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.
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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 March 31, 2022, the Company had $83,673 in operating cash and working
capital deficit of approximately $1.5 million.
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of the officers and
directors may, but are not obligated to, loan the Company funds as may be
required ("Working Capital Loans"). Up to $2,500,000 of any Working Capital
Loans may be convertible into private placement-equivalent warrants at a price
of $1.00 per warrant (which, for example, would result in the holders being
issued 2,500,000 warrants if $2,500,000 of notes were so converted), at the
option of the lender. If the Company completes a Business Combination, the
Company will 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.
On March 1, 2022, the Company entered into a convertible promissory note with
the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an
aggregate principal amount of $0.5 million (the "Note") (refer to Note 5 in the
condensed financial statements) as a Working Capital Loan. As of March 31, 2022,
the outstanding balance under the Note amounted to an aggregate of $0.1 million.
Based on the foregoing, including the ability of the Company to draw upon the
Working Capital Loans, such as the Note. Management believed that the Company
will have sufficient working capital and borrowing capacity to meet its needs
through the earlier of the consummation of the Business Combination or the date
the Company is required to liquidate. Over this time period, the Company will be
using the working capital funds for paying existing accounts payable, paying
travel expenditures, and structuring, negotiating and consummating the Initial
Business Combination.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company has until May 19, 2022 to
consummate the Proposed Business Combination. It is uncertain that the Company
will be able to consummate the Proposed Business Combination by this time.
Additionally, the Company may not have sufficient liquidity to fund the working
capital needs of the Company until one year from the issuance of these financial
statements. If a Business Combination is not consummated by this date, there
will be a mandatory liquidation and subsequent dissolution of the Company.
Management has determined that the liquidity condition and mandatory
liquidation, should a Business Combination not occur, and potential subsequent
dissolution, raises 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 Company intends to complete the Proposed Business Combination before the
mandatory liquidation date.
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Recent Developments
On January 31, 2022, Comera Life Sciences Holdings, Inc., a Delaware corporation
("Holdco"), CLS Sub Merger 1 Corp., a Delaware corporation and newly formed,
wholly-owned subsidiary of Holdco ("Comera Merger Sub"), CLS Sub Merger 2 Corp.,
a Delaware corporation and newly formed, wholly-owned subsidiary of Holdco ("OTR
Merger Sub"),the Company and Comera Life Sciences, Inc., a Delaware corporation
("Comera"), entered into a Business Combination Agreement (as amended from time
to time, the "Business Combination Agreement").
If the Business Combination Agreement and the transactions contemplated thereby
provide that, subject to adoption and approval by the Company's stockholders,
and the proposed Business Combination is subsequently completed, (i) Comera
Merger Sub be merged with and into Comera, with Comera surviving such merger as
a direct wholly-owned subsidiary of Holdco (the "Comera Merger") and (ii) OTR
Merger Sub will be merged with and into the Company, with the Company surviving
such merger as a direct wholly-owned subsidiary of Holdco (the "OTR Merger")
(collectively with the other transactions described in the Business Combination
Agreement, the "Proposed Business Combination"). For additional information
regarding the Business Combination and the Merger Agreement and related
agreements, see the Current Reports on Form 8-K filed by the Company with the
SEC on January 31, 2022 and on February 4, 2022.
On April 14, 2022, the SEC declared effective Comera's registration statement on
Form S-4 (File No. 333-263377) (the "S-4 Registration Statement") filed with the
SEC in connection with the Proposed Business Combination and, on April 15, 2022,
the Company commenced mailing the definitive proxy statement/prospectus relating
to the special meeting in lieu of the 2022 annual meeting of the Company's
stockholders (the "Special Meeting").
The Company held the Special Meeting in a virtual format on May 10, 2022, at
2:00 p.m., Eastern time. At the Special Meeting the Company's stockholders
adopted the Business Combination Agreement, thereby approving the Proposed
Business Combination and approved the other proposals described in the S-4
Registration Statement. As of May 11, 2022, holders of an aggregate of
10,279,363 shares of Class A common stock had exercised their right to redeem
their shares in connection with the Special Meeting. Subsequently, the Company
has been made aware that certain holders of Class A common stock may request to
change their election to have their shares redeemed, which the Company may
allow. There can be no assurance, however, that such holders will request to
change their election to redeem their shares or that the final number of shares
redeemed will decrease.
