Company: VGASW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001628280-25-015480
Chunk: 137

Company: Verde Clean Fuels, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 137
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On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. The amount of repurchases applicable to the excise tax can be reduced by the fair market value of any issuances at the time of issuance that occurred during the year, as well as certain exceptions provided by the U.S. Department of the Treasury.As of December 31, 2024, the Company has recorded an accrual for excise tax liability of $978,412. During the year ended December 31, 2024, the Company reduced the estimated excise tax liability by $609,563, which was recorded as an increase to additional paid in capital within stockholders’ equity upon finalization of the calculation of the amount owed and ultimate submission of the excise tax return filed.

NOTE 7 — RELATED PARTY TRANSACTIONS

HoldingsThe Company has a related party relationship with Holdings whereby Holdings holds a majority ownership in the Company via voting shares and has control of its Board of Directors. Further, Holdings possesses 3,500,000 earn out shares. Certain of the Company's management hold Series A Incentive Units and Founder Incentive Units (each as defined below) that entitle them to participate in the earnings of and distributions by Holdings after a specified return to the Series A Preferred Unit holders. See Notes 1, 3 and 9 for further information.ChemexIn June 2024, the Company entered into a contract with Chemex, a Shaw Group company, for a FEED study related to the Permian Basin Project. Also in June 2024, the parent organization of Holdings, through a separate subsidiary, made an unrelated preferred equity investment in the Shaw Group and, in connection with the investment, Jonathan Siegler, a Company director, was appointed as a director of the Shaw Group. Total FEED study costs incurred as of December 31, 2024, net of reimbursement from Cottonmouth, were $1.0 million, and are recorded to