424B3 1 d285722d424b3.htm 424B3 424B3

Filed purusant to Rule 424(b)(3)
Registration No. 333-262706

 

PROXY STATEMENT FOR

EXTRAORDINARY GENERAL MEETING OF

SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I

(A CAYMAN ISLANDS EXEMPTED COMPANY)

106,172,565 SHARES OF COMMON STOCK OF

SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I

(AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE),

THE CONTINUING ENTITY FOLLOWING THE DOMESTICATION, WHICH WILL BE RENAMED “AKILI, INC.” IN CONNECTION WITH THE BUSINESS COMBINATION DESCRIBED HEREIN

 

 

The board of directors of Social Capital Suvretta Holdings Corp. I, a Cayman Islands exempted company with limited liability (“SCS” and, after the Domestication as described below, “Akili, Inc.”), has unanimously approved (i) the domestication of SCS as a Delaware corporation (the “Domestication”); (ii) the merger of Karibu Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and a direct wholly owned subsidiary of SCS, with and into Akili Interactive Labs, Inc. (“Akili”), a Delaware corporation (the “Merger”), with Akili surviving the Merger as a wholly owned subsidiary of Akili, Inc., pursuant to the terms of the Agreement and Plan of Merger, dated as of January 26, 2022, by and among SCS, Merger Sub and Akili, attached to this proxy statement/prospectus as Annex A (the “Merger Agreement”), as more fully described elsewhere in this proxy statement/prospectus; and (iii) the other transactions contemplated by the Merger Agreement and documents related thereto. In connection with the Business Combination, SCS will change its name to “Akili, Inc.”

As a result of and upon the effective time of the Domestication, among other things, (i) each of the then issued and outstanding Class A ordinary shares, par value $0.0001 per share, of SCS (the “SCS Class A ordinary shares”), will convert automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. common stock”); and (ii) each of the then issued and outstanding Class B ordinary shares, par value $0.0001 per share, of SCS (the “SCS Class B ordinary shares”), will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock. Accordingly, this proxy statement/prospectus covers 31,890,000 shares of Akili, Inc. common stock to be issued in the Domestication.

At the effective time of the Merger, among other things, (i) each share of Akili common stock and preferred stock outstanding as of immediately prior to the effective time of the Merger will be converted into Akili, Inc. common stock as described further below, (ii) each Akili common stock warrant outstanding as of immediately prior to the effective time of the Merger (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock, and the exercise price thereof shall be adjusted, in each case, as set forth in the applicable Akili common stock warrant and described herein and (iii) each option to purchase shares of Akili common stock (an “Akili Option”) outstanding as of immediately prior to the effective time of the Merger will be converted into an option to purchase shares of Akili, Inc. common stock (an “Akili, Inc. Option”) (and the exercise price thereof shall be adjusted) as described herein, with clauses (i) through (iii) representing an aggregate of 60,000,000 shares of Akili, Inc. common stock (the “Aggregate Merger Consideration”), and a pre-transaction equity value of Akili of $600 million (the “Base Purchase Price”). An additional 16,200,000 shares of Akili, Inc. common stock will be purchased (at a price of $10.00 per share) substantially concurrently with the Closing by certain third-party investors and affiliates of SCS (collectively, the “PIPE Investors”), for a total aggregate purchase price of $162,000,000 (the “PIPE Investment”).

At the Closing of the Merger, SCS will deposit into an escrow account for the benefit of the pre-Closing Akili stockholders, optionholders and warrantholders an aggregate number of shares of Akili, Inc. common stock equal to 7.5% of the fully diluted shares of Akili, Inc. common stock (including shares reserved under the equity incentive plan to be adopted by Akili, Inc. in connection with the Closing but excluding the Earnout Shares and rights to Earnout Shares), determined as of immediately following the Closing (collectively, the “Earnout Shares”), which Earnout Shares will be subject to release from escrow to the pre-Closing Akili stockholders, optionholders and warrantholders in three equal tranches upon the daily volume weighted average price of a share of Akili, Inc. common stock reaching $15.00/share, $20.00/share and $30.00/share, respectively, over any 20 trading days within any 30 consecutive trading day period following the Closing and prior to the fifth anniversary of the Closing, in each case, on the terms set forth in the Merger Agreement. See “Business Combination Proposal—The Merger Agreement—Earnout.”

In furtherance of the foregoing, at the effective time of the Merger, among other things, each share of Akili capital stock outstanding as of immediately prior to the effective time of the Merger (other than (x) any shares of Akili capital stock held in treasury by Akili, which treasury shares shall be canceled as part of the Merger, and


(y) any shares of Akili capital stock held by stockholders of Akili who have perfected and not withdrawn a demand for appraisal rights pursuant to the applicable provisions of the Delaware General Corporation Law (the “DGCL”)), will be canceled and converted as follows:

 

 

each share of Akili common stock will be canceled and converted into the right to receive a number of shares of Akili, Inc. common stock equal to the quotient obtained by dividing (i) the Aggregate Merger Consideration by (ii) the aggregate fully diluted number of shares of Akili common stock issued and outstanding immediately prior to the Merger as calculated pursuant to the Merger Agreement (such quotient, the “Merger Consideration Per Fully Diluted Share”);

 

 

each share of Akili Series A-1 Preferred Stock, Akili Series A-2 Preferred Stock, Akili Series B Preferred Stock, Akili Series C Preferred Stock and Akili Series D Preferred Stock (collectively, the “Akili preferred stock”) will be canceled, converted into shares of Akili common stock and converted into the right to receive a pro rata portion of the Aggregate Merger Consideration, after giving effect to the appropriate conversion ratios; and

 

 

if not previously paid, any dividend accrued on the Akili Series D Preferred Stock for a partial period will convert or be paid, as applicable, in additional shares of Akili Series D Preferred Stock at the Akili Series D Preferred Stock purchase price upon the consummation of the Merger. Dividends accrue on the Akili Series D Preferred at an annual rate of 10% and are to be paid annually in additional shares of Akili Series D Preferred Stock at the Series D Preferred Stock purchase price.

All Akili Options outstanding as of immediately prior to the Merger will be converted into Akili, Inc. Options and the exercise price thereof shall be adjusted. See “Business Combination Proposal—The Merger Agreement—Consideration—Treatment of Akili Options.” Additionally, warrants exercisable for shares of Akili common stock (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock and the exercise price thereof will be adjusted in accordance with their terms. See “Business Combination Proposal—The Merger Agreement—Consideration—Treatment of Akili Warrants.” Accordingly, this proxy statement/prospectus also relates to the issuance by Akili, Inc. of shares of Akili, Inc. common stock upon the exercise of Akili, Inc. Options and upon the exercise of Akili, Inc. warrants and the automatic exercise of Akili warrants for shares of Akili, Inc. common stock in accordance with their terms.

It is anticipated that, following the Business Combination, (i) SCS’s public shareholders are expected to own approximately 25% of outstanding Akili, Inc. common stock, (ii) Akili stockholders are expected to own approximately 55% of outstanding Akili, Inc. common stock (including shares purchased by certain existing Akili stockholders in the PIPE Investment), (iii) the Sponsor and related parties (including the Sponsor Related PIPE Investors) are expected to collectively own approximately 20% of outstanding Akili, Inc. common stock, and (iv) the Third-Party PIPE Investors (excluding existing Akili stockholders purchasing shares in the PIPE Investment) are expected to own approximately 1% of outstanding Akili, Inc. common stock. These percentages (i) assume that no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) assume that Akili Options and Akili common stock warrants shall be treated as set forth in the Merger Agreement and as further described herein, (iii) assume that Akili, Inc. issues shares of Akili, Inc. common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement, which in the aggregate equals 60,000,000 shares of Akili, Inc. common stock (assuming that all Akili, Inc. Options and Akili, Inc. warrants are net-settled), (iv) assume that Akili, Inc. issues 16,200,000 shares of Akili, Inc. common stock to the PIPE Investors pursuant to the PIPE Investment and (v) exclude the Earnout Shares. If the actual facts are different from these assumptions, the percentage ownership retained by SCS’s existing shareholders in the combined company will be different.

The SCS Class A ordinary shares are currently listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “DNAA”. SCS filed a listing application for Akili, Inc. with Nasdaq on June 30, 2022, and believes that Akili, Inc. will satisfy all criteria for initial listing upon consummation of the Business Combination. If the application is approved, upon consummation of the Business Combination, it is expected that the common stock of Akili, Inc. will trade on Nasdaq under the symbol “AKLI”. It is a condition of the consummation of the Business Combination described above that SCS receives confirmation from Nasdaq that the securities have been conditionally approved for listing on Nasdaq, but there can be no assurance such listing conditions will be met or


that SCS will obtain such confirmation from Nasdaq. If such listing conditions are not met or if such confirmation is not obtained, the Business Combination described above will not be consummated unless the Nasdaq condition set forth in the Merger Agreement is waived by the applicable parties.

On January 25, 2022, after careful consideration, SCS’s independent directors and SCS’s full board of directors unanimously determined that the Business Combination and the PIPE Investment are fair to SCS’s shareholders and that the Business Combination Proposal is in the best interests of SCS and its shareholders and recommended that SCS’s shareholders vote “FOR” the proposals presented to SCS’s shareholders in the accompanying proxy statement/prospectus. SCS’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal —Interests of SCS’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations. SCS’s independent directors did not retain an unaffiliated representative to act solely on behalf of SCS’s unaffiliated public shareholders for purposes of negotiating the terms of the Business Combination or the PIPE Investment or preparing a report concerning the fairness of the Business Combination or the PIPE Investment.

 

 

This proxy statement/prospectus provides shareholders of SCS with detailed information about the proposed business combination and other matters to be considered at the extraordinary general meeting of SCS. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in the section entitled “Risk Factors” beginning on page 47 of this proxy statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

This proxy statement/prospectus is dated July 21, 2022, and is first being mailed to SCS’s shareholders on or about July 21, 2022.


SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I

A Cayman Islands Exempted Company

(Company Number 372110)

2850 W. Horizon Ridge Parkway, Suite 200

Henderson, NV 89052

Dear Social Capital Suvretta Holdings Corp. I Shareholders:

We cordially invite you to attend the extraordinary general meeting (the “Extraordinary General Meeting”) of Social Capital Suvretta Holdings Corp. I, a Cayman Islands exempted company (“we,” “us,” “our” or “SCS”), on August 18, 2022 at 8:30 a.m., Eastern Time physically at the offices of Wachtell, Lipton, Rosen & Katz located at 51 West 52nd Street, New York, New York 10019, and virtually via live webcast at https://www.cstproxy.com/socialcapitalsuvrettaholdingsi/2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed. If you wish to attend the Extraordinary General Meeting physically, you must (i) be fully vaccinated against COVID-19 (two weeks after receiving (A) the second dose in a two dose COVID-19 vaccine series or (B) a single dose COVID-19 vaccine) and show proof of such vaccination, (ii) complete a health questionnaire upon arrival and (iii) reserve your attendance at least two business days in advance of the Extraordinary General Meeting by contacting Wachtell, Lipton, Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, telephone (212) 403-1000. In light of the ongoing COVID-19 pandemic and to support the well-being of SCS’s shareholders, directors and officers, SCS encourages you to attend the Extraordinary General Meeting virtually or via proxy. For purposes of attendance at the Extraordinary General Meeting, all references in this proxy statement/prospectus to “present in person” or “in person” shall mean physically or virtually present at the Extraordinary General Meeting.

At the extraordinary general meeting, SCS shareholders will be asked to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of January 26, 2022 (as the same may be amended, the “Merger Agreement”), by and among SCS, Merger Sub and Akili, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A. The Merger Agreement provides for, among other things, following the Domestication of SCS to Delaware as described below, the merger of Merger Sub with and into Akili (the “Merger”), with Akili surviving the Merger as a wholly owned subsidiary of Akili, Inc., in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in the accompanying proxy statement/prospectus (the “Business Combination Proposal”).

As a condition to the consummation of the Merger, the board of directors of SCS has unanimously approved a change of SCS’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and, together with the Merger, the “Business Combination”). As described in this proxy statement/prospectus, you will be asked to consider and vote upon a proposal to approve the Domestication (the “Domestication Proposal”). In connection with the consummation of the Business Combination, SCS will change its name to “Akili, Inc.”

As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding Class A ordinary shares, par value $0.0001 per share, of SCS (the “SCS Class A ordinary shares”), will convert automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. common stock”), (2) each of the then issued and outstanding Class B ordinary shares, par value $0.0001 per share, of SCS (the “SCS Class B ordinary shares”), will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock. As used herein, “public shares” shall mean the SCS Class A ordinary shares that were registered pursuant to the Registration Statements on Form S-1 (333-256723 and 333-257543) and the shares of Akili, Inc. common stock issued as a matter of law upon the conversion thereof on the effective date of the Domestication. For further details, see “Domestication Proposal.”

You will also be asked to consider and vote upon (1) three separate proposals to approve material differences between SCS’s amended and restated memorandum and articles of association (as may be amended from time to


time, the “Cayman Constitutional Documents”) and the proposed certificate of incorporation and bylaws of Akili, Inc. (collectively, the “Organizational Documents Proposals”), (2) a proposal for holders of the SCS Class B ordinary shares to appoint to a staggered board seven directors who, upon consummation of the Business Combination, will be the directors of Akili, Inc. (the “Director Appointment Proposal”), (3) a proposal to approve for purposes of complying with the applicable provisions of Nasdaq Rule 5635, the issuance of Akili, Inc. common stock to (a) the PIPE Investors, including the Sponsor Related PIPE Investors, pursuant to the PIPE Investment and (b) the Akili Stockholders pursuant to the Merger Agreement (the “Stock Issuance Proposal”), (4) a proposal to approve and adopt the 2022 Stock Option and Incentive Plan (the “Incentive Plan Proposal”), (5) a proposal to approve and adopt the 2022 Employee Stock Purchase Plan (the “ESPP Proposal”), (6) a proposal to approve the appointment by SCS’s audit committee of Marcum LLP as the independent registered public accountants to SCS to audit and report on SCS’s consolidated financial statements for the year ending December 31, 2022 (the “Auditor Ratification Proposal”) and (7) a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more of the Condition Precedent Proposals (as defined below) at the extraordinary general meeting (the “Adjournment Proposal”). The Business Combination will be consummated only if the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal and the ESPP Proposal (collectively, the “Condition Precedent Proposals”) are approved at the extraordinary general meeting. Unless waived by the parties to the Merger Agreement, each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and the Adjournment Proposal are not conditioned upon the approval of any other proposal. Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which each shareholder is encouraged to read carefully and in its entirety.

At the effective time of the Merger, among other things, (i) each share of Akili common stock and preferred stock outstanding as of immediately prior to the effective time of the Merger will be converted into Akili, Inc. common stock as described further below, (ii) each Akili common stock warrant outstanding as of immediately prior to the effective time of the Merger (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock, and the exercise price thereof shall be adjusted, in each case, as set forth in the applicable Akili common stock warrant and described herein and (iii) each option to purchase shares of Akili common stock (an “Akili Option”) outstanding as of immediately prior to the effective time of the Merger will be converted into an option to purchase shares of Akili, Inc. common stock (an “Akili, Inc. Option”) (and the exercise price thereof shall be adjusted) as described herein, with clauses (i) through (iii) representing an aggregate of 60,000,000 shares of Akili, Inc. common stock (the “Aggregate Merger Consideration”), and a pre-transaction equity value of Akili of $600 million (the “Base Purchase Price”).

At the Closing of the Merger, SCS will deposit into an escrow account for the benefit of the pre-Closing Akili stockholders, optionholders and warrantholders an aggregate number of shares of Akili, Inc. common stock equal to 7.5% of the fully diluted shares of Akili, Inc. common stock (including shares reserved under the equity incentive plan to be adopted by Akili, Inc. in connection with the closing but excluding the Earnout Shares and rights to Earnout Shares), determined as of immediately following the closing (collectively, the “Earnout Shares”), which Earnout Shares will be subject to release from escrow to the pre-Closing Akili stockholders, optionholders and warrantholders in three equal tranches upon the daily volume weighted average price of a share of Akili, Inc. common stock reaching $15.00/share, $20.00/share and $30.00/share, respectively, over any 20 trading days within any 30 consecutive trading day period following the closing and prior to the fifth anniversary of the closing, in each case, on the terms set forth in the Merger Agreement. See “Business Combination Proposal—The Merger Agreement—Earnout.”

In furtherance of the foregoing, at the effective time of the Merger, among other things, each share of Akili capital stock outstanding as of immediately prior to the effective time of the Merger (other than (x) any shares of Akili capital stock held in treasury by Akili, which treasury shares shall be canceled as part of the Merger, and (y) any shares of Akili capital stock held by stockholders of Akili who have perfected and not withdrawn a


demand for appraisal rights pursuant to the applicable provisions of the Delaware General Corporation Law (the “DGCL”)), will be canceled and converted as follows:

 

   

each share of Akili common stock will be canceled and converted into the right to receive a number of shares of Akili, Inc. common stock equal to the quotient obtained by dividing (i) the Aggregate Merger Consideration by (ii) the aggregate fully diluted number of shares of Akili common stock issued and outstanding immediately prior to the Merger as calculated pursuant to the Merger Agreement (such quotient, the “Merger Consideration Per Fully Diluted Share”);

 

   

each share of Akili Series A-1 Preferred Stock, Akili Series A-2 Preferred Stock, Akili Series B Preferred Stock, Akili Series C Preferred Stock and Akili Series D Preferred Stock (collectively, the “Akili preferred stock”) will be canceled, converted into shares of Akili common stock and converted into the right to receive a pro rata portion of the Aggregate Merger Consideration, after giving effect to the appropriate conversion ratios; and

 

 

if not previously paid, any dividend accrued on the Akili Series D Preferred Stock for a partial period will convert or be paid, as applicable, in additional shares of Akili Series D Preferred Stock at the Akili Series D Preferred Stock purchase price upon the consummation of the Merger. Dividends accrue on the Akili Series D Preferred at an annual rate of 10% and are to be paid annually in additional shares of Akili Series D Preferred Stock at the Series D Preferred Stock purchase price.

All Akili Options outstanding as of immediately prior to the Merger will be converted into Akili, Inc. Options and the exercise price thereof shall be adjusted. See “Business Combination Proposal—The Merger Agreement—Consideration—Treatment of Akili Options.” Additionally, warrants exercisable for shares of Akili common stock (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock and the exercise price thereof will be adjusted in accordance with their terms. See “Business Combination Proposal—The Merger Agreement—Consideration—Treatment of Akili Warrants.” Accordingly, this proxy statement/prospectus also relates to the issuance by Akili, Inc. of shares of Akili, Inc. common stock upon the exercise of Akili, Inc. Options and upon the exercise of Akili, Inc. warrants and the automatic exercise of Akili warrants for shares of Akili, Inc. common stock in accordance with their terms.

In connection with the Business Combination, certain related agreements have been entered into or will be entered into on or prior to the date of the closing of the Business Combination (the “Closing Date”), including (i) the Sponsor Support Agreement, (ii) the Akili Holders Support Agreement, (iii) the Registration Rights Agreement, (iv) the Lock-Up Agreement and (v) the PIPE Subscription Agreements. For additional information, see “Business Combination Proposal—Related Agreements” in the accompanying proxy statement/prospectus.

Pursuant to the Cayman Constitutional Documents, a holder (a “public shareholder”) of public shares may request that SCS redeem all or a portion of such shareholder’s public shares for cash if the Business Combination is consummated. Public shareholders may elect to redeem their public shares even if they vote “FOR” the Business Combination Proposal or any other Condition Precedent Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental Stock Transfer & Trust Company, SCS’s transfer agent, Akili, Inc. will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of our initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of March 31, 2022, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Akili, Inc. common stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of SCS—Redemption Rights” in the accompanying proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.


Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash. Such public shareholder, alone or acting in concert or as a group, will not be restricted in their ability to vote for or against the Business Combination with respect to all of its shares.

SCS Sponsor I LLC, a Cayman Islands limited liability company (the “Sponsor”), and each director and officer of SCS have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, and to waive their redemption rights in connection with the consummation of the Business Combination with respect to any SCS ordinary shares held by them, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement, dated as of January 26, 2022, a copy of which is attached as Annex C to this proxy statement/prospectus (the “Sponsor Support Agreement”). The Sponsor and each officer and director of SCS did not receive any compensation in exchange for their agreement to waive such redemption rights. The SCS ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of the accompanying proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding SCS ordinary shares.

The Merger Agreement provides that the obligations of Akili to consummate the Merger are conditioned on, among other things, that as of the Closing, the amount of cash available in the trust account, after deducting the amount required to satisfy SCS’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents (but prior to the payment of any (i) deferred underwriting commissions being held in the trust account and (ii) transaction expenses of Akili or SCS) (such amount, the “Trust Amount”) plus the PIPE Investment Amount (as defined herein) actually received by SCS at or prior to the Closing Date (as defined herein), is at least equal to $150 million (the “Minimum Available Cash Amount”) (such condition, the “Minimum Cash Condition”). This condition is for the sole benefit of Akili. If such condition is not met, and such condition is not waived by Akili under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Cayman Constitutional Documents, in no event will SCS redeem public shares in an amount that would cause Akili, Inc.’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.

The Merger Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/prospectus (including the approval of the Merger Agreement and the transactions contemplated thereby by the affirmative vote or written consent of the holders of (i) a majority of the voting power of the outstanding Akili Capital Stock, voting as a single class and on an as-converted-to-common-stock basis and (ii) a majority of the outstanding shares of Akili Series D Preferred Stock, voting as a single class on an as-converted-to-common stock basis). There can be no assurance that the parties to the Merger Agreement would waive any such condition, to the extent waivable.

SCS is providing the accompanying proxy statement/prospectus and accompanying proxy card to SCS’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournments of the extraordinary general meeting. Information about the extraordinary general meeting, the Business Combination and other related business to be considered by SCS’s shareholders at the extraordinary general meeting is included in the accompanying proxy statement/prospectus. Whether or not you plan to attend the extraordinary general meeting, all of SCS’s shareholders are urged to read the accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors beginning on page 47 of this proxy statement/prospectus.


After careful consideration, the board of directors of SCS has unanimously approved the Business Combination and unanimously recommends that shareholders vote “FOR” adoption of the Merger Agreement, and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to SCS’s shareholders in the accompanying proxy statement/prospectus. The existence of financial and personal interests of SCS’s director(s) may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the Transaction Proposals. In addition, SCS’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of SCS’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.

The approval of each of the Domestication Proposal and Organizational Documents Proposals requires a resolution passed by the holders of not less than a two-thirds majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Business Combination Proposal, the Director Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Auditor Ratification Proposal and the Adjournment Proposal require a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor (as defined below) or its affiliates.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Unless waived by the parties to the Merger Agreement, each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and the Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in the accompanying proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting and will not be voted. If you do not give your broker or nominee instructions as to how to vote your shares, they may not be voted, except on routine matters for which the broker or nominee may exercise discretionary authority under applicable rules. For purposes of the extraordinary general meeting, the Auditor Ratification Proposal to ratify Marcum LLP as our independent registered public accounting firm is the only routine matter to be considered. An abstention or a broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT SCS REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARE CERTIFICATES (IF ANY) AND ANY OTHER REDEMPTION FORMS TO SCS’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT SUCH MEETING.


YOU MAY TENDER YOUR SHARE CERTIFICATES (IF ANY) AND ANY OTHER REDEMPTION FORM BY EITHER DELIVERING YOUR SHARE CERTIFICATES (IF ANY) AND ANY OTHER REDEMPTION FORM TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN (“DWAC”) SYSTEM. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of SCS’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.

Sincerely,

/s/ Chamath Palihapitiya

Chamath Palihapitiya

Chief Executive Officer and Chairman of the

Board of Directors

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/prospectus is dated July 21, 2022 and is first being mailed to shareholders on or about July 21, 2022.


SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I

A Cayman Islands Exempted Company

(Company Number 372110)

2850 W. Horizon Ridge Parkway, Suite 200

Henderson, NV 89052

NOTICE OF EXTRAORDINARY GENERAL MEETING

TO BE HELD ON August 18, 2022

TO THE SHAREHOLDERS OF SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “extraordinary general meeting”) of Social Capital Suvretta Holdings Corp. I, a Cayman Islands exempted company with limited liability, company number 372110 (“SCS”), will be held on August 18, 2022, at 8:30 a.m., Eastern Time physically at the offices of Wachtell, Lipton, Rosen & Katz located at 51 West 52nd Street, New York, New York 10019, and virtually via live webcast at https://www.cstproxy.com/socialcapitalsuvrettaholdingsi/2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed. If you wish to attend the Extraordinary General Meeting physically, you must (i) be fully vaccinated against COVID-19 (two weeks after receiving (A) the second dose in a two dose COVID-19 vaccine series or (B) a single dose COVID-19 vaccine) and show proof of such vaccination, (ii) complete a health questionnaire upon arrival and (iii) reserve your attendance at least two business days in advance of the Extraordinary General Meeting by contacting Wachtell, Lipton, Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, telephone (212) 403-1000. In light of the ongoing COVID-19 pandemic and to support the well-being of SCS’s shareholders, directors and officers, SCS encourages you to attend the Extraordinary General Meeting virtually or via proxy. For purposes of attendance at the Extraordinary General Meeting, all references in this proxy statement/prospectus to “present in person” or “in person” shall mean physically or virtually present at the Extraordinary General Meeting. We cordially invite you to attend the extraordinary general meeting, which will be held for the following purposes:

 

   

Proposal No. 1—The Business Combination Proposal—to consider and vote upon a proposal to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of January 26, 2022 (the “Merger Agreement”), by and among SCS, Merger Sub and Akili, a copy of which is attached to this proxy statement/prospectus statement as Annex A. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Akili (the “Merger”), with Akili surviving the Merger as a wholly owned subsidiary of Akili, Inc., in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus (the “Business Combination Proposal”);

 

   

Proposal No. 2—The Domestication Proposal—to consider and vote upon a proposal to approve by special resolution, the change of SCS’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and, together with the Merger, the “Business Combination”) (the “Domestication Proposal”);

 

   

Organizational Documents Proposals—to consider and vote upon the following three separate proposals (collectively, the “Organizational Documents Proposals”) for approval effective upon the filing with and acceptance by the Secretary of State of Delaware of the certificate of domestication in accordance with Section 388 of the Delaware General Corporation Law (the “DGCL”)), which will be renamed “Akili, Inc.” in connection with the Business Combination (SCS after the Domestication, including after such change of name, is referred to herein as “Akili, Inc.”):

 

  (A)

Proposal No. 3—Organizational Documents Proposal A—as a special resolution, the change in the authorized share capital of SCS from 500,000,000 Class A ordinary shares, par value $0.0001 per share (the “SCS Class A ordinary shares”), 50,000,000 Class B ordinary shares, par value $0.0001 per share (the “SCS Class B ordinary shares” and, together with the SCS Class A ordinary shares, the “ordinary shares”), and 5,000,000 preference shares, par value $0.0001 per


  share (the “SCS preference shares”), to 1,000,000,000 shares of common stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. common stock”) and 100,000,000 shares of preferred stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. preferred stock”) (“Organizational Documents Proposal A”);

 

  (B)

Proposal No. 4—Organizational Documents Proposal B—as a special resolution, the issue of any or all shares of Akili, Inc. preferred stock in one or more classes or series by the board of directors of Akili, Inc., with such terms and conditions as may be expressly determined by Akili, Inc.’s board of directors and as may be permitted by the DGCL (“Organizational Documents Proposal B”); and

 

  (C)

Proposal No. 5—Organizational Documents Proposal C—as a special resolution, the adoption of the Proposed Certificate of Incorporation and the Proposed Bylaws in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex J and Annex K, respectively), including (1) changing the corporate name from “Social Capital Suvretta Holdings Corp. I” to “Akili, Inc.,” (2) making Akili, Inc.’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation and the United States Federal District Courts as the exclusive forum for litigation arising out of the Securities Act of 1933, as amended (the “Securities Act”), (4) being subject to the provisions of Section 203 of DGCL and (5) removing certain provisions related to SCS’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCS’s board of directors believes is necessary to adequately address the needs of Akili, Inc. after the Business Combination (“Organizational Documents Proposal C”);

 

   

Proposal No. 6—The Director Appointment Proposal—for holders of the SCS Class B ordinary shares, to consider and vote upon a proposal to approve by ordinary resolution, assuming the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved, to appoint to a staggered board seven directors who, upon consummation of the Business Combination, will be the directors of Akili, Inc. (the “Director Appointment Proposal”);

 

   

Proposal No. 7—The Stock Issuance Proposal—to consider and vote upon a proposal to approve by ordinary resolution for purposes of complying with the applicable provisions of Nasdaq Rule 5635, the issuance of Akili, Inc. common stock to (a) the PIPE Investors, including the Sponsor Related PIPE Investors, pursuant to the PIPE Investment and (b) the Akili Stockholders pursuant to the Merger Agreement (the “Stock Issuance Proposal”);

 

   

Proposal No. 8—The Incentive Plan Proposal—to consider and vote upon a proposal to approve by ordinary resolution, the 2022 Stock Option and Incentive Plan (the “2022 Plan” and “Incentive Plan Proposal,” respectively);

 

   

Proposal No. 9—The ESPP Proposal—to consider and vote upon a proposal to approve by ordinary resolution, the 2022 Employee Stock Purchase Plan (the “2022 ESPP” and “ESPP Proposal,” respectively);

 

   

Proposal No. 10—The Auditor Ratification Proposal—to consider and vote upon a proposal to approve by ordinary resolution the ratification of the appointment of Marcum LLP as the independent registered public accountants of SCS to audit and report upon SCS’s consolidated financial statements for the year ending December 31, 2022 (the “Auditor Ratification Proposal”); and

 

   

Proposal No. 11—The Adjournment Proposal—to consider and vote upon a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more of Proposal No. 1 through Proposal No. 9 at the extraordinary general meeting (the “Adjournment Proposal”).


Unless waived by the parties to the Merger Agreement, each of Proposals No. 1 through 9 is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and the Adjournment Proposal are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus. Notwithstanding the order of proposals set out above, the Chairman may put resolutions to the meeting in such order as deemed appropriate.

These items of business are described in this proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting.

Only holders of record of ordinary shares at the close of business on July 14, 2022 are entitled to notice of and to vote and have their votes counted at the extraordinary general meeting and any adjournment of the extraordinary general meeting.

This proxy statement/prospectus and accompanying proxy card is being provided to SCS’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournment of the extraordinary general meeting. Whether or not you plan to attend the extraordinary general meeting, all of SCS’s shareholders are urged to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 47 of this proxy statement/prospectus.

After careful consideration, the board of directors of SCS has unanimously approved the Business Combination and unanimously recommends that shareholders vote “FOR” adoption of the Merger Agreement, and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to SCS’s shareholders in this proxy statement/prospectus. The existence of financial and personal interests of SCS’s director(s) may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the Transaction Proposals. In addition, SCS’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of SCS’s Directors and Executive Officers in the Business Combination” in this proxy statement/prospectus for a further discussion of these considerations.

Pursuant to the Cayman Constitutional Documents, a holder of public shares (a “public shareholder”) may request of SCS that Akili, Inc. redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

hold public shares;

 

  (ii)

submit a written request to Continental Stock Transfer & Trust Company (“Continental”), SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash;

 

  (iii)

deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”); and

 

  (iv)

provide the full name and shares of the beneficial holder.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m., Eastern Time, on August 16, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. Public shareholders may elect to redeem public shares regardless of if or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank.


Business Combination Proposal

If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, SCS’s transfer agent, Akili, Inc. will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of our initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of March 31, 2022, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Akili, Inc. common stock that will be redeemed promptly after consummation of the Business Combination. See “Extraordinary General Meeting of SCS—Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash. Such public shareholder, alone or acting in concert or as a group, will not be restricted in their ability to vote for or against the Business Combination with respect to all of its shares.

SCS Sponsor I LLC, a Cayman Islands limited liability company and shareholder of SCS (the “Sponsor”), and each director and officer of SCS have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, and to waive their redemption rights in connection with the consummation of the Business Combination with respect to any SCS ordinary shares held by them, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement, dated as of January 26, 2022, a copy of which is attached to this proxy statement/prospectus statement as Annex C (the “Sponsor Support Agreement”). The Sponsor and each officer and director of SCS did not receive any compensation in exchange for this agreement. The SCS ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of the accompanying proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding SCS ordinary shares.

The Merger Agreement provides that the obligations of Akili to consummate the Merger are conditioned on, among other things, that as of the Closing (as defined herein), the amount of cash available in the trust account, after deducting the amount required to satisfy SCS’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents (but prior to the payment of any (i) deferred underwriting commissions being held in the trust account and (ii) transaction expenses of Akili or SCS) (such amount, the “Trust Amount”) plus the PIPE Investment Amount (as defined herein) actually received by SCS at or prior to the Closing Date (as defined herein), is at least equal to $150 million (the “Minimum Available Cash Amount”) (such condition, the “Minimum Cash Condition”). This condition is for the sole benefit of Akili. If such condition is not met, and such condition is not waived by Akili under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Cayman Constitutional Documents, in no event will SCS redeem public shares in an amount that would cause Akili, Inc.’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.

The Merger Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/prospectus. There can be no assurance that the parties to the Merger Agreement would waive any condition, to the extent waivable.


The approval of each of the Domestication Proposal and Organizational Documents Proposals requires a resolution passed by the holders of not less than a two-thirds majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Business Combination Proposal, the Director Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Auditor Ratification Proposal and the Adjournment Proposal require a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Unless waived by the parties to the Merger Agreement, each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and the Adjournment Proposal are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting and will not be voted. If you do not give your broker or nominee instructions as to how to vote your shares, they may not be voted, except on routine matters for which the broker or nominee may exercise discretionary authority under applicable rules. For purposes of the extraordinary general meeting, the Auditor Ratification Proposal to ratify Marcum LLP as our independent registered public accounting firm is the only routine matter to be considered. An abstention or a broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

Your attention is directed to the remainder of the proxy statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read this proxy statement/prospectus carefully and in its entirety, including the Annexes and other documents referred to herein. If you have any questions or need assistance voting your ordinary shares, please contact Morrow Sodali LLC (“Morrow Sodali”), our proxy solicitor, by calling (800) 662-5200 or banks and brokers can call collect at (203) 658-9400, or by emailing DNAA.info@investor.morrowsodali.com.

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors of Social Capital Suvretta Holdings Corp. I,

July 21, 2022

/s/ Chamath Palihapitiya                            

Chamath Palihapitiya

Chief Executive Officer and Chairman of the Board of Directors


TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT SCS REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARE CERTIFICATES (IF ANY) AND ANY OTHER REDEMPTION FORMS TO SCS’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT SUCH MEETING. YOU MAY TENDER YOUR SHARE CERTIFICATES (IF ANY) AND ANY OTHER REDEMPTION FORM BY EITHER DELIVERING YOUR SHARE CERTIFICATES (IF ANY) AND ANY OTHER REDEMPTION FORM TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN (“DWAC”) SYSTEM. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.


TABLE OF CONTENTS

 

REFERENCES TO ADDITIONAL INFORMATION

     iii  

TRADEMARKS

     iii  

SELECTED DEFINITIONS

     iv  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     viii  

QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF SCS

     xi  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     1  

SELECTED HISTORICAL FINANCIAL INFORMATION OF SCS

     39  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF AKILI

     40  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     42  

UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF SCS AND AKILI

     44  

MARKET PRICE AND DIVIDEND INFORMATION

     46  

RISK FACTORS

     47  

EXTRAORDINARY GENERAL MEETING OF SCS

     116  

BUSINESS COMBINATION PROPOSAL

     124  

DOMESTICATION PROPOSAL

     174  

ORGANIZATIONAL DOCUMENTS PROPOSALS

     177  

ORGANIZATIONAL DOCUMENTS PROPOSAL A—APPROVAL OF AUTHORIZATION OF CHANGE TO AUTHORIZED SHARE CAPITAL, AS SET FORTH IN THE PROPOSED ORGANIZATIONAL DOCUMENTS

     180  

ORGANIZATIONAL DOCUMENTS PROPOSAL B—APPROVAL OF PROPOSAL REGARDING ISSUANCE OF PREFERRED STOCK OF AKILI, INC. AT THE BOARD OF DIRECTORS’ SOLE DISCRETION, AS SET FORTH IN THE PROPOSED ORGANIZATIONAL DOCUMENTS

     182  

ORGANIZATIONAL DOCUMENTS PROPOSAL C—APPROVAL OF OTHER CHANGES IN CONNECTION WITH ADOPTION OF THE PROPOSED ORGANIZATIONAL DOCUMENTS

     184  

DIRECTOR APPOINTMENT PROPOSAL

     187  

STOCK ISSUANCE PROPOSAL

     189  

INCENTIVE PLAN PROPOSAL

     191  

ESPP PROPOSAL

     199  

AUDITOR RATIFICATION PROPOSAL

     203  

ADJOURNMENT PROPOSAL

     205  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     206  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     217  

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     225  

INFORMATION ABOUT SCS

     231  

SCS’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     240  

INFORMATION ABOUT AKILI

     245  

AKILI’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     301  

MANAGEMENT OF AKILI, INC. FOLLOWING THE BUSINESS COMBINATION

     317  

EXECUTIVE COMPENSATION

     324  

BENEFICIAL OWNERSHIP OF SECURITIES

     330  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     334  

COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS

     340  

DESCRIPTION OF AKILI, INC. SECURITIES

     343  

SECURITIES ACT RESTRICTIONS ON RESALE OF AKILI, INC. SECURITIES

     348  

STOCKHOLDER PROPOSALS AND NOMINATIONS

     349  

SHAREHOLDER COMMUNICATIONS

     350  

 

i


LEGAL MATTERS

     351  

EXPERTS

     352  

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     353  

ENFORCEABILITY OF CIVIL LIABILITY

     354  

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

     355  

INDEX TO FINANCIAL STATEMENTS

     F-1  

 

Annex A  

Merger Agreement

     A-1  
Annex B  

Akili Holders Support Agreement

     B-1  
Annex C  

Sponsor Support Agreement

     C-1  
Annex D  

Form of Subscription Agreement

     D-1  
Annex E  

Amended and Restated Registration Rights Agreement

     E-1  
Annex F  

Form of Lock-Up Agreement

     F-1  
Annex G  

Akili, Inc. 2022 Stock Option and Incentive Plan

     G-1  
Annex H  

2022 Employee Stock Purchase Plan

     H-1  
Annex I  

Cayman Constitutional Documents of SCS

     I-1  
Annex J  

Form of Proposed Certificate of Incorporation

     J-1  
Annex K  

Form of Proposed Bylaws

     K-1  

 

ii


REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information that is not included in or delivered with this proxy statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov.

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other publicly available information concerning SCS, without charge, by written request to Secretary at Social Capital Suvretta Holdings Corp. I, 2850 W. Horizon Ridge Parkway, Suite 200, Henderson, NV 89052, or by telephone request at (650) 521-9007; or Morrow Sodali LLC, SCS’s proxy solicitor, by calling (800) 662-5200 or banks and brokers can call collect at (203) 658-9400, or by emailing DNAA.info@investor.morrowsodali.com, or from the SEC through the SEC website at the address provided above.

In order for SCS’s shareholders to receive timely delivery of the documents in advance of the extraordinary general meeting of SCS to be held on August 18, 2022, you must request the information no later than August 11, 2022, five business days prior to the date of the extraordinary general meeting.

TRADEMARKS

This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this proxy statement/prospectus may appear without the ® or symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. SCS does not intend its use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of it by, any other companies.

 

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SELECTED DEFINITIONS

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:

 

   

“2011 Plan” are to Akili Interactive Labs, Inc. Amended and Restated 2011 Stock Incentive Plan, as amended from time to time;

 

   

“2022 Incentive Plan” or “2022 Plan” are to the 2022 Stock Option and Incentive Plan for Akili, Inc. (following the Domestication) attached to this proxy statement/prospectus as Annex G;

 

   

“2022 ESPP” are to the 2022 Employee Stock Purchase Plan for Akili Interactive Labs, Inc. (following the Domestication) attached to this proxy statement/prospectus as Annex H;

 

   

“Akili common stock” are to common stock, par value $0.00001 per share, of Akili;

 

   

“Akili Options” are to options to purchase shares of Akili common stock;

 

   

“Akili, Inc.” are to SCS after the Domestication and its name change from Social Capital Suvretta Corp. I;

 

   

“Akili, Inc. common stock” are to common stock, par value $0.0001 per share, of Akili, Inc.;

 

   

“Akili, Inc. Options” are to options to purchase shares of Akili, Inc. common stock;

 

   

“Akili, Inc. Restricted Stock” are to restricted shares of Akili, Inc. common stock;

 

   

“Akili Stockholders” are to the stockholders of Akili, holders of Akili Options and holders of warrants to acquire Akili common stock, in each case prior to the Business Combination;

 

   

“ASC” are to Accounting Standards Codification;

 

   

“Available Cash” are to the amount calculated by adding the Trust Amount and the PIPE Investment Amount;

 

   

“Black-Scholes Model” are to the Black-Scholes Option Pricing Model;

 

   

“Business Combination” are to the Domestication together with the Merger;

 

   

“CARES Act” are to the Coronavirus Aid, Relief and Economic Security Act;

 

   

“Cayman Constitutional Documents” are to SCS’s amended and restated memorandum and articles of association, as amended from time to time;

 

   

“Cayman Islands Companies Act” are to the Cayman Islands Companies Act (As Revised);

 

   

“Closing” are to the closing of the Business Combination;

 

   

“Company,” “we,” “us” and “our” are to SCS prior to its domestication as a corporation in the State of Delaware and to Akili, Inc. after its domestication as a corporation incorporated in the State of Delaware, including after its change of name to Akili, Inc.;

 

   

“Condition Precedent Approvals” are to approval at the extraordinary general meeting of each of the Condition Precedent Proposals;

 

   

“Condition Precedent Proposals” are to the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal and the ESPP Proposal, collectively;

 

   

“Continental” are to Continental Stock Transfer & Trust Company;

 

   

“COVID-19” are to the novel coronavirus pandemic;

 

   

“DGCL” are to the General Corporation Law of the State of Delaware;

 

   

“Domestication” are to the domestication of Social Capital Suvretta Holdings Corp. I as a corporation incorporated in the State of Delaware;

 

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“Exchange Act” are to the Securities Exchange Act of 1934, as amended;

 

   

“Federal Reserve” are to the Board of Governors of the Federal Reserve System;

 

   

“founder shares” are to the SCS Class B ordinary shares purchased by the Sponsor in a private placement prior to the initial public offering, and the SCS Class A ordinary shares that will be issued upon the conversion thereof;

 

   

“GAAP” are to accounting principles generally accepted in the United States of America;

 

   

“HSR Act” are to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

“initial public offering” are to SCS’s initial public offering that was consummated on July 2, 2021;

 

   

“IPO registration statement” are to the Registration Statements on Form S-1 (333-256723 and 333-257543) filed by SCS in connection with its initial public offering, which became effective on June 29, 2021 and June 30, 2021, respectively;

 

   

“IRS” are to the U.S. Internal Revenue Service;

 

   

“JOBS Act” are to the Jumpstart Our Business Startups Act of 2012;

 

   

“LIBOR” are to the London Inter-Bank Offered Rate;

 

   

“Merger” are to the merger of Merger Sub with and into Akili, with Akili surviving the merger as a wholly owned subsidiary of Akili, Inc.;

 

   

“Merger Sub” are to a Delaware corporation and subsidiary of SCS;

 

   

“Minimum Cash Condition” are to the Trust Amount and the PIPE Investment Amount, in the aggregate, being equal to or greater than $150 million;

 

   

“Nasdaq” are to the Nasdaq Capital Market;

 

   

“ordinary shares” are to the SCS Class A ordinary shares and the SCS Class B ordinary shares, collectively;

 

   

“Person” are to any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or instrumentality or other entity of any kind;

 

   

“PIPE Investment” are to the purchase of shares of Akili, Inc. common stock pursuant to the Subscription Agreements;

 

   

“PIPE Investment Amount” are to the aggregate gross purchase price received by SCS prior to or substantially concurrently with Closing for the shares in the PIPE Investment;

 

   

“PIPE Investors” are to those certain investors participating in the PIPE Investment pursuant to the Subscription Agreements;

 

   

“private placement shares” are to the Class A ordinary shares issued to Sponsor in a private placement that was consummated concurrently with the closing of the initial public offering and the shares of common stock of Akili, Inc. issued as a matter of law upon the conversion thereof at the time of the Domestication;

 

   

“pro forma” are to giving pro forma effect to the Business Combination;

 

   

“Proposed Bylaws” are to the proposed bylaws of Akili, Inc. upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex K;

 

   

“Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of Akili, Inc. upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex J;

 

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“Proposed Organizational Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws;

 

   

“public shareholders” are to holders of public shares, whether acquired in SCS’s initial public offering or acquired in the secondary market;

 

   

“public shares” are to the SCS Class A ordinary shares that were offered and sold by SCS in its initial public offering and registered pursuant to the IPO registration statement or the shares of Akili, Inc. common stock issued as a matter of law upon the conversion thereof at the time of the Domestication, as the context requires;

 

   

“redemption” are to each redemption of public shares for cash pursuant to the Cayman Constitutional Documents;

 

   

“Registration Rights Agreement” are to the Amended and Restated Registration Rights Agreement to be entered into at the Closing, by and among Akili, Inc. (following the Domestication), the Sponsor, certain affiliates of the Sponsor, certain directors and advisors of SCS and certain former stockholders of Akili;

 

   

“Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002;

 

   

“SCS” are to Social Capital Suvretta Holdings Corp. I, prior to its domestication as a corporation in the State of Delaware;

 

   

“SCS Class A ordinary shares” are to SCS’s Class A ordinary shares, par value $0.0001 per share;

 

   

“SCS Class B ordinary shares” are to SCS’s Class B ordinary shares, par value $0.0001 per share;

 

   

“SEC” are to the United States Securities and Exchange Commission;

 

   

“Securities Act” are to the Securities Act of 1933, as amended;

 

   

“SPE” are to special-purpose entity;

 

   

“Sponsor” are to SCS Sponsor I LLC, a Cayman Islands limited liability company, the sponsor of SCS;

 

   

“Sponsor Related PIPE Investor” are to a PIPE Investor that is an affiliate of the Sponsor (together with its permitted transferees);

 

   

“Sponsor Support Agreement” are to that certain Sponsor Support Agreement, dated January 26, 2022, by and among the Sponsor, SCS, each director of SCS and Akili, as amended and modified from time to time;

 

   

“Subscription Agreements” are to the subscription agreements pursuant to which the PIPE Investment will be consummated;

 

   

“Third-Party PIPE Investment” are to any PIPE Investment made by a Third-Party PIPE Investor;

 

   

“Third-Party PIPE Investment Amount” are to the aggregate gross purchase price received by SCS prior to or substantially concurrently with Closing for the shares in the Third-Party PIPE Investment;

 

   

“Third-Party PIPE Investor” are to any PIPE Investor who is not a Sponsor Related PIPE Investor;

 

   

“trust account” are to the trust account established at the consummation of SCS’s initial public offering and maintained by Continental, acting as trustee;

 

   

“Trust Agreement” are to the Investment Management Trust Agreement, dated June 29, 2021, by and between SCS and Continental, as trustee;

 

   

“Trust Amount” are to the amount of cash available in the trust account, after deducting the amount required to satisfy SCS’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents (but prior to the payment of any

 

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(i) deferred underwriting commissions being held in the trust account and (ii) transaction expenses of Akili or SCS); and

 

   

“VIEs” are to variable interest entities.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of SCS and Akili. These statements are based on the beliefs and assumptions of the management of SCS and Akili. Although SCS and Akili believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither SCS nor Akili can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “continues,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “might,” “will,” “should,” “could,” “seeks,” “plans,” “scheduled,” “possible,” “potential,” “predict,” “project,” “anticipates,” “intends,” “aims,” “works,” “focuses,” “aspires,” “strives” or “sets out” or similar expressions.

Forward-looking statements are not guarantees of performance, and the absence of these words does not mean that a statement is not forward looking. You should understand that the following important factors, in addition to those discussed under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus, could affect the future results of SCS and Akili prior to the Business Combination, and Akili, Inc. following the Business Combination, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this proxy statement/prospectus. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:

 

   

our ability to complete the Business Combination with Akili or, if we do not consummate such Business Combination, any other initial business combination;

 

   

satisfaction or waiver of the conditions to the Business Combination including, among others: (i) obtaining the approval of the Business Combination and related agreements and transactions by the respective shareholders of SCS and Akili; (ii) effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part; (iii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended; (iv) receipt of approval for listing on Nasdaq, the shares of Akili, Inc. common stock to be issued in connection with the Merger; (v) that we have at least $5,000,001 of net tangible assets upon Closing; (vi) the satisfaction of the Minimum Cash Condition; (vii) that the size and composition of the Board shall be as contemplated in the Merger Agreement; (viii) the completion of the Domestication as contemplated by the Merger Agreement; and (ix) the absence of any injunctions;

 

   

the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against SCS and/or Akili following the announcement of the Merger Agreement and/or the transactions contemplated therein, that could give rise to the termination of the Merger Agreement;

 

   

the prospective financial information with respect to, and market opportunity of, Akili, Inc.;

 

   

the ability to obtain and/or maintain the listing of Akili, Inc. common stock on Nasdaq, and the potential liquidity and trading of such securities;

 

   

the risk that the proposed Business Combination disrupts current plans and operations of Akili as a result of the announcement and consummation of the proposed Business Combination;

 

   

the ability to recognize the anticipated benefits of the proposed Business Combination, which may be affected by, among other things, competition, and the ability of the Akili, Inc. to grow and manage growth profitably and retain its key employees;

 

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costs related to the proposed Business Combination;

 

   

Akili’s success in retaining or recruiting its officers, key employees or directors following the completion of the Business Combination;

 

   

Akili’s officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business;

 

   

SCS’s officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business;

 

   

The ability to achieve and maintain market acceptance and adoption of Akili’s EndeavorRx and other prescription digital therapeutics by patients and physicians;

 

   

Akili’s ability to obtain or maintain adequate insurance coverage and reimbursement for EndeavorRx and its other products;

 

   

Akili’s ability to accurately forecast demand for EndeavorRx and its other products;

 

   

Akili’s ability to maintain access for EndeavorRx and its other products via the Apple Store and the Google Play Store;

 

   

Akili’s ability to achieve or maintain profitability;

 

   

Akili’s ability to maintain or obtain patent protection and/or the patent rights relating to EndeavorRx and its other product candidates and Akili’s ability to prevent third parties from competing against Akili;

 

   

Akili’s ability to successfully commercialize EndeavorRx and its other products;

 

   

Akili’s ability to obtain and maintain regulatory approval for EndeavorRx and its other product candidates, in the U.S. and in foreign markets, and any related restrictions or limitations of an approved product candidate;

 

   

Akili’s ability to obtain funding for its operations, including funding necessary to complete further development of EndeavorRx and further development, approval and, if approved, commercialization of Akili’s other product candidates;

 

   

Akili’s ability to identify, in-license or acquire additional technology or product candidates;

 

   

Akili’s ability to successfully protect against security breaches and other disruptions to Akili’s information technology structure;

 

   

the impact of applicable laws and regulations, whether in the United States or foreign jurisdictions, and any changes thereof;

 

   

Akili’s ability to successfully compete against other companies developing similar products to Akili’s current and future product offerings;

 

   

Akili’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

 

   

Akili’s financial performance and ability to respond to general economic conditions;

 

   

the effect of COVID-19 on the foregoing, including our ability to consummate the Business Combination due to the continuing uncertainty resulting from the COVID-19 pandemic; and

 

   

other factors detailed under the section entitled “Risk Factors.”

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus. The risks described under the heading “Risk Factors” are not

 

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exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of SCS and Akili prior to the Business Combination, and Akili, Inc. following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can SCS or Akili assess the impact of all such risk factors on the business of SCS and Akili prior to the Business Combination, and Akili, Inc. following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to SCS or Akili or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. These statements speak only as of the date hereof, and SCS and Akili prior to the Business Combination, and Akili, Inc. following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect the beliefs and opinions of SCS or Akili, as applicable, on the relevant subject. These statements are based upon information available to SCS or Akili, as applicable, as of the date of this proxy statement/prospectus, and while such party believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that SCS or Akili, as applicable, has conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

 

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QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF SCS

The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the extraordinary general meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to SCS’s shareholders. SCS urges shareholders to read this proxy statement/prospectus, including the Annexes and the other documents referred to herein, carefully and in their entirety to fully understand the proposed Business Combination and the voting procedures for the extraordinary general meeting, which will be held on August 18, 2022, at 8:30 a.m., Eastern Time physically at the offices of Wachtell, Lipton, Rosen & Katz located at 51 West 52nd Street, New York, New York 10019, and virtually via live webcast at https://www.cstproxy.com/socialcapitalsuvrettaholdingsi/2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed. If you wish to attend the Extraordinary General Meeting physically, you must (i) be fully vaccinated against COVID-19 (two weeks after receiving (A) the second dose in a two dose COVID-19 vaccine series or (B) a single dose COVID-19 vaccine) and show proof of such vaccination, (ii) complete a health questionnaire upon arrival and (iii) reserve your attendance at least two business days in advance of the Extraordinary General Meeting by contacting Wachtell, Lipton, Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, telephone (212) 403-1000. In light of the ongoing COVID-19 pandemic and to support the well-being of SCS’s shareholders, directors and officers, SCS encourages you to attend the Extraordinary General Meeting virtually or via proxy. To participate in the special meeting if it is held via live webcast, visit https://www.cstproxy.com/socialcapitalsuvrettaholdingsi/2022 and enter the 12 digit control number included on your proxy card. You may register for the meeting as early as 5:00 p.m., Eastern Time, on August 16, 2022. If you hold your shares through a bank, broker or other nominee, you will need to take additional steps to participate in the meeting, as described in this proxy statement.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

SCS shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the Business Combination. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Akili, with Akili surviving the merger as a wholly owned subsidiary of Akili, Inc., in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. See the section entitled “Business Combination Proposal” for more detail.

A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A and you are encouraged to read it in its entirety.

As a condition to the Merger, SCS will change its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Act and a domestication under Section 388 of the DGCL, pursuant to which SCS’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. As a result of and upon the effective time of the Domestication, (1) each then issued and outstanding SCS Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock; and (2) each of the then issued and outstanding SCS Class B ordinary shares will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock. See “Domestication Proposal” for additional information.

The provisions of the Proposed Organizational Documents will differ materially from the Cayman Constitutional Documents. Please see “What amendments will be made to the current constitutional documents of SCS?” below.

THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS, INCLUDING THE ANNEXES AND THE ACCOMPANYING FINANCIAL STATEMENTS OF SCS AND AKILI, CAREFULLY AND IN ITS ENTIRETY.

 

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Q:

What proposals are shareholders of SCS being asked to vote upon?

 

A:

At the extraordinary general meeting, SCS is asking holders of ordinary shares to consider and vote upon:

 

   

a proposal to approve by ordinary resolution and adopt the Merger Agreement;

 

   

a proposal to approve by special resolution the Domestication;

 

   

the following three separate proposals to approve by special resolution the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents:

 

   

to authorize the change in the authorized share capital of SCS from (i) 500,000,000 SCS Class A ordinary shares, 50,000,000 SCS Class B ordinary shares and 5,000,000 preference shares, par value $0.0001 per share, to (ii) 1,000,000,000 shares of Akili, Inc. common stock, and 100,000,000 shares of Akili, Inc. preferred stock;

 

   

to authorize the board of directors of Akili, Inc. (the “Board”) to issue any or all shares of Akili, Inc. preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by the Board and as may be permitted by the DGCL; and

 

   

to authorize all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication, including, (1) changing the corporate name from “Social Capital Suvretta Holdings Corp. I” to “Akili, Inc.,” (2) making Akili, Inc.’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation and the United States Federal District Courts as the exclusive forum for litigation arising out of the Securities Act, (4) being subject to the provisions of Section 203 of DGCL and (5) removing certain provisions related to SCS’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCS’s board of directors believes is necessary to adequately address the needs of Akili, Inc. after the Business Combination;

 

   

a proposal to approve by ordinary resolution the appointment to a staggered board of seven directors, who, upon consummation of the Business Combination, will be the directors of Akili, Inc.;

 

   

a proposal to approve by ordinary resolution, for purposes of complying with applicable listing rules of Nasdaq, the issuance of (a) shares of Akili, Inc. common stock to the PIPE Investors, including the Sponsor Related PIPE Investors, pursuant to the PIPE Investment and (b) shares of Akili, Inc. common stock to the Akili Stockholders pursuant to the Merger Agreement;

 

   

a proposal to approve by ordinary resolution the 2022 Plan;

 

   

a proposal to approve by ordinary resolution the 2022 ESPP;

 

   

a proposal to approve by ordinary resolution the appointment of Marcum LLP as the independent registered public accountants of SCS to audit and report upon SCS’s consolidated financial statements for the year ending December 31, 2022; and

 

   

a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.

If SCS’s shareholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Merger Agreement are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated. See “Business Combination Proposal,” “Domestication Proposal,” “Organizational Documents Proposals,” “Director Appointment Proposal,” “Stock Issuance Proposal,” “Incentive Plan Proposal,” “ESPP Proposal,“Auditor Ratification Proposal” and “Adjournment Proposal.”

 

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SCS will hold the extraordinary general meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the extraordinary general meeting. Shareholders of SCS should read it carefully.

After careful consideration, SCS’s board of directors has determined that the Business Combination Proposal, the Domestication Proposal, each of the Organizational Documents Proposals, the Director Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Auditor Ratification Proposal and the Adjournment Proposal are in the best interests of SCS and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of one or more of SCS’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCS’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of SCS’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

Are the proposals conditioned on one another?

 

A:

Yes. The Business Combination is conditioned on the approval of each of the Condition Precedent Proposals at the extraordinary general meeting. Unless waived by the parties to the Merger Agreement, each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and Adjournment Proposal are not conditioned upon the approval of any other proposal.

 

Q:

Why is SCS proposing the Business Combination?

 

A:

SCS was organized to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, with one or more businesses or entities.

Akili is a leading digital medicine company pioneering the development of cognitive treatments through game-changing technologies. Its approach of leveraging technologies designed to directly target the brain establishes a new category of medicine – medicine that is validated through clinical trials like a drug or medical device, but experienced like entertainment. In June 2020, EndeavorRx, the first product built on Akili’s proprietary platform was granted marketing authorization by the FDA as a Class II medical device to improve attention function for children ages 8-12 with primarily inattentive or combined-type ADHD, who have a demonstrated attention issue. In the second half of 2022, Akili plans to initiate the commercial launch of EndeavorRx. In addition to EndeavorRx, Akili a robust pipeline of development programs, including twelve that are being evaluated, either by Akili or its partners, in clinical studies.

Based on its due diligence investigations of Akili and the industry in which it operates, including the financial and other information provided by Akili in the course of SCS’s due diligence investigations, the SCS board of directors believes that the Business Combination with Akili is in the best interests of SCS and its shareholders and presents an opportunity to increase shareholder value. However, there is no assurance of this. See “Business Combination Proposal—SCS’s Board of Directors’ Reasons for the Business Combination” for additional information.

Although SCS’s board of directors believes that the Business Combination with Akili presents a unique business combination opportunity and is in the best interests of SCS and its shareholders, the board of directors did consider certain potentially material negative factors in arriving at that conclusion. These

 

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factors are discussed in greater detail in the section entitled “Business Combination Proposal—SCS’s Board of Director’s Reasons for the Business Combination,” as well as in the section entitled “Risk Factors.

 

Q:

What will Akili Stockholders receive in return for SCS’s acquisition of all of the issued and outstanding equity interests of Akili?

 

A:

At the effective time of the Merger, among other things, (i) each share of Akili common stock and preferred stock outstanding as of immediately prior to the effective time of the Merger will be converted into Akili, Inc. common stock as described further below, (ii) each Akili common stock warrant outstanding as of immediately prior to the effective time of the Merger (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock, and the exercise price thereof shall be adjusted, in each case, as set forth in the applicable Akili common stock warrant and described herein and (iii) each option to purchase shares of Akili common stock (an “Akili Option”) outstanding as of immediately prior to the effective time of the Merger will be converted into an option to purchase shares of Akili, Inc. common stock (an “Akili, Inc. Option”) (and the exercise price thereof shall be adjusted) as described herein, with clauses (i) through (iii) representing an aggregate of 60,000,000 shares of Akili, Inc. common stock (the “Aggregate Merger Consideration”), and a pre-transaction equity value of Akili of $600 million (the “Base Purchase Price”). The portion of the Aggregate Merger Consideration reserved for the conversion of the Akili Options and Akili warrants is calculated using the treasury stock method so that all Akili Options and Akili warrants are deemed net-settled (although Akili, Inc. Options and Akili, Inc. warrants may by their terms be cash-settled, resulting in additional dilution). For further details, see “Business Combination Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration.”

At the closing of the Merger, SCS will deposit into an escrow account for the benefit of the pre-Closing Akili stockholders, optionholders and warrantholders an aggregate number of shares of Akili, Inc. common stock equal to 7.5% of the fully diluted shares of Akili, Inc. common stock (including shares reserved under the equity incentive plan to be adopted by Akili, Inc. in connection with the closing but excluding the Earnout Shares and rights to Earnout Shares), determined as of immediately following the closing (collectively, the “Earnout Shares”), which Earnout Shares will be subject to release from escrow to the pre-Closing Akili stockholders, optionholders and warrantholders in three equal tranches upon the daily volume weighted average price of a share of Akili, Inc. common stock reaching $15.00/share, $20.00/share and $30.00/share, respectively, over any 20 trading days within any 30 consecutive trading day period following the closing and prior to the fifth anniversary of the closing, in each case, on the terms set forth in the Merger Agreement. See “Business Combination Proposal—The Merger Agreement—Earnout.”

 

Q:

What equity stake will current SCS shareholders and Akili Stockholders hold in Akili, Inc. immediately after the consummation of the Business Combination?

 

A:

As of the date of this proxy statement/prospectus, there are 31,890,000 ordinary shares issued and outstanding, which include the 6,250,000 founder shares held by the Sponsor (together with SCS’s independent directors), the 640,000 private placement shares held by the Sponsor and 25,000,000 public shares. It is anticipated that, following the Business Combination, (i) SCS’s public shareholders are expected to own approximately 25% of outstanding Akili, Inc. common stock, (ii) Akili stockholders are expected to own approximately 55% of outstanding Akili, Inc. common stock (including shares purchased by certain existing Akili stockholders in the PIPE Investment), (iii) the Sponsor and related parties (including the Sponsor Related PIPE Investors) are expected to collectively own approximately 20% of outstanding Akili, Inc. common stock, and (iv) the Third-Party PIPE Investors (excluding existing Akili stockholders purchasing shares in the PIPE Investment) are expected to own approximately 1% of outstanding Akili, Inc. common stock. These percentages (i) assume that no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) assume that Akili Options and Akili common stock warrants shall be treated as set forth in the Merger Agreement and as further described

 

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  herein, (iii) assume that Akili, Inc. issues shares of Akili, Inc. common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement, which in the aggregate equals 60,000,000 shares of Akili, Inc. common stock (assuming that all Akili, Inc. Options and Akili, Inc. warrants are net-settled), (iv) assume that Akili, Inc. issues 16,200,000 shares of Akili, Inc. common stock to the PIPE Investors pursuant to the PIPE Investment and (v) exclude the Earnout Shares. If the actual facts are different from these assumptions, the percentage ownership retained by SCS’s existing shareholders in the combined company will be different.

The following sensitivity table illustrates varying ownership levels in Akili, Inc. immediately following the consummation of the Business Combination based on the assumptions above and shows the potential impact of redemptions on the pro forma book value per share of the shares owned by non-redeeming shareholders in a no redemption scenario, 50% redemption scenario, and a maximum redemption scenario. Each additional 1,000,000 shares redeemed would result in a change in the book value per share of $0.07.

 

    Share Ownership in Akili, Inc.  
    Assuming No Redemption     Assuming 50%
Redemption(1)
    Assuming Maximum
Redemption(2)
 
    Number of
Shares
    Percentage of
Outstanding
    Number of
Shares
    Percentage of
Outstanding
    Number of
Shares
    Percentage of
Outstanding
 

Akili stockholders

    62,060,000 (3)      57.4     62,060,000 (3)      64.9     62,060,000 (3)      74.7

SCS public shareholders

    25,000,000       23.1     12,500,000       13.1     —         0.0

Sponsor and related party

    20,430,000       18.9     20,430,000       21.4     20,430,000       24.6

Third-party PIPE investors

    600,000       0.6     600,000       0.6     600,000       0.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    108,090,000       100.0     95,590,000       100.0     83,090,000       100.0

Total Pro Forma Book Value

           

Post-Redemptions ($’000)(4)

  $ 347,994       $ 232,321       $ 116,647    

Pro Forma Book Value Per Share(5)

  $ 3.22       $ 2.43       $ 1.40    

 

(1)

Assumes additional redemptions of 12,500,000 of Class A public shares of SCS in connection with the Business Combination.

(2)

Assumes additional redemptions of 25,000,000 of Class A public shares of SCS in connection with the Business Combination.

(3)

Includes 56,432,056 shares expected to be issued to existing Akili common and preferred shareholders and 5,627,944 shares of Akili common stock underlying options and warrants, in each case, that are included as part of the consideration and 2,060,000 shares expected to be issued to existing Akili common and preferred shareholders in the PIPE investment. All awards issued are assumed to be issued assuming treasury stock method.

(4)

See “Unaudited Pro Forma Condensed Combined Financial Information” for pro forma book value in the no redemption scenario and the maximum redemption scenario. Pro forma book value for the 50% redemption scenario, is the result of (a) the no redemption scenario pro forma book value less (b) 50/100th of the difference between the no redemption scenario pro forma book value and the maximum redemptions scenario pro forma book value.

(5)

Pro forma book value per share is a result of pro forma book value divided by total shares outstanding.

For further details, see “Business Combination Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration.”

 

Q:

How has the announcement of the Business Combination affected the trading price of the SCS Class A ordinary shares?

 

A:

On January 25, 2022, the trading date before the public announcement of the Business Combination, SCS’s Class A ordinary shares closed at $9.62. On July 19, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, the Company’s Class A ordinary shares closed at $9.91.

 

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Q:

Will the Company obtain new financing in connection with the Business Combination?

 

A:

Yes. The PIPE Investors have agreed to purchase in the aggregate approximately 16,200,000 shares of Akili, Inc. common stock, for approximately $162,000,000 of gross proceeds, in the PIPE Investment, a portion of which is expected to be funded by the Sponsor Related PIPE Investors. The PIPE Investment is contingent upon, among other things, the closing of the Business Combination. See “Business Combination Proposal—Related Agreements—PIPE Subscription Agreements.”

 

Q:

Why is SCS proposing the Domestication?

 

A:

SCS’s board of directors believes that there are significant advantages to us that will arise as a result of a change of SCS’s domicile to Delaware. Further, SCS’s board of directors believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. SCS’s board of directors believes that there are several reasons why a reincorporation in Delaware is in the best interests of the Company and its shareholders, including (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors. Each of the foregoing are discussed in greater detail in the section entitled “Domestication Proposal—Reasons for the Domestication.”

To effect the Domestication, SCS will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SCS will be domesticated and continue as a Delaware corporation.

The approval of the Domestication Proposal is a condition to the closing of the Merger under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Act, being a resolution passed by the holders of not less than a two-thirds majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting.

 

Q:

What amendments will be made to the current constitutional documents of SCS?

 

A:

The consummation of the Business Combination is conditioned, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, SCS’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace SCS’s Cayman Constitutional Documents, in each case, under the Cayman Islands Companies Act, with the Proposed Organizational Documents, in each case, under the DGCL, which differ materially from the Cayman Constitutional Documents in the following respects:

 

    

Cayman Constitutional Documents

  

Proposed Organizational Documents

Authorized Shares (Organizational Documents Proposal A)    The Cayman Constitutional Documents authorize 555,000,000 shares, consisting of 500,000,000 SCS Class A ordinary shares, 50,000,000 SCS Class B ordinary shares and 5,000,000 preference shares.    The Proposed Organizational Documents authorize              shares, consisting of 1,000,000,000 shares of Akili, Inc. common stock and 100,000,000 shares of Akili, Inc. preferred stock.
   See paragraph 5 of the Existing Memorandum.    See Article IV of the Proposed Certificate of Incorporation.

 

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Cayman Constitutional Documents

  

Proposed Organizational Documents

Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent (Organizational Documents Proposal B)    The Cayman Constitutional Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by SCS’s board of directors. Accordingly, SCS’s board of directors is empowered under the Cayman Constitutional Documents, without shareholder approval, to issue preference shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares (except to the extent it may affect the ability of SCS to carry out a conversion of SCS Class B ordinary shares on the Closing Date, as contemplated by the Existing Articles).    The Proposed Organizational Documents authorize the Board to issue all or any shares of preferred stock in one or more series and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as the Board may determine.
   See paragraph 5 of the Existing Memorandum and Articles 3 and 17 of the Existing Articles.    See Article IV, subsection B of the Proposed Certificate of Incorporation.
Corporate Name (Organizational Documents Proposal C)    The Cayman Constitutional Documents provide the name of the company is “Social Capital Suvretta Holdings Corp. I”    The Proposed Organizational Documents provide that the name of the corporation will be “Akili, Inc.”
   See paragraph 1 of the Existing Memorandum.    See Article I of the Proposed Certificate of Incorporation.
Perpetual Existence (Organizational Documents Proposal C)    The Cayman Constitutional Documents provide that if SCS does not consummate a business combination (as defined in the Cayman Constitutional Documents) by July 2, 2023, SCS will cease all operations except for the purposes of winding up and will redeem the public shares and liquidate SCS’s trust account.    The Proposed Organizational Documents do not include any provisions relating to Akili, Inc.’s ongoing existence; the default under the DGCL will make Akili, Inc.’s existence perpetual.
   See Article 49.7 of the Existing Articles.    Default rule under the DGCL.
Exclusive Forum (Organizational Documents Proposal C)    The Cayman Constitutional Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation.    The Proposed Organizational Documents adopt Delaware as the exclusive forum for certain stockholder litigation and the United States Federal District Courts as the exclusive forum for litigation arising out of the Securities Act.
      See Section 8 of the Proposed Bylaws.

 

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Cayman Constitutional Documents

  

Proposed Organizational Documents

Takeovers by Interested Stockholders (Organizational Documents Proposal C)    The Cayman Constitutional Documents do not provide restrictions on takeovers of SCS by a related shareholder following a business combination.    The Proposed Organizational Documents do not opt out of Section 203 of the DGCL, and therefore, Akili, Inc. will be subject to Section 203 of the DGCL relating to takeovers by interested stockholders.
      Default rule under the DGCL.
Provisions Related to Status as Blank Check Company (Organizational Documents Proposal C)    The Cayman Constitutional Documents include various provisions related to SCS’s status as a blank check company prior to the consummation of a business combination.    The Proposed Organizational Documents do not include such provisions related to SCS’s status as a blank check company, which no longer will apply upon consummation of the Merger, as SCS will cease to be a blank check company at such time.
   See Article 49 of the Existing Articles.   

 

Q:

How will the Domestication affect my ordinary shares?

 

A:

As a result of and upon the effective time of the Domestication, (i) each of the then issued and outstanding SCS Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock, and (ii) each of the then issued and outstanding SCS Class B ordinary shares will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock. See “Domestication Proposal” for additional information.

 

Q:

What are the U.S. federal income tax consequences of the Domestication?

 

A:

As discussed more fully under “U.S. Federal Income Tax Considerations,” the Domestication should constitute a reorganization within the meaning of Section 368(a)(l)(F) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). However, due to the absence of direct guidance on the application of Section 368(a)(1)(F) to a statutory conversion of a corporation holding only investment-type assets such as SCS, this result is not entirely clear. Accordingly, due to the absence of such guidance, it is not possible to predict whether the IRS or a court considering the issue would take a contrary position. If the Domestication qualifies as a reorganization, U.S. Holders (as defined in “U.S. Federal Income Tax Considerations”) will be subject to Section 367(b) of the Code and, as a result:

 

   

A U.S. Holder whose SCS Class A ordinary shares have a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of SCS’s earnings in income;

 

   

A U.S. Holder whose SCS Class A ordinary shares have a fair market value of $50,000 or more and who, on the date of the Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of SCS stock entitled to vote and less than 10% of the total value of all classes of SCS stock will generally recognize gain (but not loss) on the exchange of SCS Class A ordinary shares for Akili, Inc. common stock pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holder may file an election to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its SCS Class A ordinary shares provided certain other requirements are satisfied; and

 

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A U.S. Holder who, on the date of the Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of SCS stock entitled to vote or 10% or more of the total value of all classes of SCS stock will generally be required to include in income as a deemed dividend the all earnings and profits amount attributable to its SCS Class A ordinary shares.

SCS does not expect to have significant net cumulative earnings and profits, if any, on the date of the Domestication.

As discussed more fully under “U.S. Federal Income Tax Considerations,” SCS believes that it is likely classified as a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes. In such case, notwithstanding the foregoing U.S. federal income tax consequences of the Domestication, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, would require a U.S. Holder to recognize gain on the exchange of SCS Class A ordinary shares for Akili, Inc. common stock pursuant to the Domestication. Any such gain would be taxable income with no corresponding receipt of cash in the Domestication. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. However, it is not possible to predict whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted and how any such Treasury Regulations would apply. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “U.S. Federal Income Tax Considerations—PFIC Considerations—QEF Election and Mark-to-Market Election” with respect to their SCS Class A ordinary shares are not subject to the same gain recognition rules under the currently proposed Treasury Regulations under Section 1291(f) of the Code. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see “U.S. Federal Income Tax Considerations.

Each U.S. Holder of SCS Class A ordinary shares is urged to consult its own tax advisor concerning the application of the PFIC rules, including the proposed Treasury Regulations, to the exchange of SCS Class A ordinary shares for Akili, Inc. common stock pursuant to the Domestication under such U.S. Holder’s particular circumstances.

Additionally, the Domestication may cause non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations”) to become subject to U.S. federal income withholding taxes on any amounts treated as dividends paid in respect of such non-U.S. Holder’s Akili, Inc. common stock after the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are urged to consult their tax advisors regarding the tax consequences to them of the Domestication under their particular circumstances, including the applicability and effect of U.S. federal, state and local and non-U.S. tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see “U.S. Federal Income Tax Considerations.”

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of any proposal, including the Business Combination Proposal. If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash. Such public shareholder, alone or acting in concert or as a

 

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group, will not be restricted in their ability to vote for or against the Business Combination with respect to all of its shares.

The Sponsor has agreed to waive its redemption rights with respect to all of the founder shares in connection with the consummation of the Business Combination. The founder shares and private placement shares will be excluded from the pro rata calculation used to determine the per-share redemption price.

 

Q:

How do I exercise my redemption rights?

 

A:

If you are a public shareholder and wish to exercise your right to redeem the public shares, you must:

 

  (i)

hold public shares;

 

  (ii)

submit a written request to Continental, SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash;

 

  (iii)

deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”); and

 

  (iv)

provide the full name and shares of the beneficial holder.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m., Eastern Time, on August 16, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

The address of Continental, SCS’s transfer agent, is listed under the question “Who can help answer my questions?” below.

Public shareholders will be entitled to request that their public shares be redeemed for a pro rata portion of the amount then on deposit in the trust account calculated as of two business days prior to the consummation of the Business Combination including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable). For illustrative purposes, as of March 31, 2022, this would have amounted to approximately $10.00 per issued and outstanding public share. However, the proceeds deposited in the trust account could become subject to the claims of SCS’s creditors, if any, which could have priority over the claims of the public shareholders, regardless of whether such public shareholder votes or, if they do vote, irrespective of if they vote for or against the Business Combination Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally expected due to such claims. Whether you vote, and if you do vote irrespective of how you vote, on any proposal, including the Business Combination Proposal, will have no impact on the amount you will receive upon exercise of your redemption rights. It is expected that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

Any request for redemption, once made by a holder of public shares, may not be withdrawn once submitted unless the Board of Directors of the Company determine (in their sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part). If you deliver your share certificates (if any) and any other redemption forms for redemption to Continental, SCS’s transfer agent, and later decide prior to the extraordinary general meeting not to elect redemption, you may request that SCS’s transfer agent return the shares (physically or electronically) to you, which return will be subject to SCS’s determination. You may make such request by contacting Continental, SCS’s transfer agent, at the address listed at the end of this section.

Any corrected or changed written exercise of redemption rights must be received by Continental, SCS’s transfer agent, at least two days prior to the vote taken on the Business Combination Proposal at the extraordinary general meeting. No request for redemption will be honored unless the holder’s share certificates (if any) and any other redemption forms are delivered (either physically or electronically) to Continental, SCS’s agent, at least two business days prior to the vote at the extraordinary general meeting.

 

xx


If a holder of public shares properly makes a request for redemption and the share certificates (if any) and any other redemption forms as described above, then, if the Business Combination is consummated, Akili, Inc. will redeem the public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the Business Combination. The redemption will take place following the Domestication and, accordingly, it is shares of Akili, Inc. common stock that will be redeemed immediately after consummation of the Business Combination.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

It is expected that a U.S. Holder (as defined in “U.S. Federal Income Tax Considerations”) that exercises its redemption rights to receive cash from the trust account in exchange for its Akili, Inc. common stock will generally be treated as selling such Akili, Inc. common stock resulting in the recognition of capital gain or capital loss. There may be certain circumstances, however, in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of Akili, Inc. common stock that such U.S. Holder owns or is deemed to own. For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “U.S. Federal Income Tax Considerations.”

Additionally, because the Domestication will occur immediately prior to any shareholder’s exercise of a redemption right, U.S. Holders exercising redemption rights should take into account the potential tax consequences associated with the Domestication, including Section 367 of the Code and the rules relating to PFICs. The tax consequences of Section 367 of the Code and the PFIC rules are discussed more fully below under “U.S. Federal Income Tax Considerations.”

All holders considering exercising redemption rights are urged to consult their tax advisors on the tax consequences to them of an exercise of redemption rights under their particular circumstances, including the applicability and effect of U.S. federal, state and local and non-U.S. tax laws.

 

Q:

What happens to the funds deposited in the trust account after consummation of the Business Combination?

 

A:

Following the closing of SCS’s initial public offering, an amount equal to $250.0 million ($10.00 per unit) was placed in the trust account. As of March 31, 2022, funds in the trust account totaled approximately $250.0 million and were comprised entirely of U.S. government treasury obligations with a maturity of 185 days or less or of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (1) the completion of a business combination (including the Closing), (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Cayman Constitutional Documents (i) to modify the substance or timing of SCS’s obligation to redeem 100% of the public shares if it does not complete a business combination by July 2, 2023 or (ii) with respect to any other material provisions relating to shareholders’ rights or pre-business combination activity and (3) the redemption of all of the public shares if SCS is unable to complete a business combination by July 2, 2023 (or if such date is further extended at a duly called extraordinary general meeting, such later date), subject to applicable law.

Upon consummation of the Business Combination, the funds deposited in the trust account will be released to pay holders of SCS public shares who properly exercise their redemption rights; to pay transaction fees and expenses associated with the Business Combination; and for working capital and general corporate purposes of Akili, Inc. following the Business Combination. See “Summary of the Proxy Statement/Prospectus—Sources and Uses of Funds for the Business Combination.”

 

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Q:

What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

 

A:

Our public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

The Merger Agreement provides that the obligations of Akili to consummate the Merger are conditioned on, among other things, that as of the Closing, the Trust Amount plus the PIPE Investment Amount is at least equal to the Minimum Available Cash Amount. The PIPE Investment Amount is expected to be greater than the Minimum Available Cash Amount. If such conditions are not met, and such conditions are not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, in no event will we redeem public shares in an amount that would cause our net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of SCS and Akili, (ii) effectiveness of the registration statement of which this proxy statement/prospectus forms a part of, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended, (iv) receipt of approval for listing on Nasdaq, the shares of Akili, Inc. common stock to be issued in connection with the Merger, (v) that we have at least $5,000,001 of net tangible assets upon Closing, (vi) the Minimum Cash Condition, (vii) the size and composition of the Board shall be as contemplated in the Merger Agreement, (viii) the completion of the Domestication as contemplated by the Merger Agreement; and (ix) the absence of any injunctions.

For more information about conditions to the consummation of the Business Combination, see “Business Combination Proposal—The Merger Agreement.”

 

Q:

When do you expect the Business Combination to be completed?

 

A:

It is currently expected that the Business Combination will be consummated in mid-2022. This date depends, among other things, on the approval of the proposals to be put to SCS shareholders at the extraordinary general meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted by SCS’s shareholders at the extraordinary general meeting and SCS elects to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. For a description of the conditions for the completion of the Business Combination, see “Business Combination Proposal—The Merger Agreement.”

 

Q:

What happens if the Business Combination is not consummated?

 

A:

SCS will not complete the Domestication to Delaware unless all other conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If SCS is not able to complete the Business Combination with Akili by July 2, 2023 and is not able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, SCS will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible, but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution

 

xxii


  expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

 

Q:

Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication?

 

A:

SCS’s shareholders do not have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.

 

Q:

What do I need to do now?

 

A:

SCS urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder. SCS’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

Q:

How do I vote?

 

A:

If you are a holder of record of ordinary shares on the record date for the extraordinary general meeting, you may vote in person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person, obtain a valid proxy from your broker, bank or nominee.

 

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote” to the extent your broker is able to vote on another proposal, otherwise your shares will not be counted as voted or present for the purposes of determining a quorum.

 

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  Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

 

Q:

When and where will the extraordinary general meeting be held?

 

A:

The extraordinary general meeting will be held on August 18, 2022, at 8:30 a.m., Eastern Time physically at the offices of Wachtell, Lipton, Rosen & Katz located at 51 West 52nd Street, New York, New York 10019, and virtually via live webcast at https://www.cstproxy.com/socialcapitalsuvrettaholdingsi/2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed. If you wish to attend the Extraordinary General Meeting physically, you must (i) be fully vaccinated against COVID-19 (two weeks after receiving (A) the second dose in a two dose COVID-19 vaccine series or (B) a single dose COVID-19 vaccine) and show proof of such vaccination, (ii) complete a health questionnaire upon arrival and (iii) reserve your attendance at least two business days in advance of the Extraordinary General Meeting by contacting Wachtell, Lipton, Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, telephone (212) 403-1000. In light of the ongoing COVID-19 pandemic and to support the well-being of SCS’s shareholders, directors and officers, SCS encourages you to attend the Extraordinary General Meeting virtually or via proxy.

 

Q:

How do I attend the Extraordinary General Meeting virtually?

 

A:

If you are a registered shareholder, you will receive a proxy card from Continental, SCS’s transfer agent. The form contains instructions on how to attend the virtual Shareholder Meeting including the URL address, along with your control number. You will need your control number for access. If you do not have your control number, contact the Transfer Agent at mzimkind@continentalstock.com.

You can pre-register to attend the virtual Shareholder Meeting starting August 16, 2022 at 5:00 p.m., Eastern Time. Enter the URL address into your browser https://www.cstproxy.com/socialcapitalsuvrettaholdingsi/2022, enter your control number, name and email address. At the start of the Shareholder Meeting you will need to log in again using your control number and will also be prompted to enter your control number if you vote during the Shareholder Meeting.

Shareholders who hold their investments through a bank, broker or other nominee will need to contact the transfer agent to receive a control number. If you plan to vote at the Shareholder Meeting, you will need to have a legal proxy from your bank, broker or other nominee, or if you would like to join and not vote, the transfer agent will issue you a guest control number with proof of ownership. In either case, you must contact the transfer agent for specific instructions on how to receive the control number. The transfer agent can be contacted at the number or email address above. Please allow up to 72 hours prior to the meeting for processing your control number.

 

Q:

Who is entitled to vote at the extraordinary general meeting?

 

A:

SCS has fixed July 14, 2022 as the record date for the extraordinary general meeting. If you were a shareholder of SCS at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting.

 

Q:

How many votes do I have?

 

A:

SCS shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 31,890,000 ordinary shares issued and outstanding, of which 25,000,000 were issued and outstanding public shares.

 

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Q:

What constitutes a quorum?

 

A:

A quorum of SCS shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the record date for the extraordinary general meeting, 15,945,001 ordinary shares would be required to achieve a quorum. Except for the Director Appointment Proposal, which may only be voted by holders of SCS Class B ordinary shares, Class A ordinary shares and Class B ordinary shares are entitled to vote together as a single class on all matters to be considered at the extraordinary general meeting. Voting on all resolutions at the extraordinary general meeting will be conducted by way of a poll vote. Shareholders will have one vote for each ordinary share owned at the close of business on the record date.

 

Q:

What vote is required to approve each proposal at the extraordinary general meeting?

 

A:

The following votes are required for each proposal at the extraordinary general meeting:

 

  (i)

Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Act, being a resolution passed by the holders of not less than a majority of two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (iii)

Organizational Documents Proposals: The separate approval of each of the Organizational Documents Proposals requires a special resolution under the Cayman Islands Companies Act, being a resolution passed by the holders of not less than a majority of two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (iv)

Director Appointment Proposal: The approval of the Director Appointment Proposal requires an ordinary resolution of the SCS Class B ordinary shares under SCS’s amended and restated memorandum and articles of association, being a resolution passed by the holders of not less than a simple majority of the SCS Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (v)

Stock Issuance Proposal: The approval of the Stock Issuance Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (vi)

Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (vii)

ESPP Proposal: The approval of the ESPP Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (viii)

Auditor Ratification Proposal: The approval of the Auditor Ratification Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

xxv


  (ix)

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

 

Q:

What are the recommendations of SCS’s board of directors?

 

A:

SCS’s board of directors believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of SCS’s shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Appointment Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Auditor Ratification Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of SCS’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCS’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of SCS’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

How does the Sponsor intend to vote their shares?

 

A:

Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor has agreed to vote all the founder shares, the private placement shares and any public shares they may hold in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding ordinary shares. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

At any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material nonpublic information), the Sponsor, the existing stockholders of Akili or our or their respective directors, officers, advisors or respective affiliates may (i) purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or elect to redeem, or indicate an intention to redeem, public shares, (ii) execute agreements to purchase such shares from such investors in the future, or (iii) enter into transactions with such investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of the Condition Precedent Proposals or not redeem their public shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of SCS’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, the existing stockholders of Akili or our or their respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of (1) satisfaction of the requirement that holders of a simple majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Business Combination Proposal, the Director

 

xxvi


Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Auditor Ratification Proposal and the Adjournment Proposal, (2) satisfaction of the requirement that holders of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal and the Organizational Documents Proposals, (3) satisfaction of the Minimum Cash Condition, (4) otherwise limiting the number of public shares electing to redeem and (5) our net tangible assets (as determined in accordance with Rule 3a51(g)(1) of the Exchange Act) being at least $5,000,001.

Entering into any such arrangements may have a depressive effect on our ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he or she owns, either at or prior to the Business Combination). If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. SCS will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the extraordinary general meeting or the redemption level. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The existence of financial and personal interests of one or more of SCS’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCS’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of SCS’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

What happens if I sell my SCS ordinary shares before the extraordinary general meeting?

 

A:

The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting but the transferee, and not you, will have the ability to redeem such shares.

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. Shareholders may send a later-dated, signed proxy card to SCS’s Chief Financial Officer at SCS’s address set forth below so that it is received by SCS’s Chief Financial Officer prior to the vote at the extraordinary general meeting (which is scheduled to take place on August 18, 2022) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to SCS’s Chief Financial Officer, which must be received by SCS’s Chief Financial Officer prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

Q:

What happens if I fail to take any action with respect to the extraordinary general meeting?

 

A:

If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a stockholder of Akili, Inc. If you fail to take any action with respect to the extraordinary general meeting

 

xxvii


  and the Business Combination is not approved, you will remain a shareholder of SCS. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination.

 

Q:

What should I do with my share certificates?

 

A:

Our shareholders who exercise their redemption rights must deliver (either physically or electronically) their share certificates to Continental, SCS’s transfer agent, prior to the extraordinary general meeting.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m., Eastern Time, on August 16, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Public shareholders who do not elect to have their public shares redeemed for the pro rata share of the trust account should not submit the certificates relating to their public shares.

Upon the Domestication, holders of Class A ordinary shares and Class B ordinary shares will receive shares of Akili, Inc. common stock without needing to take any action and, accordingly, such holders should not submit any certificates relating to their Class A ordinary shares (unless such holder elects to redeem the public shares in accordance with the procedures set forth above) or Class B ordinary shares.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?

 

A:

SCS will pay the cost of soliciting proxies for the extraordinary general meeting. SCS has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the extraordinary general meeting. SCS has agreed to pay Morrow Sodali LLC a fee of $32,500, plus disbursements (to be paid with non-trust account funds). SCS will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of SCS Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of SCS Class A ordinary shares and in obtaining voting instructions from those owners. SCS’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:

Where can I find the voting results of the extraordinary general meeting?

 

A:

The preliminary voting results will be expected to be announced at the extraordinary general meeting. SCS will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting.

 

xxviii


Q:

Who can help answer my questions?

 

A:

If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus, any document incorporated by reference in this proxy statement/prospectus or the enclosed proxy card, you should contact:

Morrow Sodali LLC

333 Ludlow Street

5th Floor, South Tower

Stamford, Connecticut 06902

Individuals call toll-free: (800) 662-5200

Banks and Brokerage Firms, please call (203) 658-9400

Email: DNAA.info@investor.morrowsodali.com

You also may obtain additional information about SCS from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information; Incorporation by Reference.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, at the address below prior to the extraordinary general meeting. Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m., Eastern Time, on August 16, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street, 30th floor

New York, NY 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

Please check the box on the enclosed proxy card marked “Shareholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other shareholder with respect to SCS ordinary shares. Notwithstanding the foregoing, a public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its SCS Class A ordinary shares with respect to more than an aggregate of 15% of the public shares without our prior consent. Accordingly, all public shares in excess of the 15% threshold beneficially owned by a public shareholder or group will not be redeemed for cash.

 

xxix


SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the extraordinary general meeting, including the Business Combination, you should read this proxy statement/prospectus, including the Annexes and other documents referred to herein, carefully and in their entirety. The Merger Agreement is the primary legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. The Merger Agreement is also described in detail in this proxy statement/prospectus in the section entitled Business Combination Proposal—The Merger Agreement.

Unless otherwise specified, all share calculations assume no exercise of redemption rights by the public shareholders in connection with the Business Combination.

The Parties to the Business Combination

SCS

Social Capital Suvretta Holdings Corp. I is a blank check company incorporated on February 25, 2021 as a Cayman Islands exempted company with limited liability for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. SCS has neither engaged in any operations nor generated any operating revenue to date. Based on SCS’s business activities, it is a “shell company” as defined under the Exchange Act.

SCS is a partnership between Chamath Palihapitiya, the founder and current Chief Executive Officer of Social Capital Holdings Inc. (together with its affiliates, “Social Capital”), and Kishan (a/k/a Kishen) Mehta, the Portfolio Manager of the Averill strategy at Suvretta Capital Management, LLC (“Suvretta”). SCS unites scientists, physicians, entrepreneurs and biotechnology-oriented investors around a shared vision of identifying and investing in innovative and agile biotechnology companies.

Certain of SCS’s directors and each of SCS’s officers are or have been involved with other special purpose acquisition companies. Below is a summary of those special purpose acquisition companies sponsored by affiliates of our Sponsor.

In February 2021, Mr. Palihapitiya and Mr. Mehta founded SCS and Social Capital Suvretta Holdings Corp. II (“DNAB”), Social Capital Suvretta Holdings Corp. III (“DNAC”) and Social Capital Suvretta Holdings Corp. IV (“DNAD” and, collectively with DNAB and DNAC, the “Other SCS SPACs”), each a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a business combination. Mr. Palihapitiya serves as the Chief Executive Officer and Chairman of the board of directors and Mr. Mehta serves as President and as a director of each of the Other SCS SPACs. Each of the Other SCS SPACs completed its initial public offering in July 2021, in which each sold 25,000,000 of its Class A ordinary shares, for an offering price of $10.00 per share, generating aggregate proceeds of $250,000,000 for such Other SCS SPACs. DNAC has not yet consummated a business combination; however, on January 18, 2022, DNAC announced that it had entered into a definitive agreement with ProKidney LP (“ProKidney”). DNAC’s transaction with ProKidney is subject to approval of DNAC’s shareholders and other customary closing conditions. Neither DNAB nor DNAD has yet announced or consummated a business combination. While each of the Other SCS SPACs may pursue an initial business combination target in any industry, subsector therein or geographic location (subject to certain limitations), each intends to focus its search for a target business operating in the biotechnology industry.

In July 2020, Mr. Palihapitiya, together with Ian Osborne, founded Social Capital Hedosophia Holdings Corp. V (“IPOE”), a blank check company incorporated as a Cayman Islands exempted company for the purpose

 

1


of effecting a business combination. Mr. Palihapitiya served as the Chief Executive Officer and Chairman of the board of directors of IPOE. IPOE completed its initial public offering in October 2020, in which it sold 80,500,000 units, each consisting of one IPOE Class A ordinary share and one-fourth of one redeemable warrant for one IPOE Class A ordinary share, for an offering price of $10.00 per unit, generating aggregate proceeds of $805,000,000. In May 2021, IPOE consummated a merger with Social Finance, Inc. (“SoFi”), which operates a financial services platform. SoFi’s common stock currently trades on The Nasdaq Global Select Market under the symbol “SOFI”.

Additionally, in July 2020, Mr. Palihapitiya, together with Mr. Osborne, founded Social Capital Hedosophia Holdings Corp. IV (“IPOD”) and Social Capital Hedosophia Holdings Corp. VI (“IPOF”), each a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a business combination. Mr. Palihapitiya serves as the Chief Executive Officer and Chairman of the board of directors of each of IPOD and IPOF. IPOD completed its initial public offering in October 2020, in which it sold 46,000,000 units, each consisting of one IPOD Class A ordinary share and one-fourth of one redeemable warrant for one IPOD Class A ordinary share, for an offering price of $10.00 per unit, generating aggregate proceeds of $460,000,000. IPOF completed its initial public offering in October 2020, in which it sold 115,000,000 units, each consisting of one IPOF Class A ordinary share and one-fourth of one redeemable warrant for one IPOF Class A ordinary share, for an offering price of $10.00 per unit, generating aggregate proceeds of $1,150,000,000. Neither IPOD nor IPOF has yet announced or consummated a business combination. While IPOD and IPOF may each pursue an initial business combination target in any industry or geographic location (subject to certain limitations), each intends to focus its search for a target business operating in the technology industries.

In October 2019, Mr. Palihapitiya, together with Mr. Osborne, founded Social Capital Hedosophia Holdings Corp. III (“IPOC”), a blank check company incorporated for the purposes of effecting a business combination. Mr. Palihapitiya served as the Chief Executive Officer and Chairman of the board of directors of IPOC. IPOC completed its initial public offering in April 2020, in which it sold 82,800,000 units, each consisting of one IPOC Class A ordinary share and one-third of one redeemable warrant for one IPOC Class A ordinary share, for an offering price of $10.00 per unit, generating aggregate proceeds of $828,000,000. In January 2021, IPOC consummated a merger with Clover Health Investments, Corp. (“Clover Health”), which operates next-generation Medicare Advantage plans. Clover Health’s common stock currently trades on The Nasdaq Global Select Market under the symbol “CLOV”.

In October 2019, Mr. Palihapitiya, together with Mr. Osborne, founded Social Capital Hedosophia Holdings Corp. II (“IPOB”), a blank check company incorporated for the purposes of effecting a business combination. Mr. Palihapitiya served as the Chief Executive Officer and Chairman of the board of directors of IPOB. IPOB completed its initial public offering in April 2020, in which it sold 41,400,000 units, each consisting of one IPOB Class A ordinary share and one-third of one redeemable warrant for one IPOB Class A ordinary share, for an offering price of $10.00 per unit, generating aggregate proceeds of $414,000,000. In December 2020, IPOB consummated a merger with Opendoor Technologies Inc. (“Opendoor”), a leading digital platform for residential real estate. Opendoor’s common stock currently trades on The Nasdaq Global Select Market under the symbol “OPEN”.

In May 2017, Mr. Palihapitiya, together with Mr. Osborne, founded Social Capital Hedosophia Holdings Corp. (“IPOA”), a blank check company incorporated for the purposes of effecting a business combination. Mr. Palihapitiya served as the Chief Executive Officer and Chairman of the board of directors. IPOA completed its initial public offering in September 2017, in which it sold 69,000,000 units, each consisting of one IPOA Class A ordinary share and one-third of one redeemable warrant for one IPOA Class A ordinary share, for an offering price of $10.00 per unit, generating aggregate proceeds of $690,000,000. In October 2019, IPOA consummated a merger with Virgin Galactic, a vertically-integrated aerospace company pioneering human spaceflight for private

 

2


individuals and researchers. Virgin Galactic’s common stock currently trades on the New York Stock Exchange under the symbol “SPCE”.

On July 2, 2021, SCS consummated the initial public offering of its SCS Class A ordinary shares. In connection with the initial public offering, on May 24, 2021, SCS completed the private sale of 640,000 SCS Class A ordinary shares, par value $0.0001 per share, for a total purchase price of $6,400,000.

Following the closing of SCS’s initial public offering, a total of $250.0 million ($10.00 per unit) of the net proceeds from its initial public offering and the sale of the private placement shares was placed in the trust account. The proceeds held in the trust account may be invested by the trustee only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act that invest only in direct U.S. government treasury obligations. As of March 31, 2022, funds in the trust account totaled approximately $250.0 million. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (1) the completion of a business combination (including the Closing), (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Cayman Constitutional Documents (i) to modify the substance or timing of SCS’s obligation to redeem 100% of the public shares if it does not complete a business combination by July 2, 2023 or (ii) with respect to any other material provisions relating to shareholders’ rights or pre-business combination activity and (3) the redemption of all of the public shares if SCS is unable to complete a business combination by July 2, 2023 (or if such date is further extended at a duly called extraordinary general meeting, such later date), subject to applicable law.

The SCS Class A ordinary shares are currently listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “DNAA”. SCS filed a listing application for Akili, Inc. with Nasdaq on June 30, 2022, and believes that Akili, Inc. will satisfy all criteria for initial listing upon consummation of the Business Combination. If the application is approved, upon consummation of the Business Combination, it is expected that the common stock of Akili, Inc. will trade on Nasdaq under the symbol “AKLI”.

SCS’s principal executive office is located at 2850 W. Horizon Ridge Parkway, Suite 200, Henderson, NV 89052. Its telephone number is (650) 521-9007. SCS’s corporate website address is www.SocialCapitalSuvrettaHoldings.com/dnaa. SCS’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.

Merger Sub

Karibu Merger Sub, Inc. (“Merger Sub”) is a Delaware corporation and a wholly owned subsidiary of SCS. The Merger Sub does not own any material assets or operate any business.

Akili

Unless the context otherwise requires, all references in this subsection to “we,” “us,” “our” or “the Company” refer to the business of Akili.

Akili is a leading digital medicine company pioneering the development of cognitive treatments through game-changing technologies. Our approach of leveraging technologies designed to directly target the brain establishes a new category of medicine – medicine that is validated through clinical trials like a drug or medical device, but experienced like entertainment.

Impairments in cognition are associated with many different chronic diseases and acute illnesses, impacting approximately 85 million people in the U.S. These impairments include, but are not limited to attention-deficit/

 

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hyperactivity disorder (“ADHD”), autism spectrum disorder (“ASD”), multiple sclerosis (“MS”), major depressive disorder (“MDD”), post-traumatic stress disorder (“PTSD”), cognitive impairments in COVID-19 survivors (“COVID fog”), traumatic brain injury (“TBI”), cancer-related cognitive impairment (“CRCI”) and Alzheimer’s Disease, among others. Global recognition of cognitive issues by physicians and patients is at an all-time high, yet many current treatment approaches are inadequate, as they are either unable to effectively target the brain to address underlying impairments or lack clinical validation.

With this approach, we introduced EndeavorRx, the first prescription video game treatment (and first digital treatment for a cognitive impairment) reviewed and granted marketing authorization by the U.S. Food and Drug Administration (the “FDA”) in June 2020, as a Class II medical device through the FDA’s de novo process. EndeavorRx is indicated for use to improve attention function for children ages 8-12 years old with primarily inattentive or combined-type ADHD, who have a demonstrated attention issue. In June 2020, EndeavorRx also received Conformité Européenne (“CE”) Mark certification as a prescription-only digital therapeutic software intended for the treatment of attention and inhibitory control deficits in pediatric patients with ADHD, enabling EndeavorRx to be marketed in European Economic Area (“EEA”) member countries. EndeavorRx should be considered for use as part of a therapeutic program that may include clinician-directed therapy, medication and/or educational programs, which further address symptoms of the disorder. It is not intended to be used as a stand-alone therapeutic and is not a substitution for a child’s medication.

Within ADHD, there is a large and growing opportunity for innovative non-drug treatments. Current ADHD treatment options represent a $10 billion market with over 70 million prescriptions written every year for drugs in the U.S. According to the U.S. Centers for Disease Control and Prevention, nearly half the pediatric ADHD population uses behavioral therapy as well. The total ADHD population in the U.S. is 10.8 million and our initial target population includes those with inattentive or combined type ADHD, or 8.1 million of the total U.S. ADHD population. EndeavorRx is currently cleared in the U.S. to treat patients in the 8-12 age group, which represent approximately 22% (1.8 million) of our target 8.1 million ADHD population.

Within this market we face competition from a range of companies. Our competitors include both enterprise companies who are focused on or may enter the healthcare industry, including initiatives and partnerships launched by these large companies, and from private companies that offer solutions for specific chronic conditions. We compete with companies that are developing treatments for cognitive impairment associated with ADHD and other diseases and disorders resulting in cognitive impairment. In the digital health space, we compete with companies that have created non-regulated products to treat cognitive impairment in ADHD and other diseases and disorders resulting in cognitive impairment.

Our Proprietary Approach

Our platform is powered by proprietary therapeutic engines, which are software and associated algorithms that form the core of our products and product candidates, designed to target cognitive impairment at its source in the brain, informed by decades of research (including research conducted prior to the founding of Akili) and validated through rigorous clinical programs. Our most advanced therapeutic engine, SSME, presents specific sensory stimuli and simultaneous motor challenges designed to target the fronto-parietal cortex which plays a key role in attention function, while our earlier stage therapeutic engines focus on cognitive functions, including spatial navigation, memory, and planning and organization. Each product and product candidate embodies a specific proprietary therapeutic engine with a variation of the video game-like user interface in an effort to optimize user engagement applicable to a particular disease or medical condition indication. Product candidates are clinically tested in development programs for particular disease or medical condition indications. These products and product candidates are delivered in a platform characterized by the following key attributes:

 

   

Targeted treatments that are personalized to patients’ needs.

 

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Clinically validated therapeutics like drugs and medical devices.

 

   

Therapeutics that are experienced as entertainment.

 

   

Patient focused and adaptive.

EndeavorRx®: The first prescription video game treatment

In June 2020, EndeavorRx, the first product built on the Akili platform was granted marketing authorization and classified as a Class II medical device by the FDA through FDA’s de novo process. The EndeavorRx product is indicated for use to improve attention function for children ages 8-12 with primarily inattentive or combined-type ADHD, who have a demonstrated attention issue. EndeavorRx represents a fundamental paradigm shift in the treatment of cognitive disorders, where technology is not just delivering a therapy but is itself the medicine.

EndeavorRx is the only therapeutic that is an FDA-authorized and physician-prescribed video game-based treatment designed to directly target cognitive functioning. For the first time, doctors have a treatment option that is purpose-built to target cognitive function and that is not taken as a pill, but delivered through a video game. EndeavorRx also obtained Conformité Européenne (CE) Mark certification in pediatric patients with ADHD, enabling EndeavorRx to be marketed in European Economic Area (EEA) member countries.

Our Development Pipeline

Our therapeutic engines are designed to target cognitive functions with the potential to address multiple medical conditions presenting the same functional cognitive impairments. Based on unmet need and market opportunities, our initial advanced-stage pipeline is focused on nine patient populations in pediatric and adult conditions, addressing both chronic and acute cognitive impairments. Additionally, we are pursuing treatments for cognitive impairments associated with MS MDD, and ASD, all of which have achieved proof of concept, as well as for acute cognitive dysfunction brought on by COVID-19, surgery and chemotherapy. Lastly, we are advancing research on monitors that can screen and assess cognitive impairments across populations.

Each of our development programs is oriented toward a single indication and specific patient population. We refer to variations of our treatment software as our products or product candidates, each of which incorporates the core algorithms of one of our proprietary therapeutic engines (for example, our SSME therapeutic engine, which is incorporated into the majority of our existing product candidates). Within a single development program, we may explore multiple product candidates in early research and studies to optimize user engagement applicable to a particular patient population and indication and to determine which product candidate(s) will be evaluated in later clinical studies within that development program. Based on results of our studies and regulatory feedback from our clinical studies, we may also introduce other product candidates into our ongoing development programs. Furthermore, a specific product candidate may be used for one specific development program or across different development programs. Multiple product candidates may embody a single proprietary therapeutic engine but are differentiated based on one or more characteristics, including the videogame-like user interface and gameplay difficulty and progression, and each product candidate includes unique characteristics optimized for a particular indication and population.

 

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Our current development programs are summarized in the chart below:

 

LOGO

 

 

LOGO           

    

(1)

Timeframes are estimates and are subject to change - see Disclaimer and Risk Factors.

(2)

AKL-T01 is marketed as EndeavorRx in the U.S. for children ages 8-12 old with primarily inattentive or combined-type ADHD, who have a demonstrated attention issue.

(3)

Shionogi is responsible for the clinical development and commercialization of SDT-001 (a version of AKL-T01 localized for Japanese language and culture), as well as any future development and commercialization of AKL-T02, another version of our SSME engine that has been used for our ASD program, each in Japan and Taiwan.

(4)

AKL-M01 is designed to use SSME algorithms to monitor and assess certain aspects of cognition, as opposed to providing cognitive therapy.

(5)

In the event of substantial redemptions in connection with the Business Combination, and to the extent we are unable to access additional sources of funding following the completion of the Business Combination, our current estimated timeframe for initiating a pivotal study in this development program could be delayed.

 

*

Estimated timeframes in figure above correspond to applicable milestone start times, and are subject to change.

Our Strategy

We believe we are uniquely positioned to capitalize on this opportunity, with our technologies designed to directly target the brain and delivered through high-end video game interfaces. Our current business strategies include:

 

   

Establishing a commercial foothold in pediatric ADHD.

 

   

Leveraging our initial success to expand into other ADHD populations.

 

   

Applying our clinically-validated technology to other mental health and neurology conditions.

 

   

Simultaneously pursuing new technologies designed to address other cognitive impairments.

 

   

Further evolving the treatment paradigm by creating new methods of cognitive assessment.

 

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Akili was founded in 2011. Akili’s principal executive office is located at 125 Broad Street, Fifth Floor, Boston, MA 02110. Its telephone number is (617) 456-0597. Akili’s corporate website address is www.akiliinteractive.com. Akili’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.com

Proposals to be Put to the Shareholders of SCS at the Extraordinary General Meeting

The following is a summary of the proposals to be put to the extraordinary general meeting of SCS and certain transactions contemplated by the Merger Agreement. Unless waived by the parties to the Merger Agreement, each of the proposals below, except for the Auditor Ratification Proposal and the Adjournment Proposal, is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and the Adjournment Proposal are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting.

On January 25, 2022, after careful consideration, SCS’s independent directors and SCS’s full board of directors unanimously determined that the Business Combination and the PIPE Investment are fair to SCS’s shareholders and that the Business Combination Proposal is in the best interests of SCS and its shareholders and recommended that SCS’s shareholders vote “FOR” the proposals presented to SCS’s shareholders in this proxy statement/prospectus. SCS’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal —Interests of SCS’s Directors and Executive Officers in the Business Combination” in this proxy statement/prospectus for a further discussion of these considerations. SCS’s independent directors did not retain an unaffiliated representative to act solely on behalf of SCS’s unaffiliated public shareholders for purposes of negotiating the terms of the Business Combination or the PIPE Investment or preparing a report concerning the fairness of the Business Combination or the PIPE Investment.

Business Combination Proposal

As discussed in this proxy statement/prospectus, SCS is asking its shareholders to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of January 26, 2022, by and among SCS, Merger Sub and Akili, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A. The Merger Agreement provides for, among other things, following the Domestication of SCS to Delaware as described below, the merger of Merger Sub with and into Akili (the “Merger”), with Akili surviving the merger as a wholly owned subsidiary of Akili, Inc., in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. After consideration of the factors identified and discussed in the section entitled “Business Combination Proposal—SCS’s Board of Directors’ Reasons for the Business Combination,” SCS’s board of directors concluded that the Business Combination met all of the requirements disclosed in the prospectus for SCS’s initial public offering, including that the business of Akili and its subsidiaries had a fair market value equal to at least 80% of the net assets held in trust (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust). For more information about the transactions contemplated by the Merger Agreement, see “Business Combination Proposal.”

Aggregate Merger Consideration

At the effective time of the Merger, among other things, (i) each share of Akili common stock and preferred stock outstanding as of immediately prior to the effective time of the Merger will be converted into Akili, Inc.

 

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common stock as described further below, (ii) each Akili common stock warrant outstanding as of immediately prior to the effective time of the Merger (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock, and the exercise price thereof shall be adjusted, in each case, as set forth in the applicable Akili common stock warrant and described herein and (iii) each option to purchase shares of Akili common stock (an “Akili Option”) outstanding as of immediately prior to the effective time of the Merger will be converted into an option to purchase shares of Akili, Inc. common stock (an “Akili, Inc. Option”) (and the exercise price thereof shall be adjusted) as described herein, with clauses (i) through (iii) representing an aggregate of 60,000,000 shares of Akili, Inc. common stock (the “Aggregate Merger Consideration”), and a pre-transaction equity value of Akili of $600 million (the “Base Purchase Price”). The portion of the Aggregate Merger Consideration reserved for the conversion of the Akili Options and Akili warrants is calculated using the treasury stock method so that all Akili Options and Akili warrants are deemed net-settled (although Akili, Inc. Options and Akili, Inc. warrants may by their terms be cash-settled, resulting in additional dilution). The Aggregate Merger Consideration does not include certain additional issuances to Akili management and employees pursuant to the 2022 Stock Option and Incentive Plan for Akili Interactive Labs, Inc. (the “2022 Plan”) and awards granted pursuant thereto. For further details, see “Business Combination Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration.”

At the closing of the Merger, SCS will deposit into an escrow account for the benefit of the pre-Closing Akili stockholders, optionholders and warrantholders an aggregate number of shares of Akili, Inc. common stock equal to 7.5% of the fully diluted shares of Akili, Inc. common stock (including shares reserved under the equity incentive plan to be adopted by Akili, Inc. in connection with the closing but excluding the Earnout Shares and rights to Earnout Shares), determined as of immediately following the closing (collectively, the “Earnout Shares”), which Earnout Shares will be subject to release from escrow to the pre-Closing Akili stockholders, optionholders and warrantholders in three equal tranches upon the daily volume weighted average price of a share of Akili, Inc. common stock reaching $15.00/share, $20.00/share and $30.00/share, respectively, over any 20 trading days within any 30 consecutive trading day period following the closing and prior to the fifth anniversary of the closing, in each case, on the terms set forth in the Merger Agreement. See “Business Combination Proposal—The Merger Agreement—Earnout.”

Closing Conditions

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval by SCS’s shareholders of the Business Combination and related agreements and transactions, (ii) the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended, (iv) receipt of approval for listing on Nasdaq, the shares of Akili, Inc. common stock to be issued in connection with the Merger, (v) that Akili, Inc. has at least $5,000,001 of net tangible assets upon Closing, (vi) the Minimum Cash Condition, (vii) the size and composition of the Board shall be as contemplated in the Merger Agreement, (viii) the completion of the Domestication as contemplated by the Merger Agreement; and (ix) the absence of any injunctions.

Other conditions to Akili’s obligations to consummate the Merger include, among others, that as of the Closing, (i) the Domestication has been completed, and (ii) the amount of cash available in the trust account, after deducting the amount required to satisfy SCS’s obligations to its shareholders (if any) that exercise their redemption rights pursuant to the Cayman Constitutional Documents but before the payment of any transaction expenses, and the PIPE Investment Amount, in the aggregate, is at least equal to $150.0 million (the “Minimum Available Cash Amount”).

 

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If the Available Cash (the sum of the Trust Amount and PIPE Investment) is equal to or greater than the Minimum Available Cash Amount, then the Minimum Cash Condition will be deemed to have been satisfied. This condition is for the sole benefit of Akili. If such condition is not met, and such condition is not or waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Cayman Constitutional Documents, in no event will SCS redeem public shares in an amount that would cause Akili, Inc.’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.

For further details, see “Business Combination Proposal—The Merger Agreement.”

Domestication Proposal

As discussed in this proxy statement/prospectus, if the Business Combination Proposal is approved, then SCS will ask its shareholders to approve by special resolution under the Cayman Islands Companies Act the Domestication Proposal. Pursuant to the terms of the Merger Agreement, as a condition to closing the Business Combination, the board of directors of SCS has unanimously approved the Domestication Proposal. The Domestication Proposal, if approved by SCS’s shareholders, will authorize a change of SCS’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while SCS is currently governed by the Cayman Islands Companies Act, upon the Domestication, Akili, Inc. will be governed by the DGCL. There are differences between Cayman Islands corporate law and Delaware corporate law, as well as between the Cayman Constitutional Documents and the Proposed Organizational Documents. Accordingly, SCS encourages shareholders to carefully review the information in the section entitled “Comparison of Corporate Governance and Shareholder Rights.

As a result of and upon the effective time of the Domestication, (i) each of the then issued and outstanding SCS Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock and (ii) each of the then issued and outstanding SCS Class B ordinary shares will convert automatically, on a one-for-one basis, into a share of Akili, Inc. common stock.

For additional information, see “Domestication Proposal.

Organizational Documents Proposals

If the Business Combination Proposal and the Domestication Proposal are approved, SCS will ask its shareholders to approve by special resolution under the Cayman Islands Companies Act three separate proposals (collectively, the “Organizational Documents Proposals”) in connection with the replacement of the Cayman Constitutional Documents, under the Cayman Islands Companies Act, with the Proposed Organizational Documents, under the DGCL. SCS’s board has unanimously approved each of the Organizational Documents Proposals and believes such proposals are necessary to adequately address the needs of Akili, Inc. after the Business Combination. Approval of each of the Organizational Documents Proposals is a condition to the consummation of the Business Combination. A brief summary of each of the Organizational Documents Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Organizational Documents.

 

  (A)

Organizational Documents Proposal A—to authorize the change in the authorized capital stock of SCS from 500,000,000 Class A ordinary shares, par value $0.0001 per share (the “SCS Class A ordinary shares”), 50,000,000 Class B ordinary shares, par value $0.0001 per share (the “SCS Class B ordinary shares” and, together with the SCS Class A ordinary shares, the “ordinary shares”), and 5,000,000 preference shares, par value $0.0001 per share (the “SCS preference shares”), to 1,000,000,000 shares of common stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. common stock”)

 

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  and 100,000,000 shares of preferred stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. preferred stock”);

 

  (B)

Organizational Documents Proposal B—to authorize the board of directors of Akili, Inc. to issue any or all shares of Akili, Inc. preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by Akili, Inc.’s board of directors and as may be permitted by the DGCL; and

 

  (C)

Organizational Documents Proposal C—to authorize all other changes in connection with the replacement of Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex J and Annex K, respectively), including (i) changing the corporate name from “Social Capital Suvretta Holdings Corp. I” to “Akili, Inc.,” (ii) making Akili, Inc.’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for certain stockholder litigation and the United States Federal District Courts as the exclusive forum for litigation arising out of the Securities Act, (iv) being subject to the provisions of Section 203 of DGCL and (v) removing certain provisions related to SCS’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCS’s board of directors believes is necessary to adequately address the needs of Akili, Inc. after the Business Combination.

The Proposed Organizational Documents differ in certain material respects from the Cayman Constitutional Documents and SCS encourages shareholders to carefully review the information set out in the section entitled “Organizational Documents Proposals” and the full text of the Proposed Organizational Documents of Akili, Inc.

Director Appointment Proposal

Assuming the Business Combination Proposal, the Domestication Proposal, each of the Organizational Documents Proposals, the Stock Issuance Proposal, the Incentive Plan Proposal and the ESPP Proposal are approved, the holders of the SCS Class B ordinary shares are also being asked to approve by ordinary resolution the Director Appointment Proposal. Upon the consummation of the Business Combination, the board of directors of Akili, Inc. will consist of seven directors.

For additional information, see “Director Appointment Proposal.”

Stock Issuance Proposal

Assuming the Business Combination Proposal, the Domestication Proposal, each of the Organizational Documents Proposals, the Director Appointment Proposal, the Incentive Plan Proposal and the ESPP Proposal are approved, SCS’s shareholders are also being asked to approve by ordinary resolution the Stock Issuance Proposal.

For additional information, see “Stock Issuance Proposal.”

Incentive Plan Proposal

Assuming the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Appointment Proposal, the ESPP Proposal and the Stock Issuance Proposal are approved, SCS’s shareholders are also being asked to approve by ordinary resolution the 2022 Plan, in order to comply with Nasdaq Rule 5635 and the Internal Revenue Code.

 

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For additional information, see “Incentive Plan Proposal.”

ESPP Proposal

Assuming the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Appointment Proposal, the Incentive Plan Proposal and the Stock Issuance Proposal are approved, SCS’s shareholders are also being asked to approve by ordinary resolution the 2022 ESPP, in order to comply with Nasdaq Rule 5635 and the Internal Revenue Code.

For additional information, see “ESPP Proposal.”

Auditor Ratification Proposal

SCS’s shareholders are also being asked to ratify the audit committee’s selection of Marcum as our independent registered public accounting firm for the year ending December 31, 2022. The audit committee is directly responsible for appointing SCS’s independent registered public accounting firm. The audit committee is not bound by the outcome of this vote. However, if the shareholders do not ratify the selection of Marcum as our independent registered public accounting firm for the year ending December 31, 2022, our audit committee may reconsider the selection of Marcum as our independent registered public accounting firm.

If the Business Combination is completed, Akili, Inc. is expected to use a different auditing firm for the year ended December 31, 2022.

For additional information, see “Auditor Ratification Proposal.”

Business Combination Proposal Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the extraordinary general meeting to authorize SCS to consummate the Business Combination (because any of the Condition Precedent Proposals have not been approved (including as a result of the failure of any other cross-conditioned Condition Precedent Proposals to be approved)), SCS’s board of directors may submit a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies.

For additional information, see “Adjournment Proposal.”

SCS’s Board of Directors’ Reasons for the Business Combination

SCS was organized for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

In evaluating the Business Combination, the SCS board of directors consulted with SCS’s management and considered a number of factors. In particular, the SCS board of directors considered, among other things, the following factors, although not weighted or in any order of significance:

 

   

Akili’s Large Addressable Market. The SCS board of directors believes that the market for treatments of cognitive impairments is ripe for disruption due to a number of factors. Impairments in cognition are associated with many different chronic diseases and acute illnesses, impacting approximately 85 million people in the United States. The U.S. ADHD market alone is approximately $10 billion annually. Recognition of cognitive issues across ailments is at an all-time high, and the SCS board believes that digital therapeutic solutions are beginning to disrupt more traditional pharmaceutical

 

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treatments in this large and growing patient population. The SCS board of directors believes that Akili, with EndeavorRX, its first-of-its-kind, FDA-cleared and CE-marked prescription digital therapeutic for pediatric ADHD, is uniquely positioned to be a leading digital therapeutic platform that combines science and technology to address cognitive impairments in patients across various indications through a scalable, consumer-driven model.

 

   

Akili’s Strong Clinical Validation. Akili has conducted 20 clinical studies across nine disease populations and including over 2,600 patients to validate the efficacy and safety of its digital therapeutic solution for the treatment of cognitive impairments. EndeavorRX alone was involved in five clinical trials including over 600 children with ADHD, which collectively demonstrated the technology’s ability to improve objective measures and caregiver observations of attention function. Results of Akili’s clinical studies have been published in 16 leading peer-reviewed scientific journals, including The American Journal of Psychiatry, The Lancet Digital Health and Nature: Digital Medicine. The SCS board of directors believes that the strong scientific support underpinning Akili’s core platform further supports Akili’s ability to treat the growing and largely unmet medical need of cognitive impairments with its digital therapeutic solutions.

 

   

Akili’s Highly Attractive Business Model. The unique nature of Akili’s digital therapeutic treatment for cognitive impairments also presents a highly attractive business model. Because Akili’s solution enjoys legal protection available to both medicine and technology, the SCS board of directors believes that Akili will be able to optimize its platform without a generics dynamic that would apply to traditional pharmaceutical products. This also allows for patient and customer loyalty and the potential for a long tail of future growth through direct patient connectivity and engaging treatments. Akili has the potential to serve as a platform for patient-focused and scalable treatment of cognitive impairments across patient categories and ailments through compelling, high-technology entertainment experiences.

 

   

Akili’s Future Opportunities. Akili has a compelling go-to-market strategy and pipeline for the expansion of patient age categories and cognitive ailments. The SCS board of directors expects that Akili will launch EndeavorRX commercially for patients aged 8-12 years old in the second half of 2022, and age-expansion studies are currently underway to explore bringing Akili’s digital therapeutic solutions to ADHD patients in the 3-7 year old, 13-17 year old and adult categories. Beyond ADHD, Akili’s SSME technology, which underpins its EndeavorRX product, is currently in clinical trials in three other disease areas: post-operative cognitive dysfunction, chemotherapy induced cognitive impairment and cognitive dysfunction following COVID-19 infection. Further, Akili has developed a pipeline of development programs focused on additional indications, including multiple sclerosis, major depressive disorder and autism spectrum disorder, among others.

 

   

Experienced and Proven Management Team. Akili’s management team combines expertise in biotechnology, pharmaceuticals and digital entertainment. Akili’s management team is led by its co-founder and Chief Executive Officer, W. Edward (“Eddie”) Martucci, who previously helped launch PureTech Health’s digital health initiative. Akili’s management team also includes Chief Financial Officer Santosh Shanbhag, who has over 20 years of experience leading financial operations for U.S. and international organizations, including senior finance leadership roles at Vertex Pharmaceuticals, as well as other former officers and managers of Pfizer, GE Healthcare IT, LucasArts and Cubist. Under their leadership, Akili has pioneered a new digital approach to cognitive medicine. For additional information regarding Akili, Inc.’s executive officers, see the section entitled “Management of Akili, Inc. Following the Business Combination—Executive Officers.”

For a more complete description of the SCS board of directors’ reasons for approving the Business Combination, including other factors and risks considered by the SCS board of directors, see the section entitled “Business Combination Proposal—SCS’s Board of Directors’ Reasons for the Business Combination.”

 

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Related Agreements

This section describes certain additional agreements entered into or to be entered into pursuant to the Merger Agreement. For additional information, see “Business Combination Proposal—Related Agreements.”

Sponsor Support Agreement

In connection with the execution of the Merger Agreement, SCS entered into a sponsor support agreement, with the Sponsor, each officer and director of SCS and Akili, a copy of which is attached to the accompanying proxy statement/prospectus as Annex C (the “Sponsor Support Agreement”). Pursuant to the Sponsor Support Agreement, the Sponsor and each officer and director of SCS agreed, in his or her capacity as a shareholder of SCS, among other things, (i) to vote in favor of the Merger Agreement and the transactions contemplated thereby and (ii) not to redeem any SCS ordinary shares owned by them in connection with the transactions contemplated by the Merger Agreement, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.

For additional information, see “Business Combination Proposal—Related Agreements—Sponsor Support Agreement.”

Akili Holders Support Agreement

In connection with the execution of the Merger Agreement, SCS entered into a support agreement with Akili and certain stockholders of Akili, a copy of which is attached to the accompanying proxy statement/prospectus as Annex B (the “Akili Holders Support Agreement”). Pursuant to Akili Holders Support Agreement, certain Akili Stockholders agreed to, among other things, vote to adopt and approve, following the effectiveness of the Registration Statement, the Merger Agreement and all other documents and transactions contemplated thereby, in each case, subject to the terms and conditions of Akili Holders Support Agreement.

For additional information, see “Business Combination Proposal—Related Agreements—Akili Holders Support Agreement.”

Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, Akili, Inc., the Sponsor, certain affiliates of the Sponsor, certain directors and advisors of SCS and certain former stockholders of Akili (the “Akili Holders”) will enter into the Registration Rights Agreement, pursuant to which Akili, Inc. will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Akili, Inc. common stock that are held by the parties thereto from time to time. The Registration Rights Agreement amends and restates the registration rights agreement that was entered into by SCS, the Sponsor and the other parties thereto in connection with SCS’s initial public offering.

For additional information, see “Business Combination Proposal—Related Agreements—Registration Rights Agreement.”

Lock-Up Agreement

The Merger Agreement contemplates that, at the Closing, Akili, Inc., the Sponsor, certain directors of SCS, and certain Akili Holders, will enter into the Lock-Up Agreement, a copy of the form of which is attached to the accompanying proxy statement/prospectus as Annex F, pursuant to which the parties thereto agree to restrictions on transfer for up to 180 days following the Closing Date with respect to the Lock-Up Shares (as defined in

 

13


the Lock-Up Agreement), including a lock-up, subject to certain exceptions, in each case ending on the earlier of (i) the date on which the SEC declares effective the first registration statement on Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock-Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Agreement supersedes the lock-up provisions set forth in Sections 7(a) and 7(b) of (i) that certain letter agreement, dated as of June 29, 2021, by and among SCS, the Sponsor and the other signatories thereto and (ii) that certain letter agreement, dated as of September 24, 2021, by and among SCS and the signatory thereto (together, the “Insider Letters”), which provisions will be of no further force or effect as of the date of the Merger Agreement.

For additional information, see “Business Combination Proposal—Related Agreements—Lock-up Agreement” and “Description of Akili, Inc. Securities.

PIPE Subscription Agreements

In connection with the execution of the Merger Agreement, SCS entered into Subscription Agreements with the PIPE Investors, pursuant to which the PIPE Investors agreed to purchase, in the aggregate, 16,200,000 shares of Akili, Inc. common stock at $10.00 per share for an aggregate commitment amount of $162,000,000. The obligation of the parties to consummate the purchase and sale of the shares covered by the Subscription Agreement is conditioned upon, among other things, (i) there not being in force any injunction or order enjoining or prohibiting the issuance and sale of the shares covered by the Subscription Agreement, (ii) there not being any amendment to the terms of the Merger Agreement in a manner that is materially adverse to the PIPE Investor (in its capacity as such) and (iii) the accuracy of the other party’s representations and warranties, subject to materiality qualifiers. The closings under the Subscription Agreements will occur prior to or substantially concurrently with the Closing.

For additional information, see “Business Combination Proposal—Related Agreements—PIPE Subscription Agreements.”

Ownership of Akili, Inc. following Business Combination

As of the date of this proxy statement/prospectus, there are 31,890,000 ordinary shares issued and outstanding, which include the 6,250,000 founder shares held by the Sponsor (together with SCS’s independent directors), the 640,000 private placement shares held by the Sponsor and 25,000,000 public shares.

It is anticipated that, following the Business Combination, (1) SCS’s public shareholders are expected to own approximately 25% of outstanding Akili, Inc. common stock, (2) Akili stockholders are expected to own approximately 55% of outstanding Akili, Inc. common stock (including shares purchased by certain existing Akili stockholders in the PIPE Investment), (3) the Sponsor and related parties (including the Sponsor Related PIPE Investors) are expected to collectively own approximately 20% of outstanding Akili, Inc. common stock, and (4) the Third-Party PIPE Investors (excluding existing Akili stockholders purchasing shares in the PIPE Investment) are expected to own approximately 1% of outstanding Akili, Inc. common stock. These percentages

 

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(i) assume that no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) assume that Akili Options and Akili common stock warrants shall be treated as set forth in the Merger Agreement and as further described herein, (iii) assume that Akili, Inc. issues shares of Akili, Inc. common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement, which in the aggregate equals 60,000,000 shares of Akili, Inc. common stock (assuming that all Akili, Inc. Options and Akili, Inc. warrants are net-settled), (iv) assume that Akili, Inc. issues 16,200,000 shares of Akili, Inc. common stock to the PIPE Investors pursuant to the PIPE Investment and (v) exclude the Earnout Shares. If the actual facts are different from these assumptions, the percentage ownership retained by SCS’s existing shareholders in the combined company will be different.

The following table illustrates varying ownership levels in Akili, Inc. immediately following the consummation of the Business Combination based on the assumptions above.

 

     Share Ownership in Akili, Inc.  
     No Redemptions     Maximum Redemptions (1)  
     Number of Shares     Percentage of
Outstanding
    Number of
Shares
    Percentage of
Outstanding
 

Akili stockholders

     62,060,000 (2)      57.4     62,060,000 (2)      74.7

SCS public shareholders

     25,000,000       23.1           0.0

Sponsor and related party

     20,430,000       18.9     20,430,000       24.6

Third-party PIPE investors

     600,000       0.6     600,000       0.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     108,090,000       100.0     83,090,000       100.0

 

(1)

Assumes redemptions of 25,000,000 of Class A public shares of SCS in connection with the Business Combination.

(2)

Includes 56,432,056 shares expected to be issued to existing Akili common and preferred shareholders and 5,627,944 shares of Akili common stock underlying options and warrants, in each case, that are included as part of the consideration and 2,060,000 shares expected to be issued to existing Akili common and preferred shareholders in the PIPE investment. All awards issued are assumed to be issued assuming treasury stock method.

Voting Power; Record Date

SCS shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned ordinary shares at the close of business on July 14, 2022, which is the “record date” for the extraordinary general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. As of the close of business on the record date, there were 31,890,000 ordinary shares issued and outstanding, of which 25,000,000 were issued and outstanding public shares.

Quorum and Vote of SCS Shareholders

A quorum of SCS shareholders is necessary to hold a valid meeting. A quorum will be present at the SCS extraordinary general meeting if a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting. As of the record date for the extraordinary general meeting, 15,945,001 ordinary shares would be required to achieve a quorum.

 

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The Sponsor and each director of SCS have agreed to vote all of its ordinary shares in favor of the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding ordinary shares. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

The proposals presented at the extraordinary general meeting require the following votes:

 

   

Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Act, being a resolution passed by not less than a two-thirds majority of the holders of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Organizational Documents Proposals: The separate approval of each of the Organizational Documents Proposals requires a special resolution under the Cayman Islands Companies Act, being a resolution passed by the holders of not less than a two-thirds majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Director Appointment Proposal: The approval of the Director Appointment Proposal requires an ordinary resolution of the holders of the SCS Class B ordinary shares under SCS’s amended and restated memorandum and articles of association, being a resolution passed by the holders of not less than a simple majority of the SCS Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Stock Issuance Proposal: The approval of the Stock Issuance Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

ESPP Proposal: The approval of the ESPP Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Auditor Ratification Proposal: The approval of the Auditor Ratification Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution, being a resolution passed by the holders of not less than a simple majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

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Redemption Rights

Pursuant to the Cayman Constitutional Documents, a public shareholder may request of SCS that Akili, Inc. redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

   

hold public shares;

 

   

(i) submit a written request to Continental Stock Transfer & Trust Company (“Continental”), SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash; (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and

 

   

deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through DTC.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m., Eastern Time, on August 16, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal.

If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, SCS’s transfer agent, Akili, Inc. will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of March 31, 2022, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Akili, Inc. common stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of SCS—Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Holders of public shares who elect not to have their shares redeemed may experience dilution by electing not to redeem their shares. Potential sources of such dilution include (i) the conversion of the founder shares into Akili, Inc. common stock, to the extent that the amounts contributed by the Sponsor to SCS in exchange for the founder shares on a per share basis is less than $10.00 per share, (ii) the payment of certain expenses by SCS in connection with the Closing of the Business Combination, including deferred underwriting expenses and other transaction expenses, to the extent that such amounts are paid with funds that would otherwise have been released from the Trust Account to Akili, Inc. at the Closing, (iii) awards granted pursuant to the 2022 Plan (as defined below), (iv) shares purchased pursuant to the 2022 ESPP (as defined below) and (v) redemptions by other public shareholders, to the extent that the potential sources of dilution identified in the preceding clauses (i) through (iv) would be borne by fewer public shares after the Closing. Holders of public shares who elect not to have their shares redeemed will also experience immediate dilution as a consequence of the issuance of Akili, Inc. common stock as consideration in the Business Combination and the PIPE Investment.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more

 

17


than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash. Such public shareholder, alone or acting in concert or as a group, will not be restricted in their ability to vote for or against the Business Combination with respect to all of its shares.

The Sponsor and each director of SCS have agreed to vote in favor of the Business Combination, regardless of how our public shareholders vote. Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor and each director of SCS have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement. As of the date of this proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding ordinary shares. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

Appraisal Rights

SCS shareholders do not have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. SCS has engaged Morrow Sodali LLC to assist in the solicitation of proxies.

If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the extraordinary general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting of SCS—Revoking Your Proxy.”

Executive Officers in the Business Combination

When you consider the recommendation of SCS’s board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor and SCS’s directors and executive officers have interests in such proposal that are different from, or in addition to, those of SCS shareholders generally. These interests include, among other things, the interests listed below:

 

   

Prior to SCS’s initial public offering, the Sponsor purchased 5,750,000 SCS Class B ordinary shares for an aggregate purchase price of $25,000. In June 2021, the Sponsor transferred 30,000 SCS Class B ordinary shares to Vladimir Coric (an independent director of SCS, and with the Sponsor, “SCS’s initial shareholders”). On June 29, 2021, SCS effected a share capitalization with respect to the SCS Class B ordinary shares of 575,000 shares thereof, resulting in SCS’s initial shareholders holding an aggregate of 6,325,000 founder shares (up to 825,000 of which were subject to forfeiture depending on the extent to which the underwriter’s over-allotment option in the initial public offering was exercised), resulting in an effective purchase price per SCS Class B ordinary share of approximately $0.004. As a result of the underwriters’ election to partially exercise their over-allotment option, a total of 750,000 SCS Class B ordinary shares are no longer subject to forfeiture and 75,000 SCS Class B ordinary shares were forfeited, resulting in an aggregate of 6,250,000 SCS Class B ordinary shares outstanding. If SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the

 

18


 

approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders and the 640,000 private placement shares held by the Sponsor would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. The 640,000 private placement shares were purchased by the Sponsor simultaneously with the consummation of SCS’s initial public offering for an aggregate purchase price of $6,400,000. The Sponsor and each officer and director of SCS did not receive any compensation in exchange for their agreement to waive these redemption rights. Certain of SCS’s directors and executive officers, including Chamath Palihapitiya and Kishen Mehta, also have an economic interest in the 640,000 private placement shares and the 6,220,000 SCS Class B ordinary shares owned by the Sponsor. The 6,220,000 shares of Akili, Inc. common stock into which the 6,220,000 SCS Class B ordinary shares held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $61,640,200 based upon the closing price of $9.91 per public share on Nasdaq on July 19, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. The 640,000 shares of Akili, Inc. common stock into which the 640,000 private placement shares held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradeable, would have had an aggregate market value of $6,342,400 based upon the closing price of $9.91 per public share on Nasdaq on July 19, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

As described above, in June 2021, the Sponsor transferred 30,000 SCS Class B ordinary shares to Vladimir Coric, which shares would be worthless if SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date). The 30,000 shares of Akili, Inc. common stock into which the 30,000 SCS Class B ordinary shares held by Mr. Coric will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $297,300 based upon the closing price of $9.91 per public share on Nasdaq on July 19, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

On September 24, 2021, SCS entered into a director restricted stock unit award agreement (the “Director RSU Award”), with Mr. Sundaram, providing for the grant of 30,000 restricted stock units to Mr. Sundaram, which grant is contingent on both the consummation of an initial business combination with SCS and a shareholder approved equity plan. The Director RSU Award will vest at the Closing but will not settle in shares of Akili, Inc. common stock until a date, selected by Akili, Inc., that occurs between the Closing and March 15 of the year following the Closing. The 30,000 shares of Akili, Inc. common stock underlying the Director RSU, if unrestricted and freely tradable, would have had an aggregate market value of $297,300 based upon the closing price of $9.91 per public share on Nasdaq on July 19, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

The Sponsor (including its representatives and affiliates) and SCS’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to SCS. Additionally, all of our officers and certain of our directors have fiduciary and contractual duties to either Social Capital or Suvretta and, as applicable, their underlying clients, and to certain companies in

 

19


 

which either of them has invested or which either of them has sponsored. For example, Mr. Palihapitiya and Mr. Mehta, each of whom serves as an officer and director of SCS and may be considered an affiliate of the Sponsor, are also affiliated with DNAB, DNAC and DNAD, all of which are blank check companies incorporated as Cayman Islands exempted companies for the purpose of effecting their respective initial business combinations. Mr. Palihapitiya is the Chief Executive Officer and Chairman of the Board of Directors of DNAB, DNAC and DNAD, Mr. Mehta is the President and a director of DNAB, DNAC and DNAD, and each of our other officers is also an officer of DNAB, DNAC and DNAD, and each owes fiduciary duties under Cayman Islands law to DNAB, DNAC and DNAD. Mr. Palihapitiya is also the Chief Executive Officer and Chairman of the Board of Directors of IPOD and IPOF and owes fiduciary duties under Cayman Islands law to IPOD and IPOF. The Sponsor and SCS’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to SCS completing its initial business combination. Moreover, certain of SCS’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. SCS’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to SCS, and the other entities to which they owe certain fiduciary or contractual duties, including DNAB, DNAC and DNAD, IPOD and IPOF, as applicable. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in SCS’s favor and such potential business opportunities may be presented to other entities prior to their presentation to SCS, subject to applicable fiduciary duties under Cayman Islands law. SCS’s Cayman Constitutional Documents provide that SCS renounces its interest in any corporate opportunity offered to any director or officer of SCS unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of SCS and it is an opportunity that SCS is able to complete on a reasonable basis.

 

   

SCS’s existing directors and officers will be eligible for continued indemnification and continued coverage under SCS’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement. The Sponsor, for which Mr. Palihapitiya and Mr. Mehta serve as managers and officers and in which they have an indirect ownership interest, will also be entitled to certain indemnification from SCS after the Merger pursuant to the Merger Agreement.

 

   

The Sponsor Related PIPE Investors have subscribed for $135,400,000 of the PIPE Investment, for which they will receive up to 13,540,000 shares of Akili, Inc. common stock. The 13,540,000 shares of Akili, Inc. common stock which the Sponsor Related PIPE Investors have subscribed for in the PIPE Investment, if unrestricted and freely tradable, would have had an aggregate market value of $134,181,400 based upon the closing price of $9.91 per public share on Nasdaq on July 19, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. See “Certain Relationships and Related Person Transactions—SCS—Subscription Agreements.”

 

   

In the event that SCS fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, SCS will be required to provide for payment of claims of creditors that were not waived that may be brought against SCS within the ten years following such redemption. In order to protect the amounts held in SCS’s trust account, the Sponsor has agreed that it will be liable to SCS if and to the extent any claims by a third party (other than SCS’s independent auditors) for services rendered or products sold to SCS, or a prospective target business with which SCS has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust

 

20


 

account and except as to any claims under the indemnity of the underwriters of SCS’s initial public offering against certain liabilities, including liabilities under the Securities Act.

 

   

SCS’s officers and directors, and their affiliates are entitled to reimbursement of all out-of-pocket expenses incurred by them in connection with certain activities on SCS’s behalf, such as identifying and investigating possible business targets and business combinations. SCS expects to incur significant transaction expenses and to the extent that SCS’s officers and directors or their affiliates are advancing any of these expenses on behalf of SCS, they are entitled to reimbursement of such payments. There is no maximum amount of reimbursable expenses that may be incurred by such persons. However, if SCS fails to consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), they will not have any claim against the trust account for reimbursement. Accordingly, SCS may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by such date. As of March 31, 2022, our officers and directors and their affiliates had $43,686 in unreimbursed eligible expenses.

 

   

Pursuant to the Registration Rights Agreement, the Sponsor and the Sponsor Related PIPE Investors will have customary registration rights, including shelf, demand and piggy-back rights, subject to cooperation and cut-back provisions, with respect to the shares of Akili, Inc. common stock held by such parties following the consummation of the Business Combination.

 

   

On April 20, 2022, SCS issued the SCS Promissory Note (as defined below) to the Sponsor, pursuant to which SCS may borrow up to an aggregate principal amount of $1,500,000, which is payable upon the earlier of July 2, 2023 and the effective date of a business combination, and as of July 14, 2022, $250,000 was outstanding under the SCS Promissory Note.

The following table identifies the material terms of any agreement, arrangement or understanding regarding restrictions on whether and when the Sponsor and its affiliates may sell securities of SCS, including the dates on which the restrictions may expire; the natural persons and entities subject to such restrictions; any exceptions to such restrictions; and any terms that would result in an earlier expiration of such restrictions:

 

Agreement,
Arrangement or
Understanding

 

Restrictions

 

Expiration Date

 

Natural Persons
and Entities Subject

 

Exceptions

Letter Agreement, dated as of June 29, 2021, by and among SCS, the Sponsor, Chamath Palihapitiya, Kishen Mehta, James Ryans, Shoney Katz and Vladimir Coric   Agreement by the Sponsor and SCS’s initial directors and officers not to transfer, assign or sell any founder shares or private placement shares.   For the founder shares, the earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any  

Sponsor
Chamath Palihapitiya
Kishen Mehta

James Ryans

Shoney Katz

Vladimir Coric

  Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares.

 

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Agreement,
Arrangement or
Understanding

 

Restrictions

 

Expiration Date

 

Natural Persons
and Entities Subject

 

Exceptions

   

30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property.

 

For the private placement shares, 30 days after the completion of SCS’s initial business combination.

   
        This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement.        
Letter Agreement, dated as of September 24, 2021, by and between SCS and Senthil Sundaram   Agreement by Mr. Sundaram not to transfer, assign or sell any founder shares or shares underlying restricted stock awards granted to Mr. Sundaram.   The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation,   Senthil Sundaram   Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares or restricted stock awards.

 

22


Agreement,
Arrangement or
Understanding

 

Restrictions

 

Expiration Date

 

Natural Persons
and Entities Subject

 

Exceptions

    merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property.    
        This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement.        
Letter Agreement, dated as of July 6, 2022, by and between SCS and Michael Taylor   Agreement by Mr. Taylor not to transfer, assign or sell any founder shares or any shares underlying any restricted stock awards that may be granted to Mr. Taylor.  

The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property.

 

This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement, in the event Mr. Taylor joins the Lock-Up Agreement at the Closing.

  Michael Taylor   Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any restricted stock awards, to the extent applicable.

 

23


Agreement,
Arrangement or
Understanding

 

Restrictions

 

Expiration Date

 

Natural Persons
and Entities Subject

 

Exceptions

Lock-Up Agreement (to be entered into at Closing)

  Agreement by the Sponsor, Vladimir Coric and Senthil Sundaram (among other parties) not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) make a public announcement of the intention to effect (i) or (ii) with respect to Akili, Inc. common stock (other than PIPE Shares or SCS ordinary shares acquired in the public market), subject to certain exceptions.   The earlier of (i) the date on which the SEC declares effective the first registration statement on Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock-Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for  

Sponsor

Vladimir Coric

Senthil Sundaram

Certain Equityholders of Akili

 

Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any Akili, Inc. common stock.

 

The lock-up provisions may be waived, amended or modified upon (i) the approval of a majority of the total number of directors serving on the Akili, Inc. Board and (ii) the written consent of the holders of a majority of the total shares subject to the Lock-Up Agreement, subject to certain restrictions.

 

24


Agreement,
Arrangement or
Understanding

 

Restrictions

 

Expiration Date

 

Natural Persons
and Entities Subject

 

Exceptions

   

any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Period for any Lock-Up Shares for which the Lock-Up Period has not ended on the date that is 180 days after the Closing Date shall end on such 180th day after the Closing Date.

 

   
Amended and Restated Registration Rights Agreement (to be entered into at Closing)   During the 90-day period beginning on the date of the pricing of an underwritten offering of any equity securities of Akili, Inc., agreement not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) public announcement of intention to effect (i) or (ii) with respect to Akili, Inc. ordinary shares or other equity securities of Akili, Inc., subject to certain exceptions.   N/A   Each participating holder in such underwritten offering of any equity securities of Akili, Inc. and each beneficial holder (together with its affiliates) of greater than five percent of the outstanding Akili, Inc. common stock.   If expressly permitted by a lock-up agreement or in the event the managing underwriters otherwise agree by written consent.

The Sponsor and each director and officer of SCS, in his or capacity as a shareholder of SCS, have agreed to vote in favor of the Business Combination, regardless of how our public shareholders vote. Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor and all of SCS’s directors have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement. As of the date of this proxy statement/prospectus, the Sponsor owns 21.51% and Mr. Coric owns 0.09%

 

25


of the issued and outstanding ordinary shares of SCS. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

At any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material nonpublic information), the Sponsor, the existing stockholders of Akili or our or their respective directors, officers, advisors or respective affiliates may (i) purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or elect to redeem, or indicate an intention to redeem, public shares, (ii) execute agreements to purchase such shares from such investors in the future, or (ii) enter into transactions with such investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of the Condition Precedent Proposals or not redeem their public shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of SCS’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, the existing stockholders of Akili or our or their respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to (x) increase the likelihood of approving the Condition Precedent Proposals and (y) limit the number of public shares electing to redeem, including to satisfy any minimum cash closing condition.

Entering into any such arrangements may have a depressive effect on our ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he or she owns, either at or prior to the Business Combination). If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. SCS will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the extraordinary general meeting or the redemption levels. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

In light of the foregoing, the Sponsor and SCS’s directors and officers will receive material benefits from the completion of a business combination and may be incentivized to complete the Business Combination with Akili rather than potentially liquidate even if (i) Akili is a less favorable target company or (ii) the terms of the Business Combination are less favorable to SCS shareholders. As a result, the Sponsor and SCS’s directors and officers may have interests in the completion of the Business Combination that are materially different from, and may conflict with, the interests of other shareholders. Furthermore, the Sponsor and SCS’s directors who hold founder shares may receive a positive rate of return on their investment(s) in such founder shares, even if SCS’s public shareholders and PIPE Investors (including the Sponsor Related PIPE Investors, who have subscribed for $135,400,000 of the PIPE Investment, for which they will receive 13,540,000 shares of Akili, Inc. common stock) experience a negative return on such investment after consummation of the Business Combination. The existence of financial and personal interests of one or more of SCS’s directors may therefore result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals.

 

26


Restrictions on Sales of SCS Securities

The following table identifies the material terms of any agreement, arrangement or understanding regarding restrictions on whether and when the Sponsor and its affiliates may sell securities of SCS, including the dates on which the restrictions may expire; the natural persons and entities subject to such restrictions; any exceptions to such restrictions; and any terms that would result in an earlier expiration of such restrictions:

 

Agreement,

Arrangement or
Understanding

  

Restrictions

  

Expiration Date

  

Natural Persons
and Entities Subject

  

Exceptions

Letter Agreement, dated as of June 29, 2021, by and among SCS, the Sponsor, Chamath Palihapitiya, Kishen Mehta, James Ryans, Shoney Katz and Vladimir Coric    Agreement by the Sponsor and SCS’s initial directors and officers not to transfer, assign or sell any founder shares or private placement shares.    For the founder shares, the earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash,    Sponsor Chamath Palihapitiya Kishen Mehta James Ryans Shoney Katz Vladimir Coric    Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares.

 

27


Agreement,

Arrangement or
Understanding

  

Restrictions

  

Expiration Date

  

Natural Persons
and Entities Subject

  

Exceptions

     

securities or other property.

 

For the private placement shares, 30 days after the completion of SCS’s initial business combination.

     
          This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement.          
Letter Agreement, dated as of September 24, 2021, by and between SCS and Senthil Sundaram    Agreement by Mr. Sundaram not to transfer, assign or sell any founder shares or shares underlying restricted stock awards granted to Mr. Sundaram.    The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar    Senthil Sundaram    Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares or restricted stock awards.

 

28


Agreement,

Arrangement or
Understanding

  

Restrictions

  

Expiration Date

  

Natural Persons
and Entities Subject

  

Exceptions

      transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property.      
          This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement.          
Letter Agreement, dated as of July 6, 2022, by and between SCS and Michael Taylor    Agreement by Mr. Taylor not to transfer, assign or sell any founder shares or any shares underlying any restricted stock awards that may be granted to Mr. Taylor.    The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange,    Michael Taylor    Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any restricted stock awards, to the extent applicable.

 

29


Agreement,

Arrangement or
Understanding

  

Restrictions

  

Expiration Date

  

Natural Persons
and Entities Subject

  

Exceptions

     

reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property.

 

This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement, in the event Mr. Taylor joins the Lock-Up Agreement at the Closing.

     
Lock-Up Agreement (to be entered into at Closing)    Agreement by the Sponsor, Vladimir Coric and Senthil Sundaram (among other parties) not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) make a public announcement of the intention to effect (i) or (ii) with respect to Akili, Inc. common stock (other than PIPE Shares or SCS ordinary shares acquired in the public market), subject to certain exceptions.    The earlier of (i) the date on which the SEC declares effective the first registration statement on Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock- Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common   

Sponsor Vladimir Coric Senthil Sundaram

Certain Equityholders of Akili

  

Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any Akili, Inc. common stock.

 

The lock-up provisions may be waived, amended or modified upon (i) the approval of a majority of the total number of directors serving on the Akili, Inc. Board and (ii) the written consent of the holders of a majority of the total shares subject to the Lock-Up Agreement, subject to certain restrictions.

 

30


Agreement,

Arrangement or
Understanding

  

Restrictions

  

Expiration Date

  

Natural Persons
and Entities Subject

  

Exceptions

      stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Period for any Lock-Up Shares for which the Lock- Up Period has not ended on the date that is 180 days after the Closing Date shall end on such 180th day after the Closing Date.      
Amended and Restated Registration Rights Agreement (to be entered into at Closing)    During the 90-day period beginning on the date of the pricing of an underwritten offering of any equity securities of Akili, Inc., agreement not to (i) transfer,    N/A    Each participating holder in such underwritten offering of any equity securities of Akili, Inc. and each beneficial holder (together with its affiliates) of    If expressly permitted by a lock-up agreement or in the event the managing underwriters otherwise agree by written consent.

 

31


Agreement,

Arrangement or
Understanding

  

Restrictions

  

Expiration Date

  

Natural Persons
and Entities Subject

  

Exceptions

     assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) public announcement of intention to effect (i) or (ii) with respect to Akili, Inc. ordinary shares or other equity securities of Akili, Inc., subject to certain exceptions.         greater than five percent of the outstanding Akili, Inc. common stock.     

Interests of Akili’s Directors and Officers in the Business Combination

When you consider the recommendation of SCS’s board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that Akili’s existing directors and executive officers may have interests in such proposal that are different from, or in addition to, those of SCS shareholders generally. These interests include, among other things, the interests listed below:

 

   

Treatment of Akili Equity Awards in the Business Combination. Under the Merger Agreement, all outstanding stock options granted by Akili prior to the Closing will be converted to options with respect to shares of Akili, Inc. common stock that will be subject to the same terms and conditions as were in effect prior to the Closing. See the section entitled “Business Combination Proposal—The Merger Agreement—Consideration—Treatment of Akili Options” for more information.

 

32


   

The amounts listed in the table below represent the number of stock options to be held by each existing executive officer and director of Akili immediately following consummation of the Business Combination. Stock options are stated as total outstanding stock options with the estimated intrinsic value of each executive officer’s and director’s stock options calculated as to the total outstanding stock options for each individual award multiplied by the difference between (i) the $10 fair value of Akili common stock under the Merger Agreement and (ii) the stock option exercise price.

 

Name (1)    Dollar Value ($)      Number of
Shares
 

W. Edward Martucci

     12,228,478        1,877,158  

Santosh Shanbhag

     2,982,837        495,346  

Jacqueline Studer

     2,316,421        387,512  

Matthew Franklin

     —          —    

Anil S. Jina

     2,316,421        399,622  

Jonathan David

     —          —    

Robert Perez

     7,310,810        1,124,390  

Bharatt Chowrira

     —          —    

Kenneth Ehlert

     —          80,732  

James Gates

     —          —    

Adam Gazzaley

     585,304        86,498  

Christine Lemke

     498,921        80,732  

John Spinale

     265,561        33,446  

 

(1)

This table does not include the common shares disclosed as held prior to the consummation of the Business Combination in the beneficial ownership table, which securities will receive no extra or special benefit not shared on a pro rata basis by all other holders of the same class of securities. For further information, see the section entitled “Beneficial Ownership of Securities” below.

 

   

Director Compensation. Following the Business Combination, the Akili, Inc. board of directors intends to adopt a non-employee director compensation policy (“Director Compensation Policy”). We intend that the Director Compensation Policy will provide for compensation in the form of cash, equity awards or a combination of both. For more information on the Director Compensation Policy we intend to adopt, see the section entitled “—Director Compensation” below.

 

   

2022 Plan. Effective and contingent upon the completion of the Business Combination and in connection with the implementation of the 2022 Plan, we intend to grant awards to certain executive officers representing 6% of our outstanding capital stock immediately following the Business Combination on an as converted basis (excluding any shares reserved for issuance under equity-based plans of Akili, including the 2022 Plan and the 2022 ESPP), 4% of which will be granted to our Chief Executive Officer and 2% of which will be granted to the other members of our executive team. All other future equity awards to be granted to Akili’s executive officers, directors, employees and consultants under the 2022 Plan are discretionary and cannot be determined at this time.

For more information relating to our 2022 Plan, see “Incentive Plan Proposal” discussed below.

Recommendation to Shareholders of SCS

SCS’s board of directors believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of SCS’s shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR”

 

33


each of the separate Organizational Documents Proposals, “FOR” the Director Appointment Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Auditor Ratification Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of SCS’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of SCS and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCS’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of SCS’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the Business Combination. These figures assume that no public shareholders exercise their redemption rights in connection with the Business Combination. If the actual facts are different from these assumptions, the below figures will be different.

 

Sources

         

Uses

      
($ in millions)                   

Cash and investments held in trust(1)

   $ 250      Cash on balance sheet    $ 380  

PIPE Investment(2)

   $ 162      Transaction fees and expenses(3)    $ 32  

Total Sources

   $ 412      Total Uses    $ 412  

 

(1)

Calculated as of March 31, 2022

(2)

Shares issued in the PIPE Investment are at a deemed value of $10.00 per share.

(3)

Includes deferred underwriting commission of $7.7 million and estimated transaction expenses

U.S. Federal Income Tax Considerations

For a discussion summarizing the U.S. federal income tax considerations of the Domestication and exercise of redemption rights, see “U.S. Federal Income Tax Considerations.”

Expected Accounting Treatment

The Domestication

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of Akili as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of Akili immediately following the Domestication will be the same as those of SCS immediately prior to the Domestication.

The Business Combination

We expect the Business Combination to be accounted for as a reverse recapitalization in accordance with GAAP. Under the guidance in ASC 805, SCS is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is expected to be reflected as the equivalent of Akili issuing stock for the net assets of SCS, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Akili.

 

34


Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the two filings of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. On February 9, 2022, SCS and Akili filed the required forms under the HSR Act with respect to the Business Combination with the Antitrust Division and the FTC. The waiting period expired at 11:59 p.m. Eastern Time on March 11, 2022.

At any time before or after consummation of the Business Combination, notwithstanding termination of the respective waiting periods under the HSR Act, the Department of Justice or the FTC, or any state or foreign governmental authority could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of assets, subjecting the completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. SCS cannot assure you that the Antitrust Division, the FTC, any state attorney general or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, SCS cannot assure you as to its result.

Neither SCS nor Akili is aware of any material regulatory approvals or actions required by regulatory authorities for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions is required, such approvals or actions will be sought. There can be no assurance, however, that any approvals or actions, including any such additional approvals or actions will be obtained.

Emerging Growth Company

SCS is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in SCS’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. SCS has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, SCS, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of SCS’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of SCS’s initial public offering, (b) in which we have total annual gross

 

35


revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700.0 million as of the end of the most recently completed fiscal year’s second fiscal quarter; and (ii) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” will have the meaning associated with it in the JOBS Act.

Risk Factors

Unless the context otherwise requires, all references in this subsection to we, us or our refer to the business of Akili.

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 47. Some of these risks that relate to Akili include, but are not limited to:

Risks relating to Akili’s business and industry, including that:

 

   

Akili has a history of significant losses, anticipates losses increasing expenses in the future, and may not be able to achieve or maintain profitability.

 

   

The failure of Akili’s prescription digital therapeutics to achieve and maintain market acceptance and adoption by patients and physicians could have a material adverse effect on Akili’s business, prospects, results of operation and financial condition.

 

   

The market for prescription digital therapeutics is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change, which makes it difficult to forecast demand for Akili’s products. As a result, all prospective financial information included herein are subject to change.

 

   

Akili’s development programs represent novel and innovative potential therapeutic areas, and negative perception of any product or product candidate that Akili develops could adversely affect its ability to conduct its business, obtain marketing authorizations or identify alternate regulatory pathways to market for such product candidate.

 

   

Akili faces competition, and new products may emerge that provide different or better alternatives for treatment of the conditions that EndeavorRx or Akili’s future products, if granted marketing authorization, are authorized to treat.

Risks relating to Akili’s products, including that:

 

   

If Akili fails to achieve and maintain clearance, de novo classification or approval to market its product candidates, including AKL-T01 for expanded indications, or if Akili is delayed in obtaining such marketing authorizations, its business, prospects, results of operations and financial condition could be materially and adversely affected.

 

   

Clinical trials of any of Akili’s products or product candidates may fail to produce results necessary to support marketing authorization.

 

   

EndeavorRx is made available via the Apple App Store® and on Google PlayTM, and supported by third-party infrastructure. If Akili’s ability to access these markets or access necessary third-party infrastructure was stopped or otherwise restricted or limited, it could have a material adverse effect on Akili’s business, prospects, results of operations and financial condition.

 

36


   

If Akili is not able to develop and release new products, or successful enhancements, new features and modifications to EndeavorRx or any future products, Akili’s business, prospects, results of operations and financial condition could be materially and adversely affected.

 

   

Akili relies on a single third party digital pharmacy for the fulfillment of prescriptions. This reliance on a single third party increases the risk that Akili could have disruption in the fulfillment of prescriptions, which could have a material and adverse effect on Akili’s reputation, business, results of operations and financial condition.

Risks relating to Akili’s regulatory compliance and legal matters, including that:

 

   

Akili operates in a highly regulated industry and are subject to a wide range of federal, state, and local laws, rules, and regulations, including FDA regulatory requirements and laws pertaining to fraud and abuse in healthcare, that affect nearly all aspects of Akili’s operations. Failure to comply with these laws, rules, and regulations, or to obtain and maintain required licenses, could subject Akili to enforcement actions, including substantial civil and criminal penalties, and might require Akili to recall or withdraw a product from the market or cease operations.

 

   

Akili’s commercialization efforts to date have focused almost exclusively on the U.S. Akili’s ability to enter other foreign markets will depend, among other things, on its ability to navigate various regulatory regimes with which Akili does not have experience, which could delay or prevent the growth of its operations outside of the U.S.

 

   

The insurance coverage and reimbursement status of products that recently obtained marketing authorization is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for EndeavorRx or any other of Akili’s product candidates, if granted marketing authorization, could limit Akili’s ability to market those products and materially and adversely affect its ability to generate revenue.

 

   

Akili is subject to data privacy and security laws and regulations governing its collection, use, disclosure or storage of personally identifiable information, including protected health information and payment card data, which may impose restrictions on Akili and its operations. Any actual or perceived noncompliance with such laws and regulations may result in penalties, regulatory action, loss of business or unfavorable publicity.

Risks relating to Akili’s intellectual property and technology, including that:

 

   

If Akili is unable to adequately protect and enforce its intellectual property and proprietary technology, obtain and maintain patent protection for its technology and products where appropriate or if the scope of the patent protection obtained is not sufficiently broad, or if Akili is unable to protect the confidentiality of its trade secrets and know-how, its competitors could develop and commercialize technology and products similar or identical to Akili’s products, and its ability to successfully commercialize its technology and products may be impaired.

 

   

If Akili fails to comply with obligations in the agreements under which it collaborates with or license intellectual property rights from third parties, or otherwise experience disruptions to its business relationships with collaborators or licensors, Akili could lose rights that are important to its business.

Risks relating to Akili financial reporting and position, including that:

 

   

Akili will need substantial additional funding, and if it is unable to raise capital when needed or on terms favorable to Akili, Akili’s business, financial condition and results of operation could be materially and adversely affected.

 

37


   

The amount of Akili’s future losses is uncertain and its quarterly and annual operating results may fluctuate significantly or fall below the expectations of investors or securities analysists, each of which may cause its stock price to fluctuate or decline.

Risks Related to the Business Combination and SCS, include that:

 

   

Since the Sponsor and SCS’s directors and executive officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Akili is appropriate as our initial business combination.

 

   

SCS’s independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about SCS’s ability to continue as a going concern.

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF SCS

The selected historical statements of operations data of SCS for the period from February 25, 2021 (date of inception) to December 31, 2021 and the condensed balance sheet data as of December 31, 2021 are derived from SCS’s audited financial statements included elsewhere in this proxy statement/prospectus. The selected historical statements of operations data of SCS for the three months ended March 31, 2022 and the condensed balance sheet data as of March 31, 2022 are derived from SCS’s unaudited interim financial statements included elsewhere in this proxy statement/prospectus. In SCS’s management’s opinion, the unaudited interim financial statements include all adjustments necessary to state fairly SCS’s financial position as of March 31, 2022 and the results of operations for the three months ended March 31, 2022.

SCS’s historical results are not necessarily indicative of the results that may be expected in the future and SCS’s results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022 or any other period. The information below is only a summary and should be read in conjunction with the sections entitled “SCS’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Information About SCS” and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this proxy statement/prospectus.

SCS is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination.

 

(in thousands, except share and per share data)

    

Income Statement Data:

   For the Three
Months Ended
March 31, 2022
    For the Period
from
February 25,
2021
(Inception)
Through
December 31,
2021
 

Revenue

   $     $  

Loss from operations

     (4,201     (2,447

Interest income

     25       8  

Net loss

     (4,176     (2,439

Basic and diluted weighted average shares outstanding, Class A ordinary shares

     25,640,000       15,101,877  

Basic and diluted net loss per share, Class A ordinary shares

     (0.13     (0.12

Basic and diluted weighted average shares outstanding, Class B ordinary shares

     6,250,000       5,852,751  

Basic and diluted net loss per share, Class B ordinary shares

     (0.13     (0.12

 

Balance Sheet Data:

   As of
March 31,
2022
    As of
December 31,
2021
 

Total current assets

   $ 613     $ 932  

Trust account

     250,034       250,008  

Total assets

     250,770       251,188  

Total liabilities

     13,448       9,690  

Value of ordinary shares subject to possible redemption

     250,000       250,008  

Permanent deficit

     (12,678     (8,510

 

39


SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF AKILI

The following selected historical consolidated financial information for Akili set forth below should be read in conjunction with “Akili’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Akili’s historical consolidated financial statements and the related notes included elsewhere in this proxy statement/prospectus.

The selected historical consolidated financial information presented below for the years ended December 31, 2021 and 2020 have been derived from Akili’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

The selected historical consolidated financial information as of March 31, 2022, and for the three months ended March 31, 2022 and 2021 have been derived from Akili’s unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus. The unaudited financial data presented have been prepared on a basis consistent with Akili’s audited consolidated financial statements. In the opinion of Akili’s management, such unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments necessary for a fair presentation of the results for those periods. The results of operations for the full year and interim periods are not necessarily indicative of the results to be expected for any future period or, if applicable, the full year.

 

     Three Months Ended
March 31,
    Years Ended
December 31,
 
(dollars in thousands, except per share data)    2022     2021     2021     2020  

Statement of Operations Data:

        

Total revenue

   $ 66     $ 117     $ 538     $ 3,939  

Total cost of revenues and operating expenses

     21,791       8,863       61,257       29,375  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (21,725     (8,746     (60,719     (25,436

Other income (expense):

        

Other income

     9       1       17       124  

Interest expense

     (176     (81     (465     (333

Loss on extinguishment of debt

     —         —         (181     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss before income taxes

   $ (21,892   $ (8,826   $ (61,348   $ (25,645

Income tax expense

   $ —       $ 1     $ —       $ 1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (21,892   $ (8,827   $ (61,348   $ (25,646
  

 

 

   

 

 

   

 

 

   

 

 

 

Unrealized (loss) gain on short-term investments

   $ (6   $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (21,898   $ (8,827   $ (61,348   $ (25,646
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (21,892   $ (8,827   $ (61,348   $ (25,646

Dividends on Series D convertible preferred stock

     (2,877     —         (6,660     —    

Redemption value of Series D convertible preferred stock

     (1,438     —         (58,649     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common shareholders

   $ (26,207   $ (8,827   $ (126,657   $ (25,646
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share—basic and diluted

   $ (17.96   $ (7.62   $ (105.77   $ (22.20
  

 

 

   

 

 

   

 

 

   

 

 

 

 

40


     March 31,
2022
    December 31,  
(in thousands)   2021     2020  

Balance Sheet Data:

      

Cash and cash equivalents

   $ 39,754     $ 76,899     $ 18,528  

Working capital, net(1)

     51,572       71,692       15,230  

Total assets

     63,249       80,937       20,181  

Total liabilities

     17,251       15,175       8,197  

Redeemable convertible preferred stock

     296,191       291,876       116,886  

Total stockholders’ equity (deficit)

     (250,193     (226,114     (104,902

Statement of Cash Flows Data:

      

Net cash used in operating activities

   $ (22,225   $ (53,982   $ (24,551

Net cash used in investing activities

     (14,984     (492     (116

Net cash provided by financing activities

     64       112,845       1,998  

 

(1)

Working capital, net is defined as current assets less current liabilities.

 

41


SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following selected unaudited pro forma condensed combined financial information (the “selected pro forma data”) are provided to aid you in your analysis of the financial aspects of the Business Combination and the consummation of the PIPE Investment, which are collectively referred to as the “Transactions.” The Business Combination represents a reverse merger and will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, SCS will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Akili issuing shares for the net assets of SCS, accompanied by a recapitalization. The net assets of Akili will be stated at historical cost. No goodwill or other intangible assets will be recorded. The selected unaudited pro forma condensed combined balance sheet gives pro forma effect to the Transactions as if they had been consummated on March 31, 2022. The selected unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2022 and the year ended December 31, 2021 give effect to the Transactions as if they had occurred on January 1, 2021.

The selected pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information (the “pro forma financial statements”) appearing elsewhere in this proxy statement/prospectus and the accompanying notes to the pro forma financial statements. The pro forma financial statements are based upon, and should be read in conjunction with, the historical financial statements and related notes of Akili and SCS for the applicable periods included in this proxy statement/prospectus.

The selected pro forma data have been provided for illustrative purposes only and are not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined company.

The unaudited pro forma condensed combined financial information present two redemption scenarios as follows:

 

   

Assuming No Redemptions (Scenario 1): This presentation assumes that no SCS public shareholders exercise their right to have their SCS Class A ordinary shares redeemed for their pro rata share of the trust account and thus the full amount held in the trust account as of the Closing is available for the Business Combination; and

 

42


   

Assuming Maximum Redemptions (Scenario 2): This presentation assumes that all of public shareholders exercise redemption rights with respect to their public shares. This scenario assumes that 25,000,000 public shares are redeemed for an aggregate redemption payment of approximately $250.0 million. The Merger Agreement includes as a condition to closing the Business Combination that, at the Closing, SCS will have a minimum of $150.0 million in cash comprising (i) the cash held in the trust account after giving effect to SCS share redemptions (but prior to the payment of any (a) deferred underwriting commissions being held in the trust account and (b) transaction expenses of Akili or SCS) and (ii) the PIPE Investment Amount actually received by SCS at or prior to the Closing Date. As the proceeds from the PIPE Investment are expected to satisfy the minimum cash requirement, the total trust account balance of $250.0 million (as of March 31, 2022) is reflected as being redeemed.

 

    Combined Pro Forma  
    Three Months Ended March 31, 2022  
    Assuming No
Redemptions
    Assuming Maximum
Redemptions
 

(in thousands, except share and per share amounts)

   

Summary Unaudited Pro Forma Combined Statement of Operations Data

   

Loss from operations

  $ (26,080   $ (26,045

Net loss attributable to common stockholders, basic and diluted

  $ (30,562   $ (30,527

Net loss per common share, basic and diluted

  $ (0.30   $ (0.39

Weighted-average common shares outstanding, basic and diluted

    102,462,056       77,462,056  
    Combined Pro Forma  
    Year Ended December 31, 2021  
    Assuming No
Redemptions
    Assuming Maximum
Redemptions
 

(in thousands, except share and per share amounts)

   

Summary Unaudited Pro Forma Combined Statement of Operations Data

   

Loss from operations

  $ (74,789   $ (71,965

Net loss attributable to common stockholders, basic and diluted

  $ (140,727   $ (137,903

Net loss per common share, basic and diluted

  $ (1.37   $ (1.78

Weighted-average common shares outstanding, basic and diluted

    102,462,056       77,462,056  
    Combined Pro Forma  
    March 31, 2022  
    Assuming No
Redemptions
    Assuming Maximum
Redemptions
 

(in thousands)

   

Summary Unaudited Pro Forma Combined Balance Sheet Data

   

Total assets

  $ 438,337     $ 190,537  

Total liabilities

  $ 90,343     $ 73,890  

Total stockholders’ equity

  $ 347,994     $ 116,647  

 

43


UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA

OF SCS AND AKILI

The unaudited pro forma condensed combined financial statements present two redemption scenarios as follows:

 

   

Assuming No Redemptions (Scenario 1): This presentation assumes that no SCS public shareholders exercise their right to have their SCS Class A ordinary shares redeemed for their pro rata share of the trust account and thus the full amount held in the trust account as of the Closing is available for the Business Combination; and

 

   

Assuming Maximum Redemptions (Scenario 2): This presentation assumes that all of public shareholders exercise redemption rights with respect to their public shares. This scenario assumes that 25,000,000 public shares are redeemed for an aggregate redemption payment of approximately $250.0 million. The Merger Agreement includes as a condition to closing the Business Combination that, at the Closing, SCS will have a minimum of $150.0 million in cash comprising (i) the cash held in the trust account after giving effect to SCS share redemptions (but prior to the payment of any (a) deferred underwriting commissions being held in the trust account and (b) transaction expenses of Akili or SCS) and (ii) the PIPE Investment Amount actually received by SCS at or prior to the Closing Date. As the proceeds from the PIPE Investment are expected to satisfy the minimum cash requirement, the total trust account balance of $250.0 million (as of March 31, 2022) is reflected as being redeemed.

 

44


The unaudited pro forma combined book value per share information reflects the Transactions as if they had occurred on March 31, 2022. The weighted average shares outstanding and net loss per share information reflect the Transactions as if they had occurred on January 1, 2021. This information is only a summary and should be read together with the summary historical financial information included elsewhere in this proxy statement/prospectus, and the historical financial statements of SCS and Akili and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined per share information of SCS and Akili is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined loss per share information below does not purport to represent the income (loss) per share which would have occurred had the companies been combined during the period presented, nor loss per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of SCS and Akili would have been had the companies been combined during the period presented:

 

    Three Months Ended March 31, 2022(1)  
    Historical
SCS
    Historical
Akili
    Pro Forma
Combined
(No Redemptions)
    Pro Forma
Combined
(Maximum
Redemptions)
 

Net loss attributable to common stockholders, basic and diluted

  $ (4,176   $ (26,207   $ (30,562   $ (30,527

Stockholders’ equity (deficit)

  $ (12,678   $ (250,193   $ 347,994     $ 116,647  

Shares subject to redemption

    25,000,000       —         —         —    

Outstanding shares classified in permanent equity

    6,890,000       1,454,239       102,462,056       77,462,056  

Weighted-average common shares outstanding, basic and diluted

    n/a       1,459,517       102,462,056       77,462,056  

Weighted-average shares outstanding of Class A, basic and diluted

    25,640,000       n/a       n/a       n/a  

Weighted-average shares outstanding of Class B, basic and diluted

    6,250,000       n/a       n/a       n/a  

Book value per share(2)

  $ (1.84   $ (172.04   $ 3.40     $ 1.51  

Net loss per common share, basic and diluted(3)

    n/a     $ (17.96   $ (0.30   $ (0.39

Net loss per Class A share, basic and diluted(3)

  $ (0.13     n/a       n/a       n/a  

Net loss per Class B share, basic and diluted(3)

  $ (0.13     n/a       n/a       n/a  

 

(1)

There were no cash dividends for either SCS or Akili in the period presented.

(2)

Historical book value per share for SCS and Akili calculated as permanent equity divided by the total number of outstanding shares classified in permanent equity. Pro forma book value per share is calculated as pro forma total stockholders’ equity divided by the total shares of the Post-Combination Company immediately after the Transactions under each scenario.

(3)

Calculated based on weighted-average shares outstanding.

 

45


MARKET PRICE AND DIVIDEND INFORMATION

SCS Class A ordinary shares are currently listed on the Nasdaq Capital Market Exchange under the symbol “DNAA”. SCS filed a listing application for Akili, Inc. with Nasdaq on June 30, 2022, and believes that Akili, Inc. will satisfy all criteria for initial listing upon consummation of the Business Combination. If the application is approved, upon consummation of the Business Combination, it is expected that the common stock of Akili, Inc. will trade on Nasdaq under the symbol “AKLI”.

The most recent closing price of the SCS Class A ordinary shares as of January 25, 2022, the last trading day before announcement of the execution of the Merger Agreement, was $9.62. As of July 14, 2022, the record date for the extraordinary general meeting, the most recent closing price for the common stock was $9.90.

Holders of the public shares should obtain current market quotations for their securities. The market price of Class A ordinary shares could vary at any time before the Business Combination.

Holders

As of the date of this proxy statement/prospectus there was two holders of record of SCS Class A ordinary shares and two holders of record of SCS Class B ordinary shares. See “Beneficial Ownership of Securities.”

Dividend Policy

SCS has not paid any cash dividends on its Class A ordinary shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon the revenues and earnings, if any, capital requirements and general financial condition of Akili, Inc. subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of Akili, Inc.’s board of directors. SCS’s board of directors is not currently contemplating and does not anticipate declaring dividends nor is it currently expected that the board of directors of Akili, Inc. will declare any dividends in the foreseeable future. Further, the ability of Akili, Inc. to declare dividends may be limited by the terms of financing or other agreements entered into by Akili, Inc. or its subsidiaries from time to time.

Price Range of Akili’s Securities

Historical market price information regarding Akili is not provided because there is no public market for Akili’s securities. For information regarding Akili’s liquidity and capital resources, see “Akili’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

 

46


RISK FACTORS

Unless the context otherwise requires, all references in this subsection to “we,” “us” or “our” refer to the business of Akili Interactive Labs, Inc. (“Akili”) prior to Closing, which will be the business of Akili, Inc. and its subsidiaries following Closing. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on the business, financial condition, results of operations, cash flows and future prospects of Akili, Inc., in which event the market price of Akili, Inc. common stock could decline, and you could lose part or all of your investment.

These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, prospects, financial condition and operating results of Akili and SCS and the business, prospects, financial condition and operating results of Akili, Inc. following the completion of the Business Combination. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” before deciding how to vote your SCS Class A Common Shares. Akili and SCS may face additional risks and uncertainties that are not presently known to them, or that they currently deem immaterial, which may also impair their or Akili, Inc.’s respective business, prospects, financial condition or operating results. The following discussion should be read in conjunction with the financial statements of Akili and SCS and the notes to the financial statements included therein.

Risks Related to our Business and Industry

We are a technology company with marketing authorizations to commercialize our first digital therapeutic, EndeavorRx, in the United States and the European Economic Area as well as a pipeline of developmental assets and a limited operating history. We have a history of significant losses, anticipate increasing expenses in the future, and may not be able to achieve or maintain profitability.

We are a technology company with developmental stage assets, with a limited operating history. Like biopharmaceutical product development, digital therapeutic product development is a highly speculative undertaking and involves a substantial degree of risk. Since our inception in December 2011, we have focused substantially all of our efforts and financial resources on developing our computational platform, building our research and development capabilities, and sourcing, researching, licensing in key assets and developing our product candidates. We have generated limited revenue from product sales, and we do not expect to generate significant revenue from product sales in the foreseeable future. We have only obtained marketing authorizations to commercialize EndeavorRx in the United States and the European Economic Area, but have not received regulatory approval to market it anywhere else in the world or to market any of our other product candidates and there is no assurance that we will obtain regulatory marketing authorizations to market and sell products in the future.

We have incurred net losses and negative operating cash flows in each year since our inception. Our net losses were $21.9 million and $8.8 million for the three months ended March 31, 2022 and 2021, respectively, and $61.3 million and $25.6 million for the years ended December 31, 2021 and December 31, 2020, respectively, and we had an accumulated deficit of $250.2 million as of March 31, 2022. Our net cash used in operating activities was $22.2 million and $8.8 million for the three months ended March 31, 2022 and 2021, respectively, and $54.0 million and $24.6 million for the years ended December 31, 2021 and December 31, 2020, respectively. Substantially all of our operating losses and negative operating cash flows have resulted from costs incurred in connection with developing our technology, research and development efforts, advancing our research stage and clinical programs, building our clinical operations group, facilities costs, depreciation and amortization and general and administrative expenses. We expect our operating expenses to significantly increase as we continue to invest in our platform and research and development efforts and as we commence and continue clinical trials in our existing and future development programs. In addition, we also expect to incur significant

 

47


sales and marketing expenses as we launch and commercialize EndeavorRx and any other product candidates for which we may obtain marketing authorization. We will also incur additional costs associated with operating as a public company upon the closing of the transaction to which this proxy statement/prospectus relates. As a result, we expect to continue to incur significant and increasing operating and negative operating cash flows losses for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ deficit and working capital. Because of the numerous risks and uncertainties associated with developing new technologies, such as our prescription digital therapeutics, or PDTs, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

The failure of our prescription digital therapeutics to achieve and maintain market acceptance and adoption by patients and physicians could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our current business strategy is highly dependent on our PDTs, following marketing authorization, achieving and maintaining broad market acceptance by patients and physicians. Market acceptance and adoption of our PDTs depends on educating people with cognitive impairments, as well as self-insured employers, commercial and government payers, health plans and physicians and other government entities, as to the distinct features, therapeutic benefits, cost savings, and other advantages of our PDTs as compared to competitive products or other currently available methodologies. If we are not successful in demonstrating to existing or potential patients and prescribers the benefits of our products, or if we are not able to achieve the support of patients, healthcare providers and payers for our products, we may not achieve sales in line with our forecasts.

Achieving and maintaining market acceptance of our products could be negatively impacted by many factors, including:

 

   

the failure of EndeavorRx to achieve wide acceptance among patients, self-insured employers, commercial and government payers, health plans, physicians and other government entities, and key opinion leaders in the treatment community;

 

   

lack of additional evidence of peer-reviewed publication of clinical or real world evidence supporting the effectiveness, safety, cost-savings or other advantages of our products over competitive products or other currently available methodologies;

 

   

perceived risks associated with the use of our product or similar products or technologies generally;

 

   

our ability to maintain U.S. Food and Drug Administration, or FDA, marketing authorization and other marketing authorizations for EndeavorRx;

 

   

our ability to secure and maintain other regulatory clearance, authorization or approval for AKL-T01 for expanded indications and our other product candidates;

 

   

the introduction of competitive products and the rate of acceptance of those products as compared to our products; and

 

   

results of clinical, real world and health economics and outcomes research studies relating to chronic condition products or similar competitive products.

In addition, our products may be perceived by patients and healthcare providers to be more complicated or less effective than traditional approaches, and people may be unwilling to change their current health regimens. Moreover, we believe that healthcare providers tend to be slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party reimbursement. Accordingly, healthcare providers may not recommend our products until there is sufficient evidence to convince them to alter their current approach.

 

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There is no assurance that we will obtain or maintain adequate coverage and reimbursement for EndeavorRx or any other of our other product candidates, if granted marketing authorization, or that healthcare insurers will agree to reimburse purchases of our products in the future.

We depend upon revenue from sales of EndeavorRx, and in turn on reimbursement from third-party payers for such product. The reimbursement by third-party payers for our product and the amount that we may receive in payment for our products may be materially and adversely affected by factors we do not control, including federal or state regulatory or legislative changes, and cost-containment decisions and changes in reimbursement schedules of third-party payers. Lack of reimbursement or any reduction or elimination of these payments could have a material adverse effect on our business, prospects, results of operations and financial condition.

Additionally, the reimbursement process is complex and can involve lengthy delays. Also, third-party payers may reject, in whole or in part, requests for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, that services provided were not medically necessary, that additional supporting documentation is necessary, or for other reasons. Retroactive adjustments by third-party payers may be difficult or cost-prohibitive to appeal, and such changes could materially reduce the actual amount we receive. Delays and uncertainties in the reimbursement process may be out of our control and could have a material adverse effect on our business, prospects, results of operations and financial condition.

The market for prescription digital therapeutics is new, rapidly evolving, and increasingly competitive, the healthcare industry in the United States is undergoing significant structural change, and the demand for prescription digital therapeutics in markets outside of the United States is uncertain, which makes it difficult to forecast demand for our products. As a result, all prospective financial information included herein are subject to change.

The market for our PDTs is new and rapidly evolving, and it is uncertain whether it will achieve and sustain high levels of demand and market adoption. Our future financial performance will depend on growth in this market and on our ability to adapt to emerging demands of our customers. It is difficult to predict the future growth rate and size of our target market.

The healthcare industry in the United States is undergoing significant structural change and is rapidly evolving. We believe demand for our products has been driven in large part by rapidly growing costs in the traditional healthcare system, the movement toward patient-centricity and personalized healthcare, and advances in technology. Widespread acceptance of personalized healthcare is critical to our future growth and success. A reduction in the growth of personalized healthcare could reduce the demand for our PDTs and result in a lower revenue growth rate or decreased revenue.

If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially from our expectations, and our business could suffer.

Our development programs represent novel and innovative potential therapeutic areas, and negative perception of any product or product candidate that we develop could adversely affect our ability to conduct our business, obtain marketing authorizations or identify alternate regulatory pathways to market for such product candidate.

Our product and product candidates are considered relatively new and novel therapeutic approaches. Our success will depend upon physicians who specialize in the treatment of diseases targeted by our product candidates prescribing potential treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. Access will also depend on consumer acceptance and adoption of products that are commercialized. In addition, responses by the U.S., state or foreign governments to negative public perception or ethical concerns may result

 

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in new legislation or regulations that could limit our ability to develop or commercialize any product candidates, obtain or maintain marketing authorization, identify alternate regulatory pathways to market or otherwise achieve profitability.

For example, in the United States, EndeavorRx is the first and only video game based prescription digital therapeutic that has been granted marketing authorization by the FDA for children ages 8-12 years old with primarily inattentive or combined-type ADHD, who have a demonstrated attention issue. We have developed a therapeutic technology for the treatment of attention related cognitive impairments associated with ADHD and the potential treatment of cognitive impairments associated with ASD, MS, MDD and acute cognitive dysfunction. The FDA may lack experience in evaluating the safety and efficacy of product candidates based on such technology, which could result in a longer than expected regulatory review process, increase expected development costs and delay or prevent potential commercialization of product candidates.

Negative publicity concerning our products or the PDT market as a whole could limit market acceptance of our products. If patients and healthcare providers have a negative perception of PDTs, then a market for our products may not develop at all, or it may develop more slowly than we expect. Our success will depend to a substantial extent on the willingness of healthcare providers to prescribe our products, the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations and our ability to demonstrate the value of our products to existing and potential patients and prescribers. Similarly, negative publicity regarding patient confidentiality and privacy in the context of technology-enabled healthcare or concerns experienced by our competitors could limit market acceptance of PDTs.

Clinical trials of any of our products or product candidates may fail to produce results necessary to support marketing authorization.

We incur substantial expense for, and devote significant time to, clinical trials but cannot be certain that the trials will ever result in commercial gains. We may experience significant setbacks in clinical trials, even after earlier clinical trials showed promising results, and failure can occur at any time during the clinical development process. Any of our products may malfunction or may produce undesirable adverse effects that could cause us, institutional review boards, or IRBs, or regulatory authorities to interrupt, delay or halt clinical trials. We, IRBs, the FDA, or another regulatory authority may suspend or terminate clinical trials at any time to avoid exposing trial participants to unacceptable health risks. Our clinical trials may produce negative or inconclusive results or may demonstrate a lack of effect of our product candidates. Additionally, the FDA may disagree with our interpretation of the data from our pilot studies and clinical trials, or may find the clinical trial design, conduct or results inadequate to demonstrate safety or effectiveness, and may require us to pursue additional clinical trials, which could further delay the clearance, authorization or approval of our product candidates. If we are unable to demonstrate the safety and effectiveness of product candidates in our clinical trials, we will be unable to obtain the marketing authorizations we need to commercialize new products.

In addition to the extent that additional information regarding products being studied in clinical trials could translate to currently authorized products, such as information on new side effects, those results may impact existing authorizations, and required contraindications, warnings or precautions in product labeling.

Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside of our control. If we experience delays or difficulties in the enrollment or retention of patients in clinical trials, our ability to obtain necessary marketing authorizations for our product candidates could be delayed or prevented.

We may encounter delays or difficulties in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials on our current timelines, or at all, and even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our trials. Slow enrollment in our clinical trials may lead to delays in our development timelines and milestones.

 

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Patient enrollment in clinical trials and completion of patient follow-up depend on many factors, including the size of the patient population, the nature of the trial protocol, the ability of patients to continue to receive medical care, the eligibility criteria for the clinical trial, patient compliance, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product being studied in relation to other available therapies, including any new treatments that may obtain marketing authorization for the indications we are investigating. For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and efficacy of a product candidate, or they may be persuaded to participate in contemporaneous clinical trials of a competitor’s product candidate. In addition, patients participating in our clinical trials may drop out before completion of the trial or experience adverse medical events unrelated to our products. Disruptions caused by the COVID-19 pandemic may also increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may delay commencement or completion of the clinical trial, cause an increase in the costs of the clinical trial and delays, make our data more difficult to interpret, affect the powering of our trial, or result in the failure of the clinical trial.

Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop our product candidates, or could render further development impossible. In addition, we rely on clinical trial sites to ensure timely conduct of our clinical trials and, while we have entered into agreements governing their services, we are limited in our ability to compel their actual performance.

Interim, “topline” and preliminary data from clinical trials of our products or product candidates may change as more patient data becomes available and are subject to confirmation, audit, and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose preliminary or topline data from our pilot studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. Interim or preliminary data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment and treatment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock following the Business Combination.

Further, third parties, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the potential of the particular program, the likelihood of marketing authorization or commercialization of the particular product candidate, the commercial success of any product for which we may have already obtained authorization or clearance, and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

 

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If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain marketing, authorization, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

Due to the significant resources required for the development of our pipeline, and depending on our ability to access capital, we must prioritize certain development programs over others. We may fail to expend our limited resources on certain development programs that may have been more profitable or for which there is a greater likelihood of success.

We currently have one product, EndeavorRx, that has been granted marketing authorization in the United States and the European Economic Area and several other product candidates that are at various stages of development. We seek to maintain a process of prioritization and resource allocation to maintain an optimal balance between aggressively commercializing EndeavorRx, pursuing our other development programs and ensuring the development of additional potential product candidates.

Due to the significant resources required for the advancement of our development programs, we must decide which product candidates and indications to pursue and advance and the amount of resources to allocate to each. Our decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial products and may divert resources away from better opportunities. If we make incorrect determinations regarding the viability or market potential of any of our product candidates or misread trends in the healthcare and biotechnology industry, in particular for ADHD and other diseases or disorders resulting in cognitive impairment, our business, financial condition, and results of operations could be materially adversely affected. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other development programs that may later prove to have greater commercial potential than those we choose to pursue, or relinquish valuable rights to our product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights.

We are party to and may, in the future, enter collaborations, in-licensing arrangements, joint ventures, or strategic alliances with third parties that may not result in the development of commercially viable products or the generation of significant or any future revenues.

In the ordinary course of our business, we have and may continue to enter into collaborations, in-licensing arrangements, joint ventures, or strategic alliances to develop and/or commercialize new PDTs and/or to pursue new markets. Proposing, negotiating, and implementing collaborations, in-licensing arrangements, joint ventures, and strategic alliances may be a lengthy and complex process. These transactions may entail numerous operational and financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to manage any such transaction or develop acquired products, product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected transaction, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, and difficulty and cost in facilitating the transaction or combining the operations and personnel of any acquired business, impairment of relationships with key suppliers or customers. Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms, or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products.

 

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Additionally, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts arise with our current or future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. In addition, we have limited control over the amount and timing of resources that our current collaborators or any future collaborators devote to our collaborators’ or our future products. Disputes between us and our collaborators may result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium.

We depend on our senior management team, and the loss of one or more of our executive officers or key employees or an inability to attract and retain highly skilled employees could adversely affect our business.

Our success depends largely upon the continued services of our key executive officers. These executive officers are at-will employees and therefore they may terminate employment with us at any time with no advance notice. We rely on our leadership team in the areas of operations, clinical and software development, information security, marketing, compliance and general and administrative functions. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. The loss of one or more of the members of our senior management team, or other key employees, could harm our business. The replacement of one or more of our executive officers or other key employees would likely involve significant time and costs and may significantly delay or prevent the achievement of our business objectives.

To continue to execute our growth strategy, we also must attract and retain highly skilled personnel. Competition is intense for qualified professionals. We may not be successful in continuing to attract and retain qualified personnel. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled personnel with appropriate qualifications. The pool of qualified personnel with experience working in the healthcare market is limited overall. In addition, many of the companies with which we compete for experienced personnel have greater resources than we have.

Additionally, our success is dependent on our ability to evolve our culture, align our talent with our business needs, engage our employees and inspire our employees to be open to change and innovate. Our business would be adversely affected if we fail to adequately plan for succession of our executives and senior management, or if we fail to effectively recruit, integrate, retain and develop key talent and/or align our talent with our business needs, in light of the current rapidly changing environment.

The continuing impact of the ongoing COVID-19 pandemic could have a material adverse effect on our business, prospects, results of operations and financial condition and could cause a disruption to the development of our product candidates.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. This pandemic, which has continued to spread, and the related adverse public health developments, including orders to shelter-in-place, travel restrictions, and mandated business closures, have adversely affected workforces, organizations, governments, customers, economies, and financial markets globally, leading to an economic downturn and increased market volatility. It has also disrupted the normal operations of many businesses, including ours. This outbreak, as well as intensified measures undertaken to contain the spread of COVID-19, including emerging variants of the virus, could decrease healthcare industry spending for our products, adversely affect demand for

 

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our products, affect the ability of our sales team to travel to potential customers and the ability of our professional services teams to conduct in-person services and trainings, impact expected spending from new customers, negatively impact collections of accounts receivable, and harm our business, results of operations, and financial condition.

Further, the sales cycle for a new customer of our products could lengthen, resulting in a potentially longer delay between increasing operating expenses and the generation of corresponding revenue, if any. In addition, our clinical trials may be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment may be delayed due to prioritization of healthcare system resources toward the COVID-19 pandemic. Some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.

We cannot predict with any certainty whether and to what degree the disruption caused by the COVID-19 pandemic and reactions thereto will continue and expect to face difficulty accurately predicting our internal financial forecasts. The pandemic also presents challenges as the majority of our workforce is currently working remotely and shifting to assisting new and existing customers who are also generally working remotely. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak or its continuing impact which may materially and adversely affect our business and financial results and could cause a disruption in the development of our product candidates.

If patients or physicians are not willing to change current practices to adopt EndeavorRx, or if EndeavorRx fails to gain increased market acceptance, our ability to execute our growth strategy will be impaired, and our business, prospects, results of operations and financial condition could be materially adversely affected.

Our primary strategy to grow our revenue is to drive the adoption of EndeavorRx by physicians. Physicians may choose not to adopt our digital therapeutic products for a number of reasons, including:

 

   

lack of availability of adequate third-party payer coverage or reimbursement;

 

   

lack of experience with our products;

 

   

our inability to convince key opinion leaders to recommend our products;

 

   

perceived inadequacy of evidence supporting clinical benefits, safety or cost-effectiveness of our products;

 

   

liability risks generally associated with the use of new products; and

 

   

the training required to use new products.

We focus our sales, marketing and training efforts primarily on primary care physicians. However, physicians from other disciplines, as well as other medical professionals, such as psychiatrists and therapists, are often the initial point of contact for patients with ADHD. We believe that educating physicians in these disciplines and other medical professionals about the clinical merits, patient benefits and safety profile of our digital therapeutic products is an element of increasing product adoption.

In addition, patients may not be able to adopt or may choose not to adopt our digital therapeutic if, among other potential reasons, they are worried about potential adverse effects of use of our digital therapeutic or they are unable to obtain adequate third-party coverage or reimbursement. If additional primary care physicians or other medical professionals do not appreciate and recommend the benefits of our digital therapeutic for any reason, or patients choose not to adopt EndeavorRx, our ability to execute our growth strategy will be impaired, and our business, prospects, results of operations and financial condition could be materially adversely affected.

 

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We face competition, and new products may emerge that provide different or better alternatives for treatment of the conditions that EndeavorRx or our future products, if granted marketing authorization, are authorized to treat. Many of our current and future competitors have or will have significantly more resources than us.

Our ability to achieve our strategic objectives will depend, among other things, on our ability to develop and commercialize products for the treatment of chronic conditions that are effective and safe, offer distinct features, are easy-to-use, provide measurable and meaningful cost savings to payers, and are more appealing than available alternatives. Our competitors, as well as a number of other companies, within and outside the healthcare industry, are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs, and other therapies for the monitoring and treatment of chronic conditions. Any technological breakthroughs in monitoring, treatment or prevention could reduce the potential market for our products, which would significantly reduce our sales.

The introduction by competitors of products that are or claim to be superior to our products may create market confusion, which may make it difficult for potential customers to differentiate the benefits of our products over competitive products. In addition, the entry of new PDTs to the market which treat the same or similar chronic conditions as our products may lead some of our competitors to employ pricing strategies that could materially and adversely affect the pricing of our products. If a competitor develops a product that competes with or is perceived to be superior to our products, or if a competitor employs strategies that place downward pressure on pricing within our industry, our sales may decline significantly or may not increase in line with our forecasts, either of which would materially and adversely affect our business, financial condition and results of operations.

While our market is in an early stage of development, it is evolving rapidly and becoming increasingly competitive, and we expect it to attract increased competition. We currently face competition from a range of companies. Our competitors include both enterprise companies who are focused on or may enter the healthcare industry, including initiatives and partnerships launched by these large companies, and from private companies that offer solutions for specific chronic conditions. We compete with companies that are developing treatments for cognitive impairment associated with ADHD and other diseases and disorders resulting in cognitive impairment, including Shire (Takeda), Eli Lilly & Company, Novartis, Pfizer and Highland/Ironshore Therapeutics. While pharmaceutical and biotechnology companies have increased their focus on digital treatment in general, we are unaware of any pharmaceutical or biotechnology companies currently pursuing digital treatments for ADHD.

In the digital health space, we compete with companies that have created non-regulated products to treat cognitive impairment in ADHD and other diseases and disorders resulting in cognitive impairment such as Cogstate, C8 Sciences, Cogmed, MindMaze, and Posit Science. These include educational products that are aimed at improving attention, which are not regulated by authorities like the FDA for children with ADHD, such as ACTIVATE by C8 Sciences and BrainHQ by Posit Science, the latter of which is available via the Apple App Store and on Google PlayTM. These companies, which may offer their solutions at lower prices, are continuing to develop additional products and becoming more sophisticated and effective. Competition from wellness apps, which are not authorized by the FDA but may attract consumers for other reasons, and from other parties will result in continued pricing pressures, which are likely to lead to price declines in certain product segments, which could negatively impact our sales, profitability and market share. Additionally, if such uncleared or unapproved products are allowed to compete with our products, we will face increased competition from parties who have fewer barriers to enter our industry. This increased competition could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our ability to compete effectively depends on our ability to distinguish our company and our solution from our competitors and their products.

Some of our competitors may have, or new competitors or alliances may emerge that have, greater name and brand recognition, greater market share, a larger customer base, more widely adopted proprietary technologies,

 

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greater marketing expertise, larger sales forces, or significantly greater resources than we do and may be able to offer solutions competitive with ours at a more attractive price than we can. Further, our current or potential competitors may be acquired by third parties with greater available resources. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition. In addition, our competitors may in the future establish cooperative relationships with vendors of complementary products, technologies or services to increase the availability of their solutions in the marketplace. Our competitors could also be better positioned to serve certain segments of our market, which could create additional price pressure. In light of these factors, even if our products are more effective than those of our competitors, current or potential customers may accept competitive products in lieu of purchasing our products. If we are unable to successfully compete, our business, financial condition, and results of operations could be materially and adversely affected.

If we cannot maintain our corporate culture, we could lose the innovation, collaboration and focus on the mission that contributes to our business.

We believe that our culture has been and will continue to be a critical contributor to our success. We expect to continue to hire aggressively as we expand, and we believe our corporate culture has been crucial in our success and our ability to attract highly skilled personnel. If we do not continue to develop our corporate culture or maintain and preserve our core values as we grow and evolve both in the United States and internationally, we may be unable to foster the innovation, curiosity, creativity, focus on execution, teamwork and the facilitation of critical knowledge transfer and knowledge sharing we believe we need to support our growth. Moreover, liquidity available to our employee equity holders following the Business Combination, could lead to disparities of wealth among our employees, which could adversely impact relations among employees and our culture in general. Our anticipated headcount growth and our status as a public company may result in a change to our corporate culture, which could harm our business.

We have experienced rapid growth since inception which may not be indicative of our future growth and, if we continue to grow rapidly, we may not be able to manage our growth effectively.

Since EndeavorRx was granted marketing authorization and classified as a Class II medical device by the FDA in June 2020, we have experienced operational growth and we continue to rapidly and significantly expand our operations. For example, our full-time employee headcount has grown from 64 employees as of December 31, 2020 to 122 employees as of May 31, 2022. We expect to experience significant growth in the number of our employees and the scope of our operations, particularly as we function as a public company and in the areas of sales, marketing, distribution, product development, clinical development and regulatory affairs. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. This expansion increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results.

The growth and expansion of our business creates significant challenges for our management, operational and financial resources. In the event of continued growth of our operations or in the number of our third-party relationships, our information technology systems and our internal controls and procedures may not be adequate to support our operations. To effectively manage our growth, we must continue to improve our operational, financial and management processes and systems and to effectively expand, train and manage our employee base. As our organization continues to grow and we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the benefits of our corporate culture,

 

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including our ability to quickly develop and launch new and innovative products. This could negatively affect our business performance.

We continue to experience growth in our headcount and operations, which will continue to place significant demands on our management and our operational and financial infrastructure. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, and we must maintain the beneficial aspects of our corporate culture. To attract top talent, we have had to offer, and believe we will need to continue to offer, highly competitive compensation packages before we can validate the productivity of those employees. In addition, fluctuations in the price of our common stock may make it more difficult or costly to use equity compensation to motivate, incentivize and retain our employees. We face significant competition for talent from other healthcare, technology and high-growth companies, which include both large enterprises and privately-held companies. We may not be able to hire new employees quickly enough to meet our needs. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business, results of operations and financial condition could be materially and adversely affected.

Changes in funding or disruption at the FDA, the SEC and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new or modified products from being developed, reviewed or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and grant marketing authorization for new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at FDA have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies, may also slow the time necessary for new digital therapeutics to be reviewed and/or granted marketing authorization by necessary government agencies, which would adversely affect our business. For example, in recent years, including for 35 days beginning on December 22, 2018, the U.S. government shut down several times and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities.

If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, upon completion of the Business Combination and in our operations as a public company, future government shutdowns or delays could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, results of operations, and financial condition.

Upon the consummation of the Business Combination, we will be a public company, and be subject to the reporting requirements of the Exchange Act, the listing standards of Nasdaq and other applicable securities rules and regulations. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. For example, the Exchange Act

 

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requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations and financial condition.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of the Board, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in this proxy statement/prospectus and in filings required of a public company, our business and financial condition will become more visible, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business, results of operations, and financial condition.

Any failure to offer high-quality patient support may adversely affect our relationships with our existing and prospective patients, and in turn our business, results of operations and financial condition.

In implementing and using our products, our patients will depend on our patient support to resolve issues in a timely manner. We may be unable to respond quickly enough to accommodate short-term increases in demand for patient support. Increased patient demand for support could increase costs and adversely affect our results of operations and financial condition. Any failure to maintain high-quality patient support, or a market perception that we do not maintain high-quality patient support, could adversely affect patient satisfaction or the willingness of physicians to prescribe our products, and in turn our business, results of operations, and financial condition.

Acquisitions and strategic alliances could distract management and expose us to financial, execution and operational risks that could have a detrimental effect on our business.

We intend to continue to pursue acquisitions or licenses of technology to, among other things, expand the number of products we provide as well as the features within those products. We cannot guarantee that we will identify suitable candidates for acquisition or licensing, that the transactions will be completed on acceptable terms, or that we will be able to integrate newly acquired or licensed technology into our existing business. The acquisition and integration of another technology would divert management attention from other business activities, including our core business. This diversion, together with other difficulties we may incur in integrating newly acquired or licensed technology, could have a material adverse effect on our business, financial condition and results of operations. In addition, we may borrow money or issue capital stock to finance such transactions. Such borrowings might not be available on terms as favorable to us as our current borrowing terms and may increase our leverage, and the issuance of capital stock (or securities exchangeable therefore) could dilute the interests of our stockholders.

 

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Risks Relating to our Products

Even though we have received marketing authorizations in the U.S. and European Economic Area for EndeavorRx and may receive U.S. and foreign marketing authorizations for other product candidates in the future, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expenses.

While we have received U.S. and European Economic Area marketing authorization for EndeavorRx for an initial indication, FDA or comparable foreign regulatory authorities may grant marketing authorization for any of our other indications or product candidates, including those derived from our SSME technology. In addition, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the FDA or comparable foreign regulatory authority approved products and product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and listing, compliance with FDA labeling requirements, including unique device identification requirements, as well as continued compliance with cGMPs or similar foreign requirements and GCPs for any post-marketing clinical trials that we conduct post-approval. Any marketing authorizations that we receive for our product candidates may also be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing studies, and surveillance to monitor the safety and efficacy of the product. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

 

   

restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;

 

   

clinical trial holds;

 

   

fines, warning letters or other regulatory enforcement action;

 

   

refusal by the FDA or comparable foreign regulatory authorities to clear or approve pending submissions filed by us;

 

   

product seizure or detention, or refusal to permit the import or export of products; and

 

   

injunctions or the imposition of civil or criminal penalties.

FDA’s and comparable foreign regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay marketing authorization of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing authorization that we may have obtained, which could have a material adverse effect on our business, prospects, results of operations, financial condition and our ability to achieve or sustain profitability.

Our current product candidates are in various stages of development. Our product candidates may fail in development or suffer delays that adversely affect their commercial viability. If we fail to maintain clearance, de novo classification or approval to market our product candidates, including AKL-T01 for expanded indications, or if we are delayed in obtaining such marketing authorizations, our business, prospects, results of operations and financial condition could be materially and adversely affected.

The process of seeking FDA marketing authorization is expensive and time consuming. There can be no assurance that marketing authorization will be granted. If we are not successful in obtaining timely clearance, de novo classification or approval of our product candidates, we may never be able to generate significant revenue and may be forced to cease operations. Specifically, we plan to pursue additional regulatory marketing clearances for AKL-T01in different indications and we have additional product candidates at various stages of development

 

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for which we plan to pursue clearance or de novo classification. The FDA can delay, limit or deny marketing authorizations for many reasons, including:

 

   

We may not be able to demonstrate to the FDA’s satisfaction that our product candidates meet the applicable regulatory standards for clearance, de novo classification, or approval, as applicable;

 

   

The FDA may disagree that our clinical data supports the label and use that we are seeking; and

 

   

The FDA may disagree that the data from our preclinical or pilot studies and clinical trials is sufficient to support marketing authorization.

Obtaining marketing authorization from the FDA or any foreign regulatory authority could result in unexpected and significant costs for us and consume management’s time and other resources. The FDA could ask us to supplement our submissions, collect additional nonclinical data, conduct additional clinical trials, prepare additional manufacturing data or information or engage in other time-consuming actions, or it could simply deny our requests. In addition, if granted marketing authorization, we will be required to obtain additional FDA approvals or clearances prior to making certain modifications to our devices. Further, FDA may impose other restrictions on our marketing authorizations, or we may lose marketing authorization, if post-market data demonstrates safety issues or lack of efficacy. If we are unable to obtain and maintain the necessary marketing authorizations to market our products, our financial condition may be adversely affected, and our ability to grow domestically and internationally would likely be limited. Additionally, even if granted marketing authorization, our products, including EndeavorRx, may not receive marketing authorization for the indications that are necessary or desirable for successful commercialization or profitability. This could have a material adverse effect on our business, prospects, results of operations and financial condition.

EndeavorRx is made available via the Apple App Store® and on Google PlayTM, and supported by third-party infrastructure. If our ability to access these markets or access necessary third-party infrastructure was stopped or otherwise restricted or limited, it could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our PDTs are exclusively accessed through and depend on the Apple App Store and the Google Play Store. Both Apple and Google have broad discretion to make changes to their operating systems or payment services or change the manner in which their mobile operating systems function and their respective terms and conditions applicable to the distribution of our PDTs and to interpret their respective terms and conditions in ways that may limit, eliminate or otherwise interfere with our products, our ability to distribute our products through their stores, our ability to update our products, including to make bug fixes or other feature updates or upgrades, the features we provide, the manner in which we market our products and our ability to access native functionality or other aspects of mobile devices. To the extent either or both of them do so, our business, prospects, results of operations and financial condition could be materially and adversely affected.

There is no guarantee that the third-party infrastructure that currently supports our PDTs will continue to support them or, if it does not, that other alternatives will be available or that they will be available on terms that are commercially acceptable to us. We will continue to be dependent on third-party mobile operating systems, technologies, networks and standards that we do not control, such as the Android and iOS operating systems, and any changes, bugs, technical or regulatory issues in such systems, our current relationships with carriers or future relationships with mobile manufacturers, or in their terms of service or policies that degrade our PDTs’ functionality, reduce or eliminate our ability to distribute our PDTs, limit our ability to deliver high quality PDTs, or impose fees or other charges related to delivering our offerings, could adversely affect our product usage and revenue.

 

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We rely upon third party providers of cloud-based infrastructure to host our platform. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our platform’s technological infrastructure is implemented using third-party hosting services, such as Amazon Web Services. We have no control over any of these third parties, and we cannot guarantee that such third-party providers will not experience system interruptions, outages or delays, or deterioration in their performance. We need to be able to access our computational platform at any time, without interruption or degradation of performance. Our hosted platform depends on protecting the virtual cloud infrastructure hosted by third-party hosting services by maintaining our configuration, architecture, features, and interconnection specifications, as well as protecting the information stored in these virtual data centers, which is transmitted by third-party Internet service providers. We have experienced, and expect that in the future we may again experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, hosting disruptions and capacity constraints. Any limitation on the capacity of our third-party hosting services could adversely affect our business, financial condition, and results of operations. In addition, any incident affecting our third-party hosting services’ infrastructure, which may be caused by cyber-attacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, terrorist or other attacks, and other disruptive events beyond our control, could negatively affect our cloud-based solutions. A prolonged service disruption affecting our cloud-based solutions could damage our reputation or otherwise harm our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the third-party hosting services we use.

In the event that our service agreements with our third-party hosting services are terminated, or there is a lapse of service, elimination of services or features that we utilize, interruption of Internet service provider connectivity, or damage to such facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our hosted software solutions for deployment on a different cloud infrastructure service provider, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

If we are not able to develop and release new products, or successful enhancements, new features, and modifications to EndeavorRx or any future products, our business, prospects, results of operations and financial condition could be materially and adversely affected.

We expect that the PDT market, as with many technology markets, will be characterized by rapid technological change, frequent new product and service introductions and enhancements, changing customer demands, and evolving industry standards. As an initial matter, a significant portion of our market may not have access to smartphones or other technology necessary to utilize our PDTs. In addition, the introduction of products and services embodying new technologies could quickly make existing products and services obsolete and unmarketable. Additionally, changes in laws and regulations could impact the usefulness of our products and could necessitate changes or modifications to our products to accommodate such changes. We invest substantial resources in researching and developing new products and enhancing our existing products by incorporating additional features, improving functionality, and adding other improvements to meet our patients’ evolving needs. The success of any enhancements or improvements to our products or any new products depends on several factors, including regulatory review timelines, timely completion, competitive pricing, adequate quality testing, integration with new and existing technologies in our products and third-party collaborators’ technologies and overall market acceptance. We may not succeed in developing, marketing and delivering on a timely and cost-effective basis enhancements or improvements to our products or any new products that respond to continued changes in market demands or new customer requirements, and any enhancements or improvements to our products or any new products may not achieve market acceptance. Since developing our products is complex, the timetable for the release of new products and enhancements to existing products is difficult to predict, and we may not offer new products and updates as rapidly as our users require or expect. Any new products that we

 

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develop or acquire may not be introduced in a timely or cost-effective manner, may contain errors or defects, or may not achieve the broad market acceptance necessary to generate significant or any revenue.

The introduction of new products and products by competitors, the development of entirely new technologies to replace existing offerings or shifts in healthcare benefits trends could make our products obsolete or materially and adversely affect our business, financial condition and results of operations. We may experience difficulties with software development, industry standards, design or marketing that could delay or prevent our development, introduction or implementation of new products, enhancements, additional features or capabilities. If patients and healthcare providers do not widely adopt our products, we may not be able to realize a return on our investment. If we do not accurately anticipate patient demand or we are unable to develop, license or acquire new features and capabilities on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, it could result in adverse publicity, loss of revenue or market acceptance or claims by patients or healthcare providers brought against us, each of which could have a material adverse effect on our reputation, business, prospects, results of operations and financial condition.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our patients or business or prevent us from accessing critical information and expose us to liability, which could have a material adverse effect on our reputation, business, prospects, results of operations and financial condition.

In the ordinary course of our business, we access, generate, process, and store sensitive data, including research data, clinical trial data, real-world data, patient data, intellectual property and proprietary business information owned or controlled by ourselves or our employees, partners and other parties. We manage and maintain our applications and data utilizing a combination of on-site systems and cloud-based data centers and third party services. We utilize third party vendors to manage parts of our code, infrastructure, application and services. These applications and data encompass a wide variety of business-critical information, including confidential, sensitive or personal information regarding our patients, clinical trial subjects, vendors, customers, employees and others, as well as research and development information, commercial information, and business and financial information. We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, accidental exposure, unauthorized access, inappropriate modification, and the risk of our being unable to adequately monitor, audit and modify our controls over our critical information. This risk extends to the third party vendors and subcontractors we use to manage this sensitive data or otherwise process on our behalf. Further, to the extent our employees are working at home during the COVID-19 pandemic or otherwise, additional risks may arise. The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information. Although we take reasonable measures to protect sensitive data from unauthorized access, use or disclosure, no security measures can be perfect and our third-party vendors’ and subcontractors’ information technology and infrastructure may be vulnerable to attacks by hackers or infections by viruses or other malware or breached due to employee erroneous actions or inactions by our employees or contractors, malfeasance or other malicious or inadvertent disruptions. Any such breach or interruption could compromise our systems and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Any such access, breach, or other loss of information could result in legal claims or proceedings. Unauthorized access, loss or dissemination could also disrupt our operations, result in a material disruption of our development programs and damage our reputation, any of which could adversely affect our business. For example, the loss, corruption, unavailability of, or damage to our computational models would interfere with and undermine the insights we draw from our platform, which could result in the waste of resources on insights based on flawed premises. In addition, the loss or corruption of, or other damage to, clinical trial data from ongoing or future clinical trials could result in delays in our efforts to obtain marketing authorizations and significantly increase our costs to recover or reproduce the data.

Additionally, although we maintain cybersecurity insurance coverage, we cannot be certain that such coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us

 

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relating to any incident, will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our reputation, business, prospects, results of operations and financial condition.

We currently rely on a single third party digital pharmacy for the fulfillment of prescriptions. This reliance on a single third party increases the risk that we could have a disruption in the fulfillment of prescriptions, which could have a material and adverse effect on our reputation, business, results of operations and financial condition.

We do not currently own or operate any pharmacy, nor are we licensed to perform pharmacy fulfillment services. We rely, and may continue to rely, on a single third party, Phil, for the fulfillment of prescriptions for EndeavorRx through a pharmacy services agreement. This reliance on a single third party increases the risk that we could have a disruption in the fulfillment of prescriptions for EndeavorRx which could delay, prevent or impair the distribution and sale of EndeavorRx.

Pharmacies are subject to state and federal laws and regulations. We do not control the standards and processes of, and will be completely dependent on, our digital pharmacy for compliance with federal and state law and regulations. If our digital pharmacy fails to maintain regulatory compliance, we may need to find alternative pharmacies with the capability to fulfill prescriptions for PDTs. In addition, we have no control over the ability of our digital pharmacy to maintain adequate quality control, quality assurance and qualified personnel. If a regulatory authority finds deficiencies with or withdraws required pharmacy licenses in the future, we may need to find alternative pharmacies with the capability to fulfill prescriptions for PDTs, which would significantly impact our ability to fulfill, distribute and sell EndeavorRx. We may be unable to establish any agreements with other digital pharmacies or to do so on acceptable terms. Even if we are able to establish agreements with digital pharmacies, reliance on a single digital pharmacy entails additional risks, including:

 

   

the possible breach of the manufacturing agreement by the third party; and

 

   

the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities or capacity. There are a limited number of digital pharmacies that have the capability to distribute PDTs and that might be capable of fulfilling prescriptions for EndeavorRx for us.

Any performance failure on the part of our existing or future manufacturers could disrupt the distribution and sale of EndeavorRx. If our current digital pharmacy cannot perform as agreed, we may be required to replace such digital pharmacy. We may incur added costs and delays in identifying and qualifying any such replacement. If the agreement with this third party pharmacy is terminated, if the third party pharmacy is unable to perform in accordance with the terms of the agreement, or if the services of the third party pharmacy is terminated for any reason, it could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our current and anticipated future dependence upon others for the fulfillment of prescriptions for our product candidates or products may adversely affect our future profit margins and our ability to distribute any products that receive marketing authorization on a timely and competitive basis.

 

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Our products may cause undesirable side effects or have other properties that could limit their commercial potential.

If we or others identify undesirable side effects directly or indirectly caused by our products, a number of potentially significant negative consequences could result, including:

 

   

we may lose marketing authorization of such product;

 

   

regulatory authorities may require additional warnings on the product’s label;

 

   

we may be required to issue safety communications to patients or healthcare providers that outline the risks of such side effects;

 

   

we could be sued and held liable for harm caused to patients; and

 

   

our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product or product candidate and, as a result of negative impacts to our reputation, our other products or product candidates and could have a material adverse effect on our business, prospects, results of operations and financial condition.

The misuse or off-label use of our products may harm our reputation in the marketplace, result in injuries that lead to product liability or other suits or result in costly investigations, fines, or sanctions by regulatory bodies.

Although our products, if granted marketing authorization, are marketed for the specific therapeutic uses for which the devices were designed and our personnel will be trained to not promote our products for uses outside of the FDA-authorized indications for use, known as “off-label uses,” we cannot, however, prevent a physician from using our products in ways, when in the physician’s independent professional medical judgment, he or she deems it appropriate. There may be increased risk of injury to patients if primary care physicians attempt to use our products off-label. Furthermore, the use of our products for off-label uses may not effectively treat such conditions, which could harm our reputation in the marketplace among primary care physicians and patients.

If following authorization of any other product candidates we may commercialize, or with respect to EndeavorRx, the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter or warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such as false claims laws for any products for which we obtain government reimbursement, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.

In addition, physicians may misuse our products with their patients if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If our products are misused, we may become subject to costly litigation by our patients or their patients. As described below, product liability claims could divert management’s attention from our core business, be expensive to defend and result in sizeable damage awards against us that may not be covered by insurance.

 

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Our products may be subject to product recalls. A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products, could have a material adverse effect on our business, prospects, results of operations and financial condition.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products, such as in the event of material deficiencies or defects in their design or manufacture or in the event that a product poses an unacceptable risk to health.

The FDA’s authority to require a recall for medical devices must be based on a finding that there is reasonable probability that the device would cause serious injury or death. We may also decide to voluntarily recall our products. A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and could materially and adversely affect our reputation and business, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. We may also be subject to liability claims, be required to bear other costs, or take other actions that could have a material adverse effect on our business, prospects, results of operations and financial condition.

Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary recalls or corrections for our products in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls and we may be subject to enforcement action.

We face potential product liability exposure, and, if claims brought against us are successful, we could incur substantial liabilities.

Our business exposes us to potential product liability claims that are inherent in the design, manufacture, testing and sale of medical devices. We could become the subject of product liability lawsuits alleging that component failures, manufacturing flaws, design defects or inadequate disclosure of product-related risks or product-related information resulted in an unsafe condition, injury or death to patients. In addition, the misuse of our products, or the failure of patients to adhere to operating guidelines, could cause significant harm to patients which could result in product liability claims. Product liability lawsuits and claims, safety alerts or product recalls, with or without merit, could cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business, harm our reputation and materially and adversely affect our ability to attract and retain patients, any of which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Although we maintain third-party product liability insurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies. Even if any product liability loss is covered by an insurance policy, these policies typically have substantial deductibles for which we are responsible. Product liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, prospects, results of operations and financial condition. In addition, any product liability claim brought against us, with or without merit, could result in an increase of our product liability insurance premiums. Insurance coverage varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on terms acceptable to us or at all.

Additionally, from time to time we may enter into agreements pursuant to which we indemnify third parties for certain claims relating to our products. These indemnification obligations may require us to pay significant sums of money for claims that are covered by these indemnification obligations. We are not currently subject to any product liability claims; however, any future product liability claims against us, regardless of their merit, may result in negative publicity about us that could ultimately harm our reputation and could have a material adverse effect on our business, prospects, results of operations and financial condition.

 

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We are required to report certain malfunctions, deaths and serious injuries associated with our products, which can result in voluntary corrective action or agency enforcement action.

Under the FDA’s medical device reporting regulations, we are required to report to the FDA when information from any source suggests that our product may have caused or contributed to a death or serious injury or that our product has malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. If we fail to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against us.

Any adverse event involving our products, whether in the United States or abroad, could result in future voluntary corrective actions, such as recalls, including corrections or customer notifications, or agency action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to correct the malfunctions adequately or prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected products, initiate voluntary recalls, and redesign the products. Regulatory authorities may also take actions against us, such as ordering recalls, imposing fines, or seizing the affected products. Any corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

Risks Related to our Regulatory Compliance and Legal Matters

We operate in a highly regulated industry and are subject to a wide range of federal, state, and local laws, rules, and regulations, including FDA regulatory requirements and laws pertaining to fraud and abuse in healthcare, that affect nearly all aspects of our operations. Failure to comply with these laws, rules, and regulations, or to obtain and maintain required licenses, could subject us to enforcement actions, including substantial civil and criminal penalties, and might require us to recall or withdraw a product from the market or cease operations. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.

We and our products are subject to extensive regulation in the United States, including by the FDA. The regulations to which we are subject are complex. The FDA regulates, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, content and language of instructions for use; clinical trials; product safety; medical device cybersecurity; premarket clearance, de novo classification, and approval; establishment registration and device listing; marketing, sales and distribution; complaint handling; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market studies; and product import and export. The FDA monitors compliance with these applicable regulatory requirements through periodic unannounced inspections as well as various other channels, such as reviewing post-market surveillance and recall reports, monitoring advertising and promotional practices on-line and at trade shows, and reviewing trade complaints submitted by competitors or other third parties. We do not know whether we will pass any future inspections for FDA compliance, or whether the FDA might identify compliance concern(s) through other channels of information. Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement-related actions such as: FDA Form 483s; untitled or warning letters; clinical holds on research; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances, de novo classifications, or approvals; withdrawals of current marketing authorizations, resulting in prohibitions on the sale and distribution of our products; and in the most serious cases, criminal penalties. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and could have a material adverse effect on our business, prospects, results of operations and financial condition.

The FDA and the Federal Trade Commission, or the FTC, also regulate the advertising and promotion of our products to ensure that the claims we make are consistent with our regulatory authorizations, that there is adequate and reasonable data to substantiate the claims and that our promotional labeling and advertising is

 

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neither false nor misleading. If the FDA or FTC determines that any of our advertising or promotional claims are false, misleading, not substantiated or not permissible, we may be subject to enforcement actions, including untitled or warning letters, and we may be required to revise our promotional claims and make other corrections or restitutions. We also may be subject to fines, or other regulatory, civil, or criminal sanctions.

We are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through which we research, as well as, sell, market and distribute any products for which we obtain marketing approval. Such laws include, without limitation, federal and state anti-kickback, fraud and abuse, false claims, data privacy and security and physician and other healthcare provider payment transparency laws and regulations. If their operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to significant penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and imprisonment. See the section entitled “Information about Akili—Health Care Laws and Regulations.”

Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices, including our relationships with physicians and other healthcare providers, some of whom may be compensated in the form of stock or stock options for services provided to us and may be in the position to influence the ordering of or use of our product candidates, if approved, may not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment, which could affect our ability to operate our business. Further, defending against any such actions can be costly, time-consuming and may require significant personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

Our employees, consultants and commercial collaborators may engage in misconduct or other improper activities, including non-compliance with such regulatory standards and requirements.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our activities could be subject to challenge under one or more of such laws. Any action brought against us for violations of these laws or regulations, even if successfully defended, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. We may be subject to private “qui tam” actions brought by individual whistleblowers on behalf of the federal or state governments, with potential liability under the federal False Claims Act including mandatory treble damages and significant per-claim penalties.

Although we have adopted policies and procedures designed to comply with these laws and regulations and conduct internal reviews of our compliance with these laws, our compliance is also subject to governmental review. The growth of our business and sales organization including future expansion outside of the United States may increase the potential of violating these laws or our internal policies and procedures. The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many have not

 

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been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of the federal, state and foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to penalties, including significant criminal, civil and administrative penalties, damages and fines, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, imprisonment for individuals and exclusion from participation in government programs, such as Medicare and Medicaid, as well as contractual damages and reputational harm. We could also be required to curtail or cease our operations. Any of the foregoing consequences could have a material adverse effect on our business, prospects, results of operations and financial condition.

The regulatory framework for digital health products is constantly evolving. Increasingly stringent regulatory requirements could create barriers to our development and introduction of new products. Conversely, in the event regulatory requirements are lowered, competitors could potentially enter the prescription digital therapeutic market and compete against us more easily.

Our PDTs are novel and represent a new category of therapeutics for which the regulatory framework continues to evolve. Our ability to develop and introduce new products will depend, in part, on our ability to comply with these complex requirements, which include regulations related to product design, development and manufacturing; testing, labeling, content and language of instructions for use; clinical trials; product safety; premarket clearance, de novo classification, and approval; establishment registration and device listing; and marketing, sales and distribution. If, however, the regulatory framework for digital health products simplifies and the requirements that we and others are required to comply with are lowered, it could result in the increased competition and the introduction by competitors of products that are or claim to be superior to our products. For example, the FDA issued a guidance entitled: “Enforcement Policy for Digital Health Devices For Treating Psychiatric Disorders During the Coronavirus Disease 2019 (COVID-19) Public Health Emergency,” which allows for the marketing of certain digital therapeutics without premarket clearance, de novo classification, or approval so long as certain criteria are met for the duration of the COVID-19 pandemic. Additionally, FDA has issued a proposal for public comment that may provide a limited extension of this enforcement policy after the expiration of the COVID-19 public health emergency declaration. Additionally, competitors using our products as predicates for 510(k)s may successfully argue that they should be required to submit substantially less data to support clearance of their product than was required for our products based on FDA’s growing familiarity with the technology. As a result, we are subject to risks related to the developing regulatory landscape applicable to our PDTs that could have a material adverse effect on our business, prospects, results of operations and financial condition.

Material modifications to our devices may require new 510(k) clearance, de novo classification, premarket approval, or supplement premarket approval, or may require us to cease marketing or recall the modified devices until clearances, authorizations, or approvals are obtained.

Material modifications to the intended use or technological characteristics of our devices may require new 510(k) clearance, de novo classification, Premarket Approval, or PMA, or PMA supplement approval, or may require us to cease marketing or recall the modified devices until clearances, de novo classifications, or approvals are obtained. Any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a de novo or a PMA. The FDA requires every manufacturer to make and document this determination in the first instance. A manufacturer may determine that a modification could not significantly affect safety or effectiveness and does not represent a major change in its intended use, so that no new 510(k) clearance is necessary. The FDA may review any manufacturer’s decision and may not agree with our decisions regarding whether new clearances, de novo classifications, or approvals are necessary. The FDA may also on its own initiative determine that a marketing authorization is required.

 

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Obtaining and maintaining marketing authorization of our product candidates in one jurisdiction does not mean that we will be successful in obtaining marketing authorization of our product candidates in other jurisdictions.

We may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for marketing authorization of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign marketing authorizations and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing authorizations, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

Obtaining and maintaining marketing authorization of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain marketing authorization in any other jurisdiction, while a failure or delay in obtaining marketing authorization in one jurisdiction may have a negative effect on the marketing authorization process in others. For example, even if the FDA grants marketing authorization of a product candidate, comparable regulatory authorities in foreign jurisdictions must also grant marketing authorization for the manufacturing, marketing and promotion of the product candidate in those countries. Marketing authorization procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional nonclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In short, the foreign marketing authorization process involves all of the risks associated with FDA marketing authorization. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we may intend to charge for our products will also be subject to approval.

Our commercialization efforts to date have focused almost exclusively on the U.S. Our ability to enter other foreign markets will depend, among other things, on our ability to navigate various regulatory regimes with which we do not have experience, which could delay or prevent the growth of our operations outside of the U.S.

To date, our commercialization efforts have focused almost exclusively on the United States. Expanding our business to attract customers in countries other than the United States is an element of our long-term business strategy. Our ability to continue to expand our business and to attract talented employees and customers in various international markets will require considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute resolution systems, regulatory systems and commercial infrastructures. Entering new international markets will be expensive, our ability to successfully gain market acceptance in any particular market is uncertain and the distraction of our senior management team could harm our business, financial condition and results of operation.

Sales of our products outside of the United States are subject to foreign regulatory requirements that vary widely from country to country. In addition, the FDA regulates exports of medical devices from the United States. While the regulations of some countries may not impose barriers to marketing and selling our products or only require notification, others require that we obtain the marketing authorization of a specified regulatory body. Complying with foreign regulatory requirements, including obtaining registrations or marketing authorizations, can be expensive and time-consuming, and we may not receive marketing authorizations in each country in which we may plan to market our products or we may be unable to do so on a timely basis. The time required to obtain registrations or marketing authorizations, if required by other countries, may be longer than that required for FDA clearance, de novo classification, or approval, and requirements for such registrations and marketing authorizations may significantly differ from FDA requirements. If we modify our products, we may need to apply for additional regulatory authorizations before we are permitted to sell the modified product. In addition,

 

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we may not continue to meet the quality and safety standards required to maintain the authorizations that we have received. If we are unable to maintain our authorizations in a particular country, we will no longer be able to sell the applicable product in that country. Marketing authorization by the FDA does not ensure registration or marketing authorization by regulatory authorities in other countries, and registration or marketing authorization by one or more foreign regulatory authorities does not ensure registration or marketing authorization by regulatory authorities in other foreign countries or by the FDA. A failure or delay in obtaining registration or marketing authorization in one country may have a negative effect on the regulatory process in others.

Doing business internationally involves a number of additional risks, including:

 

   

multiple, conflicting and changing laws and regulations such as tax laws, privacy and data protection laws and regulations, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

 

   

requirements to maintain data and the processing of that data on servers located within the United States or in such countries;

 

   

protecting and enforcing our intellectual property rights;

 

   

converting our products as well as the accompanying instructional and marketing materials to conform to the language and customs of different countries;

 

   

complexities associated with managing multiple payer reimbursement regimes, and government payers;

 

   

competition from companies with significant market share in our market and with a better understanding of user preferences;

 

   

financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the effect of local and regional financial pressures on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations;

 

   

natural disasters, political and economic instability, including wars, terrorism, political unrest, outbreak of disease (including the recent coronavirus outbreak), boycotts, curtailment of trade, and other market restrictions; and

 

   

regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the U.S. Foreign Corrupt Practices Act (the “FCPA”), and comparable laws and regulations in other countries.

These risks and uncertainties may impact the Company’s ability to enter foreign markets, which could delay or prevent the growth of the Company’s operations outside of the United States, and have a material adverse effect on our business, prospects, results of operations and financial condition.

The insurance coverage and reimbursement status of products that recently obtained marketing authorization is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for EndeavorRx or any other of our product candidates, if granted marketing authorization, could limit our ability to market those products and materially and adversely affect our ability to generate revenue.

In the United States, patients generally rely on third-party payers to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payers is critical to the ability of patients to afford treatments and new product acceptance. Our ability to successfully commercialize our products will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payers, such as private health insurers and health maintenance organizations, decide

 

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which medications and therapies they will pay for and establish reimbursement levels. The availability of coverage and extent of reimbursement by governmental and private payers is essential for most patients to be able to afford treatments. Sales of products, and of product candidates that we may identify, will depend substantially on the extent to which the costs to users of such products will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payers. If coverage and adequate reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our products. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to achieve profitability. See the section entitled “Information About Akili—Coverage and Reimbursement.”

There is also significant uncertainty related to, and there may be significant delays in obtaining, the insurance coverage and reimbursement of newly cleared, de novo classified, or approved products and coverage may be more limited than the purposes for which the device is cleared, de novo classified, or approved by the FDA or comparable foreign regulatory authorities. In the United States, the principal decisions about reimbursement for new medicines or medical devices are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, or HHS. FDA marketing authorization provides no assurance of coverage or reimbursement by any payer. CMS decides whether and to what extent a new medicine or medical device will be covered and reimbursed under Medicare, and private payers tend to follow CMS to a substantial degree.

Factors payers consider in determining reimbursement are based on whether the product is:

 

   

a covered benefit under its health plan;

 

   

safe, effective and medically necessary;

 

   

supported by robust clinical data from well-controlled clinical research;

 

   

appropriate for the specific patient;

 

   

cost-effective; and

 

   

neither experimental nor investigational.

Each payer determines whether or not it will provide coverage for a treatment, what amount it will pay the manufacturer for the treatment and on what tier of its formulary the treatment will be placed. The position of a treatment on a payer’s list of covered drugs, biological products, and medical devices, or formulary, generally determines the co-payment that a patient will need to make to obtain the treatment and can strongly influence the adoption of such treatment by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payers to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property, manufacture, marketing, sale and distribution expenses. Interim reimbursement levels for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the product and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost products and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payers, by any future laws limiting prices and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices than in the United States.

Third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for particular drugs or devices. We cannot be sure that coverage and reimbursement will be available for all products

 

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that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any product for which we obtain marketing authorization. If coverage and adequate reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize our products.

In addition, in some foreign countries, the proposed pricing for a prescription device must be approved before it may be lawfully marketed. The requirements governing medical product pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies. A member state may approve a specific price for the medicinal products or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceuticals or medical devices will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower. While the Company is not currently marketing or selling our products in any country other than the United States, including the European Union or any of its member states, in the event that the Company chooses to do so in the future, it will need to comply with such requirements.

We may be subject to governmental investigation, litigation, and other proceedings, which are costly to defend and could have a material adverse effect on our business, prospects, results of operations and financial condition.

We may be party to government investigations, lawsuits and legal proceedings in the normal course of business. These matters are often expensive and disruptive to normal business operations. We may face allegations, lawsuits and regulatory inquiries, audits and investigations regarding data privacy, security, labor and employment, consumer protection and intellectual property infringement, including claims related to privacy, patents, publicity, trademarks, copyrights and other rights. A portion of the technologies we use incorporates open source software, and we may face claims claiming ownership of open source software or patents related to that software, rights to our intellectual property or breach of open source license terms, including a demand to release material portions of our source code or otherwise seeking to enforce the terms of the applicable open source license. We may also face allegations or litigation related to our acquisitions, securities issuances or business practices, including public disclosures about our business. Litigation and regulatory proceedings, and particularly the patent infringement and class action matters we could face, may be protracted and expensive, and the results are difficult to predict. Certain of these matters may include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, our litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify our solution or require us to stop offering certain features, all of which could have a material adverse effect on our business, prospects, results of operations and financial condition. We may also become subject to periodic audits, which would likely increase our regulatory compliance costs and may require us to change our business practices, which could have a material adverse effect on our business, prospects, results of operations and financial condition. Managing legal proceedings, litigation and audits, even if we achieve favorable outcomes, is time-consuming and diverts management’s attention from our business.

The results of regulatory proceedings, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could have a material adverse effect on our business, prospects, results of operations, financial condition and the market price of our common stock following the Business Combination.

 

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Laws and regulations governing any international operations we may have may preclude us from developing, manufacturing and selling certain products outside of the United States and require us to develop and implement costly compliance programs.

We currently engage in certain activities supporting our product and platform development activities that occur outside the U.S., and for these activities we must dedicate additional resources to comply with numerous laws and regulations in each such jurisdiction. Additionally, the FCPA prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expand our activities outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions.

Healthcare reform and other governmental and private payer initiatives may have an adverse effect upon, and could prevent, our products’ or product candidates’ commercial success.

In the United States and in certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could impact our ability to sell our products profitably, such as the ACA. See the section entitled “Information About Akili—Healthcare Reform.”

There has been increasing legislative and enforcement interest in the United States with respect to prescription-pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. The HHS has already started the process of soliciting feedback on some of these measures and, at the same time, is immediately implementing others under its existing authority. It is unclear what effect such legislative and enforcement interest may have on prescription devices. Further, it is unclear whether the Biden administration will challenge, reverse, revoke or otherwise modify the prior administration’s executive and administrative actions.

We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any cleared, de novo classified, or approved device, which could have an adverse effect on patients for our products or product candidates. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payers.

 

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There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels in the United States directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain marketing authorization and that may affect our overall financial condition and ability to develop product candidates. If we or any third parties we may engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or such third parties are not able to maintain regulatory compliance, our current or any future product candidates we may develop may lose any marketing authorization that may have been obtained and we may not achieve or sustain profitability.

If we fail to comply with the FDA’s Quality System Regulation, or QSR, or any applicable foreign equivalent, our operations could be interrupted, and our potential product sales and operating results could suffer.

We are required to comply with the FDA’s QSR, which delineates, among other things, the design controls, document controls, purchasing controls, identification and traceability, production and process controls, acceptance activities, nonconforming product requirements, corrective and preventive action requirements, labeling and packaging controls, handling, storage, distribution and installation requirements, complaint handling, records requirements, servicing requirements, and statistical techniques potentially applicable to the production of our medical devices. We are also subject to the regulations of foreign jurisdictions if we market products overseas.

The FDA enforces the QSR through periodic and announced or unannounced inspections of manufacturing facilities. If our facilities or processes are found to be in non-compliance or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, the FDA could take legal or regulatory enforcement actions against us and/or our products, including but not limited to the cessation of sales or the initiation of a recall of distributed products, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits.

The FDA’s and other comparable non-U.S. regulatory agencies’ statutes, regulations, policies or interpretations may change, and additional government regulation or statutes may be enacted, which could increase regulatory requirements, or delay, suspend, prevent marketing of any cleared, de novo classified, or approved products or necessitate the recall of distributed products. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.

The medical device industry has been under heightened FDA scrutiny as the subject of government investigations and enforcement actions. If our operations and activities are found to be in violation of any FDA laws or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and other legal and/or agency enforcement actions. Any penalties, damages, fines, or curtailment or restructuring of our operations or activities could materially and adversely affect our ability to operate our business and our financial results. The risk of us being found in violation of FDA laws is increased by the fact that many of these laws are broad and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend ourselves against that action and its underlying allegations, could cause us to incur significant legal expenses and divert management’s attention from the operation of our business. Where there is a dispute with a federal or state governmental agency that cannot be resolved to the mutual satisfaction of all relevant parties, we may determine that the costs, both real and contingent, are not justified by the commercial returns to us from maintaining the dispute or the product.

Various claims, design features, or performance characteristics of our medical devices that we regarded as permitted by the FDA without new marketing authorization may be challenged by the FDA or state or foreign

 

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regulators. The FDA or state or foreign regulatory authorities may find that certain claims, design features, or performance characteristics, in order to be made or included in the products, may have to be supported by further clinical studies and authorizations, which could be lengthy, costly, and possibly unobtainable.

We are subject to data privacy and security laws and regulations governing our collection, use, disclosure or storage of personally identifiable information, including protected health information and payment card data, which may impose restrictions on us and our operations. Any actual or perceived noncompliance with such laws and regulations may result in penalties, regulatory action, loss of business or unfavorable publicity.

Numerous federal and state laws and regulations govern the collection, use, disclosure, storage and transmission of personally identifiable information, or PII, including protected health information, or PHI, and information related to treatment for ADHD and other diseases and disorders resulting in cognitive impairment. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change and could have a negative impact on our business. In addition, in the future, industry requirements or guidance, contractual obligations, and/or legislation at both the federal and the state level may limit, forbid or regulate the use or transmission of health information outside of the United States.

These varying interpretations can create complex compliance issues for us and our partners and potentially expose us to additional expense, adverse publicity and liability, any of which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Federal and state consumer protection laws are increasingly being applied by the FTC and states’ attorneys general to regulate the collection, use, storage and disclosure of PII, through websites or otherwise, and to regulate the presentation of website content.

The security measures that we and our third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws may not protect our facilities and systems from security breaches, acts of vandalism or theft, computer viruses, misplaced or lost data, programming and human errors or other similar events. Even though we provide for appropriate protections through our agreements with our third-party vendors, we still have limited control over their actions and practices. A breach of privacy or security of PII or PHI may result in an enforcement action, including criminal and civil liability, against us. We are not able to predict the extent of the impact such incidents may have on our business. Enforcement actions against us could be costly and could interrupt regular operations, which could have a material adverse effect on our business, prospects, results of operations and financial condition. Even if it is determined that there was no violation of laws, enforcement actions against us could be costly, generate negative publicity and could interrupt regular operations, which could have a material adverse effect on our business, prospects, results of operations and financial condition. While we have not received any notices of violation of the applicable privacy and data protection laws and believe we are in compliance with such laws, there can be no assurance that we will not receive such notices in the future.

There is ongoing concern from privacy advocates, regulators and others regarding data privacy and security issues, and the number of jurisdictions with data privacy and security laws has been increasing. Also, there are ongoing public policy discussions regarding whether the standards for de-identification, anonymization or pseudonymization of health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient privacy. We expect there will continue to be new proposed and amended laws, regulations and industry standards concerning privacy, data protection and information security in the United States, such as the California Consumer Privacy Act, the CCPA, which went into effect on January 1, 2020 and has been amended several times. Further, a new California privacy law, the California Privacy Rights Act, the CPRA, was passed by California voters on November 3, 2020, and in March 2021, Virginia passed a new privacy law, the Consumer Data Protection Act, the VCDPA, similar to the CPRA. The CPRA will create additional obligations with respect to processing and storing personal information and the VCDPA is scheduled to take effect on January 1, 2023 (with certain provisions of the CPRA having retroactive effect to January 1, 2022). In addition New York’s Stop Hacks and Improve Electronic Data Security Act, the SHIELD Act, requires any

 

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person or business owning or licensing computerized data that includes the private information of a resident of New York to implement and maintain reasonable safeguards to protect the security, confidentiality and integrity of the private information. Other U.S. states also are considering omnibus privacy legislation and industry organizations regularly adopt and advocate for new standards in these areas. While the CCPA and CPRA contain exceptions for certain activities involving PHI under Health Insurance Portability Administration and Accountability Act of 1996, as amended, or HIPAA, we cannot yet determine the impact the CCPA, CPRA, VCDPA or other such future laws, regulations and standards may have on our business.

Future laws, regulations, standards, obligations, amendments, and changes in the interpretation of existing laws, regulations, standards and obligations could impair our or our customers’ ability to collect, use or disclose information relating to patients or consumers, including information derived therefrom, which could decrease demand for our products, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue. Accordingly, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our software or platform and otherwise adapt to these changes.

Further, our patients may expect us to comply with more stringent privacy and data security requirements than those imposed by laws, regulations or self-regulatory requirements, and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data. If we, or any third parties we or our partners use to process PII on our behalf, are unable to properly protect the privacy and security of personal information, including protected health information, we and they could be found to have breached our and their contracts with certain third parties.

Any failure or perceived failure by us to comply with federal or state laws or regulations, industry standards or other legal obligations, or any actual or suspected privacy or security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of PII or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have a material adverse effect on our reputation, business, prospects, results of operations and financial condition. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products could be limited. Any of these developments could harm our business, financial condition and results of operations. Privacy and data security concerns, whether valid or not valid, may inhibit retention of our products by existing customer or adoption of our products by new customers.

Around the world, data collection and use are governed by laws and regulations governing the use, processing and cross-border transfer of personal information.

In the event we decide to conduct clinical trials or engage in other human data collection, we may be subject to additional privacy restrictions. Many foreign jurisdictions, including, without limitation, member states of the European Union (the “EU”), and the United Kingdom, Canada, Israel, Australia, New Zealand, Japan and many other countries have adopted legislation that increase or change the requirements governing the collection, distribution, use, storage, disclosure, or other processing, and/or security of personal information and other data in these jurisdictions. If our privacy or data security measures fail to comply with current or future laws and regulations, we may be subject to litigation, regulatory investigations or other liabilities, or our customers may terminate their relationships with us.

Personal privacy and data security have become significant issues in the United States, Europe, and in many other jurisdictions. The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Many federal, state, and foreign government bodies and agencies have adopted, or are considering adopting, laws and regulations regarding the collection, use, and disclosure of personal information, including protected health information. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change and could have a negative impact

 

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on Akili’s business. In addition, in the future, industry requirements or guidance, contractual obligations, and/or legislation at both the federal and the state level may limit, forbid or regulate the use or transmission of health information outside of the United States.

These varying interpretations can create complex compliance issues for Akili and Akili’s partners and potentially expose Akili to additional expense, adverse publicity and liability, any of which could adversely affect Akili’s business.

Federal and state consumer protection laws are increasingly being applied by the United States Federal Trade Commission (the “FTC”), and states’ attorneys general to regulate the collection, use, storage and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content.

The security measures that Akili and Akili’s third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws may not protect Akili’s facilities and systems from security breaches, acts of vandalism or theft, computer viruses, misplaced or lost data, programming and human errors or other similar events. Even though Akili provides for appropriate protections through Akili’s agreements with Akili’s third-party vendors, Akili still has limited control over their actions and practices. A breach of privacy or security of personally identifiable health information may result in an enforcement action, including criminal and civil liability, against us. Akili is not able to predict the extent of the impact such incidents may have on Akili’s business. Enforcement actions against Akili could be costly and could interrupt regular operations, which may adversely affect Akili’s business. While Akili has not received any notices of violation of the applicable privacy and data protection laws and believe Akili is in compliance with such laws, there can be no assurance that Akili will not receive such notices in the future.

There is ongoing concern from privacy advocates, regulators and others regarding data privacy and security issues, and the number of jurisdictions with data privacy and security laws has been increasing. Also, there are ongoing public policy discussions regarding whether the standards for de-identification, anonymization or pseudonymization of health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient privacy. Akili expects that there will continue to be new proposed and amended laws, regulations and industry standards concerning privacy, data protection and information security in the United States, such as the California Consumer Privacy Act (the “CCPA”), which went into effect on January 1, 2020 and has been amended several times. Further, a new California privacy law, the California Privacy Rights Act (the “CPRA”), was passed by California voters on November 3, 2020. The CPRA will create additional obligations with respect to processing and storing personal information that are scheduled to take effect on January 1, 2023 (with certain provisions having retroactive effect to January 1, 2022). Additionally, some observers have noted that the CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business. Already, in the United States, we have witnessed significant developments at the state level. For example, on March 2, 2021, Virginia enacted the Consumer Data Protection Act (the “CDPA”) and, on July 8, 2021, Colorado’s governor signed the Colorado Privacy Act (“CPA”), into law. The CDPA and the CPA will both become effective January 1, 2023. While the CDPA and CPA incorporate many similar concepts of the CCPA and CPRA, there are also several key differences in the scope, application, and enforcement of the law that will change the operational practices of regulated businesses. The new laws will, among other things, impact how regulated businesses collect and process personal sensitive data, conduct data protection assessments, transfer personal data to affiliates, and respond to consumer rights requests.

A number of other states have proposed new privacy laws, some of which are similar to the above discussed recently passed laws. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of comprehensive privacy laws

 

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in different states in the country would make our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.

Akili’s international operations are subject to international laws and regulations, regulatory guidance, and industry standards relating to data protection, privacy, and information security. For Akili’s EU and UK future operations, this includes the EU General Data Protection Regulation, or GDPR, as well as other national data protection legislation in force in relevant EU member states (including the GDPR in such form as incorporated into the law of England and Wales, Scotland and Northern Ireland by virtue of the European Union (Withdrawal) Act 2018 and any regulations thereunder and the UK Data Protection Act 2018, or UK GDPR.

The General Data Protection Regulation (“GDPR”) and UK GDPR are wide-ranging in scope and impose numerous additional requirements on companies that process personal data, including imposing special requirements in respect of the processing of health and other sensitive data, requiring that consent of individuals to whom the personal data relates is obtained in certain circumstances, requiring additional disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security and confidentiality of personal data, creating mandatory data breach notification requirements in certain circumstances, requiring data protection impact assessments for high risk processing and requiring that certain measures (including contractual requirements) are put in place when engaging third-party processors. The GDPR and the UK GDPR also provide individuals with various rights in respect of their personal data, including rights of access, erasure, portability, rectification, restriction and objection. The GDPR and UK GDPR define personal data to include pseudonymized or coded data and requires different informed consent practices and more detailed notices for clinical trial participants and investigators than applies to clinical trials conducted in the United States. We are required to apply GDPR and UK GDPR standards to any clinical trials that our EU and UK established businesses carry out anywhere in the world.

The GDPR and UK GDPR impose strict rules on the transfer of personal data to countries outside the European Economic Area, including the United States. The UK and Switzerland have adopted similar restrictions. Although the UK is regarded as a third country under the EU’s GDPR, the European Commission (“EC”) has now issued a decision recognizing the UK as providing adequate protection under the EU GDPR and, therefore, transfers of personal data originating in the EU to the UK remain unrestricted. Like the EU GDPR, the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate protection. The UK government has confirmed that personal data transfers from the UK to the EEA remain free flowing.

To enable the transfer of personal data outside of the EEA or the UK, adequate safeguards must be implemented in compliance with European and UK data protection laws. On June 4, 2021, the EC issued new forms of standard contractual clauses for data transfers from controllers or processors in the EU/EEA (or otherwise subject to the GDPR) to controllers or processors established outside the EU/EEA (and not subject to the GDPR). The new standard contractual clauses replace the standard contractual clauses that were adopted previously under the EU Data Protection Directive. The UK is not subject to the EC’s new standard contractual clauses but has published a draft version of a UK-specific transfer mechanism, which, once finalized, will enable transfers from the UK. We will be required to implement these new safeguards when conducting restricted data transfers under the EU and UK GDPR and doing so will require significant effort and cost.

The GDPR and UK GDPR may increase Akili’s responsibility and liability in relation to personal data that Akili’s process where such processing is subject to the GDPR and UK GDPR. Implementing legislation in applicable EU member states and the UK, including by seeking to establish appropriate lawful bases for the various processing activities Akili carries out as a controller or joint controller, reviewing security procedures and those of Akili’s vendors and collaborators, and entering into data processing agreements with relevant vendors and collaborators, Akili cannot be certain that its efforts to achieve and remain in compliance have been, and/or will continue to be, fully successful. Given the breadth and depth of changes in data protection

 

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obligations, preparing for and complying with the GDPR and UK GDPR and similar laws’ requirements are rigorous and time intensive and require significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data.

Other countries around the world in which we conduct trials or otherwise do business have also enacted strict privacy and data protection laws. For example, the Act on the Protection of Personal Information (“APPI”) of Japan regulates privacy protection issues in Japan. The APPI shares similarities with the GDPR, including extraterritorial application and obligations to provide certain notices and rights to citizens of Japan. We may be required to modify our policies, procedures, and data processing measures in order to address requirements under these or other privacy, data protection, or cyber security regimes, and may face claims, litigation, investigations, or other proceedings regarding them and may incur related liabilities, expenses, costs, and operational losses.

In addition to general privacy and data protection requirements, many jurisdictions around the world have adopted legislation that regulates how businesses operate online and enforces information security, including measures relating to privacy, data security and data breaches. Many of these laws require businesses to notify data breaches to the regulators and/or to data subjects. These laws are not consistent, and compliance in the event of a widespread data breach is costly and burdensome.

In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy and information security laws and regulations are rising. In the EU and the UK, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million (£17.5 million in the UK) or 4% of annual global revenue, whichever is greater. The authorities have shown a willingness to impose significant fines and issue orders preventing the processing of personal data on non-compliant businesses. Data subjects also have a private right of action, as do consumer associations, to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of applicable data protection laws. The APPI allows for fines of up to ¥100M for violations of the law. In the United States, possible consequences for non-compliance include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies.

In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards that may legally or contractually apply to us. If we fail to follow these security standards, even if no customer information is compromised, we may incur significant fines or experience a significant increase in costs.

The risk of our being found in violation of these laws is increased by the fact that the interpretation and enforcement of such laws is not entirely clear. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.

Compliance with data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. It could also require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business. Failure by us or our collaborators and third-party providers to comply with data protection laws and regulations could result in government enforcement actions (which could include civil or criminal penalties and orders preventing us from processing personal data), private litigation and result in

 

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significant fines and penalties against us. Moreover, clinical trial participants about whom we or our potential collaborators obtain information, as well as the providers who share this information with us, may contractually limit our ability to use and disclose the information. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend, could result in adverse publicity and could have a material adverse effect on our business, financial condition, results of operations and prospects.

We provide patient services using text and voice calls to communicate with healthcare providers, patients, and prospective patients, and we are subject to various marketing and advertising laws including the Telephone Consumer Protection Act. If we fail to comply with applicable laws, including the TCPA, we may be subject to significant liabilities.

Our patient service center uses short message service, or SMS, text messages and telephone calls to communicate with healthcare providers, patients and prospective patients. We also may use SMS, text messages and telephone calls for marketing purposes with the recipient’s advance consent. The actual or perceived improper sending of text messages or the making of telephone calls may subject us to potential risks, including liabilities or claims relating to consumer protection laws. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct SMS texting programs or make unwanted telephone calls, with many resulting in multi-million-dollar settlements to the plaintiffs. Any future such litigation against us could be costly and time-consuming to defend. For example, the Telephone Consumer Protections Act of 1991, the TCPA, is a federal statute that protects consumers from unwanted telephone calls, faxes, and text messages, restricts telemarketing and the use of automated SMS text messages without proper consent. Additionally, state regulators may determine that telephone calls to our patients are subject to state telemarketing regulations. Federal or state regulatory authorities or private litigants may claim that the notices and disclosures we provide, form of consents we obtain, or our SMS texting practices are not adequate or violate applicable law. This may in the future result in civil claims against us. The scope and interpretation of the laws that are or may be applicable to the delivery of text messages are continuously evolving and developing. If we do not comply with these laws or regulations or if we become liable under these laws or regulations, we could face direct liability, could be required to change some portions of our business model, could face negative publicity, and our business, prospects, results of operations and financial condition could be materially and adversely affected. Even an unsuccessful challenge of our SMS texting or telephone calling practices by our customers, regulatory authorities, or other third parties could result in negative publicity and could require a costly response from and defense by us.

We are subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations. We can face serious consequences for violations. Our relationships with customers and third-party payers will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminished profits and future earnings.

Among other matters, U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations (which are collectively referred to herein as “Trade Laws”), prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. We expect our non-U.S. activities to increase in time. We plan to engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals and we can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities. Any of these consequences could have a material adverse effect on our business, prospects, results of operations and financial condition.

 

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Our employees, independent contractors, consultants, commercial collaborators, principal investigators, vendors and other agents may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, consultants, commercial collaborators, principal investigators, vendors and other agents may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violates applicable regulations, including those laws requiring the reporting of true, complete and accurate information to regulatory agencies, manufacturing standards and U.S. federal and state healthcare laws and regulations. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. We could face liability under the U.S. federal Anti-Kickback Statute and similar U.S. state laws. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, referrals, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical trials, which could result in significant regulatory sanctions and serious harm to our reputation. Further, should violations include promotion of unapproved (off-label) uses one or more of our products, we could face significant regulatory sanctions for unlawful promotion, as well as substantial penalties under applicable federal or state laws. Similar concerns could exist in jurisdictions outside of the United States as well. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. The precautions we take to detect and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Federal, state and local employment-related laws and regulations could increase our cost of doing business and subject us to fines and lawsuits.

Our operations are subject to a variety of federal, state and local employment-related laws and regulations, including, but not limited to, the U.S. Fair Labor Standards Act, which governs such matters as minimum wages, the Family Medical Leave Act, overtime pay, compensable time, recordkeeping and other working conditions, Title VII of the Civil Rights Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the National Labor Relations Act, regulations of the Equal Employment Opportunity Commission, regulations of the Office of Civil Rights, regulations of the Department of Labor (DOL), regulations of state attorneys general, federal and state wage and hour laws, and a variety of similar laws enacted by the federal and state governments that govern these and other employment-related matters. As our employees are located in a number of states, compliance with these evolving federal, state and local laws and regulations could substantially increase our cost of doing business while failure to do so could subject us to fines and lawsuits.

 

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Risks Related to our Intellectual Property and Technology

If we are unable to adequately protect and enforce our intellectual property and proprietary technology, obtain and maintain patent protection for our technology and products where appropriate or if the scope of the patent protection obtained is not sufficiently broad, or if we are unable to protect the confidentiality of our trade secrets and know-how, our competitors could develop and commercialize technology and products similar or identical to our products, and our ability to successfully commercialize our technology and products may be impaired.

Our commercial success will depend in part on our ability to obtain, maintain, protect and enforce our proprietary and intellectual property rights in the United States and other countries for our product candidates, and our core technologies, including EndeavorRx, preclinical and clinical assets, methods of use patents and related know-how. We seek to protect our proprietary and intellectual property position by, among other methods, filing patent applications in the United States and abroad related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. However, the patent process is expensive, time consuming and complex, and we may not be able to apply for patents on certain aspects of our technology and products in a timely fashion, at a reasonable cost, in all jurisdictions or at all, and any potential patent coverage we obtain may not be sufficient to prevent substantial competition. In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain, enforce and defend the patents, covering technology that we may exclusively license from third parties. Further, we can provide no assurance that any of our current or future patent applications will result in issued patents or that any issued patents will provide us with any competitive advantage. In addition, we also rely on trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position that we seek to protect, in part, through confidentiality agreements with employees, consultants and others. We cannot assure you, however, that our proprietary information will not be shared or accessed without authorization, that our confidentiality agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors. Further, if any collaboration partner or licensor is unable to obtain or maintain patent or trade secret protection with respect to product candidates that we or they currently are or may in the future develop, or if the scope of the protection secured is not sufficiently broad, third parties could develop and commercialize products similar or identical to ours and our ability to commercialize any product candidates we may develop may be adversely affected. Our inability to maintain and protect our proprietary information and trade secrets could have a material adverse effect on our business, prospects, results of operations and financial conditions.

We may become involved in litigation to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming and unsuccessful. We may not be able to effectively prosecute and enforce our intellectual property rights throughout the world. Failure to protect or enforce intellectual property rights could have a material adverse effect on our business, prospects, results of operations and financial condition.

Competitors and other third parties may infringe, misappropriate or otherwise violate our patents and other intellectual property rights. To counter infringement or unauthorized use, we may be required to file infringement claims. A court may disagree with our allegations, however, and may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover it. Further, such third parties could counterclaim that we infringe their intellectual property or that a patent we have asserted against them is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims, post-grant review, and inter partes reviews challenging the validity, enforceability or scope of asserted patents are commonplace. In addition, third parties may initiate legal proceedings against us to assert such challenges to our intellectual property rights. The outcome of any such proceeding is generally unpredictable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Patents may be unenforceable if someone connected with prosecution of the patent withheld relevant information from the United States Patent and Trademark Office (the “USPTO”) or made a misleading

 

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statement during prosecution. It is possible that prior art of which we and the patent examiner were unaware during prosecution exists, which could render any patents that may issue invalid. Moreover, it is also possible that prior art may exist that we are aware of but do not believe is relevant to our future patents, should they issue, but that could nevertheless be determined to render our patents invalid.

An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. If a defendant were to prevail on a legal assertion of invalidity or unenforceability of our patents covering one of our product candidates, we would lose at least part, and perhaps all, of the patent protection covering such product candidate or technology. Competing products may also be sold in other countries in which our patent coverage might not exist or be as strong. Any litigation or other proceedings to enforce our intellectual property rights may fail and, even if successful, may result in substantial costs and distract our management and other personnel. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.

Accusations of infringement of third-party intellectual property rights could have a material adverse effect on our business, prospects, results of operations and financial condition.

There has been substantial litigation in the healthcare industry regarding intellectual property rights, and we may be sued for infringement from time to time in the future. Also, in some instances, we have agreed to indemnify third parties for expenses and liability resulting from claimed intellectual property infringement. From time to time, we may receive requests for indemnification in connection with allegations of intellectual property infringement and we may choose, or be required, to assume the defense and/or reimburse third parties for their expenses, settlement and/or liability. We cannot assure you that we will be able to settle any future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable to us. Our broad range of technology may increase the likelihood that third parties will claim that we infringe their intellectual property rights.

We may in the future receive notices of allegations of infringement, misappropriation or misuse of other parties’ proprietary rights. Furthermore, regardless of their merits, accusations and litigation of this nature may require significant time and expense to defend, may negatively affect customer relationships, may divert management’s attention away from other aspects of our operations and, upon resolution, could have a material adverse effect on our business, prospects, results of operations and financial condition.

Certain technology necessary for us to provide our solutions may, in fact, be patented by other parties either now or in the future. If such technology were validly patented by a third party, we may have to negotiate a license for the use of that technology. We may not be able to negotiate such a license at a price that is acceptable to us or at all. The existence of such a patent, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using the technology and cease offering products incorporating the technology, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

If we, or any of our products, were found to be infringing on the intellectual property rights of any third party, we could be subject to liability for such infringement, which could be material. We could also be prohibited from using or selling certain products, prohibited from using certain processes, or required to redesign certain products, each of which could have a material adverse effect on our business, prospects, results of operations and financial condition.

These and other outcomes may result in the loss of a substantial number of existing customers or prohibit the acquisition of new customers; cause us to pay license fees for intellectual property we are deemed to have infringed; cause us to incur costs and devote valuable technical resources to redesigning our products; cause our cost of revenues to increase; cause us to accelerate expenditures to preserve existing revenues; materially and adversely affect our brand in the marketplace and cause a substantial loss of goodwill; cause us to change our

 

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business methods or products; and require us to cease certain business operations or offering certain products or features.

If we fail to comply with obligations in the agreements under which we collaborate with or license intellectual property rights from third parties, or otherwise experience disruptions to our business relationships with collaborators or licensors, we could lose rights that are important to our business.

We license certain intellectual property that is important to our business, including from the University of California San Francisco, and in the future we may enter into additional agreements that provide us with licenses to valuable intellectual property or technology. Some of our current license agreements impose various development, diligence, commercialization or sublicensing, and other obligations, including payments in connection with the achievement of specified milestones, on us in order to maintain the licenses. In spite of our efforts, a current or future licensor might conclude that we have materially breached our obligations under such license agreements and seek to terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements. If these in-licenses are terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek marketing authorization of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.

Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including:

 

   

the scope of rights granted under the license agreement and other interpretation-related issues;

 

   

the extent to which our technology and processing infringe on intellectual property of the licensor that is not subject to the licensing agreement;

 

   

the sublicensing of patent and other rights under our collaborative development relationships;

 

   

our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

 

   

the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and

 

   

the priority of invention of patented technology.

The agreements under which we may license intellectual property or technology from third parties may be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, prospects, results of operations and financial condition. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Confidentiality and intellectual property assignment agreements that we have with our employees and other parties may not adequately prevent disclosure of trade secrets and other proprietary information.

We depend heavily upon confidentiality agreements with our officers, employees, consultants and subcontractors to maintain the proprietary nature of our technology. These measures may not afford us complete or even sufficient protection, and may not afford an adequate remedy in the event of an unauthorized disclosure of confidential information. If we fail to protect and/or maintain our intellectual property, third parties may be able

 

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to compete more effectively against us, we may lose our technological or competitive advantage, and/or we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property. In addition, others may independently develop technology similar to ours, otherwise avoiding the confidentiality agreements, or produce patents that would materially and adversely affect our business, prospects, financial condition and results of operations. A third party may also attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Some of our solutions utilize third-party open-source data and software, and any failure to comply with the terms of one or more of these open-source software licenses could have a material adverse effect on our business, prospects, results of operations and financial condition, subject us to litigation, or create potential liability.

Our solutions include software and data licensed from third parties under any one or more open source licenses, and we expect to continue to incorporate open source software in our solutions in the future. Moreover, we cannot ensure that we have effectively monitored our use of open source software, or validated the quality or source of such software, or that we are in compliance with the terms of the applicable open source licenses or our current policies and procedures. There have been claims against companies that use open source software in their products and services asserting that the use of such open source software infringes the claimants’ intellectual property rights. As a result, we could be subject to suits by third parties claiming that what we believe to be licensed open source software infringes such third parties’ intellectual property rights. Additionally, if an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages and required to comply with onerous conditions or restrictions on these solutions, which could disrupt the distribution and sale of these solutions. Litigation could be costly for us to defend, have a material adverse effect on our business, prospects, results of operations and financial condition, or require us to devote additional research and development resources to change our solutions. Furthermore, these third-party open source providers could experience service outages, data loss, privacy breaches, cyber-attacks, and other events relating to the applications and services they provide that could diminish the utility of these services and which could harm our business as a result.

Use of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, including with respect to security vulnerabilities where open source software may be more susceptible. In addition, certain open source licenses require that source code for software programs that interact with such open source software be made available to the public at no cost and that any modifications or derivative works to such open source software continue to be licensed under the same terms as the open source software license. The terms of various open source licenses to which we are subject have not been interpreted by courts in the relevant jurisdictions, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market or provide our software and data. By the terms of certain open source licenses, we could be required to release the source code of our proprietary software, and to make our proprietary software available under open source licenses, if we combine our proprietary software with open source software in a certain manner. In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our solutions, or otherwise be limited in the licensing of our solutions, each of which could reduce or eliminate the value of our solutions. Disclosing our proprietary source code could allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales. Furthermore, any such re-engineering or other remedial efforts could require significant additional research and development resources, and we may not be able to successfully complete any such re-engineering or other remedial efforts. Any of these events could create liability for us and

 

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damage our reputation, which could have a material adverse effect on our business, prospects, results of operations, financial condition and the market price of our shares.

Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general and may impact the validity, scope or enforceability of our patent rights, thereby impairing our ability to protect our product candidates.

As is the case with other digital therapeutic companies, our success is dependent on intellectual property, particularly patents and trade secrets. Obtaining and enforcing patents in the digital therapeutic industry involve both technological and legal complexity and are therefore costly, time consuming, and inherently uncertain. Our patent rights, their associated costs, and the enforcement or defense of such patent rights may be affected by developments or uncertainty in the patent statute, patent case law or USPTO rules and regulations. Changes in either the patent laws or interpretation of the patent laws could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of our issued patents.

For example, in March 2013, under the Leahy-Smith America Invents Act (the “America Invents Act”), the United States transitioned from a “first to invent” to a “first-to-file” patent system. Under a “first-to-file” system, assuming that other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on an invention regardless of whether another inventor had made the invention earlier. A third party that files a patent application in the USPTO after March 2013, but before us, could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either file any patent application related to our technology or product candidates or invent any of the inventions claimed in our or our licensor’s patents or patent applications. The America Invents Act also includes a number of other significant changes to U.S. patent law, including provisions that affect the way patent applications will be prosecuted, allowing third party submission of prior art and establishing a new post-grant review system including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. The effects of these changes are currently unclear as the USPTO continues to promulgate new regulations and procedures in connection with the America Invents Act and many of the substantive changes to patent law, including the “first-to-file” provisions, only became effective in March 2013. In addition, the courts have yet to address many of these provisions and the applicability of the act and new regulations on the specific patents discussed in this filing have not been determined and would need to be reviewed. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Additionally, there have been recent proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact our ability to obtain patent protection for our proprietary technology or our ability to enforce rights in our proprietary technology. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce any patents that we may obtain in the future.

In addition, it is uncertain whether the World Trade Organization (the “WTO”) will waive certain intellectual property protections now or in the future on certain technologies. It is unknown if such a waiver would be limited

 

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to patents, or would include other forms of intellectual property including trade secrets and confidential know-how. We cannot be certain that any of our current or future product candidates or technologies would not be subject to an intellectual property waiver by the WTO. We also cannot be certain that any of our current or future intellectual property rights, whether patents, trade secrets, or confidential know-how would be eliminated, narrowed, or weakened by such a waiver. Given the uncertain future actions by the WTO and other countries and jurisdictions around the world, including the United States, it is unpredictable how our current or future intellectual property rights or how our current or future business would be impacted.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and trade names by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names. Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, know-how, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could have a material adverse effect on our business, prospects, results of operations and financial condition.

We in-license patents and content from third parties to develop our products and product candidates. If we fail to obtain or maintain such licenses, or have a dispute with a third-party licensor, it could materially and adversely affect our ability to commercialize the product or product candidates affected by the dispute.

Licensing intellectual property involves complex legal, business and scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:

 

   

the scope of rights granted under the license agreement and other interpretation-related issues;

 

   

amount of royalty payments under the license agreement;

 

   

whether and to what extent our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

 

   

our right to sublicense patent and other rights to collaborators and other third parties;

 

   

our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations; and

 

   

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators.

We use the patented or proprietary technology of third parties to commercialize our products, If we are not able to maintain such licenses, or fail to obtain any future necessary licenses on commercially reasonable terms or with sufficient breadth to cover the intended use of third-party intellectual property, our business could be materially harmed.

 

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If disputes over licensed intellectual property prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product, or the dispute may have an adverse effect on our results of operation.

Risks Related to our Financial Reporting and Position

We will need substantial additional funding, and if we are unable to raise capital when needed or on terms favorable to us, our business, financial condition and results of operations could be materially and adversely affected.

We have consumed substantial amounts of capital to date, and we expect to incur net losses over the next several years as we continue to develop our business, direct market our products and make investments in our human capital in order to scale up our business. We expect to continue to spend substantial amounts to continue the development of our pipeline of product candidates, to complete our currently planned clinical trials and future clinical trials, to achieve and maintain market acceptance by physicians and patients, expand our marketing channels and operations, grow and enhance our platform offering of products, and make the necessary investments in human capital to scale our business. Other unanticipated costs may arise in the course of our development efforts. If we are able to gain marketing authorization for additional product candidates, we will require significant additional amounts of funding in order to launch and commercialize such additional product candidates. We cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product candidate we develop and may need substantial additional funding after consummation of this transaction to complete the development and commercialization of our existing and any future product candidates. Our future need for additional funding depends on many factors, including:

 

   

the scope, progress, results and costs of researching and developing our current product candidates, as well as other additional product candidates we may develop and pursue in the future;

 

   

the timing of, and the costs involved in, obtaining marketing authorization for our product candidates and any other additional product candidates we may develop and pursue in the future;

 

   

the number of future product candidates that we may pursue and their development requirements;

 

   

the costs of commercialization activities for our product candidates, including the costs and timing of establishing product sales, marketing, and distribution capabilities;

 

   

revenue received from commercial sales of our current products and, subject to receipt of authorization, revenue, if any, received from commercial sales of our product candidates;

 

   

the extent to which we in-license or acquires rights to other products, product candidates or technologies;

 

   

our investment in our human capital required to grow the business and the associated costs as we expand our research and development and establishes a commercial infrastructure;

 

   

the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property-related claims;

 

   

the cost of operating a public company; and

 

   

the extent to which the public shareholders of SCS choose to redeem their public shares in connection with the Business Combination.

We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, reduce or terminate our product development programs or plans for commercialization. Further, if we raise additional capital in the form of capital stock (or securities exchangeable therefore), such issuances could dilute the interests of our stockholders.

We do not currently have any commitments for future funding beyond the consummation of the Business Combination. We believe that following the consummation of the Business Combination (including the

 

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consummation of the transactions contemplated by the Subscription Agreements), we will be able to fund our operating expenses and capital expenditure requirements into 2024. Our estimates may prove to be wrong, and we could use our available capital resources sooner than expected. Further, changing circumstances, some of which are beyond our control, could cause us to consume capital significantly faster than anticipated, and we may need to seek additional funds sooner than planned. If adequate funds are not available on acceptable terms, we may not be able to successfully execute our business plan or continue our business.

The amount of our future losses is uncertain and our quarterly and annual operating results may fluctuate significantly or fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.

Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following:

 

   

the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners or as a result of COVID-19;

 

   

our ability to successfully recruit and retain subjects for clinical trials, and any delays caused by difficulties in such efforts, including as a result of COVID-19;

 

   

our ability to obtain marketing authorization for our product candidates and the timing and scope of any such marketing authorizations we may receive;

 

   

the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time;

 

   

our ability to attract, hire and retain qualified personnel;

 

   

expenditures that we will or may incur to develop additional product candidates;

 

   

the level of demand for EndeavorRx and our other product candidates should such product candidates receive marketing authorizations, which may vary significantly;

 

   

the risk/benefit profile, cost and reimbursement policies with respect to EndeavorRx and our other product candidates, if granted marketing authorization, and existing and potential future therapeutics that compete with our product candidates;

 

   

the changing and volatile U.S. and global economic environments including global inflationary pressures; and

 

   

future accounting pronouncements or changes in our accounting policies.

The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our operating results or revenue fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, investors may lose confidence in the

 

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accuracy of our financial reports, which would harm our business and the trading price of our common stock. Our management will be required to evaluate the effectiveness of our internal control over financial reporting.

As a public reporting company, we will become subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations established by the SEC and Nasdaq. These rules and regulations will require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel, including senior management. In addition, as a public company, we will be required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting. Management’s initial certification under Section 404 of the Sarbanes-Oxley Act will be required with our annual report on Form 10-K for the year ending December 31, 2022.

In support of such certifications, we will be required to document and make significant changes and enhancements, including potentially hiring additional personnel, to our internal control over financial reporting. Likewise, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report is required to be filed with the SEC following the date we are no longer an emerging growth company.

To achieve compliance with Section 404 within the prescribed period, we will need to continue to dedicate internal resources, including hiring additional financial and accounting personnel and potentially engaging outside consultants. During our evaluation of our internal control, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.

We rely on assumptions, estimates, internally developed software and data from third parties to deliver timely and accurate information in order to accurately report our financial results in the timeframe and manner required by law.

Certain of our performance indicators and other business metrics are calculated using third-party applications or internal company data that have not been independently verified. While these numbers are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring such information. In addition, our measurement of certain metrics may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology and as a result our results may not be comparable to our competitors.

We could be subject to additional tax liabilities and our ability to use our net operating loss carryforwards and other tax attributes may be limited.

We have incurred net operating losses, or NOLs, since our inception and may never achieve or sustain profitability. Generally, for U.S. federal income tax purposes, NOLs incurred will carry forward. However, NOL carryforwards generated prior to January 1, 2018, are subject to expiration for U.S. federal income tax purposes. As of December 31, 2021, we had federal NOL carryforwards of approximately $161.4 million, of which $31.2 million will begin to expire in 2031. As of December 31, 2021, we had state NOL carryforwards of approximately $66.9 million which will begin to expire in 2031. As of December 31 2021, we also had federal research and development tax credits of $4.4 million, which may be available to offset future income tax liabilities. The federal research and development tax credit carryforwards would begin to expire in 2039. As of December 31, 2021, we also had state research and development tax credits of $1.9 million, which may be available to offset future income tax liabilities. Certain state research and development tax credit carryforwards would begin to expire in 2033.

 

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In general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in our equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-ownership change NOLs, carryforwards and other pre-ownership change tax attributes, such as research tax credits, to offset its post-ownership change income or taxes may be limited. Similar provisions of state tax law may also apply to limit the use of our state NOL carryforwards and other state tax attributes. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes. In addition, future changes in our stock ownership, including with respect to the proposed Business Combination, which may be outside of our control, may materially limit our ability to utilize our NOL carryforwards and other tax attributes. As a result, even if we earn net taxable income in the future, we may be unable to use a material portion of our NOL carryforwards and other tax attributes, which could materially and adversely affect our future cash flows. There is also a risk that regulatory changes, such as suspensions on the use of NOL or other unforeseen reasons, may result in our existing NOL carryforwards expiring or otherwise becoming unavailable to offset future taxable income. For these reasons, we may not be able to utilize a material portion of our NOL carryforwards and other tax attributes, even if we attain profitability. A temporary suspension of the use of certain net operating losses and tax credits has been enacted in California, and other states may enact suspensions as well. If we are limited in our ability to use our NOLs in future years in which we have taxable income, we will pay more taxes than if we were able to fully utilize our NOLs. This could have a material adverse effect on our business, prospects, results of operations and financial condition.

Risks Related to the Business Combination and SCS

Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us,” or “our” refer to SCS prior to the consummation of the Business Combination.

The Sponsor has agreed to vote in favor of the Business Combination, regardless of how SCS’s public shareholders vote.

Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor and each director and officer of SCS have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement. As of the date of this proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding ordinary shares. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates.

Neither the SCS board of directors nor any committee thereof obtained a third-party valuation in determining whether or not to pursue the Business Combination.

Neither the SCS board of directors nor any committee thereof is required to obtain an opinion that the price that we are paying for Akili is fair to us from a financial point of view. Neither the SCS board of directors nor any committee thereof obtained a third-party valuation in connection with the Business Combination. In analyzing the Business Combination, the SCS board of directors and management conducted due diligence on Akili. The SCS board of directors reviewed comparisons of selected financial data of Akili with its peers in the industry and the financial terms set forth in the Merger Agreement, and concluded that the Business Combination was in the best interest of SCS’s shareholders. Accordingly, investors will be relying solely on the judgment of the SCS board of directors and management in valuing Akili, and the SCS board of directors and management may not have properly valued such businesses. The lack of a third-party valuation may also lead an increased number of shareholders to vote against the Business Combination or demand redemption of their shares, which could potentially impact our ability to consummate the Business Combination.

 

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We may be forced to close the Business Combination even if we determined it is no longer in our shareholders’ best interest.

Our public shareholders are protected from a material adverse event of Akili arising between the date of the Merger Agreement and the Closing primarily by the right to redeem their public shares for a pro rata portion of the funds held in the trust account, calculated as of two business days prior to the vote at the extraordinary general meeting.

However, if we do not obtain shareholder approval at the extraordinary general meeting, Akili can continually obligate us to hold additional extraordinary general meetings to vote on the Condition Precedent Proposals until the earlier of such shareholder approval being obtained and three business days prior to the Agreement End Date. We are also restricted from seeking, soliciting, negotiating or consummating any alternative business combination while the Merger Agreement is still in effect.

Since the Sponsor and SCS’s directors and executive officers have interests that are different, or in addition to (and which may conflict with) the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Akili is appropriate as our initial business combination. Such interests include that Sponsor will lose its entire investment in us if the Business Combination is not completed.

When you consider the recommendation of SCS’s board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor and SCS’s directors and officers have interests in such proposal that are different from, or in addition to, those of SCS shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

On March 2, 2021, the Sponsor paid $25,000 to cover certain offering and formation costs of SCS in consideration for which the Sponsor received 5,750,000 Class B ordinary shares. On June 29, 2021, the Company effected a share capitalization with respect to its Class B ordinary shares of 575,000 shares thereof, resulting in the Company’s initial shareholders holding an aggregate of 6,325,000 founder shares. All share and per-share amounts have been retroactively restated to reflect the share capitalization. The founder shares included an aggregate of up to 825,000 shares that were subject to forfeiture depending on the extent to which the underwriters’ over-allotment option was exercised. As a result of the underwriters’ election to partially exercise their over-allotment option, a total of 750,000 founder shares are no longer subject to forfeiture and 75,000 founder shares were forfeited, resulting in an aggregate of 6,250,000 founder shares outstanding. If SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders and the 640,000 private placement shares held by the Sponsor would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. The 640,000 private placement shares were purchased by the Sponsor simultaneously with the

 

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consummation of SCS’s initial public offering for an aggregate purchase price of $6,400,000. The Sponsor and each officer and director of SCS did not receive any compensation in exchange for their agreement to waive these redemption rights. Certain of SCS’s directors and executive officers, including Chamath Palihapitiya and Kishen Mehta, also have an economic interest in the 640,000 private placement shares purchased by the Sponsor simultaneously with the consummation of SCS’s initial public offering and in the 6,250,000 SCS Class B ordinary shares owned by the Sponsor. The 6,250,000 shares of Akili, Inc. common stock into which the 6,250,000 SCS Class B ordinary shares collectively held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $61,640,200 based upon the closing price of $9.91 per public share on Nasdaq on July 19, 2022, the most