Akili(AKLI) - 2022 Q2 - Quarterly Report

Part I. Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Social Capital Suvretta Holdings Corp. I, detailing financial position, operations, equity changes, and cash flows, alongside notes on its SPAC status and going concern uncertainty Condensed Consolidated Balance Sheets As of June 30, 2022, total assets were approximately $251.0 million, primarily marketable securities, while total liabilities increased to $15.5 million, resulting in a $14.8 million permanent deficit Condensed Consolidated Balance Sheet Highlights (in USD) | Balance Sheet Item | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $145,044 | $428,189 | | Marketable securities held in Trust Account | $250,371,095 | $250,008,324 | | Total Assets | $251,040,889 | $251,188,047 | | Liabilities & Equity | | | | Total current liabilities | $7,752,934 | $1,989,837 | | Deferred underwriting fee payable | $7,700,000 | $7,700,000 | | Total Liabilities | $15,452,934 | $9,689,837 | | Class A ordinary shares subject to possible redemption | $250,371,095 | $250,008,324 | | Accumulated deficit | ($14,783,829) | ($8,510,803) | | Total Permanent Deficit | ($14,783,140) | ($8,510,114) | Condensed Consolidated Statements of Operations For the three and six months ended June 30, 2022, the company reported net losses of $1.7 million and $5.9 million, respectively, primarily due to operating costs offset by interest income Statement of Operations Summary (in USD) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Operating and formation costs | $2,071,642 | $6,273,026 | | Interest earned on marketable securities | $337,595 | $362,771 | | Net loss | ($1,734,047) | ($5,910,255) | | Basic and diluted net loss per share, Class A | ($0.05) | ($0.19) | | Basic and diluted net loss per share, Class B | ($0.05) | ($0.19) | Condensed Consolidated Statements of Changes in Temporary Equity and Permanent (Deficit) Equity The company's permanent deficit increased from $8.5 million to $14.8 million by June 30, 2022, primarily due to the $5.9 million net loss incurred during the period - The accumulated deficit increased from $(8,510,803) on January 1, 2022, to $(14,783,829) on June 30, 2022, driven by net losses during the period[14] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2022, net cash used in operating activities was $533,145, partially offset by $250,000 from financing, leading to a cash balance decrease from $428,189 to $145,044 Cash Flow Summary for the Six Months Ended June 30, 2022 (in USD) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | ($533,145) | | Net cash provided by financing activities | $250,000 | | Net Change in Cash | ($283,145) | | Cash – Beginning of period | $428,189 | | Cash – End of period | $145,044 | Notes to Condensed Consolidated Financial Statements These notes confirm the company's status as a blank check company pursuing a business combination with Akili, disclose a going concern uncertainty due to a July 2, 2023 liquidation deadline, and detail related-party transactions and a $7.7 million deferred underwriting fee - The company is a blank check company formed to effect a business combination and has not commenced any operations as of June 30, 2022[22][23] - On January 26, 2022, the Company entered into a definitive merger agreement with Akili Interactive Labs, Inc. ("Akili")[36] - Management has determined that the mandatory liquidation requirement if a business combination is not consummated by July 2, 2023, raises substantial doubt about the Company's ability to continue as a going concern[44][45] - The company has a deferred underwriting fee of $7.7 million, which is payable from the Trust Account only upon the completion of a Business Combination[95] - On April 20, 2022, the company issued a promissory note to its Sponsor, allowing it to borrow up to $1,500,000 for working capital, with $250,000 outstanding as of June 30, 2022[85] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and results, confirming its blank check status with no operating revenue, attributing net losses to public company costs and Akili Business Combination due diligence, and highlighting liquidity challenges and going concern uncertainty related to the July 2, 2023 merger deadline - The company is a blank check company and has not engaged in any operations or generated any operating revenues to date, with all activity relating to its formation, IPO, and pursuit of the Akili Business Combination[113][115] Results of Operations (in USD) | Period | Net Loss | Key Drivers | | :--- | :--- | :--- | | Three months ended June 30, 2022 | ($1,734,047) | Operating costs of $2,071,642, offset by interest income of $337,595 | | Six months ended June 30, 2022 | ($5,910,255) | Operating costs of $6,273,026, offset by interest income of $362,771 | - The company has until July 2, 2023, to consummate a Business Combination, with this deadline and potential mandatory liquidation raising substantial doubt about its ability to continue as a going concern[125] - Key contractual obligations include a deferred underwriting commission of $7.7 million payable upon a business combination and a monthly $10,000 fee to an affiliate of the Sponsor for administrative services[128] Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company under Rule 12b-2 of the Exchange Act, the company is not required to provide quantitative and qualitative disclosures regarding market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[135] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of June 30, 2022, due to a material weakness in accounting for complex financial instruments, with remediation steps implemented - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were not effective[137] - The ineffectiveness was attributed to a material weakness in internal control over financial reporting concerning the accounting for complex financial instruments[137] - Remediation steps have been implemented, including enhancing the review process for complex securities and accounting standards[137] Part II. Other Information Legal Proceedings The company received demand letters and a shareholder complaint regarding alleged S-4 deficiencies for the Akili Business Combination, which was voluntarily discontinued with prejudice on June 29, 2022 - The company received demand letters and a shareholder complaint related to alleged deficiencies in the S-4 filing for the proposed Akili Business Combination[139] - The shareholder complaint, Elstein v. Palihapitiya et al., was voluntarily discontinued with prejudice on June 29, 2022[93][139] Risk Factors This section highlights a new risk factor concerning potential changes in laws or regulations, specifically the SEC's proposed SPAC rules issued on March 30, 2022, which could adversely affect the company's ability to complete a business combination - The company highlights a new risk factor related to changes in laws or regulations, particularly the SEC's proposed rules for SPACs issued on March 30, 2022[141][142] - These proposed rules, if adopted, could impose additional disclosure requirements and increase potential liability, which may adversely affect the company's ability to complete its initial business combination[141][142] Unregistered Sales of Equity Securities and Use of Proceeds This section outlines proceeds from the July 2, 2021 IPO of 25,000,000 shares, generating $250 million, and a private placement of 640,000 shares, generating $6.4 million, with $250 million placed in the Trust Account IPO and Private Placement Proceeds (July 2, 2021) | Transaction | Shares Sold | Price per Share | Gross Proceeds | | :--- | :--- | :--- | :--- | | Initial Public Offering | 25,000,000 | $10.00 | $250,000,000 | | Private Placement | 640,000 | $10.00 | $6,400,000 | | Total Placed in Trust Account | | | $250,000,000 | Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - None[144] Mine Safety Disclosures This item is reported as not applicable - None[144] Other Information The company reports no other information to disclose for the period - None[144] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, a promissory note dated April 20, 2022, and officer certifications - The report includes several exhibits, such as corporate governance documents, a promissory note, and required CEO/CFO certifications[147]