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Item 2. Management’s Discussion and Analysis

2023-05-16 compared with 2022-11-21 · 423 added, 390 removed, 4 unchanged (100% of the section changed)

Management’s Discussion and

Analysis of Financial Condition and Results of Operations.

References to “we”, “us”,

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

The following discussion

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

Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking

This Quarterly Report on Form 10-Q includes

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended (the “Exchange Act”).

We have based these forward-looking statements on our current expectations

and projections about future events.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions

about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future

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

In some cases, you

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

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

or the negative of such terms or other similar expressions.

Factors that might cause or contribute to such a discrepancy include, but

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

We are a newly organized blank check company

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

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

Our sponsor is CENAQ Sponsor, LLC, a Delaware

limited liability company.

The registration statement for the initial public offering was declared effective on August 12, 2021.

17, 2021, we consummated our initial public offering (“Public Offering” or “IPO”) of 15,000,000 units, at $10.00

per unit, generating gross proceeds of $150,000,000.

The underwriter was granted a 45-day option from the date of the final prospectus

relating to the IPO to purchase up to 2,250,000 additional units to cover over-allotments, if any, at $10.00 per unit.

On August 19, 2021,

the underwriters exercised the over-allotment in full, generating additional gross proceeds of $22,500,000.

Transaction costs of our IPO

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

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

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

Simultaneously with the closing of the IPO, we

consummated the private placement (“Private Placement”) of 6,000,000 warrants, at a price of $1.00 per warrant, generating

gross proceeds to us of $6 million.

On August 19, 2021, the underwriters exercised the over-allotment in full and consummated the private

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

Upon the closing of the IPO and the Private Placement,

$174,225,000 ($10.10 per share) of the net proceeds of the sale of the Units in the IPO and the Private Placement were placed in the Trust

If we are unable to complete an initial Business

Combination within the Combination Period, until February 16, 2023, we will (i) cease all operations except for the purpose of winding

up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,

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

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

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

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

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

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

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

Proposed Business Combination

Business Combination Agreement

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.”).

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 (“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

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.

Agreements to be Executed at Closing

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to

Verde Clean Fuels, Inc.

(formerly known as CENAQ Energy Corp.).

References to our “management” or our “management

team” refer to our officers and directors.

The following discussion and analysis of the Company’s financial condition

and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in

this Quarterly Report.

Certain information contained in the discussion and analysis set forth below includes forward-looking

statements that involve risks and uncertainties.

Special note regarding forward-looking statements

This Quarterly Report includes

“forward-looking statements” for the purposes of federal securities laws that are not historical facts and involve risks and

uncertainties that could cause actual results to differ materially from those expected and projected.

All statements, other than statements

of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and

Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and

the plans and objectives of management for future operations, are forward-looking statements.

Words such as “expect,” “believe,”

“anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions

are intended to identify such forward-looking statements.

Such forward-looking statements relate to future events or future performance,

but reflect management’s current beliefs, based on information currently available.

A number of factors could cause actual events,

performance or results to differ materially from the events, performance and results discussed in the forward-looking statements.

information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking

statements, please refer to the Risk Factors contained in this Form 10-Q.

The Company’s securities filings can be accessed on the

EDGAR section of the SEC’s website at www.sec.gov.

Except as expressly required by applicable securities law, the Company disclaims

any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or

On July 29, 2020, Green Energy

Partners, Inc.

(“GEP”), formed by the Chief Executive Officer of Intermediate, and an additional individual (the “Founders”),

entered into an asset purchase agreement with Primus Green Energy, Inc.

(“Primus”) to purchase the assets of Primus.

under the asset purchase agreement included a demonstration facility, a laboratory, office space, and intellectual property including

the patented STG+ process technology.

GEP then assigned its rights

under the asset purchase agreement to a newly formed subsidiary of Intermediate.

