Forward-Looking Statements
This Quarterly Report on Form 10-Q/A, including, without limitation, statements
under the heading "Management's Discussion and Analysis of Financial Condition
and Results of Operations," includes forward-looking statements. Our
forward-looking statements include, but are not limited to, statements regarding
our or our management team's expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that refer to
projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. The forward-looking statements contained in
this report are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that
future developments affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results
or performance to be materially different from those expressed or implied by
these forward-looking statements. These risks and uncertainties include, but are
not limited to, those factors described herein under the heading "Risk Factors"
and under the headings "Cautionary Note Regarding Forward-Looking Statements"
and "Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2020. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these forward-looking
statements. Except as expressly required by applicable securities law, we
disclaim any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
Overview
References in this report to "we," "us," "our," "company" or "our company" are
to Oyster Enterprises Acquisition Corp., to "management" or our "management
team" are to our directors and officers; and to the "sponsor" are to Oyster
Enterprises LLC, a Delaware limited liability company.
We are a recently incorporated blank check company incorporated as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We have not identified any business
combination target and we have not, nor has anyone on our behalf, initiated any
substantive discussions, directly or indirectly, with any business combination
target. We intend to effectuate our initial business combination using cash from
the proceeds of our IPO (as defined below) and the Private Placements (as
defined below), our capital stock, debt or a combination of cash, stock and
debt.
On January 22, 2021, we consummated our initial public offering ("IPO") of
20,000,000 units (the "Units"), each Unit consisting of one share of Class A
common stock of the Company, par value $0.0001 per share (the "Class A Common
Stock") and one-half of one redeemable warrant of the Company (each, a
"Warrant"), each whole Warrant entitling the holder thereof to purchase one
share of Class A Common Stock for $11.50 per share (subject to adjustment). The
Units were sold at a price of $10.00 per Unit, and the IPO generated gross
proceeds of $200,000,000. Simultaneously with the closing of the IPO, we
consummated a private placement (the "Private Placement") with our sponsor and
Imperial Capital, LLC and I-Bankers Securities, Inc., the underwriters in the
IPO (the "Underwriters"), of an aggregate of 5,950,000 warrants (the "private
placement warrants") at a price of $1.00 per private placement warrant,
generating gross proceeds to the Company of $5,950,000. On January 22, 2021, a
total of $200,000,000 of the net proceeds from the IPO and the Private Placement
were deposited in a trust account (the "Trust Account") established for the
benefit of the Company's public stockholders at JPMorgan Chase Bank, N.A., with
Continental Stock Transfer & Trust Company, acting as trustee.
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On January 25, 2021, the Underwriters exercised in full the option granted to
them by the Company to purchase up to 3,000,000 additional Units solely to cover
over-allotments, which option was granted to them under the underwriting
agreement for the IPO. The sale of these 3,000,000 additional Units closed on
January 28, 2021, generating gross proceeds of $30,000,000. Simultaneously with
the closing of the over-allotment option, we consummated a private placement
(the "Additional Private Placement" and, together with the Private Placement,
the "Private Placements") with our sponsor and the Underwriters of an aggregate
of an additional 600,000 private placement warrants at a price of $1.00 per
private placement warrant, generating gross proceeds to the Company of $600,000.
On January 28, 2021, a total of $30,000,000 of the net proceeds from the closing
of the over-allotment option and the Additional Private Placement were deposited
into the Trust Account, resulting in a total deposit of $230,000,000 in the
Trust Account since the Trust Account was established. The net proceeds
deposited into the Trust Account remain on deposit in the Trust Account earning
interest and are available for a business combination, assuming no redemptions,
after payment of up to $8,050,000 of deferred underwriting fees, before fees and
expenses associated with our initial business combination.
Results of Operations and Known Trends or Future Events
We did not commence operations until after the closing of our IPO in
January 2021, and we have not engaged in any significant operations nor
generated any operating revenues to date. We will not generate any operating
revenues until after completion of our initial business combination. We have
generated and will continue to generate non-operating income in the form of
interest income on cash and cash equivalents. There has been no significant
change in our financial or trading position and no material adverse change has
occurred since the date of our audited financial statements. We have incurred
and expect to continue to incur increased expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses.
For the three months ended September 30, 2021, we had net income of $2,694,255
which consisted of $3,534 in interest income and a non-cash $2,888,000 decrease
in fair value of warrant liabilities. These gains were partially offset by
$197,279 in general and administrative expenses, which were primarily comprised
of legal and accounting fees.
For the nine months ended September 30, 2021, we had net income of $6,815,712
which consisted of $9,544 in interest income and a non-cash $7,958,000 decrease
in fair value of warrant liabilities. These gains were partially offset by
transaction expenses of $672,964 related to offering costs related to issuance
of warrants and $478,868 in general and administrative expenses. General and
administrative expenses of $478,868 were primarily comprised of legal and
accounting fees.
Liquidity and Capital Resources
The funds in the Trust Account have been or will be invested only in U.S.
government treasury bills with a maturity of 185 days or less or in money market
funds that meet certain conditions under Rule 2a-7 under the Investment Company
Act and that invest only in direct U.S. government obligations. We intend to use
substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account (less taxes payable and
deferred underwriting commissions) to complete our initial business combination.
Delaware franchise tax is based on our authorized shares or on our assumed par
and non-par capital, whichever yields a lower result. Under the authorized
shares method, each share is taxed at a graduated rate based on the number of
authorized shares with a maximum aggregate tax of $200,000 per year. Under the
assumed par value capital method, Delaware taxes each $1,000,000 of assumed par
value capital at the rate of $400; where assumed par value would be (1) our
total gross assets, divided by (2) our total issued shares of common stock,
multiplied by (3) the number of our authorized shares. Our annual franchise tax
obligation is expected to be capped at the maximum amount of annual franchise
taxes payable by us as a Delaware corporation of $200,000. Our annual income tax
obligations will depend on the amount of interest and other income earned on the
amounts held in the Trust Account. We expect the only taxes payable by us out of
the funds in the Trust Account will be income and franchise taxes. We expect the
interest earned on the amount in the Trust Account will be sufficient to pay our
taxes. To the extent that our capital stock or debt is used, in whole or in
part, as consideration to complete our initial business combination, the
remaining proceeds held in the Trust Account will be used as working capital to
finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategies.
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As of February 28, 2022, we held $540,370 outside the Trust Account. We expect
to use these funds primarily to identify and evaluate target businesses, perform
business due diligence on prospective target businesses, travel to and from the
offices or similar locations of prospective target businesses or their
representatives or owners, review corporate documents and material agreements of
prospective target businesses, structure, negotiate and complete a business
combination, and to pay taxes to the extent the interest earned on the Trust
Account is not sufficient to pay our taxes.
As of February 28, 2022, we had working capital of approximately $217,000. In
order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination, our sponsor, Alden
Global, any other affiliate of our sponsor, or our officers or directors may,
but none of them is obligated to, loan us funds as may be required. If we
complete our initial business combination, we would repay such loaned amounts
out of the proceeds of the Trust Account released to us. In the event that our
initial business combination does not close, we may use a portion of the working
capital held outside the Trust Account to repay such loaned amounts but no
proceeds from our Trust Account would be used for such repayment. Up to
$1,500,000 of such loans may be convertible into warrants at a price of $1.00
per warrant at the option of the lender. These warrants would be identical to
the private placement warrants. The terms of such loans, if any, have not been
determined and no written agreements exist with respect to such loans. We do not
expect to seek loans from parties other than our sponsor, Alden Global or
another affiliate of our sponsor, or our officers and directors, if any, as we
do not believe third parties will be willing to loan such funds and provide a
waiver against any and all rights to seek access to funds in our Trust Account.
We expect our primary liquidity requirements over the next 12 months will
include approximately $350,000 for legal, accounting, due diligence, travel and
other expenses in connection with any business combinations; $100,000 for legal
and accounting fees related to regulatory reporting requirements; $75,000 for
Nasdaq continued listing fees; and approximately $350,000 for working capital to
cover miscellaneous expenses (including franchise taxes net of anticipated
interest income).
These amounts are estimates and may differ materially from our actual expenses.
In addition, we could use a portion of the funds held outside the Trust Account
to pay commitment fees for financing, fees to consultants to assist us with our
search for a target business or as a down payment or to fund a "no-shop"
provision (a provision designed to keep target businesses from "shopping" around
for transactions with other companies or investors on terms more favorable to
such target businesses) with respect to a particular proposed business
combination, although we do not have any current intention to do so. If we
entered into an agreement where we paid for the right to receive exclusivity
from a target business, the amount that would be used as a down payment or to
fund a "no-shop" provision would be determined based on the terms of the
specific business combination and the amount of our available funds at the time.
Our forfeiture of such funds (whether as a result of our breach or otherwise)
could result in our not having sufficient funds to continue searching for, or
conducting due diligence with respect to, prospective target businesses.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimates of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating an initial business combination are less than the actual amount
necessary to do so, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our public
shares upon completion of our initial business combination, in which case we may
issue additional securities or incur debt in connection with such business
combination. In addition, we may target businesses with enterprise values that
are greater than we could acquire with the net proceeds of our IPO and the
Private Placements, and, as a result, if the cash portion of the purchase price
exceeds the amount available from the Trust Account, net of amounts needed to
satisfy redemptions by public stockholders, we may be required to seek
additional financing to complete such proposed initial business combination. We
may also obtain financing prior to the closing of our initial business
combination to fund our working capital needs and transaction costs in
connection with our search for and completion of our initial business
combination. There is no limitation on our ability to raise funds through the
issuance of equity or equity-linked securities or through loans, advances or
other indebtedness in connection with our initial business combination,
including pursuant to forward purchase agreements or backstop arrangements we
may enter into. Subject to compliance with applicable securities laws, we would
only complete such financing simultaneously with the completion of our business
combination. If we are unable to complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to
cease operations and liquidate the Trust Account. In addition, following our
initial business combination, if cash on hand is insufficient, we may need to
obtain additional financing in order to meet our obligations.
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Going Concern
We have until January 22, 2023 to consummate a Business Combination. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution. Management has determined that
the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about our ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after
January 22, 2023.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of February 28, 2022, we did not have any off-balance sheet arrangements or
any commitments or contractual obligations.
Critical Accounting Policies and Estimates
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480,
Distinguishing Liabilities from Equity ("ASC 480"). Common stock subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including 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) is classified as temporary equity. At all other times, common stock
is classified as stockholders' equity. Our Class A common stock feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, as of September 30, 2021
and December 31, 2020, respectively, 23,000,000 and no shares of Class A common
stock subject to possible redemption were presented at redemption value as
temporary equity, outside of the stockholders' equity section of our condensed
balance sheet.
Net Earnings Per Share
The Company has two classes of shares, which are referred to as Class A common
stock and Class B common stock. The contractual formula utilized to calculate
the redemption amount approximates fair value. The Class A 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 share is computed by
dividing the pro rata net loss between the Class A common shares and the Class B
common shares by the weighted average number of shares of common stock
outstanding for each of the periods. The Company has not considered the effect
of the Public Warrants and Private Placement Warrants sold in the Initial Public
Offering and as part of the Placement Units to purchase 18,050,000 shares of
Class A common stock in the calculation of diluted income per share, since the
exercise of such warrants is contingent upon the occurrence of future events and
the inclusion of such warrants would be anti-dilutive.
Warrant Liabilities
We account for our outstanding Public Warrants and Private Placement Warrants
(collectively, the "Warrants") in accordance with authoritative guidance in ASC
480 and ASC 815, Derivatives and Hedging ("ASC 815"). We determined that the
outstanding Warrants do not meet the criteria for equity treatment thereunder.
As such, each warrant must be recorded as a liability and is subject to
re-measurement at each balance sheet date and any change in fair value is
recorded in our statement of operations.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a significant effect
on our financial statements, other than as described in Note 3 to the financial
statements included in this report.
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