Company: VGASW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001628280-25-015480
Chunk: 141

Company: Verde Clean Fuels, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 141
---
 the performance requirements for vesting were not achieved. All Sponsor Shares granted in connection with the Business Combination were issued and outstanding as of December 31, 2024 and 2023. 

F-19

Table of Contents

Sponsor Shares subject to forfeiture pursuant to the above terms that do not vest in accordance with such terms shall be forfeited.The grant-date fair value of the Earn Out Equity, using a Monte Carlo simulation model, was $10,594,000 and $5,791,677 attributable to Holdings and the Sponsor, respectively. The following table provides a summary of key inputs utilized in the valuation of the Earn Out Equity on February 15, 2023:InputsAs ofFebruary 15,2023Expected volatility50.00%Expected dividends0%Remaining expected term (in years)5.0 yearsRisk-free rate4.7%Discount Rate (WACC)14.7%Payment Probability12.6% to 18.3%based onTriggering EventThe earn out arrangements are akin to a distribution to our stockholders, similar to the declaration of a pro rata dividend, and the fair value of the shares are a reduction to retained earnings.Based on the per share Class A common stock trading price, the market conditions were not met and no shares of Earn Out Equity vested as of December 31, 2024.Share-based CompensationCompensation expense related to share-based compensation arrangements is included within general and administrative expenses. The total compensation expense incurred related to the Company’s equity-based compensation plans was $1,354,005 and $2,901,569 for the years ended December 31, 2024 and December 31, 2023, respectively. As a taxable event has not occurred, there were no income tax benefits recorded for these awards for the years ended December 31, 2024 and 2023.Incentive UnitsPrior to Closing, certain subsidiaries of the Company, including Intermediate, were wholly owned subsidiaries of Holdings. Holdings, which was outside of the Business Combination perimeter, had entered into several compensation related arrangements with certain of Intermediate's management and employees. Compensation costs associated with those arrangements were allocated by Holdings to Intermediate as the employees were rendering services to Intermediate. However, the ultimate contractual obligation related to these awards, including any future settlement, rested and continues to rest with Holdings. The Holdings equity compensation instruments consist of 1,000 authorized and issuable Series A Incentive Units (the "Series A Incentive Units")