What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-13 compared with 2023-08-14 · 539 added, 611 removed, 486 unchanged (70% of the section changed)

Financial Statements

VERDE CLEAN FUELS, INC.

CONSOLIDATED BALANCE SHEETS

CLEAN FUELS, INC.

BALANCE SHEETS

September 30,

Current assets:

9 unchanged sentences

Operating lease right-of-use assets, net

Finance lease right-of-use assets, net

Intellectual patented technology

5 unchanged sentences

Operating lease liabilities – current portion

Finance lease liabilities – current portion

Notes payable – insurance premium financing

4 unchanged sentences

Contingent consideration

Other accrued expenses – long term

Operating lease liabilities

Finance lease liabilities – long term

Total non-current liabilities

Total liabilities

Commitments and Contingencies (see Note 5)

Stockholders’ equity

Intermediate Member’s Equity

Class A common stock, par value $ 0.0001 per share, 9,387,836 shares issued and outstanding as of June 30, 2023

Class C common stock, par value $ 0.0001 per share, 22,500,000 shares issued and outstanding as of June 30, 2023

Class A common stock, par value $ 0.0001 per share, 9,387,836 shares issued and outstanding as of September 30, 2023

Class C common stock, par value $ 0.0001 per share, 22,500,000 shares issued and outstanding as of September 30, 2023

Additional paid in capital

5 unchanged sentences

Total liabilities and stockholders’ equity

The accompanying notes to the unaudited consolidated

financial statements are an integral part of these statements.

VERDE CLEAN FUELS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

CLEAN FUELS, INC.

STATEMENTS OF OPERATIONS

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

General and administrative expenses

5 unchanged sentences

Total Operating (income) loss

( 4,347,748 )

( 3,600,180 )

Other (income)

Interest Expense

Loss (income) before income taxes

( 4,347,748 )

( 3,600,180 )

Provision for income taxes

2 unchanged sentences

$ ( 8,299,479 )

$ ( 747,568 )

Net income (loss) attributable to noncontrolling interest

4 unchanged sentences

$ ( 2,096,801 )

$ ( 747,568 )

Earnings per share

1 unchanged sentence

Loss per Share of Class A common stock

The accompanying notes to the unaudited consolidated

financial statements are an integral part of these statements.

VERDE CLEAN FUELS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

Statement of Stockholders’ Equity for the Three months ended

June 30, 2023

Class A Common

Class C Common

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

CLEAN FUELS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

of Stockholders’ Equity for the Three months ended September 30, 2023

Stockholders’

Balance - March 31, 2023

Balance – June 30, 2023

$ ( 22,502,750 )

Stock-based compensation

Warrant exercise

Net income (loss)

Balance – June 30, 2023

Statement of Stockholders’ Equity for the Six months ended

June 30, 2023

Class A Common

Class C Common

( 1,858,910 )

( 2,632,102 )

Balance – September 30, 2023

$ ( 23,275,942 )

of Stockholders’ Equity for the Nine months ended September 30, 2023

Stockholders’

7 unchanged sentences

( 3,272,392 )

( 1,103,365 )

Recapitalization transaction

9 unchanged sentences

( 6,202,679 )

Balance – September 30, 2023

$ ( 23,275,942 )

of Member’s Equity for the Three Months Ended September 30, 2022

Balance – June 30, 2022

$ ( 15,139,398 )

Statement of Member’s Equity for the Three Months Ended June

Balance - March 31, 2022

$ ( 4,055,518 )

$ ( 6,359,240 )

Capital contribution

Unit-based compensation expense

Balance June 30, 2022

$ ( 15,139,398 )

Balance September 30, 2022

$ ( 10,791,650 )

Statement of Member’s Equity for the Six Months Ended June

of Member’s Equity for the Nine Months Ended September 30, 2022

Balance – December 31, 2021

3 unchanged sentences

Unit-based compensation expense

Balance June 30, 2022

$ ( 15,139,398 )

Balance September 30, 2022

$ ( 10,791,650 )

The accompanying notes to the unaudited consolidated financial

statements are an integral part of these statements.

VERDE CLEAN FUELS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

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

CLEAN FUELS, INC.

STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

Cash flows from operating activities:

$ ( 5,667,377 )

Net (loss) income

$ ( 8,299,479 )

8 unchanged sentences

Prepaid expenses

( 1,001,239 )

Accounts payable

Accrued liabilities

Security deposits

Income taxes payable

Other changes in operating assets and liabilities

Operating lease liabilities

3 unchanged sentences

Cash flows from investing activities

Purchases of property, equipment and improvements

Purchases of property, plant and equipment

Net cash used in investing activities

8 unchanged sentences

Repayments of the principal portion of finance lease liabilities

Deferred transaction costs

Deferred financing costs

7 unchanged sentences

Supplemental cash flows

Income tax payable (non-cash)

Non-cash income tax payable and deferred tax liability obtained from CENAQ

Non-cash impact of debt issuance through the business combination

Accrued deferred transaction costs

The accompanying notes to the unaudited consolidated

financial statements are an integral part of these statements.

VERDE CLEAN FUELS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION

Verde Clean Fuels, Inc.

(the “Company”

or “Verde Clean Fuels”) is a renewable energy company specializing in the conversion of synthesis gas, or syngas, derived

from diverse feedstocks, such as biomass, municipal solid waste (“MSW”) and mixed plastics, as well as natural gas (including

synthetic natural gas) and other feedstocks, into liquid hydrocarbons that can be used as gasoline through an innovative and proprietary

liquid fuels technology, the STG+® process.

Through Verde Clean Fuels’ STG+® process, Verde Clean Fuels converts syngas

into Reformulated Blend-stock for Oxygenate Blending (“RBOB”) gasoline.

Verde Clean Fuels is focused on the development

of technology and commercial facilities aimed at turning waste and other bio-feedstocks into a usable stream of syngas which is then transformed

into a single finished fuel, such as gasoline, without any additional refining steps.

The availability of biogenic MSW and the economic

and environmental drivers that divert these materials from landfills will enable us to utilize these waste streams to produce renewable

gasoline from modular production facilities.

On February 15, 2023 (the “Closing Date”),

Verde Clean Fuels finalized a business combination (“Business Combination”) pursuant to that certain business combination

agreement, dated as of August 12, 2022 by and among CENAQ Energy Corp.

(“CENAQ”), Verde Clean Fuels OpCo, LLC, a Delaware

limited liability company and a wholly owned subsidiary of CENAQ (“OpCo”), Bluescape Clean Fuels Holdings, LLC, a Delaware

limited liability company (“Holdings”), Bluescape Clean Fuels Intermediate Holdings, LLC, a Delaware limited liability company

(“Intermediate”), and CENAQ Sponsor LLC (“Sponsor”).

Immediately upon the completion of the Business Combination,

CENAQ was renamed to Verde Clean Fuels, Inc.

The Business Combination is discussed further in Note 3.

Following the completion of the Business Combination,

the combined company is organized in an “Up-C” structure and the only direct assets of the Company, consists of equity interests

in OpCo, whose only direct assets consists of equity interests in Intermediate.

Immediately following the Business Combination, Verde

Clean Fuels is the sole manager of and controls OpCo.

As of the year ended December 31, 2022, prior

to the Business Combination, and up to the transaction close on February 15, 2023, Verde Clean Fuels, previously CENAQ Energy Corp., was

a special purpose acquisition company (“SPAC”) incorporated for the purpose of effecting a merger, share exchange, asset acquisition,

share purchase, reorganization or similar business combination with one or more businesses.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements

should be read in conjunction with the audited financial statements of Intermediate included in the Current Report on Form 8-K/A filed

on April 7, 2023 and are presented in conformity with accounting principles generally accepted in the United States of America (“US

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

Securities and Exchange Commission (“SEC”).

opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly

the financial position, and the results of its operations and its cash flows.

