ARYA Sciences Acquisition IV(ARYD) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed financial statements detail the company's financial position, operations, equity changes, and cash flows Condensed Balance Sheets Condensed Balance Sheet Highlights (June 30, 2022 vs. December 31, 2021) | Metric | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Cash | $49,535 | $501,242 | | Prepaid expenses | $246,400 | $368,797 | | Total current assets | $295,935 | $870,039 | | Investments in Trust Account| $149,702,679 | $149,552,336 | | Total Assets | $149,998,614 | $150,422,375 | | Accounts payable | $67,068 | $173,073 | | Accrued expenses | $5,871,543 | $5,812,109 | | Due to related party | $30,000 | $- | | Total current liabilities | $5,968,611 | $5,985,182 | | Deferred underwriting commissions | $5,232,500 | $5,232,500 | | Total liabilities | $11,201,111 | $11,217,682 | | Class A ordinary shares subject to redemption | $149,602,679 | $149,500,000 | | Accumulated deficit | $(10,805,600) | $(10,295,731) | | Total shareholders' deficit | $(10,805,176) | $(10,295,307) | - The company's cash significantly decreased from $501,242 at December 31, 2021, to $49,535 at June 30, 2022, while investments held in the Trust Account slightly increased[7] - Total current assets decreased from $870,039 to $295,935, and total current liabilities remained relatively stable, resulting in a negative working capital position[7] Unaudited Condensed Statements of Operations Condensed Statements of Operations Highlights (Three and Six Months Ended June 30, 2022 vs. 2021) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | General and administrative expenses | $304,811 | $166,913 | $557,533 | $392,490 | | Loss from operations | $(304,811) | $(166,913) | $(557,533) | $(392,490) | | Unrealized gain on investments in Trust Account | $108,807 | $4,485 | $150,343 | $19,811 | | Net loss | $(196,004) | $(162,428) | $(407,190) | $(372,679) | | Basic and diluted net loss per share, Class A | $(0.01) | $(0.01) | $(0.02) | $(0.03) | | Basic and diluted net loss per share, Class B | $(0.01) | $(0.01) | $(0.02) | $(0.03) | - The company reported an increased net loss for both the three and six months ended June 30, 2022, primarily due to higher general and administrative expenses, partially offset by increased unrealized gains on trust account investments[9] Unaudited Condensed Statements of Changes in Shareholders' Equity (Deficit) Changes in Shareholders' Deficit (Six Months Ended June 30, 2022 vs. 2021) | Metric | December 31, 2021 | June 30, 2022 (Unaudited) | | :--- | :--- | :--- | | Accumulated Deficit (Start) | $(10,295,731) | $(10,295,731) | | Net Loss | $(407,190) | $(407,190) | | Increase in redemption value of Class A ordinary shares | $(102,679) | $(102,679) | | Accumulated Deficit (End) | N/A | $(10,805,600) | | Total Shareholders' Deficit (End) | $(10,295,307) | $(10,805,176) | - The total shareholders' deficit increased from $(10,295,307) at December 31, 2021, to $(10,805,176) at June 30, 2022, primarily due to net losses and an increase in the redemption value of Class A ordinary shares[12] Unaudited Condensed Statements of Cash Flows Condensed Statements of Cash Flows Highlights (Six Months Ended June 30, 2022 vs. 2021) | Cash Flow Activity | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(406,707) | $(812,141) | | Net cash used in investing activities | $- | $(149,500,000) | | Net cash (used in) provided by financing activities | $(45,000) | $151,069,388 | | Net change in cash | $(451,707) | $757,247 | | Cash - end of the period | $49,535 | $757,247 | - Net cash used in operating activities decreased in the first six months of 2022 compared to 2021, while financing activities shifted from a large inflow in 2021 to a net outflow in 2022[16] Notes to Unaudited Condensed Financial Statements Note 1 - Description of Organization and Business Operations - ARYA Sciences Acquisition Corp IV is a Special Purpose Acquisition Company (SPAC) incorporated on August 24, 2020, to effect a business combination[18] - The company completed its Initial Public Offering (IPO) on March 2, 2021, raising $149.5 million from public shares and approximately $5.0 million from a private placement[20][21] - Substantially all net proceeds, totaling $149.5 million, were placed in a Trust Account invested in U.S. government securities or money market funds[22] - The company must complete a business combination by March 2, 2023, with a fair market value of at least 80% of the Trust Account's net assets[23][24][28][29] - As of June 30, 2022, $50,000 in its operating account and a negative working capital of $5.7 million raise substantial doubt about its ability to continue as a going concern[33][35] Note 2 - Summary of Significant Accounting Policies - The financial statements are prepared in accordance with GAAP and SEC rules for interim reporting[38] - As an 'emerging growth company' under the JOBS Act, the company has elected to use the extended transition period for new accounting standards[40][41] - Investments held in the Trust Account are classified as trading securities recognized at fair value using Level 1 inputs[45][48][49] - Class A ordinary shares subject to possible redemption are classified as temporary equity and presented at redemption value[53] - Net loss per ordinary share is calculated by dividing net loss by the weighted-average number of ordinary shares outstanding[57] Note 3 - Initial Public Offering - On March 2, 2021, the Company consummated its IPO of 14,950,000 Public Shares at $10.00 per share, generating gross proceeds of $149.5 million and incurring $8.8 million in offering costs[63] Note 4 - Related Party Transactions - The Sponsor acquired 3,737,500 Founder Shares for $25,000 and 499,000 Private Placement Shares for $5.0 million[64][65][67] - The Sponsor loaned the company up to $300,000 for IPO expenses, of which approximately $161,000 was borrowed and fully repaid[68][69] - An administrative support agreement requires reimbursement to the Sponsor of $10,000 per month for office and administrative services[70] Note 5 - Commitments and Contingencies - Holders of Founder Shares and Private Placement Shares have registration rights to register their securities after applicable lock-up periods[73] - The company owes underwriters $5.2 million in deferred underwriting commissions, payable from the Trust Account upon completion of a business combination[74] - Management is evaluating the impact of the COVID-19 pandemic and the Russia-Ukraine military action, concluding their financial impacts are not readily determinable[75][76] Note 6 - Class A Ordinary Shares Subject to Possible Redemption - As of June 30, 2022, 14,950,000 Class A ordinary shares were subject to possible redemption and classified as temporary equity[77] Class A Ordinary Shares Subject to Possible Redemption Calculation (June 30, 2022) | Item | Amount | | :--- | :--- | | Gross Proceeds | $149,500,000 | | Less: Offering costs allocated to Class A ordinary shares subject to possible redemption | $(8,734,896) | | Plus: Accretion on Class A ordinary shares subject to possible redemption amount | $8,734,896 | | Increase in redemption value of Class A ordinary shares subject to possible redemption | $102,679 | | Class A ordinary shares subject to possible redemption | $149,602,679 | Note 7 - Shareholders' Equity (Deficit) - The company is authorized to issue 479,000,000 Class A ordinary shares and 20,000,000 Class B ordinary shares[80][81] - Class B shares automatically convert to Class A shares upon the consummation of the initial Business Combination[82][83] Note 8 - Fair Value Measurements Fair Value Measurements of Assets Held in Trust Account (June 30, 2022) | Description | Quoted Prices in Active Markets (Level 1) | | :--- | :--- | | U.S. Treasury Securities | $149,697,917 | | Cash equivalents - money market funds | $4,762 | | Total | $149,702,679 | - All investments held in the Trust Account are measured at fair value using Level 1 inputs (quoted prices in active markets)[87][88] Note 9 - Subsequent Events - Management has evaluated subsequent events and concluded that all required recognition or disclosure events have been addressed[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management discusses the company's financial condition, operational results, liquidity, and critical accounting policies Cautionary Note Regarding Forward-Looking Statements - The report contains forward-looking statements based on current expectations, which involve risks and uncertainties[92][93] - Key risks include the lack of operating history, ability to complete a business combination, potential dilution, and economic conditions[93] Overview - ARYA Sciences Acquisition Corp IV is a blank check company that completed its IPO on March 2, 2021, raising $149.5 million and a private placement raising $5.0 million[96][97] - Proceeds totaling $149.5 million are held in a Trust Account for investment in U.S. government securities[98] - The company must complete a business combination by March 2, 2023, or it will cease operations and liquidate[100] - A business combination poses risks of significant equity dilution, subordination of Class A shares, and increased vulnerability from debt incurrence[101][103] Results of Operations - The company has not generated operating revenues since inception, with all activities focused on its formation, IPO, and search for a business combination[104] Net Loss and Key Components (Three and Six Months Ended June 30, 2022 vs. 2021) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(196,000) | $(162,000) | $(407,000) | $(373,000) | | General and administrative expenses | $305,000 | $167,000 | $557,000 | $392,000 | | Unrealized gains on investments in Trust Account | $109,000 | $5,000 | $150,000 | $19,000 | - The net loss for the six months ended June 30, 2022, was approximately $407,000, primarily driven by general and administrative expenses[104][105] Liquidity and Going Concern - As of June 30, 2022, the company had approximately $50,000 in its operating bank account and a negative working capital of approximately $5.7 million[106] - The working capital deficit and mandatory liquidation date of March 2, 2023, raise substantial doubt about the company's ability to continue as a going concern[109] - Liquidity needs have been met through Sponsor contributions, a repaid Sponsor loan, and proceeds from the Private Placement[108] - The financial statements do not include adjustments that might be necessary if the company is unable to continue as a going concern[109] Contractual Obligations - The company has an Administrative Support Agreement to reimburse the Sponsor $10,000 per month for office and administrative services[111] - The company has registration rights obligations for Founder Shares and Private Placement Shares, bearing the expenses for filing registration statements[113] - A deferred underwriting commission of approximately $5.2 million is payable to underwriters upon completion of a business combination[114] Critical Accounting Policies - Class A ordinary shares subject to possible redemption are classified as temporary equity at redemption value[115] - Net income (loss) per ordinary share is calculated by dividing net income (loss) by the weighted-average number of ordinary shares outstanding[116] Recent Accounting Pronouncements - Management believes no recently issued accounting standards would have a material effect on the financial statements[118] Off-Balance Sheet Arrangements - As of June 30, 2022, the company did not have any off-balance sheet arrangements[119] JOBS Act - As an 'emerging growth company', the company is electing to delay the adoption of new or revised accounting standards[120] - The company is evaluating other reduced reporting requirements provided by the JOBS Act[121] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[122] Item 4. Controls and Procedures The evaluation of disclosure controls and procedures confirms effectiveness and the remediation of a prior material weakness Evaluation of Disclosure Controls and Procedures - As of June 30, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[124] - A material weakness in internal control over financial reporting identified in 2021 was remediated as of June 30, 2022[126] - Disclosure controls and procedures provide reasonable, not absolute, assurance that objectives are met[127] Changes in Internal Control over Financial Reporting - Other than the remediation of the material weakness, there were no material changes in internal control over financial reporting during the most recent fiscal quarter[128] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings as of the date of this report - There are no legal proceedings to report[129] Item 1A. Risk Factors Risk factors are unchanged except for potential impacts from new SEC proposed rules concerning SPAC business combinations - No material changes to risk factors have occurred since the Annual Report, except for the potential adverse effects of changes in laws or regulations[129] - New SEC proposed rules issued on March 30, 2022, regarding SPACs could materially increase costs and time to complete a business combination[132] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities This section details the private placement sale of equity securities and the use of IPO proceeds for the Trust Account - The Sponsor purchased 499,000 Private Placement Shares for approximately $5.0 million simultaneously with the IPO[133] - Of the IPO gross proceeds, $149,500,000 was placed in the Trust Account[134] - The company paid approximately $3.0 million in underwriting discounts and commissions, with an additional $5.2 million deferred[134] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[134] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[135] Item 5. Other Information The company reported no other information for this period - There is no other information to report[135] Item 6. Exhibits This section lists all exhibits filed as part of the report, including agreements, certifications, and XBRL data - The report includes various exhibits such as organizational documents, key agreements, and certifications from the CEO and CFO[138] - XBRL (eXtensible Business Reporting Language) documents are also filed[138] Signature - The report was signed by Michael Altman, Chief Financial Officer, on behalf of ARYA Sciences Acquisition Corp IV on August 5, 2022[140]