Energem (ENCP) - 2023 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements Energem Corp. reported a $193,375 net income for H1 2023, driven by trust account interest, despite a significant shareholders' deficit and going concern challenges Balance Sheets As of June 30, 2023, total assets were $20.8 million, primarily trust account holdings, with liabilities increasing and shareholders' deficit worsening | Financial Metric | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash | $8,086 | $47,789 | | Cash and marketable securities held in trust | $20,670,271 | $19,535,946 | | Total Assets | $20,793,913 | $19,897,384 | | Liabilities & Equity | | | | Total Current Liabilities | $1,788,483 | $1,085,331 | | Total Liabilities | $5,813,483 | $5,110,331 | | Class A ordinary shares subject to possible redemption | $20,670,271 | $19,706,540 | | Total Shareholders' Deficit | ($5,689,841) | ($4,919,487) | Statements of Operations Net income reached $210,137 for Q2 2023 and $193,375 for H1 2023, driven by increased interest income from trust account securities | Period | Net Income (Loss) 2023 | Net Income (Loss) 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $210,137 | ($12,989) | | Six Months Ended June 30 | $193,375 | ($72,389) | - The primary driver for the improved performance was the interest earned on marketable securities in the trust account, which rose to $241,790 in Q2 2023 from $157,620 in Q2 2022[13] Statements of Cash Flows Net cash used in operations was $249,385 for H1 2023, offset by $892,055 from financing, leaving an $8,086 cash balance at period-end | Cash Flow Activity (Six Months Ended June 30) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($249,385) | ($452,854) | | Net cash used in investing activities | ($682,373) | $0 | | Net cash provided by financing activities | $892,055 | $0 | | Net change in cash | ($39,703) | ($452,854) | | Cash at the end of the period | $8,086 | $262,873 | Notes to Unaudited Financial Statements Notes detail the company's blank check status, pending Graphjet Technology business combination, liquidity challenges, and going concern doubts - The Company is a blank check company formed to effect a business combination, with a focus on the oil, gas, and renewable energy sectors[22] - On August 1, 2022, the Company entered into a share purchase agreement to acquire Graphjet Technology Sdn. Bhd. for a consideration of approximately $1.38 billion in Energem Class A ordinary shares[38][40] - The deadline to complete a business combination was extended from November 18, 2022, to August 18, 2023, through nine one-month extensions, requiring monthly deposits into the Trust Account[42][43][47] - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern due to its limited time to consummate a business combination and potential lack of sufficient funds[59] - Subsequent to the quarter end, on August 10, 2023, shareholders approved a further extension of the business combination deadline to February 18, 2024. This resulted in the redemption of 678,549 Class A shares for approximately $7.4 million[113][115][116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, pending Graphjet Technology business combination, net income shift, and severe working capital deficit - The company is pursuing a business combination with Graphjet Technology, which converts palm kernel shells into graphene and graphite for products like EV batteries. The transaction values Graphjet at $1.38 billion[125][126] - For the six months ended June 30, 2023, the company had a net income of $193,375, compared to a net loss of $72,389 in the prior year period, with the improvement attributed to a significant increase in interest income from the trust account[142] - As of June 30, 2023, the company had only $8,086 in cash and a working capital deficit of $1,664,841. Management believes it may not have sufficient working capital to meet its needs through the consummation of a Business Combination or for one year[146][148] - The company is reliant on loans from its sponsor to fund working capital and transaction costs. As of June 30, 2023, $209,682 was borrowed under a Working Capital Loan, and $88,542 was outstanding under a promissory note[150][151][152] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market and interest rate risk exposure is immaterial, as Trust Account funds are invested in short-term U.S. government treasury bills - The company's exposure to market and interest rate risk is considered immaterial as proceeds in the Trust Account are invested in short-term U.S. government securities[160] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls during the quarter - Based on an evaluation as of June 30, 2023, the principal executive and financial officers concluded that the company's disclosure controls and procedures were effective[163] - There were no material changes to the company's internal control over financial reporting during the fiscal quarter ended June 30, 2023[164] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reports no legal proceedings - The company has no legal proceedings to report[166] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred as of the date of this quarterly report[167] Item 2. Unregistered Sale of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities - The company had no unregistered sales of equity securities during the period[168] Item 5. Other Information The company reports no other information - There is no other information to report for the period[171] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, along with Inline XBRL documents[173]