Cactus Acquisition 1 (CCTS) - 2023 Q3 - Quarterly Report

PART I Financial Statements This section presents Cactus Acquisition Corp. 1 Limited's unaudited condensed financial statements, including balance sheets, operations, and cash flows, with detailed notes on accounting and significant events Unaudited Condensed Financial Statements The financial statements show a significant asset decrease from share redemptions, net earnings from interest income, substantial cash outflow from financing, and a $5.22 million capital deficiency as of September 30, 2023 Condensed Balance Sheet Data (in thousands USD) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $24,651 | $131,411 | | Cash and cash equivalents | $28 | $243 | | Cash held in trust account | $24,597 | $130,893 | | Total Liabilities | $5,277 | $4,570 | | Class A Ordinary Shares Subject to Possible Redemption | $24,597 | $130,893 | | Total Capital Deficiency | ($5,223) | ($4,052) | Condensed Statement of Operations Data (in thousands USD) | Description | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Interest Earned on Trust Account | $2,405 | $770 | | Operating Expenses | ($971) | ($656) | | Net Earning for the Period | $1,434 | $114 | Condensed Statement of Cash Flows Data (Nine Months Ended Sep 30, 2023, in thousands USD) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash provided by operating activities | $1,940 | | Net cash used by financing activities | ($108,451) | | Net Change in Cash | ($106,511) | Notes to Condensed Financial Statements The notes detail the company's SPAC nature, financing, and key events, including extending the business combination deadline, substantial share redemptions, Nasdaq deficiency notices, sponsor loans, and substantial doubt about its going concern ability - The Company is a blank check company formed to effect a business combination, focusing on Israeli technology-based life science businesses[26][52] - The business combination deadline was extended to November 2, 2024, raising substantial doubt about the Company's ability to continue as a going concern[32][58][83] - In May and June 2023, 10,389,649 Class A ordinary shares were redeemed, distributing over $108.9 million from the Trust Account[37][62] - The company received Nasdaq deficiency notices for failing to meet minimum market value of listed securities (MVLS) and total holders requirements, and has submitted a plan to regain compliance[65][67][91] - The Sponsor provided a $450,000 promissory note, fully drawn by August 2023, to finance operations, with a new convertible promissory note for up to $120,000 issued in November 2023[105][118][127] - Subsequent to quarter end, on November 2, 2023, the company extended the business combination deadline to November 2, 2024, resulting in the redemption of an additional 347,980 Class A shares[89][122] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, operational results, and liquidity, highlighting trust account reduction, reliance on sponsor loans, going concern doubt, and efforts to regain Nasdaq compliance - The company is a blank check company without a definitive agreement for an initial business combination[131] - The trust account value significantly reduced from approximately $132.6 million to about $21.0 million by November 2023 due to multiple share redemptions[145][155] - The company relies on sponsor funding for working capital, having drawn down a $450,000 loan and secured an additional $120,000 loan commitment post-quarter end[142] - The company received Nasdaq deficiency notices for non-compliance with the Minimum Value of Listed Securities (MVLS) and Minimum Total Holders rules; the sponsor converted 3,162,499 Class B shares into Class A shares on October 24, 2023, to help regain MVLS compliance[138][140][141] - Insufficient funds to operate and complete a business combination before the November 2, 2024, deadline raise substantial doubt about the company's ability to continue as a going concern[148] Quantitative and Qualitative Disclosures About Market Risk The company has minimal market risk as trust account proceeds are invested in short-term U.S. government treasury bills or money market funds, with potential liquidation to cash reducing interest income - The company's trust account funds are invested in short-maturity U.S. government treasury bills or money market funds, indicating no material exposure to interest rate risk[149] - To mitigate investment company classification risk, the company may liquidate treasury holdings and hold cash, likely resulting in minimal interest earned on trust account funds[185] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting during the most recent fiscal quarter - Based on a September 30, 2023, evaluation, the company's principal executive and financial officers concluded that disclosure controls and procedures were effective[150] - No material changes occurred in internal control over financial reporting during the most recent fiscal quarter[151] PART II - OTHER INFORMATION Legal Proceedings The company reports no legal proceedings to which it is a party - None[203] Risk Factors This section updates key risk factors, including failure to complete a business combination by November 2, 2024, adverse impact of share redemptions, potential Nasdaq delisting, and heightened geopolitical risks in Israel - The company may not complete a business combination by the November 2, 2024, deadline, leading to cessation of operations and liquidation[154][177] - Significant share redemptions reduced the trust account to approximately $21.0 million, potentially preventing the company from meeting minimum cash closing conditions for a business combination[155][207] - The company is not in compliance with Nasdaq's Minimum Value of Listed Securities (MVLS) and Minimum Total Holders Rules, facing delisting if compliance is not regained by specified deadlines[182][183][208] - The company's focus on Israeli-connected businesses exposes it to additional risks, particularly from ongoing armed conflict in the region, potentially disrupting target search or future operations[189][191][218] Unregistered Sales of Equity Securities and Use of Proceeds The use of proceeds from the company's Initial Public Offering (IPO) has not materially changed from the intended use described in the final prospectus - The use of net proceeds from the IPO does not reflect a material change from the expected use described in the final prospectus[220] Defaults Upon Senior Securities This section is not applicable as the company has no senior securities upon which to default - Not applicable[194] Mine Safety Disclosures This section is not applicable to the company's business - Not applicable[221] Other Information The company reports no other information to disclose in this section - None[227] Exhibits This section lists the exhibits filed as part of the Form 10-Q, including a new promissory note to the sponsor and certifications by the Principal Executive and Financial Officers Filed Exhibits | Exhibit No. | Description | | :--- | :--- | | 10.1 | Promissory Note, dated November 8, 2023 | | 31.1 | Certification of Principal Executive Officer (Sec. 302) | | 31.2 | Certification of Principal Financial Officer (Sec. 302) | | 32.1 | Certification of Principal Executive Officer (Sec. 906) | | 32.2 | Certification of Principal Financial Officer (Sec. 906) | | 101 | Inline XBRL Documents |