ARYA Sciences Acquisition IV(ARYD) - 2022 Q4 - Annual Report

PART I Business Overview This blank check company, established in August 2020, seeks to merge with a healthcare or medical technology firm, leveraging its management's life science expertise while navigating specific reporting exemptions - The company was formed on August 24, 2020, as a Cayman Islands exempted company for the purpose of effecting an initial business combination, and currently has no operating revenue[18] - The company focuses on the healthcare or medical technology industry, particularly life sciences and medical technology in North America or Europe, with its management team possessing extensive investment experience[19] - The company's management team has extensive experience in executing public acquisition vehicles, having successfully completed business combinations with Immatics Biotechnologies GmbH, Cerevel Therapeutics, and Nautilus Biotechnology, Inc[21] - The company targets businesses with valuations of $300 million to $500 million or more, with the potential to achieve a market capitalization of $1 billion or more[29] - As of December 31, 2022, the company had approximately $149 million available for its initial business combination, after deducting $2,616,250 in deferred underwriting fees[48] - The company is classified as an "emerging growth company" and a "smaller reporting company," benefiting from certain reporting exemptions that may affect the attractiveness and volatility of its securities[44][47] Company Overview - The company was formed on August 24, 2020, as a Cayman Islands exempted company for the purpose of effecting an initial business combination, and currently has no operating revenue[18] Our Founders - The company's founders are the management of Perceptive Advisors, with Joseph Edelman as Chairman, Adam Stone as CEO, Michael Altman as CFO, and Konstantin Poukalov as Chief Business Officer[20] - Perceptive Advisors is a life sciences-focused investment firm, managing over $9.5 billion in assets as of December 31, 2022, with investments in over 200 companies[20] Experience with Special Purpose Acquisition Vehicles - The management team has experience in executing public acquisition vehicles, having successfully completed business combinations with Immatics Biotechnologies GmbH (IMTX), Cerevel Therapeutics (CERE), and Nautilus Biotechnology, Inc. (NAUT)[21] - The management team also formed ARYA Sciences Acquisition Corp V (ARYE) in February 2021, completing its initial public offering in July 2021[22] Industry Opportunity - The company focuses on the healthcare industry in the United States and other developed countries, particularly in life sciences and medical technology, viewing it as a large and growing market[23] US Healthcare Spending and Global Biotechnology Market | Metric | Amount/Growth Rate | | :--- | :--- | | 2019 US National Healthcare Expenditure | Approximately $3.8 trillion | | 2018 US National Healthcare Expenditure | Approximately $3.6 trillion (approximately 18% of US GDP) | | Projected 2024 Global Biotechnology Market Revenue | Over $460 billion (approximately 6.3% growth) | - The company believes that current dynamics in the life sciences and medical technology IPO market are favorable for identifying attractive targets, and SPAC acquisitions offer a more transparent and efficient listing mechanism for private healthcare companies[24][25][26] Acquisition Strategy - The company leverages its relationships with venture capitalists, growth equity funds, corporate executives, and investment banks to identify potential business combination targets[27] - The company seeks to acquire companies with scientific or competitive advantages, strong management and governance, public investor appeal, significant growth opportunities, undervaluation, and attractive risk-adjusted equity returns for shareholders[28] - The company focuses on target businesses with valuations of $300 million to $500 million or more, and the potential to achieve a market capitalization of $1 billion or more[29] Initial Business Combination - The total fair market value of the target company in the initial business combination must be at least 80% of the net assets held in the trust account (excluding deferred underwriting discounts and taxes payable on interest)[30] - The company expects to acquire the target company with 100% equity or assets, but may acquire less than 100% interest if it holds 50% or more of the target company's voting securities or control[31] - The sponsor has expressed interest in purchasing up to $25 million of common stock in a private placement upon completion of the initial business combination, though this is not a binding agreement[32] Other Considerations - The company does not prohibit business combinations with entities affiliated with Perceptive Advisors or its sponsor, officers, or directors, but an independent investment bank or valuation firm's fairness opinion is required for related party transactions[33] - The company's officers and directors may have conflicts of interest due to their fiduciary or contractual obligations in other entities, including other blank check companies and funds managed by Perceptive Advisors[37][38] Status as a Public Company - As an existing public company, the company offers target businesses an alternative to a traditional IPO, potentially faster and less costly[40][42] - The company is an "emerging growth company" and a "smaller reporting company," eligible for certain exemptions under the JOBS Act, including auditor attestation requirements, executive compensation disclosure, and accounting standard transition periods[44][45][47] Financial Position - As of December 31, 2022, the company had approximately $149 million available for its initial business combination, after deducting $2,616,250 in deferred underwriting fees[48] - The company may complete a business combination using cash, equity, debt, or a combination thereof, to suit the target company's needs[48] Effectuating Our Initial Business Combination - The company plans to use cash proceeds from its initial public offering and private placement, equity, debt, or a combination thereof, to complete its initial business combination[50] - The company may require additional financing to complete a business combination or fund the target business's operations and growth, potentially involving dilutive equity issuance or higher debt levels[52] - The company will identify acquisition targets through its management team's and Perceptive Advisors' industry experience, transaction capabilities, and extensive network[54] - The company will conduct thorough due diligence when evaluating potential target businesses, including meetings with management and employees, document review, customer and supplier interviews, and facility inspections[60] - The company may proceed with redemptions without a shareholder vote, but may seek shareholder approval if required by applicable law or exchange rules, or for business reasons[66] - If the company fails to complete an initial business combination by the specified date, it will cease all operations and liquidate, redeeming public shares[96] General - The company plans to use cash proceeds from its initial public offering, private placement shares, equity, debt, or a combination thereof as consideration for its initial business combination[50] - The company may require additional financing to complete its initial business combination or more cash due to significant public share redemptions, potentially leading to the issuance of additional securities or incurring debt[52] Sources of Target Businesses - The company identifies acquisition targets through Perceptive Advisors and its management team's industry experience, transaction capabilities, and extensive network, including venture capitalists, executives, and investment banks[54] - The company may engage professional firms or individuals to assist with business acquisitions, paying finder's or consulting fees, but the sponsor, officers, or directors and their affiliates will not receive such fees before the business combination is completed[57] Evaluation of a Target Business and Structuring of Our Initial Business Combination - The company conducts thorough due diligence when evaluating potential target businesses, including meetings with management and employees, document review, customer and supplier interviews, and facility inspections[60] - The time and cost required to identify, evaluate, structure, and complete an initial business combination are currently undeterminable, and uncompleted transactions will result in losses[61] Lack of Business Diversification - After completing an initial business combination, the company's success may depend entirely on the future performance of a single business, and a lack of diversification could expose it to adverse economic, competitive, and regulatory developments[62][63] Limited Ability to Evaluate the Target's Management Team - The company's assessment of the target business's management may be inaccurate, and future management may lack the necessary skills to manage a public company, potentially negatively impacting the combined company's operations[64][65] Shareholders May Not Have the Ability to Approve Our Initial Business Combination - The company may proceed with redemptions without a shareholder vote, unless required by applicable law or Nasdaq listing rules, or if the company decides to seek shareholder approval for business or other reasons[66][68] - If shareholder approval is required, the company will only complete the transaction if a majority of the ordinary shares voted at a shareholder meeting approve the business combination[82] Permitted Purchases of Our Securities and Other Transactions with Respect to Our Securities - If the company seeks shareholder approval and does not redeem through a tender offer, the sponsor, directors, officers, advisors, or their affiliates may purchase public shares in privately negotiated transactions or open market purchases to satisfy transaction conditions or reduce redemptions[69][71] - Any such purchases will comply with federal securities laws, including Regulation M and Rule 10b-18, and will be disclosed in a Form 8-K, including the amount, purpose, impact on business combination approval, and identity of selling shareholders[69][74][75] Redemption Rights for Public Shareholders upon Completion of Our Initial Business Combination - The company will offer public shareholders the opportunity to redeem their Class A ordinary shares upon completion of the initial business combination, at a redemption price equal to the per-share cash amount in the trust account, including interest[76] - The sponsor and management team have agreed to waive their redemption rights for their founder shares, private placement shares, and any public shares purchased during or after the initial public offering[76] Limitations on Redemptions - The company's articles of association stipulate that the amount of public share redemptions must not result in the company's net tangible assets falling below $5,000,001 to avoid being subject to SEC "penny stock" rules[77] - If the total cash consideration for redemption requests plus the cash conditions required for the business combination exceed the company's total available cash, the company will not complete the business combination or redeem any shares[77] Manner of Conducting Redemptions - The company will conduct redemptions either through a shareholder meeting to approve the business combination or via a tender offer, depending on transaction timing, legal requirements, or exchange listing requirements[79] - If shareholder approval is sought, the company will conduct a proxy solicitation in accordance with Regulation 14A of the Exchange Act and file proxy materials[80][81] - If redemptions are conducted via a tender offer, the company will proceed in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act, and file tender offer documents[84] Limitation on Redemption upon Completion of Our Initial Business Combination If We Seek Shareholder Approval - If the company seeks shareholder approval and does not redeem through a tender offer, public shareholders and their affiliates or "groups" will be limited from redeeming "excess shares" exceeding 15% of the total shares sold in the initial public offering, unless with prior company consent[86] - This limitation aims to prevent minority shareholders from using redemption rights to force the company to purchase their shares at a high price, thereby affecting the completion of the business combination[86] Tendering Share Certificates in Connection with a Tender Offer or Redemption Rights - Public shareholders seeking to exercise redemption rights must submit their share certificates (if any) to the transfer agent or electronically deliver shares via the DWAC system by the date specified in the proxy solicitation or tender offer materials[88] - Unlike many blank check companies, the company requires physical or electronic delivery before the meeting to ensure that redeeming shareholders' redemption choices are irrevocable after business combination approval[91] Redemption of Public Shares and Liquidation If No Initial Business Combination - The company's articles of association require it to complete an initial business combination by June 2, 2023 (as extended), otherwise it will cease operations, liquidate, and redeem public shares[94] - If the company fails to complete a business combination by the specified date, public shares will be redeemed at a per-share cash price equal to the total amount in the trust account, less income taxes and liquidation expenses, divided by the number of public shares outstanding[96] - The sponsor has agreed to waive its liquidation distribution rights for its founder shares and private placement shares to protect funds in the trust account[97] - The company will endeavor to have all vendors and service providers sign agreements waiving any rights to funds in the trust account, to mitigate the risk of third-party claims[101] Competition - The company faces intense competition from other blank check companies, private equity groups, public companies, and operating businesses seeking strategic acquisitions when identifying, evaluating, and selecting business combination targets[116] - Many competitors possess greater financial, technical, human, and other resources than the company, potentially placing it at a competitive disadvantage when acquiring large target businesses[116] Facilities - The company currently maintains executive offices at 51 Astor Place, 10th Floor, New York, New York, paying the sponsor $10,000 per month for office space, secretarial, and administrative support[117] Employees - The company currently has three executive officers and does not intend to have full-time employees before completing an initial business combination; officers will dedicate necessary time based on the business combination process[118] Periodic Reporting and Financial Information - The company has registered its Class A ordinary shares under the Exchange Act and is obligated to file annual, quarterly, and current reports with the SEC[119][123] - The company will provide shareholders with audited financial statements of a potential target business, which may need to comply with GAAP or IFRS and be audited by the PCAOB[120] - The company is a Cayman Islands exempted company and has obtained a tax exemption undertaking from the Cayman Islands government, exempting it from taxes on profits, income, gains, or appreciation for 20 years[124] Risk Factors The company faces significant risks including failure to complete a business combination, redemption rights impacting deals, management conflicts of interest, macroeconomic events, internal control weaknesses, and potential regulatory or delisting issues - The company may fail to complete an initial business combination by the specified date, leading to liquidation, where public shareholders may receive only approximately $10.00 per share or less in redemption[154][156] - Public shareholders' right to redeem shares may make the company's financial condition unattractive to potential business combination targets, hindering transaction completion[138][139] - The company's officers and directors have fiduciary or contractual obligations in other entities, including other blank check companies, potentially leading to conflicts of interest and affecting the presentation of business opportunities[283][284] - Geopolitical conditions such as the COVID-19 pandemic and the Russia-Ukraine conflict may significantly and adversely affect the company's search for business combinations and the operations of target businesses[147][148][151][152][153] - The company has material weaknesses in internal control, which may lead to untimely or inaccurate financial information reporting and increased litigation risk[299][301][302][303][304] - The company may be deemed an investment company under the Investment Company Act, leading to burdensome compliance requirements and activity restrictions, potentially even forcing liquidation[241][243] - Nasdaq may delist the company's securities, which would limit investors' ability to trade the company's securities and subject the company to additional trading restrictions[264][265][266] Risks Related to Business Combination Process - The company may not conduct a shareholder vote on its initial business combination, meaning the combination could be completed even if a majority of shareholders do not support it[130][131] - Public shareholders' right to redeem shares may make the company's financial condition unattractive to potential business combination targets, hindering transaction completion[138][139] - The requirement for the company to complete an initial business combination by a specified date may give potential target businesses leverage in negotiations and limit the time available for due diligence[145][146] Risks Related to External Factors - The ongoing impact of the COVID-19 pandemic may significantly and adversely affect the company's search for business combinations and the operations of target businesses[147][148][149] - Geopolitical conditions, sanctions, and impacts on debt and equity markets resulting from the Russia-Ukraine conflict may significantly and adversely affect the company's search for business combinations and the operations of target businesses[151][152][153] Risks Related to Shareholder Rights and Liquidation - If the company fails to complete an initial business combination by the specified date, it will cease all operations and liquidate, where public shareholders may receive only approximately $10.00 per share or less in redemption[154][156] - The sponsor, directors, officers, advisors, and their affiliates may purchase public shares, which could influence the business combination's voting outcome and reduce the public float of Class A ordinary shares[158][159][160] - If shareholders fail to receive the company's redemption offer notice or do not comply with the procedures for tendering shares, their shares may not be redeemed[163][164] Risks Related to Competition and Resources - The increasing number of special purpose acquisition companies has led to a scarcity of attractive targets and intensified competition, potentially increasing business combination costs or resulting in failure to find a target[166][167] - The company's limited resources and intense competition may make it difficult to complete an initial business combination; if unsuccessful, public shareholders may receive only approximately $10.00 per share or less in redemption[168][169] - If funds outside the trust account are insufficient to support company operations until liquidation, the company will rely on loans from the sponsor or management team, otherwise it may be forced to liquidate[170][171][173] Risks Related to Target Business Characteristics - The company may seek business combination opportunities with high complexity requiring significant operational improvements, which could delay or hinder the achievement of expected results[174][175] - The company may complete an initial business combination with a private company having limited information, potentially leading to the combined company being less profitable than anticipated[236] - The company may acquire a business outside of management's area of expertise, leading to an inability to fully assess risks and potentially negatively impacting shareholder value[179][180] Risks Related to Corporate Governance and Control - The company's articles of association do not specify a maximum redemption threshold, potentially allowing the company to complete an initial business combination even if a majority of shareholders disagree[182][183] - The company may amend its articles of association to facilitate a business combination, even if shareholders may not support such amendments[184][185] - The company's initial shareholders hold a significant equity stake, potentially exerting substantial influence over actions requiring shareholder votes, and their voting may not align with public shareholders' interests[186] Risks Related to Financial Reporting and Accounting - Even with due diligence on a target business, the company may not uncover all material issues, leading to post-combination asset write-downs, restructurings, or impairments, negatively impacting financial condition and stock price[191][192] - If third parties make claims against the company, funds in the trust account may be reduced, resulting in shareholders receiving less than $10.00 per share upon redemption[194][195][196] - If the company files for bankruptcy after distributing trust account funds to public shareholders, a bankruptcy court may recover these funds, and board members could face punitive damages claims for breach of fiduciary duty[200][201] - The company has material weaknesses in internal control, which may lead to untimely or inaccurate financial information reporting and increased litigation risk[299][301][302][303][304] Risks Related to Healthcare Industry - As the company plans to seek business combinations in the healthcare industry, its future operations will face industry-specific risks such as government regulation, cost controls, new product approvals, patent expirations, and product liability litigation[207][208][209][210][211] - The healthcare industry invests heavily in R&D, and research findings and technological innovations may render existing treatments, services, or products unattractive, significantly and adversely affecting target companies[213] Risks Related to Securities - The company may issue additional Class A ordinary shares or preferred stock to complete an initial business combination or implement employee incentive plans, which will dilute existing shareholders' equity and may introduce other risks[217][220] - Securities invested in the trust account may yield negative interest rates, reducing trust asset value and resulting in public shareholders receiving less than $10.00 per share upon redemption[259][260] - If the company seeks shareholder approval and does not redeem through a tender offer, shareholders holding more than 15% of Class A ordinary shares will lose the ability to redeem all excess shares[261][262] - Nasdaq may delist the company's securities, which would limit investors' ability to trade the company's securities and subject the company to additional trading restrictions[264][265][266] Risks Related to Sponsor and Management Team - The company relies on its officers and directors, whose departure could adversely affect company operations, especially before completing an initial business combination[274] - The company's officers and directors allocate their time to other businesses, potentially leading to conflicts of interest and affecting the time they dedicate to company affairs[281][282] - The company's officers and directors have fiduciary or contractual obligations in other entities, potentially leading to conflicts of interest and affecting the presentation of business opportunities[283][284] - The personal and financial interests of the sponsor, officers, and directors may influence their motivation in identifying and selecting target businesses, potentially leading to conflicts of interest[287][288] - If the initial business combination is not completed, the sponsor, officers, and directors will lose their entire investment (excluding public shares), which could create conflicts of interest in their target selection[294][295] General Risk Factors - The company has material weaknesses in internal control, which may lead to untimely or inaccurate financial information reporting and increased litigation risk[299][301][302][303][304] - The report of the independent registered public accounting firm includes an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern[305] - As a newly formed company with no operating history or revenue, investors cannot assess its ability to achieve business objectives[306] - The SEC has issued proposed rules regarding special purpose acquisition companies, which may increase the cost and time of business combinations, restrict combination conditions, and potentially even lead to company liquidation[310][311] - The past performance of the company's management team or its affiliates (including Perceptive Advisors) is not indicative of a guarantee of the company's future investment performance[312][313] - As a Cayman Islands exempted company, investors may face difficulties protecting their interests, and their ability to enforce rights through U.S. federal courts may be limited[320][321][324][325] Unresolved Staff Comments As of the report date, the company has no unresolved staff comments - The company has no unresolved staff comments[343] Properties The company's executive offices are located in New York City, with a monthly payment of $10,000 to the sponsor for administrative support, and the current space is sufficient - The company's executive offices are located at 51 Astor Place, 10th Floor, New York, New York[344] - The company pays the sponsor $10,000 per month for office space, secretarial, and administrative support[344] - The company believes its current office space is sufficient for its present operational needs[344] Legal Proceedings To management's knowledge, there are no pending or anticipated legal proceedings against the company, its officers, or directors - To management's knowledge, there are no pending or anticipated legal proceedings against the company, its officers, or directors[345] Mine Safety Disclosures This item is not applicable - This item is not applicable[346] PART II Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The company's Class A ordinary shares trade on Nasdaq, with limited record holders; no cash dividends have been paid, and unregistered securities sales include Class B shares and convertible notes to the sponsor - The company's Class A ordinary shares trade on Nasdaq under the symbol "ARYD," commencing public trading on February 26, 2021[347] - As of the report date, the company had two record holders of Class A ordinary shares and four record holders of Class B ordinary shares[347] - The company has not paid any cash dividends, and future dividend payments will depend on post-business combination revenue, profitability, capital requirements, and financial condition[347] - The company issued 3,737,500 Class B ordinary shares to the sponsor and privately placed 499,000 Class A ordinary shares to the sponsor at $10.00 per share[348][349] - The company issued an unsecured convertible promissory note for $120,000 to the sponsor on November 7, 2022, for general corporate purposes, and a second convertible promissory note on February 28, 2023, allowing borrowing up to $1,680,000[350][351] Market Information - The company's Class A ordinary shares trade on Nasdaq under the symbol "ARYD," commencing public trading on February 26, 2021[347] Holders - As of the report date, the company had two record holders of Class A ordinary shares and four record holders of Class B ordinary shares[347] Dividends - The company has not paid any cash dividends, and future dividend payments will depend on post-business combination revenue, profitability, capital requirements, and financial condition[347] Securities Authorized for Issuance under Equity Compensation Plans - The company has not authorized the issuance of any securities under equity compensation plans[348] Performance Graph - Not applicable[348] Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings - The company issued 3,737,500 Class B ordinary shares to the sponsor and privately placed 499,000 Class A ordinary shares to the sponsor at $10.00 per share[348][349] - The company issued an unsecured convertible promissory note for $120,000 to the sponsor on November 7, 2022, for general corporate purposes[350] - The company issued a second convertible promissory note on February 28, 2023, allowing borrowing up to $1,680,000 for general corporate purposes and trust account deposits[351] - Net proceeds of $149.5 million from the initial public offering and private placement have been deposited into a trust account, invested in U.S. government treasury bills or money market funds[352] - The company paid approximately $3 million in underwriting discounts and commissions and deferred $5.2 million in underwriting discounts and commissions, with one underwriter waiving its right to 50% of the deferred commission[353] Unregistered Sales - On January 4, 2021, the company issued 3,737,500 Class B ordinary shares to the sponsor in exchange for a $25,000 capital contribution[348] - Upon completion of the initial public offering, the company privately placed 499,000 Class A ordinary shares to the sponsor at $10.00 per share, totaling $4,990,000[349] - On November 7, 2022, the company issued an unsecured convertible promissory note for $120,000 to the sponsor for general corporate purposes[350] - On February 28, 2023, the company issued a second convertible promissory note, allowing borrowing up to $1,680,000, of which $1,380,000 is convertible into working capital shares[351] Use of Proceeds - Net proceeds of $149.5 million from the initial public offering and private placement have been deposited into a trust account, invested in U.S. government treasury bills or money market funds[352] - The company paid approximately $3 million in underwriting discounts and commissions and deferred $5.2 million in underwriting discounts and commissions, with one underwriter waiving its right to 50% of the deferred commission[353] Purchases of Equity Securities by the Issuer and Affiliated Purchasers - None[356] Reserved This item is reserved - This item is reserved[357] Management's Discussion and Analysis of Financial Condition and Results of Operations As a blank check company, the company's focus has been on its IPO and finding a business combination, with net income primarily from trust investments, while facing going concern uncertainties and contractual obligations - The company's primary activities since inception have been preparing for its initial public offering and seeking a potential initial business combination, with no operating revenue generated[358][373] - On February 28, 2023, the company's shareholders approved an extension of the business combination deadline to June 2, 2023, with optional monthly extensions until March 2, 2024[369] - To mitigate the risk of being deemed an investment company, the company instructed the trustee to liquidate investments in the trust account and hold funds in an interest-bearing demand deposit account[368] Operating Results for 2022 and 2021 | Metric | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | General and Administrative Expenses | $1,009,074 | $6,614,208 | | Operating Loss | ($1,009,074) | ($6,614,208) | | Interest Income and Unrealized Gains from Trust Account Investments | $2,076,558 | $52,336 | | Net Income (Loss) | $1,067,484 | ($6,561,872) | | Basic and Diluted Net Income (Loss) Per Class A Ordinary Share | $0.06 | ($0.40) | | Basic and Diluted Net Income (Loss) Per Class B Ordinary Share | $0.06 | ($0.40) | - As of December 31, 2022, the company had approximately $91,000 in cash in its operating bank account and a working capital deficit of approximately $6.1 million, with the independent registered public accounting firm's report expressing substantial doubt about the company's ability to continue as a going concern[374][376] - The company pays the sponsor $10,000 per month for administrative support and has entered into two convertible promissory note agreements with the sponsor to meet working capital needs[377][382][384] Overview - The company is a blank check company, formed on August 24, 2020, for the purpose of effecting a business combination, with ARYA Sciences Holdings IV as its sponsor[358] - The company completed its initial public offering on March 2, 2021, issuing 14,950,000 Class A ordinary shares, raising $149.5 million, and incurring approximately $8.8 million in offering costs, including $5.2 million in deferred underwriting commissions[359] - On August 8, 2022, one underwriter waived its right to 50% of the deferred underwriting commission[359] - Net proceeds of $149.5 million from the initial public offering and private placement have been deposited into a trust account, invested in U.S. government securities or money market funds[361] - If the company fails to complete a business combination by the specified date, it will cease operations, liquidate, and redeem public shares[363] Adoption of Extension Amendment Proposal - On February 27, 2023, the company instructed the trustee to liquidate investments in the trust account and hold funds in an interest-bearing demand deposit account to mitigate the risk of being deemed an investment company[368] - On February 28, 2023, the company's shareholders approved an extension of the business combination deadline to June 2, 2023, with optional monthly extensions until March 2, 2024[369] - As part of the extension, the sponsor deposited $420,000 into the trust account and received a second convertible promissory note[369] - Following the adoption of the extension amendment proposal, 11,259,169 public shares were redeemed, leaving 4,189,831 Class A ordinary shares and 3,737,500 Class B ordinary shares outstanding[370] - The sponsor's Class B ordinary shares represent 47.1% of the outstanding ordinary shares[370] Results of Operations - The company's primary activities since inception have been preparing for its initial public offering and seeking a potential initial business combination, with no operating revenue generated[373] Operating Results for 2022 and 2021 | Metric | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | General and Administrative Expenses | $1,009,074 | $6,614,208 | | Operating Loss | ($1,009,074) | ($6,614,208) | | Interest Income and Unrealized Gains from Trust Account Investments | $2,076,558 | $52,336 | | Net Income (Loss) | $1,067,484 | ($6,561,872) | | Basic and Diluted Net Income (Loss) Per Class A Ordinary Share | $0.06 | ($0.40) | | Basic and Diluted Net Income (Loss) Per Class B Ordinary Share | $0.06 | ($0.40) | Going Concern - As of December 31, 2022, the company had approximately $91,000 in cash in its operating bank account and a working capital deficit of approximately $6.1 million[374] - The company's liquidity needs are met through contributions from the sponsor, loans, and proceeds from private placements[374] - The report of the independent registered public accounting firm expresses substantial doubt about the company's ability to continue as a going concern due to its working capital deficit and risk of mandatory liquidation[376] Contractual Obligations - The company pays the sponsor $10,000 per month for administrative support, incurring approximately $120,000 in fees as of December 31, 2022[377] - Holders of founder shares and private placement shares have registration rights, and the company will bear the expenses of filing registration statements[379] - The company paid approximately $3 million in underwriting discounts and deferred $5.2 million in underwriting commissions, with one underwriter waiving its right to 50% of the deferred commission[381] - The company has two convertible promissory note agreements with the sponsor for working capital, with $120,000 outstanding on the first note as of December 31, 2022[382][384] Critical Accounting Estimates - The company's management has not identified any critical accounting estimates[385] Off-Balance Sheet Arrangements - As of December 31, 2022, the company had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K[386] JOBS Act - As an "emerging growth company," the company has elected to delay adoption of new or revised accounting standards, which may make its financial statements incomparable to non-emerging growth companies[388] - The company is evaluating the benefits of relying on other simplified reporting requirements provided by the JOBS Act, including exemptions from auditor attestation reports on internal control and reduced executive compensation disclosure[389] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide the information for this item - As a smaller reporting company, the company is not required to provide the information requested by this item[390] Financial Statements and Supplementary Data This item refers to the financial statements and supplementary data located at the end of the report - This item refers to the financial statements and supplementary data on pages F-1 through F-20 at the end of the report[390] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company has no changes in or disagreements with accountants regarding accounting and financial disclosure - The company has no changes in or disagreements with accountants on accounting and financial disclosure[390] Controls and Procedures Management assessed disclosure controls and procedures as ineffective due to material weaknesses in internal control, specifically in accounting for contingent obligations, and is implementing remediation efforts - The company's management assessed that as of December 31, 2022, its disclosure controls and procedures were ineffective due to material weaknesses in internal control[391] - Specifically, the company's internal controls were ineffective in design or maintenance regarding the interpretation and accounting for the extinguishment of significant contingent obligations related to waivers[391] - Management has conducted additional analysis to ensure financial statements comply with GAAP and believes the financial statements in this report fairly present the company's financial position in all material respects[391] - The company has dedicated and will continue to dedicate significant effort and resources to remediate and improve internal controls to ensure effective evaluation of accounting for complex transactions[395] Evaluation of Disclosure Controls and Procedures - The company's management assessed that as of December 31, 2022, its disclosure controls and procedures were ineffective due to material weaknesses in internal control[391] - Specifically, the company's internal controls were ineffective in design or maintenance regarding the interpretation and accounting for the extinguishment of significant contingent obligations related to waivers[391] Management's Annual Report on Internal Control Over Financial Reporting - Management is responsible for establishing and maintaining adequate internal control to ensure reliable financial reporting and financial statement preparation in accordance with U.S. GAAP[393] - Based on an evaluation using the COSO framework, management concluded that the company's internal control was ineffective as of December 31, 2022[393] Changes in Internal Control over Financial Reporting - The company has taken and plans to continue taking steps to remediate identified material weaknesses and improve internal controls to ensure the accuracy of accounting for complex financial instruments[395] Other Information This item contains no other information - This item contains no other information[396] Disclosures Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable - This item is not applicable[396] PART III Directors, Executive Officers and Corporate Governance The board comprises executive and independent directors across three classes, with established committees and a code of ethics, while managing potential conflicts of interest among officers and directors - The company's board of directors consists of Joseph Edelman (Chairman), Adam Stone (CEO and Director), Michael Altman (CFO and Director), Konstantin Poukalov (Chief Business Officer), and Todd Wider, Leslie Trigg, and Michael Henderson (Independent Directors)[399][400][402][403][404][406] - The board of directors is divided into three classes, with each class serving a three-year term, and one class elected annually[407] - The company has established an audit committee, a nominating committee, and a compensation committee, with all committee members identified as independent directors[411][413][414][418] - The company has adopted a code of ethics applicable to its directors, officers, and employees[422] - The company's officers and directors have fiduciary or contractual obligations in other entities, potentially leading to conflicts of interest, but the company does not believe these conflicts will materially affect its ability to complete an initial business combination[427][430] Directors and Executive Officers Directors and Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Joseph Edelman | 67 | Chairman | | Adam Stone | 43 | Chief Executive Officer and Director | | Michael Altman | 41 | Chief Financial Officer and Director | | Konstantin Poukalov | 39 | Chief Business Officer | | Todd Wider | 58 | Director | | Leslie Trigg | 52 | Director | | Michael Henderson | 33 | Director | - Joseph Edelman is the Founder, CEO, and Portfolio Manager of Perceptive Advisors, and serves as a director on several other biotechnology companies[399] - Adam Stone is the Chief Investment Officer of Perceptive Advisors and serves as a director or supervisory board member for several life sciences companies[399] - Michael Altman is a Managing Director at Perceptive Advisors, focusing on medical devices, diagnostics, digital health, and specialty pharmaceuticals, and serves as a director for several companies[400] - Konstantin Poukalov is a Managing Director at Perceptive Advisors, focusing on various strategies, and serves as a director for several life sciences companies[402] - Todd Wider, Leslie Trigg, and Michael Henderson are all independent directors with extensive experience in the healthcare and life sciences industries[403][404][406] Number and Terms of Office of Officers and Directors - The company's board of directors is divided into three classes, with each class of directors serving a three-year term, and one class elected annually[407] - Before the completion of an initial business combination, board vacancies may be filled by nomination of a majority of the holders of founder shares, and directors may be removed by a majority of the holders of founder shares[408] - Officers are appointed by the board of directors and serve at the discretion of the board, without specific terms of office[409] Director Independence - Nasdaq listing standards require that a majority of the board of directors be independent directors[410] - Joseph Edelman, Todd Wider, Leslie Trigg, and Michael Henderson are identified as independent directors[410] Committees of the Board of Directors - The company's board of directors has an audit committee, a nominating committee, and a compensation committee, each operating under a charter approved by the board[411] Audit Committee - The audit committee members include Todd Wider (Chair), Leslie Trigg, and Michael Henderson, all identified as independent directors[413] - Todd Wider qualifies as an "audit committee financial expert"[413] - The audit committee is responsible for overseeing the independent registered public accounting firm's audit work, reviewing financial reports, ensuring compliance, and approving all payments to related parties[413] Nominating Committee - The nominating committee members include Todd Wider, Leslie Trigg (Chair), and Michael Henderson, all identified as independent directors[414] - The nominating committee is responsible for overseeing the selection of board members, considering candidates' accomplishments, intellect, experience, ethical standards, and professionalism[414][416][417] Compensation Committee - The compensation committee members include Todd Wider, Leslie Trigg, and Michael Henderson (Chair), all identified as independent directors[418] - The compensation committee is responsible for reviewing and approving the compensation of the CEO and other executive officers, reviewing compensation policies and plans, implementing incentive plans, and reviewing director compensation[418] Compensation Committee Interlocks and Insider Participation - The company's executive officers currently do not serve on the compensation committee of any entity where an executive officer of that entity serves as a director of the company[421] Code of Ethics - The company has adopted a code of ethics applicable to its directors, officers, and employees[422] Section 16(a) Beneficial Ownership Reporting Compliance - Based on a review of forms, the company believes there were no late filers as of December 31, 2022[423] Conflicts of Interest - Under Cayman Islands law, directors and officers have fiduciary duties, including acting in good faith, in the best interests of the company as a whole, exercising powers fairly, and avoiding conflicts of interest[424][425][426] - The company's officers and directors have fiduciary or contractual obligations in other entities, potentially leading to conflicts of interest and affecting the presentation of business opportunities[427][430] - The company does not prohibit business combinations with entities affiliated with Perceptive Advisors or its sponsor, officers, or directors, but an independent investment bank or valuation firm's fairness opinion is required for related party transactions[434] Executive Compensation Officers and directors receive no cash compensation, but the sponsor receives $10,000 monthly for administrative services, and out-of-pocket expenses are reimbursed; post-combination, management may receive consulting fees - The company's officers and directors do not receive any cash compensation[440] - The company pays the sponsor $10,000 per month for office space, secretarial, and administrative services[440] - The sponsor, officers, and directors and their affiliates will be reimbursed for out-of-pocket expenses incurred in identifying potential target businesses and conducting due diligence[440] - Upon completion of a business combination, any directors or management team members who remain may receive consulting or management fees, with specific amounts determined by the combined company's board of directors at that time[442] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of April 6, 2023, ARYA Sciences Holdings IV is the largest beneficial owner with 52.3% voting control, following significant public share redemptions that increased the sponsor's Class B ordinary share percentage to 47.1% Beneficial Ownership as of April 6, 2023 | Beneficial Owner Name | Class B Ordinary Shares | Approximate Percentage of Class B Ordinary Shares | Class A Ordinary Shares | Approximate Percentage of Class A Ordinary Shares | Approximate Percentage of Voting Control | | :--- | :--- | :--- | :--- | :--- | :--- | | Arya Sciences Holdings IV (Sponsor) | 3,647,500 | 97.6% | 499,000 | 11.9% | 52.3% | | Joseph Edelman | - | - | - | - | - | | Adam Stone | 3,647,500 | 97.6% | 499,000 | 11.9% | 52.3% | | Michael Altman | 3,647,500 | 97.6% | 499,000 | 11.9% | 52.3% | | Konstantin Poukalov | - | - | - | - | - | | Michael Henderson | 30,000 | * | - | - | * | | Todd Wider | 30,000 | * | - | - | * | | Leslie Trigg | 30,000 | * | - | - | * | | All Executive Officers and Directors (Seven Individuals) | 3,737,500 | 100% | 499,000 | 11.9% | 53.4% | | Adage Capital Partners, L.P. | - | - | 1,000,000 | 23.9% | 12.6% | | Farallon Capital Partners, L.P. | - | - | 800,000 | 19.1% | 10.1% | | Glazer Capital, LLC | - | - | 500,000 | 11.9% | 6.3% | | Radcliffe Capital Management, L.P. | - | - | 221,613 | 5.3% | 2.8% | - As of April 6, 2023, the sponsor, ARYA Sciences Holdings IV, is the largest beneficial owner, holding 3,647,500 Class B ordinary shares and 499,000 Class A ordinary shares, totaling 52.3% of the voting control[447] - Following the adoption of the extension amendment proposal, 11,259,169 public shares were redeemed, resulting in the sponsor's Class B ordinary shares representing 47.1% of the outstanding ordinary shares[453] Security Ownership Beneficial Ownership as of April 6, 2023 | Beneficial Owner Name | Class B Ordinary Shares | Approximate Percentage of Class B Ordinary Shares | Class A Ordinary Shares | Approximate Percentage of Class A Ordinary Shares | Approximate Percentage of Voting Control | | :--- | :--- | :--- | :--- | :--- | :--- | | Arya Sciences Holdings IV (Sponsor) | 3,647,500 | 97.6% | 499,000 | 11.9% | 52.3% | | Joseph Edelman | - | - | - | - | - | | Adam Stone | 3,647,500 | 97.6% | 499,000 | 11.9% | 52.3% | | Michael Altman | 3,647,500 | 97.6% | 499,000 | 11.9% | 52.3% | | Konstantin Poukalov | - | - | - | - | - | | Mi