What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-14 · 186 added, 142 removed, 472 unchanged (41% of the section changed)

1 unchanged sentence

VERDE CLEAN FUELS, INC.

CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

2025 December 31,

25 unchanged sentences

Stockholders’ equity

Class A common stock, par value $ 0.0001 per share, 22,049,621 and 9,549,621 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Class C common stock, par value $ 0.0001 per share, 22,500,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Class A common stock, par value $ 0.0001 per share, 22,049,621 and 9,549,621 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Class C common stock, par value $ 0.0001 per share, 22,500,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Additional paid in capital 62,797,055 37,502,903

3 unchanged sentences

Total liabilities and stockholders’ equity $ 68,726,638 $ 23,572,306

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

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

VERDE CLEAN FUELS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

General and administrative expenses $ 3,094,320 $ 2,988,774 $ 6,091,842 $ 5,778,150

3 unchanged sentences

Loss before income taxes ( 2,574,199 ) ( 2,845,586 ) ( 5,224,784 ) ( 5,374,669 )

Income tax expense 53,000 -

Income tax (benefit) expense ( 28,200 ) ( 13,866 ) 24,800 ( 13,866 )

Net loss $ ( 2,545,999 ) $ ( 2,831,720 ) $ ( 5,249,584 ) $ ( 5,360,803 )

5 unchanged sentences

Loss per share of Class A common stock $ ( 0.07 ) $ ( 0.14 ) $ ( 0.15 ) $ ( 0.27 )

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

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

VERDE CLEAN FUELS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Statement of Stockholders’ Equity for the Three Months Ended March 31, 2025

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended June 30, 2025

Common Class C

4 unchanged sentences

Shares Values Shares Values

Balance – December 31, 2024 9,549,621 $ 955 22,500,000 $ 2,250 $ 37,502,903 $ ( 27,257,086 ) $ 10,434,454 $ 20,683,476

Issuance of Class A common stock to Cottonmouth 12,500,000 1,250 - - 49,345,212 - - 49,346,462

Balance – March 31, 2025 22,049,621 $ 2,205 22,500,000 $ 2,250 $ 62,246,109 $ ( 28,503,797 ) $ 33,996,136 $ 67,742,903

Share-based compensation - - - - 494,959 - - 494,959

Rebalancing of ownership percentage for issuance of Class A shares - - - - ( 25,018,556 ) - 25,018,556 -

Equity offering cost adjustment - - - - 55,987 - - 55,987

Net loss - - - - - ( 1,260,130 ) ( 1,285,869 ) ( 2,545,999 )

Balance – June 30, 2025 22,049,621 $ 2,205 22,500,000 $ 2,250 $ 62,797,055 $ ( 29,763,927 ) $ 32,710,267 $ 65,747,850

Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended June 30, 2024

Common Class C

Common Additional

Capital Accumulated

Interest Total

Stockholders’

Shares Values Shares Values

Balance – March 31, 2024 9,428,797 $ 943 22,500,000 $ 2,250 $ 35,673,145 $ ( 24,695,101 ) $ 15,973,323 $ 26,954,560

Statement of Stockholders’ Equity for the Three Months Ended March 31, 2024

Conversion of restricted stock units 120,824 12 - - ( 12 ) - - -

Share-based compensation - - - - 262,627 - - 262,627

Rebalancing of ownership percentage for issuance of Class A shares - - - - 114,903 - ( 114,903 ) -

Net loss - - - - - ( 903,707 ) ( 1,928,013 ) ( 2,831,720 )

Balance – June 30, 2024 9,549,621 $ 955 22,500,000 $ 2,250 $ 36,050,663 $ ( 25,598,808 ) $ 13,930,407 $ 24,385,467

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

VERDE CLEAN FUELS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2025

Common Class C

5 unchanged sentences

Balance – December 31, 2024 9,549,621 $ 955 22,500,000 $ 2,250 $ 37,502,903 $ ( 27,257,086 ) $ 10,434,454 $ 20,683,476

Issuance of Class A common stock to Cottonmouth 12,500,000 1,250 - - 49,345,212 - - 49,346,462

Share-based compensation - - - - 911,509 - - 911,509

Rebalancing of ownership percentage for issuance of Class A shares - - - - ( 25,018,556 ) - 25,018,556 -

Equity offering cost adjustment - - - - 55,987 - - 55,987

Net loss - - - - - ( 2,506,841 ) ( 2,742,743 ) ( 5,249,584 )

Balance – June 30, 2025 22,049,621 $ 2,205 22,500,000 $ 2,250 $ 62,797,055 $ ( 29,763,927 ) $ 32,710,267 $ 65,747,850

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

VERDE CLEAN FUELS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2024

Common Class C

Common Additional

Capital Accumulated

Shares Values Shares Values Total

Stockholders’

Balance – December 31, 2023 9,387,836 $ 939 22,500,000 $ 2,250 $ 35,014,836 $ ( 23,922,730 ) $ 17,730,035 $ 28,825,330

Related party promissory note settlement 40,961 4 - - 409,608 - - 409,612

Conversion of restricted stock units 120,824 12 - - ( 12 ) - - -

Share-based compensation - - - - 511,328 - - 511,328

Rebalancing of ownership percentage for issuance of Class A shares - - - - 114,903 - ( 114,903 ) -

