UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction |
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| (I.R.S. Employer |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: |
| Trading Symbol: |
| Name of Each Exchange on Which Registered: |
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| The Market LLC | ||
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| The Market LLC | ||
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| The Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of September 30, 2021,
Explanatory Note
References throughout this Amendment No. 1 to the Quarterly Report on Form 10-Q/A to “we,” “us,” the “Company” or “our company” are to OTR Acquisition Corp., unless the context otherwise indicates.
This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends the Quarterly Report on 10-Q of OTR Acquisition Corp. as of and for the fiscal period ended September 30, 2021, as filed with the Securities and Exchange Commission (“SEC”) on November 8, 2021 (the “Original Filing”).
In light of recent comment letters issued by the SEC, the Company has re-evaluated our application of ASC 480 10 S99 3A to its accounting and classification of the Class A common stock, par value, par value $0.0001 (the “Public Shares”), issued as part of the units sold in the Initial Public Offering on November 19, 2020. Historically, a portion of the Public Shares was classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Pursuant to such re-evaluation, the Company’s management has determined that the Public Shares include certain provisions that require classification of all of the Public Shares as temporary equity regardless of the net tangible assets redemption limitation contained in the Company’s amended and restated certificate of incorporation. In addition, in connection with the change in presentation for the Public Shares, management determined it should restate earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares of common stock. This presentation contemplates a an initial business combination as the most likely outcome, in which case, both classes of shares share pro rata in the income and losses of the Company.
The Company’s previously filed financial statements that contained the error were initially reported in the Company’s Form 8-K filed with the SEC on November 25, 2020 and the Company’s Annual Report on 10-K for the annual period ended December 31, 2020, which were previously restated in the Company’s Amendment No. 1 to its Form 10-K as filed with the SEC on May 18, 2021, as well as the Form 10-Qs for the quarterly periods ended March 31, 2021, June 30, 2021 and September 30, 2021 (the “Affected Periods”). Therefore, on November 30, 2021, the management and the Company’s Audit Committee concluded that the previously issued financial statements for the Affected Periods should be restated to report all Public Shares as temporary equity and should no longer be relied upon. As such, the Company is restating 2021 interim financial statements for the Affected Periods herein and intends to restate the 2020 period herein.
The restatement does not have an impact on our cash position and cash held in the Trust Account.
The management has concluded that in light of the classification error described above, a material weakness exists in our internal control over financial reporting and that our disclosure controls and procedures were not effective.
In connection with the restatement, our management reassessed the effectiveness of our disclosure controls and procedures for the periods affected by the restatement. As a result of that reassessment, we determined that our disclosure controls and procedures for such periods were not effective with respect to our internal controls around the proper accounting and classification of complex financial instruments. For more information, see Part I Item 4 included in this Amendment No. 1.
The restatement is more fully described in Note 2 of the notes to the financial statements included herein.
We are filing this Amendment No. 1 to amend and restate the Original Filing with modification as necessary to reflect the restatements. The following items have been amended to reflect the restatements:
Part I, Item 1. Financial Statements
Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I, Item 4. Controls and Procedures
Part II, Item 1A. Risk Factors
In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Amendment No. 1 (Exhibits 31.1, 31.2, 32.1 and 32.2).
Except as described above, no other information included in the Original Filing is being amended or updated by this Amendment No. 1 and this Amendment No. 1 does not purport to reflect any information or events subsequent to the Original Filing. This Amendment No. 1 continues to describe the conditions as of the date of the Original Filing and, except as expressly contained herein, we have not updated, modified or supplemented the disclosures contained in the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing.
OTR ACQUISITION CORP.
QUARTERLY REPORT ON FORM 10-Q
Table of Contents
Item 1. Financial Statements
OTR ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| September 30, 2021 |
| December 31, 2020 | |||
(Unaudited) | (Restated) | |||||
Assets | ||||||
Cash | $ | | $ | | ||
Prepaid expenses |
| | | |||
Total Current Assets | | | ||||
Cash and marketable securities held in Trust Account | | | ||||
Total Assets | $ | | $ | | ||
Liabilities and Stockholders' Deficit |
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Current Liabilities |
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Accrued expenses | $ | | $ | | ||
Total Current Liabilities | | | ||||
Deferred underwriting fee payable | | | ||||
Derivative warrant liabilities |
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Total Liabilities |
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Commitments and Contingencies |
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Class A common stock subject to possible redemption; | | |||||
Stockholders' Deficit |
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Preferred stock, $ |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
| — | — | |||
Accumulated deficit |
| ( | ( | |||
Total Stockholders' Deficit |
| ( | ( | |||
Total Liabilities and Stockholders' Deficit | $ | | $ | |
The accompanying notes are an integral part of these condensed financial statements.