Immediately following the closing of the asset purchase

agreement, the Founders sold 100% of their membership interests to BEP Clean Fuels Holdings, LLC, a Delaware limited liability company

(“BEP”) in exchange for agreeing to make the payments under the asset purchase agreement as well as other capital contributions

and a contingent payment.

BEP ultimately contributed the membership interests to Intermediate.

Intermediate holds the acquired assets

through Bluescape Clean Fuels, LLC.

Since acquiring the assets from Primus, we have developed the use and application of the technology

acquired to focus on the renewable energy industry.

The Transactions

We entered into the Business Combination Agreement

with CENAQ on August 12, 2022.

Pursuant to the Business Combination Agreement, and based on approval by CENAQ’s shareholders, (i)

(A) CENAQ contributed to OpCo (1) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy

any exercise by CENAQ stockholders of their redemption rights SPAC Stockholder Redemption Amount) and (2) the Holdings Class C Shares

and (B) in exchange therefor, OpCo issued to CENAQ a number of Class A OpCo Units equal to the number of total shares of Class A Common

Stock issued and outstanding immediately after the Closing (taking into account the PIPE Financing and following the exercise of Redemption

Rights) and (ii) immediately following the SPAC Contribution, (A) Holdings contributed to OpCo 100% of the issued and outstanding limited

liability company interests of Intermediate and (B) in exchange therefor, OpCo transferred to Holdings (1) the Holdings OpCo Units and

the Holdings Class C Shares.

After giving effect to the business combination, Holdings holds 22,500,000 OpCo Units and an equal number

of shares of Class C Common Stock.

The Business Combination was

accounted for as a common control reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP.

The Business Combination was not treated as a change in control of Intermediate.

This determination reflects Holdings holding a majority

of the voting power of Verde Clean Fuels, Intermediate’s pre-Business Combination operations being the majority post-Business Combination

operations of Verde Clean Fuels, and Intermediate’s management team retaining similar roles at Verde Clean Fuels.

Further, Holdings

continues to have control of the board of directors through its majority voting rights.

Under the guidance in the Financial Accounting

Standards Board Accounting Standards Codification 805, Business Combinations, for transactions between entities under common control,

the assets, liabilities, and noncontrolling interests of CENAQ and Intermediate are recognized at their carrying amounts on the date of

the Business Combination.

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

Tax Receivable Agreement

In 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 any, in U.S.

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 U.S.

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.

Payments 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.

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

Following the Closing,

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

In 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”).

Pursuant 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.

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.

Under this method of accounting, CENAQ will be treated as the “acquired” company for financial reporting

Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Intermediate issuing stock for

the net assets of CENAQ, accompanied by a recapitalization.

The most significant change in Verde Clean Fuel’s

reported financial position and results is a net increase in cash (as compared to Intermediate’s financial position as of December 31,

2022) of $37.3 million, consisting of $32.0 million in PIPE Financing proceeds, $19.0 million from the trust, and $91 thousand from the

CENAQ operating account offset by $10.0 million in transaction expenses which were recorded as a reduction to additional paid in capital,

and offset by a $3.75 million capital repayment to Holdings.

On February 15, 2023 CENAQ

completed the Business Combination.

Immediately, upon the completion of the Business Combination, CENAQ was renamed Verde Clean Fuels

Following the Business Combination,

Verde Clean Fuels is a renewable energy company specializing in the conversion of synthesis gas, or syngas, derived from diverse feedstocks,

such as biomass, municipal solid waste (“MSW”) and mixed plastics, as well as natural gas (including synthetic natural gas)

and other feedstocks, into liquid hydrocarbons that can be used as gasoline through an innovative and proprietary liquid fuels technology,

the STG+® process.

Through our STG+® process, we convert syngas into Reformulated Blend-stock for Oxygenate Blending (“RBOB”)

We are focused on the development of technology and commercial facilities aimed at turning waste and other bio-feedstocks into

a usable stream of syngas which is then transformed into a single finished fuel, such as gasoline, without any additional refining steps.

