What changed in this filing

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Item 1. Financial Statements

2022-08-26 compared with 2022-05-12 · 551 added, 347 removed, 406 unchanged (69% of the section changed)

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Total current assets

Deferred financing costs

Marketable securities held in trust account

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Accounts payable and accrued expenses

Income taxes payable

Interest payable

Promissory note - related party

Total current liabilities

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Commitments and Contingencies (Note 6)

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

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

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 March 31, 2022 and December 31, 2021

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

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

Additional paid-in capital

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CONDENSED STATEMENTS OF OPERATIONS

For the three months ended

Three Months Ended

Six Months Ended

General and administrative costs

Loss from operations

Other income :

( 1,394,632 )

Other income (expense):

Interest earned on marketable securities held in Trust Account

Total other income

Interest expense on promissory note - related party

Unrealized gain on marketable securities held in Trust Account

Total other income, net

Loss before provision for income taxes

( 1,174,048 )

Provision for income taxes

$ ( 243,730 )

$ ( 1,179,136 )

Basic and diluted weighted average shares outstanding, common stock subject to redemption

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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

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CENAQ ENERGY CORP.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDER’S

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’

(DEFICIT) EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022

Stockholder’s

Balance as of January 1, 2022

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

Additional Paid-in

Total Stockholders’

Balance — January 1, 2022

$ ( 5,546,187 )

$ ( 5,545,737 )

Balance as of March 31, 2022

Balance — March 31, 2022

$ ( 6,481,593 )

$ ( 6,481,143 )

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Stockholder’s

Balance as of January 1, 2021

Balance — June 30, 2022

$ ( 6,725,323 )

$ ( 6,724,873 )

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

Additional Paid-in

Total Stockholders’

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

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CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended

Six months Ended

Cash Flows from Operating Activities:

$ ( 1,179,136 )

Adjustments to reconcile net loss to net cash used in operating activities:

Interest earned on marketable securities held in Trust Account

Unrealized gain on cash and marketable securities held in Trust Account

Changes in operating assets and liabilities:

Prepaid expenses

Due to related party

Accounts payable and accrued expenses

Interest payable

Income taxes payable

Net cash used in operating activities

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Net Change in Cash

Cash, beginning of the period

Cash, end of the period

Cash – Beginning of period

Cash – End of period

Supplemental disclosure of noncash investing and financing activities:

Deferred financing costs included in accounts payable and accrued expenses

Accrued deferred offering costs

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NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1 — Organization and

Business Operations

Note 1 — Organization

and Business Operations

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”).

The Company has not reached an agreement with any specific Business

Combination target.

The Company is focusing its search for a target business in the energy industry in North America.

As of March 31, 2022, the

(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.

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

March 31, 2022 relates to the Company’s formation and the initial public offering (“IPO”), described below.

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

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.

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.

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’s sponsor

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for the Company’s IPO was declared effective on August 12, 2021 (the “Effective Date”).

On August 17, 2021, Company

On August 17, 2021, the Company

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

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

In connection with the closing

of the IPO, the Sponsor sold membership interest reflecting an allocation of 75,000 founder shares, or an aggregate of 825,000 founder

shares, to each anchor investor at their original purchase price of approximately $ 0.0058 per share.

In connection with the

closing of the IPO, the Sponsor sold membership interest reflecting an allocation of 75,000 founder shares, or an aggregate

of 825,000 founder shares, to each anchor investor at their original purchase price of approximately $ 0.0058 per share.

The Company estimated the

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Warrants and Private Placement Warrants (defined below).

Simultaneously with the closing

of the IPO, the Company completed the private sale of an aggregate of 6,000,000 warrants (the “Private Placement Warrants”)

to the Sponsor and the Underwriters at a purchase price of $ 1.00 per Private Placement Warrant, generating gross proceeds to the

Company of $ 6,000,000 .

The Private Placement Warrants are identical to the Warrants sold in the IPO, except that the Sponsor and the Underwriters

agreed not to transfer, assign or sell any of the Private Placement Warrants (except to certain permitted 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,

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 .

Simultaneously with the

closing of the IPO, the Company completed the private sale of an aggregate of 6,000,000 warrants (the “Private Placement

Warrants”) to the Sponsor and the Underwriters at a purchase price of $ 1.00 per Private Placement Warrant, generating gross

proceeds to the Company of $ 6,000,000 .

The Private Placement Warrants are identical to the Warrants sold in the IPO, except that the

Sponsor and the Underwriters agreed not to transfer, assign or sell any of the Private Placement Warrants (except to certain permitted

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 .

