What changed in this filing

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Item 1. Financial Statements

2022-11-21 compared with 2022-08-26 · 471 added, 375 removed, 582 unchanged (59% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

September 30,

Current assets:

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Commitments and Contingencies (Note 6)

Class A common stock subject to possible redemption, 17,250,000 shares at $ 10.10 redemption value at June 30, 2022 and December 31, 2021

Class A common stock subject to possible redemption, 17,250,000 shares at $ 10.13 and $ 10.10 redemption value at September 30, 2022 and December 31, 2021, respectively

Stockholders’ Deficit:

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200,000,000 shares authorized;

189,750 issued and outstanding (excluding 17,250,000 shares subject to possible redemption) at June 30, 2022 and December 31, 2021

189,750 issued and outstanding (excluding 17,250,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021

Class B common stock, $ 0.0001 par value;

20,000,000 shares authorized;

4,312,500 shares issued and outstanding at June 30, 2022 and December 31, 2021

4,312,500 shares issued and outstanding at September 30, 2022 and December 31, 2021

Additional paid-in capital

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$ 174,958,342

The accompanying notes are

an integral part of these unaudited condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

CENAQ ENERGY CORP.

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

General and administrative costs

1 unchanged sentence

( 3,013,729 )

Other income (expense):

( 4,408,361 )

Other income:

Interest earned on marketable securities held in Trust Account

Interest expense on promissory note - related party

Unrealized gain on marketable securities held in Trust Account

Unrealized loss on marketable securities held in Trust Account

Total other income, net

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( 2,260,271 )

( 3,434,319 )

Provision for income taxes

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Basic and diluted net loss per non-redeemable common stock

an aggregate of up to 562,500 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full

or in part by the underwriters as of June 30, 2021(see Note 5).

The accompanying notes are

an integral part of these unaudited condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

CENAQ ENERGY CORP.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’

(DEFICIT) EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

Additional Paid-in

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( 6,724,873 )

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

Remeasurement adjustment of Class A common stock subject to possible redemption

( 2,387,015 )

Balance — September 30, 2022

$ ( 9,613,440 )

$ ( 9,612,990 )

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

Additional Paid-in

Total Stockholders’

as of January 1, 2021

Balance as of January 1, 2021

Balance as of March 31, 2021

Balance — June 30, 2021

up to 562,500 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see

The accompanying notes are

an integral part of these unaudited condensed financial statements.

Issuance of 189,750 representative shares to underwriters

Excess of fair value of Anchor Shares

Fair value of 12,937,500 Public Warrants net of allocated offering costs

Proceeds of 6,625,000 Private Placement Warrants net of allocated offering costs

Measurement adjustment of Class A common stock subject to possible redemption

( 25,726,062 )

( 5,089,388 )

( 30,815,450 )

Balance — September 30, 2021

$ ( 5,166,748 )

$ ( 5,166,298 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

CENAQ ENERGY CORP.

CONDENSED STATEMENTS OF CASH FLOWS

Six months Ended

Nine months Ended

September 30,

Cash Flows from Operating Activities:

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Interest earned on marketable securities held in Trust Account

Unrealized gain on cash and marketable securities held in Trust Account

Payment made on behalf of the SPAC by related party

Changes in operating assets and liabilities:

Prepaid expenses

Due to related party

Accounts payable and accrued expenses

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Net cash used in operating activities

Cash Flows from Investing Activities:

Principal deposited in Trust Account

( 174,225,000 )

Cash withdrawn from Trust Account to pay franchise and income taxes

Net cash used in investing activities

( 174,225,000 )

Cash Flows from Financing Activities:

Proceeds from Initial Public Offering, net of underwriters’ fees

Proceeds from private placement

Proceeds from issuance of promissory note to related party

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Deferred financing costs included in accounts payable and accrued expenses

Accrued deferred offering costs

Deferred offering costs paid by Sponsor in promissory note

The accompanying notes are

an integral part of these unaudited condensed financial statements.

Deferred underwriting commissions charged to additional paid in capital

Due from related party

Remeasurement adjustment of Class A common stock subject to possible

The accompanying notes are an integral part of

these unaudited condensed financial statements.

CENAQ ENERGY CORP.

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CENAQ Energy Corp.

(the “Company”) is a newly organized

blank check company incorporated as a Delaware corporation on June 24, 2020.

The Company was incorporated for the purpose of effecting

a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses

(the “Business Combination”).

On August 12, 2022, the Company has filed a proxy statement with the SEC in connection with

the Business Combination Agreement.

As of June 30, 2022, the

Company has neither engaged in any operations nor generated any revenues.

“Company”) is a newly organized blank check company incorporated as a Delaware corporation on June 24, 2020.

The Company was

incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar

business combination with one or more businesses (the “Business Combination”).

On November 10, 2022, the Company filed

a definitive proxy statement with the SEC in connection with the Business Combination Agreement (as defined below).

As of September 30, 2022,

the Company has neither engaged in any operations nor generated any revenues.

All activity for the period from June 24, 2020 (inception)

through June 30, 2022 relates to the Company’s formation and the initial public offering (“IPO”), described below.

The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.

through September 30, 2022 relates to the Company’s formation and the initial public offering (“IPO”), described below,

and identifying a target company for a Business Combination, in particular, activities in connection with the potential transaction with

Bluescape (see Note 6).

The Company will not generate any operating revenues until after the completion of its initial Business Combination,

at the earliest.

The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO.

The Company has

selected December 31 as its fiscal year end.

The Company has selected December 31 as its fiscal year end.

The Company’s sponsor

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(“Warrant”), each whole Warrant entitling the holder thereof to purchase one Class A common stock for $ 11.50 per share.

The Units were sold at a price of $ 10.00 per unit, generating gross proceeds to the Company of $ 150,000,000 , which is discussed in

The Units were sold at a price of $ 10.00 per unit, generating gross proceeds to the Company of $ 150,000,000 , which is discussed

Certain qualified institutional

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Investors”) have purchased up to 1,485,000 Units in the IPO at the offering price of $ 10.00 per Unit, generating

gross proceeds to the Company of $ 14,850,000 included in the gross proceeds from units offered to public of $ 150,000,000 .

gross proceeds to the Company of $ 14,850,000 included in the gross proceeds from units offered to the public of $ 150,000,000 .