Net loss - - - - - ( 1,676,078 ) ( 3,684,725 ) ( 5,360,803 )

Balance – March 31, 2024 9,428,797 $ 943 22,500,000 $ 2,250 $ 35,673,145 $ ( 24,695,101 ) $ 15,973,323 $ 26,954,560

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

Balance – June 30, 2024 9,549,621 $ 955 22,500,000 $ 2,250 $ 36,050,663 $ ( 25,598,808 ) $ 13,930,407 $ 24,385,467

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

VERDE CLEAN FUELS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Cash flows from operating activities:

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Accounts receivable for reimbursement of capital expenditures (at period end) $ 1,005,698 $ 624,670

Equity issuance costs in accounts payable and accrued liabilities (at period end) $ 559,880 $ —

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

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

VERDE CLEAN FUELS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – THE COMPANY

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Basis of Presentation

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed on March 28, 2025 and are presented in conformity with accounting principles generally accepted in the United States of America (“U.S.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed on March 28, 2025 and are presented in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and pursuant to the rules and regulations of the U.S.

8 unchanged sentences

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with U.S.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of unaudited condensed consolidated financial statements in conformity with U.S.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

The most significant estimates pertain to the calculations of the fair values of equity instruments, impairment of intangible and long-lived assets and income taxes.

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The Company consolidates all entities that it controls by ownership interest or other contractual rights giving the Company control over the most significant activities of an investee.

The Company's unaudited consolidated financial statements include its subsidiaries as follows:

The Company's unaudited condensed consolidated financial statements include its subsidiaries as follows:

• Intermediate;

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Research and development expenses consist primarily of activities related to the Company’s technology that are not capitalized, including labor (engineers and consultants), engineering software costs, and demonstration plant operations and maintenance costs.

Other income is primarily related to interest and dividend income earned from the Company's cash balances and money market investments, which are included within cash and cash equivalents in the unaudited Consolidated Balance Sheets.

Cash, Cash Equivalents and Restricted Cash

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government agencies and instrumentalities.

The Company also has a restricted cash balance that is included in the determination of cash and restricted cash in the unaudited Consolidated Statements of Cash Flows.

The Company also has a restricted cash balance that is included in the determination of cash and restricted cash in the unaudited Condensed Consolidated Statements of Cash Flows.

See Note 7 for further information.

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Additionally, the Company’s investments held in a short-term money market fund are not guaranteed by the FDIC.

As of March 31, 2025 and December 31, 2024, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on such accounts.

As of June 30, 2025 and December 31, 2024, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on such accounts.

Accounts Receivable – Other

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Measurement of Credit Losses on Financial Instruments”, the Company’s accounts receivable are required to be presented at the net amount expected to be collected through an allowance for credit losses that are expected to occur over the life of the remaining life of the asset, rather than incurred losses.

The Company considers the amounts due from Cottonmouth to be fully collectible and, accordingly, there was no allowance for credit losses recorded by the Company as of March 31, 2025 and December 31, 2024.

The Company considers the amounts due from Cottonmouth to be fully collectible and, accordingly, there was no allowance for credit losses recorded by the Company as of June 30, 2025 and December 31, 2024.

Other Current Assets

As of December 31, 2024, other current assets included $ 469,612 of deferred equity issuance costs in connection with the Company’s issuance of shares of its Class A common stock to Cottonmouth in January 2025.

There were no deferred equity issuance costs as of March 31, 2025, as deferred equity issuance costs were recorded within additional paid-in capital for the three months ended March 31, 2025 as a reduction to the proceeds received from the issuance of the Class A common stock to Cottonmouth.

There were no deferred equity issuance costs as of June 30, 2025, as deferred equity issuance costs were recorded within additional paid-in capital for the six months ended June 30, 2025 as a reduction to the proceeds received from the issuance of the Class A common stock to Cottonmouth.

See Note 3 for further information.

2 unchanged sentences

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.

The fair values of cash, restricted cash, cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses are estimated to approximate their respective carrying values as of March 31, 2025 and December 31, 2024 due to the short-term maturities of such instruments.

The fair values of cash, restricted cash, cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses are estimated to approximate their respective carrying values as of June 30, 2025 and December 31, 2024 due to the short-term maturities of such instruments.

In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value.

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Diluted loss per share of Class A common stock is computed by dividing net loss attributable to Class A common stockholders by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

Antidilutive instruments, including outstanding warrants, stock options, certain restricted stock units (“RSUs”) and Sponsor earn out shares, were excluded from diluted earnings per share for the three months ended March 31, 2025 and 2024 because the inclusion of such instruments would be anti-dilutive.

Antidilutive instruments, including outstanding warrants, stock options, certain restricted stock units (“RSUs”) and Sponsor earn out shares, were excluded from diluted earnings per share for the three and six months ended June 30, 2025 and 2024 because the inclusion of such instruments would be anti-dilutive.

As a result, diluted net loss per share of common stock is the same as basic net loss per share of common stock for all periods presented.

3 unchanged sentences

For issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, they are recorded at their initial fair value on the date of issuance and are subject to remeasurement each balance sheet date with changes in the estimated fair value of the warrants to be recognized as a non-cash gain or loss in the unaudited Consolidated Statements of Operations.

