[Executive Summary and Business Overview](index=1&type=section&id=Executive_Summary_Business_Overview) [Fiscal Year 2023 Highlights](index=1&type=section&id=Fiscal_Year_2023_Highlights) AON achieved significant FY2023 revenue growth from increased patient encounters, went public, and strategically invested in its operating platform Fiscal Year 2023 Financial Highlights | Metric | Value (2023) | Change vs 2022 | | :----- | :----------- | :------------- | | Revenue | $1,279.2 million | +11.3% | | Patient Encounters | | +7.9% | - The company successfully went public during the year and made significant investments in its industry-leading service platform, including transitioning to a new enterprise revenue cycle platform in Q4 2023[2](index=2&type=chunk) - The new revenue cycle platform enabled AON to successfully navigate the recent Change Healthcare disruption that impacted many other healthcare providers[2](index=2&type=chunk) [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth_Quarter_2023_Highlights) Q4 2023 revenue grew from patient encounters, but net loss widened due to a non-recurring reserve, and Adjusted EBITDA declined from rising drug costs Fourth Quarter 2023 Financial Highlights | Metric | Value (Q4 2023) | Change vs Q4 2022 | | :----- | :-------------- | :---------------- | | Revenue | $324.2 million | +7.9% | | Patient Encounters | | +9.5% | | Net Loss before NCI | $(22.4) million | vs $1.4 million Net Income | | Adjusted EBITDA | $5.0 million | -$3.0 million (-37.5%) | - Revenue per patient decreased by **1.8%** in Q4 2023, primarily due to a **$20.7 million** non-recurring incremental accounts receivable reserve related to the transition from the old to the new billing system[3](index=3&type=chunk) - The decline in Q4 Adjusted EBITDA was primarily attributable to increased drug costs[4](index=4&type=chunk) [CEO Commentary](index=1&type=section&id=CEO_Commentary) CEO Todd Schonherz highlighted 2023's growth, including revenue and patient encounter increases, public listing, and strategic platform investments, emphasizing AON's national oncology platform status - The CEO highlighted significant growth across all aspects of the company's business, including **11.3% revenue growth** and **7.9% patient encounter growth**[2](index=2&type=chunk) - Strategic investment in the new enterprise revenue cycle platform in Q4 2023 not only prepared AON for the future but also enabled it to successfully navigate the Change Healthcare disruption[2](index=2&type=chunk) - AON believes it will be the preferred destination for community oncology practices seeking to grow their businesses as the only truly national oncology platform[2](index=2&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed_Financial_Performance) [Three-Month Periods Ended December 31 (Fourth Quarter)](index=1&type=section&id=Three_Month_Periods_Ended_December_31_Q4) AON's Q4 2023 revenue grew 7.9% from patient encounters, but a $20.7 million non-recurring reserve led to a $22.4 million net loss and decreased revenue per patient Q4 Revenue Performance | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Total Revenue | $324,182 | $300,398 | $23,784 | 7.9% | | Patient Service Revenue, net | $320,038 | $297,425 | $22,613 | 7.6% | | Other Revenue | $4,144 | $2,973 | $1,171 | 39.4% | - Q4 2023 revenue growth was primarily attributable to a **9.5%** increase in patient encounters, contributing **$28.4 million** in revenue growth, partially offset by a **$5.8 million** decrease in revenue per patient, stemming from a **1.8%** reduction in revenue per patient[3](index=3&type=chunk) - The decrease in revenue per patient was due to a **$20.7 million** non-recurring incremental accounts receivable reserve related to the transition from the old to the new billing system in Q4 2023[3](index=3&type=chunk) [Q4 Profitability Analysis](index=1&type=section&id=Q4_Profitability_Analysis) Q4 Profitability Metrics | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Net Income (Loss) before NCI | $(22,353) | $1,363 | $(23,716) | * | | Adjusted EBITDA | $5,013 | $8,038 | $(3,025) | (37.6%) | | Loss per share of Class A Common Stock (Basic) | $(0.76) | $0.00 | | | - The primary reason for the net loss in Q4 2023 was a **$20.7 million** incremental accounts receivable reserve related to accounts receivable from the old billing system[4](index=4&type=chunk) - The decline in Adjusted EBITDA was primarily due to increased drug costs[4](index=4&type=chunk) [Fiscal Years Ended December 31 (Full Year)](index=1&type=section&id=Fiscal_Years_Ended_December_31_Full_Year) AON's FY2023 revenue grew 11.3% to $1.2792 billion from patient encounters, but a $63.2 million net loss resulted from increased transaction expenses, non-recurring reserves, and non-cash adjustments Full Year Revenue Performance | Metric | FY 2023 (in thousands) | FY 2022 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Total Revenue | $1,279,185 | $1,149,670 | $129,515 | 11.3% | | Patient Service Revenue, net | $1,265,719 | $1,137,932 | $127,787 | 11.2% | | Other Revenue | $13,466 | $11,738 | $1,728 | 14.7% | - Overall revenue growth was primarily attributable to a **7.9%** increase in patient encounters, contributing **$148.5 million** in revenue growth, partially offset by a decrease in revenue per patient, which stemmed from a **$20.7 million** incremental accounts receivable reserve[5](index=5&type=chunk) [Full Year Profitability Analysis](index=1&type=section&id=Full_Year_Profitability_Analysis) Full Year Profitability Metrics | Metric | FY 2023 (in thousands) | FY 2022 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Net Income (Loss) before NCI | $(63,150) | $2,589 | $(65,739) | * | | Income (Loss) from Operations | $(49,154) | $5,566 | $(54,720) | * | | Adjusted EBITDA | $18,087 | $18,133 | $(46) | (0.3%) | | Loss per share of Class A Common Stock (Basic) | $(1.36) | $0.00 | | | - The year-over-year decrease in net income was primarily attributable to a **$27.9 million** increase in transaction expenses related to the company's business combination, a **$20.7 million** non-recurring incremental accounts receivable reserve related to old billing system receivables, a **$9.3 million** increase in non-cash valuation adjustments related to equity instruments classified as liabilities, and a **$4.9 million** increase in non-cash stock-based compensation expense[6](index=6&type=chunk)[7](index=7&type=chunk) [Liquidity, Cash Flow, and Debt](index=2&type=section&id=Liquidity_Cash_Flow_and_Debt) AON's total liquidity was $105.3 million as of December 31, 2023; FY2023 net cash used in operations was $18.1 million, including $31.2 million in transaction expenses Liquidity and Debt (as of December 31, 2023) | Metric | Value (in millions) | | :-------------------------------- | :------------------ | | Total Liquidity | $105.3 | | Cash and Cash Equivalents | $28.5 | | Short-term Marketable Securities | $35.4 | | Incremental Borrowing Capacity (PNC Loan) | $40.4 | | Incremental Borrowing Capacity (PNC Line of Credit) | $1.0 | | Outstanding under PNC Loan Facility | $81.3 | | PNC Line of Credit | Undrawn | - Net cash used in operating activities for fiscal year 2023 was **$18.1 million**, which included **$31.2 million** in transaction expenses related to the business combination[7](index=7&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non_GAAP_Financial_Measures) [Definition and Rationale of Adjusted EBITDA](index=2&type=section&id=Definition_and_Rationale_of_Adjusted_EBITDA) Adjusted EBITDA, a non-GAAP measure, offers a clearer view of AONC's operating performance by excluding capital, financing, non-cash, and non-recurring expenses, supplementing GAAP results - Adjusted EBITDA is defined as net income before interest income, interest expense, income taxes, depreciation, and amortization, further adjusted for certain other non-cash expenses that may be recorded annually (such as stock-based compensation expense and non-cash valuation adjustments) and non-recurring expenses (such as revenue cycle transformation costs and business combination-related transaction costs)[9](index=9&type=chunk) - Management uses this metric to evaluate operating results, assess factors and trends affecting the business, and plan and budget for future periods, believing it provides a more comprehensive understanding of AONC's operating results when used in conjunction with GAAP results[8](index=8&type=chunk)[10](index=10&type=chunk) - Non-GAAP financial measures should be considered supplementary to, not a substitute for or superior to, GAAP results, with disclosures and reconciliations provided for investors' independent analysis[10](index=10&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted EBITDA (Full Year)](index=6&type=section&id=Reconciliation_of_Net_Income_%28Loss%29_to_Adjusted_EBITDA_%28Full_Year%29) Full-year reconciliation shows Adjusted EBITDA stability despite a net income to net loss shift, highlighting non-cash and non-recurring item impacts Full Year Adjusted EBITDA Reconciliation (Selected Items) | Item | FY 2023 (in thousands) | FY 2022 (in thousands) | Change (in thousands) | | :----------------------------- | :--------------------- | :--------------------- | :-------------------- | | Net Income (Loss) | $(63,150) | $2,589 | $(65,739) | | Revenue cycle transformation (a) | $21,589 (approx) | $1,726 | $19,863 (approx) | | Non-cash valuation adjustments (b) | $9,249 | $0 | $9,249 | | Transaction expenses (c) | $27,959 | $3,277 | $24,682 | | Adjusted EBITDA | $18,087 | $18,133 | $(46) | - Revenue cycle transformation costs for fiscal year 2023 included approximately **$20.7 million** in incremental implied price concessions related to exiting the old billing system and approximately **$0.9 million** in duplicate billing system costs during the old system's decommissioning period[24](index=24&type=chunk) - Non-cash valuation adjustments primarily represent valuation adjustments related to equity instruments classified as liabilities[24](index=24&type=chunk) - Transaction expenses are costs associated with the business combination[24](index=24&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted EBITDA (Fourth Quarter)](index=6&type=section&id=Reconciliation_of_Net_Income_%28Loss%29_to_Adjusted_EBITDA_%28Fourth_Quarter%29) Q4 reconciliation shows operational transformation costs, including non-recurring reserves, significantly impacted the shift from net income to a net loss; Adjusted EBITDA declined from increased drug costs Q4 Adjusted EBITDA Reconciliation (Selected Items) | Item | Q4 2023 (in thousands) | Q4 2022 (in thousands) | Change (in thousands) | | :----------------------------- | :--------------------- | :--------------------- | :-------------------- | | Net Income (Loss) | $(22,354) | $1,364 | $(23,718) | | Operational transformation | $21,589 | $317 | $21,272 | | Transaction expenses | $1,351 | $3,126 | $(1,775) | | Adjusted EBITDA | $5,013 | $8,038 | $(3,025) | - Operational transformation costs in Q4 2023 were **$21.6 million**, significantly higher than Q4 2022, reflecting the impact of the billing system transition[25](index=25&type=chunk) [Company Information](index=3&type=section&id=Company_Information) [Conference Call Details](index=3&type=section&id=Conference_Call_Details) American Oncology Network, Inc. held a conference call on March 28, 2024, to discuss Q4 2023 financial results, with live access, replay, and webcast details - The conference call was held on Thursday, March 28, 2024, at 8:30 AM Eastern Time[13](index=13&type=chunk) - A replay of the call is available via telephone and a live webcast on the investor relations website, investors.aconology.com[13](index=13&type=chunk) [About American Oncology Network, Inc.](index=3&type=section&id=About_American_Oncology_Network%2C%20Inc.) Founded in 2018, AONC is a physician-led, community-based oncology management platform supporting physicians and enhancing patient care; its network spans 86 locations in 19 states and D.C. with over 200 providers as of December 31, 2023 - Since its inception in 2018, AONC has offered an innovative physician-led, community-based oncology management model[14](index=14&type=chunk) - The company's purpose is to preserve and enhance community oncology by helping physicians navigate complex healthcare environments, providing them with an efficient platform to operate and grow independently, and most importantly, improving the quality of patient care delivered[14](index=14&type=chunk) AONC Network Statistics (as of December 31, 2023) | Metric | Value | | :---------------- | :---- | | Providers | >200 | | Locations | 86 | | States + D.C. | 19 | [Forward-Looking Statements](index=3&type=section&id=Forward_Looking_Statements) [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward_Looking_Statements_Disclaimer) This section contains standard forward-looking statements and disclaimers under the Private Securities Litigation Reform Act of 1995, cautioning readers about inherent risks and uncertainties, with no update obligation unless legally required - This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding American Oncology Network, Inc.'s financial condition, results of operations, profitability prospects, and outlook[15](index=15&type=chunk) - Forward-looking statements are based on current expectations and projections about future events and various assumptions, involving risks, uncertainties (many of which are beyond AON's control), or other assumptions that could cause actual results or performance to differ materially from those expressed or implied by these statements[15](index=15&type=chunk)[16](index=16&type=chunk) - AON cannot guarantee that it will actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements, and readers should not place undue reliance on AON's forward-looking statements, with AON undertaking no obligation to publicly update or revise any forward-looking statements unless required by law[15](index=15&type=chunk)[17](index=17&type=chunk)

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 ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the unaudited condensed financial statements and management's discussion for Digital Transformation Opportunities Corp [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements for Digital Transformation Opportunities Corp. for the periods ended June 30, 2023, and December 31, 2022, including balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with comprehensive notes detailing the company's organization, accounting policies, and significant transactions [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Presents the company's financial position with key asset, liability, and equity figures as of June 30, 2023, and December 31, 2022 Condensed Balance Sheet Highlights | Asset/Liability Category | June 30, 2023 (Unaudited) | December 31, 2022 | | :----------------------- | :------------------------ | :------------------ | | Cash | $2,044 | $374,304 | | Cash and securities held in Trust Account | $19,303,902 | $338,422,091 | | Total Assets | $19,397,814 | $338,883,014 | | Accounts payable and accrued expenses | $3,871,117 | $2,605,527 | | Total current liabilities | $8,643,973 | $2,605,527 | | Warrant liability | $2,250,975 | $875,083 | | Total Liabilities | $10,894,948 | $15,728,108 | | Total Stockholders' Deficit | $(10,167,824) | $(14,203,550) | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) Details the company's net loss and per-share performance for the three and six months ended June 30, 2023 and 2022 Condensed Statements of Operations Highlights | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(1,712,369) | $1,861,876 | $(1,532,961) | $5,383,569 | | Basic and diluted net (loss) income per share, Class A common stock subject to possible redemption | $(0.17) | $0.04 | $(0.07) | $0.13 | [Condensed Statements of Changes in Stockholders' Deficit](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Deficit) Outlines the changes in stockholders' deficit for the six months ended June 30, 2023, including net loss and underwriting fee adjustments Changes in Stockholders' Deficit (Six Months Ended June 30, 2023) | Item | Amount ($) | | :---------------------------------- | :--------- | | Balance as of January 1, 2023 | (14,203,550) | | Conversion of Class B shares to Class A | 0 | | Excise tax payable | (3,211,601) | | Net income (Q1 2023) | 179,408 | | Reduction of underwriting fee payable | 11,252,662 | | Net loss (Q2 2023) | (1,712,369) | | Balance as of June 30, 2023 | (10,167,824) | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Condensed Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :---------------------------------- | :----------- | :----------- | | Net (loss) income | (1,532,961) | 5,383,569 |\ | Net cash used in operating activities | (1,259,310) | (512,600) | | Net cash provided by investing activities | 321,540,190 | — | | Net cash used in financing activities | (320,653,140) | — | | Net Change in Cash | (372,260) | (512,600) | | Cash, end of period | 2,044 | 290,709 | [Notes to Unaudited Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) Provides detailed explanations of the company's financial statements, accounting policies, and significant transactions [Note 1 — Organization and Business Operations](index=8&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Business%20Operations) DTOC is a **blank check company** formed in **2020** for a **business combination**, focusing on its **IPO** and target identification, facing a **liquidation deadline** - **Company** was incorporated on **November 17, 2020**, as a **blank check company** for the purpose of effecting a **business combination**[22](index=22&type=chunk) - Consummated **Initial Public Offering (IPO)** on **March 12, 2021**, selling **33,350,000 units** at **$10.00 per unit**, generating gross proceeds of **$333,500,000**[24](index=24&type=chunk) - Following the **IPO**, **$333,500,000** was placed in a **Trust Account**, invested in U.S. government securities or money market funds[27](index=27&type=chunk) - The deadline to complete an initial **business combination** was extended from **March 12, 2023**, to **June 30, 2023**, with options for further extensions up to **September 30, 2023**[29](index=29&type=chunk) - In **March 2023**, **31,502,931 public shares** were redeemed for **$321,160,140** (approximately **$10.19 per share**) from the **trust account**[29](index=29&type=chunk) - On **June 6, 2023**, **Barclays Capital Inc.** waived its entitlement to **$11,672,500** in **deferred underwriting commissions**[34](index=34&type=chunk) Liquidity and Working Capital | Metric | June 30, 2023 | December 31, 2022 | | :---------------------- | :------------ | :---------------- | | Cash | $2,044 | $374,304 | | Working Capital Deficit | $7,916,849 | $1,655,967 | - The **company's liquidity condition** and **mandatory liquidation date** raise substantial doubt about its ability to continue as a **going concern**[40](index=40&type=chunk) - As of **June 30, 2023**, the **company** recorded **$3,211,601** of **excise tax liability**, calculated as **1%** of shares redeemed on **March 8, 2023**, under the **Inflation Reduction Act of 2022**[46](index=46&type=chunk) [Note 2 — Significant Accounting Policies](index=14&type=section&id=Note%202%20%E2%80%94%20Significant%20Accounting%20Policies) Outlines **significant accounting policies** for **unaudited condensed financial statements**, covering **GAAP**, **emerging growth company** status, **fair value measurements**, and **warrant liabilities** - **Unaudited condensed financial statements** are presented in conformity with **US GAAP** for interim financial information[47](index=47&type=chunk) - The **company** is an '**emerging growth company**' and has elected not to opt out of the **extended transition period** for complying with new or revised financial accounting standards[49](index=49&type=chunk)[50](index=50&type=chunk) - Assets held in the **Trust Account** are classified as **trading securities** and presented at **fair value**[53](index=53&type=chunk) - **Fair value measurements** utilize a **three-tier hierarchy** (**Level 1**, **2**, **3**) based on observable and unobservable inputs[54](index=54&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - **Public Warrants** and **Private Placement Warrants** are recorded as **derivative liabilities** at **fair value**, with changes recognized in the **Statements of Operations**[61](index=61&type=chunk)[70](index=70&type=chunk) - **Class A common stock subject to possible redemption** is classified as **temporary equity** at **redemption value** due to **redemption rights** outside the **company's control**[62](index=62&type=chunk)[65](index=65&type=chunk) Effective Tax Rates | Period | 2023 (%) | 2022 (%) | | :----------------------------------- | :------- | :------- | | Three months ended June 30 | (2.10) | 0.93 | | Six months ended June 30 | (46.65) | 0.32 | - **Net income (loss) per common share** is computed using the **two-class method**; **warrants** are **anti-dilutive** and not included in **diluted EPS**[75](index=75&type=chunk)[76](index=76&type=chunk) [Note 3 — Initial Public Offering](index=25&type=section&id=Note%203%20%E2%80%94%20Initial%20Public%20Offering) Details the **IPO** of DTOC, including **unit sales**, **Public Warrant** terms, **exercise price**, and **redemption triggers** based on **Class A common stock price** - On **March 12, 2021**, the **Company** sold **33,350,000 Units** at **$10.00 per Unit**[83](index=83&type=chunk) - Each **Unit** consists of one share of **Class A common stock** and one-fourth of one redeemable warrant[83](index=83&type=chunk) - **Public Warrants** are exercisable at **$11.50 per share**, becoming exercisable on the later of **12 months** from **IPO** closing or **30 days** after **business combination**, and expire **five years** after **business combination**[84](index=84&type=chunk) - The **Company** may redeem outstanding **warrants** at **$0.01 per warrant** if the **Class A common stock price** equals or exceeds **$18.00 per share** for a specified period[87](index=87&type=chunk)[88](index=88&type=chunk) - The **Company** may also redeem outstanding **warrants** at **$0.10 per warrant** if the **Class A common stock price** equals or exceeds **$10.00 per share** for a specified period, with holders able to exercise on a cashless basis[88](index=88&type=chunk) [Note 4 — Private Placement](index=27&type=section&id=Note%204%20%E2%80%94%20Private%20Placement) Describes the **private placement** of **Private Placement Warrants** to the **Sponsor**, generating **$9.17 million** and outlining their **non-redeemable** terms - Simultaneously with the **IPO** closing, the **Sponsor** purchased **6,113,333 Private Placement Warrants** at **$1.50 per warrant**[91](index=91&type=chunk) - The **private placement** generated gross proceeds of **$9,170,000**[91](index=91&type=chunk) - **Private Placement Warrants** are **non-redeemable** while held by the **Sponsor** or its permitted transferees and have identical terms to **Public Warrants**[92](index=92&type=chunk) [Note 5 — Related Party Transactions](index=29&type=section&id=Note%205%20%E2%80%94%20Related%20Party%20Transactions) Details **related party transactions** with the **Sponsor**, including **Founder Shares**, **promissory notes** for extensions, and **working capital advances** - On **January 8, 2021**, the **Sponsor** purchased **7,187,500 shares** of **Class B common stock (Founder Shares)** for **$25,000**, which increased to **8,625,000** after a stock dividend, with some later forfeited[93](index=93&type=chunk) - **25,000 Founder Shares** were transferred to each independent director and **150,000** to the **CFO** as inducement, vesting upon consummation of an initial **business combination**[94](index=94&type=chunk) - The **Sponsor**, officers, and directors agreed to waive their **redemption rights** with respect to their **Founder Shares** and public shares[95](index=95&type=chunk) - On **March 6, 2023**, an **unsecured promissory note** for **$150,000** was issued to the **Sponsor** for a **Trust Account** deposit to fund an extension[98](index=98&type=chunk) - On **June 26, 2023**, an **unsecured promissory note** for **$50,000** was issued to the **Sponsor** for an extension payment[98](index=98&type=chunk) - For the **six months** ended **June 30, 2023**, the **Sponsor** advanced **$307,000** for **working capital purposes**[100](index=100&type=chunk) - On **May 1, 2023**, the **Company** issued a **promissory note** to the **Sponsor** for up to **$700,000 (Working Capital Facility)** to fund **operating expenses**, **non-interest bearing** and due upon **business combination** or **liquidation**[102](index=102&type=chunk) [Note 6 — Commitments and Contingencies](index=31&type=section&id=Note%206%20%E2%80%94%20Commitments%20and%20Contingencies) Details **commitments and contingencies**, including **registration rights**, waived **deferred underwriting fees**, and the **AON Business Combination Agreement** with recent amendments - Holders of **Founder Shares**, **Private Placement Warrants**, and **warrants** from **Working Capital Loans** have certain '**piggy-back' registration rights**[103](index=103&type=chunk) - Underwriters were entitled to **$11,672,500** in **deferred underwriting fees**[104](index=104&type=chunk) - On **June 6, 2023**, **Barclays Capital Inc.** waived its entitlement to the **$11,672,500 deferred underwriting commissions**[105](index=105&type=chunk) - On **October 5, 2022**, the **Company** entered into a **Business Combination Agreement** with **American Oncology Network, LLC (AON)** to form a combined company[106](index=106&type=chunk) - The **Business Combination Agreement** was amended multiple times, including on **January 6, 2023**, **April 27, 2023**, and **June 14, 2023**, to modify terms such as board composition, employee unit exchanges, and the introduction of **New AON Series A preferred stock**[108](index=108&type=chunk)[142](index=142&type=chunk) - The **Third Amended and Restated Business Combination Agreement (June 14, 2023)** removed the **PIPE financing** and **minimum cash requirement** due to a **$65 million Class C Investment**[142](index=142&type=chunk) - The **Company** received a **Public Float Notice** from **Nasdaq** on **April 20, 2023**, but was notified on **June 9, 2023**, that it complies with the **minimum publicly held shares requirement**[114](index=114&type=chunk)[115](index=115&type=chunk) [Note 7 — Stockholders' Deficit](index=34&type=section&id=Note%207%20%E2%80%94%20Stockholders'%20Deficit) Details **authorized and outstanding shares** for **Preferred**, **Class A**, and **Class B Common Stock**, including **conversion mechanisms** and **voting rights** - Authorized **1,000,000 shares** of **preferred stock**; none issued or outstanding[116](index=116&type=chunk) Common Stock Outstanding | Class of Stock | June 30, 2023 | December 31, 2022 | | :------------- | :------------ | :---------------- | | Class A | 10,109,569 | 33,350,000 | | Class B | 75,000 | 8,337,500 | - **Class B common stock** automatically converts into **Class A common stock** on a **one-for-one basis** at the time of the initial **business combination**, subject to adjustment[117](index=117&type=chunk) - Holders of **Class A** and **Class B common stock** vote together as a single class, with each share entitling the holder to one vote[118](index=118&type=chunk) [Note 8 — Fair Value Measurements](index=36&type=section&id=Note%208%20%E2%80%94%20Fair%20Value%20Measurements) Provides **fair value measurements** for **marketable securities** and **warrant liabilities**, classifying them within the **fair value hierarchy** and detailing **Monte Carlo simulation inputs** Fair Value Hierarchy of Assets and Liabilities (June 30, 2023) | Asset/Liability Category | Fair Value ($) | Level 1 ($) | Level 2 ($) | Level 3 ($) | | :----------------------- | :------------- | :---------- | :---------- | :---------- | | U.S. Money Market held in Trust Account | 19,303,902 | 19,303,902 | — | — | | Public Warrants Liability | 1,285,643 | 1,285,643 | — | — | | Private Placement Warrants Liability | 965,332 | — | — | 965,332 | - The **fair value** of **Private Placement Warrants** is estimated using a **Monte Carlo simulation model** and classified as **Level 3**[121](index=121&type=chunk) Key Inputs for Private Warrants Valuation (June 30, 2023) | Input | Value | | :---------------------------------------- | :-------- | | Probability of completing a business combination | 30% | | Risk-free interest rate | 5.43% | | Expected term remaining (years) | 0.76 | | Expected volatility | 11.3% | | Stock price | $10.32 | | Dividend yield | 0.00% | | Exercise price | $11.50 | Changes in Fair Value of Level 3 Warrant Liabilities (Six Months Ended June 30) | Period | 2023 ($) | 2022 ($) | | :----------------------------------- | :---------- | :---------- | | Fair Value as of December 31 | 374,833 | 4,053,659 | | Change in valuation (Q1) | 242,757 | (1,596,851) |\ | Fair Value as of March 31 | 617,590 | 2,456,808 | | Change in valuation (Q2) | 347,742 | (761,608) | | Fair Value as of June 30 | 965,332 | 1,695,200 | [Note 9 — Subsequent Events](index=37&type=section&id=Note%209%20%E2%80%94%20Subsequent%20Events) Discloses **subsequent events**, specifically the **Sponsor's** exercise of an option to extend the **business combination deadline** to **August 31, 2023** - On **July 24, 2023**, the **Sponsor** exercised its option to extend the **business combination deadline** from **July 31, 2023**, to **August 31, 2023**[125](index=125&type=chunk) - The **Sponsor** deposited **$50,000** into the **trust account** for this extension, evidenced by a **non-interest bearing**, **unsecured promissory note**[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting its status as a blank check company focused on a business combination. It details the IPO, private placement, and the significant reduction in trust account funds due to redemptions. The discussion covers recent developments regarding the AON Business Combination, financial performance (net losses in H1 2023), liquidity challenges, and critical accounting policies, emphasizing the going concern uncertainty [Overview](index=39&type=section&id=Overview) Provides a high-level summary of the company's formation, IPO, trust account activities, and the ongoing business combination efforts - **Digital Transformation Opportunities Corp.** is a **blank check company** formed on **November 17, 2020**, to effect a **business combination**[128](index=128&type=chunk) - The **IPO** on **March 12, 2021**, generated **$333.5 million**, and a **private placement** of **6,113,333 warrants** generated **$9.2 million**[129](index=129&type=chunk)[130](index=130&type=chunk) - **$333.5 million** from the **IPO** and **private placement** was placed in a **Trust Account**[131](index=131&type=chunk) - Stockholders approved an extension to **June 30, 2023** (with options to **September 30, 2023**), leading to the **redemption** of **31,502,931 public shares** for **$321,160,140**[132](index=132&type=chunk) - The **Sponsor** deposited **$150,000** into the **Trust Account** for the extension, evidenced by an **unsecured promissory note**, with **$200,000** outstanding as of **June 30, 2023**[133](index=133&type=chunk) - The **CFO** and **Sponsor** converted **8,262,500 Class B shares** into **Class A common stock**, which are not entitled to **Trust Account** funds[134](index=134&type=chunk) - Failure to complete a **business combination** by the deadline will result in **mandatory liquidation** and **dissolution**[135](index=135&type=chunk) [Recent Developments](index=41&type=section&id=Recent%20Developments) Highlights key events including amendments to the AON Business Combination Agreement and waiver of deferred underwriting commissions - On **October 5, 2022**, the **Company** entered into a **Business Combination Agreement** with **American Oncology Network, LLC (AON)**[136](index=136&type=chunk) - The **Business Combination Agreement** was amended on **January 6, 2023**, to modify the **AON board of managers** and allow **AON unitholders** to elect **warrants**[137](index=137&type=chunk) - Further amendments on **April 27, 2023**, and **June 14, 2023**, introduced an employee unit exchange offer, **New AON Series A preferred stock**, and removed the **PIPE financing** and **minimum cash requirement** due to a **$65 million Class C Investment**[142](index=142&type=chunk) - On **March 2, 2023**, a **$150,000 unsecured promissory note** was issued to the **Sponsor** for an extension payment[143](index=143&type=chunk) - On **June 6, 2023**, **Barclays Capital Inc.** waived its entitlement to **$11,672,500** in **deferred underwriting commissions**[144](index=144&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, detailing net losses for the periods ended June 30, 2023, and net income for 2022 - For the **three months** ended **June 30, 2023**, the **company** reported a **net loss** of approximately **$1.7 million**, primarily due to **$1.5 million** in **operating costs**, **$35,000** in **income taxes**, and an **$0.8 million loss** from **warrant liabilities**, partially offset by **$0.2 million interest income** and **$0.4 million reduction** of **deferred underwriting fee**[145](index=145&type=chunk) - For the **six months** ended **June 30, 2023**, the **company** reported a **net loss** of approximately **$1.5 million**, including **$2.5 million loss** from **operations**, **$0.1 million unrealized loss** on **marketable securities**, a **$1.4 million loss** from the change in **fair value** of **warrant liabilities**, and **$0.5 million income tax provision**, offset by **$0.4 million reduction** in **deferred underwriting fee** and **$2.6 million interest income**[13](index=13&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - For the **three** and **six months** ended **June 30, 2022**, the **company** reported **net incomes** of approximately **$1.9 million** and **$5.4 million**, respectively, primarily driven by gains from the change in **fair value** of **warrant liabilities** (**$1.8 million** and **$5.6 million**, respectively) and **interest income**[149](index=149&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, working capital, and ability to fund operations and a business combination, noting going concern issues Cash and Working Capital | Metric | June 30, 2023 | December 31, 2022 | | :---------------------- | :------------ | :---------------- | | Cash | $2,044 | $374,304 | | Working Capital Deficit | $7,916,849 | $1,655,967 | - The **company** expects to incur **significant costs** and needs to raise additional funds to meet **operating expenditures** and consummate a **business combination**[151](index=151&type=chunk) - The **liquidity condition** and **mandatory liquidation date** raise substantial doubt about the **company's ability** to continue as a **going concern**[152](index=152&type=chunk) - The **company** does not have any **long-term debt obligations**, **capital lease obligations**, **operating lease obligations**, **purchase obligations**, or **long-term liabilities**[153](index=153&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses key accounting judgments, including fair value measurements for warrants and classification of redeemable common stock - **Critical accounting estimates** include the estimated **fair values** of **warrant liability** and the **redemption value** of **Class A common stock subject to possible redemption**[157](index=157&type=chunk) - The **company** uses a **three-tier fair value hierarchy** (**Level 1**, **2**, **3**) for classifying assets and liabilities, prioritizing observable inputs[157](index=157&type=chunk) - **Warrants** are recorded as **derivative liabilities** at **fair value**, with changes recognized in the **Statements of Operations**, due to specific provisions in the **Warrant Agreement**[158](index=158&type=chunk) - **Class A common stock subject to possible redemption** is classified as **temporary equity** at **redemption value**, with changes recognized immediately, due to **redemption provisions** outside the **company's control**[159](index=159&type=chunk)[160](index=160&type=chunk) - **Net income (loss) per share** is computed using the **two-class method**; **warrants** are **anti-dilutive** and not included in **diluted EPS**[161](index=161&type=chunk)[164](index=164&type=chunk) [Recent Accounting Pronouncements](index=49&type=section&id=Recent%20Accounting%20Pronouncements) Reviews the impact of new accounting standards on the company's financial statements - **ASU 2020-06 (Debt-Debt with Conversion and Other Options)** and **ASU 2022-03 (Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions)** are not expected to have a **material impact** on the **company's financial statements**[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Off-Balance Sheet Arrangements](index=49&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of any off-balance sheet arrangements for the reported periods - As of **June 30, 2023**, and **December 31, 2022**, the **company** did not have any **off-balance sheet arrangements**[168](index=168&type=chunk) [JOBS Act](index=49&type=section&id=JOBS%20Act) Explains the company's status as an emerging growth company and its election to utilize extended transition periods for accounting standards - The **company** qualifies as an '**emerging growth company**' under the **JOBS Act**[169](index=169&type=chunk) - The **company** elects to delay the adoption of new or revised accounting standards based on private company effective dates, which may affect comparability[169](index=169&type=chunk) - The **company** is evaluating relying on other **reduced reporting requirements** provided by the **JOBS Act**, such as exemptions from **auditor attestation** on **internal controls** and certain **executive compensation disclosures**[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Digital Transformation Opportunities Corp. is exempt from providing detailed quantitative and qualitative disclosures about market risk - The **company** is a **smaller reporting company** and is not required to provide quantitative and qualitative disclosures about **market risk**[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2023, due to a material weakness in internal control over financial reporting related to accounting for complex financial instruments. Despite this, management believes the financial statements fairly present the company's financial position. No material changes in internal control over financial reporting occurred during the quarter - **Disclosure controls and procedures** were not effective as of **June 30, 2023**[173](index=173&type=chunk) - A **material weakness** was identified in **internal control over financial reporting** related to the interpretation and accounting for certain **complex equity** and **equity-linked instruments**[173](index=173&type=chunk) - Management believes that the **financial statements** included in this **Quarterly Report on Form 10-Q** present fairly in all material respects the **company's financial position**, **results of operations**, and **cash flows**[173](index=173&type=chunk) - There were no changes in **internal control over financial reporting** during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, **internal control over financial reporting**[175](index=175&type=chunk) [PART II. OTHER INFORMATION](index=52&type=section&id=PART%20II.%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Digital Transformation Opportunities Corp. has no legal proceedings to report - No **legal proceedings** to report[177](index=177&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company refers to the significant risk factors previously disclosed in its Annual Report on Form 10-K filed on March 31, 2023, and Quarterly Report on Form 10-Q filed on May 15, 2023. No material changes to these risk factors have occurred as of the date of this report - **Significant risk factors** are described in the **Annual Report on Form 10-K** filed on **March 31, 2023**, and **Quarterly Report on Form 10-Q** filed on **May 15, 2023**[178](index=178&type=chunk) - No material changes from the previously disclosed **risk factors** as of the date of this **Quarterly Report on Form 10-Q**[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Digital Transformation Opportunities Corp. reports no unregistered sales of equity securities or use of proceeds for the period - No **unregistered sales of equity securities** and **use of proceeds** to report[179](index=179&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Digital Transformation Opportunities Corp. reports no defaults upon senior securities - No **defaults upon senior securities** to report[179](index=179&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to Digital Transformation Opportunities Corp - **Mine Safety Disclosures** are not applicable[179](index=179&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) Digital Transformation Opportunities Corp. has no other information to report under this item - No other information to report[179](index=179&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Third Amended and Restated Business Combination Agreement, promissory notes, and certifications from the CEO and CFO - Key **exhibits** include the **Third Amended and Restated Business Combination Agreement (June 14, 2023)**, **Promissory Notes (June 26, 2023, and July 24, 2023)**, and **Certifications of Chief Executive Officer and Chief Financial Officer**[182](index=182&type=chunk)

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)