Financial Commitments and Risks - The company is incurring significant costs related to acquisition plans, with a commitment of up to $450,000 in working capital from its sponsor and primary limited partners [127]. - If the initial business combination is not completed due to insufficient funds, public shareholders may receive approximately $10.20 per share upon liquidation, with potential for less [129]. - Claims by third parties could reduce the proceeds in the trust account, potentially lowering the per-share redemption amount below $10.20 [130]. - The company may need to raise additional financing from unaffiliated parties if the committed funding is insufficient for working capital [127]. - The net proceeds from the initial public offering and the sale of private warrants amount to approximately $130.14 million, with an additional $450,000 available from loans, but only about $975,000 is available for working capital and business combination pursuits as of December 31, 2021 [148]. - The company may face challenges in completing initial business combinations due to compliance with federal proxy rules requiring financial statement disclosures [163]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with acquisitions, particularly for target companies that may not meet internal control requirements [165]. - The market for the company's securities is currently limited, which could adversely affect liquidity and price [204]. - The company is newly formed with no operating history and no revenues, making it difficult to evaluate its ability to achieve business objectives [235]. Acquisition Strategy and Focus - The company may pursue acquisition opportunities across various industries, although it is focused on technology-based healthcare businesses with significant Israeli connections [145]. - The company may complete its initial business combination with a single target or multiple targets, but the lack of diversification could expose it to economic, competitive, and regulatory risks [149]. - The company may seek acquisition opportunities with early-stage or financially unstable businesses, which could involve significant risks due to limited historical financial data and competition [152]. - The company may pursue a business combination with a private company, which typically has limited public information, increasing the risk of acquiring a less profitable entity [153]. - The company may seek acquisition opportunities outside of its management's areas of expertise, which could pose risks to shareholders [180]. - Pursuing target companies outside the U.S. may introduce additional risks, including regulatory approvals and currency fluctuations [168]. Governance and Compliance - The company is not currently required to hold an annual general meeting until one year after its first fiscal year end following its Nasdaq listing [143]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements that could hinder its ability to complete a business combination [138]. - Amendments to the company's governing documents may be made with the approval of at least two-thirds of shareholders, potentially facilitating the completion of a business combination that some shareholders may not support [159]. - The company may amend the terms of its public warrants with the approval of a majority of the outstanding warrants, which could adversely affect holders of public warrants [161]. - Certain agreements related to the initial public offering may be amended without shareholder approval, which could impact the value of investments in the company's securities [162]. - The company currently complies with Nasdaq corporate governance requirements but may choose to utilize exemptions in the future [219]. - The existence of registration rights may complicate the completion of the initial business combination and affect market prices [224]. Shareholder Dynamics and Control - The company’s initial shareholders purchased 2,875,000 founders shares for a total of $25,000, which represents a significant investment prior to the initial public offering [187]. - Following a share dividend in October 2021, the total number of Class B ordinary shares outstanding increased to 3,162,500, held by the sponsor [187]. - The sponsor owns 20.0% of the issued and outstanding shares, which may influence decisions regarding business combinations [187]. - The company’s initial business combination must be completed within 18 months from the closing date of the initial public offering, or the founders shares will become worthless [188]. - The company’s initial shareholders control the appointment of the board of directors and hold substantial influence over shareholder votes, owning 20% of the ordinary shares [198]. - Key personnel from the target business may resign after the initial business combination, which could negatively affect operations [175]. - The success of the initial business combination is heavily dependent on the efforts of key personnel, whose departure could impact profitability [177]. Financial Instruments and Market Impact - The company issued 12,650,000 units, which included warrants to purchase 6,325,000 Class A ordinary shares at an exercise price of $11.50 per warrant [202]. - The company sold an aggregate of 4,866,667 private warrants at the same exercise price of $11.50 per share, which may affect the attractiveness of the company as an acquisition vehicle [202]. - The company may redeem outstanding warrants at a price of $0.01 per warrant if the Class A ordinary shares reach or exceed $18.00 for 20 trading days within a 30-day period [201]. - The exercise price of warrants may be adjusted if additional Class A ordinary shares are issued at a price below $9.20, complicating the completion of a business combination [200]. - The potential issuance of shares underlying various warrants may adversely affect the market price of Class A ordinary shares [224]. - The company has the ability to convert up to $1,500,000 in working capital loans into warrants at a price of $1.50 per warrant, which could further dilute existing shareholders [202]. - The company may issue additional Class A ordinary shares or preference shares to complete its initial business combination, which could significantly dilute existing shareholders [225]. Regulatory and Compliance Challenges - Changes in laws or regulations may adversely affect the company's ability to negotiate and complete its initial business combination [141]. - The company is subject to evolving laws and regulations, increasing general and administrative expenses and diverting management focus from revenue-generating activities to compliance [236]. - Compliance with new regulations may lead to ongoing uncertainty and additional costs related to disclosure and governance practices [237]. - The company may be classified as a passive foreign investment company (PFIC), which could result in adverse tax consequences for U.S. investors [233]. - The company has the option to reincorporate or merge in another jurisdiction, which may impose taxes on shareholders [234]. Post-Combination Considerations - Post-combination, the company may need to take write-downs or incur impairment charges that could adversely affect financial condition and share price [173]. - The management of the target business may not possess the necessary skills to operate a public company, potentially impacting operations and profitability [174]. - The company may not maintain control of the target business post-combination, leading to potential management challenges [176]. - After the initial business combination, a majority of the company's directors and officers may reside outside the United States, complicating enforcement of legal rights for U.S. investors [216].
Cactus Acquisition Corp. 1 Ltd.(CCTSU) - 2021 Q4 - Annual Report