See Note 9 for further information.

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The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2025 and December 31, 2024.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2025 and December 31, 2024.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

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Maintenance and repairs are charged to expense as incurred, and improvements that increase the useful life of the asset are capitalized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recorded in the accompanying unaudited Consolidated Statements of Operations in the period realized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recorded in the accompanying unaudited Condensed Consolidated Statements of Operations in the period realized.

Indefinite-Lived Intangible Assets

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Fair value is determined primarily using the estimated cash flows discounted at a rate commensurate with the risk involved.

During the three months ended March 31, 2025 and 2024, the Company did not record any impairment charges.

During the three and six months ended June 30, 2025 and 2024, the Company did not record any impairment charges.

Intangible Assets

1 unchanged sentence

In performing this analysis, macroeconomic conditions, industry and market conditions are considered in addition to current and forecasted financial performance, entity-specific events and changes in the composition or carrying amount of net assets.

During the three months ended March 31, 2025 and 2024, the Company did not record any impairment charges.

During the three and six months ended June 30, 2025 and 2024, the Company did not record any impairment charges.

The Company accounts for leases under ASC 842, “Leases” (“ASC 842”).

The core principle of this standard is that a lessee should recognize the assets and liabilities that arise from leases by recognizing in the consolidated balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset (“ROU asset”) representing the lessee’s right to use, or control the use of, the underlying asset for the lease term.

In accordance with the guidance of ASC 842, leases are classified as finance or operating leases, and both types of leases are recognized on the consolidated balance sheet.

The core principle of this standard is that a lessee should recognize the assets and liabilities that arise from leases by recognizing in the condensed consolidated balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset (“ROU asset”) representing the lessee’s right to use, or control the use of, the underlying asset for the lease term.

In accordance with the guidance of ASC 842, leases are classified as finance or operating leases, and both types of leases are recognized on the condensed consolidated balance sheet.

Certain lease arrangements may contain renewal options.

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Forfeitures of service-based and performance-based units are recognized upon the time of occurrence.

Incentive units had not and were unlikely to be met as of March 31, 2025.

As such, no share-based compensation cost was recorded for these units.

Equity-Based Awards

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In addition to stock options and RSUs, the 2023 Plan authorizes for the future potential grant of stock appreciation rights, restricted stock, performance awards, stock awards, dividend equivalents, other stock-based awards, cash awards, and substitute awards to certain employees (including executive officers), consultants and non-employee directors, and is intended to align the interests of the Company’s service providers with those of the stockholders.

Stock options represent the contingent right of award holders to purchase shares of the Company’s Class A common stock at a stated price for a limited time.

Stock options granted to employees and officers will generally vest at a rate of 25 % on each of the first, second, third and fourth anniversaries of the date of grant, subject to continued service through the vesting dates.

Stock options granted to non-employee directors will generally vest 100 % on the first anniversary of the date of grant, subject to continued service through the vesting date.

Forfeitures are recognized as they occur.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes model and the fair value of RSUs on the date of grant based on the value of the stock price on that date.

The fair value of equity instruments are subject to a discount for lack of marketability.

The cost of awarded equity instruments is recognized based on each instrument’s grant-date fair value over the period during which the grantee is required to provide service in exchange for the award.

The determination of fair value requires significant judgment and the use of estimates, particularly with regard to Black-Scholes assumptions such as stock price

volatility and expected option term.

Equity-based compensation is recorded as a general and administrative expense in the unaudited Consolidated Statements of Operations.

The Company estimates the expected term of options granted based on peer benchmarking and expectations.

The Company uses U.S.

Treasury yield curve rates for the risk-free interest rate in the option valuation model with maturities similar to the expected term of the options.

Volatility is determined by reference to the actual volatility of several publicly traded peer companies that are similar to the Company in its industry sector.

The Company does not anticipate paying cash dividends and therefore uses an expected dividend yield of zero in the option valuation model.

Forfeitures are recognized as they occur.

The Company assesses whether a discount for lack of marketability is applied based on certain liquidity factors.

All equity-based payment awards subject to graded vesting based only on a service condition are amortized on a straight-line basis over the requisite service periods.

There is substantial judgment in selecting the assumptions used to determine the fair value of such equity awards, and other companies could use similar market inputs and experience and arrive at different conclusions.

Equity-based compensation is recorded as a general and administrative expense in the unaudited Condensed Consolidated Statements of Operations.

The determination of fair value of stock options requires significant judgment and the use of estimates, particularly with regard to Black-Scholes assumptions.

The key assumptions for the Black-Scholes model include the expected term, risk-free interest rate, volatility, and dividend yield.

The Company estimates the key assumptions for the Black-Scholes model as follows:

• expected term is based on peer benchmarking and expectations;

• risk-free interest rate is based on U.S.

Treasury yield curve rates with maturities similar to the expected term;

• volatility is based on the volatility of various publicly traded peer companies.

The Company does not anticipate paying cash dividends and therefore uses an expected dividend yield of zero.

The Company also assesses whether or not a discount for lack of marketability is applied based on certain liquidity factors.

RSUs represent an unsecured right to receive one share of the Company’s Class A common stock equal to the per share value of the Class A common stock on the settlement date.