In connection with the

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transferees) until 30 days after the completion of the Company’s initial Business Combination.

The underwriters had a

45-day option from the date of the Company’s IPO (August 17,2021) to purchase up to an additional 2,250,000 Units to

cover over-allotments, if any.

On August 19, 2021, the underwriters exercised the overallotment in full, at $ 10.00 per Unit, generating

additional gross proceeds of $ 22,500,000 .

Simultaneously with the closing of the over-allotment, the Company consummated the sale of

additional 450,000 Private Placement Warrants to the Sponsor, and additional 225,000 Private Placement Warrants to

the Underwriters, at $ 1.00 per warrant, generating gross proceeds to the Company of $ 675,000 .

The underwriters had a 45-day

option from the date of the Company’s IPO (August 17, 2021) to purchase up to an additional 2,250,000 Units to cover over-allotments,

On August 19, 2021, the underwriters exercised the over-allotment in full, at $ 10.00 per Unit, generating additional gross

proceeds of $ 22,500,000 .

Simultaneously with the closing of the over-allotment, the Company consummated the sale of additional 450,000 Private

Placement Warrants to the Sponsor, and additional 225,000 Private Placement Warrants to the Underwriters, at $ 1.00 per

warrant, generating gross proceeds to the Company of $ 675,000 .

CENAQ ENERGY CORP.

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189,750 representative shares of $ 1,442,100 and $ 576,438 of other cash offering costs were charged to additional paid in capital.

Following the closing of the IPO on August 17, 2021 and over-allotment

on August 19, 2021, $ 174,225,000 ($ 10.10 per Unit) from the net proceeds of the sale of the Units in the IPO, and a portion

of the proceeds from the sale of the Private Placement Warrants, was deposited in a trust account (“Trust Account”), located

in the United States with Continental Stock Transfer & Trust Company acting as trustee, and may only be invested in U.S.

securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or

less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only

in direct U.S.

Following the closing of

the IPO on August 17, 2021 and over-allotment on August 19, 2021, $ 174,225,000 ($ 10.10 per Unit) from the net proceeds of the

sale of the Units in the IPO, and a portion of the proceeds from the sale of the Private Placement Warrants, was deposited in a trust

account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as

trustee, and may only be invested in U.S.

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company

Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated

under the Investment Company Act which invest only in direct U.S.

government treasury obligations.

Except with respect to interest earned on the funds held in the Trust Account that may

be released to the Company to pay franchise and income tax obligations as well as expenses relating to the administration of the Trust

Account, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the

earliest of (i) the completion of initial Business Combination, (ii) the redemption of the any public shares properly submitted in connection

with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (a) to modify the substance or

timing of the Company’s obligation to redeem 100 % of its public shares if the Company does not complete initial Business Combination

within 12 months (or within 18 months if the Company extends the period of time to consummate its initial Business Combination) from August

17, 2021, or (b) relating to any other provisions relating to stockholders’ rights or permitted pre-initial business combination

activity, or (iii) the redemption of the Company’s public shares if the Company is unable to complete its Business Combination within

12 months (or within 18 months if the Company extends the period of time to consummate its initial Business Combination) from August 17,

2021, subject to applicable law.

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 (Note 8).

The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have

priority over the claims of the Company’s public stockholders, according to the investment management trust agreement.

Except with respect to interest earned

on the funds held in the Trust Account that may be released to the Company to pay franchise and income tax obligations as well as expenses

relating to the administration of the Trust Account, the proceeds from the IPO and the sale of the Private Placement Warrants will not

be released from the Trust Account until the earliest of (i) the completion of initial Business Combination, (ii) the redemption of the

any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate

of incorporation (a) to modify the substance or timing of the Company’s obligation to redeem 100 % of its public shares if

the Company does not complete initial Business Combination within 12 months (or within 18 months if the Company extends the period of

time to consummate its initial Business Combination) from August 17, 2021, or (b) relating to any other provisions relating to stockholders’

rights or permitted pre-initial business combination activity, or (iii) the redemption of the Company’s public shares if the Company

is unable to complete its Business Combination within 12 months (or within 18 months if the Company extends the period of time to consummate

its initial Business Combination) from August 17, 2021, subject to applicable law.

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.

The proceeds deposited

in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the

claims of the Company’s public stockholders, according to the investment management trust agreement.

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 November 16, 2022 to February 16, 2023.

In connection with the Extension, the

Sponsor has deposited $1,725,000, representing 1% of the gross proceeds of the IPO, into the Trust Account for its public stockholders

The Company must complete

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a business combination) without depositing the Additional Funds.

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 (Note 8).

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.

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 November 16, 2022 to February 16, 2023.

connection with the Extension, the Sponsor has deposited $ 1,725,000 , representing 1 % of the gross proceeds of the IPO, into the Trust

Account for its public stockholders (Note 8).

If the Company is unable

to complete the initial Business Combination within the Combination Period (or up to 18 months following extensions), the Company 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 the Company 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 the Company 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

the Company’s remaining stockholders and the Company’s board of directors, liquidate and dissolve, subject, in each case,

to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

to complete the initial Business Combination within the Combination Period, by February 16, 2023, the Company 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 the Company 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 the Company 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 the Company’s remaining stockholders and

the Company’s board of directors, liquidate and dissolve, subject, in each case, to the Company’s obligations under Delaware

law to provide for claims of creditors and the requirements of other applicable law.

The Sponsor, officers and

directors, as well as the Anchor Investors, have agreed to (i) waive their redemption rights with respect to any Founder Shares held

by them in connection with the completion of the initial Business Combination, (ii) waive their rights to liquidating distributions from

the Trust Account with respect to any Founder Shares hold by them if the Company fails to complete the initial Business Combination within

the Combination Period (or within 18 months following extensions), and (iii) vote any Founder Shares held by them and any public shares

purchased during or after the IPO in favor of the initial Business Combination.

directors, as well as the Anchor Investors, have agreed to (i) waive their redemption rights with respect to any Founder Shares held by

them in connection with the completion of the initial Business Combination, (ii) waive their rights to liquidating distributions from

the Trust Account with respect to any Founder Shares held by them if the Company fails to complete the initial Business Combination within

the Combination Period, by February 16, 2023, and (iii) vote any Founder Shares held by them and any public shares purchased during or

after the IPO in favor of the initial Business Combination.

