CACTUS ACQUISITION CORP. 1 LIMITED The following discussion and analysis of our financial condition and results of
operations should be read together with our unaudited condensed financial
statements and related notes appearing elsewhere in this Quarterly Report, and
our audited financial statements and related notes thereto as of, and for the
period from
Overview
We are a blank check company incorporated as a
The issuance of additional ordinary shares in a business combination:
? may significantly dilute the equity interest of investors in our initial
public offering, which dilution would increase if the anti-dilution provisions
of the Class B ordinary shares result in the issuance of Class A ordinary
shares on a greater than one-to-one basis upon conversion of the Class B
ordinary shares;
? may subordinate the rights of holders of Class A ordinary shares if
preference shares are issued with rights senior to those afforded our
Class A ordinary shares;
? could cause a change of control if a substantial number of our Class A
ordinary shares are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could
result in the resignation or removal of our present officers and
directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to
obtain control of us; and
? may adversely affect prevailing market prices for our Class A ordinary
shares, warrants and/or public units.
2
Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt
obligations;
? acceleration of our obligations to repay the indebtedness even if we make
all principal and interest payments when due if we breach certain
covenants that require compliance with certain financial ratios or
reserves without a waiver or renegotiation of the relevant covenant;
? our immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand;
? our inability to obtain necessary additional financing if the debt
security contains covenants restricting our ability to obtain such
financing while the debt security is issued and outstanding;
? our inability to pay dividends on our Class A ordinary shares;
? using a substantial portion of our cash flow to pay principal and interest
on our debt, which will reduce the funds available for dividends on our
Class A ordinary shares if declared, payment of expenses, capital
expenditures, acquisitions and other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in
our business and in the industry in which we will operate;
? increased vulnerability to adverse changes in general economic, industry
and competitive conditions and adverse changes in government regulation;
and
? limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
As indicated in the accompanying financial statements, at
3
Results of Operations and Known Trends or Future Events
We have not engaged in any revenue-generating operations to date. Our only
activities since inception have been organizational activities, preparations for
our initial public offering, and, subsequent to our initial public offering,
searching for, and due diligence related to, potential target companies with
which to consummate a business combination transaction. We have not and we will
not generate any operating revenues until after completion of our initial
business combination. We generate non-operating income in the form of interest
income on funds held in our trust account after our initial public offering.
There has been no significant change in our financial or trading position and no
material adverse change has occurred since the
Liquidity and Capital Resources
We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Our management expects that the proceeds of our initial public offering, together with proceeds from additional loans from our sponsor, if necessary (as described below), will suffice to cover our working capital needs until our initial business combination. We cannot assure you that our plans to consummate or to finance (if necessary) an initial business combination will be successful.
Prior to the completion of our initial public offering, our liquidity needs were
satisfied from the availability of up to
In order to fund potential working capital deficiencies or finance transaction
costs in connection with our intended initial business combination, our sponsor,
together with its three primary limited partners (Clal Biotechnology Industries,
The net proceeds from (i) the sale of the units in our initial public offering,
including due to the underwriters' exercise, in full, of their over-allotment
option, after deducting offering expenses of approximately
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (which interest shall be net of taxes payable and excluding potential fees to be payable to the underwriters for advisory services in connection with our initial business combination transaction), minus amounts paid out to redeeming shareholders, to complete our initial business combination. We may withdraw interest from the trust to pay taxes, if any. Our annual income tax obligations depend on the amount of interest and other income earned on the amounts held in the trust account. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account (less any amounts paid out to redeeming shareholders) will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
4
Following our initial public offering, we had available to us
Our primary anticipated liquidity requirements during our post-initial public
offering, pre-business combination period include approximately
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a "no-shop" provision (a provision designed to keep target businesses from "shopping" around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a "no-shop" provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Because of the anticipated costs of identifying a target business, undertaking
in-depth due diligence and negotiating an initial business combination, as noted
above, we have secured up to
Critical Accounting Estimates
None.
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