CCTSF 10-K
Cactus Acquisition Corp. 1 Ltd (CCTSF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the fiscal year ended
For the transition period from _______________ to _______________
Commission File Number
(Exact name of registrant as specified in its charter)
| 333-258042 | ||||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone
number, including area code:
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
|
Title of each class |
Trading Symbol(s) | Name of each exchange on which registered | ||
| Over The Counter (OTC) Market | ||||
| Over The Counter (OTC) Markets | ||||
| Over The Counter (OTC) Markets |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the fi ling reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The aggregate market value
of the voting and non-voting common equity held by non-affiliates of the Registrant on June 30, 2024 (the last business day of the Registrant’s
second fiscal quarter), based on the closing price of $11.35 for the Registrant’s Class A ordinary shares, as reported by the Market,
was $
As of March 31, 2025, Class A ordinary shares, par value $ per share, and Class B ordinary share, par value $ per share, were issued and outstanding.
Documents Incorporated by
Reference:
CACTUS ACQUISITION CORP. 1 LTD.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
| i |
CERTAIN TERMS
Unless otherwise stated in this Annual Report on Form 10-K (this “Annual Report”), references to:
| ● | “Board” our board of directors from time to time; |
| ● | “initial business combination” are to a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses;” |
| ● | “Class A ordinary shares” are to our Class A ordinary shares, par value $0.0001 per share; |
| ● | “Class B ordinary shares” are to our Class B ordinary shares, par value $0.0001 per share; |
| ● | “combination period” are from the closing of the IPO to November 2, 2025 (or such earlier date as determined by the Board) reflecting the first extension, the second extension, and third extension that we have to consummate an initial business combination; provided that the combination period may be further extended pursuant to an amendment to the amended and restated memorandum and articles of association and consistent with applicable laws, regulations and stock exchange rules; |
| ● | “Companies Law” are to the Companies Law (2021 Revision) of the Cayman Islands, as the same may be amended from time to time; |
| ● | “founders shares” are to our 3,162,499 Class A ordinary shares and 1 Class B ordinary share, in the aggregate, initially purchased in the form of Class B ordinary shares in a private placement (2,875,000 shares), or received in a share dividend (287,500 shares), by our original sponsor prior to our IPO, and the 1 Class A ordinary shares that will be issued upon the automatic conversion of those the remaining 1 Class B ordinary shares at the time of our initial business combination (for the avoidance of doubt, such Class A ordinary shares will not be “public shares”); |
| ● | “founder share conversion” are to the conversion by our original sponsor 3,162,499 of the 3,162,500 founders shares from Class B ordinary shares to Class A ordinary shares on October 24, 2023; |
| ● | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
| ● | “IPO” or “initial public offering” refers to the initial public offering of our Class A ordinary shares, which was consummated on November 2, 2021; |
| ● | “management” or our “management team” are to our officers and directors; |
| ● | “original sponsor” are to Cactus Healthcare Management LP, a Delaware limited partnership, including, where applicable, its affiliates; |
| ● | “private warrants” are to the 4,866,667 warrants that were issued and sold to our original sponsor in a private placement simultaneously with the closing of our initial public offering; |
| ● | “public shareholders” are to the holders of our public shares, including our original sponsor, officers and directors to the extent our original sponsor, officers or directors purchase public shares, provided their status as a “public shareholder” shall only exist with respect to such public shares; |
| ● | “public shares” are to our Class A ordinary shares sold as part of the public units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market); |
| ● | “public units” are to the units (consisting of public shares and warrants) sold in our initial public offering; |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; |
| ● | “Securities Act” are to the Securities Act of 1933, as amended; |
| ● | “sponsor alliance” are to the transfers of 80% of the founders shares and 80% of the private warrants held by the sponsor to the first successor sponsor, including all agreements executed in connection with such transfers, which closed on February 23, 2024; |
| ● | “sponsor purchase agreement” are to the sponsor purchase agreement dated February 9, 2024, among our original sponsor, the successor sponsor and us; |
| ● | “sponsor shareholders” are to our original sponsor, Cactus Healthcare Management LP, the successor sponsor, EVGI Ltd, and the current sponsor, ARWM Inc Pte. Ltd; |
| ● | “successor sponsor” are to EVGI Ltd, an English private limited company, including, where applicable, its affiliates; |
| ● | “third extension” are to the extension, to November 2, 2025, of the deadline for our entry into an initial business combination under our amended and restated memorandum and articles of association; |
| ● | “third extension meeting” is to the extraordinary general meeting held on November 1, 2024 approval for, among related matters, the third extension; |
| ● | “trust account” are to the U.S.-based trust account at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee; |
| ● | “trust agreement” are to the investment management trust agreement, dated as of November 2, 2021, by and between our company and Continental Stock Transfer & Trust Company, as trustee; |
| ● | “unit” are to a unit consisting of one Class A ordinary share and one-half warrant; |
| ii |
| ● | “warrants” are to our redeemable warrants sold as part of the public units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market) and the private warrants; |
| ● | “we,” “us,” “our,” “the company” or “our company” are to Cactus Acquisition Corp. 1 Limited, a Cayman Islands exempted company; |
| ● | “2024 SPAC Rules” are to the new rules and regulations for special purpose acquisition companies adopted by the SEC on January 24, 2024, which became effective on July 1, 2024; and |
| ● | “$,” “US$” and “U.S. dollar” each refer to the United States dollar. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report are forward-looking in nature. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report may include, for example, statements about:
| ● | our ability to consummate the business combination with Tembo e-LV B.V. pursuant to the Business Combination Agreement entered into on August 29, 2024; | |
| ● | the expected benefits of the business combination with Tembo e-LV B.V., including the future financial and operating performance of the combined company; | |
| ● | our ability to obtain the required shareholder and regulatory approvals and satisfy other closing conditions under the Business Combination Agreement; | |
| ● | the anticipated timing of the closing of the business combination and listing of the combined company on the Nasdaq Stock Market; | |
| ● | our potential ability to obtain additional financing to support transaction expenses or post-closing operations; | |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees, or directors following the business combination; | |
| ● | our officers and directors allocating their time to other businesses and potential conflicts of interest; | |
| ● | risks related to the business and operations of Tembo and the markets in which it operates; | |
| ● | the use of proceeds not held in our trust account at Bank of America, N.A., maintained by Continental Stock Transfer & Trust Company as trustee; | |
| ● | our trust account not being subject to claims of third parties; or | |
| ● | our financial performance following our initial public offering or following the completion of the business combination. |
Forward-looking statements are subject to numerous risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected in such statements, including those discussed in “Risk Factors” and elsewhere in this Annual Report.
The forward-looking statements contained in this Annual Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Item 1A. Risk Factors”. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
| iii |
Summary of Risk Factors
An investment in our securities involves a high degree of risk. We have provided the following summary of the material risks involved:
Risks Relating to our Search for, and Consummation of or Inability to Consummate, a Business Combination
| ● | The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares. | |
| ● | The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. | |
| ● | We have been delisted from the Nasdaq Stock Market and may face challenges in relisting or qualifying the combined company for listing on a major U.S. exchange. We may be unable to obtain - on reasonable terms or at all - additional financing to continue operations, complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. | |
| ● | We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us. | |
| ● | The requirement that we complete our initial business combination within the combination period may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach the end of the combination period, which could undermine our ability to complete our initial business combination on terms that would provide value for our shareholders. | |
| ● | Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by unfavorable macro-economic trends, ongoing military conflicts and other geopolitical uncertainties. | |
| ● | Because there are many SPACs evaluating targets, attractive targets have become scarcer and there is more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to consummate an initial business combination. | |
| ● | We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public shareholders may receive only $11.12 per share, or less than such amount in certain circumstances, and our warrants will expire worthless. | |
| ● | The notes to the financial statements included in this Annual Report contain an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” | |
| ● | Our public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination. | |
| ● | Our sponsor shareholders will be able to approve the business combination regardless of how our public shareholders vote. | |
| ● | Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of the business combination. | |
| ● | If we seek shareholder approval of our initial business combination, our original sponsor, successor sponsor and other initial shareholders, as well as our directors, officers, advisors or any of their affiliates may elect to purchase shares or warrants from public shareholders, which may influence a vote on a proposed business combination and reduce the public “float” of our securities. | |
| ● | You will not be entitled to protections normally afforded to investors of many other blank check companies. | |
| ● | If we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares. | |
| ● | Because the funds being held outside of the trust account are insufficient to allow us to operate for the remainder of the combination period , that could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, as we will depend on additional loans third parties to fund those activities. | |
| ● | If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $11.12 per share. |
| iv |
| ● | Our directors may decide not to enforce the indemnification obligations of our original sponsor, or to enforce provisions of the sponsor purchase agreement allocating our liabilities to our successor sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders. | |
| ● | If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced. | |
| ● | If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our Board may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our Board and us to claims of punitive damages. | |
| ● | If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination. | |
| ● | Changes in SEC rules affecting SPACs may adversely affect our ability to negotiate and complete our initial business combination. | |
| ● | Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations. | |
| ● | Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares. | |
| ● | Because we are not limited to any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations. | |
| ● | Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines. | |
| ● | We are not required to obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view. | |
| ● | We may only be able to complete one business combination with the proceeds from our initial public offering and the sale of the private warrants, along with funding from third party sources (which may not be available), which will cause us to be solely dependent on a single business which may have a limited number of products or services, or product candidates. This lack of diversification may negatively impact our operations and profitability. | |
| ● | We may seek acquisition opportunities with an early-stage company, a financially unstable business or an entity lacking an established record of revenue or earnings. | |
| ● | We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all. | |
| ● | In order to effectuate an initial business combination, blank check companies have, in the past, amended various provisions of their charters and modified governing instruments. We seek at a meeting to approved our initial business combination, to amend our amended and restated memorandum and articles of association in a manner that will make it easier for us to complete our initial business combination, which some of our shareholders may not support. | |
| ● | The provisions of our amended and restated memorandum and articles of association that relate to our pre-business combination activity may be amended with the approval of holders of at least two-thirds of our ordinary shares that, being entitled to do so, attend and vote at a general meeting, and corresponding provisions of the agreement governing the release of funds from our trust account may be amended with the approval of holders of at least 65% of our then outstanding ordinary shares who attend and vote at a general meeting, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association and the trust agreement to facilitate the completion of an initial business combination that some of our shareholders may not support. | |
| ● | We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public warrants. | |
| ● | Certain agreements related to our initial public offering may be amended without shareholder approval. |
| v |
| ● | Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses. | |
| ● | We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, which could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies. | |
| ● | Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition. | |
| ● | We may be deemed a “foreign person” and therefore may not be able to complete our business combination because such transaction may be subject to regulatory review and approval requirements, including pursuant to foreign investment regulations and review by governmental entities such as the Committee on Foreign Investment in the United States, or may be ultimately prohibited. | |
| ● | Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $11.12 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. |
Risks Relating to the Post-Business Combination Company
| ● | If we effect a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks that may negatively impact our operations. | |
| ● | If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues. | |
| ● | After our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies, developments and conditions in the country in which we operate. | |
| ● | Exchange rate fluctuations and currency policies may diminish a target business’ ability to succeed in the international markets. | |
| ● | Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment. | |
| ● | We may have limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company. | |
| ● | Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business. |
Risks Relating to our Management Team
| ● | Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the skills efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business. | |
| ● | Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous. | |
| ● | Past performance by the companies in which our management team and our successor sponsor’s members and affiliates have been involved may not be indicative of future performance of an investment in us. |
| vi |
| ● | Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. | |
| ● | Since our original sponsor, successor sponsor and the other initial shareholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may acquire), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. | |
| ● | Since our successor sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. | |
| ● | Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination. |
Risks Relating to our Securities
| ● | Our securities have been delisted from Nasdaq, limiting liquidity and subjecting us to additional trading restrictions. Our successor sponsor controls the appointment of our Board until completion of our initial business combination and holds a substantial interest in us. As a result, it appoints all of our directors prior to our initial business combination and may exert a substantial influence on actions requiring shareholder vote, potentially in a manner that you do not support. | |
| ● | A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination. | |
| ● | We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. | |
| ● | Our warrants contained in our units, together with our founders shares and private warrants, may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination. | |
| ● | There is currently a limited market for our securities, which could adversely affect the liquidity and price of our securities. | |
| ● | Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited. | |
| ● | Our amended and restated memorandum and articles of association provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act, which may impose additional litigation costs on our shareholders. | |
| ● | Our amended and restated articles of association provide that unless we consent otherwise, the courts of the Cayman Islands shall have sole and exclusive jurisdiction for all disputes between our company and our shareholders under the Companies Act. | |
| ● | Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management. | |
| ● | After our initial business combination, it is possible that a majority of our directors and officers will live outside the United States and all or substantially of our assets will be located outside the United States; therefore, investors may not be able to enforce federal securities laws or their other legal rights. | |
| ● | An investment in our securities may result in uncertain or adverse United States federal income tax consequences. | |
| ● | If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our extension meeting or initial business combination or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. | |
| ● | The warrants that are part of the units that we offered publicly and issued privately, together with our grant of registration rights to our original sponsor and others, may have an adverse effect on the market price of our Class A ordinary shares and may make it more difficult for us to complete our initial business combination. | |
| ● | Our original sponsor paid a nominal price for its acquisition of the founders shares. We may furthermore issue additional Class A ordinary shares or other securities to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. Any such issuances would dilute the interest of our shareholders further and likely present other risks. | |
| ● | Unlike certain other blank check companies, our sponsor shareholders will receive additional Class A ordinary shares if we issue shares to consummate an initial business combination. |
| vii |
| ● | We may be a passive foreign investment company, or “PFIC,” which could result in adverse United States federal income tax consequences to U.S. investors. | |
| ● | Because of the number of Class A ordinary shares received by our original sponsor upon the conversion of the founder shares, Nasdaq may in the future consider us to be a “controlled company” within the meaning of the Nasdaq rules and, as a result, we may qualify for exemptions from certain corporate governance requirements. | |
| ● | We may reincorporate in, migrate to or merge with and into another entity as a surviving company in, another jurisdiction in connection with our initial business combination and such reincorporation, migration or merger may result in taxes imposed on shareholders. |
Emerging Regulatory and Market Risks
| ● | Increased regulatory scrutiny of SPAC transactions may delay or prevent our ability to complete a business combination, or increase the cost of compliance. | |
| ● | The SEC and other regulatory bodies have recently introduced or proposed new rules specific to SPACs and de-SPAC transactions, including enhanced disclosure requirements and potential reclassification of SPACs as investment companies. These developments could result in additional regulatory burdens, increase the time and cost necessary to complete our initial business combination, or deter potential target companies from entering into a business combination with us. | |
| ● | Litigation and heightened shareholder activism in the SPAC space could adversely affect our business combination efforts. SPACs and de-SPAC transactions have increasingly been subject to class action lawsuits, shareholder demands, and heightened scrutiny from activist investors. Any such actions taken against us or a prospective target could materially delay or prevent the consummation of a business combination and could result in significant legal expenses or reputational harm. |
Additional Risk Factors for Consideration
| ● | The delisting from Nasdaq may reduce the appeal of our securities to potential business combination targets and investors of our securities may increase the risk of a “failed” de-SPAC transaction or force us to agree to less favorable terms with a target company. | |
| ● | Delisting has reduced our leverage in negotiations with potential targets, particularly if the combined company will need to meet the initial listing requirements of a national securities exchange in connection with the closing of a business combination. We may be required to accept less favorable deal terms or undertake additional steps, including concurrent capital raises or corporate restructuring, to meet relisting standards, any of which could delay or jeopardize our ability to complete a business combination. | |
| ● | Our ability to relist our securities on a national securities exchange after a business combination is subject to significant uncertainty and risks. | |
| ● | There can be no assurance that we or the combined company will be able to satisfy the initial listing standards of a national securities exchange, such as Nasdaq or the NYSE, after the consummation of our initial business combination. If we are unable to relist, investors may experience reduced liquidity, lower trading volumes, and a corresponding decrease in the market price of our securities. | |
| ● | Delisting may be viewed negatively by regulators, potential targets, or investors, and could increase the likelihood of regulatory inquiries or shareholder litigation. The perception that we may be less financially stable or operationally viable as a delisted company could adversely affect our ability to complete a business combination on favorable terms or at all. | |
| ● | The delisting may increase our cost of capital and limit our ability to attract future financing. | |
| ● | The loss of our listing on Nasdaq may negatively affect our ability to attract and retain experienced directors, officers, and other key personnel who prefer to be associated with an exchange-listed company. This could impair our ability to manage operations and execute a business combination effectively. | |
| ● | We have identified material weaknesses in our internal control over financial reporting. These weaknesses could result in misstatements of our financial statements or disclosures, which may not be prevented or detected on a timely basis. As a result, management has concluded that our internal control over financial reporting was not effective as of December 31, 2024. The existence of these material weaknesses increases the risk that our financial statements may contain material errors, and we may be required to restate previously issued financial information. Additionally, any continued failure to maintain effective internal controls could harm our reputation with investors, lead to regulatory scrutiny, limit our ability to raise additional capital, and negatively impact our stock price. | |
| ● | We are in the process of implementing remediation plans to address the material weaknesses identified in our internal control over financial reporting. These plans include hiring additional accounting personnel and implementing enhanced control procedures. There can be no assurance, however, that these efforts will be successful or that we will be able to fully remediate the material weaknesses within our expected timeframe. Furthermore, we may in the future identify additional deficiencies in our internal control over financial reporting that may also constitute significant deficiencies or material weaknesses. Failure to remediate existing material weaknesses or to prevent new ones from arising could impair our ability to accurately and timely report our financial results, which may result in loss of investor confidence and potential legal or regulatory consequences. |
General Risk Factors
| ● | We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance. |
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PART I
Item 1. Business.
Introduction
We are a blank check company formed on April 19, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Annual Report as our initial business combination.
We have generated no revenues to date, and we do not expect that we will generate operating revenues at the earliest until we have completed our initial business combination. While we may pursue a business combination target in any business or industry and across any geographical region, and have historically focused our search on technology-based healthcare businesses 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, since the closing of the sponsor alliance (as discussed and defined below under “Recent Developments - Sponsor Alliance”), and the appointment of new directors to the board and a new management team, we altered the focus of our search to emerging technology companies globally, and particularly those in the renewables sector. The current sponsor of our company is ARWM Inc Pte. Ltd.
Initial Public Offering
On November 2, 2021, we completed our initial public offering of 12,650,000 units, amounting to $10 per unit for a total of $126,500,000, with each unit consisting of one Cactus Class A ordinary share (12,650,000 total shares) and one-half of one Cactus public warrant (6,250,000 total public warrants). Each whole Cactus warrant entitles the holder thereof to purchase one Cactus Class A ordinary share at a price of $11.50 per share. An additional $2,530,000 was invested by the initial sponsor for the benefit of the public shareholders to preserve a redemption value of $10.20. Cactus raised total gross proceeds of $129,030,000 in the IPO, and a total of $129,030,000 was deposited into the Trust Account. Concurrently with the closing of the initial public offering, Cactus completed the private sale of 4,866,667 private warrants to its initial sponsor, Cactus Healthcare Management LP, at a purchase price of $1.50 per private placement warrant, generating aggregate gross proceeds of $7,300,000 for Cactus working capital and IPO-related closing costs. A Cactus private warrant entitles the holder to purchase one Cactus Class A ordinary share at an exercise price of $11.50 per share.
Prior to the consummation of the IPO, in May 2021, the initial sponsor purchased 2,875,000 founders shares in Cactus for an aggregate purchase price of $25,000, or approximately $0.009 per share. In October 2021, Cactus effected a stock share dividend of 0.1 shares for each founder share outstanding, resulting in an aggregate of 3,162,500 founder shares outstanding and held by the sponsor.
Founder Share Conversion
On May 30, 2023, we held an extraordinary general meeting (the “articles amendment meeting”). At the articles amendment meeting, our shareholders approved, by way of special resolution, a proposal to amend the amended and restated memorandum and articles of association to provide that the existing restriction under the amended and restated memorandum and articles of association that prevents the issuance of additional shares that would vote together with the publicly-held Class A ordinary shares on a proposal to approve our 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 our trust account. The requisite voting majority was achieved for approval.
On October 24, 2023, our original sponsor converted 3,162,499 of the 3,162,500 founders shares from Class B ordinary shares to Class A ordinary shares, leaving only 1 Class B ordinary share outstanding.
Sponsor Alliances
On February 9, 2024, our first sponsor, Cactus Healthcare Management, L.P. (“Cactus LP”), entered into a sponsor securities purchase agreement with EVGI Limited (“EVGI”), our second sponsor, pursuant to which, on February 23, 2024, Cactus LP transferred to EVGI 80% of the securities of the Company owned by Cactus LP prior to the transaction. As part of the closing, a change in management and the board of directors was implemented.
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On April 29, 2024, a subsequent sponsor securities purchase agreement was executed between EVGI, our second sponsor, and ARWM Pte Limited (ARWM”), our third sponsor, pursuant to which, on May 16, 2024, EVGI transferred to ARWM 100% of the Cactus securities owned by EVGI. As part of the closing, a change in management and the board of directors was implemented.
Business Combination Agreement
On August 29, 2024, we signed a Business Combination Agreement (BCA) with Tembo e-LV B.V. (Tembo), a private company incorporated under the laws of the Netherlands,. Under the BCA, the consideration to be paid to the equity holders of Tembo is $838 million and will be paid entirely in the form of newly issued ordinary shares of new combined company, with each share valued at $10.00. The BCA was entered into by the parties following due diligence and receipt by our board of directors of a fairness opinion from an independent third party. We are advancing activities towards consummating a Business Combination with Tembo.
Recent Developments
Delisting from Nasdaq
On October 29, 2024, we received a notice from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC (Nasdaq) stating that because we had not completed an initial business combination within 36 months of the effective date of its registration statement in connection with its initial public offering, we were not in compliance with Nasdaq IM 5101-2 and therefore subject to delisting. Trading in our securities on NASDAQ was suspended at the opening of business on November 5, 2024 and trading of our securities on the OTC market commenced on November 6, 2024, under the symbol CCTSFF. The delisting and commencement of trading on OTC does not affect our business combination agreement with Tembo, as both parties continue to work to effectuate the completion of the transaction. The combined company intends to apply for up-listing on the Nasdaq Stock Market in connection with the completion of the business combination.
Extension of our Combination Period - Third Extension
On November 1, 2024, we held an extraordinary general meeting, at which our shareholders voted to approve the Third Extension, which extended the mandatory liquidation date from November 2, 2024 to November 2, 2025. A total of 1,148,799 Class A ordinary shares were redeemed in connection with the Third Extension, resulting in 3,926,071 Class A ordinary shares outstanding, consisting of 763,572 publicly-held Class A ordinary shares and 3,162,499 founders shares. Accordingly, on November 13, 2024, $13,389,826 was distributed from the Trust Account to the shareholders who redeemed their shares.
On October 29, 2024, we and ARWM Inc Pte. Ltd. (our current Sponsor), entered into a non-redemption agreement (NRA) with an unaffiliated third party (the “Non-Redeeming Shareholder”). Pursuant to the NRA, the Non-Redeeming Shareholder agreed not to redeem (or to validly rescind any redemption requests with respect to) an aggregate of 500,000 publicly-held Class A ordinary shares of the Company (“Non-Redeemed Shares”) in connection with the shareholder vote on the Articles Extension Proposal. In exchange for the foregoing commitments not to redeem the Non-Redeemed Shares, the Sponsor agreed to transfer an aggregate of 125,000 founder shares held by it to the Non-Redeeming Shareholder immediately following, and subject to, consummation of an initial business combination. To the extent that a business combination does not close by May 2, 2025, the Sponsor agreed to transfer an additional 25,000 founder shares held by it per month beginning on May 3, 2025 and ending on October 2, 2025 (up to 150,000 founder shares).
Promissory Note
On March 25, 2024, the Company issued an unsecured promissory note to Energi Holding Limited (the “Lender”) , not a related party, with a principal amount up to $600,000 (the “Note”). The Note is repayable in full upon the earlier of (a) November 1, 2024, (b) the date of the consummation of the Company’s initial business combination or (c) the date of the liquidation of the Company (such earlier date, the “Maturity Date”). The Note bears no interest, however, an establishment fee, a line fee and an exit fee totaling in aggregate 9.0% per annum, are payable on the Maturity Date.
