Business Context and Reporting Period
This Form 8-K is filed by Data Knights Acquisition Corp. (not Onemednet Corp) on November 15, 2021. The registrant is a Delaware corporation and an emerging growth company. The filing addresses a material weakness in internal controls and a subsequent restatement of previously issued financial statements.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the classification of equity and the effectiveness of disclosure controls.
Material Changes and Restatement
- Non-Reliance on Prior Statements: The Audit Committee concluded that the audited balance sheet as of May 11, 2021, and the unaudited financial statements as of June 30, 2021, should no longer be relied upon.
- Accounting Error: The Company previously classified a portion of its Class A common stock in permanent equity based on a charter provision prohibiting redemption if net tangible assets fell below $5,000,001. Following recent SEC guidance, the Company determined this threshold did not alter the redeemable nature of the shares, requiring them to be disclosed outside of permanent equity.
- Restatement: The Company has reflected these restatements in Note 2 of the financial statements included in its Form 10-Q for the period ended September 30, 2021.
Management Commentary, Risks, and Controls
- Material Weakness: The CEO and CFO concluded that disclosure controls and procedures were not effective during the period the error persisted due to a material weakness in analyzing complex financial instruments.
- Remediation: Additional analysis was performed to ensure interim financial statements comply with U.S. GAAP. Management believes the restated September 30, 2021, financial statements fairly present the Company's financial position.
- Auditor Communication: The Audit Committee discussed these matters with the independent registered public accounting firm, Marcum LLP.
- Forward-Looking Statements: The filing includes standard disclaimers regarding risks and uncertainties, noting that actual results may differ from projections.
Investor Verification Checklist
- Verify the specific impact of the equity reclassification on the Company's net tangible assets and share count in the restated Form 10-Q (filed November 15, 2021).
- Confirm the current status of the material weakness in internal controls over financial reporting.
- Review the updated balance sheet to ensure Class A common stock is correctly classified as temporary equity rather than permanent equity.
- Check for any subsequent filings regarding the completion of the audit for the restated periods.