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

Annual report pursuant to Section 13 and 15(d)

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2021

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. References in this document to “GCEH” refer only to Global Clean Energy Holdings, Inc.

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 nonfood feedstocks (the “Bakersfield Renewable Fuels Refinery''). The Bakersfield Renewable Fuels Refinery 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 the second half of

2022. After necessary start-up procedures and testing are complete, we expect production to be approximately 10,000 barrels per day

(“BPD”)

(420,000 gallons per day). Although the Bakersfield

Renewable Fuels Refinery

will have a nameplate capacity of 15,000

BPD

, we do not expect to produce more than 10,000

BPD

for at least the first year of production.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of GCEH. and its subsidiaries, and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). References to the “ASC” hereafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board (“FASB”) as the source of authoritative U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation.

During the year ended December 31, 2021, we identified a classification error within the total stockholders’ deficit section of the consolidated balance sheet as of December 31, 2020

related to

the fair value of a call option that was part of our purchase of the Bakersfield refinery asset on May 7, 2020. The option provides for the selling entity to acquire a non-controlling interest, up to 33,333 units of GCE Holdings Acquisitions, LLC (“GCE Acquisitions”) representing up to 33.33% of GCE Acquisitions upon the exercise of this call option. The call option was valued at $5.5 million and the full amount was originally included in additional paid-in capital on our consolidated balance sheet. Upon our review, this amount should be separately identified in the stockholders’ deficit section as non-controlling Interest. This does not impact our valuation, has no effect on our assets

liabilities

or total stockholders’ deficit

and has no impact on our consolidated loss for the year ended December 31, 2020. The Company followed ASC 810,

Contracts in Entity’s Own Equity

, regarding the presentation of the call option in presenting the amount in the consolidated financial statements for the year ended December 31, 2020 and 2021 and the reclassification in the stockholders’ deficit section of the balance sheet was not considered material to any year, including the Company’s quarterly unaudited interim condensed consolidated financial statements. The selling entity holding the call option has not exercised their right as of December 31, 2021.

Certain

reclassifications have been made within the consolidated financial statements for the prior period to conform with current presentation.

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 consolidated financial statements and footnotes have been adjusted to reflect the foregoing reverse stock split.

Restricted Cash

In accordance with the Company’s Senior Credit Facility (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

Renewable Fuels Refinery.

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

Renewable Fuels Refinery

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

from the date of purchase

to be cash

and cash

equivalents. The Company maintains cash and cash equivalents at high quality financial institutions. However, deposits exceed the federally insured limits. At December 31, 2021, the Company had approximately $22.3 million in uninsured cash.

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 December 31, 202

and December 31, 202

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. However, 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 statements of operations. Interest on borrowings related to the retrofitting of the Bakersfield

Renewable Fuels Refinery

is being capitalized, which will continue until the refinery is available for commercial use. During the years ended December 31, 2021 and December 31, 2020, $30.0 million and $10.2 million, respectively, of interest was capitalized and is included in property, plant and equipment, net, for a total of $40.2 million of capitalized interest for the project.

Long-Lived Assets

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 year ended December 31, 202

and 202

, there were no impairment losses recognized on

long-lived assets.

Goodwill and Indefinite Lived Assets

The Company’s indefinite lived assets consist of, Goodwill and trade names. 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.

We have one reporting unit. The first step in our annual goodwill assessment is to perform the optional qualitative assessment allowed by ASC Topic 350, “

Intangibles - Goodwill and Other

” (“ASC 350”). In our qualitative assessment, we evaluate relevant events or circumstances to determine whether it is more likely than not (i.e., greater than 50%) that the fair value of a reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, ASC 350 requires us to compare the fair value of such reporting unit to its carrying value including goodwill. We performed a qualitative assessment of the reporting unit and concluded that there were no indicators of potential impairment and, therefore, no additional testing was needed.

The other indefinite lived assets were separately identified intangible assets apart from goodwill. These separately identified assets with indefinite lives are not amortized and instead are tested annually for impairment, or more frequently if events or circumstances indicate a likely impairment.

Debt Issuance Costs

Debt issuance costs primarily relate to financing related to fund the costs of retrofitting the Bakersfield Renewable Fuels Refinery and are amortized over the term of the loan as interest under the effective interest method: however, as such interest primarily relates to retrofitting of the refinery, these costs are being capitalized as part of the refinery until the renewable fuels refinery is placed in service. The amortization of the debt issuance costs that are not capitalized are recorded as interest expense. At December 31, 2021 and December 31, 2020, unamortized debt issuance costs related to the Senior Credit Facility and Bridge Loan (see Note E) are classified as a direct deduction from the carrying amount of each 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 at December 31. 2021. See Note E - Debt for more detail on the financing.

Accrued Liabilities

As of December 31, 2021 and December 31, 2020, accrued liabilities consists of:

	As of December 31, 2021		As of December 31, 2020
Accrued compensation and related liabilities		3,818,701		3,034,688
Accrued interest payable		1,857,343		2,093,649
Accrued construction costs		27,045,738		-
Other accrued liabilities		3,677,671		3,146,478
Current portion of asset retirement obligations		2,530,000		3,716,000
Current portion of environmental liabilities		1,339,550		883,000
	$	40,269,003	$	12,873,815

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

Renewable Fuels Refinery

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. 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 years ended December 31, 2021 and December 31, 2020.

	Year ended December 31, 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		(2,265,557	)		(135,000	)
Accretion		978,009			652,000
Revised obligation estimates		-			(940,000	)
Asset retirement obligations - end of period	$	20,191,429		$	21,478,977

The amounts shown as of December 31, 2021 and December 31, 2020, include $2.5 million and $3.7 million, respectively, which have been classified as current liabilities and included in accrued liabilities and $17.7 million and $17.8 million, respectively which have been classified as long-term liabilities as of December 31, 2021 and December 31, 2020, respectively.

Advances to Contractors

Upon the acquisition of the Bakersfield

Renewable Fuels Refinery

, 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.

During

June 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 December 31, 2021, reductions of $7.8 million to the contractor advance have been made, resulting in $10.0 million reflected as advance

to contractor

as of December 31, 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

December 31, 2021

and December 31, 2020

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606,

“

Revenue From Contracts With Customers

”

, using th

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 $0.2 million in revenues during the year ended December 31, 2021 and had no comparable sales in the year ended December 31, 2020. The Company is engaged in contracting with farmers to grow Camelina grain that will be processed into oil for use in Bakersfield

Renewable Fuels Refinery

. The Company will recognize revenues upon the sale of its i) certified Camelina seed to farmers ii) the crushed Camelina meal that it plans to sell to third-party livestock and poultry operators, and iii) any Camelina oil that is sold outside of the consolidated group. 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 renewable diesel and products

sometime in the second half of

2022.

Research and Development

Research and development costs are charged to operating expenses when incurred, which were nominal for the years ended December 31, 2021 and December 31, 2020.

Fair Value Measurements and Fair Value of Financial Instruments

As of December 31, 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, 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. Additionally, as further described below, the Company recognized a liability for a warrant commitment to its Senior Lenders as part of a debt modification included in its executed Amendment No.6 to its Senior Credit Facility, which is reported at fair value. The Senior Credit Facility is a long-term fixed rate debt instrument which has a carrying amount that is

approximately at

fair value

based on a comparison of recently completed

market

transactions.

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:

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 derivative liability discussed herein was derecognized in the first quarter of 2020, and the Company had no derivative assets or liabilities at December 31, 2021 and December 31, 2020.

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

On December 20, 2021, the Company executed Amendment No. 6 to the Senior Credit Facility whereby the Company agreed to issue warrants covering 5,017,008 shares of common stock of GCEH at an exercise price to be determined based on a market pricing mechanism upon the completion of the Series C Financing

(See Note B)

for a term of five years from that date (the “Warrant Commitment Liability”). The Warrant Commitment Liability was in consideration for i) the 1%, or $4.1 million, consent premium payable from an earlier amendment to the Senior and Mezzanine Credit Facilities, ii) the Bridge Loan, and iii) as additional creditor fees for forbearance to the Senior Lenders and Mezzanine Lenders. Such creditor fees were recorded as additional debt discount. The Company recognized a Warrant Commitment Liability as a freestanding instrument that is classified as a liability under ASC 480, “

Distinguishing Liabilities From Equity”

, as the commitment to issue the warrants represents a variable share settlement where the warrants to be issued to the Senior Lenders vary based on occurrence of the Exxon Funding Event (see Note B). This Warrant Commitment Liability was initially recognized at fair value and is measured at fair value at each reporting date until settled with changes in fair value recognized in earnings in other income (expense).