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On March 25, 2024, the Lender advanced $600,000 to the Company under the Note. If the Company does not consummate an initial business combination by the Maturity Date, the Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
We signed a Note extension with the lender to extend the Maturity Date from November 1, 2024 to November 2, 2025. All other terms of the Note remain unchanged by the Note extension.
Industry Opportunity
We intend to acquire a high-quality growth business or asset that can generate attractive, risk-adjusted returns for stockholders. To that end, our acquisition and value creation strategy is to identify, acquire and, after our initial business combination, enhance the growth of a company in the clean and sustainable energy industry that complements the experience and expertise of our new management team, our board members and our advisors. Our selection process leverages our team’s extensive global network of relationships, deep industry knowledge across multiple geographies, transaction execution experience and deal sourcing capabilities that provide access to a broad spectrum of acquisition opportunities.
Our goal is to identify and pursue businesses that participate in the global energy transition ecosystem that are facilitating the way that energy is produced, stored, transmitted, distributed and consumed, all while reducing or mitigating greenhouse gas emissions. We focus on companies that serve key and evolving segments in the clean energy ecosystem, including those involved in carbon, hydrogen, sustainable agriculture, and renewable energy, which are becoming increasingly intertwined. Additional areas of focus include, but are not limited to, energy storage, distributed energy, zero-emission transportation, carbon utilization, low or carbon-free industrial applications and sustainable manufacturing.
We believe that clean energy and sustainability solutions are revolutionizing many traditional industries and creating numerous investment opportunities which are soundly driven by important long-term global trends, such as the cost of carbon emissions, regulatory incentive programs, and consumers’ increasing value placed on clean energy products and services, in addition to advancements in technology providing for more cost-effective solutions and alternatives to fossil fuels. We believe that the regulatory frameworks incentivizing the adoption of sustainable practices and technologies will become increasingly favorable to the sectors that we are targeting. These trends provide long-term benefits for companies that develop and distribute services and products that take part of an integrated approach to the continued decarbonization of the economy.
Our team is uniquely positioned to source and evaluate deals globally. We believe that our expertise and experience in major worldwide markets allow us to source and compare targets across markets, offering us the broadest pool of targets and the possibility to maximize returns. In addition to attractive targets in the U.S. and other developed markets, we have access to companies in other world markets which offer, in some cases, highly attractive growth prospects at more advantageous valuation multiples. Our team also has access to proprietary opportunities across the globe within the clean and sustainable energy space that can be leveraged to drive value. Our management team is unique in that we have executives that have operated across continents and have team members on the ground in multiple jurisdictions, enabling us to identify and evaluate rapidly growing businesses at an early stage. Our management team also has access to proprietary global deal flow from our family office and other investor relationships. Additionally, members of our management team have exceptional regulatory backgrounds and insights.
Our team has a demonstrated extensive track record of value creation and enhancement with clean and sustainable energy. Our team’s experience, resources and track record includes founding successful startups across multiple industries, venture capital investing and startup advisory, sustainable infrastructure project development, financing and execution, acquiring and integrating private investment companies, financial institution assets and taking them public, and international expansion.
We believe that our team has the experience, resources and track record to execute a successful transaction, the operational expertise to navigate the financial regulatory landscape and an understanding of purchasing, integrating and growing clean energy assets. We understand value at each stage of the financial life cycle, allowing us to evaluate not only what transactions make sense, but also those on which we should pass.
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The following differentiated value propositions will allow us to bring to the public market a highly attractive business:
| ● | successful investment and M&A track record across public and private markets; | |
| ● | established deep relationships and insights within private equity and clean energy sectors globally; | |
| ● | proven experience in consummating transactions; | |
| ● | operational expertise to add value and help grow and optimize businesses post-acquisition; | |
| ● | decades of experience in clean energy and technology investing; | |
| ● | sustainable infrastructure project development and execution; | |
| ● | leadership team; | |
| ● | proprietary deal flow; and | |
| ● | comprehensive set of competencies in clean energy, decarbonization and other energy transition investment themes. |
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we will not engage in, any operations until our initial business combination. We intend to effectuate our initial business combination using cash from the proceeds of the initial public offering, a private placement at the time of the business combination closing, our capital stock, debt or a combination of these as the consideration to be paid in our initial business combination.
Accordingly, stockholders are investing without first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.
Sources of Target Businesses
We believe based on our management’s business knowledge and past experience that there are numerous potential candidates available. Our principal means of identifying potential target businesses is through the extensive contacts and relationships of our sponsor, initial stockholders, officers and directors. While our officers and directors are not required to commit any specific amount of time in identifying or performing due diligence on potential target businesses, our officers and directors believe that the relationships they have developed over their careers and their access to our sponsor’s contacts and resources will generate a number of potential business combination opportunities that will warrant further investigation. Target business candidates are also brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis, since many of these sources will have read this Annual Report and know what types of businesses we are targeting.
Our officers and directors must present to us all target business opportunities that have a fair market value of at least 80% of the assets held in our trust account at the time of the agreement to enter into the initial business combination, subject to any pre-existing fiduciary or contractual obligations. We may engage the services of professional firms or other individuals that specialize in business acquisitions on a formal basis, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however, will our sponsor, initial stockholders, officers, directors or their respective affiliates be paid any compensation prior to, or for any services they render in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is) other than the payment of consulting, success or finder fees in connection with the consummation of our initial business combination, the repayment of the IPO promissory note described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and reimbursement of any out-of-pocket expenses. Our audit committee will review and approve all reimbursements and payments made to our sponsor, officers, directors or our or their respective affiliates, with any interested director abstaining from such review and approval.
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We are not restricted from entering into an agreement or transaction with a target business that is affiliated with any of our officers, directors or sponsor, and may do so if (i) such transaction is approved by a majority of our disinterested independent directors and (ii) we obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions, that the business combination is fair to our unaffiliated stockholders from a financial point of view.
Significant Activities since Inception
On November 2, 2021, we consummated the closing of our initial public offering, selling 12,650,000 units to the public and generating aggregate gross proceeds of $126,500,000 for us. Each unit consists of one Class A ordinary share and one-half redeemable warrant, each warrant entitling the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share.
Substantially concurrent with the closing of the IPO, we completed the private sale of 4,866,667 private warrants to our original sponsor at a purchase price of $1.50 per private warrant, generating aggregate gross proceeds of $7,300,000 for us.
Following the respective closings, a total of $129,030,000 was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee.
Our units commenced trading on the Nasdaq Global Market on November 2, 2021 under the symbol “CCTSFU”. As of December 30, 2021, holders of the units sold in our initial public offering could begin to elect to separately trade the Class A ordinary shares and warrants included in the units. Following our delisting from Nasdaq on November 5, 2024, our Class A ordinary shares, warrants and units are now quoted on the OTC Pink Market under the symbols “CCTSFF” “CTSWF” and “CTSUF”, respectively.
Status of Our Initial Business Combination
On August 29, 2024, we entered into a definitive Business Combination Agreement (the “BCA”) with Tembo e-LV B.V. (“Tembo”), Tembo Holdco N.V. (“Holdco”), CCTSF Merger Sub Inc. (“Merger Sub”), and VivoPower International PLC (“VivoPower”). The BCA outlines a multi-step transaction pursuant to which Holdco will become a publicly traded company on the Nasdaq Stock Market.
Under the terms of the BCA:
| ● | Company Share Exchange: All outstanding shares of Tembo will be contributed to Holdco in exchange for newly issued Holdco ordinary shares. | |
| ● | Corporate Reorganization: Holdco will convert from a Dutch private limited liability company (B.V.) to a public limited liability company (N.V.). | |
| ● | Merger: Merger Sub will merge with and into CCTSF, with CCTSF surviving as a wholly owned subsidiary of Holdco. Each outstanding Class A ordinary share of CCTSF not redeemed by public shareholders will be exchanged for one Holdco ordinary share. | |
| ● | Nasdaq Listing: Following the closing, Holdco will apply to Nasdaq for its ordinary shares to be listed on Nasdaq under a new ticker symbol. |
The BCA includes governance provisions, including board representation from both the Tembo and CCTSF sponsor groups and customary lock-up arrangements restricting the resale of Holdco shares following closing. The transaction is structured to qualify as a tax-free reorganization under Section 351 of the U.S. Internal Revenue Code.
In connection with the BCA, key shareholders of both Tembo and CCTSF have entered into Investor Support Agreements, agreeing to vote in favor of the proposed transaction and to refrain from exercising redemption rights. Additionally, the parties executed lock-up agreements and an Investor Rights Agreement providing customary registration rights for certain Holdco shareholders.
The closing of the business combination remains subject to regulatory approvals, including SEC clearance of the Form F-4 registration statement, the completion of financial audits under PCAOB standards, shareholder approvals, and other customary conditions.
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Financial Position
With funds available in our trust fund in an amount of $9,080,000 (as of April 15, 2025), which amount will be reduced as a result of any redemptions in connection with any future extension meeting and/or a meeting to approve a business combination, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations, or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, given the significant percentage of our public shareholders that have elected to redeem their shares in connection with our first extension meeting, second extension meeting, third extension meeting, and our article amendment meeting, and may elect to redeem at a meeting to approve a business combination, thereby reducing our cash resources, we likely will need to secure third party financing in order to successfully effect such a business combination and there can be no assurance that it will be available to us on terms acceptable to us or at all.
Fair Market Value of Target Business
Prior to our delisting, Nasdaq listing rules required that the target business or businesses we acquired collectively have a fair market value equal to at least 80% of the balance of the funds in our trust account (excluding taxes payable on income earned on the trust account) at the time of executing a definitive agreement for an initial business combination. As we are no longer listed on Nasdaq, we are no longer required to meet this 80% fair market value test as a listing standard. Nevertheless, our board of directors continues to apply customary valuation practices in connection with our pending business combination.
On August 29, 2024, we entered into a definitive Business Combination Agreement with Tembo e-LV B.V., under which we will complete a multi-step transaction that includes a merger and share exchange. While we previously considered multiple transaction structures, the terms of the Business Combination Agreement provide for the merger of Merger Sub with and into CCTSF and the exchange of Class A ordinary shares for Holdco ordinary shares.
In connection with the Business Combination Agreement, our board of directors reviewed the financial condition and valuation of Tembo, including an independent fairness opinion. Specifically, CCTSF engaged Gemini Valuation Services, LLC (“GVS”) to provide a fairness opinion regarding the proposed transaction. GVS reviewed Tembo’s financial statements, internal projections, comparable company analyses, and held discussions with Tembo’s senior management. Based on its analysis, GVS concluded that the consideration to be paid in the business combination is fair, from a financial point of view, to CCTSF and its security holders.
The proxy materials or registration statement (Form F-4) being prepared in connection with the transaction will include further information regarding the financial analysis performed by GVS, as well as the full fairness opinion.
Lack of Business Diversification
We expect to complete our business combination with just one business, Tembo e-LV B.V. Therefore, the prospects for our success will likely depend entirely on the future performance of this one business. Unlike entities with the resources to diversify operations across multiple businesses or industries, we will initially be reliant on Tembo’s business operations, and we will not benefit from the potential to spread risk across multiple unrelated business lines.
As a result, our lack of diversification may:
| ● | subject us to numerous economic, competitive, and regulatory developments that could have a significant adverse impact on the specific industry in which Tembo operates following the business combination; and | |
| ● | result in our dependency on the success of Tembo’s business, products, and services, and the market acceptance thereof. |
Limited Ability to Evaluate the Target Business’ Management
Although we conducted due diligence on the management of Tembo e-LV B.V. in connection with the evaluation of the business combination, we cannot assure you that our assessment of Tembo’s management will prove to be accurate. In addition, we cannot guarantee that Tembo’s management team will possess all of the necessary skills, qualifications, or experience to operate a public company listed on Nasdaq following the completion of the business combination.
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The future role of our current officers and directors, if any, in the combined company following the business combination has not been determined. While it is possible that some of our key personnel may remain associated with the combined company in senior management or advisory positions, they are not expected to devote their full-time efforts to its operations. Any continued involvement of our key personnel would be subject to the negotiation of separate employment or consulting agreements with the combined company. Such negotiations, if pursued, may occur in parallel with the completion of the business combination and could result in compensation in the form of cash and/or equity awards.
Although the personal or financial interests of our key personnel may influence their motivation in identifying and selecting a target business, we have determined that their ability to remain with the company post-combination was not a determinative factor in proceeding with the proposed business combination with Tembo.
Additionally, while Tembo’s incumbent management is expected to lead the combined company following the business combination, we cannot assure you that they will be successful in operating the business as a public company. Furthermore, the combined company may seek to recruit additional executives to supplement Tembo’s existing leadership team, but there can be no assurance that we will be able to attract or retain such individuals or that any additional managers recruited will possess the skills and expertise needed to enhance the combined company’s performance.
Shareholders May Not Have the Ability to Approve an Initial Business Combination
In connection with any proposed business combination, we will either (i) seek shareholder approval of our initial business combination at a general meeting called for such purpose at which shareholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in our trust account (net of taxes payable), or (ii) provide our shareholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in our trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. If we determine to engage in a tender offer, such tender offer will be structured so that each shareholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares. In that case, we will file tender offer documents with the SEC, which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. Whether we seek shareholder approval or engage in a tender offer, we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation and, if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination.
We chose our net tangible asset threshold of $5,000,001 under our amended and restated memorandum and articles of association to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act of 1933, as amended. However, if we seek to consummate an initial business combination and do not believe that we will comply with the $5,000,001 threshold (due to redemptions of shares or otherwise), we may seek shareholder approval to amend our amended and restated memorandum and articles of association to eliminate that threshold as part of the approval of the business combination. We may, in the alternative, agree with a target business on a working capital closing condition or other condition that requires us to have a minimum amount of funds available from our trust account upon consummation of such initial business combination in an amount that causes us to exceed $5,000,001 in net tangible assets either immediately prior to or upon consummation of the business combination. Any such minimum cash condition may force us to seek third party financing, which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the combination period, if at all. Public shareholders who have not redeemed their shares in connection the first extension meeting, the second extension meeting or the articles amendment meeting may have to wait until the end of the combination period, or November 2, 2025, in order to be able to receive a pro rata share of our trust account. Our sponsor shareholders, officers and directors have agreed (i) to vote any ordinary shares owned by them in favor of any proposed business combination, (ii) not to convert any ordinary shares in connection with a shareholder vote to approve a proposed initial business combination, and (iii) not sell any ordinary shares in any tender in connection with a proposed initial business combination.
None of our officers, directors, sponsor shareholders or their affiliates indicated any intention to purchase Class A ordinary shares from public shareholders in the open market or in private transactions. However, in connection with a meeting to approve a proposed business combination, if a significant number of shareholders vote, or indicate an intention to vote, against the proposed business combination or intend to have their shares redeemed, our officers, directors, sponsor shareholders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote and reduce the number of redemptions. Notwithstanding the foregoing, our officers, directors, sponsor shareholders and their affiliates will not make purchases of Class A ordinary shares if the purchases violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.
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Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination
At any additional general meeting called to approve an extension of the combination period or an initial business combination, public shareholders may request that we redeem their shares, regardless of whether they vote for or against the extension or proposed business combination (as applicable) or do not vote at all, and to receive their pro rata share of the aggregate amount then on deposit in our trust account as of two business days prior to an extension meeting or prior to the consummation of the initial business combination (as applicable), less any taxes then due but not yet paid. Alternatively, in the case of approval of the business combination, we may provide our public shareholders with the opportunity to sell their Class A ordinary shares to us through a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in our trust account, less any taxes then due but not yet paid.
Our sponsor shareholders, the other initial shareholders and our officers and directors will not have redemption rights with respect to any ordinary shares owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them in the initial public offering or in the after market.
We may require public shareholders, whether they are a record holder or hold their shares in “street name,” to either (i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, in each case prior to a date set forth in the proxy materials sent in connection with the proposal to approve an extension or the business combination (as applicable). There is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00, and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated. However, in the event we require shareholders seeking to exercise redemption rights to do so prior to an extension or prior to the consummation of the proposed business combination, and the proposed extension or business combination is not consummated, and, consequently, redemptions are not this may result in an increased cost to shareholders.
Any proxy solicitation materials we furnish to shareholders in connection with a vote for an extension and for any proposed business combination will indicate whether we are requiring shareholders to satisfy such certification and delivery requirements. Accordingly, a shareholder would have from the time the shareholder received our proxy statement up until two business days prior to the scheduled vote on the proposal to approve an extension or business combination to deliver his, her or its shares if he, she or it wishes to seek to exercise his redemption rights. This time period varies depending on the specific facts of each transaction. However, as the delivery process can be accomplished by the shareholder, whether or not he, she or it is a record holder or his, her or its shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his, her or its shares through the DWAC System, we believe this time period is sufficient for an average investor. However, we cannot assure you of this fact.
Any request to redeem public shares once made, may be withdrawn at any time up to the vote on the proposed business combination or the expiration of the tender offer. Furthermore, if a holder of Class A ordinary shares delivered his certificate in connection with an election of their redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, he or she may simply request that the transfer agent return the certificate (physically or electronically).
If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different target until the end of the combination period, or November 2, 2025, unless a further extension to the combination period is approved by our shareholders in accordance with our amended and restated memorandum and articles of association.
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Redemption of Public Shares and Liquidation if No Initial Business Combination
We will have only until the end of the combination period to complete our initial business combination. If we are unable to complete our initial business combination by the end of the combination period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in our trust account, including interest (less up to $100,000 of interest to pay dissolution expenses (which interest shall be net of taxes payable) divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination by the end of the combination period. Our original sponsor and other initial shareholders have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from our trust account with respect to their founders shares if we fail to complete our initial business combination by the end of the combination period. However, if our original sponsor and other initial shareholders acquire public shares, they will be entitled to liquidating distributions from our trust account with respect to such public shares if we fail to complete our initial business combination by the end of the combination period.
Our original sponsor and other initial shareholders have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association (A) that would affect our public shareholders’ ability to convert or sell their shares to us in connection with a business combination as described herein or to modify the substance or timing of the redemption rights provided to shareholders as described in this Annual Report or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless we provide our public shareholders with the opportunity to redeem their public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in our trust account, including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 either immediately prior to or upon completion of our initial business combination (so that we do not then become subject to the SEC’s “penny stock” rules).
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from the $10,000 of proceeds held outside our trust account as of April 15, 2025, plus proceeds from a loan from the we are currently in the process of negotiating, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in our trust account not required to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds from our initial public offering and the sale of the private warrants, other than the proceeds deposited in our trust account, and without taking into account interest, if any, earned on our trust account, the per-share redemption amount received by shareholders upon our dissolution would be approximately $11.12. The proceeds deposited in our trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders. We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $11.12. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we seek to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in our trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against our trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in our trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in our trust account, our management performs an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against our trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Our original sponsor had agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in our trust account to below (i) $11.12 per public share or (ii) such lesser amount per public share held in our trust account as of the date of the liquidation of our trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes.
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In addition, pursuant to the sponsor purchase agreement, other than certain expenses allocated to the original sponsor, the successor sponsor agreed that it will be liable to us for all liabilities incurred by us from February 23, 2024.
These liabilities will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to our trust account and except as to any claims under our indemnity of the underwriters as part of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective target businesses to acquire, the only third parties we currently engage are vendors such as lawyers, investment bankers, computer or information and technical services providers or prospective target businesses. In the event that an executed waiver is deemed to be unenforceable against a third party, then our original sponsor and our successor sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether our original sponsor or our successor sponsor has sufficient funds to satisfy its indemnity obligations and believe that our original sponsor’s and our successor sponsor’s only assets are securities of our company and, therefore, our original sponsor and our successor sponsor may not be able to satisfy those obligations. We have not asked our original sponsor or our successor sponsor to reserve for such obligations. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in our trust account are reduced below (i) $11.12 per public share or (ii) such lesser amount per public share held in our trust account as of the date of the liquidation of our trust account, due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our successor sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our successor sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our successor sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $11.12 per share
We have sought and will seek to reduce the possibility that our original sponsor or our successor sponsor will have to indemnify our trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in our trust account. Our original sponsor will also not be liable as to any claims under our indemnity of the underwriters as part of our initial public offering against certain liabilities, including liabilities under the Securities Act.
In the event that we liquidate, and it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could be liable for claims made by creditors.
If we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in our trust account could be subject to applicable insolvency laws and may be included in our insolvency estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any insolvency claims deplete our trust account, we cannot assure you we will be able to return $11.12 per share to our public shareholders. Additionally, if we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable preference. As a result, a bankruptcy court could seek to recover some or all amounts received by our shareholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public shareholders from our trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public shareholders will be entitled to receive funds from our trust account only upon the earliest to occur of: (i) the redemption of any public shares properly submitted in connection with the shareholder vote for the extension or any other shareholder vote to amend our amended and restated memorandum and articles of association (a) that would affect our public shareholders’ ability to convert or sell their shares to us in connection with a business combination as described herein or to modify the substance or timing of the redemption rights provided to shareholders as described in this Annual Report, or (b) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity; (ii) the completion of our initial business combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein; and (iii) the redemption of our public shares if we are unable to complete our initial business combination by the end of the combination period (November 2, 2025, unless a further extension is approved by our shareholders in accordance with our amended and restated memorandum and articles of association), subject to applicable law and as further described herein. In no other circumstances will a shareholder have any right or interest of any kind to or in our trust account. In connection with an extension meeting or in the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the extension or our initial business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of our trust account. Such shareholder must have also exercised its redemption rights described above.
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Amended and Restated Memorandum and Articles of Association
| ● | Our amended and restated memorandum and articles of association contain certain requirements and restrictions that apply to us until the completion of our initial business combination. Our amended and restated memorandum and articles of association contain a provision which provides that, if we seek to amend our amended and restated memorandum and articles of association (i) that would affect our public shareholders’ ability to convert or sell their shares to us in connection with a business combination as described herein or to modify the substance or timing of our obligation to redeem our public shares if we do not complete our initial business combination by the end of the combination period (November 2, 2025, unless a further extension is approved by our shareholders in accordance with our amended and restated memorandum and articles of association) or ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, we will provide public shareholders with the opportunity to redeem their public shares in connection with any such amendment. Specifically, our amended and restated memorandum and articles of association provide, among other things, that: prior to the completion of our initial business combination, we shall either (a) seek shareholder approval of our initial business combination at a general meeting called for such purpose at which public shareholders may elect to redeem their public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed business combination, or (b) provide our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination by means of a tender offer (and thereby avoid the need for a shareholder vote), in each in cash, for an amount payable in cash equal to the aggregate amount then on deposit in our trust account as of two business days prior to the completion of our initial business combination, including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, subject to the limitations described herein; | |
| ● | we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior to or upon completion of our initial business combination and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor of the business combination; | |
| ● | if our initial business combination is not consummated by the end of the combination period, then our existence will terminate, and we will distribute all amounts in our trust account; and | |
| ● | prior to our initial business combination, (except in connection with the conversion of Class B ordinary shares into Class A ordinary shares where the holders of such shares have waived any right to receive funds from our trust fund) we may not issue additional shares that would entitle the holders thereof to (i) receive funds from our trust account or (ii) vote as a class with our public shares (provided that this 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 our trust account) (a) on any initial business combination or (b) to approve an amendment to our amended and restated memorandum and articles of association to (x) extend the time we have to consummate a business combination beyond the end of the combination period or (y) amend the foregoing provisions. |
These provisions cannot be amended without the approval of holders of at least two-thirds of our Class A ordinary shares present and voting at a general meeting. In the event we seek shareholder approval in connection with our initial business combination, our amended and restated memorandum and articles of association provide that we may consummate our initial business combination only if approved by an ordinary resolution under Cayman Islands law, being the affirmative vote of a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting in favor of the business combination.
Additionally, our amended and restated memorandum and articles of association provide that, prior to our initial business combination, holders of our Class B ordinary shares are the only shareholders that will have the right to vote on the appointment of directors and the right to remove a member of the board of directors for any reason. These provisions of our amended and restated memorandum and articles of association may only be amended by a special resolution passed by at least 90% of our ordinary shares voting in a general meeting. With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial business combination, except as required by law, holders of our founders shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote.
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Comparison of redemption or purchase prices in connection with the extension or our initial business combination with a situation in which we fail to complete our initial business combination.
