UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                 --------------

                                    FORM 10-K

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                   For The Fiscal Year Ended December 31, 2005
                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from _______________ to __________________

                        Commission file number: 001-32587

                          HEALTHCARE ACQUISITION CORP.
             (Exact name of registrant as specified in its charter)

       Delaware                                        20-2726770
(State of incorporation)                    (I.R.S. Employer Identification No.)

                              2116 Financial Center
                                666 Walnut Street
                             Des Moines, Iowa 50309
          (Address of principal executive offices, including zip code)

                                 (515) 244-5746
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

                    Common Stock, $.0001 par value per share
                   Warrants to purchase shares of Common Stock
                                (Title Of Class)

           Securities registered pursuant to Section 12(g) of the Act:

                                      None


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<PAGE>


      Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes |_| No |X|.

      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 |_| No |X|.

      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. Yes |X| No |_|.

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

      Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange
Act.

Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|

      Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|.

      The aggregate market value of the outstanding common stock, other than
shares held by persons who may be deemed affiliates of the registrant, computed
by reference to the closing sales price for the Registrant's Common Stock on
March 27, 2006, as reported on the American Stock Exchange, was approximately
$75,670,000. As of March 27, 2006, there were 11,650,000 shares of common stock,
par value $.0001 per share, of the registrant outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

      PART I
<S>         <C>                                                                                                             <C>

Item 1.     Business..........................................................................................................5

Item 1A.    Risk Factors.....................................................................................................13

Item 1B.    Unresolved Staff Comments........................................................................................28

Item 2.     Properties.......................................................................................................29

Item 3.     Legal Proceedings................................................................................................29

Item 4.     Submission of Matters to a Vote of Security Holders..............................................................29


      PART II


Item 5.     Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.....30

Item 6.     Selected Financial Data..........................................................................................34

Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations............................35

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.......................................................35

Item 8.     Financial Statements and Supplementary Data......................................................................35

Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ...........................36

Item 9A.    Controls and Procedures..........................................................................................36

Item 9B.    Other Information................................................................................................36


      PART III


Item 10.    Directors and Executive Officers of the Registrant...............................................................37

Item 11.    Executive Compensation...........................................................................................42

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...................43

Item 13.    Certain Relationships and Related Transactions...................................................................45

Item 14.    Principal Accounting Fees and Services...........................................................................46


      PART IV


Item 15.    Exhibits and Financial Statement Schedules.......................................................................48
</TABLE>



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<PAGE>

      CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      The  statements  contained in this Annual Report on Form 10-K that are not
purely historical are forward-looking statements. Our forward-looking statements
include,  but are not limited to,  statements  regarding our or our management'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 "anticipates," "believe,"
"continue,"  "could,"  "estimate,"  "expect," "intends," "may," "might," "plan,"
"possible,"  "potential,"  "predicts,"  "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  on Form  10-K  may  include,  for  example,
statements about our:

      o     ability  to  complete  a   combination   with  one  or  more  target
            businesses;

      o     success in  retaining  or  recruiting,  or changes  required in, our
            officers,   key   employees  or   directors   following  a  business
            combination;

      o     executive  officers  and  directors  allocating  their time to other
            businesses  and  potentially  having  conflicts of interest with our
            business  or in  approving  a business  combination,  as a result of
            which  they would then o receive  expense  reimbursements  and their
            shares of common stock would become  eligible for later release from
            escrow;

      o     potential  inability  to obtain  additional  financing to complete a
            business combination;

      o     limited pool of prospective target businesses;

      o     securities' ownership being concentrated;

      o     potential  change  in  control  if we  acquire  one or  more  target
            businesses for stock; or

      o     risks associated with operating in the healthcare industry.

      The  forward-looking  statements  contained in this Annual  Report on Form
10-K  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 under the heading "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  and/or  if  and  when  management  knows  or has a
reasonable basis on which to conclude that previously disclosed  projections are
no longer reasonably attainable.


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<PAGE>


PART I


Item 1. Business.

Introduction

      Healthcare  Acquisition  Corp. (the  "Company",  "we", or "us") is a blank
check  company  organized  under the laws of the State of  Delaware on April 25,
2005. We were formed to acquire, through a merger, capital stock exchange, asset
acquisition  or other  similar  business  combination,  one or more  domestic or
international  assets or an operating  business in the healthcare  industry.  To
date, our efforts have been limited to  organizational  activities,  our initial
public offering and the search for a suitable  business  combination.  As of the
date of this filing, we have not acquired any business operations.

      Our executive  offices are located at 2116  Financial  Center,  666 Walnut
Street,  Des Moines,  Iowa 50309 and our  telephone  number at that  location is
(515) 244-5746.  We do not currently have a website and consequently do not make
available  materials  we file with or furnish  to the  Securities  and  Exchange
Commission. We will provide electronic or paper copies of such materials free of
charge upon request.

Recent Developments

      A  registration  statement  for our initial  public  offering was declared
effective on July 28, 2005.  On August 3, 2005, we sold  9,000,000  units in the
initial public offering. On August 16, 2005, we sold an additional 400,000 units
pursuant  to the  overallotment  option  granted  to the  representative  of the
underwriters in our initial public offering.  Each of our units consisted of one
share of our common stock, $.0001 par value per share, and one redeemable common
stock purchase warrant. Each warrant entitles the holder to purchase from us one
share of common stock at an exercise price of $6.00 on the later of (i) July 28,
2006 or (ii) the  consummation  of a  business  combination,  and such  warrants
expire on the earlier of (i) July 27, 2009 or (ii) their redemption. We received
gross proceeds of  approximately  $75,200,000  from our initial public  offering
(including  exercise  of the  overallotment  option) of which  $67,928,000  were
placed in trust.

      On July 29,  2005,  our units  commenced  trading  on the  American  Stock
Exchange under the symbol "HAQ.U".  On October 6, 2005, our units ceased trading
and our common stock and warrants  commenced  separately trading on the American
Stock Exchange under the symbols "HAQ" and "HAQ.WS", respectively.

      Pursuant to an agreement with the  representative  of the  underwriters in
our initial public  offering,  and subject to Rule 10b5-1  purchase  plans,  our
officers  acquired  an  aggregate  of 354,900  of our  warrants  in  open-market
transactions during the fourth quarter of 2005.

      Since the completion of our initial public offering, we have contacted and
continue  to contact  those  industry  professionals  who we  believe  can be of
strategic  assistance in sourcing potential deals for us, including,  investment
bankers,   business   consultants,   accountants   and   lawyers.   Through  the
relationships  of our board of  directors,  officers  and  directors  and senior
advisors,   we  have  also  made  contact  with  certain   large   national  and
international  concerns to determine if they have any interest in divesting  any
of their existing  interests.  We have also sought out owners and  institutional
owners of healthcare  industry  businesses  and  investment  bankers or business
brokerage companies that are active in the healthcare industry.

Overview

      The healthcare  industry  constitutes  one of the largest  segments of the
United  States  economy.  According  to the Centers for  Medicare  and  Medicaid
Services, or CMS, healthcare  expenditures have increased from $245.8 billion in
1980 to a  forecasted  $1.9  trillion in 2005,  representing  a Compound  Annual
Growth  Rate,  or CAGR,  of 9%.  Further,  in 2003,  approximately  64% of total
healthcare  expenditures were spent on the following  categories:  hospital care
(31%),  physician and clinical  services (23%) and prescription  drugs (10%). In
2003, healthcare expenditures totaled $1.7 trillion (or $5,800 per American) and
accounted for 15.3% of Gross Domestic  Product,  or GDP, which outpaced  overall
economic growth by 3%. In the future, national health expenditures are projected
to reach $3.6  trillion by 2014,  representing  a CAGR of 7.4% over the next ten
years. Health spending is projected to reach 18.7% of GDP by 2014.


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<PAGE>

      Funding for healthcare comes from public and private sources. Medicaid and
Medicare  programs were created in the mid 1960's.  Medicare  focuses on elderly
coverage  (over 65 years old) and the  disabled  of any age.  Medicaid  provides
coverage  for the poor and  indigent  population  and is  jointly  funded by the
Federal  and  State  governments.  In 2002,  according  to CMS,  roughly  34% of
healthcare  payments came from Medicaid and Medicare.  Private health  insurance
supports  roughly 35% of total  costs.  As  healthcare  costs rise,  the private
sector is  responding by shifting more of the cost of healthcare to employees by
paying a smaller percent of healthcare  premiums.  The employee,  usually in the
form of a payroll  deduction,  must pay the amount of the  premium not funded by
the employer.  However,  according to the U.S. Census Bureau,  approximately  40
million Americans were uninsured in 2003.

      Our management believes that, as a result of continued growth,  there will
be numerous  acquisition  targets within the healthcare  sector.  Our management
believes that this growth will be driven by the following factors:

      EXPANDING AND AGING POPULATION. According to U.S. Census Bureau estimates,
      in 2005 the American  population is approximately 296 million and growing.
      Simultaneously,  we are witnessing  the "graying of America",  whereby the
      elderly  population  is  increasing  more  rapidly  than  the  rest of the
      population  and  represents  the  largest  users of  healthcare  services.
      According  to the  U.S.  Census  Bureau,  approximately  12%  of the  U.S.
      population  was over-65 in 2003 and was  forecasted to account for roughly
      20% of the population by 2030. By 2010, the number of people in the United
      States  between the ages of 40 and 60 is expected to grow from  roughly 58
      million to more than 64 million.

      EVOLVING  MEDICAL  TREATMENTS.   Advances  in  technology  have  favorably
      impacted the development of new medical devices and  treatments/therapies.
      The products are generally more effective and easier-to-use. Some of these
      breakthroughs have reduced hospital stays, costs and recovery periods. The
      continued  advancement of technological  breakthroughs  should continue to
      boost services administered by healthcare providers.

      INCREASED CONSUMER  AWARENESS.  In recent years, the publicity  associated
      with new  technological  advances and new medical  therapies has increased
      the number of patients visiting healthcare professionals to seek treatment
      for new and innovative  therapies.  Simultaneously,  consumers have become
      more vocal due to rising costs and reduced access to  physicians.  Lastly,
      the rise in cosmetic  procedures has emerged as one of the fastest growing
      healthcare segments.  Since many cosmetic procedures require out-of-pocket
      expenditures,  this rise may reflect a growing willingness by consumers to
      pay for certain  procedures out of their  discretionary  funds. We believe
      that more active and aware  consumers  will  continue to  stimulate a wide
      variety of healthcare segments.

      ACCESS  TO  CAPITAL.  The  venture  capital  community  has  traditionally
      embraced healthcare  companies.  Capital investments have allowed entities
      to grow and expand via  consolidation  or organic  growth.  Therefore,  we
      believe  there are many mature  companies  that may  potentially  serve as
      platforms  for future  acquisitions  and  growth.  According  to Dow Jones
      VentureSource, 2,142 healthcare companies raised venture capital financing
      rounds from 2001-2004.  In that time period, 66 venture-backed  healthcare
      companies  completed  initial  public  offerings  and  194  venture-backed
      healthcare companies were acquired via merger and acquisition.

      Although  we  may  consider  a  target  business  in  any  segment  of the
healthcare  industry,  we  are  concentrating  our  search  for  an  acquisition
candidate in the following segments:


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<PAGE>

      o     healthcare services;

      o     healthcare information technology;

      o     healthcare facilities; and

      o     medical devices and products.

Our Management Team

      Mr.  Pappajohn,  our chairman and  secretary,  has been an active  private
equity investor in healthcare companies for more than 30 years and has served as
a director of more than 40 public companies. Mr. Pappajohn has been a founder in
several public  healthcare  companies such as Caremark Rx, Inc.,  Quantum Health
Resources and Radiologix, Inc. Mr. Pappajohn and Dr. Schaffer, our vice chairman
and chief executive officer, have worked together for more than fifteen years on
a variety of healthcare  companies and have co-founded Allion  Healthcare,  Inc,
Patient Infosystems,  Inc. and Radiologix all of which are public companies.  In
addition,  Mr.  Pappajohn and Dr.  Schaffer have worked together on many private
healthcare companies, such as Logisticare, Inc. and Source Medical Inc.

      Dr.  Schaffer  serves as a  director  of  Allion  Healthcare  and  Patient
InfoSystems.  He  has  served  as  chairman  of  several  healthcare  companies,
including  Radiologix when it was private. He has been an active co-investor and
co-founder  of companies  with Mr.  Pappajohn for more than fifteen  years.  Dr.
Schaffer  has also served as a director  on many  healthcare  boards,  including
several  health  systems and more than ten  healthcare  services and  technology
companies.  Dr. Schaffer is also currently a Clinical  Professor of Radiology at
Weill Cornell Medical College.

      Mr.  Kinley,  our  president  and  treasurer,  has  been  involved  in the
financing and  development of more than twenty  companies with Mr.  Pappajohn in
the past eleven  years.  Mr.  Kinley has worked with Dr.  Schaffer for more than
eleven years on healthcare  services and  technology  companies.  Mr. Kinley has
also held various  positions  at KPMG Peat  Marwick,  working on tax,  audit and
merger and acquisition issues.

Effecting a Business Combination

General

      We are not presently engaged in any substantive  commercial  business.  We
intend to utilize cash derived from the proceeds of our initial public offering,
our  capital  stock,  debt or a  combination  of these in  effecting  a business
combination.  Although  substantially  all of the net  proceeds  of our  initial
public offering are intended to be generally applied toward effecting a business
combination,  the proceeds were not otherwise  designated  for any more specific
purposes. 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  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.

We have not identified a target business

      To date,  although we continue to search for a potential  candidate  for a
business  combination,  we have not entered into any definitive  agreements with
any target business for a business combination.

      Subject to the limitation  that a target business have a fair market value
of at least 80% of our net assets at the time of the  acquisition,  as described
below in more detail, we have virtually unrestricted  flexibility in identifying
and  selecting a prospective  acquisition  candidate.  Accordingly,  there is no
basis for  investors  to  evaluate  the  possible  merits or risks of the target
business with which we may ultimately  complete a business  combination.  To the
extent we effect a business  combination with a financially  unstable company or
an  entity in its early  stage of  development  or  growth,  including  entities
without established records of sales or earnings, we may be affected by numerous
risks inherent in the business and operations of financially  unstable and early
stage or potential  emerging  growth  companies.  Although our  management  will
endeavor to evaluate the risks  inherent in a  particular  target  business,  we
cannot assure you that we will properly ascertain or assess all significant risk
factors.


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<PAGE>

Sources of target businesses

      Target business candidates have been 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,  who  present  solicited  or  unsolicited
proposals. Our officers and directors as well as their affiliates may also bring
to  our  attention  target  business  candidates.  While  we  do  not  presently
anticipate  engaging  the  services of  professional  firms that  specialize  in
business  acquisitions  on any formal  basis,  we may engage  these firms in the
future,  in which event we may pay a finder's fee or other  compensation.  In no
event,  however,  will we pay any of our  existing  officers,  directors  or our
stockholders  prior to our initial public offering or any entity with which they
are affiliated any finder's fee or other  compensation for services  rendered to
us prior to or in connection with the consummation of a business combination. We
will not enter into any business combinations with any affiliates of our initial
stockholders, officers or directors.

Selection of a target business and structuring of a business combination

      Subject to the requirement that our initial  business  combination must be
with a target  business with a fair market value that is at least 80% of our net
assets  at  the  time  of  such   acquisition,   our  management  has  virtually
unrestricted  flexibility  in  identifying  and selecting a  prospective  target
business.  In  evaluating a prospective  target  business,  (including  any such
target business that may have international operations or assets) our management
will consider, among other factors, the following:

      o     financial condition and results of operation;

      o     growth potential;

      o     experience  and skill of management and  availability  of additional
            personnel;

      o     capital requirements;

      o     competitive position;

      o     barriers to entry into other industries;

      o     stage of development of the products, processes or services;

      o     degree of current or potential  market  acceptance  of the products,
            processes or services;

      o     proprietary  features and degree of  intellectual  property or other
            protection of the products, processes or services;

      o     regulatory environment of the industry; and

      o     costs associated with effecting the business combination.


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<PAGE>

      These criteria are not intended to be exhaustive.  Any evaluation relating
to the merits of a particular business  combination will be based, to the extent
relevant,  on the above factors as well as other considerations  deemed relevant
by our  management  in  effecting  a business  combination  consistent  with our
business objective. In evaluating a prospective target business, we will conduct
an extensive  due  diligence  review which will  encompass,  among other things,
meetings  with  incumbent  management,   where  applicable,  and  inspection  of
facilities,  as well as review of financial and other  information which will be
made available to us.

      The time and costs  required to select and evaluate a target  business and
to  structure  and  complete  the  business   combination  cannot  presently  be
ascertained with any degree of certainty. Any costs incurred with respect to the
identification  and  evaluation  of a prospective  target  business with which a
business combination is not ultimately completed will result in a loss to us and
reduce  the  amount of  capital  available  to  otherwise  complete  a  business
combination.  While we may pay fees or  compensation  to third parties for their
efforts in introducing us to a potential target business,  in no event, however,
will we pay any of our  officers,  directors  or persons  who were  stockholders
prior  to our  initial  public  offering  or any  entity  with  which  they  are
affiliated any finder's fee or other  compensation  for services  rendered to us
prior to or in connection with the consummation of a business combination, other
than the $7,500 payable  monthly to Equity  Dynamics,  Inc. (an affiliate of our
Chairman,  Mr.  Pappajohn,  and our President,  Mr. Kinley) for office space and
certain  general  and  administrative  services  (a  prior  arrangement  with an
affiliate of our Chief Executive  Officer,  Derace Schaffer,  M.D.,  pursuant to
which  we paid  $1,500  a  month  for  office  space  and  certain  general  and
administrative  services, as a portion of the $7,500, was terminated on December
31, 2005). In addition,  none of our officers,  directors,  special  advisors or
persons who were stockholders  prior to our initial public offering will receive
any finder's fee,  consulting fees or any similar fees from any person or entity
in  connection  with  any  business  combination  involving  us  other  than any
compensation  or fees that may be received for any services  provided  following
such business combination.

Fair market value of target business

      The initial target  business that we acquire must have a fair market value
equal to at least  80% of our net  assets at the time of such  acquisition.  The
fair market value of such  business will be determined by our board of directors
based upon  standards  generally  accepted by the financial  community,  such as
actual and potential sales,  earnings and cash flow and book value. If our board
is not able to independently determine that the target business has a sufficient
fair market value, we will obtain an opinion from an  unaffiliated,  independent
investment  banking  firm  which  is a member  of the  National  Association  of
Securities  Dealers,  Inc. with respect to the  satisfaction  of such  criteria.
Since any opinion, if obtained,  would merely state that fair market value meets
the 80% of net  assets  threshold,  it is not  anticipated  that  copies of such
opinion  would be  distributed  to our  stockholders,  although  copies  will be
provided  to  stockholders  who request it. We will not be required to obtain an
opinion from an investment banking firm as to the fair market value if our board
of directors  independently  determines  that the target business has sufficient
fair market value.

Probable lack of business diversification

      While we may seek to  effect  business  combinations  with  more  than one
target business, our initial business combination must be with a target business
which satisfies the minimum valuation  standard at the time of such acquisition,
as discussed above.

      Consequently,  it is probable that we will have the ability to effect only
a single  business  combination.  Accordingly,  the prospects for our ability to
execute any potential  business plan may be entirely  dependent  upon the future
performance  of a single  business.  Unlike  other  entities  which may have the
resources to complete  several  business  combinations of entities  operating in
multiple industries or multiple areas of a single industry,  it is probable that
we will not have the resources to diversify  our  operations or benefit from the
possible  spreading of risks or offsetting of losses. By consummating a business
combination with only a single entity, our lack of diversification may:


                                       9

<PAGE>
      o     subject  us  to  numerous   economic,   competitive  and  regulatory
            developments,  any or all of which  may have a  substantial  adverse
            impact  upon  the  particular  industry  in  which  we  may  operate
            subsequent to a business combination, and

      o     result in our dependency upon the  development or market  acceptance
            of a single or limited number of products, processes or services.

      Additionally,  since our business  combination may entail the simultaneous
acquisitions of several assets or operating  businesses at the same time and may
be with different  sellers,  we will need to convince such sellers to agree that
the purchase of their assets or closely  related  businesses is contingent  upon
the simultaneous closings of the other acquisitions.

Limited ability to evaluate the target business' management

      Although  we  expect  most of our  management  and  other  key  personnel,
particularly our chairman of the board,  chief executive  officer and president,
to remain  associated  with us  following  a business  combination,  they may be
involved  in  different  capacities  than at  present,  and we may employ  other
personnel  following  the  business  combination.  Although we intend to closely
scrutinize such individuals, we cannot assure you that our assessment will prove
to be correct. In addition,  we cannot assure you that new members that join our
management  following a business  combination  will have the  necessary  skills,
qualifications or abilities to help manage a public company.

Opportunity for stockholder approval of business combination

      Prior to the  completion  of a business  combination,  we will  submit the
transaction  to  our  stockholders  for  approval,  even  if the  nature  of the
acquisition is such as would not ordinarily require  stockholder  approval under
applicable  state law. In  connection  with  seeking  stockholder  approval of a
business  combination,  we will furnish our stockholders with proxy solicitation
materials  prepared in  accordance  with the  Securities  Exchange  Act of 1934,
which, among other matters,  will include a description of the operations of the
target  business  and  certain  required  financial  information  regarding  the
business.

      In  connection  with the vote required for any business  combination,  all
persons who were  stockholders  prior to our initial public offering,  including
all of our officers and directors,  have agreed to vote their respective  shares
of common stock owned by them  immediately  prior to our initial public offering
in  accordance  with the  majority  of the shares of common  stock  voted by the
public stockholders.  This voting arrangement does not apply to shares purchased
following our initial  public  offering in the open market by such persons,  and
with respect to shares so acquired by such persons,  such  stockholders may vote
against a proposed business  combination and exercise their conversion rights in
the event that the business combination transaction is approved. We will proceed
with the business  combination  only if a majority of the shares of common stock
voted by the public stockholders are voted in favor of the business  combination
and public  stockholders  owning less than 20% of the shares sold in our initial
public offering  exercise their conversion  rights.  Voting against the business
combination alone will not result in conversion of a stockholder's shares into a
pro rata share of the trust fund. Such  stockholder must have also exercised its
conversion rights described below.

