FLORHAM PARK, N.J., Jan. 11, 2024 (GLOBE NEWSWIRE) -- Cellectar Biosciences, Inc. (NASDAQ:CLRB), a late-stage clinical biopharmaceutical company focused on the discovery, development and commercialization of targeted drugs for the treatment of cancer, announced today a partnership to advance the treatment of Waldenstrom's macroglobulinemia (WM) in the community setting with American Oncology Network (AON), a leading oncology platform with an innovative model of physician-led, community-based oncology manage ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-04321 American Oncology Network, Inc. (Exact name of registrant as specified in its charter) Delaware 85-3984427 (State or other jurisdiction of incorp ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to DIGITAL TRANSFORMATION OPPORTUNITIES CORP. (Exact name of registrant as specified in its charter) | --- | --- | --- | |------------------- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to DIGITAL TRANSFORMATION OPPORTUNITIES CORP. (Exact name of registrant as specified in its charter) | --- | --- | --- | |------------------ ...

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business.) DTOC, a SPAC, aims to merge with a high-growth healthcare technology company, extending its combination deadline after significant redemptions [Company Overview](index=3&type=section&id=Company%20Overview) DTOC, a blank check company, completed its IPO, entered a business combination agreement with AON, and extended its deadline after significant redemptions - DTOC is a blank check company that completed its IPO on March 12, 2021, raising gross proceeds of **$333.5 million**[7](index=7&type=chunk)[8](index=8&type=chunk) - The company entered into a Business Combination Agreement with American Oncology Network, LLC ("AON") on October 5, 2022, which was subsequently amended on January 6, 2023[14](index=14&type=chunk)[15](index=15&type=chunk)[17](index=17&type=chunk) Trust Account Status After Extension and Redemptions | Metric | Value | | :--- | :--- | | Shares Redeemed | 31,502,931 | | Amount Removed from Trust | $321,160,140 (approx. $10.19 per share) | | Remaining in Trust Account | $18,830,151 | - The deadline to complete a business combination was extended from March 12, 2023, to June 30, 2023, with an option for three additional one-month extensions to September 30, 2023[11](index=11&type=chunk)[18](index=18&type=chunk) [Management Team and Board of Directors](index=6&type=section&id=Our%20Management%20Team%20and%20Board%20of%20Directors) The company's management and board bring extensive healthcare and technology experience, leveraging deep industry relationships and a robust target pipeline - The management team and board possess extensive experience as entrepreneurs, operators, and investors in the healthcare and technology sectors[19](index=19&type=chunk) - Kevin Nazemi, Chairman and CEO, co-founded healthcare technology companies Oscar Health and Renew Health[20](index=20&type=chunk) - The team's strengths include deep industry relationships, a differentiated approach to value creation, a robust pipeline of targets, and experience positioning private companies for public markets[27](index=27&type=chunk)[28](index=28&type=chunk) [Business Strategy and Acquisition Criteria](index=9&type=section&id=Business%20Strategy%20and%20Acquisition%20Criteria) DTOC seeks to merge with high-growth, technology-leveraged healthcare companies benefiting from secular trends, applying specific acquisition criteria - The company's strategy is to merge with a high-growth, technology-leveraged company making significant improvements in the healthcare industry[30](index=30&type=chunk) - DTOC is particularly focused on targets benefiting from long-term secular tailwinds, such as the shift to consumer-driven and value-based healthcare[32](index=32&type=chunk) - Key acquisition criteria include an entrepreneurial management team, a technology-first model, strong customer value, a competitive moat, and attractive unit economics[33](index=33&type=chunk)[34](index=34&type=chunk) [Initial Business Combination](index=11&type=section&id=Initial%20Business%20Combination) The company's initial business combination must meet an 80% trust account value threshold and secure a controlling interest, with potential conflicts of interest noted - The initial business combination must be with a target business having an aggregate fair market value of at least 80% of the Trust Account's value at the time of signing the definitive agreement[36](index=36&type=chunk) - The company will only complete a business combination if it acquires 50% or more of the target's outstanding voting securities or otherwise gains a controlling interest[37](index=37&type=chunk) - The company's certificate of incorporation renounces interest in corporate opportunities offered to directors or officers in their personal capacity, potentially creating conflicts of interest, though management does not believe this will materially impact their ability to find a target[42](index=42&type=chunk)[43](index=43&type=chunk) [Corporate Information](index=13&type=section&id=Corporate%20Information) DTOC qualifies as an emerging growth and smaller reporting company, facing intense competition with limited full-time employees - The company is an "emerging growth company" and a "smaller reporting company," which allows for certain exemptions from standard public company reporting requirements[44](index=44&type=chunk)[48](index=48&type=chunk) - DTOC faces significant competition from other SPACs, private equity funds, and strategic acquirers in identifying and completing a business combination[49](index=49&type=chunk) - The company has two executive officers who are not obligated to devote a specific number of hours to company matters and does not intend to have full-time employees before its initial business combination[52](index=52&type=chunk) [Item 1A. Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors.) The company faces significant risks including failure to complete the AON combination, going concern issues, dilution from founder shares, and potential Nasdaq delisting [Risks Related to Business and Initial Business Combination](index=16&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20the%20Initial%20Business%20Combination) Key risks include liquidation if the combination deadline is missed, a going concern warning, difficulty meeting the AON deal's minimum cash, and new excise tax impacts - The company must complete its initial business combination by June 30, 2023 (or September 30, 2023, if extended), or it will be forced to liquidate, potentially returning only **$10.08 per share** or less to public stockholders[67](index=67&type=chunk)[72](index=72&type=chunk) - The company's independent registered public accounting firm has issued a report with an explanatory paragraph expressing substantial doubt about the company's ability to continue as a "going concern" due to its working capital deficit and the need to consummate a business combination[81](index=81&type=chunk) - The AON Business Combination has a minimum cash condition of **$60 million**, and the ability of public stockholders to redeem their shares may make it difficult to meet this condition[61](index=61&type=chunk) - A new **1% U.S. federal excise tax** on stock repurchases (including redemptions) that took effect after December 31, 2022, will likely apply to redemptions and could reduce the cash available for a business combination[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Risks Related to Ownership of Our Securities](index=41&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Securities) Risks include potential Nasdaq delisting, limited warrant exercise, reduced interest income from trust funds, and dilution from future stock issuances - The company's securities may be delisted from Nasdaq if it fails to meet continued listing requirements, such as minimum stockholders' equity (**$2.5 million**) and a minimum of **300 public holders**, which could reduce liquidity[160](index=160&type=chunk)[161](index=161&type=chunk) - The company has converted its investments in the Trust Account into cash and intends to hold them in an interest-bearing demand deposit account, which will result in lower interest income compared to U.S. government securities[156](index=156&type=chunk)[157](index=157&type=chunk) - Stockholders will not be permitted to exercise their warrants unless the company has an effective registration statement for the underlying Class A common stock, and there is no guarantee such a statement will be maintained[164](index=164&type=chunk)[165](index=165&type=chunk) - The company may issue a substantial number of additional common or preferred shares to complete its business combination, which could significantly dilute the equity interest of investors[169](index=169&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) [Risks Related to Management](index=50&type=section&id=Risks%20Related%20to%20Our%20Management) Management risks include dependence on key personnel, conflicts of interest due to other commitments, the Sponsor's financial incentives, and a material weakness in internal controls - The company's ability to effect a business combination is totally dependent on its key personnel, and their loss could negatively impact operations[189](index=189&type=chunk)[190](index=190&type=chunk) - Officers and directors are not required to commit their full time to the company's affairs, creating potential conflicts of interest in allocating their time and business opportunities[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - The Sponsor and its affiliates will lose their entire at-risk investment if a business combination is not completed, creating a conflict of interest that may influence their motivation in selecting a target[208](index=208&type=chunk)[209](index=209&type=chunk) - A material weakness in internal control over financial reporting has been identified related to the accounting for complex financial instruments[213](index=213&type=chunk)[214](index=214&type=chunk) [General Risk Factors](index=59&type=section&id=General%20Risk%20Factors) General risks include past performance not guaranteeing future success, reduced attractiveness due to disclosure exemptions, increased SPAC competition, and charter provisions discouraging lawsuits - Past performance of the management team and their affiliates is not a guarantee of future success, and investors should not rely on it as an indicator[218](index=218&type=chunk)[219](index=219&type=chunk) - The company is an emerging growth company and smaller reporting company, which allows for reduced disclosure requirements that could make its securities less attractive to investors[220](index=220&type=chunk)[221](index=221&type=chunk)[223](index=223&type=chunk) - An increasing number of SPACs has led to more competition for attractive targets, which could increase the cost of an initial business combination or result in an inability to find a suitable target[224](index=224&type=chunk)[225](index=225&type=chunk) - The company's amended and restated certificate of incorporation requires derivative actions to be brought in the Court of Chancery in Delaware, which may discourage lawsuits against directors and officers[235](index=235&type=chunk)[236](index=236&type=chunk) [Item 1B. Unresolved Staff Comments](index=43&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company reports no unresolved staff comments from the SEC - None[238](index=238&type=chunk) [Item 2. Properties](index=43&type=section&id=Item%202.%20Properties.) The company's executive offices are located in Los Angeles, California, and are considered adequate for current operations - The company maintains its executive offices at 10250 Constellation Blvd, Suite 23126, Los Angeles, CA 90067[238](index=238&type=chunk) [Item 3. Legal Proceedings](index=43&type=section&id=Item%203.%20Legal%20Proceedings.) The company reports that it is not involved in any legal proceedings - None[238](index=238&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not Applicable[238](index=238&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) The company's securities trade on Nasdaq, with three Class A common stock holders, no cash dividends paid, and IPO proceeds held in a trust account - The company's securities trade on Nasdaq under the symbols DTOCU (Units), DTOC (Class A common stock), and DTOCW (warrants)[239](index=239&type=chunk) - As of March 30, 2023, there were three holders of record of the Class A common stock[240](index=240&type=chunk) - The company has not paid and does not intend to pay cash dividends prior to completing its initial business combination[241](index=241&type=chunk) - Following the IPO, **$333.5 million** was deposited into the Trust Account, and as of the report date, approximately **$803,309** of cash was held outside the Trust Account for working capital[245](index=245&type=chunk) [Item 6. Selected Financial Data](index=45&type=section&id=Item%206.%20Selected%20Financial%20Data.) This section is reserved and contains no information - [Reserved][249](index=249&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The company reported a net income of $10.5 million for 2022, but faces a working capital deficit and going concern doubt, having extended its business combination deadline after redemptions [Results of Operations](index=46&type=section&id=Results%20of%20Operations) For 2022, the company reported a net income of approximately $10.5 million, primarily from a gain on warrant liabilities and interest income, offset by operating costs Results of Operations Summary (Years Ended Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Net Income** | **$10.5 million** | **$8.39 million** | | Gain on Warrant Liability | $8.7 million | $10.67 million | | Interest Income | $5.1 million | $0.02 million | | Formation & Operating Costs | $2.4 million | $1.63 million | [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company had limited cash and a significant working capital deficit, raising substantial doubt about its ability to continue as a going concern Financial Position (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Cash | $374,304 | | Working Capital Deficit (net of taxes) | ($1,655,967) | - The company's financial condition and the impending deadline to complete a business combination raise substantial doubt about its ability to continue as a going concern[269](index=269&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, the company is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[285](index=285&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=50&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section refers to the financial statements located after Item 15 of the report - This information appears following Item 15 of this report and is included herein by reference[285](index=285&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=50&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures.) The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None[285](index=285&type=chunk) [Item 9A. Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded that disclosure controls were ineffective due to a material weakness in accounting for complex financial instruments, with remediation steps underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2022[287](index=287&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting related to the accounting for complex financial instruments[287](index=287&type=chunk) - Remediation steps include improving the review process for complex securities and enhancing access to accounting expertise[291](index=291&type=chunk) [Item 9B. Other Information](index=52&type=section&id=Item%209B.%20Other%20Information.) The company reports no other information - None[292](index=292&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=53&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) The company is led by its Chairman and CEO, with a four-member board divided into two classes, and has established independent audit and compensation committees - The executive officers are Kevin Nazemi (Chairman & CEO) and Kyle Francis (CFO & Secretary)[295](index=295&type=chunk) - The board of directors consists of four members and is divided into two classes with two-year terms[300](index=300&type=chunk) - The company has two standing committees: an audit committee and a compensation committee, both composed of independent directors[304](index=304&type=chunk) [Item 11. Executive Compensation](index=57&type=section&id=Item%2011.%20Executive%20Compensation.) No cash compensation was paid to executive officers or directors in 2021-2022, though Class B common stock was issued, and out-of-pocket expenses will be reimbursed - No compensation of any kind, including finders fees, will be paid to the Sponsor, officers, or directors prior to or for services rendered to effectuate a business combination[310](index=310&type=chunk) - In March 2021, each independent director received **25,000 shares** of Class B common stock, and the CFO received **150,000 shares** of Class B common stock[310](index=310&type=chunk) - Individuals will be reimbursed for out-of-pocket expenses incurred on the company's behalf, such as for identifying and performing due diligence on potential targets[310](index=310&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=57&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Officers and directors collectively own 81.9% of common stock, with the Sponsor holding 79.7%, giving initial stockholders significant influence over company matters Beneficial Ownership as of March 30, 2023 | Beneficial Owner | Approximate Percentage of Outstanding Common Stock | | :--- | :--- | | Kevin Nazemi (via Sponsor) | 79.7% | | All officers and directors as a group | 81.9% | | Glazer Capital, LLC | 15.6% | - The initial stockholders' ownership block allows them to effectively influence the outcome of all matters requiring stockholder approval, including the initial business combination[318](index=318&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=58&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) The company has related party transactions primarily with its Sponsor, including founder shares and private placement warrants, with independent directors overseeing such transactions - The Sponsor purchased **8,625,000 Founder Shares** for **$25,000** and subsequently transferred shares to independent directors and the CFO[321](index=321&type=chunk) - The Sponsor purchased **6,113,333 Private Placement Warrants** for approximately **$9.2 million** simultaneously with the IPO[322](index=322&type=chunk) - The Sponsor, officers, or directors may provide up to **$2,000,000** in working capital loans, which are convertible into warrants at **$1.50 per warrant**[325](index=325&type=chunk) - The board has determined that Bradley Fluegel, Jim Moffatt, and Heather Zynczak are independent directors as defined by Nasdaq listing rules[330](index=330&type=chunk) [Item 14. Principal Accounting Fees and Services](index=60&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Marcum LLP served as the principal accountant, billing $77,250 in audit fees for 2022, with the audit committee pre-approving all services Fees Paid to Marcum LLP | Fee Type | 2022 | 2021 | | :--- | :--- | :--- | | Audit Fees | $77,250 | $118,965 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | PART IV [Item 15. Exhibits, Financial Statement Schedules](index=62&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists the financial statements and key exhibits, including the business combination agreement and charter documents - The report includes the company's financial statements for the years ended December 31, 2022 and 2021[336](index=336&type=chunk) - Key exhibits filed include the business combination agreement, charter documents, warrant agreement, and related party agreements[337](index=337&type=chunk)[338](index=338&type=chunk) [Item 16. Form 10-K Summary](index=64&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - None[340](index=340&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=98&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's report includes an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern due to its financial condition and combination deadline - The auditor's report contains an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern[348](index=348&type=chunk) - The going concern uncertainty is based on the requirement to complete a business combination by June 30, 2023, and insufficient cash and working capital as of December 31, 2022[348](index=348&type=chunk) [Financial Statements Data](index=100&type=section&id=Financial%20Statements%20Data) The 2022 financial statements show total assets of $338.9 million, total liabilities of $15.7 million, and a net income of $10.5 million, with significant cash in the Trust Account Balance Sheet Highlights (as of Dec 31, 2022) | Account | Value | | :--- | :--- | | Cash and securities held in Trust Account | $338,422,091 | | Total Assets | $338,883,014 | | Warrant liability | $875,083 | | Deferred underwriting fee | $11,672,500 | | Total Liabilities | $15,728,108 | | Class A Common Stock subject to possible redemption | $337,358,456 | | Total Stockholders' Deficit | ($14,203,550) | Statement of Operations Highlights (Year ended Dec 31, 2022) | Account | Value | | :--- | :--- | | Net Income | $10,532,439 | | Loss from Operations | ($2,389,899) | | Change in fair value of warrant liability | $8,680,492 | | Interest income | $5,128,585 | [Notes to Financial Statements](index=104&type=section&id=Notes%20to%20Financial%20Statements) The notes detail the company's organization, accounting policies, and related party transactions, also disclosing significant redemptions and the combination period extension post-year-end - The company has until June 30, 2023 (or September 30, 2023, if extended) to complete a business combination, and this condition raises substantial doubt about its ability to continue as a going concern[372](index=372&type=chunk)[378](index=378&type=chunk) - Warrants are accounted for as derivative liabilities and are re-measured to fair value at each reporting period, with changes recognized in the statement of operations[392](index=392&type=chunk) - All Class A common stock is classified as temporary equity due to redemption features outside of the company's control[393](index=393&type=chunk) - Subsequent to year-end, in March 2023, stockholders approved an extension of the combination period, resulting in the redemption of **31,502,931 public shares** for approximately **$321.2 million**[453](index=453&type=chunk)

Part I [Business](index=5&type=section&id=Item%201.%20Business) Digital Transformation Opportunities Corp. is a blank check company seeking a healthcare technology business combination by March 2023 - The company is a **blank check company** formed for a business combination[8](index=8&type=chunk) - The company has until **March 12, 2023** (24 months from its IPO closing) to complete an initial business combination, or it will be required to liquidate and return funds held in the Trust Account to public stockholders[8](index=8&type=chunk) - The company's business strategy is to merge with a **high-growth company** that has leveraged technology to improve the healthcare industry, focusing on sectors like **Consumer-Driven Healthcare** and **Value-Based Healthcare**[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) Initial Public Offering and Trust Account Details | Metric | Value | | :--- | :--- | | IPO Date | March 12, 2021 | | Units Offered | 33,350,000 Units | | Price per Unit | $10.00 | | Gross Proceeds | $333.5 million | | Amount Placed in Trust Account | $333.5 million ($10.00 per Unit) | [Company Overview](index=5&type=section&id=Company%20Overview) Digital Transformation Opportunities Corp. is a blank check company that completed its IPO in March 2021, raising **$333.5 million** - The company is a **blank check company** formed for the purpose of a business combination[8](index=8&type=chunk) - Simultaneously with the IPO, the Sponsor purchased **6,113,333 Private Placement Warrants** at **$1.50 each**, generating approximately **$9.2 million** in gross proceeds[8](index=8&type=chunk) - The company must complete a business combination by **March 12, 2023**, or it will cease operations and redeem public shares[8](index=8&type=chunk) [Our Management Team and Board of Directors](index=5&type=section&id=Our%20Management%20Team%20and%20Board%20of%20Directors) The company's management and board, led by Kevin Nazemi and Kyle Francis, bring extensive healthcare and technology experience - The management team and board possess collective experience as entrepreneurs, operators, executives, and investors in the healthcare and technology sectors[9](index=9&type=chunk) - **Kevin Nazemi**, Chairman & CEO, co-founded Oscar Health and Renew Health[10](index=10&type=chunk) - The team's strengths include deep healthcare industry relationships, a differentiated approach to value creation, a robust pipeline of potential targets, and experience positioning private companies for public markets[12](index=12&type=chunk) [Market Opportunity](index=7&type=section&id=Market%20Opportunity) The U.S. healthcare industry, with **$4.1 trillion** spending in 2020, offers a significant market for digital transformation - U.S. healthcare spending reached **$4.1 trillion**, or **$12,530 per person**, in 2020, representing **19.7% of GDP**[13](index=13&type=chunk) - The company identifies significant opportunities for digital transformation to disrupt and improve the healthcare system, citing examples like GoodRx, Livongo, and Teladoc[14](index=14&type=chunk) [Business Strategy and Acquisition Criteria](index=8&type=section&id=Business%20Strategy%20and%20Acquisition%20Criteria) The company's strategy targets high-growth, technology-leveraged healthcare companies, focusing on consumer-driven and value-based healthcare - The strategy focuses on merging with a **high-growth company** that has leveraged technology to improve the healthcare industry[15](index=15&type=chunk) - Key investment themes include **Consumer-Driven Healthcare** and **Value-Based Healthcare**[16](index=16&type=chunk)[18](index=18&type=chunk) - Acquisition criteria include: a **technology-first business model**, compelling customer value proposition, strong competitive position, favorable industry tailwinds, attractive unit economics, and an entrepreneurial management team[19](index=19&type=chunk) [Initial Business Combination](index=10&type=section&id=Initial%20Business%20Combination) The initial business combination must be at least **80%** of the Trust Account value, ensuring a controlling interest and public stockholder redemption rights - The initial business combination must have a fair market value of at least **80%** of the Trust Account value[21](index=21&type=chunk)[31](index=31&type=chunk) - The company will only complete a business combination if it acquires **50% or more** of the target's outstanding voting securities or a controlling interest[21](index=21&type=chunk)[31](index=31&type=chunk) - Public stockholders have the opportunity to redeem their Class A common stock for cash upon completion of the initial business combination[39](index=39&type=chunk) - If no business combination is completed by **March 12, 2023**, the company will liquidate and return funds in the Trust Account to public shareholders[47](index=47&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks as a SPAC, including potential liquidation by March 2023, conflicts of interest, and a material weakness in internal controls - The company is a newly incorporated entity with **no operating history**, and its management team lacks prior blank check company experience[136](index=136&type=chunk) - Failure to complete an initial business combination by the **March 12, 2023** deadline will result in liquidation, with public stockholders receiving approximately **$10.00 per share** and worthless warrants[59](index=59&type=chunk) - The Sponsor's and insiders' financial interests may conflict with public stockholders, potentially incentivizing approval of a less-than-ideal transaction if a business combination is not completed[132](index=132&type=chunk) - A **material weakness** in internal control over financial reporting has been identified related to accounting for complex financial instruments, potentially affecting accurate financial reporting[134](index=134&type=chunk) - The independent auditor included a **"going concern"** explanatory paragraph, citing mandatory liquidation if a business combination is not completed by the deadline[64](index=64&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - No unresolved staff comments[148](index=148&type=chunk) [Properties](index=55&type=section&id=Item%202.%20Properties) The company's executive offices are located at **10207 Clematis Court, Los Angeles, CA 90077**, considered adequate for current operations - The company's executive offices are located at **10207 Clematis Court, Los Angeles, CA 90077**[148](index=148&type=chunk) [Legal Proceedings](index=55&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no legal proceedings - No legal proceedings are currently reported[148](index=148&type=chunk) [Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[148](index=148&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=56&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's units, Class A common stock, and warrants trade on Nasdaq, with IPO and private placement proceeds deposited into a trust account - The company's securities trade on Nasdaq under symbols **DTOCU** (Units), **DTOC** (Class A common stock), and **DTOCW** (Warrants)[151](index=151&type=chunk) - The company has not paid and does not intend to pay cash dividends prior to completing a business combination[152](index=152&type=chunk) - Gross proceeds of **$333.5 million** from the IPO and approximately **$9.2 million** from the private placement were generated, with **$333.5 million** deposited into the Trust Account[153](index=153&type=chunk)[155](index=155&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For the year ended December 31, 2021, the company reported **$8.39 million** net income, primarily from a non-cash gain on warrant liabilities, with management noting going concern doubt Results of Operations Summary | Item | For the year ended Dec 31, 2021 | For the period from Nov 17, 2020 to Dec 31, 2020 | | :--- | :--- | :--- | | Loss from Operations | $(1,632,489) | $(834) | | Change in fair value of warrant liabilities | $10,666,695 | $0 | | **Net Income (Loss)** | **$8,394,719** | **$(834)** | - As of December 31, 2021, the company held approximately **$0.8 million** in its operating bank account and **$0.2 million** in working capital[160](index=160&type=chunk) - Management concluded that the **March 12, 2023** mandatory liquidation date, if a business combination is not consummated, raises **substantial doubt** about the company's ability to continue as a going concern[162](index=162&type=chunk) - A critical accounting policy classifies warrants as liabilities measured at fair value, with changes recognized in the Statement of Operations due to warrant agreement provisions precluding equity classification[165](index=165&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2021, due to a **material weakness** in internal control over financial reporting - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2021[175](index=175&type=chunk) - The ineffectiveness stems from a **material weakness** in internal control over financial reporting related to accounting for complex equity and equity-linked instruments[175](index=175&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=63&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company is led by Kevin Nazemi and Kyle Francis, with a four-member board including three independent directors, and established audit and compensation committees Directors and Executive Officers | Name | Age | Position | | :--- | :-- | :--- | | Kevin Nazemi | 40 | Chairman of the Board and Chief Executive Officer | | Kyle Francis | 48 | Chief Financial Officer and Secretary | | Bradley Fluegel | 60 | Director | | Jim Moffatt | 63 | Director | | Heather Zynczak | 50 | Director | - The board has two standing committees: an **audit committee** and a **compensation committee**[183](index=183&type=chunk)[185](index=185&type=chunk) - The board determined that **Bradley Fluegel, Jim Moffatt, and Heather Zynczak** are independent directors[203](index=203&type=chunk) [Executive Compensation](index=66&type=section&id=Item%2011.%20Executive%20Compensation) No cash compensation is paid to executive officers or directors, though independent directors and the CFO received Class B common stock, and out-of-pocket expenses are reimbursed - No compensation is paid to the Sponsor, CEO, CFO, or directors for services rendered to effectuate a business combination[189](index=189&type=chunk) - In March 2021, independent directors each received **25,000 shares** of Class B common stock, and CFO Kyle Francis received **150,000 shares** of Class B common stock[189](index=189&type=chunk) - Individuals will be reimbursed for out-of-pocket expenses incurred on the company's behalf[191](index=191&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=67&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of April 11, 2022, officers and directors as a group beneficially owned **20.0%** of outstanding common stock, with the Sponsor as the largest holder Beneficial Ownership as of April 11, 2022 | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Approximate Percentage of Outstanding Common Stock | | :--- | :--- | :--- | | Kevin Nazemi | 8,112,500 (2) | 19.5 % | | Kyle Francis | 150,000 (3) | * | | Bradley Fluegel | 25,000 (3) | * | | Jim Moffatt | 63 | Director | | Heather Zynczak | 25,000 (3) | * | | Digital Transformation Sponsor LLC | 8,112,500 (3) | 19.5 % | | All officers and directors as a group (five individuals) | 8,337,500 (3) | 20.0 % | | Glazer Capital, LLC | 2,854,230 | 6.8 % | - The initial stockholders beneficially own **20.0%** of the issued and outstanding common stock and have the right to elect all directors prior to the initial business combination[195](index=195&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=68&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company has several related party transactions, primarily with its Sponsor, including the purchase of Founder Shares and Private Placement Warrants - The Sponsor purchased **8,625,000 shares** of Class B common stock for **$25,000** and later transferred some shares to directors and the CFO[197](index=197&type=chunk) - The Sponsor purchased **6,113,333 Private Placement Warrants** for **$9.17 million**[197](index=197&type=chunk) - The Sponsor provided a **$300,000** non-interest-bearing promissory note for IPO expenses, fully repaid on **March 12, 2021**[199](index=199&type=chunk) - The board determined that **Bradley Fluegel, Jim Moffatt, and Heather Zynczak** are independent directors[203](index=203&type=chunk) [Principal Accounting Fees and Services](index=70&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Marcum LLP serves as the principal accountant, with aggregate audit fees of **$118,965** in 2021 and **$15,450** in 2020, and all services pre-approved by the audit committee Fees Paid to Marcum LLP | Fee Type | 2021 | 2020 | | :--- | :--- | :--- | | Audit Fees | $118,965 | $15,450 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | Part IV [Exhibits, Financial Statement Schedules](index=71&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including financial statements and various exhibits such as the Certificate of Incorporation and Warrant Agreement - The financial statements are filed as part of this Form 10-K[206](index=206&type=chunk)[207](index=207&type=chunk) - Exhibits filed include the Amended and Restated Certificate of Incorporation, Warrant Agreement, and Registration and Stockholder Rights Agreement[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=76&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Marcum LLP issued an opinion on the financial statements, including an explanatory paragraph expressing **substantial doubt** about the company's ability to continue as a going concern - The auditor's report contains an explanatory paragraph regarding the company's ability to continue as a **going concern**[231](index=231&type=chunk) - The going concern uncertainty stems from the **March 12, 2023** deadline to complete a business combination, leading to liquidation if unsuccessful[231](index=231&type=chunk) [Financial Statements Data](index=77&type=section&id=Financial%20Statements%20Data) As of December 31, 2021, total assets were **$334.9 million**, with total liabilities of **$22.3 million**, and a net income of **$8.4 million** for the year Balance Sheet Highlights (as of Dec 31) | Account | 2021 | 2020 | | :--- | :--- | :--- | | Cash | $803,309 | $0 | | Cash and securities held in Trust Account | $333,520,259 | $0 | | **Total Assets** | **$334,879,010** | **$9,572** | | Warrant liability | $9,555,575 | $0 | | Deferred underwriting fee | $11,672,500 | $0 | | **Total Liabilities** | **$22,256,543** | **$10,406** | | Class A Common Stock subject to possible redemption | $333,500,000 | $0 | | Total stockholders' deficit | $(20,877,533) | $(834) | Statement of Operations Highlights | Account | Year Ended Dec 31, 2021 | Period Ended Dec 31, 2020 | | :--- | :--- | :--- | | Loss from Operations | $(1,632,489) | $(834) | | Change in fair value of warrant liability | $10,666,695 | $0 | | **Net Income (Loss)** | **$8,394,719** | **$(834)** | [Notes to Financial Statements](index=81&type=section&id=Notes%20to%20Financial%20Statements) The notes detail the company's SPAC organization, IPO, private placement, related party transactions, and key accounting policies, including warrant classification as liabilities - The company must complete a business combination within **24 months** from the **March 12, 2021** IPO closing or face liquidation, raising **substantial doubt** about its ability to continue as a going concern[242](index=242&type=chunk)[244](index=244&type=chunk)[247](index=247&type=chunk) - Warrants are classified as liabilities and measured at fair value at each reporting period, with changes affecting the statement of operations[259](index=259&type=chunk) - The fair value of Private Placement Warrants is determined using a **Monte Carlo simulation model**, a **Level 3 fair value measurement** due to unobservable inputs like business combination probability[286](index=286&type=chunk)[291](index=291&type=chunk)

Financial Performance - The company reported a net income of approximately $9.0 million for the nine months ended September 30, 2021, which included a loss from operations of $0.69 million and a gain from the change in fair value of warrant liabilities of $10.3 million [108]. - The company has not completed a Business Combination within 24 months from the IPO closing date, which may lead to the redemption of public shares [107]. - The company has not considered the effect of warrants in the calculation of diluted income (loss) per share, resulting in basic and diluted net income (loss) per share being the same [117]. IPO and Proceeds - The company completed its IPO on March 12, 2021, raising gross proceeds of $333.5 million from the sale of 33,350,000 units at $10.00 per unit, incurring offering costs of approximately $18.9 million [104]. - The company raised gross proceeds of $333.35 million from its IPO of 33,350,000 Units at $10.00 per Unit, including the underwriters' full exercise of the Over-Allotment Option [137]. - Offering costs incurred during the IPO were approximately $18.83 million, which included $11.67 million in deferred underwriting commissions [137]. - The company has placed $333.5 million of net proceeds from the IPO and Private Placement into a trust account, which will be used for a Business Combination [106]. - The company placed $2.1 million of net proceeds from the IPO and certain proceeds from the Private Placement Warrants into the Trust Account [137]. Financial Position - As of September 30, 2021, the company had approximately $0.9 million in its operating bank account and working capital of approximately $1.1 million [109]. - The company has no long-term debt obligations or significant liabilities as of the reporting date [112]. - The company’s management believes it will have sufficient working capital to meet its needs through the earlier of the consummation of a Business Combination or one year from the filing date [111]. Internal Controls and Reporting - The company identified a material weakness in internal control over financial reporting related to complex financial instruments as of September 30, 2021 [132]. - The company continues to evaluate steps to remediate the identified material weakness, which may be time-consuming and costly [133]. - There were no changes in internal control over financial reporting that materially affected the company during the three months ended September 30, 2021 [130]. - The company has not identified any new material weaknesses as of the date of the Quarterly Report, but future weaknesses could impair financial reporting [134]. - The company’s internal controls are necessary to provide reliable financial reports and prevent fraud [133]. - The company’s management has acknowledged the inherent limitations in disclosure controls and procedures, which may not prevent all errors or instances of fraud [129]. Risk Factors - The company’s risk factors, which could materially adversely affect its business, were disclosed in the final prospectus for the IPO filed with the SEC on March 1, 2021 [131].