The following table compares the redemptions and other permitted purchases of public shares that may take place in connection with an extension or our initial business combination with redemptions that would occur if we are unable to complete our initial business combination by the end of the combination period.
| Redemptions
in Connection with an Extension or Our Initial Business Combination |
Other
Permitted Purchases of Public Shares by Our Affiliates |
Redemptions
If We Fail to Complete an Initial Business Combination | ||||
| Calculation
of redemption price |
Redemptions at the time of a further extension or our initial business combination may be made in connection with a shareholder vote (or, in the case of the initial business combination, a tender offer). The redemption price will be the same whether we conduct redemptions in connection with a shareholder vote or pursuant to a tender offer. In either case, our public shareholders may redeem their public shares for cash equal to the aggregate amount then on deposit in our trust account as of two business days prior to the extension meeting or consummation of the initial business combination (which is currently anticipated to be approximately $11.12 per share), including interest (which interest shall be net of taxes payable) divided by the number of then issued and outstanding public shares, subject to the limitation that no redemptions will take place if all of the redemptions would cause our net tangible assets to be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination. | If we seek shareholder approval of our initial business combination, our sponsor shareholders, directors, officers, or their respective affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following completion of our initial business combination. Such purchases will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. None of the funds in our trust account will be used to purchase shares in such transactions. | If we are unable to complete our initial business combination by the end of the combination period, we will redeem all public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in our trust account (which is currently anticipated to be approximately $11.12 per share), including interest (less up to $100,000 of interest to pay dissolution expenses, which interest shall be net of taxes payable) divided by the number of then issued and outstanding public shares. | |||
| Impact to remaining shareholders | The redemptions in connection with an extension or our initial business combination will reduce the book value per share for our remaining shareholders, who will bear the burden of interest withdrawn in order to pay taxes (to the extent not paid from amounts accrued as interest on the funds held in our trust account). | If the permitted purchases described above are made, there will be no impact to our remaining shareholders because the purchase price would not be paid by us. | The redemption of our public shares if we fail to complete our initial business combination will reduce the book value per share for the shares held by our sponsor shareholders and other initial shareholders, who will be our only remaining shareholder after such redemptions. |
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Competition
We face intense competition from other entities having a business objective similar to ours and whose sponsor shareholders and/or affiliates have experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do, and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses that we could potentially acquire with the net proceeds from our initial public offering and the sale of the private warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable is limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek shareholder approval of our initial business combination, and we are obligated to pay cash for our Class A ordinary shares, it will potentially reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. We may furthermore face competition from other newly-formed entities that may target a business combination transaction with similar focus areas as ours, which may intensify the competition that we face in achieving our objective.
Conflicts of Interest
Certain of our executive officers and directors have fiduciary and contractual duties to other companies, which may create potential conflicts of interest in connection with the execution of our business combination with Tembo e-LV B.V. and related post-closing matters. While these entities are no longer competing with us for acquisition opportunities, as we have already entered into a definitive Business Combination Agreement with Tembo, such duties could influence their allocation of time and focus during the process of completing the transaction or in the combined company thereafter.
Additionally, some of our officers and directors currently have, and may in the future acquire, additional fiduciary or contractual obligations to other entities, which may include commitments to present future business opportunities to those entities. We believe, however, that these fiduciary or contractual obligations will not materially affect our ability to consummate the business combination with Tembo or fulfill our obligations under the Business Combination Agreement.
Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter that may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
Indemnity
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in our trust account to below (i) $11.12 per public share or (ii) such lesser amount per public share held in our trust account as of the date of the liquidation of our trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to our trust account and except as to any claims under our indemnity of the underwriters as part of our initial public offering against certain liabilities, including liabilities under the Securities Act. In addition, pursuant to the sponsor purchase agreement, other than certain expenses allocated to the original sponsor and the successor sponsor, the successor sponsor agreed that it will be liable to us for all liabilities incurred by us from February 23, 2024.
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In the event that an executed waiver is deemed to be unenforceable against a third party, our original sponsor and our successor sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether our original sponsor or our successor sponsor has sufficient funds to satisfy its indemnity obligations and believe that our original sponsor’s and our successor sponsor’s only assets are securities of our company and, therefore, our original sponsor and our successor sponsor may not be able to satisfy those obligations. We have not asked our original sponsor or our successor sponsor to reserve for such obligations.
Employees
As of the date of this Annual Report, we have one officer, who acts as the Chief Executive Officer and a Principal Accounting Officer. Members of our management team are not obligated to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that our officers or any other members of our management team devote in any time period varies based on the status of our pursuit of a target business for our initial business combination and the current stage of the business combination process.
Periodic Reporting and Financial Information
We registered our units, Class A ordinary shares, and warrants under the Exchange Act and are subject to reporting obligations, including the requirement to file annual, quarterly, and current reports with the SEC. In accordance with the Exchange Act, each of our annual reports will include financial statements audited and reported on by our independent registered public accounting firm.
In connection with the proposed business combination with Tembo e-LV B.V., we will provide shareholders with audited financial statements of Tembo as part of the registration statement on Form F-4 and proxy materials for the shareholder vote. These financial statements will be prepared in accordance with IFRS and audited in accordance with PCAOB standards. The enhanced disclosure requirements for de-SPAC transactions under the 2024 SPAC Rules may increase the time and cost associated with preparing and delivering such materials.
We are required to evaluate our internal control procedures for the fiscal year ended December 31, 2024, as required by the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”); however, as we are not deemed to be a large accelerated filer or an accelerated filer, and continue to qualify as an emerging growth company, we are not required to obtain an auditor attestation regarding the effectiveness of our internal control over financial reporting. Tembo may not currently be in full compliance with the internal control requirements of the Sarbanes-Oxley Act, and achieving such compliance may increase post-closing costs and time commitments.
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups (JOBS) Act of 2012 (“JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including exemptions from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced executive compensation disclosures, and the requirement to hold a non-binding advisory vote on executive compensation. If investors find our securities less attractive as a result of these exemptions, there may be reduced liquidity in the market for our securities and increased volatility.
Additionally, we take advantage of the extended transition period for complying with new or revised accounting standards available to emerging growth companies under the JOBS Act.
We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing date of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer; or (2) the date on which we issue more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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Additionally, we are a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act and may take advantage of reduced disclosure obligations, including providing only two years of audited financial statements and limiting comparative annual period disclosures. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues equal or exceed $100 million and the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter.
Item 1A Risk Factors
An investment in our securities involves a high degree of risk. We have provided the following summary of the material risks involved:
Risks Relating to our Search for, and Consummation of or Inability to Consummate, a Business Combination
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights in connection the business combination, we might not be able to meet that closing condition and, as a result, would not be able to proceed with the business combination. Over the past six quarters or so, the rate of redemption of shares by public shareholders of special purpose acquisition companies, or SPACs, such as ours at the time of the extension of the expiration date of the SPAC or the initial business combination of the SPAC has increased significantly, thereby increasing the likelihood that we, too, will face a high level of redemptions that will jeopardize our ability to successfully consummate a business combination.
In particular, at the first extension meeting a total of 10,185,471 Class A ordinary shares were redeemed; at the second extension meeting a total of 347,980 Class A ordinary shares were redeemed and at the articles amendment meeting a total of 204,178 Class A ordinary shares were redeemed; at the third extension meeting a total of 1,148,799 Class A ordinary shares were redeemed. This resulted in shareholders holding 11,886,428 publicly-held Class A ordinary shares exercising their right to redeem and as a result, approximately $126,130,989 was distributed from our trust account, with 763,572 publicly-held Class A ordinary shares remaining. As of April 15, 2025, there remained approximately $9,080,000 in our trust account.
Furthermore, under our current amended and restated memorandum and articles of association (unless we seek to amend them in connection with a vote on our initial business combination), in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination (so that we do not then become subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination or less than such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption of our public shares and the related business combination, and we instead may search for an alternate business combination.
If our initial business combination is unsuccessful, you will not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate, or you are able to sell your shares in the open market.
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The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise their redemption rights, and we will therefore need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. As noted above, the high rates of redemption of shares of public shareholders of SPACs in recent times increases the likelihood that we, too, will have less cash from our trust at the time of our initial business combination, thereby forcing us to rely upon outside financing to supplement our cash reserves. In particular, at the first extension meeting a total of 10,185,471 Class A ordinary shares were redeemed; at the second extension meeting a total of 347,980 Class A ordinary shares were redeemed and at the articles amendment meeting a total of 204,178 Class A ordinary shares were redeemed; at the third extension meeting a total of 1,148,799 Class A ordinary shares were redeemed. This resulted in shareholders holding 11,886,428 publicly-held Class A ordinary shares exercising their right to redeem and as a result, approximately $126,130,989 was distributed from our trust account, with 763,572 publicly-held Class A ordinary shares remaining. As of April 15, 2025, there remained approximately $9,080,000 in our trust account.
Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
We have been delisted from the Nasdaq Stock Market and may face challenges in relisting or qualifying the combined company for listing on a major U.S. exchange.
Following our delisting from Nasdaq, we may face heightened scrutiny or more stringent requirements to relist our securities or the securities of a combined company on a national securities exchange such as Nasdaq or the NYSE. The inability to relist could adversely impact the attractiveness of a potential business combination partner and may reduce investor interest or market valuation.
We may be unable to obtain- on reasonable terms or at all- additional financing to continue operations, complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
If the available net proceeds available to us for our initial business combination (due to excessive redemptions in connection with our extension meeting or a shareholder meeting to approve an initial business combination, or the expenditure of excessive funds in continuing operations or investigating potential target companies) are insufficient, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, or before to continue operations, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The market for financings of initial business combinations of SPACs has been very difficult over the past several years, with financings often available only on terms that are onerous to the combined company following the business combination, or not at all. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete our initial business combination, our public shareholders may only receive approximately $11.12 per share on the liquidation of our trust account, and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $11.12 per share on the redemption of their shares. See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $11.12 per share” and other risk factors below.
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 requested loans from several third parties. While, if obtained, we anticipate that these loans will suffice for the period leading up to our initial business combination, there can be no assurance that the loans will be obtained and, if they are, that the costs of identifying a target business, undertaking in-depth due diligence and negotiating and consummating an initial business combination may be greater than what we currently estimate would be needed to do so. Consequently, we may have insufficient funds available to operate our business prior to our initial business combination.
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We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although we have not committed as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding debt to complete our initial business combination, we may choose to do so. We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
| ● | 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 the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that 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, 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 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. |
The requirement that we complete our initial business combination within the combination period may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach the end of the combination period, which could undermine our ability to complete our initial business combination on terms that would provide value for our shareholders.
Any potential target business with which we enter into negotiations concerning a business combination is aware that we must complete our initial business combination before the end of the combination period, or by November 2, 2025. Consequently, any such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. As of the date of this Annual Report, we have just over six months remaining to consummate a business combination. As a result, this risk has increased as we have gotten closer to the end of the combination period. We may also have more limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation and/or if we had more time.
Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by unfavorable macro-economic trends, ongoing military conflicts and other geopolitical uncertainties.
Certain global macro-economic trends that developed in the aftermath of the COVID-19 pandemic have been adversely impacting the global economic environment. Supply chain delays, initially caused by closures during the pandemic, and rising shipping costs, which have been exacerbated by the ongoing Russian invasion of the Ukraine, have contributed towards inflationary pressures on many goods and commodities globally. The infusion of money into circulation as part of a “loose” monetary policy during the pandemic to encourage consumer spending, along with historically low interest rates for an extended period of time, which were designed to ease economic conditions, further triggered upwards pressure on prices of goods and services. The high rates of inflation globally have caused governments and central banks to act to curb inflation, including by raising interest rates, which has been inhibiting economic activity and access to capital markets, and may cause a recession, whether in individual countries or regions, or globally.
In response to Russia’s invasion of Ukraine, the United States, the European Union, and several other countries are imposing far-reaching sanctions and export control restrictions on Russian entities and individuals. This rising conflict and the resulting market volatility could adversely affect global economic, political and market conditions. Additionally, ongoing conflicts between Israel and Hamas have continued to cause disruptions in the U.S. and global economy. These and other global and regional conditions may adversely impact our business and our ability to consummate our initial business combination.
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These deteriorating economic conditions, ongoing military conflicts and other geopolitical uncertainties may adversely impact our access to financing for the combined company upon the consummation of a potential business combination, thereby frustrating our ability to effect that combination.
If the disruptions posed by unfavorable macro-economic conditions continue for a further extensive period of time, the operations of the target company with which we would combine may be materially adversely affected.
Because there are many SPACs evaluating targets, attractive targets have become scarcer and there is more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to consummate an initial business combination.
In recent years, the number of SPACs that were formed and conducted their initial public offering increased materially. Many potential targets for SPACs have already entered into an initial business combination, and there are still many SPACs seeking targets for their initial business combination. As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
In addition, because there are more SPACs seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals or business models has increased, which could cause targets companies to demand improved financial terms. We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do, and our financial resources will be relatively limited when contrasted with those of many of these competitors.
Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public shareholders may receive only $11.12 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
We must complete our initial business combination within the combination period, or November 2, 2025. We may not be able to complete an initial business combination by the conclusion of such time period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
Our ability to complete our initial business combination within the combination period could be adversely affected by the sponsor alliance, insofar as it has resulted in significant changes to our management team and the replacement of all members of the Board. See “Item 1. Business. - Recent Developments - Sponsor Alliance.”
If we are unable to complete our initial business combination within the combination period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the remaining outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our Board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, our public shareholders may receive only $11.12 per share, or less than $11.12 per share, on the redemption of their shares, and our warrants will expire worthless. See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $11.12 per share” and other risk factors herein.
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The notes to the financial statements included in this Annual Report contain an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
We cannot assure you that our plans to consummate an initial business combination will be successful, which is in part dependent on our ability to obtain sufficient financing that continues after that business combination. The market for financings of companies emerging from a business combination with a SPAC has become very tight in the last two years. In the absence of such a business combination transaction, our company will cease to exist after the combination period has passed, which would occur less than 12 months following the date of this Annual Report. The short-term expiration date for our company as well as the question as to whether we will have the required financial resources to complete our initial business combination raise substantial doubt about our ability to continue as a going concern. The financial statements contained in the F-1 pages of this Annual Report do not include any adjustments that might result from our inability to consummate a business combination or our inability to continue as a going concern.
Our public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination.
We will either (i) seek shareholder approval of our initial business combination at a general meeting called for such purpose at which public shareholders may elect to redeem their public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed business combination, or (ii) provide our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination by means of a tender offer (and thereby avoid the need for a shareholder vote), in each in cash, for an amount payable in cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the completion of our initial business combination, including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, subject to the limitations described herein. Accordingly, it is possible that we will consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination we consummate. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. For instance, Nasdaq rules currently allow us to engage in a tender offer in lieu of a shareholder meeting but would still require us to obtain shareholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek shareholder approval of such business combination instead of conducting a tender offer.
Our sponsor shareholders will be able to approve the business combination regardless of how our public shareholders vote.
Our amended and restated memorandum and articles of association provide that, if we seek shareholder approval, we will complete our business combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting. Our original sponsor and the other initial shareholders (and their permitted transferees, including our successor sponsor) will agree, pursuant to the terms of a letter agreement entered into with us, to vote their founder shares and any public shares held by them in favor of our business combination. As a result, given that our current sponsor, successor sponsor, and original sponsor and the other initial shareholders own approximately 80.55% of our outstanding ordinary shares, we don’t need any additional public shares voted in favor of a business combination in order to have our business combination approved.
Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of the business combination.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our Board may elect to complete a business combination without seeking shareholder approval, public shareholders may not have the right or opportunity to vote on the business combination, unless we seek such shareholder approval. Accordingly, if we do not seek shareholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public shareholders in which we describe our initial business combination.
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If we seek shareholder approval of our initial business combination, our original sponsor, successor sponsor and other initial shareholders, as well as our directors, officers, advisors or any of their affiliates may elect to purchase shares or warrants from public shareholders, which may influence a vote on a proposed business combination and reduce the public “float” of our securities.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our original sponsor, successor sponsor and other initial shareholders, as well as our directors, officers, advisors or any of their affiliates may purchase public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation or duty to do so. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our original sponsor, successor sponsor and other initial shareholders, as well as our directors, officers, advisors or any of their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination, such selling shareholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial business combination. The price per share paid in any such transaction may be different than the amount per share a public shareholder would receive if it elected to redeem its shares in connection with our initial business combination. The purpose of such purchases could be to vote such shares in favor of our initial business combination and thereby increase the likelihood of obtaining shareholder approval of our initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. This may result in the completion of our initial business combination when it may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A ordinary shares or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of our initial public offering and the sale of the private warrants are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 upon the completion of our initial public offering and the sale of the private warrants and have filed a Current Report on Form 8-K that provided an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419 under the Securities Act. Accordingly, investors are not afforded the benefits or protections of that and other rules. Among other things, this means our units are immediately tradable and we have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial public offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “excess shares,” without our prior consent. However, we would not restrict our shareholders’ ability to vote all of their shares (including excess shares) for or against our initial business combination. Your inability to redeem the excess shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell excess shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the excess shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
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Because the funds being held outside of the trust account are insufficient to allow us to operate for the remainder of the combination period , that could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, as we will depend on additional loans third parties to fund those activities.
The funds available to us outside of the trust account are in the view of management insufficient to allow us to operate for the remainder of the combination period. As of April 15, 2025, approximately $10,000 is available to us outside of the trust account to fund our working capital requirements. Consequently, we may have insufficient funds available to operate our business prior to our initial business combination. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”
We are incurring significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital is discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report.
If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In that case, our public shareholders may receive only approximately $11.12 per share on the liquidation of our trust account, and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $11.12 per share on the redemption of their shares. See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $11.12 per share” and other risk factors herein.
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $11.12 per share.
Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we seek to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waive any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $11.12 per share initially held in the trust account, due to claims of such creditors.
Our original sponsor agreed that it will be liable to us if and to the extent any claims by a vendor (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $11.12 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters as part of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our original sponsor will not be responsible to the extent of any liability for such third-party claims.
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In addition, pursuant to the sponsor purchase agreement, other than certain expenses allocated to the original sponsor, the successor sponsor agreed that it will be liable to us for all liabilities incurred by us from February 23, 2024.
We have not independently verified whether our original sponsor or successor sponsor has sufficient funds to satisfy its indemnity obligations and believe that our original sponsor’s only assets are securities of our company. Accordingly, our original sponsor and successor sponsor may not have sufficient funds available to satisfy those obligations. We have not asked our original sponsor or successor sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $11.12 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
If our original sponsor fulfills its foregoing indemnity obligations or our successor sponsor has incurred liabilities on behalf of us but then seeks indemnity for those obligations from us or from the surviving entity in a business combination transaction, that could reduce the consideration payable to you in any such business combination transaction.
Our directors may decide not to enforce the indemnification obligations of our original sponsor, or to enforce provisions of the sponsor purchase agreement allocating our liabilities to our successor sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.
In the event that the proceeds in the trust account are reduced below the lesser of (i) $11.12 per public share or (ii) such lesser amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our original sponsor or successor sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our original sponsor or successor sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our original sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance, in particularly where our original sponsor or successor has no assets. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $11.12 per share.
If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy or insolvency laws and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy or insolvency claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our Board may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our Board and us to claims of punitive damages.
If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or insolvency court could seek to recover all amounts received by our shareholders. In addition, our Board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors.
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If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act of 1940, as amended, (or the Investment Company Act), our activities may be restricted, including:
| ● | restrictions on the nature of our investments; and | |
| ● | restrictions on the issuance of securities; | |
| ● | each of which may make it difficult for us to complete our initial business combination. | |
| ● | In addition, we may have imposed upon us burdensome requirements, including: | |
| ● | registration as an investment company; | |
| ● | adoption of a specific form of corporate structure; and | |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to. |
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
We do not believe that our principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account were only to be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. An investment in our securities is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account was intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any Class A ordinary shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (a) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our Class A ordinary shares if we do not complete our initial business combination by November 2, 2025, or (b) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent an initial business combination by November 2, 2025, our return of the funds held in the trust account to the public shareholders as part of our redemption of the Class A ordinary shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination, our public shareholders may receive approximately $11.12 per share, or less in certain circumstances, on the liquidation of our trust account, and our warrants will expire worthless.
Changes in SEC rules affecting SPACs may adversely affect our ability to negotiate and complete our initial business combination.
Our consummation of a business combination may be contingent upon our ability to comply with certain laws, regulations, interpretations and applications, and any post-business combination company may be subject to additional laws, regulations, interpretations and applications. Compliance with the foregoing may be difficult, time consuming and costly. Laws and regulations and their interpretation and application may also change from time to time, and those changes could have a material adverse effect on our business, including our ability to negotiate and complete an initial business combination.
Additionally, on January 24, 2024, the SEC (as defined below) adopted the 2024 SPAC Rules, which became effective on July 1, 2024, and may affect our ability to effect a business combination transactions. The 2024 SPAC Rules, among other things, impose additional disclosure requirements in business combination transactions involving SPACs and private operating companies; amend the financial statement requirements applicable to business combination transactions involving such companies; update and expand guidance regarding the general use of projections in SEC filings, including requiring disclosure of all material bases of the projections and all material assumptions underlying the projections; and increase the potential liability of certain participants in proposed business combination transactions. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules and related guidance may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
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Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations.
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers, who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of up to $18,292 and to imprisonment for five years in the Cayman Islands.
Because we are not limited to any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’ operations.
While we are focused upon a combination with businesses that participate in the global energy transition ecosystem that are facilitating the way that energy is produced, stored, transmitted, distributed and consumed, we nevertheless may pursue acquisition opportunities in any one of numerous industries or geographic locations. We are not, however, under our amended and restated memorandum and articles of association, permitted to effectuate our business combination with another blank check company or similar company with nominal operations. To the extent we complete our business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or an early-stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination contained an actionable material misstatement or material omission.
Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval for business or other legal reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $11.12 per share on the liquidation of our trust account and our warrants will expire worthless.
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We are not required to obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm, or from another independent entity that commonly renders valuation opinions, that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our Board, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
We may only be able to complete one business combination with the proceeds from our initial public offering and the sale of the private warrants, along with funding from third party sources (which may not be available), which will cause us to be solely dependent on a single business which may have a limited number of products or services, or product candidates. This lack of diversification may negatively impact our operations and profitability.
The net proceeds from our initial public offering and the sale of the private warrants, which was initially $130,142,000, has been reduced significantly due to redemptions by our public shareholders in connection with the first extension meeting, the second extension meeting and the articles amendment meeting and may be further reduced at our meeting to approve our initial business combination. In particular, at the first extension meeting a total of 10,185,471 Class A ordinary shares were redeemed; at the second extension meeting a total of 347,980 Class A ordinary shares were redeemed and at the articles amendment meeting a total of 204,178 Class A ordinary shares were redeemed; at the third extension meeting a total of 1,148,799 Class A ordinary shares were redeemed. This resulted in shareholders holding 11,886,428 publicly-held Class A ordinary shares exercising their right to redeem and as a result, approximately $126,130,989 was distributed from our trust account, with 763,572 publicly-held Class A ordinary shares remaining. As of April 15, 2025, there remained approximately $9,080,000 in our trust account. Given the significant percentage of our public shareholders that have elected to redeem their shares in connection with our first extension meeting, our second extension meeting and our article amendment meeting, and may elect to redeem at a meeting to approve a business combination, thereby reducing our cash resources, we likely will need to secure third party financing in order to successfully effect such a business combination and there can be no assurance that it will be available to us on terms acceptable to us or at all.
We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
| ● | solely dependent upon the performance of a single business, property or asset; or | |
| ● | dependent upon the development or market acceptance of a single or limited number of products, processes, services or potential products. |
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This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We may seek acquisition opportunities with an early-stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
Many of the targets that fall within global energy transition ecosystem are early-stage companies. To the extent we complete our initial business combination with an early-stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
In order to effectuate an initial business combination, blank check companies have, in the past, amended various provisions of their charters and modified governing instruments. We may seek at a meeting to approve our initial business combination, to amend our amended and restated memorandum and articles of association in a manner that will make it easier for us to complete our initial business combination, which some of our shareholders may not support.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. For example, blank check companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination. Amending our amended and restated memorandum and articles of association requires at least a special resolution of our shareholders as a matter of Cayman Islands law. A resolution is deemed to be a special resolution as a matter of Cayman Islands law where it has been approved by either (i) at least two-thirds (or any higher threshold specified in a company’s articles of association) of a company’s shareholders at a general meeting for which notice specifying the intention to propose the resolution as a special resolution has been given or (ii) if so authorized by a company’s articles of association, by a unanimous written resolution of all of the company’s shareholders. Our amended and restated memorandum and articles of association provide that special resolutions must be approved either by at least two-thirds of our shareholders who attend and vote at a shareholders meeting (i.e., the lowest threshold permissible under Cayman Islands law) (other than amendments relating to the appointment or removal of directors prior to our initial business combination, which require the approval of the holders of at least 90% of our ordinary shares as, being entitled to do so, vote in a general meeting), or by a unanimous written resolution of all of our shareholders.
