References to the "Company," "Future Health," "our," "us" or "we" refer to Future Health ESG Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Risk Factors".

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance, or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's annual report Form 10-K filed with the SEC on March 9, 2023. The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

Future Health is a blank check company incorporated in Delaware on February 25, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses (the "Business Combination"). We intend to effectuate our business combination using cash from the proceeds of our initial public offering and the sale of the private warrants, our capital stock, debt, or a combination of cash, stock, and debt. The Company is an "emerging growth company", and as such, the Company is subject to all the risks associated with emerging growth companies.

Results of Operations

As of March 31, 2023, the Company had not commenced any operations. All activity for the period from February 25, 2021 (inception) through March 31, 2023 relates to the Company's formation and initial public offering described below and, since the initial public offering, the search for a target business for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on cash and cash equivalents from the proceeds held in the Trust Account (as defined below). The Company has selected December 31 as its fiscal year end.

On September 9, 2021, the Company consummated its initial public offering (the "IPO") of 20,000,000 units (the "Units"). Each Unit consists of one share of common stock and one-half of one redeemable warrant of the Company. Each whole warrant entitles the holder thereof to purchase one share of common stock for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $200,000,000.

Simultaneously with the closing of the IPO, the Company completed the private sale of 7,375,000 warrants (the "Private Placement Warrants") at a purchase price of $1.00 per Private Placement Warrant (the "Private Placement"), to Future Health ESG Associates 1, LLC (the "Sponsor") and Cantor Fitzgerald & Co, generating gross proceeds to the Company of $7,375,000.


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From the proceeds of the IPO and the Private Placement, an aggregate of $201,000,000 was placed into a trust account for the benefit of the Company's public stockholders to fund redemptions of the shares of common stock held by the Company's public stockholders (the "Trust Account"), to be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the requirements of Rule 2(a)(7) of the Investment Company Act, until the earlier of (i) the consummation of a business combination or (ii) the distribution of the Trust Account.

Transaction costs amounted to $21,881,745, including $9,000,000 in deferred underwriting and advisory fees payable, $4,019,555 in upfront underwriting fees, $8,163,891 in offering costs allocated to anchor investors, and $698,299 in other offering costs related to the IPO.

On June 13, 2022, the Company entered into a business combination agreement with Excelera DCE, Inc., which was subsequently terminated on October 31, 2022.

For the three months ended March 31, 2023, we earned net loss of $103,814, which consisted of operating costs of $248,412 and provision for income taxes of $36,071, offset by interest income on our cash balance of $6,052 and net gains on marketable securities held in our trust account of $174,617.

For the three months ended March 31, 2022, we incurred a net loss of $152,562, which consisted of operating costs of $170,284, partially offset by interest income on our cash balance of $1,318 and net gains on marketable securities held in our operating and trust accounts of $16,404.

Liquidity and Capital Resources

On September 9, 2021, the Company consummated the IPO of 20,000,000 units. Each Unit consists of one share of common stock and one-half of one redeemable warrant of the Company. Each whole warrant entitles the holder thereof to purchase one share of common stock for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $200,000,000. Simultaneously with the closing of the IPO, the Company completed the Private Placement of 7,375,000 Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant to the Sponsor and Cantor Fitzgerald & Co, generating gross proceeds to the Company of $7,375,000.

Following the IPO and the sale of the Private Placement Warrants, $201,000,000 ($10.05 per redeemable share sold in the IPO) was placed in the Trust Account. We incurred $21,881,745 in transaction costs, including $9,000,000 in deferred underwriting and advisory fees payable, $4,019,555 in upfront underwriting fees, $8,163,891 in offering costs allocated to the fair value of the common shares sold to anchor investors by certain related parties, and $698,299 of other offering costs related to the IPO.

For the three months ended March 31, 2023, cash used in operating activities was $158,278, comprised of a net loss of $103,814, gain on marketable securities (net), dividends and interest held in Trust Account of $174,617 and $120,153 in cash provided by changes in operating assets and liabilities.

For the three months ended March 31, 2022, cash used in operating activities was $316,895, comprised of a net loss of $152,562, gain on marketable securities (net), dividends and interest held in Trust Account of $16,404, and $147,929 in cash used by changes in operating assets and liabilities.

As of March 31, 2023, we had cash and marketable securities held in the Trust Account of $16,505,866. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting and advisory fees payable and income and franchise taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, any remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.



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As of March 31, 2023, we had cash of $679,414. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

Future Health ESG Associates 1, LLC loaned us $250,000 to cover expenses related to the IPO pursuant to two promissory notes dated March 4, 2021 and August 24, 2021. These notes were non-interest bearing and repaid in full after the closing of the IPO on September 14, 2021.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor, or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $2,000,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants. As of March 31, 2023, no amount had been borrowed from the Sponsor, officers, or directors.

We may be required to raise additional funds in order to meet the expenditures required for operating our business, identifying a target business, undertaking in-depth due diligence, and negotiating a Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Going Concern

As of March 31, 2023, the Company had $679,414 in its operating bank account and $666,538 of working capital deficiency. As of March 31, 2023, the Company had $16,505,866 of securities held in the Trust Account which will be used for a Business Combination or to repurchase or redeem the Company's common stock in connection therewith.

The Company has principally financed its operations from inception using proceeds from the sale of its equity securities to its shareholders prior to the Initial Public Offering and such amount of proceeds from the Private Placement that were placed in an account outside of the Trust Account for working capital purposes. Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. Management believes that it will have sufficient working capital and borrowing capacity to meet the Company's needs through the earlier of the consummation of a Business Combination or one year from this filing, however, there is a risk that the Company's liquidity may not be sufficient.

The Company may need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company's officers, directors and Sponsor may, but are not obligated to (other than as described above), loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company's working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standard Board's ("FASB") ASC Subtopic 205-40, "Presentation of Financial Statements - Going Concern," the Company has until December 31, 2023, to consummate a Business Combination. It is uncertain whether the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and



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subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, raises substantial doubt about the Company's ability to continue as a going concern through approximately one year from the date these financial statements were issued. Management intends to consummate a Business Combination prior to December 31, 2023. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no obligations, assets, or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described below.

The underwriter of the IPO was paid $4,019,555 in underwriting discount and expense reimbursement upon the closing of the IPO. An additional $6,000,000 of deferred underwriting fees will be due to the underwriter only upon the closing of an Initial Business Combination. Included in this amount is a financial advisory fee of $300,000 that will be payable to Roth Capital Partners, LLC only upon the closing of an Initial Business Combination. In an Amendment to the Underwriting Agreement executed on June 13, 2022, the underwriter agreed to reduce the deferred underwriting fees payable in cash in exchange for issuance of 272,727 shares of the Company's common stock upon the closing of an Initial Business Combination with Excelera DCE, Inc. On October 31, 2022, the Amendment to the Underwriting Agreement was terminated in connection with termination of the Excelera Business Combination Agreements.

The Company has entered into capital markets advisory agreements with multiple advisors pursuant to which fees will be paid in an aggregate amount of up to 2% of the cash retained from the trust account (net of redemptions) plus any gross proceeds raised in a financing relating to an Initial Business Combination. The capital markets advisory fees are contingent on both the consummation and the specific terms of an Initial Business Combination, neither of which can be reasonably predicted at this time. Accordingly, no accrual has been made for these arrangements in the unaudited financial statements.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The Company's management has reviewed all estimates used in the preparation of the financial statements and has determined that none reflect both a significant level of estimation uncertainty and a reasonable likelihood of material impact on the Company's financial condition or results of operations.

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