company and its Senior Lenders 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 a cash reserve of at least $35 million, 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 contingency 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 Credit Facility, 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 required that we raise no less than $35 million in a public or private financing transaction by July 31, 2021 and that we deposit, by that date, at least $35 million into the new Bakersfield Biorefinery cash reserve account. As consideration for the amendments to the two credit agreements, we agreed to pay each Senior Lender and Mezzanine Lender an amendment and consent premium equal to 1.00% of the aggregate commitments and loans of such lenders. On July 29, 2021 the time period for funding the $35 million contingency reserve was extended to September 15, 2021 and has been further extended to November 19, 2021.

On May 4, 2020, BKRF HCB, LLC, the indirect parent of BKRF OCB, LLC, entered into a the Mezzanine Credit Facility with a group of Mezzanine Lenders who 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. As of September 30, 2021, BKRF HCB, LLC has not drawn down on the Mezzanine Credit Facility. The Mezzanine 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. Such deferred interest is added to principal. As additional consideration for the Mezzanine Credit Facility, the Mezzanine Lenders will be issued Class C Units in BKRF HCP, LLC at such times as advances are made under the Mezzanine Credit Facility. The Mezzanine 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 Credit Facility matures in November 2027.

On May 18, 2021 certain of our subsidiaries, including BKRF, entered into Amendment No. 4 to our Credit Agreement with the Senior Lenders. The Amendment was entered into primarily to consent to the replacement of the original EPC firm and agreement with the new EPC firm and agreement. See Note H - Commitments and Contingencies.

On July 29, 2021, the Company entered into an amendment to each of its Senior Credit Facility and Mezzanine Credit Facility with its lenders to extend the date of funding the $35 million contingency reserve to September 15, 2021, to increase the availability under the credit agreements by an aggregate of $5 million, and to convert its 1% fee payable under a prior amendment from a cash payment to a warrant to purchase $3.8 million in value of the Company's common stock. As of September 30, 2021, the warrant has not been issued, and subsequent to September 15, 2021 the date of funding for the $35 million contingency reserve has been extended to November 19, 2021.. The number of shares to be issued upon exercise of the warrant is to be determined based on the price at which the Company issues shares of its common stock in its next additional capital raise, which is defined as a minimum of $35.0 million..

Fixed Payment Obligation

As described in Note A, under “Fair Value Measurements and Fair Value of Financial Instruments”, the Company amended a derivative forward contract during the quarter ended March 31, 2020, with the counterparty. The amendment terminated the derivative forward contract and replaced it with a fixed payment obligation. Under the terms of the fixed payment obligation, the Company agreed to pay the counterparty a total of $23.1 million, which included a payment of $5.5 million in April 2020, and six equal installment payments in 2022 totaling $17.6 million. 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 was paid), and six equal monthly installment payments beginning in May 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%.

-21-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE E – DEBT (CONTINUED)

Other Notes Payable

Included in “other notes” as of September 30, 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 Biorefinery in May 2020, the Company purchased numerous insurance contracts to cover its corporate, ownership and construction risks primarily to provide financial protection against various risks and to satisfy certain lender requirements. The Company paid 35% of the total premiums and financed the balance at 3.8% annual interest

rate. The Company is obligated to make seventeen equal monthly payments totaling approximately $

4.5

million beginning in July 2020. The insurance policies cover various periods from 12 to 60 months beginning in May 2020. As of September 30, 2021, the Company had six payments remaining for a total of $1.8 million. In May, 2021, the Company entered into new insurance policies to replace the policies that were expiring in May 2020. 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. In March, 2021, the Company received a SBA Paycheck Protection Program loan for $0.6 million at a 1% interest rate. The loan matures in March 2026, and the Company may have the opportunity to have the loan forgiven under the government program.

Convertible Note Payable to Executive Officer

On October 16, 2018, Richard Palmer, the Company’s Chief Executive Officer and President, entered into a new employment agreement with the Company and concurrently agreed to defer $1 million of his accrued unpaid salary and bonus for two years. In order to evidence the 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 repaying Mr. Palmer’s loan and, accordingly, is currently in default under the Convertible Note. The Company accrued interest expense of $12,500 and $37,500 on this note in each quarter and nine months respectively, ended September 30, 2021 and 2020. The Company had recorded accrued interest payable of approximately $148,000 and $110,000 as of September 30, 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.

Convertible Notes Payable

The Company had several notes that were convertible into shares of the Company or the Company’s subsidiaries at different prices: ranging from $0.30 per share into the Company’s stock and up to $1.48 per share into Susoils’s common stock. These notes have 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 convertible promissory note upon the conversion of the entire outstanding balance, principal and accrued interest, for that note. During the quarter ending June 30, 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 September 30, 2021, there are no remaining convertible notes payable to third parties.

-22-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE E – DEBT (CONTINUED)

The following table summarizes the minimum required payments of notes payable and long-term debt as of September 30, 2021:

Year		Required Minimum Payments
2021	$	2,928,949
2022		21,250,001
2023		-
2024		-
2025		-
Thereafter		290,626,038
Total	$	314,804,988

Class B Units

As described above, during the year ended December 31, 2020 and through September 30, 2021, the Company issued or had issuable 151.5 million and 284.8 million, respectively, Class B Units of its subsidiary, BKRF HCB, LLC, to its Senior Lenders. 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 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 commence once the Bakersfield Biorefinery begins operations and will continue through the later of five years after operations of the refinery begins or until the cumulative distributions reach a certain threshold defined in the operating agreement of BKRF HCB, LLC. The 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 Facility, or approximately $635 million. As of September 30, 2021, 284.8 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 $10.1 million which were recorded as debt discount. The aggregate fair value of the earned units as of September 30, 2021 was approximately $18.1 million. The fair value of such units is remeasured at each new issuance and at each quarter end. It is expected that the fair value will increase as the Company continues to de-risk the project through ongoing retooling activities. The fair value is largely based on the present value of the expected distributions that will be made to the Class B Unit holders, which consider various risk factors, including a market risk premium, project size, the uniqueness and age of the refinery, the volatility of the feedstock and refinery inputs, operational costs, environmental costs and compliance, effective tax rates, illiquidity of the units, etc. As completion of retrofitting the refinery progresses, the fair value is expected to increase, and further increases in fair value are expected when the refinery becomes operational and begins generating revenues. For accounting purposes, these Class B Units are considered to be mandatorily redeemable and have been classified as liabilities in the accompanying balance sheets and are remeasured at fair value at the end of each reporting period.

NOTE F - STOCKHOLDERS’ EQUITY

Common Stock

In the first nine months of 2021, the Company issued 62,332 shares of its common stock upon the exercise of stock options. These option exercises consisted of 50,000 and 12,332 shares issued to a director and employees, respectively.

March

26,

2021,

the

Company

issued

1,586,786

its

common

stock

the

holder

convertible

promissory

note

upon

the conversion, on the original terms of the note, of the entire outstanding balance, principal and accrued interest, for that note, which

was

$476,036.

-23-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE F - STOCKHOLDERS’ EQUITY (CONTINUED)

On April 15, 2021, the Company issued 830,526 shares of its common stock as consideration for the acquisition of ATI. The shares were valued at $5 million, based on an agreed formula based on the shares trading price.

On April 16, 2021 the Company issued 496,000 shares of its common stock and warrants to purchase an additional 19,840 shares of common stock, all for $3.1 million in a private sale to three accredited investors.

On June 1, 2021, the Company issued 53,723 shares of its common stock to various note holders upon the conversion of, or as payment for the entire outstanding balance, principal and accrued interest, of notes, all in accordance with the original terms of the notes, having an outstanding balance of $308,889 in the aggregate.

On June 30, 2021, 1,181,819 shares of its common stock became issuable upon the delivery to the Company of notices of conversion for the conversion of all the outstanding shares of the Company’s Series B Convertible Preferred Stock. The new shares of common stock and the new certificates will be issued to the former holders of the preferred stock upon the tender of lost certificate documentation by the holders.

Series B Convertible Preferred Stock

On November 6, 2007, the Company sold a total of 13,000 shares of Series B Convertible Preferred Stock (“Series B Shares”) to two investors for an aggregate purchase price of $1.3 million, less offering costs of $9,265. Each share of the Series B Shares has a stated value of $100.

The Series B Shares were convertible into shares of the Company’s Common Stock. As of June 30, 2021, the two holders of the shares of preferred stock tendered notices of conversion, and all of the outstanding shares of Series B Convertible Preferred Stock were converted into 1,181,819 shares of the Company’s common stock. As a result, effective as of June 30, 2021, the Company had no outstanding Series B Convertible Preferred Stock.

NOTE G – STOCK OPTIONS AND WARRANTS

2020 Equity incentive Plan

In April 2020, the Company’s Board of Directors adopted the Global Clean Energy Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) wherein 2,000,000 shares of the Company’s common stock were reserved for issuance thereunder. Options and awards granted to new or existing officers, directors, employees, and non-employees vest ratably over a period as individually approved by the Board of Directors generally over three years, but not in all cases. The 2020 Plan provides for a three-month exercise period of vested options upon termination of service. The exercise price of options granted under the 2020 Plan is equal to the fair market value of the Company’s common stock on the date of grant. Options issued under the 2020 Plan have a maximum term of ten years for exercise and may be exercised with cash consideration or through a cashless exercise in which the holder forfeits a portion of the award in exchange for shares of common stock of the remaining portion of the award. As of September 30, 2021, there were

561,177

shares available for future option grants under the 2020 Plan.

During the nine months ended September 30, 2021 the Company granted stock options for the purchase of a total of 424,740 shares of Common Stock under the 2020 Plan, of which 364,740 were to employees and 60,000 were to directors.

-24-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE G – STOCK OPTIONS AND WARRANTS (CONTINUED)

The Company previously granted stock options that were not issued under

the 2020 Plan which the terms and conditions are described within the Company's Form 10-K filed on April 13, 2021.

A summary of the option award activity in

2021 and awards outstanding at September 30, 2021 (includes 100,000, 18,809,026 and 559,678 options under the 2010 Equity

Incentive

Plan,

the

non-plan

and

the

2020

Plan,

respectively)

follows:

	Shares Under Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Outstanding at December 31, 2020		19,230,214		$	0.16		2.81	$	30,044,649

Granted		424,740			5.61				-
Exercised		(61,770	)		0.17				319,433
Forfeited		(121,418	)		5.94				-
Expired		(3,062	)		5.51				-

Outstanding at September 30, 2021		19,468,704		$	0.33		2.34	$	58,046,239

Vested and exercisable at September 30, 2021		18,597,978		$	0.23		2.27	$	56,549,516

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:

	Nine months ended September 30, 2021
Expected Term (in Years)		2 to 5
Volatility		85.665	%
Risk Free Rate		0.401	%
Dividend Yield		0	%
Exit Rate Pre-vesting ( 1 )		0	%
Exit Rate Post-vesting ( 2 )		0	%
Aggregate Grant Date Fair Value	$	1,389,197

(

)

Assumed forfeiture rate for market condition option awards prior to vesting.

(

)

Assumed expiration or forfeiture rate for market condition option awards after vesting.

-25-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE G – STOCK OPTIONS AND WARRANTS (CONTINUED)

Stock Purchase Warrants and Call Option

In the nine months ended September 30, 2021, the Company issued warrants to investors that invested $3.1 million in a private transaction in April 2021 to purchase 19,840 shares of 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.

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, Susoils. for approximately $20 million. The warrant had an expiration date of June 1, 2021, and was not exercised. The value of the warrant upon issuance was determined to be immaterial.

Concurrently with the acquisition of the Bakersfield Biorefinery, the Company, 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.

NOTE H – COMMITMENTS AND CONTINGENCIES

Engineering, Procurement and Construction Contract

On April 30, 2020, GCE Acquisitions entered into an Engineering, Procurement and Construction Agreement with a national engineering firm pursuant to which this firm agreed to provide services for the engineering, procurement, construction, (“EPC”) start-up and testing of the Bakersfield Biorefinery. The agreement, which was assigned by GCE Acquisitions to BKRF OCB, LLC, the borrower under the Senior Credit Facility, provides for this engineering firm to be paid on a cost-plus fee basis subject to a guaranteed maximum price of $201.4 million, subject to increase for approved change orders. As of May 17, 2021, the remaining balance of the contract was approximately $151 million. 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 two major subcontracts for the Bakersfield Biorefinery were not terminated and were subsumed in the new replacement EPC agreement (see below). Accordingly, the two major subcontractors will continue to provide their services for the Bakersfield Biorefinery.

On May 18, 2021 our BKRF subsidiary and CTCI Americas, Inc., a Texas corporation (“CTCI”), entered into a Turnkey Agreement with a Guaranteed Maximum Price for the Engineering, Procurement and Construction 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 under construction in Bakersfield, California. CTCI’s fees and costs, including direct costs, overhead fees and the contractor’s fee, are guaranteed not to exceed $178 million (which maximum price is subject to adjustment for certain change orders). The obligations of CTCI have been guaranteed by CTCI Corporation, the Taiwanese parent company of CTCI

-26-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE H – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Environmental Remediation Liabilities

The Company recognizes its asset retirement obligation and environmental remediation liabilities 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 September 30, 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 September 30 2021, accrued environmental remediation liability costs totaled $21.0 million of which $1.5 million have been classified as current liabilities. At December 31, 2020, accrued environmental liabilities totaled $21.3 million of which $0.9 million have been classified as current liabilities.

On May 7, 2020 through BKRF OCB, LLC, one of the Company’s indirect subsidiaries, the Company purchased all of the outstanding equity interests of Bakersfield Renewable Fuels, LLC from Alon Paramount 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. In connection with the acquisition, BKRF OCB, LLC agreed to undertake certain cleanup activities at the refinery and provide a guarantee for liabilities arising from the cleanup. The Company has assumed significant environmental and clean-up liabilities associated with the purchase of the Bakersfield Refinery.