The results of operations for an interim period may not

give a true indication of results for a full year.

The Company’s management does not believe

that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying

financial statements.

Risks and uncertainties

The Company is currently in the development stage

and has not yet commenced principal operations or generated revenue.

The development of the Company’s projects are subject to a

number of risks and uncertainties including, but not limited to, the receipt of the necessary permits and regulatory approvals, commodity

price risk impacting the decision to go forward with the projects, the availability and ability to obtain the necessary financing for

the construction and development of projects.

Use of Estimates

The preparation of financial statements in conformity

with US 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 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 financial statements, which management considered in formulating its estimate, could change in the near

term due to one or more future confirming events.

Such estimates may be subject to change as more current information becomes

Non-cash deferred transaction costs

Non-cash deferred financing costs

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

CLEAN FUELS, INC.

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION

Clean Fuels, Inc.

(the “Company” or “Verde Clean Fuels”) is a renewable energy company specializing in the conversion

of synthesis gas, or syngas, derived from diverse feedstocks, such as biomass, municipal solid waste (“MSW”) and mixed plastics,

as well as natural gas (including synthetic natural gas) and other feedstocks, into liquid hydrocarbons that can be used as gasoline

through an innovative and proprietary liquid fuels technology, the STG+® process.

Through Verde Clean Fuels’ STG+® process,

Verde Clean Fuels converts syngas into Reformulated Blend-stock for Oxygenate Blending (“RBOB”) gasoline.

Fuels is focused on the development of technology and commercial facilities aimed at turning waste and other bio-feedstocks into a usable

stream of syngas which is then transformed into a single finished fuel, such as gasoline, without any additional refining steps.

availability of biogenic MSW and the economic and environmental drivers that divert these materials from landfills will enable us to

utilize these waste streams to produce renewable gasoline from modular production facilities.

February 15, 2023 (the “Closing Date”), Verde Clean Fuels finalized a business combination (the “Business Combination”)

pursuant to that certain business combination agreement, dated as of August 12, 2022 by and among CENAQ Energy Corp.

Verde Clean Fuels OpCo, LLC, a Delaware limited liability company and a wholly owned subsidiary of CENAQ (“OpCo”), Bluescape

Clean Fuels Holdings, LLC, a Delaware limited liability company (“Holdings”), Bluescape Clean Fuels Intermediate Holdings,

LLC, a Delaware limited liability company (“Intermediate”), and CENAQ Sponsor LLC (“Sponsor”).

Immediately upon

the completion of the Business Combination, CENAQ was renamed to Verde Clean Fuels, Inc.

The Business Combination is discussed further

the completion of the Business Combination, the combined company is organized in an “Up-C” structure and the only direct

assets of the Company, consists of equity interests in OpCo, whose only direct assets consists of equity interests in Intermediate.

following the Business Combination, Verde Clean Fuels is the sole manager of and controls OpCo.

of the year ended December 31, 2022, prior to the Business Combination, and up to the transaction close on February 15, 2023, Verde Clean

Fuels, previously CENAQ Energy Corp., was a special purpose acquisition company (“SPAC”) incorporated for the purpose of

effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited consolidated financial statements should be read in conjunction with the audited financial statements of Intermediate

included in the Current Report on Form 8-K/A filed on April 7, 2023 and are presented in conformity with accounting principles generally

accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S.

and Exchange Commission (the “SEC”).

In the opinion of management, all adjustments (consisting of normal recurring adjustments)

have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows.

results of operations for an interim period may not give a true indication of results for a full year.

Company’s management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted

would have a material effect on the accompanying consolidated financial statements.

and uncertainties

Company is currently in the development stage and has not yet commenced principal operations or generated revenue.

The development of

the Company’s projects are subject to a number of risks and uncertainties including, but not limited to, the receipt of the necessary

permits and regulatory approvals, commodity price risk impacting the decision to go forward with the projects, the availability and ability

to obtain the necessary financing for the construction and development of projects.

preparation of financial statements in conformity with US 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 financial

statements and the reported amounts of revenues and expenses during the reporting period.

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 financial statements, which management considered in formulating

its estimate, could change in the near term due to one or more future confirming events.

Such estimates may be subject to

change as more current information becomes available.

Accordingly, the actual results could differ significantly from those estimates.

Principles of Consolidation

The Company’s policy is to consolidate all

entities that the Company controls by ownership interest or other contractual rights giving the Company control over the most significant

activities of an investee.

The consolidated financial statements include the accounts of Verde Clean Fuels, and its subsidiaries OpCo,

Intermediate, Bluescape Clean Fuels Employee Holdings, LLC, Bluescape Clean Fuels EmployeeCo., LLC, Bluescape Clean Fuels, LLC, and Maricopa

Renewable Fuels I, LLC.

All intercompany balances and transactions have been eliminated in consolidation.

Cash Equivalents

The Company considers all short-term investments

with an original maturity of three months or less when purchased to be cash equivalents.

The Company has a restricted cash balance

of $ 100,000 as of June 30, 2023 for a letter of credit which is included in the determination of cash and restricted cash in the

Consolidated Statements of Cash Flows.

There were no other cash equivalents as of June 30, 2023, or December 31, 2022.

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal

Depository Insurance Corporation limit of $ 250,000 .

As of June 30, 2023, the Company has not experienced losses on these accounts and

management believes the Company is not exposed to significant risks on such accounts.

Fair Value of Financial Instruments

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 its short-term nature.

In determining fair value, the valuation techniques

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

ASC 820 establishes a

fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability.

inputs are further defined as observable and unobservable inputs.

Observable inputs are those that buyer and seller would use in pricing

the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs reflect the Company’s

assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information

available in the circumstances.

The fair value hierarchy is categorized into three

levels based on the inputs as follows:

Level 1 — Valuations based on

unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Valuation adjustments

and block discounts are not being applied.

Since valuations are based on quoted prices that are readily and regularly available in an

active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 — Valuations based on

(i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for

identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived

principally from or corroborated by market through correlation or other means.

Level 3 — Valuations based

on inputs that are unobservable and significant to the overall fair value measurement.

of Consolidation

Company’s policy is to consolidate all entities that the Company controls by ownership interest or other contractual rights giving

the Company control over the most significant activities of an investee.

The consolidated financial statements include the accounts of

Verde Clean Fuels and its subsidiaries:

OpCo, Intermediate, Bluescape Clean Fuels Employee Holdings, LLC, Bluescape Clean Fuels EmployeeCo.,

LLC, Bluescape Clean Fuels, LLC, and Maricopa Renewable Fuels I, LLC.

All intercompany balances and transactions have been eliminated

in consolidation.

Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company has a restricted cash balance of $ 100,000 as of September 30, 2023 for a letter of credit, which is included in the

determination of cash and restricted cash in the Consolidated Statements of Cash Flows.

There were no other cash equivalents as of September

30, 2023 or December 31, 2022.

Concentration

of Credit Risk

instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,

which, at times, may exceed the Federal Depository Insurance Corporation limit of $ 250,000 .

As of September 30, 2023, the Company has

not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Value of Financial Instruments

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 its short-term nature.

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

to measure fair value.

ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer

and seller in pricing the asset or liability.

These inputs are further defined as observable and unobservable inputs.

Observable inputs

are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of

Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing

the asset or liability developed based on the best information available in the circumstances.

fair value hierarchy is categorized into three levels based on the inputs as follows:

— Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has

the ability to access.