The Anchor Investors are

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any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian

Federation and Belarus commenced a military action with the country of Ukraine.

As a result of this action, various nations, including

the United States, have instituted economic sanctions against the Russian Federation and Belarus.

Further, the impact of this action

and related sanctions on the world economy are not determinable as of the date of these condensed financial statements.

impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these

condensed financial statements.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Liquidity and Going Concern

As of June 30, 2022, the Company had $ 86,284 in its operating

bank account, and a working capital deficit of $ 938,699 .

Inflation Reduction Act of 2022

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,

federal 1 % excise tax on certain repurchases of stock by publicly traded U.S.

domestic corporations and certain U.S.

subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023.

The excise tax is imposed on the repurchasing

corporation itself, not its shareholders 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.

However, for purposes of calculating the excise tax, repurchasing

corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases

during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of the Treasury (the “Treasury”)

has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

Any redemption or other

repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject

to the excise tax.

Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination,

extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases

in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and

amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection

with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and

other guidance from the Treasury.

In addition, because the excise tax would be payable by the Company and not by the redeeming holder,

the mechanics of any required payment of the excise tax have not been determined.

The foregoing could cause a reduction in the cash available

on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

Going Concern

As of September 30, 2022,

the Company had $ 8,242 in its operating bank account, and a working capital deficit of $ 3,600,490 .

Until the consummation

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business to acquire, and structuring, negotiating and consummating the Business Combination.

In order to finance transaction costs in connection with a Business

Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors committed

to provide the Company with Working Capital Loans up to $ 1,500,000 , as defined later (see Note 5).

This commitment extends through August

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.

To date, there were no amounts

outstanding under any Working Capital Loans.

In order to finance transaction

costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s

officers and directors committed to provide the Company with Working Capital Loans up to $ 1,500,000 , as defined later (see Note 5) .

This commitment extends through February 16, 2023.

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

If the Company’s

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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 of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”)

2014-15, “Disclosures 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 November 16, 2022, then the Company will cease all operations except

for the purpose of liquidating.

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.

The financial statements contained elsewhere in this Quarterly Report on Form 10-Q do not include any adjustments that might result from

our inability to continue as a going concern.

In connection with the Company’s

assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update

(“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,”

the Company has until February 16, 2023 to consummate a Business Combination.

It is uncertain whether the Company will be able to consummate

a Business Combination by this time.

If a Business Combination is not consummated by this date, there will be a mandatory liquidation

and subsequent dissolution of the Company.

Management has determined that the liquidity condition and the mandatory liquidation, should

a Business Combination not occur and the deadline to complete a Business Combination not be extended, and potential 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 February 16, 2023.

The Company intends to continue

to search for and seek to complete a Business Combination before the mandatory liquidation date.

The Company is within 12 months

of its mandatory liquidation date as of the time of filing of this Quarterly Report on Form 10-Q.

CENAQ ENERGY CORP.

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of the balances and results for the period presented.

Operating results for the three and six months ended June 30, 2022 are not necessarily

indicative of the results that may be expected through December 31, 2022.

Operating results for the three and nine months ended September 30, 2022 are not

necessarily indicative of the results that may be expected through December 31, 2022.

The accompanying unaudited

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The most significant estimates that affected the financial

statements as of June 30, 2022 and December 31, 2021 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.

Such estimates may be subject to change as more current information

becomes available.

statements as of September 30, 2022 and December 31, 2021 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.

Such estimates may be subject to change as more current

information becomes available.

Accordingly, the actual results could differ significantly from those estimates.

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short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

As of June 30, 2022

As of September

30, 2022 and December 31, 2021, the Company has cash of $ 8,242 and $ 505,518 , respectively.

The Company did not have any cash equivalents as of

June 30, 2022 and December 31, 2021.

The Company did not have any cash equivalents

as of September 30, 2022 and December 31, 2021.

CENAQ ENERGY CORP.

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Marketable Securities held in Trust Account

As of June 30, 2022, the

Company had $ 174,451,326 in Marketable Securities held in the Trust Account which was invested in US Treasury bills.

Upon closing of

the IPO, $ 10.10 per Unit sold in the IPO, including the proceeds of the sale of the Private Placement Warrants, were held in a trust

As of September 30, 2022,

the Company had $ 174,873,584 in Marketable Securities held in the Trust Account which was invested in US Treasury bills.

of the IPO, $ 10.10 per Unit sold in the IPO, including the proceeds of the sale of the Private Placement Warrants, were held in a trust

account (“Trust Account”) and may be invested only in U.S.

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may exceed the Federal Deposit Insurance Corporation coverage limit of $ 250,000 .

At June 30, 2022, the Company has not experienced losses

on this account.

At September 30, 2022, the Company has not experienced

losses on this account.

Offering Costs associated with the Initial

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Deferred Financing Costs

Deferred financing costs consists

of legal expenses incurred through the balance sheet date that are directly related to a proposed financing agreement of a Business Combination.

As of June 30, 2022, there were $ 25,000 of deferred financing costs recorded in the accompanying condensed balance sheets.

Deferred financing costs

consists of legal expenses incurred through the balance sheet date that are directly related to a proposed financing agreement of a Business

As of September 30, 2022, there were $ 25,000 of deferred financing costs recorded in the accompanying condensed balance

Fair Value of Financial Instruments

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Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term

The net asset value for the investments held in the trust account as of June 30, 2022 and December 31, 2021 was $ 174,451,326

The net asset value for the investments held in the trust account as of September 30, 2022 and December 31, 2021 was $ 174,873,584

and $ 174,229,680 , respectively.

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assets and liabilities, which qualify as financial instruments under ASC 820, approximates the carrying amounts represented in the balance

The fair values of cash, prepaid expenses, and accrued expenses are estimated to approximate the carrying values as of June 30,

The fair values of cash, prepaid expenses, and accrued expenses are estimated to approximate the carrying values as of September

30, 2022 and December 31, 2021 due to the short maturities of such instruments.

The Company valued the over-allotment

option using the Black Scholes model and the over-allotment option liability is recorded as a Level 3 financial instrument due to the

unobservable inputs.

The Company valued the

over-allotment option using the Black Scholes model and the over-allotment option liability is recorded as a Level 3 financial instrument

due to the unobservable inputs.

At August 17, 2021, the Company recorded $ 157,500 of over-allotment liability.

On August 19, 2021, in connection

with the fully exercise of over-allotment option by the underwriters, the Company recorded changes of fair value of over-allotment option

of $ 22,500 , and reclassified $ 180,000 of over-allotment liability into equity.

On August 19, 2021, in

connection with the fully exercise of over-allotment option by the underwriters, the Company recorded changes of fair value of over-allotment

option of $ 22,500 , and reclassified $ 180,000 of over-allotment liability into equity.

Over-allotment Option Liability

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At all other times, common stock is classified as stockholders’ equity.

At June 30, 2022 and December 31,

2021, 17,250,000 Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of

the stockholders’ equity section of the Company’s balance sheets.

At September 30, 2022 and December

31, 2021, 17,250,000 Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside

of the stockholders’ equity section of the Company’s balance sheets.

All of the 17,250,000 shares

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and accumulated deficit.

As the holders of representative

shares and Class B common stock have agreed to waive their redemption rights per the letter agreement and the underwriting agreement,

the representative shares and Class B common stock are non-redeemable.

The representative shares

and Class B common stock are non-redeemable.

CENAQ ENERGY CORP.

6 unchanged sentences

The 19,612,500 potential common stock for outstanding warrants to purchase the Company’s common stock were

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

excluded from diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 because the warrants are contingently

exercisable, and the contingencies have not yet been met and its inclusion would be anti-dilutive.

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and denominator used to compute basic and diluted net loss per share for each class of common stock:

Three Months Ended June 30,

Six Months Ended June 30,

Redeemable common stock

Non- redeemable common stock

Redeemable common stock

Non- redeemable common stock

Redeemable common stock

Non- redeemable common stock

Redeemable common stock

Non- redeemable common stock

Three Months Ended September 30,

Nine Months Ended September 30,

Basic and diluted net loss per share:

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$ ( 2,828,034 )

$ ( 738,117 )

Weighted Average Shares Outstanding including common stock subject to redemption

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allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it.

The Company’s effective tax rate was 2.13 % and 0.00 % for the

three months ended June 30, 2022 and 2021, respectively, and 0.43 % and 0.00 % for the six months ended June 30, 2022 and 2021, respectively.

The effective tax rate differs from the statutory tax rate of 21 % for the three and six months ended June 30, 2022 and 2021, due to merger

and acquisition expenses, unrealized gain on marketable securities held in the Trust Account and the valuation allowance on the deferred

ASC 740 also clarifies the

accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold

and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and

The Company recognizes accrued

interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and no amounts

accrued for interest and penalties as of June 30, 2022 and December 31, 2021.

The Company is currently not aware of any issues under review

that could result in significant payments, accruals or material deviation from its position.

September 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it.

ASC 740-270-25-2 requires

that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods under

ASC 740-270-30-5.

The Company’s effective tax rate was 5.61 % and 0.00 % for the three months ended September 30, 2022 and 2021,

respectively, and 3.84 % and 0.00 % for the nine months ended September 30, 2022 and 2021, respectively.

The effective tax rate differs

from the statutory tax rate of 21 % for the three and nine months ended September 30, 2022 and 2021, due to merger and acquisition expenses

and the valuation allowance on the deferred tax assets.

ASC 740 also clarifies

the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition

threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken

in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by

taxing authorities.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period,

disclosure and transition.

The Company recognizes

accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and

no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021.

The Company is currently not aware of any

issues under review that could result in significant payments, accruals or material deviation from its position.

The Company has identified

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Recent Accounting Pronouncements

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.

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.

The guidance was adopted starting January 1, 2022.

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

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

of operations or cash flows.

In May 2021, the FASB issued

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On August 17, 2021, Company

consummated its IPO of 15,000,000 units (the “Units”).

Each Unit consists of one Class A common stock of the Company,

par value $ 0.0001 per share (the “Class A common stock”), and three-quarters of one redeemable warrant of the Company

consummated its IPO of 15,000,000 Units.

Each Unit consists of one Class A common stock and three-quarters of one redeemable

Warrant, each whole Warrant entitling the holder thereof to purchase one Class A common stock for $ 11.50 per share.

The Units were sold at a price of $ 10.00 per unit, generating gross proceeds to the Company of $ 150,000,000 .

The warrants will become

exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the IPO,

and will expire five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.

The Units were

sold at a price of $ 10.00 per unit, generating gross proceeds to the Company of $ 150,000,000 .

The warrants will become exercisable

on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the IPO, and will expire

five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.

The underwriters had a

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business combination.

As of June 30, 2022, there was $ 125,000 outstanding under the Promissory Note.

As of September 30, 2022, there was $ 125,000 outstanding under the Promissory Note.

Working Capital Loans

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Such warrants would be identical to the Private Placement Warrants.

As of June 30, 2022 and December 31, 2021, the Company had

no borrowings under the Working Capital Loans.

As of September 30, 2022 and December 31, 2021, the Company

had no borrowings under the Working Capital Loans.

Note 6 — Commitments and Contingencies

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The Company granted the

underwriters a 45-day option from the date of this IPO to purchase up to an additional 2,250,000 units to cover over-allotments,

underwriters a 45-day option from the date of our IPO to purchase up to an additional 2,250,000 units to cover over-allotments,

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

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Representative Shares

Simultaneously with the

closing of the IPO, the Company issued to Imperial Capital LLC and/or its designees, 165,000 shares of Class A Common Stock (the

“Representative Shares”).

On August 19, 2021, the over-allotments were exercised in full and the Company issued additional

24,750 Representative Shares to Imperial Capital LLC and/or its designees.

The aggregate fair value of the Representative shares was

$1,442,100, or $7.60 per share and recorded as offering costs, which was treated as transaction cost of offering.

Simultaneously with the closing

of the IPO, the Company issued to Imperial Capital LLC and/or its designees, 165,000 shares of Class A common stock (the “Representative

On August 19, 2021, the over-allotments were exercised in full and the Company issued additional 24,750 Representative

Shares to Imperial Capital LLC and/or its designees.

The aggregate fair value of the Representative shares was $1,442,100, or $7.60 per

share and recorded as offering costs, which was treated as transaction cost of offering.

Imperial Capital LLC has

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respect to such shares of common stock if the Company fails to complete an initial business combination within the Combination Period,

(or up to 18 months following extensions).

The representative shares

may be deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the commencement

of sales of the registration statement of which the IPO forms a part pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules.

Pursuant to FINRA Rule 5110(e)(1), these securities may not be sold, transferred, assigned, pledged or hypothecated or the subject of

any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person

for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part,

nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the commencement

of sales of the IPO except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners,

registered persons or affiliates or as otherwise permitted under Rule 5110(e)(2).

until February 16, 2023.

The representative shares may be deemed compensation by FINRA and are

therefore subject to a lock-up for a period of 180 days immediately following the commencement of sales of the registration statement

for the IPO pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules.

Pursuant to FINRA Rule 5110(e)(1), these securities may not

be sold, transferred, assigned, pledged or hypothecated or the subject of any hedging, short sale, derivative, put or call transaction

that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective

date of the registration statement for the IPO, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180

days immediately following the commencement of sales of the IPO except to any underwriter and selected dealer participating in the offering

and their bona fide officers or partners, registered persons or affiliates or as otherwise permitted under Rule 5110(e)(2).

Business Combination Agreement

On August 12, 2022, the Company, Verde Clean Fuels OpCo, LLC, a Delaware

limited liability company and wholly-owned subsidiary of the Company (“OpCo”), and, for a limited purpose, the Sponsor, entered

into a business combination agreement (as the same may be amended from time to time, the “Business Combination Agreement”)

with Bluescape Clean Fuels Holdings, LLC, a Delaware limited liability company (“Holdings”), and Bluescape Clean Fuels Intermediate

Holdings, LLC, a Delaware limited liability company (“Intermediate”).

The transactions contemplated by the Business Combination

Agreement are collectively referred to herein as the “business combination.” In connection with the closing of the business

combination (the “Closing”), the Company will change its name to Verde Clean Fuels, Inc.

(“Verde Inc.”).

to the Business Combination Agreement, during the period between the consummation of the business combination and the earlier of the five

year anniversary from the consummation of the business combination or the date of the consummation of a sale of the post combination company

(the “Earn Out Period”), OpCo may transfer up to 3,500,000 Class C common units of OpCo and a corresponding number of shares

of Class C common stock, par value $ 0.0001 per share (“Class C common stock”), of the post combination company to Holdings

within five business days after the occurrence of certain triggering events.

Sponsor Letter

In connection with the execution of the Business Combination Agreement,

on August 12, 2022, the Sponsor entered into a letter agreement with Intermediate, Holdings and the Company, pursuant to which, among

other things, the Sponsor agreed to (i) forfeit 2,475,000 of its Private Placement Warrants, (ii) comply with the lock-provisions in the

Letter Agreement, dated August 12, 2021, by and among the Company, the Sponsor and the Company’s directors and officers, (iii) vote

all of its shares of Class A common stock and Founder Shares in favor of the adoption and approval of the Business Combination Agreement

and the business combination, (iv) not redeem any of its shares of Class A common stock in connection with such stockholder approval,

(v) waive its anti-dilution rights with respect to its Founder Shares in connection with the consummation of the business combination

and (vi) subject a portion of the shares of Class A common stock as a result of the conversion of its Founder Shares to forfeiture if

certain triggering events do not occur during the Earn Out Period.

Underwriters Letter

connection with the execution of the Business Combination Agreement, on August 12, 2022, the Company, Intermediate and Holdings entered

into a letter agreement with the underwriters, pursuant to which, among other things, (i) Imperial Capital, LLC agreed to forfeit all

of its 1,423,125 Private Placement Warrants and all of its 156,543 Representative Shares, (ii) I-Bankers Securities, Inc.

agreed to forfeit

all of its 301,875 Private Placement Warrants and all of its 33,207 Representative Shares and (iii) the underwriters agreed to reduce

their deferred underwriting fees related to the IPO from $6,037,500 to $4,312,500.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Subscription Agreements

connection with the execution of the Business Combination Agreement, on August 12, 2022, the Company entered into separate subscription

agreements with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase, and the

Company agreed to sell to the PIPE Investors, an aggregate of 8,000,000 shares of Class A common stock for a purchase price of $ 10.00

per share and an aggregate purchase price of $ 80,000,000 in a private placement (the “PIPE Financing”).

Of the $ 80,000,000

of commitments, Holdings has agreed to purchase 800,000 shares to be sold in the PIPE Financing for an aggregate commitment of $ 8,000,000 .

Arb Clean Fuels Management LLC (“Arb Clean Fuels”), an entity affiliated with a member of the Sponsor, has agreed to purchase

7,000,000 shares to be sold in the PIPE Financing for an aggregate commitment of $ 70,000,000 ;

provided, that, to the extent funds in

the Trust Account immediately prior to the consummation of the business combination, after giving effect to the Company stockholders’

redemption rights, exceed $17,420,000, each $10.00 increment of such excess funds shall reduce Arb Clean Fuels’ commitment by $10.00

up to a maximum reduction of $20,000,000.

Additionally, an entity unaffiliated with the Sponsor has agreed to purchase 200,000 shares

for an aggregate commitment of $2,000,000.

Lock-Up Agreement

connection with the execution of the Business Combination Agreement, on August 12, 2022, Holdings entered into a Lock-Up Agreement, pursuant

to which Holdings agreed to subject its shares of common stock received in connection with the business combination to the lock-up provisions

Agreements to be Executed at Closing

The Business Combination

Agreement also contemplates the execution by the parties of various agreements at the Closing, including, among others, those below.

Tax Receivable

connection with the business combination, the Company will enter into the tax receivable agreement (the “Tax Receivable Agreement”)

with Holdings (together with its permitted transferees, the “TRA Holders,” and each a “TRA Holder”) and the Agent

(as defined therein), which will generally provide for the payment by Verde Inc.

to each TRA Holder of 85 % of the net cash savings, if

federal, state and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state

and local taxes) that Verde Inc.

realizes (or is deemed to realize in certain circumstances) in periods after the business combination

as a result of (i) certain increases in tax basis that occur as a result of Verde Inc.’s acquisition (or deemed acquisition for

federal income tax purposes) of all or a portion of such TRA Holder’s Class C OpCo Units pursuant to an OpCo Holder Exchange

set forth in the A&R LLC Agreement, and (ii) imputed interest deemed to be paid by Verde Inc.

as a result of, and additional tax

basis arising from, any payments Verde Inc.

makes under the Tax Receivable Agreement.

will retain the benefit of the remaining

15 % of these net cash savings.

generally will be made under the Tax Receivable Agreement as Verde Inc.

realizes actual cash tax savings in periods after the consummation

of the business combination from the tax benefits covered by the Tax Receivable Agreement.

However, if the Tax Receivable Agreement terminates

early (at Verde Inc.’s election or due to other circumstances, including Verde Inc.’s breach of a material obligation thereunder

or upon certain changes of control described in the Tax Receivable Agreement), Verde Inc.

would be required to make an immediate payment

to each TRA Holder equal to the present value of the anticipated future payments to be made by it under the Tax Receivable Agreement

(based upon certain valuation assumptions and deemed events set forth in the Tax Receivable Agreement), such payments not to exceed $ 50

million, in the aggregate, in the case of certain changes of control.

will depend on OpCo to make distributions to Verde Inc.

in an amount sufficient to cover Verde Inc.’s obligations under the

Tax Receivable Agreement.

A&R LLC Agreement

the Closing, Verde Inc.

will operate its business through OpCo.

On the Closing Date, Verde Inc.

and Holdings will enter into an amended

and restated limited liability company agreement of OpCo (the “A&R LLC Agreement”).

The A&R LLC Agreement will provide,

among other things, that each Class C OpCo Unit will be exchangeable, subject to certain conditions, for one share of Class A common stock,

and a corresponding share of Class C common stock will be cancelled in connection with such exchange, pursuant to and in accordance with

the terms of the A&R LLC Agreement.

A&R Registration

Rights Agreement

connection with the Closing, that certain Registration Rights Agreement dated August 17, 2021 (the “IPO Registration Rights Agreement”)

will be amended and restated and Verde Inc., certain stockholders of CENAQ prior to the Closing (the “Initial Holders”) and

certain stockholders receiving Class A common stock and Class C common stock pursuant to the business combination (the “New Holders”

and together with the Initial Holders, the “Reg Rights Holders”) will enter into an amended and restated IPO Registration

Rights Agreement (the “A&R Registration Rights Agreement”).

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

to the A&R Registration Rights Agreement, Verde Inc.

will agree that, within thirty (30) days after the Closing, it will use its

commercially reasonable efforts to file with the SEC (at Verde Inc.’s sole cost and expense) a registration statement registering

the resale of certain securities held by or issuable to the Reg Rights Holders (the “Resale Registration Statement”), and

will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as reasonably

practicable after the filing thereof.

In certain circumstances, the Reg Rights Holders can demand Verde Inc.’s assistance with

underwritten offerings and block trades, and the Reg Rights Holders will be entitled to certain piggyback registration rights.

Note 7 — Stockholders’

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and other rights and preferences as may be determined from time to time by the Company’s board of directors.

As of June 30, 2022

As of September 30,

2022 and December 31, 2021, there were no preferred stock issued and outstanding.

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$ 0.0001 per share.

At June 30, 2022 and December 31, 2021, there were 189,750 Class A common stocks issued or outstanding excluding

17,250,000 Class A stock subject to redemption.

At September 30, 2022 and December 31, 2021, there were 189,750 shares of Class A common stock issued or outstanding

excluding 17,250,000 shares of Class A common stock subject to redemption.

Class B common

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Holders are entitled to one vote for each share of Class B common stock.

At June 30, 2022 and December 31, 2021,

At September 30, 2022 and December 31,

2021, there were 4,312,500 shares of Class B common stock issued and outstanding.

Of the 4,312,500 shares of Class B

common stock, an aggregate of up to 562,500 shares were subject to forfeiture to the Company for no consideration to the extent

that the underwriters’ over-allotment option is not exercised in full or in part, so that the initial stockholders will collectively

own 20 % of the Company’s issued and outstanding common stocks after the IPO.

On August 19, 2021, the over-allotments were

exercised in full, hence the 562,500 Founder Shares were no longer subject to forfeiture.

Of the 4,312,500 shares of

Class B common stock, an aggregate of up to 562,500 shares were subject to forfeiture to the Company for no consideration

to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the initial stockholders

will collectively own 20 % of the Company’s issued and outstanding common stocks after the IPO.

On August 19, 2021, the over-allotments

were exercised in full, hence the 562,500 Founder Shares were no longer subject to forfeiture.

Holders of Class A common

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matter voted on by its stockholders.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The Class B common stock

will automatically convert into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject

to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as

provided herein.

In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in

excess of the amounts offered in this IPO and related to the closing of the Business Combination, including pursuant to a specified future

issuance, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless

the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance

or deemed issuance, including a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion

of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20 % of the sum of the total number

of all shares of common stock outstanding upon completion of the IPO plus all shares of Class A common stock and equity-linked securities

issued or deemed issued in connection with the Business Combination (excluding any shares or equity-linked securities issued, or to be

issued, to any seller in the Business Combination).

Holders of Founder Shares may also elect to convert their shares of Class B common

stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time.

The Class B common stock will automatically convert into Class A common

stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends,

reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein.

In the case that additional shares

of Class A common stock or equity-linked securities are issued or deemed issued in excess of the amounts offered in our IPO and related

to the closing of the Business Combination, including pursuant to a specified future issuance, the ratio at which shares of Class B common

stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of

Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including a specified future

issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal,

in the aggregate, on an as-converted basis, 20 % of the sum of the total number of all shares of common stock outstanding upon completion

of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Business

Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination).

of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock,

subject to adjustment as provided above, at any time.

There are 19,612,500 warrants currently outstanding, including 12,937,500 public warrants and 6,675,000 Private

20 unchanged sentences

at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

We may call the warrants

for redemption, in whole and not in part, at a price of $0.01 per warrant:

any time after the warrants become exercisable;

not less than 30 days’ prior written notice of redemption to each warrant holder;

and only if, the reported last sale price of the shares of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock

splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at

any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders;

and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants.

after the warrants become exercisable;

upon not less

than 30 days’ prior written notice of redemption to each warrant holder;

if, the reported last sale price of the shares of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock

splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing

at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant

● if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants.

If and when the warrants

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securities for sale under all applicable state securities laws.

The Private Placement Warrants,

as well as any warrants the Company issues to the Sponsor, officers, directors, initial stockholders or their affiliates in payment of

Working Capital Loans made to the Company, will be identical to the public warrants underlying the Units being offered in the Initial

Public Offering.

The Private Placement Warrants, as well as any warrants the Company

issues to the Sponsor, officers, directors, initial stockholders or their affiliates in payment of Working Capital Loans made to the Company,

will be identical to the public warrants underlying the Units being offered in the IPO.

Note 8 — Subsequent Events

The Company evaluated subsequent events and transactions that occurred

after the balance sheet date up to the date that the unaudited condensed financial statements were issued.

Based upon this review, other

than as described below, the Company did not identify any subsequent events that would have required adjustment in these unaudited condensed

financial statements.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Business Combination Agreement

On August 12, 2022, the

Company, Verde Clean Fuels OpCo, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“OpCo”),

and, for a limited purpose, the Sponsor, entered into a business combination agreement (as the same may be amended from time to time,

the “Business Combination Agreement”) with Bluescape Clean Fuels Holdings, LLC, a Delaware limited liability company (“Holdings”),

and Bluescape Clean Fuels Intermediate Holdings, LLC, a Delaware limited liability company (“Intermediate”).

The transactions

contemplated by the Business Combination Agreement are collectively referred to herein as the “business combination.”

Pursuant to the Business

Combination Agreement, during the period between the consummation of the business combination and the earlier of the five year anniversary

from the consummation of the business combination or the date of the consummation of a sale of the post combination company (the "Earn

Out Period"), OpCo may transfer up to 3,500,000 Class C common units of OpCo and a corresponding number of shares of Class C common

stock, par value $ 0.0001 per share, of the post combination company to Holdings within five business days after the occurrence of certain

triggering events.

Sponsor Letter

In connection with the execution

of the Business Combination Agreement, on August 12, 2022, the Sponsor entered into a letter agreement with Intermediate, Holdings and

the Company, pursuant to which, among other things, the Sponsor agreed to (i) forfeit 2,475,000 of its Private Placement Warrants, (ii)

comply with the lock-provisions in the Letter Agreement, dated August 12, 2021, by and among the Company, the Sponsor and the Company’s

directors and officers, (iii) vote all of its shares of Class A common stock and Founder Shares in favor of the adoption and approval

of the Business Combination Agreement and the business combination, (iv) not redeem any of its shares of Class A common stock in connection

with such stockholder approval, (v) waive its anti-dilution rights with respect to its Founder Shares in connection with the consummation

of the business combination and (vi) subject a portion of the shares of Class A common stock it will receive as a result of the conversion

of its Founder Shares in connection with the consummation of the business combination to forfeiture if certain triggering events do not

occur during the Earn Out Period.

Underwriters Letter

In connection with the execution

of the Business Combination Agreement, on August 12, 2022, the Company, Intermediate and Holdings entered into a letter agreement with

the underwriters, pursuant to which, among other things, (i) Imperial Capital, LLC agreed to forfeit all of its 1,423,125 Private Placement

Warrants and all of its 156,543 Representative Shares, (ii) I-Bankers Securities, Inc.

agreed to forfeit all of its 301,875 Private Placement

Warrants and all of its 33,207 Representative Shares and (iii) the underwriters agreed to reduce their deferred underwriting fees related

to the IPO from $6,037,500 to $4,312,500.

Subscription Agreements

In connection with the execution

of the Business Combination Agreement, on August 12, 2022, the Company entered into separate subscription agreements with certain investors

(the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase, and the Company agreed to sell to the PIPE

Investors, an aggregate of 8,000,000 shares of Class A common stock for a purchase price of $10.00 per share and an aggregate purchase

price of $80,000,000 in a private placement (the “PIPE Financing”).

Of the $80,000,000 of commitments, Holdings has agreed

to purchase 800,000 shares to be sold in the PIPE Financing for an aggregate commitment of $8,000,000.

Arb Clean Fuels Management LLC

(“Arb Clean Fuels”), an entity affiliated with a member of the Sponsor, has agreed to purchase 7,000,000 shares to be sold

in the PIPE Financing for an aggregate commitment of $70,000,000;

provided, that, to the extent funds in the Trust Account immediately

prior to the consummation of the business combination, after giving effect to the Company stockholders’ redemption rights, exceed

$17,420,000, each $10.00 increment of such excess funds shall reduce Arb Clean Fuels’ commitment by $10.00 up to a maximum reduction

of $20,000,000.

Additionally, an entity unaffiliated with the Sponsor has agreed to purchase 200,000 shares for an aggregate commitment

of $2,000,000.

Lock-Up Agreement

In connection with the execution

of the Business Combination Agreement, on August 12, 2022, Holdings entered into a Lock-Up Agreement, pursuant to which Holdings agreed

to subject its shares of common stock received in connection with the business combination to the lock-up provisions therein.

On August 12, 2022, the Company issued a press

release announcing that its board of directors has elected to extend the date by which it has to consummate its initial business combination

from August 17, 2022 to November 16, 2022 (the “Extension”), as permitted under the Company’s third amended and restated

certificate of incorporation.

The Company must complete an initial business combination within 12 months from the closing of the IPO on

August 17, 2021 (the “Initial Combination Period”), which may be extended by three months if it files a proxy statement, registration

statement or similar filing for an initial business combination within the Initial Combination Period.

The Company filed a preliminary

proxy statement in connection with its previously announced business combination with Intermediate with the SEC on August 12, 2022, extending

the time it has to complete its initial business combination from August 17, 2022 to November 16, 2022.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Agreements to be Executed

Business Combination Agreement also contemplates the execution by the parties of various agreements at the Closing, including, among others,

Tax Receivable

connection with the business combination, the Company will enter into the tax receivable agreement (the “Tax Receivable Agreement”)

with Holdings (together with its permitted transferees, the “TRA Holders,” and each a “TRA Holder”) and the Agent

(as defined therein), which will generally provide for the payment by Verde Inc.

to each TRA Holder of 85% of the net cash savings, if

federal, state and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state

and local taxes) that Verde Inc.

realizes (or is deemed to realize in certain circumstances) in periods after the business combination

as a result of (i) certain increases in tax basis that occur as a result of Verde Inc.’s acquisition (or deemed acquisition for

federal income tax purposes) of all or a portion of such TRA Holder’s Class C OpCo Units pursuant to an OpCo Holder Exchange

set forth in the A&R LLC Agreement, and (ii) imputed interest deemed to be paid by Verde Inc.

as a result of, and additional tax basis

arising from, any payments Verde Inc.

makes under the Tax Receivable Agreement.

will retain the benefit of the remaining 15%

of these net cash savings.

generally will be made under the Tax Receivable Agreement as Verde Inc.

realizes actual cash tax savings in periods after the consummation

of the business combination from the tax benefits covered by the Tax Receivable Agreement.

However, if the Tax Receivable Agreement terminates

early (at Verde Inc.’s election or due to other circumstances, including Verde Inc.’s breach of a material obligation thereunder

or upon certain changes of control described in the Tax Receivable Agreement), Verde Inc.

would be required to make an immediate payment

to each TRA Holder equal to the present value of the anticipated future payments to be made by it under the Tax Receivable Agreement (based

upon certain valuation assumptions and deemed events set forth in the Tax Receivable Agreement), such payments not to exceed $ 50 million,

in the aggregate, in the case of certain changes of control.

will depend on OpCo to make distributions to Verde Inc.

in an amount sufficient to cover Verde Inc.’s obligations under the

Tax Receivable Agreement.

A&R LLC Agreement

the Closing, Verde Inc.

will operate its business through OpCo.

On the Closing Date, Verde Inc.

and Holdings will enter into an amended

and restated limited liability company agreement of OpCo (the “A&R LLC Agreement”).

The A&R LLC Agreement will provide,

among other things, that each Class C OpCo Unit will be exchangeable, subject to certain conditions, for one share of Class A Common Stock,

and a corresponding share of Class C Common Stock will be cancelled in connection with such exchange, pursuant to and in accordance with

the terms of the A&R LLC Agreement.

A&R Registration

Rights Agreement

connection with the Closing, that certain Registration Rights Agreement dated August 17, 2021 (the “IPO Registration Rights Agreement”)

will be amended and restated and Verde Inc., certain stockholders of CENAQ prior to the Closing (the “Initial Holders”) and

certain stockholders receiving Class A Common Stock and Class C Common Stock pursuant to the business combination (the “New Holders”

and together with the Initial Holders, the “Reg Rights Holders”) will enter into an amended and restated IPO Registration

Rights Agreement (the “A&R Registration Rights Agreement”).

to the A&R Registration Rights Agreement, Verde Inc.

will agree that, within thirty (30) days after the Closing, it will use its commercially

reasonable efforts to file with the SEC (at Verde Inc.’s sole cost and expense) a registration statement registering the resale

of certain securities held by or issuable to the Reg Rights Holders (the “Resale Registration Statement”), and Verde Inc.

will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as reasonably practicable

after the filing thereof.

In certain circumstances, the Reg Rights Holders can demand Verde Inc.’s assistance with underwritten

offerings and block trades, and the Reg Rights Holders will be entitled to certain piggyback registration rights.

The Company evaluated subsequent

events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were

Based upon this review, other than as described below, the Company did not identify any other subsequent events that would have

required adjustment in these unaudited condensed financial statements.

On October 26, 2022, in

accordance with the third amended and restated certificate of incorporation of the Company, the Sponsor elected to convert 3,487,500 of

its shares of Class B Common Stock into shares of Class A common stock on a one-for-one basis.

Proxy Statement

November 10, 2022, the Company filed a Definitive Proxy Statement seeking to obtain stockholder approval to consider and vote upon certain

proposals, including proposals to (a) approve and adopt the Business Combination Agreement and Plan of Reorganization, dated as of

August 12, 2022, and (b) approve and adopt, the fourth amended and restated certificate of incorporation, which, if approved, would

take effect upon Closing.

November 15, 2022, the Company’s board of directors has elected to extend the date by which the Company has to consummate a business

combination from November 16, 2022 to February 16, 2023 (the “Extension”), as permitted under the Company’s third amended

and restated certificate of incorporation.

The Extension is the second of two three-month extensions permitted under the Charter.

connection with the Extension, the Sponsor has deposited $ 1,725,000 , representing 1 % of the gross proceeds of the IPO, into the Trust

Account for its public stockholders.

Promissory Notes

— Related Party

November 15, 2022, the Company issued an unsecured promissory note (the “Extension Note”) in the principal amount of $ 1,725,000

to the Sponsor in connection with the Extension.

The Extension Note bears no interest and is due and payable upon the earlier to occur

of (i) the date on which CENAQ’s initial business combination is consummated and (ii) the liquidation of the Company on or before

February 16, 2023 or such later liquidation date as may be approved by the Company’s stockholders.

If the Business Combination is

consummated, the amount repayable under the Extension Note will be reduced by a percentage equal to the aggregate amount of cash proceeds

required to satisfy any exercise by the Company’s eligible stockholders of their redemption rights provided for in the Company’s

third amended and restated certificate of incorporation divided by the total amount required if all eligible holders of Class A common

stock, par value $ 0.0001 per share, of the Company elected to exercise their redemption rights with respect to all eligible shares of

Class A common stock held by such holders in accordance with Section 8.03 of the Business Combination Agreement.

November 15, 2022, the Company issued an unsecured promissory note (the “Sponsor Note”) in the principal amount of $ 467,500

to the Sponsor.

The Sponsor Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which CENAQ’s

initial business combination is consummated and (ii) the liquidation of the Company on or before February 16, 2023 or such later liquidation

date as may be approved by the Company’s stockholders.

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 1. Financial Statements