Leases

On May 1, 2019, the Company amended its Torrance, California office lease to extend the lease term to July 31, 2022.

On January 1, 2021, the Company entered into a lease agreement for a storage facility in Montana. The storage facility will be used for SusOils operations and runs through December 31, 2022.

On April 20, 2021, the Company entered into a 36 month lease agreement for two Zephir electric railcar movers for use at the Bakersfield Biorefinery.

-27-

GLOBAL CLEAN ENERGY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE H – COMMITMENTS AND CONTINGENCIES (CONTINUED)

The table below represents the amounts due through the end of lease terms.

Period		Minimum Payments		Discount		Minimum Payments Less: Discount
October 1, 2021 through December 31, 2021	$	40,767	$	1,480	$	39,287
2022		202,149		3,709		198,440
2023		162,616		1,111		161,504
2024		121,962		269		121,693
Total	$	527,494	$	6,569	$	520,924

On April 20, 2021, BKRF entered into a three-year lease beginning upon delivery of two railcar movers. The equipment was delivered in August and the first monthly payment was made in September 2021. The monthly payment is $13,551 and has an interest rate of 3%.

On September 24, 2021, SusOils entered into a five-year lease beginning on November 1, 2021 for its North American headquarters, a new state-of-the-art facility located in Great Falls, Montana. This new facility will consolidate SusOils crop innovation programs, commercial grower support and executive and administrative activities at one location and will be fully operational by November 1, 2021

Under the lease, we will have to pay monthly rental payments of $18,531.

In addition, we have the right to purchase the facility at any time during the lease. In order to maintain the purchase option, we will have to make annual payments of $186,000

Legal

BKRF, formerly Alon Bakersfield Property, Inc., is one of the parties to an action pending in the United States Court of Appeals for the Ninth Circuit. In June 2019, the jury awarded the plaintiffs approximately $6.7 million against Alon Bakersfield Property, Inc. and Paramount Petroleum Corporation (a parent company of Alon Bakersfield Property, Inc. at the time of the award in 2019). Under the agreements pursuant to which we purchased BKRF,

Alon

Paramount

agreed

assume

and

liable

for

(and

indemnify,

defend,

and

hold 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, and Paramount Petroleum Corporation has agreed to absorb all of the liability and has

posted a bond to cover the judgement amount, no loss has been accrued by the Company with respect to this matter. In August 2021,

the Ninth Circuit entered a limited remand to the district court to determine whether it properly exercised jurisdiction over Alon

Bakersfield Property, Inc. and Paramount Petroleum Corporation, and the district court has authorized jurisdictional discovery to

resolve

that

matter.

In August, 2020, Wood Warren & Co. Securities, LLC (“Wood Warren”) filed a complaint in the Superior Court of California,

Alameda County, against GCEH Acquisitions titled

Wood Warren & Co Securities, LLC vs. GCE Holdings Acquisitions, LLC

, Case

No. RG 20072242, alleging that GCEH Acquisitions breached a consulting agreement with it.

Wood Warren seeks damages of $1.2

million plus interest.

On October 14, 2020, GCEH Acquisitions filed an answer to Wood Warren’s complaint.

The parties are

currently

engaged

discovery

and

trial

date

has

yet

been

set.

are

unable

predict

the

outcome

the

matter.

-28-

GLOBAL

CLEAN

ENERGY

HOLDINGS,

INC.

AND

SUBSIDIARIES

NOTES

CONDENSED

CONSOLIDATED

FINANCIAL

STATEMENTS

(UNAUDITED)

NOTE H – COMMITMENTS AND CONTINGENCIES (CONTINUED)

In December, 2020, Roll Energy Investments LLC (“Roll”) filed a complaint in the Superior Court of California, Los Angeles County, titled

Roll Energy Investments LLC v. Global Clean Energy Holdings, Inc.,

Case No. 20RTCV00921. Roll alleged that the Company breached a promissory note in the principal sum of $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 Settlement Agreement to fully resolve Roll’s claims, accepting the amount previously wired with no additional amounts due. On or about June 29, 2021, Roll dismissed the action in its entirety, with prejudice.

In the ordinary course of business, the Company may face various claims brought by third parties and the Company may, from time to time, make claims or take legal actions to assert the Company’s rights, including intellectual property rights, contractual disputes and other commercial disputes. Any of these claims could subject the Company to litigation. Management believes the outcomes of currently pending claims will not likely have a material effect on the Company’s consolidated financial position and results of operations.

Indemnities and Guarantees

In addition to the indemnification provisions contained in the Company’s organization documents, the Company generally enters into separate indemnification agreements with the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s directors or officers, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessor in connection with its facility lease for certain claims arising from the use of the facility. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying condensed consolidated balance sheets.

COVID-19

In December 2019, a novel strain of coronavirus diseases (“COVID-19”) was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. The extent of COVID-19’s effect on the Company’s operational and financial performance is ongoing, but the Company believes that the pandemic to date has not materially impacted the Company’s operations and that the pandemic is not expected to be materially disruptive to its future plans and targeted date of beginning commercial operations, although certain supply chain disruptions could impact the completion date of the Bakersfield Biorefinery. The Company has implemented strict protocols on its on-site workforce and continues to monitor the potential impacts to its business. The extent of the impact of the COVID-19 pandemic on the Company’s operations, cash flows, liquidity and capital resources is highly uncertain, as information is evolving with respect to the duration and severity of the virus and its variants. However, based on its experience with the disease to date, the Company expects that the future impacts due to COVID-19 are not likely to be materially disruptive to its ongoing business.

Acquisitions

On July 20, 2021, the Company entered into a non-binding Letter of Intent to acquire an off-shore company that owns certain patents, feedstock pathway expertise and intellectual property related to camelina development. The consummation of the transaction is subject to the Company's completion of its due diligence review and the preparation of mutually acceptable transaction documents. The transaction is expected to close by November 30, 2021.

-29-

Item 2: Management’s

Discussion and

Analysis of

Financial

Condition

and Results of

Operations

The following discussion should be read in conjunction with the Company’s condensed consolidated financial statements and

the related notes and other financial information appearing elsewhere in this Form 10-Q. Readers are also urged to carefully review

and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the

Company’s business, including without limitation the disclosures made under the caption “Management’s Discussion and Analysis of

Financial Condition and Results of Operations,” under the caption “Risk Factors,” and the audited consolidated financial statements

and related notes included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2020 and other

reports

and

filings

made

with

the

Securities

and

Exchange

Commission

(“SEC”).

Cautionary

Note

Regarding

Forward-looking

Statements

This report contains forward-looking statements. These statements relate to future events or the Company’s future financial

performance.

some

cases,

you

can

identify

forward-looking

statements

terminology

such

“may,”

“will,”

“should,”

“expect,”

“plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable

terminology.

These

statements

are

only

predictions.

Actual

events

results

may

differ

materially.

Although

the

Company

believes

that

the

expectations

reflected

the forward-looking statements are reasonable, the

Company cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Company, nor any

other person, assumes responsibility for the accuracy and completeness of the forward-looking statements. The Company is under no

obligation to update any of the forward-looking statements after the filing of this Quarterly Report on Form 10-Q to conform such

statements

actual

results

changes

its

expectations.

Overview

Global Clean Energy Holdings, Inc. and its subsidiaries (collectively, hereinafter the “Company,” “we,” “us,” or “our) is a

vertically integrated renewable fuels company. Our goal is to do our part in accelerating the global push to reduce greenhouse gas

emissions through sustainable, more environmentally friendly alternatives to conventional petroleum-based fuels.

Since 2013 our

principal focus has been on the development of our proprietary varieties of

Camelina sativa

(“Camelina”)

a fallow land rotation crop,

as a biofuels feedstock.

In 2020, we acquired a 500-acre crude oil refinery in Bakersfield, California, that we are converting into a

dedicated

renewable

diesel

refinery

(the

“Bakersfield

Biorefinery”).

Bakersfield Biorefinery

Commencing in April 2019, the date that we entered into an agreement to purchase the Bakersfield

Biorefinery, through the closing of the purchase of the Bakersfield Biorefinery in May 2020, we were exclusively engaged in

completing the purchase of the refinery and in obtaining the financing necessary to purchase and thereafter retool the Bakersfield

Biorefinery

into

renewable

fuels

facility.

Accordingly,

our

principal

expenses

prior

May

2020

consisted of general and

administrative expenses and costs incurred to obtain the financing required to purchase and retool the Bakersfield Biorefinery. After

the purchase of the Bakersfield Biorefinery on May 7, 2020, both our operating expenses and our capital expenditures increased

significantly.

Since most of our resources during the past two years have been dedicated to the purchase, financing and retooling of the

Bakersfield Biorefinery and to further developing our Camelina deployment platform, we did not generate any significant operating

revenues

either

2021

2020.

order

fund

our operating expenses during these periods, we obtained $10 million in the

aggregate under a derivative contract (the “Derivative Contract”) that we entered into with a commodity trading company. The

Derivative Contract was amended in 2020 and replaced by a fixed payment obligation that requires us 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 beginning in May

2022. The cash that we received from the Derivative Contract was used to fund development efforts, our operating costs, our due

diligence costs, our pre-acquisition costs, the purchase price down payment/deposit for the Bakersfield Biorefinery, our continued

Camelina trials in the Northwest and the Northern Plains, our consulting and legal fees associated with the acquisition, and our

payments

key

vendors

and

suppliers.

In May 2020 we completed the purchase of the Bakersfield Biorefinery. 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 Biorefinery and the on-going conversion of the facility into a renewable diesel refinery, in May 2020

entered

into

the

(i)

Senior

Credit

Facility

that,

amended,

currently

provides

with

credit

facility

$317.6

million,

and

(ii)

Mezzanine

Credit

Facility

that,

amended,

currently

provides

with

$67.4

million

credit.

are

converting

the

Bakersfield

refinery from a crude oil refinery into a biorefinery, and are currently scheduled to commence our biofuel refinery operations in early

2022. Therefore, we do not anticipate generating revenues from the operations of the Bakersfield Biorefinery until 2022.

We have

spent

approximately

$230

million

our

Bakersfield

Biorefinery

project

through

September

30,

2021.

-30-

Camelina Development and Activities

. A key element of our business plan is to control the development and production of

the underlying base materials, or feedstock, required to produce renewable diesel at the Bakersfield Biorefinery. Our goal is to use the

oil

produced

from our enhanced proprietary varieties of Camelina as a significant component of the Bakersfield Biorefinery’s

feedstock.

Accordingly, we recently have contracted with numerous farmers for the planting of our Camelina certified seed, which

seed will be used for Camelina grain production for the 2022 crop years. To date, we have produced certified Camelina seed to plant

over 220,000 acres on our proprietary varieties of Camelina in 2022 (although we do not anticipate that we will be able to plant that

many acres in 2022).

Although farmers in six Western states are currently commercially producing Camelina for our use in the

Bakersfield

Biorefinery,

our

principal

focus

the

near

term

the

production

Camelina

Montana

and

Kansas.

The Company has relocated its Sustainable Oils, Inc.'s (its upstream subsidiary) headquarters to Great Falls, Montana, which

is at the southern portion of the rich farming area known as the Golden Triangle. This location is expected to serve both agronomy

support to our growers in Montana and to further our research and development activities on our proprietary Camelina development.

The Company has historically outsourced various agronomic and grower development efforts, and has recently determined that to

fulfill its goals of Camelina development, the Company will be better served to employ directly the expertise it needs to have its

employees

fully

engaged

such

Camelina

development.

that

end,

the

Company

pursuing

acquisition

fulfill

this

goal.

Our strategy for contracting more acres for Camelina production is a cost based model. We view our contracted growers (or

farmers) as partners and it is our goal to incentivize them economically to grow our proprietary Camelina seed. As our seed is grown

on fallow acres (or acres that can be double-cropped, but would not be double-cropped normally) any additional economic benefits

from growing Camelina will add revenues to these contracted growers. Most growers normally incur negative cash flows from their

fallow acres.

Thus, by providing growers with the opportunity to place those fallow acres into production by planting Camelina, we

provide the growers with the ability to generate additional revenues from land that otherwise would remain unproductive. Camelina is

a fast-growing (around 100 days) dryland crop that does not degrade the soil for the next crop, which attributes are very beneficial to

the growers. Another key factor in a grower’s willingness to plant and grow Camelina is that the equipment required for planting,

monitoring,

harvesting

and

storing

the

grain

(in

the

short-run)

the

same

used

for

other

grains

and,

therefore,

already

owned

or controlled by the grower.

Growing Camelina typically does not require additional capital investments by the grower. We believe

our value proposition for our contracted growers will benefit the growers by crop diversification, converting an “idle” asset into a

productive

asset

and

assisting

justifying

their

continuing

capital

investment

and improvements into their farms which should

provide them with long-term sustainable economics. We believe this will also have a positive economic multiplier effect in these

grower communities. We use our personnel and certain strategic partners to communicate with, and educate, potential growers about

the benefits of growing our Camelina varieties. This team provides agronomy support from planting to harvesting and is focused on

increasing

the

number

growers

and

the

overall

acreage

under

production.

Montana has recently experienced extreme heat and drought, which has reduced the normal-weather yields of Camelina and

most other crops.

