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Item 7. Management’s Discussion and Analysis

2026-03-27 compared with 2025-03-28 · 92 added, 108 removed, 113 unchanged (64% of the section changed)

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“Risk Factors.”

We are a clean fuels company focused on the deployment of our innovative and proprietary liquid fuels processing technology through development of commercial production plants.

Verde’s syngas-to-gasoline plus (STG+®) process converts syngas, derived from diverse feedstocks, into fully finished liquid fuels that require no additional refining.

Verde is currently focused on identifying and evaluating opportunities to convert associated natural gas into gasoline, which is expected to provide a market for such natural gas with the added potential benefits of flare mitigation and production of gasoline with a lower carbon intensity than conventional gasoline.

As of December 31, 2024, the Company is still in the process of developing its first commercial production facility and has not derived revenue from its principal business activities.

The Company is managed as an integrated business and there is only one reportable segment.

We own an innovative and proprietary gas-to-liquids processing technology capable of converting low-value or stranded feedstocks into higher-value clean transportation fuels.

Our synthesis gas (“syngas”)-to-gasoline plus (STG+®) process is designed to convert syngas, derived from a variety of feedstocks, including natural gas and biomass, into fully finished liquid fuels that require no additional refining.

The STG+® technology is engineered for industrial-scale deployment and intended to be delivered in standardized modular units.

The technology has been validated through a fully integrated demonstration plant that has completed over 10,000 hours of operation.

As of December 31, 2025, we are still in the process of deploying our STG+ ® technology and have not derived revenue from our principal business activities.

We acquired our STG+ ® technology from Primus in 2020, which was originally founded in 2007 and invested over $110 million in developing and demonstrating such technology, including the construction and operation of the demonstration plant.

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Recent Developments

On February 6, 2026, we announced the suspension of development of the Permian Basin Project (as defined below) primarily as a result of changing market conditions driven by increasing demand for natural gas in the Permian Basin.

On February 18, 2026, we announced a revised strategy to deploy our innovative and proprietary liquid fuels processing technology through capital-lite opportunities.

The shift in strategy is intended to identify the most effective pathways to commercialize the STG+® technology with a disciplined approach to capital allocation.

Related to our revised strategy, we have implemented and intend to continue implementing aggressive cost savings initiatives targeting a 50% reduction in costs in 2026 as compared to 2025.

In connection with this initiative, our Board of Directors has created a Restructuring Committee and appointed director Jonathan Siegler as the sole member of that committee.

The Restructuring Committee’s mandate includes overseeing all aspects of our revised strategy and evaluation of strategic alternatives while ensuring we remain fully NASDAQ-compliant.

In connection with our cost savings initiatives, we are streamlining our Board of Directors.

Related thereto, current directors Martijn Dekker and Dail St.

Claire will not be standing for re-election at the end of their term.

On March 20, 2026, we announced the appointment of George Burdette as CEO and engagement of Roth Capital Partners as financial advisor to assist the Company in evaluating strategic alternatives.

These announcements are part of the Company’s continued advancement of its previously announced restructuring and cost reduction initiatives.

Burdette succeeds Ernie Miller who is stepping down from his role as CEO to pursue another opportunity.

Miller will remain with the Company as a senior advisor.

Burdette, who has served as the Company’s CFO since October 2024, will also continue in that role.

PIPE Investment

On December 18, 2024, the Company entered into the Purchase Agreement with Cottonmouth, a subsidiary of Diamondback, pursuant to which the Company agreed to issue and sell the PIPE Shares to Cottonmouth in a private placement.

On December 18, 2024, the Company entered into common stock purchase agreement (the “Purchase Agreement”) with Cottonmouth Ventures, LLC (“Cottonmouth”), a subsidiary of Diamondback Energy, LLC (“Diamondback”), pursuant to which the Company agreed to issue and sell an aggregate of 12,500,000 shares of its Class A common stock, par value $0.0001 (“Class A common stock”) to Cottonmouth at a price of $4.00 per share for an aggregate purchase price of $50 million (the “PIPE Investment”) in a private placement.

The Company consummated the transactions contemplated by the Purchase Agreement on January 29, 2025.

In connection with the closing of the PIPE Investment, on January 29, 2025, (i) Cottonmouth and the Company amended that certain equity participation right agreement, dated February 13, 2023 (the “Existing Equity Participation Right Agreement”), to remove certain preemptive rights with respect to the Company’s equity securities granted to Cottonmouth under the Existing Equity Participation Right Agreement and (ii) the Company entered into that certain Second Amended and Restated Registration Rights Agreement with Cottonmouth and the other parties thereto, which amended and restated that certain Amended and Restated Registration Rights Agreement, dated February 15, 2023, by and among the Company and certain stockholders named therein (the “Existing Registration Rights Agreement”), to add Cottonmouth as a party to the Existing Registration Rights Agreement.

In connection with the closing of the PIPE Investment, on January 29, 2025, (i) Cottonmouth and the Company amended an equity participation right agreement, dated February 13, 2023 (the “Existing Equity Participation Right Agreement”), to remove certain preemptive rights with respect to the Company’s equity securities granted to Cottonmouth under the Existing Equity Participation Right Agreement and (ii) the Company entered into a Second Amended and Restated Registration Rights Agreement with Cottonmouth and the other parties thereto, which amended and restated that certain Amended and Restated Registration Rights Agreement, dated February 15, 2023, by and among the Company and certain stockholders named therein (the “Existing Registration Rights Agreement”), to add Cottonmouth as a party to the Existing Registration Rights Agreement.

Restated Charter

On December 18, 2024, the holder of a majority of the issued and outstanding shares of Class A Common Stock and Class C Common Stock, adopted resolutions by written consent, in lieu of a meeting of stockholders to, among other things, amend and restate, immediately prior to and contingent upon the consummation of the closing of the PIPE Investment, our Fourth A&R Charter to (A) increase the amount of authorized shares of Class C Common Stock from 25,000,000 to 26,000,000 and (B) increase the size of our Board from seven to eight and to provide Cottonmouth with certain director designation and board observer rights.

On December 18, 2024, the holder of a majority of the issued and outstanding shares of Class A common stock and Class C common stock, par value $0.0001 (“Class C common stock”) adopted resolutions by written consent, in lieu of a meeting of stockholders to, among other things, amend and restate, immediately prior to and contingent upon the consummation of the closing of the PIPE Investment, our fourth amended and restated certificate of incorporation (the “Restated Charter”) to (A) increase the amount of authorized shares of Class C common stock from 25,000,000 to 26,000,000 and (B) increase the size of our Board of Directors (the “Board” or "Board of Directors") from seven to eight and to provide Cottonmouth with certain director designation and board observer rights.

The Restated Charter was approved and recommended by the Board prior to the stockholder action by written consent.

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Commencing and Expanding Commercial Operations

A critical step in our business strategy will be the successful construction and operation of the first commercial production plant using our patented STG+® technology.

Concurrent with the Business Combination, Diamondback through its wholly-owned subsidiary, Cottonmouth, made a $20 million equity investment in Verde and entered into an equity participation right agreement pursuant to which Verde must grant Cottonmouth the right to participate and jointly develop facilities in the Permian Basin utilizing Verde’s STG+® technology for the production of gasoline derived from economically disadvantaged natural gas feedstocks.

A critical step in our business strategy will be the successful deployment of our STG+® technology.

Concurrent with the Business Combination, Diamondback, through its wholly-owned subsidiary, Cottonmouth, made a $20 million equity investment in Verde and entered into the Existing Equity Participation Right Agreement pursuant to which Verde must grant Cottonmouth the right to participate and jointly develop natural gas-to-gasoline plants in the Permian Basin utilizing Verde’s STG+® technology and associated natural gas from Diamondback’s operations.

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

The production of gasoline from natural gas sourced from the Permian Basin is designed to allow Diamondback to mitigate the flaring of natural gas while also producing a high-margin product from natural gas streams that are subject to being price disadvantaged compared to other natural gas basins.

In February 2024, Verde and Cottonmouth entered into the JDA, which provides a pathway forward for the parties to reach final definitive documents and FID.

The JDA frames the contracts contemplated to be entered into between the parties,

including an operating agreement, ground lease agreement, construction agreement, license agreement and financing agreements as well as conditions precedent to close such as FID.

The expectation for the project is to produce approximately 3,000 barrels per day of fully-refined gasoline utilizing Verde’s patented STG+® process.

We expect that the proposed facility, which is to be located in the Permian Basin, could serve as a template for additional natural gas-to-gasoline projects throughout the Permian Basin and other pipeline-constrained basins in the U.S., as well as addressing flared or stranded natural gas opportunities internationally.

In June 2024, the Company entered into a contract with Chemex for a FEED study related to the Permian Basin Project.

In connection with entering into the JDA and the commencement of FEED, we began to incur development costs with respect to the project.

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

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

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

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

In connection with entering into the JDA and the commencement of the FEED study, we began to incur development costs with respect to the project.

Under the terms of the JDA, 65% of the approved development costs that we incur (which includes the FEED costs) are reimbursed by Cottonmouth.

The construction in progress balance as of December 31, 2024 is comprised of capitalized FEED costs of $2,937,528 and is net of $1,908,628 of cost reimbursements from Cottonmouth.

Upon FEED completion and reaching FID, it is anticipated that engineering, procurement and construction work will then commence.

It is expected that commercial operations will be achieved with 18-24 months from commencement of engineering, procurement and construction work.

The FEED study was completed in December 2025;

however, the Permian Basin Project was suspended in February 2026.

We believe the FEED study will continue to be useful as we explore other opportunities to deploy the STG+® technology.

Also in February 2026, we announced a revised strategy to deploy our innovative and proprietary liquid fuels processing technology through capital-lite opportunities.

The shift in strategy is intended to identify the most effective pathways to commercialize the STG+® technology with a disciplined approach to capital allocation.

Such opportunities include licensing technology and providing engineering, technical, and operational services.

Key Components of Results of Operations

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We have not generated any revenue to date.

We expect to generate a significant portion of our future revenue from activities related to the proposed Permian Basin Project, which will produce RBOB grade gasoline.

These revenues are currently expected to be comprised of distributions from our share of ownership of the Permian Basin Project as well as fees from our role as operator of such project.

We expect that future revenue generation opportunities would result from capital-lite opportunities to deploy our STG+® technology.

Such opportunities include licensing technology and providing engineering, technical, and operational services.

General and Administrative Expense

General and administrative expenses consist of compensation costs including salaries, benefits and share-based compensation expense, for personnel in executive, finance, accounting and other administrative functions.

General and administrative expenses also include outside service costs, such as legal fees, professional fees paid for accounting, auditing and consulting services, and insurance costs.

Following the Business Combination, we incurred and expect to continue to incur higher general and administrative expenses for public company costs such as compliance with the regulations of the SEC and Nasdaq.

General and administrative expenses primarily consist of compensation costs, including salaries, benefits and share-based compensation expense, for personnel in executive, finance, accounting and other administrative functions.

General and administrative expenses also include business development costs, outside service costs, such as legal fees, professional fees paid for accounting, auditing and consulting services, and insurance costs.

Research and Development Expense

Our research and development (“R&D”) expenses consist primarily of internal and external expenses incurred in connection with our R&D activities.

These expenses include labor directly performed on our projects and fees paid to third parties working on and testing specific aspects of our STG+® design and gasoline product output.

R&D costs are expensed as incurred.

We expect R&D expenses to grow as we continue to develop the STG+® technology and develop market and strategic relationships with other businesses.

Contingent consideration

Prior to the Business Combination, we had an arrangement payable to our Chief Executive Officer and a consultant whereby a contingent payment would become payable if certain return on investment hurdles were met within five years of an asset purchase arrangement.

The contingent consideration was forfeited in connection with the Closing.

Other income primarily consists of interest and dividend income earned on our cash and cash equivalents balances.

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

Other income primarily consists of interest and dividend income earned on our cash and cash equivalents.

Income Tax Effects

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Results of Operations

Comparison of the years ended December 31, 2024 and 2023

2024 December 31,

Comparison of Operations for the Years Ended December 31, 2025 and 2024

For The Year Ended

(in thousands) 2025 2024

General and administrative expenses 11,927 $ 11,206

Contingent consideration - (1,299,000)

Research and development expenses 591 451

Impairment of property, plant and equipment 3,936 —

Total operating loss 16,454 11,657

Other (income) (2,425) (1,193)

Interest expense - 236,699

Loss before income taxes (14,029) (10,464)

Provision for income taxes 51,465 166,265

Income tax expense 106 51

Net loss $ (14,135) $ (10,515)

General and Administrative

General and administrative expenses decreased approximately $0.3 million, or 3%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The decrease was primarily due to $2.1 million of unit-based compensation expense recorded in the year ended December 31, 2023 associated with the accelerated vesting of all the outstanding Series A Incentive Units and Founder Incentive Units (each as defined in Note 9 in the accompanying Consolidated Financial Statements) as a result of the Business Combination, as well as decreases in miscellaneous general and administrative expenses of $0.4 million.

These decreases were partially offset by higher employee compensation-related expense of $0.9 million attributable to an increase in headcount, higher outside services expense of $0.7 million and higher share-based compensation expense of $0.6 million associated with restricted stock units and stock options granted in 2023 and stock options granted in 2024.

Contingent Consideration

The $1.3 million decrease in contingent consideration for the year ended December 31, 2024 as compared to the prior year reflects the reversal during the year ended December 31, 2023 of the remaining accrual made by Holdings for certain contingent payments due to a contractual forfeiture of the payments following the close of the Business Combination on February 15, 2023.

See Note 3 in the accompanying Consolidated Financial Statements for further information.

Research and Development

R&D expenses for the year ended December 31, 2024 increased approximately $0.1 million, or 37%, as compared to the prior year.

The increase was primarily due to higher employee compensation-related expense attributable to an increase in headcount, partially offset by lower outside services expense.

Other income increased approximately $0.7 million for the year ended December 31, 2024 as compared to the prior year.

The increase was primarily attributable to higher interest and dividend income earned as a result of our money market investment.

Interest Expense

Interest expense decreased approximately $0.2 million for the year ended December 31, 2024 as compared to the prior year.

The decrease was primarily due to our former land lease in Maricopa, Arizona, which was classified as a finance lease until the third quarter of 2023, at which time the lease was modified and reclassified to an operating lease.

The lease was exited on December 31, 2023.

Provision for Income Taxes

The provision for income taxes decreased approximately $0.1 million for the year ended December 31, 2024 as compared to the prior year.

The decrease was primarily due to changes in estimations related to CENAQ’S fiscal year 2022 tax obligations.

See Note 12 to the accompanying Consolidated Financial Statements for further information.

Liquidity and Capital Resources

As of December 31, 2024, we are in process of developing our first commercial production plant and have not derived revenue from our principal business activities.

We do not expect to generate any meaningful revenue unless and until we are able to commercialize our first production plant.

Since inception, we have incurred operating losses and generated negative operating cash flows primarily attributable to our ongoing general and administrative expenses and development activities.

We measure liquidity in terms of our ability to fund the cash requirements of our development activities and our near-term business operations, including our contractual obligations and other commitments.

Our current liquidity needs primarily involve general and administrative expenses and activities related to the ongoing development of our first commercial production plant.

As of December 31, 2024, we had cash and cash equivalents of $19.0 million.

We expect that our cash and cash equivalents, including the net proceeds from the PIPE Investment received after December 31, 2024, will be sufficient to fund our cash requirements, including ongoing general and administrative expenses and planned development activities through the 2025 fiscal year.

However, notwithstanding the PIPE Investment, we further expect that additional capital will be required in order to complete our first commercial production plant.

The exact timing of these additional cash requirements will depend on the pacing of our development activities, which is uncertain and subject to a variety of factors, many of which are outside of our control.

Accordingly, we will likely be required to raise additional funds through the issuance of equity, equity-related or debt securities, through obtaining credit from government or financial institutions or by engaging in joint ventures or other alternative forms of financing.

We cannot be certain that additional funds will be available on favorable terms when required, or at all.

If we cannot raise additional funds when needed, our financial condition, results of operations, business and prospects could be materially and adversely affected.

Our ability to raise funds through equity offerings may be limited by the significant number of shares that may be publicly sold as well as by the amount of publicly traded Class A Common Stock as well as outstanding Warrants, stock options, restricted stock units ("RSUs") or Earn Out Equity.

As the exercise price of our Warrants is $11.50 per share of Class A Common Stock, we do not expect that Warrants will be exercised in the foreseeable future.

In addition, to the extent we raise funds through the sale of additional equity securities, our stockholders would experience additional dilution.

If we raise funds through the issuance of debt securities or through loan arrangements, the terms of such debt securities or loan arrangements could require significant interest payments, contain covenants that restrict our business, or contain other unfavorable terms.

The current high interest rate environment adds additional risk and expense to the issuance of debt securities or loan arrangements to fund capital investment.

General and Administrative Expenses

General and administrative expenses increased approximately $721, or 6%, for the year ended December 31, 2025 as compared to the same period in 2024.

The increase was primarily due to additional stock options granted during 2025 and additional employee headcount, which was partially offset by lower outside services and insurance expenses.

Of our general and administrative expenses for the years ended December 31, 2025 and 2024, $242 and $316, respectively, were business development costs.

The decrease was primarily due to development costs associated with the Permian Basin Project incurred in the comparative period prior to our entry into the JDA, partially offset by increased activities related to the identification and evaluation of potential opportunities to deploy our technology.

Research and Development Expenses

Research and development expenses increased by $140, or 31%, for the year ended December 31, 2025 as compared to the same period in 2024.

The increase was primarily due to higher engineering software costs, which was partially offset by classification of a portion of the engineers’ and consultants’ time associated with the Permian Basin Project to construction in progress in 2025.

Impairment of Property, Plant and Equipment

On February 6, 2026, the Company announced the suspension of development of the Permian Basin Project primarily as a result of changing market conditions driven by increasing demand for natural gas in the Permian Basin.

For the year ended December 31, 2025, the Company recorded an impairment of property, plant and equipment of $3,936, which represented the full value of the Company's construction in progress assets.

Prior to the impairment, the Company's construction in progress assets were comprised of capitalized development costs (which include costs associated with the FEED study) related to the Permian Basin Project, net of costs reimbursable by Cottonmouth in accordance with the JDA.

Other income increased by $1,232, or 103%, for the year ended December 31, 2025 as compared to the same period in 2024.

The increase was primarily due to higher interest and dividend income earned on our cash and cash equivalents resulting from the net proceeds received from the closing of the PIPE Investment in January 2025.

Income Tax Expense

Income tax expense increased approximately $55, or 106%, for the year ended December 31, 2025 as compared to the same period in 2024.

Comparison of Cash Flows for the Years Ended December 31, 2025 and 2024

The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for the periods presented below:

For The Year Ended

(in thousands) 2025 2024

Net cash used in operating activities $ (8,889) $ (8,880)

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Net cash provided by financing activities 49,446 —

Net increase in cash, cash equivalents and restricted cash $ (9,735,110) $ 28,324,248

Net change in cash, cash equivalents and restricted cash

$ 38,171 $ (9,735)

Cash Flows Used in Operating Activities

Net cash used in operating activities decreased $0.2 million during the year ended December 31, 2024 as compared to the prior year.

The decrease was primarily due to higher operating cash flows from interest and dividend income, partially offset by higher operating expenses, including employee compensation-related and outside services.

Net cash used in operating activities increased by $9 during the year ended December 31, 2025 as compared to the same period in 2024.

The increase was primarily due to higher general and administrative and research and development expenses and higher working capital requirements largely resulting from cash paid for excise tax, which was largely offset by higher interest and dividend income earned on our cash and cash equivalents resulting from the net proceeds received from the closing of the PIPE Investment in January 2025.

Cash Flows Used In Investing Activities

Net cash used in investing activities increased $0.8 million during the year ended December 31, 2024 as compared to the prior year.

The increase was primarily attributable to development costs incurred in connection with the JDA upon commencement of FEED study in June 2024, partially offset by cash reimbursements for certain capital expenditures received from Cottonmouth.

Net cash used in investing activities increased $1,531 during the year ended December 31, 2025 as compared to the same period in 2024.

The increase was primarily due to higher development costs related to the Permian Basin Project, net of amounts reimbursable by Cottonmouth in accordance with the JDA.

See Notes 3, 5, and 14 in the accompanying consolidated financial statements for further information.

Cash Flows From Financing Activities

Net cash provided by financing activities was zero for the year ended December 31, 2024 as compared to $37.5 million for the prior year.

Net cash provided by financing activities for the year ended December 31, 2023 consisted of the net proceeds received from the closing of the Business Combination and PIPE Financing.

Following the Business Combination and the closing of the PIPE Financing, we received approximately $37.3 million in cash, net of approximately $10.0 million of transaction expenses and the repayment of approximately $3.8 million of capital contributions made by Holdings since December 2021.

The gross amount, before expenses, was composed of approximately $19.0 million release from CENAQ’s trust account, after payment of approximately $158.8 million to public stockholders who exercised Redemption Rights (representing a redemption rate of approximately 89.3%), and $32.0 million of proceeds from the PIPE Financing.

We also received $0.1 million from the CENAQ operating account.

Net cash provided by financing activities increased by $49,446 for the year ended December 31, 2025 as compared to the same period in 2024.

The increase was due to the net proceeds received from the closing of the PIPE Investment in January 2025.

Liquidity and Capital Resources

We have not generated any revenue to date.

We expect that future revenue generation opportunities would result from capital-lite opportunities to deploy our STG+® technology.

Such opportunities include licensing technology and providing engineering, technical, and operational services.

As of December 31, 2025, we are still in the process of deploying our STG+® technology and have not derived revenue from our principal business activities.

We do not expect to generate revenue unless and until we are able to deploy our STG+® technology.

Since inception, we have incurred operating losses and generated negative operating cash flows that were primarily due to our general and administrative expenses and development activities.

We measure liquidity in terms of our ability to fund the cash requirements of our near-term business operations, including our contractual obligations and other commitments.

Our current liquidity needs are primarily comprised of general and administrative expenses.

As of December 31, 2025, we had cash and cash equivalents of $57,215.

We expect that our cash and cash equivalents will be sufficient to fund our cash requirements, including ongoing general and administrative expenses, for the next 12 months from the reporting date.

Commitments and Contractual Obligations

In October 2022, we 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 occurred in February 2023 contemporaneous with us obtaining control of the identified asset.

The lease was modified during the third quarter of 2023, resulting in a reclassification of the lease from finance to operating.

We exited the lease as of December 31, 2023.

See Note 8 to the accompanying Consolidated Financial Statements for further information.

The Company had a restricted cash balance of $100,000 as of both December 31, 2024 and December 31, 2023.

As of December 31, 2025 and 2024, we had a restricted cash balance of $100.

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

Off-Balance Sheet Arrangements

As of December 31, 2024 and during the year ended December 31, 2024, we had not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies

As of December 31, 2025 and during the year then ended, we did not engage in any off-balance sheet arrangements, as defined in the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”).

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in conformity with U.S.

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

GAAP requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses and allocated charges during the reporting period.

The following is a summary of certain critical accounting policies and estimates that are impacted by judgments and uncertainties and under which different amounts might be reported using different assumptions or estimation methodologies.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses and allocated charges during the reporting period.

The following is a summary of certain critical accounting policies and

estimates that are impacted by judgments and uncertainties and under which different amounts might be reported using different assumptions or estimation methodologies.

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

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

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2024 and December 31, 2023.

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

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

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

There were no impairment charges in any of the periods presented.

Impairment of Intangible Assets

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If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference.

The Company also considered market transactions (such as the PIPE Investment and Business Combination) in qualitatively assessing impairment.

We further determined our estimated enterprise value utilizing a mix of market approach, discounted cash flow and relief from royalty methods (obtained from various analyses including the determination of the grant date fair value of our securities in connection with the share-based compensation awarded in 2024 and 2023), and the estimated enterprise value exceeded the carrying amount of this intangible asset by a substantial amount.

During the years ended December 31, 2024 and 2023, we placed the most weight on the PIPE Investment and Business Combination, respectively, in concluding that no impairment testing was required.

Such transactions served to support management’s conclusion that fair value of our indefinite-lived intangible asset is greater than its carrying amount by a substantial amount, and no impairment charges were recognized in any of the periods presented.

Additionally, during the year ended December 31, 2024, there were no events or changes in circumstances noted that would indicate that the carrying amount of the indefinite-lived intangible asset may not be recoverable.

Unit-Based Compensation

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

We accelerated the unvested service and performance-based units during the year ended December 31, 2023 in connection with the Business Combination.

No service-based or performance-based incentive units were granted during the year ended December 31, 2024.

No service-based or performance-based incentive units were granted during the years ended December 31, 2025 and 2024.

Share-Based Compensation

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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-K

Item 7. Management’s Discussion and Analysis