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Following the Business Combination, holders of Class A common stock own a direct controlling interest in the results of the Company, while Holdings own an economic interest in the Company, which is presented as noncontrolling interest ("NCI").

NCI is classified as permanent equity within the consolidated balance sheets.

NCI is classified as permanent equity within the condensed consolidated balance sheets.

Income or loss is attributed to NCI based on their contractual distribution rights and the relative percentages of equity interests held during the period.

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Early adoption is permitted.

The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statements.

The Company is currently evaluating the impact that ASU 2023-09 will have on its condensed consolidated financial statements.

In March 2024, the SEC issued Release No.

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33-11275 will become effective, if ever.

The Company is currently monitoring the status of Release No.

33-11275 and is evaluating the impact that the release would have on its consolidated financial statements.

requires additional disclosure about specified categories of expenses included in relevant expense captions presented on the income statement.

Furthermore, in June 2025, the SEC issued a notice that it was withdrawing several proposed rulemakings, including the SEC’s 2022 proposal titled “Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices.” The Company is currently monitoring the status of Release No.

33-11275 and is evaluating the impact that the release would have on its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses” ("ASU 2024-03"), which requires additional disclosure about specified categories of expenses included in relevant expense captions presented on the income statement.

The amendments are effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

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The Company considers the applicability and impact of all ASUs issued by the FASB.

There are no other accounting pronouncements which have been issued but are not yet effective that would have a material impact on the consolidated financial statements when adopted.

There are no other accounting pronouncements which have been issued but are not yet effective that would have a material impact on the condensed consolidated financial statements when adopted.

NOTE 3 – RELATIONSHIP WITH COTTONMOUTH AND PERMIAN BASIN PROJECT

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and is a wholly-owned subsidiary of Diamondback, an independent oil and natural gas company headquartered in Midland, Texas, focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

As of March 31, 2025, the Company and Cottonmouth are advancing development activities related to the Permian Basin Project, including the FEED study (each as defined below).

As of June 30, 2025, the Company and Cottonmouth are advancing development activities related to the Permian Basin Project, including the FEED study (each as defined below).

See Notes 1, 4, 6 and 10 for further information.

Initial Investment

In connection with the Closing of the Business Combination, the Company issued and sold to Cottonmouth 2,000,000 shares of its Class A common stock in a private placement for an aggregate purchase price of $ 20,000,000 and entered into an equity participation right agreement, dated as of February 13, 2023 ("Existing Equity Participation Right Agreement"), by and among the Company and Cottonmouth, pursuant to which Verde granted Cottonmouth the right to participate and jointly develop facilities in the Permian Basin utilizing Verde’s STG+® technology for the production of gasoline derived from economically disadvantaged natural gas feedstocks.

In connection with the Closing of the Business Combination, the Company issued and sold to Cottonmouth 2,000,000 shares of its Class A common stock in a private placement for an aggregate purchase price of $ 20,000,000 and entered into an equity participation right agreement, dated as of February 13, 2023 ("Existing Equity Participation Right Agreement"), by and among the Company and Cottonmouth, pursuant to which Verde granted Cottonmouth the right to participate and jointly develop natural gas-to-gasoline plants in the Permian Basin utilizing Verde’s STG+® technology and associated natural gas from Diamondback's operations.

Permian Basin Project

In February 2024, Verde and Cottonmouth entered into a joint development agreement (“JDA”) for the proposed development, construction, and operation of a commercial production plant to produce commodity-grade gasoline using natural gas feedstock supplied from Diamondback’s operations in the Permian Basin (the “Permian Basin Project”).

The JDA provides a pathway forward for the parties to reach final definitive documents and final investment decision (“FID”).

The JDA frames the contracts contemplated to be entered into between the parties, including an operating agreement, ground lease agreement, construction agreement, license agreement and financing agreements, as well as conditions precedent to close, such as FID.

In February 2024, Verde and Cottonmouth entered into a JDA, which provides a pathway forward for the proposed development, construction, and operation of a natural gas-to-gasoline plant in the Permian Basin utilizing Verde's STG+® technology and associated natural gas from Diamondback’s operations (the “Permian Basin Project”).

The JDA frames the contracts contemplated to be entered into between the parties and outlines the conditions precedent for the parties to enter into definitive documents and achieve final investment decision (“FID”) to proceed with the Permian Basin Project.

The JDA conditions precedent include finalizing applicable project contracts, obtaining necessary permits, obtaining project financing on terms satisfactory to each party, and receiving FID by each party.

In June 2024, the Company entered into a contract with Chemex Global, LLC (“Chemex”), a Shaw Group company (“Shaw Group”), for a front-end engineering and design (“FEED”) study related to the Permian Basin Project.

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Closing of the PIPE Investment occurred on January 29, 2025.

In connection with the closing of the PIPE Investment, on January 29, 2025, (i) Cottonmouth and the Company amended the Existing Equity Participation Right Agreement to remove certain preemptive rights with respect to the Company’s equity securities granted to Cottonmouth under the Existing Equity Participation Right Agreement and (ii) the Company entered into a second amended and restated registration rights agreement with Cottonmouth and the other parties thereto, which amended and restated that certain amended and restated registration rights agreement, dated February 15, 2023, by and among the Company and certain stockholders named therein (the “Existing Registration Rights Agreement”), to add Cottonmouth as a party to the Existing Registration Rights Agreement.

Additionally, in connection with the consummation of the transactions contemplated by the Purchase Agreement, the Company amended and restated its fourth amended and restated certificate of incorporation (the “Fourth A&R Charter” and such amended and restated Fourth A&R Charter is referred to as the “Restated Charter”).

and among the Company and certain stockholders named therein (the “Existing Registration Rights Agreement”), to add Cottonmouth as a party to the Existing Registration Rights Agreement.

In accordance with the Restated Charter, effective January 29, 2025, the Company (i) increased the number of authorized shares of Class C common stock from 25,000,000 to 26,000,000 and (ii) increased the size of its Board of Directors from seven to eight and to provide Cottonmouth with certain director designation and board observer rights.

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The Company's construction in progress assets are comprised of capitalized FEED costs, net of amounts reimbursable by Cottonmouth in accordance with the JDA.

The Company's construction in progress assets as of March 31, 2025 are comprised of capitalized FEED costs of $ 4,301,267 , net of amounts reimbursable by Cottonmouth of $ 2,783,228 .

The Company's construction in progress assets as of June 30, 2025 are comprised of capitalized FEED costs of $ 6,414,100 , net of amounts reimbursable by Cottonmouth of $ 4,168,400 .

See Note 3 for further information.

1 unchanged sentence

Accrued liabilities consist of the following:

March 31, 2025 December 31, 2024

Accrued bonus $ 467,856 $ 331,398

June 30, 2025 December 31, 2024

Accrued compensation $ 467,856 $ 331,398

Accrued construction in progress 9,043 -

1 unchanged sentence

Accrued professional fees - 68,000

Accrued income taxes 53,000 -

Accrued excise tax liability - 978,412

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The amount of the excise tax is generally 1 % of the fair market value of the shares repurchased at the time of the repurchase.

The amount of repurchases applicable to the excise tax can be reduced by the fair market value of any issuances at the time of issuance that occurred during the year, as well as certain exceptions provided by the U.S.

The amount of repurchases applicable to the excise tax can be reduced by the fair market value of any

issuances at the time of issuance that occurred during the year, as well as certain exceptions provided by the U.S.

Department of the Treasury.

Based on Congressional initiatives, it is possible that some or all of the IR Act may be subject

to amendment or repeal, including through Congressional budget reconciliation.

The Company is currently monitoring the status of any efforts to amend or repeal the IR Act.

As of December 31, 2024, the Company had recorded an accrual for excise tax liability of $ 978,412 .

During the three months ended March 31, 2025, the accrued excise tax liability was paid in full.

As of December 31, 2024, the Company had recorded an accrual for an excise tax liability of $ 978,412 .

During the six months ended June 30, 2025, the accrued excise tax liability was paid in full.

NOTE 6 – RELATED PARTY TRANSACTIONS

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Also in June 2024, the parent organization of Holdings, through a separate subsidiary, made an unrelated preferred equity investment in the Shaw Group and, in connection with the investment, Jonathan Siegler, a Company director, was appointed as a director of the Shaw Group.

Total FEED study costs incurred as of March 31, 2025, net of reimbursement from Cottonmouth, were $ 1,518,039 and are recorded to Construction in Progress within Property, Plant and Equipment, Net on the Company’s unaudited Consolidated Balance Sheets.

Total FEED study costs incurred as of June 30, 2025, net of reimbursement from Cottonmouth, were $ 2,245,700 and are recorded to Construction in Progress within Property, Plant and Equipment, Net on the Company’s unaudited Condensed Consolidated Balance Sheets.

See Notes 3 and 4 for further information.

A subsidiary of the Company is a party to a letter agreement with Five Star Clean Fuels LLC, formerly known as Arb Clean Fuels Management LLC (“Five Star”), whereby it granted Five Star certain non-exclusive rights to utilize the STG+® technology and agreed to enter into mutually acceptable to be negotiated agreements related to a potential site in Odessa, Texas.

To date, there have been no material developments with respect to this arrangement, nor has the Company received any consideration from Five Star or incurred any expense in connection therewith.

Martijn Dekker, a Company director, is an officer and director of Five Star and his affiliate has an ownership interest in Five Star.

Five Star Clean Fuels

A subsidiary of the Company is a party to a letter agreement with Five Star Clean Fuels LLC, formerly known as Arb Clean Fuels Management LLC (“FSCF”), whereby it granted FSCF certain non-exclusive rights to utilize the STG+® technology and agreed to enter into mutually acceptable to be negotiated agreements related to a potential site in Odessa, Texas.

To date, there have been no material developments with respect to this arrangement, nor has the Company received any consideration from FSCF or incurred any expense in connection therewith.

Martijn Dekker, a Company director, is an officer and director of FSCF and his affiliate has an ownership interest in FSCF.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

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Statements of Operations Three Months Ended

June 30, Six Months Ended

Lease Cost Classification 2025 2024 2025 2024

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Supplemental information related to the Company’s operating lease arrangements was as follows:

Three Months Ended

Six Months Ended

Operating lease – supplemental information 2025 2024

ROU assets obtained in exchange for operating lease $ 308,623 $ 353,162

Remaining lease term – operating lease 1.3 years 1.7 years

Discount rate – operating lease 7.50 % 7.50 %

The Company had a restricted cash balance of $ 100,000 as of March 31, 2025 and December 31, 2024.

Remaining lease term – operating leases 1.1 years 1.5 years

Discount rate – operating leases 7.50 % 7.50 %

The Company had a restricted cash balance of $ 100,000 as of June 30, 2025 and December 31, 2024.

The restricted cash balance is maintained in support of a letter of credit.

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The second half will no longer be subject to forfeiture when the VWAP of the Class A common stock is greater than or equal to $ 18.00 over the same measurement period.

Notwithstanding the forgoing, the shares of Earn Out Equity will vest in the event of a sale of the Company at a price that is equal to or greater than the applicable trigger price payable to the buyer of the Company.

The Earn Out Equity was

issued in connection with the Business Combination on February 15, 2023.

Holdings earn out shares are neither issued nor outstanding as of March 31, 2025 as the performance requirements for vesting were not achieved.

All Sponsor Shares granted in connection with the Business Combination were issued and outstanding as of March 31, 2025 and December 31, 2024.

Notwithstanding the foregoing, the shares of Earn Out Equity will vest in the event of a sale of the Company at a price that is equal to or greater than the applicable trigger price payable to the buyer of the Company.

The Earn Out Equity was issued in connection with the Business Combination on February 15, 2023.

Holdings earn out shares are neither issued nor outstanding as of June 30, 2025 as the performance requirements for vesting were not achieved.

All Sponsor Shares granted in connection with the Business Combination were issued and outstanding as of June 30, 2025 and December 31, 2024.

Sponsor Shares subject to forfeiture pursuant to the above terms that do not vest in accordance with such terms shall be forfeited.

Share-based Compensation

Compensation expense related to share-based compensation arrangements is included within general and administrative expenses.

The total compensation expense incurred related to the Company’s equity-based compensation plans was $ 416,550 and $ 248,701 for the three months ended March 31, 2025 and 2024, respectively.

As a taxable event has not occurred, there were no income tax benefits recorded for these awards for the three months ended March 31, 2025 and 2024.

The Company records compensation expense related to share-based compensation arrangements within general and administrative expenses.

The total compensation expense incurred related to the Company’s equity-based compensation plans was $ 494,959 and $ 911,509 for the three and six months ended June 30, 2025, respectively, and was $ 262,627 and $ 511,328 for the three and six months ended June 30, 2024, respectively.

No related income tax benefits were recognized during the three and six months ended June 30, 2025 and 2024.

Stock Options

Stock options represent the contingent right of award holders to purchase shares of the Company’s common stock at a stated price for a limited time.

Stock options granted to non-employee directors will generally vest 100 % on the first anniversary of the date of grant, subject to continued service through the vesting date.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes model and the following underlying assumptions.

Expected volatility was based on historical volatility for public company peers that operate in the Company’s industry.

The expected term of awards granted represents management’s estimate for the number of years until a liquidity event as of the grant date.

The risk-free rate for the period of the expected term was based on the U.S.

Treasury yield curve in effect at the time of grant.

The table below presents activity related to stock options during the three months ended March 31, 2025:

On June 2, 2025, the Company awarded additional stock options to certain employees and officers and to non-employee directors, consistent with the terms of the 2023 Plan.

The stock options granted in 2025 have an exercise price of $ 4.76 per share and will expire 7 years from the date of grant.

Stock options granted to employees and executive officers will vest at a rate of 25 % on each of the first, second, third and fourth anniversaries of the date of grant, subject to continued service through the vesting dates.

Stock options granted to non-employee directors will vest one year from the date of grant, subject to continued service through the vesting date.

The fair value of stock options granted during 2025 was $ 1.54 per option for options granted to both employees and officers and to non-employee directors.

The fair value of stock options granted in 2025 was determined using the following assumptions as of the grant date:

Risk-free interest rate 4.5 %

Expected term 3.5 years

Volatility 40 %

Dividend yield zero

Discount for lack of marketability zero

During the six months ended June 30, 2025, the Company had changes in stock options as follows:

options Weighted

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Forfeited / expired ( 163,445 ) $ 5.99 -

Outstanding as of March 31, 2025 3,224,193 $ 7.91 5.7

Unvested as of March 31, 2025 2,886,348 $ 7.60 5.8

Exercisable as of March 31, 2025 28,843 $ 5.99 0.5

There were no stock options granted during the three months ended March 31, 2025 and 2024.

As of March 31, 2025, there were 2,783,631 options granted to employees and officers outstanding, of which 2,445,786 were unvested, and 440,562 options granted to non-employee directors outstanding, all of which were unvested.

Restricted Stock Units

In April 2024, all 141,656 of RSUs outstanding were vested.

Of these vested RSUs, 120,824 were converted into an equal number of shares of the Company’s Class A common stock, and the remaining 20,832 were outstanding as of March 31, 2025, as the awardee elected to defer receipt.

Outstanding as of June 30, 2025 5,950,499 $ 6.47 6.1

Unvested as of June 30, 2025 4,497,650 $ 5.93 6.4

Exercisable as of June 30, 2025 28,843 $ 5.99 -

As of June 30, 2025, there were 4,956,240 options granted to employees and officers outstanding, of which 3,943,953 were unvested, and 994,259 options granted to non-employee directors outstanding, of which 553,697 were unvested.

See Note 2 for further information.

In April 2023, the Company granted 141,656 RSUs to non-employee directors.

In April 2024, all of the previously granted RSUs vested.

In May 2024, the Company settled 120,824 of the vested RSUs through issuance of 120,824 shares of Class A common stock.

As of June 30, 2025, the Company has not yet settled 20,832 of the vested RSUs, as the awardee elected to defer receipt.

The Company includes the vested and deferred RSUs within weighted-average shares outstanding for the computation of basic and diluted loss per share.

See Note 2 for further information.

Incentive Units

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The Holdings equity compensation instruments consist of 1,000 Series A Incentive Units and 1,000 Founder Incentive Units.

Both Series A Incentive Unit holders and Founder Incentive Unit holders are entitled to participate in the earnings of and distributions by Holdings after a specified return to the Series A Preferred Unit holders.

The Series A Incentive Unit holders are entitled to participate in the earnings of and distributions by Holdings after a specified return threshold to the Series A Preferred Unit holders has been achieved.

The Founder Incentive Unit holders are entitled to receive a certain aggregate distribution amount by Holdings after a specified aggregate distribution amount has been received by the Series A Preferred Unit holders.

The Series A Incentive Units were deemed to be service-based awards and the Founder Incentive Units were deemed to be performance-based awards.

On August 7, 2020, Holdings issued 800 Series A Incentive Units and 1,000 Founder Incentive Units to certain of Intermediate's management and employees in compensation for their services.

In connection with the Closing, all of the outstanding and unvested Series A Incentive Units and Founder Incentive Units became fully vested.

As such, the Company accelerated the remaining service-based share-based payment expense related to these awards.

The accelerated share-based payment expense was included in general and administrative expenses for the year ended December 31, 2023.

Performance conditions for the performance-based Founder Incentive Units had not and were unlikely to be met as of March 31, 2025.

As such, no share-based compensation cost was recorded for these units.

In August 2022, certain amendments were made to the Series A Incentive Units and Founder Incentive Units whereby such units would become fully vested upon completion of the Business Combination.

In connection with the Closing of the Business Combination, all of the outstanding and unvested Series A Incentive Units and Founder Incentive Units became fully vested.

For the year ended December 31, 2023, the Company accelerated the remaining share-based payment expense for the Series A Incentive Units and recorded such expense in general and administrative expenses.

For the years ended December 31, 2024 and 2023, the Company did not record additional share-based compensation expense for the Founder Incentive Units as certain conditions had not been met.

The Company continues to evaluate the conditions related to the Founder Incentive Units.

As of June 30, 2025, such conditions continue to not have been met.

See Note 6 for further information.

NOTE 9 – WARRANTS

There were 15,383,263 warrants outstanding as of March 31, 2025 (the "Warrants").

There were 15,383,263 warrants outstanding as of June 30, 2025 (the "Warrants").

Each Warrant entitles the registered holder to purchase one share of Class A common stock at a price of $ 11.50 per share, subject to adjustment as discussed below.

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If that exemption, or another exemption, is not available, holders will not be able to exercise their Warrants on a cashless basis.

In the event of such cashless exercise, each holder would pay the exercise price by surrendering the Warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” (defined below) by (y) the fair market value.

In the event of such cashless exercise, each holder would pay the exercise price by

surrendering the Warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” (defined below) by (y) the fair market value.

The “fair market value” for this purpose will mean the average reported last sale price of the shares of Class A common stock for the five trading days ending on the trading day prior to the date of exercise.

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If and when the Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

No Warrants were exercised during the three months ended March 31, 2025 and 2024.

No Warrants were exercised during the three and six months ended June 30, 2025 and 2024.

NOTE 10 – LOSS PER SHARE

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net loss attributable to Verde Clean Fuels, Inc.

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The following amounts were not included in the calculation of net loss per diluted share for the periods presented because their effects were anti-dilutive:

As of March 31,

As of June 30,

Warrants 15,383,263 15,383,263

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Stock options 5,950,499 3,019,639

RSUs (2) - 141,656

Total anti-dilutive instruments 24,568,137 21,637,277

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See Note 6 for further information.

(2) Excludes 20,832 of vested and deferred RSUs outstanding as of March 31, 2025.

(2) Excludes 20,832 of vested and deferred RSUs outstanding as of June 30, 2025.

Such shares are included within weighted-average shares outstanding for the computation of basic and diluted loss per share.

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As of December 31, 2024, the ownership interests of the Class A common stockholders and the NCI were 29.80 % and 70.20 %, respectively.

As of March 31, 2025, the ownership interests of the Class A common stockholders and the NCI were 49.49 % and 50.51 %, respectively.

The change in ownership interests was due to the issuance of Class A common stock to Cottonmouth during the three months ended March 31, 2025.

As of June 30, 2025, the ownership interests of the Class A common stockholders and the NCI were 49.49 % and 50.51 %, respectively.

The change in ownership interests was due to the issuance of Class A common stock to Cottonmouth during the six months ended June 30, 2025.

See Note 3 for further information.

NOTE 11 – INCOME TAX

As of March 31, 2025, Verde Clean Fuels, Inc.

holds 49.49 % of the economic interest in OpCo, which is treated as a partnership for U.S.