However, despite the severe weather conditions, our Camelina varieties fared very well in Montana compared to

many other crops. We believe that the harsh 2021 growing season in Montana has demonstrated the sturdiness and stress tolerance of

our proprietary Camelina varieties, and is an indication of the economic viability of the crop even under such harsh conditions. We

have

targeted

Montana

and

Kansas

for

our

first

phase

our

commercial

Camelina

production

because

our

prior

operating

history

these

states

and

because

there

are

estimated

million

acres

farmland

that

can

potentially

grow

Camelina

these

two

states. Approximately one-third of this acreage may be available during any year, to grow Camelina, based on normal fallow rotations.

order to be able to produce and handle larger quantities of Camelina grain, we are currently engaged in establishing our first grain

aggregation center in Montana, which, when completed, will be used for the storage and cleaning of Camelina grain, and for loading

the

Camelina

grain

into

railcars

for

transport

downstream

oil

extraction

plants

located

near

the

Bakersfield

Biorefinery.

Camelina is also currently being grown for us under contracts we have entered into with independent farmers in Colorado,

Idaho,

Oregon

and

Washington.

These

states

represent

targeted

Camelina

growing

acres

over

million

acres

the

aggregate.

Due to the COVID-19 pandemic and adverse weather conditions that negatively impacted the commercial production of

Camelina, the number of acres of Camelina cultivated this year will be comparatively modest compared to 2020.

However, we

anticipate a significant increase in Camelina production in 2022 in Montana, Kansas and the other states that we are currently

targeting.

To date we have generated, and we will continue to generate revenues from the sale of certified Camelina seed to farmers,

which seed the farmers use to grow our proprietary varieties of Camelina. Revenues generated from those seed sales to date have not

been, and are not expected to be material in the future compared to our expected Camelina oil and refinery revenues. As the Company

expands its Camelina grain production, it will also generate revenues from the sale of its non-GMO Camelina meal to third parties for

use

animal

feed.

These

revenues

will

likely

immaterial

2022,

but

may

grow

significantly

future

years.

Our goal is to increase Camelina production by both increasing the number of acres planted and by increasing the yield

produced on each acre.

We hold patents on three proprietary Camelina plant varieties.

However, in order to further increase yields,

have

developed

six

new

Camelina

varieties,

which

varieties

are

covered

both

the

utility

patent

applications

that

filed

last year with the USPTO, and by applications filed this year under the Plant Variety Protection Act. We are also continuing our Camelina

research and development program to improve the yields and oil composition of our patented Camelina varieties and the tolerance and

other

characteristics

our

Camelina

varieties.

-31-

To supplement our efforts to improve our proprietary varieties of Camelina, on April 15, 2021 we acquired Agribody

Technologies, Inc., (“ATI”) a privately-held agricultural biotechnology company that owns 16 patents related to the use of genetics to

increase yield, shelf life and other sustainability traits in Camelina and many other crops. The acquisition was effected in an all-stock

transaction with a total fair value of approximately $5 million, and ATI is now a 100% owned subsidiary of the Company. In

consideration for ATI, we issued 830,526 shares valued at $6.02 per share. In April 2021, ATI was issued a new key utility patent with

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. ATI has a history of working with various crops to improve certain plant characteristics, and we expect

ATI

continue

this

work

and

maximize

the

value

its

patent

portfolio.

Bakersfield Biorefinery’s Status

The Bakersfield refinery had significant infrastructure in place and on site at the time of

our acquisition - this includes grid power, natural gas pipeline access, steam generation, fiber and controls, rail access and railway

facilities, an 8-bay truck rack and storage tanks capable of storing up to 3.3 million barrels of feedstock and/or product. The

reconstruction

and

conversion

the

Bakersfield

petroleum

refinery

into

biorefinery

progressing,

and

testing

and

upgrades

many of the acquired infrastructure assets are being completed. We are scheduled to begin commercial operations in early 2022. The

proprietary

hydrotreating

reactor

vessels

that

will

be used to convert feedstock to renewable diesel and other products at the

Bakersfield

Biorefinery

have

been fabricated and are being installed (all reactors are expected to be installed by mid-November,

2021). We have upgraded the existing railroad track and related facilities at the Bakersfield Biorefinery to handle incoming feedstocks

and have leased two electric railcar movers on site in preparation of commercial operations. We continue to evaluate various facility

improvements and related investments that can lower our overall carbon intensity and/or costs in our operations. We are working with

our utility provider to add a 10MW solar facility on site to improve our economics and to lower our carbon footprint, and we expect

construction to begin in 2022. We are currently evaluating certain agricultural processing facilities at our Bakersfield site that, upon

implementation, will provide for more control over processing costs and allow for optimum scheduling of our feedstock 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 cost. Our midstream aggregation facilities are being sited along mainline BNSF railway lines which run directly from our

growing

zones

directly

into

the

Bakersfield

Biorefinery

site.

Critical

Accounting

Policies

and

Estimates

There have been no substantial changes to our critical accounting policies and related estimates from those previously

disclosed

our

2020

Annual

Report

Form

10-K.

Results

Operations

Three

Months

Ended

September

30,

2021

vs.

Three

Months

Ended

September

30,

2020

Revenues.

On May 7, 2020 we purchased the Bakersfield Biorefinery. Following the acquisition, we focused our efforts on

building our operations and management teams and on putting the processes in place to accomplish the task of retrofitting the

Bakersfield Biorefinery. Therefore, we had no operating revenues in the three months ended September 30, 2020 (the “2020 fiscal

quarter”).

did

not

engage

any

operating

activities

that

generated

revenues

until

the

first

quarter

2021

when

started

selling

a limited amount of our certified Camelina seeds to farmers for the production of either Camelina seed and/or Camelina grain to be

used at our Bakersfield Biorefinery. Therefore, we had no operating revenues from the Bakersfield Biorefinery in the three months

ended

September

30,

2021

(the

“2021

fiscal

quarter”)

and

only

minimal

amount

seed

revenues/returns.

General

and Administrative Expenses and Facility Expenses

. General and administrative expenses consist of expenses

generally involving corporate overhead functions and operations. Most of our general and administrative expenses are incurred in the

operations of the Bakersfield Biorefinery. In the 2020 fiscal quarter, we were not fully staffed and were ramping up business for the

retooling

the

Bakersfield

Biorefinery

and,

result,

our

overhead

expenses

the

2020

fiscal

quarter

were

less

than

the

expenses

the

2021 fiscal quarter, a quarter in which were more appropriately staffed and fully engaged in retooling activities at the

Bakersfield Biorefinery. As a result, our administrative expenses increased by $1.9 million from the 2020 fiscal quarter to $4.6 million

in the 2021 fiscal quarter. This increase was primarily related to an increase in overall payroll costs and benefits, professional fees,

insurance costs, technology and communications costs and various vendor costs. We anticipate that our general and administrative

expenses will continue to increase as the development of the refinery progresses and operations commence. Facility expense primarily

consists of maintenance costs at the Bakersfield refinery, and expenses normally related to the operations of a refinery. Our facility

expenses increased by $1.6 million from $1.6 million in the 2020 fiscal quarter to $3.2 million in the 2021 fiscal quarter because we

were

increasing

our

activities

the

refinery.

-32-

Other Income/Expense.

In the 2021 fiscal quarter we recognized a charge of $2.8 million on the change in fair value of our

Class B Units.

We had no comparable charge in the 2020 fiscal quarter.

This increase in the fair value is a result of increased

borrowings

and

higher

estimated

value

the

outstanding

Class

Units

from

when

they

were

originally

issued.

Interest Income/Expense.

Interest expense in the 2021 fiscal quarter and the 2020 fiscal quarter consisted of interest of $0.7

million

and

$0.8

million,

respectively,

from

outstanding

promissory

notes.

Our

incurred

interest

will

increase

significantly

the

future

as we further draw down on the $317.6 million Senior Credit Facility and $67.4 million Mezzanine Credit Facility, and as the

outstanding principal balances of those loans increase. However, construction period interest is capitalized as part of the cost of the

refinery

and

therefore,

does

not

impact

our

interest

expense.

Net losses.

We incurred an operating loss of $8.1 million and $4.7 million in the 2021 and 2020 fiscal quarters, respectively,

and a net loss of $11.7 million in the 2021 fiscal quarter compared to a $5.4 million net loss in the 2020 fiscal quarter. Our operating

loss increased primarily as a result of the increase in activity related to our retooling of the Bakersfield Biorefinery. We expect to incur

losses for the remainder of 2021 while our biorefinery is under construction and, therefore, not operational. Operating losses and net

losses were lower in the fiscal 2020 quarter than in the 2021 fiscal quarter because we acquired the Bakersfield Biorefinery during

2020

and

after

that

time

began

building

our

staff

and

incurring

necessary

costs,

therefore,

our

general

and

administrative

costs

were

higher in the 2021 fiscal quarter.

In addition, our staffing and other costs related to the Bakersfield Biorefinery have significantly

increased

the

2021

fiscal

quarter

our

operating

activities

and

the

retooling

activities

have

increased.

Nine

Months

Ended

September

30,

2021

vs.

Nine

Months

Ended

September

30,

2020

Revenues.

As discussed above, during the second quarter of 2020 we transitioned our activities from the acquisition of the

Bakersfield Biorefinery to building the team necessary to properly retrofit the asset and implement the structure to accomplish the task

retooling

the Bakersfield Biorefinery on the planned schedule. Our activities necessary for the retooling of the Bakersfield

Biorefinery continued to grow in the third quarter of 2021. Therefore, we had no operating revenues in the nine months ended

September

30,

2020

(the

“2020

fiscal

period”)

and

only

$0.2

million

revenues

from

Camelina

certified

seed

sales

the

nine

months

ended

September

30,

2021

(the

“2021

fiscal

period”).

General

and Administrative Expenses and Facility Expenses

. General and administrative expense consists of expenses

generally involving corporate overhead functions and operations, mostly at the Bakersfield Biorefinery. In the 2020 fiscal period, we

did not own the Bakersfield Biorefinery for the full period and, as a result, we had fewer overhead expenses. In the 2021 fiscal period,

owned

the

Bakersfield

Biorefinery

for

the

full

period

and,

therefore,

had

significantly

higher

expenses. As a result, our

administrative expenses increased by $10.6 million from $5.0 million in the 2020 fiscal period to $15.6 million in the 2021 fiscal

period. This increase was primarily related to an increase in overall payroll costs and benefits, professional fees, insurance costs,

technology and communications costs and various vendor costs. We anticipate that our general and administrative expenses will

continue to increase as the development of the refinery progresses and when our refinery operations commence in 2022. Facility

expense

primarily

consists

maintenance

costs

keep

the

Bakersfield

assets,

that

purchased

May

2020,

operational

mode and expenses normally related to the operations of a refinery. Our facility expenses increased by $7.3 million in the 2020 fiscal

period

$9.7

million

the

2021

fiscal

period.

Other Income/Expense.

In the 2021 fiscal period we had no impact from derivatives, whereas in the 2020 fiscal period we

recognized $5.5 million of income from the decrease in fair value of the Derivative Contract and a gain of $0.5 million on the

derecognition of the Derivative Contract. In the 2021 fiscal period we recognized a charge of $5.9 million on the change in fair value

of our Class B Units; no such charge was incurred in the 2020 fiscal period

(as described in “Liquidity” below, Class B Units were

issued to the Senior Lenders).

The increase in the charge related to the Class B Units is a result of higher borrowings and a higher

estimated value of the outstanding Class B Units from when the units were originally issued. We also had $0.1 million of other

income

the

2021

fiscal

period

with

similar

income

the

2020

fiscal

period.

Interest Income/Expense.

Interest expense in the 2021 fiscal period and the 2020 fiscal period consisted of interest of $2.2

million

and

$1.7

million,

respectively,

from

outstanding

promissory

notes.

Our

incurred

interest

will

increase

significantly

the

future

as we continue to further draw down on the $317.6 million Senior Credit Facility and $67.4 million Mezzanine Credit Facility, and as

the outstanding principal balances of those loans increase. However, construction period interest will be capitalized as part of the cost

the

refinery,

and

therefore,

will

not

impact

our

interest

expense.

Net losses.

We incurred an operating loss of $26.0 million and $7.7 million in the 2021 and 2020 fiscal periods, respectively.

We incurred a net loss of $34.0 million in the 2021 fiscal period compared to a $3.4 million net loss in the 2020 fiscal period. Our

operating loss increased in the 2021 fiscal period as a result of the increase in activity related to the retooling of the Bakersfield

Biorefinery

and

preparation

for

operations

2022.

expect

incur

losses

for

the

remainder

2021

while

our

biorefinery

is under

construction

and

therefore

not

conducting

operations.

Our

operating

loss

was

lower

fiscal

2020

than

the

2021

fiscal

period

because

did

not

own

the

Bakersfield

Biorefinery

for

significant

portion

the

2020

fiscal

period.

-33-

Liquidity

and

Capital

Resources

September

30,

2021

and December 31, 2020, we had approximately $43.7 million and $39.0 million of cash,

respectively,

which

$25.2

million

and

$22.7

million,

respectively,

considered

long-term

that

cash

restricted

spent

the Bakersfield Biorefinery. However, of the $43.7 million of cash as of September 30, 2021, only $16.2 million is unrestricted and

available to pay our current liabilities, while the remaining $27.5 million of cash is restricted and can only be used to fund our Senior

Credit Facility loan interest obligations and our biorefinery construction costs. On September 30, 2021 and December 31, 2020 we had

negative working capital of $50.1 million and $5.8 million, respectively. This working capital does not consider the long-term cash

identified

above.

In order to fund some of our working capital expenses, on April 16, 2021, we raised $3.1 million through the private sale of

496,000

of our unregistered common stock at $6.25 per share to three accredited investors. In connection with the foregoing

sale

shares,

also

issued

the

investors

warrants

for

the

purchase

19,840

(which

warrants

have

exercise

price

of $6.25).

