UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

ST Energy Transition I Ltd.

(Exact name of registrant as specified in its charter)

Bermuda		001-41119		00-0000000N/A
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(IRS Employer Identification No.)

Par-la-Ville Place, 4^th Floor 14 Par-la-Ville Road Hamilton, Bermuda		HM08
(Address Of Principal Executive Offices)		(Zip Code)

+1 (441) 295-6935

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
SAIL^SMsecurities, each consisting of one Class A Share, of $0.0001 par value per share, and one-half of one redeemable warrant	STET.U	The New York Stock Exchange
Class A Shares, $0.0001 par value per share, included as part of the SAIL^SM securities	STET	The New York Stock Exchange
Redeemable warrants, each whole warrant exercisable for one Class A Share at an exercise price of $11.50, included as part of the SAIL^SMsecurities	STETWS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

As of November 9, 2022, there were 28,750,000 of the Registrant’s shares designated as “class A ordinary shares”, par value $0.0001 per share “Class A Shares”, and 1,437,500 of the registrant’s shares designated as “class B ordinary shares”, par value $0.0001 per share “Class B Shares”, issued and outstanding.

ST ENERGY TRANSITION I LTD.

Form 10-Q

For the Quarter Ended September 30, 2022

Table of Contents

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Interim Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	1
	Condensed Interim Statements of Operations for the Three and Nine Months Ended September 30, 2022, for the Three Months ended September 30, 2021, and for the period from April 9, 2021 (Inception) through September 30, 2021(Unaudited)	2
	Condensed Interim Statements of Changes in Shareholders’ Deficit for the Three and Nine Months Ended September 30, 2022, and for the period from April 9, 2021 (inception) through September 30, 2021 (Unaudited)	3
	Condensed Interim Statements of Cash Flows for the Nine Months Ended September 30, 2022 and for the period from April 9, 2021 (inception), through September 30, 2021 (Unaudited)	4
	Notes to Condensed Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	27
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ST ENERGY TRANSITION I LTD.

CONDENSED INTERIM BALANCE SHEETS


	September 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
Current assets
Cash	$	589,760		$	774,855
Prepaid Expenses - Current		613,940			612,120
Investments Held in Trust		293,554,273			-
Total Current Assets		294,757,973			1,386,975
Prepaid Expenses – Non-Current		98,135			539,195
Investments Held in Trust		-			291,813,714
TOTAL ASSETS	$	294,856,108		$	293,739,884

LIABILITIES, CLASS A SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts Payable and Accrued Expenses	$	994,902		$	1,775,315
Accounts Payable – Related Party		191,258			191,258
Convertible Promissory Note – Related Party		1,300,000			-
Warrant Liability - Current		2,115,000			-
Underwriter’s Fee Payable - Current		10,062,500			-
Total Current Liabilities		14,663,660			1,966,573
Warrant Liability – Non-Current		-			19,299,375
Underwriter’s Fee Payable – Non-Current		-			10,062,500
Total Liabilities	$	14,663,660		$	31,328,448

Commitments and Contingencies (Note 6)
Class A Shares Subject to Possible Redemption, 28,750,000 shares at redemption value of $10.15		293,554,273			291,812,500

Shareholders’ Deficit
Undesignated Shares, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding		-			-
Class A Shares, $0.0001 par value; 500,000,000 shares authorized; none issued and outstanding (excluding 28,750,000 shares subject to possible redemption)		-			-
Class B Shares, $0.0001 par value; 50,000,000 shares authorized, 1,437,500 shares issued and outstanding		144			144
Additional Paid-in Capital		-			-
Accumulated Deficit		(13,361,969	)		(29,401,208	)
Total Shareholders’ Deficit	$	(13,361,825	)	$	(29,401,064	)

TOTAL LIABILITIES, CLASS A SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT	$	294,856,108		$	293,739,884

ST ENERGY TRANSITION I LTD.

CONDENSED INTERIM STATEMENT OF OPERATIONS

(UNAUDITED)


	For the three months ended September 30, 2022			For the three months ended September 30, 2021		For the nine months ended September 30, 2022			For the Period from April 9, 2021 (inception) through September 30, 2021
Operating expenses	$	341,829		$	-	$	1,146,799		$	5,800
Loss from operations		(341,829	)		-		(1,146,799	)		(5,800	)
Other Income:
Interest income		1,319,696			-		1,743,436			-
Change in fair value of warrant liabilities		4,494,375			-		17,184,375			-
Total other income		5,814,071			-		18,927,811			-

Net Income/(Loss)	$	5,472,242		$	-	$	17,781,012		$	(5,800	)
Basic and diluted Weighted average shares outstanding of Class A Shares		28,750,000			-		28,750,000			-

Basic and diluted net income/(loss) per share Class A Shares	$	0.18		$	-	$	0.59		$	-
Basic and diluted Weighted average shares outstanding, Class B Shares		1,437,500			1,250,000		1,437,500			1,250,000

Basic and diluted net income per share Class B Shares	$	0.18		$	-	$	0.59		$	-

ST ENERGY TRANSITION I LTD.

CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(UNAUDITED)


	Class A Shares				Class B Shares				Additional Paid-in		Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance - January 1, 2022		-	$	-		1,437,500	$	144	$	-	$	(29,401,208	)	$	(29,401,064	)

Net income		-		-		-		-		-		9,857,936			9,857,936
Balance - March 31, 2022		-	$	-		1,437,500	$	144	$	-	$	(19,543,272	)	$	(19,543,128	)
Remeasurement of Class A Shares subject to possible redemption		-		-		-		-		-		(424,646	)		(424,646	)

Net income		-		-		-		-		-		2,450,834			2,450,834
Balance - June 30, 2022		-	$	-		1,437,500	$	144	$	-	$	(17,517,084	)	$	(17,516,940	)
Remeasurement of Class A Shares subject to possible redemption		-		-		-		-		-		(1,317,127	)		(1,317,127	)

Net income		-		-		-		-		-		5,472,242			5,472,242
Balance - September 30, 2022		-	$	-		1,437,500	$	144	$	-	$	(13,361,969	)	$	(13,361,825	)

ST ENERGY TRANSITION I LTD.

CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE PERIOD FROM APRIL 9, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021

(UNAUDITED)

	Class A Shares				Class B Shares				Additional Paid-in		Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance - April 9, 2021 (inception)		-	$	-		-	$	-	$	-	$	-		$	-
Issuance of Class B Shares to sponsors⁽¹⁾		-		-		1,725,000		173		24,827		-			25,000

Net loss		-		-		-		-		-		(5,800	)		(5,800	)
Balance - June 30, 2021		-	$	-		1,725,000	$	173	$	24,827	$	(5,800	)	$	19,200

Net loss		-		-		-		-		-		-			-
Balance - September 30, 2021		-	$	-		1,725,000	$	173	$	24,827	$	(5,800	)	$	19,200

(1)

Includes an aggregate of up to 225,000 Class B Shares that are subject to forfeiture if the over-allotment option is not exercised in full by the underwriters.

ST ENERGY TRANSITION I LTD.

CONDENSED INTERIM STATEMENT OF CASH FLOWS

(UNAUDITED)


	For the Nine Months Ended September 30, 2022			For the Period from April 9, 2021 (Inception) through September 30, 2021
Cash Flows from Operating Activities:
Net income/(loss)	$	17,781,012		$	(5,800	)
Adjustments to reconcile net income/(loss) to net cash used in operating activities:
Change in fair value of warrant liability		(17,184,375	)		-
Interest earned on investments held in Trust Account		(1,740,559	)		-
Changes in operating assets and liabilities:
Formation expenses in exchange for issuance of Class B Shares to Sponsor		-			5,800
Prepaid expenses		439,240			-
Accounts payable and accrued expenses		(780,413	)		-
Net cash used in operating activities		(1,485,095	)		-

Cash Flows from Financing Activities:
Proceeds from convertible promissory note – related party		1,300,000			-
Net cash provided by financing activities		1,300,000			-

Net Change in Cash		(185,095	)		-
Cash at the beginning of the period		774,855			-
Cash at the end of the period	$	589,760		$	-

Non-cash investing and financing activities:
Deferred offering costs included in accrued offering costs	$	-		$	340,000
Deferred offering costs paid by sponsor in exchange for issuance of Class B Shares	$	-		$	25,000
Remeasurement of Class A Shares subject to possible redemption	$	1,741,773			-

The accompanying notes are an integral part of the unaudited condensed financial statements

ST ENERGY TRANSITION I LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

ST Energy Transition I Ltd. (the “Company”) is a blank check company incorporated in Bermuda on April 9, 2021. The Company was formed for the purpose of effectuating a merger, amalgamation, capital share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of September 30, 2022, the Company had not yet commenced any operations. All activity for the period April 9, 2021 (inception) through September 30, 2022, related to the Company’s formation and the initial public offering (the “Initial Public Offering”) and identifying a target for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statement for the Company’s Initial Public Offering was declared effective on December 2, 2021. On December 7, 2021, the Company consummated the Initial Public Offering of 25,000,000 SAIL^SM securities (the “SAIL securities”). Each SAIL security consists of one Class A Share, $0.0001 par value per share , and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A Share at an exercise price of $11.50 per share, subject to adjustment. The SAIL^SM securities were sold at an offering price of $10.00 per SAIL^SM securities, generating gross proceeds of $250,000,000.

Simultaneous with the consummation of the IPO and the issuance and sale of the SAIL^SM securities, the Company consummated the private placement of 10,750,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating total proceeds of $10,750,000 (the “Private Placement”). The Private Placement Warrants, which were purchased by Sloane Square Capital Holdings Ltd. (the “Sponsor”), are substantially similar to the Public Warrants, except that if held by the Sponsor or its permitted transferees, they (i) may be exercised for cash or on a cashless basis, (ii) are not subject to being called for redemption (except in certain circumstances when the Public Warrants are called for redemption and a certain price per Class A Share threshold is met) and (iii) subject to certain limited exceptions, will be subject to transfer restrictions until 30 days following the consummation of the Company’s initial business combination. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by holders on the same basis as the Public Warrants. The Private Placement Warrants have been issued pursuant to, and are governed by the Warrant Agreement.

Following the closing of the Initial Public Offering on December 7, 2021, an amount of $253,750,000 (equal to $10.15 per unit), comprised of $245,000,000 of the proceeds from the Initial Public Offering and $8,750,000 of the proceeds of the sale of the Private Placement Warrants in the Initial Private Placement, was placed in a U.S.-based trust account (the “Trust Account”) at J.P. Morgan Chase Bank, N.A. maintained by Continental Share Transfer & Trust Company, acting as trustee.

On December 9, 2021, the underwriters exercised their over-allotment option and purchased an additional 3,750,000 SAIL^SMsecurities at a price of $10.00 per SAIL security, generating total gross proceeds of $37,500,000 (the “Over-Allotment Option”). Simultaneously, the Company completed the Private Placement of an aggregate of 1,312,500 Private Placement warrants at a price of $1.00 per Private Placement Warrant, generating total gross proceeds of $1,312,500 (the “Option Private Placement Warrant”). A total of $38,062,500 (equal to $10.15 per unit), comprised of $36,750,000 of the proceeds from the closing of the Over-Allotment Option (which amount includes $1,312,500 of the underwriters’ deferred discount) and $1,312,500 of the proceeds of the sale of the Private Placement Warrants in the Option Private Placement, was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee.

Transaction costs amounted to $17,493,141 consisting of $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees (see Note 6) and $1,680,641 of other costs. Of the transaction costs, $713,600 associated with the issuance of warrants that have been classified as a liability have been expensed. In addition, at the closing of the Initial Public Offering, $774,855 of cash was held outside of the Trust Account and is available for working capital purposes.

The Company must complete an initial Business Combination with one or more target businesses having an aggregate fair market value of at least 80% of the net investments held in the Trust Account (as defined below) (excluding the taxes payable on the income earned on the Trust Account) at the time of signing a definitive agreement in connection with the initial Business Combination and that a majority of our independent directors approve such initial Business Combination. However, the Company will only complete an initial Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise is not required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.15 per SAIL^SM securities sold in the Initial Public Offering, including certain proceeds from the sale of the Private Placement Warrants, will be held in a trust account located in the United States at J.P. Morgan Chase Bank, N.A. with Continental Share Transfer & Trust Company acting as trustee, and held as cash or invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of an initial Business Combination and (ii) the distribution of the Trust Account as described below.

The Company’s amended and restated bye-laws will provide that, other than the withdrawal of interest earned on the funds that may be released to the Company to pay taxes, none of the funds held in Trust Account will be released until the earlier of: (i) the completion of an initial Business Combination; (ii) the redemption of any of the Class A Shares included in the SAIL^SM securities being sold in the Initial Public Offering (the “Public Shares”) to its holders (the “Public Shareholders”) properly tendered in connection with a Shareholder vote to amend certain provisions of the Company’s amended and restated bye-laws prior to an initial Business Combination or (iii) the redemption of 100% of the Public Shares if the Company does not complete an initial Business Combination within the Business Combination Period (as defined below).

The Company, after signing a definitive agreement for an initial Business Combination, will either (i) seek shareholder approval of the initial Business Combination at a meeting called for such purpose in connection with which Public Shareholders may seek to redeem their Public shares, regardless of whether they vote for or against the initial Business Combination or do not vote at all, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated 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 taxes, or (ii) provide the Public Shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of our initial Business Combination at $10.15 per share and the per share interest earned on the funds held in the Trust Account (net of permitted withdrawals). As a result, such Public Share will be recorded at redemption amount and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Distinguishing Liabilities from Equity. The amount in the Trust Account is initially anticipated to be $10.15 per Public Share. The decision as to whether the Company will seek Shareholder approval of the initial Business Combination or will allow shareholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval. If the Company seeks shareholder approval, it will complete its Business Combination only if it receives an ordinary resolution under Bermuda law, which requires approval by a majority of the votes attached to shares voted at a general meeting of the company where a quorum of at least two persons present in person or by proxy representing at least 50% of the issued and outstanding shares (or class thereof) entitled to vote at such general meeting are present at the time such general meeting proceeds to business (unless applicable Bermuda law requires a higher approval threshold). However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of an initial Business Combination. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination.

Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Bye-laws provide provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is restricted from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.

The Company only has 18 months from the closing of the Initial Public Offering to complete the initial Business Combination (or such later date as approved by holders of a majority of the outstanding Class A Shares that are voted at a meeting to extend such date, voting together as a single class) (the “Business Combination Period”). If the Company does not complete an initial Business Combination within this period of time (and shareholders do not approve an amendment to the amended and restated bye-laws to extend this date), it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, of $10.15, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the Company’s obligations under Bermuda law to provide for claims of creditors and in all cases subject to the other requirements of applicable law.

The Company’s Sponsor, officers and directors, or the Initial Shareholders, have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights with respect to any Founder Shares (as defined in Note 5) and Public Shares they hold in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with a shareholder vote to approve an amendment to the Company’s amended and restated bye-laws to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company has not consummated an initial Business Combination within the Business Combination Period or with respect to any other material provisions relating to shareholders’ rights or pre-combination transaction activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete an initial Business Combination within the Business Combination Period (although they will be entitled to liquidate distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete an initial Business Combination within the Business Combination Period).

Risks and Uncertainties

In February 2022, the Russian Federation and Belarus commenced military operations in Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. The impact of this action and related sanctions on the global economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.

Management is currently evaluating the impact of the COVID-19 pandemic on the industries in which a Business Combination target is sought and has preliminarily concluded that, while it is reasonably possible that the COVID-19 pandemic could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until June 7, 2023 to consummate the initial Business Combination. It is uncertain that the Company will be able to consummate the initial Business Combination by this time. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a business combination not occur, and potential subsequent dissolution, raises 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 June 7, 2023. The Company intends to complete the initial Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any business combination by June 7, 2023.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31, 2021, as filed with the SEC on March 31, 2022. The interim results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.

Liquidity and Capital Resources

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, 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 (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging 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.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.

Cash

The Company considers all 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 September 30, 2022, and December 31, 2021. The Company had $589,760 and $774,855 of cash as of September 30, 2022 and December 31, 2021, respectively.

Investments Held in Trust

At September 30, 2022 and December 31, 2021, the investments were held in money market funds, which are invested primarily in U.S. Treasury Securities, respectively. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the condensed balance sheets at fair value at the end of each reporting period.

Share-based Compensation

The transfer of the Founder Shares is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, share-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founders Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Share-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon occurrence of a Business Combination) in an amount equal to the number of Founders Shares that ultimately vest multiplied by the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founders Shares. As of September 30, 2022, the Company determined that a Business Combination is not considered probable and, therefore, no share-based compensation expense has been recognized.

The fair value at the grant date of the 60,000 shares transferred to the Company’s directors was $106,000 or $1.76 per share. Upon consummation of an initial business combination, the Company will recognize $106,000 in compensation expense.

Income Taxes

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes”, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC Topic 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, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

Currently, there is no taxation imposed on the Company’s income by the Government of Bermuda. Additionally, the Company has received an assurance from the Ministry of Finance of Bermuda granting an exemption, until March 31, 2035, from the imposition of tax under any applicable Bermuda law computed on profits or income or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax in each case in respect of the Company or any of its operations, provided that such exemption shall not prevent the application of any tax payable in accordance with the provisions of the Land Tax Act 1967 or otherwise payable in relation to land in Bermuda leased to the Company.

Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next 12 months.

Shares Subject to Possible Redemption

The Company accounts for its shares subject to possible redemption in accordance with the guidance in ASC 480 Distinguishing Liabilities from Equity. Shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable shares (including shares 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. At all other times, shares are classified as shareholders’ equity. The Company’s shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2022 and December 31, 2021, shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ deficit section of the Company’s condensed interim balance sheets.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement from initial book value to redemption amount value. The change in the carrying value of redeemable Class A Shares resulted in charges against additional paid-in capital and accumulated deficit.

As of September 30, 2022 and December 31, 2021, the Class A Shares reflected in the condensed interim balance sheets are reconciled in the following table:


Gross Proceeds	$	287,500,000
Less:
Proceeds allocated to Public Warrants		(10,925,000	)
Class A Shares issuance costs		(16,779,541	)
Plus:
Re-measurement of carrying value to redemption value		32,017,041
Class A Shares subject to possible redemption at December 31, 2021	$	291,812,500
Plus:
Remeasurement of carrying value to redemption value		1,741,773
Class A Shares subject to possible redemption at September 30, 2022	$	293,554,273

Offering Costs

The Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Deferred offering costs consist of legal, accounting and other expenses incurred through December 7, 2021, that are directly related to the Initial Public Offering. Offering costs allocated to warrant liabilities will be expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs amounting to $17,493,141, consisting of $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees, and $1,680,641 in of other offering costs were charged to shareholders’ deficit upon the completion of the Initial Public Offering. As such, the Company recorded $16,779,541 of offering costs as a reduction of equity in connection with the Class A Shares included in the SAIL^SM securities. The Company immediately expensed $713,600 of offering costs in connection with the Public Warrants included in the SAIL^SM securities that were classified as liabilities. No offering costs were recorded for the nine months ended September 30, 2022.

Net Income/(loss) Per Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company applies the two-class method in calculating net income/(loss) per share. Basic income/(loss) per share is computed by dividing net income/(loss) applicable to shareholders by the weighted average number of shares outstanding during the period. Weighted average shares were reduced for the effect of an aggregate of 225,000 Class B Shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters.

The Company has not considered the effect of the 26,437,500 warrants sold in the Initial Public Offering and private placement in the calculation of diluted net income/(loss) per share, since the exercise of the warrants is contingent upon the occurrence of future events. As of September 30, 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into shares and then share in the earnings of the Company. As a result, diluted net income/(loss) per share is the same as basic net income/(loss) per share for the periods presented. Remeasurement associated with the Class A Shares subject to possible redemption is excluded from earnings per share as the redemption value approximates fair value.

A reconciliation of net income/(loss) per share is as follows:


	For the Three Months ended September 30, 2022				For the Three Month Ended September 30, 2021				For the Nine Months ended September 30, 2022			For the period from April 9, 2021 (inception) through September 30, 2021
	Class A		Class B		Class A		Class B		Class A		Class B	Class A	Class B
EPS
Numerator: Net Income/(loss)
Allocation of net income (loss)	$	5,211,659	$	260,583	$	-	$	-	$	16,934,297

SEC Form 10-Q filed by ST Energy Transition I Ltd.