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The provisions of our amended and restated memorandum and articles of association that relate to our pre-business combination activity may be amended with the approval of holders of at least two-thirds of our ordinary shares that, being entitled to do so, attend and vote at a general meeting, and corresponding provisions of the agreement governing the release of funds from our trust account may be amended with the approval of holders of at least 65% of our then outstanding ordinary shares who attend and vote at a general meeting, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association and the trust agreement to facilitate the completion of an initial business combination that some of our shareholders may not support.
Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business combination activity, without approval by holders of a certain percentage of the company’s shares. In those companies, amendment of these provisions typically requires approval by holders holding between 90% and 100% of the company’s public shares. Our amended and restated memorandum and articles of association provide that any of their provisions, including those related to pre-business combination activity (including the requirement to deposit proceeds of our initial public offering and the private placement of units into the trust account and not release such amounts except in specified circumstances), may be amended if approved by holders of at least two-thirds of our ordinary shares who, being entitled to do so, attend and vote in a general meeting (amendments relating to the appointment or removal of directors prior to our initial business combination instead require the approval of at least 90% of our shares voting in a general meeting). Corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our then outstanding ordinary shares. Our original sponsor, successor sponsor and other initial shareholders, who collectively beneficially own 80.55% of our shares, may participate in any vote to amend our amended and restated memorandum and articles of association (other than any amendment materially adversely impacting our public shares) and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete our initial business combination with which you do not agree. However, our amended and restated memorandum and articles of association prohibit any amendment of their provisions (i) that would affect our public shareholders’ ability to convert or sell their shares to us in connection with a business combination as described herein or to modify the substance or timing of the redemption rights provided to shareholders as described in this Annual Report if we do not complete our initial business combination within the combination period or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless we provide public shareholders with the opportunity to redeem their public shares. Furthermore, our original sponsor and other initial shareholders have agreed, pursuant to a written agreement with us, that they will not propose such an amendment unless we provide our public shareholders with the opportunity to redeem their public shares. In certain circumstances, our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public warrants.
Our warrants have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision but requires the approval by the holders of at least a majority of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
Certain agreements related to our initial public offering may be amended without shareholder approval.
Certain agreements, including the underwriting agreement relating to our initial public offering, the investment management trust agreement between us and Continental Stock Transfer & Trust Company (other than provisions contained therein governing the release of funds from our trust account), the letter agreement among us and our original sponsor, officers and directors, the registration rights agreement between us and our original sponsor, and the administrative and support services agreement between us and our original sponsor, may be amended without shareholder approval. For instance, the successor sponsor was joined to the registration rights agreement and the administrative and support services agreement was terminated, both in connection with the sponsor alliance. These agreements contain various provisions that our public shareholders might deem to be material. For example, the underwriting agreement related to our initial public offering contained a covenant that the target company that we acquire must have a fair market value equal to at least 80% of the balance in the trust account at the time of signing the definitive agreement for the transaction with such target business (excluding taxes payable on the income earned on the trust account) so long as we maintain a listing for our securities on the Nasdaq. While we do not expect our Board to approve any further amendment to any of these agreements prior to our initial business combination, it may be possible that our Board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection with the consummation of our initial business combination. Any such amendment may have an adverse effect on the value of an investment in our securities.
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Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
U.S. federal proxy regulations require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or U.S. GAAP, or international financing reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, which could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders do not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot assure you that investors will not find our securities less attractive because we rely on these exemptions, which may cause the trading prices of our securities to be lower than they otherwise would be. There may also be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, 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. We have 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, we, 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 comparison of our 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.
Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter. Because we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls. We are not deemed to be a large accelerated filer or an accelerated filer, and we qualify as an emerging growth company; therefore, we are not required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
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We may be deemed a “foreign person” and therefore may not be able to complete our business combination because such transaction may be subject to regulatory review and approval requirements, including pursuant to foreign investment regulations and review by governmental entities such as the Committee on Foreign Investment in the United States, or may be ultimately prohibited.
Our successor sponsor, ARWM Inc Pte. Ltd, is controlled by non-U.S. persons. We may pursue a business combination target in any business or industry and across any geographical region, including in the United States. Certain transactions in the United States are subject to specific rules or regulations that may limit, prohibit, or create additional requirements with respect to foreign ownership of a U.S. company. In particular, our initial business combination, if effected with a U.S. target company, may be subject to regulatory review and approval requirements by governmental entities, or ultimately prohibited. For example, the Committee on Foreign Investment in the United States (“CFIUS”) has authority to review certain direct or indirect foreign investments in U.S. companies. Among other things, CFIUS is empowered to require certain foreign investors to make mandatory filings, to charge filing fees related to such filings, and to self-initiate national security reviews of foreign direct and indirect investments in U.S. companies if the parties to that investment choose not to file voluntarily. If CFIUS determines that an investment threatens national security, CFIUS has the power to impose restrictions on the investment or recommend that the President of the United States prohibit it or order divestment. Whether CFIUS has jurisdiction to review an acquisition or investment transaction depends on, among other factors, the nature and structure of the transaction, the nationality of the parties, the level of beneficial ownership interest and the nature of any information or governance rights involved.
As such, a business combination with a U.S. business or foreign business with U.S. operations that we may wish to pursue may be subject to CFIUS review. If a particular proposed business combination with a U.S. business falls within CFIUS’s jurisdiction, we may determine that we are required to make a mandatory filing or that we will submit to CFIUS review on a voluntary basis, or to proceed with the transaction without submitting to CFIUS and risk CFIUS intervention, before or after closing the transaction. CFIUS may decide to delay or recommend that the President of the United States block our proposed initial business combination, require conditions with respect to such initial business combination or recommend that the President of the United States order us to divest all or a portion of the U.S. target business of our business combination that we acquired without first obtaining CFIUS approval, which may limit the attractiveness of, or delay or prevent us from pursuing, certain target companies that we believe would otherwise be beneficial to us and our shareholders. In addition, certain types of U.S. businesses may be subject to rules or regulations that limit or impose requirements with respect to foreign ownership.
If CFIUS determines it has jurisdiction, CFIUS may decide to recommend a block or delay our business combination, or require conditions with respect to it, which may delay or prevent us from consummating a potential transaction. It is unclear at this stage whether our potential business combination transaction would fall within CFIUS’s jurisdiction, and if so, whether we would be required to make a mandatory filing or determine to submit a voluntary notice to CFIUS.
The process of government review, whether by CFIUS or otherwise, could be lengthy. Because we have only a limited amount time left to complete our business combination, our failure to obtain any required approvals within the requisite time period may require us to liquidate. If we are unable to consummate our initial business combination within the applicable time period required, including as a result of extended regulatory review, we will, as promptly as reasonably possible, redeem the public shares for a pro rata portion of the funds held in the trust account and as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our Board, liquidate and dissolve, subject in each case to our obligations under Cayman law to provide for claims of creditors and the requirements of other applicable law. In such event, our shareholders will miss the opportunity to benefit from an investment in a target company and the chance of realizing future gains through any price appreciation in the combined company. Additionally, our warrants will become worthless. As a result, the pool of potential targets with which we could complete a business combination may be limited and we may be adversely affected in terms of competing with other SPACs which do not have similar ties to non-U.S. persons.
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Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $11.12 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
The investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments requires substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $11.12 per share on the liquidation of our trust account and our warrants will expire worthless. See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $11.12 per share” and other risk factors.
Our internal computer systems, or those of our third-party contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our operations and business combination plans.
In the ordinary course of our business, we collect, store and transmit confidential information. Despite the implementation of security measures, our internal computer systems and those of our third-party contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. We rely on industry accepted measures and technology to secure confidential and proprietary information maintained on our computer systems. However, these measures and technology may not adequately prevent security breaches. While we do not believe that we have experienced any such system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a loss of clinical trial data for our product candidates that could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Cyberattacks are increasing in their frequency, sophistication, and intensity. Cyberattacks could include the deployment of harmful malware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. Significant disruptions of our information technology systems or security breaches could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information and personal information), and could result in financial, legal, business, and reputational harm to us. To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our operations and business combination plan, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and our business combination plans could be delayed.
Risks Relating to the Post-Business Combination Company
If we effect a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
For example, we would be subject to risks associated with cross-border business combinations, including in connection with conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates. If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
| ● | costs and difficulties inherent in managing cross-border business operations; | |
| ● | rules and regulations regarding currency redemption; | |
| ● | complex corporate withholding taxes on individuals; | |
| ● | exchange listing and/or delisting requirements; | |
| ● | tariffs and trade barriers; | |
| ● | regulations related to customs and import/export matters; | |
| ● | local or regional economic policies and market conditions; | |
| ● | transparency issues in general and, more specifically, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other anti-corruption compliance laws and issues; | |
| ● | unexpected changes in regulatory requirements; | |
| ● | challenges in managing and staffing international operations; | |
| ● | longer payment cycles; | |
| ● | tax issues, such as tax law changes and variations in tax laws as compared to the United States; | |
| ● | currency fluctuations and exchange controls; | |
| ● | rates of inflation; | |
| ● | challenges in collecting accounts receivable; | |
| ● | cultural and language differences; | |
| ● | employment regulations; | |
| ● | underdeveloped or unpredictable legal or regulatory systems; | |
| ● | corruption; | |
| ● | protection of intellectual property; | |
| ● | social unrest, crime, strikes, riots and civil disturbances; | |
| ● | regime changes and political upheaval; | |
| ● | terrorist attacks and wars; | |
| ● | adverse impacts from Russia’s invasion of Ukraine, including increased use of less cost-efficient resources and exacerbation of existing international supply chain back-ups; and | |
| ● | deterioration of political relations with the United States. |
We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
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If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following our initial business combination, any or all of our management could resign from their positions as officers, and the management of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
After our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies, developments and conditions in the country in which we operate.
The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our initial business combination, the ability of that target business to become profitable.
Exchange rate fluctuations and currency policies may diminish a target business’ ability to succeed in the international markets.
In the event we acquire a non-U.S. target, a substantial portion of revenues and income of the target business may be received in a foreign currency, as well as a substantial portion of its expenses paid in a foreign currency, whereas its financial results will likely be recorded in U.S. dollars. As a result, the target business’ financial results could be adversely affected by fluctuations in the value of local currencies relative to the U.S. dollar. The values of local currencies fluctuate relative to the U.S. dollar and is affected by, among other things, changes in political and economic conditions. Any change in the relative value of that currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the U.S. dollar prior to the consummation of our initial business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate a transaction with that business.
Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.
Even though we conduct extensive due diligence on a potential target business with which we may combine, we cannot assure you that this diligence will identify all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any shareholder or warrant holder who chooses to remain a shareholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities. Such shareholders and warrant holders are unlikely to have a remedy for such reduction in value.
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We may have limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, shareholders or warrant holders who choose to remain shareholders or warrant holders following our initial business combination could suffer a reduction in the value of their securities. Such shareholders or warrant holders are unlikely to have a remedy for such reduction in value.
The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure a business combination so that the post-transaction company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the issued and outstanding capital stock, shares and/or other equity interests of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our issued and outstanding ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
Risks Relating to our Management Team
Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the skills efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our initial business combination is dependent upon the skills and efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management, board member or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
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Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with the company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject to their fiduciary duties under Cayman Islands law. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
Past performance by the companies in which our management team and our successor sponsor’s members and affiliates have been involved may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, our management team and successor sponsor’s members and affiliates is presented for informational purposes only. Past performance by our management team and successor sponsor’s members and affiliates is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical record of our management team and successor sponsor’s members and affiliates as indicative of our future performance and you may lose all or part of your invested capital. Additionally, in the course of their respective careers, members of our management team and our successor sponsor’s members and affiliates have been involved in businesses and deals that were unsuccessful. None of our officers, directors or the partners or affiliates of our successor sponsor have had management experience with blank check companies or special purpose acquisition corporations in the past.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business combination, we engage in the business of identifying and combining with one or more businesses. Our officers and directors are, or may in the future become, affiliated with entities such as operating companies or investment vehicles that are engaged in making and managing investments in similar businesses.
Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to other entities prior to its presentation to us, subject to his or her fiduciary duties under Cayman Islands law.
For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Item 10. Directors, Executive Officers and Corporate Governance – Conflicts of Interest,” and “Item 13. Certain Relationships and Related Transactions, and Director Independence.”
Since our original sponsor, successor sponsor, and current sponsor, and the other initial shareholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may acquire), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
Immediately after our initial public offering, our original sponsor and the other initial shareholders held an aggregate of 3,162,500 Class B ordinary shares. On October 24, 2023, our original sponsor converted 3,162,499 of the 3,162,500 founders shares from Class B ordinary shares into Class A ordinary shares, leaving only 1 Class B ordinary share outstanding. Simultaneously with the closing of our initial public offering, our original sponsor purchased warrants to purchase an additional 4,866,667 Class A ordinary shares.
On February 9, 2024, we entered into the sponsor purchase agreement with our original sponsor and successor sponsor pursuant to which, on February 23, 2024, our original sponsor transferred to our successor sponsor the sponsor transferred securities comprising 2,529,999 Class A ordinary shares, 1 Class B ordinary share and 3,893,334 private warrants.
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On April 29, 2024, a subsequent sponsor securities purchase agreement was executed between EVGI, our second sponsor, and ARWM Pte Limited (ARWM”), our current sponsor, pursuant to which, on May 16, 2024, EVGI transferred to ARWM 100% of the securities of the Company owned by EVGI prior to the transaction.
The founders shares will be worthless if we do not complete an initial business combination. The founders shares consist of 3,162,488 Class A ordinary shares and 1 Class B ordinary share.
The personal and financial interests of our sponsor shareholders, as well as our officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the end of the combination period nears, which is the deadline for the completion of our initial business combination.
Since our successor sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
At the closing of our initial business combination, our successor sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf. In addition, our successor sponsor may seek certain indemnities from us or from the surviving entity in our initial business combination. These financial interests of our successor sponsor, officers and directors may influence their motivation in identifying and selecting a target business combination and completing an initial business combination, even if it is not in the best interests of our other shareholders.
Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In the recent period of time, the market for directors and officers liability insurance for SPACs has changed. The premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business combination entity will likely need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination entity and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
Risks Relating to our Securities
Our securities have been delisted from Nasdaq, limiting liquidity and subjecting us to additional trading restrictions. As described above –“We may not remain qualified for continued listing, or qualify for initial listing for the combined company, in each case, on the Nasdaq Stock Market, following the extension meeting or the shareholder meeting at which the approval of our initial business”, we cannot assure you that our securities will be relisted on Nasdaq post initial business combination.
As we are no longer listed on Nasdaq, our securities currently trade on a less liquid over-the-counter market. This may reduce investor interest, limit the ability of existing investors to sell or purchase securities, and adversely affect the market price and liquidity of our shares and warrants.
The National Securities Markets Improvement Act of 1996, a federal statute, prevents or preempts states from regulating the sale of certain securities, known as “covered securities.” Previously, because our units, Class A ordinary shares and warrants were listed on Nasdaq, they qualified as covered securities under this statute.
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However, since our securities are no longer listed on a national securities exchange, they may no longer qualify as covered securities. As a result, we may now be subject to the securities laws and regulations of each state where we offer or sell our securities. Although states are preempted from regulating the sale of covered securities, they may still investigate potential fraud or other violations. If such activities are found, states may prohibit or restrict the sale of our securities within their jurisdiction. While we are not currently aware of any such restrictions being imposed on our company, certain state regulators view blank check companies unfavorably and could take action to limit the sale of our securities.
Our successor sponsor controls the appointment of our Board until completion of our initial business combination and holds a substantial interest in us. As a result, it appoints all of our directors prior to our initial business combination and may exert a substantial influence on actions requiring shareholder vote, potentially in a manner that you do not support.
Our successor sponsor owns 49.85% of our issued and outstanding ordinary shares. In addition, prior to our initial business combination, only our successor sponsor, as holder of the Class B share, has the right to vote on the appointment of and holders of a majority of our founders shares may remove a member of the Board for any reason. Neither of our sponsor shareholders nor, to our knowledge, any of our officers or directors, has any current intention to purchase additional securities, other than as disclosed in this Annual Report. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A ordinary shares. In addition, as a result of their substantial ownership in our company, our sponsor shareholders may exert a substantial influence on other actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association and approval of major corporate transactions. The purchase by our sponsor shareholders of any Class A ordinary shares, including in the after market or in privately negotiated transactions, would increase their influence over these actions. Accordingly, our sponsor shareholders exert significant influence over actions requiring a shareholder vote at least until the completion of our initial business combination.
A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
If:
| (i) we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per Class A ordinary share; | ||
| (ii) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the completion of our initial business combination (net of redemptions), and | ||
| (iii) the Market Value is below $9.20 per share, |
then the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant; provided that the last reported sales price of our Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like or as indicated above) for any 20 trading days within a 30 trading-day period commencing on the date they become exercisable and ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private warrants will be redeemable by us so long as they are held by our sponsor shareholders or their permitted transferees.
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Our warrants contained in our units, together with our founders shares and private warrants, may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination.
We issued, as part of the 12,650,000 units that we offered, warrants to purchase 6,325,000 Class A ordinary shares with an exercise price of $11.50 per warrant (subject to adjustment as provided herein), and, simultaneously with the closing of our initial public offering, we sold in a private placement an aggregate of 4,866,667 private warrants, each exercisable to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as provided herein. Our sponsor shareholders currently hold 3,162,500 founders shares, comprised of 3,162,499 Class A ordinary shares and 1 Class B ordinary share. To the extent we issue ordinary shares to effectuate a business transaction, the potential for the issuance of a substantial number of additional Class A ordinary shares upon exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares issued to complete the business transaction. Therefore, our warrants and founders shares may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The private warrants are identical to the warrants sold as part of our initial public offering units except that, so long as they are held by our sponsor shareholders or their permitted transferees: (i) they will not be redeemable by us; (ii) they (including the ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor shareholders until 30 days after the completion of our initial business combination; and (iii) they (including the ordinary shares issuable upon exercise of these warrants) are entitled to registration rights with respect to the resale thereof.
There is currently a limited market for our securities, which could adversely affect the liquidity and price of our securities.
Shareholders have limited access to information about prior market history on which to base their investment decision. The price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. We are also subject to the federal securities laws of the United States. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
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As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the Board or controlling shareholders than they would as public shareholders of a United States company.
Our amended and restated memorandum and articles of association provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act, which may impose additional litigation costs on our shareholders.
Our amended and restated memorandum and articles of association provide that, unless we consent otherwise, the federal district courts of the United States shall be the exclusive forum for the resolution of any claims arising under the Securities Act (for the sake of clarification, this provision does not apply to causes of action arising under the Exchange Act). While this provision of our amended and restated memorandum and articles of association does not restrict the ability of our shareholders to bring claims under the Securities Act, nor does it affect the remedies available thereunder if such claims are successful, we recognize that it may limit shareholders’ ability to bring a claim in a judicial forum that they find favorable and may increase certain litigation costs which may discourage the filing of claims under the Securities Act against us, our directors and our officers. However, the enforceability of similar forum provisions in other companies’ organizational documents has been challenged in legal proceedings and there is uncertainty as to whether courts would enforce the exclusive forum provisions in our amended and restated articles of association. If a court were to find the choice of forum provision contained in our amended and restated memorandum and articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations.
Our amended and restated articles of association provide that unless we consent otherwise, the courts of the Cayman Islands shall have sole and exclusive jurisdiction for all disputes between our company and our shareholders under the Companies Act.
Unless we consent otherwise, the courts of the Cayman Islands shall have exclusive jurisdiction over any claim or dispute arising out of or in connection with our memorandum and articles of association or otherwise related in any way to each shareholder’s shareholding in the company, including but not limited to (i) any derivative action or proceeding brought on behalf of our company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of our company to our company or our company’s shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Act and each shareholder shall be deemed to have irrevocably submitted to the exclusive jurisdiction of the courts of the Cayman Islands over all such claims or disputes. Without prejudice to any other rights or remedies that we may have, each shareholder shall also be deemed to have acknowledged and agreed that damages alone would not be an adequate remedy for any breach of this exclusive forum provision in our memorandum and articles and that accordingly we will be entitled, without proof of special damages, to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of this provision. This exclusive forum provision is intended to apply to claims arising under Cayman Islands law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction. Such exclusive forum provision in our amended and restated memorandum and articles of association will not relieve our company of its duties to comply with federal securities laws and the rules and regulations thereunder, and shareholders of our company will not be deemed to have waived our compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with our company or our directors or officers which may discourage lawsuits against our company, our directors, and our officers.
However, there is uncertainty as to whether courts would enforce the exclusive forum provisions in our amended and restated memorandum and articles of association. If a court were to find the choice of forum provision contained in our amended and restated memorandum and articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations.
Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. These provisions include two-year director terms and the ability of the Board to designate the terms of and issue new series of preference shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
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After our initial business combination, it is possible that a majority of our directors and officers will live outside the United States and all or substantially of our assets will be located outside the United States; therefore, investors may not be able to enforce federal securities laws or their other legal rights.
It is possible that after our initial business combination, a majority of our directors and officers will reside outside of the United States and all or substantially all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.
An investment in our securities may result in uncertain or adverse United States federal income tax consequences.
An investment in our securities may result in uncertain United States federal income tax consequences. For instance, because there are no authorities that directly address instruments similar to the units that we issued in our initial public offering, the allocation an investor makes with respect to the purchase price of a unit between the Class A ordinary share and the one-half warrant included in each unit could be challenged by the IRS or the courts. Furthermore, it is unclear whether the redemption rights with respect to our ordinary shares suspend the running of a U.S. holder’s holding period for purposes of determining whether any gain or loss realized by such holder on the sale or exchange of Class A ordinary shares is long-term capital gain or loss and for determining whether any dividend we pay would be considered “qualified dividends” for federal income tax purposes. Prospective investors are urged to consult their tax advisors with respect to these and other tax consequences when purchasing, holding or disposing of our securities.
If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our extension meeting or initial business combination or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with the extension meeting and our initial business combination. Despite our compliance with these rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we are distributing in connection with the extension meeting and that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed. See “Item 1. Business- Effecting a Business Combination- Redemption Rights.”
The warrants that are part of the units that we offered publicly and issued privately, together with our grant of registration rights to our original sponsor and others, may have an adverse effect on the market price of our Class A ordinary shares and may make it more difficult for us to complete our initial business combination.
We issued warrants to purchase up to 6,325,000 ordinary shares at a price of $11.50 per share (subject to adjustment as provided herein) as part of the 12,650,000 units that we sold as part of our initial public offering following the full exercise of the over-allotment option. Furthermore, simultaneously with the closing of our initial public offering, we issued to our original sponsor in a private placement an aggregate of 4,866,667 private warrants, of which 3,893,334 have been transferred to the successor sponsor as part of the sponsor alliance. Each warrant is exercisable to purchase one ordinary share at a price of $11.50 per share, subject to adjustment as provided herein.
Pursuant to an agreement that was entered into concurrently with the issuance and sale of the securities in our initial public offering, our original sponsor, management team and their permitted transferees, including the successor sponsor, can demand that we register the resale of their founders shares beginning at the time of our initial business combination. In addition, our sponsor shareholders, as the holders of our private warrants, and their permitted transferees can demand that we register the resale of the private warrants, or the Class A ordinary shares issuable upon exercise of the private warrants.
The potential issuance of shares underlying our various groups of warrants, together with the foregoing registration rights with respect to those shares and other shares, will allow, potentially, a significant, additional number of our Class A ordinary shares to become available for trading in the public market. That potential development may have an adverse effect on the market price of our Class A ordinary shares even without there being actual additional issuances or resales. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. The shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A ordinary shares that is expected from the potential resale of the Class A ordinary shares owned by our sponsor shareholders, or issuable upon exercise of the private warrants, or their respective permitted transferees. Those resales are enabled by the registration rights.