Valuation adjustments and block discounts are not being applied.

Since valuations are based on quoted prices that

are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

— Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices

in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities,

or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.

Level 3 — Valuations

based on inputs that are unobservable and significant to the overall fair value measurement.

The fair value of certain of the Company’s

2 unchanged sentences

The fair values of cash, prepaid expenses, and accrued expenses are estimated to approximate the carrying values as of

June 30, 2023, and December 31, 2022, due to the short maturities of such instruments.

Net Loss Per Common Stock

Subsequent to the Business Combination, the Company’s

capital structure is comprised of shares of Class A common stock, par value $ 0.0001 per share (the “Class A common stock”)

and shares of Class C common stock, par value $ 0.0001 per share (the “Class C common stock”).

Public shareholders, the Sponsor,

and the investors in the private offering of securities of Verde Clean Fuels in connection with the Business Combination (the “PIPE

Financing”) hold shares of Class A common stock and warrants, and Holdings owns shares of Class C common stock and Class C units

of OpCo (the “Class C OpCo Units”).

Class C common stock represents the right to cast one vote per share at the Verde Clean

Fuels level, and carry no economic rights, including rights to dividends and distributions upon liquidation.

Thus, Class C common stock

are not participating securities per ASC 260, “Earnings Per Share” (“ASC 260”).

As the Class A common stock represent

the only participating securities, the application of the two-class method is not required.

Antidilutive instruments including outstanding

warrants, stock options, restricted stock units (“RSUs”) and earn out shares were excluded from diluted earnings per share

for the three and six-months ended June 30, 2023, because certain of those instruments are contingently exercisable where the contingencies

have not yet been met, and the inclusion of such instruments would be anti-dilutive.

As a result, diluted net loss per common stock is

the same as basic net loss per common stock for the periods.

The Company accounts for warrants as either equity-classified

or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance

in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and

Hedging” (“ASC 815”).

Management’s assessment considers whether the warrants are freestanding financial instruments

pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements

for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether

the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,

among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the

time of warrant issuance and as of each subsequent quarterly period-end date while the warrants are outstanding.

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.

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 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 statement of operations.

Operating segments are defined as components of

an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”)

in deciding how to allocate resources to an individual segment and in assessing performance.

The Company’s CODM is its Chief Executive

Officer (“CEO”).

The Company has determined that it operates in one operating segment, as the CODM reviews financial information

presented on a combined basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

The Company follows the asset and liability method

of accounting for income taxes under ASC 740, “Income Taxes (“ASC 740”).

Deferred tax assets and liabilities are

recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of

existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates

expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment

The Company has elected to use the outside basis approach to measure the deferred tax assets or liabilities based on its investment

in its subsidiaries without regard to the underlying assets or liabilities.

In assessing the realizability of deferred tax

assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which

those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future

taxable income, and tax planning strategies in making this assessment.

ASC 740 prescribes a recognition threshold

and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in

a tax return.

For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing

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

no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2023 and December 31, 2022.

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

The Company is subject to income tax examinations by major taxing authorities since inception.

Reverse recapitalization

The Business Combination was accounted for according

to a common control reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with US GAAP.

determination reflects Holdings holding a majority of the voting power of Intermediate’s pre and post Business Combination operations

and Intermediate’s management team retaining similar roles at Verde Clean Fuels.

Further, Holdings continues to have control of

the Board of Directors through its majority voting rights.

Under the guidance in ASC 805, “Business

Combinations” (“ASC 805”), for transactions between entities under common control, the assets, liabilities and noncontrolling

interests of CENAQ and Intermediate are recognized at their carrying amounts on the date of the business combination.

Under this method

of accounting, CENAQ is treated as the “acquired” company for financial reporting purposes.

Accordingly, for accounting purposes,

the business combination is treated as the equivalent of Intermediate issuing stock for the net assets of CENAQ, accompanied by a recapitalization.

The net assets of Intermediate are stated at their historical value within the financial statements with no goodwill or other intangible

assets recorded.

Property, Equipment, and Improvements

Property, equipment, and improvements are stated

at cost, less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful life of the

related asset.

September 30, 2023, and December 31, 2022, due to the short maturities of such instruments.

Loss Per Common Stock

to the Business Combination, the Company’s capital structure is comprised of shares of Class A common stock, par value $ 0.0001

per share (the “Class A common stock”) and shares of Class C common stock, par value $ 0.0001 per share (the “Class

C common stock”).

Public shareholders, the Sponsor, and the investors in the private offering of securities of Verde Clean Fuels

in connection with the Business Combination (the “PIPE Financing”) hold shares of Class A common stock and warrants, and

Holdings owns shares of Class C common stock and Class C units of OpCo (the “Class C OpCo Units”).

Class C common stock represents

the right to cast one vote per share at the Verde Clean Fuels level, and carry no economic rights, including rights to dividends and

distributions upon liquidation.

Thus, Class C common stock are not participating securities per ASC 260, “Earnings Per Share”

As the Class A common stock represent the only participating securities, the application of the two-class method

is not required.

instruments including outstanding warrants, stock options, restricted stock units (“RSUs”) and earn out shares were excluded

from diluted earnings per share for the three and nine-months ended September 30, 2023, because the inclusion of such instruments would

be anti-dilutive.

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

Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s

specific terms and the applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC

480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”).

Management’s assessment considers

whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant

to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants

are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires

the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period-end date while

the warrants are outstanding.

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 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 statement of operations.

segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed

by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing

The Company’s CODM is its Chief Executive Officer (“CEO”).

The Company has determined that it operates

in one operating segment, as the CODM reviews financial information presented on a combined basis for purposes of making operating decisions,

allocating resources, and evaluating financial performance.

Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes (“ASC 740”).

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the

financial statements carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected

to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the

period that included the enactment date.

The Company has elected to use the outside basis approach to measure the deferred tax assets

or liabilities based on its investment in its subsidiaries without regard to the underlying assets or liabilities.

assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all

of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of

future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions

taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely than not to be

sustained upon examination by taxing authorities.

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 September 30,

2023 and December 31, 2022.

The Company is currently not aware of any issues under review that could result in significant payments,

accruals or material deviation from its position.

The Company is subject to income tax examinations by major taxing authorities since

recapitalization

Business Combination was accounted for according to a common control reverse recapitalization, with no goodwill or other intangible assets

recorded, in accordance with US GAAP.

This determination reflects Holdings having a majority of the voting power of Intermediate’s

pre and post Business Combination operations and Intermediate’s management team retaining similar roles at Verde Clean Fuels.

Holdings continues to have control of the Board of Directors through its majority voting rights.

the guidance in ASC 805, “Business Combinations” (“ASC 805”), for transactions between entities under common

control, the assets, liabilities and noncontrolling interests of CENAQ and Intermediate are recognized at their carrying amounts on the

date of the business combination.

Under this method of accounting, CENAQ is treated as the “acquired” company for financial

reporting purposes.

Accordingly, for accounting purposes, the business combination is treated as the equivalent of Intermediate issuing

stock for the net assets of CENAQ, accompanied by a recapitalization.

The net assets of Intermediate are stated at their historical value

within the consolidated financial statements with no goodwill or other intangible assets recorded.

Plant and Equipment

plant and equipment are stated at cost, less accumulated depreciation.

Depreciation is computed using the straight-line method over the

estimated useful life of the related asset.

