NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Note 1 — Description of Organization and Business
Operations
ARYA Sciences Acquisition
Corp. (the “Company”) is a newly organized blank check company incorporated on June 29, 2018 (inception) 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 (the “Business Combination”). While the Company may pursue
an acquisition opportunity in any business, industry, sector or geographical location, it focuses on industries that complement
its management team’s background, and in its search for targets for its Business Combination capitalizes on the ability
of its management team to identify and acquire a business, focusing on the healthcare or healthcare related industries. In particular,
the Company is targeting North American or European companies in the biotech, pharmaceutical, medical device and therapeutics
subsectors where its management has extensive investment experience. The Company is an emerging growth company and, as such, the
Company is subject to all of the risks associated with emerging growth companies.
As of March 31, 2019,
the Company had not commenced any operations. All activity for the period from June 29, 2018 (inception) to March 31, 2019 relates
to the Company’s formation, the preparation for the initial public offering (the “Initial Public Offering”)
described below, and since the Initial Public Offering, the search for a target for a Business Combination. The Company will not
generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will
generate non-operating income in the form of interest income on cash and investments from the proceeds derived from the Initial
Public Offering.
The Company’s
sponsor is ARYA Sciences Holdings, a Cayman Islands exempted limited company (the “Sponsor”). The registration
statement for the Company’s Initial Public Offering was declared effective on October 4, 2018. On October 10, 2018, the
Company consummated the Initial Public Offering, and offered and sold 14,375,000 units (each, a “Unit” and
collectively, the “Units”) for $10.00 per Unit, which is discussed in Note 3, generating gross proceeds of $143.75 million,
and incurring offering costs of approximately $9.2 million, inclusive of approximately $4.672 million in deferred underwriting
commissions (Note 5).
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the private placement (the “Private Placement”)
of 5,953,125 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”)
at a price of $1.00 per Private Placement Warrant, to the Sponsor, generating gross proceeds of approximately $5.95 million (Note
4).
Upon the closing
of the Initial Public Offering and the Private Placement, $143.75 million ($10.00 per Unit) of the net proceeds of the
Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (the “Trust
Account”), located in the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company
acting as trustee, and will only be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of
the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less
or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions
of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier
of: (i) the completion of a Business Combination and (ii) the distribution of the assets held in the Trust Account as described
below.
Upon closing of the
Initial Public Offering and the Private Placement, the Company had approximately $1.2 million in cash held outside of the
Trust Account. The Company’s management has broad discretion with respect to the specific application of the net proceeds
of the Initial Public Offering and the Private Placement, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market
value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable
on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the
Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
The Company will
provide the holders of its outstanding Class A ordinary shares, par value $0.0001 (the “Class A ordinary shares”),
sold in the Initial Public Offering (the “Public Shareholders”) with the opportunity to redeem all or a portion of
their Public Shares (as defined in Note 3) upon the completion of a Business Combination either (i) in connection with a shareholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company
will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in
the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Shareholders
who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters
(as discussed in Note 5). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the
completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such
case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon
such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination.
If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other
legal reasons, the Company will, pursuant to its amended and restated memorandum and articles of association, conduct the redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”) and file tender offer
documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transactions is required
by law, or the Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem
Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.
Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against
the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders
(as defined below) agreed to vote their Founder Shares (as defined in Note 4) and any Public Shares purchased during or after
the Initial Public Offering in favor of a Business Combination. In addition, the initial shareholders agreed to waive their redemption
rights with respect to their Founder Shares and any Public Shares acquired by them in connection with the completion of a Business
Combination.
Notwithstanding the
foregoing, the Company’s amended and restated memorandum and articles of association provide that a Public Shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted
from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent
of the Company.
The Company’s
Sponsor, officers and directors (the “initial shareholders”) agreed not to propose an amendment to the amended and
restated memorandum and articles of association that would affect the substance or timing of the Company’s obligation to
redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined
below), unless the Company provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction
with any such amendment.
If the Company is
unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 10, 2020
(the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten 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 earned on the funds held
in the Trust Account and not previously released to the Company to pay its income taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then 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 (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal
dissolution of the Company, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims
of creditors and the requirements of other applicable law.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
The initial shareholders
agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination
within the Combination Period. However, if the initial shareholders acquire Public Shares in or after the Initial Public Offering,
they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails
to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred
underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination
within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that
will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible
that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be
only the $10.00 per share initially held in the Trust Account (or less than that in certain circumstances). In order to protect
the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by third
parties, including any vendor for services rendered or products sold to the Company, or a prospective target business with which
the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability
will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any
kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of
the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
“Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party,
the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce
the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all
third parties, including vendors, service providers (except for the Company’s independent registered public accounting firm),
prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving
any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Capital Resources
At March 31, 2019, the Company had approximately
$1.1 million in its operating bank account, and working capital of approximately $1.2 million, and approximately $1.6 million
of interest income available to pay income taxes.
The Company’s liquidity needs were
satisfied prior to the completion of the Initial Public Offering through receipt of a $25,000 capital contribution from the Sponsor
in exchange for the issuance of the Founder Shares to the Sponsor and a commitment from the Sponsor to loan up to $300,000 to
the Company to cover the Company’s expenses in connection with the Initial Public Offering. The Sponsor paid for an aggregate
of approximately $148,000 for expenses on the Company’s behalf under the Note. On October 10, 2018, the Company repaid the
note in full and advanced an additional $1,524 to the Sponsor. The Sponsor repaid this advance back to the Company on October
12, 2018. Subsequent to the consummation of the Intial Public Offering, the Company received approximately $1.6 million from the
net proceeds of the Private Placement not held in the Trust Account for working capital needs.
Based on the foregoing, management believes
that the Company will have sufficient working capital and borrowing capacity to meet the Company’s needs through the earlier
of the consummation of an initial Business Combination or one year from this filing. Over this time period, the Company will be
using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates,
performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge
with or acquire, and structuring, negotiating and consummating the initial Business Combination.
Note 2 — Summary of Significant
Accounting Policies
Basis of Presentation
The
accompanying unaudited interim condensed financial statements are presented in U.S. dollars in conformity with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and
pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which
include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented.
Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected
through December 31, 2019.
The
accompanying unaudited interim condensed financial statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2019.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Emerging Growth Company
The Company is an
“emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business
Startups Act of 2012 (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 its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and shareholder 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 an emerging growth 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.
The Company 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, the Company, 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 the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging
growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which,
at times, may exceed the Federal Depository Insurance Coverage of $250,000. At March 31, 2019 and December 31, 2018, the Company
has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Use of Estimates
The preparation of
the unaudited interim condensed financial statements in conformity with U.S. GAAP requires the Company’s management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the unaudited interim condensed financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
Offering Costs
Offering costs consist
of legal, accounting, underwriting fees and other costs that were directly related to the Initial Public Offering and were charged
to shareholders’ equity upon the completion of the Initial Public Offering.
Class A Ordinary Shares subject
to possible redemption
The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in FASB ASC
Topic 480 “
Distinguishing Liabilities from Equity
.” Class A ordinary shares subject to mandatory redemption
(if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary
shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified
as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s
Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control
and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2019 and December 31, 2018, 13,686,244 and
13,614,368 Class A ordinary shares subject to possible redemption at the redemption amount are presented as temporary equity,
outside of the shareholders’ equity section of the Company’s balance sheets.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Net Income (Loss) Per Ordinary Share
Net income (loss)
per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period.
The Company has not considered the effect of warrants sold in the Initial Public Offering and Private Placement to purchase 13,140,625
Class A ordinary shares of the Company in the calculation of diluted income per share, since their inclusion would be anti-dilutive
under the treasury stock method.
The Company’s
statement of operation includes a presentation of income per share for Class A ordinary shares subject to redemption in a manner
similar to the two-class method of income per share. Net income per share, basic and diluted for Class A ordinary shares is calculated
by dividing the interest income earned on the Trust Account of approximately $872,000, by the weighted average number of Class
A ordinary shares outstanding for the period. Net loss per share, basic and diluted for Class B ordinary shares is calculated
by dividing the net income, less income attributable to Public Shares, by the weighted average number of Class B ordinary shares
outstanding for the period.
Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “
Fair
Value Measurements and Disclosures
,” approximates the carrying amounts represented in the balance sheets.
Fair Value Measurements
Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between
market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers
include:
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Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not
active; and
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Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are
unobservable.
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In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances,
the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is
significant to the fair value measurement.
Income Taxes
The Company follows
the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “
Income Taxes
.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
FASB ASC Topic 740
prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely
than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2019
and December 31, 2018. The Company’s management determined that the Cayman Islands is the Company’s only major tax
jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits and no amounts were accrued for interest and penalties at March 31, 2019 and December
31, 2018. The Company is currently not aware of any issues under review that could result in significant payments, accruals or
material deviation from its position.
The Company may be
subject to potential examination by U.S. federal, U.S. state or foreign taxing authorities in the area of income taxes. These
potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions
and compliance with U.S. federal, U.S. state and foreign tax laws. There is currently no taxation imposed on income by the Government
of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently,
deferred tax assets and income taxes are not reflected in the Company’s unaudited interim condensed financial statements.
The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over
the next twelve months.
Recent Accounting Pronouncements
The Company’s
management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted,
would have a material effect on the Company’s unaudited interim condensed financial statements.
Note 3 — Initial Public Offering
On October 10, 2018,
the Company sold 14,375,000 Units at a price of $10.00 per Unit in the Initial Public Offering. Each Unit consists of one
Class A ordinary share (such Class A ordinary shares included in the Units being offered, the “Public Shares”), and
one-half of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase
one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 6).
Note 4 — Related Party Transactions
Founder Shares
On July 5, 2018,
the Sponsor paid $25,000 to cover certain expenses and offering costs on behalf of the Company in consideration of 3,593,750 shares
(the “Founder Shares”) of the Company’s Class B ordinary shares, par value $0.0001 per share (the “Class
B ordinary shares”). Prior to the consummation of the Initial Public Offering, the Sponsor transferred 30,000 Founder Shares
to each of Kevin Conroy, Dr. Todd Wider and Dr. David Hung, the Company’s independent directors. The Founder Shares will
automatically convert into Class A ordinary shares at the time of the Company’s initial Business Combination and are subject
to certain transfer restrictions, as described in Note 6. The Sponsor had agreed to forfeit up to 468,750 Founder Shares to the
extent that the over-allotment option was not exercised in full by the underwriters. On October 10, 2018, the underwriters exercised
the over-allotment option in full; thus, these Founder Shares were no longer subject to forfeiture.
The initial shareholders
agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur
of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination,
(x) if the last sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger,
share exchange or other similar transaction that results in all of the Company’s shareholders having the right to exchange
their ordinary shares for cash, securities or other property.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Private Placement Warrants
Concurrently with
the closing of the Initial Public Offering, the Sponsor purchased 5,953,125 Private Placement Warrants at a price of $1.00
per Private Placement Warrant, generating proceeds of approximately $5.953 million in the Private Placement.
Each Private
Placement Warrant is exercisable for one Class A ordinary share at a price of $11.50 per share. A portion of the proceeds from
the sale of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account.
If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire
worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held
by the Sponsor or its permitted transferees.
The Sponsor and the
Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private
Placement Warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On July 5, 2018,
the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering
pursuant to a promissory note (the “Note”). This loan is non-interest bearing and payable on the earlier of December
31, 2018 or the completion of the Initial Public Offering. The Sponsor paid for an aggregate of approximately $148,000 to cover
for expenses on the Company’s behalf under the Note. On October 10, 2018, the Company repaid the Note in full and advanced
an additional $1,524 to the Sponsor. The Sponsor repaid this advance back to the Company on October 12, 2018.
In addition, in order
to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out
of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of
funds held outside the Trust Account. In the event that a Business Combination is not completed, the Company may use a portion
of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would
be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not
been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon
consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working
Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants
would be identical to the Private Placement Warrants. As of March 31, 2019 and December 31, 2018, there were no outstanding Working
Capital Loans under this arrangement.
Administrative Support Agreement
The Company agreed,
commencing on the effective date of the Initial Public Offering in October 2018 through the earlier of the Company’s consummation
of a Business Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities and
secretarial and administrative support. The Company recognized $30,000 in expenses incurred in connection with the aforementioned
arrangements with the related parties on the Statement of Operations for the three months ended March 31, 2019.
Private Placement of Ordinary Shares
The Sponsor has indicated
an interest to purchase up to $25.0 million of the Company’s ordinary shares in a private placement that would occur concurrently
with the consummation of the initial Business Combination. The funds from such private placement would be used as part of the
consideration to the sellers in the initial Business Combination, and any excess funds from such private placement would be used
for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments
to purchase, the Sponsor may determine not to purchase any such shares, or to purchase fewer shares than it indicated an interest
in purchasing. Furthermore, the Company is not under any obligation to sell any such shares.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Note 5 — Commitments & Contingencies
Registration and Shareholder Rights
The holders of Founder
Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled
to registration rights (in the case of the Founder Shares, only after conversion of such shares into Class A ordinary shares)
pursuant to a registration and shareholder rights agreement entered into in connection with the consummation of the Initial Public
Offering. These holders are entitled to certain demand and “piggyback” registration and shareholder rights. However,
the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under
the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted
the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up
to 1,875,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions.
The underwriters exercised this option in full on October 10, 2018.
The underwriters
were entitled to underwriting discounts of $0.275 per Unit, or approximately $3.953 million in the aggregate, paid upon the closing
of the Initial Public Offering. An additional fee of $0.325 per Unit, or approximately $4.672 million in the aggregate, will be
payable to the underwriters for deferred underwriting commissions. The deferred underwriting commissions will become payable to
the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
Note 6 — Shareholders’
Equity
Class A Ordinary
Shares
— The Company is authorized to issue 479,000,000 Class A ordinary shares with a par value of $0.0001
per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share on each matter on which
they are entitled to vote. As of March 31, 2019 and December 31, 2018, there were 14,375,000 Class A ordinary shares
issued or outstanding, including 13,686,244 and 13,614,368 Class A ordinary shares subject to possible redemption, respectively.
Class B Ordinary
Shares
— The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001
per share. Holders of Class A ordinary shares and Class B ordinary shares will vote together as a single class on all matters
submitted to vote, except as required by law. Holders of Class B ordinary shares are entitled to one vote for each share. As of
March 31, 2019 and December 31, 2018, there were 3,593,750 Class B ordinary shares outstanding.
The Class B ordinary
shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination at a ratio such
that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate,
on an as-converted basis, 20.0% of the sum of (i) the total number of Class A ordinary shares issued and outstanding upon completion
of the Initial Public Offering, plus (ii) the sum of (a) the total number of Class A ordinary shares or equity-linked securities
exercisable for or convertible into Class A ordinary shares issued or deemed issued in connection with the initial Business Combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination or
any warrants issued to the Sponsor upon conversion of Working Capital Loans), minus (b) the number of Public Shares redeemed by
Public Shareholders in connection with the initial Business Combination.
Preference
Shares
— The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share,
and with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s
board of directors. As of March 31, 2019 and December 31, 2018, there were no preference shares issued or outstanding.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Warrants
—
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation
of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days
after the completion of a Business Combination or (b) twelve months from the closing of the Initial Public Offering; provided
in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares
issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders
to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities
Act). The Company agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business
Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the
Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. The Company will use its best efforts
to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus
relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a
registration statement covering the Class A ordinary shares issuable upon exercise of the Public Warrants is not effective by
the sixtieth (60th) day after the closing of the initial Business Combination, warrant holders may, until such time as there is
an effective registration statement and during any period when the Company will have failed to maintain an effective registration
statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another
exemption. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation.
The Private Placement
Warrants are identical to the Public Warrants included in the Units sold in the Initial Public Offering, except that the Private
Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,
the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees. If
the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company may call
the Public Warrants for redemption:
|
|
●
|
in
whole and not in part;
|
|
|
●
|
at
a price of $0.01 per warrant;
|
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
|
●
|
if,
and only if, the last reported closing price of the ordinary shares equals or exceeds $18.00 per share for any 20 trading days
within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption
to the warrant holders.
|
If the Company calls
the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price
and number of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not
be adjusted for issuance of Class A ordinary shares at a price below its exercise price. Additionally, in no event will the Company
be required to net cash settle the warrant shares. If the Company is unable to complete a Business Combination within the Combination
Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds
with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
ARYA
SCIENCES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Note 7 — Fair Value Measurements
The following table
presents information about the Company’s assets that are measured on a recurring basis as of March 31, 2019 and December 31, 2018 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
March 31, 2019
|
|
|
Quoted Prices
in Active Markets
|
|
|
Significant Other
Observable Inputs
|
|
|
Significant
Other
Unobservable Inputs
|
|
|
Description
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Cash and investment held in Trust Account
|
|
$
|
145,360,619
|
|
|
|
-
|
|
|
|
-
|
|
December 31, 2018
|
|
|
Quoted Prices
in Active Markets
|
|
|
Significant Other
Observable Inputs
|
|
|
Significant
Other
Unobservable Inputs
|
|
|
Description
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Cash and investment held in Trust Account
|
|
$
|
144,488,284
|
|
|
|
-
|
|
|
|
-
|
|
At March 31, 2019
and December 31, 2018, approximately $696 of the balance held in the Trust Account was held in cash at both periods.
Note 8 — Subsequent Events
The Company evaluated
subsequent events and transactions that occurred up to the date the unaudited interim condensed financial statements were available
to be issued. Based upon this review, the Company did not identify any other subsequent events, not previously disclosed, that
would have required adjustment or disclosure in the unaudited interim condensed financial statements.