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In addition, in connection with the first extension meeting and the second extension meeting, and third extension meeting, our original sponsor entered into the first NRAs with the first non-redeeming shareholders and the second NRAs with second non-redeeming shareholders. The third (current) sponsor entered into the third NRAs with the third non-redeeming shareholders. Pursuant to the first NRAs and the second NRAs, the original sponsor agreed to transfer a total of 299,990 existing founder shares to the first non-redeeming shareholders and second non-redeeming shareholders immediately following, and subject to, consummation of an initial business combination, in exchange for their agreement not to redeem their shares. Pursuant to the sponsor purchase agreement the successor (second) sponsor agreed to assume the original sponsor’s obligations to transfer all such founder shares to the first non-redeeming shareholders and second non-redeeming shareholders from the founder shares it purchased from the original sponsor. Pursuant to the subsequent sponsor purchase agreement the third (current) sponsor agreed to assume the second sponsor’s obligations to transfer 299,990 founder shares to the first non-redeeming shareholders and second non-redeeming shareholders from the founder shares it purchased from the second sponsor. Pursuant to the third NRAs, the third (current) sponsor agreed to transfer a total of up to 275,000 existing founder shares to the third non-redeeming shareholders immediately following, and subject to, consummation of an initial business combination, in exchange for their agreement not to redeem their shares. See “Item 1. Business - Extension of our Combination Period.”
We may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares upon the conversion of the Class B ordinary share at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles of association. Any such issuances would substantially dilute the interest of our shareholders and likely present other risks.
Our amended and restated memorandum and articles of association authorizes the issuance of ordinary shares, including 500,000,000 Class A ordinary shares, par value $0.0001 per share, and 50,000,000 Class B ordinary shares, par value $0.0001 per share, as well as 5,000,000 preference shares, par value $0.0001. As of April 15, 2025, there are 496,073,939 and 49,999,999 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance, some of which Class A ordinary shares are reserved for issuance upon exercise of issued and outstanding warrants, and upon conversion of the 1 outstanding Class B ordinary share, and 5,000,000 authorized but unissued preference shares available for issuance.
Our original sponsor paid a nominal price for its acquisition of the founders shares. We may furthermore issue additional Class A ordinary shares or other securities to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. Any such issuances would dilute the interest of our shareholders further and likely present other risks.
Our original sponsor acquired the founders shares and representative shares, respectively, at nominal prices, significantly contributing to the dilution to investors in our initial public offering.
The authorized share capital under our amended and restated memorandum and articles of association also presents the possibility of additional, substantial dilution. Under those charter documents, we are authorized to issue up to 500,000,000 Class A ordinary shares, par value $0.0001 per share, up to 50,000,000 Class B ordinary shares, par value $0.0001 per share, and up to 5,000,000 preference shares, par value $0.0001 per share. As of April 15, 2025, there are 496,073,939 and 49,999,999 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance, some of which Class A ordinary shares are reserved for issuance upon exercise of issued and outstanding warrants, and upon conversion of the 1 outstanding Class B ordinary share. The 1 Class B ordinary share is convertible into Class A ordinary shares, initially at a one-for-one ratio, but subject to adjustment as set forth herein and in our amended and restated memorandum and articles of association.
We may issue a substantial number of additional Class A ordinary shares in order to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares upon conversion of the 1 Class B ordinary share at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles of association. Our amended and restated memorandum and articles of association provide, among other things, that prior to our initial business combination, we may not issue additional ordinary shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination.
Our potential target company, if it is the acquirer in a business combination with us, may issue to our shareholders in the business combination shares constituting a minority of the outstanding shares of the combined company.
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The issuance of additional ordinary shares in any of the above-described scenarios:
| ● | may significantly dilute the equity interest of investors in our initial public offering; |
| ● | could cause a change in control if a substantial number of 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; and |
| ● | may adversely affect prevailing market prices for our (or the target company’s) Class A ordinary shares (or other class of ordinary/common shares) and/or warrants. |
Unlike certain other blank check companies, our sponsor shareholders will receive additional Class A ordinary shares if we issue shares to consummate an initial business combination.
The sole Class B ordinary share will automatically convert into Class A ordinary shares on the first business day following the completion of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. As a result of the founder share conversion, 3,162,499 of the Class B ordinary shares comprising founders shares were converted into the same number of Class A ordinary shares In the case that additional Class A ordinary shares, or equity-linked securities convertible or exercisable for Class A ordinary shares, are issued or deemed issued in excess of the amounts issued in our initial public offering and related to the closing of our initial business combination, the ratio at which founders shares will convert into Class A ordinary shares will be adjusted (subject to waiver by holders of a majority of the Class B ordinary shares then in issue) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of our ordinary shares issued and outstanding upon the completion of our initial public offering plus the number of Class A ordinary shares and equity-linked securities issued or deemed issued in connection with our initial business combination (net of redemptions), excluding any Class A ordinary shares or equity-linked securities issued, or to be issued, to any seller in our initial business combination and any private warrants issued to our sponsor shareholders, a partner or affiliate of our sponsor shareholders, or any of our officers or directors. This is different than certain other blank check companies in which the sponsor shareholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to our initial business combination.
We may be a passive foreign investment company, or “PFIC,” which could result in adverse United States federal income tax consequences to U.S. investors.
If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined below) of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception. Depending on the particular circumstances, the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, moreover, will not be determinable until after the end of such taxable year. If we determine we are a PFIC for any taxable year (of which there can be no assurance), we will endeavor to provide to a U.S. Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance that we will timely provide such required information, and such election would be unavailable with respect to our warrants in all cases. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules.
The term “U.S. Holder” means a beneficial owner of units, Class A ordinary shares or warrants who or that is for United States federal income tax purposes: (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) it has in effect a valid election to be treated as a U.S. person.
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Because of the number of Class A ordinary shares received by our original sponsor upon the conversion of the founder shares, Nasdaq may in the future consider us to be a “controlled company” within the meaning of the Nasdaq rules and, as a result, we may qualify for exemptions from certain corporate governance requirements.
Because of the number of Class A ordinary shares received by our original sponsor, a majority of which were transferred to the successor sponsor upon the conversion of the founder shares, the Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq corporate governance standards. Disregarding the additional Class A ordinary shares underlying those warrants (and the shares underlying warrants sold in our initial public offering as part of the units), our original sponsor owns 16.11% of our issued and outstanding shares and our successor sponsor owns 45.46% at December 31, 2024. Under the Nasdaq corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that:
| ● | we have a board that includes a majority of “independent directors,” as defined under the rules of the Nasdaq; | |
| ● | we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and | |
| ● | director nominations be made, or recommended to the full board, by our independent directors or by a nominating committee of our board that is composed entirely of independent directors with a written charter or resolution addressing the committee’s purpose and responsibilities. |
We do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of the Nasdaq, subject to applicable phase-in rules. However, if we determine in the future to utilize some or all of these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.
We may reincorporate in, migrate to or merge with and into another entity as surviving company in, another jurisdiction in connection with our initial business combination and such reincorporation, migration or merger may result in taxes imposed on shareholders.
We may, in connection with our initial business combination and subject to requisite shareholder approval under the Companies Act, reincorporate in, migrate to or merge with and into another entity as surviving company in, the jurisdiction in which the target company or business is located or in another jurisdiction. The transaction may require a shareholder or warrant holder to recognize taxable income in the jurisdiction in which the shareholder or warrant holder is a tax resident or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to shareholders or warrant holders to pay such taxes. Shareholders or warrant holders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
Emerging Regulatory and Market Risks
Increased regulatory scrutiny of SPAC transactions may delay or prevent our ability to complete a business combination, or increase the cost of compliance.
The SEC and other regulatory bodies have recently introduced new rules specific to SPACs and de-SPAC transactions, including enhanced disclosure requirements and potential reclassification of SPACs as investment companies. These new rules could result in additional regulatory burdens, increase the time and cost necessary to complete our initial business combination, or deter potential target companies from entering into a business combination with us.
Litigation and heightened shareholder activism in the SPAC space could adversely affect our business combination efforts.
SPACs and de-SPAC transactions have increasingly been subject to class action lawsuits, shareholder demands, and heightened scrutiny from activist investors. Any such actions taken against us or a prospective target could materially delay or prevent the consummation of a business combination and could result in significant legal expenses or reputational harm.
Additional Risk Factors for Consideration
Our delisting from Nasdaq may reduce the appeal of our securities to potential business combination targets and investors.
Many private companies view a business combination with a listed SPAC as a route to a public listing on a national exchange. Because we are no longer listed on Nasdaq, we may face difficulties in negotiating with attractive target businesses that prefer to partner with a listed SPAC to expedite access to public capital markets. In addition, the delisting could make our securities less attractive to institutional investors, PIPE investors, and others, which may impair our ability to complete a successful business combination.
The delisting of our securities may increase the risk of a “failed” de-SPAC transaction or force us to agree to less favorable terms with a target company.
Delisting has reduced our leverage in negotiations with potential targets, particularly if the combined company will need to meet the initial listing requirements of a national securities exchange in connection with the closing of a business combination. We may be required to accept less favorable deal terms or undertake additional steps, including concurrent capital raises or corporate restructuring, to meet relisting standards, any of which could delay or jeopardize our ability to complete a business combination.
Our ability to relist our securities on a national securities exchange after a business combination is subject to significant uncertainty and risks.
There can be no assurance that we or the combined company will be able to satisfy the initial listing standards of a national securities exchange, such as Nasdaq or the NYSE, after the consummation of our initial business combination. If we are unable to relist, investors may experience reduced liquidity, lower trading volumes, and a corresponding decrease in the market price of our securities.
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We may face greater regulatory scrutiny and reputational harm as a result of our delisting and its impact on our financial and operational stability.
Delisting may be viewed negatively by regulators, potential targets, or investors, and could increase the likelihood of regulatory inquiries or shareholder litigation. The perception that we may be less financially stable or operationally viable as a delisted company could adversely affect our ability to complete a business combination on favorable terms or at all.
The delisting may increase our cost of capital and limit our ability to attract future financing.
Delisting from Nasdaq may result in higher borrowing costs and reduced access to capital markets, as many investors and lenders have mandates restricting participation in non-exchange-listed entities. This could impair our ability to fund operational expenses or finance a business combination without substantial sponsor support or alternative financing arrangements on less favorable terms.
Being a non-listed company may make it more difficult to retain and attract key personnel.
The loss of our listing on Nasdaq may negatively affect our ability to attract and retain experienced directors, officers, and other key personnel who prefer to be associated with an exchange-listed company. This could impair our ability to manage operations and execute a business combination effectively
Material weakness in internal control
We have identified material weaknesses in our internal control over financial reporting. These weaknesses could result in misstatements of our financial statements or disclosures, which may not be prevented or detected on a timely basis. As a result, management has concluded that our internal control over financial reporting was not effective as of December 31, 2024. The existence of these material weaknesses increases the risk that our financial statements may contain material errors, and we may be required to restate previously issued financial information. Additionally, any continued failure to maintain effective internal controls could harm our reputation with investors, lead to regulatory scrutiny, limit our ability to raise additional capital, and negatively impact our stock price.
We are in the process of implementing remediation plans to address the material weaknesses identified in our internal control over financial reporting. These plans include hiring additional accounting personnel and implementing enhanced control procedures. There can be no assurance, however, that these efforts will be successful or that we will be able to fully remediate the material weaknesses within our expected timeframe. Furthermore, we may in the future identify additional deficiencies in our internal control over financial reporting that may also constitute significant deficiencies or material weaknesses. Failure to remediate existing material weaknesses or to prevent new ones from arising could impair our ability to accurately and timely report our financial results, which may result in loss of investor confidence and potential legal or regulatory consequences.
General Risk Factors
We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative and support expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Item 2. Properties
We currently maintain our executive offices at 4B Cedar Brook Drive, Cranbury, NJ 08512. Our executive offices are currently provided to us by our original sponsor at no cost. We consider our current office space adequate for our current operations.
Item 3. Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
| (a) | Market Information |
[Our units, Class A ordinary shares and warrants are each traded on the OTC Pink Market under the symbols “CCTSFF,” “CTSWF” and “CTSUF,” respectively. Prior to November 5, 2024, our securities were listed on the Nasdaq Capital Market under the same symbols Our units commenced public trading on November 2, 2021. On December 30, 2021, the holders of our units were granted the right to elect to separately trade the Class A ordinary shares and warrants, and separate trading commenced within the first couple of trading days thereafter (with the units continuing to trade concurrently).]
| (b) | Holders |
On April 15, 2025, there were 763,562 Class A ordinary shares held publicly, consisting of one shareholder of record holding 500,000 shares and less than 100 holders of record holding the remaining 263,562 Class A public shares. There was one holder of record of our Class B ordinary share.
| (c) | Dividends |
We have not paid any cash dividends on our Class A ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any share capitalizations in the foreseeable future.
| (d) | Securities Authorized for Issuance Under Equity Compensation Plans |
None.
| (e) | Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings |
Unregistered Sales
Nothing issued that has not been previously reported
| (g) | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Following the first extension meeting 10,185,471 Class A ordinary shares were redeemed on May 1, 2023. See “Item 1 - Extension of our Combination Period - First extension” above.
Following the articles amendment meeting 204,178 Class A ordinary shares were redeemed on June 15, 2023. See “Item 1 - Founder Share Conversion” above.
Following the second extension meeting 347,980 Class A ordinary shares were redeemed on November 10, 2023. See “Item 1 - Extension of our Combination Period - Second extension” above.
Following the third extension meeting 1,148,799 Class A ordinary shares were redeemed on November 1, 2024. See “Item 1 - Extension of our Combination Period – “Third extension” above.
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Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
All statements other than statements of historical fact included in this annual report including, without limitation, statements under this “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this annual report, words such “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward-looking statements.
Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this annual report should be read as being applicable to all forward-looking statements whenever they appear in this annual report. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We completed our initial public offering in November 2021, and since that time, we have engaged in discussions with potential business combination target companies; we have reached a definitive agreement with a specific target company with respect to an initial business combination with us. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private warrants, our shares, debt or a combination of cash, shares and debt.
The issuance of additional ordinary shares in a business combination (by our company, or by a target company that will serve as the public company following the business combination and in which target company shareholders may possess a majority interest):
| ● | 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 resulted 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 (or the target company’s) 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 and/or warrants. |
Similarly, if we or the target company issue(s) 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 the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; | |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
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| ● | 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 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 ordinary shares if declared, 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 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 December 31, 2024 we had $8,000 of cash and $2,069,000 of working capital deficiency. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Extension of our Combination Period
First extension
We initially had until May 2, 2023, or 18 months from the closing of the IPO, to consummate our initial business combination. On April 20, 2023, we held the first extension meeting in lieu of our 2023 annual general meeting. At the first extension meeting our shareholders voted to approve the first extension. At the first extension meeting 10,185,471 Class A ordinary shares were redeemed, resulting in 2,464,529 publicly-held Class A ordinary shares outstanding. Accordingly, on May 1, 2023, $106,733,855 was distributed from trust account to the shareholders who redeemed their shares.
In connection with the first extension meeting, we and our original sponsor entered into the first NRAs with the first non-redeeming shareholders. Pursuant to the first NRAs, the first non-redeeming shareholders agreed not to redeem an aggregate of 2,000,000 Class A ordinary shares in connection with the first extension. In exchange for the foregoing commitment, our original sponsor agreed to transfer an aggregate of 130,000 Class B ordinary shares held by our original sponsor to the first non-redeeming shareholders immediately following, and subject to, consummation of an initial business combination.
In addition, in connection with the shareholders’ approval of the first extension, we and our original sponsor committed to contribute up to $240,000 to our 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) our Board determines to liquidate us or (b) an initial business combination is completed.
Second extension
On November 2, 2023, we held the second extension meeting, at which our shareholders voted to approve the second extension. At the second extension meeting 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 Class A ordinary shares comprising founders shares. Accordingly, on November 10, 2023, $3,813,082 was distributed from trust account to the shareholders who redeemed their shares.
In connection with the second extension meeting, we and our original sponsor entered into the second NRAs with the second non-redeeming shareholders. Pursuant to the second NRAs, the second non-redeeming shareholders agreed not to redeem an aggregate of 1,849,900 Class A ordinary shares related to the shareholder vote on the second extension.
In exchange for the foregoing commitment, our original sponsor agreed to transfer an aggregate of 184,990 founders shares (which were converted from Class B ordinary shares to Class A ordinary shares) held by our original sponsor to the Second Non-Redeeming Shareholders immediately following, and subject to, consummation of a business combination.
In addition to transfer of founders shares, we and our original sponsor committed, in connection with the shareholders’ approval of the second extension, to contribute to our trust account, on a monthly basis until November 2, 2024, the lesser of (i) $20,000 and (ii) $0.01 per publicly-held Class A ordinary share multiplied by the number of publicly-held Class A ordinary shares outstanding. Monthly contributions are to be made on the 15th day of each calendar month during the second extension period, beginning in November 2023 and until (but not including) November 2024. Given the 1,912,371 publicly-held Class A ordinary shares that were not redeemed, the contributions over the course of the twelve-month second extension period are expected to amount to approximately $19,124 per month, or up to $229,485 in the aggregate. Our original sponsor contributions will cease on such earlier date on which (a) the Board determines to liquidate the company or (b) a business combination is completed. Pursuant to the sponsor purchase agreement, the successor sponsor has agreed to make such contributions from the closing of the sponsor alliance.
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Third extension
On November 1, 2024, we held an extraordinary general meeting, at which our shareholders voted to approve the Third Extension, which extended the mandatory liquidation date from November 2, 2024 to November 2, 2025. A total of 1,148,799 Class A ordinary shares were redeemed in connection with the Third Extension, resulting in 3,926,071 Class A ordinary shares outstanding, consisting of 763,572 publicly-held Class A ordinary shares and 3,162,499 founders shares. Accordingly, on November 13, 2024, $13,389,826 was distributed from the Trust Account (see Note 1 c.) to the shareholders who redeemed their shares.
On October 29, 2024, the Company and ARWM Inc Pte. Ltd. (the Company’s current Sponsor), entered into a non-redemption agreement (NRA) with an unaffiliated third party (the “Non-Redeeming Shareholder”). Pursuant to the NRA, the Non-Redeeming Shareholder agreed not to redeem (or to validly rescind any redemption requests with respect to) an aggregate of 500,000 publicly-held Class A ordinary shares of the Company (“Non-Redeemed Shares”) in connection with the shareholder vote on the Articles Extension Proposal. In exchange for the foregoing commitments not to redeem the Non-Redeemed Shares, the Sponsor agreed to transfer an aggregate of 125,000 founder shares of the Company held by it to the Non-Redeeming Shareholder immediately following, and subject to, consummation of an initial business combination. To the extent that a business combination does not close by May 2, 2025, the Sponsor agreed to transfer an additional 25,000 founder shares of the Company held by it per month beginning on May 3, 2025 and ending on October 2, 2025 (up to 150,000 founder shares). The 125,000 Class A shares due to the Non-Redeeming Shareholder has an implied value of $2.22 per share, or an aggregate of $277,000. The $277,000 value was determined based on a market approach methodology with a probability of acquisition assessment, using a stock price at the measurement date of $11.06 and assigning a probability of acquisition of 20%. This $277,000 value consideration is reflected in the shareholders equity section of the financial statements.
The Sponsors and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to any Class B ordinary shares (as described in Note 4) held by them if the Company fails to complete the Initial Business Combination within 18 months of the closing of the Public Offering or during any extended time that the Company has to consummate. We may seek to further extend the combination period in accordance with our amended and restated memorandum and articles of association and consistent with applicable laws, regulations and stock exchange rules. Such redemptions will likely have a material adverse effect on the amount held in our trust account, our capitalization, the composition of our principal shareholders, and may negatively impact us or our management team. As we are no longer listed on Nasdaq, this could also adversely affect any efforts to re-list our securities following a business combination.
Recent Developments
Business Combination Agreement
On August 29, 2024, we signed a Business Combination Agreement (BCA) with Tembo e-LV B.V. (Tembo), a private company incorporated under the laws of the Netherlands,. Under the BCA, the consideration to be paid to the equity holders of Tembo is $838 million and will be paid entirely in the form of newly issued ordinary shares of new combined company, with each share valued at $10.00. The BCA was entered into by the parties following due diligence and receipt by the our board of directors of a fairness opinion from an independent third party. We are advancing activities towards consummating a Business Combination with Tembo.
Under the terms of the BCA:
| ● | Company Share Exchange: All outstanding shares of Tembo will be contributed to Holdco in exchange for newly issued Holdco ordinary shares. |
| ● | Corporate Reorganization: Holdco will convert from a Dutch private limited liability company (B.V.) to a public limited liability company (N.V.). |
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| ● | Merger: Merger Sub will merge with and into CCTSF, with CCTSF surviving as a wholly owned subsidiary of Holdco. Each outstanding Class A ordinary share of CCTSF not redeemed by public shareholders will be exchanged for one Holdco ordinary share. |
| ● | Nasdaq Listing: Following the closing, Holdco will apply to list its ordinary shares on Nasdaq under a new ticker symbol. |
The BCA includes governance provisions, including board representation from both the Tembo and CCTSF sponsor groups and customary lock-up arrangements restricting the resale of Holdco shares following closing. The transaction is structured to qualify as a tax-free reorganization under Section 351 of the U.S. Internal Revenue Code.
In connection with the BCA, key shareholders of both Tembo and CCTSF have entered into Investor Support Agreements, agreeing to vote in favor of the proposed transaction and to refrain from exercising redemption rights. Additionally, the parties executed lock-up agreements and an Investor Rights Agreement providing customary registration rights for certain Holdco shareholders.
The closing of the business combination remains subject to regulatory approvals, including SEC clearance of the Form F-4 registration statement, the completion of financial audits under PCAOB standards, shareholder approvals, and other customary conditions.
Delisting from Nasdaq
On October 29, 2024, we received a notice from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC (Nasdaq) stating that because we had not completed an initial business combination within 36 months of the effective date of its registration statement in connection with its initial public offering, we were not in compliance with Nasdaq IM 5101-2 and therefore subject to delisting. Trading in our securities on NASDAQ was suspended at the opening of business on November 5, 2024 and trading of our securities on the OTC market commenced on November 6, 2024, under the symbol CCTSFF. The delisting and commencement of trading on OTC does not affect our business combination agreement with Tembo, as both parties continue to work to effectuate the completion of the transaction. The combined company intends to apply for up-listing on the Nasdaq Stock Market in connection with the completion of the business combination.
Extension of our Combination Period - Third Extension
On November 1, 2024, we held an extraordinary general meeting, at which our shareholders voted to approve the Third Extension, which extended the mandatory liquidation date from November 2, 2024 to November 2, 2025. A total of 1,148,799 Class A ordinary shares were redeemed in connection with the Third Extension, resulting in 3,926,071 Class A ordinary shares outstanding, consisting of 763,572 publicly-held Class A ordinary shares and 3,162,499 founders shares. Accordingly, on November 13, 2024, $13,389,826 was distributed from the Trust Account to the shareholders who redeemed their shares.
On October 29, 2024, we and ARWM Inc Pte. Ltd. (our current Sponsor), entered into a non-redemption agreement (NRA) with an unaffiliated third party (the “Non-Redeeming Shareholder”). Pursuant to the NRA, the Non-Redeeming Shareholder agreed not to redeem (or to validly rescind any redemption requests with respect to) an aggregate of 500,000 publicly-held Class A ordinary shares of the Company (“Non-Redeemed Shares”) in connection with the shareholder vote on the Articles Extension Proposal. In exchange for the foregoing commitments not to redeem the Non-Redeemed Shares, the Sponsor agreed to transfer an aggregate of 125,000 founder shares held by it to the Non-Redeeming Shareholder immediately following, and subject to, consummation of an initial business combination. To the extent that a business combination does not close by May 2, 2025, the Sponsor agreed to transfer an additional 25,000 founder shares held by it per month beginning on May 3, 2025 and ending on October 2, 2025 (up to 150,000 founder shares).