Conversion rights

      At the time we seek stockholder approval of any business  combination,  we
will offer each public stockholder the right to have such  stockholder's  shares
of common stock converted to cash if the stockholder  votes against the business
combination and the business  combination is approved and completed.  The actual
per-share  conversion  price  will be equal to the  amount  in the  trust  fund,
inclusive  of any  interest  (calculated  as of two  business  days prior to the
consummation  of the proposed  business  combination),  divided by the number of
shares  sold in our initial  public  offering.  Without  taking into any account
interest earned on the trust fund, the initial per-share  conversion price would
be $7.23 or $0.77 less than the per- unit offering  price of $8.00.  An eligible
stockholder  may  request  conversion  at any  time  after  the  mailing  to our
stockholders  of the proxy statement and prior to the vote taken with respect to
a proposed  business  combination  at a meeting held for that  purpose,  but the
request will not be granted  unless the  stockholder  votes against the business
combination and the business combination is approved and completed.  Any request
for  conversion,  once made,  may be withdrawn at any time up to the date of the
meeting.  It is anticipated  that the funds to be  distributed  to  stockholders
entitled  to convert  their  shares  who elect  conversion  will be  distributed
promptly after  completion of a business  combination.  Public  stockholders who
convert  their  stock into their share of the trust fund still have the right to
exercise  the  warrants  that they  received  as part of the units.  We will not
complete any business combination if public stockholders,  owning 20% or more of
the shares  sold in our  initial  public  offering,  exercise  their  conversion
rights.

                                       10

<PAGE>

      Because the initial  per share  conversion  price is $7.23 per share (plus
any interest),  which is lower than the $8.00 per unit price paid in our initial
public  offering  and,  which may be lower than the  market  price of the common
stock on the date of the conversion,  there may be a disincentive on the part of
public  stockholders  to  exercise  their  conversion  rights.  The term  public
stockholders  means the holders of common stock sold as part of the units in our
initial  public  offering or in the open market,  including any persons who were
stockholders  prior to our  initial  public  offering  to the  extent  that they
purchase or acquire such shares.

Liquidation if no business combination

      If we do not  complete a business  combination  within 18 months after the
consummation  of our initial public offering (by February 3, 2007), or within 24
months if the extension criteria described below have been satisfied, we will be
dissolved and will distribute to all of our public  stockholders,  in proportion
to their respective  equity  interests,  an aggregate sum equal to the amount in
the trust fund,  inclusive of any interest,  plus any remaining net assets.  Our
stockholders  have  waived  their  rights  to  participate  in  any  liquidation
distribution  with respect to shares of common  stock owned by them  immediately
prior to our initial public  offering.  There will be no  distribution  from the
trust fund with respect to our warrants, which will expire worthless.

      If we were  to  expend  all of the  net  proceeds  of our  initial  public
offering,  other than the  proceeds  deposited  in the trust  fund,  and without
taking into  account  interest,  if any,  earned on the trust fund,  the initial
per-share  liquidation  price  would be $7.23 or $0.77  less  than the  per-unit
initial public offering price of $8.00. The proceeds deposited in the trust fund
could,  however,  become  subject to the claims of our creditors  which could be
prior to the claims of our public  stockholders.  We cannot  assure you that the
actual per-share  liquidation  price will not be less than $7.23, plus interest,
due to claims of creditors.  Our chairman and all of our executive officers have
agreed pursuant to agreements with us and Maxim Group LLC, the representative of
the  underwriters  in our initial  public  offering,  that, if we distribute the
proceeds  held in trust to our  public  stockholders,  they  will be  personally
liable under certain  circumstances (for example, if a vendor does not waive any
rights or claims to the trust fund) to pay debts and  obligations  to vendors or
other entities that are owed money by us for services  rendered or products sold
to us in excess of the net proceeds of our initial  public  offering not held in
the trust  account,  to the extent  necessary  to ensure that such claims do not
reduce the amount in the trust account. We cannot assure you, however, that they
would be able to satisfy those obligations.

      If we enter into either a letter of intent, an agreement in principle or a
definitive  agreement to complete a business combination prior to the expiration
of 18 months after the  consummation of our initial public offering (by February
3,  2007),  but are  unable to  complete  the  business  combination  within the
18-month period, then we will have an additional six months in which to complete
the  business  combination  contemplated  by the letter of intent,  agreement in
principle or definitive  agreement.  If we are unable to do so by the expiration
of the 24-month period from the consummation of our initial public offering,  we
will then  liquidate.  Upon  notice  from us, the trustee of the trust fund will
commence  liquidating the investments  constituting the trust fund and will turn
over  the  proceeds  to our  transfer  agent  for  distribution  to  our  public
stockholders.  We anticipate  that our instruction to the trustee would be given
promptly after the expiration of the applicable 18-month or 24-month period.


                                       11

<PAGE>

      Our public  stockholders shall be entitled to receive funds from the trust
fund only in the event of our liquidation or if the stockholders seek to convert
their  respective  shares  into  cash  upon a  business  combination  which  the
stockholder  voted  against and which is actually  completed  by us. In no other
circumstances  shall a stockholder  have any right or interest of any kind to or
in the trust fund. Voting against the business combination alone will not result
in conversion of a stockholder's shares into a pro rata share of the trust fund.
Such stockholder must have also exercised its conversion rights described above.

Competition for target businesses

      In  identifying,  evaluating  and  selecting  a  target  business,  we may
encounter  intense  competition from other entities having a business  objective
similar to ours. Many of these entities are well  established and have extensive
experience  identifying and effecting business  combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other
resources than us and our financial  resources  will be relatively  limited when
contrasted with those of many of these  competitors.  While we believe there are
numerous potential target businesses that we could acquire with the net proceeds
of our initial  public  offering,  our ability to compete in  acquiring  certain
sizable target businesses will be limited by our available financial  resources.
This inherent  competitive  limitation gives others an advantage in pursuing the
acquisition of a target business. Further:

      o     our   obligation  to  seek   stockholder   approval  of  a  business
            combination  or obtain the  necessary  financial  information  to be
            included  in the  proxy  statement  to be  sent to  stockholders  in
            connection  with such business  combination may delay or prevent the
            completion of a transaction;

      o     our  obligation  to convert into cash shares of common stock held by
            our  public   stockholders  in  certain  instances  may  reduce  the
            resources available to us for a business combination;

      o     our outstanding  warrants and options,  and the future dilution they
            potentially represent, may not be viewed favorably by certain target
            businesses; and

      o     the requirement to acquire assets or an operating  business that has
            a fair  market  value equal to at least 80% of our net assets at the
            time of the  acquisition  could require us to acquire several assets
            or closely  related  operating  businesses at the same time,  all of
            which sales would be  contingent on the closings of the other sales,
            which  could  make it more  difficult  to  consummate  the  business
            combination.

      Based upon publicly  available  information as of the date of this filing,
approximately  44 similarly  structured  blank check  companies  have  completed
initial  public  offerings  since  August  2003 and  numerous  others have filed
registration   statements.   Of  these  companies,   only  five  companies  have
consummated a business  combination,  while eight other companies have announced
they have entered into a definitive  agreement for a business  combination,  but
have  not  consummated  such  business  combination.   Accordingly,   there  are
approximately 31 blank check companies with  approximately $2.1 billion in trust
that are  seeking to carry out a business  plan  similar to our  business  plan.
While some of those companies have specific industries that they must complete a
business  combination in, a number of them may consummate a business combination
in any industry  they choose.  We may therefore be subject to  competition  from
these and other companies  seeking to consummate a business plan similar to ours
which will, as a result, increase demand for privately-held companies to combine
with companies  structured  similarly to ours. Further,  the fact that only five
such  companies has completed a business  combination  and eight such  companies
have entered into a definitive  agreement for a business  combination  may be an
indication that there are only a limited number of attractive  target businesses
available to such entities or that many privately-held target businesses may not
be inclined to enter into business  combinations  with publicly held blank check
companies like us.


                                       12

<PAGE>

      Any of  these  factors  may  place  us at a  competitive  disadvantage  in
negotiating a business combination.  Our management believes,  however, that our
status as a public  entity  and  potential  access to the United  States  public
equity markets may give us a competitive advantage over privately-held  entities
having a similar  business  objective as us in acquiring a target  business with
significant growth potential on favorable terms.

      If we effect a business  combination,  there  will be, in all  likelihood,
intense  competition from  competitors of the target business.  We cannot assure
you that,  subsequent to a business  combination,  we will have the resources or
ability to compete effectively.

Financial Information

      We will  not  acquire  a  target  business  if we  cannot  obtain  audited
financial  statements  based on  United  States  generally  accepted  accounting
principles for such target business.  We will provide these financial statements
in the proxy  solicitation  materials  sent to  stockholders  for the purpose of
seeking stockholder approval of our initial business combination. Our management
believes  that the need for  target  businesses  to have,  or be able to obtain,
audited  financial  statements may limit the pool of potential target businesses
available for acquisition.

Available Information

      We are  subject  to the  information  requirements  of the  Exchange  Act.
Therefore, we file periodic reports, proxy statements and other information with
the SEC. Such reports, proxy statements and other information may be obtained by
visiting the Public Reference Room of the SEC at 100 F Street,  NW,  Washington,
DC 20549.  You may obtain  information on the operation of the Public  Reference
Room by calling the SEC at  1-800-SEC-0330.  In addition,  the SEC  maintains an
Internet site  (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding issuers that file electronically.


I
tem 1A. Risk Factors

      An investment in our securities involves a high degree of risk. You should
consider carefully all of the material risks described below,  together with the
other  information  contained  in this  prospectus  before  making a decision to
invest in our securities.

                  RISKS ASSOCIATED WITH OUR POTENTIAL BUSINESS

WE ARE A NEWLY FORMED COMPANY WITH NO OPERATING  HISTORY AND,  ACCORDINGLY,  YOU
WILL NOT HAVE ANY BASIS ON WHICH TO EVALUATE OUR ABILITY TO ACHIEVE OUR BUSINESS
OBJECTIVE.

            We are a recently formed company with no operating  results to date.
Since we do not have any operations or an operating  history,  you have no basis
upon which to evaluate our ability to achieve our business  objective,  which is
to acquire one or more domestic or international assets or an operating business
in  the  healthcare  industry.   Other  than  researching  prospective  business
combinations  and conducting  initial due  diligence,  neither we nor any of our
agents or affiliates has yet taken any measure, directly or indirectly, to enter
into a business combination.  We will not generate any revenues or income (other
than interest income on the proceeds of our initial public  offering)  until, at
the earliest, after the consummation of a business combination.


                                       13

<PAGE>

IF WE ARE  FORCED  TO  LIQUIDATE  BEFORE  A  BUSINESS  COMBINATION,  OUR  PUBLIC
STOCKHOLDERS WILL RECEIVE LESS THAN $8.00 PER INITIAL PUBLIC OFFERING PRICE UPON
DISTRIBUTION OF THE TRUST FUND AND OUR WARRANTS WILL EXPIRE WORTHLESS.

            If we are unable to complete a business  combination  and are forced
to  liquidate  our assets,  the  per-share  liquidation  will be less than $8.00
because  of the  expenses  of our  initial  public  offering,  our  general  and
administrative  expenses  and  the  anticipated  costs  of  seeking  a  business
combination  after our initial public  offering.  Furthermore,  there will be no
distribution  with respect to our  outstanding  warrants and,  accordingly,  the
warrants  will expire  worthless  if we  liquidate  before the  completion  of a
business combination.

BECAUSE  THERE ARE  NUMEROUS  COMPANIES  WITH A  BUSINESS  PLAN  SIMILAR TO OURS
SEEKING TO EFFECTUATE A BUSINESS COMBINATION, IT MAY BE MORE DIFFICULT FOR US TO
COMPLETE A BUSINESS COMBINATION.

      Based upon publicly  available  information as of the date of this filing,
approximately  44 similarly  structured  blank check  companies  have  completed
initial  public  offerings  since  August  2003 and  numerous  others have filed
registration   statements.   Of  these  companies,   only  five  companies  have
consummated a business  combination,  while eight other companies have announced
they have entered into a definitive  agreement for a business  combination,  but
have  not  consummated  such  business  combination.   Accordingly,   there  are
approximately 31 blank check companies with  approximately $2.1 billion in trust
that are  seeking to carry out a business  plan  similar to our  business  plan.
While some of those companies have specific industries that they must complete a
business  combination in, a number of them may consummate a business combination
in any industry  they choose.  We may therefore be subject to  competition  from
these and other companies  seeking to consummate a business plan similar to ours
which will, as a result, increase demand for privately-held companies to combine
with companies  structured  similarly to ours. Further,  the fact that only five
such  companies has completed a business  combination  and eight such  companies
have entered into a definitive  agreement for a business  combination  may be an
indication that there are only a limited number of attractive  target businesses
available to such entities or that many privately-held target businesses may not
be inclined to enter into business  combinations  with publicly held blank check
companies  like us. We cannot  assure  you that we will be able to  successfully
compete for an attractive business  combination.  Additionally,  because of this
competition,  we cannot assure you that we will be able to effectuate a business
combination  within  the  required  time  periods.  If we are  unable  to find a
suitable  target  business  within  such  time  periods,  we will be  forced  to
liquidate.

IF THIRD  PARTIES  BRING CLAIMS  AGAINST US, THE PROCEEDS HELD IN TRUST COULD BE
REDUCED AND THE PER-SHARE  LIQUIDATION  PRICE RECEIVED BY  STOCKHOLDERS  WILL BE
LESS THAN $7.23 PER SHARE.

      Our placing of funds in trust may not protect those funds from third party
claims against us. Although we will seek to have all vendors, prospective target
businesses or other  entities we engage execute  agreements  with us waiving 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 stockholders,  there is no guarantee
that they will execute such  agreements.  Nor is there any  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.  Accordingly,
the proceeds  held in trust could be subject to claims which could take priority
over the claims of our  public  stockholders  and the  initial  public  offering
per-share liquidation price could be less than $7.23 per share held in the trust
account,  plus interest,  due to claims of such  creditors.  If we are unable to
complete a business  combination  and are forced to liquidate,  our chairman and
executive  officers will be personally liable under certain  circumstances  (for
example,  if a vendor does not waive any rights or claims to the trust  account)
to ensure  that the  proceeds in the trust fund are not reduced by the claims of
various  vendors  or  other  entities  that are  owed  money by us for  services
rendered or  products  sold to us, to the extent  necessary  to ensure that such
claims do not reduce the amount in the trust fund. However, we cannot assure you
that our executive officers will be able to satisfy those obligations.


                                       14

<PAGE>
WE MAY ISSUE  SHARES OF OUR  CAPITAL  STOCK OR DEBT  SECURITIES  TO  COMPLETE  A
BUSINESS COMBINATION, WHICH WOULD REDUCE THE EQUITY INTEREST OF OUR STOCKHOLDERS
AND LIKELY CAUSE A CHANGE IN CONTROL OF OUR OWNERSHIP.

      Our  certificate  of  incorporation  authorizes  the  issuance  of  up  to
100,000,000  shares of common stock,  par value $.0001 per share,  and 1,000,000
shares of preferred  stock,  par value $.0001 per share.  As of the date hereof,
there  are  78,500,000  authorized  but  unissued  shares  of our  common  stock
available for issuance (after appropriate reservation for the issuance of shares
upon full exercise of our outstanding  warrants and the  underwriters  warrants)
and all of the  1,000,000  shares of preferred  stock  available  for  issuance.
Although we have no commitments  as of the date hereof to issue our  securities,
we may issue a substantial  number of  additional  shares of our common stock or
preferred  stock, or a combination of common and preferred  stock, to complete a
business  combination.  The issuance of additional shares of our common stock or
any number of shares of our preferred stock:

      o     may significantly reduce the equity interest of current investors in
            our securities;

      o     will likely cause a change in control if a substantial number of our
            shares of common  stock are issued,  which may  affect,  among other
            things, our ability to use our net operating loss carry forwards, if
            any,  and most likely also result in the  resignation  or removal of
            our present officers and directors; and

      o     may adversely affect prevailing market prices for our common stock.

      Additionally, the healthcare industry is capital intensive,  traditionally
using  substantial  amounts of  indebtedness  to finance  acquisitions,  capital
expenditures  and working capital needs. If we finance the purchase of assets or
operations through the issuance of debt securities, it could result in:

      o     default  and  foreclosure  on our assets if our  operating  revenues
            after a  business  combination  were  insufficient  to pay our  debt
            obligations;

      o     acceleration of our obligations to repay the indebtedness even if we
            have made all principal  and interest  payments when due if the debt
            security  contained  covenants  that  required  the  maintenance  of
            certain  financial  ratios or reserves  and any such  covenant  were
            breached without a waiver or renegotiation of that covenant;

      o     our immediate payment of all principal and accrued interest, if any,
            if the debt security was payable on demand; and

      o     our inability to obtain additional financing,  if necessary,  if the
            debt security contained covenants  restricting our ability to obtain
            additional financing while such security was outstanding.

OUR  ABILITY  TO EFFECT A BUSINESS  COMBINATION  AND TO  EXECUTE  ANY  POTENTIAL
BUSINESS PLAN AFTERWARDS  WILL BE TOTALLY  DEPENDENT UPON THE EFFORTS OF OUR KEY
PERSONNEL, SOME OF WHOM MAY JOIN US FOLLOWING A BUSINESS COMBINATION AND WHOM WE
WOULD HAVE ONLY A LIMITED ABILITY TO EVALUATE.

      Our  ability to effect a business  combination  will be totally  dependent
upon the  efforts of our key  personnel.  The future  role of our key  personnel
following  a  business   combination,   however,   cannot   presently  be  fully
ascertained.  Although we expect most of our management and other key personnel,
particularly  our chairman of the board,  vice  chairman  and  president to each
remain associated with us following a business combination,  we may employ other
personnel  following  the  business  combination.  While we  intend  to  closely
scrutinize any additional individuals we engage after a business combination, we
cannot  assure you that our  assessment  of these  individuals  will prove to be
correct.  Moreover,  our current management will only be able to remain with the
combined  company after the  consummation of a business  combination if they are
able to  negotiate  the same as part of any such  combination.  If we acquired a
target business in an all-cash transaction, it would be more likely that current
members of management would remain with us if they chose to do so. If a business
combination  were structured as a merger whereby the  stockholders of the target
company were to control the combined company  following a business  combination,
it may be less likely that  management  would remain with the  combined  company
unless  it was  negotiated  as  part  of the  transaction  via  the  acquisition
agreement,  an  employment  agreement  or  other  arrangement.   In  making  the
determination as to whether current  management  should remain with us following
the business  combination,  management will analyze the experience and skill set
of the  target  business'  management  and  negotiate  as part  of the  business
combination that certain members of current  management remain if it is believed
that  it  is in  the  best  interests  of  the  combined  company  post-business
combination.  If management negotiates to be retained post-business  combination
as a condition to any potential  business  combination,  such  negotiations  may
result in a conflict of interest.

                                       15

<PAGE>

OUR OFFICERS AND DIRECTORS MAY ALLOCATE THEIR TIME TO OTHER  BUSINESSES  THEREBY
CAUSING  CONFLICTS  OF  INTEREST IN THEIR  DETERMINATION  AS TO HOW MUCH TIME TO
DEVOTE TO OUR  AFFAIRS.  THIS  COULD HAVE A  NEGATIVE  IMPACT ON OUR  ABILITY TO
CONSUMMATE A BUSINESS COMBINATION.

      Our officers and  directors  are not required to commit their full time to
our affairs, which may result in a conflict of interest in allocating their time
between our operations and other  businesses.  We do not intend to have any full
time employees prior to the consummation of a business combination.  Each of our
officers are engaged in several other  business  endeavors and are not obligated
to contribute any specific number of hours per week to our affairs.

      If our  officers'  other  business  affairs  require  them to devote  more
substantial  amounts of time to such  affairs,  it could limit their  ability to
devote time to our  affairs  and could have a negative  impact on our ability to
consummate a business combination.

OUR OFFICERS AND  DIRECTORS ARE CURRENTLY  AFFILIATED  WITH ENTITIES  ENGAGED IN
BUSINESS  ACTIVITIES  SIMILAR  TO  THOSE  INTENDED  TO BE  CONDUCTED  BY US  AND
ACCORDINGLY,  MAY HAVE  CONFLICTS  OF INTEREST  IN  DETERMINING  WHICH  ENTITY A
PARTICULAR BUSINESS OPPORTUNITY SHOULD BE PRESENTED TO.

      Our officers and directors may in the future become  affiliated with other
entities,   including  other  "blank  check"  companies,   engaged  in  business
activities  similar to those intended to be conducted by us.  Additionally,  our
officers and directors may become aware of business  opportunities  which may be
appropriate for presentation to us as well as the other entities with which they
are or may be  affiliated.  Further,  certain of our officers and  directors are
currently  involved  in  other  businesses  that  are  similar  to the  business
activities that we intend to conduct  following a business  combination.  Due to
these existing  affiliations,  they have prior fiduciary  obligations to present
potential  business  opportunities to those entities prior to presenting them to
us which could cause additional  conflicts of interest.  Accordingly,  they have
conflicts  of interest in  determining  to which  entity a  particular  business
opportunity should be presented.

ALL OF OUR DIRECTORS OWN SHARES OF OUR SECURITIES  WHICH WILL NOT PARTICIPATE IN
LIQUIDATION  DISTRIBUTIONS AND THEREFORE THEY MAY HAVE A CONFLICT OF INTEREST IN
DETERMINING  WHETHER A PARTICULAR  TARGET BUSINESS IS APPROPRIATE FOR A BUSINESS
COMBINATION.

      All of our  directors own shares of common stock in our company which were
issued  prior to our initial  public  offering,  but have waived  their right to
receive  distributions  with respect to those shares upon our  liquidation if we
are unable to complete a business combination. Additionally, our chairman, chief
executive  officer and president have purchased an aggregate of 354,900 warrants
on the open market.  These warrants will not be sold until the consummation of a
business  combination.  The shares and warrants owned by these directors will be
worthless  if we do not  consummate  a business  combination.  The  personal and
financial  interests  of these  directors  may  influence  their  motivation  in
identifying   and  selecting  a  target   business  and  completing  a  business
combination in a timely manner.  Consequently,  these  directors'  discretion in
identifying and selecting a suitable target business may result in a conflict of
interest  when  determining  whether  the  terms,  conditions  and  timing  of a
particular  business  combination are appropriate and in our stockholders'  best
interest.


                                       16

<PAGE>

PERSONS WHO WERE  STOCKHOLDERS  PRIOR TO OUR INITIAL  PUBLIC  OFFERING  WILL NOT
RECEIVE  REIMBURSEMENT  FOR ANY  OUT-OF-POCKET  EXPENSES INCURRED BY THEM TO THE
EXTENT  THAT SUCH  EXPENSES  EXCEED  THE  AMOUNT IN THE TRUST  FUND  UNLESS  THE
BUSINESS  COMBINATION IS  CONSUMMATED  AND THEREFORE THEY MAY HAVE A CONFLICT OF
INTEREST.

      Persons who were  stockholders  prior to our initial public  offering will
not receive reimbursement for any out-of-pocket expenses incurred by them to the
extent  that such  expenses  exceed  the  amount in the trust  fund  unless  the
business combination is consummated and there are sufficient funds available for
reimbursement  after such  consummation.  The financial interest of such persons
could influence their  motivation in selecting a target business and thus, there
may be a conflict of interest  when  determining  whether a particular  business
combination is in the stockholders' best interest.