The availability of biogenic MSW and the economic and environmental drivers that divert these materials from landfills will enable us

to utilize these waste streams to produce renewable gasoline from modular production facilities with expected capacity to produce between

approximately seven million to 30 million gallons of renewable gasoline per year.

We are redefining liquid fuels technology through

our proprietary and innovative STG+® process to deliver scalable and cost-effective renewable gasoline.

We acquired our STG+®

technology from Primus Green Energy (“Primus”), a company established in 2007 that developed the patented STG+® technology

to convert syngas into gasoline or methanol.

Since acquiring the technology, we have adapted the application of our STG+® technology

to focus on the renewable energy industry.

This adaptation requires a third-party gasification system to produce acceptable synthesis

gas from these renewable feedstocks.

Our proprietary STG+® system converts the syngas into gasoline.

have made significant progress towards commercializing the first STG+® based commercial production facility in the United States.

We expect our first commercial production facility to be operational will be in Maricopa, Arizona.

In the first phase, which could be

operational as early as 2025, we expect this facility to produce approximately 7 million gallons per year of renewable.

In the second

phase, which we expect to be operational in 2026, we anticipate producing approximately 30 million gallons per year of renewable gasoline.

Additionally, we have several additional renewable gasoline projects, and flare mitigating natural gas to gasoline projects, in various

early stages of development.

Over $110 million has been invested in our technology,

including our demonstration facility in New Jersey, which has completed over 10,500 hours of operation producing gasoline or methanol.

Our demonstration facility represents the scalable nature of our operational modular commercial design which has fully integrated reactors

and recycle lines and is designed with key variables, like gas velocity and catalyst bed length, at a 1-to-1 scale with our commercial

We have also participated in carbon lifecycle studies to validate the CI score and reduced lifecycle emissions of our renewable

gasoline as well as fuel, blending and engine testing to validate the specification and performance of our gasoline product.

our renewable gasoline exhibits a significant lifecycle carbon emissions reduction compared to traditional petroleum-based gasoline.

a result, we believe our gasoline produced from renewable feedstock, such as biomass, will qualify under the RFS for the D3 RIN (a carbon

credit), which can have significant value.

Similarly, gasoline produced from our process may also qualify for various state carbon programs,

including California’s Low Carbon Fuel Standards (“LCFS”).

Unlike many other gas-to-liquids technologies, not only can

our STG+® process produce renewable gasoline from syngas, but we expect it will be able to be applied at other production facilities

to produce other end products including methanol.

In addition to our initial focus on the production of renewable gasoline, there is opportunity

to continue to develop additional process technology to produce middle distillates including sustainable diesel and sustainable aviation

As of March 31, 2023, the Company has not derived revenue from its principal business activities.

The Company is managed as an integrated

business and consequently, there is only one reportable segment.

Key Factors Affecting Our Prospects and Future Results

We believe that our performance

and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including

competition from other carbon-based and other non-carbon-based fuel producers, changes to existing federal and state level low-carbon

fuel credit systems, and other factors discussed under the section titled “Risk Factors.” We believe the factors described

below are key to our success.

Commencing and Expanding Commercial Operations

April 2022, we commenced a pre-FEED study for the Maricopa, AZ facility which we expect to be our first commercial production facility.

Following our entry into a 25 year lease (Note 5) to secure the site of the future facility, we are actively engaged in activities associated

with designing the feedstock supply chain to the site, evaluating utility interconnections, and validating front-end gasification design

for our first commercial facility.

We believe our commercialization activities are being completed at a pace that can support first commercial

production of renewable gasoline as early as 2025.

We have three additional

production facilities planned and four additional identified potential production facility development opportunities.

We believe the number

of planned and identified potential production facilities bode well for our potential future success.

Successful Implementation of the first commercial facility

A critical step in our success

will be the successful construction and operation of the first commercial production facility using our patented STG+ technology.

that the first commercial production facility could be operational as early as 2025.

