Description of Organization and Business Operations

6 Months Ended

Jun. 30, 2023

Description of Organization and Business Operations [Abstract]

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS:

a. Organization and General

Cactus Acquisition Corp. 1 Limited (hereafter – the Company) is a blank check company, incorporated on April 19, 2021 as a Cayman Islands exempted company, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination (hereafter – the Business Combination).

Although the Company is not limited to a particular industry or geographic region for the purpose of consummating a Business Combination, the Company intends to focus its search on Israeli technology-based life science businesses or industries, that are domiciled in Israel, that carry out all or a substantial portion of their activities in Israel, or that have some other significant Israeli connection.

The Company is an early stage and an emerging growth company, and as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

All activity for the period from inception through June 30, 2023 relates to the Company’s formation, its initial public offering (the “Public offering”) described below and its search for a target company. The Company generates interest income on proceeds held in the trust account derived from the Public Offering and the private placement (as defined below in Note 3).

b. Sponsor and Financing

The Company’s sponsor is Cactus Healthcare Management, L.P., a Delaware limited partnership (the “Sponsor”).

The registration statement relating to the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on October 28, 2021. The initial stage of the Company’s Public Offering— the sale of 12,650,000 Units — closed on November 2, 2021. Upon that closing $129.03 million was placed in a trust account (the “Trust Account”) (see also note 1(c) below). Out of the $129.03 million placed in the trust account, the Company raised a total of $126.5 million, inclusive of the exercise of the over-allotment option and an additional $2.53 million were invested by the Company’s Sponsor for the benefit of the Public to preserve a redemption value of $10.20. The Company intends to finance its initial Business Combination with the net proceeds from the Public Offering and the Private Placement. See also Note 6.

c. The Trust Account

The proceeds held in the Trust Account are invested in money market funds registered under the Investment Company Act and compliant with Rule 2a-7 thereof that maintain a stable net asset value of $1.00. Unless and until the Company completes the Initial Business Combination, it may pay its expenses only from the net proceeds of the Public Offering held outside the Trust Account.

d. Initial Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating an initial Business Combination. The initial Business Combination must occur with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding taxes payable on the income accrued in the Trust Account). There is no assurance that the Company will be able to successfully consummate an initial Business Combination.

The Company, after signing a definitive agreement for an Initial Business Combination, will provide its public shareholders the opportunity to redeem all or a portion of their shares upon the completion of the initial Business Combination, either (i) in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender offer. 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 thousand following such redemptions. In such case, the Company would not proceed with the redemption of its public shares and the related initial Business Combination, and instead may search for an alternate initial Business Combination.

If the Company holds a shareholder vote or there is a tender offer for shares in connection with an initial Business Combination, a public shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account, calculated as of two days prior to the general meeting or commencement of the Company’s tender offer, including interest but less taxes payable. As a result, the Company’s Class A ordinary shares are recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”

e. Substantial Doubt about the Company’s Ability to Continue as a Going Concern

On April 20, 2023 the Company extended the date by which the Company has to consummate an Initial Business Combination from May 2, 2023 to November 2, 2023 (hereafter – the Mandatory Liquidation Date). If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. The Company intends to complete an Initial Business Combination before the Mandatory Liquidation Date.

Concurrently, in order to finance the requested extension and continued operations, the Company requested that the $450 thousand promissory note (see note 6) with the Sponsors be funded. The Company drew down $250 thousand of the $450 thousand in May 2023. However, there can be no assurance that the Company will be able to consummate any business combination ahead of the Mandatory Liquidation Date, nor that they will be able to raise sufficient funds to complete an Initial Business Combination. These matters raise substantial doubt about the Company’s ability to continue as a going concern, for the subsequent twelve months following the issuance date of these financial statements. No adjustments have been made to the carrying amounts and classification of assets or liabilities should the Company fail to obtain financial support in its search for an Initial Business Combination, nor if it is required to liquidate after the Mandatory Liquidation Date. See also Note 6.

f. Emerging Growth Company

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 a 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.

g. Extension Amendment / Articles Amendment Proposal

On April 20, 2023, the Company held an extraordinary general meeting in lieu of its 2023 annual general meeting (“Meeting”). In connection with the Meeting, the Company and its Sponsor (see Note 1 b.), entered into non-redemption agreements (the “NRAs”) with several unaffiliated third parties (“Non-Redeeming Shareholders”). Pursuant to the NRAs, the Non-Redeeming Shareholders agreed not to redeem an aggregate of 2,000,000 Class A ordinary shares of the Company related to the shareholder vote on the Extension Amendment Proposal (“Extension”), to extend the date by which the Company has to consummate a business combination from May 2, 2023 to November 2, 2023.

In exchange for the foregoing commitment, the Sponsor agreed to transfer an aggregate of 100,000 Class B ordinary shares of the Company held by the Sponsor to the Non-Redeeming Shareholders immediately following, and subject to, consummation of an initial business combination. The number of Class B ordinary shares transferable by the Sponsor to the Non-Redeeming Shareholders is subject to potential increase if the number of Class A ordinary shares that are not redeemed in connection with the Meeting exceeds 2,000,000. Since 2,464,528 Class A ordinary shares were not redeemed, an additional 30,000 Class B ordinary shares are due to the Non-Redeeming Shareholders.

The transfer of the Class B ordinary shares to the Non-Redeeming Shareholders is furthermore conditioned upon Cactus’ fulfilling the continued or initial listing requirements for listing on the Nasdaq Global Market following the Meeting.

At the Meeting, the Company’s shareholders approved the Extension Amendment Proposal, and 10,185,471 Class A ordinary shares were redeemed in connection with the Extension, resulting in 2,464,529 Class A ordinary shares outstanding. Accordingly, on May 1, 2023, $106,733,855 was distributed from the Trust Account (see Note 1 c.) to the shareholders who redeemed their shares.

In addition, in connection with the shareholders’ approval of the Extension, the Sponsor and the Company committed to contribute up to $240,000 to the Company’s Trust Account, consisting of $40,000 on or before May 2, 2023, and $40,000 on or before the 2nd day of each subsequent calendar month until (but excluding) November 2, 2023 or such earlier date on which (a) the Company’s board of directors determines to liquidate the Company or (b) an initial business combination is completed. These contributions will be funded from the $450 thousand Promissory Note (see Note 6).

On May 30, 2023, the Company held an extraordinary general meeting of the Company (the “Meeting”). At the Meeting, the Company’s shareholders approved, by way of special resolution, a proposal to amend the Articles to provide that the existing restriction under the Articles that prevents the issuance of additional shares that would vote together with the publicly held Class A ordinary shares on a proposal to approve the Company’s initial business combination will not apply to the issuance of Class A ordinary shares upon conversion of Class B ordinary shares where the holders of the converted shares waive their rights to proceeds from the Company’s trust account (the “Articles Amendment Proposal”). The requisite voting majority was achieved for approval and 204,178 Class A ordinary shares were redeemed in connection with the approval of the Articles Amendment Proposal, resulting in 2,260,351 Class A Ordinary Shares remaining outstanding after the Meeting. Accordingly, on June 15, 2023, $2,167,226 was distributed from the Trust Account (see Note 1 c.) to the shareholders who redeemed their shares.

Since an additional 204,178 Class A ordinary shares were redeemed at the May 30, 2023 Meeting, the additional 30,000 Class B ordinary shares referenced above as due to the Non-Redeeming Shareholders, was reduced to 15,000, for a total of 115,000. The 115,000 Class B shares due to the Non-Redeeming Shareholders has an implied value of $1.60 per share, or an aggregate of $184,000. The $184,000 value was determined based on a market approach methodology with a probability of acquisition assessment, using a stock price at the measurement date of $10.70 and assigning a probability of acquisition of 15%. This $184,000 value consideration is reflected in the shareholders equity section of the financial statements.

h. Notice of Delisting

On June 29, 2023, the Company received a written notice (the “Notice”) from the Nasdaq Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that the Company was not in compliance with Listing Rule 5450(b)(2)(A) (the “MVLS Rule”), which requires the Company to have at least $50 million market value of listed securities (the “MVLS”) for continued listing on the Nasdaq Global Market. The Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on the Nasdaq Global Market.

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Notice states that the Company has 180 calendar days, or until December 26, 2023, in which to regain compliance with the MVLS Rule. The Notice states that if at any time before December 26, 2023, the Company’s MVLS closes at $50 million or more for a minimum of ten (10) consecutive business days, the Nasdaq staff will provide written confirmation that the Company has regained compliance with the MVLS Rule.

If compliance is not achieved by December 26, 2023, the Company expects that Nasdaq would provide written notification to the Company that its securities are subject to delisting. At that time, the Company could appeal the delisting decision to a Nasdaq Hearings Panel. The Company will continue to monitor its MVLS and consider its available options to regain compliance with the MVLS Rule.