IT IS PROBABLE  THAT WE WILL ONLY BE ABLE TO COMPLETE ONE BUSINESS  COMBINATION,
WHICH WILL CAUSE US TO BE SOLELY DEPENDENT ON A SINGLE BUSINESS.

      The  gross  proceeds  from our  initial  public  offering,  including  the
exercise  of  a  portion  of  the   overallotment   option  were   approximately
$75,200,000,  of which $67,928,000 was placed in trust for use in consummating a
business  combination.  Our initial business combination must be with a business
with a fair  market  value of at least 80% of our net assets at the time of such
acquisition.  Consequently,  it is  probable  that we will have the  ability  to
complete  only a single  business  combination,  although  this may  entail  the
simultaneous  acquisitions  of  several  assets  or  closely  related  operating
businesses  at the same time.  Accordingly,  the  prospects  for our  ability to
effect our business strategy may be:

      o     solely dependent upon the performance of a single business; or

      o     dependent upon the  development or market  acceptance of a single or
            limited number of products, processes or services.

      In this case, we will 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.  Furthermore,
since our  business  combination  may entail the  simultaneous  acquisitions  of
several  assets  or  operating  businesses  at the  same  time  and  may be with
different  sellers,  we will need to  convince  such  sellers  to agree that the
purchase of their  assets or  businesses  is  contingent  upon the  simultaneous
closings of the other acquisitions.

WE MAY BE UNABLE TO OBTAIN  ADDITIONAL  FINANCING,  IF  REQUIRED,  TO COMPLETE A
BUSINESS  COMBINATION  OR TO  FUND  THE  OPERATIONS  AND  GROWTH  OF THE  TARGET
BUSINESS,  WHICH COULD COMPEL US TO  RESTRUCTURE  THE  TRANSACTION  OR ABANDON A
PARTICULAR BUSINESS COMBINATION.

      Although we believe that the net proceeds of our initial  public  offering
will be sufficient to allow us to consummate a business combination,  in as much
as we have  not yet  identified  any  prospective  target  business,  we  cannot
ascertain the capital  requirements for any particular  transaction.  If the net
proceeds of our initial public offering prove to be insufficient, either because
of the size of the business  combination  or the  depletion of the available net
proceeds  in search of a target  business,  or  because we become  obligated  to
convert into cash a significant  number of shares from dissenting  stockholders,
we will be required to seek additional financing. We cannot assure you that such
financing would be available on acceptable  terms, if at all. To the extent that
additional  financing  proves to be  unavailable  when  needed to  consummate  a
particular  business  combination,  we would be  compelled  to  restructure  the
transaction  or  abandon  that  particular  business  combination  and  seek  an
alternative target business candidate.  In addition, if we consummate a business
combination,  we may require  additional  financing  to fund the  operations  or
growth of the target business.  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 stockholders is required to
provide any financing to us in connection with or after a business combination.


                                       17

<PAGE>

PERSONS WHO WERE  STOCKHOLDERS  PRIOR TO OUR INITIAL PUBLIC OFFERING,  INCLUDING
OUR OFFICERS AND  DIRECTORS,  CONTROL A SUBSTANTIAL  INTEREST IN US AND THUS MAY
INFLUENCE CERTAIN ACTIONS REQUIRING STOCKHOLDER VOTE.

      Upon consummation of our offering,  persons who were stockholders prior to
our initial  public  offering  (including  all of our  officers  and  directors)
collectively  owned 19.3% of our issued and outstanding  shares of common stock,
not including an aggregate of 354,900  warrants  purchased on the open market by
our chairman,  chief  executive  officer and president,  which are not currently
exercisable.  These  warrants  cannot  be sold  until  after  consummation  of a
business combination.

      Our board of directors  is divided  into two  classes,  each of which will
generally  serve for a term of two years with only one class of directors  being
elected in each year.  It is  unlikely  that there will be an annual  meeting of
stockholders  to elect new  directors  prior to the  consummation  of a business
combination,  in which case all of the current directors will continue in office
at least until the  consummation  of the  business  combination.  If there is an
annual  meeting,  as a  consequence  of  our  "staggered"  board  of  directors,
initially  only a minority  of the board of  directors  will be  considered  for
election and persons who were stockholders prior to our initial public offering,
because of their ownership position,  will have considerable influence regarding
the outcome.  Accordingly,  such  stockholders will continue to exert control at
least  until the  consummation  of a business  combination.  In  addition,  such
stockholders  and  their  affiliates  and  relatives  are  not  prohibited  from
purchasing our  securities in the open market.  If they do, we cannot assure you
that persons who were stockholders prior to our initial public offering will not
have  considerable  influence  upon  the  vote  in  connection  with a  business
combination.

OUR  OUTSTANDING  WARRANTS  MAY HAVE AN ADVERSE  EFFECT ON THE  MARKET  PRICE OF
COMMON STOCK AND MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS COMBINATION.

      In  connection  with our  initial  public  offering,  as part of the units
(including  overallotments  issued to the  underwriters),  we issued warrants to
purchase  9,400,000  shares of common  stock.  To the extent we issue  shares of
common stock to effect a business combination, the potential for the issuance of
substantial  numbers of additional  shares upon exercise of these warrants could
make us a less attractive  acquisition  vehicle in the eyes of a target business
as such  securities,  when  exercised,  will  increase  the number of issued and
outstanding shares of our common stock and reduce the value of the shares issued
to complete the business combination. Accordingly, our warrants may make it more
difficult  to  effectuate  a business  combination  or increase  the cost of the
target business. Additionally, the sale, or even the possibility of sale, of the
shares  underlying the warrants could have an adverse effect on the market price
for our securities or on our ability to obtain future public  financing.  If and
to the extent these warrants are exercised,  you may experience dilution to your
holdings.

IF PERSONS WHO WERE  STOCKHOLDERS  PRIOR TO OUR INITIAL PUBLIC OFFERING EXERCISE
THEIR REGISTRATION RIGHTS, IT MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OUR
COMMON STOCK AND THE  EXISTENCE  OF THESE  RIGHTS MAY MAKE IT MORE  DIFFICULT TO
EFFECT A BUSINESS COMBINATION.

      Persons who were  stockholders  prior to our initial  public  offering are
entitled to require us to register the resale of their shares of common stock at
any time after the date on which their shares are released  from escrow,  which,
except in  limited  circumstances,  will not be before  July 28,  2009.  If such
stockholders  exercise  their  registration  rights with respect to all of their
shares of common  stock,  then there will be an additional  2,250,000  shares of
common  stock  eligible for trading in the public  market.  The presence of this
additional  number of shares of common stock  eligible for trading in the public
market may have an adverse  effect on the market price of our common  stock.  In
addition, the existence of these rights may make it more difficult to effectuate
a business  combination  or  increase  the cost of the target  business,  as the
stockholders  of the target  business may be  discouraged  from  entering into a
business combination with us or will request a higher price for their securities
as a result of these  registration  rights and the potential future effect their
exercise may have on the trading market for our common stock.


                                       18

<PAGE>

THE  AMERICAN  STOCK  EXCHANGE  MAY DELIST OUR  SECURITIES  FROM  TRADING ON ITS
EXCHANGE  WHICH  COULD  LIMIT  INVESTORS'  ABILITY TO MAKE  TRANSACTIONS  IN OUR
SECURITIES AND SUBJECT US TO ADDITIONAL TRADING RESTRICTIONS.

      Our  securities  are listed on the  American  Stock  Exchange,  a national
securities  exchange.  We cannot assure you that our securities will continue to
be listed on the  American  Stock  Exchange  in the  future  prior to a business
combination.  Additionally,  in connection with our business combination,  it is
likely that the  American  Stock  Exchange  may require us to file a new initial
listing application and meet its initial listing  requirements as opposed to its
more lenient continued listing  requirements.  We cannot assure you that we will
be able to meet those initial listing requirements at that time.

      If the American Stock Exchange  delists our securities from trading on its
exchange and we are not able to list our  securities  on another  exchange or to
have them quoted on Nasdaq,  our securities  could be quoted on the OTC Bulletin
Board, or "pink sheets". As a result, we could face significant material adverse
consequences including:

      o     a limited availability of market quotations for our securities;

      o     a determination  that our common stock is a "penny stock" which will
            require  brokers  trading  in our  common  stock to  adhere  to more
            stringent rules and possibly resulting in a reduced level of trading
            activity in the secondary trading market for our securities;

      o     a limited amount of news and analyst coverage for our company; and

      o     a  decreased  ability  to  issue  additional  securities  or  obtain
            additional financing in the future.

      The  National  Securities  Markets  Improvement  Act of  1996,  which is a
federal  statute,  prevents or preempts the states from  regulating  the sale of
certain securities, which are referred to as "covered securities". Since we will
be listed  on the  American  Stock  Exchange,  our  securities  will be  covered
securities.  Although the states are preempted  from  regulating the sale of our
securities,  the federal statute does allow the states to investigate  companies
if there is a  suspicion  of  fraud,  and if there is a  finding  of  fraudulent
activity,  then the states can regulate or bar the sale of covered securities in
a particular case. While we are not aware of a state having used these powers to
prohibit  or restrict  the sale of  securities  issued by blank check  companies
generally,  certain  state  securities  regulators  view blank  check  companies
unfavorably  and might use these  powers,  or threaten to use these  powers,  to
hinder the sale of securities of blank check companies in their states.

IF  OUR  COMMON  STOCK   BECOMES   SUBJECT  TO  THE  SEC'S  PENNY  STOCK  RULES,
BROKER-DEALERS MAY EXPERIENCE DIFFICULTY IN COMPLETING CUSTOMER TRANSACTIONS AND
TRADING ACTIVITY IN OUR SECURITIES MAY BE ADVERSELY AFFECTED.

      If at any time our  securities  are no longer listed on the American Stock
Exchange or another exchange or quoted on Nasdaq and we have net tangible assets
of  $5,000,000 or less and our common stock has a market price per share of less
than $5.00, transactions in our common stock may be subject to the "penny stock"
rules promulgated under the Securities  Exchange Act of 1934. Under these rules,
broker-dealers who recommend such securities to persons other than institutional
accredited investors must:

      o     make a special written suitability determination for the purchaser;

      o     receive the purchaser's  written agreement to a transaction prior to
            sale;

      o     provide the purchaser with risk disclosure  documents which identify
            certain risks  associated with investing in "penny stocks" and which
            describe  the  market  for  these  "penny   stocks"  as  well  as  a
            purchaser's legal remedies; and

      o     obtain  a  signed  and  dated   acknowledgment  from  the  purchaser
            demonstrating  that the purchaser has actually received the required
            risk disclosure document before a transaction in a "penny stock" can
            be completed.

      If our common stock  becomes  subject to these rules,  broker-dealers  may
find it difficult to effectuate  customer  transactions  and trading activity in
our securities may be adversely  affected.  As a result, the market price of our
securities  may be  depressed,  and you may find it more  difficult  to sell our
securities.


                                       19

<PAGE>

IF WE ARE DEEMED TO BE AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940, OUR ACTIVITIES MAY BE RESTRICTED WHICH, AMONG OTHER PROBLEMS,  MAY MAKE IT
DIFFICULT FOR US TO COMPLETE A BUSINESS COMBINATION. SUCH RESTRICTIONS INCLUDE:

      o     restrictions on the nature of our investments; and

      o     restrictions on the issuance of securities.

In addition, we may have imposed upon us burdensome requirements, including:

      o     registration as an investment company;

      o     adoption of a specific form of corporate structure; and

      o     reporting, record keeping, voting, proxy and disclosure requirements
            and other rules and regulations.

      We do not believe that our anticipated  principal  activities will subject
us to the  Investment  Company Act of 1940.  To this end, the  proceeds  held in
trust may only be invested by the trust agent in  "government  securities"  with
specific maturity dates, or in money market funds meeting specific  requirements
under the Investment  Company Act of 1940. By restricting  the investment of the
proceeds  to these  instruments,  we  intend  to meet the  requirements  for the
exemption  provided in Rule 3a-1 promulgated under the Investment Company Act of
1940.  If we were  deemed  to be  subject  to the  act,  compliance  with  these
additional  regulatory burdens would require additional expense that we have not
allotted for.

OUR  DIRECTORS  MAY NOT BE  CONSIDERED  "INDEPENDENT"  UNDER THE POLICIES OF THE
NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC.

      All of our officers or directors  own shares of our common  stock,  and no
salary or other  compensation  will be paid to our  officers  or  directors  for
services  rendered  by them  on our  behalf  prior  to or in  connection  with a
business combination.  We believe that two members of our board of directors are
"independent" as that term is commonly used. However,  under the policies of the
North  American  Securities  Administrators   Association,   Inc.,  because  our
directors may receive reimbursement for out-of-pocket  expenses incurred by them
in connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations, state
securities  administrators could take the position that such individuals are not
"independent." If this were the case, they would take the position that we would
not have the  benefit  of  independent  directors  examining  the  propriety  of
expenses  incurred  on our behalf and  subject to  reimbursement.  Additionally,
there is no limit on the amount of out-of-pocket expenses that could be incurred
and there  will be no review of the  reasonableness  of the  expenses  by anyone
other than our board of  directors,  which  would  include  persons who may seek
reimbursement,  or a court of competent  jurisdiction if such  reimbursement  is
challenged.  Although we believe that all actions  taken by our directors on our
behalf will be in our best  interests,  whether or not two of them are deemed to
be  "independent,"  we cannot assure you that this will actually be the case. If
actions are taken,  or expenses are  incurred  that are actually not in our best
interests,  it  could  have  a  material  adverse  effect  on our  business  and
operations and the price of our stock held by the public stockholders.

SINCE WE HAVE NOT CURRENTLY SELECTED A PROSPECTIVE TARGET BUSINESS WITH WHICH TO
COMPLETE A  BUSINESS  COMBINATION,  INVESTORS  IN OUR  SECURITIES  ARE UNABLE TO
CURRENTLY ASCERTAIN THE MERITS OR RISKS OF THE TARGET BUSINESS' OPERATIONS.

      Since we have not yet identified a prospective  target,  investors have no
current basis to evaluate the possible  merits or risks of the target  business'
operations.  To the extent we complete a business combination with a financially
unstable company, an entity in its development stage and/or an entity subject to
unknown or  unmanageable  liabilities,  we may be  affected  by  numerous  risks
inherent in the business  operations of those entities.  Although our management
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.  We also cannot assure you that an investment in our
securities  will not  ultimately  prove to be less favorable to investors in our
initial  public  offering  than a  direct  investment,  if an  opportunity  were
available, in a target business.


                                       20

<PAGE>

WE MAY ACQUIRE A DOMESTIC BUSINESS WITH OPERATIONS OUTSIDE OF THE UNITED STATES,
AND MAY FACE CERTAIN ECONOMIC AND REGULATORY CHALLENGES THAT WE MAY BE UNABLE TO
MEET.

      While we expect to acquire a business or assets in the United  States,  we
may  acquire a business  or assets with  operations  outside the United  States.
There are certain risks  inherent in doing  business in  international  markets,
particularly  in  the  healthcare  industry,  which  is  heavily  regulated  and
controlled in many jurisdictions outside the United States. These risks include:
less developed healthcare infrastructures and generally higher costs;

      o     difficulty  in  obtaining  the   necessary   healthcare   regulatory
            approvals for any potential expansion,  and the possibility that any
            approvals  that may be obtained  would  impose  restrictions  on the
            operation of the our business;

      o     the inability to manage and  coordinate  the  healthcare  regulatory
            requirements of multiple  jurisdictions that are constantly evolving
            and subject to unexpected change;

      o     difficulties in staffing and managing foreign operations;

      o     fluctuations in exchange rates;

      o     reduced or no protection for intellectual property rights; and

      o     potentially adverse tax consequences.

      Our inability to manage these risks effectively could adversely affect our
proposed  business and limit our ability to expand our  operations,  which would
have a material  adverse  effect on the our  business,  financial  condition and
results of operations.

                  RISKS ASSOCIATED WITH THE HEALTHCARE INDUSTRY

      Even if we acquire  domestic or  international  assets or  operations,  of
which no  assurances  can be given,  our  proposed  business  will be subject to
numerous risks, including the following:

CHANGES IN THE HEALTHCARE  INDUSTRY ARE SUBJECT TO VARIOUS  INFLUENCES,  EACH OF
WHICH MAY AFFECT OUR PROSPECTIVE BUSINESS.

      The healthcare  industry is subject to changing political,  economic,  and
regulatory  influences.  These  factors  affect  the  purchasing  practices  and
operations  of  healthcare  organizations.  Any  changes in  current  healthcare
financing  and   reimbursement   systems  could  cause  us  to  make   unplanned
enhancements  of our  prospective  products or services,  or result in delays or
cancellations of orders,  or in the revocation of endorsement of our prospective
products  or  services  by  clients.   Federal  and  state   legislatures   have
periodically  considered  programs to reform or amend the U.S. healthcare system
at both the federal and state level.  Such  programs  may increase  governmental
regulation or involvement in healthcare, lower reimbursement rates, or otherwise
change  the  environment  in which  healthcare  industry  participants  operate.
Healthcare  industry  participants may respond by reducing their  investments or
postponing  investment  decisions,  including  investments  in  our  prospective
products or services.

      Many  healthcare   industry   participants  are  consolidating  to  create
integrated  healthcare  systems with greater  market  power.  As the  healthcare
industry consolidates,  competition to provide products and services to industry
participants  will  become  even  more  intense,   as  will  the  importance  of
establishing  a  relationship  with each industry  participant.  These  industry
participants may try to use their market power to negotiate price reductions for
our prospective  products and services.  If we were forced to reduce our prices,
our  operating  results  could  suffer  if we could  not  achieve  corresponding
reductions in our expenses.


                                       21

<PAGE>

ANY BUSINESS WE ACQUIRE WILL BE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.  ANY
CHANGES TO THE LAWS AND REGULATIONS  GOVERNING OUR PROSPECTIVE  BUSINESS, OR THE
INTERPRETATION  AND ENFORCEMENT OF THOSE LAWS OR REGULATIONS,  COULD CAUSE US TO
MODIFY OUR OPERATIONS AND COULD NEGATIVELY IMPACT OUR OPERATING RESULTS.

      We believe that our prospective business will be extensively  regulated by
the federal  government  and any states in which we decide to operate.  The laws
and  regulations  governing our  operations,  if any, are generally  intended to
benefit and protect persons other than our stockholders. The government agencies
administering  these laws and  regulations  have broad latitude to enforce them.
These laws and regulations  along with the terms of any government  contracts we
may enter into would regulate how we do business,  what products and services we
could  offer,  and how we  would  interact  with  the  public.  These  laws  and
regulations, and their interpretations,  are subject to frequent change. Changes
in existing laws or regulations,  or their interpretations,  or the enactment of
new laws or regulations could reduce our revenue, if any, by:

      o     imposing additional capital requirements;

      o     increasing our liability;

      o     increasing our administrative and other costs;

      o     increasing or decreasing mandated benefits;

      o     forcing us to restructure our relationships with providers; or

      o     requiring  us to  implement  additional  or  different  programs and
            systems.

      For  example,  Congress  enacted  the  Health  Insurance  Portability  and
Accountability  Act of 1996 which  mandates  that health plans  enhance  privacy
protections for member protected health information.  This requires health plans
to add, at  significant  cost,  new  administrative,  information  and  security
systems to prevent inappropriate release of protected member health information.
Compliance  with this law is uncertain  and has affected the revenue  streams of
entities  subject to it.  Similarly,  individual  states  periodically  consider
adding  operational  requirements  applicable  to health  plans,  often  without
identifying  funding for these  requirements.  California  recently required all
health plans to make  available to members  independent  medical review of their
claims.  Any  analogous  requirements  applied to our  prospective  products  or
services would be costly to implement and could affect our prospective revenues.

      We believe that our business,  if any, will be subject to various  routine
and non-routine governmental reviews, audits and investigation. Violation of the
laws governing our  prospective  operations,  or changes in  interpretations  of
those laws, could result in the imposition of civil or criminal  penalties,  the
cancellation of any contracts to provide products or services, the suspension or
revocation  of any  licenses,  and exclusion  from  participation  in government
sponsored  health  programs,  such as Medicaid and the State  Children's  Health
Insurance Program.  If we become subject to material fines or if other sanctions
or other corrective  actions were imposed upon us, we might suffer a substantial
reduction  in  revenue,  and  might  also  lose  one or more  of our  government
contracts  and as a result  lose  significant  numbers of members and amounts of
revenue.

      The current  administration's  issuance of new regulations,  its review of
the existing Health Insurance  Portability and  Accountability Act of 1996 rules
and other  newly  published  regulations,  the  states'  ability  to  promulgate
stricter rules,  and  uncertainty  regarding many aspects of the regulations may
make compliance with any new regulatory landscape difficult.  In order to comply
with any new regulatory requirements, any prospective business we acquire may be
required to employ  additional or different  programs and systems,  the costs of
which are  unknown to us at this  time.  Further,  compliance  with any such new
regulations may lead to additional costs that we have not yet identified.  We do
not know whether,  or the extent to which, we would be able to recover our costs
of  complying  with any new  regulations.  Any new  regulations  and the related
compliance costs could have a material adverse effect on our business.


                                       22

<PAGE>

IF WE ARE UNABLE TO ATTRACT  QUALIFIED  HEALTHCARE  PROFESSIONALS  AT REASONABLE
COSTS,  IT COULD LIMIT OUR ABILITY TO GROW,  INCREASE  OUR  OPERATING  COSTS AND
NEGATIVELY IMPACT OUR BUSINESS.

      We may rely  significantly  on our ability to attract and retain qualified
healthcare  professionals  who  possess  the  skills,  experience  and  licenses
necessary to meet the  certification  requirements  and the  requirements of the
hospitals, nursing homes and other healthcare facilities with which we may work,
as well as the requirements of applicable state and federal governing bodies. We
will compete for qualified  healthcare  professionals  with  hospitals,  nursing
homes and other healthcare  organizations.  Currently,  for example,  there is a
shortage  of  qualified  nurses in most areas of the United  States.  Therefore,
competition  for nursing  personnel  is  increasing,  and nurses'  salaries  and
benefits  have  risen.  This may also  occur with  respect  to other  healthcare
professionals on whom our business may become dependent.

      Our ability to attract and retain such qualified healthcare  professionals
will depend on several  factors,  including  our  ability to provide  attractive
assignments  and  competitive  benefits and wages.  We cannot assure you that we
will be  successful  in any of these  areas.  Because we may  operate in a fixed
reimbursement  environment,  increases  in the wages and  benefits  that we must
provide to attract and retain qualified healthcare professionals or increases in
our reliance on contract or temporary healthcare  professionals could negatively
affect our  revenue.  We may be unable to  continue  to  increase  the number of
qualified healthcare professionals that we recruit, decreasing the potential for
growth of our  business.  Moreover,  if we are  unable  to  attract  and  retain
qualified healthcare  professionals,  we may have to limit the number of clients
for whom we can provide any of our prospective products or services.

WE MAY FACE  SUBSTANTIAL  RISKS OF  LITIGATION  AS A RESULT OF  OPERATING IN THE
HEALTHCARE  INDUSTRY.  IF WE BECOME  SUBJECT TO  MALPRACTICE  AND RELATED  LEGAL
CLAIMS,  WE COULD BE  REQUIRED  TO PAY  SIGNIFICANT  DAMAGES,  WHICH  MAY NOT BE
COVERED BY INSURANCE.

      Litigation  is a risk that each business  contends  with,  and  businesses
operating  in the  healthcare  industry do so more than most.  In recent  years,
medical  product  companies  have  issued  recalls  of  medical  products,   and
physicians,  hospitals and other health care providers have become subject to an
increasing  number of legal actions alleging  malpractice,  product liability or
related legal theories.  Many of these actions involve large monetary claims and
significant  defense costs. We intend to maintain liability insurance in amounts
that we believe will be  appropriate  for our  prospective  operations.  We also
intend  to  maintain  business   interruption   insurance  and  property  damage
insurance,  as  well  as an  additional  umbrella  liability  insurance  policy.
However,  this insurance coverage may not cover all claims against us. Insurance
coverage  may not  continue to be  available  at a cost  allowing us to maintain
adequate levels of insurance.  If one or more successful  claims against us were
not  covered  by or  exceeded  the  coverage  of our  insurance,  our  financial
condition could be adversely affected.

WE MAY BE DEPENDENT ON PAYMENTS FROM MEDICARE AND MEDICAID. CHANGES IN THE RATES
OR METHODS GOVERNING THESE PAYMENTS FOR OUR PROSPECTIVE PRODUCTS OR SERVICES, OR
DELAYS IN SUCH PAYMENTS, COULD ADVERSELY AFFECT OUR PROSPECTIVE REVENUE.

      A large  portion of our revenue may consist of payments  from Medicare and
Medicaid  programs.  Because these are generally fixed payments,  we would be at
risk for the cost of any products or services provided to our clients. We cannot
assure you that Medicare and Medicaid will continue to pay in the same manner or
in the same amount that they  currently  do. Any  reductions  in amounts paid by
government  programs  for our  prospective  products  or  services or changes in
methods or regulations  governing  payments would adversely affect our potential
revenue.  Additionally,  delays  in any such  payments,  whether  as a result of
disputes or for any other  reason,  would also  adversely  affect our  potential
revenue.


                                       23

<PAGE>

IF OUR COSTS WERE TO INCREASE  MORE RAPIDLY THAN FIXED  PAYMENT  ADJUSTMENTS  WE
RECEIVE  FROM  MEDICARE,  MEDICAID  OR OTHER  THIRD-PARTY  PAYORS FOR ANY OF OUR
POTENTIAL PRODUCTS OR SERVICES, OUR REVENUE COULD BE NEGATIVELY IMPACTED.

      We may receive  fixed  payments for our  prospective  products or services
based on the level of service or care that we provide.  Accordingly, our revenue
may be  largely  dependent  on our  ability  to manage  costs of  providing  any
products or services and to maintain a client base. We may become susceptible to
situations  where our clients may require  more  extensive  and  therefore  more
expensive  products  or  services  than we may be able  to  profitably  deliver.
Although Medicare, Medicaid and certain third-party payors currently provide for
an annual  adjustment of various payment rates based on the increase or decrease
of the medical  care  expenditure  category of the Consumer  Price Index,  these
increases have  historically  been less than actual  inflation.  If these annual
adjustments  were  eliminated  or  reduced,  or if our  costs of  providing  our
products  or services  increased  more than the annual  adjustment,  any revenue
stream we may generate would be negatively impacted.

WE MAY DEPEND ON  PAYMENTS  FROM  THIRD-PARTY  PAYORS,  INCLUDING  MANAGED  CARE
ORGANIZATIONS.  IF THESE  PAYMENTS  ARE  REDUCED,  ELIMINATED  OR  DELAYED,  OUR
PROSPECTIVE REVENUES COULD BE ADVERSELY AFFECTED.

      We may be  dependent  upon  private  sources  of  payment  for  any of our
potential  products or services.  Any amounts that we may receive in payment for
such products and services may be adversely  affected by market and cost factors
as well as other  factors over which we have no control,  including  regulations
and  cost  containment  and  utilization  decisions  and  reduced  reimbursement
schedules of third-party payors. Any reductions in such payments,  to the extent
that we could not recoup them elsewhere, would have a material adverse effect on
our prospective business and results of operations.  Additionally, delays in any
such  payments,  whether as a result of disputes or for any other reason,  would
have a  material  adverse  effect on our  prospective  business  and  results of
operations.

MEDICAL  REVIEWS AND AUDITS BY  GOVERNMENTAL  AND PRIVATE PAYORS COULD RESULT IN
MATERIAL PAYMENT RECOUPMENTS AND PAYMENT DENIALS,  WHICH COULD NEGATIVELY IMPACT
OUR BUSINESS.

      Medicare fiscal  intermediaries and other payors may periodically  conduct
pre-payment or  post-payment  medical reviews or other audits of our prospective
products or services. In order to conduct these reviews, the payor would request
documentation from us and then review that documentation to determine compliance
with  applicable  rules and  regulations,  including  the  documentation  of any
products or services that we might provide.  We cannot predict  whether  medical
reviews or similar audits by federal or state  agencies or commercial  payors of
such products or services will result in material recoupments or denials,  which
could have a material  adverse effect on our financial  condition and results of
operations.

IF THE FDA OR OTHER STATE OR FOREIGN AGENCIES IMPOSE REGULATIONS THAT AFFECT OUR
POTENTIAL PRODUCTS, OUR COSTS WILL INCREASE.

      The development, testing, production and marketing of any of our potential
products  that  we  may  manufacture,   market  or  sell  following  a  business
combination  may be subject to regulation by the FDA as "devices" under the 1976
Medical Device  Amendments to the Federal Food,  Drug and Cosmetic Act. Before a
new medical  device,  or a new use of, or claim for, an existing  product can be
marketed in the United States,  it must first receive either 510(k) clearance or
pre-market  approval from the FDA, unless an exemption  applies.  Either process
can be expensive and lengthy.  The FDA's 510(k) clearance  process usually takes
from three to twelve months,  but it can take longer and is  unpredictable.  The
process of obtaining  pre-market approval is much more costly and uncertain than
the 510(k) clearance  process and it generally takes from one to three years, or
even longer, from the time the application is filed with the FDA.


                                       24

<PAGE>

      In the United States, medical devices must be:

      o     manufactured in registered and quality  approved  establishments  by
            the FDA; and

      o     produced  in  accordance  with  the FDA  Quality  System  Regulation
            ("QSR") for medical devices.

      As a result,  we may be required to comply with QSR requirements and if we
fail to comply with these  requirements,  we may need to find another company to
manufacture  any such devices  which could delay the  shipment of our  potential
product to our customers.

      The FDA  requires  producers  of medical  devices to obtain FDA  licensing
prior  to  commercialization  in the  United  States.  Testing,  preparation  of
necessary  applications  and the processing of those  applications by the FDA is
expensive and time  consuming.  We do not know if the FDA would act favorably or
quickly  in making  such  reviews,  and  significant  difficulties  or costs may
potentially be encountered by us in any efforts to obtain FDA licenses.  The FDA
may  also  place   conditions  on  licenses  that  could   restrict   commercial
applications of such products.  Product approvals may be withdrawn if compliance
with  regulatory  standards is not  maintained  or if problems  occur  following
initial  marketing.  Delays imposed by the FDA licensing  process may materially
reduce the period during which we have the exclusive right to commercialize  any
potential patented products.  We may make modifications to any potential devices
and may make additional  modifications  in the future that we may believe do not
or will not  require  additional  clearances  or  approvals.  If the FDA  should
disagree,   and  require  new   clearances   or  approvals   for  the  potential
modifications,  we may be required to recall and to stop marketing the potential
modified   devices.   We  also  may  be  subject  to  Medical  Device  Reporting
regulations, which would require us to report to the FDA if our products were to
cause or contribute to a death or serious  injury,  or malfunction in a way that
would likely cause or contribute to a death or serious injury.  We cannot assure
you that such problems will not occur in the future.

      Additionally,  our  potential  products  may be subject to  regulation  by
similar  agencies in other states and foreign  countries.  Compliance  with such
laws or  regulations,  including any new laws or  regulations  in connection any
potential  products  developed  by us, might  impose  additional  costs on us or
marketing impediments on such products which could adversely affect our revenues
and increase our expenses.  The FDA and state authorities have broad enforcement
powers.  Our failure to comply with  applicable  regulatory  requirements  could
result in enforcement action by the FDA or state agencies, which may include any
of the following sanctions:

      o     warning  letters,  fines,  injunctions,  consent  decrees  and civil
            penalties;

      o     repair, replacement, refunds, recall or seizure of our products;

      o     operating  restrictions  or partial  suspension or total shutdown of
            production;

      o     refusal of requests for 510(k)  clearance  or premarket  approval of
            new  products,  new  intended  uses,  or  modifications  to existing
            products;

      o     withdrawal  of 510(k)  clearance or premarket  approvals  previously
            granted; and

      o     criminal prosecution.

If any of these events were to occur, it could harm our business.


                                       25

<PAGE>

THE FDA CAN IMPOSE CIVIL AND CRIMINAL ENFORCEMENT ACTIONS AND OTHER PENALTIES ON
US IF WE WERE TO FAIL TO COMPLY WITH STRINGENT FDA REGULATIONS.

      Medical device manufacturing  facilities must maintain records,  which are
available for FDA  inspectors  documenting  that the  appropriate  manufacturing
procedures  were  followed.  Should we acquire  such a facility as a result of a
business  combination,  the FDA would have  authority to conduct  inspections of
such a  facility.  Labeling  and  promotional  activities  are also  subject  to
scrutiny by the FDA and, in certain instances,  by the Federal Trade Commission.
Any  failure by us to take  satisfactory  corrective  action in  response  to an
adverse  inspection or to comply with applicable FDA regulations could result in
enforcement  action against us, including a public warning letter, a shutdown of
manufacturing  operations, a recall of our products, civil or criminal penalties
or other  sanctions.  From time to time,  the FDA may modify such  requirements,
imposing  additional or different  requirements  which could require us to alter
our business methods which could potentially result in increased expenses.

Government Regulation

      Although  as of the  date of this  filing  we have  not  entered  into any
agreement to acquire any  operating  business,  we believe that any  prospective
business we may acquire will be extensively  regulated by the federal government
and any states in which we decide to operate. The laws and regulations governing
our  operations,  if any, are generally  intended to benefit and protect persons
other than our stockholders.  The government  agencies  administering these laws
and regulations  have broad latitude to enforce them. These laws and regulations
along  with the  terms of any  government  contracts  we may  enter  into  would
regulate how we do business,  what products and services we could offer, and how
we would  interact  with the  public.  These  laws and  regulations,  and  their
interpretations,  are subject to frequent  change.  Changes in existing  laws or
regulations,  or  their  interpretations,  or  the  enactment  of  new  laws  or
regulations could reduce our revenue, if any, by:

      o     imposing additional capital requirements;

      o     increasing our liability;

      o     increasing our administrative and other costs;

      o     increasing or decreasing mandated benefits;

      o     forcing us to restructure our relationships with providers; or

      o     requiring  us to  implement  additional  or  different  programs and
            systems.

      For  example,  Congress  enacted  the  Health  Insurance  Portability  and
Accountability  Act of 1996 which  mandates  that health plans  enhance  privacy
protections for member protected health information.  This requires health plans
to add, at  significant  cost,  new  administrative,  information  and  security
systems to prevent inappropriate release of protected member health information.
Compliance  with this law is uncertain  and has affected the revenue  streams of
entities  subject to it.  Similarly,  individual  states  periodically  consider
adding  operational  requirements  applicable  to health  plans,  often  without
identifying  funding for these  requirements.  California  recently required all
health plans to make  available to members  independent  medical review of their
claims.  Any  analogous  requirements  applied to our  prospective  products  or
services would be costly to implement and could affect our prospective revenues.

      We believe that our business,  if any, will be subject to various  routine
and non-routine governmental reviews, audits and investigation. Violation of the
laws governing our  prospective  operations,  or changes in  interpretations  of
those laws, could result in the imposition of civil or criminal  penalties,  the
cancellation of any contracts to provide products or services, the suspension or
revocation  of any  licenses,  and exclusion  from  participation  in government
sponsored  health  programs,  such as Medicaid and the State  Children's  Health
Insurance Program.  If we become subject to material fines or if other sanctions
or other corrective  actions were imposed upon us, we might suffer a substantial
reduction  in  revenue,  and  might  also  lose  one or more  of our  government
contracts  and as a result  lose  significant  numbers of members and amounts of
revenue.


                                       26

<PAGE>

      The current  administration's  issuance of new regulations,  its review of
the existing Health Insurance  Portability and  Accountability Act of 1996 rules
and other  newly  published  regulations,  the  states'  ability  to  promulgate
stricter rules,  and  uncertainty  regarding many aspects of the regulations may
make compliance with any new regulatory landscape difficult.  In order to comply
with any new regulatory requirements, any prospective business we acquire may be
required to employ  additional or different  programs and systems,  the costs of
which are  unknown to us at this  time.  Further,  compliance  with any such new
regulations may lead to additional costs that we have not yet identified.  We do
not know whether,  or the extent to which, we would be able to recover our costs
of complying with any new regulations.

      In addition,  the  development,  testing,  production and marketing of any
products  that  we  may  manufacture,   market  or  sell  following  a  business
combination  may be subject to regulation by the FDA as "devices" under the 1976
Medical  Device  Amendments  to the  Federal  Food,  Drug and  Cosmetic  Act, as
amended. Before a new medical device, or a new use of, or claim for, an existing
product can be  marketed  in the United  States,  it must first  receive  either
510(k)  clearance  or  pre-market  approval  from the FDA,  unless an  exemption
applies. Either process can be expensive and lengthy. The FDA's 510(k) clearance
process usually takes from three to twelve months, but it can take longer and is
unpredictable.  The process of obtaining pre-market approval is much more costly
and uncertain than the 510(k) clearance  process and it generally takes from one
to three years, or even longer,  from the time the application is filed with the
FDA.

      In the United States, medical devices must be:

      o     manufactured in registered and quality  approved  establishments  by
            the FDA; and

      o     produced in accordance  with the FDA Quality System  Regulation,  or
            QSR, for medical devices.

      As a result,  we may be required to comply with QSR requirements and if we
fail to comply with these  requirements,  we may need to find another company to
manufacture  any such devices  which could delay the  shipment of our  potential
product to our customers.

      The FDA requires  producers of medical  devices to obtain FDA clearance or
approval prior to commercialization in the United States.  Testing,  preparation
of necessary applications and the processing of those applications by the FDA is
expensive and time  consuming.  We do not know if the FDA would act favorably or
quickly  in making  such  reviews,  and  significant  difficulties  or costs may
potentially  be  encountered  by us in any  efforts to obtain FDA  clearance  or
approval.  The FDA may also place  conditions on clearances  and approvals  that
could restrict commercial  applications of such products.  Product approvals may
be withdrawn if compliance  with  regulatory  standards is not  maintained or if
problems occur following initial marketing.  Delays imposed by the FDA clearance
or approval  process may  materially  reduce the period during which we have the
exclusive right to commercialize any potential  patented  products.  We may make
modifications to any potential devices and may make additional  modifications in
the future that we may believe do not or will not require additional  clearances
or  approvals.  If the FDA  should  disagree,  and  require  new  clearances  or
approvals for the potential  modifications,  we may be required to recall and to
stop marketing the potential modified devices. We also may be subject to Medical
Device Reporting regulations, which would require us to report to the FDA if our
products  were  to  cause  or  contribute  to a  death  or  serious  injury,  or
malfunction in a way that would likely cause or contribute to a death or serious
injury.



                                       27

<PAGE>

      The development, testing, production and marketing of any of our potential
products  that  we  may  manufacture,   market  or  sell  following  a  business
combination  may be subject to regulation by the FDA as "drugs." All "new drugs"
must be the subject of an FDA-approved  new drug  application  (NDA) and all new
biologics products must be the subject of a biologics license  application (BLA)
before they may be marketed in the United  States.  All generic  equivalents  to
previously  approved  drugs or new dosage  forms of  existing  drugs must be the
subject of an FDA-approved  abbreviated new drug application  (ANDA) before they
may be marketed in the United States. In all cases, the FDA has the authority to
determine what testing  procedures are appropriate for a particular product and,
in some instances,  has not published or otherwise  identified  guidelines as to
the appropriate procedures.  The FDA has the authority to withdraw existing NDA,
BLA and ANDA approvals and to review the regulatory  status of products marketed
under its  enforcement  policies.  The FDA may require an approved  NDA, BLA, or
ANDA for any drug or biologic product marketed to be recalled or withdrawn under
its enforcement  policy if new information  reveals  questions about the drug or
biologic's safety or effectiveness. All drugs must be manufactured in conformity
with  current  good  manufacturing  practice  regulations  (GMPs)  and drugs and
biologics  subject  to an  approved  NDA,  BLA,  or ANDA  must be  manufactured,
processed,  packaged,  held and labeled in accordance with information contained
in those  approvals.  The required  product testing and approval process for new
drugs and biologics  ordinarily takes several years and requires the expenditure
of  substantial  resources.  Testing of any product  under  development  may not
result in a  commercially-viable  product.  Even after  such time and  expenses,
regulatory  approval by the FDA may not be obtained for any products  developed.
In addition,  delays or rejections may be encountered  based upon changes in FDA
policy during the period of product  development and FDA review.  Any regulatory
approval may impose  limitations  in the indicated use for the product.  Even if
regulatory  approval is obtained,  a marketed product,  its manufacturer and its
manufacturing   facilities   are  subject  to  continual   review  and  periodic
inspections. Subsequent discovery of previously unknown problems with a product,
manufacturer   or  facility  may  result  in  restrictions  on  the  product  or
manufacturer, including withdrawal of the product from the market.

      Even if required FDA approval has been obtained with respect to a new drug
or biologic  product,  foreign  regulatory  approval  of a product  must also be
obtained  prior to  marketing  the  product  internationally.  Foreign  approval
procedures  vary from country to country and the time  required for approval may
delay or prevent  marketing.  The  clinical  testing  requirements  and the time
required to obtain  foreign  regulatory  approvals may differ from that required
for FDA approval.  Although  there is now a centralized  European Union approval
mechanism for new  pharmaceutical  products in place, each European Union member
state may nonetheless impose its own procedures and requirements,  many of which
are time consuming and expensive,  and some European Union member states require
price approval as part of the regulatory  approval  process.  Thus, there can be
substantial  delays in obtaining required approval from both the FDA and foreign
regulatory authorities.

Employees

      We have  three  officers,  all of whom are also  members  of our  board of
directors. These individuals are not obligated to contribute any specific number
of hours per week and intend to devote only as much time as they deem  necessary
to our affairs. The amount of time they will devote in any time period will vary
based on the availability of suitable target businesses to investigate, although
we expect such individuals to devote an average of  approximately  ten hours per
week to our business.  We do not intend to have any full time employees prior to
the consummation of a business combination.


Item 1B. Unresolved Staff Comments

      Not applicable.


                                       28

<PAGE>


Item 2. Properties.

      We maintain our executive  offices at 2116  Financial  Center,  666 Walnut
Street, Des Moines, Iowa 50309. We have agreed to pay Equity Dynamics,  Inc., an
affiliated  third party of which Mr.  Pappajohn is the  President  and principal
stockholder,  and Mr. Kinley a Senior Vice President,  approximately  $7,500 per
month for office space (located at our executive offices) and certain additional
general and administrative services, such as an allocable share of receptionist,
secretarial and general office services.  These offices consist of approximately
2,570 square feet of office space. A prior  arrangement with an affiliate of our
Chief Executive Officer, Derace Schaffer, M.D., pursuant to which we paid $1,500
a month for office space and certain general and administrative  services,  as a
portion of the $7,500, was terminated on December 31, 2005.

      We consider our office space adequate for our current operations.


Item 3. Legal Proceedings.

      To the knowledge of management,  there is no litigation  currently pending
or contemplated against us or any of our officers or directors in their capacity
as such.


Item 4. Submission of Matters to a Vote of Security Holders.

      No matters were submitted to a vote of  securityholders  during the fourth
quarter of the fiscal period ended December 31, 2005.


                                       29

<PAGE>


                                     PART II


Item 5. Market For Registrant's  Common Equity,  Related Stockholder Matters and
Issuer Purchases of Equity Securities.

      Since July 29, 2005, our units,  and after their split on October 6, 2005,
our shares of common stock and warrants,  have all traded on the American  Stock
Exchange  under the  symbols  "HAQ.U",  "HAQ," and  "HAQ.WS",  respectively.  On
October 6, 2005,  our units ceased trading  separately.  Prior to July 29, 2005,
there was no established public trading market for our common stock.

      The closing  high and low sales  prices of our units,  common  stock,  and
warrants as reported by the American Stock Exchange,  for the quarters indicated
are as follows:

                      Common Stock          Warrants               Units
                      --------------------------------------------------

                      High      Low      High      Low        High       Low
2005:
Third Quarter          N/A       N/A       N/A       N/A    $  8.35   $  7.80
Fourth Quarter      $  7.20   $  6.75   $  1.75   $  0.95   $  8.15   $  8.02

      As of March 22,  2006,  there  were  eight  stockholders  of record of our
common stock and three  holders of record of our  warrants.  Such numbers do not
include beneficial owners holding shares or warrants through nominee names.

      We have not  paid any  dividends  on our  common  stock to date and do not
intend to pay dividends prior to the completion of a business  combination.  The
payment of  dividends  in the future will be  contingent  upon our  revenues and
earnings,   if  any,  capital   requirements  and  general  financial  condition
subsequent to completion of a business combination. The payment of any dividends
subsequent to a business  combination  will be within the discretion of our then
board of  directors.  It is the present  intention  of our board of directors to
retain  all  earnings,   if  any,  for  use  in  our  business  operations  and,
accordingly,  our board  does not  anticipate  declaring  any  dividends  in the
foreseeable future.

Recent Sales of Unregistered Securities

      Since  inception  in April 2005,  we sold the  following  shares of common
stock without registration under the Securities Act:

        Stockholders                                         Number of Shares

        John Pappajohn                                       600,000
        Derace L. Schaffer, M.D.                             600,000
        Matthew P. Kinley                                    300,000

      Such  shares  were  issued  on  April  25,  2005 in  connection  with  our
organization  pursuant to the exemption from  registration  contained in Section
4(2)  of  the  Securities  Act as  they  were  sold  to  sophisticated,  wealthy
individuals.  The shares issued to the  individuals and entities above were sold
for an  aggregate  offering  price of $25,000 at an  average  purchase  price of
approximately  $0.0167 per share. No underwriting  discounts or commissions were
paid with respect to such sales. In June 2005, Mr.  Pappajohn,  Dr. Schaffer and
Mr. Kinley transferred, for an aggregate consideration per share which they paid
us and pro rata to their  ownership of our common stock,  an aggregate of 30,000
shares of our common stock  equally to Mr. Berger and Mr.  Schellhammer,  two of
our  directors.  On July 8,  2005,  our Board of  Directors  authorized  a stock
dividend of  approximately  .333333 shares of common stock for each  outstanding
share of common  stock,  effectively  lowering  the  initial  purchase  price to
approximately  $.0125  per  share.  Further,  on July  22,  2005,  our  Board of
Directors  authorized a stock  dividend of  approximately  .125 shares of common
stock for each  outstanding  share of common  stock,  effectively  lowering  the
initial purchase price to approximately $.0111 per share.


                                       30

<PAGE>

Use of Proceeds from our Initial Public Offering

      The effective date of our registration statement,  which was filed on Form
S-1 under the Securities Act of 1933 (File No. 333-124712), and which relates to
the initial public offering of our units, was July 28, 2005. Each unit consisted
of one share of common  stock,  $.0001 par value per share,  and one  warrant to
purchase one share of common stock. A total of 10,350,000  units were registered
at a proposed maximum aggregate offering price of $82,800,000.

      The offering was  consummated on August 3, 2005, and the sale of a portion
of the overallotment option was consummated on August 16, 2005. The underwriters
of the offering were Maxim Group LLC, Ramius Securities, LLC, Sunrise Securities
Corp. and Broadband  Capital  Management,  LLC. A total of 9,400,000  units were
sold in the  offering and the  overallotment  at $8.00 per unit for an aggregate
offering price of $75,200,000. Each of our units commenced trading its component
share of common stock and warrant  separately  on October 6, 2005.  Our units do
not continue to trade separately from the common stock and warrants.

Our net  proceeds  from our  initial  public  offering  are as set  forth in the
following table:

                                USE OF PROCEEDS

The net proceeds of this offering will be as set forth in the following table:


<TABLE>
<CAPTION>
<S>                                                                    <C>
Gross proceeds                                                         $75,200,000
   Offering expenses
   Underwriting discount (1) (2)                                       $ 4,512,000
   Underwriting non-accountable expense
      allowance (3)                                                    $   720,000
   Legal fees and expenses (including blue
      sky services and expenses)                                       $   200,000
   Miscellaneous expenses                                              $    45,251
   Printing and engraving expenses                                     $    50,000
   Accounting fees and expenses                                        $    25,000
   SEC registration fee                                                $    17,981
   NASD registration fee                                               $    15,778
   AMEX Listing Fees                                                   $    75,000
   Initial trustee's fee                                               $     1,000
   D & O Insurance                                                     $    70,000

   Net Proceeds
   Held in trust (2)                                                   $67,928,000
   Not held in trust                                                   $ 1,540,000
        Total net proceeds                                             $69,468,000

Use of new proceeds not held in trust
   Legal, accounting and other expenses attendant to the due
       diligence investigations, structuring and negotiation
       of a business combination                                       $   200,000

   Payment for administrative services and support ($7,500 per month
      for 24 months)                                                   $   180,000
   Due diligence of prospective target business                        $   600,000
   Legal and accounting fees relating to SEC reporting obligations     $    50,000
   Working capital and services                                        $   510,000
        Total                                                          $ 1,540,000
</TABLE>



                                       31

<PAGE>

      (1) Consists of an  underwriting  discount of 6% of the gross  proceeds of
our initial public offering (including any units sold to cover overallotments).

      (2) Upon consummation of a business  combination,  Maxim Group LLC will be
paid an  additional  underwriting  discount  in the  amount  of 1% of the  gross
proceeds  of our  initial  public  offering  (including  any units sold to cover
overallotments) out of the funds held in trust, for an aggregate of $752,000.

      (3) The 1% non-accountable  expense allowance was not payable with respect
to the units sold upon exercise of the underwriters' over-allotment option.

      $67,928,000  of the net  proceeds of our initial  public  offering and the
overallotment,  or approximately $7.23 per share, were placed in a trust account
at JP Morgan Chase NY Bank  maintained  by  Continental  Stock  Transfer & Trust
Company,  New York, New York, as trustee. The proceeds will not be released from
the trust fund until the earlier of the completion of a business  combination or
our  liquidation.   The  proceeds  held  in  the  trust  fund  may  be  used  as
consideration  to pay the sellers of a target  business with which we ultimately
complete a business  combination.  Any amounts not paid as  consideration to the
sellers of the target  business may be used to finance  operations of the target
business  or to  effect  other  acquisitions,  as  determined  by our  board  of
directors at that time.

      We have agreed to pay Equity Dynamics,  Inc., an affiliated third party of
which Mr. Pappajohn is the President and principal stockholder, and Mr. Kinley a
Senior  Vice  President,  approximately  $7,500 per month for  office  space and
certain additional general and administrative services. A prior arrangement with
an affiliate of our Chief Executive Officer, Derace Schaffer,  M.D., pursuant to
which  we paid  $1,500  a  month  for  office  space  and  certain  general  and
administrative  services, as a portion of the $7,500, was terminated on December
31, 2005.  As of December 31, 2005,  approximately  $37,500 was paid pursuant to
these arrangements.

      In  accordance  with  their  agreement  with  the  representative  of  the
underwriters in our initial public offering, Mr. Pappajohn, Dr. Schaffer and Mr.
Kinley  purchased,  pursuant to the  guidelines  set forth in SEC Rule 10b5-1 in
connection with Rule 10b5-1 plans, an aggregate of 354,900 of our warrants,  for
aggregate  consideration  of $386,070,  on the open market at prices up to $1.20
per warrant. The Rule 10b5-1 plans terminated on January 6, 2006, and no further
purchases are planned.

      Prior to the closing of a business  combination,  we have agreed to obtain
keyman life  insurance in the amount of $3,000,000 in the aggregate on the lives
of certain  members of our management for a three year period.  Based on current
estimates, the premium for such life insurance policies, of which we will be the
sole  beneficiary,  is expected to be approximately  $5,000 per year.  Effective
January,  2006,  keyman life  insurance  was obtained for Matt Kinley and Derace
Schaffer in the amount of $1,500,000 each.

      We intend to use the excess working capital (approximately $510,000) being
held in reserve in the event due diligence, legal, accounting and other expenses
of structuring and negotiating  business  combinations exceed our estimates,  as
well as for reimbursement of any out-of-pocket  expenses incurred by persons who
were  stockholders  prior to our  initial  public  offering in  connection  with
activities  on our behalf as described  below.  We expect that due  diligence of
prospective  target  businesses will be performed by some or all of our officers
and directors and may include  engaging market research firms and/or third party
consultants.  Our officers and  directors  do not receive any  compensation  for
their due diligence of prospective target businesses, but are reimbursed for any
out-of-pocket  expenses (such as travel  expenses)  incurred in connection  with
such due  diligence  activities.  As of December  31, 2005,  we have  reimbursed
$67,642 to such  persons.  We believe  that the excess  working  capital will be
sufficient to cover the foregoing expenses and reimbursement costs.


                                       32

<PAGE>

      It is also  possible  that we could use a portion of such  excess  working
capital  to make a deposit,  down  payment or fund a  "no-shop"  provision  with
respect to a particular proposed business  combination,  although we do not have
any current intention to do so. In the event that we were ultimately required to
forfeit such funds (whether as a result of our breach of the agreement  relating
to such payment or  otherwise),  we may not have a sufficient  amount of working
capital  available outside of the trust account to conduct due diligence and pay
other expenses related to finding another suitable business  combination without
securing  additional  financing.  Thus,  if we were unable to secure  additional
financing, we would most likely fail to consummate a business combination in the
allotted time and would be forced to liquidate.

      To the  extent  that  our  capital  stock  is used in  whole or in part as
consideration to effect a business  combination,  the proceeds held in the trust
fund as well as any other net proceeds not expended  will be used to finance the
operations of the target business.

      Mr.  Pappajohn,  Dr. Schaffer and Mr. Kinley loaned us a total of $250,000
which was used to pay a portion of the expenses of the initial public  offering,
such as SEC  registration  fees, NASD  registration  fees, AMEX listing fees and
legal and accounting  fees and expenses.  These loans were repaid out of the net
proceeds of our initial public offering not placed in trust.

      The net proceeds of the initial public offering not held in the trust fund
and not  immediately  required  for the  purposes  set  forth  above may only be
invested by the trust agent in "government  securities"  with specific  maturity
dates,  or in  money  market  funds  meeting  specific  requirements  under  the
Investment  Company  Act of 1940,  in each case in such a manner that we are not
deemed to be an investment  company under the Investment Company Act. We believe
that,  as a result of our  initial  public  offering,  we will  have  sufficient
available funds to operate until at least August 2007,  assuming that a business
combination is not consummated during that time.

      Other than the  $7,500  aggregate  per month  general  and  administrative
service fees described  above, no  compensation of any kind (including  finder's
and consulting fees) will be paid to any persons who were stockholders  prior to
our initial public offering,  or any of their affiliates,  for services rendered
to us  prior  to  or  in  connection  with  the  consummation  of  the  business
combination.  However,  such  stockholders  will receive  reimbursement  for any
out-of-pocket  expenses  incurred by them in connection  with  activities on our
behalf,  such as  identifying  potential  target  businesses  and performing due
diligence  on  suitable  business  combinations.  After  the  consummation  of a
business  combination,  if any, to the extent our management remains as officers
of the resulting  business,  we anticipate  that they may enter into  employment
agreements,  the terms of which  shall be  negotiated  and which we expect to be
comparable to employment agreements with other  similarly-situated  companies in
the  healthcare  industry.   Further,  after  the  consummation  of  a  business
combination,  if any, to the extent our  directors  remain as  directors  of the
resulting business, we anticipate that they will receive compensation comparable
to directors at other similarly-situated companies in the healthcare industry.


                                       33

<PAGE>


Item 6. Selected Financial Data.

      The  following  tables  should be read in  conjunction  with our financial
statements  and the notes thereto  appearing  elsewhere in this Annual Report on
Form 10-K.  The selected  financial  data has been  derived  from our  financial
statements,  which have been audited by LWBJ, LLP, independent registered public
accounting firm, as indicated in their report included elsewhere herein.

                             SELECTED FINANCIAL DATA
         For the period April 25, 2005 (inception) to December 31, 2005

Income statement data

      Investment income                                            $    586,074

      Total expenses                                                   (260,779)
                                                                   ------------
      Income before provision for income taxes                          325,295
                                                                   ------------
      Provision for income taxes                                         48,000

      Net income                                                   $    277,295
                                                                   ============
      Basic earnings per share                                     $       0.04
                                                                   ============
      Diluted earnings per share                                   $       0.03
                                                                   ============
      Weighted average basic shares outstanding                       7,869,200
                                                                   ============
      Weighted average diluted shares outstanding                     8,323,201
                                                                   ============


Balance sheet data

      Cash                                                         $  1,398,181

      Investments held in trust                                      68,636,069

      Other current assets                                               52,500
                                                                   ------------
      Total assets                                                 $ 70,086,750
                                                                   ============


      Total liabilities                                                 410,535
      Common stock, subject to possible redemption                   13,578,807

      Total stockholders' equity                                     56,097,408
                                                                   ------------
      Total liabilities and stockholders' equity                   $ 70,086,750
                                                                   ============


                                       34

<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

The  following  discussion  should  be read in  conjunction  with our  financial
statements and footnotes thereto contained in this report.

      We were  formed  on April 25,  2005,  to serve as a  vehicle  to  acquire,
through a merger,  capital stock  exchange,  asset  acquisition or other similar
business  combination,  one or  more  domestic  or  international  assets  or an
operating business in the healthcare industry.  Our initial business combination
must be with a target business or businesses whose fair market value is at least
equal to 80% of net assets at the time of such acquisition. We intend to utilize
cash derived from the proceeds of our recently  completed public  offering,  our
capital  stock,  debt or a  combination  of cash,  capital  stock and  debt,  in
effecting a business combination.

      On August 3, 2005, we consummated our initial public offering of 9,000,000
units. On August 16, 2005, we consummated  the closing of an additional  400,000
units that were subject to the underwriters'  over-allotment  option.  Each unit
consists of one share of common stock and one  redeemable  common stock purchase
warrant.  Each warrant  entitles the holder to purchase from us one share of our
common stock at an exercise price of $6.00.

      Our net  proceeds  from  the sale of our  units,  including  amounts  from
exercise of the  underwriters'  over-allotment  option,  after deducting certain
offering expenses of approximately $1,220,000, including $720,000 evidencing the
underwriters'  non-accountable  expense  allowance  of 1% of the gross  proceeds
(excluding the proceeds from the underwriters' over-allotment), and underwriting
discounts of approximately $4,512,000,  were approximately $69,468,000.  Of this
amount,  $67,928,000  is being held in trust and the  remaining  funds are being
held outside of the trust. The remaining proceeds are available to be used by us
to provide for  business,  legal and  accounting  due  diligence on  prospective
acquisitions and continuing  general and  administrative  expenses.  We will use
substantially  all of the net  proceeds  of this  offering  to  acquire a target
business,   including   identifying  and  evaluating   prospective   acquisition
candidates,  selecting the target  business,  and  structuring,  negotiating and
consummating the business  combination.  To the extent that our capital stock is
used in whole or in part as consideration to effect a business combination,  the
proceeds  held in the trust fund as well as any other net  proceeds not expended
will be used to finance the  operations  of the target  business.  We believe we
will have  sufficient  available  funds  outside  of the trust  fund to  operate
through August 2007,  assuming that a business  combination  is not  consummated
during that time.  We do not believe we will need to raise  additional  funds in
order to meet the expenditures required for operating our business.  However, we
may need to raise  additional funds through a private or public offering of debt
or equity  securities  if such  funds are  required  to  consummate  a  business
combination  that is presented to us. We would only  consummate such a financing
simultaneously with the consummation of a business combination.


I
tem 7A. Quantitative and Qualitative Disclosures About Market Risk.

      Market risk is the  sensitivity  of income to changes in  interest  rates,
foreign  exchanges,  commodity prices,  equity prices,  and other  market-driven
rates or prices.  We are not  presently  engaged in, and if a suitable  business
target is not identified by us prior to the prescribed  liquidation of the trust
account we may not engage in, any substantive commercial business.  Accordingly,
the risks associated with foreign exchange rates,  commodity prices,  and equity
prices are not significant.


Item 8. Financial Statements and Supplementary Data.

      Reference is made to pages F-1 through  F-12  comprising a portion of this
Annual Report on Form 10-K.


                                       35

<PAGE>


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

      None.


Item 9A. Controls and Procedures.

      Our management carried out an evaluation, with the participation of Derace
L. Schaffer,  M.D., our principal executive officer,  and Matthew P. Kinley, our
principal financial officer, of the effectiveness of our disclosure controls and
procedures as of December 31, 2005. Based upon that evaluation, Dr. Schaffer and
Mr. Kinley concluded that our disclosure  controls and procedures were effective
to ensure that  information  required to be  disclosed  by us in reports that we
file or submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized  and  reported,  within the time  periods  specified in the rules and
forms of the Securities and Exchange Commission.

      There  has not been any  change in our  internal  control  over  financial
reporting in connection with the evaluation required by Rule 13a-15(d) under the
Exchange Act that occurred  during the three months ended December 31, 2005 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.


Item 9B. Other Information.

      Not applicable.


                                       36

<PAGE>


                                    PART III


Item 10. Directors and Executive Officers of the Registrant.

Our current directors and executive officers are as follows:


         NAME                 AGE                           POSITION
John Pappajohn                77       Chairman of the Board and Secretary

Derace L. Schaffer, M.D.      57       Vice Chairman and Chief Executive Officer

Matthew P. Kinley             38       President, Treasurer and Director

Edward B. Berger              76       Director

Wayne A. Schellhammer         53       Director

      JOHN PAPPAJOHN has served as our chairman and secretary  since April 2005.
Since 1969,  Mr.  Pappajohn has been the President and principal  stockholder of
Equity  Dynamics,  Inc.,  a  financial  consulting  firm,  and the sole owner of
Pappajohn  Capital  Resources,  a  venture  capital  firm.  He also  serves as a
director of the following public companies:  Allion Healthcare,  Inc.,  American
CareSource Holdings, Inc., MC Informatics, Inc., PACE Health Management Systems,
Inc. and Patient  InfoSystems,  Inc. Mr.  Pappajohn  has been an active  private
equity investor in healthcare companies for more than 30 years and has served as
a director of more than 40 public companies. Mr. Pappajohn has been a founder in
several public  healthcare  companies such as Caremark Rx, Inc.,  Quantum Health
Resources,  and  Radiologix,  Inc. Mr.  Pappajohn  and Dr.  Schaffer have worked
together for more than fifteen years on a variety of healthcare  companies,  and
they have co-founded Allion  Healthcare,  Inc., Patient  Infosystems,  Inc., and
Radiologix,  Inc., all of which are public companies. In addition, Mr. Pappajohn
and Dr. Schaffer have worked together on many private healthcare companies, such
as Logisticare,  Inc. and Source Medical Inc. Mr. Pappajohn  received his B.S.C.
from the University of Iowa.

      DERACE  L.  SCHAFFER,  M.D.  has  served  as our vice  chairman  and chief
executive  officer since April 2005. Dr.  Schaffer is the founder and CEO of The
Lan Group, a venture capital firm specializing in healthcare and high technology
investments.  He also serves as a director of the  following  public  companies:
Allion  Healthcare,  Inc.,  American  CareSource  Holdings,  Inc.,  and  Patient
InfoSystems,  Inc.  He has served as chairman  of several  healthcare  companies
including,  Radiologix,  Inc  when  it  was  private.  He  has  been  an  active
co-investor  with Mr.  Pappajohn  for more than  fifteen  years on a variety  of
healthcare  companies,  and they  have  co-founded  Allion  Healthcare,  Patient
Infosystems and Radiologix,  all of which are public companies. In addition, Mr.
Pappajohn  and Dr.  Schaffer  have worked  together on many  private  healthcare
companies, such as Logisticare, Inc. and Source Medical Inc. Dr. Schaffer served
as chief executive  officer and chairman of the board of Ide Imaging Group, P.C.
from 1980 to 2001.  Dr.  Schaffer  has served as a director  on many  healthcare
boards  of  directors  including  several  health  systems  and  more  than  ten
healthcare  services  and  technology  companies.   Dr.  Schaffer  received  his
postgraduate  radiology  training at Harvard  Medical  School and  Massachusetts
General Hospital,  where he served as Chief Resident.  Dr. Schaffer is currently
also a Clinical Professor of Radiology at Weill Cornell Medical College.

      MATTHEW P. KINLEY has served as our  president,  treasurer  and a director
since April 2005.  Since 1995, he has served as Senior Vice  President of Equity
Dynamics,  Inc., a financial consulting firm, and Pappajohn Capital Resources, a
venture capital firm, both owned by John Pappajohn. Mr. Kinley has been involved
in the financing and development of more than 20 companies with Mr. Pappajohn in
the past ten years.  Mr.  Kinley has worked with Dr.  Schaffer for more than ten
years on healthcare services and technology  companies.  From 1990 through 1995,
Mr. Kinley was manager and held various positions at KPMG Peat Marwick,  working
on tax, audit and merger and acquisition issues. Mr. Kinley received his B.A. in
Business, with highest honors, from the University of Northern Iowa in May 1990.


                                       37

<PAGE>

      EDWARD B. BERGER has served as a director since April 2005. He is Chairman
and Chief Executive Officer of Equity Acquisitions  Incorporated,  a position he
has held since  January  2004,  Chairman of the Board of  Directors of Southwest
Business  Systems,  Chairman  and CEO of  Berger  Equities  Inc.,  director  and
Chairman  of the Audit  Committee  of  CardSystems  Solutions  and a director of
Compass Bank of Tucson, AZ., and American CareSource Holdings,  Inc. both public
companies.  Mr. Berger has extensive healthcare  experience:  past President and
CEO of Palo Verde  Hospital;  past President and member of the Board of Trustees
of Kino Community Hospital;  past member of the Long Range Planning Committee of
Tucson  Medical  Center,  all in Tucson,  AZ. Mr. Berger is currently an Adjunct
Professor in Political  Science at Pima Community College and is the Chairman of
the MBA Advisory Council,  Eller Graduate School of Management at the University
of Arizona.  He has been admitted to practice law before the U.S. Supreme Court,
U.S. Court of Appeals for the 9th Circuit and the U.S.  District  Court-Arizona.
He is admitted to the New York Bar, the Arizona Bar and the District of Columbia
Bar. Mr. Berger  received his Juris Doctor degree from New York Law School.  Mr.
Berger is a member of both our Audit Committee and our Nominating Committee.

      WAYNE A.  SCHELLHAMMER  has  served as a director  since  June  2005.  Mr.
Schellhammer  is Chairman and Chief  Executive  Officer of American  Care Source
Holdings,  Inc., a public company, a position he has held since October of 2004.
He served as President  and CEO of Iowa Health  Physicians,  an affiliate of the
Iowa Health  System,  for five years,  as President  and CEO of InTrust for five
years and as Vice President of Physician  Services and Payer Contracting for the
Iowa Health System, a hospital and physician  integrated health system, for five
years.  Mr.  Schellhammer  has also held senior  executive  positions  with KPMG
Consulting (now BearingPoint) for two years,  Wellcare of New York, a subsidiary
of a public company,  Wellcare  HealthPlans,  Inc., for five years, as well as a
national  cardiac  consulting  firm.  He has  spent a total  of 30  years in the
healthcare  industry  and is a graduate  of the  University  of  Minnesota.  Mr.
Schellhammer  is a  member  of both  our  Audit  Committee  and  our  Nominating
Committee.

      Our board of  directors is divided into two classes with only one class of
directors being elected in each year and each class serving a two-year term. The
term of office of the first class of directors, consisting of Mr. Berger and Mr.
Schellhammer,  will expire at our first annual meeting of stockholders. The term
of office of the second class of  directors,  consisting of Mr.  Pappajohn,  Dr.
Schaffer and Mr. Kinley, will expire at the second annual meeting.

      These  individuals  will  play a key role in  identifying  and  evaluating
prospective   acquisition   candidates,   selecting  the  target  business,  and
structuring,  negotiating  and  consummating  its  acquisition.  None  of  these
individuals has been a principal of or affiliated with a public company or blank
check  company that  executed a business  plan similar to our business  plan and
none of these individuals is currently affiliated with such an entity.  However,
we believe that the skills and expertise of these individuals,  their collective
access  to  acquisition  opportunities  and  ideas,  their  contacts,  and their
transaction  expertise  should enable them to identify and effect an acquisition
although we cannot assure you that they will, in fact, be able to do so.