Protection and continuous development of our patented technology

Our ability to compete successfully will depend

on our ability to protect, commercialize, and further develop our proprietary process technology and commercial facilities in a timely

manner, and in a manner technologically superior to and/or are less expensive than competing processes.

Key Components of Results of Operations

We are an early-stage company and our historical

results may not be indicative of our future results.

Accordingly, the drivers of our future financial results, as well as the components

of such results, may not be comparable to our historical or future results of operations.

We have not generated any revenue to date.

to generate a significant portion of our future revenue from the sale of renewable RBOB grade gasoline primarily in markets with federal

and state level low-carbon fuel credit systems.

General and Administrative Expense

G&A expenses consist of compensation costs for

personnel in executive, finance, accounting, and other administrative functions.

G&A expenses also include legal fees, professional

fees paid for accounting, auditing and consulting services, and insurance costs.

Following the business combination, we expect we will

incur higher G&A expenses for public company costs such as compliance with the regulations of the SEC and the Nasdaq Capital Market.

Research and Development Expense

Our research and development (“R&D”)

expenses consist primarily of internal and external expenses incurred in connection with our R&D activities.

These expenses include

labor directly performed on our projects and fees paid to third parties working on and testing specific aspects of our STG+ design and

gasoline product output.

R&D costs have been expensed as incurred.

We expect R&D expenses to grow as we continue to develop the

STG+ technology and develop market and strategic relationships with other businesses.

Income Tax Effects

There are no current or deferred income tax

amounts recorded in our financial statements.

Results of Operations

As of September 30, 2022, we have not commenced

any operations.

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

Offering, and, since the completion of the IPO, searching for a target to consummate a Business Combination.

We will not generate any

operating revenues until after the completion of a Business Combination, at the earliest.

We will generate non-operating income in the

form of interest income from the proceeds derived from the Public Offering and placed in the Trust Account (defined below).

For the three months ended September 30, 2022,

we had a net loss of $2,387,015.

We incurred $3,013,729 of general and administrative expenses, which includes $2,501,501 in costs related

to identifying a target business.

We also incurred $3,150 of interest expense on promissory note from related party and $126,744 of provision

for income taxes.

We earned interest income of $757,106 and $498 of unrealized loss on marketable securities held in Trust Account.

For the nine months ended September 30, 2022,

we had a net loss of $3,566,151.

We incurred $4,408,361 of general and administrative expenses, which includes $3,410,564 in costs related

to identifying a target business.

We also incurred $4,212 of interest expense on promissory note from related party and $131,832 of provision

for income taxes.

We earned interest income of $978,254 on marketable securities held in Trust Account.

For the three months ended September 30, 2021,

we had a net loss of $67,295, which consists of formation and operating costs of $68,294 and interest income of $999.

For the nine months ended September 30, 2021,

we had a net loss of $72,647, which consists of formation and operating costs of $73,646 and interest income of $999.

Liquidity and Going Concern

As of September 30, 2022, we had $8,242 in our

operating bank account, and working capital deficit of $3,600,490.

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).

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.

This commitment extends through February 16, 2023.

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.

If the Company is unable

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

and liquidate the Trust Account.

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

to obtain additional financing in order to meet its obligations.

We cannot assure you that our plans to raise capital

or to consummate an initial business combination will be successful.

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

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

Comparison of the three months Ended March 31, 2023 and 2022

Three months ended

General and administrative expenses

Contingent Consideration

Research and development expenses

Total Operating (income) expenses

General and Administrative

General and administrative expense increased approximately

$3 million or 226% from $1.3 million for the three months ended March 31, 2022 to $4.33 million for the three months ended March 31, 2023

primarily due to an increase in share-based compensation expense of $1.5 million, an increase in professional fees of $0.9 million, and

other miscellaneous fee increases of $0.6 million.

