What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-13 · 285 added, 274 removed, 765 unchanged (42% of the section changed)

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CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

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Restricted cash

Prepaid expenses

Prepaid expenses and other current assets

Total current assets

Non-current assets:

Security deposits

Property, plant and equipment, net

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Accrued liabilities

Operating lease liabilities – current portion

Operating lease liabilities

Other current liabilities

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Stockholders’ equity

Class A common stock, par value $ 0.0001 per share, 9,549,621 and 9,387,836 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Class C common stock, par value $ 0.0001 per share, 22,500,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Class A common stock, par value $ 0.0001 per share, 9,549,621 and 9,387,836 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Class C common stock, par value $ 0.0001 per share, 22,500,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid in capital

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

General and administrative expenses

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( 8,180,293 )

Income tax (benefit)

Income tax (benefit) provision

$ ( 2,493,408 )

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Statement of Stockholders’ Equity for the Three Months Ended

June 30, 2024

September 30, 2024

Stockholders’

Balance – March 31, 2024

Balance – June 30, 2024

$ ( 25,598,808 )

Conversion of restricted stock units

Stock-based compensation

Rebalancing of ownership percentage for issuance of Class A shares

( 1,715,676 )

( 2,493,408 )

Balance – June 30, 2024

Balance – September 30, 2024

$ ( 26,376,540 )

Statement of Stockholders’ Equity for the Three Months Ended

June 30, 2023

September 30, 2023

Stockholders’

Balance – March 31, 2023

Balance – June 30, 2023

$ ( 22,502,750 )

Stock-based compensation

Warrant exercise

( 1,858,910 )

( 2,632,102 )

Balance – June 30, 2023

Balance – September 30, 2023

$ ( 23,275,942 )

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

Statement of Stockholders’ Equity for the Six Months Ended

June 30, 2024

Statement of Stockholders’ Equity for the Nine Months Ended

September 30, 2024

Stockholders’

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Stock-based compensation

Rebalancing of ownership percentage for issuance of Class A

Rebalancing of ownership percentage for issuance of Class A shares

( 2,453,810 )

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( 7,854,211 )

Balance – June 30, 2024

Balance – September 30, 2024

$ ( 26,376,540 )

Statement of Stockholders’ Equity for the Six Months Ended

June 30, 2023

Statement of Stockholders’ Equity for the Nine Months Ended

September 30, 2023

Stockholders’

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( 8,299,479 )

Balance – June 30, 2023

Balance – September 30, 2023

$ ( 23,275,942 )

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

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Prepaid expenses

( 1,001,239 )

Accounts payable

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Purchases of property, plant and equipment

( 1,445,174 )

Reimbursement of capital expenditures

Net cash used in investing activities

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Non-cash impact of debt issuance through the business combination

Capital expenditures in accounts payable and accrued expenses (at period

Capital expenditures in accounts payable and accrued expenses (at period end)

Accounts receivable for reimbursement of capital expenditures (at period end)

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Verde Clean Fuels, Inc.

(the “Company”, “Verde”

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

from diverse feedstocks, such as biomass or natural gas and other feedstocks, into liquid hydrocarbons, primarily 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 feedstocks into a usable stream of syngas,

which is then transformed into a single finished fuel, such as gasoline, that does not require any additional refining steps.

(the “Company”,

“Verde” and “Verde Clean Fuels”) is a clean fuels company focused on the deployment of its innovative and

proprietary liquid fuels processing technology through development of commercial production plants.

Verde Clean Fuels’

synthesis gas (“syngas”)-to-gasoline plus (STG+®) process converts syngas derived from diverse feedstocks, such as

natural gas or biomass, into fully finished liquid fuels that require no additional refining, such as reformulated

blend-stock for oxygenate blending (“RBOB”) gasoline.

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

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

The Business Combination is discussed further in

See Notes 3 and 4 for further information.

Following the completion of the Business Combination, the combined

company is organized under an umbrella partnership C corporation (“Up-C”) structure and the direct assets of the Company consists

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

Immediately following the Business Combination,

Verde Clean Fuels is the sole manager of and controls OpCo.

company is organized under an umbrella partnership C corporation (“Up-C”) structure, and the direct assets of the Company

consist of equity interests in OpCo, whose direct assets consist of equity interests in Intermediate.

Immediately following the Business

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

Prior to the Business Combination, and up to the Closing Date, Verde

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regulatory developments, construction risks, and global and regional macroeconomic developments.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR

Act”) was signed into federal law.

The IR Act provides for, among other things, a new U.S.

federal 1 % excise tax on certain

repurchases of stock, in which the cumulative fair market value is greater than $ 1 million in a calendar year, by publicly traded

domestic corporations and certain U.S.

domestic subsidiaries of publicly traded foreign corporations occurring on or after January

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

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

of repurchases applicable to the excise tax can be reduced by the fair market value of any issuances at the time of issuance that occurred

during the year, as well as certain exceptions provided by the U.S.

Department of the Treasury (the “Treasury”).

In April 2024, the Treasury and the Internal Revenue Service (the “IRS”)

released proposed regulations that detail the kinds of transactions that are and are not subject to the new excise tax as well as give

procedural guidance on how and when companies should pay the tax.

Final regulations providing procedural guidance have been issued, however

final regulations regarding the excise tax computation have not yet been issued.

In connection with the Business Combination, the Company incurred an

excise tax of $ 1.6 million based on the redemption of $ 158.9 million at the request of the Common A shareholders.

tax is expected to be paid in the fourth quarter of 2024.

The excise tax is recorded within accrued liabilities on the unaudited consolidated

balance sheets.

Other than the 1 % excise tax, the IR Act has not had a material impact on the Company’s consolidated financial

Use of Estimates

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of three months or less when purchased to be cash equivalents.

As of June 30, 2024 and December 31, 2023, the Company had cash equivalents

As of September 30, 2024 and December 31, 2023, the Company had cash equivalents

of $ 19,942,258 and $ 26,155,789 , respectively, which were comprised of funds held in a short-term money market fund having investments

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Financial instruments that potentially subject the Company to concentrations

of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation

of credit risk consist of cash accounts in financial institutions, which, at times, may exceed the Federal Depository Insurance Corporation

(“FDIC”) limit of $ 250,000 .

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market fund that is not guaranteed by the FDIC.

As of June 30, 2024 and December 31, 2023, the Company had not experienced losses on these

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

As of September 30, 2024 and December 31, 2023, the Company had not experienced losses

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

Accounts Receivable – Other

Accounts receivable – other consists of amounts to be reimbursed

to the Company from Cottonmouth Ventures LLC (“Cottonmouth”) in connection with the terms of the joint development agreement

(“JDA”) between the Company and Cottonmouth.

Accounts receivable – other primarily consists of amounts to

be reimbursed to the Company from Cottonmouth Ventures LLC (“Cottonmouth”) in connection with the terms of the joint development

agreement (“JDA”) between the Company and Cottonmouth.

See Notes 6 and 11 for further information.

In accordance with Accounting Standards

Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments”, the Company’s accounts receivable are required to be presented at the net amount expected to be collected through

an allowance for credit losses that are expected to occur over the life of the remaining life of the asset, rather than incurred losses.

The Company considers the amounts due from Cottonmouth to be fully collectible and, accordingly, there was no allowance for credit losses

recorded by the Company as of June 30, 2024.

In accordance with Accounting

Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments”, the Company’s accounts receivable are required to be presented at the net amount expected to be

collected through an allowance for credit losses that are expected to occur over the life of the remaining life of the asset, rather than

incurred losses.

The Company considers the amounts due from Cottonmouth to be fully collectible and, accordingly, there was no allowance

for credit losses recorded by the Company as of September 30, 2024.

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 their short-term nature.

The fair values of

cash, restricted cash, cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses are estimated to

approximate their respective carrying values as of June 30, 2024 and December 31, 2023 due to the short-term maturities of such

The fair value of the Company’s assets and liabilities, which

qualify as financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820,

“Fair Value Measurements and Disclosures” (“ASC 820”), approximates the carrying amounts represented in the balance

sheet, primarily due to their short-term nature.

The fair values of cash, restricted cash, cash equivalents, receivables, prepaid expenses,

accounts payable and accrued expenses are estimated to approximate their respective carrying values as of September 30, 2024 and December

31, 2023 due to the short-term maturities of such instruments.

In determining fair value, the valuation techniques consistent with

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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.

Observable inputs are those that the 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

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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.

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.

Net Loss Per Share of Common Stock

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

Public shareholders, the Sponsor, and the

Public stockholders, the Sponsor, and the

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

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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.

Holders of Class C OpCo Units, other than Verde Clean Fuels, have the right, subject to certain limitations, to

exchange all or a portion of its Class C OpCo Units and a corresponding number of shares of Class C common stock for, at Opco’s

election, (i) shares of Class A common stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations,

recapitalizations and the like, or (ii) an equivalent amount of cash.

Each share of Class C common stock represents the right to cast

one vote per share at the Verde Clean Fuels level and carries no economic rights, including rights to dividends or distributions upon

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

shares of 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,

certain restricted stock units (“RSUs”) and earn out shares, were excluded from diluted earnings per share for the three and

six months ended June 30, 2024 and June 30, 2023 because the inclusion of such instruments would be anti-dilutive.

certain restricted stock units (“RSUs”) and earn out shares, were excluded from diluted earnings per share for the three

and nine months ended September 30, 2024 and 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 all periods presented.

net loss per share of common stock is the same as basic net loss per share of common stock for all periods presented.

The Company accounts for warrants as either equity-classified or liability-classified

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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

are subject to remeasurement each balance sheet date with changes in the estimated fair value of the warrants to be recognized as a non-cash

gain or loss in the statement of operations.

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There were no unrecognized tax benefits and

no amounts accrued for interest and penalties as of June 30, 2024 and December 31, 2023.

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 inception.

no amounts accrued for interest and penalties as of September 30, 2024 and December 31, 2023.

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 inception.

Property, Plant and Equipment

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construction in progress assets until construction is completed and the assets are placed into service.

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

Cost reimbursement from project

participants related to assets under construction is recorded as an offset to the construction in progress assets.

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 realized.

Accrued Liabilities

Accrued liabilities consist of the following:

Accrued bonuses

Accrued construction in progress assets

September 30,

Accrued bonus

Accrued construction in progress

Accrued legal fees

Accrued professional fees

Excise tax payable

Accrued excise tax payable

Other accrued expenses

Total accrued liabilities

Total accrued expenses

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR

Act”) was signed into federal law.

The IR Act provides for, among other things, a new U.S.

federal 1 % excise tax on certain

repurchases of stock occurring on or after January 1, 2023.

The excise tax is imposed on the repurchasing corporation itself, not its

stockholders from which shares are repurchased.

The amount of the excise tax is generally 1 % of the fair market value of the shares

repurchased at the time of the repurchase.

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

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

of the Treasury (the “Treasury”).

In April 2024, the Treasury and the Internal Revenue Service released

proposed regulations that detail the kinds of transactions that are and are not subject to the new excise tax as well as give procedural

guidance on how and when companies should pay the tax.

Final regulations providing procedural guidance have been issued, however final

regulations regarding the excise tax computation have not yet been issued.

As of September 30, 2024, the Company has recorded an excise tax liability

of $ 1,587,975 , which is included within Accrued Liabilities on the unaudited consolidated balance sheets.

The Company accounts for leases under ASU 842, “Leases”

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on a collateralized basis over a similar term and in a similar economic environment.

Impairment of Indefinite-Lived Intangible Assets

Indefinite-Lived 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, 2024 and December

31, 2023, the gross and carrying amount of this intangible asset was $ 1,925,151 .

and patented technology and is considered an indefinite-lived intangible asset and is not subject to amortization.

As of September 30,

2024 and December 31, 2023, the gross and carrying amount of this intangible asset was $ 1,925,151 .

Impairment of Indefinite-Lived Intangible Assets

A qualitative assessment of indefinite-lived intangible assets is performed

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or carrying amount of net assets.

During the three and six months ended June 30, 2024 and 2023, the Company

did not record any impairment charges.

During the three and nine months ended September 30, 2024 and 2023,

the Company did not record any impairment charges.

Impairment of Long-Lived Assets

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

During the three and six months ended June 30, 2024 and 2023, the

Company did not record any impairment charges.

During the three and nine months ended September 30, 2024 and 2023,

the Company did not record any impairment charges.

Emerging Growth Company Accounting Election

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The Company applies ASC 718, “Compensation — Stock

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

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

Unit-Based Compensation

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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 six months ended June 30, 2023.

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 June 30, 2024.

Units had not and were unlikely to be met as of September 30, 2024.

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

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determine the fair value of such equity awards, and other companies could use similar market inputs and experience and arrive at different

RSUs represent an unsecured right to receive

one share of the Company’s Class A common stock equal to the value of the Class A common stock on the settlement date.

a zero-exercise price and vest over time in whole after the first anniversary of the date of grant subject to continuous service through

the vesting date.

Contingent Consideration

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Thus, $ 1,299,000 of accrued contingent consideration

was reversed through earnings during the three and six months ended June 30, 2023.

No contingent consideration was recorded during the

three and six months ended June 30, 2024.

was reversed through earnings during the nine months ended September 30, 2023.

No contingent consideration was recorded during the three

and nine months ended September 30, 2024.

Recent Accounting Standards

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Early adoption is permitted.

is currently evaluating the impact that ASU 2023-07 will have on its consolidated financial statements.

The disclosures

required by ASU 2023-07 are not expected to have a material effect on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes

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

In March 2024, the SEC issued Release No.

33-11275, “The Enhancement

and Standardization of Climate-Related Disclosures for Investors”, which will mandate detailed disclosure of certain climate-related

information, including, among other items, material climate-related risks and related governance, strategy and risk management processes,

certain financial statement disclosures, and Scopes 1 and 2 greenhouse gas emissions, if material, for certain public companies.

2024, the SEC issued an administrative stay of the implementation of Release No.

33-11275, pending judicial review.

Prior to the stay,

the required disclosures were subject to a phased compliance timeline, with initial disclosures for non-accelerated filers and smaller

reporting companies commencing with the fiscal year beginning January 1, 2027.

The Company is currently monitoring the status of Release

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

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting

Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses,”

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

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

beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact that ASU 2024-03 will have on its disclosures.

The Company considers the applicability and impact of all ASUs issued

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NOTE 3 – BUSINESS COMBINATION

Prior to the Business Combination, and up to the Closing Date, Verde

Clean Fuels, previously CENAQ Energy Corp., was a 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.

Pursuant to the Business Combination Agreement, (i) (A) CENAQ

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carrying amounts on the date of the Business Combination.

The Business Combination includes:

The Business Combination included:

● Holdings contributing 100 % of the issued and outstanding limited liability company interests of Intermediate to OpCo in exchange for 22,500,000 Class C OpCo Units and an equal number of shares of Class C common stock;

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Total diluted shares at Closing (including shares above)

Total proceeds raised from the business combination were $ 37,329,178 ,

Total net proceeds raised from the Business Combination were $ 37,329,178 ,

consisting of $ 32,000,000 in PIPE Financing proceeds, $ 19,031,516 from the CENAQ trust, and $ 91,454 from the CENAQ operating account,

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Promissory Note

ASC 850, “Related Party Disclosures” (“ASC 850”)

provides guidance for the identification of related parties and disclosure of related party transactions.

On February 15, 2023, the Company

entered into a new promissory note with the Sponsor totaling $ 409,612 (the “New Promissory Note”).

The New Promissory Note

canceled and superseded all prior promissory notes.

The New Promissory Note was non-interest bearing and the entire principal balance

of the New Promissory Note was payable on or before February 15, 2024 in cash or shares at the Company’s election.

On February 15,

2024, the Company settled the New Promissory Note through the issuance of shares of its Class A common stock at a conversion price of

$ 10.00 per share.

As a result, during the six months ended June 30, 2024, the Company issued 40,961 shares of its Class A common

stock and recorded an increase to additional paid-in capital of $ 409,608 .

On February 15, 2023, the Company entered into a new promissory note

with the Sponsor totaling $ 409,612 (the “New Promissory Note”).

The New Promissory Note canceled and superseded all prior

promissory notes.

The New Promissory Note was non-interest bearing and the entire principal balance of the New Promissory Note was payable

on or before February 15, 2024 in cash or shares at the Company’s election.

On February 15, 2024, the Company settled the New Promissory

Note through the issuance of shares of its Class A common stock at a conversion price of $ 10.00 per share.

As a result, during the

nine months ended September 30, 2024, the Company issued 40,961 shares of its Class A common stock and recorded an increase to additional

paid-in capital of $ 409,608 .

The Company has a related party relationship with Holdings whereby

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3,500,000 earn out shares.

See Note 3 for further information.

On June 3, 2024, the Company entered into a contract for a front-end

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Shaw Group and, in connection with the investment, Jonathan Siegler (a Company director) was appointed as a director of Shaw Group.

incurred for the FEED study as of June 30, 2024 were $ 0.3 million, net of reimbursement from Cottonmouth, and are recorded to Construction

FEED study costs incurred as of September 30, 2024, net of reimbursement from Cottonmouth, were $ 678,243 , and are recorded to Construction

in Progress within Property, Plant and Equipment, Net on the Company’s consolidated balance sheet.

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The Company leases office space and other office equipment under operating

lease arrangements with initial terms greater than twelve months.

lease arrangements with initial terms greater than 12 months.

The office lease in Hillsborough, New Jersey was extended until 2025.

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presented below.

of Operations

Ended June 30,

Months Ended June 30,

Statements of Operations

Three Months Ended

September 30,

Nine Months Ended

September 30,

Classification

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Total lease cost

Supplemental information related to the Company’s operating and

finance lease arrangements was as follows:

Six Months Ended

Supplemental information related to the Company’s operating lease

arrangements was as follows:

Nine Months Ended

September 30,

Operating lease – supplemental information 2024 2023

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Discount rate – operating lease 7.50 % 7.50 %

Six Months Ended

Finance lease – supplemental information 2024 2023

ROU assets $ -

Remaining lease term – finance lease -

Discount rate – finance lease -

Contingencies

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Major classes of property, plant and equipment are as follows:

September 30,

Construction in progress

Computers, office equipment and hardware

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Machinery and equipment

Construction in progress

Property, plant and equipment

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costs, net of reimbursements to be received from Cottonmouth in accordance with the JDA.

The construction in progress balance as of June

30, 2024 is comprised of capitalized FEED costs of $ 961,547 and is net of $ 624,670 of cost reimbursements to be received from Cottonmouth.

See Note 11 for further information.

The construction in progress balance as of September

30, 2024 is comprised of capitalized FEED costs of $ 1,896,471 and is net of $ 1,218,228 of cost reimbursements from Cottonmouth.

11 for further information.

NOTE 7 – STOCKHOLDERS’ EQUITY

Stock Options

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.

On May 29, 2024, the Company awarded

an additional 1,783,623 stock options, of which 1,343,061 were granted to certain employees and officers and 440,562 were granted to non-employee

directors, consistent with the terms of the 2023 Plan.

During the nine months ended September 30, 2024, the Company granted

1,840,637 stock options, of which 1,400,075 were granted to certain employees and officers and 440,562 were granted to non-employee directors,

consistent with the terms of the 2023 Plan.

Stock options represent the contingent right of award holders to purchase

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The table below presents activity related to stock options during the

six months ended June 30, 2024:

nine months ended September 30, 2024:

options Weighted

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Forfeited / expired -

Outstanding as of June 30, 2024 3,019,639 8.04 6.5

Unvested as of June 30, 2024 2,710,637 7.70 6.5

Exercisable as of June 30, 2024 -

Outstanding as of September 30, 2024 3,076,653 8.00 6.2

Unvested as of September 30, 2024 2,767,651 7.67 6.3

Exercisable as of September 30, 2024 -

The grant-date fair value of stock options granted in 2024 was $ 1.39

per share for options granted to employees and officers and $ 1.48 per share for options granted to non-employee directors.

As of September

30, 2024, there were 2,636,091 options granted to employees and officers outstanding, of which 2,327,089 were unvested, and 440,562 options

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Restricted Stock Units

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

RSUs represent an unsecured right to receive one share of the Company’s common stock equal to the value of the common stock on the

settlement date.

RSUs have a zero-exercise price and vest over time in whole after the first anniversary of the date of grant subject

to continuous service through the vesting date.

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

vested RSUs, 120,824 were converted into an equal number of shares of the Company’s Class A common stock, and the remaining 20,832

remain outstanding as of June 30, 2024, as the director elected to defer receipt.

were outstanding as of September 30, 2024, as the director elected to defer receipt.

NOTE 8 – WARRANTS

There were 15,383,263 warrants outstanding as of June 30, 2024.

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.

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.

There were 15,383,263 warrants outstanding as of September 30, 2024.

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.

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.

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

price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the

product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price

of the warrants and the “fair market value” (defined below) by (y) the fair market value.

The “fair market value”

for this purpose will mean the average reported last sale price of the shares of Class A common stock for the five trading days ending

on the trading day prior to the date of exercise.

The warrants will expire on February 15, 2028, at 5:00 p.m., New York City time, or

earlier upon redemption or liquidation.

The Company may call the warrants for redemption, in whole and not

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state securities laws.

Warrants were exercised on various dates during the three and six months

ended June 30, 2023, whereby the total number of warrants exercised was 29,216 , resulting in the issuance of 29,216 shares

of the Company’s Class A common stock.

The Company received cash of $ 335,984 related to the warrant exercises during the three

and six months ended June 30, 2023.

No warrants were exercised during the three and six months ended June

An aggregate of 29,216 warrants were exercised on various dates during

the nine months ended September 30, 2023, resulting in the issuance of 29,216 shares of the Company’s Class A common stock.

The Company received cash of $ 335,984 related to such warrant exercises during the nine months ended September 30, 2023.

No warrants were exercised during the three and nine months ended September

NOTE 9 – INCOME TAX

As of June 30, 2024, Verde Clean Fuels, Inc.

holds 29.80 % of the economic

interest in OpCo, which is treated as a partnership for U.S.

As of September 30, 2024, Verde Clean Fuels, Inc.

holds 29.80 % of the

economic interest in OpCo, which is treated as a partnership for U.S.

federal income tax purposes.

As a partnership, OpCo generally is not subject

As a partnership, OpCo generally is

not subject to U.S.

federal income tax under current U.S.

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is subject to U.S.

federal income taxes, in addition to

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

federal income taxes, in

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

credits of OpCo.

Intermediate was historically and remains a disregarded subsidiary

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The Company’s effective tax rate was 0 % for both the three

and six months ended June 30, 2024, respectively, and was 0 % for both the three and six months ended June 30, 2023.

The effective income

tax rates for each period differed significantly from the statutory rate primarily due to the losses allocated to noncontrolling interests

and the recognition of a valuation allowance as a result of the Company’s new tax structure.

and nine months ended September 30, 2024, respectively, and was ( 2.08 %) for both the three and nine months ended September 30, 2023.

effective income tax rates for each period differed significantly from the statutory rate primarily due to the losses allocated to noncontrolling

interests and the recognition of a valuation allowance as a result of the Company’s tax structure.

The effective tax rate for the

three and nine months ended September 30, 2023 also included a return to provision adjustment.

The Company has assessed the realizability of its net deferred tax

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The Company has maintained a full valuation allowance against

its deferred tax assets as of June 30, 2024, which will be maintained until there is sufficient evidence to support the reversal of all

or some portion of these allowances.

its deferred tax assets as of September 30, 2024, which will be maintained until there is sufficient evidence to support the reversal

of all or some portion of these allowances.

The Company’s income tax filings will be subject to audit by

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that are required to be paid (but have not yet been paid) for the year in which the change of control occurs or any prior years.

As of June 30, 2024, the Company did not have a tax receivable balance.

As of September 30, 2024, the Company did not have a tax receivable

NOTE 10 – LOSS PER SHARE

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Basic net loss per share has been computed by dividing net loss attributable

to Class A common shareholders for the period subsequent to the Business Combination by the weighted average number of shares of Class

to Class A common stockholders for the period subsequent to the Business Combination by the weighted average number of shares of Class

A common stock outstanding for the same period.

Diluted earnings per share of Class A common stock were computed by dividing net loss

attributable to Class A common shareholders by the weighted-average number of shares of Class A common stock outstanding adjusted to give

Diluted loss per share of Class A common stock was computed by dividing net loss

attributable to Class A common stockholders by the weighted-average number of shares of Class A common stock outstanding adjusted to give

effect to potentially dilutive securities.

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Therefore, the weighted average

number of common shares outstanding used to calculate both basic and diluted net loss per share is the same.

The following table sets

forth the computation of net loss used to compute basic net loss per share of Class A common stock.

number of common stock outstanding used to calculate both basic and diluted net loss per share is the same.

The following table sets forth

the computation of net loss used to compute basic net loss per share of Class A common stock.

Three Months Ended

Nine Months Ended

September 30,

Net loss attributable to Verde Clean Fuels, Inc.

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$ ( 773,192 )

Basic weighted-average shares outstanding

Dilutive effect of share-based awards

Diluted weighted-average shares outstanding

Basic loss per share

Diluted loss per share

Six Months Ended

Net loss attributable to Verde Clean Fuels, Inc.

$ ( 2,453,810 )

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per diluted share for all periods presented because their effects were anti-dilutive:

As of June 30,

Earnout Shares (1)

As of September 30,

Earn out shares (1)

Convertible debt

Stock options

Time based RSUs (2)

Total anti-dilutive instruments

(1) Excludes 3,500,000 Class C earnout shares convertible into Class A common shares.

Class C common shares are not participating securities;

(1) Excludes 3,500,000 Class C earn out shares convertible into shares of Class A common stock.

Shares of Class C common stock are not participating securities;

thus, the application of the two-class method is not required.

(2) Excludes 20,832 of vested and deferred RSUs outstanding as of June 30, 2024.

(2) Excludes 20,832 of vested and deferred RSUs outstanding as of September 30, 2024.

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

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indirect economic interests are held by Holdings in the form of Class C OpCo units.

Following the completion of the Business Combination, the

ownership interests of the Class A common stockholders and the NCI were 29.38 % and 70.62 %, respectively.

As of June 30, 2024, the

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

The change in ownership

interests was due to warrant exercises during the three months ended June 30, 2023 that resulted in the issuance of an additional

29,216 shares of Class A common stock, the settlement of the related party New Promissory Note during the three months ended March

31, 2024 that resulted in the issuance of an additional 40,961 Class A common stock and the issuance of 120,824 shares of Class A

common stock as a result of RSUs vesting during the three months ended June 30, 2024.

See Notes 4, 7 and 8 for further information.

The NCI may further decrease according to the number of shares of Class C common stock and Verde Clean Fuels OpCo LLC Class C units

that are exchanged for shares of Class A common stock or due to the issuance of additional Class A common stock.

As a result of these exchange s ,

the Company’s equity attributable to the NCI and the Class A common shareholders

was rebalanced to reflect the change in ownership percentage , as calculated

based on the respective ownership interests of the combined equity interests.

NOTE 11 – JOINT DEVELOPMENT AGREEMENT

Following the completion of the Business Combination, the ownership

interests of the Class A common stockholders and the NCI were 29.38 % and 70.62 %, respectively.

As of September 30, 2024, the ownership

interests of the Class A common stockholders and the NCI were 29.80 % and 70.20 %, respectively.

The change in ownership interests was due

to warrant exercises during the nine months ended September 30, 2023, as well as the settlement of the related party New Promissory Note

and the issuance of shares of Class A common stock as a result of RSUs vesting during the nine months ended September 30, 2024.

4, 7 and 8 for further information.

The NCI may further decrease according to the number of shares of Class C common stock and Verde Clean

Fuels OpCo LLC Class C units that are exchanged for shares of Class A common stock or due to the issuance of additional Class A common

As a result of these exchanges, the Company’s equity attributable

to the NCI and the Class A common stockholders was rebalanced to reflect the change in ownership percentage, as calculated based on the

respective ownership interests of the combined equity interests.

NOTE 11 – JOINT DEVELOPMENT AGREEMENT WITH COTTONMOUTH

On February 6, 2024, the Company and Cottonmouth, a subsidiary of Diamondback

Energy (“Diamondback”), entered into a JDA for the proposed development, construction, and operation of a facility to produce

commodity-grade gasoline using natural gas feedstock supplied from Diamondback’s operations in the Permian Basin.

(“Diamondback”), entered into the JDA for the proposed development, construction, and operation of a facility

to produce commodity-grade gasoline using natural gas feedstock supplied from Diamondback’s operations in the Permian Basin.

Diamondback is an independent oil and natural gas company headquartered

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On June 4, 2024, the Company announced that it had selected Chemex

as the contractor to spearhead the FEED phase of the JDA.

With the selection of Chemex, FEED work commenced and is expected to be

completed in early 2025.

In connection with entering into the JDA and commencement of the FEED, the Company began to incur development

costs with respect to the project.

Under the terms of the JDA, 65 % of the approved development costs incurred by the Company (which

includes the FEED costs) are reimbursed by Cottonmouth.

as the contractor to spearhead the FEED phase of the project contemplated by the JDA.

With the selection of Chemex, FEED work commenced

and is expected to be completed in mid-2025.

In connection with entering into the JDA and commencement of the FEED, the Company began

to incur development costs with respect to the project.

Under the terms of the JDA, 65 % of the approved development costs incurred

by the Company (which includes the FEED costs) are reimbursed by Cottonmouth.

See Note 6 for further information.

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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