      Dr.  Schaffer,  Mr.  Pappajohn  and Mr.  Kinley  may be  deemed  to be our
"parents" and are deemed our  "promoters,"  as these terms are defined under the
Federal securities laws.

Director Independence

      Our board of directors has determined that Mr. Berger and Mr. Schellhammer
are  "independent  directors" as defined in the American Stock Exchange  listing
standards and Rule 10A-3 of the Exchange Act. We intend to locate and appoint at
least two  additional  independent  directors to serve on the board of directors
and one additional  independent director to serve on each of our audit committee
and nominating committee prior to July 28, 2006.


                                       38

<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers,  directors and persons who  beneficially own more than ten percent
of our common stock to file reports of ownership  and changes in ownership  with
the SEC. These reporting  persons are also required to furnish us with copies of
all Section 16(a) forms they file.  Except for the Form 3 of Mr. Kinley filed on
August 5, 2005 and the Form 3 of Mr.  Schellhammer  filed on August 3, 2005, all
of these reports were filed in a timely manner.

Board Committees

      Our board of directors  established  an audit  committee  and a nominating
committee. Our board of directors adopted charters for these committees, as well
as a code of conduct  and ethics  that  governs  the  conduct of our  directors,
officers and employees.

Audit Committee

      Our audit committee currently consists of Mr. Berger and Mr. Schellhammer.
The  independent  directors  we appoint to our audit  committee  will each be an
independent  member of our board of  directors,  as  defined by the rules of the
American Stock Exchange and the SEC. Each member of our audit  committee will be
financially  literate under the current listing  standards of the American Stock
Exchange, and our board of directors has determined that Mr. Berger qualifies as
an "audit committee  financial expert," as such term is defined by SEC rules. We
intend to locate and appoint at least one additional independent director on our
audit committee prior to July 28, 2006.

      The audit committee reviews the professional  services and independence of
our independent  registered public accounting firm and our accounts,  procedures
and internal controls.  The audit committee also recommends the firm selected to
be our independent  registered public accounting firm,  reviews and approves the
scope of the annual audit,  review and  evaluates  with the  independent  public
accounting firm our annual audit and annual consolidated  financial  statements,
reviews with management the status of internal  accounting  controls,  evaluates
problem areas having a potential  financial  impact on us that may be brought to
the  committee's  attention by management,  the  independent  registered  public
accounting  firm or the board of  directors,  and  evaluates  all of our  public
financial reporting documents.

Nominating Committee

      We have  established  a nominating  committee  of the board of  directors,
which  consists  of  Mr.  Berger  and  Mr.  Schellhammer,  each  of  whom  is an
independent  director as defined by the rules of the American Stock Exchange and
the SEC. The nominating committee is responsible for overseeing the selection of
persons  to be  nominated  to serve on our board of  directors.  The  nominating
committee considers persons identified by its members, management, stockholders,
investment  bankers  and  others.  We intend to locate and  appoint at least one
additional  independent  director on our nominating  committee prior to July 28,
2006.

      The  guidelines  for  selecting  nominees,  which  are  specified  in  the
nominating  committee  charter,  generally  provide that persons to be nominated
should be  actively  engaged in business  endeavors,  have an  understanding  of
financial  statements,  corporate  budgeting and capital structure,  be familiar
with the requirements of a publicly traded company,  be familiar with industries
relevant to our business endeavors, be willing to devote significant time to the
oversight  duties of the board of directors of a public company,  and be able to
promote a diversity of views based on the  person's  education,  experience  and
professional  employment.  The nominating committee evaluates each individual in
the context of the board as a whole,  with the objective of recommending a group
of persons that can best  implement our business  plan,  perpetuate our business
and  represent  shareholder  interests.  The  nominating  committee  may require
certain skills or  attributes,  such as financial or accounting  experience,  to
meet specific board needs that arise from time to time. The nominating committee
does not  distinguish  among  nominees  recommended  by  stockholders  and other
persons.


                                       39

<PAGE>

Code of Conduct and Ethics

      We have adopted a code of conduct and ethics  applicable to our directors,
officers and employees in accordance with applicable federal securities laws and
the rules of the  American  Stock  Exchange.  You can review  this  document  by
accessing our public filings at the SEC's web site at www.sec.gov.  In addition,
a copy of the code of conduct and ethics will be  provided  without  charge upon
request to us. We intend to  disclose  any  amendments  to or waivers of certain
provisions  of our code of ethics  within 5 business  days of such  amendment or
waiver or as otherwise required by the SEC.

Conflicts of Interest

      Potential  investors should be aware of the following  potential conflicts
of interest:

      o     None of our officers and directors are required to commit their full
            time to our affairs and,  accordingly,  they will have  conflicts of
            interest  in  allocating  management  time  among  various  business
            activities.

      o     In the course of their other business  activities,  our officers and
            directors may become aware of investment and business  opportunities
            o which may be appropriate  for  presentation to our company as well
            as the other entities with which they are affiliated.  They may have
            conflicts  of interest in  determining  to which entity a particular
            business opportunity should be presented.

      o     Our officers and directors may in the future become  affiliated with
            entities, including other blank check companies, engaged in business
            activities similar to those intended to be conducted by our company.

      o     Since our  directors  beneficially  own shares of our  common  stock
            which  will  be  released  from  escrow  only  in  certain   limited
            situations, our board may have a conflict of interest in determining
            whether a  particular  target  business is  appropriate  to effect a
            business  combination.  The personal and financial  interests of our
            directors and officers may influence their motivation in identifying
            and selecting a target business,  completing a business  combination
            timely and securing the release of their stock.

      o     Our officers  and  directors  who purchase  common stock in the open
            market  are  required  to vote such  shares in favor of a business o
            combination.  Accordingly,  these initial  stockholders  will not be
            eligible to exercise the conversion rights that are available to our
            public stockholders.

      o     In the  event  we  elect  to make a  substantial  down  payment,  or
            otherwise incur significant expenses, in connection with a potential
            business  combination,  our  expenses  could  exceed  the  remaining
            proceeds not held in trust.  Our officers and  directors  may have a
            conflict  of  interest  with  respect  to  evaluating  a  particular
            business combination if we incur such excess expenses. Specifically,
            our  officers and  directors  may tend to favor  potential  business
            combinations  with target  businesses  that offer to  reimburse  any
            expenses in excess of our available proceeds not held in trust.

      o     Our  officers  and  directors  may have a conflict of interest  with
            respect to  evaluating a particular  business  combination  if the o
            retention or  resignation  of any such officers and  directors  were
            included by a target  business as a condition to any agreement  with
            respect to a business combination.


                                       40

<PAGE>

      In general, officers and directors of a corporation incorporated under the
laws of the State of Delaware are required to present business  opportunities to
a corporation if:

      o     the corporation could financially undertake the opportunity;

      o     the opportunity is within the corporation's line of business; and

      o     it would not be fair to the corporation and its stockholders for the
            opportunity not to be brought to the attention of the corporation.

      Accordingly,  as a result of multiple business affiliations,  our officers
and directors may have similar legal obligations relating to presenting business
opportunities  meeting  the  above-listed  criteria  to  multiple  entities.  In
addition,  conflicts of interest may arise when our board evaluates a particular
business opportunity with respect to the above-listed criteria. We cannot assure
you that any of the above mentioned conflicts will be resolved in our favor.

      In order to minimize potential  conflicts of interest which may arise from
multiple corporate  affiliations,  each of our officers and directors has agreed
in principle,  until the earlier of a business  combination,  our liquidation or
such time as he ceases to be an  officer or  director,  to present to us for our
consideration,   prior  to  presentation  to  any  other  entity,  any  business
opportunity  which  may  reasonably  be  required  to be  presented  to us under
Delaware law, subject to any pre-existing fiduciary obligations they might have.

      Each of our directors has, or may come to have, to a certain degree, other
fiduciary  obligations.  In addition  all of our  officers  and  directors  have
fiduciary obligations to those companies on whose board of directors they sit.

      To the  extent  that  they  identify  business  opportunities  that may be
suitable for the entities to which they owe a fiduciary obligation, our officers
and directors will honor those fiduciary obligations.  Accordingly, they may not
present  opportunities  to us that  otherwise may be attractive to us unless the
entities to which they owe a fiduciary  obligation  and any  successors  to such
entities have declined to accept such  opportunities.  Additionally,  certain of
our directors and officers are directors of companies,  both public and private,
which may perform  business  activities in the  healthcare  industry  similar to
those  which we may  perform  after  consummating  a business  combination.  Mr.
Pappajohn  is a  director  of  the  following  such  public  companies:  Patient
InfoSystems, Inc., Allion Healthcare, Inc., PACE Health Management Systems, Inc.
and  American  CareSource  Holdings,  Inc.  Mr.  Pappajohn  is a director of the
following  private company:  Partners Imaging LLC. Dr. Schaffer is a director of
the  following  such  public  companies:   Patient  InfoSystems,   Inc.,  Allion
Healthcare,  Inc.,  and  American  CareSource  Holdings,  Inc.,  as  well as the
following such private  companies:  Partners Imaging LLC and Source Medical Inc.
Mr. Berger is a director of the following  public company:  American  CareSource
Holdings,  Inc.  Mr.  Schellhammer  is Chairman and Chief  Executive  Officer of
American Care Source Holdings, Inc.

      In connection with the vote required for any business combination,  all of
our  stockholders  prior to our initial  public  offering,  including all of our
officers and directors,  have agreed to vote their  respective  shares of common
stock which were owned prior to our initial public  offering in accordance  with
the vote of the  public  stockholders  owning a  majority  of the  shares of our
common  stock sold in our initial  public  offering.  Any shares of common stock
acquired by such  stockholders  in the open market will be considered as part of
the  holdings  of public  stockholders  and will  have the same  rights as other
public  stockholders,  including voting and conversion  rights with respect to a
potential business  combination,  and persons who were stockholders prior to our
initial public  offering may thus vote against a proposed  business  combination
with respect to such shares.  Accordingly,  they may vote on a proposed business
combination  with respect to shares  acquired in the open market any way they so
choose.  In  addition,  they have  agreed to waive  their  respective  rights to
participate  in any  liquidation  distribution  occurring  upon our  failure  to
consummate  a business  combination  but only with  respect  to those  shares of
common stock acquired by them prior to our initial public  offering and not with
respect to any shares acquired in the open market.


                                       41

<PAGE>

      To further minimize potential conflicts of interest, we have agreed not to
consummate a business combination with an entity which is affiliated with any of
such  stockholders  unless we obtain an opinion from an  independent  investment
banking firm that the business  combination is fair to our  stockholders  from a
financial point of view. We expect that any such opinion will be included in our
proxy solicitation materials, furnished to stockholders in connection with their
vote on such a business combination.


Item 11. Executive Compensation.

      None  of our  executive  officers  or  directors  has  received  any  cash
compensation  for services  rendered.  Commencing on the  effective  date of our
initial public offering  through the acquisition of a target  business,  we have
agreed to pay Equity  Dynamics,  Inc.,  an  affiliated  third party of which Mr.
Pappajohn   (our  Chairman  and   Secretary)  is  the  President  and  principal
stockholder,  and Mr.  Kinley (our  President  and  Treasurer)  is a Senior Vice
President,   approximately  $7,500  per  month  for  office  space  and  certain
additional  general and  administrative  services.  A prior  arrangement with an
affiliate of our Chief Executive  Officer,  Derace Schaffer,  M.D.,  pursuant to
which  we paid  $1,500  a  month  for  office  space  and  certain  general  and
administrative  services, as a portion of the $7,500, was terminated on December
31,  2005.  During  2005,   approximately   $37,500  was  incurred  under  these
arrangements.  This  agreement is for our benefit and is not intended to provide
Mr. Pappajohn compensation in lieu of a salary. We believe that such fees are at
least as favorable as we could have obtained from an  unaffiliated  third party.
Other than this $7,500  per-month fee, no  compensation  of any kind,  including
finder's and consulting  fees, will be paid to any of our initial  stockholders,
including our officers and directors, or any of their respective affiliates, for
services  rendered  prior  to or in  connection  with  a  business  combination.
However,  persons who were  stockholders  prior to our initial public  offering,
including  our  officers  and  directors,  will  receive  reimbursement  for any
out-of-pocket  expenses  incurred by them in connection  with  activities on our
behalf,  such as  identifying  potential  target  businesses  and performing due
diligence  on  suitable  business  combinations.  After  the  consummation  of a
business  combination,  if any, to the extent our management remains as officers
of the resulting  business,  we anticipate  that they may enter into  employment
agreements,  the terms of which  shall be  negotiated  and which we expect to be
comparable to employment agreements with other  similarly-situated  companies in
the  healthcare  industry.   Further,  after  the  consummation  of  a  business
combination,  if any, to the extent our  directors  remain as  directors  of the
resulting business, we anticipate that they will receive compensation comparable
to directors at other similarly- situated companies in the healthcare  industry.
Any and all such amounts shall be fully disclosed to stockholders, to the extent
then known, in the proxy solicitation  materials  furnished to our stockholders.
It is unlikely  the amount of such  compensation  will be known at the time of a
stockholder meeting held to consider a business combination, as it will be up to
the  directors  of the  post-combination  business to  determine  executive  and
director  compensation.  In this  event,  such  compensation  will  be  publicly
disclosed  at the time of its  determination  in a Form 8-K,  as required by the
SEC.

Performance Graph

      We have not included the performance  graph index as we became a reporting
company on July 28,  2005.  We do not expect that our  securities  will trade at
prices much different  than the amounts paid for such  securities in our initial
public offering until such time that we complete a business  combination,  if we
are able to do so.


                                       42

<PAGE>


Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.

      The following table sets forth  information as of March 27, 2006, based on
information  obtained  from  the  persons  named  below,  with  respect  to  the
beneficial  ownership  of shares of our common stock by (i) each person known by
us to be the owner of more than 5% of our  outstanding  shares of common  stock,
(ii) each  director and (iii) all officers and  directors as a group.  Except as
indicated  in the  footnotes to the table,  the persons  named in the table have
sole  voting and  investment  power with  respect to all shares of common  stock
shown as beneficially owned by them.


<TABLE>
<CAPTION>
                                                                         Amount
                                                                       and nature
                                                                     of beneficial    Percent
   Name and Address of Beneficial Owner (1)                            ownership     of class
<S>                                                                    <C>           <C>
John Pappajohn (2)                                                       882,000       7.57%
Derace L. Schaffer, M.D. (3)                                             882,000       7.57%
Matthew P. Kinley (4)                                                    441,000       3.79%
Edward B. Berger                                                          22,500          *
Wayne A. Schellhammer                                                     22,500          *
Amaranth LLC, Amaranth Advisors LLC and Nicholas M. Maounis (5)          875,450       7.51%
Sapling, LLC (6)                                                         681,815       5.85%
Fir Tree Recovery Master Fund, LP (6)                                    335,185       2.88%

All directors and executive officers as a group (5 persons)            2,250,000      19.31%
</TABLE>


*     Represents beneficial ownership of less than 1%.

(1)   Does not include shares of common stock issuable upon exercise of warrants
      which are beneficially  owned by certain of the persons named in the above
      table but which are not  exercisable  until the later of (i) July 28, 2006
      or (ii) the consummation by us of a business combination. Unless otherwise
      indicated,  the  business  address  of  each  of the  individuals  is 2116
      Financial Center, 666 Walnut Street, Des Moines, Iowa 50309.

(2)   Does not  include  141,960  warrants  purchased  on behalf of such  person
      pursuant to the guidelines set forth in SEC Rule 10b5-1 in connection with
      a Rule 10b5-1 Plan. See footnote 1, above.

(3)   Does not  include  141,960  warrants  purchased  on behalf of such  person
      pursuant to the guidelines set forth in SEC Rule 10b5-1 in connection with
      a Rule 10b5-1 Plan. See footnote 1, above.

(4)   Does not  include  70,980  warrants  purchased  on behalf  of such  person
      pursuant to the guidelines set forth in SEC Rule 10b5-1 in connection with
      a Rule 10b5-1 Plan. See footnote 1, above.

(5)   Based on information  contained in a Schedule 13G/A filed by Amaranth LLC,
      Amaranth  Advisors LLC and Nicholas M. Maounis in February 2006.  Amaranth
      LLC,  Amaranth  Advisors  LLC and Nicholas M. Maounis have shared power to
      vote or to direct  the vote,  and  shared  power to  dispose or direct the
      disposition,  of 875,450 shares of our common stock.  The address for each
      of Amaranth  LLC,  Amaranth  Advisors  LLC and  Nicholas M. Maounis is One
      American Lane, Greenwich CT 06831

(6)   Based on  information  contained in a Schedule 13G filed by Sapling LLC in
      August 2005.  Sapling may direct the vote and  disposition  of the 681,815
      shares of Common  Stock,  and Fir Tree  Recovery  may  direct the vote and
      disposition of 335,185 shares of Common Stock. The address of both Sapling
      LLC and Fir Tree  Recovery is 535 Fifth Avenue,  31st Floor New York,  New
      York 10017


                                       43

<PAGE>

      All of the shares of our common  stock  outstanding  prior to our  initial
public were placed in escrow with Continental Stock Transfer & Trust Company, as
escrow agent, until the earliest of:

      o     July 28, 2008; or

      o     the consummation of a liquidation,  merger,  stock exchange or other
            similar  transaction which results in all of our stockholders having
            the  right to  exchange  their  shares  of  common  stock  for cash,
            securities  or  other  property  subsequent  to our  consummating  a
            business combination with a target business.

      During the escrow  period,  the holders of these shares are not be able to
sell or transfer their securities except to their spouses and children or trusts
established  for  their  benefit,  but  will  retain  all  other  rights  as our
stockholders,  including,  without limitation, the right to vote their shares of
common stock and the right to receive cash dividends,  if declared. If dividends
are declared and payable in shares of common stock,  such dividends will also be
placed  in  escrow.  If we are  unable  to  effect a  business  combination  and
liquidate,   none  of  these  stockholders  will  receive  any  portion  of  the
liquidation  proceeds  with  respect to common  stock owned by them prior to our
initial public offering.


                                       44

<PAGE>


Item 13. Certain Relationships and Related Transactions.

      In April  2005,  we issued  1,500,000  shares of our  common  stock to the
individuals  set forth below for an aggregate  amount of $25,000 in cash,  at an
average purchase price of approximately $0.0167 per share, as follows:

Name                        Number of Shares   Relationship to Us

John Pappajohn              600,000            Chairman and Secretary
Derace L. Schaffer, M.D.    600,000            Vice-Chairman and CEO
Matthew P. Kinley           300,000            President, Treasurer and director

      Further,  in June  2005,  Mr.  Pappajohn,  Dr.  Schaffer  and  Mr.  Kinley
transferred, for an aggregate consideration per share which they paid us and pro
rata to their  ownership of our common  stock,  an aggregate of 30,000 shares of
our common stock equally to Mr. Berger and Mr. Schellhammer.

      On July 8, 2005,  our board of directors  authorized  a stock  dividend of
approximately  .333333  shares of common  stock  for each  outstanding  share of
common stock,  effectively  lowering the initial purchase price to approximately
$.0125 per share.

      On July 22, 2005,  our board of directors  authorized a stock  dividend of
approximately  .125 shares of common stock for each outstanding  share of common
stock,  effectively  lowering the initial purchase price to approximately $.0111
per share.

      The holders of the  majority  of these  shares will be entitled to require
us, on up to two  occasions,  to  register  these  shares.  The  holders  of the
majority of these shares may elect to exercise these registration  rights at any
time after the date on which  these  shares of common  stock are  released  from
escrow. In addition,  these stockholders have certain "piggy-back"  registration
rights on registration  statements  filed  subsequent to the date on which these
shares of common  stock are  released  from  escrow.  We will bear the  expenses
incurred in connection with the filing of any such registration statements.

      In  connection  with our  initial  public  offering,  Mr.  Pappajohn,  Dr.
Schaffer and Mr.  Kinley  loaned us a total of $250,000  which was used to pay a
portion of the expenses of our initial public offering, such as SEC registration
fees,  NASD  registration  fees, AMEX listing fees and legal and accounting fees
and  expenses.  These loans were  repaid out of the net  proceeds of our initial
public offering not placed in trust.

      In  accordance  with  their  agreement  with  the  representative  of  the
underwriters in our initial public offering, Mr. Pappajohn, Dr. Schaffer and Mr.
Kinley  purchased,  pursuant to the  guidelines  set forth in SEC Rule 10b5-1 in
connection with Rule 10b5-1 plans, an aggregate of 354,900 of our warrants,  for
aggregate  consideration  of $386,070,  on the open market at prices up to $1.20
per warrant. The Rule 10b5-1 plans terminated on January 6, 2006, and no further
purchases are planned.

      We agreed to pay Equity Dynamics, Inc., an affiliated third party of which
Mr.  Pappajohn is the  President  and  principal  stockholder,  and Mr. Kinley a
Senior  Vice  President,  approximately  $7,500 per month for  office  space and
certain additional general and administrative services. A prior arrangement with
an affiliate of our Chief Executive Officer, Derace Schaffer,  M.D., pursuant to
which  we paid  $1,500  a  month  for  office  space  and  certain  general  and
administrative  services, as a portion of the $7,500, was terminated on December
31, 2005.  As of December 31, 2005,  we have paid  approximately  $37,500  under
these arrangements.

      We will  reimburse our officers and directors for any  reasonable  out-of-
pocket business expenses incurred by them in connection with certain  activities
on our behalf such as identifying and  investigating  possible target businesses
and  business  combinations.  There  is no limit on the  amount  of  accountable
out-of-pocket  expenses  reimbursable  by us, which will be reviewed only by our
board or a court of competent  jurisdiction if such reimbursement is challenged.
As of December 31, 2005, we have reimbursed such persons an aggregate of $67,642
in connection with these activities.


                                       45

<PAGE>

      Persons  who were  stockholders  prior  to our  initial  public  offering,
including our officers and  directors,  will not receive  reimbursement  for any
out-of- pocket expenses incurred by them to the extent that such expenses exceed
the amount in the trust fund unless the business  combination is consummated and
there are sufficient funds available for reimbursement  after such consummation.
The  financial  interest of such persons  could  influence  their  motivation in
selecting a target  business and thus,  there may be a conflict of interest when
determining  whether a particular  business  combination is in the stockholders'
best interest.

      Other than the reimbursable out-of-pocket expenses payable to our officers
and  directors,  no  compensation  or fees of any kind,  including  finders  and
consulting fees, will be paid to any persons who were stockholders  prior to our
initial public offering,  officers or directors who owned our common stock prior
to our initial public  offering,  or to any of their  respective  affiliates for
services rendered to us prior to or with respect to the business combination.

      After the  consummation of a business  combination,  if any, to the extent
our management remains as officers of the resulting business, we anticipate that
our officers and directors may enter into  employment  agreements,  the terms of
which shall be  negotiated  and which we expect to be  comparable  to employment
agreements with other  similarly-situated  companies in the healthcare industry.
Further, after the consummation of a business combination, if any, to the extent
our directors remain as directors of the resulting business,  we anticipate that
they   will   receive   compensation    comparable   to   directors   at   other
similarly-situated companies in the healthcare industry.

      All ongoing and future transactions between us and any of our officers and
directors or their  respective  affiliates,  including loans by our officers and
directors,  will be on terms  believed  by us to be no less  favorable  than are
available  from  unaffiliated  third  parties  and such  transactions  or loans,
including any forgiveness of loans, will require prior approval in each instance
by a majority of our uninterested "independent" directors (to the extent we have
any) or the members of our board who do not have an interest in the transaction,
in either case who had access,  at our expense,  to our attorneys or independent
legal counsel.


Item 14. Principal Accounting Fees and Services

Description of Professional Services

      Audit Fees. The aggregate fees for professional services rendered by LWBJ,
LLP (LWBJ) for the audit of the Company's  financial  statements for fiscal year
2005,  which  includes fees related to the initial  public  offering and related
audits, review of financial statements included in our quarterly reports on Form
10-Q, and the 2005 year end audit were approximately $50,000.

      Audit-Related  Fees.  Audit-related  fees are for  assurance  and  related
services including,  among others,  consultation concerning financial accounting
and reporting  standards.  There were no aggregate fees billed for audit-related
services rendered by LWBJ.

      Tax  Fees.  Fees  for  professional  services  rendered  by  LWBJ  for tax
compliance,  tax planning and tax advice for the fiscal year ended  December 31,
2005 were approximately $3,000.

      All Other Fees.  There were no fees paid to LWBJ for  services  other than
audit services and  audit-related  services rendered by LWBJ for the fiscal year
ended December 31, 2005.


                                       46

<PAGE>

Pre-Approval Policies

      The Audit Committee is responsible for appointing,  setting  compensation,
and  overseeing the work of the  independent  auditor.  The Audit  Committee has
established  a  policy  regarding  pre-approval  of all  audit  and  permissible
non-audit services provided by the independent  auditor.  A centralized  service
request  function  is used to provide  an initial  assessment  of  requests  for
services by the  independent  auditor.  The  request  must be specific as to the
particular  services  to be  provided.  Requests  approved  during  the  initial
assessment  are  aggregated  and  submitted  to the  Audit  committee  for final
approval.  The independent auditor may not perform services,  whether associated
with audit or non-audit functions,  unless the services have been approved prior
to their  performance by the Company's  Audit  Committee.  Each fiscal year, the
Audit Committee  negotiates and pre-approves the fee for the annual audit of the
Company's  Consolidated  Financial  Statements.  Each  fiscal  year,  the  Audit
Committee   may  also   specifically   pre-approve   certain   audit   services,
audit-related  services,  tax services and other services.  At the present time,
the  Audit  Committee  has not  delegated  any  authority  for  approval  of any
services.   All  audit  and  permissible  non-audit  services  provided  by  the
independent auditor have been approved by the Audit Committee.


                                       47

<PAGE>


                                     PART IV


Item 15. Exhibits and Financial Statement Schedules

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                              Financial Statements

       For the period from April 25, 2005 (inception) to December 31, 2005



                                    Contents

Report of Independent Registered Public Accounting Firm....................F-1

Audited Financial Statements

Balance Sheet..............................................................F-2
Statement of Operations....................................................F-3
Statement of Stockholders' Equity..........................................F-4
Statement of Cash Flows....................................................F-5
Notes to Financial Statements......................................F-6 to F-12


                                       48

<PAGE>


             Report of Independent Registered Public Accounting Firm


The Board of Directors and Stockholders
Healthcare Acquisition Corp.

We have audited the accompanying balance sheets of Healthcare  Acquisition Corp.
(a  corporation  in the  development  stage) as of December  31,  2005,  and the
related statements of operations,  stockholders'  equity, and cash flows for the
period from April 25, 2005  (inception)  to December 31, 2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted  our audits in  accordance  with  auditing  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable  assurance about whether the
financial statements are free of material  misstatement.  An audit also includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Healthcare Acquisition Corp. (a
corporation in the  development  stage) as of December 31, 2005, and the results
of its  operations  and its cash  flows  for the  period  from  April  25,  2005
(inception)  to December 31, 2005,  in  conformity  with  accounting  principles
generally accepted in the United States of America.



/s/ LWBJ, LLP

LWBJ, LLP
West Des Moines, Iowa

March 14, 2006



                                      F-1

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                                  Balance Sheet

                                December 31, 2005


<TABLE>
<CAPTION>
Assets
<S>                                                                                <C>
Current assets
     Cash and cash equivalents                                                     $ 1,398,181
     Cash held in trust                                                             68,636,069
     Prepaid expense                                                                    52,500
                                                                                   -----------
Total current assets                                                                70,086,750
                                                                                   -----------
Total assets                                                                       $70,086,750
                                                                                   ===========

Liabilities and stockholders' equity
Current liabilities
     Accounts payable                                                              $     6,996
     Accrued expenses                                                                   98,996
     State income tax payable                                                           48,000
     Capital based taxes payable                                                       115,000
     Deferred interest                                                                 141,543
                                                                                   -----------
Total current liabilities                                                              410,535
                                                                                   -----------

Common stock, subject to possible redemption
     1,879,060 shares, at conversion value                                          13,578,807
                                                                                   -----------

Stockholders' equity

     Preferred stock, $.0001 par value, 1,000,000 shares authorized; none issued
     Common stock, $.0001 par value, 100,000,000 shares authorized;
          11,650,000 (which includes 1,879,060 subject to possible conversion)
          issued and outstanding                                                         1,165

     Common stock warrants (9,400,000 outstanding)                                          --
     Paid-in capital in excess of par                                               55,818,948
     Equity accumulated during the development stage                                   277,295
                                                                                   -----------
Total stockholders' equity                                                          56,097,408
                                                                                   -----------
Total liabilities and stockholders' equity                                         $70,086,750
                                                                                   ===========
</TABLE>



See accompanying notes to the financial statements.


                                      F-2

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                             Statement of Operations

       For the period from April 25, 2005 (inception) to December 31, 2005

Revenues

      Interest income                                          $   19,548

      Interest and dividend income from Trust Fund                566,526
                                                               ----------
            Total revenues
                                                                  586,074

Costs and expenses

      Capital based taxes                                         115,000

      Management fees                                              37,986

      Insurance                                                    37,500

      Travel                                                       27,741

      General and administrative                                   40,052

      Formation costs                                               2,500
                                                               ----------

            Total expenses                                        260,779
                                                               ----------


Income before taxes                                               325,295

Provision for income taxes                                         48,000

                                                               ----------

Net income                                                     $  277,295
                                                               ==========

Basic earnings per share                                       $     0.04
                                                               ==========

Diluted earnings per share                                     $     0.03
                                                               ==========


Weighted average basic shares outstanding                       7,869,200
                                                               ==========

Weighted average diluted shares outstanding                     8,323,201
                                                               ==========

See accompanying notes to the financial statements.


                                      F-3

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                       Statements of Stockholders' Equity

       For the period from April 25, 2005 (inception) to December 31, 2005


<TABLE>
<CAPTION>
                                                                                                         Equity
                                                                                                       Accumulated
                                            Common         Common         Common        Additional     During the
                                            Stock           Par           Stock           Paid in      Development    Stockholders'
                                            Shares         Amount        Warrants         Capital         Stage          Equity
                                          ------------   ------------   ------------    ------------   ------------   ------------
<S>                                       <C>            <C>            <C>             <C>            <C>            <C>
Common shares issued to initial
   stockholders at $.0111 per share          2,250,000   $        150                   $     24,850   $         --   $     25,000

Stock dividend - July 8, 2005                       --             50                            (50)            --             --

Stock dividend - July 22, 2005                      --             25                            (25)            --             --
Sale of 9,000,000 units, net of
   underwriters' discount and offering
   expenses (includes 1,799,100 shares
   subject to possible conversion)           9,000,000            900                     66,364,920             --     66,365,820
Proceeds of exercise of underwriters'
   over-allotment option for 400,000
   units, net of commissions. (includes
   79,960 shares subject to possible
   conversion)                                 400,000             40                      3,007,960             --      3,008,000
Proceeds subject to possible
   conversion of 1,879,060 shares                   --             --                    (13,578,807)            --    (13,578,807)

Proceeds from issuance of unit options              --             --                            100             --            100

Net income                                          --             --                             --        277,295        277,295
                                          ------------   ------------   ------------    ------------   ------------   ------------

Balance at December 31, 2005                11,650,000   $      1,165   $         --    $ 55,818,948   $    277,295   $ 56,097,408
                                          ============   ============   ============    ============   ============   ============
</TABLE>


See accompanying notes to the financial statements.


                                      F-4

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                             Statement of Cash Flows

       For the period from April 25, 2005 (inception) to December 31, 2005

Operating activities
     Net income                                           $    277,295
     Increase in prepaid insurance                             (52,500)
     Increase in accounts payable and accrued expenses          24,996
     Increase in state income tax payable                       48,000
     Increase in capital based taxes payable                   115,000
     Increase in deferred interest                             141,543
                                                          ------------
Net cash provided by operating activities                      554,334
                                                          ------------

Investing activities
     Cash held in Trust Fund                               (68,636,069)
                                                          ------------

Financing activities
     Gross proceeds from initial public offering            75,200,000
     Proceeds from issuance of unit option                         100
     Proceeds from notes payable, stockholders                 250,000
     Payments made on notes payable, stockholders             (250,000)
     Proceeds from sale of common stock                         25,000
     Payments made for costs of initial public offering     (5,745,184)
                                                          ------------
Net cash provided by financing activities                   69,479,916
                                                          ------------
Net increase in cash                                         1,398,181


Cash, beginning of period                                           --
                                                          ------------
Cash, end of period                                       $  1,398,181
                                                          ============

Supplemental schedule of non-cash financing activities
     Accrual of deferred offering costs                   $     80,996


           See accompanying notes to the financial statements.


                                      F-5

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)


                          Notes to Financial Statements

                                December 31, 2005


1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Healthcare  Acquisition  Corp. (the  "Company") was  incorporated in Delaware on
April 25, 2005, as a blank check company whose objective is to acquire,  through
a merger,  capital stock exchange,  asset  acquisition or other similar business
combination, a currently unidentified operating business.

Primarily  all  activity  through  December  31, 2005  relates to the  Company's
formation  and the public  offering  described  below.  The Company has selected
December 31 as its fiscal year-end. The registration statement for the Company's
initial public offering  ("Offering") was declared  effective July 28, 2005. The
Company consummated the Offering on August 3, 2005 (and 400,000 units subject to
the  underwriters'  over-allotment  option on August 16,  2005) and received net
proceeds of  approximately  $69,450,000  (Note 2). The Company's  management has
broad discretion with respect to the specific application of the net proceeds of
this Offering,  although  substantially  all of the net proceeds of the Offering
are intended to be generally applied toward consummating a business  combination
with an operating domestic or international  company in the healthcare industry,
a "target business".

In evaluating a prospective  target business,  the Company will consider,  among
other  factors,  the  financial  condition  and  results  of  operation;  growth
potential;  experience  and  skill of  management;  availability  of  additional
personnel;  capital requirements;  competitive position;  barriers to entry into
other industries;  stage of development of the products,  processes or services;
degree of current or potential market  acceptance of the products,  processes or
services;  proprietary  features  and degree of  intellectual  property or other
protection of the products, processes or services; regulatory environment of the
industry;  and costs associated with effecting the business  combination.  These
criteria  are not  intended to be  exhaustive.  Any  evaluation  relating to the
merits  of a  particular  business  combination  will be  based,  to the  extent
relevant,  on the above factors, as well as other considerations deemed relevant
by the Company in effecting a business combination  consistent with its business
objective.

There  are no  assurances  the  Company  will be able to  successfully  effect a
business  combination.  An amount of $67,928,000 or  approximately  90.3% of the
gross proceeds of this offering (approximately $7.23 per unit) are being held in
an interest  bearing  trust  account at JP Morgan  Chase NY Bank  maintained  by
Continental Stock Transfer & Trust Company ("Trust Fund") and invested in United
States Treasury Bills or short-term  securities having a maturity of one hundred
eighty  (180) days or less,  until the  earlier of (i) the  consummation  of the
Company's first business  combination or (ii) the liquidation of the Company. In
October 2005, the Company entered into an amendment to its trust agreement which
permits it to invest the funds held in trust not only in treasury bills having a
maturity  of 180 days or less,  but also in any money  market  fund  meeting the
requirements  of a  "cash  item"  as set  forth  in  Section  3(a)(1)(C)  of the
Investment  Company Act of 1940,  as  amended,  and any  regulations,  no-action
letters, exemptive orders or interpretations promulgated thereunder. The Company
believes that the amendment  will allow it greater  flexibility in investing the
funds held in trust from its initial  public  offering,  as well as reducing its
tax liability, by allowing the Company to invest in tax-free money market funds.
The  placing of funds in the Trust Fund may not  protect  those funds from third
party  claims  against the  Company.  Although the Company will seek to have all
vendors,  prospective  target  businesses or other entities it engages,  execute
agreements with the Company waiving any right,  title,  interest or claim of any
kind in or to any monies held in the Trust Fund, there is no guarantee that they
will execute such agreements.  The Company's officers have severally agreed that
they will be personally liable to ensure that the proceeds in the Trust Fund are
not reduced by the claims of target businesses or vendors or other entities that
are owed  money by the  Company  for  services  rendered  or  contracted  for or
products sold to the Company.



                                      F-6

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                    Notes to Financial Statements (continued)

1.  Nature  of  Operations  and  Summary  of  Significant   Accounting  Policies
(continued)

Nature of Operations (continued)

However,  there can be no assurance  that the  officers  will be able to satisfy
those obligations. The remaining proceeds, not held in trust, may be used to pay
for business,  legal and  accounting  expenses,  expenses  which may be incurred
related  to the  investigation  and  selection  of a  target  business,  and the
negotiation  of an agreement to acquire a target  business,  and for  continuing
general and administrative expenses.

The Company's  first  business  combination  must be with a business with a fair
market  value of at least 80% of the  Company's  net asset  value at the time of
acquisition.   The  Company,  after  signing  a  definitive  agreement  for  the
acquisition of a target  business,  will submit such transaction for stockholder
approval.  In the event that stockholders  owning 20% or more of the outstanding
stock excluding,  for this purpose, those persons who were stockholders prior to
the Offering,  vote against the business combination or request their conversion
right as described below, the business combination will not be consummated.  All
of the  Company's  stockholders  prior  to the  Offering,  including  all of the
officers and directors of the Company ("Initial  Stockholders"),  have agreed to
vote their 2,250,000 founding shares of common stock in accordance with the vote
of the majority in interest of all other  stockholders  of the Company  ("Public
Stockholders") with respect to any business  combination.  After consummation of
the Company's first business combination, all of these voting safeguards will no
longer be applicable.

With  respect  to  the  first  business   combination   which  is  approved  and
consummated,  any Public Stockholder who voted against the business  combination
may demand that the Company redeem his or her shares.  The per share  redemption
price  will  equal  the  amount  in the  Trust  Fund as of the  record  date for
determination  of  stockholders  entitled  to vote on the  business  combination
divided by the number of shares of common stock held by Public  Stockholders  at
the  consummation  of the Offering.  Accordingly,  Public  Stockholders  holding
19.99% of the aggregate  number of shares owned by all Public  Stockholders  may
seek  redemption  of their shares in the event of a business  combination.  Such
Public  Stockholders  are  entitled to receive  their per share  interest in the
Trust Fund computed,  without regard to the shares held by Initial Stockholders.
Accordingly,  a portion of the net  proceeds  from the  Offering  (19.99% of the
amount held in the Trust Fund) has been  classified  as common stock  subject to
possible  conversion  in the  accompanying  December 31, 2005 balance  sheet and
19.99% of the  related  interest  earned on cash held in the Trust Fund has been
recorded as deferred revenue.

The Company's  Amended and Restated  Certificate of  Incorporation  provides for
mandatory liquidation of the Company, without stockholder approval, in the event
that the Company does not consummate a business combination within eighteen (18)
months from the date of the  consummation of the Offering,  or twenty-four  (24)
months from the consummation of the Offering if certain extension  criteria have
been  satisfied.  In the event of  liquidation,  it is likely that the per share
value of the residual assets  remaining  available for  distribution  (including
Trust Fund assets) will be less than the initial public offering price per share
in the Offering  (assuming no value is attributed  to the Warrants  contained in
the Units to be offered in the Offering discussed in Note 2.)


                                      F-7

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                    Notes to Financial Statements (continued)

1.  Nature  of  Operations  and  Summary  of  Significant   Accounting  Policies
(continued)

Earnings Per Share

Basic  earnings  per share is computed by dividing  income  available  to common
stockholders  (the  numerator) by the  weighted-average  number of common shares
(the denominator) for the period.  The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is increased
to  include  the  number  of  additional  common  shares  that  would  have been
outstanding  if the  potentially  dilutive  common  shares had been issued.  The
denominator in the calculation is based on the following weighted-average number
of common shares at December 31, 2006:



Basic                            7,869,200
Add:
   Shares issuable pursuant to
     Common Stock Warrants         454,001
                                 ---------
Diluted                          8,323,201
                                 =========

As stated in Note 8, Warrants began trading  separately from the Company's stock
on October 6, 2005.

Derivative Financial Instruments

As  described  in Note 4,  the  Company  has  granted  a  Purchase  Option  to a
representative of its  underwriters.  Based on Emerging Issues Task Force 00-19,
Accounting  for Derivative  Financial  Instruments  Indexed to, and  Potentially
Settle in, a Company's Own Stock,  the sale of the Purchase  Option was reported
in  permanent  equity  and  accordingly,  there is no  impact  on the  Company's
financial  position  and results of  operation,  except for the $100 in proceeds
from sale.  Subsequent  changes in fair value will not be  recognized as long as
the Purchase Option continues to be classified as an equity instrument.

The Company has determined,  based on the Black-Scholes  option pricing formula,
the fair value of the Purchase  Option at date of issuance,  was $3.79 per share
or  approximately  $852,750  total,  using a risk  free  interest  rate of 4.0%,
expected life of five years and estimated volatility of 60.0%.

The volatility  calculation of 60.0% is based on the 365-day average  volatility
of a representative  sample of eight (8) healthcare companies in the information
technology and services niches with market capitalizations  between $200 million
and $910 million ("Representative  Sample").  Because the Company did not have a
trading history,  the Company needed to estimate the potential volatility of its
common  stock  price,  which  depends on a number of factors  which could not be
ascertained at this time. The Company referred to the 365-day  volatility of the
Representative  Sample  because its  management  believed that the volatility of
these  representative  companies was a reasonable benchmark to use in estimating
the  expected   volatility   for  the  Company's   common  stock   post-business
combination.


                                      F-8

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                    Notes to Financial Statements (continued)

1.  Nature  of  Operations  and  Summary  of  Significant   Accounting  Policies
(continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Income Taxes

Current tax expense related entirely to state taxes, amounted to $48,000 for the
year ended December 31, 2005.

At December 31, 2005,  the Company had a net  operating  loss  carryforward  for
federal  income tax purposes of  approximately  $274,000,  which is available to
offset future federal taxable income.

Deferred  income  taxes are provided  for the  differences  between the basis of
assets and  liabilities  for  financial  reporting  and income tax  purposes.  A
valuation  allowance is established to reduce  deferred tax assets to the amount
expected to be realized.

The  Company  recorded  a  deferred  income  tax asset for the tax effect of net
operating  loss  carryforwards  and  temporary  differences  related  to revenue
recognition  aggregating  to  approximately  $145,000 at December 31,  2005.  In
recognition  of the  uncertainty  regarding  the  ultimate  amount of income tax
benefits to be derived,  the Company has recorded a full valuation  allowance at
December 31, 2005.

The effective  tax rate differs from the statutory  rate of 34% primarily due to
substantially  all  interest  being tax exempt for federal tax  purposes and the
valuation allowance.

Recent Accounting Pronouncements

The Company does not believe that any recently  issued,  but not yet  effective,
accounting standards,  if currently adopted, would have a material effect on the
accompanying financial statements.

2. Initial Public Offering

On July 28, 2005, the Company sold 9,000,000 units ("Units") in the Offering. On
August 16, 2005 an additional 400,000 Units were sold. Each Unit consists of one
share of the Company's common stock,  $.0001 par value and one Redeemable Common
Stock Purchase Warrant ("Warrant"). In connection with the Offering, the Company
paid the  underwriter a discount of 6% of the gross proceeds of the Offering and
a non-accountable expense allowance of 1% of the gross proceeds of the Offering.

3. Notes Payable, Stockholders

The Company issued  unsecured  promissory  notes to three Initial  Stockholders,
amounting  to $250,000,  who are also  officers.  These notes were  non-interest
bearing and were repaid from the proceeds of this Offering.


                                      F-9

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                    Notes to Financial Statements (continued)

4. Unit Option

In connection with the Offering, the Company issued to the representative of the
underwriters  for $100,  an option to purchase  up to a total of 225,000  units,
exercisable  at $10 per unit  ("Purchase  Option").  In lieu of  payment  of the
exercise price in cash, the holder of the Purchase Option has the right (but not
the obligation) to convert any  exercisable  portion of the Purchase Option into
units using a cashless  exercise based on the difference  between current market
value of the units and its exercise  price.  The Warrants  issued in conjunction
with these units are identical to those offered by the  prospectus,  except that
they have an exercise price of $7.50 (125% of the exercise price of the warrants
included in the Units sold in the offering).  This option commences on the later
of the consummation of a business  combination and one (1) year from the date of
the prospectus and expiring five (5) years from the date of the prospectus.

Additionally,  the option  may not be sold,  transferred,  assigned,  pledged or
hypothecated  for a one-year  period  (including the foregoing  180-day  period)
following  July  28,  2005.  However,  the  option  may  be  transferred  to any
underwriter  and selected  dealer  participating  in the offering and their bona
fide  officers or partners.  The purchase  option  grants to holders  demand and
"piggy back"  rights for periods of five (5) and seven (7) years,  respectively,
from July 28, 2005 with respect to the registration  under the Securities Act of
the securities directly and indirectly issuable upon exercise of the option. The
Company will bear all fees and expenses attendant to registering the securities,
other  than  underwriting  commissions,  which  will be paid for by the  holders
themselves. The exercise price and number of units issuable upon exercise of the
option may be adjusted  in certain  circumstances,  including  in the event of a
stock   dividend,   or   our   recapitalization,   reorganization,   merger   or
consolidation.  However, the option will not be adjusted for issuances of common
stock at a price below its exercise price.

5. Commitments and Contingencies

The Company  presently  occupies office space in two locations,  provided by two
affiliates of the Initial Stockholders.  Such affiliates have agreed that, until
the  Company  consummates  a business  combination,  they will make such  office
space,  as well as certain  office and  secretarial  services,  available to the
Company,  as may be required by the Company  from time to time.  The Company has
agreed to pay such affiliates  $7,500 per month for such services  commencing on
the effective date of the Offering. Upon completion of a business combination or
liquidation,  the Company will no longer be required to pay these  monthly fees.
Subsequent to December 31, 2005,  the entire monthly fee of $7,500 shall be paid
to one affiliate of the Initial Stockholders.


                                      F-10

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                    Notes to Financial Statements (continued)

5. Commitments and Contingencies (continued)

The  Company  has  engaged  a third  party to act as the  representative  of the
underwriters, on a non-exclusive basis, as its agent for the solicitation of the
exercise of the Warrants.  To the extent not inconsistent with the guidelines of
the  NASD  and  the  rules  and  regulations  of  the  Securities  and  Exchange
Commission,  the  Company  has  agreed to pay the  representative  for bona fide
services  rendered,  a  commission  equal to 4% of the  exercise  price for each
Warrant exercised more than one (1) year after July 28, 2005 if the exercise was
solicited by the  underwriters.  In addition to soliciting,  either orally or in
writing, the exercise of the Warrants,  the  representative's  services may also
include  disseminating  information,  either  orally or in  writing,  to Warrant
holders about the Company or the market for its securities, and assisting in the
processing of the exercise of the Warrants.  No compensation will be paid to the
representative upon the exercise of the Warrants if:

      o     the market price of the  underlying  shares of common stock is lower
            than the exercise price;

      o     the holder of the  Warrants  has not  confirmed  in writing that the
            underwriters solicited the exercise;

      o     the Warrants are held in a discretionary account;

      o     the Warrants are exercised in an unsolicited transaction; or

      o     the  arrangement  to pay  the  commission  is not  disclosed  in the
            prospectus provided to Warrant holders at the time of exercise.

The Initial  Stockholders  who are holders of 2,250,000  issued and  outstanding
shares of common  stock are  entitled  to  registration  rights  pursuant  to an
agreement  signed on the  effective  date of the  Offering.  The  holders of the
majority of these shares are  entitled to request the Company,  on up to two (2)
occasions, to register these shares. The holders of the majority of these shares
can elect to exercise  these  registration  rights at any time after the date on
which these shares of common stock are released from escrow. In addition,  these
stockholders  have  certain  "piggy-back"  registration  rights on  registration
statements  filed  subsequent  to the date on which these shares of common stock
are  released  from  escrow.  The  Company  will bear the  expenses  incurred in
connection with the filing of any such registration statements.

6. Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences, as may be determined from
time to time by the Board of Directors.

7. Common Stock

On July 8, 2005,  the  Company's  Board of  Directors  authorized a .333333 to 1
stock dividend.  On July 22, 2005, the Company's Board of Directors authorized a
.125  to  1  stock  dividend.  All  references  in  the  accompanying  financial
statements to the number of shares of stock have been retroactively  restated to
reflect  these  transactions,  assuming  they  occurred at the  beginning of the
period.


                                      F-11

<PAGE>

                          HEALTHCARE ACQUISITION CORP.
                    (a corporation in the development stage)

                    Notes to Financial Statements (continued)

8. Common Stock Warrants

Each  Warrant  entitles  the holder to  purchase  from the  Company one share of
common  stock  at an  exercise  price  of  $6.00  commencing  the  later  of the
completion of a business combination with a target business or one (1) year from
the  effective  date of the  Offering  and  expiring  four  (4)  years  from the
effective  date of the Offering.  The Warrants will be redeemable by the Company
at a price of $.01 per Warrant,  upon thirty (30) days notice after the Warrants
become  exercisable,  only in the event that the last sales  price of the common
stock is at least  $11.50 per share for any twenty  (20)  trading  days within a
thirty (30)  trading-day  period  ending on the third day prior to date on which
notice of redemption is given.  The warrants began trading  separately  from the
Company's common stock on October 6, 2005.

9. Summarized Quarterly Data (unaudited)

Financial  information  for each  quarter  for the period  from  April 25,  2005
(inception) to December 31, 2005 is as follows:


<TABLE>
<CAPTION>
                                                                                April 25, 2005
                                  June 30,      September 30,  December 31,     (inception) to
                                   2005             2005          2005        December 31, 2005
                                ------------    ------------   ------------   ------------------
<S>                             <C>             <C>            <C>            <C>
Total revenue                   $         --    $    206,261   $    379,813   $          586,074
Income (loss) from operations         (2,500)        156,476        171,319              325,295
Net income (loss)                     (2,500)        146,476        133,319              277,295
Basic earnings per share                  --             .02            .01                  .04
Diluted earnings per share                --             .02            .01                  .03
</TABLE>



                                      F-12

<PAGE>

      (b) Exhibits.

      The following exhibits,  which are numbered in accordance with Item 601 of
Regulation  S-K,  are filed  herewith  or, as noted,  incorporated  by reference
herein:

EXHIBIT
NO.       DESCRIPTION
--------------------------------------------------------------------------------

1.1.1     Underwriting Agreement among the Registrant and Maxim Group LLC.(3)

1.1.2     Amendment No. 1 to the Underwriting Agreement among the Registrant and
          Maxim Group LLC. *

3.1       Amended and Restated Certificate of Incorporation. (4)

3.2       By-laws. (1)

4.1       Specimen Unit Certificate. (1)

4.2       Specimen Common Stock Certificate. (1)

4.3       Specimen Warrant Certificate. (1)

4.4       Form of Warrant Agreement  between  Continental Stock Transfer & Trust
          Company and the Registrant. (3)

10.1.1    Letter  Agreement  among  the  Registrant,  Maxim  Group  LLC and John
          Pappajohn. (2)

10.1.2    Letter  Agreement among the Registrant,  Maxim Group LLC and Derace L.
          Schaffer, M.D. (2)

10.1.3    Letter Agreement among the Registrant,  Maxim Group LLC and Matthew P.
          Kinley. (2)

10.1.4    Restated Letter  Agreement  among the Registrant,  Maxim Group LLC and
          Edward B. Berger. (3)

10.1.5    Letter  Agreement among the  Registrant,  Maxim Group LLC and Wayne A.
          Schellhammer. (3)

10.2      Form of Investment  Management  Trust  Agreement  between  Continental
          Stock Transfer & Trust Company and the Registrant. (3)

10.2.1    Amendment No. 1 to of Investment  Management  Trust Agreement  between
          Continental Stock Transfer & Trust Company and the Registrant.(5)

10.3      Form of Stock Escrow  Agreement  between the  Registrant,  Continental
          Stock Transfer & Trust Company and the Initial Stockholders. (3)

10.4      Form of  Registration  Rights  Agreement  among the Registrant and the
          Initial Stockholders. (4)

10.5.1    Office  Services  Agreement by and between the  Registrant  and Equity
          Dynamics, Inc. (1)

10.5.2    Office  Services  Agreement by and between the  Registrant and The Lan
          Group. (1)

10.6.1    Promissory  Note, dated April 28, 2005,  issued to John Pappajohn,  in
          the amount of $70,000. (1)

10.6.2    Promissory Note,  dated April 28, 2005,  issued to Derace L. Schaffer,
          M.D., in the amount of $70,000. (1)

10.6.3    Promissory Note, dated April 28, 2005, issued to Matthew P. Kinley, in
          the amount of $35,000. (1)

10.6.4    Promissory Note, dated July 26, 2005, issued to John Pappajohn, in the
          amount of $30,000. (4)

10.6.5    Promissory  Note,  dated July 26, 2005,  issued to Derace L. Schaffer,
          M.D., in the amount of $30,000. (4)

10.6.6    Promissory Note, dated July 26, 2005,  issued to Matthew P. Kinley, in
          the amount of $15,000. (4)

10.7      Form of Unit Option  Purchase  Agreement  between the  Registrant  and
          Maxim Group LLC. (3)

10.8      Form of Warrant Purchase Agreement by and between the Registrant, John
          Pappajohn and Maxim Group LLC. (2)

14        Code of Ethics. (3)

31.1      Rule 13a-14(a)/15d-14(a) Certification *

31.2      Rule 13a-14(a)/15d-14(a) Certification *

32.1      Section 1350 Certification *

32.2      Section 1350 Certification *

99.1      Audit Committee Charter. (3)

99.2      Nominating Committee Charter. (3)

-------------------------------

1.    Incorporated by reference to the Registration Statement on Form S-1 of the
      Registrant filed on May 6, 2005.

2.    Incorporated by reference to the  Registration  Statement on Form S-1/A of
      the Registrant filed on June 10, 2005.

3.    Incorporated by reference to the  Registration  Statement on Form S-1/A of
      the Registrant filed on July 12, 2005.

4.    Incorporated by reference to the  Registration  Statement on Form S-1/A of
      the Registrant filed on July 27, 2005.

5.    Incorporated  by reference to the  Quarterly  Report on Form 10-Q filed by
      the Registrant on November 14, 2005.

*     filed herewith


                                       49

<PAGE>


 
                                  SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                       HEALTHCARE ACQUISITION CORP.

                                       By:  /s/ Derace L. Schaffer, M.D.
                                            -----------------------------------
                                       Name:    Derace L. Schaffer, M.D.
                                       Title:   Vice-Chairman and CEO (principal
                                                executive officer)

                          ---------------------------

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
               Signature                                      Title                                 Date
-------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                               <C>

          /s/ John Pappajohn
--------------------------------------
            John Pappajohn                            Chairman and Secretary                   March 30, 2006


/s/ Derace L. Schaffer, M.D.
--------------------------------------
    Derace L. Schaffer, M.D.                             Vice-Chairman and CEO                 March 30, 2006
                                                    (principal executive officer)


         /s/ Matthew P. Kinley
--------------------------------------
           Matthew P. Kinley                    President, Treasurer and Director
                                             (principal financial and accounting officer)      March 30, 2006



         /s/ Edward B. Berger
--------------------------------------
           Edward B. Berger                                  Director                          March 30, 2006


        /s/ Wayne Schellhammer
--------------------------------------
          Wayne Schellhammer                                 Director                          March 30, 2006
</TABLE>



                                       50





                                 AMENDMENT NO. 1

                                       TO

                             UNDERWRITING AGREEMENT

            This Amendment No. 1 (the "Amendment") to the Underwriting Agreement
(the  "Agreement")  dated  July 28,  2005,  is made as of March 20,  2006 by and
between HEALTHCARE ACQUISITION CORP. (the "Corporation") and MAXIM GROUP LLC, as
representative of the underwriters (the "Representative"). Any terms used herein
but not defined shall have the meaning set forth in the Agreement.

            WHEREAS, the Corporation and the Representative desire to enter into
this  Amendment  to  clarify  the   enforceability  of  certain  provisions  the
Corporation's amended and restated charter (the "Charter");

            NOW,  THEREFORE,  in consideration of the mutual  agreements  herein
contained, the parties hereto agree as follows:

            1. The following  provisions  (A) through (E) shall apply during the
period   commencing  from  the  filing  of  Charter  and  terminating  upon  the
consummation of any "Business Combination",  and may not be amended prior to the
consummation of any Business  Combination.  A "Business  Combination" shall mean
the acquisition by the Corporation,  whether by merger,  capital stock exchange,
asset or stock acquisition or other similar type of transaction, of assets or an
operating business in the healthcare industry ("Target
 Business").

            A.  Prior  to the  consummation  of any  Business  Combination,  the
Corporation  shall submit such  Business  Combination  to its  stockholders  for
approval  regardless  of whether  the  Business  Combination  is of a type which
normally  would require such  stockholder  approval  under the GCL. In the event
that a majority of the IPO Shares (defined below) cast at the meeting to approve
the  Business   Combination   are  voted  for  the  approval  of  such  Business
Combination,  the  Corporation  shall be authorized  to consummate  the Business
Combination;  provided that the  Corporation  shall not  consummate any Business
Combination  if 20% or more in interest  of the  holders of IPO Shares  exercise
their conversion rights described in paragraph B below.

            B.  In  the  event  that  a  Business  Combination  is  approved  in
accordance with the above paragraph A and is consummated by the Corporation, any
stockholder  of the  Corporation  holding  shares of Common Stock ("IPO Shares")
issued in the  Corporation's  initial public offering  ("IPO") of securities who
voted  against the Business  Combination  may,  contemporaneous  with such vote,
demand that the  Corporation  convert his IPO Shares into cash.  If so demanded,
the Corporation  shall convert such shares at a per share conversion price equal
to the  quotient  determined  by  dividing  (i) the amount in the Trust Fund (as
defined below), inclusive of any interest thereon, calculated as of two business
days prior to the proposed consummation of the Business Combination, by (ii) the
total  number  of  IPO  Shares.  "Trust  Fund"  shall  mean  the  trust  account
established by the  Corporation at the  consummation of its IPO and into which a
certain amount of the net proceeds of the IPO are deposited.

            C. In the event that the Corporation  does not consummate a Business
Combination by the later of (i) 18 months after the  consummation  of the IPO or
(ii) 24 months  after the  consummation  of the IPO in the event  that  either a
letter of intent,  an  agreement  in  principle  or a  definitive  agreement  to
complete a Business Combination was executed but was not consummated within such
18 month period (such later date being referred to as the  "Termination  Date"),
the officers of the Corporation shall take all such action necessary to dissolve
and liquidate the  Corporation as soon as reasonably  practicable.  In the event
that the  Corporation  is so dissolved and  liquidated,  only the holders of IPO
Shares (at such time) shall be entitled to receive liquidating distributions and
the Corporation shall pay no liquidating distributions with respect to any other
shares of capital stock of the Corporation.



<PAGE>

            D. A holder of IPO Shares shall be entitled to receive distributions
from the Trust Fund only in the event of a liquidation of the  Corporation or in
the event he demands  conversion of his shares in accordance  with  paragraph B,
above. In no other  circumstances shall a holder of IPO Shares have any right or
interest of any kind in or to the Trust Fund.

            E. The Board of Directors shall be divided into two classes: Class A
and Class B. The number of  directors  in each class shall be as nearly equal as
possible.  Prior to the IPO,  there shall be elected two Class A directors for a
term expiring at the  Corporation's  first Annual  Meeting of  Stockholders  and
three Class B directors for a term expiring at the  Corporation's  second Annual
Meeting of Stockholders. Commencing at the first Annual Meeting of Stockholders,
and at each  annual  meeting  thereafter,  directors  elected to  succeed  those
directors  whose terms expire shall be elected for a term of office to expire at
the second  succeeding  annual  meeting of  stockholders  after their  election.
Except as the GCL may otherwise require,  in the interim between annual meetings
of stockholders or special  meetings of stockholders  called for the election of
directors  and/or the  removal of one or more  directors  and the filling of any
vacancy in that connection, newly created directorships and any vacancies in the
Board of Directors,  including unfilled vacancies  resulting from the removal of
directors  for cause,  may be filled by the vote of a majority of the  remaining
directors  then in  office,  although  less  than a quorum  (as  defined  in the
Corporation's  Bylaws), or by the sole remaining  director.  All directors shall
hold office until the expiration of their  respective  terms of office and until
their  successors  shall have been elected and qualified.  A director elected to
fill a vacancy  resulting  from the death,  resignation or removal of a director
shall serve for the  remainder  of the full term of the  director  whose  death,
resignation  or removal  shall have created such vacancy and until his successor
shall have been elected and qualified.

            2. The  Corporation  acknowledges  that the  purchasers  of the Firm
Units and the Option  Units in the  Offering  shall be deemed to be third  party
beneficiaries of this Amendment.

            3. The Representative  and the Corporation  specifically agree that,
except  pursuant  to its own terms,  this  Amendment  shall not be  modified  or
amended in any way.

            4.  Terms  used  herein  but  not  defined  herein  shall  have  the
definitions set forth in the Agreement or the Charter, as applicable.

            The Agreement shall otherwise remain in full force and effect.



                  [remainder of page intentionally left blank]



<PAGE>


            IN WITNESS WHEREOF, the parties have duly executed this Amendment as
of the date first written above.


                                   HEALTHCARE ACQUISITION CORP.


                                   By:  /s/  Matthew P. Kinley
                                        -------------------------------------
                                        Name: Matthew P. Kinley
                                        Title:  President



                                   MAXIM GROUP, LLC, as Representative


                                   By:  /s/ Clifford Teller
                                        -------------------------------------
                                        Name: Clifford Teller
                                        Title: Director of Investment Banking




                                                                    Exhibit 31.1

                                 CERTIFICATIONS


      I, Derace L. Schaffer, M.D., certify, that:

1.    I have reviewed this Annual Report on Form 10-K of Healthcare  Acquisition
      Corp;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the issuer as of, and for, the periods covered by this report;

4.    The  issuer's  other   certifying   officer  and  I  are  responsible  for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  and  internal
      control  over  financial  reporting  (as  defined  in  Exchange  Act Rules
      13a-15(f) and 15d-15(f)) for the issuer and have:

      a)    designed such  disclosure  controls and  procedures,  or caused such
            disclosure  controls  and  procedures  to be  designed  under  our a
            supervision,  to ensure that  material  information  relating
 to the
            issuer, including its consolidated subsidiaries, is made known to us
            by others within those entities,  particularly  during the period in
            which this report is being prepared;

      b)    designed such internal control over financial  reporting,  or caused
            such internal control over financial  reporting to be designed under
            b our supervision,  to provide  reasonable  assurance  regarding the
            reliability of financial  reporting and the preparation of financial
            statements  for  external  purposes  in  accordance  with  generally
            accepted accounting principles;

      c)    evaluated the effectiveness of the issuer's  disclosure controls and
            procedures and presented in this report are conclusions  about the c
            effectiveness of the disclosure  controls and procedures,  as of the
            end of the period  covered by this report based on such  evaluation;
            and

      d)    disclosed in this report any change in the issuer's internal control
            over financial  reporting that occurred during the issuer's fourth d
            quarter  that has  materially  affected or is  reasonably  likely to
            materially  affect,  the issuer's  internal  control over  financial
            reporting;

5.    The issuer's other certifying  officer and I have disclosed,  based on our
      most recent  evaluation of internal control over financial  reporting,  to
      the  issuer's  auditors and the audit  committee of the issuer's  board of
      directors (or persons performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to  adversely  affect  the  issuer's  ability  to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other employees who have a significant role in the issuer's internal
            control over financial reporting.

Date: March 30, 2006               By: /s/ Derace L. Schaffer, M.D.
                                       -----------------------------------------
                                       Derace L. Schaffer, M.D.
                                       Vice Chairman and Chief Executive Officer


                                                                    Exhibit 31.2

                                 CERTIFICATIONS

      I, Matthew P. Kinley, certify, that:

1.    I have reviewed this Annual Report on Form 10-K of Healthcare  Acquisition
      Corp.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the issuer as of, and for, the periods presented in this report;

4.    The  issuer's  other   certifying   officer  and  I  are  responsible  for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  and  internal
      control  over  financial  reporting  (as  defined  in  Exchange  Act Rules
      13a-15(f) and 15d-15(f)) for the issuer and have:

      a)    designed such  disclosure  controls and  procedures,  or caused such
            disclosure  controls  and  procedures  to be  designed  under  our a
            supervision,  to ensure that  material  information  relating
 to the
            issuer, including its consolidated subsidiaries, is made known to us
            by others within those entities,  particularly  during the period in
            which this report is being prepared;

      b)    designed such internal control over financial  reporting,  or caused
            such internal control over financial  reporting to be designed under
            b our supervision,  to provide  reasonable  assurance  regarding the
            reliability of financial  reporting and the preparation of financial
            statements  for  external  purposes  in  accordance  with  generally
            accepted accounting principles;

      c)    evaluated the effectiveness of the issuer's  disclosure controls and
            procedures and presented in this report are conclusions  about the c
            effectiveness of the disclosure  controls and procedures,  as of the
            end of the period  covered by this report based on such  evaluation;
            and d) disclosed in this report any change in the issuer's  internal
            control over financial  reporting that occurred  during the issuer's
            fourth d  quarter  that has  materially  affected  or is  reasonably
            likely to  materially  affect,  the issuer's  internal  control over
            financial reporting;

      d)    disclosed in this report any change in the issuer's internal control
            over financial  reporting that occurred  during the issuer's  fourth
            quarter  that has  materially  affected or is  reasonably  likely to
            materially  affect,  the issuer's  internal  control over  financial
            reporting;

5.    The issuer's other certifying  officer and I have disclosed,  based on our
      most recent  evaluation of internal control over financial  reporting,  to
      the  issuer's  auditors and the audit  committee of the issuer's  board of
      directors (or persons performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to  adversely  affect  the  issuer's  ability  to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other employees who have a significant role in the issuer's internal
            control over financial reporting.

Date: March 30, 2006                          By: /s/ Matthew P. Kinley
                                                  ----------------------------
                                                  Matthew P. Kinley.
                                                  President


                                                                    Exhibit 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                                   AS ADDED BY
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report of Healthcare  Acquisition Corp. (the
"Company")  on Form 10-K for the year ended  December 31, 2005 as filed with the
Securities and Exchange Commission (the "Report"), I, Derace L. Schaffer,  M.D.,
Vice Chairman and Chief Executive Officer of the Company,  certify,  pursuant to
18 U.S.C. ss.1350, as added by ss.906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the  requirements of Section 13(a) or 15(d)
      of the Securities Exchange Act of 1934; and

2.    To my knowledge,  the information contained in the Report fairly presents,
      in  all  material  respects,   the  financial  condition  and  results  of
      operations of the Company as of and for the period covered by the Report.


Date: March 30, 2006        By: /s/ Derace L. Schaffer, M.D.
                                -----------------------------------------
                                Derace L. Schaffer, M.D.
                                Vice Chairman and Chief Executive Officer






                                                                    Exhibit 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                                   AS ADDED BY
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report of Healthcare  Acquisition Corp. (the
"Company") on Form 10-K for the period ended December 31, 2005 as filed with the
Securities  and  Exchange  Commission  (the  "Report"),  I,  Matthew P.  Kinley,
President of the Company,  certify,  pursuant to 18 U.S.C.  ss.1350, as added by
ss.906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the  requirements of Section 13(a) or 15(d)
      of the Securities Exchange Act of 1934; and

2.    To my knowledge,  the information contained in the Report fairly presents,
      in  all  material  respects,   the  financial  condition  and  results  of
      operations of the Company as of and for the period covered by the report.


Date: March 30, 2006                            By:   /s/ Matthew P. Kinley
                                                      ----------------------
                                                      Matthew P. Kinley
                                                      President