In order to fund our working capital requirements and the third party costs and expenses related to our efforts to acquire the

Bakersfield refinery we entered into a derivative contract agreement pursuant to which we received an aggregate of $10 million of

funding. The derivative agreement was amended on April 20, 2020 and called for a cash payment of $4.5 million in June 2020 (that

was paid) and six equal monthly payments of $3.375 million beginning in May 2022. This payment stream is scheduled to coincide

near

the

date

the

commencement

commercial

operations

the

Bakersfield

Biorefinery.

The Bakersfield Biorefinery is currently being retooled and converted from a crude oil refinery into a biofuels refinery. The

construction of the Bakersfield Biorefinery is expected to be completed, and the Bakersfield Biorefinery is scheduled to commence

commercial operations in early 2022. Until the Bakersfield Biorefinery is operational, we will not generate any refinery operating

revenues. We anticipate that we will generate some revenues during the remainder of 2021 from sales of our Camelina certified seed,

although such revenues are not expected to be significant. During the construction phase of the biorefinery, we will continue to incur

significant general and administrative, 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

engineering

fees

and

payroll

costs,

property

taxes,

labor

costs,

general

and

administrative costs, the costs of upgrading the refinery’s rail line and certain pipelines, and making interest and other payments under

our

Senior

Credit

Facility

and

Mezzanine

Credit

Facility.

In order to fund the cost of acquiring the Bakersfield oil refinery, converting the oil refinery into a biorefinery, and paying all

operating expenses during the preoperational period, in May 2020 we entered into (i) a $300 million senior secured term loan facility

with certain Senior Lenders which credit facility was upsized to $313.2 million in November 2020, and (ii) a $65 million secured term

loan facility with certain Mezzanine Lenders which was also upsized to $66.8 million in November 2020. Our credit facilities were

upsized by a total of $5 million as of July 29, 2021, whereby the borrowing capacity of our (i) Senior credit facility is $317.6 million

and (ii) our Mezzanine Credit Facility is $67.4 million. As of September 30, 2021, we have borrowed $284.9 million under the Senior

Credit Facility, of which approximately $60 million was unspent as of the end of September 30, 2021. As of September 30, 2021, we

have

not

yet

utilized

the

Mezzanine

Credit

Facility.

The Senior Credit Facility bears interest at the rate of 12.5% per annum, payable quarterly. No principal payments are

required to be made under the Senior Credit Facility until maturity. The Senior Credit Facility matures on November 4, 2026. The

Mezzanine

Credit

Facility

will

bear

interest

the

rate

15.0%

per

annum

amounts

borrowed,

payable

quarterly,

provided

that

may defer up to 2.5% interest to the extent we do not have sufficient cash to pay the interest (any deferred interest will be added to

principal). Principal of the Mezzanine Credit Facility is due at maturity. As additional consideration for the Senior Credit Facility

and

Mezzanine Credit Facility, the Senior Lenders were issued Class B units (and the Mezzanine Lenders will be issued Class C Units

when we borrow under the Mezzanine Credit Facility) in our BKRF HCB, LLC, the subsidiary that indirectly owns the Bakersfield

Biorefinery.

The

Class

and

Units

will

not

affect

our

liquidity

until

the

Bakersfield

Biorefinery

commences

operations

2022. However, since the holders of the Class B and C Units will be entitled to certain priority cumulative distributions, if any, that may be

made

the

future

from

the

operations

the

Bakersfield

Biorefinery,

distributions

made

the

holders

the

Class

and

Units

will

reduce

the

amount

distributions

that

may

entitled

receive

the

future

from

the

operations

the

Bakersfield

Biorefinery.

-34-

Based on our construction budget (including the purchase orders we have issued for the required equipment) and on our

internal projections of our future operating expenses, we anticipated that the $385 million available to us under the Senior Credit

Facility

and

Mezzanine

Credit

Facility

would

sufficient

fund

our

original

projected

capital

expenditures

and

operating

expenses at

the

Bakersfield

Biorefinery

until

the

Bakersfield

Biorefinery

becomes

operational.

However,

the

scope

the

Bakersfield

Biorefinery has both changed and expanded to include additional capabilities and equipment, which changes are increasing the cost of

installing, developing and constructing the Bakersfield Biorefinery. In order to fund the expected cost overruns and other additional

investments in, or related to the biorefinery, earlier this year we agreed with our Senior Lenders and Mezzanine Lenders to raise

additional third party funding and to establish a $35 million contingency reserve.

The date by which the reserve account has to be

funded

has

been

extended

November

19,

2021.

the

date

this

quarterly

report,

have

not

yet

established

the

foregoing $35 million contingency reserve and may not be able to do so by November 19, 2021. While our lenders have in the past amended the

credit agreements to provide us with additional time to establish the reserve account, no assurance can be given that the lenders will do

so in the future. The Company is not able to fund the $35 million reserve account absent an amendment or additional debt and/or

equity

financing.

These

conditions

raise

substantial

doubt

about

the

Company’s

ability

continue

going

concern

for

period

least one year from the time the financial statements are issued.

Management plans to close on an additional debt and/or equity

financing in the short-term and believes that transaction is probable of closing.

Therefore, management believes their plan alleviates

the

substantial

doubt.

We are a vertically integrated renewable fuels company with operations in both the farm and finished fuels lines of business.

Recently, our focus has been on the acquisition and construction of our Bakersfield Biorefinery. As the development of the refinery

nears its completion, we have decided to accelerate the development of our Camelina operations. The primary focus of the accelerated

growth of our Camelina operations consists of increasing the amount of Camelina that is produced for use at the Bakersfield

Biorefinery and, possibly, for sale to third party biofuel producers.

Increasing the number of acres of Camelina that our contracted

growers will cultivate requires a substantial up-front investment since we have to pay the growers for the Camlina grain that they

produce before we derive any revenues from that grain (the Camelina grain must first be converted into Camelina oil, which oil is then

used to produce renewable diesel and other renewable fuel products that can be sold to generate revenues).

As part of our efforts to

grow our Camelina operations, we have increased our efforts to recruit additional growers, have leased a state-of-the art headquarters

and research facility in Great Falls, Montana, and are pursuing the talent that we desire to expand our operations and commenced

negotiations to acquire a European Camelina company. These initiatives will require capital expenditures that significantly exceed our

current financial resources. Accordingly, in order to obtain the funds we need for the $35 million refinery contingency reserve, for

general corporate purposes, and our Camelina initiatives, we have been in discussions for debt and/or equity financing with certain

agri-finance companies, strategic partners, our existing lenders, and third party investors.

No assurance can be given that we will

obtain

some

all

the

funds

seek,

that

obtain

such

funding,

that

the

terms

under

which

obtain

such

funding

will

be beneficial to us. Furthermore, any funding that we obtain may result in issuance of a substantial number of shares of preferred or

common stock or common stock equivalents, which issuances could be dilutive to, or have priority over, the holders of our common

stock.

Our transition to profitability is dependent upon, among other things, the successful and timely development and construction

of our biorefinery and the commercialization of the products that we intend to produce at the Bakersfield Biorefinery. To ensure that

we have a buyer for the renewable diesel produced at our biorefinery, we have entered into an offtake agreement with ExxonMobil Oil

Corporation (ExxonMobil). Under that agreement, ExxonMobil has agreed to purchase 2.5 million barrels per year of renewable diesel

from the Bakersfield Biorefinery for a period of five years following the date that the Bakersfield Biorefinery commences commercial

operations.

The

Bakersfield

Biorefinery

being

designed

for

capacity

15,000

barrels

per

day or an annual volume of

approximately 5.4 million barrels per year. On April 20, 2021 we entered into a second agreement, a term purchase agreement, with

ExxonMobil whereby ExxonMobil has the right to purchase additional quantities of renewable diesel above the original 2.5 million

barrels per year. The revenues we expect to receive under the offtake agreement and the term purchase agreement, together with our

other

projected

sources

revenues,

are

expected

fund

our

anticipated

working

capital

and

liquidity

needs.

Once completed, the Bakersfield Biorefinery will be able to produce renewable diesel from various renewable feedstocks,

such as Camelina oil produced from our patented Camelina varieties, soybean oil and other plant and animal sources. We believe that

one of our strategic advantages is that a significant portion of the feedstock expected to be used at our biorefinery will be Camelina

grain produced from our patented Camelina varieties for us by third party farmers for use in the Bakersfield Biorefinery or for sale to

third parties. However, we anticipate that we will need additional funding for general corporate purposes and to grow our certified

Camelina

seeds,

enter

into

agreements

with

farmers,

and

otherwise

ramp

the

cultivation

and

production

Camelina.

the

date

this

report,

have

only

secured

limited

funding

for

our

Camelina

production

plans.

-35-

To the extent that we raise additional funds through the issuance of equity securities, our stockholders will experience

dilution, and the terms of the newly issued securities could include certain rights that would adversely affect our stockholders’ rights.

In addition, we are also considering obtaining funding through the issuance of preferred stock, which preferred stock may require us to

make significant dividend and other payments to the investors. Payments on any new series of preferred stock may negatively affect

our future liquidity. Furthermore, if these new securities are convertible or are accompanied by the issuance of warrants to purchase

shares of our common stock, our current stockholders may experience substantial dilution. Over the last year we have moved the

listing of our common stock from the OTC Pink marketplace, which had limited liquidity, to our current trading platform on the

OTCQX,

which

has

better

liquidity

for

trading

our

shares.

Our

goal

list

our

common

stock

one

the

NASDAQ markets, and while we do not currently meet NASDAQ’s listing requirements, we have filed a preliminary application in preparation

of becoming listed. Our ability to secure additional debt or equity financing could be significantly impacted by numerous factors

including the status, timing and cost of the conversion of the Bakersfield Biorefinery, positive or negative developments in the

environmental

regulations

and

the

demand

for

biofuels,

delay or inability to become listed on NASDAQ and general market

conditions. There can be no assurance that we will be successful in raising debt or equity funding or that any such financing will be

available, available on favorable or acceptable terms or at the times, or in the amounts needed. Additionally, while the potential

economic impact brought on by and the duration of the coronavirus pandemic is difficult to assess or predict, the significant impact of

the coronavirus pandemic on the global financial markets 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.

have

off-balance

sheet

arrangements

defined

Item

303(a)

Regulation

S-K.

-36-

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K promulgated by the SEC under the U.S. Securities Act of 1933, as amended, we are not required to provide the information required by this Item 3.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) 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.

As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this Quarterly Report on Form 10-Q, management, under the supervision and with the participation of our Certifying Officers, evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, the Certifying Officers have concluded that, as of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective because of the following material weaknesses in our internal control over financial reporting: (i) ineffective controls over period end financial disclosure and reporting processes, including not timely performing certain reconciliations, and lack of approval of adjusting journal entries, (ii) inadequate segregation of duties in various key processes including the information technology control environment, and (iii) we had not performed a risk assessment and mapped the accounting processes to control objectives. We are taking remedial steps to address the material weaknesses in our internal control over financial reporting. These remedial steps include the following:

(a) In 2021, the Company has hired additional financial and accounting personnel who are experienced in general accounting and financial reporting. The Company is also evaluating its accounting and information technology personnel as necessary to remediate the identified weaknesses;

(b) The Company is implementing more robust financial reporting, accounting and management controls over its accounting, disclosure, and financial reporting functions, including developing and implementing a supplemental approval procedure for costs and expenses in excess of budgeted line items. The Company continues to evaluate and modify, as necessary, its approval control procedures;

(c) The Company has engaged an independent consultant to assist the Company in improving its internal control over financial reporting, and the Company is evaluating the recommendations put forth by the consultant.

Changes in Internal Control Over Financial Reporting

Except as described above, there has been no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

-37-

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required with respect to this item can be found under “Legal” in Note H to our condensed consolidated financial statements included elsewhere in this Form 10-Q and is incorporated by reference into this Item 1.

In the future, we may become party to legal matters and claims arising in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

RISK FACTORS

Investment in our stock involves a high degree of risk. You should consider carefully the risks described below, together with other information in this Quarterly Report on Form 10-Q and our other filings with the SEC, before making investment decisions regarding our stock. If any of the following events actually occur, our business, operating results, prospects or financial condition could be materially and adversely 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.

These risk factors also contain forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.

The risk factors set forth below with an asterisk (*) before the title are new risk factors or ones containing substantive changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC.

Risks Related to Our Business and Industry

* We have not completed the construction and commissioning of the Bakersfield Biorefinery. We may experience time delays, unforeseen expenses, increased capital costs, and other complications while developing the Bakersfield Biorefinery, 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 of the Bakersfield Biorefinery. Based on our updated construction timetable, the engineering and construction of the Bakersfield Biorefinery is currently scheduled to be completed, and to commence operations in early 2022. Although our primary contractors have agreed to complete the construction of the Bakersfield Biorefinery within a specified period at a maximum price to us, the construction of these kinds of facilities is inherently subject to the risks of unforeseen required change orders, regulatory issues, cost overruns and delays. In addition, 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 our estimated timelines, or amendments or change orders to the construction contract, could increase the cost of completion beyond the amounts that we have budgeted. Furthermore, while we believe that we currently hold all necessary environmental, regulatory, construction and zoning permissions that we need for the construction of the Bakersfield Biorefinery, no assurance can be given that we will not be required to obtain additional regulatory and land use approvals, which additional regulatory approvals may delay the commencement of operations of the Bakersfield Biorefinery or increase its development costs. If for any reason we are unable to construct and commission the Bakersfield Biorefinery within the financial and timing requirements, our business and our expected operating results, cash flows and liquidity could be materially and adversely affected.

We have a limited operating history in commercially refining and selling biofuels, and no history in operating a renewable diesel biorefinery. Accordingly, we have no history from which you can evaluate our business and prospects.