The following is the recorded fair value of the Class B Units and the Warrant Commitment

Liability

as of December 31, 2021 and December 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	$	21,628,689	$	21,628,689	$	-	$	-	$	21,628,689
Warrant Commitment Liability		19,215,140		19,215,140						19,215,140

	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	$	5,123,000	$	5,123,000			$	5,123,000
Warrant Commitment Liability		-		-				-

The following presents changes in the Class B Units for the years ending December 31, 2021 and December 31, 2020:

	Year ended December 31, 2021		Year ended December 31, 2020
Beginning Balance	$	5,123,000	$	-
New unit issuances		10,422,413		3,101,344
Change in fair value recognized in earnings		6,083,276		2,021,656
Ending Balance	$	21,628,689	$	5,123,000

The following presents changes in the Warrant Commitment

Liability

for the years ending December 31, 2021 and December 31, 2020:

	Year ended December 31, 2021		Year ended December 31, 2020
Beginning Balance	$	-	$	-
Value at establishment		16,004,255		-
Change in fair value recognized in earnings		3,210,885		-
Ending Balance	$	19,215,140	$	-

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 and the Warrant Commitment Liability issued to the Company’s lenders under the Senior Credit Facility, and f) the fair value of the consideration for acquisitions and the fair value of the assets acquired and liabilities assumed. It is reasonably possible that the significant estimates used will change within the next year.

Income/Loss Per Common Share

Income/Loss per Common Share

Income/Loss per share amounts are computed by dividing income or loss applicable to the common 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, options, and convertible notes and accrued interest 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

potentially

dilutive for the years ended December 31, 2021 and December 31, 2020 that were excluded from diluted earnings per share as they would have been

anti-dilutive

	Year ended December 31, 2021		Year ended December 31, 2020
Convertible notes and accrued interest		7,535,173		10,214,164
Convertible preferred stock - Series B		-		1,181,819
Stock options and warrants		19,567,360		19,317,714

The table above does not include the warrants that will be issued to the Senior Lenders as described in Note B.

Stock Based Compensation

The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. 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. Forfeitures are accounted for as incurred.

Recent Accounting Pronouncements

On December 18, 2019, the FASB issued ASU 2019-12, which affects general principles within ASC 740,

Income Taxes

. The ASU removes the following exceptions: (1) incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and (4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The ASU also will make changes to franchise tax recognition, consideration of the tax basis recognition of goodwill related to acquisitions, specify tax allocation to subsidiaries, reflecting a change in tax law in the interim period, annual effective tax rate computation in the period of enactment, and changes to the employee stock ownership plans and investments. For public business entities, the amendments in ASU 2019-12 are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The

Company adopted

ASU 2019-12

on January 1, 2021 and it

did not have a material impact on the Company’s consolidated financial statements.

In August, 2020, the FASB issued ASU 2020-06, which reduces the complexity of the accounting for convertible debt instruments and its effect on earnings per share calculation. The guidance reduces the number of accounting models used for convertible debt instruments, which will result in fewer embedded conversion features being recognized separately from the original contract. This will also affect the guidance associated with convertible debt for earnings-per-share by requiring the if-converted method rather than the treasury stock method, requiring that potential share settlement be included in the calculation of diluted earnings per share and clarifying that an entity should use the weighted-average share count from each quarter when calculating the year-to-date weighted-average share count. For public business entities, the amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2021, including interim periods within those years, and early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods within those years. The Company is evaluating the impact of the guidance on its consolidated financial statements, but does not expect the impact to be material.

In October, 2021, the FASB issued ASU 2021-08, which updates the guidance related to the acquisition of revenue contracts in a business combination. The new guidance requires that the acquiring entity recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date the acquirer should recognize the contract assets and liabilities under Topic 606 as they would have been recognized at contract origination rather than at fair value at the time of the acquisition. The intent is to create more comparability of recognition and measurement of the acquired contracts in business combinations. For public business entities, the amendments in ASU 2021-08 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its consolidated finance statements.

In November, 2021, the FASB issued ASU 2021-10, which requires business entities to provide certain disclosures when they (1) have received government assistance and (2) use a grant or contribution accounting model by analogy to other accounting guidance. The guidance will require business entities to disclose the nature of the transactions, accounting policies used to account for the transactions, and state which line items on the balance sheet and income statement are affected by these transactions and the amount applicable to each financial statement line. Business entities will also have to disclose significant terms and conditions of transactions with a government such as the duration of the agreement, any commitments made by either side, provisions, and contingencies. The guidance in ASU 2021-10 is effective for all entities for fiscal years beginning after December 15, 2021. Entities may apply the provision either (1) prospectively to all transactions within the scope of ASC 832 that are reflected in the financial statements as of the adoption date and all new transactions entered into after the date of adoption or (2) retrospectively. Early adoption is permitted. The Company is still evaluating the impact of the guidance on its consolidated financial statements.

Subsequent Events

Where applicable, the notes to these consolidated financial statements have been updated to discuss all significant subsequent events which have occurred through the date of issuance of the consolidated financial statements.