2
OTR ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the period from | |||||||||
July 23, 2020 | |||||||||
Three Months Ended | Nine Months Ended | (inception) through | |||||||
September 30, 2021 | September 30, 2021 | September 30, 2020 | |||||||
Operating costs |
| $ | |
| $ | |
| $ | |
Loss from operations | $ | ( | $ | ( | $ | ( | |||
Other income: | |||||||||
Interest earned on cash and marketable securities held in Trust Account | | | — | ||||||
Change in fair value of derivative warrant liabilities | | | — | ||||||
Net income / (loss) | $ | | $ | | $ | ( | |||
Basic and diluted weighted average shares outstanding of redeemable Class A common stock | | | — | ||||||
Basic and diluted net income per share, redeemable Class A common stock | | | $ | — | |||||
Basic and diluted weighted average shares outstanding of non-redeemable common stock(1) |
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Basic and diluted net income / (loss) per share, non-redeemable common stock | | | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
OTR ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the three and nine months ended September 30, 2021
Common Stock | Total | |||||||||||||||||||
Class A | Class B | Additional | Accumulated | Stockholders' | ||||||||||||||||
| Shares |
| Amount | Shares |
| Amount |
| Paid-in Capital |
| Earnings (Deficit) |
| Deficit | ||||||||
Balance - January 1, 2021 | | $ | | | $ | | $ | ( | $ | ( | ||||||||||
Net income | — | — | — | — | — | | | |||||||||||||
Balance - March 31, 2021, as restated |
| | | | | — | ( | ( | ||||||||||||
Net loss |
| — |
| — | — |
| — | — |
| ( |
| ( | ||||||||
Balance - June 30, 2021, as restated | | | | | — | ( | ( | |||||||||||||
Net income | — | — | — | — | — | | | |||||||||||||
Balance - September 30, 2021 | | $ | | | $ | | $ | — | $ | ( | $ | ( |
For the period from July 23, 2020 (inception) through September 30, 2020
Common Stock | Total | |||||||||||||||||||
Class A | Class B | Additional | Accumulated | Stockholders' | ||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity | |||||||
Balance - July 23, 2020 (inception) | | $ | | | $ | | $ | | $ | | $ | | ||||||||
Issuance of Class B common stock to Sponsor | — | — | | | | — | | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance - September 30, 2020 |
| — | $ | — | | $ | | $ | | $ | ( | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
OTR ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| For the period from | |||||
For the nine months | July 23, 2020 | |||||
ended | (inception) through | |||||
September 30, 2021 | September 30, 2020 | |||||
Cash Flows from Operating Activities: | ||||||
Net income / (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income / (loss) to net cash used in operating activities: |
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Interest earned on cash and marketable securities held in Trust Account |
| ( | — | |||
Change in fair value of derivative warrant liabilities |
| ( | — | |||
Changes in operating assets and liabilities: |
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Prepaid expenses |
| | — | |||
Accrued expenses |
| ( | | |||
Net cash used in operating activities | ( | ( | ||||
Cash Flows from Investing Activities: | ||||||
Transfer from Trust Account | | — | ||||
Net cash provided by investing activities | | — | ||||
Cash Flows from Financing Activities: | ||||||
Proceeds from issuance of Class B common stock to Sponsor | — | | ||||
Proceeds from issuance of note payable to Sponsor | — | | ||||
Deferred offering costs paid | — | ( | ||||
Net cash provided by financing activities | — | | ||||
Net Change in Cash |
| ( | | |||
Cash - Beginning of period |
| | — | |||
Cash - End of period | $ | | $ | | ||
Non-cash investing and financing activities: |
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Deferred offering costs paid through promissory note - related party | $ | — | $ | | ||
Formation costs paid through promissory note - related party | $ | — | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS
OTR Acquisition Corp. (the “Company”) was incorporated in Delaware on July 23, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses that the Company has not yet identified (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, however, the Company intends to concentrate its efforts to initially focus on identifying businesses within North America. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not yet commenced any operations. All activity through September 30, 2021 relates to the Company’s formation and the proposed initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The Company’s sponsor is OTR Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on November 17, 2020. On November 19, 2020, the Company consummated its Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of
Upon the closing of the Initial Public Offering and the Private Placement (including the additional Units and additional Private Placement Warrants sold in connection with the partial exercise of the underwriters’ over-allotment option), $
6
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS (Continued)
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating an initial Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value equal to at least
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of its initial Business Combination either (i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of its initial Business Combination or conduct a tender offer will be made by the Company. The public stockholders 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 $
The Company will only proceed with an initial Business Combination if the Company has net tangible assets of at least $
Notwithstanding the above, if the Company seeks stockholder approval of an initial Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder 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
7
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS (Continued)
The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of an initial Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem
The Company will have until May 19, 2022, to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within 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
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 7) 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 other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than $
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if, and to the extent, any claims by a third party 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 to below the lesser of (1) $
8