We have a limited operating history and track record in the biofuels market, and no history in the construction and operations of a renewable fuels biorefinery. Prior to the acquisition of the Bakersfield Biorefinery, we were an energy agri-business company focused on developing our ultra-low carbon nonfood-based feedstocks for renewable fuels and chemicals in the United States, Mexico and the Caribbean. In the near term, our growth strategy depends on our ability to successfully operate the Bakersfield Biorefinery and to provide the Bakersfield Biorefinery 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 any 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 Biorefinery 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’s development and future operations, to our feedstock supply chain, and to other matters.

-38-

Our

ability

implement

our

business

strategy

may

materially

and

adversely

affected

many

known

and

unknown

factors.

Our

business

strategy

relies

upon

our future ability to successfully operate the Bakersfield Biorefinery and to source

Camelina

and

other

feedstocks

cost-effective

manner.

Our

business

strategy

relies

numerous

assumptions

and

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:

●

inability

complete

the

construction

the

Bakersfield

Biorefinery

timely

manner;

●

inability to complete the construction of the Bakersfield Biorefinery for the anticipated cost and within our available

financial

resources;

●

inability to source feedstock for the Bakersfield Biorefinery, including Camelina, in sufficient quantities and/or at

economically

attractive

prices;

●

failure

manage

third-party

Camelina

cultivation

operations

the

expected

costs

and

the

projected

time

frame;

●

inability to enroll a sufficient number of third party farmers to grow Camelina our behalf in order to fulfill our

forecasted

Camelina

feedstock

requirements;

●

failure

our

proprietary

Camelina

varieties

produce

the

amount

and

quality

grain

expected;

●

changes in existing and future governmental laws and regulations affecting the energy markets in general, and the

renewable

energy

markets

particular;

●

changes in general economic, political and business conditions in the U.S., particularly those that affect the energy

and

renewable

fuels

markets;

●

increases in operating costs, including the need for additional or unexpected capital improvements, labor costs

transportation,

processing and storage costs, insurance premiums, general taxes, real estate taxes and utilities,

environmental

regulation

compliance

costs,

and

other

costs

affecting

our

profit

margins;

●

public health crises, such as the novel coronavirus outbreak that began in early 2020, which could impact global

economic

conditions;

●

inability,

failure,

any

customer

contract

counterparty

perform

their

contractual

obligations

us.

* The termination of the ExxonMobil Oil Corporation Product Offtake Agreement would negatively affect our future marketing

and

sales

renewable

diesel

and

would

trigger

event

default

under

our

two

credit

facilities.

Under

the

Offtake

Agreement

that

entered

into

with

ExxonMobil

Oil

Corporation,

ExxonMobil

has

agreed

purchase

2.5

million barrels of renewable diesel per year from the Bakersfield Biorefinery for a period of five years following the date that the

Bakersfield Biorefinery commences operations. We have also entered into a Term Purchase Agreement with ExxonMobil pursuant to

which we granted ExxonMobil the right to purchase the renewable diesel produced at the Bakersfield Biorefinery 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 Biorefinery does not meet certain production levels by the end of the first and second six-month periods

following

the

commencement

the

Bakersfield

Biorefinery’s

operations.

addition, ExxonMobil can terminate the Offtake

Agreement if the construction of the biorefinery is not completed by October 15, 2022. A termination of the Offtake Agreement will

also terminate the Term Purchase Agreement.

In addition, termination of the Offtake Agreement could constitute an event of default

under our credit agreements that provide us with $385 million of financing from our Senior Lenders and Mezzanine Lenders. Our

obligations under the credit agreements are secured by a security interest in all of the assets at the Bakersfield Biorefinery and by all of

the

assets

and

ownership

interests

our

subsidiaries

that

directly

indirectly

own

the

Bakersfield

Biorefinery.

-39-

are

dependent

our

contractors

for

the

successful

completion

the

Bakersfield

Biorefinery.

The construction of most of the Bakersfield Biorefinery has been outsourced to a primary contractor under a guaranteed

maximum price engineering, procurement and construction (EPC) contract, but certain other contractors have also been engaged by us

to,

among

other

things,

construct

and refurbish railroad tracks through the Bakersfield Biorefinery and to install underground

pipelines. Our business strategy is highly dependent on our contractors’ performance under their agreements with us. Our contractors’

ability

perform

successfully

under

their

contracts

dependent

number

factors,

including

their

ability

to:

●

design

and

engineer

the

Bakersfield

Biorefinery

operate

accordance

with

specifications;

●

engage

and

retain

third-party

subcontractors

and

procure

equipment

and

supplies;

●

respond to difficulties such as equipment failure, delivery delays, schedule changes and failure to perform by

subcontractors,

some

which

are

beyond

their

control;

●

attract,

develop

and

retain

skilled

personnel,

including

engineers;

●

post

required

construction

bonds

and

comply

with

the

terms

thereof;

●

manage the construction process generally, including coordinating with other contractors and regulatory agencies;

and

●

maintain

their

own

financial

condition,

including

adequate

insurance

coverage

and

working

capital.

Although our primary EPC contract provides for liquidated damages if the contractor fails to perform in the manner required

with respect to certain of its obligations, the events that trigger a requirement to pay liquidated damages may delay or impair the

operation of our Bakersfield Biorefinery, 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 of rights and remedies under their contracts and increase the

cost of the project 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 events would likely result in significant

project

delays

and

increased

costs.

* The

COVID-19

pandemic

may

adversely

impact

our

business.

The COVID-19 pandemic has negatively impacted the global economy. While we have to date not incurred significant,

unmanageable

operational

financial

disruptions

from

the

COVID-19

pandemic or from the measures that we implemented to

address

the

pandemic,

the

extent

which

the

COVID-19

pandemic

may

adversely

impact

our

business

depends

future

developments,

which

are

highly

unpredictable.

We cannot predict the degree to, or the time period over which our sales and operations will be affected by this outbreak, and

the

effects

could

material.

The

impacts

include,

but

are

not

limited

to:

●

significant

decline

demand

for

our

products

due

market

disruptions,

resulting

decline

sales

and

prices;

●

limitations

feedstocks,

price

volatility,

or disruptions

our

suppliers’

operations;

●

the

interruption

our

distribution

system,

temporary

long-term

disruption

our

supply

chains,

delays

the

delivery

our

products;

●

suspension

renewable

fuel

and/or

low

carbon

fuel

policies;

●

limitations on our ability to operate our business as a result of federal, state or local regulations, including any

changes

the

designation

our

business

“essential”

the

Department

Homeland

Security;

●

decreases in the demand for and price of Renewable Identification Numbers (“RINs”) and low carbon fuel standard

(LCFS)

credits

result

reduced

demand

for

petroleum-based

gasoline

and

diesel

fuel;

and

●

Our management of the impact of COVID-19 has and will continue to require significant investment of time and

may cause us to divert or delay the application of its resources toward other or new initiatives or investments, which

may

cause

material

adverse

impact

the

results

operations.

-40-

The extent of the impact of the COVID-19 pandemic on our business is highly uncertain, as information is evolving with

respect to the duration and severity of the pandemic. In addition, new coronavirus mutations and variants, which may be more

contagious or deadly than the original virus, continue to appear.

These new mutations or variants may, directly or indirectly, impact

our operations in the future in ways we cannot anticipate. We cannot reasonably estimate the duration and severity of the COVID-19

pandemic,

its

impact,

which

may

significantly

harmful

our

operations

and

profitability.

* We may encounter difficulties in integrating the businesses or facilities we acquire, including any international businesses that

may

acquire

the

future.

As part of our business plan, we intend to acquire other businesses that enhance or supplement our biorefinery and camelina

production operations.

Earlier in 2021 we acquired an agricultural biotechnology company, and we are currently in discussions to

acquire one or more complementary businesses. We may face significant challenges in integrating any of the entities, businesses or

other facilities, including other refineries, that we acquire, and we may not realize the benefits anticipated from such acquisitions. Our

integration

future

acquisitions

involves

number

risks,

including:

●

difficulty

integrating

the

operations

and

retaining

personnel

any

acquired

company,

business

facility;

●

difficulty in effectively integrating the acquired technologies, products or services with our current technologies, products or

services;

●

demands on management related to the increase in our size after an acquisition and integration of the acquired business and

personnel;

●

failure

achieve

expected

synergies

and

costs

savings;

●

difficulties in the integration of departments, systems, including accounting systems, technologies, books and records and

procedures, as well as in maintaining uniform standards and controls, including internal control over financial reporting, and

procedures

and

policies;

●

the incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating

results;

●

the

need

fund

significant

working

capital

requirements

any

acquired

production

facilities

businesses;

●

potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings or challenges

of an acquired company or technology, including but not limited to, issues with the acquired company’s intellectual property,

product quality, environmental liabilities, data back-up and security, revenue recognition or other accounting practices,

employee,

customer

partner

issues,

legal,

tax

and

financial

contingencies;

●

exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an

acquisition, including but not limited to, claims from terminated employees, customers, former stockholders or other third

parties;

and

●

the

incurrence

significant

exit

charges

products

services

acquired

business

combinations

are

unsuccessful.

We are also considering acquiring entities or businesses outside of the United States.

Any such foreign acquisitions will, in

addition

the

foregoing

risks,

also

subject

number

other

risks,

including:

●

challenges caused by distance, language, cultural differences, political economic and social instability, and the assimilation of

broad

and

geographically

dispersed

personnel

and

operations;

●

difficulties

protecting

and

enforcing

our

intellectual

property

rights

abroad;

●

the

inability

extend

proprietary

rights

our

technology

into

new

jurisdictions;

●

currency

exchange

rate

fluctuations

and

foreign

tax

consequences;

●

general

economic

and

political

conditions

foreign

jurisdictions;

●

foreign

exchange

controls

U.S.

tax

laws

respect

repatriating

income

earned

outside

the

United

States;

●

compliance with the U.S.'s Foreign Corrupt Practices

Act and other similar anti-bribery and anti-corruption

regulations,

and

-41-

●

higher

costs

associated

with

doing

business

internationally,

such

those

associated

with

complying

with

export,

import

regulations

and

trade

and

tariff

restrictions.

Loss

key

personnel

our

inability

attract,

train

and

retain

additional

key

personnel

could

harm

our

ability

meet

our

business

objectives.

Our Bakersfield Biorefinery 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 Biorefinery is operational and the

Camelina cultivation expands to our projected levels. Failure to hire the qualified employees that we will need could affect the

operations

and

the

future

profitability

of both our Bakersfield Biorefinery and our Cameliina 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, the operations of the Bakersfield Biorefinery, and the implementation of our Camelina

cultivation and production plan. The loss of these key employees and contractors could have a significant detrimental impact on the

development and initial operations of the Bakersfield Biorefinery, 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 Biorefinery is designed to produce. If

we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience staffing

constraints

that

will

adversely

affect

our

future

operations.

Our

Camelina

patents

may

not

protect

against

competition

from

other

biofuel

competitors.

An important element of our plan of operations of our Bakersfield Biorefinery is the use of Camelina oil that is derived from

our

patented

varieties

Camelina

one

the

principal

feedstocks

the

Bakersfield

Biorefinery.

currently

have

three

issued U.S. utility patents for varieties of Camelina as well as another issued U.S. utility patent directed to methods for improving the

Camelina oil. We have also filed seven additional utility patent applications, including a patent application directed to methods for

improving Camelina oil, and applications for another six Camelina plant varieties (which varieties are also covered by six applications

that

have

filed under the Plant Variety Protection Act (PVPA)). We have acquired patents in our acquisition of Agribody

Technologies, Inc., and certain of those patents can enhance our existing intellectual property for Camelina. Interpreting the scope and

validity

patents

and

success

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. 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 patent rights will be broad enough in scope to provide commercial advantage and prevent circumvention, nor do our patents give

us the exclusive right to cultivate other varieties of Camelina.

Our patents do not limit the right of others to use the oil from 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.

* Our

Camelina

operations

will

dependent

upon

the

availability

farmland,

our

relationship

with

third-party

farmers,

and

factors

affecting

agricultural

operations

general.

We do 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, and possibly elsewhere. Our ability to obtain the amount of

Camelina that we propose to use as feedstock at the Bakersfield Biorefinery 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 hereof 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. 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. 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, floods and storms, severe heat, frost, hail, and unusual temperature changes), 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

planted

and

expected

planted.

These

drought

conditions

may

negatively

impact

our

ability

produce

the amount of Camelina that we are currently planning to produce for our Bakersfield Biorefinery.

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.

Our Camelina operations will also be subject to any new government regulations regarding farming and the

marketing

agricultural

products.

-42-

* Large

capital

projects

can

take

many

years

complete,

and

market

conditions

could

deteriorate

over

time,

negatively

impacting

project

returns.

We may engage in other capital projects based on the forecasted project economics and level of return on the capital to be

employed in the project. Large-scale projects take many years to complete, and market conditions can change from our forecast. As a

result, we may be unable to fully realize our expected returns, which could negatively impact our financial condition, results of

operations,

and

cash

flows.

* Increased industry-wide production of renewable diesel due to potential utilization of existing excess production capacity,

announced plant expansions of renewable diesel and potential co-processing of renewable diesel by petroleum refiners, could

reduce

prices

for

our

fuel

and

increase

costs

feedstocks,

which

would

seriously

harm

any

future

revenues

and

operations.

If additional volumes of advanced biofuel RIN production come online and the EPA does not increase the renewable volume

obligation (RVO) under the Renewable Fuels Standard (RFS2) in accordance with the increased production, the volume of advanced

biofuel

RINs

generated

could

exceed

the

volume

required

under

the

RFS2.

the

event

this

occurs,

biomass-based

diesel

and

advanced biofuel RIN prices would be expected to decrease, potentially significantly, harming demand for our products and our

profitability.

According to the EPA, in 2018, 4.1 billion gallons per year of biomass-based diesel production capacity in the United States

were registered under the RFS2 program. This amount far exceeds both historic consumption of biomass-based diesel in the United

States

and

required

consumption

under

the

RFS2.

