Business Context and Reporting Period
Company: Data Knights Acquisition Corp. (Note: Input metadata referenced "Onemednet Corp," but the filing text identifies the registrant as Data Knights Acquisition Corp.)
Reporting Period: Quarterly period ended March 31, 2021 (Inception: February 8, 2021)
Business Type: Blank check company (Special Purpose Acquisition Company) incorporated in Delaware.
Status: Pre-operational. The company was formed to effectuate a merger or business combination. As of March 31, 2021, the company had not commenced operations. The Initial Public Offering (IPO) was consummated subsequently on May 11, 2021.
Key Financial Metrics
| Metric | Value (USD) |
|---|---|
| Total Assets | $70,000 |
| Cash and Cash Equivalents | $25,000 |
| Deferred Offering Costs | $45,000 |
| Total Liabilities | $45,845 |
| Accrued Expenses | $45,845 |
| Stockholders' Equity | $24,155 |
| Net Loss | $(845) |
| Working Capital Deficit | $(20,845) |
Revenue: $0 (No operations commenced).
Profit/Loss: Net loss of $845 attributed to formation costs.
Cash Flow: Net cash provided by financing activities was $25,000 (proceeds from issuance of Class B common stock to Sponsor). Net cash used in operating activities was $0.
Material Changes and Subsequent Events
The filing covers the period from inception through March 31, 2021. Significant events occurred subsequent to the balance sheet date, as disclosed in the notes:
- IPO Completion: On May 11, 2021, the company consummated an IPO of 11,500,000 Units at $10.00 per unit, generating gross proceeds of $115,000,000.
- Private Placement: Simultaneously, the Sponsor purchased 585,275 Private Placement Units for $5,852,750.
- Trust Account: $117,300,000 was deposited into a Trust Account.
- Transaction Costs: Total transaction costs amounted to $6,760,812, including $2,300,000 in underwriting fees and $4,025,000 in deferred underwriting fees.
- Liquidity Shift: While the company had a working capital deficit of $20,845 as of March 31, 2021, management determined that sufficient capital exists to sustain operations following the IPO.
Outlook, Risks, and Contingencies
Outlook: The company intends to use proceeds to consummate a Business Combination within 12 months (extendable to 18 months) of the IPO closing. If no combination is completed, the company will liquidate and redeem public shares from the Trust Account.
Risks and Contingencies:
- Liquidity: Prior to the IPO, the company lacked liquidity to sustain operations for one year. This was resolved by the IPO proceeds.
- Extension Loans: The Sponsor may deposit up to $2,000,000 (or $2,300,000 with over-allotment) into the Trust Account to extend the combination period by up to 18 months total.
- Warrant Liability: Warrants issued in the IPO are classified as liabilities and will be re-valued at each reporting date, with changes recognized in operations.
- COVID-19: Management is evaluating the impact of the pandemic, noting it could negatively affect the search for a target company, though specific impacts are not determinable.
- Related Party Loans: The Sponsor and affiliates may provide working capital loans up to $1,500,000, convertible into units, to finance transaction costs.
Investor Verification Checklist
- Company Identity: Verify the registrant is Data Knights Acquisition Corp., not Onemednet Corp.
- IPO Timing: Confirm that the financial statements reflect a pre-IPO balance sheet; the $115M in proceeds occurred after the reporting period.
- Trust Account Balance: Verify the $117,300,000 deposit into the Trust Account post-IPO.
- Deferred Fees: Note the $4,025,000 deferred underwriting fee payable only upon a successful Business Combination.
- Share Structure: Confirm the 2,875,000 Class B Founder Shares outstanding as of March 31, 2021, and the subsequent issuance of Class A shares via IPO.