Verde Clean Fuels, Inc.

Previous wording

References in this Quarterly Report on Form 10-Q (this “Quarterly Report”) to “we,” “our,” “us,” “Verde,” “Verde Clean Fuels” or the “Company” refer to Verde Clean Fuels, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Current wording

References in this Quarterly Report on Form 10-Q (this “Quarterly Report”) to “we,” “our,” “us,” “Verde,” “Verde Clean Fuels” or the “Company” refer to Verde Clean Fuels, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. The amounts contained herein are presented in thousands, except share and per share amounts. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Previous wording

•significant developments in macroeconomic and political conditions beyond the Company’s control, including disruptions in the supply chain, increased costs due to inflation, the imposition of tariffs or trade disputes;

Current wording

•significant developments in macroeconomic and political conditions beyond the Company’s control, including disruptions in the supply chain, increased costs due to inflation, the imposition of tariffs or other economic measures or trade disputes, and any U.S. government shutdowns;

Previous wording

In February 2024, Verde and Cottonmouth entered into a joint development agreement ("JDA"), which provides a pathway forward 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 (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.

Current wording

In February 2024, Verde and Cottonmouth entered into a joint development agreement (“JDA”), which provides a pathway forward for 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.

Previous wording

In June 2024, we entered into a contract with Chemex Global, LLC ("Chemex") for a front-end engineering and design ("FEED") study related to the Permian Basin Project. Completing the FEED study is a key requirement to achieving FID. In January 2025, we identified a new site for the Permian Basin Project with improved access to key utilities. To date, we have continued to advance development activities related to the Permian Basin Project, including the FEED study.

Current wording

In January 2025, we identified a new site for the Permian Basin Project with improved access to key utilities. To date, we have continued to advance development activities related to the Permian Basin Project, including the FEED study, which is a key requirement to achieving FID. Upon satisfaction of the JDA conditions precedent and achieving FID for the Permian Basin Project, it is anticipated that engineering, procurement, and construction work would then commence.

Previous wording

Under the terms of the JDA, 65% of the approved development costs that we incur (which includes costs associated with the FEED study) are reimbursed by Cottonmouth. As of June 30, 2025, our construction in progress assets are comprised of capitalized FEED costs related to the Permian Basin Project of $6,414,100, net of amounts reimbursable by Cottonmouth of $4,168,400.

Current wording

As of September 30, 2025, our construction in progress assets are comprised of capitalized development costs (which include costs associated with the FEED study) related to the Permian Basin Project of $9,293, net of amounts reimbursable by Cottonmouth of $5,977.

Previous wording

General and administrative expenses increased $313,692, or 5%, for the six months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to additional headcount resulting in higher compensation expense, which was largely offset by a reduction in outside services and insurance expense.

Current wording

General and administrative expenses increased by $58, or 2%, for the three months ended September 30, 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 largely offset by lower outside services and insurance expenses.

Previous wording

Other income increased $349,155, or 110%, for the three months ended June 30, 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, which increased due to the net proceeds received from the closing of the PIPE Investment in January 2025.

Current wording

Other income increased by $359, or 123%, for the three months ended September 30, 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.

Previous wording

General and administrative expenses increased $105,546, or 4%, for the three months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to additional headcount resulting in higher compensation expense, largely offset by a reduction in outside services and insurance expense.

Current wording

General and administrative expenses increased by $372, or 4%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The increase was primarily due to additional employee headcount and additional stock options granted during 2025, which was partially offset by lower outside services and insurance expenses.

Previous wording

Of our general and administrative expenses for the three months ended June 30, 2025 and 2024, $7,290 and $85,047, 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.

Current wording

Of our general and administrative expenses for the nine months ended September 30, 2025 and 2024, $207 and $308, 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.

Previous wording

Research and development expenses increased $69,693, or 27%, for the six months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to higher software costs, offset by classification of a portion of the engineers' and consultants' time associated with the Permian Basin Project to construction in progress in 2025.

Current wording

Research and development expenses increased by $107, or 30%, for the nine months ended September 30, 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.

Previous wording

Other income increased $533,270, or 81%, for the six months ended June 30, 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, which increased due to the net proceeds received from the closing of the PIPE Investment in January 2025.

Current wording

Other income increased by $892, or 94%, for the nine months ended September 30, 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.

Previous wording

As of June 30, 2025, we are still in the 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.

Current wording

As of September 30, 2025, we are still in the 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 that were primarily attributable to our ongoing general and administrative expenses and development activities.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $62.1 million.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $59,440.

Previous wording

Summary Statement of Cash Flows for the Six Months Ended June 30, 2025 and June 30, 2024

Current wording

Summary Statement of Cash Flows for the Nine Months Ended September 30, 2025 and 2024

Previous wording

Net cash used in operating activities increased approximately $0.9 million during the six months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to cash paid for D&O insurance and excise tax, partially offset by higher interest and dividend income earned on our cash and cash equivalents, which increased due to the net proceeds received from the closing of the PIPE Investment in January 2025.

Current wording

Net cash used in operating activities increased by $908 during the nine months ended September 30, 2025 as compared to the same period in 2024. The increase was primarily due to higher working capital requirements largely resulting from cash paid for excise tax, which was partially 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.

Previous wording

Net cash used in investing activities during the six months ended June 30, 2025 was largely consistent as compared to the same period in 2024. The activities were primarily related to development costs incurred in connection with the JDA, partially offset by cash reimbursements for such capital expenditures received from Cottonmouth. See Note 4 in the accompanying unaudited condensed consolidated financial statements for further information.

Current wording

Net cash used in investing activities increased by $1,036 during the nine months ended September 30, 2025 as compared to the same period in 2024. The increase was primarily attributable to higher development costs related to the Permian Basin Project, net of amounts reimbursable by Cottonmouth in accordance with the JDA. See Note 4 in the accompanying unaudited condensed consolidated financial statements for further information.

Previous wording

Net cash provided by financing activities was $49.4 million for the six months ended June 30, 2025 as compared to $0 for the same period in 2024. The increase was due to the net proceeds from the closing of the PIPE Investment in January 2025.

Current wording

Net cash provided by financing activities increased by $49,446 for the nine months ended September 30, 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.

Previous wording

The Company had a restricted cash balance of $100,000 as of both June 30, 2025 and December 31, 2024. The restricted cash balance is maintained in support of a letter of credit.

Current wording

The Company had a restricted cash balance of $100 as of both September 30, 2025 and December 31, 2024. The restricted cash balance is maintained in support of a letter of credit.