The estimated useful lives of assets are as follows:

Computers, office equipment and hardware

Computers, office equipment and

Furniture and fixtures

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Shorter of the lease term (including estimated renewals) or the estimated useful lives of the improvement

Maintenance and repairs are charged to expense

as incurred, and improvements 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 reflected in the accompanying statements of operations in the period

Accrued Liabilities

Accrued liabilities consist of the following:

and repairs are charged to expense as incurred, and improvements 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 reflected in the accompanying statements

of operations in the period realized.

liabilities consist of the following:

September 30,

Accrued bonuses

2 unchanged sentences

Other accrued expenses

The Company accounts for leases under ASU 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 its right to use 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.

Certain lease arrangements

may contain renewal options.

Renewal options are included in the expected lease term only if they are reasonably certain of being exercised

by the Company.

The Company elected the practical expedient to

not separate non-lease components from lease components for real-estate lease arrangements.

The Company combines the lease and non-lease

component into a single accounting unit and accounts for the unit under ASC 842 where lease and non-lease services are included in the

classification of the lease and the calculation of the right-of-use asset and lease liability.

In addition, the Company has elected the

practical expedient to not apply lease recognition requirements to leases with a term of one year or less.

Under this expedient, lease

costs are not capitalized;

accrued expenses as of the period ended September 30, 2023 consist primarily of an excise tax payment of $ 1.6 million due in April 2024,

due to redemptions of Common A shares in connection with the Business Combination that closed on February, 15, 2023.

Company accounts for leases under ASU 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 its right to use 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.

lease arrangements may contain renewal options.

Renewal options are included in the expected lease term only if they are reasonably certain

of being exercised by the Company.

Company elected the practical expedient to not separate non-lease components from lease components for real-estate lease arrangements.

The Company combines the lease and non-lease component into a single accounting unit and accounts for the unit under ASC 842 where lease

and non-lease components are included in the classification of the lease and the calculation of the ROU asset and lease liability.

addition, the Company has elected the practical expedient to not apply lease recognition requirements to leases with a term of one year

Under this expedient, lease costs are not capitalized;

rather, are expensed on a straight-line basis over the lease term.

The Company’s leases do not contain

residual value guarantees or material restrictions or covenants.

The Company uses either the rate implicit in the

lease, if readily determinable, or the Company’s incremental borrowing rate for a period comparable to the lease term in order to

calculate the net present value of the lease liability.

The incremental borrowing rate represents the rate that would approximate the

rate to borrow funds on a collateralized basis over a similar term and in a similar economic environment.

Impairment of Intangible Assets

The Company’s intangible asset consists

of its intellectual property and patented technology and is considered an indefinite lived intangible and is not subject to amortization.

As of June 30, 2023, and December 31, 2022, the gross and carrying amount of this intangible asset was $ 1,925,151 .

A qualitative assessment of indefinite-lived intangible

assets is performed in order to determine whether further impairment testing is necessary.

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 under the quantitative analysis, intellectual property and patents

During the three and six months ended June 30,

2023 and 2022, the Company did not record any impairment charges.

Impairment of Long-Term Assets

The Company evaluates the carrying value of long-lived

assets when indicators of impairment exist.

The carrying value of a long-lived asset is considered impaired when the estimated separately

identifiable, undiscounted cash flows from such asset are less than the carrying value of the asset.

In that event, a loss is recognized

based on the amount by which the carrying value exceeds the fair value of the long-lived asset.

Fair value is determined primarily using

the estimated cash flows discounted at a rate commensurate with the risk involved.

During the three and six months ended June 30, 2023

and 2022, the Company did not record any impairment charges.

Emerging Growth Company Accounting Election

Section 102(b)(1) of the JOBS Act exempts emerging

growth companies from being required to comply with new or revised financial accounting standards until private companies are required

to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect not to take advantage

of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election

to not take advantage of the extended transition period is irrevocable.

The Company expects to be an emerging growth company through 2023.

Prior to the Business Combination, CENAQ elected to irrevocably opt out of the extended transition period, which means that when a standard

is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised

standard when those standards are effective for public registrants.

Equity-Based Compensation

The Company applies ASC 718, “Compensation — Stock

Compensation” (“ASC 718”), in accounting for unit-based compensation to employees.

Unit-Based Compensation

Service-based units compensation cost is measured

at the grant date based on the fair value of the equity instruments awarded and is recognized over the period during which an employee

is required to provide service in exchange for the award, or the requisite service period, which is usually the vesting period.

Performance-based

unit compensation cost is measured at the grant date based on the fair value of the equity instruments awarded and is expensed over the

requisite service period, based on the probability of achieving the performance goal, with changes in expectations recognized as an adjustment

to earnings in the period of the change.

If the performance goal is not met, no unit-based compensation expense is recognized and any

previously recognized unit-based compensation expense is reversed.

Forfeitures of service-based and performance-based units are recognized

upon the time of occurrence.

Prior to closing of the Business Combination,

certain subsidiaries of the Company, including Intermediate, were wholly-owned subsidiaries of Holdings.

Holdings, which was outside

of the Business Combination perimeter, had entered into several compensation related arrangements with management of Intermediate.

costs associated with those arrangements were allocated by Holdings to Intermediate as the employees were rendering services to Intermediate.

However, the ultimate contractual obligation related to these awards, including any future settlement, rested and continues to rest with

On August 5, 2022, Holdings entered into an agreement

with its management team whereby, all outstanding unvested Series A Incentive Units and Founder Incentive Units became fully vested on

the closing of the Business Combination.

As part of the agreement, the priority of distributions under the Series A Incentive Units and

Founders Incentive Units was also revised such that participants receive 10 % of distributions after a specified return to Holdings’

Series A Preferred Unit holders (instead of 20 %).

Series A Incentive Units refers to 800 incentive units issued by Holdings on August 7,

2020 to certain members of management of Intermediate in compensation for their services.

Founder Incentive Units refers to 1,000 incentive

units issued by Holdings on August 7, 2020 to certain members of management of Intermediate in compensation for their services.

In connection with the close of the Business Combination,

the Company accelerated the unvested service and performance-based units and recorded share-based payment expense of $ 2,146,792 during

the three-months ended March 31, 2023.

The share-based payment expense was included in general and administrative expenses for the

three-month period ended March 31, 2023.

Performance conditions for the performance-based Founder Incentive Units had not, and were unlikely

to be met as of June 30, 2023.

Company’s leases do not contain residual value guarantees or material restrictions or covenants.

Company uses either the rate implicit in the lease, if readily determinable, or the Company’s incremental borrowing rate for a

period comparable to the lease term in order to calculate the net present value of the lease liability.

The incremental borrowing rate

represents the rate that would approximate the rate to borrow funds on a collateralized basis over a similar term and in a similar economic

of Indefinite-Lived Intangible Assets

Company’s intangible asset consists of its intellectual property and patented technology and is considered an indefinite lived

intangible and is not subject to amortization.

As of September 30, 2023, and December 31, 2022, the gross and carrying amount of this

intangible asset was $ 1,925,151 .

qualitative assessment of indefinite-lived intangible assets is performed in order to determine whether further impairment testing is

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 under the

quantitative analysis, intellectual property and patents are tested.

the three and nine months ended September 30, 2023 and 2022, the Company did not record any impairment charges.

of Long-Term Assets

Company evaluates the carrying value of long-lived assets when indicators of impairment exist.

The carrying value of a long-lived asset

is considered impaired when the estimated separately identifiable, undiscounted cash flows from such asset are less than the carrying

value of the asset.

In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the

long-lived asset.

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

During the three and nine months ended September 30, 2023 and 2022, the Company did not record any impairment charges.

Growth Company Accounting Election

102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards

until private companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company

can elect not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth

companies, and any such election to not take advantage of the extended transition period is irrevocable.

The Company expects to be an

emerging growth company through 2023.

Prior to the Business Combination, CENAQ elected to irrevocably opt out of the extended transition

period, which means that when a standard is issued or revised and it has different application dates for public or private companies,

the Company will adopt the new or revised standard when those standards are effective for public registrants.

Company applies ASC 718, “Compensation — Stock Compensation” (“ASC 718”), in accounting

for unit-based compensation to employees.

Service-based

units compensation cost is measured at the grant date based on the fair value of the equity instruments awarded and is recognized over

the period during which an employee is required to provide service in exchange for the award, or the requisite service period, which

is usually the vesting period.

Performance-based unit compensation cost is measured at the grant date based on the fair value of the

equity instruments awarded and is expensed over the requisite service period, based on the probability of achieving the performance goal,

with changes in expectations recognized as an adjustment to earnings in the period of the change.

If the performance goal is not met,

no unit-based compensation expense is recognized and any previously recognized unit-based compensation expense is reversed.

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

to closing of the Business Combination, certain subsidiaries of the Company, including Intermediate, were wholly-owned subsidiaries

Holdings, which was outside of the Business Combination perimeter, had entered into several compensation related arrangements

with management of Intermediate.

Compensation costs associated with those arrangements were allocated by Holdings to Intermediate as

the employees were rendering services to Intermediate.

However, the ultimate contractual obligation related to these awards, including

any future settlement, rested and continues to rest with Holdings.

August 5, 2022, Holdings entered into an agreement with its management team whereby all outstanding unvested Series A Incentive Units

and Founder Incentive Units became fully vested on the closing of the Business Combination.

As part of the agreement, the priority of

distributions under the Series A Incentive Units and Founders Incentive Units was also revised such that participants receive 10 % of

distributions after a specified return to Holdings’ Series A Preferred Unit holders (instead of 20 %).

Series A Incentive Units

refers to 800 incentive units issued by Holdings on August 7, 2020 to certain members of management of Intermediate in compensation

for their services.

Founder Incentive Units refers to 1,000 incentive units issued by Holdings on August 7, 2020 to certain members

of management of Intermediate in compensation for their services.

connection with the close of the Business Combination, the Company accelerated the unvested service and performance-based units and recorded

share-based payment expense within general and administrative expense of $ 2,146,792 during the nine months ended September 30, 2023.

Performance conditions for the performance-based Founder Incentive Units had not and were unlikely to be met as of September 30, 2023.

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

Equity-Based Awards

In March 2023, the Company authorized and approved

the Verde Clean Fuels, Inc.

March 2023, the Company authorized and approved the Verde Clean Fuels, Inc.

2023 Omnibus Incentive Plan (the “2023 Plan”).

On April 25, 2023, the Company granted stock options

to certain employees and officers and RSUs to non-employee directors, consistent with the terms of the 2023 Plan.

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 granted were determined

by the value of the stock price on the date of the award subject to a discount for lack of marketability (see Note 7).

Equity-based compensation is measured using a

fair value-based method for all equity-based awards.

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 Consolidated

Statements of Operations.

We estimate the expected term of options granted

based on peer benchmarking and expectations.

We use the 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 us in our industry sector.

We do not anticipate paying cash dividends and therefore

use an expected dividend yield of zero in the option valuation model.

On April 25, 2023, the Company granted stock options to certain employees and officers and granted RSUs to non-employee directors, consistent

with the terms of the 2023 Plan.

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 granted were determined by the value of the stock price on the date of the award, subject to a discount for

lack of marketability (see Note 7).

compensation is measured using a fair value-based method for all equity-based awards.

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 Consolidated Statements of Operations.

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

Treasury yield curve rates are used

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

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.

We assess 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 which we use to determine the fair value of such equity awards and other companies could use similar market inputs and experience

and arrive at different conclusions.

Contingent Consideration

Holdings had an arrangement payable to the Company’s

CEO and a consultant whereby a contingent payment could become payable in the event that certain return on investment hurdles were met

within 5 years of the closing date of the Primus asset purchase.

On August 5, 2022, Holdings entered into an agreement with the Company’s

management and CEO whereby, if the Business Combination reaches closing, the Contingent Consideration will be forfeited.

For the three and six months ended June 30, 2022,

the Company remeasured the liability of this arrangement, and reassessed the probability of the completion of the Business Combination

and reversed $ 1,893,000 of the accrued expense through earnings.

The Business Combination closed on February 15,

2023, and therefore the contingent consideration arrangement was terminated and no payments were made.

Thus, the remaining $ 1,299,000

of accrued contingent consideration was reversed through earnings for the six months ended June 30, 2023.

NOTE 3 – BUSINESS COMBINATION

On August 12, 2022, the Company entered into

a business combination agreement (the “Business Combination Agreement”) by and among CENAQ Energy Corp., Verde Clean Fuels

OpCo, LLC, a Delaware limited liability company and a wholly owned subsidiary of CENAQ, Bluescape Clean Fuels Holdings, LLC, a Delaware

limited liability company, Bluescape Clean Fuels Intermediate Holdings, LLC, a Delaware limited liability company, and CENAQ Sponsor LLC.

The Company consummated the Business Combination on February 15, 2023 (the “Closing Date”).

Pursuant to the Business Combination Agreement,

(i) (A) CENAQ contributed to OpCo (1) all of its assets (excluding its interests in OpCo and the aggregate amount of cash

required to satisfy any exercise by CENAQ stockholders of their redemption rights (the “Redemption Rights”) and (2) the

shares of Class C common stock (the “Holdings Class C Shares”) and (B) in exchange therefor, OpCo issued to CENAQ a

number of Class A OpCo Units equal to the number of total shares of Class A common stock issued and outstanding immediately

after the Closing (taking into account the PIPE Financing and following the exercise of Redemption Rights) (such transactions, the “SPAC

Contribution”) and (ii) immediately following the SPAC Contribution, (A) Holdings contributed to OpCo 100 % of the issued

and outstanding limited liability company interests of Intermediate and (B) in exchange therefor, OpCo transferred to Holdings the

Holdings OpCo Units and the Holdings Class C Shares.

Holdings holds 22,500,000 OpCo Units and an equal number of shares

of Class C common stock.

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.

is substantial judgment in selecting the assumptions which we use to determine the fair value of such equity awards and other companies

could use similar market inputs and experience and arrive at different conclusions.

Consideration

had an arrangement payable to the Company’s CEO and a consultant whereby a contingent payment could become payable in the event

that certain return on investment hurdles were met.

On August 5, 2022, Holdings entered into an agreement with the Company’s management

and CEO whereby if the Business Combination was completed, the Contingent Consideration would be forfeited.

the three and nine months ended September 30, 2022, the Company remeasured the liability of this arrangement and reassessed the probability

of the completion of the Business Combination.

The Company reversed $ 5,288,000 and $ 7,181,000 of the accrued expense through earnings

in the three and nine months ended September 30, 2022, respectively.

Business Combination closed on February 15, 2023, and therefore the contingent consideration arrangement was terminated and no payments

Thus, the remaining $ 1,299,000 of accrued contingent consideration was reversed through earnings for the nine months ended

September 30, 2023.

3 – BUSINESS COMBINATION

August 12, 2022, the Company entered into a business combination agreement (the “Business Combination Agreement”) by

and among CENAQ Energy Corp., Verde Clean Fuels OpCo, LLC, a Delaware limited liability company and a wholly owned subsidiary of CENAQ,

Bluescape Clean Fuels Holdings, LLC, a Delaware limited liability company, Bluescape Clean Fuels Intermediate Holdings, LLC, a Delaware

limited liability company, and CENAQ Sponsor LLC.

The Company consummated the Business Combination on February 15, 2023.

to the Business Combination Agreement, (i) (A) CENAQ contributed to OpCo (1) all of its assets (excluding its interests

in OpCo and the aggregate amount of cash required to satisfy any exercise by CENAQ stockholders of their redemption rights (the “Redemption

Rights”) and (2) the shares of Class C common stock (the “Holdings Class C Shares”) and (B) in exchange

therefor, OpCo issued to CENAQ a number of Class A OpCo Units equal to the number of total shares of Class A common

stock issued and outstanding immediately after the Closing (taking into account the PIPE Financing and following the exercise of Redemption

Rights) (such transactions, the “SPAC Contribution”) and (ii) immediately following the SPAC Contribution, (A) Holdings

contributed to OpCo 100% of the issued and outstanding limited liability company interests of Intermediate and (B) in exchange therefor,

OpCo transferred to Holdings the Holdings OpCo Units and the Holdings Class C Shares.

Holdings holds 22,500,000 OpCo Units and

an equal number of shares of Class C common stock.

Pursuant to ASC 805, the Business Combination

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The Company has a related party relationship with

Holdings whereby Holdings holds a majority ownership in the Company via voting shares and has control of the Board of Directors.

Holdings whereby Holdings holds a majority ownership in the Company via voting shares and has control of its Board of Directors.

Holdings possesses 3,500,000 earn out shares.

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a lease liability, which is a lessee’s

obligation to make lease payments arising from a lease, measured on a discounted basis;

and a right-of-use asset, which is an asset that

obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that

represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

3 unchanged sentences

Office space is leased to provide adequate workspace for all employees.

In October 2022, the Company

entered into a 25-year land lease in Maricopa, Arizona with the intent of building a biofuel processing facility.

The commencement date

of the lease was in February 2023 as control of the identified asset did not transfer to the Company on the effective date of the lease.

As such, the Company did not record a ROU asset nor a lease liability as of December 31, 2022, specific to the land lease.

of the facility is expected to commence in fiscal year 2024 and the Company expects to incur an asset retirement obligation throughout

the construction period as the Company is obligated to return the land to its original state upon exit of the lease.

The fair value of

the asset retirement obligation is zero as of June 30, 2023 and December 31, 2022, as construction has not commenced.

The present value

of the minimum lease payments exceeds the fair value of the land, and, accordingly, the lease is classified as a finance lease.

expires in 2047 and contains a single four-year renewal option.

The exercise of the lease renewal is at the Company’s discretion;

In October 2022, the Company entered into a 25-year

land lease in Maricopa, Arizona with the intent of building a renewable gasoline processing facility.

The commencement date of the lease

was in February 2023 as control of the identified asset did not transfer to the Company on the effective date of the lease.

Company did not record a ROU asset nor a lease liability as of December 31, 2022, specific to the land lease.

At inception, the present

value of the minimum lease payments exceeded the fair value of the land, and, accordingly, the lease was classified as a finance lease.

The lease expires in 2047 and contains a single four-year renewal option.

The exercise of the lease renewal is at the Company’s

however, management is not reasonably expected to exercise the option;

thus, the option is not included within the lease term.

periods are included in the expected lease term only if they are reasonably certain of being exercised by the Company.

The Company elected the practical expedient for

real estate lease arrangements to not separate non-lease components from lease components as the lease component is the predominant element.

Under the practical expedient, as a lessee, the Company combines the lease and non-lease component into a single accounting unit and accounts

for the unit under ASC 842.

As such, lease and non-lease services are included in the classification of the lease and the calculation

of the ROU asset and lease liability.

In addition, the Company has elected the practical expedient to not apply lease recognition requirements

to leases with a term of one year or less.

Under this expedient, lease costs are not capitalized;

rather, are expensed on a straight-line

basis over the lease term.

The Company’s leases do not contain residual value guarantees, material restrictions or covenants.

The Company uses either the rate implicit in the

lease, if readily determinable, or the Company’s incremental borrowing rate for a period comparable to the lease term in order to

calculate the net present value of the lease liability.

The incremental borrowing rate represents the rate that would approximate the

rate to borrow funds on a collateralized basis over a similar term and in a similar economic environment.

Lease costs for the Company’s operating and finance

leases are presented below.

Renewal periods are included in the expected lease term only if they are reasonably certain of being exercised by the Company.

On August 31, 2023, the Company terminated the

land lease in Maricopa, Arizona.

In connection with the termination, the Company incurred a termination fee of three months’ base

The termination is effective four months after the termination notice;

thus, the Company has a continued right-of-use and obligation

to make rental payments for use of the land through December 31, 2023.

The Company accounted for the termination with a continued right-of-use

as a lease modification resulting in a reclassification of the lease from finance to operating as of the lease modification date.

the Company incurred finance lease costs during the three months ended September 30, 2023 up to the modification date.

The Company expects

to incur operating lease costs subsequent to the modification until lease termination.

As the lease was classified as an operating lease

as of August 31, 2023, the lease is presented as an operating lease within these unaudited consolidated financial statements as of September

Lease costs for the Company’s operating

and finance leases are presented below.

Statements of Operations Classification

September 30,

Amortization of finance lease right-of-use asset

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Statements of Operations Classification

September 30,

Amortization of finance lease right-of-use asset

10 unchanged sentences

Statements of Operations Classification

September 30,

Operating lease cost

4 unchanged sentences

Statements of Operations Classification

September 30,

Operating lease cost

4 unchanged sentences

Maturities of the Company’s operating and

finance leases as of June 30, 2023 are presented below.

As of June 30, 2023

finance leases as of September 30, 2023 are presented below.

As of September 30, 2023

Maturity of lease liabilities

Total future minimum lease payments

( 6,371,257 )

Present value of lease liabilities

2 unchanged sentences

Operating lease - supplemental information

September 30,

Right-of-use assets obtained in exchange for operating lease

1 unchanged sentence

Discount rate - operating lease

Finance lease - supplemental information

Right-of-use assets

Remaining lease term - finance lease

Discount rate - finance lease

Contingencies

The Company is not party to any litigation.

NOTE 6 – PROPERTY, EQUIPMENT AND IMPROVEMENTS

Major classes of property, equipment, and improvements

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Major classes of property, plant and equipment

are as follows:

September 30,

Computers, office equipment and hardware

1 unchanged sentence

Machinery and equipment

Property, equipment, and improvements

Property, plant and equipment

accumulated depreciation

Property, equipment and improvements, net

Depreciation expense was $ 580 and $ 1,160 for the three and six months

ended June 30, 2023, respectively, and was $ 2,640 and $ 5,354 for the three and six months ended June 30, 2022, respectively.

Property, plant and equipment, net

Depreciation expense was $ 603 and $ 1,764 for the three and nine months

ended September 30, 2023, respectively, and was $ 4,679 and $ 10,033 for the three and nine months ended September 30, 2022, respectively.

NOTE 7 – STOCKHOLDER’S EQUITY

Earn-out Consideration

Earnout Consideration

Earnout shares potentially issuable as part of

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As consideration for the contribution of the equity

interests in Intermediate, Holdings received earnout consideration (“Holdings earnout”) of 3,500,000 shares of Class C common

stock and a corresponding number of Class C OpCo Units subject to vesting with the achievement of separate market conditions.

half of the Holdings earnout shares will meet the market condition when the volume-weighted average share price (“VWAP”) of

the Class A Common stock is greater than or equal to $ 15.00 for any 20 trading days within any period of 30 consecutive trading days within

five years of the closing date.

The second half will vest when the VWAP of the Class A Common stock is greater than or equal to $ 18.00

over the same measurement period.

interests in Intermediate, Holdings received earnout consideration (the “Holdings earnout”) of 3,500,000 shares of Class C

common stock and a corresponding number of Class C OpCo Units, subject to vesting with the achievement of separate market conditions.

One half of the Holdings earnout shares will meet the market condition when the volume-weighted average share price (“VWAP”)

of the Class A Common stock is greater than or equal to $ 15.00 per share for any 20 trading days within any period of 30 consecutive trading

days within five years of the Closing Date.

The second half will vest when the VWAP of the Class A Common stock is greater than or equal

to $ 18.00 per share over the same measurement period.

Additionally, the Sponsor received earnout consideration

(“Sponsor earnout”) of 3,234,375 shares of Class A common stock subject to forfeiture which will no longer be subject

to forfeiture with the achievement of separate market conditions (the “Sponsor Shares”).

One half of the Sponsor earnout will

no longer be subject to forfeiture if the VWAP of Class A common stock is greater than or equal to $ 15.00 for any 20 trading days within

any period of 30 consecutive trading days within five years of the closing date.

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.

(the “Sponsor earnout”) of 3,234,375 shares of Class A common stock subject to forfeiture, which will no longer

be subject to forfeiture with the achievement of separate market conditions (the “Sponsor Shares”).

One half of the Sponsor

earnout will no longer be subject to forfeiture if the VWAP of Class A common stock is greater than or equal to $ 15.00 per share for any

20 trading days within any period of 30 consecutive trading days within five years of the Closing Date.

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 per share over the same measurement

Notwithstanding the forgoing, the Holdings earnout

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The earn out consideration was issued in connection with the Business Combination on February

Holdings earn out shares are neither issued nor outstanding as of June 30, 2023 as the performance requirements for vesting

Holdings earn out shares are neither issued nor outstanding as of September 30, 2023 as the performance requirements for vesting

were not achieved.

All Sponsor Shares granted in connection with the Business Combination are issued and outstanding as of June 30, 2023.

All Sponsor Shares granted in connection with the Business Combination are issued and outstanding as of September 30,

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

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of the shares are a reduction to retained earnings.

the Class A common stock trading price the market conditions were not met and no Earnout Shares vested as of June 30, 2023.

the Class A common stock trading price the market conditions were not met and no earnout shares vested as of September 30, 2023.

Share-based Compensation

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The total compensation expense incurred related to the Company’s

equity-based compensation plans was $ 200,264 and $ 2,347,056 for the three and six months ended June 30, 2023.

As a taxable event has not

occurred, the income tax benefits for these awards were zero for the three and six months ended June 30, 2023.

equity-based compensation plans was $ 276,880 and $ 2,623,936 for the three and nine months ended September 30, 2023.

As a taxable event

has not occurred, the income tax benefits for these awards were zero for the three and nine months ended September 30, 2023.

Share-based compensation costs incurred in the

three and six months ended June 30, 2022 were $ 376,013 and $ 978,511 , respectively.

three and nine months ended September 30, 2022 were $ 103,103 and $ 1,081,614 , respectively.

Incentive Units

Prior to closing of the business combination,

certain subsidiaries of the Company, including Intermediate, were wholly-owned subsidiaries of Holdings.

Holdings, which was outside

of the business combination perimeter, had entered into several compensation related arrangements with management of Intermediate.

costs associated with those arrangements were allocated by Holdings to Intermediate as the employees were rendering services to Intermediate.

However, the ultimate contractual obligation related to these awards, including any future settlement, rested and continues to rest with

The Holdings equity compensation instruments consisted

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and provided service to the Company, the Company recognized $ 103,103 and $ 1,081,614 of compensation expense related to the awards during

the three and six months ended June 30, 2022, respectively.

the three and nine months ended September 30, 2022, respectively.

There were 1,000 Founder Incentive Units issued

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No compensation expense was recorded related to these awards

during the three months ended June 30, 2022 as performance conditions had not, and were unlikely to be met.

during the three and nine months ended September 30, 2022 as performance conditions had not, and were unlikely to be met.

On August 5, 2022, certain amendments to the existing

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agreements, the priority of distributions under the Series A Incentive Units and Founders Incentive Units was also revised such that participants

receive 10 % of distributions after a specified return to BCF Holdings’ Series A Incentive Unit holders (instead of 20 %).

receive 10 % of distributions after a specified return to Holdings’ Series A Incentive Unit holders (instead of 20 %).

The modifications

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to these awards of $ 2,146,792 .

The share-based payment expense was included in general and administrative expenses for the six-month

period ended June 30, 2023.

Performance conditions for the performance-based Founder Incentive Units had not, and were unlikely to be

met as of June 30, 2023.

The share-based payment expense was included in general and administrative expenses for the nine months

ended September 30, 2023.

Performance conditions for the performance-based Founder Incentive Units had not, and were unlikely to be met

as of September 30, 2023.

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

2023 Equity Awards

In March 2023, the Company authorized and approved

the Verde Clean Fuels, Inc.

2023 Omnibus Incentive Plan (the “2023 Plan”).

On April 25, 2023, consistent with the terms of

the 2023 Plan, the Company granted stock options to certain employees and officers and RSUs to non-employee directors.

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.

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

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The table below presents activity related to stock

options awarded in 2023:

options awarded for the nine months ended September 30, 2023:

Number of options

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Forfeited / expired

Outstanding as of June 30, 2023

Vested as of June 30, 2023

Unvested as of June 30, 2023

Exercisable as of June 30, 2023

Outstanding as of September 30, 2023

Vested as of September 30, 2023

Unvested as of September 30, 2023

Exercisable as of September 30, 2023

Stock-based compensation expense related to stock

options was $ 88,841 for the three and six months ended June 30, 2023, respectively.

As of June 30, 2023, unrecognized compensation expense

related to unvested stock options was $ 1,876,425 .

The remaining compensation cost is expected to be recognized over a weighted-average

period of 3.82 years.

There were no vested stock options outstanding as of June 30, 2023.

options was $ 122,829 and $ 211,670 for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2023, unrecognized

compensation expense related to unvested stock options was $ 1,753,596 .

The remaining compensation cost is expected to be recognized over

a weighted-average period of 3.57 years.

There were no vested stock options outstanding as of September 30, 2023.

Restricted Stock Units

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The fair value of RSUs granted in 2023 were determined

by the value of the stock price on the date of the award subject to a discount for lack of marketability of 13 % for a per unit value of

The discount due to lack of marketability was applied because of the limited trading activity of the Company’s public equity.

RSU activity for the six months ended June 30,

by the value of the stock price on the date of the award, subject to a discount for lack of marketability of 13 % for a per unit value

The discount due to lack of marketability was applied because of the limited trading activity of the Company’s public

RSU activity for the nine months ended September

30, 2023 is as follows:

Time-based restricted stock units

Unvested, December 31, 2022

Granted in six months ended June 30, 2023

Unvested June 30, 2023

Granted in the nine months ended September 30, 2023

Unvested September 30, 2023

For RSUs, the compensation expense was $ 154,051

for the three and six months ended June 30, 2023.

As of June 30, 2023, unrecognized compensation expense related to unvested RSUs was

The remaining compensation cost is expected to be recognized over a weighted-average period of 0.82 years.

and $ 265,474 for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2023, unrecognized compensation

expense related to unvested RSUs was $ 350,730 .

The remaining compensation cost is expected to be recognized over a weighted-average period

of 0.57 years.

To date, the Company has not granted RSUs which

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However, the reverse recapitalization

requires a recast of Intermediate’s equity and EPS and is adjusted to reflect the par value of the outstanding capital stock of

For periods before the reverse recapitalization, shareholders’ equity of Intermediate is presented based on the historical

equity of Intermediate restated using the exchange ratio to reflect the equity structure of CENAQ.

requires a recast of Intermediate’s equity and earnings per share and is adjusted to reflect the par value of the outstanding capital

stock of CENAQ.

For periods before the reverse recapitalization, shareholders’ equity of Intermediate is presented based on the

historical equity of Intermediate restated using the exchange ratio to reflect the equity structure of CENAQ.

Management evaluated the impact of the number

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There are 15,383,263 warrants currently outstanding.

including 12,908,263 public warrants and 2,475,000 Private Placement 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, at any time

commencing 30 days after the completion of our initial business combination.

However, no warrants will be exercisable for cash unless

there is an effective and current registration statement covering the shares of Class A common stock issuable upon exercise of the warrants

and a current prospectus relating to such shares of Class A common stock.

Notwithstanding the foregoing, if a registration statement covering

the shares of Class A common stock issuable upon exercise of the public warrants is not effective within a specified period following

the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement

and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis

pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.

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

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 5 trading days ending on the trading day prior to the date of exercise.

The warrants will expire on the fifth anniversary

of our completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

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, at any time commencing 30 days after the completion of the Business Combination.

However, no warrants

will be exercisable for cash unless there is an effective and current registration statement covering the shares of Class A common stock

issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A common stock.

Notwithstanding the foregoing,

if a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective within

a specified period following the consummation of the Business Combination, warrant holders may, until such time as there is an effective

registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants

on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.

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

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 5 trading days ending on the trading day prior to the date of exercise.

The warrants will

expire on the fifth anniversary of our completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon

redemption or liquidation.

The Company may call the warrants for redemption,

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under all applicable state securities laws.

The Private Placement Warrants, as well as warrants

the Company issued to the Sponsor, officers, directors, initial stockholders or their affiliates in payment of Working Capital Loans made

to the Company, are identical to the public warrants issued in connection with the CENAQ initial public offering.

Warrants were exercised on various dates during

the three months ended June 30, 2023 whereby the total number of warrants exercised was 29,216 resulting in 29,216 Class A common shares

The Company received cash of $ 335,984 related to the warrant exercise as of June 30, 2023.

the nine months ended September 30, 2023 whereby the total number of warrants exercised was 29,216 resulting in 29,216 Class A common

shares issued.

The Company received cash of $ 335,984 related to the warrant exercise as of September 30, 2023.

NOTE 9 – INCOME TAX

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share of any net taxable income or loss and any related tax credits of OpCo.

The effective tax rate was 0 % for the three

and six months ended June 30, 2023.

The effective income tax rate differed significantly from the statutory rates, primarily due to the

losses allocated to non-controlling interests and the recognition of a valuation allowance as a result of the Company’s new tax

structure following the Business Combination.

The Company’s effective tax rate was ( 2.08 %)

for the three and nine months ended September 30, 2023.

The effective income tax rate differed significantly from the statutory rates,

primarily due to the losses allocated to non-controlling interests, the recognition of a valuation allowance as a result of the Company’s

new tax structure, and a return to provision adjustment.

The Company has assessed the realizability of

the net deferred tax assets and in that analysis has considered the relevant positive and negative evidence available to determine whether

its net deferred tax assets and in 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 recorded a full valuation

allowance against its deferred tax assets as of June 30, 2023, which will be maintained until there is sufficient evidence to support

allowance against its deferred tax assets as of September 30, 2023, which will be maintained until there is sufficient evidence to support

the reversal of all or some portion of these allowances.

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Treasury bills.

As a result of the investment income, $ 292,673 of estimated

Federal income taxes payable survived the Business Combination and remained on the Company’s balance sheet as of June 30, 2023.

As a result of the investment income, CENAQ generated a Federal

income tax liability of $ 431,632 for the December 31, 2022 taxable year.

CENAQ’s Federal income tax payable survived the Business

Combination and still remains on the Company’s balance sheet as of September 30, 2023.

Tax receivable agreement

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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 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

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.

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NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

As of June 30, 2023, the Company did not have

any assets or liabilities measured at fair value on a recurring basis as earn out shares, public warrants, and private placement warrants

are equity classified.

As of September 30, 2023, the Company did not

have any assets or liabilities measured at fair value on a recurring basis as earn out shares and warrants are equity classified and therefore

are not measured at fair value.

The Company measured the liability for contingent

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There was no contingent

consideration as of June 30, 2023 as this liability was reversed and recognized in earnings during the six-month period ended June 30,

2023 as a result of the close of the Business Combination.

consideration liability as of September 30, 2023 as this liability was reversed and recognized in earnings during the nine month period

ended September 30, 2023 as a result of the close of the Business Combination.

NOTE 11 – LOSS PER SHARE

Prior to the reverse recapitalization in connection

with the Closing, all net loss was attributable to the noncontrolling interest.

For the periods prior to February 15, 2023, earnings per

share was not calculated because net income prior to the Business Combination was attributable entirely to Intermediate.

Further, prior

to the consummation of the Business Combination, the Intermediate ownership structure included equity interests held solely by Holdings.

The Company analyzed the calculation of earnings per share for comparative periods presented and determined that it resulted in values

that would not be meaningful to the users of these condensed consolidated financial statements.

Therefore, the earnings per share

information has not been presented for the three and six months ended June 30, 2022.

with the Business Combination, all net loss was attributable to the noncontrolling interest.

For the periods prior to February 15, 2023,

earnings per share was not calculated because net income prior to the Business Combination was attributable entirely to Intermediate.

Further, prior to the consummation of the Business Combination, the Intermediate ownership structure included equity interests held solely

The Company analyzed the calculation of earnings per share for comparative periods presented and determined that it resulted

in values that would not be meaningful to the users of these condensed consolidated financial statements.

Therefore, the earnings

per share information has not been presented for the three and nine months ended September 30, 2022.

Basic net loss per share has been computed by

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following table sets forth the computation of net loss used to compute basic net loss per share of Class A common stock for the three

and six months ended June 30, 2023.

and nine months ended September 30, 2023.

September 30,

Net income (loss) attributable to Verde Clean Fuels, Inc.

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Diluted income per share

September 30,

Net income (loss) attributable to Verde Clean Fuels, Inc.

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operations exists or when the exercise price exceeds the average closing price of the Company’s common stock during the period,

because their inclusion would result in an antidilutive effect on per share amounts.

because their inclusion would result in an anti-dilutive effect on per share amounts.

The following amounts were not included in the

calculation of net income per diluted share because their effects were anti-dilutive:

Public warrants

Private placement warrants

September 30,

Earnout Shares

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Time based RSUs

Total antidilutive instruments

Total anti-dilutive instruments

NOTE 12 – SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions

that occurred after the balance sheet date, up to the date which the financial statements were issued.

On August 1, 2023, the Company announced a Carbon

Dioxide Management Agreement (“CDMA”) with Carbon TerraVault JV HoldCo, LLC (“CTV JV”), a carbon management partnership

focused on carbon capture and sequestration development formed between Carbon TerraVault, a subsidiary of California Resources Corporation

(“CRC”), and Brookfield Renewable.

Under the terms of the non-binding agreement, the

Company expects to construct a new renewable gasoline production facility at CRC’s existing Net Zero Industrial Park in Kern County,

The plant is expected to capture carbon dioxide and produce renewable gasoline from biomass and other agricultural waste feedstock

to help support the further decarbonization of California’s economy and its transportation sector.

that occurred after the balance sheet date, up to the date which the consolidated financial statements were issued.

There were no subsequent

events or transactions.

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