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.

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.

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.

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.

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.

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.

The Company must complete

one or more initial Business Combinations having an aggregate fair market value of at least 80 % of the value of the assets held in

the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust

Account) at the time of the agreement to enter into the initial Business Combination.

However, the Company will only complete a Business

Combination if the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise

acquires a controlling interest in the target sufficient for the post-transaction company not to be required to register as an investment

company under the Investment Company Act 1940, as amended (the “Investment Company Act”).

There is no assurance that the Company

will be able to complete a Business Combination successfully.

one or more initial Business Combinations having an aggregate fair market value of at least 80 % of the value of the assets held

in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the income earned on the

Trust Account) at the time of the agreement to enter into the initial Business Combination.

However, the Company will only complete a

Business Combination if the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target

or otherwise acquires a controlling interest in the target sufficient for the post-transaction company not to be required to register

as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).

There is no assurance

that the Company will be able to complete a Business Combination successfully.

The Company will provide

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The stockholders will be entitled to redeem all or a portion of their public shares

upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit

in the Trust Account as of two business days prior to the consummation of the initial Business Combination, 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, divided by the number of then outstanding public shares, subject to the limitations

described herein.

upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on

deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, 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, divided by the number of then outstanding public shares, subject to

the limitations described herein.

The amount in the Trust Account was $ 10.10 per public share.

The per-share amount the Company will distribute

to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the

underwriters.

The per-share amount the Company

will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company

will pay to the underwriters.

The shares of common stock

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NOTES TO CONDENSED FINANCIAL STATEMENTS

The Company will have until

August 17, 2022, 12 months from the closing of the IPO, to complete the initial Business Combination (the “Combination Period”).

If the Company anticipates that it may not be able to consummate its initial Business Combination within the Combination Period, it may,

but not obligated to, extend the Combination Period two times by an additional three months each time (for a total of up to 18 months

to complete a Business Combination);

provided that the Sponsor (or its designees) must deposit into the trust account funds equal to one

percent ( 1 %) of the gross proceeds of the offering (including such proceeds from the exercise of the underwriters’ over-allotment

option, if exercised) for each 3-month extension of the time period to complete the initial Business Combination, in exchange for a non-interest

bearing, unsecured promissory note.

The Company will have until August 17, 2022, 12 months from the closing

of the IPO, to complete the initial Business Combination (the “Combination Period”).

If the Company anticipates that it may

not be able to consummate its initial Business Combination within the Combination Period, it may, but not obligated to, extend the Combination

Period two times by an additional three months each time (for a total of up to 18 months to complete a Business Combination);

that the Sponsor (or its designees) must deposit into the trust account funds equal to one percent ( 1 %) of the gross proceeds of the offering

(including such proceeds from the exercise of the underwriters’ over-allotment option, if exercised) for each 3-month extension

of the time period to complete the initial Business Combination, in exchange for a non-interest bearing, unsecured promissory note.

if the Company filed a proxy statement, registration statement or similar filing for an initial business combination within the initial

12-month period, we may extend the period of time to consummate a business combination by three months (or up to 15 months to complete

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).

If the Company is unable

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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.

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

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

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The Anchor Investors are

not required to vote any of their public shares (as opposed to their Founder Shares) in favor of our initial business combination or for

or against any other matter presented for a stockholder vote.

The Sponsor has agreed that

it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent auditors)

not required to vote any of their public shares (as opposed to their Founder Shares) in favor of our initial business combination or

for or against any other matter presented for a stockholder vote.

The Sponsor has agreed

that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent auditors)

for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering

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the specific impact is not readily determinable as of the date of this financial statement.

The financial statement does not include any

adjustments that might result from the outcome of this uncertainty.

The financial statement does not include

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

CENAQ ENERGY CORP.

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Liquidity and Going Concern

As of March 31, 2022, the

Company had $ 155,930 in its operating bank account, and a 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.

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).

commitment 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

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.

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

bank account, and a 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 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.

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.

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

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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 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.

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.

CENAQ ENERGY CORP.

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of the balances and results for the period presented.

Operating results for the three months ended March 31, 2022 are not necessarily

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.

The accompanying unaudited

condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual

Report on Form 10-K filed by the Company with the SEC on March 30, 2022.

condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the

Annual Report on Form 10-K filed by the Company with the SEC on March 30, 2022.

Emerging Growth Company Status

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growth companies but any such election to opt out is irrevocable.

