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    ENCP   KYG304491056

ENERGEM CORP.

(ENCP)
Delayed Nasdaq  -  11:15 2022-08-05 am EDT
10.08 USD    0.00%
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ENERGEM CORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

05/13/2022 | 01:27pm EDT

References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to Energem Corp. References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to Energem, LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the consolidated 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 on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act 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 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. For 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 section of the Company's Annual Report on Form 10-K for the year ending December 31, 2021 filed with the SEC on March 31, 2022. 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 otherwise.




Overview

The Company is a blank check company formed under the laws of the Cayman Islands on August 6, 2021 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination (a "Business Combination") with one or more businesses. The Company intends to effectuate its initial Business Combination using cash from the proceeds of our initial public offering ("Initial Public Offering") the private placement of the placement units ("Placement Units"), the proceeds of the sale of our securities in connection with our initial Business Combination, our shares, debt or a combination of cash, stock and debt.

The issuance of additional shares in connection with an initial Business Combination to the owners of the target or other investors:



  ? may significantly dilute the equity interest of investors, which dilution
    would increase if the anti-dilution provisions in the Class B ordinary shares
    resulted in the issuance of Class A ordinary shares on a greater than
    one-to-one basis upon conversion of the Class B ordinary shares;

  ? may subordinate the rights of holders of our ordinary shares if preferred
    shares are issued with rights senior to those afforded our ordinary shares;

  ? could cause a change in control if a substantial number of shares of our
    ordinary shares is issued, which may affect, among other things, our ability
    to use our net operating loss carry forwards, if any, and could result in the
    resignation or removal of our present officers and directors;

  ? may have the effect of delaying or preventing a change of control of us by
    diluting the share ownership or voting rights of a person seeking to obtain
    control of us; and

  ? may adversely affect prevailing market prices for our Class A ordinary shares
    and/or warrants.




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Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:



  ? default and foreclosure on our assets if our operating revenues after an
    initial Business Combination are insufficient to repay our debt obligations;

  ? acceleration of our obligations to repay the indebtedness even if we make all
    principal and interest payments when due if we breach certain covenants that
    require the maintenance of certain financial ratios or reserves without a
    waiver or renegotiation of that covenant;

  ? our immediate payment of all principal and accrued interest, if any, if the
    debt security is payable on demand;

  ? our inability to obtain necessary additional financing if the debt security
    contains covenants restricting our ability to obtain such financing while the
    debt security is outstanding;

  ? our inability to pay dividends on our ordinary shares;

  ? using a substantial portion of our cash flow to pay principal and interest on
    our debt, which will reduce the funds available for dividends on our ordinary
    shares if declared, our ability to pay expenses, make capital expenditures and
    acquisitions, and fund other general corporate purposes;

  ? limitations on our flexibility in planning for and reacting to changes in our
    business and in the industry in which we operate;

  ? increased vulnerability to adverse changes in general economic, industry and
    competitive conditions and adverse changes in government regulation;

  ? limitations on our ability to borrow additional amounts for expenses, capital
    expenditures, acquisitions, debt service requirements, and execution of our
    strategy; and

  ? other purposes and other disadvantages compared to our competitors who have
    less debt.



We expect to continue to incur significant costs in the pursuit of our initial Business Combination plans. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.



Results of Operations


We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to March 31, 2022 were organizational activities, those necessary to prepare for the Initial Public Offering ("Initial Public Offering") and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to continue to generate non-operating income in the form of interest income on cash and marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.

For the three-month period ended March 31, 2022, we had a net loss of $59,400, which consists of formation and operating costs $71,105 and interest earned on marketable securities hold in the trust account of $11,705.



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Liquidity and Capital Resources

On November 16, 2021, the Company consummated its Initial Public Offering of 10,000,000 units (the "Units" consisting of one Class A ordinary share and one redeemable warrant entitling the holder to purchase one Class A ordinary share at $11.50 per share (the "Public Shares")), at $10.00 per Unit, generating gross proceeds of $100,000,000, and incurring offering costs of $6,738,148, of which $4,025,000 was for deferred underwriting commissions (see Note 6). The Company granted the underwriter a 45-day option to purchase up to an additional 1,500,000 Units at the Initial Public Offering price to cover over-allotments.

Simultaneously with the consummation of the closing of the Initial Public Offering, the Company consummated the private placement of an aggregate of 475,575 units (the "Private Placement Units") to Energem LLC, the sponsor of the Company (the "Sponsor"), at a price of $10.00 per Private Placement Unit, generating total gross proceeds of $4,755,750 (the "Private Placement") (see Note 4).

On November 18, 2021, the underwriters purchased an additional 1,500,000 Option Units pursuant to the exercise of the over-allotment option. The Option Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $15,000,000. Also, in connection with the partial exercise of the over-allotment option, the Sponsor purchased an additional 52,500 Option Private Placement Units at a purchase price of $10.00 per unit.

As of March 31, 2022, we had available to us $354,204 of cash on our balance sheet and a working capital of $499,714. We intend to use the funds held outside of the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination. The interest income earned on the investments in the Trust Account are unavailable to fund operating expenses.

In order to finance transaction costs in connection with a Business Combination, the Company's Sponsor or an affiliate of the Sponsor, or the Company's officers and directors may, but are not obligated to, loan the Company funds as may be required ("Working Capital Loans"). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, at the lender's discretion, up to $1,500,000 of notes may be converted upon consummation of a Business Combination into additional Placement Units at a price of $10.00 per Unit. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.

If the Company anticipates that it may not be able to consummate our initial Business Combination within 12 months, the Company may, by resolution of our board if requested by our sponsor, extend the period of time to consummate a Business Combination up to two times, each by an additional three months (for a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing additional funds into the Trust Account as set out below. Public shareholders, in this situation, will not be offered the opportunity to vote on or redeem their shares. Pursuant to the terms of our amended and restated memorandum and articles of association and the trust agreement to be entered into between us and Continental Stock Transfer & Trust Company on the date of this prospectus, in order for the time available for us to consummate our initial Business Combination to be extended, our Sponsor or its affiliates or designees, upon five business days advance notice prior to the applicable deadline, must deposit into the Trust Account $1,000,000, or $1,150,000 if the underwriters' over-allotment option is exercised in full ($0.10 per unit in either case), on or prior to the date of the applicable deadline, for each of the available three-month extensions, providing a total possible business combination period of 18 months at a total payment value of $2,000,000, or $2,300,000 if the underwriters' over-allotment option is exercised in full twice (totaling $0.20 per unit total in either case). Any such payments would be made in the form of non-interest bearing loans. If the Company completes our initial Business Combination, the Company will, at the option of our Sponsor, repay such loaned amounts out of the proceeds of the Trust Account released to us or convert a portion or all of the total loan amount into units at a price of $10.00 per unit, which units will be identical to the placement units. If the Company do not complete a business combination, the Company will repay such loans only from funds held outside of the Trust Account. Furthermore, the letter agreement with our initial shareholders contains a provision pursuant to which our sponsor has agreed to waive its right to be repaid for such loans to the extent there is insufficient funds held outside of the Trust Account in the event that the Company do not complete a business combination. Our sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for us to complete our initial Business Combination. In the event the Company receives notice from the sponsor five days prior to the applicable deadline of their intent to effect an extension, the Company intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, the Company intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. The public shareholders will not be afforded an opportunity to vote on the extension of time to consummate an initial Business Combination from 12 months to 18 months described above or redeem their shares in connection with such extensions.



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Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered any non-financial assets.



Contractual Obligations


We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. Commencing on the date of the prospectus and until completion of the Company's Business Combination or liquidation, the Company may reimburse Energem LLC, the Sponsor, up to an amount of $10,000 per month for office space, secretarial and administrative support.

The Underwriter was paid a cash underwriting fee of 2.0% of gross proceeds of the Public Offering, or $2,300,000. In addition, the Underwriter is entitled to aggregate deferred underwriting commissions of $4,025,000 consisting of (i) 3.5% of the gross proceeds of the Public Offering. The deferred underwriting commissions will become payable to the Underwriter from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.



Critical Accounting Policies


The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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. Actual results could materially differ from those estimates. We have not identified any critical accounting policies

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed consolidated financial statements.

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Financials ()
Sales 2021 - - -
Net income 2021 -0,74 M - -
Net cash 2021 0,63 M - -
P/E ratio 2021 -
Yield 2021 -
Capitalization 132 M 132 M -
EV / Sales 2020
EV / Sales 2021 -
Nbr of Employees -
Free-Float 55,2%
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Managers and Directors
Swee Guan Hoo Chief Executive Officer & Director
Cu Seng Kiu Chief Financial Officer
Kok Seong Wong Chairman
Sing Ee Wong Independent Director
Kwang Fock Chong Independent Director
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