Verde Clean Fuels(VGAS) - 2021 Q4 - Annual Report

IPO and Financial Proceeds - The company completed its IPO on August 17, 2021, raising gross proceeds of $150 million from the sale of 15 million units at $10.00 per unit[22]. - An additional $22.5 million was generated from the underwriters exercising their over-allotment option, bringing total gross proceeds to $172.5 million[27]. - The trust account initially holds $174,225,000 available for a business combination, equating to $10.10 per unit before any underwriting commissions and expenses[57]. - The net proceeds from the IPO and private placement warrants available outside the trust account are approximately $600,000, which may not be sufficient for operations over the next 12 months[161]. - Offering expenses totaled $576,438, which did not exceed the estimated $900,000, allowing for an increase in available funds outside the trust account[161]. Business Combination Strategy - The company has identified potential business combination targets in the energy sector, focusing on energy transition and renewable fuels industries[21]. - The company plans to focus on acquiring assets that are underperforming due to capital starvation or other market dislocations, aiming for attractive risk-adjusted returns[39]. - The company aims to leverage relationships with management teams and financial institutions to identify numerous business combination opportunities[38]. - The company intends to conduct comprehensive due diligence on potential targets, leveraging the management team's experience in the energy sector[45]. - The company may pursue opportunities with entities where officers or directors have fiduciary obligations, potentially allowing co-investment during the initial business combination[50]. Management and Experience - The management team has over 170 years of combined experience in forming, financing, and operating public and private oil and gas companies[31]. - The CEO has previously led the acquisition of over 150 oil and gas properties, with a net production of 18,500 BOPD and 146 MMCFD at the time of acquisition[34]. - The management team has a proven track record of executing transactions under varying economic conditions, enhancing the attractiveness of potential target businesses[36]. - The company is dependent on a relatively small group of individuals, particularly its officers and directors, for its operations, and their loss could adversely affect the company's ability to operate[203]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," allowing it to benefit from reduced reporting requirements until it reaches $1.07 billion in annual gross revenue or other specified thresholds[55]. - The company may remain a "smaller reporting company" until the market value of its common stock held by non-affiliates exceeds $250 million or annual revenues exceed $100 million[56]. - Stockholder approval is required for mergers involving the company if shares issued equal or exceed 20% of Class A common stock outstanding[69]. - The company must ensure that net tangible assets remain above $5,000,001 to avoid being classified as a "penny stock" under SEC rules[92]. - The company is subject to NASDAQ's initial listing requirements, which include maintaining a stock price of at least $4.00 per share[142]. Redemption Rights and Stockholder Approval - The anticipated redemption price for public stockholders is approximately $10.10 per share, based on the trust account balance[76]. - Public stockholders can redeem shares either through a stockholder meeting or a tender offer, with a minimum notice period of 10 days[77]. - If stockholder approval is sought, a majority of outstanding shares must vote in favor for the business combination to proceed[81]. - Redemption rights are limited to 15% of shares sold in the IPO for any single stockholder or group acting in concert[83]. - The company will not redeem shares if it would cause net tangible assets to fall below $5,000,001[82]. Risks and Challenges - The company acknowledges the risks of depending on a single business for future performance post-combination, which may expose it to economic and regulatory challenges[65]. - The company may face challenges in completing its initial business combination due to limited resources and significant competition[116]. - The ongoing COVID-19 pandemic may materially adversely affect the company's search for a business combination and the status of debt and equity markets, potentially limiting travel and meetings necessary for negotiations[153]. - The ability to raise equity and debt financing may be impacted by COVID-19, leading to increased market volatility and decreased liquidity, which could adversely affect the company's financing capabilities[154]. - The company faces intense competition from other blank check companies and private equity groups in identifying target businesses[107]. Financial Condition and Future Outlook - The company has no operating history and has generated no revenues to date[114]. - As of December 31, 2021, the company had $505,518 in cash and working capital of $487,083, raising substantial doubt about its ability to continue as a going concern[194][195]. - The company’s balance sheet reflects negative stockholders' equity, indicating potential financial instability[120]. - The company may incur write-downs or other charges post-business combination that could negatively impact financial condition and stock price, potentially leading to losses for investors[162]. - If the initial business combination is not completed, public stockholders may receive approximately $10.10 per share on liquidation of the trust account, which could be less in certain circumstances[201]. Conflicts of Interest - Conflicts of interest may arise as officers and directors may be affiliated with entities engaged in similar business activities, affecting their allocation of time and business opportunities[212]. - The company may engage in a business combination with target businesses affiliated with its sponsor, officers, or directors, which could raise potential conflicts of interest[216]. - The management team may negotiate employment or consulting agreements with a target business, which could create conflicts of interest in determining the most advantageous business combination[208]. Additional Financing and Share Issuance - The company may seek additional funds through private offerings of debt or equity securities in connection with the business combination[60]. - The company may issue additional shares of common stock or preferred stock to complete its initial business combination, which could dilute existing shareholders' interests[196]. - The company may attempt to complete multiple business combinations simultaneously, which could complicate operations[120]. - The issuance of additional shares could cause a change of control, potentially affecting the company's ability to use net operating loss carryforwards and resulting in the resignation or removal of current officers and directors[204].