| DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS:
a. Organization and General Cactus Acquisition Corp. 1 Limited
(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 (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 September 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 LP, 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 was 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 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 a 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 a Business Combination. The Company, after signing a definitive
agreement for a Business Combination, will provide its public shareholders the opportunity to redeem all or a portion of their shares
upon the completion of the 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 Business Combination, and instead may search for an alternate Business Combination. If the Company holds a shareholder
vote or there is a tender offer for shares in connection with a 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 a Business Combination from May 2, 2023 to November 2, 2023, and on November 2, 2023,
the Company further extended that deadline from November 2, 2023 to November 2, 2024 (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 a Business Combination before the Mandatory Liquidation Date. Concurrently with the initial extension
of the Mandatory Liquidation Date, 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 and the remaining $200 thousand in August 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 a 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 a Business Combination, nor if it is required
to liquidate after the Mandatory Liquidation Date.
In November 2023, Company signed a convertible promissory note under which it can borrow up to a $120 thousand principal amount from the
Sponsor, for which funding will be provided by the three primary limited partners ($40 thousand each). The full amount of the $120 thousand
promissory note was received by the Company in November, 2023. See also Notes 6 and 8.
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 / Conversion Amendment Shareholder Meetings On April 20, 2023, the Company held
an extraordinary general meeting in lieu of its 2023 annual general meeting (the “First Extension Meeting”). In connection
with the First Extension 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 (the “First Extension”), which, upon approval, extended the Mandatory Liquidation Date 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 (which were convertible into Class A ordinary
shares) (“founders shares”) held by the Sponsor to the Non-Redeeming Shareholders immediately following, and subject to, consummation
of an initial business combination. The number of founders shares transferable by the Sponsor to the Non-Redeeming Shareholders was subject
to potential increase if the number of Class A ordinary shares that were not redeemed in connection with the First Extension Meeting exceeded
2,000,000. Since 2,464,528 Class A ordinary shares were not redeemed, an additional 30,000 founders shares are due to the Non-Redeeming
Shareholders. The transfer of the founders shares
to the Non-Redeeming Shareholders was furthermore conditioned upon Cactus’ fulfilling the continued or initial listing requirements
for listing on the Nasdaq Global Market following the First Extension Meeting. At the First Extension Meeting, the
Company’s shareholders approved the Extension Amendment Proposal, and 10,185,471 Class A ordinary shares were redeemed in connection
with the First 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 First 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 were funded from the $450 thousand loaned by the
Sponsor under the Promissory Note (see Note 6). On May 30, 2023, the Company held an
extraordinary general meeting of the Company (the “Conversion Amendment Meeting”). At the Conversion Amendment 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 “Conversion Amendment Proposal”). The requisite voting majority was achieved, and 204,178 Class A ordinary
shares were redeemed in connection with the approval of the Conversion Amendment Proposal, resulting in 2,260,351 Class A ordinary shares
remaining outstanding after the Conversion Amendment 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 founders shares referenced above as due to the Non-Redeeming
Shareholders, was reduced to 15,000, for a total of 115,000. The 115,000 founders shares due to the Non-Redeeming Shareholders have 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. As described in Note 8 below, following
September 30, 2023, on November 2, 2023, the Company held an extraordinary general meeting (the “Second Extension Meeting”),
at which the Company’s shareholders voted to approve the extension of the Mandatory Liquidation Date from November 2, 2023 to November
2, 2024 (the “Second Extension”). A total of 347,980 Class A ordinary shares were redeemed in connection with the Second Extension,
resulting in 5,074,870 Class A ordinary shares outstanding, consisting of 1,912,371 publicly-held Class A ordinary shares and 3,162,499
founders shares (which had been converted by the Sponsor into Class A ordinary shares from Class B ordinary shares on October 24, 2023).
Accordingly, on November 10, 2023, $3,813,082 was distributed from the Trust Account (see Note 1 c.) to the shareholders who redeemed
their shares. On June 29, 2023, the Company received
a written notice (the “MVLS Notice”) from the 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 MVLS 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 MVLS Notice states that the Company has 180 calendar days, or until December 26, 2023, in which to regain compliance
with the MVLS Rule. The MVLS 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.. On September 8, 2023, the Company,
received an additional written notice (the “Total Holders Notice”) from Nasdaq indicating that the Company was not in compliance
with Nasdaq Listing Rule 5450(a)(2), which requires the Company to maintain at least 400 total holders for continued listing on the Nasdaq
Global Market (the “Minimum Total Holders Rule”). In accordance with Nasdaq Listing Rule 5810(c)(2)(A)(i), the Total
Holders Notice stated that the Company had 45 calendar days, or until October 23, 2023, to submit a plan to regain compliance
with the Minimum Total Holders Rule. As described in Note 8 below, following
September 30, 2023, on October 23, 2023, the Company submitted a plan to regain compliance with the Minimum Total Holders Rule. Nasdaq
has accepted the Company’s plan, and in doing so Nasdaq granted the Company an extension until March 6, 2024 to evidence compliance
with the Minimum Total Holders Rule. The Company is monitoring the number of holders of its Class A ordinary shares and will consider
options available to it to potentially achieve compliance. |