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Promissory Note
On March 25, 2024, the Company issued an unsecured promissory note to Energi Holding Limited (the “Lender”) , not a related party, with a principal amount up to $600,000 (the “Note”). The Note is repayable in full upon the earlier of (a) November 1, 2024, (b) the date of the consummation of the Company’s initial business combination or (c) the date of the liquidation of the Company (such earlier date, the “Maturity Date”). The Note bears no interest, however, an establishment fee, a line fee and an exit fee totaling in aggregate 9.0% per annum, are payable on the Maturity Date.
On March 25, 2024, the Lender advanced $600,000 to the Company under the Note. If the Company does not consummate an initial business combination by the Maturity Date, the Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
We signed a Note extension with the lender to extend the Maturity Date from November 1, 2024 to November 2, 2025. All other terms of the Note remain unchanged by the Note extension.
Results of Operations
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 December 31, 2024 date of our audited financial statements contained in this Annual Report, other than as reflected in the subsequent events note of the financial statements. After our initial public offering, which was consummated in November 2021, we have been incurring increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses related to our search for a target company.
For the year ended December 31, 2024, we had a net loss of $1,312 thousand, which consisted of $1,016 thousand of interest income and dividend income and realized gains on marketable securities held in our trust account, less operating and financial expenses of $2,328 thousand.
For the year ended December 31, 2023, we had net income of $1,564 thousand, which consisted of $2,704 thousand of interest income and dividend income and realized gains on marketable securities held in our trust account, less operating expenses of $1,140 thousand.
Liquidity and Capital Resources
As of December 31, 2024, we had approximately $8,000 in our operating bank account, and a working capital deficit of $2,069,000.
Our liquidity needs to date have been satisfied through loans from the sponsors and a third-party promissory note to cover certain operating expenses.
On May 17, 2024, we issued an unsecured promissory note to our third sponsor, ARWM Inc Pte. Ltd. (the “Lender”).
The Note has a maturity date of June 30, 2025. The balance due the Lender as of December 31, 2024 was $689,000. If we do not consummate an Initial Business Combination by the maturity date the Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
On March 25, 2024, we issued an unsecured promissory note to Energi Holding Limited (the “Lender”) , not a related party, with a principal amount of $600,000 (the “Note”). The Note has a maturity date of November 2, 2025. If the Company does not consummate an initial business combination by the maturity date, the Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
We intend to use substantially all of the funds held in our trust account, including any amounts representing interest earned on our trust account (which interest shall be net of taxes payable), minus amounts paid out to redeeming shareholders, as consideration to complete our initial business combination. 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 our 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.
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Prior to our initial business combination, we are using the proceeds held outside of our trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, pay for administrative and support services, and pay taxes to the extent the interest earned on our trust account is not sufficient to pay our taxes. 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.
As of April 15, 2025, approximately $10,000 is available to us outside of the trust account to fund our working capital requirements. 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 requested $1,000,000 of additional loans from several third parties. While, if obtained, we anticipate that these loans will suffice for the period leading up to our initial business combination, there can be no assurance that the loans will be obtained and, if they are, that the costs of identifying a target business, undertaking in-depth due diligence and negotiating and consummating an initial business combination may be greater than what we currently estimate would be needed to do so. Consequently, we may have insufficient funds available to operate our business prior to our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate our trust account. That required liquidation date would be less than 12 months after the date of this Annual Report. That, among other factors, raises substantial doubt about our ability to continue as a going concern. See “Item 1 - Risk Factors – Risks Relating to our Search for, and Consummation of or Inability to Consummate, a Business Combination - Because the funds being held outside of the trust account are insufficient to allow us to operate for the remainder of the combination period , that could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, as we will depend on additional loans third parties to fund those activities.”
Moreover, given the significant percentage of our public shareholders that have elected to redeem their shares in connection with our first extension meeting, our second extension meeting and our article amendment meeting, and may elect to redeem at a meeting to approve a business combination, thereby reducing our cash resources, we likely will need to secure third party financing in order to successfully effect such a business combination and there can be no assurance that it will be available to us on terms acceptable to us or at all. Subject to compliance with applicable securities laws, we would only raise financing by issuing additional securities simultaneously with the completion of our business combination. We cannot assure you that our plans for that financing or to consummate an initial business combination will be successful.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
As of December 31, 2024, we did not have any off-balance sheet arrangements as described in Item 303 of Regulation S-K and did not have any commitments for capital expenditures or contractual obligations. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Critical Accounting Estimates
None.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The net proceeds from our initial public offering and the sale of the private warrants held in our trust account are invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 8. Financial Statements and Supplementary Data
The information required by this Item 8 appears in Item 15 of this Annual Report and is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management evaluated, with the participation of our chief executive officer/chief financial officer, whom we refer to as our Certifying Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2024, pursuant to Rule 13a-15(b) or Rule 15d-15(b) under the Exchange Act.
Based upon an evaluation, our chief executive officer/chief financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2024 because of the material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, our management has concluded that our control around the interpretation and accounting for the assignment of founder shares by the sponsor to directors was not effectively designed or maintained. Additionally, this material weakness could result in a misstatement of the appropriate value regarding the assignment of founder shares, and related accounts and disclosures, that may result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. We note that there were several inconsistencies in the Form 10-K for the year ended December 31, 2023, including two inconsistent opinions on our effectiveness of internal control over financial reporting, when in fact the internal control over financial reporting was ineffective as of that date.
Management plans to initiate a number of measures to remediate such material weaknesses; however, as of December 31, 2024 management has not remediated the material weakness. If we are unable to remediate our material weaknesses in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial information. The existence of material weaknesses in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our shares. We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. Even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Disclosure of Internal Control Weakness – Insufficient Finance Personnel Leading to Lack of Segregation of Duties and Financial Reporting Risks
As part of management’s assessment of internal control over financial reporting as of December 31, 2024, the Company identified a material weakness resulting from an insufficient number of qualified finance and accounting personnel. This staffing shortfall has led to inadequate segregation of duties within key financial processes and has increased the risk of errors or misstatements in the Company’s financial reporting. Management determined that the current finance team lacks the capacity to adequately separate accounting and financial reporting responsibilities. As a result, a limited number of individuals are responsible for multiple functions, reducing opportunities for independent oversight and increasing the risk that material financial misstatements may not be detected in a timely manner.
To remediate this material weakness, management plans to initiate several corrective actions. These include implementing enhanced review procedures, reallocating responsibilities to improve role separation, and evaluating the need for additional qualified finance personnel to strengthen oversight and reinforce the control environment. However, until these remediation efforts are fully implemented and have been in place for a sufficient period of time, there remains an ongoing risk that material errors or omissions in financial reporting could go undetected.
Despite this internal control weakness, management believes that the financial statements included in this report fairly present, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented. Management is committed to strengthening the Company’s internal controls and maintaining the integrity of its financial reporting processes.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management, with the participation of our Certifying Officers, conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, our Certifying Officers have concluded that our internal control over financial reporting was not effective as of December 31, 2024.
Attestation Report of Registered Public Accounting Firm
This Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
Our current executive officers and directors are as follows:
| Name | Age | Title | ||
| Adam Ridgway | 50 | Chief Executive Officer, Principal Accounting Officer, and Director | ||
| Terry Alan Ferris | 50 | Chairman of the Board and Independent Director | ||
| Jeff LeBlanc | 52 | Independent Director | ||
| Ranier Michael Preiss | 55 | Independent Director |
Adam Ridgway has served as a member of our Board since May 16,2024 and has served as our Chief Executive Officer and Principal Accounting Officer since November 26, 2024. He also serve as Vice Chairman of the Board. He has over 20 years of experience in media, mobility, and sustainability sectors. He is currently the founder and CEO of One Moto Technologies, an electric vehicle company operating across multiple regions. Mr. Ridgway has extensive expertise in scaling ventures, strategic leadership, and mobility-focused solutions in the Middle East and beyond. He previously held senior leadership roles in media production and sustainable mobility businesses. Mr. Ridgway earned his Master’s degree from the University of Liverpool. We believe Mr. Ridgway is qualified to serve as a member of our Board because of his leadership background, entrepreneurial track record, and deep sector knowledge in transport and sustainability industries.
Terry Alan Farris is serving as Chairman of the Board and as a member of our Board since May 16, 2024. Mr. Farris has over 30 years of experience in Asia, where he has advised ultra-high-net-worth families on succession planning, family office structures, and impact investing. He is Managing Director of Pleco Inc., Founder and Board Member of Asia Impact Foundation, and Chairman of EdventureCo Asia Pacific and Lumify Work Philippines. Mr. Farris’ deep expertise in philanthropy, corporate governance, and private wealth management makes him highly qualified to lead our Board.
Jeff LeBlanc has served as a member of our Board since May 16, 2024. He is the Chief Financial Officer of Klotho Therapeutics Holdings, a biotechnology company focused on advancing treatments for neurodegenerative and kidney diseases. Mr. LeBlanc has more than 15 years of experience in corporate finance, strategy, and operations. We believe Mr. LeBlanc is well-qualified to serve on our Board due to his financial expertise and broad industry experience.
Rainer Michael Preiss has served as a member of our Board since November 27, 2024. Mr. Preiss is a seasoned investment professional and wealth management advisor, with extensive experience in asset management and private banking. He has held senior positions at major global financial institutions and has provided strategic advisory services to sovereign wealth funds, family offices, and ultra-high-net-worth clients. Mr. Preiss is currently active as a senior advisor in the investment sector. We believe Mr. Preiss is well-qualified to serve on our Board due to his global financial expertise and leadership experience.
Number and Terms of Office of Officers and Directors
Our board of directors consists of four members. Our current sponsor appointed each of our directors or a two-year term, and holders of our public shares do not have the right to vote on the appointment of directors during such term. The provisions of our amended and restated memorandum and articles of association regarding director term may only be amended by a special resolution passed by the holders of at least 90% of our shares as, being entitled to do so, vote in a general meeting. Subject to any other special rights applicable to the shareholders, any vacancies on our board of directors may be filled by the affirmative vote of a majority of the directors present and voting at the meeting of our board or by a majority of the holders of our founders shares. Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate.
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Director Independence
Our Board consists of independent directors, in accordance with applicable Nasdaq listing standards and SEC rules, even though we are no longer listed on Nasdaq. An “independent director” is generally defined as a person who is not an officer or employee of the company or its subsidiaries and who has no relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment. Our Board has determined that Mr. Terry Alan Farris , Mr. Jeff LeBlanc, and Mr. Rainer Michael Preiss qualify as independent directors under these standards. Both our audit committee and compensation committee are fully composed of independent directors, meeting all relevant regulatory requirements. Additionally, our independent directors hold regularly scheduled meetings without management present.
Committees of the Board of Directors
We have established two standing committees — an audit committee in compliance with Section 3(a)(58)(A) of the Exchange Act and a compensation committee — each comprised entirely of independent directors, consistent with applicable SEC rules and best practices. In lieu of a standing nominating committee, a majority of our independent directors may recommend a director nominee for selection by the Board of Directors (as described below under “Nominating Committee”).
Audit Committee
We have established an audit committee of the Board. Mr. Terry Alan Ferris, Mr. Jeff LeBlance and Mr. Rainer Michael Preiss serve as members of our audit committee and Mr. Terry Alan Ferris serves as the chairman of the audit committee. While we are no longer subject to Nasdaq listing rules, our audit committee composition complies with applicable SEC requirements for public companies. Each member of our audit committee qualifies as an independent director under SEC rules.
Each member of the audit committee is or will be financially literate and our board of directors has determined that Mr. Terry Alan Ferris qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
We have adopted an audit committee charter, which details the purpose and principal functions of the audit committee, including:
| ● | the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us; | |
| ● | pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; | |
| ● | reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence; | |
| ● | setting clear hiring policies for employees or former employees of the independent auditors; | |
| ● | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; | |
| ● | obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; | |
| ● | meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; | |
| ● | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and | |
| ● | reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
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Compensation Committee
We have established a compensation committee of the Board. Mr. Terry Alan Farris and Mr. Jeff LeBlanc serve as members of our compensation committee, and Mr. LeBlanc serves as the chairperson of the compensation committee. While we are no longer subject to Nasdaq listing standards, the committee composition meets applicable SEC requirements for public companies.
We have adopted a compensation committee charter, which outlines the committee’s responsibilities, including:
● Reviewing and approving annual goals and objectives relevant to our Chief Executive Officer’s compensation;
● Evaluating the performance of the Chief Executive Officer and determining compensation;
● Making recommendations to the Board regarding compensation and incentive programs for other officers;
● Overseeing the implementation and administration of any equity or incentive compensation plans;
● Approving perquisites, cash payments, and other compensation arrangements for officers and employees;
● Assisting in compliance with executive compensation disclosure requirements;
● Preparing reports on executive compensation for inclusion in annual filings; and
● Reviewing and recommending any changes to director compensation.
The compensation committee has authority to retain external advisers and will evaluate their independence consistent with SEC guidelines.
Nominating Committee
We do not currently have a standing nominating committee and are not required to form one under applicable regulations. Our Board believes that the independent directors are capable of carrying out the responsibilities related to identifying and recommending director nominees without a separate nominating committee. The directors who will participate in the consideration and recommendation of director nominees are Mr. Terry Alan Farris and Mr. Jeff LeBlanc, both of whom are independent under applicable SEC rules.
Prior to our initial business combination, in the event of a vacancy, the board may also consider director candidates recommended by shareholders.
We have not established any specific minimum qualifications for director candidates but generally consider educational background, professional experience, independence, integrity, and ability to represent the best interests of shareholders.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any entity that has one or more officers serving on our board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers, directors, and persons who own more than 10% of our Class A Ordinary Shares to file reports of ownership and changes in ownership with the SEC. Officers, directors, and 10% beneficial owners are also required to furnish us with copies of all such filings.
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To the best of our knowledge (based on a review of such forms), we believe that during the year ended December 31, 2024, and through the date of this report, the following individuals were delinquent in filing reports:
| ● | Mr. Adam Ridgway, Mr. Terry Alan Farris, Mr. Jeff LeBlanc, each failed to timely file a Form 3 upon becoming directors on May 16, 2024, with all such forms filed on May 22, 2024. Mr. Rainer Michael Preiss failed to file a Form 3 upon becoming a director on November 27, 2024. | |
| ● | The second sponsor (EVGI) failed to file a Form 3 within two business days of acquiring 2,530,000 (representing 49.85%) of our Class A Ordinary Shares and one share of our Class B ordinary shares on February 23, 2024, and subsequently filed such form on March 6, 2024. | |
| ● | Current sponsor ARWM Inc Pte. Ltd., failed to file a Form 3 within two business days of acquiring 2,359,999 Class A ordinary shares and one Class B ordinary share, acquired on April 29, 2024, and representing 46.5% of the ownership. Such form was subsequently filed on May 22, 2024. |
Code of Ethics
We have adopted a code of ethics applicable to our directors, officers and employees (our “Code of Ethics”). Our Code of Ethics is available on our website. Our Code of Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Ethics on our website.
Conflicts of Interest
Certain of our executive officers and directors have or may have fiduciary and contractual duties to certain companies in which they have invested. These entities may compete with us for acquisition opportunities. If these entities decide to pursue any such opportunity, we may be precluded from pursuing it. However, we do not expect these duties to present a significant conflict of interest with our search for an initial business combination.
Under Cayman Islands law, directors and officers owe the following fiduciary duties:
| ● | duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; | |
| ● | duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; | |
| ● | duty to not improperly fetter the exercise of future discretion; | |
| ● | duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and | |
| ● | duty to exercise independent judgment. |
In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience which that director has.
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to benefit as a result of their position at the expense of the company. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders; provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
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Certain of our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be, subject to their fiduciary duties under Cayman Islands law, required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present such business combination opportunity to such entity, subject to their fiduciary duties under Cayman Islands law. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination. Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
Potential investors should also be aware of the following other potential conflicts of interest:
| ● | None of our officers or directors are required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. | |
| ● | In the course of their other business activities, our officers and directors may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a complete description of our management’s other affiliations, see the biographical information under “Item 10. Directors, Executive Officers and Corporate Governance- Directors and Executive Officers” above. | |
| ● | Our original sponsor and the other initial shareholders have agreed to waive their redemption rights with respect to their founders shares and any public shares held by them in connection with the completion of our initial business combination. Our directors and officers have also entered into the letter agreement, imposing similar obligations on them with respect to public shares acquired by them, if any. Additionally, our original sponsor and the other initial shareholders have agreed to waive their redemption rights with respect to their founders shares if we fail to consummate our initial business combination within the remaining months of the combination period. However, if our original sponsor and the other initial shareholders or any of our officers, directors or affiliates acquired public shares as part of or after our initial public offering, they are entitled to liquidating distributions from our trust account with respect to such public shares if we fail to consummate our initial business combination within the prescribed time frame. If we do not complete our initial business combination within such applicable time period, the remaining proceeds of the sale of the private warrants that are held in our trust account will be used to fund the redemption of our public shares, and the private warrants will expire worthless. With certain limited exceptions, the founders shares, and private warrants are subject to the following transfer restrictions: | |
| ● | 50% of the founders shares will not be transferable, assignable or salable by our successor sponsor, original sponsor and the other initial shareholders, and will remain in escrow, until the earlier of (i) six months after the date of the consummation of our initial business combination and (ii) the date on which we consummate a liquidation, merger, amalgamation, share exchange, reorganization, or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property. | |
| ● | The remaining 50% of the founders shares will not be transferred, assigned, sold or released from escrow until six months after the date of the consummation of our initial business combination, or the date on which we consummate a liquidation, merger, amalgamation, share exchange, reorganization, or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property, unless the last reported sale price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination, in which case those shares will be released from the lock-up. | |
| ● | With certain limited exceptions, the private warrants and underlying securities will not be transferable, assignable or salable by our successor sponsor, original sponsor and the other initial shareholders until 30 days after the completion of our initial business combination. Since our successor sponsor, original sponsor and the other initial shareholders and officers and directors may directly or indirectly own ordinary shares and warrants following our initial public offering our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. | |
| ● | Our officers and directors may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether to proceed with a particular business combination. | |
| ● | Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. | |
| ● | Our officers and directors may have a conflict of interest with respect to their involvement in other special purpose acquisition companies seeking business combinations but have agreed in connection with that potential conflict not to file publicly a registration statement for another such company until our company signs an agreement for an initial business combination transaction without the consent of the representatives. | |
| ● | The conflicts described above may not be resolved in our favor. |
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We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor shareholders, officers, or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor shareholders, officers, or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.
In addition, our sponsor shareholders or any of their affiliates may make additional investments in our company in connection with the initial business combination, although our sponsor shareholders and their affiliates have no obligation or current intention to do so. If our sponsor shareholders or any of their affiliates elects to make additional investments, such proposed investments could influence our sponsor shareholders’ motivation to complete an initial business combination.
In the event that we submit our initial business combination to our public shareholders for a vote, our sponsor shareholders and the other initial shareholders have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote their founders shares and any public shares held by them in favor of our initial business combination. Our directors and officers have also entered into the letter agreement, imposing similar obligations on them with respect to public shares acquired by them, if any.
Limitation on Liability and Indemnification of Officers and Directors
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provide for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect.
We may purchase a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. We also intend to enter into indemnity agreements with them.
Our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in our trust account, and have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against our trust account for any reason whatsoever. Accordingly, any indemnification provided will only be able to be satisfied by us if we (i) have sufficient funds outside of our trust account or (ii) consummate an initial business combination. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 11. Executive Compensation.
None of our current officers or directors, or any of our prior officers and directors, have received any cash compensation for services rendered since inception to December 31, 2024. Our current sponsor has assigned 35,000 founder shares to each of our independent directors. Additionally, our Chief Executive Officer and director, Mr. Adam Ridgway, has been assigned 70,000 founder shares and is entitled to monthly compensation of $10,000. Mr. Adam Ridgway received $20,000 as cash compensation in February 2025.
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Our current sponsor, officers and directors, and any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. In addition, we may pay a customary financial consulting fee to an affiliate of our successor sponsor, which will not be made from the proceeds of our initial public offering held in our trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources that we believe are necessary in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest. Our audit committee also reviews, on a quarterly basis, all payments that were made to our successor sponsor, officers, directors or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time such materials are distributed, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined by a compensation committee constituted solely by independent directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information regarding the beneficial ownership of our Class A ordinary shares as of the date of this Annual Report by:
| ● | each person known by us to be the beneficial owner of more than 5% of our issued and outstanding Class A ordinary shares; | |
| ● | each of our officers and directors; and | |
| ● | all our officers and directors as a group. |
Beneficial ownership is presented in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and generally reflects voting and/or investment power with respect to our ordinary shares. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following table does not reflect record or beneficial ownership of public or private warrants, as those warrants are not exercisable within 60 days of the date of this Annual Report.
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| Name and Address of Beneficial Owner(1) | Number of Class A Ordinary Shares Beneficially Owned | Approximate Percentage of Issued and Outstanding Class A Ordinary Shares(2) | ||||||
| 5% or Greater Shareholders | ||||||||
| ARWM Limited(3) | 1,784,999 | (4) | 45.46 | % | ||||
| Cactus Healthcare Management LP(5) | 632,500 | (5) | 16.11 | % | ||||
| RiverNorth Capital Management, LLC(6) | 500,000 | 12.73 | % | |||||
| Directors and Executive Officers * | ||||||||
| Adam Ridgway(7) | - | - | ||||||
| Terry Alan Farris(8) | - | - | ||||||
| Jeff LeBlanc(9) | - | - | ||||||
| Michael Rainer Preiss(10) | - | - | ||||||
| All officers, directors as a group (four individuals)(7)(8)(9)(10) | <1 | % | ||||||
| (1) | Unless otherwise noted, the business address of each of the following entities or individuals is c/o Cactus Acquisition Corp. 1 Limited, 4B Cedar Brook Drive, Cranbury, NJ 08512. |
| (2) | The percentage of Class A Ordinary Shares outstanding is based upon 3,926,061 Class A Ordinary Shares issued and outstanding as of April 15, 2025. In addition, as of that date, the current sponsor (ARWM) holds 1 outstanding Class B Ordinary Share, which will convert into 1 Class A Ordinary Share on a one-for-one basis upon consummation of our initial business combination. Other than the foregoing conversion provisions, the Class B Ordinary Share has the same rights as Class A Ordinary Shares, except that only the Class B Ordinary Share has the right to vote in the election of directors, as described herein. Consequently, we have treated the 1 Class B Ordinary Share as part of the Class A Ordinary Shares solely for the purposes of the presentation of the successor sponsor’s beneficial ownership herein. |
| (3) | ARWM Ltd, our current sponsor, directly holds our shares that are reported in this row. |
| (4) | Excludes 3,893,334 Class A Ordinary Shares underlying warrants held, which are not exercisable as of, or within 60 days of, the date of this Information Statement. |
| (5) | Cactus Healthcare Management LP, our original sponsor, directly holds our shares that are reported in this row. Cactus Healthcare Management LLC serves as the sole general partner of the original sponsor and may therefore be deemed to share voting and investment authority with respect to the shares held thereby. Each of Israel Biotech Fund, Kalistcare Ltd. (an affiliate of Consensus Business Group) and Clal Biotechnology Industries holds an equal 33.33% equity interest in Cactus Healthcare Management LLC. No single individual or group of individuals possesses the ability to control the decisions made by the sole general partner. Excludes 973,333 Class A Ordinary Shares underlying warrants held by the original sponsor, which are not exercisable as of, or within 60 days of, the date of this Information Statement. |
| (6) | Based solely on a Schedule 13G filed by RiverNorth Capital Management, LLC with the SEC on February 14, 2024. The address of RiverNorth Capital Management, LLC is 360 S. Rosemary Avenue, Ste. 1420, West Palm Beach, Florida 33401. |
| (7) | Mr. Adam Ridgway was assigned 70,000 founder shares by the current sponsor and acquired 30,000 founder shares from the current sponsor. |
| (8) | Mr. Terry Alan Ferris was assigned 35,000 founder shares by the current sponsor. |
| (9) | Mr. Jeff Leblanc was assigned 35,000 founder shares by the current sponsor and acquired 100,000 founder shares from the current sponsor. |
| (10) |
Mr. Rainer Michael Preiss was assigned 35,000 founder shares by the current sponsor.
*Does not include 170,000 Class A Ordinary shares owned by the former sponsor (EVGI) and former directors. |
Prior to our initial business combination, only holders of our founders shares will have the right to vote on the appointment of directors, and holders of a majority of our founders shares may remove a member of the board of directors for any reason. In addition, because of their ownership block, our sponsor shareholders may be able to effectively influence the outcome of all other matters requiring approval by our shareholders, including amendments to our amended and restated memorandum and articles of association and approval of significant corporate transactions.
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Concurrently with our initial public offering, our original sponsor purchased, in the aggregate, 4,866,667 private warrants at a price of $1.50 per warrant ($7,300,000, in the aggregate) in a private placement. Each whole private warrant is exercisable to purchase one whole Class A ordinary share at $11.50 per share, subject to adjustment as provided herein. The purchase price of the private warrants was added to the proceeds from our initial public offering and is held in our trust account pending our completion of our initial business combination. If we do not complete our initial business combination by the end of the combination period, the proceeds of the sale of the private warrants held in our trust account will be used to fund the redemption of our public shares, and the private warrants will expire worthless. The private warrants are subject to the transfer restrictions described below. Pursuant to the sponsor purchase agreement, on February 23, 2024 the original sponsor transferred to the successor sponsor 3,893,334 private warrants. On April 29, 2024, a subsequent sponsor securities purchase agreement was executed between EVGI, the Company’s second sponsor, and ARWM Pte Limited, the Company’s third sponsor, pursuant to which, EVGI agreed to transfer to ARWM on the closing (a) an aggregate of 2,360,000 founders’ shares, consisting of 2,359,999 Class A ordinary shares of the Company and 1 Class B ordinary share of the Company and (b) 3,893,334 private warrants that had been purchased by the first Sponsor concurrently with the Company’s IPO. The private warrants will not be redeemable by us so long as they are held by the sponsor shareholders. If the private warrants are held by holders other than our sponsor shareholders or their permitted transferees, the private warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units that were sold in our initial public offering. Otherwise, the private warrants have terms and provisions that are identical to those of the warrants that were sold as part of the units in our initial public offering.
Our current sponsor and our current officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws. See “Item 13. Certain Relationships and Related Transactions, and Director Independence” for additional information regarding our relationships with our promoters.
Transfers of Founders Shares and Private Warrants
The founders shares and private warrants and any Class A ordinary shares issued upon conversion or exercise thereof (as applicable) are each subject to transfer restrictions pursuant to lock-up provisions in the letter agreement entered into by our sponsor shareholders with us. Those lock-up provisions provide that such securities are not transferable or salable:
| (i) | in the case of the founders shares: |
| (x) f | or 50% of those shares, until the earlier of (A) six months after the completion of our initial business combination or (B) subsequent to our initial business combination, when the last sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share consolidations, share capitalizations, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period; and | |
| (y) | for the other 50% of those shares, for the six months after the completion of our initial business combination transaction. |
(All founders shares will also be released from lock-up, if sooner than the above, on the date on which we consummate a liquidation, merger, amalgamation, share exchange, reorganization, or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property.)
| (ii) | in the case of the private warrants, and the Class A ordinary shares underlying such warrants, until 30 days after the completion of our initial business combination. |
The above-described transfer restrictions are subject to an exception, in each case, for transfers (i) to our officers or directors, any affiliates or family members of our officers or directors, any members of our original sponsor, or any affiliates of our original sponsor, (ii) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (iv) in the case of an individual, pursuant to a qualified domestic relations order; (v) by private sales or transfers made in connection with the consummation of a business combination at prices no greater than the price at which the securities were originally purchased; (vi) in the event of our liquidation prior to our completion of our initial business combination; (vii) by virtue of the laws of the Cayman Islands or our original sponsor’s exempted limited partnership agreement, as amended, upon liquidation of our original sponsor; or (viii) in the event of our completion of a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction which results in all of our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (i) through (v) or (vii) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and by the same agreements entered into by our original sponsor with respect to such securities (including provisions relating to voting, our trust account and liquidation distributions described elsewhere in this Annual Report).
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Registration Rights
The holders of the founders shares and private warrants (and any ordinary shares issuable upon the exercise of the private warrants and upon conversion of the founders shares) will be entitled to registration rights pursuant to the registration rights agreement requiring us to register such securities for resale. The holders of these securities will be entitled to make up to two demands, excluding short form registration demands, that we register such securities. The holders of the majority of the founders shares can elect to exercise these registration rights at any time commencing three months prior to the date on which the Class B ordinary share is to be released from its transfer restrictions. The holders of a majority of the private warrants (or underlying securities) issued to our original sponsor, officers, directors or their affiliates can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. We will bear the expenses incurred in connection with the filing of any such registration statements.
In connection with the sponsor alliance, we, our original sponsor and our successor sponsor entered into the registration rights joinder agreement whereby (a) our original sponsor assigned its rights under the registration rights agreement with respect to the sponsor transferred securities to our successor sponsor and (b) our successor sponsor became party to the registration rights agreement.
Equity Compensation Plans
None of our officers or directors has received any cash compensation for services rendered to us during the year ended December 31, 2024. Our sponsor (ARWM) has assigned to each of our three independent directors 35,000 founder shares; and has assigned to our CEO, Mr. Adam Ridgway, 70,000 founder shares. In addition, our successor sponsor, officers and directors, and any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. In addition, we may pay a customary financial consulting fee to an affiliate of our successor sponsor, which will not be made from the proceeds of our initial public offering held in our trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources that we believe are necessary in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest. Our audit committee will also review on a quarterly basis all payments that were made to our successor sponsor, officers, directors or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time such materials are distributed, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined by a compensation committee constituted solely by independent directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
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Item 13. Certain Relationships and Related Transactions, and Director Independence
In May 2021, our original sponsor purchased 2,875,000 founders shares for an aggregate purchase price of $25,000, or approximately $0.008 per share. In October 2021, we effected a share dividend of 0.1 shares for each share then outstanding, thereby resulting in 3,162,500 founders shares held by our original sponsor.
Our original sponsor purchased, in a private placement that closed simultaneously with the closing of our initial public offering, 4,866,667 private warrants at a price of $1.50 per warrant ($7,300,000 in the aggregate). Each private warrant is exercisable to purchase one whole ordinary share at $11.50 per share, subject to adjustment as provided herein. Our original sponsor is permitted to transfer the private warrants held by it to certain permitted transferees, including our officers and directors and other persons or entities affiliated with or related to it, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as our original sponsor. Otherwise, these units will generally not be transferable or salable until 30 days after the completion of our initial business combination. The private warrants will be non-redeemable so long as they are held by our original sponsor or its permitted transferees (except as described above under “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters- Transfers of Founders Shares and Private Warrants”). The private warrants may be exercised by the original sponsor or its permitted transferees for cash. Other that as described above in this paragraph, the private warrants have terms and provisions that are identical to those of the warrants that were sold as part of the initial public offering units (including, that they are not exercisable on a cashless basis).
On February 9, 2024, we entered into the sponsor purchase agreement pursuant to which, on February 23, 2024, our original sponsor transferred to our successor sponsor (EVGI) (a) an aggregate of 2,530,000 founders’ shares, consisting of 2,529,999 Class A ordinary shares and 1 Class B ordinary share and (b) 3,893,334 private warrants. These sponsor transferred securities collectively constituted 80% of our securities owned by our original sponsor prior to the sponsor transfer. The original sponsor has retained 632,500 Class A Ordinary Shares and 973,333 Private Warrants.
On April 29, 2024, a subsequent sponsor securities purchase agreement was executed by our second sponsor (EVGI) and ARWM Pte Limited (ARWM”), our third sponsor, pursuant to which, on May 16, 2024, EVGI transferred to ARWM 100% of the Cactus securities owned by EVGI.
Administrative Services Agreement
On May 21, 2021, we entered into the administrative services agreement pursuant to which we pay our original sponsor up to $10,000 per month for office space, administrative and support services. The administrative services agreement was terminated on February 15, 2024 pursuant to the administrative services agreement termination.
As more fully discussed in “Item 10. Directors, Executive Officers and Corporate Governance - Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, subject to their fiduciary duties under Cayman Islands law, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us, subject to his or her fiduciary duties under Cayman Islands law. Our amended and restated memorandum and articles of association provide that to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
Our officers and directors currently have and will in the future have certain relevant fiduciary duties or contractual obligations that may, subject to applicable law, take priority over their duties to us. Our successor sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee reviews on a quarterly basis all payments that were made to our successor sponsor, officers and directors, or any of their respective affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
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At the closing of our initial business combination, we may pay a customary financial consulting fee to an affiliate of our successor sponsor, which will not be made from the proceeds of our initial public offering held in our trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources that we believe are necessary in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest.
IPO promissory note
On May 24, 2021, our original sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of our initial public offering; our obligation to repay those loans was reflected in a $300,000 IPO promissory note that we issued to our original sponsor. The loans under that note were non-interest bearing, unsecured and were due at the earlier of December 31, 2021 or the close of our initial public offering. The loans were repaid upon the closing of the offering on November 2, 2021 out of the offering proceeds not held in our trust account and no amounts were outstanding under the IPO promissory note issued to our original sponsor.
Sponsor promissory notes
On January 30, 2024, we issued a convertible promissory note to our first Sponsor under which we could borrow up to a $330 thousand principal amount (the “Payee”). On January 31, 2024, we requested of the first Sponsor that $290 thousand of the $330 thousand promissory note be funded. The requested amount of $290 thousand was received by us on February 5, 2024.
On February 23, 2024, as part of closing of the Second Sponsor Alliance, the promissory notes issued by us to the first Sponsor, consisting of promissory notes (x) dated March 16, 2022, in a principal amount of $450,000, (y) dated November 8, 2023, in a principal funded amount of $120,000, and (z) dated January 30, 2023, in a principal funded amount of $290,000, were waived by the Sponsor. This $860,000 adjustment was reflected in the changes in shareholders’ equity (capital deficiency) section of our financial statements.
On May 17, 2024, we issued an unsecured promissory note to our third sponsor, ARWM Inc Pte. Ltd. (the “Lender”) with a principal amount up to $500,000 (the “Note”). The Note is repayable in full upon the earlier of (a) November 1, 2024, (b) the date of the consummation of the Company’s initial business combination or (c) the date of the liquidation of the Company (such earlier date, the “Maturity Date”). The Note bears no interest, however, an establishment fee, a line fee and an exit fee totaling in aggregate 9.0% per annum are payable on the Maturity Date. At the option of Lender, at any time on or prior to the Maturity Date, any unpaid principal amount outstanding under this Note may be converted into whole warrants to purchase common stock at a conversion price equal to $1.00 per Warrant. If Lender elects such conversion, the terms of such Warrants shall be identical, with the exception of the exercise price, to the warrants issued in connection with our initial public offering that closed on November 02, 2021 (the “Private Placement Warrants”).
We signed a Note extension with the Lender to extend the Maturity Date from November 2, 2024 to June 30, 2025. All other terms of the Note remain unchanged by the Note extension.
The balance due the Lender as of December 31, 2024 was $689,000, which consisted of $663,000 of advances under the Note plus $26,000 of accrued interest. If the Company does not consummate an Initial Business Combination by the Maturity Date the Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a general meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.
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We entered into indemnity agreements with each of our officers and directors, a form of which was filed as an exhibit to this Annual Report. Those agreements require us to indemnify those individuals to the fullest extent permitted under applicable Cayman Islands law and to hold harmless, exonerate and advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Related Party Transactions Policies
We have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified in accordance with any such policy.
Prior to the consummation of our initial public offering, we adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interest, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. A form of the code of ethics that we adopted prior to the consummation of our initial public offering was filed as an exhibit to the registration statement.
Our audit committee, pursuant to a written charter that we adopted prior to the consummation of our initial public offering, is responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present is required in order to approve a related party transaction. A majority of the members of the entire audit committee constitutes a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. Our audit committee reviews on a quarterly basis all payments that were made to our successor sponsor, officers or directors, or our or any of their affiliates.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our successor sponsor, officers or directors unless we, or a committee of independent and disinterested directors, have obtained an opinion from an independent investment banking firm or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.
Furthermore, no finder’s fees, reimbursements or cash payments will be made by us to our successor sponsor, officers or directors, or our or any of their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of our initial public offering and the sale of the private warrants held in our trust account prior to the completion of our initial business combination:
| ● | Until the arrangement was terminated pursuant to the administrative services agreement termination on February 15, 2024, payment to our original sponsor of up to $10,000 per month for office space, administrative and support services; | |
| ● | Payment of consulting, success or finder fees to our sponsor shareholders, officers, directors, or their affiliates in connection with the consummation of our initial business combination; | |
| ● | Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; | |
| ● | At the closing of our initial business combination, we may pay a customary financial consulting fee to an affiliate of our successor sponsor. We may pay a customary financial consulting fee to an affiliate of our successor sponsor, which will not be made from the proceeds of our initial public offering held in our trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources that we believe are necessary in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest.. |
| 63 |
The above payments may be funded using the net proceeds of our initial public offering and the sale of the private warrants not held in our trust account or, upon completion of the initial business combination, from any amounts remaining from the proceeds of our trust account released to us in connection therewith.
Our audit committee reviews on a quarterly basis all payments that are made to our successor sponsor, officers or directors, or our or their affiliates.
Director Independence
While we are no longer subject to Nasdaq listing requirements due to our delisting, we continue to apply similar independence standards. An “independent director” is generally defined as a person other than an officer or employee of the company or its subsidiaries, or any individual whose relationship with the company could impair their independent judgment.
Our board has determined that each of Mr. Terry Alan Farris, Mr. Jeff LeBlanc, and Mr. Rainer Preiss qualifies as an “independent director” under applicable SEC rules. Our audit committee and compensation committee are each entirely composed of independent directors meeting SEC requirements. Our independent directors also hold regularly scheduled meetings at which only independent directors are present.
Item 14. Principal Accounting Fees and Services
The following is a summary of fees paid or to be paid to Kesselman & Kesselman (“PwC Israel”), for services rendered.
Audit Fees. Audit fees consist of fees that we paid for professional services rendered by PwC Israel in connection with the audit of our consolidated annual financial statements and services that would normally be provided by PwC Israel in connection with statutory and regulatory filings or engagements, including with respect to our IPO process that was completed in November 2021. Audit fees were $94,000 and $117,500 for the years ended December 31, 2024 and December 31, 2023, respectively.
Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay PwC Israel any audit-related fees for the years ended December 31, 2024 and December 31, 2023 respectively.
Tax Fees. We did not pay PwC Israel any tax fees for the years ended December 31, 2024 and December 31, 2023, respectively.
All Other Fees. We did not pay PwC Israel for other services years ended December 31, 2024 and December 31, 2023, respectively.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre- approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre- approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
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PART IV
Item 15. Exhibits, Financial Statement Schedules
| (a) | The following documents are filed as part of this Form 10-K: |
| (1) | Financial Statements: |
| (2) | Financial Statement Schedules: |
None.
| (3) | Exhibits |
We hereby file as part of this Annual Report the exhibits listed in the following Exhibit Index:
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
| 65 |
| 66 |
| (1) | Incorporated herein by reference to Exhibit 1.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021 |
| (2) | Incorporated herein by reference to Exhibit 3.2 of the Registrant’s Registrant Statement on Form S-1/A (Registration No. 333-258042) filed with the SEC on October 7, 2021 |
| (3) | Incorporated herein by reference to Exhibit 4.1 of the Registrant’s Registrant Statement on Form S-1/A (Registration No. 333-258042) filed with the SEC on October 7, 2021 |
| (4) | Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 20, 2023 |
| (5) | Incorporated herein by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 30, 2023 |
| (6) | Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 25, 2023 |
| (7) | Incorporated herein by reference to Exhibit 4.1 of the Registrant’s Registrant Statement on Form S-1/A (Registration No. 333-258042) filed with the SEC on October 7, 2021 |
| (8) | Incorporated herein by reference to Exhibit 4.2 of the Registrant’s Registrant Statement on Form S-1 (Registration No. 333-258042) filed with the SEC on July 20, 2021 |
| (9) | Incorporated herein by reference to Exhibit 4.3 of the Registrant’s Registrant Statement on Form S-1 (Registration No. 333-258042) filed with the SEC on July 20, 2021 |
| (10) | Incorporated herein by reference to Exhibit 4.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021 |
| (11) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Registrant Statement on Form S-1 (Registration No. 333-258042) filed with the SEC on July 20, 2021 |
| (12) | Incorporated herein by reference to Exhibit 10.1.2 of the Registrant’s Registrant Statement on Form S-1/A (Registration No. 333-258042) filed with the SEC on October 7, 2021 |
| (13) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021 |
| (14) | Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021 |
| (15) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 20, 2023 |
| (16) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 2, 2023 |
| 67 |
| (17) | Incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021 |
| (18) | Incorporated herein by reference to Exhibit 10.5 of the Registrant’s Registrant Statement on Form S-1 (Registration No. 333-258042) filed with the SEC on July 20, 2021 |
| (19) | Incorporated herein by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021 |
| (20) | Incorporated herein by reference to Exhibit 10.7 of the Registrant’s Registrant Statement on Form S-1 (Registration No. 333-258042) filed with the SEC on July 20, 2021 |
| (21) | Incorporated herein by reference to Exhibit 10.8 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022 |
| (22) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 27, 2023 |
| (23) | Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2023, filed with the SEC on November 14, 2023 |
| (24) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2024 |
| (25) | Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2024 |
| (26) | Incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2024 |
| (27) | Incorporated herein by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2024 |
| (28) | Incorporated herein by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC November 3, 2021 |
| (29) | Incorporated herein by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2024 |
| (30) | Incorporated herein by reference to Exhibit 10.6 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2024 |
| (31) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 25, 2024 |
| (32) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 16, 2024 |
| (33) | Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 16, 2024 |
| (34) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 21, 2024 |
| (35) | Incorporated herein by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 4, 2024 |
| (36) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 4, 2024 |
| (37) | Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 4, 2024 |
| (38) | Incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 4, 2024 |
| (39) | Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 31, 2024 |
| (40) | Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 7, 2024 |
| (41) | Incorporated herein by reference to Exhibit 4.5 of the Registrant’s Annual Report on Form 10-K filed with the SEC on April 15, 2024 |
| (42) | Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Annual Report on Form 10-K filed with the SEC on April 15, 2024 |
| * | Filed herewith. |
| ** | Furnished herewith. |
Item 16. Form 10-K Summary
Not applicable.
| 68 |
CACTUS ACQUISITION CORP. 1 LIMITED
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2024
| 69 |
CACTUS ACQUISITION CORP. 1 LIMITED
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2024
INDEX
| Page | |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | F-2 |
| FINANCIAL STATEMENTS - IN U.S. DOLLARS: | |
| Balance sheets | F-3 |
| Statements of Operations | F-4 |
| Statements of Changes in Capital Deficiency | F-5 |
| Statements of Cash Flows | F-6 |
| Notes to Financial Statements | F-7-F-22 |
| F-1 |
Report of Independent Registered Public Accounting Firm
To the board of directors and shareholders of Cactus Acquisition Corp. 1 Limited
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Cactus Acquisition Corp. 1 Limited (the “Company”) as of December 31, 2024 and 2023, and the related statements of operations, changes in capital deficiency and cash flows for the years then ended, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has until November 2, 2025 (hereafter – the Mandatory Liquidation Date) to consummate an Initial Business Combination. 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. 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 it will be able to raise sufficient funds to complete an Initial Business Combination. These matters raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
PCAOB
ID:
Certified Public Accountants (Isr.)
A member firm of PricewaterhouseCoopers International Limited
April 15, 2025
We have served as the Company’s auditor since 2021.
Kesselman & Kesselman, 146 Derech Menachem Begin, Tel-Aviv 6492103, Israel,
P.O Box 50005 Tel-Aviv 6150001, Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il
| F-2 |
CACTUS ACQUISITION CORP. 1 LIMITED
BALANCE SHEETS
| December 31 | ||||||||||
| Note | 2024 | 2023 | ||||||||
| U.S. Dollars in thousands | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | ||||||||||
| Prepaid expenses | ||||||||||
| TOTAL CURRENT ASSETS | ||||||||||
| NON-CURRENT ASSETS: | ||||||||||
| Cash held in trust account | 1c | |||||||||
| TOTAL ASSETS | ||||||||||
| Liabilities, shares subject to possible redemption and capital deficiency | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Related party | ||||||||||
| Sponsor loan | 6b | |||||||||
| Promissory note | 7 | |||||||||
| Accrued expenses and other liabilities | ||||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||
| LONG TERM LIABILITIES - | ||||||||||
| Underwriters’ deferred compensation | 8 | |||||||||
| TOTAL LIABILITIES | ||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION: shares at December 31, 2024, at a redemption value of $ and shares at December 31, 2023, at a redemption value of $ per share | 2f | |||||||||
| CAPITAL DEFICIENCY: | 4 | |||||||||
| Class A ordinary shares, $ par value; shares authorized, shares and shares issued and outstanding at December 31, 2024 and December 31, 2023 respectively | ||||||||||
| Class B ordinary shares, $ par value; shares authorized, share and shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively | * | * | ||||||||
| Preference Shares, $ par value; shares authorized, shares issued and outstanding | ||||||||||
| Additional paid-in capital | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| TOTAL CAPITAL DEFICIENCY | ( | ) | ( | ) | ||||||
| TOTAL LIABILITIES, SHARES SUBJECT TO POSSIBLE REDEMPTION AND CAPITAL DEFICIENCY | ||||||||||
| (*) |
The accompanying notes are an integral part of these financial statements.
| F-3 |
CACTUS ACQUISITION CORP. 1 LIMITED
STATEMENTS OF OPERATIONS
| Year ended December 31 | ||||||||
| 2024 | 2023 | |||||||
U.S. Dollars in thousands | ||||||||
| Except per share data | ||||||||
| INTEREST EARNED ON MARKETABLE SECURITIES HELD IN TRUST ACCOUNT | ||||||||
| OPERATING EXPENSES | ( | ) | ( | ) | ||||
| FINANCIAL EXPENSES | ( | ) | ||||||
| NET EARNINGS (LOSS) FOR THE YEAR | ( | ) | ||||||
| WEIGHTED AVERAGE OF CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION | ||||||||
| BASIC AND DILUTED EARNINGS PER CLASS A ORDINARY SHARE, see Note 5 | ||||||||
| WEIGHTED AVERAGE OF NON-REDEEMABLE CLASS A AND CLASS B ORDINARY SHARES OUTSTANDING | ||||||||
| BASIC AND DILUTED EARNINGS (LOSS) PER NON-REDEEMABLE CLASS A AND CLASS B ORDINARY SHARES, see Note 4 | ) | |||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
CACTUS ACQUISITION CORP. 1 LIMITED
STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
Class A Ordinary shares | Class B Ordinary shares | Additional | ||||||||||||||||||||||||||
| Number of shares | Par value | Number of shares | Par value | paid-in capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| U.S. dollars in thousands (except share data) | ||||||||||||||||||||||||||||
| BALANCE AT JANUARY 1, 2023 | * | ( | ) | ( | ) | |||||||||||||||||||||||
| CHANGES DURING 2023: | ||||||||||||||||||||||||||||
| Sponsor surrender of Class B common stock | ||||||||||||||||||||||||||||
| Subsequent accretion of Class A common stock subject to redemption amount | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of Class B common stock | * | ( | ) | * | * | |||||||||||||||||||||||
| Net earnings for the year | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2023 | * | * | ( | ) | ( | ) | ||||||||||||||||||||||
| CHANGES DURING 2024: | ||||||||||||||||||||||||||||
| Sponsor Loan Waiver | ||||||||||||||||||||||||||||
| Valuation of promissory note | ||||||||||||||||||||||||||||
| Sponsor surrender of founder shares | ||||||||||||||||||||||||||||
| Sponsor assignment of stock based compensation | ||||||||||||||||||||||||||||
| Subsequent accretion of Class A common stock subject to redemption amount | ( | ) | ( | ) | ||||||||||||||||||||||||
| Underwriters’ deferred compensation waiver | ||||||||||||||||||||||||||||
| Net loss for the year | ( | ) | ( | ) | ||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | * | * | ( | ) | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
CACTUS ACQUISITION CORP. 1 LIMITED
STATEMENT OF CASH FLOWS
| Year ended December 31 | ||||||||
| 2024 | 2023 | |||||||
| U.S. Dollars in thousands | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net earnings (loss) for the year | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Financial expenses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Stock based compensation | ||||||||
| Decrease (increase) in prepaid expenses | ( | ) | ||||||
| Increase (decrease) in accrued expenses | ||||||||
| Net cash (used in), provided by operating activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Redemption of Class A Ordinary share | ( | ) | ( | ) | ||||
| Proceeds from sponsor loan | ||||||||
| Proceeds from promissory note | ||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ( | ) | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | ||||||||
| RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||
| Cash and cash equivalents | ||||||||
| Cash held in trust account | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | ||||||||
| SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: | ||||||||
| Sponsor Loan Waiver | ||||||||
| Sponsor inducement for issuing the promissory note | ||||||||
| Underwriters’ deferred compensation waiver | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
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).