The Company has elected not to 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, the Company,

as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company

nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential

differences in accounting standards used.

The Company has elected not to 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,

the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised

This may make comparison of the Company’s financial statements with another public company which is neither an emerging

growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because

of the potential differences in accounting standards used.

Use of Estimates

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The most significant estimates that affected the financial

statements as of March 31, 2022 and December 31, 2021 are the calculations of the fair values of the over-allotment option, fair values

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.

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

The Company did not

have any cash equivalents as of March 31, 2022 and December 31, 2021.

As of June 30, 2022

and December 31, 2021, the Company has cash of $ 86,284 and $ 505,518 , respectively.

The Company did not have any cash equivalents as of

June 30, 2022 and December 31, 2021.

CENAQ ENERGY CORP.

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Marketable Securities held in Trust Account

As of March 31, 2022, the

Company had $ 174,246,244 in Marketable Securities held in the Trust Account which was invested in BLF Treasury Trust Fund.

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 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

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

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potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,

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

At March 31, 2022, the Company has not experienced losses on

this account.

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.

Offering Costs associated with the Initial

Public Offering

Offering costs consist of

underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO.

complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A—“Expenses

Offering costs consist

of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO.

Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A—“Expenses

of Offering”.

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basis compared to total proceeds received.

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.

Fair Value of Financial Instruments

The fair value of the Company’s

assets and liabilities, other than the over-allotment option, which qualify as financial instruments under FASB ASC 820, “Fair 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 March 31, 2022 and December 31, 2021 was $ 174,246,244

assets and liabilities, other than the over-allotment option, which qualify as financial instruments under FASB ASC 820, “Fair

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

and $ 174,229,680 , respectively.

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the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value.

820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or

ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset

or liability.

These inputs are further defined as observable and unobservable inputs.

Observable inputs are those that buyer and seller would

use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs reflect

the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based

on the best information available in the circumstances.

Observable inputs are those that buyer and seller

would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs

reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed

based on the best information available in the circumstances.

The fair value hierarchy

is categorized into three levels based on the inputs as follows:

Level 1 — Valuations based on unadjusted

quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Valuation adjustments

and block discounts are not being applied.

Since valuations are based on quoted prices that are readily and regularly available in an

active market, valuation of these securities does not entail a significant degree of judgment.

Level 1 — Valuations

based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

adjustments and block discounts are not being applied.

Since valuations are based on quoted prices that are readily and regularly available

in an active market, valuation of these securities does not entail a significant degree of judgment.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Level 2 — Valuations based on (i) quoted

prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar

assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from

or corroborated by market through correlation or other means.

Level 3 — Valuations based on inputs

that are unobservable and significant to the overall fair value measurement.

The fair value of certain of the Company’s assets and

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

The fair values of cash, prepaid expenses, and accrued expenses are estimated to approximate the carrying values as of March 31, 2022

Level 2 — Valuations

based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not

active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs

that are derived principally from or corroborated by market through correlation or other means.

Level 3 — Valuations

based on inputs that are unobservable and significant to the overall fair value measurement.

The fair value of certain of the Company’s

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,

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

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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

The Company accounted for the

over-allotment option (Note 6) in accordance with the guidance contained in ASC 480.

The Company accounted for

the over-allotment option (Note 6) in accordance with the guidance contained in ASC 480.

The over-allotment is not considered indexed

to the Company’s own ordinary shares, and as such, it does not meet the criteria for equity treatment and is recorded as a liability.

to the Company’s own common stock, and as such, it does not meet the criteria for equity treatment and is recorded as a liability.

The fair value changes of over-allotment option liability between IPO closing date and the option exercise date was recorded in operations.

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

At March 31, 2022 and December 31,

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

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to the Company’s certificate of incorporation.

The Class A common

stock sold as part of the Units in the IPO is subject to ASC 480-10-S99.

If it is probable that the equity instrument will become

redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance

(or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of

the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the

instrument to equal the redemption value at the end of each reporting period.

The Company recognizes changes in redemption value

immediately as they occur.

Immediately upon the closing of the IPO, the Company recognized the subsequent re-measurement under ASC

480-10-S99 from initial carrying amount to redemption value.

The change in the carrying value of redeemable common stock resulted in

charges against additional paid-in capital and accumulated deficit.

The Class A common stock

sold as part of the Units in the IPO is subject to ASC 480-10-S99.

If it is probable that the equity instrument will become redeemable,

the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date

that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to

recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption

value at the end of each reporting period.

The Company recognizes changes in redemption value immediately as they occur.

upon the closing of the IPO, the Company recognized the subsequent re-measurement under ASC 480-10-S99 from initial carrying amount to

redemption value.

The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital

and accumulated deficit.

As the holders of representative

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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 months ended March 31, 2022 and 2021 because the warrants are contingently exercisable,

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

As a result, diluted net loss per common stock is

the same as basic net loss per common stock for the periods.

The table below presents a reconciliation of the numerator and denominator

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

For the three months ended

excluded from 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 and its inclusion would be anti-dilutive.

As a result, diluted net loss per

common stock is the same as basic net loss per common stock for the periods.

The table below presents a reconciliation of the numerator

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

Basic and diluted net loss per share:

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$ ( 193,283 )

$ ( 935,080 )

$ ( 244,056 )

Weighted Average Shares Outstanding including common stock subject to redemption

Basic and diluted net loss per share

The Company follows the asset

and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are

recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of

existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates

expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 prescribes a recognition

threshold and a measurement attribute for the financial statement recognition and measurement of tax positions 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.

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 March 31, 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 is subject to income tax examinations by major taxing authorities since inception.

The Company accounts for

income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities

for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities

and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation

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.

The Company has identified

the United States as its only “major” tax jurisdiction.

The Company is subject to income taxation by major taxing authorities

since inception.

These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax

jurisdictions and compliance with federal and state tax laws.

The Company’s management does not expect that the total amount of

unrecognized tax benefits will materially change over the next twelve months.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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.

The Company is currently evaluating the impact of the ASU on its financial position, results of operations or cash flows.

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.

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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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

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 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.

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.

The guidance was adopted starting January 1, 2022.

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

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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

The Company’s management

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

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 over-allotments were exercised in full, at $ 10.00 per Unit, generating additional proceeds of $ 22,500,000 .

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 over-allotments were exercised in full, at $ 10.00 per Unit, generating additional

proceeds of $ 22,500,000 .

Note 4 — Private Placement

Simultaneously with the closing

of the IPO, the Company’s Sponsor purchased an aggregate of 4,500,000 warrants at a price of $ 1.00 per warrant, for

an aggregate purchase price of $ 4,500,000 and the Company’s underwriters purchased an aggregate of 1,500,000 warrants

Simultaneously with the

closing of the IPO, the Company’s Sponsor purchased an aggregate of 4,500,000 warrants at a price of $ 1.00 per warrant,

for an aggregate purchase price of $ 4,500,000 and the Company’s underwriters purchased an aggregate of 1,500,000 warrants

at a price of $ 1.00 per whole warrant (for an aggregate purchase price of $ 1,500,000 ) in a private placement.

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are identical to the warrants sold as part of the Units in the IPO.

The Sponsor and the underwriters have agreed, subject to certain limited

exceptions, that the Private Placement Warrants will not be transferred, assigned or sold until 30 days after the completion of the Company’s

initial Business Combination and that they will be entitled to certain registration rights.

The Sponsor and the underwriters have agreed, subject to certain

limited exceptions, that the Private Placement Warrants will not be transferred, assigned or sold until 30 days after the completion

of the Company’s initial Business Combination and that they will be entitled to certain registration rights.

Note 5 — Related Party

Founder Shares

On December 31, 2020, the Sponsor

paid $ 25,000 , or approximately $ 0.006 per share, to cover certain offering costs in consideration for 4,312,500 Class B

common stocks, par value $ 0.0001 (the “Founder Shares”).

On December 31, 2020, the

Sponsor paid $ 25,000 , or approximately $ 0.006 per share, to cover certain offering costs in consideration for 4,312,500 Class

B common stocks, par value $ 0.0001 (the “Founder Shares”).

Up to 562,500 Founder Shares were subject to forfeiture

3 unchanged sentences

As a result, these 562,500 founder shares are no longer subject to forfeiture.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Additionally, upon consummation

of the IPO, the Sponsor sold 75,000 Founder Shares to each of the 11 Anchor Investors that purchased at least 9.9% of the units sold in

the IPO, at their original purchase price of approximately $0.0058 per share.

of the IPO, the Sponsor sold 75,000 Founder Shares to each of the 11 Anchor Investors that purchased at least 9.9% of the units sold

in the IPO, at their original purchase price of approximately $0.0058 per share.

The aggregate fair value of these founder shares attributable

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(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 the Company’s 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 the Company

completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of its stockholders having the

right to exchange their shares of common stock for cash, securities or other property (the “Lock-up” ).

Notwithstanding the

foregoing, if (1) the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock

splits, stock capitalizations, 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 (2) the Company completes a liquidation, merger, capital stock

exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock

for cash, securities or other property, the Founder Shares will be released from the Lock-up.

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(B) subsequent to the initial Business Combination, (x) if the last sale price of the Company’s 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 the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of its stockholders

having the right to exchange their shares of common stock for cash, securities or other property (the “Lock-up” ).

Notwithstanding

the foregoing, if (1) the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for

stock splits, stock capitalizations, 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 (2) the Company completes a liquidation, merger, capital

stock exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of common

stock for cash, securities or other property, the Founder Shares will be released from the Lock-up.

Promissory Note — Related Party

On May 31, 2022, the Sponsor

agreed to loan the Company $ 125,000 pursuant to a promissory note (the “Promissory Note”).

The Promissory Note bears an interest

of 10 % per annum, payable on the earlier of (i) February 17, 2023 or (ii) the closing date on which the Company consummates an initial

business combination.

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

Working Capital Loans

In addition, in order to finance

transaction costs in connection with an intended Business Combination, on November 11, 2021 the Sponsor signed a commitment letter to

provide loans of up to an aggregate of $ 1,500,000 to the Company (“Working Capital Loans”).

In addition, in order to

finance transaction costs in connection with an intended Business Combination, on November 11, 2021 the Sponsor signed a commitment letter

to provide loans of up to an aggregate of $ 1,500,000 to the Company (“Working Capital Loans”).

This commitment extends through

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Such warrants would be identical to the Private Placement Warrants.

As of March 31, 2022 and December 31, 2021, the Company had

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

no borrowings under the Working Capital Loans.

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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 the Company to register for resale such securities

pursuant to Rule 415 under the Securities Act.

However, the registration rights agreement provides that the Company 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 the Company completes

a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s

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.

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

filed subsequent to the completion of the initial Business Combination and rights to require the Company to register for resale such

securities pursuant to Rule 415 under the Securities Act.

However, the registration rights agreement provides that the Company 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 the

Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the

Company’s 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.

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

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Underwriters Agreement

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, if any.

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,

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

Simultaneously with the closing

of the IPO and the over-allotment, the underwriters were paid an underwriting discount of two percent ( 2 %) of the gross proceeds

of the IPO and the over-allotment, or $ 3,450,000 .

Additionally, the underwriters will be entitled to a deferred underwriting discount

of 3.5 % of the gross proceeds of the IPO and the over-allotment upon the completion of the Company’s initial Business Combination.

Simultaneously with the

closing of the IPO and the over-allotment, the underwriters were paid an underwriting discount of two percent ( 2 %) of the gross

proceeds of the IPO and the over-allotment, or $ 3,450,000 .

Additionally, the underwriters will be entitled to a deferred underwriting

discount of 3.5 % of the gross proceeds of the IPO and the over-allotment upon the completion of the Company’s initial Business

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

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 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.

Imperial Capital LLC has

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(or up to 18 months following extensions).

CENAQ ENERGY CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The representative shares

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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,

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).

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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 March 31, 2022

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

As of June 30, 2022

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

Class A common

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$ 0.0001 per share.

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

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.

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

At March 31, 2022 and December 31, 2021,

At June 30, 2022 and December 31, 2021,

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

3 unchanged sentences

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.

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

1 unchanged sentence

stockholders except as required by law.

Unless specified in the Company’s amended and restated certificate of incorporation or bylaws,

or as required by applicable provisions of the Delaware General Corporation Law (“DGCL”) or applicable stock exchange rules,

the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter

voted on by its stockholders.

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.

Unless specified in the Company’s amended and restated certificate of incorporation or

bylaws, or as required by applicable provisions of the Delaware General Corporation Law (“DGCL”) or applicable stock exchange

rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such

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.

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

2 unchanged sentences

share, subject to adjustment as discussed below, at any time commencing 30 days after the completion of our initial business combination.

However, no warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of

Class A common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A common stock.

Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the public

warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may,

until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective

However, no warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares

of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A common stock.

Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the

public warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders

may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective

registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities

27 unchanged sentences

Note 8 — Subsequent Events

The Company evaluated subsequent

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

The Company did not identify any subsequent events that would have required adjustment in these unaudited condensed financial statements.

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.

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