10-Q: Cactus Acquisition Corp. 1 Ltd. Q2 2026 Update: Tembo Deal Progress Amidst Financial Concerns

Cactus Acquisition Corp. 1 Ltd. reports progress on its business combination with Tembo e-LV B.V. but faces ongoing substantial doubt regarding its ability to continue as a going concern.

Summary

• Cactus Acquisition Corp. 1 Limited (the Company) is a blank check company focused on the energy renewables sector, aiming for a business combination.
• The company has signed a Business Combination Agreement with Tembo e-LV B.V. (Tembo) and is working towards its completion, targeting a resubmission of its Form F-4 registration statement in the second half of 2026.
• The mandatory liquidation date has been extended to November 2, 2026.
• As of June 30, 2026, the company reported $131,000 in cash and a working capital deficit of $3,262,000.
• The company has incurred net losses for the six months ended June 30, 2026 ($286,000) and June 30, 2025 ($160,000).
• There is substantial doubt about the company's ability to continue as a going concern due to the potential for mandatory liquidation if a business combination is not consummated by November 2, 2026.
• Trading of the company's securities was suspended from NASDAQ and commenced on the OTC market under the symbol CCTSF.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to the ongoing uncertainty surrounding the business combination and the company's ability to continue as a going concern, despite progress on the business combination agreement.

Positives

• Progress made on the Business Combination Agreement with Tembo e-LV B.V., with a target for resubmission of the Form F-4 registration statement.
• The mandatory liquidation date has been extended to November 2, 2026, providing additional time to complete a business combination.
• The company has secured additional promissory note funding, including a $300,000 note from TAG INTL DMCC.
• Operating expenses decreased by $90,000 for the quarter ended June 30, 2026, compared to the same period in 2025, primarily due to lower professional fees related to the Tembo transaction.

Negatives

• The company has a working capital deficit of $3,262,000 as of June 30, 2026.
• Net loss for the six months ended June 30, 2026, was $286,000, an increase from $160,000 in the prior year period.
• Interest income from the trust account significantly decreased to $11,000 for the six months ended June 30, 2026, from $188,000 in the prior year period, due to shareholder redemptions.
• There is substantial doubt about the company's ability to continue as a going concern.
• Disclosure controls and procedures were not effective due to a material weakness related to an insufficient number of qualified finance and accounting personnel.

Risks

• If a business combination is not consummated by November 2, 2026, there will be a mandatory liquidation and dissolution of the Company.
• The company may have insufficient funds to operate its business prior to a business combination, potentially forcing it to cease operations and liquidate.
• The company may not be able to secure necessary third-party financing to complete a business combination.
• Dilution of equity interests for investors in the initial public offering may occur if additional ordinary shares are issued in a business combination.
• The company's disclosure controls and procedures were not effective due to a material weakness in internal control resulting from an insufficient number of qualified finance and accounting personnel.

Future Outlook

The company is actively working towards completing its business combination with Tembo e-LV B.V. before its mandatory liquidation date of November 2, 2026. Management is targeting a confidential resubmission of the amended Form F-4 registration statement in the second half of 2026. The company anticipates needing additional financing and faces substantial doubt regarding its ability to continue as a going concern if the business combination is not completed.

Management Comments

• Management is targeting confidential resubmission of the amended Form F-4 during the second half of 2026 and continues to work toward completing the proposed business combination prior to the Companys mandatory liquidation date of November 2, 2026.
• Management evaluated the effectiveness of disclosure controls and procedures and concluded they were not effective due to a material weakness in internal control resulting from an insufficient number of qualified finance and accounting personnel.
• The company intends to use substantially all of the funds held in its trust account, minus amounts paid to redeeming shareholders, as consideration to complete its initial business combination.

Industry Context

StockSavvy.ai notes that Cactus Acquisition Corp. 1 Limited operates as a Special Purpose Acquisition Company (SPAC) in the energy renewables sector. The current environment for SPACs involves increased regulatory scrutiny and a challenging market for consummating business combinations, particularly for companies with limited operating history and significant financial dependencies.

Comparison to Industry Standards

• As a SPAC, direct comparison to operating companies is not applicable. However, the extended timeline for business combination completion and the reliance on third-party financing are common challenges faced by many SPACs.
• The company's net loss and working capital deficiency are typical for SPACs in their pre-business combination phase, where operational revenues are non-existent and expenses are primarily related to search and administrative costs.
• The significant shareholder redemptions in connection with extension meetings are a common trend observed across the SPAC market, impacting the cash available for business combinations.

Related Party Transactions

• Sponsor loan from ARWM Inc Pte. Ltd. with a principal amount of approximately $894,000 as of June 30, 2026, consisting of advances and accrued interest.
• The company issued an unsecured promissory note to its third sponsor, ARWM Inc Pte. Ltd., with a principal amount up to $900,000, bearing no interest but with fees totaling 9.0% per annum. The note has been extended multiple times.

Stakeholder Impact

• Shareholders face potential dilution if additional shares are issued in the business combination.
• Shareholders who redeemed shares in connection with extension meetings have received cash distributions from the trust account.
• The company's ability to continue as a going concern impacts all stakeholders, with a potential liquidation if the business combination is not completed.
• Creditors and noteholders face risks related to the company's ability to repay outstanding promissory notes and sponsor loans if a business combination is not achieved.

Next Steps

• Finalize responses to the SEC's comment letter and update the Form F-4 registration statement.
• Target confidential resubmission of the amended Form F-4 during the second half of 2026.
• Continue working towards completing the proposed business combination with Tembo e-LV B.V. prior to the mandatory liquidation date of November 2, 2026.
• Obtain shareholder and regulatory approvals for the business combination.
• Satisfy other customary closing conditions for the business combination.

Key Dates

Recommendation

The company is in a critical pre-business combination phase with significant progress on the Tembo deal, but also faces substantial doubt about its going concern status and a looming liquidation deadline. The potential for dilution and the need for further financing introduce considerable risk. A 'hold' recommendation reflects the speculative nature of the investment, balancing the potential upside of a successful business combination against the significant downside risks.

Keywords

Special Purpose Acquisition Company, Business Combination, Tembo e-LV B.V., Energy Renewables, Form 10-Q, Liquidation Date, Working Capital, Promissory Notes