Akili(AKLI) - 2022 Q1 - Quarterly Report

Part I. Financial Information Financial Statements This blank check company reported a $4.18 million net loss for Q1 2022 and faces going concern doubts Condensed Consolidated Balance Sheet Data | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Cash | $69,991 | $428,189 | | Marketable securities held in Trust Account | $250,033,500 | $250,008,324 | | Total Assets | $250,770,024 | $251,188,047 | | Total current liabilities | $5,748,022 | $1,989,837 | | Total Liabilities | $13,448,022 | $9,689,837 | | Class A ordinary shares subject to possible redemption | $250,000,000 | $250,008,324 | | Accumulated deficit | $(12,678,687) | $(8,510,803) | Condensed Consolidated Statement of Operations | Metric | For the Three Months Ended March 31, 2022 | For the Period from Feb 25, 2021 (Inception) to Mar 31, 2021 | | :--- | :--- | :--- | | Operating and formation costs | $4,201,384 | $5,182 | | Interest earned on Trust Account | $25,176 | $0 | | Net loss | $(4,176,208) | $(5,182) | | Basic and diluted net loss per share, Class A | $(0.13) | N/A | - The company is a blank check company formed to effect a business combination, with all activity related to its formation, IPO, and the proposed merger with Akili Interactive Labs, Inc[21][22] - On January 26, 2022, the Company entered into a definitive merger agreement with Akili Interactive Labs, Inc, which includes a PIPE investment of $162 million[35][36][39] - Management has determined there is substantial doubt about the Company's ability to continue as a going concern due to a working capital deficit of $5.1 million and the risk of liquidation if a business combination is not completed by July 2, 2023[41][42][43] - On April 20, 2022, the Company issued a promissory note to its Sponsor, allowing it to borrow up to $1.5 million for working capital needs, and drew $250,000 on April 26, 2022[100] Management's Discussion and Analysis of Financial Condition and Results of Operations The company has no revenue, a $4.18 million net loss from merger costs, and limited liquidity - The company is a blank check company formed to effect a business combination and has not engaged in any operations or generated revenue to date[105][107] - For the three months ended March 31, 2022, the net loss of $4,176,208 was driven by operating costs, of which $3,852,295 was directly associated with the proposed business combination with Akili[108] - The company's liquidity is constrained, with only $69,991 in cash held outside the Trust Account as of March 31, 2022, prompting the issuance of a $1.5 million promissory note to its Sponsor[114][115][116] - The company has a deferred underwriting commission of $7.7 million, which is payable from the Trust Account only upon the completion of a Business Combination[119] Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, it is exempt from providing market risk disclosures - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[125] Controls and Procedures Management found disclosure controls ineffective due to a material weakness in accounting for complex instruments - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of March 31, 2022[128] - The ineffectiveness was due to a material weakness in internal control over financial reporting concerning the company's accounting for complex financial instruments[128] - Management has implemented remediation steps, including an improved review process and plans to consult with third-party professionals[129] Part II. Other Information Legal Proceedings The company faces shareholder lawsuits over its proposed Akili merger, which could delay the transaction - Beginning February 24, 2022, the company received demand letters from purported shareholders alleging deficiencies in the Form S-4 Registration Statement for the Akili Business Combination[131] - On March 11, 2022, a shareholder filed a complaint asserting breach of fiduciary duty and alleging the proxy statement was materially misleading, seeking to enjoin the merger[132] - The company believes the allegations are meritless but acknowledges the legal matters could prevent or delay the Akili Business Combination and result in costs[133] Risk Factors Proposed SEC rules for SPACs pose a material risk to completing the business combination - The company is subject to risks from changing laws and regulations, which could adversely affect its ability to complete a business combination[134] - On March 30, 2022, the SEC issued proposed rules that would impose additional disclosure requirements and increase potential liability in SPAC business combinations[135] - These proposed rules, if adopted, may materially adversely affect the company's business, including its ability to negotiate and complete its initial business combination[136] Unregistered Sales of Equity Securities and Use of Proceeds The company raised $250 million from its IPO, which is now held in a trust account - On July 2, 2021, the company consummated its IPO of 25,000,000 Public Shares at $10.00 per share, generating gross proceeds of $250,000,000[137] - Concurrently with the IPO, the company sold 640,000 Private Placement Shares to the Sponsor at $10.00 per share, generating $6,400,000[138] - A total of $250,000,000 was placed in the Trust Account, with offering costs including $4.4 million in upfront underwriting fees and $7.7 million in deferred fees[138] Defaults Upon Senior Securities The company reports no defaults upon its senior securities - The company reports no defaults upon senior securities[139] Mine Safety Disclosures This item is not applicable as the company has no mining operations - The company reports no mine safety disclosures[139] Other Information The company reports no other material information for this period - The company reports no other information[139] Exhibits This section lists all exhibits filed with the report, including the merger agreement - This section provides a list of all exhibits filed with or incorporated by reference into the Form 10-Q[141][142]