Verde Clean Fuels(VGAS) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements The development-stage company reported a $2.7 million net loss in Q1 2025, with total assets significantly increasing to $71.3 million due to a $50 million PIPE investment Consolidated Financial Statements The company's Q1 2025 consolidated financial statements show a $2.7 million net loss and significant balance sheet growth from a $50 million equity issuance Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $65,280,360 | $19,044,067 | | Total current assets | $67,172,582 | $20,174,410 | | Total assets | $71,289,198 | $23,572,306 | | Liabilities & Equity | | | | Total current liabilities | $3,456,938 | $2,810,585 | | Total liabilities | $3,546,295 | $2,888,830 | | Total stockholders' equity | $67,742,903 | $20,683,476 | Consolidated Statement of Operations Highlights (Unaudited) | Account | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Total operating loss | $3,180,828 | $2,875,211 | | Net loss | $(2,703,585) | $(2,529,083) | | Net loss attributable to Verde Clean Fuels, Inc. | $(1,246,711) | $(772,371) | | Loss per share of Class A common stock | $(0.08) | $(0.13) | Consolidated Statement of Cash Flows Highlights (Unaudited) | Activity | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,701,761) | $(2,829,250) | | Net cash used in investing activities | $(11,946) | $(8,323) | | Net cash provided by financing activities | $49,950,000 | $0 | | Net change in cash, cash equivalents and restricted cash | $46,236,293 | $(2,837,573) | Notes to Unaudited Consolidated Financial Statements Notes detail accounting policies, the Cottonmouth partnership, the $50 million PIPE investment, cost-sharing, warrants, and equity structure - The company is focused on deploying its proprietary syngas-to-gasoline (STG+®) process, converting feedstocks like natural gas into finished liquid fuels[23] - In January 2025, the company closed a $50 million PIPE Investment by issuing 12.5 million shares of Class A common stock to Cottonmouth Ventures, LLC at $4.00 per share[88] - Under the Joint Development Agreement (JDA) for the Permian Basin Project, Cottonmouth reimburses 65% of the approved development costs, including the Front-End Engineering and Design (FEED) study[87] - Construction in progress assets as of March 31, 2025, totaled $1,518,039, consisting of capitalized FEED costs of $4,301,267, net of $2,783,228 reimbursable by Cottonmouth[91] - As of March 31, 2025, there were 15,383,263 warrants outstanding, each entitling the holder to purchase one share of Class A common stock at $11.50 per share[121] - Due to the issuance of stock to Cottonmouth, the ownership interest of Class A common stockholders increased from 29.80% at year-end 2024 to 49.49% as of March 31, 2025[128] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic focus on the Permian Basin Project, Q1 2025 results showing increased net loss, and liquidity strengthened by a $50 million PIPE investment Overview and Recent Developments Verde, a pre-revenue clean fuels company, closed a $50 million PIPE investment with Cottonmouth in January 2025, advancing the Permian Basin Project - The company's core business is the deployment of its STG+® process to convert syngas from diverse feedstocks into finished liquid fuels, with a current focus on converting associated natural gas to gasoline[143] - On January 29, 2025, the company consummated a $50 million PIPE Investment with Cottonmouth, a subsidiary of Diamondback Energy[147] - The company is advancing the Permian Basin Project with Cottonmouth, which is expected to produce approximately 3,000 barrels per day of gasoline, with a new site identified in Q1 2025 for better utility access[153][154] Results of Operations Q1 2025 total operating loss increased to $3.2 million due to higher G&A and R&D expenses, while other income rose to $0.5 million Comparison of Operations (Three Months Ended March 31) | Account | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | General and administrative expenses | $2,997,522 | $2,789,376 | | Research and development expenses | $183,306 | $85,835 | | Total operating loss | $3,180,828 | $2,875,211 | | Other (income) | $(530,243) | $(346,128) | | Net loss | $2,703,585 | $2,529,083 | - General and administrative expenses increased by approximately $0.2 million (8%) in Q1 2025 compared to Q1 2024, primarily due to additional headcount[165] - Research and development expenses increased by approximately $0.1 million (114%) in Q1 2025 compared to Q1 2024, mainly due to additional headcount and higher software costs[167] Liquidity and Capital Resources As of March 31, 2025, cash and cash equivalents totaled $65.3 million, significantly bolstered by a $50 million PIPE investment, sufficient for 2025 operations but requiring more capital for plant construction - As of March 31, 2025, the company had cash and cash equivalents of $65.3 million[171] - Current cash is expected to be sufficient to fund requirements through the 2025 fiscal year, but additional capital will be required to complete the first commercial production plant[172] - Net cash provided by financing activities was $49.9 million for Q1 2025, entirely from the net proceeds of the PIPE Investment, compared to $0 in Q1 2024[177] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Verde Clean Fuels is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Verde Clean Fuels is not required to provide quantitative and qualitative disclosures about market risk[183] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures are effective[184] - There were no material changes to the company's internal control over financial reporting during the first quarter of 2025[185] PART II OTHER INFORMATION Legal Proceedings As of March 31, 2025, the company is not involved in any material pending legal proceedings - The company is not currently a party to any material pending legal proceedings[188] Risk Factors No material changes to risk factors were reported since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the period ended December 31, 2024[189] [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable for the current reporting period - Not applicable[190] Defaults Upon Senior Securities No defaults upon senior securities occurred during the reporting period - None[191] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[192] Other Information No other material information is reported for the period - None[193] Exhibits This section lists exhibits filed, including charter documents, Cottonmouth investment agreements, officer certifications, and XBRL data - Exhibits filed include the Fifth Amended and Restated Certificate of Incorporation, an amendment to the Equity Participation Right Agreement with Cottonmouth, the Second Amended and Restated Registration Rights Agreement, and officer certifications required by the Sarbanes-Oxley Act[195]