Upon the closing of the Proposed Business Combination (the "Closing"), which is
expected to occur on or before May 19, 2022, subject to satisfaction or waiver
of all necessary closing conditions set forth in the Business Combination
Agreement, by virtue of the Comera Merger, all shares of Comera common stock
issued and outstanding immediately prior to the Closing (including shares of
Comera common stock issued upon conversion of Comera preferred stock immediately
prior to the Closing) will be canceled and converted into the right to receive
shares of Holdco common stock, all Comera vested in-the-money stock options
outstanding will be canceled and converted into the right to receive shares of
Holdco common stock and all outstanding Comera unvested stock options and Comera
vested out-of-the-money options will be converted into options to purchase
shares of Holdco common stock. The aggregate transaction consideration to be
paid in the Comera Merger will be the number of shares of Holdco common stock
equal to $126 million divided by $10.00. The aggregate transaction consideration
will be allocated among the holders of shares of Comera common stock (including
Comera common stock issued upon the conversion of Comera preferred stock) and
holders of Comera in-the-money stock options.
In addition, at the Closing, Holdco will place 3,150,000 shares of Holdco Common
Stock (the "Earn-Out Shares") into escrow. If, at any time during the period
beginning on the Closing Date and expiring at the close of business on the
second anniversary of the Closing Date, the volume-weighted average price of
Holdco Common Stock is equal to or greater than $12.50 for any 20 trading days
within a period of 30 consecutive trading days (the "Earn-Out Trigger"), then
within 10 business days following the achievement of the Earn-Out Trigger, the
Earn-Out Shares will be released to the holders of Comera Common Stock and
holders of Comera Vested In-the-Money Options on a pro rata basis.
Immediately prior to the OTR Merger Effective Time, all shares of the Company's
Class B Common Stock will be converted into shares of the Company's Class A
Common Stock. Upon the Closing, by virtue of the OTR Merger, all shares of the
Company's Class A common stock of issued and outstanding immediately prior to
the Closing will be converted on a one-to-one basis into the right to receive
shares of Holdco common stock and all the Company's warrants of outstanding will
be converted into warrants to purchase shares of Holdco common stock.
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Results of Operations
Our entire activity since inception up to March 31, 2022 was in preparation for
our Initial Public Offering, identifying a Business Combination target and
negotiating and seeking to consummate a Business Combination. 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 March 31, 2022, we had net income of $1.84 million
which consisted of $1.62 million operating costs, offset by $3.44 million of
change in fair value of derivative warrant liabilities and $10,783 of interest
income.
For the three months ended March 31, 2021, we had a net income of $4.25 million
which consisted of $0.24 million operating costs, offset by $4.45 million of
change in fair value of derivative warrant liabilities and $31,033 of interest
income.
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 Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting estimates:
Derivative Warrant Liabilities
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815 under which the
warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the warrants as liabilities at their fair
value and adjust the warrants to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations. The Public Warrants issued in connection with the Initial Public
Offering were initially measured at fair value using a Monte Carlo simulation
model, and subsequently measured based on the listed market price of such
warrants, whereas the fair value of the Private Placement Warrants was initially
measured using a Black Scholes option pricing model, and continue to be measured
at fair value using a Black-Scholes model.
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Common stock subject to possible redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Shares of Class A common stock subject to mandatory redemption (if any)
are classified as liability instruments and are measured at fair value. Shares
of conditionally redeemable Class A common stock (including Class A common stock
that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within our control) are classified as temporary equity. At all other times,
shares of Class A common stock are classified as stockholders' equity. Our Class
A common stock features certain redemption rights that are considered to be
outside of our control and subject to the occurrence of uncertain future events.
Accordingly, at March 31, 2022 and December 31, 2021, 10,447,350 shares of Class
A common stock subject to possible redemption are presented as temporary equity,
outside of the stockholders' equity section of the balance sheet.
Effective with the closing of the Initial Public Offering, the Company
recognized the accretion from initial book value to redemption amount, which,
resulted in charges against additional paid-in capital (to the extent available)
and accumulated deficit.
Net income (loss) 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 income (loss) per share of common stock is computed by
dividing net income (loss) by the weighted average number of common shares
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.
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.
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