Cactus Acquisition: minimal operating cash, relies on trust and loans as Tembo deal looms

Cactus Acquisition Corp. 1 Limited (NASDAQ: CCTSU) - Quick inside look

What's happening: the SPAC is still pursuing its announced business combination with Tembo e‑LV B.V., but is operating with minimal cash outside its trust account, a capital deficit and continued reliance on sponsor and third‑party promissory financing. The company remains under substantial doubt as a going concern and was previously delisted from Nasdaq and now trades on the OTC market (OTC: CCTSF) while working toward its Tembo deal and potential re‑listing.

Key facts & figures (U.S. dollars in thousands unless noted)

- Total assets: 9,222

- Cash and cash equivalents (operating): 21

- Cash held in trust account: 9,075

- Total current liabilities: 2,389

- Sponsor loan balance (March 31, 2025): 780

- Promissory note (Energi / unrelated lender) balance (Mar 31, 2025): 646

- Capital deficiency / working capital deficit: (2,242)

- Class A ordinary shares subject to possible redemption: 763,572 at a redemption value of $11.88 per share (Mar 31, 2025)

- Net earnings (loss) for Q1 2025: (78)

- Interest earned on marketable securities held in trust (Q1 2025): 95 (Q1 2024: 277)

- Operating expenses (Q1 2025): (143) (Q1 2024: (240))

- Financial expenses (Q1 2025): (30) (Q1 2024: 0)

- Basic & diluted EPS - redeemable Class A (Q1 2025): 0.08; non‑redeemable Class A/B (Q1 2025): (0.04)

- Business Combination Agreement consideration (per BCA): $838 million to Tembo, paid in shares valued at $10.00 each

- Subsequent event (Jul 17, 2025): unsecured promissory note issued to Hali International Limited - $200,000 at 12% interest (matures Dec 31, 2025)

Inside the company - what matters

- Liquidity is concentrated in the trust account ($9,075) which is reserved for the business combination; operating cash outside the trust is effectively nil ($21). That leaves day‑to‑day operations and transaction costs dependent on sponsor loans and external promissory notes.

- Management continues working toward the Tembo transaction (BCA signed Aug 29, 2024) but the deal remains subject to regulatory approvals, audits and shareholder votes. Tembo's owner VivoPower received a competing proposal from Energi, which could affect the timeline or structure.

- Corporate status and market access: the company was notified of Nasdaq delisting for failure to complete a business combination in the original window; trading moved to OTC and the company plans to reapply for Nasdaq listing after closing a business combination.

- Governance / controls: management disclosed a material weakness in internal controls (insufficient finance personnel / segregation of duties) that has not yet been remediated - a risk for financial reporting and investor confidence.

Positive aspects of the income statement

- Interest income continues to be generated from the trust account (Q1 2025: 95), providing non‑operating revenue while the SPAC searches for and executes a business combination.

- Operating expenses declined year‑over‑year (Q1 2025: 143 vs Q1 2024: 240), indicating some cost control on public‑company and due‑diligence spending.

Negative aspects of the income statement

- Net result moved from a small profit (Q1 2024: +37) to a net loss in Q1 2025 of (78), driven by lower interest income and the introduction of financial expenses (30) tied to sponsor and promissory financing.

- Interest income on trust investments declined materially (95 vs 277 year‑over‑year), reducing the buffer available to fund operating and transaction costs.

- Financial expenses (30) are new and reflect mounting cost of bridge financing; continued reliance on such financing increases risk of dilution, default, or onerous conversion terms tied to completing a business combination.

Main risks to watch (short list)

- Going concern: management explicitly states substantial doubt about the company's ability to continue as a going concern without completing a business combination or obtaining additional financing.

- Low operating cash: only $21 outside the trust - limited runway for transaction expenses unless additional sponsor / third‑party funding arrives.

- Dilution and structure risk: the Tembo transaction contemplates a large share issuance ($838m consideration in shares) that will materially change capitalization; investor redemptions and sponsor share transfers add complexity.

- Control / reporting risk: material weakness in internal controls remains unresolved.

Bottom line: Cactus Acquisition is a SPAC with meaningful funds in trust but almost no operating liquidity and a clear dependency on external promissory / sponsor financing to reach closing. The income statement shows modest interest income and lower operating costs, but a move to a net loss and new financing expenses underline the funding pressure. Completion of the Tembo deal (or alternative financing) is the key catalyst - until then the company faces significant execution and going‑concern risk.