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 2 ─ RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In the Company’s unaudited condensed financial statements for the quarterly period ended September 30, 2021, the Company concluded it should restate its previously issued financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In accordance with ASC 480-10-S99, redemption provisions not solely within the control of the Company, require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $
In connection with the change in presentation for the Class A common stock subject to redemption, the Company also restated its presentation Class A common stock and Class B common stock to present redeemable Class A and non-redeemable. As such, a portion of the Class A common stock is included in the weighted average shares outstanding non-redeemable common stock in the As Restated balances. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares share pro rata in the income (loss) of the Company.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021, June 30, 2021 and September 30, 2021 (the “Affected Quarterly Periods”). Therefore, the Company, in consultation with its Audit Committee, concluded that the Affected Quarterly Periods should be restated to present all Class A common stock subject to possible redemption as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering and restate presentation of weighted average shares as indicated above. As such, the Company is reporting these restatements to those periods in this quarterly report.
9
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 2 ─ RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Continued)
Impact of the Restatement
The impact of the restatement on the financial statements for the non-reliance periods is presented below. The table below summarizes the changes to the previously issued financial information.
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Operations for the nine months ended September 30, 2021 |
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Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding, Class A common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class A common stock | | ( | $ | — | |||||
Weighted average shares outstanding, Class B common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class B common stock | | ( | $ | — | |||||
Weighted average shares outstanding, redeemable Class A common stock |
| — |
| |
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Basic and diluted net income per share, redeemable Class A common stock | $ | — | | | |||||
Weighted average shares outstanding, non-redeemable common stock |
| — |
| |
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Basic and diluted net income per share, non-redeemable common stock | $ | — | | |
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Operations for the three months ended September 30, 2021 | |||||||||
Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding, Class A common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class A common stock | | ( | $ | — | |||||
Weighted average shares outstanding, Class B common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class B common stock | | ( | $ | — | |||||
Weighted average shares outstanding, redeemable Class A common stock |
| — |
| |
| | |||
Basic and diluted net income per share, redeemable Class A common stock | $ | — | | | |||||
Weighted average shares outstanding, non-redeemable common stock |
| — |
| |
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Basic and diluted net income per share, non-redeemable common stock | $ | — | | |
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Balance sheet as of June 30, 2021 | |||||||||
Class A common stock subject to possible redemption (at approximately $ | $ | | $ | |
| $ | | ||
Stockholders’ equity (deficit) | |||||||||
Class A common stock, $ | | ( |
| | |||||
Class B common stock, $ |
| | — |
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| | |||
Additional paid-in capital | | ( |
| — | |||||
Accumulated deficit | ( | ( |
| ( | |||||
Total stockholders’ equity/(deficit) | $ | | $ | ( |
| $ | ( |
10
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 2 ─ RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Continued)
Impact of the Restatement (Continued)
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Operations for the six months ended June 30, 2021 |
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Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding, Class A common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class A common stock | — | — | — | ||||||
Weighted average shares outstanding, Class B common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class B common stock | | ( | — | ||||||
Weighted average shares outstanding, redeemable Class A common stock |
| — |
| |
| | |||
Basic and diluted net income per share, redeemable Class A common stock | — | | | ||||||
Weighted average shares outstanding, non-redeemable common stock |
| — |
| |
| | |||
Basic and diluted net income per share, non-redeemable common stock | — | | |
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Operations for the three months ended June 30, 2021 |
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Net loss | $ | ( | $ | — | $ | ( | |||
Weighted average shares outstanding, Class A common stock |
| |
| ( |
| — | |||
Basic and diluted net loss per share, Class A common stock | — | — | $ | — | |||||
Weighted average shares outstanding, Class B common stock |
| |
| ( |
| — | |||
Basic and diluted net loss per share, Class B common stock | ( | | — | ||||||
Weighted average shares outstanding, redeemable Class A common stock |
| — |
| |
| | |||
Basic and diluted net loss per share, redeemable Class A common stock | — | ( | ( | ||||||
Weighted average shares outstanding, non-redeemable common stock |
| — |
| |
| | |||
Basic and diluted net loss per share, non-redeemable common stock | — | ( | ( |
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Cash Flows for the six months ended June 30, 2021 |
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Supplemental Disclosure of Non-Cash Financing Activities: |
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Change in value of Class A common stock subject to possible redemption | $ | | $ | ( | $ | — |
11
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 2 ─ RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Continued)
Impact of the Restatement (Continued)
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Balance sheet as of March 31, 2021 |
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Class A common stock subject to possible redemption (at approximately $ | $ | | $ | | $ | | |||
Stockholders’ equity (deficit) |
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Class A common stock, $ | | ( | | ||||||
Class B common stock, $ | | — | | ||||||
Additional paid-in capital |
| |
| ( |
| — | |||
Accumulated deficit |
| |
| ( |
| ( | |||
Total stockholders’ equity/(deficit) | $ | | $ | ( | $ | ( |
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Operations for the three months ended March 31, 2021 |
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Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding, Class A common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class A common stock | — | — | — | ||||||
Weighted average shares outstanding, Class B common stock |
| |
| ( |
| — | |||
Basic and diluted net income per share, Class B common stock | | ( | — | ||||||
Weighted average shares outstanding, redeemable Class A common stock |
| — |
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Basic and diluted net income per share, redeemable Class A common stock | — | | | ||||||
Weighted average shares outstanding, non-redeemable common stock |
| — |
| |
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Basic and diluted net income per share, non-redeemable common stock | $ | — | | |
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Statement of Cash Flows for the three months ended March 31, 2021 |
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Supplemental Disclosure of Non-Cash Financing Activities: |
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Change in value of Class A common stock subject to possible redemption | $ | | $ | ( | $ | — |
12
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 3 ─ SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected through December 31, 2021, or any future period.
The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K, as amended, filed by the Company with the SEC on May 18, 2021.
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 of 2002, 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 stockholder approval of any golden parachute payments not previously approved.
13
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 3 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Emerging Growth Company (Continued)
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.
Going Concern
As of September 30, 2021, the Company had $
The Company's liquidity needs had been satisfied with the net proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with an initial Business Combination, Sponsor, an affiliate of the Sponsor, or certain of the Company's officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”) To date, there were no amounts outstanding under any Working Capital Loan.
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements – Going Concern,” management has determined that the liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 19, 2022.
Use of Estimates
The preparation of the condensed financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available, and accordingly the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents, outside of funds held in the Trust Account, as of December 31, 2020. As of September 30, 2021, the Company did not have any cash equivalents.
14
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 3 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Marketable Securities Held in Trust Account
As of September 30, 2021, the Company had $
Common Stock Subject to Possible Redemption
All of the
As of September 30, 2021 and December 31, 2020, the shares of Class A common stock reflected on the balance sheet are reconciled in the following table:
Gross proceeds | $ | | |
Less: |
|
| |
Proceeds allocated to public warrants | ( | ||
Class A shares issuance costs | ( | ||
Plus: |
| ||
Accretion of carrying value to redemption value | | ||
Class A common stock subject to possible redemption | $ | |
Net Income Per Share of Common Stock
The Company applies the two-class method in calculating earnings per share. The contractual formula utilized to calculate the redemption amount approximates fair value. The Class feature to redeem at fair value means that there is effectively only one class of stock. Changes in fair value are not considered a dividend of the purposes of the numerator in the earnings per share calculation. Net loss per common stock is computed by dividing the pro rata net loss between the Class A common stock and the Class B common stock by the weighted average number of common stock outstanding for each of the periods. The calculation of diluted loss per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable for
15
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 3 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income Per Share of Common Stock (Continued)
For the Period from | |||||||||
July 23,2020 | |||||||||
For the Nine Months Ended | For the Three Months Ended | (inception) through | |||||||
September 30, 2021 | September 30, 2021 | September 30, 2020 | |||||||
Common stock subject to possible redemption | |||||||||
Numerator: | |||||||||
Net income allocable to Class A common stock subject to possible redemption | $ | | $ | | $ | — | |||
Denominator: | |||||||||
Weighted average shares outstanding, redeemable Class A common stock | | | — | ||||||
Basic and diluted net income per share, redeemable Class A common stock | | | $ | — | |||||
Non-Redeemable Common stock |
|
|
|
|
|
| |||
Numerator: |
|
|
|
|
|
| |||
Net income / (loss) allocable to redeemable Class A common stock not subject to redemption | $ | | $ | | $ | ( | |||
Denominator: |
|
|
|
|
|
| |||
Weighted average shares outstanding, non-redeemable common stock |
| |
| |
| | |||
Basic and diluted net income / (loss) per share, non-redeemable common stock | | | $ | ( |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the Federal Depository Insurance Corporation limit of $
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 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 consist of:
● | Level 1 - Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
● | Level 2 - Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
● | Level 3 - Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
16
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 3 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments (Continued)
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 September 30, 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 marketable securities held in Trust Account are comprised of investments in mutual funds. The fair value of marketable securities held in Trust Account is determined using quoted prices in active markets.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15.
Public Warrants (defined in Note 4) and Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have been measured based on the listed market price of such warrants, subsequent to separate trading (see Note 9).
Income Taxes
The Company complies with the accounting and reporting requirements of FASB ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were
17
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 3 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed financial statements. In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. Management is currently evaluating the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s financial statements.
NOTE 4 ─ INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold
NOTE 5 ─ PRIVATE PLACEMENT WARRANTS
Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of
The proceeds from the Private Placement Warrants were 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 proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
NOTE 6 ─ RELATED PARTY TRANSACTIONS
Founder Shares
On July 23, 2020 (inception), the Sponsor purchased
On October 25, 2020, the Sponsor effected a surrender of
A further surrender of
All shares and associated amounts have been retroactively restated to reflect the share capitalization.
18
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 6 ─ RELATED PARTY TRANSACTIONS (Continued)
Founder Shares (Continued)
The Founder Shares included an aggregate of up to
Founder Shares are subject to a lock-up until the earlier of (A) one year after the completion of the Company’s Business Combination or (B) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction after the Company’s Business Combination that results in all of the public stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of Class A common stock equals or exceeds $
Promissory Note – Related Party
On July 23, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could have borrowed up to an aggregate principal amount of $
Related Party Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates 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 may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. 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, the Company may use a portion of 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $
Administrative Support Agreement
Commencing on the date of the listing of the Company's securities on Nasdaq in connection with the Initial Public Offering, the Company pays the Sponsor a total of up to $
19
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 7 ─ COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed financial statements. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to certain registration rights pursuant to a registration rights agreement entered into on November 17, 2020, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to any registration statements filed subsequent to the completion of an initial Business Combination. 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
The underwriters were entitled to an underwriting discount of $
Representative’s Common Stock
The Company issued to the underwriters,
20
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 7 ─ COMMITMENTS AND CONTINGENCIES (Continued)
Representative’s Common Stock (Continued)
The shares received by the underwriters described immediately above have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the Form S-1 filed with the SEC in connection with the Initial Public Offering (the “Registration Statement”) pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the Registration Statement, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the Registration Statement except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners.
NOTE 8 ─ STOCKHOLDERS’ DEFICIT
Common Stock
Preferred Stock - The Company is authorized to issue
Class A Common Stock - The Company is authorized to issue
Class B Common Stock - The Company is authorized to issue
Holders of Class A common stock and holders of Class B common stock will vote together as a single class for the election of directors on all other matters submitted to a vote of the Company’s stockholder, except as otherwise required by law. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of an initial Business Combination on a
21
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 9 ─ DERIVATIVE WARRANT LIABILITIES
As of September 30, 2021 and December 31,
Public Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a)
Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $
● | in whole and not in part; |
● | at a price of $ |
● | upon not less than |
● | if, and only if, the last reported sale price of the Class A common stock for any |
In addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $
Private Placement Warrants
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that (x) the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until
22
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 10 ─ FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320, “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheets and adjusted for the amortization or accretion of premiums or discounts.
