Global Clean Energy Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

NOTE C – PROPERTY, PLANT AND EQUIPMENT

On May 7, 2020 through its subsidiary BKRF OCB, LLC, the Company purchased all of the outstanding equity interests of Alon Bakersfield Property, Inc. a company that owned a crude oil refinery in Bakersfield, California from Alon Paramount Holdings, Inc. (“Alon Paramount”) for a total consideration of $89.4
 million (excluding acquisition costs). Immediately prior to the purchase, Alon Bakersfield Property Inc. was converted into a limited liability company and renamed as “Bakersfield Renewable Fuels, LLC.” The Company is now retooling the acquired crude oil refinery into a biorefinery. 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 a) substantially all of the fair value of the gross assets acquired is concentrated in a 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 consideration for the purchase of the Bakersfield Biorefinery was $

89.4

million, and consisted of $

million of cash, an option right valued at $

5.5

million granted to the seller, and an assumption of $

43.9

million of liabilities. The liabilities assumed consist of $

21.9

million of asset retirement obligations (ARO) and $

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

%. The total consideration of the purchase was allocated to the asset categories acquired based upon their relative fair value, except that the fair value of the ARO was allocated to the specific assets to which they relate. The following summarizes this allocation of the purchase price 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

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

	June 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		122,353,287			86,019,130
Transportation Equipment		136,237			-
Construction in Process		67,566,616			33,212,695
Construction P eriod I nterest		22,099,706			10,220,766
Total Cost	$	221,856,883		$	139,152,200
Less A ccumulated D epreciation		(233,241	)		(179,525	)
Property and equipment, net	$	221,623,642		$	138,972,675

Depreciation expense for property and equipment was approximately $

28,000

and $

27,000

for the quarters ended June 30, 2021 and June 30, 2020, respectively and $

54,000

and $

27,000

for the six months ending June 30, 2021 and June 30, 2020, respectively.