As of June 30, 2025, the Company holds 49.49 % of the economic interest in OpCo, which is treated as a partnership for U.S.

federal income tax purposes.

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federal income tax under current U.S.

Verde Clean Fuels, Inc.

is subject to U.S.

The Company is subject to U.S.

federal income taxes, in addition to state and local income taxes, with respect to its distributive share of the net taxable income (loss) and any related tax credits of OpCo.

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As such, OpCo’s distributive share of any net taxable income or loss and any related tax credits of Intermediate are then distributed to the Company.

The Company’s effective tax rate was ( 2 )% and 0 % for the three months ended March 31, 2025 and 2024, respectively.

The Company’s effective tax rate was 1.1 % and ( 0.5 )% for the three and six months ended June 30, 2025, respectively, and was 0.5 % and 0.3 % for the three and six months ended June 30, 2024, respectively.

The effective income tax rates for each period differed significantly from the statutory rate primarily due to the losses allocated to NCI and the recognition of a valuation allowance as a result of the Company’s tax structure.

The Company has assessed the realizability of its net deferred tax assets and that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The Company has maintained a full valuation allowance against its deferred tax assets as of March 31, 2025, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.

The Company has maintained a full valuation allowance against its deferred tax assets as of June 30, 2025, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.

The Company’s income tax filings will be subject to audit by various taxing jurisdictions.

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Tax Receivable Agreement

On the Closing Date, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Verde Clean Fuels entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Holdings (together with its permitted transferees, the “TRA Holders,” and each a “TRA Holder”) and the Agent (as defined in the Tax Receivable Agreement).

Pursuant to the Tax Receivable Agreement, Verde Clean Fuels is required to pay each TRA Holder 85 % of the amount of net cash savings, if any, in U.S.

federal, state and local income and franchise tax that Verde Clean Fuels actually realizes (computed using certain simplifying assumptions) or is deemed to realize in certain circumstances in periods after the Closing Date as a result of, as applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of Verde Clean Fuels’ acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holder’s Class C OpCo Units pursuant to the exercise of the OpCo Exchange Right, a Mandatory Exchange or the Call Right (each as defined in the Amended and Restated LLC Agreement of OpCo) and (ii) imputed interest deemed to be paid by Verde Clean Fuels as a result of, and additional tax basis arising from, any payments Verde Clean Fuels makes under the Tax Receivable Agreement.

Verde Clean Fuels will retain the benefit of the remaining 15 % of these net cash savings.

On the Closing Date, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Holdings (together with its permitted transferees, the “TRA Holders,” and each a “TRA Holder”) and the Agent (as defined in the Tax Receivable Agreement).

Pursuant to the Tax Receivable Agreement, the Company is

required to pay each TRA Holder 85 % of the amount of net cash savings, if any, in U.S.

federal, state and local income and franchise tax that the Company actually realizes (computed using certain simplifying assumptions) or is deemed to realize in certain circumstances in periods after the Closing Date as a result of, as applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of the Company's acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holder’s Class C OpCo Units pursuant to the exercise of the OpCo Exchange Right, a Mandatory Exchange or the Call Right (each as defined in the Amended and Restated LLC Agreement of OpCo) and (ii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the Tax Receivable Agreement.

The Company will retain the benefit of the remaining 15 % of these net cash savings.

The Tax Receivable Agreement contains a payment cap of $ 50,000,000 , which applies only to certain payments required to be made in connection with the occurrence of a change of control.

The payment cap would not be reduced or offset by any amounts previously paid under the Tax Receivable Agreement or any amounts that are required to be paid (but have not yet been paid) for the year in which the change of control occurs or any prior years.

As of March 31, 2025 and December 31, 2024, the Company did not record a tax receivable balance.

As of June 30, 2025 and December 31, 2024, the Company did not record a tax receivable balance.

NOTE 12 - SEGMENT INFORMATION

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A significant segment expense is an expense that is significant to the segment considering qualitative and quantitative factors, regularly provided or easily computed from information regularly provided to the CODM and is included in the reported measure of segment profit or loss.

The Company’s significant expenses are aggregated and presented as general and administrative and research and development financial statement line items on the unaudited Consolidated Statements of Operations.

Other segment items represent the difference between reported significant segment expenses and consolidated operating loss.

Significant segment expenses and other segment items are reviewed by the CODM on a disaggregated basis as follows:

Three Months Ended

March 31, 2025 March 31, 2024

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Outside services $ 1,041,772 $ 1,468,002 $ 2,289,389 $ 2,942,826

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NOTE 13 – SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date, up to the date which the unaudited consolidated financial statements were issued.

Based upon this review, the Company did not identify any other subsequent events, not previously disclosed, that would have required adjustment or disclosure in the unaudited consolidated financial statements .

On July 4, 2025, the “One Big, Beautiful Bill Act” ("OBBBA") was signed into federal law.

The OBBBA included multiple provisions applicable to U.S.

income tax for businesses, including bonus depreciation for qualified tangible property, immediate expensing of research expenditures, and updates to the calculation of disallowed interest.

The Company is currently evaluating the potential impact of these provisions.

Any impact to the Company's condensed consolidated financial statements would be accounted for in the period of enactment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements