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Item 2. Management’s Discussion and Analysis

2021-08-10 compared with 2021-05-13 · 238 added, 282 removed, 3 unchanged (99% of the section changed)

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

References to the “Company,” “our,” “us” or “we” refer to ARYA Sciences Acquisition Corp III.

The following discussion and analysis of the Company’s financial condition and

results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.

Certain information contained in the discussion and analysis

set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements contained in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” for purposes of the federal securities laws.

Our forward-looking statements

include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future.

In addition, any statements that refer to projections, forecasts or other

characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.

The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,”

“potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us.

There can be no

assurance that future developments affecting us will be those that we have anticipated.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual

results or performance to be materially different from those expressed or implied by these forward-looking statements.

These risks and uncertainties include, but are not limited to, the following risks, uncertainties (some of which are beyond our

control) or other factors:

we have no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective;

our ability to select an appropriate target business or businesses;

our ability to complete a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”) ;

our expectations around the performance of a prospective target business or businesses;

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial Business Combination;

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial Business Combination;

our potential ability to obtain additional financing to complete our initial Business Combination;

our pool of prospective target businesses;

our ability to consummate an initial Business Combination due to the uncertainty resulting from the recent COVID-19 pandemic;

the ability of our officers and directors to generate a number of potential Business Combination opportunities;

our public securities’ potential liquidity and trading;

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

the trust account not being subject to claims of third parties

our financial performance following our initial public offering (the “Initial Public Offering”);

the other risks and uncertainties discussed herein, in our annual report on form 10-K filed with the SEC on March 30, 2021 and our other filings with the SEC.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

We are a blank check company incorporated on March 27, 2020 as a Cayman Islands exempted company for the purpose of effecting a Business Combination that we have not yet identified.

is ARYA Sciences Holdings III, a Cayman Islands exempted limited company (our “Sponsor”).

Our registration statement for our Initial Public Offering was declared effective on August 6, 2020.

On August 11, 2020, we consummated the Initial Public Offering of 14,950,000 Class A ordinary

shares (the “Public Shares”), including the 1,950,000 Public Shares as a result of the underwriters’ full exercise of their over-allotment option, at an offering price of $10.00 per Public Share, generating gross proceeds of $149.5 million, and

incurring offering costs of approximately $8.8 million, inclusive of approximately $5.2 million in deferred underwriting commissions.

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 499,000 Class A ordinary shares (the “Private Placement Shares”), at

a price of $10.00 per Private Placement Share to our Sponsor, generating gross proceeds of approximately $5.0 million.

Upon the closing of the Initial Public Offering and the Private Placement, $149.5 million ($10.00 per share) of the net proceeds of the Initial Public Offering and certain of the proceeds of the

Private Placement were placed in a trust account (“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 be invested only in U.S.

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 185 days or less or in money market fund meeting the conditions of paragraphs (d)(1),

(d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of:

(i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

If we have not completed a Business Combination within 24 months from the closing of the Initial Public Offering, or August 11, 2022 or with respect to any other provision relating to the rights

of Public Shareholders, unless we provide the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment, we will (i) cease all operations except for the purpose of winding up;

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 us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding Public Shares, which redemption will

completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any);

and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our

remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

We reviewed a number of opportunities to enter into a business combination with an operating business before entering on February 7, 2021 into the business combination agreement (“Business

Combination Agreement”), by and among the company, Mako Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Nautilus Biotechnology, Inc., a Delaware corporation (“Nautilus”).

We intend to finance the Business Combination through a

combination of (i) shares of New Nautilus Common Stock (as defined below) issued to the equityholders of Nautilus, (ii) cash held in the trust account net of redemptions and deferred underwriting discounts and (iii) gross proceeds from the PIPE

Financing (as defined below).

The issuance of additional shares in a business combination:

may significantly dilute the equity interest of investors in our initial public offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the

issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;

may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;

could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and

could result in the resignation or removal of our present officers and directors;

may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;

may adversely affect prevailing market prices for our Class A ordinary shares.

Similarly, if we issue debt or otherwise incur significant debt, it could result in:

our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;

our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

our inability to pay dividends on our ordinary shares;

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares, if declared, expenses, capital

expenditures, acquisitions and other general corporate purposes;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages

compared to our competitors who have less debt.

As of March 31, 2021, we had approximately $682,000 in cash held outside of the trust account, approximately $149.6 million in cash held in the trust account.

Further, we expect to continue to

incur significant costs in the pursuit of our initial business combination.

We cannot assure you that our plans to raise capital or to complete the Business Combination will be successful.

Proposed Nautilus Business Combination and related Proposed Transactions

The Business Combination Agreement provides for, among other things, the following transactions:

(i) Nautilus will changes its name to “Nautilus Subsidiary, Inc.” (or another name mutually

agreed to by us and Nautilus);

(ii) we will become a Delaware corporation (the “Domestication”) and, in connection with the Domestication, (A) our name will be changed to “Nautilus Biotechnology, Inc.” (“New Nautilus”) and (B) each of our

outstanding Class A ordinary shares and outstanding Class B ordinary shares will become one share of common stock of New Nautilus (the “New Nautilus Common Stock”);

and (iii) following the Domestication, Merger Sub will merge with and into

Nautilus, with Nautilus as the surviving company in the merger and, after giving effect to such merger, continuing as a wholly-owned subsidiary of New Nautilus (the “Merger”).

The Domestication, the Merger and the other transactions contemplated

by the Business Combination Agreement are hereinafter referred to as the “Nautilus Business Combination.”

In accordance with the terms and subject to the conditions of the Business Combination Agreement, outstanding shares of Nautilus (other than treasury shares and any Company Dissenting Shares

(as defined in the Business Combination Agreement) will be exchanged for shares of New Nautilus Common Stock and outstanding Nautilus options to purchase shares of Nautilus (whether vested or unvested) will be exchanged for comparable options to

purchase New Nautilus Common Stock, in each case, based on an implied Nautilus equity value of $900 million.

The Nautilus Business Combination is expected to close in the second quarter of 2021, following the receipt of the required approval by our shareholders and the fulfillment of other customary

closing conditions.

Concurrently with the execution of the Business Combination Agreement, the company, the sponsor, and each other holder of Class B ordinary shares of ARYA (the “ Other

Class B Shareholders ”) and Nautilus entered into the Sponsor Letter Agreement (the “ Sponsor Letter Agreement ”), pursuant to which the sponsor and the Other Class B Shareholders, among other

things, (i) vote in favor of each of the transaction proposals to be voted upon at the meeting of ARYA shareholders, including approval of the Business Combination Agreement and the transactions contemplated thereby (including the Merger) and

(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);

and (iii) be bound by certain transfer restrictions with respect to his, her or its shares in the company prior to the closing of the Nautilus Business Combination, in

each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement.

Concurrently with the execution of the Business Combination Agreement, we entered into subscription agreements (the “Subscription Agreements”) with certain investors, including, among others,

Perceptive Life Sciences Master Fund Ltd., a fund managed by Perceptive Advisors, an affiliate of the sponsor, as well as certain equity holders of Nautilus and additional third party investors.

Pursuant to the Subscription Agreements, each

investor agreed to subscribe for and purchase, and the Company agreed to issue and sell to such investors, on the Closing Date (as defined in the Business Combination Agreement) immediately prior to the Closing (as defined in the Business

Combination Agreement), an aggregate of 20,000,000 shares of the New Nautilus Common Stock for a purchase price of $10.00 per share, for aggregate gross proceeds of $200,000,000.

Within 24 hours of the signing of the Business Combination Agreement, certain directors, officers and stockholders of Nautilus entered into a Transaction Support Agreement with the company,

pursuant to which such parties have agreed to, among other things, (i) support and vote in favor of the Business Combination Agreement and the transactions contemplated thereby (including the Merger), and (ii) be bound by certain other covenants

and agreements related to the Nautilus Business Combination, including a restriction on transfers with respect to his, her or its shares in Nautilus prior to the closing of the Nautilus Business Combination.

The company, the Perceptive Shareholders (as defined in the Business Combination Agreement), the Other Class B Shareholders and certain Nautilus shareholders entered into an amended and

restated registration rights and lock-up agreement, pursuant to which, among other things, the Perceptive Shareholders, the Other Class B Shareholders and the certain Nautilus shareholders agreed not to effect any sale or distribution of the

company equity securities during the lock-up period described therein and will be granted certain customary registration rights, in each case subject to, and conditioned upon and effective as of, the effective time of the Merger.

A copy of each of the above referenced agreements is filed as exhibits with a Current Report on Form 8-K, filed with the SEC on February 8, 2021.

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of Nautilus Biotechnology, Inc.’s (“Nautilus” or the “Company”) condensed consolidated results of operations and financial condition.

The discussion should be read together with the condensed consolidated financial statements and the accompanying notes to those statements that are included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements for the year ended December 31, 2020 and the related notes included in the Company’s Current Report on Form 8-K filed with the SEC on June 10, 2021.

This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.

Nautilus’ actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” in Part II, Item 1A as set forth in this Quarterly Report on Form 10-Q.

Unless otherwise indicated or the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to “Nautilus,” “we,” “us,” “our” and other similar terms refer to the business and operations of Legacy Nautilus prior to the Business Combination and to New Nautilus and its consolidated subsidiary following the Business Combination.

We are a development stage life sciences company creating a platform technology for quantifying and unlocking the complexity of the human proteome.

Our mission is to transform the field of proteomics by democratizing access to the proteome and enabling fundamental advancements across human health and medicine.

We were founded on the belief that incremental advancements of existing technologies are inadequate, and that a bold scientific leap would be required to radically reinvent proteomics and revolutionize precision medicine.

Our vision is to integrate our breakthrough innovations in computer science, engineering, and biochemistry to develop and commercialize a proteomic analysis technology of extreme sensitivity and scale.

To accomplish this, we have built a prototype of a single-molecule instrument, our Proteomic Analysis System, which will be further developed to deliver the speed, simplicity, accuracy, and versatility that we believe is necessary to establish a new gold standard in the field.

Since our incorporation in 2016, we have devoted substantially all of our resources to research and development activities, including with respect to our proteomics platform, or Nautilus Platform, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.

We do not have any products available for commercial sale, and we have not generated any revenue from our Nautilus Platform or other sources since inception.

Our ability to generate revenue sufficient to achieve profitability, if ever, will depend on the successful development and eventual commercialization of our Nautilus Platform, which we expect, if it ever occurs, will take a number of years.

Our Nautilus Platform, which includes our end-to-end solution comprised of instruments, consumables, and software analysis, is currently under development and will require significant additional research and development efforts, including extensive testing prior to commercialization.

These efforts require significant amounts of additional capital and adequate personnel infrastructure.

There can be no assurance that our research and development activities will be successfully completed, or that our Nautilus Platform will be commercially viable.

In order to commercialize our Nautilus Platform in volume, we will need to establish internal manufacturing capacity or to contract with one or more manufacturing partners, or both.

Our technology is complex, and the manufacturing process for our products will be similarly complex, involving a large number of unique precision parts in addition to the production of various reagents and antibodies.

We may encounter unexpected difficulties in manufacturing our Nautilus Platform, instruments, and related consumables.

Among other factors, we will need to develop reliable supply chains for the various components in the Nautilus Platform, instruments, and consumables to support large-scale commercial production.

In connection with our Nautilus Platform, we intend to utilize over 300 complex reagents and various antibodies in order to generate deep proteomic information at the speed and scale

which we expect our Nautilus Platform to perform.

Such reagents and antibodies are expected to be more difficult to manufacture and more expensive to procure.

There is no assurance that we will be able to build manufacturing or consumable production capacity internally or find one or more suitable manufacturing or production partners, or both, to meet the volume and quality requirements necessary to be successful in the proteomics market.

Given our stage of development, we have not yet established a commercial organization or distribution capabilities.

We do intend to build a commercial infrastructure to support sales of our products.

We expect to manage sales, marketing and distribution through both internal resources and third-party relationships.

We plan to commercialize our proteomics platform using a three-phase plan that has been shown to be effective and optimal for introducing disruptive products in numerous life sciences technology markets.

The first phase is expected to involve collaboration with biopharmaceutical companies and key opinion leaders to validate the performance and utility of Nautilus’ product, during which we do not expect to recognize significant revenue, if any.

The second phase will include an early access limited release phase in which we expect to recognize limited revenue.

Finally, the third phase is anticipated to include a broader commercial launch.

We are currently in the collaboration phase during which we are seeking to enter collaborations with a small number of research customers, including with biopharmaceutical companies and key opinion leaders in proteomics whose assessment and validation of our products can significantly influence other researchers in their respective markets and/or fields.

During the early access limited release phase, we plan to leverage our publications to drive awareness and customer demand to pre-sell instruments and reagents to select customers performing large-scale proteomics research.

During this phase, we plan to provide our early access program partners with broad-scale analysis and profiling of samples analyzed in our facility and shared via a cloud platform.

We do not anticipate that the second phase will begin any earlier than the second half of 2022 and do not anticipate that it will result in any material revenue.

During this phase, we expect to work closely with early access customers to demonstrate a unique value proposition for our proteomics product platform.

We expect this second phase to continue through the end of 2023 and lead into the third phase of broad commercialization at the end of 2023 and the beginning of 2024.

We do not expect to realize any material revenue prior to the second half of 2023.

We intend to commercialize our Nautilus Platform through a direct sales channel in the United States, and through both direct and distributor sales channels in regions outside the United States.

Given our stage of development, we currently have no marketing, sales, commercial product distribution or service and support capabilities.

We intend to build the necessary infrastructure for these activities in the United States, European Union, the United Kingdom, and potentially other countries and regions, including Asia-Pacific, as we execute on our three phase commercial launch strategy for our Nautilus Platform.

Prior to the Business Combination, we financed our operations primarily through private placements of convertible preferred stock.

Through June 30, 2021, we had raised aggregate net proceeds of $108.4 million from these private placements and as of June 30, 2021, we had cash, cash equivalents and short-term investments of $373.1 million.

Following consummation of the Business Combination and PIPE Financing, we received additional gross proceeds of approximately $345.5 million from PIPE Investors and the Business Combination, offset by approximately $18.2 million of transaction costs and underwriters’ fees relating to the closing of the Business Combination.

Based on this, we believe that our existing cash, cash equivalents, and short-term investments will enable us to fund our planned operating expenses and capital expenditures through at least the next 12 months.

We have incurred significant losses since the commencement of our operations.

Our net loss was $19.1 million during the six months ended June 30, 2021, and we expect to continue to incur significant losses for the foreseeable future as we continue our research and development activities and planned commercialization of our proteomics platform.

As of June 30, 2021, we had an accumulated deficit of $49.4 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and to a lesser extent from general and administrative costs associated with our operations.

We expect to incur significant and increasing expenses and operating losses for the foreseeable future.

Our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned commercialization and research and development activities.

We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities as we:

• continue our research and development activities, including with respect to our Nautilus Platform;

• undertake activities to establish sales, marketing and distribution capabilities for our Nautilus Platform;

• setup costs related to production tooling and required testing;

• maintain, protect and expand our intellectual property portfolio, including patents, trade secrets and know how;

• implement operational, financial and management information systems;

• attract, hire and retain additional management, scientific and administrative personnel;

• operate as a public company.

As a result, we will require substantial additional funding to develop our products and support our continuing operations.

Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties or from grants.

We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all.

Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, and could force us to delay, reduce or eliminate our product development or future commercialization efforts.

We may also be required to grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.

The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Impact of COVID-19 Pandemic

The global COVID-19 pandemic continues to rapidly evolve.

The extent of the impact of the COVID-19 pandemic on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on our development activities, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

As the COVID-19 pandemic has developed, we have taken numerous steps to help ensure the health and safety of our employees.

We are maintaining hygiene and respiratory protocols;

controls for social distancing;

enhanced cleaning, disinfecting, decontamination, and ventilation protocols;

health policies;

and usage of personal protective equipment, where appropriate.

During March and April of 2020 in which stay at home orders were in place in the state of California and Washington, the volume of ongoing lab work was reduced, and only critical program work in the lab has continued with staggered lab employee work shifts to minimize risk of exposure to COVID-19, which has and may continue to disrupt or delay our ability to conduct development activities.

Employees whose tasks can be performed offsite have been instructed to work from home.

We have been and continue to actively monitor our supply chain during the COVID-19 pandemic, including third-party materials and suppliers.

To date, we have experienced some supply disruptions due to the pandemic, including closures at certain chip manufacturers, which led to extended lead times for certain chips;

diversion of certain lab materials needed to support COVID-19 relief efforts;

and lower availability of certain reagents.

While certain of these disruptions have resolved since the start of the COVID-19 pandemic, we are continuing to monitor our supply chain and contingency planning is ongoing with our partners to reduce the possibility of an interruption to our development activities or the availability of necessary materials.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel and with our employees working remotely.

We will continue to actively monitor the rapidly

evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

At this point, the extent to which the COVID-19 pandemic may affect our future business, operations and development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain.

Reverse Recapitalization Transaction

On June 9, 2021 (the “Closing Date”), Nautilus Biotechnology, Inc., a Delaware corporation (f/k/a ARYA Sciences Acquisition Corp III, a Cayman Islan ds exempted company and our predecessor company (“ARYA”)) (the “Company”), consummated its previously announced business combination (the “Business Combination”) pursuant to the terms of that certain Business Combination Agreement, dated as of February 7, 2021 (the “Business Combination Agreement”), by and among ARYA, Mako Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ARYA (“Mako Merger Sub”), and Nautilus Subsidiary, Inc., a Delaware corporation (f/k/a Nautilus Biotechnology, Inc.) (“Legacy Nautilus”).

Pursuant to the terms of the Business Combination Agreement, on the Closing Date, (i) ARYA changed its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”), upon which ARYA changed its name to “Nautilus Biotechnology, Inc.” (together with its consolidated subsidiary, “New Nautilus” or “Nautilus”) and (ii) Mako Merger Sub merged with and into Legacy Nautilus (the “Merger”), with Legacy Nautilus as the surviving company in the Merger and, after giving effect to such Merger, Legacy Nautilus becoming a wholly-owned subsidiary of New Nautilus.

In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the effective time of the Merger (the “Effective Time”), (i) each share of Legacy Nautilus outstanding as of immediately prior to the Effective Time was exchanged for shares of common stock of New Nautilus, par value $0.0001 per share (“Common Stock”), and (ii) all vested and unvested options to purchase shares of Legacy Nautilus were exchanged for comparable options to purchase shares of Common Stock, in each case, based on an implied Legacy Nautilus equity value of $900,000,000.

As of the open of trading on June 10, 2021, the Common Stock of the Company, formerly those of ARYA, began trading on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “NAUT.”

In conjunction with the consummation of the Business Combination with ARYA, we received gross proceeds of approximately $345.5 million from PIPE Investors and the Business Combination, offset by approximately $18.2 million of transaction costs and underwriters’ fees relating to the closing of the Business Combination.

Components of Our Results of Operations

To date, we have not generated any revenue and we may not generate any revenue from the sale of products or from other sources in the near future.

Operating Expenses

Research and Development Expense

Research and development expenses account for a significant portion of our operating expenses and consist primarily of salaries, related benefits and stock-based compensation expense of product development personnel, facilities costs, laboratory supplies and equipment, depreciation and amortization, external costs of vendors engaged to conduct research and development activities, and allocated expenses for technology and facilities.

We expense research and development expenses in the periods in which they are incurred.

We plan to continue to invest in our research and development efforts and to increase our investment in research and development efforts related to our product development.

As a result, we expect research and development

expenses to increase in absolute dollars as we continue to advance our product development, hire additional personnel and retain existing personnel, purchase supplies and materials and allocate expense to our research and development facilities.

General and Administrative Expenses

General and administrative expenses consist of salaries and benefits, and stock-based compensation expense for personnel in executive, operations, legal, human resources, finance and administrative functions, professional fees for legal, patent, consulting, accounting and audit services, and allocated expenses for technology and facilities.

We expense general and administrative expenses in the periods in which they are incurred.

We expect that our general and administrative expenses will increase substantially over the next several years as we hire additional personnel to support the continued research and development of our products and growth of our business.

Following the completion of the Business Combination, we also anticipate that we will incur substantially higher expenses as a result of operating as a public company, i ncluding expenses related to accounting, audit, legal, regulatory, insurance, compliance with the rules and regulations of the SEC, Sarbanes-Oxley Act an d those of any national securities exchange on which our securities are traded, director and officer insurance, investor and public relations, and other administrative and professional services.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income on our cash, cash equivalents and investments and other miscellaneous non recurring expenses.

Results of Operations

Our entire activity since inception through March 31, 2021 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the

search for a prospective initial Business Combination.

We have neither engaged in any operations nor generated any revenues to date.

We will not generate any operating revenues until after completion of our initial Business Combination.

generate non-operating income in the form of interest income, gains, dividends and interest on cash, cash equivalents and investments held in the Trust Account.

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.

For the three months ended March 31, 2021, we had a net loss of approximately $1.8 million, which consisted of approximately $1.8 million in general and administrative expenses partially offset

by approximately $11,000 of net gains, dividends and interest on investments held in Trust Account.

Going Concern Consideration

As of March 31, 2021, we had approximately $682,000 in our operating bank account and a working capital deficit of approximately $864,000, and no interest income available in the Trust Account to

pay for our tax obligations, if any.

Our liquidity needs to date have been satisfied through a contribution of $25,000 from our Sponsor to cover certain of our offering costs in exchange for the issuance of the Founder Shares, the

loan proceeds of $200,000 from our Sponsor pursuant to a note agreement (the “Note”), and the proceeds from the consummation of the Private Placement not held in the Trust Account.

We repaid the Note in full on August 11, 2020.

In addition, in

order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to, provide us working capital loans.

As of March 31,

2021, there were no amounts outstanding under any working capital loan.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Updated (“ASU”) 2014-15, “Disclosures of Uncertainties about

an Entity’s Ability to Continue as a Going Concern”, management has determined that the working capital deficit raises substantial about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustment

that might be necessary if the Company is unable to continue as a going concern .

We continue to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the balance sheet.

The financial statement

does not include any adjustments that might result from the outcome of this uncertainty.

Related Party Transactions

Founder Shares

On April 2, 2020, our sponsor paid $25,000 to cover certain expenses and offering costs on behalf of our company in consideration of 3,593,750 Class B ordinary shares, par value $0.0001 per

In July 2020, the sponsor transferred an aggregate of 90,000 founder shares to our independent directors.

On August 6, 2020, we effected a share capitalization resulting in the initial shareholders holding 3,737,500 founder shares.

shares and the associated amounts have been retroactively restated to reflect the share capitalization.

The sponsor agreed to forfeit up to 487,500 founder shares to the extent that the over-allotment option was not exercised in full by the

Underwriters, so that the founder shares would represent 20.0% of our issued and outstanding ordinary shares (excluding the private placement shares) after the Initial Public Offering.

The Underwriters fully exercised the over-allotment option

on August 11, 2020;

thus, these 487,500 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:

(i) one year after the completion of

the initial Business Combination and (ii) subsequent to the initial Business Combination, (A) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations,

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 (B) the date on which we complete a liquidation, merger, share

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

Private Placement Shares

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 499,000 private placement shares, at a price of $10.00 per private placement share to the

sponsor, generating gross proceeds of approximately $5.0 million.

The private placement shares will not be transferable or salable until 30 days after the completion of the initial Business Combination.

A portion of the proceeds from the

private placement shares was added to the proceeds from the Initial Public Offering held in the trust account.

The sponsor and our officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their private placement shares until 30 days after the completion of the

initial Business Combination.

Related Party Loans

On April 2, 2020, the sponsor agreed to loan us an aggregate of up to $300,000 to cover for expenses related to the Initial Public Offering pursuant to the Note.

This loan was non-interest

bearing and payable upon the completion of the Initial Public Offering.

We borrowed $200,000 under the Note and fully repaid this Note on August 11, 2020.

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 our officers and directors may, but are

not obligated to, loan us funds as may be required in the form of Working Capital Loans.

If we complete a Business Combination, we may repay the Working Capital Loans out of the proceeds of the trust account released to us.

Otherwise, the Working

Capital Loans may be repaid only out of funds held outside the trust account.

In the event that a Business Combination does not close, we 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 shares of the post Business

Combination entity at a price of $10.00 per share.

The shares would be identical to the private placement shares.

To date, we have no outstanding borrowings under the Working Capital Loans.

Administrative Support Agreement

Commencing on the date the registration statement relating to our Initial Public Offering became effective through the earlier of consummation of the initial Business Combination and our

liquidation, we reimburse the sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month.

We incurred $30,000 for these services and are included in general and administrative expenses in

the accompanying unaudited statement of operations for the three months ended March 31, 2021.

Other Contractual Obligations

We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than for an agreement pay our Sponsor

fees of $10,000 per month for administrative support services.

Registration and Shareholder Rights

The holders of founder shares, private placement shares, and securities that may be issued upon conversion of Working Capital Loans, if any, are entitled to registration rights pursuant to a

registration and shareholder rights agreement.

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 our completion of a business combination.

However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed

under the Securities Act of 1933, as amended (the “Securities Act”) to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the founder shares, in accordance with the letter agreement our initial

shareholders entered into and (ii) in the case of the private placement shares, 30 days after the completion of our business combination.

The company will bear the expenses incurred in connection with the filing of any such registration

Underwriting Agreement

We granted the Underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 1,950,000 additional Public Shares to cover over-allotments at

the initial public offering price less the underwriting discounts and commissions.

The Underwriters fully exercised the over-allotment option on August 11, 2020.

The Underwriters were paid a cash underwriting discount of $0.20 per Public Share, or $3.0 million in the aggregate, paid upon the closing of the Initial Public Offering.

In addition, $0.35 per

Public Share, or approximately $5.2 million in the aggregate, will be payable to the Underwriters for deferred underwriting commissions.

The deferred fee will become payable to the Underwriters 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.

Critical Accounting Policies

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting

principles generally accepted in the United States of America.

The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the

disclosure of contingent assets and liabilities in our financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses.

We base our estimates

on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

The Company has identified the following as its critical accounting policies:

Class A Ordinary Shares Subject to Possible Redemption

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.

Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of

uncertain future events.

Accordingly, at March 31, 2021, 13,846,772 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

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 periods.

Our unaudited condensed statements of operations

include a presentation of income (loss) per share for ordinary shares subject to redemption in a manner similar to the two-class method of income per share.

Net income per ordinary share, basic and diluted, for Class A ordinary shares is

calculated by dividing the net gain, dividends and interest on investments held in Trust Account, net of applicable taxes available to be withdrawn from the Trust Account, resulting in a net gain of approximately $11,000 for the three months

ended March 31, 2021, by the weighted average number of Class A ordinary shares outstanding for the period.

Net loss per ordinary share, basic and diluted for Class B ordinary shares is calculated by dividing the net loss, less income

attributable to Class A ordinary shares by the weighted average number of Class B ordinary shares outstanding for the period.

Fair Value of Financial Instruments

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

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:

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

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;

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.

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.

As of March 31, 2021, the carrying values of cash, prepaid expenses and accrued expenses approximate their fair values due to the short-term nature of the instruments.

The Company’s investments

held in trust account is comprised of investments in U.S.

Treasury securities with an original maturity of 180 days or less and are recognized at fair value.

The fair value of investments held in trust account is determined using quoted prices in

active markets.

Recent Accounting Pronouncements

Our management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June, 2020

The following table shows our statements of operations for the periods indicated:

Three Months Ended June 30, Change

(in thousands)

Operating expenses:

Research and development $ 6,380 $ 2,751 $ 3,629 132 %

General and administrative 4,317 649 3,668 565 %

Total operating expenses 10,697 3,400 7,297 215 %

Other income (expense), net (16) 45 (61) (136) %

Net loss $ (10,713) $ (3,355) $ (7,358) 219 %

Research and Development Expenses

Research and development expenses were $6.4 million for the three months ended June 30, 2021, compared to $2.8 million for the three months ended June 30, 2020, an increase of $3.6 million, or 132%.

The increase was primarily due to a $2.0 million increase in salaries, related benefits, and stock-based compensation due to an increase in headcount to support on-going development of our products, a $0.9 million increase in laboratory supplies and equipment expense and a $0.2 million increase in facilities costs.

General and Administrative Expenses

General and administrative expenses were $4.3 million for the three months ended June 30, 2021, compared to $0.6 million for the three months ended June 30, 2020, an increase of $3.7 million, or 565%.

The increase was primarily due to a $2.2 million increase in salaries, related benefits, and stock-based compensation, a $0.6 million increase in professional services, primarily related to audit and legal activities and a $0.2 million increase in marketing costs.

Other Income (Expense), Net

Other income (expense), net for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 changed primarily due to lower interest income as well as state franchise taxes incurred in the three months ended June 30, 2021.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June, 2020

The following table shows our statements of operations for the periods indicated:

Six Months Ended June 30, Change

(in thousands)

Operating expenses:

Research and development $ 11,215 $ 5,221 $ 5,994 115 %

General and administrative 7,899 1,176 6,723 572 %

Total operating expenses 19,114 6,397 12,717 199 %

Other income (expense), net (8) 108 (116) (107) %

Net loss $ (19,122) $ (6,289) $ (12,833) 204 %

Research and Development Expenses

Research and development expenses were $11.2 million for the six months ended June 30, 2021, compared to $5.2 million for the six months ended June 30, 2020, an increase of $6.0 million, or 115%.

The increase was primarily due to a $3.4 million increase in salaries, related benefits, and stock-based compensation due to an increase in headcount to support on-going development of our products, a $1.5 million increase in laboratory supplies and equipment expense and a $0.3 million increase in facilities cost.

General and Administrative Expenses

General and administrative expenses were $7.9 million for the six months ended June 30, 2021, compared to $1.2 million for the six months ended June 30, 2020, an increase of $6.7 million, or 572%.

The increase was primarily due to a $3.7 million increase in salaries, related benefits, and stock-based compensation, a $1.8 million increase in professional services, a $0.2 million increase in facilities costs and a $0.2 million increase in marketing costs.

Other Income (Expense), Net

Other income (expense), net for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 changed primarily as a result of a $0.1 million increase in amortization of discounts on investments.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

Our net loss was $19.1 million for the six months ended June 30, 2021.

As of June 30, 2021, we had an accumulated deficit of $49.4 million.

Prior to the Business Combination, we funded our operations primarily with proceeds from the sale of convertible preferred stock.

Through June 30, 2021, we had raised net proceeds of $108.4 million from these private placements of our convertible preferred stock and had cash, cash equivalents and short-term investments of $373.1 million.

In June 2021, in conjunction with the consummation of the Business Combination with ARYA, we received additional gross proceeds of approximately $345.5 million from PIPE Investors and the Business Combination, offset by approximately $18.2 million of transaction costs and underwriters’ fees relating to the closing of the Business Combination.

Our primary uses of cash to date have been to fund our research and development activities, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations.

Funding Requirements

To date, we have not generated any revenue and we may not generate any revenue from the sale of products or from other sources in the near future.

Following the completion of the Business Combination, we expect our expenses and capital requirements will increase substantially in connection with our ongoing activities as we:

• continue our research and development activities, including with respect to our proteomics platform;

• undertake activities to establish sales, marketing and distribution capabilities for our proteomics platform;

• incur setup costs related to production tooling and required testing;

• maintain, protect and expand our intellectual property portfolio, including patents, trade secrets and know how;

• implement operational, financial and management information systems;

• attract, hire and retain additional management, scientific and administrative personnel;

• operate as a public company.

Based on our planned operations, we expect our current cash, cash equivalents, and short-term investments will be sufficient to fund our operating expenses for at least the next 12 months.

We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to:

delays in execution of our development plans;

the scope and timing of our investment in our sales, marketing, and distribution capabilities;

changes we may make to the business that affect ongoing operating expenses;

the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

changes we may make in our business or commercialization strategy;

changes we may make in our research and development spending plans;

our need to implement additional infrastructure and internal systems;

the impact of the COVID-19 pandemic;

and other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions.

