Verde Clean Fuels(US:VGAS)2023-11-13 21:18Financial Performance - Verde Clean Fuels reported a net increase in cash of $37.3 million, consisting of $32.0 million from PIPE Financing, $19.0 million from the trust, and $91 thousand from the CENAQ operating account, offset by $10.0 million in transaction expenses and a $3.75 million capital repayment to Holdings [150]. - As of September 30, 2023, the company reported a net loss of $2.6 million compared to a net income of $4.3 million for the same period in 2022, reflecting significant changes in operating expenses [170]. - The company incurred a net loss of $8,299,479 for the nine months ended September 30, 2023, compared to a net income of $3,600,180 for the same period in 2022 [177]. - The company has an accumulated deficit of $23.3 million as of September 30, 2023, with negative operating cash flow during the nine months ended September 30, 2023, and 2022 [185]. - Net cash used in operating activities increased by $4.5 million during the nine months ended September 30, 2023, primarily due to additional professional fees of $2.6 million related to the business combination [190]. Expenses - For the three months ended September 30, 2023, general and administrative expenses increased by approximately $1.6 million, or 189%, to $2.5 million, primarily due to higher professional fees, insurance costs, and share-based payment expenses [171]. - General and administrative expenses rose by approximately $5.9 million, or 177%, from $3.3 million for the nine months ended September 30, 2022, to $9.2 million for the same period in 2023 [178]. - Research and development expenses for the three months ended September 30, 2023, were $78,314, slightly up from $72,548 in the same period in 2022, indicating ongoing investment in technology development [170]. - R&D expenses increased by approximately $6 thousand, or 8%, from $72 thousand in Q3 2022 to $78 thousand in Q3 2023, primarily due to higher operating costs associated with the demonstration plant in New Jersey [173]. Future Plans and Growth - The company has not generated any revenue to date but expects to generate significant future revenue from the sale of renewable RBOB grade gasoline in markets with low-carbon fuel credit systems [166]. - Verde Clean Fuels plans to construct a new renewable gasoline production facility in Kern County, California, expected to produce approximately 7 million gallons per year, with project FID targeted for mid-2025 and operations expected to begin in the second half of 2027 [162]. - The first commercial production facility using the STG+® technology could be operational as early as 2025, which is critical for the company's success [163]. - The company has three additional production facilities planned and four additional identified potential production facility development opportunities, indicating a strong pipeline for future growth [159]. - The company expects to use the proceeds from the Business Combination to fund ongoing operations and R&D activities, with sufficient funds available to cover cash needs through 2024 [186]. Capital and Financing - The company raised approximately $37.3 million in net proceeds from the Business Combination, which closed on February 15, 2023 [186]. - The company anticipates that 70% of its total project capital requirements will be met through project financing, industrial revenue bonds, or pollution control bonds [187]. Internal Controls and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which have not been fully remediated [195]. - Management believes there is no new accounting guidance issued but not yet effective that would have a material impact on the Company's current consolidated financial statements [212]. Share-Based Compensation - The Company accelerated share-based payment expense related to service-based units totaling $2.1 million during the three-month period ended March 31, 2023 [209]. - No service-based or performance-based incentive units were granted during the three- and nine-month periods ended September 30, 2023 [209]. - The Company authorized and approved the 2023 Plan, which includes potential future grants of stock appreciation rights, restricted stock, performance awards, and other stock-based awards [210]. - Amendments to existing unit-based awards resulted in all outstanding unvested Series A Incentive Units and Founders Incentive Units becoming fully vested upon completion of the Business Combination [208]. - The priority of distributions under the Series A Incentive Units and Founders Incentive Units was revised to 10% after a specified return to Holdings' Series A Incentive Unit holders [208]. - The Company does not anticipate paying any cash dividends in the foreseeable future, using an expected dividend yield of zero in the option valuation model [205]. - Compensation costs associated with certain arrangements were allocated by Holdings to Intermediate, with the ultimate contractual obligation resting with Holdings [207]. - Performance-based unit compensation cost is measured at the grant date based on the fair value of the equity instruments awarded and is expensed over the requisite service period [206]. - The Company expects to be an emerging growth company at least through 2023 following the consummation of the Business Combination [211].