Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 15, 2021, Oyster Enterprises Acquisition Corp. (the "Company") filed
its Form 10-Q for the quarterly period ended September 30, 2021 (the "Q3
Form 10-Q"), which included in Note 2, Revision of Previously Issued Financial
Statements to the Company's unaudited interim financial statements ("Note 2"), a
discussion of the revision to a portion of the Company's previously issued
financial statements for the classification of its Class A common stock subject
to possible redemption issued as part of the units sold in the Company's initial
public offering ("IPO") on January 22, 2021. As described in Note 2, upon its
IPO, the Company classified a portion of the Class A common stock as permanent
equity to maintain net tangible assets greater than $5,000,000 on the basis that
the Company will consummate its initial business combination only if the Company
has net tangible assets of at least $5,000,001. The Company re-evaluated the
conclusion and determined that the Class A common stock included certain
provisions that require classification of the Class A common stock as temporary
equity regardless of the minimum net tangible assets required to complete the
Company's initial business combination. As a result, the Company corrected the
error by reclassifying all Class A common stock subject to possible redemption
from permanent equity to temporary equity. This resulted in an adjustment to the
initial carrying value of the Class A common stock subject to possible
redemption with the offset recorded to additional paid-in capital (to the extent
available), accumulated deficit and Class A common stock.
Also in Note 2 of the Q3 Form 10-Q, in connection with the change in
presentation for the Class A common stock subject to possible redemption, the
Company revised its earnings per share calculation to allocate income and losses
pro rata between the two classes of shares. This presentation differs from the
previously presented method of earnings per share, which was similar to the
two-class method.
The Company initially determined the changes were not qualitatively material to
the Company's previously issued financial statements and revised its previously
issued financial statements in Note 2 to its Q3 Form 10-Q. However, upon further
consideration of the material nature of the changes, the Company determined the
change in classification of the Class A common stock subject to possible
redemption and change to its presentation of earnings per share is
quantitatively material and the Company should restate its previously issued
financial statements.
On March 14, 2022, the Company and the audit committee of the Company's board of
directors (the "Audit Committee") concluded that the Company's previously issued
(i) audited balance sheet as of January 22, 2021 (the "Audited Balance Sheet"),
as reported in the Company's Current Report on Form 8-K filed with the U.S.
Securities and Exchange Commission (the "SEC") on January 28, 2021,
(ii) unaudited interim financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with
the SEC on May 24, 2021, (iii) unaudited interim financial statements included
in the Company's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2021, filed with the SEC on August 13, 2021, and (iv) unaudited interim
financial statements included in the Q3 Form 10-Q, filed with the SEC on
November 15, 2021 (collectively, the "Affected Periods" and clauses (ii) through
(iv) only, the "Affected Quarterly Periods"), should no longer be relied upon
and that it is appropriate to restate the Company's financial statements for all
of the Affected Periods. As a result, the Company intends to restate its
financial statements for all of the Affected Quarterly Periods in Amendment
No. 1 to the Company's Q3 Form 10-Q (the "Amended Q3 Form 10-Q") to be filed
with the SEC as soon as practicable. The Amended Q3 Form 10-Q will include
restatements of the unaudited interim condensed financial statements for all of
the Affected Quarterly Periods. In addition, the Company intends to restate the
Audited Balance Sheet in a future filing with the SEC.
The Company does not expect any of the above changes will have any impact on its
cash position and cash held in the trust account established in connection with
the IPO.
The Company has concluded that in light of the classification error described
above, a material weakness exists in the Company's internal control over
financial reporting for accounting for complex financial instruments during the
Affected Periods and that the Company's disclosure controls and procedures were
not effective. The Company's remediation plan with respect to such material
weakness will be described in more detail in the Amended Q3 Form 10-Q.
The Company and the Audit Committee have discussed the matters disclosed in this
Current Report on Form 8-K pursuant to this Item 4.02 with WithumSmith+Brown,
PC, the Company's independent registered public accounting firm.
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