What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-26 compared with 2022-05-12 · 142 added, 133 removed, 126 unchanged (69% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations.

References to “we”, “us”,

“our” or the “Company” are to CENAQ Energy Corp., except where the context requires otherwise.

The following discussion

should be read in conjunction with our unaudited condensed financial statements and related notes thereto included elsewhere in this report.

Cautionary Note Regarding Forward-Looking Statements

The following

discussion should be read in conjunction with our unaudited condensed financial statements and related notes thereto included elsewhere

in this report.

Cautionary Note Regarding Forward-Looking

This Quarterly Report on Form 10-Q includes

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results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

In some cases, you can

identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,”

In some cases, you

can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,”

“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”

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are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.

We are a newly organized blank check company incorporated

as a Delaware corporation on June 24, 2020, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,

reorganization or similar business combination with one or more businesses.

We are a newly organized blank check company

incorporated as a Delaware corporation on June 24, 2020, for the purpose of effecting a merger, capital stock exchange, asset acquisition,

stock purchase, reorganization or similar business combination with one or more businesses.

Our sponsor is CENAQ Sponsor, LLC, a Delaware

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the overallotment in full, generating additional gross proceeds of $22,500,000.

Transaction costs of our initial public offering and the

over-allotment amounted to $17,771,253 consisting of $3,450,000 of underwriting discount, $6,037,500 of deferred underwriting discount,

Transaction costs of our initial public offering and

the over-allotment amounted to $17,771,253 consisting of $3,450,000 of underwriting discount, $6,037,500 of deferred underwriting discount,

an excess of fair value of the founder shares acquired by the Anchor Investors of $6,265,215, fair value of the 189,750 representative

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warrant, generating gross proceeds to us of $6 million.

On August 19, 2021, the underwriters exercised the overallotment in full and consummated

the private placement of additional 675,000 warrants, at a price of $1.00 per warrant, generating gross proceeds to us of $675,000.

On August 19, 2021, the underwriters exercised the overallotment in full and

consummated the private placement of additional 675,000 warrants, at a price of $1.00 per warrant, generating gross proceeds to us of

Upon the closing of the initial public offering

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Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as

reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal

to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not

previously released to us to pay its franchise and income taxes as well as expenses relating to the administration of the Trust Account

(less up to $100,000 of interest released to us to pay dissolution expenses), divided by the number of then outstanding public shares,

which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further

liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,

reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash,

equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account

and not previously released to us to pay its franchise and income taxes as well as expenses relating to the administration of the Trust

Account (less up to $100,000 of interest released to us to pay dissolution expenses), divided by the number of then outstanding public

shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive

further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,

subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject, in each case, to our

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Results of Operations

As of March 31, 2022, we have not commenced any

All activity for the period from June 24, 2020 (inception) through March 31, 2022 relates to our formation and initial public

As of June 30, 2022, we have not commenced any

All activity for the period from June 24, 2020 (inception) through June 30, 2022 relates to our formation and initial public

offering (“Public Offering” or “IPO”), and, since the completion of the IPO, searching for a target to consummate

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the Trust Account (defined below).

For the three months ended March 31, 2022, we had

For the three months ended June 30, 2022, we had

a net loss of $243,730.

We incurred $279,885 of general and administrative expenses.

We earned interest income of $16,564.

For the three months ended March 31, 2021, we

had a net loss of $2,067, which consists of formation and operating costs.

We incurred $442,662 of general and administrative expenses which includes $236,978 in costs related to identifying

a target business, $1,062 of interest expense on promissory note from related party and $5,088 of provision for income taxes.

interest income of $204,584 and $498 of unrealized gain on marketable securities held in Trust Account.

For the six months ended June 30, 2022, we had

a net loss of $1,179,136.

We incurred $1,394,632 of general and administrative expenses which includes $909,063 in costs related to identifying

a target business, $1,062 of interest expense on promissory note from related party and $5,088 of provision for income taxes.

interest income of $221,148 and $498 of unrealized gain on marketable securities held in Trust Account .

For the three months ended June 30, 2021, we

had a net loss of $3,285, which primarily consisted of Bank Charges of $1,236 and Other Miscellaneous Service Cost of $2,049.

For the six months ended June 30, 2021, we had

a net loss of $5,352, which primarily consisted of Bank Charges of $2,493 and Other Miscellaneous Service Cost of $2,859.

Liquidity and Going Concern

As of March 31, 2022, we had $155,930 in our operating

bank account, and working capital of $ 207,198.

Until the consummation of a Business Combination, the Company will

be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence

on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating

and consummating the Business Combination.

As of June 30, 2022, we had $86,284 in our operating bank account,

and working capital deficit of $938,699.

Until the consummation of a Business Combination,

the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates,

performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire,

and structuring, negotiating and consummating the Business Combination.

In order to finance transaction costs in connection

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extends through August 17, 2022.

To date, there were no amounts outstanding under any Working Capital Loans.

If the Company’s estimate of the costs of

identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount

necessary to do so, the Company may have insufficient funds available to operate its business prior to the Business Combination.

the Company may need to obtain additional financing either to complete its Business Combination or because it becomes obligated to redeem

a significant number of its public shares upon consummation of the Business Combination, in which case the Company may issue additional

securities or incur debt in connection with such Business Combination.

Subject to compliance with applicable securities laws, the Company

would only complete such financing simultaneously with the completion of the Business Combination.

If the Company is unable to complete

its Business Combination because it does not have sufficient funds available to it, the Company will be forced to cease operations and

liquidate the Trust Account.

In addition, following the Business Combination, if cash on hand is insufficient, the Company may need to

obtain additional financing in order to meet its obligations.

We cannot assure you that our plans to raise capital

or to consummate an initial business combination will be successful.

These factors, among others, raise substantial doubt about our ability

to continue as a going concern, which is considered to be one year from the issuance of the financial statements.

The financial statements

contained elsewhere in this Quarterly Report do not include any adjustments that might result from our inability to continue as a going

As of the date of the filing of these financial statements, the period of time for the Company to complete

a business combination under its amended and restated certificate of incorporation is extended for a period of 3 months from August 17,

2022 to November 16, 2022 based upon the filing of a proxy statement for an initial business combination on August 12, 2022.

there were no amounts outstanding under any Working Capital Loans.

If the Company’s estimate of the costs

of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual

amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the Business Combination.

Moreover, the Company may need to obtain additional financing either to complete its Business Combination or because it becomes obligated

to redeem a significant number of its public shares upon consummation of the Business Combination, in which case the Company may issue

additional securities or incur debt in connection with such Business Combination.

Subject to compliance with applicable securities laws,

the Company would only complete such financing simultaneously with the completion of the Business Combination.

If the Company is unable

to complete its Business Combination because it does not have sufficient funds available to it, the Company will be forced to cease operations

and liquidate the Trust Account.

In addition, following the Business Combination, if cash on hand is insufficient, the Company may need

to obtain additional financing in order to meet its obligations.

We cannot assure you that our plans to raise

capital or to consummate an initial business combination will be successful.

These factors, among others, raise substantial doubt about

our ability to continue as a going concern, which is considered to be one year from the issuance of the financial statements.

The financial

statements contained elsewhere in this Quarterly Report do not include any adjustments that might result from our inability to continue

as a going concern.

In connection with the Company’s assessment

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of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company

is unable to complete a Business Combination by August 17, 2022, then the Company will cease all operations except for the purpose of

The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s

ability to continue as a going concern.

No adjustments have been made to the carrying amounts of assets or liabilities should the Company

be required to liquidate after August 17, 2022.

We granted the underwriters a 45-day option from

the date of this initial public offering to purchase up to an additional 2,250,000 units to cover over-allotments, if any.

On August 19,

2021, the over-allotments were exercised in full.

is unable to complete a Business Combination by November 16, 2022, then the Company will cease all operations except for the purpose of

The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the

Company’s ability to continue as a going concern.

No adjustments have been made to the carrying amounts of assets or liabilities

should the Company be required to liquidate after November 16, 2022.

Underwriters agreement

We granted the underwriters a 45-day option from the date of this initial

public offering to purchase up to an additional 2,250,000 units to cover over-allotments, if any.

On August 19, 2021, the over-allotments

were exercised in full.

Simultaneously with the closing of the initial

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Contractual Obligations

As of March 31, 2022, we did not have any long-term

As of June 30, 2022, we did not have any long-term

debt, capital or operating lease obligations.

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The preparation of financial statements and related

disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the

periods reported.

disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during

the periods reported.

Making estimates requires management to exercise significant judgment.

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The most significant estimates that affected the financial statements

as of March 31, 2022 are the calculations of the fair values of the over-allotment option, fair values of the representative shares and

as of June 30, 2022 are the calculations of the fair values of the over-allotment option, fair values of the representative shares and

the fair values of the anchor shares.

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Actual results could materially differ from those estimates.

We have identified

the following as our critical accounting policies:

identified the following as our critical accounting policies:

Offering Costs associated with the Initial

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We account for the Class A common stock subject

to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock

subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value.

to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common

stock subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value.

Conditionally redeemable

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The 19,612,500 potential common shares for outstanding warrants to purchase our stock were excluded from

diluted earnings per share for the three months ended March 31, 2022 and 2021 because the warrants are contingently exercisable, and the

contingencies have not yet been met.

As a result, diluted net loss per common share is the same as basic net loss per common share for

diluted earnings per share for the three and six months ended June 30, 2022 and 2021 because the warrants are contingently exercisable,

and the contingencies have not yet been met.

As a result, diluted net loss per common share is the same as basic net loss per common

share for the periods.

Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards

Update (“ASU”) No.

2020-06, Debt —debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging

—Contracts in Entity’ Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’

Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required

under current GAAP.

The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the

derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas.

We are currently evaluating

the impact of the ASU on the financial position, results of operations or cash flows.

In May 2021, the FASB issued

ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock

Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting

for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues

This guidance clarifies certain aspects of the current guidance to promote consistency among reporting of an issuer’s

accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity

classified after modification or exchange.

The amendments in this update are effective for all entities for fiscal years beginning after

December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted for all entities, including adoption

in an interim period.

In August 2020, the FASB issued Accounting Standards Update (“ASU”)

2020-06, Debt —debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging —Contracts in Entity’

Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”),

which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and

it simplifies the diluted earnings per share calculation in certain areas.

The guidance was adopted starting January 1, 2022.

Adoption of the ASU did not impact the Company’s financial

position, results of operations or cash flows.

of the ASU did not impact the Company’s financial position, results of operations or cash flows.

In May 2021, the FASB issued ASU 2021-04, Earnings

Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718),

and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications

or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).

This guidance

clarifies certain aspects of the current guidance to promote consistency among reporting of an issuer’s accounting for modifications

or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification

The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including

interim periods within those fiscal years.

Early adoption is permitted for all entities, including adoption in an interim period.

guidance was adopted starting January 1, 2022.

Adoption of the ASU did not impact the Company’s financial position, results of

operations or cash flows.

Our management does not believe that any other

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only after conversion to our Class A common stock).

The holders of the majority of these securities are entitled to make up to three demands,

excluding short form demands, that we register such securities.

In addition, the holders have certain “piggy-back” registration

rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require

us to register for resale such securities pursuant to Rule 415 under the Securities Act.

However, the registration rights agreement provides

that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable

lock-up period, which occurs (i) in the case of the Founder Shares, on the earlier of (A) six months after the completion of the initial

Business Combination or (B) subsequent to the initial Business Combination, (x) if the last sale price of our Class A common stock equals

or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20

trading days within any 30-trading day period commencing at least 75 days after the initial Business Combination, or (y) the date on which

we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders

having the right to exchange their shares of common stock for cash, securities or other property and (ii) in the case of the Private Placement

Warrants and the respective Class A common stock underlying such warrants, 30 days after the completion of the initial Business Combination.

We will bear the expenses incurred in connection with the filing of any such registration statements.

The holders of the majority of these securities are entitled to make up to three

demands, excluding short form demands, that we register such securities.

In addition, the holders have certain “piggy-back”

registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and

rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act.

However, the registration

rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until

termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, on the earlier of (A) six months after

the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last sale price

of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations

and the like) for any 20 trading days within any 30-trading day period commencing at least 75 days after the initial Business Combination,

or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that

results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property and

(ii) in the case of the Private Placement Warrants and the respective Class A common stock underlying such warrants, 30 days after the

completion of the initial Business Combination.

We will bear the expenses incurred in connection with the filing of any such registration

Underwriters Agreement

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the date of this initial public offering to purchase up to an additional 2,250,000 units to cover over-allotments, if any.

On August 19,

19, 2021, the over-allotments were exercised in full.

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of 3.5% of the gross proceeds of the initial public offering and the over-allotment upon the completion of our initial Business Combination.

On April 5, 2012, the JOBS Act was signed into law.

On April 5, 2012, the JOBS Act was signed into

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements

based on the effective date for private (not publicly traded) companies.

We have elected to irrevocably opt out of such extended transition

period, which means that when a standard is issued or revised and it has different application dates for public or private companies,

we will adopt the new or revised standard at the time public companies adopt the new or revised standard.

This may make comparison of

our financial statements with another emerging growth company that has not opted out of using the extended transition period difficult

or impossible because of the potential differences in accountant standards used.

We qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting

pronouncements based on the effective date for private (not publicly traded) companies.

We have elected to irrevocably opt out of such

extended transition period, which means that when a standard is issued or revised and it has different application dates for public or

private companies, we will adopt the new or revised standard at the time public companies adopt the new or revised standard.

make comparison of our financial statements with another emerging growth company that has not opted out of using the extended transition

period difficult or impossible because of the potential differences in accountant standards used.

Additionally, we are in the process of evaluating

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in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among

other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to

Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank

Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory

audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements

(auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive

compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

These exemptions will apply

for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,”

whichever is earlier.

other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant

to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the

Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding

mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the

financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation

between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging

growth company,” whichever is earlier.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis