Research Alliance Corp III 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to the “Company”, “us,” “our,” or “we” refer to Research Alliance Corporation III. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes herein. Overview We are a blank check company incorporated on February 19, 2026 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We intend to effectuate our initial business combination (including the OHBP Business Combination) using the cash from the Initial Public Offering and the sale of the private placement shares, our shares, debt or a combination of cash, equity and debt. We cannot assure you that our plans to complete an initial business combination will be successful. Recent Developments On July 26, 2026, the Company entered into the Business Combination Agreement and related agreements in connection with the proposed OHBP Business Combination. Business Combination Agreement As described in Note 1, on July 26, 2026, the Company, OHBP and the OHBP Shareholders entered into the Business Combination Agreement, pursuant to which the Company will effect the OHBP Business Combination. The OHBP Business Combination is expected to close in the second half of 2026, following the receipt of the requisite approvals of the Company’s shareholders and the fulfillment of other customary closing conditions. Subject to the terms and conditions of the Business Combination Agreement, at least one business day prior to the closing of the OHBP Business Combination (the “Closing”), the Company will de-register from the Register of Companies in the Cayman Islands and transfer by way of continuation from the Cayman Islands to Delaware and domesticate as a Delaware corporation (the “Domestication”), to be renamed “Oak Hill Bio, Inc.” (“New OHB”). Immediately prior to the Domestication, each issued and outstanding Class B ordinary share of the Company will be converted, on a one-for-one basis, into Class A ordinary shares of the Company. In connection with the Domestication, each issued and outstanding Class A ordinary share of the Company will convert automatically, on a one-for-one basis, into one share of common stock, par value $0.0001 per share, of New OHB (the “New OHB Common Stock”). In accordance with the Company’s governing documents and in connection with the OHBP Business Combination transactions, the Company will provide the holders of its Class A ordinary shares the right to have all or a portion of their Class A ordinary shares redeemed for cash, at a per-share price equal to the pro rata portion of the funds then in the Company’s trust account (including interest earned on the funds held in the trust account, less taxes paid or payable). Following the Domestication and concurrently with the Closing, each of the OHBP Shareholders will sell and transfer to Company 100% of the outstanding shares in the capital of OHBP (the “OHBP Shares”) in exchange for newly issued shares of New OHB Common Stock (the “Share Acquisition”). The number of shares of New OHB Common Stock to be issued as consideration for the Share Acquisition (the “Closing Consideration”) is equal to (a) the Adjusted Equity Value (as defined in the Business Combination Agreement) divided by (b) $10.00. Each OHBP Shareholder will receive a number of shares of New OHB Common Stock equal to the Exchange Ratio (as defined in the Business Combination Agreement) multiplied by the number of OHBP Shares held by such OHBP Shareholder. Sponsor Letter Agreement Concurrently with the execution of the Business Combination Agreement, the Company, the Sponsor, each of the Company’s independent directors as holders of Class B shares of the Company (the “Other Class B Shareholders”) and OHBP entered into a sponsor letter agreement (the “Sponsor Letter Agreement”), pursuant to which the Sponsor and each Other Class B Shareholder has agreed to, among other things, (i) vote in favor of the Business Combination Agreement and the OHBP Business Combination, (ii) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution or similar protection with respect to the Class B ordinary shares (whether resulting from the transactions contemplated by the Subscription Agreements (as defined below) or otherwise), (iii) be bound by certain other covenants and agreements related to the OHBP Business Combination, (iv) be bound by certain transfer restrictions with respect to its shares in the Company prior to the Closing, and (v) be subject to the restrictions contemplated by the Lock-Up Agreements (as defined below) in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement. OHBP SAFEs Concurrently with the execution of the Business Combination Agreement, each of RA Capital Healthcare Fund, L.P. and RA Capital Nexus Fund IV, L.P. (the “SAFE Holders”) entered into a simple agreement for future equity (collectively, the “OHBP SAFEs”) with OHBP, pursuant to which the SAFE Holders have agreed to provide interim financing to OHBP in the aggregate principal amount of $45,000,000, bearing interest at a rate of 8% per annum. The OHBP SAFEs will convert into ordinary shares of OHBP immediately prior to the Closing. The sum of the principal amount of the OHBP SAFEs and all accrued and unpaid interest thereon as of the Closing Date is referred to as the “OHBP SAFE Amount.” The OHBP SAFE Amount is added to the Base Equity Value to determine the Adjusted Equity Value for purposes of calculating the Closing Consideration. Backstop Agreement Concurrently with the execution of the Business Combination Agreement, the Company and RA Capital Healthcare Fund, L.P. (the “Backstop Purchaser”) entered into a backstop agreement (the “Backstop Agreement”), pursuant to which the Backstop Purchaser has committed to subscribe for up to 7,500,000 shares of New OHB Common Stock at a purchase price of $10.00 per share (the “Backstop Limit”), to the extent necessary to backstop RACC shareholder redemptions, on the terms and subject to the conditions set forth in the Backstop Agreement. The Backstop Limit will be reduced by the number of public shares not subject to shareholder redemptions. The aggregate amount the Backstop Purchaser will be required to fund pursuant to the Backstop Agreement shall not exceed $75,000,000. PIPE Financing (Private Placement) Concurrently with the execution of the Business Combination Agreement, on July 26, 2026, the Company entered into subscription agreements (the “Subscription Agreements”) with certain qualified institutional buyers, institutional accredited investors, and other accredited investors (collectively, the “PIPE Investors”). Pursuant to the Subscription Agreements, the PIPE Investors agreed to subscribe for and purchase, and the Company agreed to issue and sell to the PIPE Investors, on the date the Closing occurs (the “Closing Date”), (a) shares of New OHB Common Stock at $10.00 per share and/or (b) pre-funded warrants to purchase shares of New OHB Common Stock (the “Pre-Funded Warrants”), each to purchase one share of New OHB Common Stock, with a per share exercise price equal to $0.0001, at a purchase price per Pre-Funded Warrant equal to $10.00 less the exercise price (collectively, the “PIPE Financing”), for aggregate gross proceeds of $55,000,000. The obligations of each party to consummate the PIPE Financing are conditioned upon, among other things, (i) the New OHB Common Stock (including the New OHB Common Stock issuable to the PIPE Investors pursuant to the Subscription Agreements) having been approved for listing on Nasdaq; (ii) satisfaction of all conditions precedent to the Closing (or otherwise waived in accordance with the terms thereto); and (iii) the absence of specified adverse judgments, orders, laws, rules or regulations enjoining or otherwise prohibiting the consummation of the OHBP Business Combination. The obligations of the Company to consummate the PIPE Financing are further subject to additional conditions, including, among other things: (i) material truth and accuracy of the representations and warranties of the PIPE Investors, subject to customary bringdown standards; and (ii) material compliance by the PIPE Investors with their covenants, agreements and conditions under the Subscription Agreements. The obligations of the PIPE Investors to consummate the PIPE Financing are further subject to additional conditions, including, among other things: (i) the Business Combination Agreement shall not have been amended, modified, or supplemented, and no condition waived thereunder, in a manner that would reasonably be expected to materially and adversely affect the economic benefits that a PIPE Investor (in its capacity as such) would reasonably expect to receive under the Subscription Agreements; (ii) the material truth and accuracy of the representations and warranties of the Company in the Subscription Agreements, subject to customary bringdown standards; (iii) no subscription agreement, or other agreements or understandings (including side letters) entered into in connection with the sale of New OHB Common Stock or Pre-Funded Warrants under the Subscription Agreements, with any other PIPE Investors shall have been amended, modified, or waived in any manner that benefits such other PIPE Investor unless all PIPE Investors have been offered substantially the same benefits (other than terms particular to the legal or regulatory requirements of such other PIPE Investor or its affiliates or related persons); (iv) all specified consents, waivers or other authorizations and notices, required to be made in connection with the issuance and sale of New OHB Common Stock under the Subscription Agreements shall have been obtained or made, except where failure to so obtain would not prevent the Company from consummating the transactions contemplated by the Subscription Agreements; (v) material compliance by the Company with its covenants, agreements and conditions under the Subscription Agreements; (vi) there has not occurred any Material Adverse Effect (as defined in the Business Combination Agreement) since the date of the Subscription Agreements that is continuing. The Subscription Agreements provide that the Company will grant the PIPE Investors certain customary registration rights. Investor Rights Agreement In connection with the Closing, the Company, the Sponsor, RA Capital Healthcare Fund, L.P., RA Capital Nexus Fund IV, L.P., certain existing shareholders of the Company, and all former shareholders of OHBP will enter into an investor rights agreement (the “Investor Rights Agreement”). Pursuant to the Investor Rights Agreement, among other things, Company will agree that, within 30 calendar days following the Closing Date, Company will file with the SEC a registration statement registering the resale of certain shares of New OHB Common Stock held by or issuable to the parties thereto (the “Resale Registration Statement”), and the Company will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as reasonably practicable after the filing thereof. Such holders will be entitled to customary piggyback registration rights and demand registration rights, including underwritten demands. The Investor Rights Agreement will amend and restate the Registration Rights Agreement. Lock-Up Agreement At the Closing, the Sponsor, the Other Class B Shareholders, and certain existing shareholders of OHBP will each enter into a lock-up agreement (the “Lock-Up Agreement”) with the Company. Pursuant to the Lock-Up Agreement, the Sponsor, the Other Class B Shareholders, and certain existing shareholders of OHBP will agree not to transfer (except for certain permitted transfers) any shares of New OHB Common Stock held by such holder immediately after the Closing (excluding shares issued pursuant to the Subscription Agreements, and the Backstop Agreement) until six months after the Closing Date. Results of Operations and Known Trends or Future Events We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and activities related to the IPO. We do not expect to generate any operating revenues until after completion of our initial business combination at the earliest. We will generate non-operating income in the form of interest income on cash and cash equivalents derived from the IPO and sale of private placement shares. Since the completion of the IPO, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially as a result of being a public company. For the three months ended June 30, 2026 and the period from February 19, 2026 (inception) through June 30, 2026, we had net income of $54,050 and a net loss of $11,199, respectively, which consisted of formation, general and administrative expenses and interest income. We generated $238,468 of interest income for the three months ended June 30, 2026 and for the period from February 19, 2026 (inception) through June 30, 2026. We had $75,238,468 assets held in the Trust Account as of June 30, 2026. Liquidity and Capital Resources As indicated in the accompanying financial statements, as of June 30, 2026, we had cash of $832,812 and working capital of $905,874. Further, we expect to incur significant costs in the pursuit of our initial business combination, including in connection with the OHBP Business Combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful. On May 21, 2026, the Company consummated its initial public offering of 7,500,000 shares of its Class A ordinary shares, par value $0.0001 per share (each, a “Public Share” and collectively, the “Public Shares”) at $10.00 per Public Share generating gross proceeds of $75,000,000 and incurring offering costs of $3,762,251, inclusive of $2,250,000 in deferred underwriting commissions, $750,000 of upfront underwriting discounts and $762,251 of other offering costs. Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (the “Private Placement”) of 275,000 Class A ordinary shares (the “Private Placement Shares”), generating gross proceeds of $2,750,000. Prior to the closing of the IPO our liquidity needs have been satisfied through a payment of $25,000 from our sponsor to cover certain expenses in exchange for the issuance of the founder shares and a commitment from our sponsor to loan up to $300,000 to us to cover our expenses in connection with the IPO. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less permitted withdrawals and deferred underwriting commissions), to complete our initial business combination. We have available to us the proceeds held outside the trust account, funds from permitted withdrawals as well as certain funds from loans from our sponsor, members of our management team or any of their affiliates. We will use these funds to continue to identify and evaluate target businesses, as needed, perform business due diligence on prospective target businesses including OHBP, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners including OHBP, review corporate documents and material agreements of OHBP, and structure, negotiate and complete a business combination, including in connection with the proposed OHBP Business Combination. We do not believe we will need to raise additional funds following the Initial Public Offering in order to meet the expenditures required for operating our business prior to the completion of our initial business combination, other than funds available from loans from our sponsor, members of our management team or any of their affiliates. However, if our estimates of the costs of undertaking in-depth due diligence and negotiating an initial business combination, including in connection with the proposed OHBP Business Combination, are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the completion of our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor, affiliates of our sponsor or our officers and directors may, but are not obligated to, loan us funds as may be required. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations As of June 30, 2026, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. The underwriter is entitled to a deferred fee of $0.30 per share, or $2,250,000 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement. The Class B ordinary shares of the Company initially issued to the Sponsor (the “Class B Ordinary Shares” and together with the Class A Ordinary Shares, collectively, the “Ordinary Shares”), the Class A Ordinary Shares, and any Class A Ordinary Shares that may be issued upon conversion of working capital loans (and any underlying securities) will be entitled to registration rights pursuant to a registration rights agreement entered into in connection with the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements. Critical Accounting Policies and Estimates In preparing these unaudited financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results may differ from these estimates. We have not identified any critical accounting estimates. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our financial statements. Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, we are not required to make disclosures under this Item.