Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
As of June 30, 2020,
the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s securities were
not publicly traded. The registrant’s units began trading on The Nasdaq Capital Market on November 17, 2020 and the registrant’s
Class A common stock and redeemable warrants began trading on The Nasdaq Capital Market on December 10, 2020. The aggregate
market value of the common stock outstanding, other than shares held by persons who may be deemed affiliates of the registrant, computed
by reference to the closing sales price for our Class A common stock on December 31, 2020, as reported on the Nasdaq Capital
Market, was $109,490,843.70. Common stock held by each officer and director and by each person known to the registrant who owned 10% or
more of the outstanding voting and non-voting common stock have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of December 31, 2020, 10,630,179 shares
of Class A common stock, par value $0.0001 per share, and 2,611,838 shares of Class B common stock par value $0.0001 per share,
were issued and outstanding, respectively.
References throughout this
Amendment No. 3 to the Annual Report on Form 10-K/A to “we,” “us,” the “Company” or “our
company” are to OTR Acquisition Corp., unless the context otherwise indicates.
This Amendment No. 3
(“Amendment No. 2”) to the Annual Report on Form 10-K/A amends the Annual Report on 10-K/A of OTR Acquisition Corp.
as of and for the fiscal period ended December 31, 2020, as filed with the Securities and Exchange Commission (“SEC”)
on December 13, 2021 (the “Amendment No. 2”), which amended the Annual Report on Form 10-K of the Company as
of and for the fiscal period ended December 31, 2020, as filed with the SEC on March 3, 2021 (the "Original Filing"),
as amended by that certain Amendment No. 1 on Form 10-K/A, as filed with the SEC on May 18, 2021.
In this Amendment No. 3
to the Annual Report on Form 10-K of the Company for the period ended December 31, 2020, we are restating the audit report to
the audited financial statements as previously revised in Amendment No. 2 solely to clarify disclosure regarding the restatement
of such financials under the heading “Restatement of Financials”.
Except as described above,
no other information included in Amendment No. 2 is being amended or updated by this Amendment No. 3 and this Amendment No. 3
does not purport to reflect any information or events subsequent to Amendment No. 2. This Amendment No. 3 continues to describe
the conditions as of the date of Amendment No. 2 and, except as expressly contained herein, we have not updated, modified or supplemented
the disclosures contained in Amendment No. 2. Accordingly, this Amendment No. 3 should be read in conjunction with the Original
Filing, Amendment No. 1 and Amendment No. 2, and with our filings with the SEC subsequent to the Original Filing.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
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
an initial 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 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.
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.
As of December 31, 2020,
the Company had not commenced any operations. All activity for the period from July 23, 2020 (inception) through December 31,
2020 relates to the Company’s formation and the proposed initial public offering (“Initial Public Offering”), which
is described below, and subsequent to the Initial Public Offering, 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 on Form S-1
for the Company’s Initial Public Offering was declared effective on November 17, 2020. On November 19, 2020, the Company
consummated its Initial Public Offering of 10,000,000 units (the “Units” and, with respect to the Class A common stock
included in the Units offered in the Initial Public Offering, the “Public Shares”) at $10.00 per Unit, generating gross proceeds
of $100.0 million. 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 to cover over-allotments, if any, at $10.00 per Unit. The underwriters' over-allotment
option was partially exercised, resulting in the purchase of an additional 447,350 Units, resulting into incremental gross proceeds of
approximately $4.5 million. On December 21, 2020, the underwriters waived their right to exercise the remaining over-allotment option.
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,650,000 warrants
(each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the 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 the Company of $5.7 million. In connection with the partial exercise of the underwriters’ over-allotment
option, the 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 (Note 5).
Transaction costs amounted
to $7.1 million consisting of $1.8 million of the fair value of the shares issued to Maxim Group LLC for acting as the representative
of the several underwriters in connection with the Initial Public Offering, $1.3 million in cash underwriting fees, $3.4 million of deferred
underwriting fees and $0.55 million of other offering costs. In addition, as of December 31, 2020, cash of $0.99 million was held
outside of the Trust Account (as defined below) and is available for the payment of offering costs and for working capital purposes.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS OPERATIONS (Continued)
Upon the closing of the Initial
Public Offering and the Private Placement, an amount of $107.1 million ($10.25 per Unit) from the net proceeds of the sale of the Units
in the Initial Public Offering and the Private Placement was 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, and are invested only
in U.S. government securities, within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until
the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
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 a 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
80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned
on the Trust Account) at the time of the Company’s signing a definitive agreement in connection with a Business Combination. The
Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires an interest in the target business or assets sufficient for it not to be required
to register as an investment company under the Investment Company Act.
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 a Business Combination either (i) in connection with a stockholder meeting called to approve
a Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a 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 $10.25 per Public Share, plus
any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public
Shares subject to redemption will be recorded at redemption value and classified as temporary equity upon the completion of the Initial
Public Offering in accordance with the Financial Accounting Standards Board Accounting Standard Codification, or FASB ASC Topic 480, “Distinguishing
Liabilities from Equity”.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS OPERATIONS (Continued)
The Company will only proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of
a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business
Combination. If a stockholder vote is not required by applicable law or stock exchange rules and the Company does not decide to hold
a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation
(the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of
the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business
Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange rules, or the Company
decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem the Public Shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder
approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6), and any
Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public
stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not
vote at all.
Notwithstanding the above,
if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Amended 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 20% or more of the Public Shares, without the prior consent of the Company.
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 a Business
Combination and (b) not to propose an amendment to the 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 100%
of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public stockholders with
the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until
18 months from the closing of the Initial Public Offering, or 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 ten business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax
obligations (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 Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption
rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to
complete a Business Combination within the Combination Period.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS OPERATIONS (Continued)
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 $10.25.
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) $10.25 per Public Share and (2) the actual
amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value
of the trust assets, less taxes payable, provided that such liability will not apply to claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the
Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.
The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective
target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in, or to monies held in the Trust Account.
Liquidity and Going Concern
As of December 31, 2020,
the Company had approximately $0.99 million in its operating bank account and working capital of approximately $1.2 million. Prior to
the completion of the Initial Public Offering, the Company’s liquidity needs were satisfied through a payment of $25,000 from its
Sponsor in exchange for the issuance of Founder Shares, as well as the loan under the Promissory Note of $0.21 million. Subsequent to
the consummation of the Initial Public Offering on November 19, 2020, 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. The Company fully repaid the Promissory
Note on November 19, 2020. 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.
The Company expects to incur
significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date that the accompanying financial statements are issued. Also, in
connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, “Basis of Presentation
– Going Concern,” management has determined that 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. The financial statements do not include any adjustment that might
be necessary if the Company is unable to continue as a going concern.
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.
NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED
FINANCIAL STATEMENTS
The Company concluded it should
restate its previously issued financial statements by amending Amendment No. 1 to its Annual Report on Form 10-K/A, filed with
the SEC on May 18, 2021, to classify all Class A common stock subject to possible redemption in temporary equity. In accordance
with the SEC and its staff guidance on redeemable equity instruments in 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 $5,000,001. Previously, the Company did not consider redeemable stock classified as temporary equity as part of net tangible
assets. Effective with these financial statements, the Company restated this interpretation to include temporary equity in net tangible
assets. Also, in connection with the change in presentation for the Class A common stock subject to possible redemption, the Company
also restated its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares including
non-redeemable Class A common stocks together with Class B common stocks for EPS. This presentation contemplates a 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.
As a result, the Company restated its previously filed financial statements to present all redeemable Class A common stock as temporary
equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering and in accordance
with ASC 480. 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 (the "IPO Balance Sheet") 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"). These financial statements restate the Company's previously issued audited
and unaudited financial statements covering the periods through December 31, 2020. The quarterly periods ended March 31, 2021,
June 30, 2021 and September 30, 2021 will be restated in the Company's Form 10-Q/A for the quarterly period ended September 30,
2021.
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.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED
FINANCIAL STATEMENTS (Continued)
Impact of the Restatement
The impact of the restatement
on the balance sheet as of November 19, 2020 is presented below:
| | |
As Previously
Reported in 8-K | | |
Adjustment | | |
As Restated | |
| Balance Sheet as of November 19, 2020 | |
| | | |
| | | |
| | |
| Class A common stock subject to possible redemption (at approximately $10.25 per share) | |
$ | 91,604,384 | | |
$ | 15,480,954 | | |
$ | 107,085,338 | |
| Stockholders' equity (deficit) | |
| | | |
| | | |
| | |
| Class A common stock, $0.0001 par value | |
| 87 | | |
| (69 | ) | |
| 18 | |
| Class B common stock, $0.0001 par value | |
| 288 | | |
| - | | |
| 288 | |
| Additional paid-in capital | |
| 5,010,305 | | |
| (5,010,305 | ) | |
| - | |
| Accumulated deficit | |
| (10,679 | ) | |
| (10,470,580 | ) | |
| (10,481,259 | ) |
| Total stockholders’ equity (deficit) | |
$ | 5,000,001 | | |
$ | (15,480,954 | ) | |
$ | (10,480,953 | ) |
The impact of the restatement
on the audited balance sheet as of December 31, 2020 is presented below:
| | |
As Reported
As Previously
Restated in
10-K/A
Amendment No. 1 | | |
Adjustment | | |
As Restated | |
| Balance Sheet as of December 31, 2020 | |
| | | |
| | | |
| | |
| Class A common stock subject to possible redemption (at approximately $10.25 per share) | |
$ | 88,644,124 | | |
$ | 18,441,214 | | |
$ | 107,085,338 | |
| Stockholders' equity (deficit) | |
| | | |
| | | |
| | |
| Class A common stock, $0.0001 par value | |
| 198 | | |
| (180 | ) | |
| 18 | |
| Class B common stock, $0.0001 par value | |
| 262 | | |
| - | | |
| 262 | |
| Additional paid-in capital | |
| 8,280,331 | | |
| (8,280,331 | ) | |
| - | |
| Accumulated deficit | |
| (3,280,790 | ) | |
| (10,160,703 | ) | |
| (13,441,493 | ) |
| Total stockholders’ equity (deficit) | |
$ | 5,000,001 | | |
$ | (18,441,214 | ) | |
$ | (13,441,213 | ) |
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED
FINANCIAL STATEMENTS (Continued)
Impact of the Restatement (Continued)
The impact to the reported
amounts of weighted average shares outstanding and basic and diluted earnings per share of common stock is presented below for the period
ended December 31, 2020:
| | |
As Reported
As Previously
Restated in
10-K/A
Amendment No. 1 | | |
Adjustment | | |
As Restated | |
| Statement of Operations for the period from July 23, 2020 (inception) through December 31, 2020 | |
| | | |
| | | |
| | |
| Net loss | |
$ | (3,280,790 | ) | |
$ | - | | |
$ | (3,280,790 | ) |
| Basic and diluted weighted average shares outstanding of Class A common stock | |
| 10,630,179 | | |
| (10,630,179 | ) | |
| - | |
| Basic and diluted net loss per share, Class A common stock | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | - | |
| Basic and diluted weighted average shares outstanding of Class B common stock | |
| 2,531,315 | | |
| (2,531,315 | ) | |
| - | |
| Basic and diluted net loss per share, Class B common stock | |
$ | (1.30 | ) | |
$ | 1.30 | | |
$ | - | |
| Weighted average shares outstanding, redeemable common stock | |
| - | | |
| 2,725,396 | | |
| 2,725,396 | |
| Basic and diluted net loss per share, redeemable common stock | |
$ | - | | |
$ | (0.61 | ) | |
$ | (0.61 | ) |
| Weighted average shares outstanding, non-redeemable common stock | |
| - | | |
| 2,659,533 | | |
| 2,659,533 | |
| Basic and diluted net loss per share, non-redeemable common stock | |
$ | - | | |
$ | (0.61 | ) | |
$ | (0.61 | ) |
The impact of the restatement
to the previously reported as restated statement of cash flows for the period ended December 31, 2020, is presented below:
| | |
As Reported
As Previously
Restated in
10-K/A
Amendment No. 1 | | |
Adjustment | | |
As Restated | |
| Statement of Cash Flows for the period from July 23, 2020 (inception) through December 31, 2020 | |
| | | |
| | | |
| | |
| Supplemental Disclosure of Non-Cash Financing Activities: | |
| | | |
| | | |
| | |
| Initial classification of common stock subject to possible redemption | |
$ | 100,057,362 | | |
$ | (100,057,362 | ) | |
| - | |
| Change in value of common stock subject to possible redemption | |
$ | (11,413,238 | ) | |
$ | 11,413,238 | | |
| - | |
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying 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. As described in the Company's Form 8-K filed on November 30, 2021
and in Note 2-Restatement of Previously Issued Financial Statements, the Company's financial statements as of and for the period from
July 23, 2020 (inception) through December 31, 2020, and the IPO Balance Sheet as of November 19, 2020 (collectively, the
"Affected Periods"), are restated in this Annual Report on Form 10-K/A (Amendment No. 2) (this "Annual Report")
to correct the misapplication of accounting guidance related to the Company's Public Shares in the Company's previously issued audited
and unaudited condensed financial statements for such periods. The restated financial statements are indicated as "Restated"
in the audited and accompanying notes, as applicable. See Note 2-Restatement of Previously Issued Financial Statements for further discussion.
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.
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.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Use of Estimates
The preparation of 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 period.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ 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 as of December 31, 2020.
Marketable Securities Held in Trust Account
At December 31, 2020,
substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
Common Stock Subject to Possible Redemption
All of the 10,447,350 shares
of Class A common stock sold as part of the Units in the Initial Public Offering contain a redemption feature. In accordance with
the Accounting Standards Codification 480-10-S99-3A, “Classification and Measurement of Redeemable Securities”, redemption
provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation
events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions
of ASC 480. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value
to redemption amount value. The change in the carrying value of redeemable shares of Class A common stock resulted in charges against
additional paid-in capital (to the extent available) and accumulated deficit.
As of December 31, 2020,
the shares of Class A common stock reflected on the balance sheet are reconciled in the following table:
| Gross proceeds | |
$ | 104,473,500 | |
| | |
| | |
| Less: | |
| | |
| Proceeds allocated to public warrants | |
| (3,904,107 | ) |
| Class A shares issuance costs | |
| (4,940,543 | ) |
| Plus: | |
| | |
| Accretion of carrying value to redemption value | |
| 11,456,488 | |
| | |
| | |
| Class A common stock subject to possible redemption | |
$ | 107,085,338 | |
Offering Costs
Offering costs consist of
legal, accounting, underwriting fees, and other costs incurred that were directly related to the Initial Public Offering. Offering costs
are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Offering costs associated with derivative warrant liabilities are expenses as incurred, presented as non-operating
expenses in the statement of operations. Offering costs associated with the Public Shares were charged to stockholders’ equity upon
the completion of the Initial Public Offering. Of the total offering costs of the Initial Public Offering, approximately $0.31 million
is included in the offering costs associated with warrants recorded as liabilities in the statement of operations and approximately $8.5
million is included in the stockholders’ equity.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Net Loss 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 11,041,432 shares of Class A
common stock in the aggregate.
| | |
For the period from
July 23, 2020 (inception)
through December 31, 2020 | |
| | |
Redeemable Shares | | |
Non-Redeemable Shares | |
| Basic and diluted net loss per share: | |
| | | |
| | |
| Numerator: | |
| | | |
| | |
| Allocation of net loss | |
$ | (1,660,459 | ) | |
$ | (1,620,331 | ) |
| | |
| | | |
| | |
| Denominator: | |
| | | |
| | |
| Weighted-average shares outstanding | |
| 2,725,396 | | |
| 2,659,533 | |
| Basic and diluted net loss per share | |
$ | (0.61 | ) | |
$ | (0.61 | ) |
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 $250,000. At December 31, 2020, the Company has not experienced losses
on these accounts and management believes the Company is not exposed to significant risks on such accounts.
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 include:
| |
· |
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. |
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.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Fair Value of Financial Instruments (Continued)
As of December 31, 2020,
the carrying values of cash 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 U.S. Treasury securities with an original maturity of 185
days. 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. 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.
The 5,223,675 Public Warrants
(defined in Note 4) and the 5,817,757 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.
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 no unrecognized
tax benefits as of December 31, 2020. FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial
statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized,
a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties
at December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals,
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting Standards
Management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s financial statements.
NOTE 4 – INITIAL PUBLIC OFFERING
Pursuant to the Initial Public
Offering, the Company sold 10,447,350 Units, which includes the partial exercise by the underwriters of their over-allotment option in
the amount of 447,350 Units, at a purchase price of $10.00 per Unit, generating gross proceeds of $104.5 million. Each Unit consists of
one share of Class A common stock and one-half warrant (“Public Warrant”). Each whole Public Warrant entitles the holder
to purchase one share of the Company’s Class A common stock at an exercise price of $11.50 per share (see Note 8).
NOTE 5 – PRIVATE PLACEMENT WARRANTS
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the Private Placement of 5,817,757 Private Placement Warrants, including 167,757
Private Placement Warrants purchased in connection with the underwriters’ partial over-allotment option (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 $5.8 million.
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 August 3, 2020, the
Sponsor purchased 7,187,500 shares of the Company’s Class B common stock (the “Founder Shares”) for an aggregate
purchase price of $25,000.
On October 25, 2020,
the Sponsor effected a surrender of 3,881,250 shares of Class B common stock to the Company for no consideration, resulting in a
decrease in the total number of shares of Class B common stock outstanding from 7,187,500 to 3,306,250.
A further surrender of 431,250
shares of Class B common stock was effected on November 17, 2020 by the Sponsor to the Company for no consideration, resulting
in a decrease in the total number of shares of Class B common stock outstanding from 3,306,250 to 2,875,000.
All shares and associated
amounts have been retroactively restated to reflect the share capitalization.
The Founder Shares included
an aggregate of up to 375,000 Class B common stock subject to forfeiture by the Sponsor to the extent that the underwriters’
over-allotment was not exercised in full or in part, so that the number of Founder Shares would collectively represent 20% of the Company’s
issued and outstanding shares upon the completion of the Initial Public Offering. On November 19, 2020, the underwriters partially
exercised their over-allotment option. On December 21, 2020, the underwriters waived their right to exercise the remaining over-allotment
option and the forfeiture of 263,162 Founder Shares. Forfeiture of 263,162 Founder Shares resulted in an aggregate of 2,611,838 Founders
Shares issued and outstanding, so that the number of shares of Class B common stock collectively equaled 20% of the Company’s
issued and outstanding common stock after the Initial Public Offering.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 6 – RELATED PARTY TRANSACTIONS (Continued)
Founder Shares (Continued)
Founder Shares are subject
to 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 Company’s 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 the Company’s common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period 150 days after an initial Business Combination, the Founder Shares will be released.
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 $300,000. The Promissory Note was non-interest bearing and was payable on the earlier
of December 31, 2020 or the consummation of the Initial Public Offering. The total outstanding balance of $205,991 was paid in full
on November 19, 2020.
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 would repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination 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 $2.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity.
The warrants would be identical to the Private Placement Warrants. 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. As of December 31, 2020, no Working
Capital Loans were outstanding.
Administrative Support Agreement
Commencing on the effective
date of the Initial Public Offering, the Company pays the Sponsor a total of up to $10,000 per month in the aggregate for up to 18 months
for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s
liquidation, the Company will cease paying these monthly fees. For the period ended December 31, 2020, the Company incurred $20,000
for these services, of which such amount is included in the operating costs on accompanying statement of operations.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
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 financial statements. The 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 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 registration rights pursuant to a registration rights agreement dated as of
November 17, 2020, which requires 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). Pursuant to such registration rights agreement, 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 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 45-day option from the date of Initial Public Offering to purchase up to 1,500,000 additional Units to cover over-allotments, if any,
at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters partially exercised the over-allotment
option on November 17, 2020. The underwriters waived their right to exercise the remaining over-allotment option on December 21,
2020.
The underwriters were paid
an underwriting discount of $0.125 per unit, or $1.3 million in the aggregate. In addition, the underwriters are entitled to a deferred
fee of $0.325 per unit, or $3.4 million in the aggregate which 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 a Business Combination, subject to the terms of the underwriting agreement entered into in connection with the Initial Public
Offering.
Representative’s Common Stock
The Company issued to the
underwriters from the Initial Public Offering, 182,829 shares of Class A common stock upon the consummation of the Initial Public
Offering. The underwriters agreed not to transfer, assign or sell any such shares until the completion of the Company’s initial
Business Combination. In addition, the underwriters have agreed (i) to waive its redemption rights with respect to such shares in
connection with the completion of a Business Combination and (ii) to waive its rights to liquidating distributions from the Trust
Account with respect to such shares if the Company fails to complete a Business Combination within 18 months from the closing of the Initial
Public Offering. Based on the Initial Public Offering price of $10.00 per Unit, the fair value of the 182,829 shares of Class A common
stock was $1.8 million, which was an expense of the Initial Public Offering, resulting in a charge directly to stockholders’ equity
upon the completion of the Initial Public Offering.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
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 registration statement on Form S-1 filed with the SEC in connection
with the Initial Public Offering (the “Registration Statement”) pursuant to Rule 5110(g)(1) of FINRA’s NASD
Conduct Rules. Pursuant to FINRA Rule 5110(g)(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 of 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 1,000,000 preferred shares with a par value of $0.0001 per preferred share.
As of December 31, 2020, there are no preferred shares issued or outstanding.
Class A
Common Stock - The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001
per share. As of December 31, 2020, there were 182,829 shares of Class A common stock issued or outstanding, which are non-redeemable.
This number excludes 10,447,350 shares of Class A common stock that are subject to possible amounting to $107.1 million, that were
issued as part of the Units sold at the Initial Public Offering.
Class B
Common Stock - The Company is authorized to issue 10,000,000 shares of Class B common stock, with a par value of $0.0001
per share. Holders of the Class B common stock are entitled to one vote for each share. At December 31, 2020 there were 2,611,838
shares of Class B common stock issued and outstanding.
Holders of Class A common
stock and holders of Class B common stock, voting together as a single class, for the election of directors on all other matters
submitted to a vote of the Company’s stockholders 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 a Business Combination on a one-for-one basis, subject to
adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued
in excess of the amounts offered in the closing of a Business Combination, the ratio at which shares of Class B common stock shall
convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B
common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A
common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis,
20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (not including
the shares of Class A common stock underlying the Placement Units) plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with a Business Combination. In addition, the calculation mentioned above will be subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations, and the like. In no event will the Class B common
stock convert into Class A common stock at a rate of less than one to one.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 9 – DERIVATIVE WARRANT LIABILITIES
As of December 31, 2020,
the Company has 5,223,675 and 5,817,757 Public Warrants and Private Placement Warrants, respectively, outstanding.
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) 30 days after the completion of a Business Combination and (b) 12 months from the
closing of the Initial Public Offering.
Redemption of Warrants When
the Price per Share of Class A Common Stock Equals or Exceeds $18.00 —once the warrants become exercisable, the Company may
redeem the outstanding Public Warrants:
| |
· |
in whole and not in part; |
| |
· |
at a price of $0.01 per Public Warrant; |
| |
· |
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| |
· |
if, and only if, the last reported sale price of the Class A common stock for any 20 trading days within a 30-trading day period ending three business days before sending the notice of redemption to warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like). |
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 our initial business combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or
effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to
our Sponsor or its affiliates, without taking into account any Founder Shares held by our Sponsor or such affiliates, as applicable, prior
to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than
60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial business combination
on the date of the consummation of the Company’s initial Business Combination (net of redemptions), and (z) the volume weighted
average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day prior
to the day on which the Company consummates its initial business combination (such price, the “Market Value”) is below $9.20
per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value
and the Newly Issued Price, and the $18.00 per share redemption trigger price described above in this section will be adjusted (to the
nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
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 30 days after the completion of a Business Combination, subject to certain limited exceptions, (y) the Private Placement
Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted
transferees and (z) the Private Placement Warrants and the Class A common stock issuable upon exercise of the Private Placement
Warrants will be entitled to registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers
or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the
same basis as the Public Warrants.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 10 – INCOME TAX
The income tax provision consists
of the following:
| | |
December 31, | |
| | |
2020 | |
| Federal | |
| | |
| Deferred | |
| 40,502 | |
| | |
| | |
| State | |
| | |
| Deferred | |
| 6,666 | |
| Change in valuation allowance | |
| (47,168 | ) |
| Income tax provision | |
$ | - | |
The Company’s net deferred
tax assets are as follows:
| | |
December 31, | |
| | |
2020 | |
| Deferred tax asset | |
| 47,168 | |
| Valuation allowance | |
| (47,168 | ) |
| Deferred tax asset, net of allowance | |
$ | - | |
As of December 31, 2020,
the Company has a $79,419 U.S. federal and state net operating loss carryover available to offset future taxable income.
In assessing the realization
of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration
of all of the information available, management believes that significant uncertainty exists with respect to future realization of the
deferred tax assets and has therefore established a full valuation allowance. For the period ended December 31, 2020, the change
in the valuation allowance was $47,168.
A reconciliation of the federal
income tax rate to the Company’s effective tax rate for the period ended December 31, 2020 is as follows:
| Statutory federal income tax rate |
|
|
21.00 |
% |
| State taxes, net of federal tax benefit |
|
|
3.52 |
% |
| Change in fair value of the derivative warrant liabilities |
|
|
(17.70 |
)% |
| Offering costs |
|
|
(2.00 |
)% |
| Change in valuation allowance |
|
|
(4.82 |
)% |
| Income tax provision benefit |
|
|
0.00 |
% |
The Company files income tax
returns in the U.S. federal jurisdiction and various state and local jurisdictions and is subject to examination by the various taxing
authorities.
OTR ACQUISITION CORP.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 11 – FAIR VALUE MEASUREMENTS
The fair value of the Company’s
financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the
use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| |
· |
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. |
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. For the period ended December 31, 2020, the Company recognized a charge to the statement
of operations resulting from decrease in the fair value of liabilities of $2.8 million presented as change in fair value of derivative
warrant liabilities in the accompanying statement of operations.
The following table presents
information about the Company’s financial assets that are measured at fair value on a recurring basis as of December 31, 2020
by level within the fair value hierarchy:
| Description | |
Quoted Prices
in Active
Markets
(Level 1) | | |
Significant
Other
Observable
Inputs
(Level 2) | | |
Significant
Other
Unobservable Inputs
(Level 3) | |
| Assets: | |
| | | |
| | | |
| | |
| U.S. Treasury securities | |
$ | 106,966,830 | | |
$ | - | | |
$ | - | |
| | |
$ | 106,966,830 | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Liabilities: | |
| | | |
| | | |
| | |
| Derivative warrant liabilities - Public | |
$ | - | | |
$ | - | | |
$ | 5,284,490 | |
| Derivative warrant liabilities - Private | |
| - | | |
| - | | |
| 5,939,893 | |
| | |
$ | - | | |
$ | - | | |
$ | 11,224,383 | |
As of December 31, 2020,
there was $127,663 of cash held in the trust account.
OTR ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
December 31,
2020
NOTE 11 – FAIR VALUE MEASUREMENTS (Continued)
Transfers to/from Levels 1,
2 and 3 are recognized at the end of the reporting period. There were no transfers between Levels 1, 2 or 3 during the period ended December 31,
2020.
The estimated fair value of
the Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, 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 December 31, 2020 | | |
Initial Measurement | |
| Exercise Price | |
$ | 11.50 | | |
$ | 11.50 | |
| Stock Price | |
| 10.30 | | |
| 9.63 | |
| Volatility | |
| 15.1 | % | |
| 15.2 | % |
| Probability of completing a Business Combination | |
| 88.3 | % | |
| 88.3 | % |
| Term (in years) | |
| 5.88 | | |
| 6.00 | |
| Risk-free rate | |
| 0.49 | % | |
| 0.51 | % |
The change in the fair value of the derivative warrant liabilities
for the period ended December 31, 2020 is summarized as follows:
| |
|
Private Placement
Warrants |
|
|
Public Placement
Warrants |
|
|
Total Derivative
Warrant Liabilities |
|
| Initial measurement on November 19, 2020 |
|
$ |
4,548,871 |
|
|
$ |
3,904,107 |
|
|
$ |
8,452,978 |
|
| Change in fair value of derivative warrant liabilities |
|
|
1,391,022 |
|
|
|
1,380,383 |
|
|
|
2,771,405 |
|
| Derivative warrant liabilities at December 31, 2020 |
|
$ |
5,939,893 |
|
|
$ |
5,284,490 |
|
|
$ |
11,224,383 |
|
NOTE 12 – SUBSEQUENT EVENTS
The Company evaluated subsequent
events and transactions in Note 2 (Restatement of Previously Issued Financial Statements) that occurred after the balance sheet date up
to the date financial statements were issued. Other than as described herein, the Company did not identify any other subsequent events
that would have required adjustment or disclosure in the financial statements.