Contingent Consideration

The reduction in the contingent consideration

liability of $1.3 million to $0 during the three-months ended March 31, 2023 was primarily due to a contractual forfeiture of the payment

following the close of the Business Combination on February 15, 2023.

Research and Development

Research and development expense decreased approximately

$15 thousand or 15% from $97 thousand for the three-months ending March 31, 2022 to $83 thousand for the three-months ending March 31,

The decrease in research and development expense was a result of a decrease in consulting and outside contractor billings, as a

new consulting firm hired worked less hours on a fuel testing H2 analysis project.

Liquidity and Capital Resources

We measure liquidity in terms of our ability to

fund the cash requirements of our R&D activities and our near-term business operations, including our contractual obligations and

other commitments.

Our current liquidity needs primarily involve General and administrative and R&D activities for the ongoing commercialization

of our first production facility and associated plant design.

To date, we have not generated any revenue.

do not expect to generate any meaningful revenue unless and until we are able to commercialize our first production facility.

Since inception,

we have incurred significant operating losses, have an accumulated deficit of $21.8 million as of March 31, 2023 and negative

operating cash flow during the three-months ending March 31, 2023 and 2022.

Management expects that operating losses and negative cash

flows may increase because of additional costs and expenses related to the development of technology and the development of market and

strategic relationships with other companies.

Our continued solvency is dependent upon our ability to obtain additional working capital

to complete our product development, to successfully achieve commerciality of our projects.

Following the Business Combination and the

closing of the PIPE Financing, we received approximately $37.3 million in cash, net of approximately $10.0 million of transaction

expenses and the repayment of approximately $3.75 million of capital contributions made by Bluescape Clean Fuels Holdings LLC since

December 2021.

We expect to use such proceeds to fund our ongoing operations and R&D activities.

The gross amount, before

expenses, was composed of approximately $19.0 million release from CENAQ’s Trust Account, after payment of approximately

$158.8 million to public stockholders who exercised redemption rights (representing a redemption rate of approximately 89.3%), and

$32.0 million of proceeds from the PIPE Financing.

We also received $91 thousand from the CENAQ operating account.

We believe that

based on our current level of operating expenses and currently available cash on hand, we will have sufficient funds available to

cover R&D activities and operating cash needs through 2024.

However, as we have not yet developed a commercial production

facility and have no meaningful revenue to date, we may require additional funds in future years.

Our ability to raise funds through

equity offerings may be limited by the significant number of shares that may be publicly sold.

Our ability to fund R&D

activities and our operating cash needs for several years does not depend on the proceeds we may receive as the result of exercises

As our transaction with CENAQ

only resulted in $37.3 million of net proceeds, we expect that we will only be able to construct one of our first four originally

planned production facilities with the proceeds from the CENAQ transaction.

The $37.3 million of net proceeds raised at closing of

the transaction with CENAQ will contribute to the equity capital portion of our capital expenditure requirements through 2025.

expect to earn interest income on the net proceeds raised at closing during the ongoing development and construction of our facilities

through 2025, and that such interest income will be utilized towards capital expenditures or for general and administrative expenses.

We also expect 70% of our total project capital requirements will be met with project financing, industrial revenue bonds, or pollution

control bonds, or some combination of debt financing.

While we have been in discussions with banks and other credit counterparties regarding

project financing, industrial revenue bonds, or pollution control bonds, and these discussions have led to indications of debt financing

equivalent to 70% of our capital expenditure requirements, there can be no assurance that we will be successful in obtaining such financing.

In connection with the Closing, Sponsor was due

$409,612 under existing promissory notes with CENAQ.

On February 15, 2023, in lieu of repayment of the existing promissory notes with

Sponsor, the Company entered into the New Promissory Note with the Sponsor totaling $409,612 (“ New Promissory Note ”).

The New Promissory Note, cancels and supersedes the existing promissory notes.

The New Promissory note is non-interest bearing and the

entire principal balance of the New Promissory Note is payable on or before February 15, 2024.

The New Promissory Note is payable at the

Company’s election in cash or in Class A common stock at a conversion price of $10.00 per share.

Summary Statement of Cash Flows for the Interim

Periods Ended March 31, 2023 and March 31, 2022

The following table sets forth the primary sources

and uses of cash and cash equivalents for the periods presented below:

For the Three Months Ended

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net increase (decrease) in cash and restricted cash

Cash Flows used in Operating Activities

Net cash used in our operating activities increased

$2.1 million during the three months ended March 31, 2023 versus the same period in 2022, due to a larger net loss from higher General

and administrative expenses of approximately $3.0 million comprised of increased share-based payment expense of $1.5 million, and increased

professional fees of $0.9 million.

An increase in prepaid expenses of $1.6 Million due to the payment of directors and officers’

insurance policy further increased net cash used in operating activities.

Cash Flows used in Investing Activities

Net cash used in investing activities was $0 for

the three months ended March 31, 2023 and 2022.

Cash Flows from Financing Activities

Net cash provided by financing activities increased

approximately $36.0 million during the three months ended March 31, 2023 compared to the same period in prior in 2022.

was primarily due to the close of the business combination on February 15, 2023 which raised $37.3 million.

Commitments and Contractual Obligations

On October 17, 2022, we entered into a 25-year land lease in Maricopa,

Arizona with the intent of building a biofuel processing facility.

The commencement date of the lease occurred in February of 2023 contemporaneous

with the Company obtaining control of the identified asset.

Off-Balance Sheet Arrangements

As of March 31, 2023, we have not engaged in any

off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Internal Control over Financial Reporting

We have identified material weaknesses in our

internal control over financial reporting.

A material weakness is deficiency, or a combination of deficiencies, in internal control over

financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements

will not be prevented, or detected and corrected, on a timely basis.

Management of Intermediate noted a material weakness in our internal

control over financial reporting related to the understatement of unit-based compensation expense.

The understatement of the grant

date fair value was due to a revision in the underlying fair value determination, and such revision was not appropriately reflected in

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 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 February 16, 2023, 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 February 16, 2023.

Underwriters agreement

We granted the underwriters a 45-day option from

the date of our Public Offering to purchase up to an additional 2,250,000 units to cover over-allotments, if any.

On August 19, 2021,

the over-allotments were exercised in full.

Simultaneously with the closing of the Public

Offering and the over-allotment, the underwriters were paid an underwriting discount of 2% of the gross proceeds of the Public Offering

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 Public Offering and the over-allotment upon the completion of our initial Business Combination.

Contractual Obligations

As of September 30, 2022, we did not have any

long-term debt, capital or operating lease obligations.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements and related

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

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

the periods reported.

Making estimates requires management to exercise significant judgment.

It is possible that the estimates management

considered could possibly change due to one or more future events.

The most significant estimates that affected the financial statements

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

and the fair values of the anchor shares.

These estimates are uncertain due to the assumptions used in the stock valuations.

These estimates

and assumptions have not changed significantly during the year.

Actual results could materially differ from those estimates.

identified the following as our critical accounting policies:

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.

We comply with the requirements

of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A “Expenses of Offering”.

Offering costs

are allocated to the separable financial instruments, if any, issued in the IPO based on a relative fair value basis compared to total

proceeds received.

Class A Common Stock Subject to Possible Redemption

We account for the Class A common stock subject

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

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

Conditionally redeemable

common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption

upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

times, common stock is classified as stockholders’ equity.

We recognize changes in redemption value immediately

as they occur.

Immediately upon the closing of the IPO, we 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.

Net Loss Per Common stock

We have two classes of common stock, which are

referred to as Class A common stock and Class B common stock.

Income and losses are allocated on pro rata basis between redeemable and

non-redeemable common stock.

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

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

share for the periods.

Management concluded that the grant date fair value and corresponding incremental expense should be adjusted

by recognizing the additional expense in Intermediate’s March 31, 2022 financial statements.

As part of such process, management

identified a material weakness in its internal control over financial reporting related to the grant date fair value revision.

Additionally,

Intermediate did not maintain effective internal control regarding the date on which to apply new accounting standards based upon CENAQ’s

elections made as an emerging growth company under the JOBS Act, which required Intermediate to apply new accounting standards as if it

were a public business entity.

Effective internal controls are necessary to provide

reliable financial reports and prevent fraud, and material weaknesses could limit the ability to prevent or detect a misstatement of accounts

or disclosures that could result in a material misstatement of annual or interim financial statements.

Our management continues to evaluate

steps to remediate the material weaknesses.

These material weaknesses have not been fully remediated.

We are in the early stages of designing

and implementing a plan to remediate the material weaknesses identified.

Our plan includes the below:

● Designing and implementing a risk assessment process supporting the

identification of risks facing our Company.

● Implementing controls to enhance

our review of significant accounting transactions and other new technical accounting and financial reporting issues and preparing and

reviewing accounting memoranda addressing these issues.

● Hiring additional experienced

accounting, financial reporting and internal control personnel and changing roles and responsibilities of our personnel as we transition

to being a public company and are required to comply with Section 404 of the Sarbanes Oxley Act of 2002.

● Implementing controls to enable

an accurate and timely review of accounting records that support our accounting processes and maintain documents for internal accounting

We cannot assure you that these measures will

significantly improve or remediate the material weaknesses described above.

The implementation of these remediation measures is in the

early stages and will require validation and testing of the design and operating effectiveness of our internal controls over a sustained

period of financial reporting cycles and, as a result, the timing of when we will be able to fully remediate the material weaknesses is

uncertain and we may not fully remediate these material weaknesses during the year ended December 31, 2023.

If the steps we take

do not remediate the material weaknesses in a timely manner, there could be a reasonable possibility that these control deficiencies or

others may result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on

a timely basis.

This, in turn, could jeopardize our ability to comply with our reporting obligations, limit our ability to access the

capital markets and adversely impact our stock price.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been

prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) as determined

by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).

Impairment of Intangible Assets

The Company’s intangible asset consists of

its intellectual property and patented technology and is considered an indefinite lived intangible and is not subject to amortization.

As of March 31, 2023, and December 31, 2022, the gross and carrying amount of this intangible asset was $1,925,151.

A qualitative assessment of indefinite-lived intangible

assets is performed in order to determine whether further impairment testing is necessary.

In performing this analysis, macroeconomic

conditions, industry and market conditions are considered in addition to current and forecasted financial performance, entity-specific

events and changes in the composition or carrying amount of net assets under the quantitative analysis, intellectual property and patents

are tested for impairment using a discounted cash flow approach and tested for impairment using the relief-from-royalty method.

fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference.

During the three months ended March 31, 2023,

and 2022, the Company did not record any impairment charges.

Impairment of Long-Term Assets

The Company evaluates the carrying value of long-lived

assets when indicators of impairment exist.

The carrying value of a long-lived asset is considered impaired when the estimated separately

identifiable, undiscounted cash flows from such asset are less than the carrying value of the asset.

In that event, a loss is recognized

based on the amount by which the carrying value exceeds the fair value of the long-lived asset.

Fair value is determined primarily using

the estimated cash flows discounted at a rate commensurate with the risk involved.

During the three months ended March 31, 2023 and 2022,

the Company did not record any impairment charges.

Unit-Based Compensation

The Company applies the fair value method under

ASC 718, Compensation — Stock Compensation (“ASC 718”), in accounting for unit-based compensation

to employees.

Service-based units compensation cost is measured at the grant date based on the fair value of the equity instruments awarded

and is recognized over the period during which an employee is required to provide service in exchange for the award, or the requisite

service period, which is usually the vesting period.

Performance-based unit compensation cost is measured at the grant date based on the

fair value of the equity instruments awarded and is expensed over the requisite service period, based on the probability of achieving

the performance goal, with changes in expectations recognized as an adjustment to earnings in the period of the change.

If the performance

goal is not met, no unit-based compensation expense is recognized and any previously recognized unit-based compensation expense is reversed.

Forfeitures of Forfeitures of service-based and performance-based units are recognized upon the time of occurrence.

Prior to closing of the business

combination, certain subsidiaries of the Holdings, including Intermediate, were wholly-owned subsidiaries of Holdings.

Holdings, which was outside of the business combination perimeter, had entered into several compensation related arrangements with

management of Intermediate.

Compensation costs associated with those arrangements were allocated by BCF Holdings to Intermediate as

the employees were rendering services to Intermediate.

However, the ultimate contractual obligation related to these awards,

including any future settlement, rested and continues to rest with Holdings.

On August 5, 2022, in connection with entering

into the Business Combination Agreement, certain amendments to existing unit-based awards were made whereby all outstanding unvested Series

A Incentive Units (service-based) and Founders Incentive Units (performance-based) of Holdings became fully vested in upon completion

of the Business Combination.

Additionally, as part of the amendment to these agreements, the priority of distributions under the Series

A Incentive Units and Founders Incentive Units were also revised such that participants receive 10% of distributions after a specified

return to Holdings’ Series A Incentive Unit holders (instead of 20%).

The modifications to the Series A Incentive Units and Founders

Incentive Units did not result in any incremental unit-based compensation expense in connection with the modification.

The Company accelerated share-based payment expense

related to service-based units during the three-month period ending March 31, 2023 in connection with the Business Combination totaling

$2.1 million.

No service-based or performance-based incentive units were granted during the three-month period ended March 31, 2023.

Emerging Growth Company Accounting Election

Section 102(b)(1) of the JOBS Act exempts emerging

growth companies from being required to comply with new or revised financial accounting standards until private companies are required

to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect not to take advantage

of the extended transition period and comply with the requirements that apply to non- emerging growth companies, and any such election

to not take advantage of the extended transition period is irrevocable.

Following the consummation of the Business Combination, we expect

to be an emerging growth company at least through 2023;

however, prior to the transaction CENAQ did not elect to use the extended transition

As such, when a standard is issued or revised and it has different application dates for public or private companies, we will

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

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 guidance was adopted starting

January 1, 2022.

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

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

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

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

Issuer’s Accounting for Certain Modifications

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

This guidance

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

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

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

interim periods within those fiscal years.

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

guidance was adopted starting January 1, 2022.

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

operations or cash flows.

Our management does not believe that any other

recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited

condensed financial statement.

Off-Balance Sheet Arrangements;

and Contractual Obligations

Registration Rights

The holders of the Founder Shares, Private Placement

Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon

the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion

of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on

the effective date of the Public Offering, requiring us to register such securities for resale (in the case of the Founder Shares, only

after conversion to our Class A common stock).

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

excluding short form demands, that we register such securities.

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

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

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

However, the registration rights agreement provides

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

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

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

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

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

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

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

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

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

Underwriters Agreement

We granted the underwriters a 45-day option from

the date of the Public Offering to purchase up to an additional 2,250,000 units to cover over-allotments, if any.

On August 19, 2021,

the over-allotments were exercised in full.

Simultaneously with the closing of the Public

Offering and the over-allotment, the underwriters were paid an underwriting discount of 2% of the gross proceeds of the Public Offering

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 Public Offering and the over-allotment upon the completion of our initial Business Combination.

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

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

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

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

We have elected to irrevocably opt out of such

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

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

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

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

Additionally, we are in the process of evaluating

the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth

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

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

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

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

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

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

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

These exemptions will apply

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

Quantitative and Qualitative Disclosures

About Market Risk

Not required for smaller reporting companies.

See Note 2 in the accompanying unaudited consolidated

financial statements included in this Quarterly Report for information regarding recent accounting pronouncements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller

reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis