UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
OR
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TRANSITION REPORT PURSUANT TO SECTION 130215(D) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
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FOR THE TRANSITION PERIOD FROM
TO
COMMISSION FILE NUMBER:
1-33396
MBF HEALTHCARE ACQUISITION CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Delaware
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22-3934207
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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121 ALHAMBRA PLAZA, SUITE 1100
CORAL GABLES, FL 33134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(305) 461-1162
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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Title of each Class
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Name of each Exchange on which Registered
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Units, each consisting of one share of Common Stock,
$0.0001 par value, and One Warrant to Purchase
Common Stock
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NYSE Alternext US
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Common Stock, $0.0001 par value
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NYSE Alternext US
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Warrants to Purchase Common Stock
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NYSE Alternext US
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes:
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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 Act.
Yes:
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No
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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
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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.
x
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.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Indicate by check mark if whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes
x
No
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The aggregate market value of the Registrant’s voting or non-voting equity held by
non-affiliates of the registrant as of June 30, 2008, the last business day of the registrant’s
most recently completed second fiscal quarter, computed by reference to the closing sale price for
the Registrant’s Common Stock on that date as reported on The NYSE Alternext US, was approximately
$167,984,206.
The number of outstanding shares of the Registrant’s common stock as of March 13, 2009 was
26,593,750.
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 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:
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ability to complete a combination with a target business;
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success in retaining or recruiting, or changes required in, our officers, key
employees or directors following a business combination;
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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 receive expense reimbursements and
their shares of common stock would become eligible for later release from escrow;
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potential inability to obtain additional financing to complete a business
combination;
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limited pool of prospective target businesses;
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securities’ ownership being concentrated;
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potential change in control if we acquire a target business for stock;
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risks associated with operating in the healthcare industry;
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public securities’ limited liquidity and trading, as well as the current lack of a
trading market;
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delisting of our securities from NYSE Alternext US or an inability to have our
securities quoted on NYSE Alternext US following a business combination; or
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use of proceeds not in trust and our financial performance following our IPO.
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ability to obtain necessary shareholder approval for business combinations.
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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” in Item 1A below. 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.
ii
PART I
Item 1. Business
General
References to “we”, “us”, or the “Company” are to MBF Healthcare Acquisition Corp. Reference
to “MBFHP” are to MBF Healthcare Partners, L.P., an affiliate of our officers and directors.
We are a blank check company incorporated in Delaware on June 2, 2006 in order to serve as a
vehicle for the acquisition of an operating business through a merger, capital stock exchange,
stock purchase, asset acquisition, or other similar business combination.
On April 13, 2007, MBFHP purchased an aggregate of 343,750 Private Units from us at a price of
$8.00 per unit and 4,250,000 Private Placement Warrants at a purchase price of $1.00 per warrant,
for an aggregate purchase price of $7,000,000. Each Private Unit consists of one share of our
common stock, $0.0001 par value, and one redeemable common stock purchase warrant (each, a “Unit
Warrant” and together with the Private Placement Warrants, the “Private Warrants”). Each Private
Warrant entitles the holder to purchase from us one share of common stock at an exercise price of
$6.00 commencing on the completion of a Business Combination with a target business or the
distribution of the Trust Account (as hereinafter defined) and expiring on April 17, 2011. At our
sole discretion, the Private Warrants will be redeemable at a price of $0.01 per Private Warrant
upon 30 days’ notice after the Private Warrants become exercisable, only in the event that the last
sale price of the common stock is at least $11.50 per share for any 20 trading days within a 30-day
trading period ending on the third day prior to the date on which the notice of redemption is
given. The Private Warrants are identical to the Warrants, except that (1) upon a redemption of
Private Warrants, MBFHP will have the right to exercise the Private Warrants on a cashless basis
and (2) upon the exercise of the Private Warrants, MBFHP will receive unregistered shares of common
stock.
On April 23, 2007, we completed our initial public offering (“IPO”) of 18,750,000 units
(“Units”), consisting of one share of common stock and one warrant, and on May 8, 2007, we
completed the closing of an additional 2,812,500 Units that were subject to the underwriters’
over-allotment option. The 21,562,500 Units sold in the IPO, including the 2,812,500 Units subject
to the over-allotment option, were sold at an offering price of $8.00 per Unit, generating total
gross proceeds of $172,500,000. Of the net proceeds after offering expenses of the IPO and the
Private Placement, $170,962,500 was placed in a trust account maintained at Continental Stock
Transfer & Trust Company (the “Trust Account”). Except for payment of taxes, the proceeds will
not be released from the Trust Account until the earlier of (i) the completion of a Business
Combination or (ii) our liquidation. Public stockholders voting against our initial business
combination will be entitled to convert their common stock into a pro rata share of the amount held
in the Trust Account (including the amount held in the Trust Account representing the deferred
portion of the underwriters’ discounts and commissions), including any interest earned on their pro
rata share (net of taxes payable), if the business combination is approved and consummated. Public
stockholders who convert their stock into a pro rata share of the Trust Account will continue to
have the right to exercise any warrants they may hold.
Each warrant entitles the registered holder to purchase one share of our common stock at a
price of $6.00 per share, commencing on the completion of the initial business combination. None
of the Warrants issued in the Public Offering will be exercisable and we will not be obligated to
issue shares of common stock unless at the time of exercise a prospectus relating to common stock
issuable upon exercise of these Warrants is current and the common stock has been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the Warrants. In no event will we be required to net cash settle any Warrant exercise. Under
the terms of the Warrant Agreement, we have agreed to use our reasonable best efforts to maintain a
current prospectus relating to common stock issuable upon exercise of the Warrants issued in the
Public Offering until the expiration of these Warrants. However, we make no assurance that we will
be able to do so and, if we do not maintain a current prospectus relating to the common stock
issuable upon exercise of the Warrants issued in the Public Offering, holders will be unable to
exercise their Warrants and we will not be required to settle any such Warrant exercise. If the
prospectus relating to the common stock issuable upon the exercise of these Warrants is not
current, or if the common stock is not qualified or exempt from qualification in jurisdictions in
which the holders of the Warrants reside, these Warrants may have no value, the market for these
Warrants may be limited and these
Warrants may expire worthless. If a registration statement is not effective for any
unexercised Warrant, then the purchaser of Units purchased in the Public Offering will be deemed to
have paid the full purchase price of $8.00 for the one share of our common stock included in the
Unit. Even if the prospectus relating to the common stock issuable upon exercise of the Warrants
issued in the Public Offering is not current, the Private Warrants will be exercisable for
unregistered shares of common stock. If and when the Warrants become redeemable by us, we may
exercise its redemption right even if the Warrants are not exercisable by their holders.
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In connection with our IPO, we paid the underwriters additional underwriting fees of
$6,037,500, including units exercised with the over-allotment option which, the underwriters have
agreed to defer until the consummation of our initial business combination. In the event that an
initial business combination occurs, we expect that such fees will be paid out of the proceeds held
in the Trust Account.
Recent Developments
On February 6, 2008, we entered into a Stock Purchase Agreement (the “Stock Purchase
Agreement”) with Critical Homecare Solutions Holdings, Inc. (“CHS”), a Delaware corporation,
Kohlberg Investors V, L.P. (the “Seller’s Representative”) and the other stockholders of CHS (each,
together with the Seller’s Representative, the “Seller” and collectively the “Sellers”).
On October 31, 2008, we, CHS and the Sellers mutually terminated the Stock Purchase Agreement.
Currently, we are not in negotiations with any qualified acquisition targets and we anticipate we
will not be able to complete a business combination by April 23, 2009. As a result, our corporate
existence will terminate and our Amended and Restated Certificate of Incorporation requires that we
promptly initiate procedures to liquidate and distribute our assets on April 23, 2009.
Sector Focus
Since our IPO, we were actively engaged in sourcing a suitable business combination candidate
in the healthcare industry. This focus is based on, among other things, the experience, expertise,
and network of professional relationships of our management team and the members of our Board of
Directors.
Healthcare Industry
According to the Centers for Medicare and Medicaid Services, or CMS, the healthcare industry
is one of the largest segments of the U.S. economy, with total U.S. healthcare expenditures in 2005
of nearly $2.0 trillion, or $6,697 per person, which accounted for 16% of the 2005 U.S. gross
domestic product, or GDP. Overall, national healthcare spending is anticipated to continue to grow
at close to 7% per year, reaching nearly $4.0 trillion by 2015. In our view, the primary drivers
behind these expenditures are: (i) medical service spending, (ii) hospital spending and (iii)
prescription drug spending. In 2005, over 81% of total U.S. healthcare expenditures were related to
the above categories, with medical services (including nursing homes and home healthcare), hospital
care and prescription drugs, comprising 41%, 30% and 10%, respectively.
Industry Trends
Several significant trends affect the competitive landscape of our target industries, which we
believe create significant investment opportunities. The following is a summary of some of the more
influential of these trends:
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Expanding and Aging Population
. According to U.S. Census Bureau estimates, in 2005
the American population is approximately 297 million and is expected to reach 392
million by 2050. Simultaneously, we are witnessing the “graying of America,” whereby
the elderly population, the largest consumer of healthcare services, is increasing more
rapidly than the rest of the population. According to the U.S. Census Bureau,
approximately 12% of the U.S. population was over 65 in 2004 and was forecasted to
account for roughly 20% of the population by 2030.
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Evolving Medical Treatments
. Advances in technology have favorably impacted the
development of more effective and easier-to-use medical devices, treatments and
therapies. Many of these advances have reduced hospital stays, costs and recovery
periods. The continued advancement of medical technology should continue to support the
markets for healthcare goods and services.
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Increased Consumer Awareness
. In recent years, publicity associated with advances
in medical technology, treatments and therapies has increased the number of patients
visiting healthcare professionals. We believe that more active and aware consumers, who
are increasingly vocal due to rising costs and reduced access to physicians, will
continue to stimulate a wide variety of healthcare segments. In addition, the market
for discretionary medical services, such as cosmetic procedures, continues to grow.
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No Assurance of Future Services from Executive Officers or Board Members
Our management team currently intends to stay involved with us following a business
combination, either as managers or in an advisory capacity. The role that our management team or
our Board of Directors will assume will depend on the type of business acquired and the sector of
the healthcare industry in which the target company operates.
Effecting a Business Combination
General
We intend to utilize the net proceeds after expenses of the IPO, our capital stock, debt, or a
combination of these as the consideration to be paid in a business combination. While substantially
all of the net proceeds after expenses of our IPO are allocated to completing a business
combination, the proceeds are not otherwise designated for more specific purposes. Accordingly,
prospective investors will at the time of their investment in us not be provided an opportunity to
evaluate the specific merits or risks of one or more target businesses. If we use our capital
stock and/or debt financing as the consideration to fund the business combination, proceeds from
our IPO then will be used to undertake additional acquisitions or to fund the operations of the
combined business.
Subject to the requirement that our initial business combination must be with an operating
business whose fair market value is at least equal to 80% of the balance in the trust account (less
the deferred underwriting discounts and commissions and taxes payable) at the time of such
acquisition, we have virtually unrestricted flexibility in seeking a business combination with one
or more prospective target businesses in the healthcare industry. If we combine with a financially
unstable company or an entity in the development stage, including an entity lacking an established
record of sales or earnings, we may be affected by numerous risks inherent in the business and
operations of a financially unstable or development stage entity. Although our management will
assess the risks inherent in a particular target business with which we may combine, we cannot
assure you that this assessment will result in our identifying all risks that a target business may
encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do
nothing to control or reduce the chances that those risks will adversely impact a target business.
We cannot assure you that we will close a business combination with one or more target
businesses.
Fair Market Value of Target Business or Businesses
Our initial business combination must be with one or more operating businesses whose fair
market value is at least equal to 80% of the balance in the trust account (less the deferred
underwriting discounts and commissions and taxes payable) at the time of such acquisition. As a
result, we expect to effect an initial business combination of a company with a fair market value
of at least $132,570,000. The actual amount of consideration which we will be able to pay for the
business combination will depend on whether we choose, or are able, to pay a portion of the
business combination consideration with shares of our common stock, if we are able to finance a
portion of the business combination consideration with shares of our common stock, if we are able
to finance a portion of the consideration with debt financing or if we are required to fund
stockholder conversion rights.
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In contrast to many other companies with business plans similar to ours where the minimum fair
market value of the target businesses for the initial business combination is based on 80% of the
acquiror’s net assets, our minimum fair market value is based on 80% of the balance in the trust
account at the time of such acquisition. If we acquire less than 100% of one or more target
businesses in our initial business combination, the aggregate fair market value of the portion or
portions we acquire must equal at least 80% of the balance in the trust account (excluding deferred
underwriting discounts and commissions and taxes payable) at the time of such initial business
combination. In no instance will we acquire less than majority voting control of a target business.
However, this restriction will not preclude a reverse merger or similar transaction where we will
acquire the target business. The fair market value of a target business or businesses will be
determined by our Board of Directors based upon standards generally accepted by the financial
community, such as actual and potential sales, the values of comparable businesses, earnings and
cash flow, and book value. If our Board of Directors is not able to independently determine that
the target business has a sufficient fair market value to meet the threshold criterion, 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
criterion.
Stockholder Approval of our Initial Business Combination
Prior to the completion of our initial 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. If a majority of the shares of
common stock voted by the public stockholders are not voted in favor of a proposed initial business
combination, we may continue to seek other target businesses with which to effect our initial
business combination that meet the criteria set forth in this prospectus until April 23, 2009, 24
months from the consummation of our IPO. 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, which, among other matters, will include a
description of the operations of the target business and audited historical financial statements of
the target business based on United States generally accepted accounting principles.
In connection with the vote required for any business combination, MBFHP has agreed to vote
its shares of common stock acquired by it prior to the completion of our IPO, either for or against
a business combination in the same manner that a majority of the shares of common stock are voted
by our public stockholders. MBFHP has also agreed that it will not be eligible to exercise
conversion rights with respect to those shares. In addition, our officers, directors and existing
stockholder have agreed that they will vote any shares they purchase in the open market in or after
our IPO, including shares purchased in the open market pursuant to an agreement with the
underwriters, in favor of a business combination. As a result, an officer, director or existing
stockholder who acquires shares in or after our IPO must vote those shares in favor of the proposed
initial business combination with respect to those shares, and will therefore not be eligible to
exercise conversion rights for those shares if our initial business combination is approved by a
majority of our public stockholders. 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 fewer than 30% of the shares sold in our IPO
exercise their conversion rights. Our threshold for conversion has been established at 30% in order
for our IPO to be competitive with other blank check company offerings. However, to date a 20%
threshold has been more typical for offerings of this type. We have increased the threshold to
reduce the risk of a small group of stockholders exercising undue influence on the approval
process. Voting against the business combination alone will not result in conversion of a
stockholder’s shares into a
pro rata
share of the trust account. To do so, a stockholder must have
also exercised the 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 aggregate amount then on
deposit in the trust account including accrued interest, net of any income taxes on such interest,
which shall be paid from the trust account (calculated as of two business days prior to the
consummation of the proposed business combination), divided by the number of shares sold in our
IPO. The initial per share conversion price would be approximately $7.96, or $0.04 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. A stockholder who requests conversion of his or her shares must hold
these shares from the record date through the closing date of the business combination.
4
Due to the difficulty of identifying objecting beneficial owners of securities, we may not
know at the time of the stockholder meeting whether the holders of shares on the record date who
have voted to convert their shares continue to hold their shares through the stockholder meeting
and consummation of the business combination and, therefore, whether a vote against the business
combination of 30% or more would actually also result in more than 30% of the shares being
converted, such that the business combination could not be consummated. Consequently, in order to
ensure that we accurately account for shares to be converted, we may require that stockholders who
wish to exercise their conversion rights tender physical share certificates not later than the day
prior to the stockholder meeting. We will notify investors on a Current Report on Form 8-K and in
our proxy statement related to the business combination if we impose this requirement. Initial
public offerings by blank check companies with structures that are comparable to our IPO have not
generally included disclosure in their initial public offering prospectuses regarding the ability
of the issuer to require that stockholders tender physical share certificates in order to convert
their shares. And, while some blank check companies have required physical delivery of stock
certificates in connection with the vote on their initial business combination, most such companies
have not imposed such a requirement. Consequently, you may have a higher likelihood of encountering
difficulty in converting your shares in connection with the vote on our initial business
combination than you would in connection with other blank check companies.
A stockholder who wishes to exercise his or her conversion rights should request delivery of a
physical stock certificate at least two weeks prior to the stockholder meeting. However, because no
assurance can be given that two weeks will provide a stockholder with adequate time to obtain
physical certificates, a stockholder may wish to consider requesting delivery of physical
certificates promptly following our announcement of a business combination. We have been informed
that our transfer agent, Continental Stock & Trust Company, will charge a handling fee of $35.00 in
connection with the tender of physical certificates and that the fee is the same whether the shares
are tendered before or after the business combination. If we elect to require physical delivery of
the share certificates, we would expect that stockholders would have to comply with the following
steps. If the shares are held in street name, stockholders must instruct their account executive at
the stockholders’ bank or broker to withdraw the shares from the stockholders’ account and request
that a physical certificate be issued in the stockholders’ name. Our transfer agent, will be
available to assist with this process. No later than the day prior to the stockholder meeting, the
written instructions stating that the stockholder wishes to convert his or her shares into a pro
rata share of the trust account and confirming that the stockholder has held the shares since the
record date and will continue to hold them through the stockholder meeting and the closing of our
business combination must be presented to our transfer agent. Certificates that have not been
tendered in accordance with these procedures by the day prior to the stockholder meeting will not
be converted into cash. In the event a stockholder tenders his or her shares and decides prior to
the stockholder meeting that he or she does not want to convert his or her shares, the stockholder
may withdraw the tender. In the event that a stockholder tenders shares and our business
combination is not completed, these shares will not be converted into cash and the physical
certificates representing these shares will be returned to the stockholder.
If a stockholder votes against the business combination but fails to properly exercise its
conversion rights, such stockholder will not have its shares of common stock converted to its
pro
rata
distribution of the trust account. 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 account will still have the right to exercise the warrants that they received as
part of the units. We will not complete our proposed initial business combination if public
stockholders owning 30% or more of the shares sold in our IPO exercise their conversion rights.
As the initial conversion price of approximately $7.96 per share is lower than the $8.00 per
unit offering price and may be less than the market price of the common stock on the date of
conversion, there may be a disincentive on the part of public stockholders to exercise their
conversion rights.
5
Plan of Dissolution and Distribution of Assets if No Business Combination
If we do not complete a business combination by April 23, 2009 (24 months after the
consummation of our IPO), our corporate existence will terminate except for the purposes of winding
up our affairs and liquidating pursuant to Section 278 of the Delaware General Corporation Law
(“DGCL”), in which case we will as promptly as practicable thereafter adopt a plan of dissolution
and distribution in accordance with Section 281(b) of the DGCL. Section 278 provides that our
existence will continue for at least three years after its expiration for the purpose of
prosecuting and defending suits, whether civil, criminal or administrative, by or against us, and
of enabling us gradually to settle and close our business, to dispose of and convey our property,
to discharge our liabilities and to distribute to our stockholders any remaining assets, but not
for the purpose of continuing the business for which we were organized. Our existence will
continue automatically even beyond the three-year period for the purpose of completing the
prosecution or defense of suits begun prior to the expiration of the three-year period, until such
time as any judgments, orders or decrees resulting from such suits are fully executed.
Section 281(b) will require us to adopt a plan of dissolution and distribution of our assets
that will provide for the payment to our creditors and potential creditors, based on facts known to
us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that may
subsequently be brought against us in the subsequent 10 years. The plan will also provide that
after reserving amounts sufficient to cover our liabilities and obligations and the costs of
dissolution and liquidation, we will promptly distribute our remaining assets, including the
amounts held in the trust account, solely to our public stockholders. We will liquidate our
assets, including the trust account, and after reserving amounts sufficient to cover our
liabilities and obligations and the costs of dissolution and promptly distribute those assets
solely to our public stockholders. We cannot assure you that third parties will not seek to
recover from assets distributed to our public stockholders any amounts owed to them by us. Under
the DGCL, our stockholders could be liable for any claims against the corporation to the extent of
distributions received by them after dissolution. Further, since we will distribute our assets in
accordance with Section 281(b) rather than Sections 280 and 281(a), any such liability of our
stockholders could extend to claims for which an action, suit or proceeding is begun after the
third anniversary of our dissolution.
Upon its receipt of notice that our existence has terminated, the trustee will promptly commence
liquidating the investments constituting the trust account and distribute the proceeds to our
public stockholders. We anticipate that it will take no more than 10 days to effectuate such
distribution. MBFHP has waived its right to participate in any distributions occurring upon our
failure to complete a business combination with respect to shares of common stock acquired by it
prior to our IPO and in the private placement. In addition, MBF Healthcare Partners, L.P. and our
officers and directors have agreed to waive any claim against us and the trust account, other than
with respect to any shares of common stock acquired in our IPO or in the open market following the
consummation of our IPO. We estimate that, in the event we liquidate the trust account and
distribute those assets to our public stockholders, each public stockholder will receive
approximately $7.96 per share plus his proportionate share of the net interest earned on the trust
account. In addition, the public stockholders will receive their proportionate share of any
Federal Income Tax refund received by the Company for the deductibility of previously disallowed
expenses to be deducted in the Company’s 2009 Federal Income Tax Return. This refund is expected to
be received in 2010 and will then be distributed to the public stockholders. We estimate that our
total costs and expenses for implementing and completing our dissolution and plan of distribution
of our assets will be in the range of $50,000 to $75,000. This amount includes all costs and
expenses relating to filing of our certificate of dissolution in the State of Delaware and the
winding up of our company. MBF Healthcare Partners, L.P. has agreed to pay the costs of our
dissolution in the event our remaining assets outside the trust account are insufficient to pay
those costs. However, if we do not have sufficient funds to cover our liabilities and obligations
or if MBF Healthcare Partners, L.P. does not have sufficient funds to cover the amount that the
costs and expenses for implementing and completing our dissolution exceeds our remaining assets
outside the trust account, if any, the amount distributed to our public stockholders would be less
than $7.96 per share.
6
Under the DGCL, stockholders may be held liable for claims by third parties against a
corporation to the extent of distributions received by them in a dissolution. If we complied with
certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against us, including a 60-day notice period during which any third-party
claims can be brought against us, a 90-day period during which we may reject any claims brought,
and an additional 150-day waiting period before any liquidating distributions are made to
stockholders, any liability of a stockholder with respect to a liquidating distribution is limited
to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and
any liability of the stockholder would be barred after the third anniversary of the dissolution.
However, it is our intention to make liquidating distributions to our public stockholders as soon
as reasonably possible after dissolution and, therefore, we do not intend to comply with those
procedures. As such, our public stockholders could potentially be liable for any claims to the
extent of distributions received by them in a dissolution and any such liability of our public
stockholders will likely extend beyond the third anniversary of such dissolution. Because we will
not be complying with Section 280 or 281(a), we will comply with Section 281(b) of the DGCL,
requiring us to adopt a plan of dissolution that will provide for our payment, based on facts known
to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that
may be potentially brought against us within the subsequent 10 years. However, because we are a
blank check company, rather than an operating company, and our operations will be limited to
searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as accountants, lawyers, investment bankers, etc.) or potential target
businesses. Although we will seek to have all vendors, prospective target businesses, and other
entities with whom we execute agreements waive any right, title, interest, or claim of any kind in
or to any monies held in the trust account for the benefit of our public stockholders, there is no
guarantee that they will enter into such agreements, and it is not a condition to our doing
business with anyone. Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where management is unable to find a
provider of required services willing to provide the waiver. However to the extent that claims
arise from third parties who have not executed agreements waiving their right to any monies held in
trust or to the extent that such agreements are found to be unenforceable, the proceeds held in the
trust account could be subject to claims that could take priority over the claims of our public
stockholders and the per share liquidation price could be less than approximately $7.96, plus
interest (net of taxes payable on such interest, which taxes, if any, shall be paid from the trust
account), due to claims of such creditors or other entities.
Our current officers have each agreed to be jointly and severally personally liable for
ensuring that the proceeds in the trust account are not reduced by (i) the claims of vendors for
services rendered or products sold to us, (ii) claims of prospective target businesses for fees and
expenses of third parties for which we agree in writing to be liable and (iii) claims by vendors or
prospective target businesses, if such person or entity does not provide a valid and enforceable
waiver to rights or claims to the trust account so as to ensure that the proceeds in the trust
account are not reduced by the claims of such persons that are owed money by us, in each case to
the extent any insurance we may procure is inadequate to cover any claims made against the trust
account and the payment of such debts or obligations actually reduces the amount in the trust
account. Based on representations made to us by our officers, we currently believe that they are
of substantial means and capable of funding a shortfall in our trust account to satisfy their
foreseeable indemnification obligations, but we have not asked them to reserve for such an
eventuality. The indemnification obligations may be substantially higher than our officers
currently foresee or expect and their financial resources may deteriorate in the future. Hence, we
cannot assure you that our officers will be able to satisfy those obligations or that the proceeds
in the trust account will not be reduced by those claims. If our Board of Directors adopts a plan
of distribution of our assets and it is subsequently determined that our reserve for claims and
liabilities to third parties is insufficient, stockholders who received funds from our trust
account could be liable for up to such amounts to creditors.
If we are forced to file a bankruptcy case or an involuntary case is filed against us that is
not dismissed, the funds held in the trust account will be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with
priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, the per share liquidation distribution would be less than the initial $7.96 per
share held in the trust account.
7
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation sets forth certain requirements and
restrictions that will apply to us until the consummation of a business combination. Specifically,
our amended and restated certificate of incorporation provides, among other things, that:
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upon consummation of our IPO, $170,962,500 of the proceeds from our IPO and the
private placement and the deferred underwriting discount were placed into the trust
account, which funds
may not be disbursed from the trust account except in connection with our initial
business combination or upon our liquidation;
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prior to the consummation of our initial business combination, we will submit such
business combination to our stockholders for approval;
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we may not consummate our initial business combination unless (i) it is approved by
a majority of the shares of our common stock voted by our public stockholders and (ii)
public stockholders owning less than 30% of the shares sold in our IPO both vote
against the business combination and exercise their conversion rights;
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if our initial business combination is approved and consummated, public stockholders
who voted against the business combination and who exercised their conversion rights
will receive their
pro rata
share of the trust account (net of taxes payable);
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if a business combination is not consummated within the 24-month time period, our
corporate existence will terminate and our powers will immediately thereupon be limited
to acts and activities relating to winding up our affairs, including distribution of
our assets, and we will not be able to engage in any other business activities; and
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we may not consummate our initial business combination unless it meets the
conditions specified in this prospectus, including the requirement that the business
combination be with an operating business whose fair market value is equal to at least
80% of the balance in the trust account (less the deferred underwriting discounts and
commissions and taxes payable) at the time of such business combination.
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Our amended and restated certificate of incorporation requires that we obtain unanimous
consent of our stockholders to amend the above-described provisions. However, the validity of
unanimous consent provisions under Delaware law has not been settled. A court could conclude that
the unanimous consent requirement constitutes a practical prohibition on amendment in violation of
the stockholders’ implicit rights to amend the corporate charter. In that case, the
above-described provisions would be amendable without unanimous consent and any such amendment
could reduce or eliminate the protection afforded to our stockholders. However, we view the
foregoing provisions as obligations to our stockholders, and we will not take any action to waive
or amend any of these provisions.
Our amended and restated certificate of incorporation provides that at the time we submit an
initial business combination to our stockholders for approval, we will also submit an amendment to
Article Fourth thereof to permit our continued existence. This is the only instance in which
Article Fourth can be amended.
Competition
In consummating a business combination, we may encounter intense competition from other
entities having a business objective similar to ours including other blank check companies, private
equity groups and leveraged buyout funds, and operating businesses seeking acquisitions. Many of
these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Moreover, many of these competitors possess
greater financial, technical, human, and other resources than us. While we believe there are
numerous potential target businesses with which we could combine, our ability to acquire larger
target businesses will be limited by our available financial resources. This inherent limitation
gives others an advantage in pursuing the acquisition of a target business. In addition:
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the requirement that we obtain stockholder approval of an initial business
combination and audited and perhaps interim-unaudited 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;
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our obligation not to target any companies with respect to which MBF Healthcare
Partners, L.P. has initiated any contacts or entered into any discussions, formal or
informal, or negotiations regarding such company’s acquisition prior to the completion
of our offering may prevent the consummation of a transaction within the required time
frame;
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the conversion of common stock held by our public stockholders into cash may reduce
the resources available to us to fund an initial business combination;
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our outstanding warrants, and the dilution they potentially represent, may not be
viewed favorably by certain target businesses; and
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the requirement to acquire assets or an operating business that has a fair market
value at least equal to 80% of the balance in the trust account (less the deferred
underwriting discounts and commissions and taxes payable) 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.
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Any of these factors may place us at a competitive disadvantage in successfully negotiating a
business combination. Our management believes, however, that a privately held target business may
view our status as a well-financed public entity as offering advantages over other entities that
have a business objective similar to ours.
If we succeed in effecting a business combination, there will, in all likelihood, be intense
competition from competitors of the target businesses. In particular, certain industries that
experience rapid growth frequently attract an increasingly larger number of competitors, including
competitors with increasingly greater financial, marketing, technical, human, and other resources
than the initial competitors in the industry. The degree of competition characterizing the
industry of any prospective target business cannot presently be ascertained. We cannot assure you
that, subsequent to a business combination, we will have the resources to compete effectively,
especially to the extent that the acquired businesses are in high-growth industries.
Available information
We are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with
the Securities and Exchange Commission (“SEC”) on a regular basis, and are required to disclose
certain material events (e.g., changes in corporate control; acquisitions or dispositions of a
significant amount of assets other than in the ordinary course of business and bankruptcy) in a
current report on Form 8-K. The public may read and copy any materials we file with the SEC at the
SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet website that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC. The SEC’s Internet
website is located at http://www.sec.gov.
Employees
We currently have three officers, all of whom are also members of our Board of Directors.
Although our officers are not obligated to contribute any specific number of hours per week to our
business, Mike Fernandez, Marcio Cabrera and Jorge Rico, devote a significant portion of their
working time to our business. Each of such persons is actively employed by MBFHP, a private equity
firm engaged in seeking to make investments and acquisitions in the healthcare industry. The
amount of time Mike Fernandez, Marcio Cabrera and Jorge Rico devote to us in any time period varies
based on the availability of suitable target businesses to investigate, the course of negotiations
with target businesses, and the due diligence preceding and accompanying a possible business
combination. We do not intend to have any other employees prior to the consummation of a business
combination.
9
Item 1A. Risk Factors
An investment in our securities involves a high degree of risk. You should consider carefully
all of the risks described below, together with the other information contained in this Form 10-K
before making a decision to invest in our securities. If any of the following risks occur, our
business, financial condition and results of operations may be adversely affected. In that event,
the trading price of our securities could decline, and you could lose all or a part of your
investment.
Risks Relating to the Company
We are a development stage company with no operating history and, accordingly, you will have no
basis upon which to evaluate our ability to achieve our business objective.
We are a recently incorporated development stage company with no operating results to date.
Therefore, our ability to begin operations was dependent upon obtaining financing through the
public offering of our securities. Because we do not have an operating history, you will have no
basis upon which to evaluate our ability to achieve our business objective, which is to acquire one
or more operating businesses in the healthcare industry. We will not generate any revenues (other
than interest income on the proceeds of our initial public offering held in the trust account)
until, if at all, after the consummation of a business combination. We cannot assure you as to
when, or if, a business combination will occur.
We will likely not be able to complete a business combination within the required time frame, in
which case our corporate existence will terminate and we will be forced to liquidate.
We must complete a business combination with a fair market value at least equal to 80% of the
balance in the trust account (less the deferred underwriting discounts and commissions and taxes
payable) at the time of the acquisition by April 23, 2009 (24 months after the consummation of our
IPO). Since we anticipate we will not complete a business combination within the required time
frame, our corporate existence will terminate and our amended and restated certificate of
incorporation requires that we promptly initiate procedures to liquidate and distribute our assets
in compliance with Section 281(b) of the DGCL.
If we are forced to liquidate before a business combination, our public stockholders may receive
less than $8.00 per share upon distribution of the funds held in the trust account and our warrants
will expire with no value.
If we are unable to complete a business combination and are forced to liquidate our assets,
the per share liquidation amount may be less than $8.00 because of the expenses related to our IPO,
our general and administrative expenses, and the anticipated costs associated with seeking a
business combination. Furthermore, holders of our warrants are not entitled to participate in a
liquidation distribution and the warrants will expire with no value if we liquidate before the
completion of a business combination. As a result, purchasers of the units may have paid the full
unit purchase price of $8.00 solely for the share of common stock included in each unit.
Unlike most other blank check offerings, we allow up to but less than 30% of our public
stockholders to exercise their conversion rights. This higher threshold will make it easier for us
to get a business combination approved over stockholder dissent, and you may not receive the full
amount of your original investment upon exercise of your conversion rights.
When we seek stockholder approval of a business combination, we will offer each public
stockholder (other than our founding stockholder and our officers and directors) the right to have
their shares of common stock converted to cash if the stockholder votes against the business
combination and the business combination is approved and consummated. We will consummate the
initial business combination only if the following two conditions are met: (i) a majority of the
shares of common stock voted by the public stockholders are voted in favor of the business
combination and (ii) public stockholders owning 30% or more of the shares sold in our IPO do not
vote against the business combination and exercise their conversion rights. Because we permit a
larger number of stockholders to exercise their conversion rights, it will reduce the requirement
to consummate an initial business combination with a target business which you may vote against,
making it easier for us to get a business
combination approved over stockholder dissent, and you may not receive the full amount of your
original investment upon exercise of your conversion rights.
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Unlike most other blank check offerings, we allow up to but less than 30% of our public
stockholders to exercise their conversion rights. The ability of a larger number of our
stockholders to exercise their conversion rights may not allow us to consummate the most efficient
business combination or optimize our capital structure.
When we seek stockholder approval of a business combination, we will offer each public
stockholder (other than our founding stockholder and our officers and directors) the right to have
their shares of common stock converted to cash if the stockholder votes against the business
combination and the business combination is approved and consummated. Such holder must both vote
against such business combination and then exercise their conversion rights to receive a pro rata
share of the trust account. Unlike most other blank check offerings which have a 20% threshold, we
allow up to but less than 30% of our public stockholders to exercise their conversion rights.
Accordingly, if our business combination requires us to use substantially all of our cash to pay
the purchase price, because we will not know how many stockholders may exercise such conversion
rights, we may either need to reserve part of the trust account for possible payment upon such
conversion if the transaction is approved, or we may need to arrange third party financing to help
fund our business combination in case a larger percentage of stockholders exercise their conversion
rights than we expect. In the event that the acquisition involves the issuance of our stock as
consideration, we may be required to issue a higher percentage of our stock to make up for a
shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity
financing or incurring indebtedness at a higher than desirable level. This may limit our ability
to effectuate the most attractive business combination available to us.
Under Delaware law, the requirements and restrictions relating to our IPO contained in our
amended and restated certificate of incorporation may be amended, which could reduce or eliminate
the protection afforded to our stockholders by such requirements and restrictions.
Our amended and restated certificate of incorporation contains certain requirements and
restrictions relating to our IPO that will apply to us until the consummation of a business
combination. Specifically, our amended and restated certificate of incorporation provides, among
other things, that:
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upon consummation of our IPO, $170,962,500 of the proceeds from our IPO and of the
private placement and the deferred underwriting discount were placed into the trust
account, which funds may not be disbursed from the trust account except in connection
with our initial business combination or upon our liquidation;
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prior to the consummation of our initial business combination, we will submit such
business combination to our stockholders for approval;
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we may not consummate our initial business combination unless (i) it is approved by
a majority of the shares of our common stock voted by our public stockholders and (ii)
public stockholders owning less than 30% of the shares sold in our IPO both vote
against the business combination and exercise their conversion rights;
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if our initial business combination is approved and consummated, public stockholders
who voted against the business combination and who exercised their conversion rights
will receive their pro rata share of the trust account (net of taxes payable);
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if a business combination is not consummated within the 24-month period specified in
our final prospectus filed with the SEC on April 17, 2007, our corporate existence will
terminate and our power will immediately thereupon be limited to acts and activities
relating to winding up our affairs, including distribution of our assets, and we will
not be able to engage in any other business activities; and
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we may not consummate our initial business combination unless it meets the
conditions specified in our final prospectus filed with the SEC on April 17, 2007,
including the requirement that the business combination be with an operating business
whose fair market value is equal to at least 80% of the balance in the trust account
(less the deferred underwriting discounts and commissions and taxes payable) at the
time of such business combination.
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Our amended and restated certificate of incorporation requires that we obtain the unanimous
consent of our stockholders to amend the above provisions. However, the validity of unanimous
consent provisions under Delaware law has not been settled. A court could conclude that the
unanimous consent requirement constitutes a practical prohibition on amendment in violation of the
stockholders’ implicit rights to amend the corporate charter. In that case, some or all of the
above provisions could be amended without unanimous consent and any such amendment could reduce or
eliminate the protection afforded to our stockholders. However, we view the foregoing provisions
as obligations to our stockholders and we will not take any action to waive or amend any of these
provisions.
The ability of our stockholders to exercise their conversion rights may not allow us to consummate
the most desirable business combination or optimize our capital structure.
When we seek stockholder approval of our initial business combination, we will offer each
public stockholder (other than our founding stockholder) the right to have his, her or its shares
of common stock converted to cash if the stockholder votes against our initial business combination
and our initial business combination is approved and consummated. Such holder must both vote
against such business combination and then exercise his, her or its conversion rights to receive a
pro rata share of the trust account. Accordingly, if our business combination requires us to use
substantially all of our cash to pay the purchase price, because we will not know how many
stockholders may exercise such conversion rights, we may either need to reserve part of the trust
account for possible payment upon such conversion, or we may need to arrange third party financing
to help fund our business combination in case a larger percentage of stockholders exercise their
conversion rights than we expect. Therefore, we may not be able to consummate a business
combination that requires us to use all of the funds held in the trust account as part of the
purchase price, or we may end up having to incur an amount of leverage that is not optimal for our
business combination. This may limit our ability to effectuate the most attractive business
combination available to us.
Because the amount of time it will take to obtain physical stock certificates is uncertain and
beyond our control, stockholders who wish to convert may be unable to obtain physical certificates
by the deadline for exercising their conversion rights.
We may require that stockholders who wish to exercise their conversion rights tender physical
certificates representing their shares to us not later than the day prior to the stockholders
meeting. While some blank check companies have required physical delivery of certificates, most
such companies do not impose such a requirement. Consequently, our stockholders may have a higher
likelihood of encountering difficulty in converting their shares than they would in connection with
other blank check companies. In order to obtain a physical stock certificate, a stockholder’s
broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this
request. It is our understanding that stockholders should generally allot at least two weeks to
obtain physical certificates from the transfer agent. However, because we do not have any control
over this process or over the brokers or DTC, it may take significantly longer than two weeks to
obtain a physical stock certificate. If it takes longer than we anticipate to obtain a physical
certificate, stockholders who wish to convert may be unable to obtain physical certificates by the
deadline for exercising their conversion rights and thus will be unable to convert their shares.
You will not be entitled to protections normally afforded to investors of blank check companies
under federal securities laws.
Because the net proceeds from our IPO are intended to be used to complete a business
combination with one or more operating businesses, we may be deemed to be a blank check company
under federal securities laws. However, since we had net tangible assets in excess of $5,000,000
upon the successful consummation of our IPO and filed a Current Report on Form 8-K with the
Securities and Exchange Commission, or the SEC, including an
audited balance sheet demonstrating this fact, we believe that we are exempt from the rules
promulgated by the SEC to protect investors in blank check companies, such as Rule 419.
Accordingly, investors will not be afforded the benefits or protections of those rules. Because we
do not believe we are subject to Rule 419, our units will be immediately tradeable and we will have
a longer period of time within which to complete a business combination in certain circumstances
than would be permitted under Rule 419.
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If we do not consummate a business combination and dissolve, payments from the trust account to our
public stockholders may be delayed.
We currently believe that our dissolution and any plan of distribution subsequent to the
expiration of the 24-month deadline contained in our amended and restated certificate of
incorporation would proceed in approximately the following manner. Our board of directors will,
consistent with our amended and restated certificate of incorporation, as promptly as practicable
thereafter adopt a plan of distribution in accordance with Section 281(b) of the DGCL. Due to the
need to comply with Section 281(b), we cannot provide any assurances that the distribution of our
assets will occur within a specified time frame.
Our stockholders may be held liable for claims by third parties against us to the extent of
distributions received by them, regardless of when the claims are filed.
We cannot assure you that third parties will not seek to recover from the assets distributed
to our public stockholders any amounts owed to them by us. Under the DGCL, our stockholders could
be liable for any claims against the company to the extent of distributions received by them in
dissolution. Further, because we will distribute our assets in accordance with Section 281(b)
rather than Sections 280 and 281(a), any such liability of our stockholders could extend to claims
for which an action, suit or proceeding is begun after the third anniversary of our dissolution.
The limitations on stockholder liability under the DGCL for claims against a dissolved corporation
are determined by the procedures that a corporation follows for distribution of its assets
following dissolution. If we complied with the procedures set forth in Sections 280 and 281(a) of
the DGCL (which would include, among other things, a 60-day notice period during which any
third-party claims can be brought against us, a 90-day period during which we may reject any claims
brought, an additional 150-day waiting period before any liquidating distributions are made to
stockholders, as well as review by the Delaware Court of Chancery) our stockholders would have no
further liability with respect to claims on which an action, suit or proceeding is begun after the
third anniversary of our dissolution. However, in accordance with our intention to dissolve and
distribute our assets to our stockholders as soon as reasonably possible after dissolution, our
amended and restated certificate of incorporation provides that we will comply with Section 281(b)
of the DGCL instead of Sections 280 and 281(a). Accordingly, our stockholders’ liability could
extend to claims for which an action, suit or proceeding is begun after the third anniversary of
our dissolution.
If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per share liquidation price received by our stockholders would be less than approximately
$7.96 per share.
Placing the funds in a trust account may not protect those funds from third-party claims
against us. Pursuant to Sections 280 and 281 of the DGCL, upon our dissolution we will be required
to pay or make reasonable provision to pay all claims and obligations of the corporation, including
all contingent, conditional, or unmatured claims. While we intend to pay those amounts from our
funds not held in trust, we cannot assure you those funds will be sufficient to cover such claims
and obligations. Although we will seek to have all vendors, prospective target businesses, and
other entities with whom we execute agreements waive any right, title, interest, or claim of any
kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will enter into such agreements, and it is not a condition to our
doing business with anyone. Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where management is unable to find a
provider of required services willing to provide the waiver. In any event, our management would
perform an analysis of the alternatives available to it and would enter into an agreement with a
third party that did not execute a waiver only if management believed that such third party’s
engagement would be significantly more beneficial to us than any alternative. In addition, there
is no guarantee that such entities will agree to waive any claims they may have in the future as a
result of, or arising out of, any negotiations, contracts, or agreements with us and will not
seek recourse against the trust account for any reason. Accordingly, the proceeds held in the
trust account could be subject to claims that could take priority over the claims of our public
stockholders and the per share liquidation price could be less than approximately $7.96, plus
interest (net of taxes payable on such interest, which taxes, if any, shall be paid from the trust
account), due to claims of such creditors or other entities. Any insurance we may procure to cover
such claims will be subject to various limits and exclusions and may be insufficient to adequately
protect the trust account against such claims.
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If we are unable to complete a business combination and are forced to liquidate, our current
officers have each agreed to be jointly and severally personally liable for ensuring that the
proceeds in the trust account are not reduced by (i) the claims of vendors for services rendered or
products sold to us, (ii) claims of prospective target businesses for fees and expenses of third
parties for which we agree in writing to be liable and (iii) claims by vendors or prospective
target businesses, or if such person or entity does not provide a valid and enforceable waiver to
rights or claims to the trust account so as to ensure that the proceeds in the trust account are
not reduced by the claims of such persons that are owed money by us, in each case to the extent any
insurance we may procure is inadequate to cover any claims made against the trust account and the
payment of such debts or obligations actually reduces the amount in the trust account. Based on
representations made to us by our officers, we currently believe that they are of substantial means
and capable of funding a shortfall in our trust account to satisfy their foreseeable
indemnification obligations, but we have not asked them to reserve for such an eventuality. The
indemnification obligations may be substantially higher than our officers currently foresee or
expect and their financial resources may deteriorate in the future. Hence, we cannot assure you
that our officers will be able to satisfy those obligations or that the proceeds in the trust
account will not be reduced by those claims. If our Board of Directors adopts a plan of
distribution of our assets and it is subsequently determined that our reserve for claims and
liabilities to third parties is insufficient, stockholders who received funds from our trust
account could be liable for up to such amounts to creditors.
If we are forced to file a bankruptcy case or an involuntary case is filed against us that is
not dismissed, the funds held in the trust account will be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with
priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, the per share liquidation distribution would be less than the initial $7.96 per
share held in the trust account.
A significant portion of working capital could be expended in pursuing acquisitions that are not
consummated.
The investigation of each specific target business and the negotiation, drafting, and
execution of relevant agreements, disclosure documents, and other instruments will require
substantial management time and attention and substantial costs for accountants, attorneys, and
others. In addition, we may opt to make down payments or pay exclusivity or similar fees in
connection with structuring and negotiating a business combination. If a decision is made not to
complete a specific business combination, the costs incurred up to that point in connection with
the abandoned transaction, potentially including down payments or exclusivity or similar fees, will
not be recoverable. Furthermore, we may fail to consummate the transaction for any number of
reasons including those beyond our control, such as if 30% or more of our public stockholders vote
against the transaction even though a majority of our public stockholders approve the transaction.
Any such event will result in a loss to us of the related costs incurred, which could materially
adversely affect subsequent attempts to locate and acquire or merge with another business.
We may issue additional shares of our capital stock, including through convertible debt securities,
to complete a business combination, which would reduce the equity interest of our stockholders and
may cause a change in control of our ownership.
Our amended and restated certificate of incorporation authorizes the issuance of up to
50,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred
stock, par value $.0001 per share. Immediately after our initial public offering, there were
1,562,500 authorized but unissued shares of our common stock available for issuance (after
appropriate reservation of shares issuable upon full exercise of our outstanding warrants) and all
of the 1,000,000 shares of preferred stock available for issuance. We may issue a substantial
number of additional shares of our common stock, preferred stock, or a combination of both,
including through convertible debt securities, to complete a business combination. The issuance of
additional shares of our common stock or any number of shares of preferred stock, including upon
conversion of any debt securities:
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may significantly reduce the equity interest of our stockholders;
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could cause a change in control which may affect, among other things, our ability to
use our net operating loss carryforwards, if any, and result in the resignation or
removal of our present officers and directors; and
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may adversely affect prevailing market prices for our common stock and warrants.
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We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a
business combination, which may adversely affect our leverage and financial condition.
We may incur a substantial amount of debt to finance a business combination. The incurrence
of debt:
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may lead to default and foreclosure on our assets if our operating revenues after a
business combination are insufficient to pay our debt obligations;
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may cause an acceleration of our obligation to repay the debt, even if we make all
principal and interest payments when due, if we breach the covenants contained in the
terms of any debt documents, such as covenants that require the maintenance of certain
financial ratios or reserves, without a waiver or renegotiation of such covenants;
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may create an obligation to repay immediately all principal and accrued interest, if
any, upon demand to the extent any debt securities are payable on demand;
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may require us to dedicate a substantial portion of our cash flow to pay principal
and interest on our debt, which will reduce the funds available for dividends on our
common stock, working capital, capital expenditures, acquisitions, and other general
corporate purposes;
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may limit our flexibility in planning for and reacting to changes in our business
and in the industry in which we operate;
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may make us more vulnerable to adverse changes in general economic, industry, and
competitive conditions and adverse changes in government regulation;
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may limit our ability to borrow additional amounts for working capital, capital
expenditures, acquisitions, debt service requirements, execution of our strategy, or
other purposes; and
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may place us at a disadvantage compared to our competitors who have less debt.
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Any desire by our current officers and directors to remain with us following a business combination
may result in a conflict of interest in determining whether a particular target business is
appropriate for a business combination and in the public stockholders’ best interests.
The personal and financial interests of our current officers and directors may influence them
to negotiate their retention with us following the business combination, and to view more favorably
acquisition targets that offer them a continuing relationship, either as an officer, director,
consultant, or other third-party service provider, after the business combination. In addition,
there may be a conflict of interest in the negotiation of the terms and conditions related to such
continuing relationships as our officers and directors may be influenced by their personal and
financial interests rather than the best interests of our public stockholders.
15
The loss of any member of our management team prior to the consummation of a business combination
could adversely affect our ability to successfully consummate a business combination.
Our operations prior to our initial business combination are dependent upon a relatively small
group of members of our management, including Mike Fernandez, Marcio Cabrera and Jorge Rico. We
believe that our success prior to the consummation of a business combination depends upon the
continued service of our management. We cannot assure you that these individuals will remain with
us for the immediate or foreseeable future. We do not have key man life insurance on these
individuals. We do not have employment contracts with any of our current management. The loss of
any of these individuals would have an adverse effect on our ability to successfully consummate a
business combination.
Our ability to be successful following a business combination will depend on the efforts of the
management team that remains with the combined company.
Our management team currently intends to stay involved with us following a business
combination, either as managers or in an advisory capacity. The future role of our management
personnel following a business combination, however, cannot presently be fully ascertained. In
making the determination whether our current management should remain with us following the
business combination, management will analyze the experience and skill set of the target business’
management, determine whether it is in the best interests of the combined company to retain such
personnel and negotiate with such personnel as appropriate. We will have limited ability to
evaluate the management of the target business and we cannot assure you that our assessment of
these individuals will prove to be correct.
Our management team will only be able to remain with the combined company after the
consummation of a business combination if they are able to negotiate mutually agreeable employment
terms as a part of any such combination, which terms would be disclosed to our stockholders in any
proxy statement relating to such transaction. If our current management chooses to remain with us
after the business combination, they will negotiate the terms of the business combination as well
as the terms of their employment arrangements and may have a conflict of interest in negotiating
the terms of the business combination while, at the same time, negotiating terms of their
employment arrangements. The unexpected loss of the services of one or more of these members of
our management team could have a detrimental effect on us.
Our officers and directors will 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 complete a business combination.
Our officers and directors are not required to, and will likely not, 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 member of our management team is engaged in several
other business endeavors, including without limitation, active employment with MBFHP, and they are
not obligated to contribute any specific number of hours per week to our affairs. As active
employees of MBFHP, or the fund, members of our management team are required to identify target
businesses for the fund, which could impact their ability to identify target businesses for us.
Furthermore, we have agreed that any target companies with respect to which MBFHP has initiated any
contacts or entered into any discussions, formal or informal, or negotiations regarding such
company’s acquisition prior to the completion of our IPO will not be a potential acquisition target
for us. If our officers’ and directors’ other business affairs require them to devote substantial
amounts of time to such affairs in excess of their current commitment levels, it could limit their
ability to devote time to our affairs and could have a negative impact on our ability to complete a
business combination.
Our officers and directors are, and may in the future become, affiliated with entities in the
healthcare industry and, accordingly, may have conflicts of interest in determining to which entity
a particular business opportunity should be presented.
Our officers and directors are affiliated with entities, including other “blank check”
companies, that are engaged in a similar business. Each of Mike Fernandez, Marcio Cabrera and
Jorge Rico is affiliated with MBFHP, a private equity firm targeting companies in the healthcare
industry for acquisition or investment. Roger J. Medel and Carlos Saladrigas, members of our Board
of Directors, are also on the Advisory Committee of MBFHP. Mike Fernandez is a majority owner of
Healthcare Atlantic, Inc., one of Florida’s largest dental health maintenance
organizations. In addition, Mr. Fernandez is on the board of directors of Pediatrix Medical
Group, Inc., a provider of newborn, maternal-fetal and pediatric physician services, and Dr. Medel
is the Chief Executive Officer and a director of Pediatrix Medical Group, Inc. These entities may
compete with us for investment and acquisition opportunities.
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Each of Messrs. Fernandez, Cabrera, Rico and Saladrigas, Antonio Argiz and MBFHP has granted
us a “right of first refusal,” effective upon the consummation of our IPO, with respect to any
company or business in the healthcare industry whose aggregate enterprise value is at least equal
to 80% of the balance in the trust account (less the deferred underwriting discounts and
commissions and taxes payable). However, if our other officers and directors become aware of
business opportunities that may be appropriate for presentation to us as well as the other entities
with which they are or may be affiliated, due to existing and potential future affiliations with
these and other entities, they may have fiduciary obligations to present potential business
opportunities to those entities prior to presenting them to us.
Mike Fernandez, our Chairman and Chief Executive Officer, is subject to non-competition
restrictions that will restrict us from pursuing business opportunities in selected sectors of the
healthcare industry. This could have a negative impact on our ability to complete a business
combination.
In connection with the disposition of previously owned businesses in the healthcare industry,
Mike Fernandez entered into various noncompetition agreements. Mike Fernandez agreed that until
February 16, 2010, he cannot (1) own or operate any medical center, office, clinic or facility in
Florida or (2) directly or indirectly engage in any Medicare+Choice/Medicare Advantage Program,
Medicare insurance line of business or Medicare insurance product in any of the following
jurisdictions: Arizona, Colorado, Florida, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana,
Michigan, Minnesota, Missouri, North Carolina, North Dakota, Ohio, Puerto Rico, South Carolina,
South Dakota, Tennessee, Texas, Utah and Wisconsin. Because of Mike Fernandez’s position as our
Chairman and Chief Executive Officer, the restrictions in his non-competition agreements will
effectively restrict us from pursuing business combinations and investments that involve certain
government sponsored healthcare services which we could have considered had these non-competition
agreements not been in place. Our inability to pursue these opportunities could have a negative
impact on our ability to complete a business combination.
None of our officers or directors has ever been associated with a publicly held blank check
company.
Our officers and directors have never served as officers or directors of a development stage
public company with the business purpose of raising funds to acquire a company. Furthermore, our
officers and directors have limited experience in private equity companies with the business
purpose of raising funds to acquire a company. Accordingly, you may not be able to adequately
evaluate their ability to successfully complete a business combination through a blank check public
company or a company with a structure similar to ours.
Because Mike Fernandez, our Chairman and Chief Executive Officer, indirectly owns shares of our
common stock that will not participate in liquidating distributions, he may have a conflict of
interest in determining whether a particular target business is appropriate for a business
combination.
Mike Fernandez, our Chairman and Chief Executive Officer, through MBFHP, indirectly owns
shares of our common stock. Upon our liquidation, MBFHP will not have the right to receive
distributions from the trust account with respect to shares of our common stock it acquired prior
to the completion of our IPO and it would lose its entire investment in us were this to occur.
Therefore, Mr. Fernandez’s personal and financial interests may influence his motivation in
identifying and selecting target businesses and completing a business combination in a timely
manner. This 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.
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Our officers’ and directors’ interests in obtaining reimbursement for any out-of-pocket expenses
incurred by them may lead to a conflict of interest in determining whether a particular target
business is appropriate for a business combination and in the public stockholders’ best interest.
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 of available proceeds not
deposited in the trust account unless the business combination is consummated. The amount of
available proceeds is based upon our management’s estimate of the amount needed to fund our
operations for the next 14 months and complete a business combination. This estimate may prove to
be inaccurate, especially if a portion of the available proceeds is used to make a down payment in
connection with a business combination or pay exclusivity or similar fees or if we expend a
significant portion of the available proceeds in pursuit of an acquisition that is not consummated.
The financial interest of our officers and directors 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 our public stockholders’ best interest.
We may engage in a business combination with one or more target businesses that have relationships
with entities that may be affiliated with our founding stockholder or our officers and directors,
which may raise potential conflicts of interest.
In light of our founding stockholder’s and our officers’ and directors’ involvement with other
healthcare companies and our intent to complete a business combination with one or more operating
businesses in the same industry, we may decide to acquire one or more businesses affiliated with
our founding stockholder or our officers and directors. For example, each of Mike Fernandez,
Marcio Cabrera and Jorge Rico is affiliated with our founding stockholder, MBFHP, a private equity
firm that has acquired one healthcare company and is targeting companies in the healthcare industry
for acquisition or investment. In addition, Mike Fernandez is the majority owner of Healthcare
Atlantic, Inc. and Hospitalists of America, LLC, both companies in the healthcare industry.
Further, Mr. Fernandez is on the board of directors of Pediatrix Medical Group, Inc. and Dr. Medel
is the Chief Executive Officer and a director of Pediatrix Medical Group, Inc. Despite our
agreement to obtain an opinion from an independent investment banking firm regarding the fairness
to our public stockholders from a financial point of view of a business combination with one or
more businesses affiliated with our founding stockholder, or our officers and directors, potential
conflicts of interest still may exist and, as a result, the terms of the business combination may
not be as advantageous to our public stockholders as they would be absent any conflicts of
interest.
We will not generally be required to obtain a determination of the fair market value of a target
business or target businesses from an unaffiliated, independent investment banking firm.
Our initial business combination must be with one or more operating businesses whose fair
market value is at least equal to 80% of the balance in the trust account (less the deferred
underwriting discounts and commissions and taxes payable) at the time of such acquisition. The
fair market value of such business or businesses will be determined by our Board of Directors based
upon standards generally accepted by the financial community, such as actual and potential sales,
earnings, cash flow, and book value. We have agreed to obtain an opinion from an unaffiliated,
independent investment banking firm which is a member of the National Association of Securities
Dealers, Inc., or NASD, with respect to the satisfaction of such criteria. However, 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 or businesses have sufficient
fair market value, even if the target business or businesses are affiliated with one of our
officers or directors.
NYSE Alternext US 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 currently listed on NYSE Alternext US, a national securities exchange. We
cannot assure you that our securities will continue to be listed on NYSE Alternext US in the future
prior to a business combination. Additionally, in connection with our business combination, it is
likely that NYSE Alternext US 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.
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If NYSE Alternext US 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:
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a limited availability of market quotations for our securities;
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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;
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a limited amount of news and analyst coverage for our company; and
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a decreased ability to issue additional securities or obtain additional financing in
the future.
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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 NYSE Alternext US, 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, 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. Further, if we were no longer listed on NYSE Alternext US, our securities would not be
covered securities and we would be subject to regulation in each state in which we offer
securities.
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 NYSE Alternext US or another exchange or
quoted on Nasdaq or we have net tangible assets of $5,000,000 or less or 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, as amended. Under these
rules, broker-dealers who recommend such securities to persons other than institutional accredited
investors must:
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make a special written suitability determination for the purchaser;
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receive the purchaser’s written agreement to a transaction prior to sale;
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provide the purchaser with risk disclosure documents that identify certain risks
associated with investing in “penny stocks” and that describe the market for these
“penny stocks,” as well as a purchaser’s legal remedies; and
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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 “penny stock” can be completed.
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If our common stock becomes subject to these rules, broker-dealers may find it difficult to
effect 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.
We may only be able to complete one business combination, which may cause us to be solely dependent
on a single business and a limited number of products or services.
The net proceeds from our IPO and the private placement were $172,762,500, which provided us
with approximately $170,962,500, which we may use to complete a business combination. Although we
are permitted to effect a business combination with more than one target business, we currently
intend to effect our initial business combination with a single operating business whose fair
market value is at least equal to 80% of the balance in the trust account (less the deferred
underwriting discounts and commissions and taxes payable) at the time of the acquisition. If we
acquire more than one target business, additional issues would arise, including possible complex
accounting issues, which would include generating pro forma financial statements reflecting
the operations of several target businesses as if they had been combined, and numerous logistical
issues, which would include attempting to coordinate the timing of negotiations, proxy statement
disclosure, and closing with multiple target businesses. In addition, we would be exposed to the
risk that conditions to closings with respect to the acquisition of one or more of the target
businesses would not be satisfied, bringing the fair market value of the business combination below
the required threshold of 80% of the balance in the trust account (less the deferred underwriting
discounts and commissions and taxes payable). As a result, we are likely to complete a business
combination with only a single operating business, which may have only a limited number of products
or services. The resulting lack of diversification may:
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result in our dependency upon the performance of a single operating business;
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result in our dependency upon the development or market acceptance of a single or
limited number of products, processes, or services; and
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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.
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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 that may have the resources to
complete several business combinations in different industries or different areas of a single
industry so as to diversify risks and offset losses. Further, the prospects for our success may be
entirely dependent upon the future performance of the initial target business or businesses we
acquire.
Any attempt to consummate more than one transaction as our initial business combination will make
it more difficult to consummate our initial business combination.
We may seek to acquire contemporaneously multiple operating companies whose collective fair
market value is at least equal to 80% of the balance in the trust account (less the deferred
underwriting discounts and commissions and taxes payable) at the time of those acquisitions.
Acquisitions involve a number of special risks, including diversion of management’s attention,
legal, financial, accounting, and due diligence expenses, and general risks that transactions will
not be consummated. To the extent we try to consummate more than one transaction at the same time,
all of these risks will be exacerbated, especially in light of the small size of our management
team and our limited financial and other resources. Completing our initial business combination
through more than one acquisition likely would result in increased costs as we would be required to
conduct a due diligence investigation of more than one business and negotiate the terms of the
acquisition with multiple sellers. In addition, due to the difficulties involved in consummating
multiple acquisitions concurrently, our attempt to complete our initial business combination in
this manner would increase the chance that we would be unable to successfully complete our initial
business combination in a timely manner. In addition, if our initial business combination entails
simultaneous transactions with different sellers, each seller will need to agree that its
transaction is contingent upon the simultaneous closing of the other transactions, which may make
it more difficult for us, or delay our ability, to complete the initial business combination. As a
result, if we attempt to consummate our initial business combination in the form of multiple
transactions, there is an increased risk that we will not be in a position to consummate some or
all of those transactions, which could result in our failure to satisfy the requirements for an
initial business combination and force us to liquidate.
Because of our limited resources and the significant competition for business combination
opportunities, we may not be able to consummate an attractive business combination.
We expect to encounter intense competition from other entities having a business objective
similar to ours, including venture capital funds, leveraged buyout funds, operating businesses, and
other entities and individuals, both foreign and domestic. Many of these entities are well
established and have extensive experience in identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human, and
other resources than we do and our financial resources will be relatively limited when
contrasted with those of many of these competitors. While we believe that there are numerous
potential target businesses that we could acquire with the net proceeds of our IPO, together with
additional financing, if available, 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 certain target businesses.
Further:
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our obligation to seek stockholder approval of a business combination may delay or
prevent the consummation of a transaction;
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our obligation not to target any companies with respect to which MBFHP has initiated
any contacts or entered into any discussions, formal or informal, or negotiations
regarding such company’s acquisition prior to the completion of our offering may
prevent the consummation of a transaction within the required time frame;
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our obligation to convert the shares of common stock into cash in certain instances
may reduce the resources available for a business combination; and
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our outstanding warrants, and the future dilution they potentially represent, may
not be viewed favorably by certain target businesses.
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Any of these factors may place us at a competitive disadvantage in successfully negotiating a
business combination.
We may seek to acquire contemporaneously multiple operating companies whose collective fair
market value is at least equal to 80% of the balance in the trust account (less the deferred
underwriting discounts and commissions and taxes payable) at the time of those acquisitions. To
the extent that our business combination entails the contemporaneous acquisition of more than one
operating business, we may not have sufficient resources, financial or otherwise, to effectively
and efficiently conduct adequate due diligence and negotiate definitive agreements on terms most
favorable to our stockholders. In addition, because our business combination may be with different
sellers, we will need to convince such sellers to agree that the purchase of their businesses is
contingent upon the simultaneous closings of the other acquisitions.
We may acquire a target business with a history of poor operating performance and there is no
guarantee that we will be able to improve the operating performance of that target business.
Due to the competition for business combination opportunities, we may acquire a target
business with a history of poor operating performance if we believe that target business has
attractive attributes that can take advantage of trends in the healthcare industry. However,
acquiring a target company with a history of poor operating performance can be extremely risky and
we may not be able to improve operating performance. If we cannot improve the operating
performance of such a target business following our business combination, then our business,
financial condition, and results of operations will be adversely affected. Factors that could
result in us not being able to improve operating performance include, among other things:
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inability to predict changes in technological innovation;
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inability to predict changes in consumer tastes and preferences;
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competition from superior or lower-priced products;
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lack of financial resources;
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inability to attract and retain key executives and employees;
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claims for infringement of third-party intellectual property rights and/or the
availability of third-party licenses; and
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changes in, or costs imposed by, government regulation.
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We may acquire a target business with operations located outside of the United States which may
subject us to additional risks that could have an adverse effect on our business operations and
financial results subsequent to the business combination.
Acquiring and operating a domestic target company with operations located outside of the
United States may involve additional risks, including changes in trade protection and investment
laws, policies and measures, and other regulatory requirements affecting foreign trade and
investment; social, political, labor, or economic conditions in a specific country or region; and
difficulties in staffing and managing foreign operations. In addition, significant fluctuations in
exchange rates between the U.S. dollar and foreign currencies may adversely affect the price of
acquiring a foreign target business and, subsequent to acquisition, our future net revenues. These
types of risks may impede our ability to successfully complete a business combination with a target
business which has operations located outside of the United States and may impair our financial
results and operations if we consummate such a business combination.
Our founding stockholder controls a substantial interest in us and thus may influence certain
actions requiring a stockholder vote.
Our founding stockholder, MBFHP, owns approximately 19.7% of our issued and outstanding shares
of common stock. In addition, there is no restriction on the ability of our founding stockholder
and our officers and directors to purchase units or shares of our common stock in the market. If
it were to do so, the percentage of our outstanding common stock held by our founding stockholder
and our officers and directors would increase. Our Board of Directors will be divided into three
classes, each of which generally will serve for a term of three years, with only one class of
directors being elected in each year. There may not 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 this “staggered” Board of Directors, only a
minority of the Board of Directors would be considered for election. As a result of his
substantial beneficial ownership through control of our founding stockholder, Mike Fernandez, our
Chairman and Chief Executive Officer, may exert considerable influence on actions requiring a
stockholder vote, including the election of officers and directors, amendments to our amended and
restated certificate of incorporation, the approval of benefit plans, mergers, and similar
transactions (other than approval of the initial business combination). Moreover, except to the
extent stockholder proposals are properly and timely submitted, our directors will determine which
matters, including prospective business combinations, to submit to a stockholder vote. As a
result, they will exert substantial control over actions requiring a stockholder vote both before
and following a business combination.
Because of our founding stockholder’s agreement with the underwriters to make open market
purchases of common stock commencing on the later of (a) ten business days after we file a Current
Report on Form 8-K announcing our execution of a definitive agreement for our initial business
combination or (b) 60 calendar days after the end of the “restricted period” under Regulation M
promulgated by the SEC, and ending on the business day immediately preceding the record date for
the meeting of stockholders at which such business combination is to be voted upon by our
stockholders, our founding stockholder may obtain an even larger ownership block of our common
stock which could permit it to influence the outcome of all matters requiring approval by our
stockholders at such time, including our initial business combination, the election of directors
and approval of significant corporate transactions following the consummation of our initial
business combination. For a more complete discussion, including a detailed description of when
such purchases may begin under Regulation M, please see the section of our final prospectus filed
with the SEC on April 17, 2007 entitled “Principal Stockholders.”
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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 IPO, as part of the units, we issued warrants to purchase 21,562,500
shares of common stock. In addition, in connection with the private placement, we issued warrants
to purchase 343,750 shares of common stock as part of the units, and additional warrants to
purchase 4,250,000 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
the potential for such issuance could reduce the value of the shares that may be issued to complete
the business combination. Accordingly, the existence of our warrants may make it more difficult to
effectuate a business combination or may increase the acquisition cost of a target business if we
are unable to complete a business combination solely with cash. Additionally, the sale, or
potential 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.
Our founding stockholder’s obligation to purchase common stock in the open market commencing on the
later of ten business days after we file a current report on Form 8-K announcing our execution of a
definitive agreement for our initial business combination or 60 calendar days after the end of the
“restricted period” under Regulation M and ending on the business day immediately preceding the
record date for the meeting of stockholders at which such business combination is voted upon by our
stockholders may support the market price of the common stock and/or warrants during such period
and, accordingly, the termination of the support provided by such purchases may materially
adversely affect the market price of the common stock and/or warrants.
Our founding stockholder has agreed, pursuant to an agreement with the underwriters in our IPO
in accordance with guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934,
to purchase up to $12.0 million of our common stock in the open market, at market prices not to
exceed the per share amount held in the trust account (less taxes payable), commencing on the later
of (a) ten business days after we file a Current Report on Form 8-K announcing our execution of a
definitive agreement for our initial business combination (“Signing 8-K”) or (b) 60 calendar days
after the end of the “restricted period” under Regulation M, and ending on the business day
immediately preceding the record date for the meeting of stockholders at which such business
combination is to be voted upon by our stockholders. Based on the execution date of the Stock
Purchase Agreement, our founding stockholder began making these open market purchases on February
25, 2008. The per share amount held in the trust account (less taxes payable) as determined on
February 5, 2008 was $8.13. Our founding stockholder will not have any discretion or influence
with respect to such purchases and will not be able to sell or transfer any common stock purchased
in the open market pursuant to such agreement until six months following the consummation of a
business combination. Consequently, if the market does not view a business combination positively,
these purchases may have the effect of counteracting the market’s view of the business combination,
which would otherwise be reflected in a decline in the market price of our securities. The
termination of the support provided by these purchases may materially adversely affect the market
price of our securities.
An effective registration statement may not be in place when an investor desires to exercise
warrants, which would preclude an investor from being able to exercise his, her or its warrants and
cause those warrants to be practically worthless.
None of the warrants issued in our IPO will be exercisable, and we will not be obligated to
issue shares of common stock unless, at the time a holder seeks to exercise these warrants, a
prospectus relating to the common stock issuable upon exercise of these warrants is current and the
common stock has been registered or qualified or deemed to be exempt under the securities laws of
the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we
have agreed to use our reasonable best efforts to maintain a current prospectus relating to the
common stock issuable upon exercise of the warrants until the expiration of these warrants.
However, we cannot assure you that we will be able to do so, and if we do not maintain a current
prospectus related to the common stock issuable upon exercise of the warrants issued in our IPO,
holders will be unable to exercise their warrants and we will not be required to settle any such
warrant exercise. In no event will we be required to net cash settle any warrant exercise. If the
prospectus relating to the common stock issuable upon the exercise of these warrants is not current
or if the common stock is not qualified or exempt from qualification in the jurisdictions in which
the holders of the warrants reside, these warrants may have no value, the market for these warrants
may be limited and these warrants may expire worthless. Thus, in these instances, the purchaser of
a unit purchased in our IPO would have paid the full $8.00 purchase price solely for the one share
of our common stock included in the unit. Even if the prospectus relating to the common stock
issuable upon exercise of the warrants is not current, the
warrants issued in the private placement to MBF Healthcare Partners, L.P. will be exercisable
for unregistered shares of common stock.
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We may choose to redeem our outstanding warrants when a prospectus relating to the common stock
issuable upon exercise of such warrants is not current, the warrants will not be exercisable and
the warrant holders may receive less than fair market value for the warrant or no value at all.
We may redeem the warrants at any time after the warrants become exercisable in whole and not
in part, at a price of $0.01 per warrant, upon a minimum of 30 days’ prior written notice of
redemption, if and only if, the last sales price of our common stock equals or exceeds $11.50 per
share for any 20 trading days within a 30 trading day period ending three business days before we
send the notice of redemption to warrant holders. Redemption of the warrants could force the
warrant holders (i) to exercise the warrants and pay the exercise price therefore at a time when it
may be disadvantageous for the holders to do so, (ii) to sell the warrants at the then current
market price when they might otherwise wish to hold the warrants or (iii) to accept the nominal
redemption price which, at the time the warrants are called for redemption, is likely to be
substantially less than the market value of the warrants. Further, if we redeem the warrants while
the prospectus relating to the common stock issuable upon exercise of the warrants is not current,
public warrant holders will not be able to exercise the warrants and may receive much less than
fair value for the warrant or no value at all. In addition, public warrant holders may not be able
to exercise their warrants during the 30-day notice period prior to redemption if a current
prospectus is unavailable.
Our founding stockholder’s exercise of its registration rights may have an adverse effect on the
market price of our common stock, and the existence of these rights may make it more difficult to
effect a business combination.
MBFHP is entitled to demand on up to two occasions that we register the resale of its shares
of common stock and warrants, including those shares of common stock included in, or issued upon
exercise of the warrants purchased in this private placement and included in the units purchased in
the private placement, in certain circumstances and has certain “piggy back” registration rights.
If MBFHP exercises its registration rights with respect to all of its shares of common stock and
warrants (including the shares and warrants included in the units and the warrants issued in the
private placement) then there will be an additional 9,625,000 shares of common stock eligible for
trading in the public market. This potential increase in trading volume 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 effect a business combination or increase the acquisition cost of a target
business in the event that we are unable to complete a business combination solely with cash, as
the stockholders of a particular 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.
If we are deemed to be an investment company, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete a
business combination.
If we are deemed to be an investment company under the Investment Company Act of 1940, as
amended, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for
us to complete a business combination.
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In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy, and disclosure requirements, and other
rules and regulations.
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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 the trust account may only be invested by
the trustee in money market funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940 or securities issued or guaranteed by the United States. By
restricting the investment of the proceeds to these instruments, we intend to avoid being deemed an
investment company within the meaning of the Investment Company Act of 1940. Our common stock is
not intended for persons who are seeking a return on investments in government securities. The
trust account and the purchase of government securities for the trust account is intended as a
holding place for funds pending the earlier to occur of either: (i) the consummation of our primary
business objective, which is a business combination, or (ii) absent a business combination, our
dissolution and return of the funds held in the trust account to our public stockholders as part of
our plan of dissolution and distribution. If we do not invest the proceeds as discussed above, we
may be deemed to be subject to the Investment Company Act of 1940. If we were deemed to be subject
to the Investment Company Act of 1940, compliance with these additional regulatory burdens would
require additional expense for which we have not accounted.
Our directors, including those we expect to serve on our Audit Committee, may not be considered
“independent” under the policies of the North American Securities Administrators Association, Inc.
and, therefore, may take actions or incur expenses that are not deemed to be independently approved
or independently determined to be in our best interest.
Under the policies of the North American Securities Administrators Association, Inc., an
international organization devoted to investor protection, because all of our directors may receive
reimbursement for out-of-pocket expenses incurred by them in connection with activities on our
behalf such as attending meetings of the Board of Directors, identifying potential target
businesses, and performing due diligence on suitable business combinations, and certain of our
directors indirectly own shares of our securities, 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. 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. To the
extent such out-of-pocket expenses exceed the available proceeds not deposited in the trust
account, such out-of-pocket expenses would not be reimbursed by us unless we complete a business
combination. Although we believe that all actions taken by our directors on our behalf will be in
our best interests, whether or not they 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 actually are
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.
If the private placement was not conducted in compliance with applicable law, our founding
stockholder may have the right to rescind its unit and warrant purchase. The rescission rights, if
any, may require us to refund an aggregate of $7,000,000 to our founding stockholder, thereby
reducing the amount in the trust account available to us to consummate a business combination, or,
in the event we do not complete a business combination within the period prescribed by our IPO, the
amount available to our public stockholders upon our liquidation.
Although we believe that we conducted the private placement in accordance with applicable law,
there is a risk that the securities issued in the private placement should have been registered
under the Securities Act of 1933, as amended, and applicable blue sky laws. Although our founding
stockholder has waived its rights, if any, to rescind its unit and warrant purchases as a remedy to
our failure to register these securities, its waiver may not be enforceable in light of the public
policy underlying Federal and state securities laws. If the founding stockholder brings a claim
against us and successfully asserts rescission rights, we may be required to refund an aggregate of
$7,000,000, plus interest, to it, thereby reducing the amount in the trust account available to us
to consummate a business combination, or, in the event we do not complete a business combination
within the period prescribed by our IPO, the amount available to our public stockholders upon our
liquidation.
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Current difficult conditions in the global financial markets and the economy generally may
materially adversely affect our ability to consummate a business combination.
Our ability to consummate a business combination may be materially affected by conditions in
the global financial markets and the economy generally, both in the U.S. and elsewhere around the
world. The stress experienced by global financial markets that began in the second half of 2007
continued and substantially increased during the second half of 2008 and beginning of 2009. The
volatility and disruption in the global financial markets have reached unprecedented levels. The
availability and cost of credit has been materially affected. These factors, combined with volatile
oil prices, depressed home prices and increasing foreclosures, falling equity market values, rising
unemployment, declining business and consumer confidence and the risk of increased inflation, have
precipitated what may be a severe recession. We do not expect that the difficult conditions in the
financial markets are likely to improve in the near future. A worsening of these conditions would
likely exacerbate the adverse effects of these difficult market conditions on us.
Risks Associated With The Healthcare Industry
We intend to acquire a company in the healthcare industry. Businesses in the healthcare
industry are subject to numerous risks, including the following:
The healthcare industry is subject to various influences, each of which may adversely 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 require 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. 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 would be adversely
affected if we could not achieve corresponding reductions in our expenses.
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 possible operations and could adversely
affect our operating results.
We believe that our prospective business may be extensively regulated by the federal
government and any states in which we decide to operate. The laws and regulations which may govern
our prospective operations 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 by:
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imposing additional capital requirements;
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increasing our liability;
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increasing our administrative and other costs;
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increasing or decreasing mandated benefits;
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forcing us to restructure our relationships with providers; or
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requiring us to implement additional or different programs and systems.
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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 the 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.
In 1999, the California legislature enacted a law effective in 2001 for all health care service
plan contracts issued, delivered, amended or renewed on or after January 1, 2000, requiring 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 adversely affect our prospective revenues.
We believe that our business, if any, will be subject to various routine and non-routine
governmental reviews, audits and investigations. 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. 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
adversely affect our business.
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 and other healthcare 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. Furthermore, 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.
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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.
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
would be adversely affected.
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 adversely
affected.
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 adversely affect 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 adversely affect 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 adversely affect 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 adversely affect our financial
condition and results of operations.
Regional concentrations of our prospective business may subject us to economic downturns in those
regions.
Our business may include or consist of regional companies. If our operations are concentrated
in a small number of states, we will be exposed to potential losses resulting from the risk of an
economic downturn in these states. If economic conditions in these states deteriorate, we may
experience a reduction in existing and new business, which may adversely affect our business,
financial condition and results of operations.
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We may be dependent primarily on a single potential product or service. Such a product or service
may take us a long time to develop, gain approval for and market.
Our future financial performance may depend in significant part upon the development,
introduction and client acceptance of new or enhanced versions of a single potential product or
service to the healthcare industry. We cannot assure you that we will be successful in acquiring,
developing or marketing such a product or service or any potential enhancements to it. Such
activities may take us a long time to accomplish, and there can be no guarantee that we will ever
actually acquire, develop or market any such product or service. In addition, competitive
pressures or other factors may result in price erosion that could adversely affect our results of
operation.
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 Food and Drug Administration, or the FDA under the Federal Food, Drug and Cosmetic Act.
Product candidates and the activities associated with their development and commercialization,
including their testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval,
advertising, promotion, sale and distribution, will be subject to comprehensive regulation by the
FDA and other United States regulatory agencies and by comparable authorities in other countries.
Securing approval requires the submission of extensive preclinical and clinical data, information
about product manufacturing processes and inspection of facilities and supporting information for
each therapeutic indication to establish the product candidate’s safety and efficacy.
The FDA requires producers of medical devices and drug products 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 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 with any potential products developed by us, might impose additional
costs on us or marketing impediments on such products, which could adversely affect our prospective
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 an enforcement action
by the FDA or state agencies, which may include any of the following sanctions:
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warning letters, fines, injunctions, consent decrees and civil penalties;
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repair, replacement, refunds, recall or seizure of our products;
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operating restrictions or partial suspension or total shutdown of production;
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refusal of requests for regulatory clearance or pre-market approval of new products,
new intended uses or modifications to existing products;
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withdrawal of regulatory approvals previously granted; and
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If any of these events were to occur, it could adversely affect our business.
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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 an 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.
If we consummate an acquisition of a healthcare technology company and are unable to keep pace with
the changes in the technology applicable to the healthcare industry, our products could become
obsolete and it could hurt our prospective results of operations.
The healthcare technology industry is generally characterized by intense, rapid changes, often
resulting in product obsolescence or short product life cycles. If we consummate an acquisition of
a healthcare technology company, then our ability to compete after consummation of a business
combination will be dependent upon our ability to keep pace with changes in healthcare technology.
If we are ultimately unable to adapt our operations as needed, our financial condition following a
business combination will be adversely affected.
If we are unable to obtain and maintain protection for the intellectual property relating to our
technologies and products or services following a business combination, the value of our
technology, products or services may decline, which could adversely affect our business.
Intellectual property rights in the fields of biotechnology, pharmaceuticals, diagnostics and
medical devices are highly uncertain and involve complex legal and scientific questions. At the
same time, the profitability of companies in these fields generally depends on sustained
competitive advantages and differentiation that are based in part on intellectual property. Our
success following a business combination will depend in large part on our ability to obtain and
maintain protection in the United States and other countries for the intellectual property covering
or incorporated into our technology, products or services. We may not be able to obtain additional
issued patents relating to our technology, products or services. Even if issued, patents may be
challenged, narrowed, invalidated or circumvented, which could limit our ability to stop
competitors from marketing similar products or services, limit the length of term of patent
protection we may have for our products or services, and expose us to substantial litigation costs
and drain our resources. Changes in either patent laws or in interpretations of patent laws in the
United States and other countries may diminish the value of our intellectual property or narrow the
scope of our patent protection.
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.
30
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.
The healthcare industry may not accept our products or services, if any, or buy such products or
services, which would adversely affect our financial results.
We will have to attract customers throughout the healthcare industry or our financial results
will be adversely affected. To date, the healthcare industry has been resistant to adopting
certain new products and services, such as information technology solutions.
We believe that we will have to gain significant market share with our prospective products
and services before our competitors introduce alternative products or services with features
similar to ours. Any significant shortfall in the number of clients using our prospective products
or services would adversely affect our financial results.
Our prospective business may rely on third-party manufacturers or subcontractors to assist in
producing our healthcare products, and any delay or failure to perform by these third parties may
adversely affect our business.
Our prospective business may use third-party manufacturers to produce medical devices or other
healthcare products or product components. This arrangement affords less control over the
reliability of supply, quality and price of products or product components. Our target company may
risk disruptions in its supply of key products or components if its suppliers fail to perform
because of strikes, natural disasters or other factors beyond the control of our prospective
business. Products or components that are supplied by a third-party manufacturer may not perform
as expected, and these performance failures may adversely affect our business.
If our prospective business infringes on the rights of third parties, we could be prevented from
selling products, forced to pay damages, and may have to defend against litigation.
In the event that the products, methods, processes or other technologies of our prospective
business are claimed to infringe the proprietary rights of other parties, we could incur
substantial costs and may be required to:
|
|
•
|
|
obtain licenses, which may not be available on commercially reasonable terms, if at
all;
|
|
|
|
|
•
|
|
abandon an infringing product, process or technology;
|
|
|
|
|
•
|
|
redesign our products, processes or technologies to avoid infringement;
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|
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|
•
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|
stop using the subject matter claimed in the patents held by others;
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|
•
|
|
defend litigation or administrative proceedings; or
|
|
|
|
|
•
|
|
pay damages.
|
31
If we complete a business combination that involves a target focused on pharmaceutical compounds or
biotechnology therapeutics, we may not be able to commercialize our product candidates.
Before obtaining regulatory approval for the sale of drug product candidates, pharmaceutical
and biotechnology therapeutic companies must conduct, at their own expense, extensive preclinical
tests and clinical trials to demonstrate the safety and efficacy in humans of their product
candidates. Preclinical and clinical testing is expensive, is difficult to design and implement,
necessarily involves substantial cooperation with and reliance on third parties, can take many
years to complete and is uncertain as to outcome. Success in preclinical testing and early
clinical trials does not ensure that later clinical trials will be successful, and interim results
of a clinical trial do not necessarily predict final results. A failure of one or more clinical
trials can occur at any stage of testing.
Our failure to obtain and maintain regulatory approval for a product candidate following a
business combination will prevent us from commercializing it. Product candidates and the
activities associated with their development and commercialization, including their testing,
manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion,
sale and distribution, will be subject to comprehensive regulation by the FDA and other United
States regulatory agencies and by comparable authorities in other countries. Securing approval
requires the submission of extensive preclinical and clinical data, information about product
manufacturing processes and inspection of facilities and supporting information for each
therapeutic indication to establish the product candidate’s safety and efficacy. Varying
interpretations of the data obtained from preclinical and clinical testing could delay, limit or
prevent regulatory approval of a product candidate. The process of obtaining and maintaining
regulatory approvals may vary and involves substantial regulatory discretion, is expensive, and
often takes many years, if approval is obtained at all.
We will also have to rely on third parties for the production of clinical and commercial
quantities of drug product candidates. There are a limited number of manufacturers operating under
the FDA’s current Good Manufacturing Practices, or cGMP, regulations that will be both capable of
manufacturing our products and willing to do so. These manufacturers are subject to inspection to
ensure strict compliance with cGMP regulations and other governmental regulations and corresponding
foreign standards. We will not be certain that our manufacturers will be able to comply with these
regulations and standards and will not control their compliance, while we will risk regulatory
sanctions, liabilities and penalties if they fail to comply. Our dependence upon others for the
manufacture of product candidates and products may adversely affect our future profits and our
ability, on a timely and competitive basis, both to develop product candidates and to commercialize
any products that receive regulatory approval.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Facilities
We do not own any real estate or other physical properties. We currently maintain our
executive offices at 121 Alhambra Plaza, Suite 1100, Coral Gables, Florida 33134. The cost for
this space is included in the $7,500 per-month fee MBFHP charges us for general and administrative
services pursuant to a letter agreement between us and MBFHP. The agreement provides for a term
that terminates on the earlier of our consummation of a business combination or our liquidation.
We believe that based on rents and fees for similar services in the Miami, Florida area that the
fee charged by MBFHP is at least as favorable as we could have obtained from an unaffiliated party.
We consider our existing 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.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of our shareholders during the fourth quarter of the
fiscal year ended December 31, 2008.
32
PART II
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Item 5.
|
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Our units, common stock and warrants are listed on the NYSE Alternext US (the “Exchange”)
under the symbols “MBH.U,” “MBH” and “MBH.WS,” respectively. The following table sets forth the
range of high and low sales prices for the units, common stock and warrants for the periods
indicated since the units commenced public trading on April 18, 2007, and since the common stock
and warrants commenced public trading separately on July 2, 2007:
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|
|
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|
|
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|
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|
|
|
|
|
|
Units
|
|
|
Common Stock
|
|
|
Warrants
|
|
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|
|
High
|
|
|
Low
|
|
|
High
|
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|
Low
|
|
|
High
|
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|
Low
|
|
|
2008:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
8.09
|
|
|
$
|
7.50
|
|
|
$
|
7.95
|
|
|
$
|
7.50
|
|
|
$
|
0.22
|
|
|
$
|
0.00
|
|
|
Third Quarter
|
|
$
|
8.25
|
|
|
$
|
7.90
|
|
|
$
|
8.08
|
|
|
$
|
7.80
|
|
|
$
|
0.39
|
|
|
$
|
0.09
|
|
|
Second Quarter
|
|
$
|
8.15
|
|
|
$
|
7.55
|
|
|
$
|
7.95
|
|
|
$
|
7.52
|
|
|
$
|
0.44
|
|
|
$
|
0.20
|
|
|
First Quarter
|
|
$
|
8.53
|
|
|
$
|
7.90
|
|
|
$
|
7.80
|
|
|
$
|
7.65
|
|
|
$
|
0.77
|
|
|
$
|
0.24
|
|
|
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Fourth Quarter
|
|
$
|
8.50
|
|
|
$
|
8.22
|
|
|
$
|
7.75
|
|
|
$
|
7.48
|
|
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
Third Quarter
|
|
$
|
8.48
|
|
|
$
|
8.10
|
|
|
$
|
7.69
|
|
|
$
|
7.50
|
|
|
$
|
0.91
|
|
|
$
|
0.70
|
|
|
Second Quarter
|
|
$
|
8.41
|
|
|
$
|
8.02
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
On February 10, 2009, we received notice from the Exchange indicating that the Company was
below certain additional continued listing standards of the Exchange, specifically that we had not
held an annual meeting of stockholders in 2008, as set forth in Section 704 of the Exchange’s
Company Guide.
The notification from the Exchange indicates that we have until March 10, 2009 to submit a
plan advising the Exchange of action it has taken, or will take, that would bring the Company into
compliance with all continued listing standards by August 11, 2009. Upon receipt of our plan, which
we timely filed with the Exchange on March 10, 2009, the Exchange will evaluate the plan and make a
determination as to whether the Company has made a reasonable demonstration in the plan of an
ability to regain compliance with the continued listing standards, in which case the plan will be
accepted. If accepted, we will be able to continue its listing, during which time we will be
subject to continued periodic review by the Exchange’s staff. If our plan is not accepted, the
Exchange could initiate delisting procedures against us.
Holders of Common Equity
As of March 13, 2009, we had two stockholders of record of our outstanding common stock, two
holders of record of our outstanding units, and two holders of record of our outstanding warrants.
Dividend Policy
We have not paid any dividends on our common stock to date. 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 of Directors does not anticipate declaring any dividends in the foreseeable
future. The payment of dividends, if any, will be contingent upon our revenues and earnings, if
any, capital requirements, and general financial condition. We do not intend to pay dividends
prior to the 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 and subject to
any restrictions in our debt agreements.
33
Item 6. Selected Financial Data
Results of Operations
The following table sets forth selected historical financial information derived from our
audited financial statements included elsewhere in this Report for the period from June 2, 2006
(inception) to December 31, 2006, for the year ended December 31, 2007, for the year ended December
31, 2008 and for the period from June 2, 2006 (inception) to December 31, 2008. The following data
should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and our financial statements including the notes thereto, included elsewhere
in this Annual Report on Form 10-K.
34
Statement of Operations Information:
|
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
June 2, 2006
|
|
|
|
|
|
|
|
|
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|
June 2, 2006
|
|
|
|
|
(date of inception)
|
|
|
|
|
|
|
|
|
|
|
(date of inception)
|
|
|
|
|
through
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
through
|
|
|
|
|
December 31, 2006
|
|
|
December 31, 2007
|
|
|
December 31, 2008
|
|
|
December 31, 2008
|
|
|
Expenses
|
|
$
|
(52,088
|
)
|
|
$
|
(467,277
|
)
|
|
$
|
(4,126,425
|
)
|
|
$
|
(4,645,790
|
)
|
|
Net loss before interest
income
|
|
|
(52,088
|
)
|
|
|
(467,277
|
)
|
|
|
(4,126,425
|
)
|
|
|
(4,645,790
|
)
|
|
Interest income (expense),
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) income, net
|
|
|
(5,304
|
)
|
|
|
6,186,811
|
|
|
|
4,417,251
|
|
|
|
10,598,758
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
(2,125,395
|
)
|
|
|
(109,438
|
)
|
|
|
(2,234,833
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(57,392
|
)
|
|
$
|
3,594,139
|
|
|
$
|
181,388
|
|
|
$
|
3,718,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Net (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
0.18
|
|
|
$
|
0.01
|
|
|
$
|
0.20
|
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.15
|
|
|
$
|
0.01
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,687,500
|
|
|
|
19,765,668
|
|
|
|
26,593,750
|
|
|
|
19,002,784
|
|
|
Diluted
|
|
|
4,687,500
|
|
|
|
23,633,342
|
|
|
|
32,617,565
|
|
|
|
22,844,423
|
|
Balance Sheet Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Cash and cash equivalents
|
|
$
|
110,158
|
|
|
$
|
957,753
|
|
|
Restricted cash held in Trust Fund
|
|
|
177,107,455
|
|
|
|
175,501,579
|
|
|
Working capital
|
|
|
121,045,727
|
|
|
|
169,991,188
|
|
|
Total Assets
|
|
|
179,179,990
|
|
|
|
176,576,647
|
|
|
Deferred underwriters’ fee
|
|
|
—
|
|
|
|
6,037,500
|
|
|
Stockholders’ equity
|
|
|
122,809,011
|
|
|
|
117,420,799
|
|
35
Quarterly Results of Operations
(unaudited)
The following table sets forth unaudited operating data for each of the quarters of the year
ended December 31, 2008, December 31, 2007 and the period from June 2, 2006 (inception) to December
31, 2006. This quarterly information has been prepared on the same basis as the annual financial
statements of the Company and, in the opinion of management, reflects all significant adjustments
(consisting primarily of normal recurring adjustments) necessary for a fair presentation of results
of operations for the periods presented.
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
|
|
Net income (loss)
|
|
$
|
988,985
|
|
|
$
|
717,128
|
|
|
$
|
(1,969,424
|
)
(3)
|
|
$
|
444,699
|
(4)
|
|
Basic income (loss) per share (2)
|
|
|
0.04
|
|
|
|
0.03
|
|
|
|
(0.07
|
)
|
|
|
0.02
|
|
|
Diluted income (loss) per share (2)
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
(0.07
|
)
|
|
|
0.01
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
|
|
Net income (loss)
|
|
$
|
(30,671
|
)
|
|
$
|
948,577
|
(1)
|
|
$
|
1,286,936
|
(1)
|
|
$
|
1,389,297
|
(1)
|
|
Basic income (loss) per share (2)
|
|
|
(.01
|
)
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
Diluted income (loss) per share (2)
|
|
|
(.01
|
)
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
0.04
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
$
|
(10,071
|
)
|
|
$
|
(36,988
|
)
|
|
$
|
(10,333
|
)
|
|
Basic loss per share
|
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
Diluted loss per share
|
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
|
|
|
(1)
|
|
In April 2007, the Company completed its IPO, raising gross proceeds of $172.5 million.
|
|
|
|
(2)
|
|
The sum of the quarters is not meant to agree to the year-to-date amount due to calculations on
a quarterly basis for purposes of this presentation.
|
|
|
|
(3)
|
|
In September 2008, the Company wrote-off approximately $4,021,000 in acquisition related costs.
|
|
|
|
(4)
|
|
During the fourth quarter of 2008, the Company negotiated discounts with certain acquisition
related vendors resulting in a net reduction in acquisition related costs of approximately
$442,000.
|
|
|
|
|
|
Item 7.
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
You should read the following discussion and analysis of our financial condition and results
of operations together with “Selected Financial Data” and our financial statements and notes
thereto that appear elsewhere in this Annual Report on
Form 10-K
. This discussion and analysis
contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual
results may differ materially from those anticipated in these forward-looking statements as a
result of various factors, including, but not limited to, those presented under “Risks Relating to
the Company” included in Item 1A and elsewhere in this Annual Report on
Form 10-K
.
Overview
References to “we”, “us”, or the “Company” are to MBF Healthcare Acquisition, Corp. Reference
to “MBFHP” are to MBF Healthcare Partners, L.P., an affiliate of our officers and directors.
We are a blank check company incorporated in Delaware on June 2, 2006 in order to serve as a
vehicle for the acquisition of an operating business through a merger, capital stock exchange,
stock purchase, asset acquisition, or other similar business combination.
36
On April 13, 2007, MBFHP purchased an aggregate of 343,750 Private Units from us at a price of
$8.00 per unit and 4,250,000 Private Placement Warrants at a purchase price of $1.00 per warrant,
for an aggregate
purchase price of $7,000,000. Each Private Unit consists of one share of our common stock,
$0.0001 par value, and one redeemable common stock purchase warrant (each, a “Unit Warrant” and
together with the Private Placement Warrants, the “Private Warrants”). Each Private Warrant
entitles the holder to purchase from us one share of common stock at an exercise price of $6.00
commencing on the completion of a Business Combination with a target business or the distribution
of the Trust Account (as hereinafter defined), and expiring on April 17, 2011. At our sole
discretion, the Private Warrants will be redeemable at a price of $0.01 per Private Warrant upon 30
days’ notice after the Private Warrants become exercisable, only in the event that the last sale
price of the common stock is at least $11.50 per share for any 20 trading days within a 30-day
trading period ending on the third day prior to the date on which the notice of redemption is
given. The Private Warrants are identical to the Warrants, except that (1) upon a redemption of
Private Warrants, MBFHP will have the right to exercise the Private Warrants on a cashless basis
and (2) upon the exercise of the Private Warrants, MBFHP will receive unregistered shares of common
stock.
On April 23, 2007, we completed our initial public offering (“IPO”) of 18,750,000 units
(“Units”), consisting of one share of common stock and one warrant, and on May 8, 2007, we
completed the closing of an additional 2,812,500 Units that were subject to the underwriters’
over-allotment option. The 21,562,500 Units sold in the IPO, including the 2,812,500 Units subject
to the over-allotment option, were sold at an offering price of $8.00 per Unit, generating total
gross proceeds of $172,500,000. Of the net proceeds after offering expenses of the IPO and the
Private Placement, $170,962,500 was placed in a trust account maintained at Continental Stock
Transfer & Trust Company (the “Trust Account”). Except for payment of taxes, the proceeds will not
be released from the Trust Account until the earlier of (i) the completion of a Business
Combination or (ii) our liquidation. Public stockholders voting against our initial business
combination will be entitled to convert their common stock into a pro rata share of the amount held
in the Trust Account (including the amount held in the Trust Account representing the deferred
portion of the underwriters’ discounts and commissions), including any interest earned on their pro
rata share (net of taxes payable), if the business combination is approved and consummated. Public
stockholders who convert their stock into a pro rata share of the Trust Account will continue to
have the right to exercise any warrants they may hold.
Each warrant entitles the registered holder to purchase one share of our common stock at a
price of $6.00 per share, commencing on the completion of the initial business combination. None
of the Warrants issued in the Public Offering will be exercisable and we will not be obligated to
issue shares of common stock unless at the time of exercise a prospectus relating to common stock
issuable upon exercise of these Warrants is current and the common stock has been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the Warrants. In no event will we be required to net cash settle any Warrant exercise. Under
the terms of the Warrant Agreement, we have agreed to use its reasonable best efforts to maintain a
current prospectus relating to common stock issuable upon exercise of the Warrants issued in the
Public Offering until the expiration of these Warrants. However, that we make no assurance that it
will be able to do so and, if we do not maintain a current prospectus relating to the common stock
issuable upon exercise of the Warrants issued in the Public Offering, holders will be unable to
exercise their Warrants and we will not be required to settle any such Warrant exercise. If the
prospectus relating to the common stock issuable upon the exercise of these Warrants is not
current, or if the common stock is not qualified or exempt from qualification in jurisdictions in
which the holders of the Warrants reside, these Warrants may have no value, the market for these
Warrants may be limited and these Warrants may expire worthless. If a registration statement is
not effective for any unexercised Warrant, then the purchaser of Units purchased in the Public
Offering will be deemed to have paid the full purchase price of $8.00 for the one share of our
common stock included in the Unit. Even if the prospectus relating to the common stock issuable
upon exercise of the Warrants issued in the Public Offering is not current, the Private Warrants
will be exercisable for unregistered shares of common stock. If and when the Warrants become
redeemable by us, we may exercise its redemption right even if the Warrants are not exercisable by
their holders.
In connection with our IPO, we paid the underwriters additional underwriting fees of
$6,037,500, including units exercised with the over-allotment option which, the underwriters have
agreed to defer until the consummation of our initial business combination. In the event that an
initial business combination occurs, we expect that such fees will be paid out of the proceeds held
in the Trust Account.
37
Recent Developments
On February 6, 2008, we entered into a Stock Purchase Agreement (the “Stock Purchase
Agreement”) with Critical Homecare Solutions Holdings, Inc. (“CHS”), a Delaware corporation,
Kohlberg Investors V, L.P. (the “Seller’s Representative”) and the other stockholders of CHS (each,
together with the Seller’s Representative, the “Seller” and collectively the “Sellers”).
On October 31, 2008, we, CHS and the Sellers mutually terminated the Stock Purchase Agreement.
Currently, we are not in negotiations with any qualified acquisition targets, and we anticipate we
will not be able to complete a business combination by April 23, 2009. As a result, our corporate
existence will terminate and our Amended and Restated Certificate of Incorporation requires that we
promptly initiate procedures to liquidate and distribute our assets on April 23, 2009.
Results Of Operations And Known Trends Or Future Events
We have neither engaged in any operations nor generated revenues to date. Since our
inception, our only activities have been organizational activities and those necessary to prepare
for our IPO, and thereafter, certain expenses related to pursuing a target business. We will not
generate any operating revenues until the completion of a business combination, if any. We have
generated non-operating income in the form of interest income on cash and cash equivalents and our
other short term investments. Since our IPO, we have been actively engaged in sourcing a suitable
business combination candidate. We have met with target companies, service professionals and other
intermediaries to discuss our company, the background of our management and our combination
preferences. In the course of these discussions, we have also spent time explaining the capital
structure of our IPO, the business combination approval process and the timeline under which we may
operate before the proceeds of our IPO are returned to investors.
Critical Accounting Policies and Significant Estimates
Our discussion and analysis of our financial condition and results of operations are based
upon our financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. On an ongoing basis, we re-evaluate all of our estimates. We
base our estimates on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may materially differ from these estimates under different assumptions or
conditions as additional information becomes available in future periods.
Management has discussed the development and selection of critical accounting estimates with
the Audit Committee of the Board of Directors and the Audit Committee has reviewed our disclosure
relating to critical accounting estimates in this Annual Report.
38
Results Of Operations, Financial Condition And Liquidity
The following table sets forth the results of operations for the year ended December 31, 2008,
the year ended December 31, 2007, the period from June 2, 2006 (inception) through December 31,
2006 and for the period from June 2, 2006 (inception) through December 31, 2008.
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June 2,
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2006
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June 2, 2006
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(date of
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(date of
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inception)
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inception)
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Year Ended
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Year Ended
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through
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through
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December 31,
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December 31,
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December
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December
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2008
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2007
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31, 2006
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31, 2008
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Formation and operating costs
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$
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(547,355
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)
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$
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(467,277
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)
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$
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(52,088
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)
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$
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(1,066,720
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)
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Write-off of deferred acquisition
costs
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(3,579,070
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)
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—
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—
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(3,579,070
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)
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Interest income (expense)
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4,417,251
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6,186,811
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(5,304
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)
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10,598,758
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Income (loss) before income tax
provision
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290,826
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5,719,534
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(57,392
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)
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5,952,968
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Provision for income taxes
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(109,438
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)
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(2,125,395
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)
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—
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(2,234,833
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)
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Net income (loss)
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$
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181,388
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$
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3,594,139
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$
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(57,392
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)
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$
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3,718,135
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Weighted average shares outstanding:
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Basic
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26,593,750
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19,765,668
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4,687,500
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19,002,784
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Diluted
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32,617,565
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23,633,342
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4,687,500
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22,844,423
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Net income (loss) per share:
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Basic
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$
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0.01
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$
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0.18
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$
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(0.01
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)
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$
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0.20
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Diluted
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$
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0.01
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$
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0.15
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$
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(0.01
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)
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$
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0.16
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Our formation and operating expenses totaled $547,355, $467,277, $52,088, respectively, for
the year ended December 31, 2008, the year ended December 31, 2007, and for the period from
inception to December 31, 2006. Operating expenses were comprised primarily of insurance,
accounting and legal expenses.
For the year ended December 31, 2008, write-off of deferred acquisition costs included legal,
accounting, and other direct costs in relation to the CHS acquisition.
We had interest income earned on cash held in the Trust Account of $4,436,509 and $6,138,829,
respectively for the years ended December 31, 2008 and December 31, 2007. Interest income earned
on funds held in the Trust Account associated with common stock subject to possible conversion and,
except for amounts equal to any taxes payable by us relating to such interest earned, will not be
released from the Trust Account until the earlier of the completion of a business combination or
the expiration of the time period during which we may complete a business combination. The
remaining interest income was primarily related to funds held outside of the Trust Fund.
We have provided for an effective tax rate of 38% for the years ended December 31, 2008 and
December 31, 2007.
We expect to use substantially all of the proceeds from our IPO 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 account as well as any other net proceeds not expended
will be used to finance operations of the target business. On August 7, 2008, the Company entered
into a $300,000 non-revolving line of credit facility evidenced by a letter agreement with MBF
Healthcare Management, LLC, a related party. The proceeds of this line of credit are being used
for purposes of funding our operating costs through April 2009. The line of credit bears interest
at a rate of 5% per annum and is payable upon the earlier of consummation of a business combination
or the dissolution of the Company. On October 31, 2008, the line of credit was increased to
$2,000,000. On February 5, 2009, the line of credit was increased to $3,000,000. The balance on the
line of credit as of December 31, 2008 is $2,386,795. As of March 13, 2009, the balance on the
line of credit is $2,710,271. Until we enter into a business combination, we expect to use our
available resources for general working capital as well as legal, accounting and due diligence
expenses for structuring and negotiating a business combination and legal and accounting fees
relating to our Securities and Exchange Commission reporting obligations.
39
Impact of Recently Issued Accounting Pronouncements
In September 2006, FASB issued SFAS No. 157,
Fair Value Measurements
(“SFAS No. 157”)
.
SFAS
No. 157 defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 does not impose fair value measurements on
items not already accounted for at fair value; rather it applies, with certain exceptions, to other
accounting pronouncements that either require or permit fair value measurements. Under SFAS No.
157, fair value refers to the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants in the principal or most
advantageous market. The standard clarifies that fair value should be based on the assumptions
market participants would use when pricing the asset or liability. In February 2008, the FASB
issued FASB Staff Position No. 157-2,
Effective Date of FASB Statement No. 157
(“FSP FAS 157-2”),
which delays the effective date of SFAS No. 157 for all non-financial assets and liabilities,
except those that are recognized or disclosed at fair value in the financial statements on a
recurring basis, until fiscal years beginning after November 15, 2008. These non-financial items
include assets and liabilities such as non-financial assets and liabilities assumed in a business
combination, reporting units measured at fair value in a goodwill impairment test and asset
retirement obligations initially measured at fair value. The Company adopted the provisions of SFAS
No. 157 for assets and liabilities recognized at fair value on a recurring basis effective January
1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on the Company’s
financial statements.
This standard requires that a Company measure its financial assets and liabilities using
inputs from the three levels of the fair value hierarchy. A financial asset or liability
classification within the hierarchy is determined based on the lowest level input that is
significant to the fair value measurement. The three levels are as follows:
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o
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Level 1 — Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
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o
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Level 2 — Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs other
than quoted prices that are observable for the asset or liability and
inputs that are derived principally from or corroborated by observable
market data by correlation or other means (market corroborated
inputs).
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o
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Level 3 — Unobservable inputs reflect the Company’s judgments about
the assumptions market participants would use in pricing the asset or
liability since limited market data exists. The Company develops these
inputs based on the best information available, including the
Company’s own data.
|
As of December 31, 2008, the Company has no financial assets or liabilities that are measured at
fair value, other than restricted cash.
On December 4, 2007, the FASB issued SFAS No. 141R (revised 2007)
Business Combinations
, which
will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will
be required to recognize all the assets acquired and liabilities assumed in a transaction at the
acquisition-date fair value with limited exceptions. SFAS No. 141R retains the purchase method of
accounting for acquisitions, but requires a number of changes, including expensing acquisition
costs as incurred, capitalization of in-process research and development at fair value, recording
noncontrolling interests at fair value and recording acquired contingent liabilities at fair value.
SFAS No. 141R will apply prospectively to business combinations with an acquisition date on or
after the beginning of the first annual reporting period beginning after December 15, 2008. Both
early adoption and retrospective application are prohibited. SFAS No. 141R will have an impact on
the accounting for the Company’s business combinations once adopted, but the effect depends on the
terms of the Company’s business combinations subsequent to December 31, 2008, if any.
A variety of proposed or otherwise potential accounting standards are currently under study by
standard-setting organizations and various regulatory agencies. Because of the tentative and
preliminary nature of these proposed standards, management has not determined whether
implementation of such proposed standards would be material to the Company’s financial statements.
40
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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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 we do not consummate a suitable business combination 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 may be invested by the trustee only in United States “government securities” within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days or
less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940. Given our limited risk in our exposure to government securities
and money market funds, we do not view the interest rate risk to be significant.
We have not engaged in any hedging activities since our inception. We do not currently expect
to engage in any hedging activities.
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Item 8.
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Financial Statements and Supplementary Data
|
Reference is made to the Index to Financial Statements that appears on page F-1 of this Annual
Report. The Report of Independent Registered Public Accounting Firm, the Financial Statements and
the Notes of Financial Statements, listed in the Index to Financial Statements, which appear
beginning on page F-2 of this Annual Report, are incorporated by reference into this Item 8.
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Item 9.
|
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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None.
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Item 9A.
|
|
Controls and Procedures
|
Disclosure controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in company reports filed or submitted under the
Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange Commission’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in company reports filed or submitted
under the Exchange Act is accumulated and communicated to management, including our chief executive
officer, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive officer
carried out an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2008. Based upon his evaluation, and as a result of the
material weakness in internal control over financial reporting as discussed below, he concluded
that our disclosure controls and procedures were not effective.
41
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of MBF Healthcare Acquisition Corp. is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal control over financial reporting is a
process designed by, or under the supervision of, the Company’s chief executive and chief financial
officer and effected by the Company’s board of directors, management and other personnel 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 and includes those policies and procedures that:
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•
|
|
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
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|
|
•
|
|
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
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|
•
|
|
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
|
Because of inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Projections of any evaluation of effectiveness to future periods are subject
to the risks that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate. A control system, no matter
how well designed and operated, can provide only reasonable, but not absolute, assurance that the
control system’s objectives will be met. The design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their
costs.
Management assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2008. In making this assessment, management used the criteria set
forth in
Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO
”).
As a result of our assessment, management identified a
material weakness in internal control over financial reporting relating to certain information
technology applications and general computer controls which are considered to have an impact on
financial reporting and which resulted in a more than reasonable possibility that material
misstatements in our financial statements would not be prevented or detected. Specifically, we
lacked effective controls with respect to access to the Company’s accounting information system. A
material weakness is a control deficiency, or combination of control deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will not be prevented or detected on a
timely basis. Based on this assessment, management concluded that the Company’s internal control
over financial reporting was not effective as of December 31, 2008.
Our management has discussed the material weakness described above with our audit committee.
In an effort to remediate the identified material weakness, we will contemplate implementing
changes to our internal control over financial reporting, including upgrading our information
technology applications and general computer controls to enhance our controls with respect to
access to the Company’s accounting information system.
The Company’s independent registered public accounting firm, Grant Thornton LLP, has issued an
audit report on the Company’s internal control over financial reporting. Their report appears
below.
42
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
MBF Healthcare Acquisition, Corp.
We have audited MBF Healthcare Acquisition Corp.’s (a development stage company) (the “Company”)
internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying
Management’s Report on Internal
Control over Financial Reporting
. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed 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. A
company’s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency, or combination of control deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement
of the company’s annual or interim financial statements will not be prevented or detected on a
timely basis. The following material weakness has been identified and included in management’s
assessment:
Management identified a material weakness in internal control over financial reporting relating to
certain information technology applications and general computer controls which are considered to
have an impact on financial reporting and which resulted in a more than reasonable possibility that
material misstatements in the Company’s financial statements would not be prevented or detected.
Specifically, the Company lacked effective controls with respect to access to the Company’s
accounting information system. Based on this assessment, management concluded that the Company’s
internal control over financial reporting was not effective as of December 31, 2008.
In our opinion, because of the effect of the material weakness described above on the achievement
of the objectives of the control criteria, the Company has not maintained effective internal
control over financial reporting as of December 31, 2008, based on criteria established in
Internal
Control—Integrated Framework
issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the balance sheets of the Company as of December 31, 2008 and 2007 and the
related statements of
operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2008
and 2007, the period from June 2, 2006 (date of inception) through December 31, 2006, and the
period from June 2, 2006 (date of inception) through December 31, 2008. The material weakness
identified above was considered in determining the nature, timing, and extent of audit tests
applied in our audit of the 2008 financial statements, and this report does not affect our report
dated March 11, 2009, which expressed an unqualified opinion with an explanatory paragraph
regarding the Company’s ability to continue as going concern on those financial statements.
/s/ Grant Thornton LLP
Miami, Florida
March 11, 2009
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Item 9B.
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Other Information
|
Not applicable.
43
PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
|
Our current directors and executive officers are as follows:
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Name
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Age
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Position
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Mike B. Fernandez
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55
|
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|
Chairman and Chief Executive Officer
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Jorge L. Rico
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43
|
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Senior Vice President, Chief Operating Officer and Director
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Marcio C. Cabrera
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44
|
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Senior Vice President, Chief Financial Officer and Director
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Antonio L. Argiz
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55
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Director
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Roger J. Medel, M.D.
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61
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Director
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Carlos A. Saladrigas
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59
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Director
|
Below is a summary of the business experience of each of our executive officers and directors.
Mike B. Fernandez
became our Chairman and Chief Executive Officer upon our formation in June
2006. Mr. Fernandez has served as Chairman and is a Managing Director of MBF Healthcare Partners,
L.P., a healthcare private equity firm, since its formation in April 2005. Mr. Fernandez served as
Chief Executive Officer of CAC-Florida Medical Centers, LLC, a group of ten medical clinics,
CarePlus Health Plans, Inc., a health maintenance organization serving Medicare-eligible
individuals in South Florida, and PrescribIT Rx, LLC (f/k/a CarePlus Pharmacies, LLC), a pharmacy
company, from December 2002 until February 2005 when all three companies were sold to Humana Inc.
(NYSE: HUM). Mr. Fernandez founded and served as Chief Executive Officer of Physicians Healthcare
Plans, Inc., a full service health maintenance organization, from 1993 until December 2002 when it
was sold to AMERIGROUP Corporation (NYSE: AGP), a managed health services company. Mr. Fernandez
has also founded and is a majority owner of Healthcare Atlantic, Inc., parent company for Atlantic
Dental, Inc., a dental benefit company, and Hospitalists of America, LLC, a hospitalists service
provider. Mr. Fernandez has 30 years of experience in the healthcare industry in the areas of
operations, health insurance programs, managed care solutions, business development and
investments. Mr. Fernandez currently sits on the boards of Pediatrix Medical Group, Inc. (NYSE:
PDX), a provider of newborn, maternal-fetal and pediatric physician services, Healthcare Atlantic,
Inc., HSC Health & Wellness, Inc., a health benefit discount plan, and Medical Specialties
Distributors, LLC, a distributor of medical supplies and bio-med equipment, as well as several
charitable organizations.
Jorge L. Rico
became our Senior Vice President, Chief Operating Officer and a member of our
Board of Directors upon our formation in June 2006. Mr. Rico has served as a Managing Director of
MBF Healthcare Partners, L.P., since its formation in April 2005. From July 2004 until April 2005,
Mr. Rico served as a private consultant. Mr. Rico served as President of Division III, of
Psychiatric Solutions, Inc. (Nasdaq: PSYS), a provider of inpatient behavioral healthcare services,
from June 2003 to July 2004. Mr. Rico served as Executive Vice President and Chief Operating
Officer of Ramsay Youth Services, Inc. (f/k/a Ramsay Health Care, Inc. (Nasdaq: RHCI)), a provider
of behavioral healthcare treatment programs and services focused on at-risk and special-needs
youth, from February 1997 until it was sold in June 2003 to Psychiatric Solutions. Mr. Rico has 20
years of experience in the healthcare industry in the areas of operations, health plan
administration, hospital administration, business development and information technology. Mr. Rico
currently sits on the Board of Directors of Hospitalists of America, LLC and Medical Specialties
Distributors, LLC.
Marcio C. Cabrera
became our Senior Vice President, Chief Financial Officer and a member of
our Board of Directors upon our formation in June 2006. Mr. Cabrera has served as a Managing
Director of MBF Healthcare Partners, L.P. since its formation in January 2005. From July 2004
until April 2005, Mr. Cabrera served as a private consultant. From July 1998 to June 2004, Mr.
Cabrera held various management positions at Ramsay Youth
Services, Inc. (and at Psychiatric Solutions, Inc. (Nasdaq: PSYS) subsequent to the sale of
Ramsay Youth Services, Inc. to Psychiatric Solutions, Inc. in June 2003). His various positions
included Executive Vice President, Chief Financial Officer and Treasurer. Mr. Cabrera currently
sits on the boards of Hospitalists of America, LLC, Medical Specialties Distributors, LLC and
Healthcare Atlantic, Inc.
44
Antonio L. Argiz
became a member of our Board of Directors upon our formation in June 2006.
Since 1997, Mr. Argiz has served as Managing Partner of Morrison, Brown, Argiz & Farra, a public
accounting firm. Mr. Argiz previously served on the American Institute of Certified Public
Accountant’s (AICPA) Nominations Committee, the governing body of the AICPA (The Council) and
served as the Chairman of the Florida Board of Accountancy.
Roger J. Medel, M.D.
became a member of our Board of Directors upon our formation in June
2006. Dr. Medel has been a director of Pediatrix Medical Group, Inc. (NYSE: PDX) since he
co-founded the company in 1979 with Dr. Gregory Melnick. Dr. Medel served as Pediatrix’s President
until May 2000 and as Chief Executive Officer until December 2002. In March 2003, Dr. Medel
reassumed the position of President, serving in that position until May 2004, and became Chief
Executive Officer, a position in which he continues to serve today. Dr. Medel is a member of the
Advisory Committee of MBF Healthcare Partners, L.P. Dr. Medel has been an instructor in pediatrics
at the University of Miami and participates as a member of several medical and professional
organizations. Dr. Medel also holds a Masters Degree in Business Administration from the
University of Miami.
Carlos A. Saladrigas
became a member of our Board of Directors upon our formation in June
2006. Mr. Saladrigas has been the Chairman of the Board of Premier American Bank, a banking and
financial services company, since 2002. In 2002 he retired as Chief Executive Officer of ADP
TotalSource (previously The Vincam Group, Inc.), a human resources outsourcing company that
provides services to small and mid-sized businesses. He currently sits on the Boards of Directors
of Progress Energy, Inc. (NYSE: PGN), a diversified energy holding company, and Advance Auto Parts,
Inc. (NYSE: AAP), a retailer of automotive parts. Mr. Saladrigas is a member of the Advisory
Committee of MBF Healthcare Partners, L.P.
Number and Terms of Directors
Our Board of Directors has six directors and is divided into three classes with only one class
of directors being elected in each year and each class serving a three-year term. The term of
office of the first class of directors, consisting of Jorge Rico and Antonio Argiz, will expire at
our first annual meeting of stockholders. The term of office of the second class of directors,
consisting of Marcio Cabrera and Roger Medel, will expire at the second annual meeting. The term
of office of the third class of directors, consisting of Mike Fernandez and Carlos Saladrigas, will
expire at the third annual meeting. Each of our current directors has served on our Board of
Directors since June 2006.
Our directors will play a key role in structuring, negotiating and consummating an
acquisition. None of our directors has been a principal of or affiliated with a public blank check
company that executed a business plan similar to our business plan and none of our directors is
currently affiliated with such an entity.
Director Independence
Our Board of Directors has determined that Messrs. Argiz and Saladrigas are “independent
directors” as defined in NYSE Alternext US listing standards and applicable SEC rules. NYSE
Alternext US listing standards require that a majority of our Board of Directors be independent.
However, since we have listed on NYSE Alternext US in connection with our IPO, we are not required
to meet this requirement until one year from our listing on NYSE Alternext US. We intend to
appoint additional members to our Board of Directors in the future to meet the requirement that a
majority of our Board of Directors be independent within one year of our listing on NYSE Alternext
US.
45
Committees of the Board of Directors
Audit Committee
Our Board of Directors has an Audit Committee that reports to the Board of Directors. Messrs.
Argiz, Saladrigas and Cabrera serve as members of our Audit Committee. Under NYSE Alternext US
listing standards and applicable SEC rules, we are required to have three members of the Audit
Committee, all of whom must be independent. However, since we have listed on NYSE Alternext US in
connection with our IPO, we are permitted to have one independent member at the time of listing, a
majority of independent members within 90 days of listing and all independent members within one
year.
Currently, two members of the Audit Committee are independent, Messrs. Argiz and Saladrigas.
We intend to replace Mr. Cabrera with an independent member in the future to meet the requirement
that we have three independent members on our Audit Committee.
Mr. Argiz serves as the chairman of the Audit Committee. Each member of the Audit Committee
is financially literate and our Board of Directors has determined that Mr. Argiz qualifies as an
“audit committee financial expert” as defined in applicable SEC rules. The Audit Committee is
responsible for meeting with our independent accountants regarding, among other issues, audits, and
adequacy of our accounting and control systems.
In addition, the Audit Committee will monitor compliance on a quarterly basis. If any
noncompliance is identified, then the Audit Committee will be charged with the responsibility to
immediately take all necessary action to rectify such noncompliance or otherwise cause compliance.
The Audit Committee’s approval will be required for any related person transaction.
We do not have a compensation or similar committee. We anticipate that the independent
members of our Board of Directors perform the functions of a compensation committee including:
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•
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|
reviewing and approving our overall compensation strategy and policies;
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|
|
|
|
•
|
|
reviewing and approving corporate performance goals and objectives relevant to the
compensation of our executive officers and other senior management;
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|
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|
|
•
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|
determining the compensation and other terms of employment of our Chief Executive
Officer; and
|
|
|
|
|
•
|
|
reviewing and approving the compensation and other terms of employment of the other
executive officers and senior management.
|
We do not have a nominating or similar committee. The independent members of our Board of
Directors perform the functions of a nominating committee including:
|
|
•
|
|
identifying, reviewing and evaluating candidates to serve as our directors
(consistent with criteria approved by the Board of Directors);
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|
•
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|
reviewing and evaluating incumbent directors;
|
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|
|
•
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|
recommending candidates to the Board of Directors for election to the Board of
Directors; and
|
|
|
|
|
•
|
|
making recommendations to the Board of Directors regarding membership on committees
of the Board of Directors.
|
46
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act of 1934, as amended, requires our officers, directors and
persons who own more than ten percent of a registered class of our equity securities to file
reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and ten percent
stockholders are required by regulation to furnish us with copies of all Section 16(a) forms they
file. We believe that, during the most recent fiscal year, all filing requirements applicable to
our officers, directors and greater than ten percent beneficial owners were complied with.
Code of Ethics
We have adopted a code of ethics that applies to our officers, directors and employees. We
will provide a copy free of charge. To obtain a copy, write to: MBF Healthcare Acquisition Corp.,
121 Alhambra Plaza, Suite 1100, Coral Gables, Florida 33134, Attn: Jorge Rico.
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|
|
Item 11.
|
|
Executive Compensation
|
None of our executive officers or directors has received any cash compensation for services
rendered. Commencing on April 23, 2007 through the acquisition of a target business, we have paid,
and will continue to pay MBFHP, an affiliate of our officers and directors, approximately $7,500
per month for office space and certain additional general and administrative services. We believe
that, based on rents and fees for similar services in the Miami, Florida area, the fee charged by
MBFHP is at least as favorable as we could have obtained from an unaffiliated third party. This
arrangement was agreed to by MBFHP for our benefit and is not intended to provide Mr. Fernandez
with compensation in lieu of his salary. During 2008 and 2007, approximately $90,000 and $63,250
were incurred under this arrangement. Other than this $7,500 per-month fee to MBFHP, reimbursement
for out-of-pocket expenses payable to our officers and directors and reimbursement to MBF
Healthcare Management for costs arising from our officers’ and directors’ use of its corporate jet
at a cost up to $750 per person per flight, 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, including attendance at
Board of Directors meetings, prior to or in connection with a business combination. However, these
individuals will be reimbursed for any out-of-pocket expenses incurred in connection with
activities on our behalf such as identifying a potential target business and performing due
diligence on a suitable business combination. There is no limit on the amount of these
out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone
other than our board of directors, which includes persons who may seek reimbursement, or a court of
competent jurisdiction if such reimbursement is challenged. We have not reserved any specific
amount for such payments, which may have the effect of reducing the available proceeds not
deposited in the trust account for payment of our ongoing expenses and reimbursement of
out-of-pocket expenses incurred on our behalf.
In addition, since the role of present management after a business combination is uncertain,
we have no ability to determine what remuneration, if any, will be paid to those persons after a
business combination. While the role of present management after a business combination is
uncertain, our executive officers and directors who remain with us may be paid consulting,
management or other fees from the combined company with any and all amounts being fully disclosed
to 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.
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|
Item 12.
|
|
Security Ownership of Certain Beneficial Owners and Management
|
The following table sets forth information regarding the beneficial ownership of our common
stock as of March 13, 2009 by:
|
|
•
|
|
each person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;
|
|
|
|
|
•
|
|
each of our officers and directors; and
|
|
|
|
|
•
|
|
all of our officers and directors as a group.
|
47
As of March 13, 2009, we had 26,593,750 shares of common stock issued and outstanding. Unless
otherwise indicated, we believe that all persons named in the table have sole voting and investment
power with respect to all shares of common stock beneficially owned by them.
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|
|
|
|
|
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|
|
Approximate
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
Amount and Nature of
|
|
Outstanding Common
|
|
Name and Address of Beneficial Owner (2)
|
|
Beneficial Ownership (1)
|
|
Stock
|
|
|
|
Mike B. Fernandez (3)(4)(5)
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|
|
5,248,870
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|
|
|
19.7
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%
|
|
Marcio C. Cabrera(3)
|
|
|
—
|
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|
—
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|
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Jorge L. Rico(3)
|
|
|
—
|
|
|
|
—
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|
|
Antonio L. Argiz
|
|
|
—
|
|
|
|
—
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|
|
Roger J. Medel(3)
|
|
|
—
|
|
|
|
—
|
|
|
Carlos A. Saladrigas(3)
|
|
|
—
|
|
|
|
—
|
|
|
All directors and executive officers as
a group (5 individuals)
|
|
|
5,248,870
|
|
|
|
19.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
|
MBF Healthcare Partners, L.P. (4)
|
|
|
5,248,870
|
|
|
|
19.7
|
%
|
|
HBK Investments L.P. (6)
|
|
|
2,658,573
|
|
|
|
9.9
|
%
|
|
Fir Tree, Inc. (7)
|
|
|
2,265,000
|
|
|
|
8.5
|
%
|
|
QVT Financial L.P. (8)
|
|
|
2,243,284
|
|
|
|
8.4
|
%
|
|
Aldebaran Investments LLC (9)
|
|
|
2,143,426
|
|
|
|
8.1
|
%
|
|
FMR Corp. (10)
|
|
|
1,972,000
|
|
|
|
7.4
|
%
|
|
Federated Investors, Inc. (11)
|
|
|
1,875,000
|
|
|
|
7.1
|
%
|
|
Highbridge International LLC (12)
|
|
|
1,400,000
|
|
|
|
5.3
|
%
|
|
|
|
|
|
(1)
|
|
Includes shares of common stock which the person has the right to acquire within 60 days of
March ___, 2009.
|
|
|
|
(2)
|
|
Unless otherwise noted, the business address of each of the following is 121 Alhambra Plaza,
Suite 1100, Coral Gables, Florida 33134.
|
|
|
|
(3)
|
|
MBF Healthcare Partners, L.P. purchased an aggregate of 343,750 units and 4,250,000 warrants
from us in a private placement that occurred prior to our IPO. Mike Fernandez, Marcio
Cabrera, Jorge Rico, Carlos Saladrigas and Roger Medel each directly or indirectly own
interests in MBF Healthcare Partners, L.P. Mr. Saladrigas possesses sole voting and
dispositive authority over 20,095 shares of common stock owned by MBF Healthcare Partners,
L.P. prior to the offering and the private placement and 22,282 shares of common stock owned
by MBF Healthcare Partners, L.P. after our IPO and the private placement.
|
|
|
|
(4)
|
|
Mike Fernandez, as the owner of the general partner of the general partner of MBF Healthcare
Partners, L.P., may be deemed to be the beneficial owner of the shares of common stock held by
MBF Healthcare Partners, L.P.
|
|
|
|
(5)
|
|
Consists of shares issued to MBF Healthcare Partners, L.P. See footnotes (3) and (5) above.
|
|
|
|
(6)
|
|
Represents 2,658,573 shares of common stock owned by HBK Investments L.P. HBK Investments
L.P. has delegated discretion to vote and dispose of the Securities to HBK Services LLC
(“Services”). Services may, from time to time, delegate discretion to vote and dispose of
certain of the Securities to HBK New York LLC, a Delaware limited liability company, HBK
Virginia LLC, a Delaware limited liability company, and/or HBK Europe Management LLP, a
limited liability partnership organized under the laws of the United Kingdom (collectively,
the “Subadvisors”). Each of Services and the Subadvisors is under common control with HBK
Investments L.P. The Subadvisors expressly declare that the filing of this statement on
Schedule 13G shall not be construed as an admission that they are, for the purpose of Section
13(d) or 13(g) of the Securities Exchange Act of 1934, beneficial owners of the Securities.
The business address of
HBK Investments L.P. is 2101 Cedar Springs Road, Suite 700, Dallas, Texas 75201. The
foregoing information is derived from a Schedule 13G filed on January 29, 2009.
|
48
|
(7)
|
|
Sapling, LLC (“Sapling”) and Fir Tree Capital Opportunity Master Fund, L.P. (“Fir Tree
Capital Opportunity”) are the beneficial owners of 1,919,300 shares of common stock and
345,700 shares of common stock, respectively. Fir Tree, Inc. (“Fir Tree”) may be deemed to
beneficially own the shares of common stock held by Sapling and Fir Tree Capital Opportunity
as a result of being the investment manager of Sapling and Fir Tree Capital Opportunity.
Sapling and Fir Tree Capital Opportunity are the beneficial owners of 7.2% and 1.3%,
respectively, of the outstanding shares of common stock. Sapling may direct the vote and
disposition of 1,919,300 shares of common stock. Fir Tree Capital Opportunity may direct the
vote and disposition of 345,700 shares of common stock. Fir Tree has been granted investment
discretion over the common stock held by Sapling and Capital Opportunity. The business
address of Fir Tree, Inc. is 505 Fifth Avenue, 23rd Floor, New York, New York 10017. The
foregoing information was derived from a Schedule 13G/A filed with the SEC on February 10,
2009.
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|
|
|
(8)
|
|
Represents 2,243,284 shares of common stock owned by QVT Financial LP (“QVT Financial”),
which is the investment manager for QVT Fund LP (the “Fund”), which beneficially owns
2,034,615 shares of Common Stock, and for Quintessence Fund L.P. (“Quintessence), which
beneficially owns 96,137 shares of Common Stock. QVT Financial is also the investment manager
for a separate discretionary account managed for a third party (the “Separate Account”), which
holds 112,532 shares of Common Stock. QVT Financial has the power to direct the vote and
disposition of the Common Stock held by the Fund, Quintessence and the Separate Account.
Accordingly, QVT Financial may be deemed to be the beneficial owner of an aggregate amount of
2,243,284 shares of Common Stock, consisting of the shares owned by the Fund, Quintessence and
the shares held in the Separate Account. The Fund, Quintessence and the Separate Account own
Warrants that are not exerciseable until the later of the MBF completion of a business
combination and April 17, 2008, and will expire on April 16, 2011 or earlier upon redemption.
QVT Financial GP LLC, as General Partner of QVT Financial, may be deemed to beneficially own
the same number of shares of Common Stock reported by QVT Financial. QVT Associates GP LLC,
as General Partner of the Fund and Quintessence, may be deemed to beneficially own the
aggregate number of shares of Common Stock owned by the Fund and Quintessence, and
accordingly, QVT Associates GP LLC may be deemed to be the beneficial owner of an aggregate
amount of 2,130,752 shares of Common Stock. Each of QVT Financial and QVT Financial GP LLC
disclaims beneficial ownership of the shares of Common Stock owned by the Fund, Quintessence
and the Separate Account. QVT Associates GP LLC disclaims beneficial ownership of all shares
of Common Stock owned by the Fund and Quintessence, except to the extent of its pecuniary
interest therein. The business address of QVT Financial is 1177 Avenue of the Americas, 9th
Floor, New York, New York 10036. The foregoing information was derived from a Schedule 13G
filed with the SEC on February 3, 2009.
|
|
|
|
(9)
|
|
Represents 2,143,426 shares of common stock owned by Aldebaran Investments LLC (“Aldebaran”).
The business address is Aldebaran is 500 Park Avenue 5th Floor New York, NY 10022. The
foregoing information was derived from a Schedule 13G filed with the SEC on February 17, 2009.
|
|
|
|
(10)
|
|
Represents 1,972,000 shares of common stock owned by Fidelity Management & Research Company
(“Fidelity”), a wholly-owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940 as a result of acting as investment
adviser to various investment companies registered under Section 8 of the Investment Company
Act of 1940. Edward C. Johnson 3d and FMR Corp., through its control of Fidelity, and the
funds each has sole power to dispose of the 1,972,000 shares owned by the Funds. Members of
the family of Edward C. Johnson 3d, Chairman of FMR Corp., are the predominant owners,
directly or through trusts, of Series B shares of common stock of FMR Corp., representing 49%
of the voting power of FMR Corp. The Johnson family group and all other Series B shareholders
have entered into a shareholders’ voting agreement under which all Series B shares will be
voted in accordance with the majority vote of Series B shares. Accordingly, through their
ownership of voting common stock and the execution of the shareholders’ voting agreement,
members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form
a controlling group with respect to FMR Corp. Neither FMR Corp. nor Edward C. Johnson 3d,
Chairman of FMR Corp., has the sole power to vote or direct the voting of the shares owned
directly by the Fidelity Funds,
which power resides with the Funds’ Boards of Trustees. Fidelity carries out the voting of
the shares under written guidelines established by the Funds’ Boards of Trustees. The
business address of Fidelity is 82 Devonshire Street, Boston, Massachusetts 02109. The
foregoing information was derived from a Schedule 13G filed with the SEC on May 10, 2007.
|
49
|
(11)
|
|
Represents 1,875,000 shares of common stock owned by Federated Investors, Inc. (the
“Parent”). The Parent is the parent holding company of Federated Equity Management Company of
Pennsylvania and Federated Global Investment Management Corp. (the “Investment Advisers”),
which act as investment advisers to registered investment companies and separate accounts that
own shares of common stock (the “Reported Securities’). The Investment Advisers are wholly
owned subsidiaries of FII Holdings, Inc., which is wholly owned subsidiary of Federated
Investors, Inc., the Parent. All of the Parent’s outstanding voting stock is held in the
Voting Shares Irrevocable Trust (the “Trust”) for which John F. Donahue, Rhodora J. Donahue
and J. Christopher Donahue act as trustees (collectively, the “Trustees”). The Trustees have
joined in filing this Schedule 13G because of the collective voting control that they exercise
over the Parent. In accordance with Rule 13d-4 under the Securities Act of 1934, as amended,
the Parent, the Trust, and each of the Trustees declare that this statement should not be
construed as an admission that they are the beneficial owners of the Reported Securities, and
the Parent, the Trust, and each of the Trustees expressly disclaim beneficial ownership of the
Reported Securities. The business address of Parent is 5800 Corporate Drive, Pittsburgh, PA
15222. The foregoing information is derived from a Schedule 13GIA filed with the SEC on
February 17, 2009.
|
|
|
|
(12)
|
|
Represents 1,400,000 shares of common stock owned by Highbridge International LLC.
Highbridge International LLC holds 115,100 shares of Common Stock and each of Highbridge
Capital Management, LLC, Glenn Dubin and Henry Swieca may be deemed the beneficial owner of
the 115,100 shares of Common Stock held by Highbridge International LLC. Highbridge Capital
Management, LLC is the trading manager of Highbridge International LLC. Glenn Dubin is the
Chief Executive Officer of Highbridge Capital Management, LLC. Henry Swieca is the Chief
Investment Officer of Highbridge Capital Management, LLC. In addition, each of Highbridge
Capital Management, LLC, Glenn Dubin and Henry Swieca disclaims beneficial ownership of shares
of Common Stock owned by Highbridge International LLC. In addition to the reported shares of
Common Stock, the Reporting Persons may be deemed to beneficially own 1,400,000 shares of
Common Stock issuable to Highbridge International LLC upon exercise of warrants (the
“Warrants”). However, pursuant to the terms of these Warrants, the Warrants cannot be
exercised until the later of the completion of a business combination by MBF and April 17,
2008. Highbridge Capital Management, LLC is the trading manager of Highbridge International
LLC. Glenn Dubin is the Chief Executive Officer of Highbridge Capital Management, LLC. Henry
Swieca is the Chief Investment Officer of Highbridge Capital Management, LLC. The foregoing
should not be construed in and of itself as an admission by any Reporting Person as to
beneficial ownership of Shares of Common Stock owned by another Reporting Person. In
addition, each of Highbridge Capital Management, LLC, Glenn Dubin and Henry Swieca disclaims
beneficial ownership of shares of Common Stock owned by Highbridge International LLC. The
business address of Highbridge International LLC is c/o Harmonic Fund Services, The Cayman
Corporate Centre, 4th Floor, 27 Hospital Road, Grand Cayman, Cayman Islands, British West
Indies. The foregoing information was derived from a Schedule 13G filed with the SEC on
October 19, 2007 and a 13G/A filed with the SEC on January 23, 2008.
|
|
|
|
|
|
Item 13.
|
|
Certain Relationships and Related Transactions
|
On June 2, 2006, we issued 4,687,500 shares of our common stock to MBFHP for $20,000 in cash
at a purchase price of approximately $0.0043 per share.
On July 3, 2006, we entered into an agreement with MBFHP pursuant to which it has agreed to
purchase an aggregate of 312,500 units at a purchase price of $8.00 per unit. On February 2, 2007,
the agreement was amended and restated to increase the number of units to 343,750 units at a
purchase price of $8.00 per unit and to obligate MBF Healthcare Partners, L.P. to purchase
2,750,000 warrants at a purchase price of $1.00 per warrant, for an aggregate purchase price of
$5,500,000. On April 13, 2007, the agreement was further amended and restated to increase the
number of warrants to 4,250,000, for an additional purchase price of $1,500,000, resulting in an
aggregate purchase price of $7,000,000. These securities will be purchased in a private
placement pursuant to an exemption from registration contained in Section 4(2) of the Securities
Act of 1933.
50
MBFHP will be entitled to make up to two demands that we register these securities, including
the shares of common stock included in, or issued upon exercise of the warrants purchased by it in
the private placement and included in the units purchased by it in the private placement, pursuant
to an agreement to be signed prior to or on the date of this prospectus. MBFHP can elect to
exercise these registration rights at any time beginning three months prior to the date on which
the escrow period applicable to such securities expires. The escrow period expires six months
following the consummation of the initial business combination, unless we were to consummate a
transaction after the consummation of the initial business combination which results in all of the
stockholders of the combined entity having the right to exchange their shares of common stock for
cash, securities or other property. However, if (1) during the last 17 days of the six-month
period, we issue material news or a material event relating to us occurs or (2) before the
expiration of the six-month period, we announce that material news or a material event will occur
during the 16-day period beginning on the last day of the six-month period, the six-month period
will be extended for up to 18 days beginning on the issuance of the material news or the occurrence
of the material event. We may not waive the escrow provisions. In addition, MBFHP has certain
“piggy-back” registration rights with respect to these securities on registration statements filed
subsequent to such date. We will bear the expenses incurred in connection with the filing of any
such registration statements.
We will reimburse our officers and directors for any 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, including reimbursement of up to $750 per
person per flight that may be paid to MBF Healthcare Management, an entity owned by Mike Fernandez,
our Chairman and Chief Executive Officer, for the use of its corporate jet in connection with
activities on our behalf, such as identifying and investigating targets for our initial business
combination. There is no limit on the amount of accountable out-of-pocket expenses reimbursable by
us, which will be reviewed only by our Board of Directors or a court of competent jurisdiction if
such reimbursement is challenged. To the extent such out-of-pocket expenses exceed the available
proceeds not deposited in the trust account, such out-of-pocket expenses would not be reimbursed by
us unless we complete a business combination.
Other than the payment of $7,500 per month to MBFHP in connection with the general and
administrative services arrangement for services rendered to us, reimbursement for out-of-pocket
expenses payable to our officers and directors and reimbursement to MBF Healthcare Management for
costs arising from our officers’ and directors’ use of its corporate jet, no compensation of any
kind, including finder’s and consulting fees, will be paid to any of our officers, directors, or
existing stockholder or any of their respective affiliates prior to or in connection with the
business combination. In 2008, the expense for rent and general and administrative services and for
the use of the corporate jet was $90,000 and $13,500, respectively.
On August 7, 2008, we entered into a $300,000 non-revolving line of credit facility with MBF
Healthcare Management, LLC, an affiliate of several officers of the Company. The proceeds of this
line of credit is being used for purposes of funding the Company’s operating costs through April
2009. The line of credit bears interest at 5% per annum and all interest and principal is payable
upon the earlier of the consummation of a Business Combination or the dissolution of the Company.
On October 31, 2008, the line of credit was increased to $2,000,000. On February 5, 2009, the line
of credit was increased to $3,000,000. The balance on the line of credit as of December 31, 2008
was $2,386,795.
51
|
|
|
|
|
Item 14.
|
|
Principal Accountant Fees and Services
|
Audit Fees.
The aggregate fees for professional services rendered by Grant Thornton LLP, our
independent auditors, for SAS 100 quarterly reviews, year-end audit of our financial statements and
in 2007, fees related to our IPO, were approximately $84,000 and $101,000 for the fiscal years
ended December 31, 2008 and 2007, respectively.
Audit-Related Fees.
Audit-related fees are for assurance and related services including,
among others, consultation concerning financial accounting and reporting standards. For the year
ended December 31, 2008
approximately, $51,000 in such fees paid to Grant Thornton LLP related to review of proxy
material, filed with the SEC. No such fees were paid in 2007.
Tax Fees.
Tax fees for compliance services rendered by Grant Thornton LLP were approximately
$12,000 for the fiscal year ended December 31, 2008. There were no fees paid for tax planning and
tax advice rendered by Grant Thornton LLP for the fiscal year ended December 31, 2008. There were
no tax fees paid to Grant Thornton LLP for the fiscal year ended December 31, 2007.
All Other Fees
. There were no fees paid to Grant Thornton LLP for services other than audit
services, audit-related services and tax compliance rendered by Grant Thornton LLP for the fiscal
years ended December 31, 2008 and 2007.
52
PART IV
|
|
|
|
|
Item 15.
|
|
Exhibits and Financial Statement Schedules
|
|
(1)
|
|
Financial Statements
|
|
|
|
|
|
See Item 8 — Financial Statements and Supplementary Data.
|
|
|
|
(2)
|
|
Financial Statement Schedules
|
All supplemental schedules have been omitted since the required information is not present in
amounts sufficient to require submission of the schedule, or because the required information is
included in the financial statements or notes thereto.
|
(3)
|
|
Exhibits
|
|
|
|
|
|
See Exhibit Index.
|
53
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit Number
|
|
Exhibit Description
|
|
|
3.1
|
|
|
Form of Amended and Restated Certificate of Incorporation*
|
|
|
|
|
|
|
|
|
3.2
|
|
|
By-Laws*
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Specimen Unit Certificate*
|
|
|
|
|
|
|
|
|
4.2
|
|
|
Specimen Common Stock Certificate*
|
|
|
|
|
|
|
|
|
4.3
|
|
|
Specimen Warrant Certificates*
|
|
|
|
|
|
|
|
|
4.4
|
|
|
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and
the Registrant*
|
|
|
|
|
|
|
|
|
10.1
|
|
|
Subscription Agreement, dated September 10, 2008, by and between the Company and
MBF Healthcare Partners, L.P.**
|
|
|
|
|
|
|
|
|
10.2
|
|
|
Letter Agreement, dated September 10, 2008, by and between the Company and MBF
Healthcare Management, LLC**
|
|
|
|
|
|
|
|
|
10.3
|
|
|
Amended and Restated Letter Agreement, dated October 31, 2008, by and between the
Company and MBF Healthcare Management, LLC***
|
|
|
|
|
|
|
|
|
10.4
|
|
|
Amended and Restated Letter Agreement, dated February 5, 2009, by and between the
Company and MBF Healthcare Management, LLC****
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Certification of Chief Executive Officer Pursuant to SEC Rule 13a-14(a)/15d-14(a)****
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Certification of Chief Financial Officer Pursuant to SEC Rule 13a-14(a)/15d-14(a)****
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350****
|
|
|
|
|
|
|
|
|
32.2
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350****
|
|
|
|
|
|
*
|
|
Incorporated by reference to exhibits of the same number filed with the Registrant’s
Registration Statement on Form S-1 on amendments thereto (File No. 333-135610)
|
|
|
|
**
|
|
Incorporated by reference to the exhibit of the same number filed with the Registrant’s Form
8-K, as filed with the SEC on September 16, 2008
|
|
|
|
***
|
|
Incorporated by reference to the exhibit of the same number filed with the Registrant’s Form
10-Q for fiscal quarter ended September 30, 2008, as filed with the SEC on November 12, 2008
|
|
|
|
****
|
|
Filed herewith
|
54
MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
MBF Healthcare Acquisition, Corp.
We have audited the accompanying balance sheets of MBF Healthcare Acquisition Corp. (a development
stage company) (the “Company”) as of December 31, 2008 and 2007, and the related statements of
operations, changes in stockholders’ equity, and cash flows for the years ended December 31, 2008
and 2007, the period from June 2, 2006 (date of inception) through December 31, 2006, and the
period from June 2, 2006 (date of inception) through December 31, 2008. 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 the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes 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 the Company as of December 31, 2008 and 2007, and the results
of its operations and its cash flows for the years ended December 31, 2008 and 2007, the period
from June 2, 2006 (date of inception) through December 31, 2006, and the period from June 2, 2006
(date of inception) through December 31, 2008 in conformity with accounting principles generally
accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company’s internal control over financial reporting as of December 31,
2008, based on criteria established in
Internal Control—Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO
)
and our report dated March
11, 2009 expressed an adverse opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as
a going concern. As discussed in Note A to the financial statements, if the Company is unable to
complete a business combination by April 23, 2009, the Company will be required to liquidate. This
factor raises substantial doubt about the Company’s ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Grant Thornton LLP
Miami, Florida
March 11, 2009
F-2
MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
110,158
|
|
|
$
|
957,753
|
|
|
Restricted cash held in Trust Fund
|
|
|
177,107,455
|
|
|
|
175,501,579
|
|
|
Prepaid expenses
|
|
|
41,771
|
|
|
|
47,826
|
|
|
Income tax receivable
|
|
|
157,322
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
177,416,706
|
|
|
|
176,507,158
|
|
|
Deferred acquisition costs
|
|
|
—
|
|
|
|
22,379
|
|
|
Deferred tax asset
|
|
|
1,763,284
|
|
|
|
47,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
179,179,990
|
|
|
$
|
176,576,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Income taxes payable
|
|
$
|
—
|
|
|
$
|
312,505
|
|
|
Accrued expenses
|
|
|
513,630
|
|
|
|
165,965
|
|
|
Notes Payable — related party
|
|
|
2,386,795
|
|
|
|
—
|
|
|
Deferred underwriters’ fee
|
|
|
—
|
|
|
|
6,037,500
|
|
|
Common stock, subject to possible redemption,
6,468,749 shares at redemption value
|
|
|
51,491,242
|
|
|
|
—
|
|
|
Interest income attributable to common stock
subject to possible redemption (net of taxes)
|
|
|
1,979,312
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
56,370,979
|
|
|
|
6,515,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, subject to possible redemption,
6,468,749 shares at redemption value
|
|
|
—
|
|
|
|
51,491,242
|
|
|
Interest income attributable to common stock
subject to possible redemption (net of taxes)
|
|
|
—
|
|
|
|
1,148,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common stock, subject to possible redemption
|
|
|
—
|
|
|
|
52,639,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.0001 par value, Authorized
1,000,000 shares; no shares issued and
outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $.0001 par value, Authorized
50,000,000 shares, issued and outstanding
26,593,750 shares (which includes 6,468,749
shares subject to possible redemption)
|
|
|
2,659
|
|
|
|
2,659
|
|
|
Additional paid-in capital
|
|
|
121,067,529
|
|
|
|
115,030,029
|
|
|
Retained earnings
|
|
|
1,738,823
|
|
|
|
2,388,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
122,809,011
|
|
|
|
117,420,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
179,179,990
|
|
|
$
|
176,576,647
|
|
|
|
|
|
|
|
|
|
See notes to financial statements
F-3
MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2, 2006
|
|
|
June 2, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
(date of inception)
|
|
|
(date of inception)
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
through
|
|
|
through
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Formation and
operating costs
|
|
|
(547,355
|
)
|
|
|
(467,277
|
)
|
|
|
(52,088
|
)
|
|
|
(1,066,720
|
)
|
|
Write-off of
deferred
acquisition costs
|
|
|
(3,579,070
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,579,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before
interest income
|
|
|
(4,126,425
|
)
|
|
|
(467,277
|
)
|
|
|
(52,088
|
)
|
|
|
(4,645,790
|
)
|
|
Interest income
(expense), net
|
|
|
4,417,251
|
|
|
|
6,186,811
|
|
|
|
(5,304
|
)
|
|
|
10,598,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income
tax provision
|
|
|
290,826
|
|
|
|
5,719,534
|
|
|
|
(57,392
|
)
|
|
|
5,952,968
|
|
|
Provision for
income taxes
|
|
|
(109,438
|
)
|
|
|
(2,125,395
|
)
|
|
|
—
|
|
|
|
(2,234,833
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
181,388
|
|
|
$
|
3,594,139
|
|
|
$
|
(57,392
|
)
|
|
$
|
3,718,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
26,593,750
|
|
|
|
19,765,668
|
|
|
|
4,687,500
|
|
|
|
19,002,784
|
|
|
Diluted
|
|
|
32,617,565
|
|
|
|
23,633,342
|
|
|
|
4,687,500
|
|
|
|
22,844,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
|
$
|
0.18
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.20
|
|
|
Diluted
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.16
|
|
See notes to financial statements
F-4
MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
during the
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
development
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
stage
|
|
|
Total
|
|
|
Balance, June 2, 2006
(date of inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Initial capitalization
from founding stockholder
|
|
|
4,687,500
|
|
|
|
469
|
|
|
|
19,531
|
|
|
|
—
|
|
|
|
20,000
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(57,392
|
)
|
|
|
(57,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2006
|
|
|
4,687,500
|
|
|
|
469
|
|
|
|
19,531
|
|
|
|
(57,392
|
)
|
|
|
(37,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 343,750 units in
a private placement
|
|
|
343,750
|
|
|
|
34
|
|
|
|
2,749,966
|
|
|
|
—
|
|
|
|
2,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 4,250,000
warrants to initial
stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
4,250,000
|
|
|
|
—
|
|
|
|
4,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 21,562,500 units,
net of underwriters’
discount and offering
expenses of $12,996,070
(6,468,749 shares subject
to possible redemption)
|
|
|
21,562,500
|
|
|
|
2,156
|
|
|
|
159,501,774
|
|
|
|
—
|
|
|
|
159,503,930
|
|
|
Proceeds subject to
possible redemption of
6,468,749 shares
|
|
|
—
|
|
|
|
—
|
|
|
|
(51,491,242
|
)
|
|
|
—
|
|
|
|
(51,491,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of trust fund
relating to common stock
subject to possible
redemption
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,148,636
|
)
|
|
|
(1,148,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,594,139
|
|
|
|
3,594,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007
|
|
|
26,593,750
|
|
|
|
2,659
|
|
|
|
115,030,029
|
|
|
|
2,388,111
|
|
|
|
117,420,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reversal of accrued
underwriters’ fee
|
|
|
—
|
|
|
|
—
|
|
|
|
6,037,500
|
|
|
|
—
|
|
|
|
6,037,500
|
|
|
Accretion of trust fund
relating to common stock
subject to possible
redemption
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(830,676
|
)
|
|
|
(830,676
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
181,388
|
|
|
|
181,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
26,593,750
|
|
|
$
|
2,659
|
|
|
$
|
121,067,529
|
|
|
$
|
1,738,823
|
|
|
$
|
122,809,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to financial statements
F-5
MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASHFLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2, 2006
|
|
|
June 2, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
(date of
|
|
|
(date of
|
|
|
|
|
|
|
|
|
|
|
|
|
inception)
|
|
|
inception)
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
through
|
|
|
through
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
181,388
|
|
|
$
|
3,594,139
|
|
|
$
|
(57,392
|
)
|
|
$
|
3,718,135
|
|
|
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of deferred acquisiton costs
|
|
|
3,579,070
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,579,070
|
|
|
Deferred income taxes
|
|
|
(1,716,174
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,716,174
|
)
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
6,055
|
|
|
|
(47,826
|
)
|
|
|
—
|
|
|
|
(41,771
|
)
|
|
Income taxes payable/receivable
|
|
|
(469,827
|
)
|
|
|
265,395
|
|
|
|
—
|
|
|
|
(204,432
|
)
|
|
Accrued expenses
|
|
|
(83,876
|
)
|
|
|
149,679
|
|
|
|
16,285
|
|
|
|
82,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities
|
|
|
1,496,636
|
|
|
|
3,961,387
|
|
|
|
(41,107
|
)
|
|
|
5,416,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash held in trust fund
|
|
|
(1,605,876
|
)
|
|
|
(175,501,579
|
)
|
|
|
—
|
|
|
|
(177,107,455
|
)
|
|
Payment of acquistion costs
|
|
|
(3,125,150
|
)
|
|
|
(22,379
|
)
|
|
|
—
|
|
|
|
(3,147,529
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(4,731,026
|
)
|
|
|
(175,523,958
|
)
|
|
|
—
|
|
|
|
(180,254,984
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds from initial public offering
|
|
|
—
|
|
|
|
172,500,000
|
|
|
|
—
|
|
|
|
172,500,000
|
|
|
Payment of costs of public offering
|
|
|
—
|
|
|
|
(6,752,080
|
)
|
|
|
(206,489
|
)
|
|
|
(6,958,569
|
)
|
|
Proceeds from sale of units in a private placement
|
|
|
—
|
|
|
|
2,750,000
|
|
|
|
—
|
|
|
|
2,750,000
|
|
|
Proceeds from notes payable to a related party
|
|
|
2,386,795
|
|
|
|
35,000
|
|
|
|
240,000
|
|
|
|
2,661,795
|
|
|
Payments of notes payable to a related party
|
|
|
—
|
|
|
|
(275,000
|
)
|
|
|
—
|
|
|
|
(275,000
|
)
|
|
Proceeds from issuance of common stock to founding
stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
Proceeds from issuance of warrants
|
|
|
—
|
|
|
|
4,250,000
|
|
|
|
—
|
|
|
|
4,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
2,386,795
|
|
|
|
172,507,920
|
|
|
|
53,511
|
|
|
|
174,948,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
(847,595
|
)
|
|
|
945,349
|
|
|
|
12,404
|
|
|
|
110,158
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
957,753
|
|
|
|
12,404
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
110,158
|
|
|
$
|
957,753
|
|
|
$
|
12,404
|
|
|
$
|
110,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash financing activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual of offering costs
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
251,419
|
|
|
$
|
251,419
|
|
|
Common stock subject to possible redemption
|
|
|
—
|
|
|
|
51,491,242
|
|
|
|
—
|
|
|
|
51,491,242
|
|
|
Interest income on common stock subject to possible redemption
|
|
|
830,676
|
|
|
|
1,148,636
|
|
|
|
—
|
|
|
|
1,979,312
|
|
|
Accrual of acquisition costs
|
|
|
431,841
|
|
|
|
—
|
|
|
|
—
|
|
|
|
431,841
|
|
|
Deferred underwriting fees
|
|
|
(6,037,500
|
)
|
|
|
6,037,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
—
|
|
|
$
|
4,027
|
|
|
$
|
6,285
|
|
|
$
|
10,312
|
|
|
Cash paid for taxes
|
|
$
|
2,295,439
|
|
|
$
|
1,860,000
|
|
|
$
|
—
|
|
|
$
|
4,155,439
|
|
See notes to financial statements
F-6
MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008
Note A — Organization and Business Operations
MBF Healthcare Acquisition Corp. (the “Company”) was incorporated in Delaware on June 2, 2006.
The Company was formed to serve as a vehicle for the acquisition of an operating business through
a merger, capital stock exchange, stock purchase, asset acquisition, or other similar business
combination (the “Business Combination”). The Company has neither engaged in any operations nor
generated any revenue to date. The Company is considered to be in the development stage and is
subject to the risks associated with activities of development stage companies.
Going concern consideration — There is substantial doubt about the Company’s ability to
continue as a going concern due to the requirement that the Company completes a business
combination by April 23, 2009 or it will be forced to liquidate and as a result of a working
capital deficiency, without including funds held in trust, as of December 31, 2008. The Company plans to fund its operations by deferring payments to certain vendors and
availability under the Company’s line of credit facility with MBF Healthcare Management, LLC (See
Note D). There is no assurance that the Company will complete a business combination by April 23,
2009. The accompanying financial statements do not include any adjustments that may result from
the outcome of this uncertainty.
The Company’s management has broad discretion with respect to the specific application of the
net proceeds of the initial public offering of Units (as defined in Note C below) and the private
placement of 343,750 units and 4,250,000 warrants that occurred prior to the initial public
offering (the “Private Placement”), although substantially all of the net proceeds of the initial
public offering and Private Placement are intended to be generally applied toward consummating a
Business Combination with (or acquisition of) one or more operating businesses in the healthcare
industry. Furthermore, there is no assurance that the Company will be able to successfully effect
a Business Combination. Upon the closing of the initial public offering, at least ninety-nine and
a half (99.5%) percent of the gross proceeds of the initial public offering, after payment of
certain amounts to the underwriters, were deposited in a trust account maintained at Continental
Stock Transfer & Trust Co. (the “Trust Account”), and were invested in money market funds meeting
conditions of the Investment Company Act of 1940 or securities principally issued or guaranteed by
the U.S. government until the earlier of (i) the consummation of its first Business Combination or
(ii) the distribution of the Trust Account as described below. The remaining proceeds may be used
to pay for business, legal and accounting due diligence on prospective acquisitions and continuing
general and administrative expenses. The Company, after signing a definitive agreement for the
acquisition of a target business and after receiving Securities and Exchange Commission (SEC)
approval, will submit such transaction for stockholder approval. The Company will proceed with the
Business Combination only if:
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a majority of the shares of common stock voted by the public stockholders are voted
in favor of the Business Combination; and
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•
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public stockholders owning less than 30% of the shares sold in the initial public
offering both vote against the Business Combination and exercise their conversion
rights as described below.
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Public stockholders voting against the Business Combination will be entitled to convert their
stock into a pro rata share of the amount held in the Trust Account (including the amount held in
the Trust Account representing the deferred portion of the underwriters’ discounts and
commissions), including any interest earned on their pro rata share (net of taxes payable), if the
Business Combination is approved and consummated.
In the event that the Company does not complete a Business Combination within 24 months from
the consummation of the initial public offering, the Company will dissolve pursuant to Section 278
of the DGCL and
F-7
distribute the proceeds held in the Trust Account to public stockholders, excluding the
existing stockholder to the extent of its initial stockholdings and the shares purchased by it in
the Private Placement. The Company anticipates that it will take no more than 10 days to
effectuate such distribution. In the event of such distribution, the per share value of the
residual assets remaining available for distribution (including Trust Account assets) may be less
than the initial public offering price per share in the initial public offering.
On February 6, 2008, we entered into a Stock Purchase Agreement (the “Stock Purchase
Agreement”) with Critical Homecare Solutions Holdings, Inc. (“CHS”), a Delaware corporation,
Kohlberg Investors V, L.P. (the “Seller’s Representative”) and the other stockholders of CHS (each,
together with the Seller’s Representative, the “Seller” and collectively the “Sellers”).
On October 31, 2008, we, CHS and the Sellers mutually terminated the Stock Purchase Agreement.
Currently, we are not in negotiation with any qualified acquisition target, and we anticipate we
will not be able to complete a business combination by April 23, 2009. As a result, our corporate
existence will terminate and our Amended and Restated Certificate of Incorporation requires that we
promptly initiate procedures to liquidate and distribute our assets on April 23, 2009.
Note B — Summary of Significant Accounting Policies
[1]
Cash and cash equivalents:
The Company considers all highly liquid investments with original maturities of three months or
less to be cash equivalents.
[2] Restricted Cash held in Trust Fund
Restricted cash held in Trust Fund consists of investments in a money market fund that invests
exclusively in obligations of the U.S. government and its agencies and instrumentalities, and in
repurchase agreements collateralized by such securities.
[3] Earnings (loss) per common share:
Income (loss) per share is computed by dividing net income (loss) applicable to common stockholders
by the weighted average number of common shares outstanding for the period. The dilutive effect of
common stock equivalents have been excluded from the diluted income (loss) per share calculation
for the 2006 period presented as the effect is antidilutive. Included in the weighted average
shares calculation for Diluted EPS purposes are 6,023,815, 3,867,674 and 3,841,639 shares related
to the dilutive effect of outstanding stock warrants for the years ended December 31, 2008 and 2007
and the period from June 2, 2006 through December 31, 2008, respectively.
[4] Use of estimates:
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the report period. Actual results could
differ from those estimates.
[5] Acquisition costs:
The Company capitalizes the direct costs of pending acquisitions and these costs are included in
deferred acquisition costs in the accompanying balance sheets. Such costs are treated as a
component of the purchase price upon consummation of the Business Combination. Costs associated
with Business Combinations that do not materialize are expensed at such time the completion of the
pending Business Combination is determined to be doubtful.
F-8
Due to the termination of the Stock Purchase Agreement between the Company, CHS and the Sellers,
$3,579,070 in acquisition related costs incurred through December 31, 2008 in relation to the CHS
acquisition were written off in the accompanying statement of operations for the year ended
December 31, 2008.
[6] Income taxes:
Deferred income taxes are provided for the differences between the bases of assets and liabilities
for financial reporting and income tax purposes. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.
The components of the provision for income taxes are as follows:
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June 2, 2006
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(date of
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inception)
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Year ended
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Year ended
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through
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December 21,
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December 31,
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December 31,
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2008
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2007
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2006
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Current
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Federal
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$
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1,558,781
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$
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1,854,972
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$
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—
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State
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266,831
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317,533
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—
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Deferred
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Federal
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(1,465,339
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)
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(40,224
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—
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State
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(250,835
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)
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(6,886
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—
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Provision for Income Taxes
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$
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109,438
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$
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2,125,395
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$
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—
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The temporary differences as of December 31, 2008 represent acquisition related costs and other
deferred start-up costs and as of December 31, 2007 represent accrued expenses and deferred
start-up costs. The Company recorded deferred income tax assets of $1,763,284 and $47,110 as of
December 31, 2008 and 2007, respectively.
For the year December 31, 2008 and 2007, the effective tax rate of 38% differs from the statutory
rate of 35% due to the provision for state income taxes.
We adopted the provisions of FIN No. 48,
Accounting for Uncertainty in Income Taxes — an
interpretation of FASB Statement No. 109,
on January 1, 2007
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Previously, we had accounted for tax
contingencies in accordance with SFAS No. 5,
Accounting for Contingencies
. As required by FIN No.
48, which clarifies SFAS No. 109,
Accounting for Income Taxes
, we recognize the financial statement
benefit of a tax position only after determining that the relevant tax authority would more likely
than not sustain the position following an audit. For tax positions meeting the
more-likely-than-not threshold, the amount recognized in the financial statements is the largest
benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement
with the relevant tax authority. At the adoption date, we applied Interpretation 48 to all tax
positions for which the statute of limitations remained open. As a result of the implementation of
Interpretation 48, we did not recognize a change in the liability for unrecognized tax benefits.
There were no unrecognized tax benefits as of January 1, 2008, and there have been no material
changes in unrecognized tax benefits through December 31, 2008.
The Company is subject to income taxes in the U.S. federal jurisdiction and in the state of
Florida. Tax regulations within each jurisdiction are subject to the interpretation of the related
tax laws and regulations and require significant judgment to apply. The Company’s policy is to
record interest and penalties as part of income tax expense.
F-9
[7] Fair value of financial instruments:
Financial instruments consist primarily of cash, cash equivalents, and restricted cash in which the
fair market value approximates the carrying value due to its short term nature. It is not
practicable to estimate the fair value of notes payable — related party due to its related party
nature (See Note D).
[8] Recent accounting pronouncements:
Impact of Recently Issued Accounting Pronouncements
In September 2006, FASB issued SFAS No. 157,
Fair Value Measurements
(“SFAS No. 157”)
.
SFAS
No. 157 defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 does not impose fair value measurements on
items not already accounted for at fair value; rather it applies, with certain exceptions, to other
accounting pronouncements that either require or permit fair value measurements. Under SFAS No.
157, fair value refers to the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants in the principal or most
advantageous market. The standard clarifies that fair value should be based on the assumptions
market participants would use when pricing the asset or liability. In February 2008, the FASB
issued FASB Staff Position No. 157-2,
Effective Date of FASB Statement No. 157
(“FSP FAS 157-2”),
which delays the effective date of SFAS No. 157 for all non-financial assets and liabilities,
except those that are recognized or disclosed at fair value in the financial statements on a
recurring basis, until fiscal years beginning after November 15, 2008. These non-financial items
include assets and liabilities such as non-financial assets and liabilities assumed in a business
combination, reporting units measured at fair value in a goodwill impairment test and asset
retirement obligations initially measured at fair value. The Company adopted the provisions of SFAS
No. 157 for assets and liabilities recognized at fair value on a recurring basis effective January
1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on the Company’s
financial statements.
This standard requires that a Company measure its financial assets and liabilities using
inputs from the three levels of the fair value hierarchy. A financial asset or liability
classification within the hierarchy is determined based on the lowest level input that is
significant to the fair value measurement. The three levels are as follows:
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Level 1 — Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
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Level 2 — Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs other
than quoted prices that are observable for the asset or liability and
inputs that are derived principally from or corroborated by observable
market data by correlation or other means (market corroborated
inputs).
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Level 3 — Unobservable inputs reflect the Company’s judgments about
the assumptions market participants would use in pricing the asset or
liability since limited market data exists. The Company develops these
inputs based on the best information available, including the
Company’s own data.
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As of December 31, 2008 the Company has no financial assets or liabilities that are measured at
fair value, other than restricted cash.
On December 4, 2007, the FASB issued SFAS No. 141R (revised 2007)
Business Combinations
, which will
change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a transaction at the
acquisition-date fair value with limited exceptions. SFAS No. 141R retains the purchase method of
accounting for acquisitions, but requires a number of changes, including expensing acquisition
costs as incurred, capitalization of in-process research and development at fair value, recording
noncontrolling interests at fair value and recording acquired contingent liabilities at fair value.
SFAS No. 141R will apply prospectively to business combinations with an acquisition date on or
after the beginning of the first annual reporting period beginning after December 15, 2008. Both
early adoption and retrospective
F-10
application are prohibited. SFAS No. 141R will have an impact on the accounting for the Company’s
business combinations once adopted, but the effect depends on the terms of the Company’s business
combinations subsequent to December 31, 2008 if any.
Note C — Public Offering
On April 23, 2007, the Company completed its initial public offering (“IPO”) of 18,750,000 units
(“Units”), consisting of one share of common stock and one warrant, and on May 8, 2007, the Company
completed the closing of an additional 2,812,500 Units that were subject to the underwriters’
over-allotment option. The 21,562,500 Units sold in the IPO, including the 2,812,500 Units subject
to the over-allotment option, were sold at an offering price of $8.00 per Unit, generating total
gross proceeds of $172,500,000. Of the net proceeds after offering expenses of the IPO and the
Private Placement, $170,962,500 was placed in a Trust Account. Except for payment of taxes, the
proceeds will not be released from the Trust Account until the earlier of (i) the completion of a
Business Combination or (ii) liquidation of the Company. Public stockholders voting against the
Company’s initial business combination will be entitled to convert their common stock into a pro
rata share of the amount held in the Trust Account (including the amount held in the Trust Account
representing the deferred portion of the underwriters’ discounts and commissions), including any
interest earned on their pro rata share (net of taxes payable), if the business combination is
approved and consummated. Public stockholders who convert their stock into a pro rata share of the
Trust Account will continue to have the right to exercise any warrants they may hold.
Note D — Related Party Transactions
[
1
] On August 7, 2008, The Company entered into a $300,000 non-revolving line of credit facility
as evidenced by a letter agreement with MBF Healthcare Management, LLC, an affiliate of several
officers of the Company. The proceeds of this line of credit is being used for purposes of funding
the Company’s operating costs through April 2009. The line of credit bears interest at 5% per
annum and all interest at 5% per annum and all interest and principal is payable upon the earlier
of the consummation of a Business Combination or the dissolution of the Company. On October 31,
2008, the line of credit was increased to $2,000,000. On February 5, 2009, the line of credit was
increased to $3,000,000. The balance on the line of credit as of December 31, 2008 was $2,386,795.
Interest expense on the line of credit for 2008 was $23,536.
[
2
] The Company presently occupies office space provided by MBFHP, an affiliate of several of the
officers of the Company. Such affiliate has agreed that 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 has agreed to pay such affiliate $7,500 per month for such
services which commenced on the effective date of the Registration Statement, April 17, 2007 and
continues until the earlier of the acquisition of a target business by the Company or the Company’s
liquidation. In 2008 and 2007, the expenses for such services were $90,000 and $63,250,
respectively. The Company has also agreed to reimburse MBF Healthcare Management, an entity owned
by a related party, of up to $750 per person per flight for the use of its corporate jet by the
Company’s officers and directors in connection with activities on the Company’s behalf, such as
identifying and investigating targets for the Company’s initial Business Combination. In 2008 and
2007, the expenses for the use of the corporate jet were $13,500 and $29,250 of which all was
accrued as of December 31, 2008 and 2007.
Note E — Commitments
In connection with the Public Offering, the Company committed to pay a fee of 3.5% of the gross
offering proceeds, including the over-allotment option, to the underwriters at the closing of the
Public Offering (or the over-allotment option, as the case may be). In addition, the Company
committed to pay a deferred fee of 3.5% of the gross proceeds to the underwriters on the completion
of an initial business combination by the Company (subject to a pro rata reduction of $0.28 per
share for public stockholders who exercise their conversion right). The Company paid the
underwriters $6,037,500 upon the closing of the Public Offering and the underwriters’
over-allotment option. The remaining $5,250,000 from the Public Offering and an additional
$787,500 from the exercise of the Units that were subject to the underwriters’ over-allotment
option, for a total of $6,037,500, had been accrued by the Company as of December 31, 2007. As of
December 31, 2008, the Company concluded that the payment of this remaining amount was no longer
probable and reversed the accrual against additional paid-in capital.
F-11
Note F — Private Placement
On April 13, 2007, MBFHP, a related party to the Company purchased an aggregate of 343,750 Private
Units from the Company at a price of $8.00 per unit and 4,250,000 Private Placement Warrants at a
purchase price of $1.00 per warrant, for an aggregate purchase price of $7,000,000. Each Private
Unit consists of one share of the Company’s common stock, $0.0001 par value, and one redeemable
common stock purchase warrant (each, a “Unit Warrant” and together with the Private Placement
Warrants, the “Private Warrants”). Each Private Warrant entitles the holder to purchase from the
Company one share of common stock at an exercise price of $6.00 commencing on the later of (a) one
year from the date of the final prospectus for the IPO (April 17, 2007) or (b) the completion of a
Business Combination with a target business or the distribution of the Trust Account, and expiring
four years from the date of the final prospectus for the IPO. At the Company’s sole discretion,
the Private Warrants will be redeemable at a price of $0.01 per Private Warrant upon 30 days’
notice after the Private Warrants become exercisable, only in the event that the last sale price of
the common stock is at least $11.50 per share for any 20 trading days within a 30-day trading
period ending on the third day prior to the date on which the notice of redemption is given. The
Private Warrants will be identical to the Warrants, except that (1) upon a redemption of Private
Warrants, MBFHP will have the right to exercise the Private Warrants on a cashless basis and (2)
upon the exercise of the Private Warrants, MBFHP will receive unregistered shares of common stock.
Note G — Warrants
Each warrant entitles the registered holder to purchase one share of our common stock at a price of
$6.00 per share, commencing on the later of the completion of the initial business combination or
one year from the date of the completion of the Public Offering (April 17, 2008). None of the
Warrants issued in the Public Offering will be exercisable and the Company will not be obligated to
issue shares of common stock unless at the time of exercise a prospectus relating to common stock
issuable upon exercise of these Warrants is current and the common stock has been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the Warrants. In no event will the Company be required to net cash settle any Warrant exercise.
Under the terms of the Warrant Agreement, the Company has agreed to use its reasonable best
efforts to maintain a current prospectus relating to common stock issuable upon exercise of the
Warrants issued in the Public Offering until the expiration of these Warrants. However, the
Company makes no assurance that it will be able to do so and, if the Company does not maintain a
current prospectus relating to the common stock issuable upon exercise of the Warrants issued in
the Public Offering, holders will be unable to exercise their Warrants and the Company will not be
required to settle any such Warrant exercise. If the prospectus relating to the common stock
issuable upon the exercise of these Warrants is not current, or if the common stock is not
qualified or exempt from qualification in jurisdictions in which the holders of the Warrants
reside, these Warrants may have no value, the market for these Warrants may be limited and these
Warrants may expire worthless. If a registration statement is not effective for any unexercised
Warrant, then the purchaser of Units purchased in the Public Offering will be deemed to have paid
the full purchase price of $8.00 for the one share of the Company’s common stock included in the
Unit. Even if the prospectus relating to the common stock issuable upon exercise of the Warrants
issued in the Public Offering is not current, the Private Warrants will be exercisable for
unregistered shares of common stock. If and when the Warrants become redeemable by the Company,
the Company may exercise its redemption right even if the Warrants are not exercisable by their
holders.
Note H — Common Stock Subject to Possible Redemption
Public stockholders voting against the Company’s initial business combination will be entitled to
convert their common stock into a pro rata share of the amount held in the Trust Account (including
the amount held in the Trust Account representing the deferred portion of the underwriters’
discounts and commissions), including any interest earned on their pro rata share (net of taxes
payable), if the business combination is approved and consummated. Public stockholders who convert
their stock into a pro rata share of the Trust Account will continue to have the right to exercise
any warrants they may hold. As a result of the anticipated timing of any potential redemption, the
Company has recorded a current liability of $53,470,554 and a long term liability of $52,639,878 as
of December 31, 2008 and 2007, respectively.
F-12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: March 16, 2009
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MBF HEALTHCARE ACQUISITION CORP.
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/s/ Miguel B. Fernandez
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Miguel B. Fernandez
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Chief Executive Officer
(Principal Executive Officer)
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Date: March 16, 2009
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/s/ Marcio C. Cabrera
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Marcio C. Cabrera
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Chief Financial Officer
(Principal Financial Officer)
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Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on
Form 10-K has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
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Signature
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Title
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Date
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/s/ Miguel B. Fernandez
Miguel B. Fernandez
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Chief Executive Officer
(Principal Executive Officer)
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March 16, 2009
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/s/ Marcio C. Cabrera
Marcio C. Cabrera
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Senior Vice President, Chief
Financial Officer & Director
(Principal Financial Officer)
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March 16, 2009
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/s/ Jorge L. Rico
Jorge L. Rico
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Senior Vice President, Chief
Operating Officer & Director
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March 16, 2009
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/s/ Antonio L Argiz
Antonio L. Argiz
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Director
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March 16, 2009
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/s/ Roger J. Medel M.D.
Roger J. Medel M.D.
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Director
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March 16, 2009
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/s/ Carlos A. Saladrigas
Carlos A. Saladrigas
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Director
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March 16, 2009
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