UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2006
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 or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2116 Financial Center
666 Walnut Street
Des Moines, Iowa 50309
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code): (515) 244-5746
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 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 |_|.
As of May 15, 2006, there were 11,650,000 shares of common stock, par value
$.0001 per share, of the registrant outstanding.
HEALTHCARE ACQUISITION CORP.
Table of Contents
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Balance Sheet 2
Statements of Operations 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Item 4. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits 13
SIGNATURES 14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Healthcare Acquisition Corp.
We have reviewed the accompanying balance sheet of Healthcare Acquisition Corp.
(a corporation in the development stage) as of March 31, 2006, and the related
statements of operations, stockholders' equity and cash flows for the three
months ended March 31, 2006 and the period from April 25, 2005 (inception) to
March 31, 2006. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with United States generally accepted accounting principles.
We have previously audited, in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States), the balance sheet of
Healthcare Acquisition Corp. 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 (not presented herein); and in our report
dated March 14, 2006, we expressed an unqualified opinion on those financial
statements.
LWBJ, LLP
West Des Moines, Iowa
May 15, 2006
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
HEALTHCARE ACQUISITION CORP.
(a corporation in the development stage)
BALANCE SHEETS
March 31, 2006 December 31, 2005
-------------- -----------------
Assets (audited)
Current assets
Cash and cash equivalents $ 1,322,615 $ 1,398,181
Cash held in trust 69,124,399 68,636,069
Prepaid expense 50,328 52,500
-------------- -----------------
Total current assets $ 70,497,342 $ 70,086,750
============== =================
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 54,737 $ 6,996
Accrued expenses 85,487 98,996
State income tax payable 81,000 48,000
Capital based taxes payable 156,293 115,000
Deferred revenue 239,160 141,543
-------------- -----------------
Total current liabilities 616,677 410,535
-------------- -----------------
Common stock, subject to possible redemption
1,879,060 shares, at conversion value 13,578,807 13,578,807
-------------- -----------------
Stockholders' equity
Preferred stock, $.0001 par value, 1,000,000 shares
authorized; none issued and outstanding -- --
Common stock, $.0001 par value, 100,000,000 shares
authorized; 11,650,000 shares issued and outstanding
(which includes 1,879,060 subject to possible conversion) 1,165 1,165
Common stock warrants (9,400,000 outstanding) -- --
Paid-in capital in excess of par 55,818,948 55,818,948
Equity accumulated during the development stage 481,745 277,295
-------------- -----------------
Total stockholders' equity 56,301,858 56,097,408
-------------- -----------------
Total liabilities and stockholders' equity $ 70,497,342 $ 70,086,750
============== =================
See accompanying notes to financial statements.
2
HEALTHCARE ACQUISITION CORP.
(a corporation in the development stage)
STATEMENTS OF OPERATIONS
For the For the Period from
Three Months April 25, 2005
Ended (inception) to
March 31, 2006 March 31, 2006
-------------- -------------------
Revenues
Interest income $ 14,310 $ 33,858
Interest and dividend income from Trust Fund 390,713 957,239
-------------- -------------------
Total revenues 405,023 991,097
Costs and expenses
Capital based taxes 41,168 156,168
Management fees 22,500 60,486
Insurance 22,500 60,000
Legal fees 45,820 55,356
Travel 19,403 47,144
General and administrative 16,182 46,698
Formation costs -- 2,500
-------------- -------------------
Total expenses 167,573 428,352
-------------- -------------------
Income before taxes 237,450 562,745
Provision for income taxes 33,000 81,000
-------------- -------------------
Net income $ 204,450 $ 481,745
============== ===================
Basic earnings per share $ 0.02
Diluted earnings per share $ 0.01
Weighted average basic shares outstanding 11,650,000
Weighted average diluted shares outstanding 13,725,325
See accompanying notes to financial statements.
3
HEALTHCARE ACQUISITION CORP.
(a corporation in the development stage)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the period from April 25, 2005 (inception) to March 31, 2006
Equity
Accumulated
Common Common Common Additional During the
Stock Par Stock Paid in Development Stockholders'
Shares Amount Warrants Capital Stage Equity
---------- ------ -------- ------------ ------------ -------------
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
---------- ------ -------- ------------ ------------ -------------
Net income -- -- -- -- 204,450 204,450
---------- ------ -------- ------------ ------------ -------------
Balance at March 31, 2006 11,650,000 $1,165 -- $ 55,818,948 $ 481,745 $ 56,301,858
========== ====== ======== ============ ============ =============
See accompanying notes to financial statements.
4
HEALTHCARE ACQUISITION CORP.
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
For the Period from
April 25, 2005
For the Three Months (inception) to
Ended March 31, 2006 March 31, 2006
-------------------- --------------------
Operating activities
Net income $ 204,450 $ 481,745
Adjustments to reconcile net income
to net cash provided by operating activities:
Decrease (increase) in prepaid expenses 2,172 (50,328)
Increase in accounts payable and accrued expenses 34,232 59,228
Increase in deferred revenue 97,617 239,160
Increase in income tax payable 33,000 81,000
Increase in capital based taxes payable 41,293 156,293
-------------------- --------------------
Net cash provided by operating activities 412,764 967,098
-------------------- --------------------
Investing activities
Increase in cash held in Trust Fund (488,330) (69,124,399)
-------------------- --------------------
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
Proceeds from issuance of common stock -- 25,000
Payments made on notes payable, stockholders -- (250,000)
Payments made for costs of Initial Public Offering -- (5,745,184)
-------------------- --------------------
Net cash provided by financing activities -- 69,479,916
-------------------- --------------------
Net increase (decrease) in cash (75,566) 1,322,615
Cash, beginning of period 1,398,181 --
-------------------- --------------------
Cash, end of period $ 1,322,615 $ 1,322,615
==================== ====================
Supplemental schedule of non-cash financing activities
Accrual of deferred offering costs $ -- $ 80,996
See accompanying notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements at March 31, 2006 and for the three months ended March
31, 2006 are unaudited. In the opinion of management, all adjustments
(consisting of normal accruals) have been made that are necessary to present
fairly the financial position of Healthcare Acquisition Corp. (the "Company") as
of March 31, 2006 and the results of its operations and its cash flow for the
three months ended March 31, 2006 and the period from April 25, 2005 (inception)
to March 31, 2006. Operating results for the interim period are not necessarily
indicative of the results to be expected for the full year.
2. 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 March 31, 2006 relates to the Company's
formation, evaluating prospective target businesses and the public offering
described below. Accordingly, the Company is a corporation in the development
stage. 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 3). 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,
6
2. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Nature of Operations (continued)
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.
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 March 31, 2006 balance sheet and 19.99%
of the related interest earned on cash held in the Trust Fund has been recorded
as deferred revenue.
7
2. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Nature of Operations (continued)
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 3.)
Net Income Per Common Share
Net income per share is computed by dividing net income by the weighted-average
number of shares of common stock outstanding during the period.
Derivative Financial Instrument
As described in Note 5, 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.
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.
8
2. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Income Taxes
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, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
The effective tax rate differs from the statutory rate of 34% due to primarily
all interest income being generated from tax-exempt securities.
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.
3. 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"). 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. 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.
4. 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 the Offering.
5. 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.
9
5. Unit Option (continued)
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.
6. Commitments and Contingencies
The Company presently occupies office space in one location, provided by an
affiliate of an Initial Stockholder. This affiliate has agreed that, until the
Company consummates a business combination, it 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 currently pays
this affiliate $7,500 per month for such services under an office services
agreement. Upon completion of a business combination or liquidation, the Company
will no longer be required to pay this monthly fee.
The Company has engaged a 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.
10
7. 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.
8. 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.
9. 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.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We have based
these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may",
"should", "could", "would", "expect", "plan", "anticipate", "believe",
"estimate", "continue", or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and
Exchange Commission filings. The following discussion should be read in
conjunction with our Financial Statements and related Notes thereto included
elsewhere in this report.
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
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.
Item 3. 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 date of the trust fund,
we may not engage in, any substantive commercial business. Accordingly, we are
not and, until such time as we consummate a business combination, we will not
be, exposed to risks associated with foreign exchange rates, commodity prices,
equity prices or other market-driven rates or prices. The net proceeds of our
initial public offering held in the trust fund have been invested only in
securities meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940. Given our limited risk in our exposure to these
short-term securities, we do not view the interest rate risk to be significant.
12
Item 4. Controls and Procedures.
Our management carried out an evaluation, with the participation of our chief
executive officer (our principal executive officer), and our president (our
principal financial and accounting officer) of the effectiveness of our
disclosure controls and procedures as of March 31, 2006. Based upon that
evaluation, our chief executive officer and our president 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 quarter ended March 31, 2006,
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings pending against us.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of our equity securities during the quarter
ended March 31, 2006.
For additional information on our use of proceeds from our public offering,
please see item 2 of Part I.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6.
Exhibits
31.1 Section 302 Certification of Chief Executive Officer
31.2 Section 302 Certification of Chief Financial Officer
32.1 Section 906 Certification of Chief Executive Officer
32.2 Section 906 Certification of Chief Financial Officer
13
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.
Date: May 15, 2006 By: /s/ Derace L. Schaffer, M.D
-----------------------------------
Derace L. Schaffer, M.D.
Vice-Chairman and CEO
(Principal executive officer)
Date: May 15, 2006 By: /s/ Matthew P. Kinley
-----------------------------------
Matthew P. Kinley
President, Treasurer and Director
(Principal financial and
accounting officer)
14
Exhibit 31.1
CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
I, Derace L. Schaffer, M.D., hereby certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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 registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers 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
registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, 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 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 registrant's disclosure controls
and procedures and presented in this report our conclusions about the
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 registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over
financial reporting.
Date: May 15, 2006 By: /s/ Derace L. Schaffer, M.D.
----------------------------------
Derace L. Schaffer, M.D.
Vice-Chairman and CEO
(Principal executive officer)
Exhibit 31.2
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
I, Matthew P. Kinley, hereby certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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 registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers 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
registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, 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 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 registrant's disclosure controls and
procedures and presented in this report our conclusions about the 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 registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over
financial reporting.
Date: May 15, 2006 By: /s/ Matthew P. Kinley
------------------------------------
Matthew P. Kinley
President, Treasurer and Director
(Principal financial and
accounting officer)
Exhibit 32.1
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Healthcare Acquisition Corp., a Delaware corporation (the
"Company"), does hereby certify, to such officer's knowledge, that:
The Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 (the
"Form 10-Q") of the Company fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained
in the Form 10-Q fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: May 15, 2006 By: /s/ Derace L. Schaffer, M.D
-----------------------------------
Derace L. Schaffer, M.D.
Vice-Chairman and CEO
(Principal executive officer)
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Healthcare Acquisition Corp., a Delaware corporation (the
"Company"), does hereby certify, to such officer's knowledge, that:
The Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 (the
"Form 10-Q") of the Company fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained
in the Form 10-Q fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: May 15, 2006 By: /s/ Matthew P. Kinley
-------------------------------------
Matthew P. Kinley
President, Treasurer and Director
(Principal financial and
accounting officer)
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.