The
Company may pursue a business combination target in any business or industry and across any geographical region. However, the original
sponsor focused its search on technology-based healthcare businesses domiciled in Israel and that carry out all or a substantial portion
of their activities in Israel. Upon the completion of the sale of
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 December 31, 2024 relates to the Company’s formation, its initial public offering (the “Public offering”) described below, and activities to identify a business combination target. The Company generates non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering and the private placement (as defined below in Note 3). The Company has selected December 31 as its fiscal year end.
| b. | Sponsor and Financing |
On
February 9, 2024, the Company’s first sponsor, Cactus Healthcare Management, L.P. (“Cactus LP”), entered into a sponsor
securities purchase agreement with EVGI Limited (“EVGI”), the Company’s second sponsor, pursuant to which, on February
23, 2024, Cactus LP transferred to EVGI
On
April 29, 2024, a subsequent sponsor securities purchase agreement was executed between EVGI, the Company’s second sponsor, and
ARWM Pte Limited (ARWM”), the Company’s third sponsor, pursuant to which, on May 16, 2024, EVGI transferred to ARWM
See Note 6 Related Party Transactions regarding Second Sponsor Alliance, Third Sponsor Alliance, and Promissory Notes for additional information.
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
Units — closed on November 2, 2021. Upon that closing $
| F-7 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
| 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 $. 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
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 $
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, which are non-Founder 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. | Initial Business Combination / Extension Amendments |
Pursuant
to the Company’s amended and restated memorandum and articles of association, if the Company is unable to complete the Initial
Business Combination within 18 months from the closing of the Public Offering, the Company will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which
interest shall be net of taxes payable, and less up to $
| F-8 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
On April 20, 2023, the Company held an extraordinary general meeting in lieu of its 2023 annual general meeting (the “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 (the “Non-Redeeming Shareholders”). Pursuant to the NRAs, the Non-Redeeming Shareholders agreed not to redeem an aggregate of Class A ordinary shares of the Company related to the shareholder vote on the Extension Amendment Proposal (the “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 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 . Since Class A ordinary shares were not redeemed, an additional 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 the Company 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, and Class A ordinary shares were redeemed in connection
with the Extension, resulting in Class A ordinary shares outstanding. Accordingly, on May 1, 2023, $
In
addition, in connection with the shareholders’ approval of the Extension, the Sponsor and the Company committed to contribute up
to $
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 Class
A ordinary shares were redeemed in connection with the approval of the Articles Amendment Proposal, resulting in Class A Ordinary
Shares remaining outstanding after the Meeting. Accordingly, on June 15, 2023, $
| F-9 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
Since
an additional Class A ordinary shares were redeemed at the May 30, 2023 Meeting, the additional Class B ordinary shares
referenced above as due to the Non-Redeeming Shareholders, it was reduced to , for a total of .
The Class B shares due to the Non-Redeeming Shareholders has an implied value of $ per share, or an aggregate of $
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 Second Extension, which extended the Mandatory Liquidation Date from November 2, 2023 to November 2,
2024. A total of
In connection with the Second 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 Class A ordinary shares of the Company related to the shareholder vote on the Second Extension.
In
exchange for the foregoing commitment, the Sponsor agreed to transfer an aggregate of founders shares (which were converted from
Class B ordinary shares to Class A ordinary shares) held by the Sponsor to the Non-Redeeming Shareholders immediately following, and
subject to, consummation of a business combination. The number of founders shares transferable by the Sponsor to the Non-Redeeming Shareholders
was to be subject to increase if the number of publicly-held Class A ordinary shares that were not redeemed in connection with the Second
Extension Meeting was to exceed . Since publicly- held Class A ordinary shares were not redeemed, no additional founders
shares are due to the Non-Redeeming Shareholders. The Class A shares due to the Non-Redeeming Shareholders has an implied value
of $ per share, or an aggregate of $
The transfer of the Class A ordinary shares to the Non-Redeeming Shareholders is furthermore conditioned upon the Company fulfilling the continued or initial listing requirements for listing on the Nasdaq Global Market following the Meeting.
In
addition to transfer of founders shares, the Sponsor and the Company committed, in connection with the shareholders’ approval of
the Second Extension, to contribute to the Company’s Trust Account, on a monthly basis throughout the Second Extension period,
the lesser of (i) $ and (ii) $ per publicly-held Class A ordinary share multiplied by the number of publicly-held Class A ordinary
shares outstanding. Monthly contributions are to be made on the 15th day of each calendar month during the Second Extension,
beginning in November 2023 and until (but not including) November 2024. Given the publicly-held Class A ordinary shares that
were not redeemed, the contributions over the course of the twelve-month Second Extension period are expected to amount to approximately
$
| F-10 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
On April 2, 2024, the Company entered into a non-binding heads of agreement with Tembo e-LV B.V. (Tembo), a private company incorporated under the laws of the Netherlands, regarding a potential business combination transaction. At the time of the execution of this agreement, the Company’s Chief Executive Officer was also the Chief Operating Officer and Chief Financial Officer of VivoPower International PLC, which owns 100% of Tembo.
On
August 29, 2024, the Company and Tembo signed a Business Combination Agreement (BCA). Under the BCA, the consideration to be paid to
the equity holders of Tembo is $
On October 29, 2024, the Company and ARWM Inc Pte. Ltd. (the Company’s current Sponsor), entered into a non-redemption agreement (NRA) with an unaffiliated third party (the “Non-Redeeming Shareholder”). Pursuant to the NRA, the Non-Redeeming Shareholder agreed not to redeem (or to validly rescind any redemption requests with respect to) an aggregate of publicly-held Class A ordinary shares of the Company (“Non-Redeemed Shares”) in connection with the shareholder vote on the Articles Extension Proposal. In exchange for the foregoing commitments not to redeem the Non-Redeemed Shares, the Sponsor agreed to transfer an aggregate of founder shares of the Company held by it to the Non-Redeeming Shareholder immediately following, and subject to, consummation of an initial business combination. To the extent that a business combination does not close by May 2, 2025, the Sponsor agreed to transfer an additional founder shares of the Company held by it per month beginning on May 3, 2025 and ending on October 2, 2025 (up to founder shares). The Class A shares due to the Non-Redeeming Shareholder has an implied value of $ per share, or an aggregate of $. The $ value was determined based on a market approach methodology with a probability of acquisition assessment, using a stock price at the measurement date of $ and assigning a probability of acquisition of %. This $ value consideration is reflected in the shareholders equity section of the financial statements.
The Sponsors and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to any Class B ordinary shares (as described in Note 4) held by them if the Company fails to complete the Initial Business Combination within 18 months of the closing of the Public Offering or during any extended time that the Company has to consummate an Initial Business Combination beyond 18 months as a result of a shareholder vote to amend its amended and restated memorandum and articles of association. However, if the Sponsor or any of the Company’s directors or officers acquire any Class A ordinary shares, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.
| F-11 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
On
November 1, 2024, the Company held an extraordinary general meeting, at which the Company’s shareholders voted to approve the Third
Extension, which extended the mandatory liquidation date from November 2, 2024 to November 2, 2025. A total of Class A ordinary
shares were redeemed in connection with the Third Extension, resulting in Class A ordinary shares outstanding, consisting of
publicly-held Class A ordinary shares and founders shares. Accordingly, on November 13, 2024, $
In the event of a liquidation, dissolution or winding up of the Company after an initial Business Combination, the Company’s shareholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the ordinary shares. The Company’s shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that the Company will provide its shareholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, under the circumstances, and, subject to the limitations described herein.
| f. | Substantial Doubt about the Company’s Ability to Continue as a Going Concern |
On November 2, 2024 the Company extended the date by which the Company has to consummate an Initial Business Combination from November 2, 2024 to November 2, 2025 (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.
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 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.
| g. | 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.
| F-12 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
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.
| 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. 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 Company took steps to regain compliance prior to the December 26, 2023 date and in January 2024, Nasdaq staff notified the Company that it had regained compliance 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.
On October 23, 2023, the Company submitted a plan to regain compliance with the Minimum Total Holders Rule. On November 9, 2023 Nasdaq accepted the Company’s plan, and in doing so Nasdaq granted the Company an extension until March 6, 2024 (subsequently extended to March 11, 2024) to evidence compliance with the Minimum Total Holders Rule. On March 12, 2024 the Company received notice from Nasdaq that it was once again in compliance with the Minimum Total Holders Rule.
On May 7, 2024, the Company received a written notice (the “Notice”) from Nasdaq indicating that the Company was not in compliance with Listing Rule 5450(b)(2)(C) (the “MVPHS Rule”), which requires listed securities to maintain a minimum Market Value of Publicly Held Shares (MVPHS) of $15,000,000. Based upon Nasdaq’s review of the Company’s MVPHS, the Company no longer meets this requirement. Consequently, a deficiency exists with regard to the MVPHS Rule. However, in accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Notice states that the Company has 180 calendar days, or until November 4, 2024, in which to regain compliance with the MVPHS Rule.
On October 29, 2024, the Company received a notice from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC (Nasdaq) stating that because the Company had not completed an initial business combination within 36 months of the effective date of its registration statement in connection with its initial public offering, it was not in compliance with Nasdaq IM 5101-2 and was therefore subject to delisting. The Company had until November 5, 2024 to request a hearing before the Nasdaq Hearings Panel (Panel), but did not request a hearing and intends to trade on the over the counter (OTC) market.
| F-13 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (continued):
On November 2, 2024, the Company secured shareholder approval to extend its life by 12 months, to November 2, 2025. Trading in the Company’s securities on NASDAQ was suspended at the opening of business on November 5, 2024 and trading of the Company’s securities on the OTC market commenced on November 6, 2024, under the symbol CCTSF. The delisting and commencement of trading on OTC does not affect the Company’s previously announced business combination agreement with Tembo, as both parties continue to work to effectuate the completion of the transaction. The combined company intends to apply for up-listing on the Nasdaq Stock Market in connection with the completion of the business combination.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (hereafter – U.S. GAAP) and the regulations of the Securities Exchange Commission (hereafter – SEC). The significant accounting policies used in the preparation of the financial statement are as follows:
| a. | Use of estimates in the preparation of financial statement |
The preparation of the financial statement in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates and such differences may have a material impact on the Company’s financial statement.
| b. | Functional currency |
The U.S. dollar is the currency of the primary economic environment. The Company’s financing and operational costs are denominated in U.S. dollars. Accordingly, the functional currency of the Company is the U.S. dollar.
| c. | Cash and cash equivalents |
The Company considers as cash equivalents all short-term, highly liquid investments, which include short-term bank deposits with original maturities of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash.
| d. | Trust account |
As
of December 31, 2024, the Company held deposits of $
| F-14 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| e. | Accrued expenses |
The Company accounts for all incurred expenses which have yet to be paid as accrued expenses.
| f. | Redeemable Class A Ordinary Shares |
As
discussed in Note 1, all of the
Accordingly, on December 31, 2024 and 2023, and , respectively, Class A ordinary shares included in the Units were classified outside of permanent equity at their redemption value of $ and $ per share respectively.
| Redeemable Shares of Class A Common Stock | ||||
| U.S. dollars in thousands | ||||
| Class A common stock subject to possible redemption, as of January 1, 2023 | ||||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Less: | ||||
| Sponsor surrender of class B common stock | ( | ) | ||
| Redemption of Class A Ordinary Share | ( | ) | ||
| Class A common stock subject to possible redemption, as of December 31, 2023 | ||||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Less: | ||||
| Redemption of Class A Ordinary Share | ( | ) | ||
| Class A common stock subject to possible redemption, as of December 31, 2024 | ||||
| g. | Warrants |
The Company accounts for the warrants in accordance with the guidance contained in Accounting Standards Codification 815 (“ASC 815”), “Derivatives and Hedging”. Accordingly, both the public and the private warrants are considered indexed to the entity’s own stock and are classified within equity.
| F-15 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| h. | Concentration of credit risk |
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $
| i. | Financial instruments |
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures”, approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
| j. | Stock based compensation |
The Company charges to expense the fair value of stock awards granted or assigned to employees and nonemployees for services. Compensation costs for stock awards with immediate vesting are recognized immediately in the income statement based on the fair value of the award.
| k. | Income tax |
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes (hereafter – ASC 740). ASC 740 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that a portion or all of the deferred tax assets will not be realized, based on the weight of available positive and negative evidence. Deferred tax liabilities and assets are classified as non-current in accordance with ASC 740.
The Company accounts for uncertain tax positions in accordance with ASC 740-10. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement. The Company accrues interest and penalties related to unrecognized tax benefits under taxes on income (tax benefit).
| l. | Net Earnings per share |
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Basic earnings per share is computed by dividing net earnings attributable to holders of ordinary shares of the Company, by the weighted average number of ordinary shares outstanding for the reporting period.
In computing the Company’s diluted earnings per share, the denominator for diluted earnings per share is a computation of the weighted-average number of ordinary shares and the potential dilutive ordinary shares outstanding during the period.
| m. | Segment information reporting |
In accordance with FASB ASC Topic 280, the Company has determined that it operates in a single operating and reportable segment. The Company’s chief executive officer acts as the Company’s chief operating decision maker (CODM) and examines the Company as a whole, including the review of financial income and expenses. See Note 9 for details of financial income and expenses.
| n. | Recent accounting pronouncements |
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statement.
| F-16 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3 - PUBLIC OFFERING:
In
the Initial Public Offering, the Company issued and sold units at an offering price of $ per unit (the “Units”).
The Sponsor purchased an aggregate of
Each
Unit consists of one Class A ordinary share, $ par value, and one-half of one warrant, with each whole warrant exercisable for
one Class A ordinary share (each, a “Warrant” and, collectively, the “Warrants”). Each Warrant entitles the holder
thereof to purchase one whole Class A ordinary share at a price of $
Once
the Public Warrants become exercisable, the Company may redeem them in whole and not in part at a price of $
The Warrants sold in the Private Placement (the “Private Warrants”) are identical to the Public Warrants except that: (1) they (including the ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the sponsor until 30 days after the completion of the initial business combination; (2) they (including the ordinary shares issuable upon exercise of these warrants) are not registered but are entitled to registration rights; and (3) prior to being sold in the open market or transferred into “street name”, they are not redeemable by the Company.
The
Company paid an underwriting commission of
| F-17 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 - CAPITAL DEFICIENCY:
| a. | Ordinary Shares |
Class A ordinary shares
The
Company is authorized to issue up to Class A ordinary shares of $ par value each. Pursuant to the initial Public Offering
on December 31, 2022 the Company issued and sold an aggregate of Class A ordinary shares as part of the Units sold in the
respective transaction. The Units (which also included Warrants) were sold at a price of $ per Unit, and for an aggregate consideration
of $
Class B ordinary shares
The
Company is authorized to issue up to Class B ordinary shares of $ par value each. On May 14, 2021 the Company issued
Class B ordinary shares of $ par value each for a total consideration of $
Class B ordinary shares are convertible into Class A ordinary shares, on a one-to-one basis, at any time and from time to time at the option of the holder, or automatically on the day of the business combination. Class B ordinary shares also possess the sole right to vote for the election or removal of directors, until the consummation of an initial business combination.
On October 24, 2023, the Sponsor converted of the founders shares from Class B ordinary shares to Class A ordinary shares, leaving only one Class B ordinary share outstanding.
| b. | Preference shares |
The Company is authorized to issue up to Preference Shares of $ par value each. As of June 30, 2024 and 2023, the Company has Preference shares issued and outstanding.
| F-18 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
| a. | Basic |
As of December 31, 2024 and 2023, the Company had two classes of ordinary shares, Class A ordinary shares subject to possible redemption and non-redeemable Class A and Class B ordinary shares. In order to determine the net loss attributable to each class, the Company first considered the total earnings (loss) allocable to both sets of shares. This is calculated using the total earnings (loss) less any Interest Earned on Investments Held in Trust Account. The accretion to redemption value of the Class A ordinary shares subject to possible redemption is fully allocated to the Class A ordinary shares subject to redemption.
| Year ended December 31 | ||||||||
| 2024 | 2023 | |||||||
U.S. dollars in thousands (except share data) | ||||||||
| Net earnings (loss) for the year | ( | ) | ||||||
| Less - interest earned
on marketable securities held in trust account | ( | ) | ( | ) | ||||
| Net loss excluding interest | ( | ) | ( | ) | ||||
| Class A ordinary shares subject to possible redemption: | ||||||||
| Numerator: | ||||||||
| Net loss excluding interest | ( | ) | ( | ) | ||||
| Accretion on Class A ordinary shares subject to possible redemption to redemption amount (“Accretion”) | ||||||||
| Denominator: | ||||||||
| Weighted average of class
A ordinary shares subject to possible redemption | ||||||||
| Basic and diluted earnings per Class A ordinary share subject to possible redemption | ||||||||
| Non-redeemable Class A and Class B ordinary shares: | ||||||||
| Numerator: | ||||||||
| Net loss excluding interest | ) | ) | ||||||
| Sponsor Loan Waiver | ||||||||
| Accretion | ) | ) | ||||||
| Underwriters’ deferred compensation waiver | ||||||||
| ) | ||||||||
| Denominator: | ||||||||
| Weighted average of non-redeemable Class A shares and Class B ordinary share outstanding | ||||||||
| Basic and diluted earnings (loss) per non-redeemable Class A and Class B ordinary share: | ) | |||||||
| b. | Diluted |
As of December 31, 2024 and 2023, the Company did not have any dilutive securities or any other contracts which could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company.
| F-19 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 6 - RELATED PARTY TRANSACTIONS:
| a. | Issuance of shares |
On October 2021, the Company effected a stock share dividend of shares for each founder share outstanding, resulting in an aggregate of founder shares outstanding and held by the Sponsor and the Company’s directors. For warrants purchased by the Sponsor at the Initial Public Offering see note 3.
| b. | Promissory Notes |
On
January 30, 2024, the Company issued a convertible promissory note to the first Sponsor under which the Company can borrow up to a $
On
January 31, 2024, the Company requested of the first Sponsor that $
On
February 23, 2024, as part of closing of the Second Sponsor Alliance, the promissory notes issued by the Company to the first Sponsor,
consisting of promissory notes (x) dated March 16, 2022, in a principal amount of $
On
May 17, 2024, the Company issued an unsecured promissory note to the Company’s third sponsor, ARWM Inc Pte. Ltd. (the “Lender”)
with a principal amount up to $
The
Company and the Lender signed a Note extension to extend the Maturity Date from
The
balance due the Lender as of December 31, 2024 was $
| F-20 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 6 - RELATED PARTY TRANSACTIONS (continued):
Second Sponsor Alliance
On
February 9, 2024, a sponsor securities purchase agreement was executed between the Company’s first sponsor, Cactus Healthcare Management,
L.P. (“Cactus LP”) and the Company’s second sponsor, EVGI Limited (“EVGI”), pursuant to which, on February
23, 2024, Cactus LP transferred to EVGI (a) an aggregate of founders’ shares (“Founders’ Shares”),
consisting of Class A ordinary shares, par value $ of the Company (“Class A ordinary shares”) and Class
B ordinary share, par value $, of the Company (“Class B ordinary share”), and (b)
In connection with the Second Sponsor Alliance, the Company, Cactus LP and EVGI entered into a joinder agreement (the “Registration Rights Joinder Agreement”) to the registration rights agreement, dated November 2, 2021, by and among the Company, the first Sponsor and any other holders of the Company’s securities who become party thereto from time to time (the “Registration Rights Agreement”) whereby (i) the first Sponsor assigned its rights under the Registration Rights Agreement with respect to the Transferred Securities to the Purchaser, and (ii) the Purchaser became party to the Registration Rights Agreement. Also, in connection with the Transfer, the Company waived the transfer restrictions applicable to the Transferred Securities under the letter agreement, dated October 28, 2021 (the “Letter Agreement”), by and among the Company, the first Sponsor and the original officers and directors of the Company, in order to allow for the Transfer by the first Sponsor to the Purchaser of the Founders’ Shares and Private Warrants (the “Letter Agreement Waiver”).
In addition, in connection with the closing of the Transferred Securities, the Company obtained a waiver from the representatives of the underwriters of the Company’s IPO, with respect to the underwriters’ respective entitlement to the payment of any deferred underwriting commissions under the terms of the Underwriting Agreement, dated October 28, 2021, by and between the Company and the underwriters of the IPO.
On February 23, 2024, the parties completed the closing of the Second Sponsor Alliance and as part of the closing, the Company introduced a change in management and the board of directors of the Company.
Third Sponsor Alliance
On
April 29, 2024, a subsequent sponsor securities purchase agreement was executed between EVGI, the Company’s second sponsor, and
ARWM Pte Limited (“ARWM”), the Company’s third sponsor, pursuant to which, EVGI agreed to transfer to ARWM on the closing
(a) an aggregate of founders’ shares, consisting of Class A ordinary shares of the Company, or % of the
outstanding Class A Ordinary Shares, and Class B ordinary share of the Company (“Class B Ordinary Share”), or % of the
outstanding Class B Ordinary Shares and (b)
| F-21 |
CACTUS ACQUISITION CORP. 1 LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 6 - RELATED PARTY TRANSACTIONS (continued):
On May 16, 2024, the parties completed the closing and as part of the closing of the Third Sponsor Alliance, the Company introduced a change in management and the board of directors of the Company.
NOTE 7 – PROMISSORY NOTE – UNRELATED PARTY:
On
March 25, 2024, the Company issued an unsecured promissory note to Energi Holding Limited (the “Lender”) , not a related
party, with a principal amount up to $
On
March 25, 2024, the Lender advanced $
The Company and the Lender signed a Note extension to extend the Maturity Date from November 1, 2024 to November 2, 2025. All other terms of the Note remain unchanged by the Note extension.
As
an inducement for the Lender to fund the Note, EVGI Limited (“EVGI”), the second sponsor, and the Lender agreed that (a)
Sponsor and the Lender shall enter into an agreement pursuant to which the Lender may elect upon forfeiture of its rights to payment
of amounts outstanding under the Note to receive a number of the Company’s Class A Ordinary Shares held of record by the
Sponsor to be determined in such agreement and (b) Sponsor shall transfer to the Lender
of the Company’s Class A ordinary shares held of record by Sponsor, or subsequent sponsors, for no consideration at such time
and on such terms as shall be agreed. The Sponsor’s inducement was recognized as a deduction from the $
The balance due the Lender as of December 31, 2024 was $, which consisted of $ of advances under the Note plus $ of accrued interest.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Underwriters’ Deferred Compensation
Under
the Underwriting Agreement, the Company was obligated to pay an additional fee (the “Deferred Underwriting Compensation”)
of
In connection with the closing of the Sponsor Alliance on February 23, 2024 (see Note 6), the Company obtained a waiver with respect to the underwriters’ payment of the deferred underwriting compensation additional fee.
NOTE 9 – FINANCIAL INCOME AND EXPENSES
Financial income represents interest
earned on funds in the Trust account (see Note 2d), which amounted to $$
During
the year ended December 31, 2024, the Sponsor assigned
Class A non-redeemable shares (founder shares) to directors. The stock awards were valued at $
| F-22 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, as amended, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on April 15, 2025.
| Cactus Acquisition Corp. 1 Limited | ||
| By: | /s/ Adam Ridgway | |
| Name: | Adam Ridgway | |
| Title: | Chief Executive Officer, Principal Accounting Officer, and Director | |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following persons in the capacity and on the dates indicated.
| Name | Position | Date | ||
| /s/ Adam Ridgway | Chief Executive Officer, Principal Accounting Officer, and Director | April 15, 2025 | ||
| Adam Ridgway | ||||
| /s/ Terry Alan Farris | Director, Chairman of the Board | April 15, 2025 | ||
| Terry Alan Farris | ||||
| /s/ Jeff LeBlanc | Director | April 15, 2025 | ||
| Jeff Leblanc | ||||
| /s/ Rainer Michael Preiss | Director | April 15, 2025 | ||
| Ranier Michael Preiss |
| 70 |