Healthcare AI Acquisition Corp.(HAIAU) - 2023 Q4 - Annual Report

Financial Condition - As of December 31, 2023, the company had $212 in its operating bank account and working capital of $593,046, raising substantial doubt about its ability to continue as a going concern [197]. - The net proceeds from the initial public offering, over-allotment, and the sale of private placement warrants amounted to $222,436,490, including $196,000,000 from the IPO after underwriting costs [203]. - Approximately $6.6 million remained in the Trust Account as of March 31, 2024, after share redemptions related to extending the business combination deadline to December 14, 2024 [203]. - The company may incur substantial debt to complete its initial business combination, which could adversely affect its leverage and financial condition [198]. - There are no current commitments to issue debt, but the company may choose to do so, potentially impacting the per-share amount available for redemption from the trust account [199]. - The company may require additional financing to fund operations or growth of the target business, which could adversely affect its development [219]. Business Combination Risks - The company may only be able to complete one business combination, leading to a lack of diversification that could negatively impact operations and profitability [202]. - The company may face increased costs and risks if it attempts to complete multiple business combinations simultaneously [206]. - The company may seek to acquire private companies with limited public information, which could result in less profitable business combinations than anticipated [209]. - The company may amend its governing instruments to facilitate the completion of its initial business combination, which may not align with shareholder interests [213]. - If the initial business combination is not completed within the required time, public shareholders may receive approximately $10.20 per share upon liquidation of the trust account [218]. - The company has not yet entered into a definitive agreement with any specific target business, making it difficult to ascertain capital requirements for any particular transaction [219]. - If the company does not consummate its initial business combination by December 14, 2024, public shareholders may receive approximately $10.20 per share upon liquidation [232]. - The company may not be able to maintain control of a target business after the initial business combination, which could negatively impact operations and profitability [240]. - The company must furnish shareholders with target business financial statements, which may limit the pool of potential target businesses [223][224]. - The company may structure its initial business combination to own less than 100% of the equity interests or assets of a target business, but must acquire at least 50% of the outstanding voting securities to avoid registration as an investment company [241]. - There is a risk that shareholders prior to the business combination may collectively own a minority interest in the post-combination company, potentially affecting management's control over the target business [242]. - The company may face challenges in assessing the management capabilities of a prospective target business, which could negatively impact shareholder value if the management lacks necessary skills [243]. - If the company pursues a target with operations outside the U.S., it may encounter additional risks such as regulatory approvals and currency fluctuations that could adversely affect operations [245]. - The company may be subject to various risks associated with cross-border business combinations, including tariffs, trade barriers, and local economic conditions [247]. - Following the initial business combination, the company may have substantial assets and revenue located in a foreign country, making it vulnerable to that country's economic and political conditions [259]. - Exchange rate fluctuations could adversely affect the financial condition and results of operations if revenues are received in a foreign currency [262]. Management and Governance - The company is dependent on a small group of executive officers and directors, and their loss could adversely affect operations and the ability to complete the initial business combination [263]. - Key personnel may negotiate employment agreements that could create conflicts of interest in selecting a target business [267]. - The company may face conflicts of interest as its executive officers and directors are not required to commit full time to its affairs, potentially impacting the search for a business combination [270]. - The company has not adopted a policy to prohibit directors and executive officers from having financial interests in transactions involving the company, which may lead to conflicts of interest [276]. - Only holders of founder shares will have the right to vote on the election of directors prior to the initial business combination, which may classify the company as a "controlled company" under Nasdaq rules [295]. Regulatory and Compliance Issues - Compliance with the Sarbanes-Oxley Act may increase the time and costs of completing a business combination, particularly due to the need for target businesses to meet internal control requirements [225][226]. - The company may face challenges in completing a business combination with a U.S. target company due to foreign investment regulations and potential CFIUS review [235][236]. - If the company cannot complete its initial business combination due to regulatory delays, it may be required to liquidate, resulting in public shareholders receiving only $10.20 per share [237]. - The company may face challenges in enforcing legal rights in the U.S. due to the majority of directors and officers potentially residing outside the U.S. after the initial business combination [290]. Market and Investor Considerations - Public shareholders can only access funds from the trust account under specific conditions, including the completion of an initial business combination by December 14, 2024, or they may have to sell shares at a loss [279]. - The company must maintain a minimum share price of $4.00 and at least 300 public holders to remain listed on Nasdaq, which may not be achievable if there are significant redemptions [281]. - If Nasdaq delists the company's securities, it could lead to reduced liquidity, limited market quotations, and a potential classification of Class A ordinary shares as "penny stocks" [282]. - The company's amended and restated memorandum and articles of association may inhibit unsolicited takeover proposals, potentially limiting the price investors are willing to pay for Class A ordinary shares [293]. - The company may amend the terms of the public warrants with the approval of at least 50% of the outstanding public warrants, which could adversely affect holders [297]. - The warrant agreement designates New York courts as the exclusive forum for certain disputes, potentially limiting the ability of warrant holders to seek favorable judicial outcomes [300]. - The company may face challenges in maintaining investor interest due to reliance on exemptions that could make its securities less attractive [327]. Company Status and Performance - The company has no operating history and no revenues, making it difficult to evaluate its ability to achieve business objectives [318]. - The company is a blank check company incorporated under the laws of the Cayman Islands, with no plans or arrangements for a business combination [319]. - The company may face challenges in completing its initial business combination, which could prevent it from generating operating revenues [319]. - The existence of registration rights for the sponsor may complicate the completion of the initial business combination and adversely affect the market price of Class A ordinary shares [317]. - The company may redeem outstanding public warrants at a price of $0.01 per warrant if the closing price of Class A ordinary shares equals or exceeds $18.00 per share [306]. - If the company issues additional Class A ordinary shares at a Newly Issued Price of less than $9.20, the exercise price of the warrants will be adjusted to 115% of the higher of the Market Value and the Newly Issued Price [304]. - The company may redeem unexpired warrants prior to their exercise, potentially making them worthless [305]. - Cyber incidents or attacks could lead to information theft, data corruption, operational disruption, and financial loss [322]. - The company may be classified as a passive foreign investment company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. investors [324]. - Past performance of the management team is not indicative of future performance, and there is no guarantee of success in identifying or executing a business combination [320]. - The company is classified as an "emerging growth company" and may take advantage of exemptions from certain disclosure requirements, which could affect the attractiveness of its securities to investors [326]. - The company may remain an emerging growth company for up to five years, but could lose this status if the market value of its Class A ordinary shares held by non-affiliates exceeds $700 million [327]. - The company has elected not to opt out of the extended transition period for new or revised financial accounting standards, which may complicate financial statement comparisons with other public companies [328]. - As a "smaller reporting company," the company can provide only two years of audited financial statements, which may hinder comparisons with other public companies [330]. - The company will remain a smaller reporting company until the market value of its ordinary shares held by non-affiliates exceeds $250 million or annual revenues exceed $100 million with a market value exceeding $700 million [331]. - The company is not required to provide quantitative and qualitative disclosures about market risk due to its smaller reporting company status [400]. - The actual status of the company as a Passive Foreign Investment Company (PFIC) for any taxable year will not be determinable until after the end of that year, creating uncertainty for U.S. holders [325]. - If the company determines it is a PFIC, it will attempt to provide necessary information to U.S. holders, but there is no assurance that this information will be timely provided [325]. - The company has no disagreements with accountants on accounting and financial disclosure [400].