The fair value of the Public Warrants and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have been measured based on the listed market price of such warrants since November 2020 when the shares began to trade separately. For the three and nine months ended September 30, 2021, the Company recognized a gain to the statement of operations resulting from decrease in the fair value of liabilities of $
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020 by level within the fair value hierarchy:
|
| Significant |
| Significant | |||||
Quoted Prices | Other | Other | |||||||
in Active | Observable | Unobservable | |||||||
Markets | Inputs | Inputs | |||||||
Description | (Level 1) | (Level 2) | (Level 3) | ||||||
Assets: |
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Marketable securities held in Trust Account | $ | | $ | — | $ | — | |||
$ | | $ | — | $ | — | ||||
Liabilities: |
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Derivative warrant liabilities - Public | $ | — | $ | — | $ | | |||
Derivative warrant liabilities - Private |
| — |
| — |
| | |||
$ | — | $ | — | $ | |
As of December 31, 2020, there was $
23
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 10 ─ FAIR VALUE MEASUREMENTS (Continued)
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021 by level within the fair value hierarchy:
|
| Significant |
| Significant | |||||
Quoted Prices | Other | Other | |||||||
in Active | Observable | Unobservable | |||||||
Markets | Inputs | Inputs | |||||||
Description | (Level 1) | (Level 2) | (Level 3) | ||||||
Assets: |
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Marketable securities held in Trust Account | $ | | $ | — | $ | — | |||
$ | | $ | — | $ | — | ||||
Liabilities: |
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Derivative warrant liabilities - Public | $ | | $ | — | $ | — | |||
Derivative warrant liabilities - Private |
| — |
| — |
| | |||
$ | | $ | — | $ | |
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. Public Warrants were transferred from Level 3 to Level 1 for the
The estimated fair value of the Private Placement Warrants is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:
| As of September 30, 2021 |
| As of December 31, 2020 |
| |||
Exercise price | $ | | $ | | |||
Stock price |
| |
| | |||
Volatility |
| | % |
| | % | |
Probability of completing a Business Combination |
| | % |
| | % | |
Term (in years) |
| |
| | |||
Risk-free rate |
| | % |
| | % |
The change in the fair value of the derivative warrant liabilities for the nine months ended September 30, 2021 is summarized as follows:
Derivative warrant liabilities at December 31, 2020 |
| $ | |
Change in fair value of derivative warrant liabilities |
| ( | |
Transfer of Public Warrans to Level 1 measurements | ( | ||
Derivative warrant liabilities at September 30, 2021 | $ | |
24
OTR ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 11 ─ SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “our,” “us” or “we” refer to OTR Acquisition Corp. 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 report. 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
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward- looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K (as amended) filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in Delaware on July 23, 2020, 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”).
Our Sponsor is OTR Acquisition Sponsor LLC (the “Sponsor”), a Delaware limited liability company. The registration statement for the initial public offering (“Initial Public Offering”) was declared effective on November 17, 2020. On November 19, 2020, we consummated our Initial Public Offering of 10,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $100.0 million, and incurring offering costs (inclusive of the partial exercise of the underwriters’ over-allotment option on November 19, 2020) of approximately $7.1 million, inclusive of $1.3 million of underwriting discount and $3.4 million in deferred underwriting commissions. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 1,500,000 additional Units (the “Over-Allotment Units”) to cover over-allotments, if any, at $10.00 per Unit. On November 19, 2020, the underwriters partially exercised their over-allotment option to purchase an additional 447,350 Units, resulting in the purchase of an additional 447,350 Units, resulting into incremental gross proceeds of approximately $4.5 million. The underwriters waived their right to exercise the remaining over-allotment option on December 21, 2020.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 5,650,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to our Sponsor, each exercisable to purchase one share of Class A common stock at $11.50 per share, at a price of $1.00 per Private Placement Warrant, generating gross proceeds to us of $5.7 million.
In connection with the partial exercise of the underwriters’ over-allotment option, our Sponsor purchased an additional 167,757 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating additional gross proceeds of $0.17 million.
26
Upon the closing of the Initial Public Offering and the Private Placement (including the additional Units and additional Private Placement Warrants sold in connection with the partial exercise of the underwriters’ over-allotment option), $107.1 million ($10.25 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement were placed in a trust account (“Trust Account”) located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee.
If we are unable to complete an initial Business Combination within 18 months from the closing of the Initial Public Offering, or May 19, 2022, we 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 a trust account (“Trust Account”), including interest earned on the funds held in the Trust Account (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 Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Liquidity and Capital Resources
As of September 30, 2021, we had $0.45 million in our operating bank account, and working capital of $0.59 million.
Our liquidity needs had been satisfied with the net proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with an initial Business Combination, Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). To date, there were no amounts outstanding under any Working Capital Loan.
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements – Going Concern,” management has determined that the liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 19, 2022.
Management continues 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 these financial statements. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Our entire activity from inception up to September 30, 2021 was in preparation for our Initial Public Offering and subsequent to our Initial Public Offering, the search for a business combination target company. We will not generate any operating revenues until the closing and completion of our initial Business Combination, at the earliest.
For the three months ended September 30, 2021, we had net income of $3.23 million, which consisted of $0.16 million of operating costs, $3.39 million of change in fair value of derivative warrant liabilities and $1,378 of interest income.
For the nine months ended September 30, 2021, we had net income of $4.75 million, which consisted of $0.62 million of operating costs, $5.34 million of change in fair value of derivative warrant liabilities and $35,417 of interest income.
For the period from July 23, 2020 (inception) through September 30, 2020, we had a net loss of $10,679, which consisted of formation costs.
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Commitments and Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares), are entitled to certain registration rights pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.125 per unit, or $1.3 million in the aggregate (reflecting the partial exercise by the underwriters of their over-allotment option), paid at the closing of the Initial Public Offering. $0.325 per unit, or $3.4 million in the aggregate (reflecting the partial exercise by the underwriters of their over-allotment option), 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 the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
Public Warrants and Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company's statement of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants.
Deferred Offering Costs Associated with the Initial Public Offering
Deferred offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly related to the Initial Public Offering. A portion of the deferred offering costs was expensed and the remaining was charged to stockholders’ equity upon the completion of the Initial Public Offering in November 2020.
Net Income Per Share of Common Stock
We comply with accounting and disclosure requirements of Financial Accounting Standards Board Accounting Standard Codification, or FASB ASC Topic 260, “Earnings Per Share.” Net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The Company applies the two-class method in calculating earnings per share. Accretion associated with the redeemable shares of Class A common stock is excluded from EPS as the redemption value approximates fair value.
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JOBS Act
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. We qualify 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 controls 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 CEO’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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15f and 15d-15 under the Exchange Act, our principal executive officer and principal financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective as of September 30, 2021.
Our internal control over financial reporting did not result in the proper accounting classification of Class A common stock subject to possible redemption issued in November 2020 which, due to its impact on our financial statements, we determined to be a material weakness.
The Company has hereby restated its financial statements filed on Form 10-Q for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021, to reclassify all the Company’s common stock subject to possible redemption in temporary equity. The restatements are described in the Note 2 of the accompanying financial statements.
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Changes in Internal Control over Financial Reporting
Other than as described herein, there was no change in our internal control over financial reporting that occurred during the quarterly period ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management identified a material weakness in internal controls related to accounting of complex financial instruments, as described above. To respond to this material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on May 18, 2021. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, other than as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on May 18, 2021.
We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Quarterly Report, we identified a material weakness in our internal control over financial reporting related to the accounting for a significant and unusual transaction related to the improper valuation of our Class A common stock subject to possible redemption at the closing of our Initial Public Offering and the restatement of our earnings per share calculation. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of September 30, 2021. This material weakness resulted in a material misstatement of the initial carrying value of the Class A common stock subject to possible redemption and the restatement of our earnings per share calculation for the affected periods.
To respond to this material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. For a discussion of management’s consideration
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of the material weakness identified related to our accounting for a significant and unusual transaction related to the improper valuation of our Class A common stock subject to possible redemption and the restatement of our earnings per share calculation, see Note 2 to the accompanying condensed financial statements, as well as Part I, Item 4: Controls and Procedures included in this Quarterly Report.
Any failure to maintain such internal control could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our Class A common stock is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds form Registered Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits.
Exhibit |
| Description |
31.1* |
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31.2* |
| |
32.1* |
| |
32.2* |
| |
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101.INS |
| Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
|
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|
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
* | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 13th day of December 2021.
| OTR ACQUISITION CORP. | |
|
|
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| By: | /s/ Nicholas J. Singer |
| Name: | Nicholas J. Singer |
| Title: | Chief Executive Officer |
| By: | /s/ Douglas B. Anderson |
| Name: | Douglas B. Anderson |
| Title: | Chief Financial Officer |
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