Until such time as we can generate significant revenue from commercialization of our products, if ever, we will continue to require substantial additional capital to develop our proteomics platform and fund operations for the foreseeable future.

We intend to obtain such capital through public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these funding sources.

We may also seek additional financing opportunistically.

We may be unable to raise additional funds on favorable terms or at all.

Our failure to raise additional capital, if needed, would have a negative impact on our financial condition and our ability to execute our business plan.

Our expected future capital requirements depend on many factors including expansion of our product portfolio and the timing and extent of spending on sales and marketing and the development of our technology.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution.

Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.

Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Historical Cash Flows

For the Six Months Ended June 30, 2021 and 2020

The following table summarizes our cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

(in thousands)

Net cash used in operating activities $ (14,545) $ (5,898)

Net cash used in investing activities (61,048) (37,687)

Net cash provided by financing activities 327,373 75,861

Net increase in cash, cash equivalents and restricted cash $ 251,780 $ 32,276

Operating Activities

During the six months ended June 30, 2021, net cash used in operating activities was $14.5 million, primarily resulting from our operating loss of $19.1 million, offset by non-cash charges aggregating $4.6 million, which primarily included $3.2 million of stock-based compensation and $0.8 million amortization of operating lease right-of-use assets.

During the six months ended June 30, 2020, net cash used in operating activities was $5.9 million, primarily resulting from our operating loss of $6.3 million, offset by non-cash charges aggregating $1.3 million, which primarily included $0.8 million amortization of operating lease right-of-use assets.

Net cash used in operating activities was increased by net changes in assets and liabilities aggregating $0.9 million, primarily driven by $0.8 million decrease in operating lease liability.

Investing Activities

During the six months ended June 30, 2021, net cash used in investing activities was $61.0 million, primarily resulting from $100.0 million in purchases of securities, partially offset by $40.0 million in proceeds from sale and maturities of securities.

During the six months ended June 30, 2020, net cash used in investing activities was $37.7 million, primarily resulting from $48.3 million in purchases of securities, partially offset by $11.0 million in proceeds from sale and maturities of securities.

Financing Activities

During the six months ended June 30, 2021, net cash provided by financing activities was $327.4 million, primarily resulting from $335.4 million in proceeds from the Business Combination and PIPE Financing, partially offset by $8.1 million in payments of deferred offering costs.

During the six months ended June 30, 2020, net cash provided by financing activities was $75.9 million from proceeds from issuance of convertible preferred stock, net of issuance costs.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of June 30, 2021 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

Payments Due by Period

Total Less than 1 Year 1-3 Years 3-5 Years More than 5 years

(in thousands)

Operating lease obligations (1)(2)(3)

$ 1,298 $ 1,298 $ — $ — $ —

Purchase obligations 1,355 1,355 — — —

Total $ 2,653 $ 2,653 $ — $ — $ —

__________________

(1) Reflects minimum payments due for office space and laboratory space under our short-term and long-term leases in San Carlos, California.

(2) In December 2020, we entered into a new lease in San Carlos, California for ten years commencing in September 2021 and expiring in September 2031 with total minimum lease payments of $42.1 million.

This lease has not commenced as of June 30, 2021, and therefore is not included in the operating lease obligations.

(3) In Ju ly 2021, we entered into a new lease in Seattle, Washington for seven years commencing in August 2021 and expiring in June 2028 with total minimum lease payments of $4.5 million.

This lease had not commenced as of June 30, 2021, and therefore is not included in the operating lease obligations.

Off-Balance Sheet Arrangements

As of March 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

We are electing to delay the adoption of new or

revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

As a result, the financial

statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth in the

JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to

Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted

by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive

compensation related items such as the correlation between executive compensation and performance and comparisons of the executive’s compensation to median employee compensation.

These exemptions will apply for a period of five years following

the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information otherwise

required under this item.

We currently do not have, and did not have during the periods presented, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses.

We evaluate our estimates and assumptions on an ongoing basis, and base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for the judgments we make about the carrying value of assets and liabilities that are not readily apparent from other sources.

Because these estimates can vary depending on the situation, actual results may differ from these estimates.

Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control.

Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and statement of cash flows.

Other than the policies noted in Part I, Item 1, Note 2, “Significant Accounting Policies,” in our notes to condensed consolidated financial statements in this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our audited financial statements as of and for the years ended December 31, 2020 and 2019.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements, see Part I, Item 1, Note 2 “Significant Accounting Policies” in our notes to condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Emerging Growth Company Accounting Election

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards

applicable to public companies until those standards would otherwise apply to private companies.

We have elected to use this extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of our financials to those of other public companies more difficult.

We will cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more, (ii) the last day of our fiscal year following the fifth anniversary of the date of the closing of ARYA’s initial public offering, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.

Further, even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions.

If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis