ARYA Sciences Acquisition IV(ARYD) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed financial statements and highlights a going concern warning due to a working capital deficit Consolidated Condensed Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash | $87,505 | $20,191 | | Cash held in Trust Account | $37,119,896 | $40,575,949 | | Total Assets | $37,260,800 | $40,652,687 | | Liabilities & Shareholders' Deficit | | | | Total current liabilities | $12,145,586 | $12,353,227 | | Total liabilities | $14,761,836 | $14,969,477 | | Class A ordinary shares subject to possible redemption | $37,019,896 | $40,475,949 | | Total shareholders' deficit | ($14,520,932) | ($14,792,739) | Consolidated Condensed Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | General and administrative expenses | $611,740 | $968,597 | | Interest earned on cash and investments held in Trust Account | $511,751 | $1,128,846 | | Net income (loss) | ($245,847) | $160,249 | | Basic and diluted net income (loss) per share, Class A | ($0.03) | $0.01 | Consolidated Condensed Statements of Cash Flows Highlights (Unaudited) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($511,686) | ($211,027) | | Net cash used in financing activities | ($3,388,804) | ($114,471,882) | | Net change in cash | $67,314 | ($31,027) | Note 1 - Description of Organization and Business Operations This note details the company's SPAC structure, IPO, and significant shareholder redemptions following two deadline extensions - The company is a Special Purpose Acquisition Company (SPAC) formed to effect a business combination and has not generated any operating revenue to date[21][22] - On February 28, 2023, following an extension approval, 11,259,169 Public Shares were redeemed for an aggregate amount of $115,071,882[38] - On February 27, 2024, a second extension was approved, leading to the redemption of an additional 390,815 Public Shares for approximately $4,358,804[40] - The company has a working capital deficit of $12,004,682 as of March 31, 2024, which raises substantial doubt about its ability to continue as a going concern[43][45] Note 4 – Related Party Transactions This note outlines transactions with the Sponsor, including share purchases and four convertible promissory notes totaling over $3.1 million - The Sponsor purchased 499,000 Private Placement Shares at $10.00 per share, generating gross proceeds of approximately $5.0 million[75] Outstanding Convertible Promissory Notes - Related Party (as of March 31, 2024) | Note | Date Issued | Amount Drawn | Purpose | | :--- | :--- | :--- | :--- | | First | Nov 7, 2022 | $120,000 | General corporate purposes | | Second | Feb 28, 2023 | $1,585,000 | Extension funding & corporate purposes | | Third | Sep 27, 2023 | $900,000 | Extension funding & corporate purposes | | Fourth | Feb 8, 2024 | $540,000 | Extension funding & corporate purposes | - The company has an Administrative Support Agreement to reimburse the Sponsor $10,000 per month for office space and administrative services[86] Note 5 - Commitments and Contingencies This note details the Business Combination Agreement with Adagio Medical, Inc, including associated PIPE and convertible security financings - On February 13, 2024, the Company entered into a Business Combination Agreement with Adagio Medical, Inc[92] - In connection with the proposed business combination, the company secured commitments for a PIPE financing valued at approximately $45,000,000[97] - The company also secured commitments for a $20,000,000 convertible security financing in the form of 13% senior secured convertible notes[100] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition as a blank check company, focusing on its proposed merger and going concern risk - The company is a blank check company with no operating history, and its activities are focused on completing a business combination[135] - For Q1 2024, the company reported a net loss of $245,847, compared to a net income of $160,249 in Q1 2023, primarily due to lower interest income[173] - The company's liquidity depends on loans from its Sponsor; a working capital deficit of $12.0M as of March 31, 2024, raises substantial doubt about its going concern status[174][177] - The business combination deadline has been extended to March 2, 2025, contingent on monthly deposits of $111,000 into the Trust Account[168] Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure requirement as a smaller reporting company - As a smaller reporting company, the registrant is not required to provide the information otherwise required under this item[197] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes identified - Based on an evaluation as of March 31, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[199] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[201] PART II. OTHER INFORMATION Legal Proceedings The company reports no current legal proceedings - The company reports no legal proceedings[202] Risk Factors This section highlights the significant risk of the company's securities being delisted from Nasdaq due to non-compliance - The company is at risk of being delisted from Nasdaq for failing to hold an annual meeting and not completing a business combination within the required 36-month timeframe[203][204] - On May 13, 2024, a Nasdaq Hearings Panel granted the company an extension until August 23, 2024, to regain compliance, noting this is the full extent of its discretionary power[204] - Potential delisting could lead to severe adverse consequences, including reduced liquidity, limited market quotations, and a determination of its shares as "penny stock"[205] Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered securities issued to the Sponsor and planned issuances for the Adagio business combination - The company issued 3,737,500 Class B ordinary shares (Founder Shares) and 499,000 Private Placement Shares to the Sponsor in unregistered transactions[208][209] - The company has issued four convertible promissory notes to the Sponsor to fund working capital and business combination deadline extensions[210][211][212] - In connection with the proposed Adagio business combination, the company will issue unregistered securities through a PIPE Financing (~$45M) and a Convertible Security Financing ($20M)[216][217] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[224] Mine Safety Disclosures This disclosure requirement is not applicable to the company - Not applicable[224] Other Information The company reports no other information for disclosure - None[224] Exhibits This section lists filed exhibits, including the Business Combination Agreement with Adagio Medical and related financing documents - Key exhibits filed include the Business Combination Agreement with Adagio Medical, Inc. and related financing agreements[226] - Also filed are amendments to the company's Amended and Restated Memorandum and Articles of Association and the four convertible promissory notes issued to the Sponsor[226] Signature - The report was signed on May 20, 2024, by Michael Altman, the Chief Financial Officer[232]