Additionally,

several

leading

biomass-based diesel companies have announced their intention to expand production of

renewable diesel for the U.S. market. World Energy has announced that it will expand capacity at its Los Angeles area biorefinery

from 45 mmgy to over 300 mmgy. Diamond Green Diesel, the largest U.S. producer of renewable diesel, is expanding its 275 mmgy

capacity by 400 mmgy as well as planning an additional 470 mmgy biorefinery in Texas. Neste, the largest global producer of

renewable

diesel,

has

announced

that

expanding

its

Singapore

facility

which

exports

significant

portion

its

production

the

U.S. West Coast. Traditional petroleum refiners are also planning to enter the renewable diesel market with Holly Frontier, Marathon

Petroleum and Phillips 66 announcing new biorefineries or the conversion of existing refineries to renewable diesel production

facilities.

Further,

due

economic

incentives

available,

several

petroleum

refiners

have

started

may

soon start to produce

co-processed renewable diesel, or CPRD. CPRD uses the same feedstocks to produce biomass-based diesel and it generates an

advanced

biofuel

RIN.

CPRD

may

cost-effective

produce

than

biomass-based

diesel.

If production of competitive advanced biofuels increases significantly as a result of utilization of existing excess production

capacity or new capacity as described above, competition for feedstocks would increase significantly, harming margins. Furthermore,

if supply of advanced biofuels exceeds demand, prices for renewable diesel and for RINs and other credits may decrease significantly,

harming

profitability

and

potentially

forcing

reduce

otherwise

limit

our

production.

* We have previously failed to timely file our Annual and Quarterly Reports with the SEC, which has affected and may continue

to affect investor confidence, our stock price, our ability to raise capital in the future and our ability to have our securities accepted

for

listing

national

security

exchange.

We failed to timely file several Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the periods prior to

December 31, 2019.

In addition, during the past two years we have had difficulty in timely filing other periodic reports because,

among other reasons, we needed additional time to complete our financial statements and to obtain information regarding our purchase

of the Bakersfield Biorefinery. Although these quarterly and annual reports were filed within the time periods permitted by Rule

12b-25 of the Securities Exchange Act of 1934, as amended, these reports are treated by investors as untimely. Such failure to timely

file

our

Annual

and

Quarterly

Reports

with

the

SEC:

●

has

had,

and

may

continue

have

the

effect

eroding

investor

confidence

and

our

financial

reporting

and

accounting

practices

and

processes;

●

may

negatively

impact

the

trading

price

our

common

stock;

-43-

●

may

result

stockholder

litigation;

●

may make it more difficult, expensive and time consuming for us to raise capital, if necessary, on acceptable terms, if at

all,

pursue

transactions

implement

business

strategies

that

might

otherwise

beneficial

our

business;

and

●

may

negatively

impact

our

reputation

with

our

future

customers.

* Our

future

financial

results

will

affected

volatile

margins,

which

are

dependent

upon

factors

beyond

our

control,

including

the

price

soybean,

canola,

and

other

feedstocks

and

the

market

price

which

can

sell

our

future

products.

The financial results of most renewable diesel producers are affected by the relationship, or margin, between their product

prices and the prices for oil, soybean, canola, and other feedstocks. Since refining margins have historically been volatile, the cost to

acquire feedstocks and the price at which the renewable diesel producers can ultimately sell their products may depend upon several

factors beyond their control, including regional and global supply of and demand for oil, soybean, canola, other feedstocks, gasoline,

diesel, other refined petroleum products, and renewable products. These in turn depend on, among other things, the availability and

quantity

imports,

the

production

levels

U.S.

and

international

suppliers,

levels

product

inventories,

productivity

and

growth

(or

the lack thereof) of U.S. and global economies, U.S. relationships with foreign governments, political affairs, and the extent of

governmental

regulation.

Refining and renewable diesel margins also can be significantly impacted by additional conversion capacity through the

expansion of existing facilities or the construction of new refineries or plants. Worldwide refining capacity expansions may result in

refining production capability exceeding refined petroleum product demand, which would have an adverse effect on future refining

margins.

Under the Term Purchase Agreement with ExxonMobil, ExxonMobil has the right to purchase the Bakersfield Biorefinery

renewable diesel that is not sold to ExxonMobil under the Offtake Agreement at a market-based formula price. Accordingly, we will

be subject to the risks related to fluctuating prices for all renewable diesel and other products that we sell to ExxonMobil under the

Term Purchase Agreement.

Our plan is to further limit our exposure to fluctuating feedstock prices by utilizing Camelina that is

purposefully grown for our Bakersfield Biorefinery.

Since the Camelina that we intend to use at our biorefinery is grown specifically

for us at pre-established costs, we have reduced much of the risks from the market/pricing volatility that exist with market-based

feedstocks.

No assurance can, however, be given that the Camelina that is produced for us can be produced at a favorable cost/price to

us,

that

can

produced

sufficient

quantities

materially

reduce

our

feedstock

risks.

* Developments

with

respect

low-carbon

fuel

policies

and

the

market

for

alternative

fuels

may

affect

demand

for

our

renewable

fuels

and

could

adversely

affect

our

future

financial

performance.

Low-carbon fuel policies, blending credits, and stricter fuel efficiency standards to help reach greenhouse gas emissions

reduction targets help drive demand for our renewable fuels. Any changes to, a failure to enforce, or a discontinuation of any of these

policies, goals, and initiatives could have a material adverse effect on our renewable fuels businesses. Similarly, new or changing

technologies may be developed, consumers may shift to alternative fuels or alternative fuel vehicles (such as electric or hybrid

vehicles) other than the renewable fuels we produce, and there may be new entrants into the renewable fuels production industry that

could

meet

demand

for

lower-carbon

transportation

fuels

and

modes

transportation

efficient

less

costly

manner

than

our

technologies

and

products,

which

could

also

have

material

adverse

effect

our

renewable

fuels

businesses.

* Once our refining operations commence, any significant interruption in our Bakersfield Biorefinery could adversely affect our

business.

Upon the completion of our refinery, our Bakersfield Biorefinery will be our principal operating asset. As a result, our

operations could be subject to significant interruption if it were to experience a major accident or mechanical failure, be damaged by

severe weather or other natural or man-made disaster, such as an act of terrorism, or otherwise be forced to shut down in the future.

Our Bakersfield Biorefinery also is subject to risks associated with earthquakes. The area near Bakersfield, California is considered to

be an earthquake zone, and the Bakersfield Biorefinery has recently experienced several moderate earthquakes that have not impacted

the refinery.

However, a major earthquake at the Bakersfield Biorefinery could result in significant additional costs, including, loss of

revenues due to unplanned temporary or permanent shutdown of the facility, loss of the ability to transport products or increased costs

to do so, cleanup costs, liability for damages or injuries, increased insurance expenses, and legal and reconstruction expenses. The

incurrence

significant

additional

costs

would

harm

our

results

operations

and

financial

condition.

* We

may

incur

losses

and

additional

costs

engage

forward-contract

activities

and

derivative

transactions.

We currently do not use commodity derivative instruments, although we may do so in the future. If the instruments we use to

hedge our exposure to various types of risk are not effective, we may incur losses. In addition, we may be required to incur additional

costs

connection

with

future

regulation

derivative

instruments

the

extent

applicable

us.

-44-

* We are subject to operational risks and our insurance may not be sufficient to cover all potential losses arising from operating

hazards.

Failure

one

insurers

honor

their

coverage

commitments

for

insured

event

could

materially

and

adversely

affect

our

financial

position,

results

operations,

and

liquidity.

Our operations are subject to various hazards common to the industry, including explosions, fires, toxic emissions, maritime

hazards, and natural catastrophes. As protection against these hazards, we maintain insurance coverage against some, but not all,

potential losses and liabilities. We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable

rates. As a result of market conditions, premiums and deductibles for certain of our insurance policies could increase substantially.

Therefore, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially

reasonable terms, if at all. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive

relative to the risks presented. In some instances, certain insurance could become unavailable or available only for reduced amounts of

coverage.

For

example,

coverage

for

terrorism

risks

includes

very

broad

exclusions.

were

incur

significant

liability

for

which

were

not

fully

insured,

could

have

material

adverse

effect

our

financial

position,

results

operations,

and

liquidity.

Our insurance program includes a number of insurance carriers. Significant disruptions in financial markets could lead to a

deterioration in the financial condition of many financial institutions, including insurance companies. We can make no assurances that

we will be able to obtain the full amount of our insurance coverage for insured events. Although we intend to maintain insurance at

levels that we believe are appropriate for our business and consistent with industry practice, we will not be fully insured against all

risks. In addition, pollution, environmental risks and the risk of natural disasters generally are not fully insurable. Losses and liabilities

from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our

financial

condition

and

results

operations.

* Our intellectual property is integral to our business. If we are unable to protect our intellectual property, or others assert that

our

operations

violate

their

intellectual

property,

our

business

could

adversely

affected.

A key element of our business model relies on our ability to produce feedstock from Camelina.

We have developed and

patented three varieties of Camelina that, we believe, have traits that make them more suitable and productive for biofuel feedstock

purposes.

In addition, we have recently developed several other new varieties that, we believe, will significantly improve the

productivity and sustainability of these varieties of Camelina.

We believe that our ability to produce Camelina from our proprietary

varieties will provide us with a significant competitive advantage in the biofuels market.

Accordingly, we attempt to protect our

Camelina-related intellectual property through a combination of intellectual property rights, including patents and trade secrets.

However, the patents on our Camelina varieties and our related patents for altering/improving traits of Camelina have only been issued

in the United States, although we have filed patent applications for certain of our patents in select foreign countries. The loss of our

rights

one

our

proprietary

Camelina

varieties

could

materially

impact

our

competitiveness.

may

difficult

protect

and

enforce

our

intellectual

property

and

litigation

initiated

enforce

and

determine

the

scope

of our proprietary rights can be costly and time-consuming. Adverse judicial decision(s) in any legal action could limit our ability to

assert our intellectual property rights, limit our ability to develop new products, limit the value of our Camelina varieties or otherwise

negatively

impact

our

business,

financial

condition

and

results

operations.

A competitor could seek to enforce intellectual property claims against us. Defending intellectual property claims asserted

against us, regardless of merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention and

force us to acquire intellectual property rights and licenses, which may involve substantial royalty payments. Further, a third party

claim, if successful, could secure a judgment that requires us to pay substantial damages or that could otherwise limit our operations.

Moreover, should we be found liable for infringement, we may be required to enter into licensing agreements (which may not be

available on acceptable terms or at all) or to pay damages and cease making or selling certain products. Any of the foregoing could

cause us to incur significant costs and prevent us from manufacturing or selling our products and thereby materially adversely affect

our

business,

result

operations

and

financial

condition.

* Litigation

regulatory

proceedings

may

materially

adversely

affect

our

business,

results

operations

and

financial

condition.

We are, or may become a party to various lawsuits, claims and loss contingencies arising in the ordinary course of business

and general liability claims, assertions by certain regulatory and governmental agencies related to permitting requirements and/or air,

wastewater and storm water discharges from our Bakersfield Biorefinery. We also may, from time to time, become subject to litigation

involving tort, contract, statutory, labor, employment, and other claims, and tax matters. The outcome of litigation, particularly class

action

lawsuits,

and

regulatory

proceedings

difficult

assess

quantify.

Plaintiffs

(including

governmental

agencies)

these

types of lawsuits and proceedings may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss

relating to such lawsuits or proceedings may remain unknown for substantial periods of time. The costs of responding to or defending

future litigation or regulatory proceedings may be significant and any future litigation or regulatory proceedings may divert the

attention

management

away

from

our

strategic

objectives.

There

may

also

adverse

publicity

associated

with

litigation

or regulatory proceedings that may decrease customer confidence in our business, regardless of whether the allegations are valid or

whether we are ultimately found liable. As a result, litigation or regulatory proceedings may have a material adverse effect on our

business,

results

operations

and

financial

condition.

-45-

* Cyberattacks through security vulnerabilities could lead to disruption of business, reduced revenue, increased costs, liability

claims,

harm

our

reputation

competitive

position.

We rely upon our information systems and networks in connection with a variety of business activities, and we collect and

store

sensitive

data.

After

our

Bakersfield

Biorefinery

becomes

operational,

the

operations

that

facility,

well

our

transportation, processing and storage activities will be heavily dependent upon our computer systems and network.

Accordingly,

security threats to our computer and information systems pose a risk to our future operations and to the security and confidentiality,

availability and integrity of our data.

While we attempt to mitigate these security vulnerabilities, there can be no assurance these

measures will be sufficient to avoid cyberattacks. If any security breaches were to occur and we were unable to protect our production

and delivery facilities and systems, our operations could be negatively impacted, and even halted, until the security breaches are

remedied.

In addition, if any sensitive data of our partners or customers were to be breached, our relationships with our business

partners and customers could be materially damaged, our reputation could be materially harmed, and we could be exposed to a risk of

litigation

and

possible

significant

liability.

The State of California enacted the California Consumer Privacy Act of 2018, or CCPA, effective on January 1, 2020. Our

business partners’ or contractors’ failure to fully comply with the CCPA and other laws could lead to significant fines and require

onerous corrective action. In addition, data security breaches experienced by us or our business partners or contractors could result in

the loss of trade secrets or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personally

identifiable

information

(including

sensitive

personal

information)

our

employees,

customers,

suppliers,

contractors

and

others.

Unauthorized use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through

breach of our systems, breach of the systems of our suppliers or vendors by an unauthorized party, or through employee or contractor

error, theft or misuse, or otherwise, could harm our business. If any such unauthorized use or disclosure of, or access to, such personal

information was to occur, our operations could be seriously disrupted, and we could be subject to demands, claims and litigation by

private parties, and investigations, related actions, and penalties by regulatory authorities. In addition, we could incur significant costs

in notifying affected persons and entities and otherwise complying with the multitude of foreign, federal, state and local laws and

regulations relating to the unauthorized access to, or use or disclosure of, personal information. Finally, any perceived or actual

unauthorized access to, or use or disclosure of, such information could harm our reputation, substantially impair our ability to attract

and

retain

customers

and

have

adverse

impact

our

business,

financial

condition

and

results

operations.

Regulatory

Risks

* We may incur significant costs complying with environmental laws and regulations, and failure to comply with these laws and

regulations

could

expose

significant

liabilities.

We believe 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

other

causes.

Compliance 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

production

cessation

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

existing

legally

enforceable

requirements

relating

to greenhouse gases are amended or repealed in the future. The costs of

complying with environmental, health and safety laws and regulations and any claims concerning noncompliance, or liability with

respect

contamination

the

future

could

have

material

adverse

effect

our

financial

condition

operating

results.

Furthermore, the loss of or failure to obtain necessary federal, state, provincial or local permits and registrations at our

Bakersfield Biorefinery or any future facility could halt or curtail operations, which could result in impairment charges related to the

affected

facility

and

otherwise

adversely

affect

our

future

operating

results.

addition,

our

failure

comply

with

applicable

rules, regulations and guidance, including obtaining or maintaining required operating certificates or permits, could subject us to: (i)

administrative penalties and injunctive relief; (ii) civil remedies, including fines, injunctions and product recalls; and/or (iii) adverse

publicity. There can be no assurance that we will not incur material costs and liabilities in connection with these rules, regulations and

guidance.

-46-

* The Renewable Fuel Standard Program, a federal law requiring the consumption of qualifying biofuels, could be repealed,

curtailed or otherwise changed, which would have a material adverse effect on our revenues, operating margins and financial

condition.

We and other participants in the biomass-based diesel industry rely on governmental programs requiring or incentivizing the

consumption of biofuels. Biomass-based diesel has historically been more expensive to produce than petroleum-based diesel fuel and

these

governmental

programs

support

market

for

biomass-based

diesel

that

might

not

otherwise

exist.

One of the most important of these programs is the RFS2, a federal law that requires that transportation fuels in the United

States contain a minimum amount of renewable fuel. This program is administered by the U.S. Environmental Protection Agency

("EPA"). The EPA's authority includes setting annual minimum aggregate levels of consumption in four renewable fuel categories,

including the two primary categories in which our fuel competes with biomass-based diesel. The parties obligated to comply with this

RVO

are

petroleum

refiners

and

petroleum

fuel

importers.

Certain members of the petroleum industry are strongly opposed to the RFS2 and can be expected to continue to press for

changes both in the RFS2 itself and in the way that it is administered by the EPA. One key point of contention is the rate of growth in

the annual RVO. We believe that growth in the annual RVOs is likely to influence our ability to grow our business and support the

price

our

fuel

through

the

RINs.

The

EPA's

future

decisions

regarding

the

RVO

may

influence

our

revenues

and

profit

margins.

The RFS2 also grants to the EPA authority to waive a qualifying refiner's obligation to comply with RFS2, through a small

refinery exemption ("SRE"), based on a determination that the program is causing severe economic harm to that refinery. SREs can

significantly harm demand for biomass-based diesel and the value of RINs. In December 2019, the EPA issued a ruling on the

reallocation of the required volumes under RFS2 in an attempt to offset the effect of the SREs. The ruling detailed the intent to

redistribute the exempt volumes granted through the SRE to non-exempt obligated parties. This redistribution will be calculated on a

three-year rolling average, based on the U.S. Department of Energy ("DoE") recommended relief. The EPA has consistently granted

relief

through

small

refinery

waivers

than

recommended

the

DoE.

We believe that the increase in small refinery waivers previously granted significantly affected the demand and price of RINs

as the average price of D4 (Biomass-based diesel classification) RINs fell during 2019 according to OPIS data. If the EPA continues

this

practice,

may

harm

demand

and

price

RINs

and

thus

our

profitability.

Subsequent

the

EPA's

December

2019

ruling, in January 2020, the 10th Circuit Court of Appeals issued a ruling

invalidating the process the EPA had been using to grant SREs. The EPA also denied 54 retroactive waivers filed for periods

2011-2018. There are 14 remaining waivers that are still to be decided on by the EPA. We believe these actions have increased RIN

values. In January 2021, the Supreme Court of the United States agreed to review the 10th Circuit Court's ruling on the SRE matter.

There is no certainty of the outcome of the review at this time. The EPA could change their procedures to permit more SREs and that

has

the

potential

cause

further

harm

RIN

values.

The COVID-19 pandemic and measures to address the pandemic have severely affected demand for gasoline and diesel,

reducing demand for 2020 RINs for RFS compliance. RVO compliance obligations are based on the volume of sales of gasoline and

diesel

party

that

subject

RFS2's

volume

requirements,

obligated

party.

those

volumes

decrease,

there

corresponding

decrease in the volume of RINs required for RFS compliance. As such, if the effects of COVID-19 on fuel demand continue

throughout 2021, we expect that demand for the RINs we produce will decrease and for those RINs to have lower values, which would

harm

our

profitability.

Several Governors have petitioned the EPA to use its general waiver authority to reduce the 2020 RVO in response to

COVID-19 economic disruptions. Should the EPA use its general waiver authority to reduce RVO requirements, we expect that this

would

harm

demand for and the value of biomass-based diesel and RINs, which would harm our revenues and earnings.

As of the

date hereof, the EPA has not issued the 2022 RVO that will affect our operations once the Bakersfield Biorefinery commences

operations.

The U.S. Congress could repeal, curtail or otherwise change the RFS2 program in a manner adverse to us. Similarly, the EPA

could curtail or otherwise change its administration of the RFS2 program in a manner adverse to us, including by not increasing or

even decreasing the RVO, by waiving compliance with the RVO or otherwise. In addition, while Congress specified RFS2 volume

requirements

through

2022

(subject

adjustment

the

rulemaking

process),

beginning

2023

required

volumes

renewable

fuel

will be largely at the discretion of the EPA (in coordination with the Secretary of Energy and Secretary of Agriculture). We cannot

predict what changes, if any, will be instituted or the impact of any changes on our business, although adverse changes could seriously

harm

our

revenues,

earnings

and

financial

condition.

-47-

* Loss of or reductions in federal and state government tax incentives for renewable diesel production or consumption may have

material

adverse

effect

our

revenues

and

operating

margins.

Federal

and

state

tax

incentives

have

assisted

the

renewable

diesel

industry

making

the

price

renewable

diesel

cost

competitive with the price of petroleum-based diesel fuel to the end user. The expiration or termination of federal and/or state

governmental incentives could have a material adverse impact on the cost of our products, on the price at which we sell our products,

and

the

other

financial

incentives

that

affect

the

commercial

value

our

renewable

diesel

and

our

operations.

The most significant tax incentive program has been the federal biodiesel mixture excise tax credit, referred to as the

Biodiesel Tax Credit ("BTC"). Under the BTC, the first person to blend pure biomass-based diesel with petroleum-based diesel fuel

receives

$1.00-per-gallon

refundable

tax

credit.

The

BTC

was

established

January

2005

and

has

lapsed

and

been

reinstated

retroactively

and

prospectively

several

times. Most recently in December 2019, the BTC was retroactively reinstated for 2018 and 2019 and is in effect from January 2020

through

December

2022.

Unlike

the

RFS2

program,

the

BTC

has

direct

effect

federal

government

spending

and

changes

federal budget policy could result in its elimination or in changes to its terms that are less beneficial to us. We cannot predict what

action, if any, Congress may take with respect to the BTC after 2022. There is no assurance that the BTC will be reinstated, that it will

reinstated

the

same

terms

or,

reinstated,

that

its

application

will

retroactive,

prospective

both.

Any

adverse

changes

the

BTC

can

expected

harm

our

results

operations

and

financial

condition.

-48-

Risks

Relating

Financial

Matters

are

development

stage

company

that

currently

has

revenues,

not

expect

generate

any

meaningful

revenues

until

the

Bakersfield

Biorefinery

commences

commercial

operations.

We are a development stage company with no revenues and no operations other than those related to the construction of the

Bakersfield Biorefinery and to the development of our Camelina cultivation operations. We do not expect to generate material

revenues, if any, until after the Bakersfield Biorefinery has commenced commercial operations, which is currently scheduled to occur

early

2022.

We will incur significant net losses and significant capital expenditures through completion of development of

Bakersfield Biorefinery. Any delays beyond the expected construction completion date for the Bakersfield Biorefinery would prolong,

and

could

increase

the

level

of,

our

operating

losses.

* We

have

history

net

losses,

and

may

not

achieve

maintain

profitability.

We incurred net losses of $10.6 million and $11.8 million during the years ended December 31, 2020 and 2019, respectively,

and a net loss of $34.0 million during the nine months ended September 30, 2021. As of September 30, 2021, we had an accumulated

deficit of $100.2 million.

According to our internal budget, in the aggregate we expect to spend approximately $190 million between

the date hereof and the commencement of commercial operations on the development and construction of the Bakersfield Biorefinery,

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 any revenues until the Bakersfield Biorefinery is fully

operational in the first quarter 2022. No assurance can be given that the Bakersfield Biorefinery and our related Camelina operations

will

profitable

once

the

Bakersfield

Biorefinery

does

commence

operations.

The

terms

our

Senior

Credit

Facility

and

Mezzanine

Credit

Facility

agreements

and

other

financing

arrangements

will

significantly

limit

the

amount

cash

that

available

GCEH

and

our

stockholders.

Under our Senior Credit Facility and Mezzanine Credit Facility agreements we can borrow an aggregate of $385 million of

financing. The Senior Credit Facility bears interest at the rate of 12.5% per annum, and the Mezzanine Loans will bear interest at the

rate of 15.0% per annum on amounts borrowed. The Senior Credit Facility and Mezzanine Credit Facility mature in November 2026

and 2027, respectively. In addition to the loan repayment obligations under both the Senior Credit Facility and Mezzanine Credit

Facility, one of our Bakersfield Biorefinery holding company subsidiaries, has issued membership interests (Class B Units) to the

Senior Lenders and will issue membership interests (Class C Units) to the Mezzanine Lenders. The Class B Units and Class C Units

membership interests provide the holders of the Class B and Class C Units with preferential cash distribution rights over the Class A

Units owned by GCEH. Under the Credit Agreements and the limited liability agreement of the financing subsidiary, any excess cash

from operations that the Bakersfield Biorefinery generates will first be used to make the debt service payments under the Senior Credit

Facility and Mezzanine Credit Facility, and then any excess cash available after making those loan payments will be allocated among

the

holders

the

Class

and

Class

Units.

The

holders

the

Class

Units

are

entitled

receive

quarterly

distributions

25% of the Bakersfield Biorefinery’s free cash flow until the Senior Lenders have received (collectively, from these cash distributions

plus principal and interest on the Senior Credit Facility) an amount equal to a 2X multiple of invested capital (“MOIC”), or two times

the amount of the Senior Credit Facility. Since we expect that the Senior Lenders will lend us $317.6 million, the Senior Lenders will

have preferential rights to receive a total of up to $635 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 among 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

distributions until the Mezzanine Lenders have received cumulative payments (cash distributions plus principal and interests on the

Mezzanine Credit Facility) 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, the amount of cash

available

for

distribution

GCEH

and

our

stockholders

will

significantly

reduced.

Accordingly,

even

the

Bakersfield

Biorefinery’s operations generate significant profits, the amount of cash available to GCEH from the Bakersfield Biorefinery will be

very

limited

for

least

five

years.

are

unable

comply

with

the

restrictions

and

covenants

our

two

credit

facility

agreements,

our

lenders

could

declare

event

default

under

the

terms

these

agreements.

The two credit agreements with our Senior Lenders and our Mezzanine Lenders each contain extensive restrictions and

covenants, including construction milestones, limitations on the use of the loan proceeds, lender consent requirements, and extensive

financial and other reporting requirements.

The credit agreements, as amended, currently also require the Company to establish a

contingency

reserve by November 19, 2021.

Although we have not been in full compliance with all of these covenants and

requirements

the

past,

date

our

lenders

have

either

waived

these

violations

otherwise

not

declared

event

default.

-49-

However, no assurance can be given that we will be able to fully comply with all of the credit agreement provisions, or if we fail to

remain in compliance that our lenders will not declare an event of default. In the event of a default under these agreements, our

lenders could terminate their commitments to lend or accelerate the loans and declare all amounts borrowed due and payable. If any of

these events occur and our lenders do not provide additional waivers, we could be forced to enter into unfavorable amendments to our

credit agreements, could be required to pay additional fees and costs, and could lose some or all of our investment in the Bakersfield

Biorefinery.

Our Bakersfield Biorefinery subsidiaries are subject to various restrictions under the Senior Credit Facility and Mezzanine Credit

Facility agreements, and substantially all of the assets of the Bakersfield Biorefinery subsidiaries are held as security under the

terms

such

credit

agreements.

The obligations under the Senior Credit Facility and Mezzanine Credit Facility agreements are secured by a security interest

in all of the assets of the BKRF, and by all of the assets and securities issued by the limited-purpose, wholly owned indirect

subsidiaries of the Company. The two credit agreements contain certain customary events of default, including events relating to

non-payment

required

interest,

principal

or other amounts due on or with respect to the Senior 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

establish

additional

cash

reserve

least

$35

million

for

BKRF.

Our

inability

raise

least

$35

million

within

the time limits specified in the amendments, and to properly fund the new contingency reserve will constitute an event of default under

the two credit agreements. A breach of any of the covenants under either of the credit agreements could result in 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

lenders could elect to declare all outstanding debt under the credit agreements to be immediately due and payable, and the secured

lenders could foreclose against all of the Bakersfield Biorefinery’s assets and the ownership interests of the various subsidiaries. A

foreclosure

could

result

the

loss

our

refinery

and

our

refining

business,

and

could

forced

into

bankruptcy

liquidation.

* We have a substantial level of indebtedness which could materially and adversely affect our financial condition and restrict our

ability

incur

additional

indebtedness

engage

transactions

We have incurred significant indebtedness that could have a material adverse effect on our business and on returns to our

stockholders.

cannot

guarantee

that

our

business

will

generate

sufficient

cash

flow from operations once the Bakersfield

Biorefinery commences operations and the Camelina cultivation operations commence to enable us to make the required payments on

our debt, to fund other liquidity needs, to make necessary future capital expenditures or to pursue other business opportunities. The

agreements and related documents that govern our indebtedness, including but not limited to, the two credit agreements that our

subsidiaries entered into on May 4, 2020, contain covenants that place restrictions on us and our subsidiaries. The credit agreements

restrict

among

other

things,

our

subsidiaries’

ability

to:

●

merge,

consolidate

transfer

all,

substantially

all,

their

assets;

●

incur

additional

debt;

●

make

certain

investments

acquisitions;

●

create liens

our

subsidiaries’

assets;

●

sell

assets;

●

alter

the

businesses

our

subsidiaries

conduct;

●

make

distributions;

and

●

enter

into

transactions

with

our

other

affiliated

entities.

These

covenants could impair our ability to grow our business, take advantage of attractive business opportunities or

successfully compete. In addition, these covenants could restrict our ability to optimize our capital structure with asset-level debt or

equity

financings.

Our Senior Credit Facility and Mezzanine Credit Facility agreements used to finance our acquisition of the Bakersfield

Biorefinery bear interest at a high rate (12.5% and 15.0%, respectively). In addition, they grant certain lenders membership interests,

which

will

provide

the

Senior

Lenders

and

Mezzanine

Lenders

with

interest

excess

cash

flows

from

the

Bakersfield

Biorefinery’s operations. These membership interests provide the lenders with an indirect financial interest in the Bakersfield Biorefinery, which is

prior

any

distribution

that

would

otherwise

available

our

stockholders.

-50-

Risks

Our

Common

Stock

* There

limited

public

trading

market

for

our

Common

Stock,

and

you

may

not

able

resell

your

shares.

Currently there has been a limited public market for our common stock. Our common stock is traded on the OTCQX Best

marketplace, an inter-dealer, over-the-counter market that provides significantly less liquidity than national securities exchanges, such

as The Nasdaq Stock Market. Furthermore, we are a relatively small company which is relatively unknown to stock analysts,

stockbrokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if

we came to the attention of such persons, they tend to be risk averse and would be reluctant to follow a company such as ours or

purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there is

currently a limited public trading market for our securities. 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, you may have difficulty selling your shares of common

stock

attractive

price,

all,

which

will

result

the

loss

your

investment.

have

stockholders’

deficit.

We have a history of losses and have a stockholders’ deficit of $28.7 million and $41.9 million as of December 31, 2020, and

June 30, 2021, respectively. Additionally, we had negative working capital of $50.1 million (which includes current short-term

restricted cash of $2.3 million) at September 30, 2021. We had long-term restricted cash of $25.2 million as of September 30, 2021

that is excluded from our working capital calculation. Our history of losses and our negative working capital position could negatively

impact

the

value

our

common

stock.

* We

cannot

assure

you

that

the

Common

Stock

will

listed

the

Nasdaq

Capital

Market

any

other

securities

exchange.

not

currently

satisfy

the

listing

requirements

the

Nasdaq

Capital

Market.

We have applied to have our common stock to be listed on the Nasdaq Capital Market. However, we cannot assure you that

we will be able to meet the initial listing standards of that stock exchange and that our application will be approved. We do not

currently

comply

with

certain

Nasdaq

listing

standards,

including

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 continue to comply with the applicable listing standards. If we are unable to maintain

compliance

with

these

Nasdaq

requirements,

our

common

stock

will

delisted

from

the

Nasdaq

Capital

Market.

We are currently a “smaller reporting company” and we have elected to comply with certain reduced reporting and disclosure

requirements

which

could

make

our

Common

Stock

less

attractive

investors.

We are a “smaller reporting company,” as defined in the Regulation S-K of the Securities Act of 1933, as amended, which

allows us to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies

that

are

not

smaller

reporting companies, including (i) not being required to comply with the auditor attestation requirements of

Section 404 of the Sarbanes-Oxley Act of 2002, and (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 stock less attractive because we may rely on these exemptions. If

some investors find our common stock less attractive as a result, there may be a less active trading market for our common 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 control over financial reporting until we are no longer a “smaller reporting company”. We cannot assure

you

that

there

will

not

material

weaknesses

significant

deficiencies

our

internal

controls

the

future.

The application of the SEC’s “penny stock” rules to our Common Stock could limit trading activity in the market, and our

stockholders

may

find

difficult

sell

their

stock.

If our common stock trades at a price of less than $5.00 per share while we are still traded on the OTCQX Best Market, our

common

stock

will

subject

the

SEC’s

penny

stock

rules.

Penny

stocks

generally

are

equity

securities

with

price

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

the

transaction

and monthly account statements showing the market value of each penny stock

held

the

customer’s

account.

The

broker-dealer

must

also

make

special

written

determination

that

the

penny

stock

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

broker-dealers

sell

our

common

stock

and

may

affect

your

ability

resell

our

common

stock.

-51-

The Company has material weaknesses in internal controls. 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

negative

effect

the

market

price

for

our

Common

Stock.

Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. As a

public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are required to

document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of

2002,

which

requires

annual

management

assessments

the

effectiveness of our internal controls over financial reporting. The

process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to

changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of

internal

controls

that

adequate

satisfy

our

reporting

obligations

public

company.

As of December 31, 2020 and September 30, 2021, we had several material weaknesses in our financial reporting, these consisted of (i) ineffective controls over period end financial disclosure and reporting processes, including not timely performing certain reconciliations, and lack of approval of adjusting journal entries, (ii) inadequate segregation of duties in various key processes including the information technology control environment, and (iii) we had not performed a risk assessment and mapped the accounting processes to control objectives. We have recently implemented changes to our system of internal control over financial reporting, which we are currently implementing. 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.

* The

market

price

our

common

stock

may

continue

volatile.

The

market

price

our

common

stock

may

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 acquired the Bakersfield

Biorefinery in May 2020 and are currently retooling and converting the refinery into a renewable diesel refinery. Since we will not

generate revenues until the construction of the Bakersfield Biorefinery is completed in 2022, our stock price will not be based on

quantifiable investment criteria used by certain investors in valuing shares. As a result, the uncertainty of our future operations and

profitability

could

result

investor

speculation

and

increased

volatility

our

stock

price.

* Because certain of our directors and executive officers are among our largest stockholders, they can exert significant control

over

our

business

and

affairs

and

have

actual

potential

interests

that

may

depart

from

those

investors.

Our officers and directors owned approximately 5,904,000 shares (or 14.7% of our outstanding voting shares), and options

and convertible notes to purchase approximately 24,932,000 additional shares as of September 30, 2021. The holdings of our directors

and executive officers may increase substantially in the future upon exercise rights under any of the options, convertible promissory

notes or warrants they may hold or in the future be granted or if they otherwise acquire additional shares of 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

the

future

financings,

may

vote,

including

the

following

actions:

●

elect

defeat

the

election

our

directors;

-52-

●

amend

prevent

amendment

our

Certificate

Incorporation

By-laws;

●

effect

prevent

merger,

sale

assets

other

corporate

transaction;

and

●

control

the

outcome

any

other

matter

submitted

our

stockholders

for

vote.

This concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business

consolidation, or discouraging a potential acquirer from making a tender offer for the common stock which in turn could reduce our

stock

price

prevent

our

stockholders

from

realizing

premium

over

our

stock

price.

Our

Board

Directors

authorized

issue

Preferred

Stock

without

obtaining

stockholder

approval.

Our Certificate of Incorporation authorizes the issuance of up to 50,000,000 shares of Preferred Stock, all of which remain available for issuance by our Board of Directors. These shares may be issued with such designations, rights and

preferences as our Board of Directors may from time to time 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. 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

the

future.

* We

not

intend

pay

dividends

for

the

foreseeable

future

and,

result,

your

ability

achieve

return

your

investment

will

depend

appreciation

the

price

our

Common

Stock.

We do not intend to pay any cash dividends for the foreseeable future. We anticipate that we will retain all of our future

earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the

future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price

appreciation,

which

may

never

occur,

the

only

way

realize

any

future

gains

their

investments.

* Future securities issuances could result in significant dilution to our stockholders and impair the market price of our Common

Stock.

As of September 30, 2021, we had outstanding, immediately exercisable options, warrants and convertible promissory notes

for the issuance of approximately 24,952,000 additional shares of common stock. In addition, we also had outstanding unvested

options for the purchase of approximately 871,000 additional shares of common stock. Future issuances of shares of our common

stock, or the perception that these sales may occur, could depress the market price of our common stock and result in dilution to

existing

holders

our

common

stock.

Also,

the

extent

outstanding

options

purchase

our

common

stock

are

exercised

options or other stock-based awards are issued or become vested, there will be further dilution. The amount of dilution could be

substantial depending upon the size of the issuances or exercises. Furthermore, we may issue additional equity securities that could

have rights senior to those of our common stock. As a result, purchasers of our common stock bear the risk that future issuances of

debt

equity

securities

may

reduce

the

value

our

common

stock

and

further

dilute

their

ownership

interest.

* If

securities

analysts

not

publish

research

reports

about

our

business

they

downgrade

our

stock

our

core

market,

our

stock

price

and

trading

volume

could

decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts

publish about us or our business or industry. We do not control these analysts. Furthermore, if one or more of the analysts who do

cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research

about our business or industry, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fails to

publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to

decline.

* Our

common

stock

equity

security

and

subordinate

our

existing

and

future

indebtedness.

our

common

stock are equity interests and do not constitute indebtedness. As such, the shares of common stock

will rank junior to all of our indebtedness, including our trade debt, and to other non-equity claims on us and our assets available to

satisfy

claims

us,

including

claims

bankruptcy,

liquidation

similar

proceedings.

Unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of common

stock,

(i)

dividends

are

payable

only

when

and

declared

our

board

directors

duly

authorized

committee

the

board

and (ii)

corporation,

are

restricted

under

applicable

Delaware

law

making

dividend

payments

and

redemption

payments

only from legally available assets. Further, under our certificate of incorporation, there are no restrictions on our business or operations or

on our ability to incur indebtedness or engage in any transactions arising as to our common stock, subject only to the voting rights

available

stockholders

generally.

-53-

Item

Unregistered

Sales

Equity

Securities

and

Use

Proceeds

Nothing

report.

Item

Defaults

upon

Senior

Securities

In order to fund the cost of acquiring the Bakersfield oil refinery, converting the oil refinery into a biorefinery, and paying all

operating expenses during the pre-operational period, the Company in May 2020 entered into (i) a $300 million senior secured term

loan facility with certain senior lenders (which credit facility has been amended to increase the loan facility to $313.2 million), and (ii)

a $65 million secured term loan facility with certain mezzanine lenders (which credit was amended to increase the mezzanine facility

to $66.8 million). Both credit agreements contain extensive restrictions and covenants, including construction milestones, limitations

on the use of the loan proceeds, lender consent requirements, and extensive financial and other reporting requirements.

The credit

agreements, as amended, currently also require the Company to establish a contingency reserve. See, “Item 5. Other Information,”

below. While the Company has not been in full compliance with all of these covenants and requirements, to date the Company’s

lenders

have

either

waived

these

violations

otherwise

not

declared

event

default.

Item

Mine

Safety

Disclosures

Nothing

report.

Item

Other

Information

As previously disclosed, on July 28, 2021, certain indirect subsidiaries of Global Clean Energy Holdings, Inc. entered into an

amendment to both the senior Credit Agreement and the mezzanine Credit Agreement with Orion Energy Partners TP Agent, LLC, as

the administrative agent, and the lenders who agreed to provide financing under that senior secured term loan facility and the

mezzanine secured term loan facility. Under these two amendments, the Company agreed to raise additional capital and to use that

capital to establish a cash contingency reserve of $35 million by September 15, 2021. The $35 contingency reserve was to be

established to fund any additional or unanticipated costs of construction, installing, equipping, completing, starting up, and operating

the Company’s Bakersfield Biorefinery. The Company has not raised additional capital and has not funded the $35 million reserve

fund. To date, the Company’s lenders have not declared an event of default and, on November 9, 2021, the lenders issued a waiver to

the

Company

and

agreed

extend

the

date

which

the

$35

million

reserve

must

established

November

19,

2021.

-54-

Item

Exhibits

Exhibit
Number		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Schema.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase.

101.DEF		XBRL Taxonomy Extension Definition Linkbase.

101.LAB		XBRL Taxonomy Extension Label Linkbase.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

104		Cover Page Interactive Data File formatted as Inline XBRL and included in Exhibit 101

-55-

SIGNATURES

accordance

with

the

requirements

the

Securities

Exchange

Act

1934,

the

registrant

has

duly

caused

this

report

signed

its

behalf

the

undersigned

thereunto

duly

authorized.

	GLOBAL CLEAN ENERGY HOLDINGS, INC.

Date: November 15, 2021	By:	/s/ Richard Palmer
		Richard Palmer
		President and Chief Executive Officer

Date: November 15, 2021	By:	/s/ Ralph Goehring
		Ralph Goehring
		Chief Financial Officer

-56-