Forward-Looking Statements
This quarterly report, 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 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 will
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 June 30, 2021, we had net loss of $3,743,546 which
consisted of a non-cash $3,610,000 increase in fair value of warrant liabilities
and $137,041 in general and administrative expenses, partially offset by $3,495
in interest income. General and administrative expenses of $137,041 were
primarily comprised of legal and accounting fees.
For the six months ended June 30, 2021, we had net income of $4,121,457 which
consisted of $6,010 in interest income and a non-cash $5,070,000 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 $281,589 in general and administrative expenses. General and
administrative expenses of $281,589 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 July 31, 2021, we held $492,477 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 July 31, 2021, we had working capital of approximately $400,000. 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; $150,000 for legal
and accounting fees related to regulatory reporting requirements; $75,000 for
Nasdaq continued listing fees; and approximately $175,000 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.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of July 31, 2021, we did not have any off-balance sheet arrangements or any
commitments or contractual obligations.
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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 June 30, 2021 and
December 31, 2020, respectively, 20,476,786 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
Net earnings per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding for the period. We
have 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 are contingent
upon the occurrence of future events and the inclusion of such warrants would be
anti-dilutive.
Our statement of operations includes a presentation of income per share for
common shares subject to redemption in a manner similar to the two-class method
of income per share. Net income per common share, basic and diluted, for Class A
redeemable common stock held by Public Stockholders for the three and six months
ended June 30, 2021 is calculated by dividing the interest income earned on the
Trust Account of $3,495 and $6,010, respectively, by the weighted average number
of shares of Class A redeemable common stock held by Public Stockholders since
issuance. Net earnings per common share, basic and diluted, for Class B
non-redeemable common stock is calculated by dividing net (loss) income for the
three and six months ended June 30, 2021 of $(3,743,546) and $4,121,457 less
income attributable to Class A redeemable common stock of $3,495 and $6,010,
respectively, by the weighted average number of Class A and Class B
non-redeemable common stock outstanding for the period. Class B non-redeemable
common stock includes the Founder Shares as these shares do not have any
redemption features and do not participate in the income earned on the Trust
Account.
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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