Business context and reporting period
The supplied filing is Data Knights Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2021—not a filing identified as OneMedNet Corp. Data Knights was a newly formed SPAC with no operating business; it was seeking a business combination. The statements cover the three months ended June 30, 2021 and, where noted, inception on February 8, 2021 through June 30, 2021.
Financial results and position
- Revenue: None; the company had not commenced operations or generated revenue.
- Net income: $4.31 million for the quarter and $4.31 million from inception, driven primarily by a $5.00 million noncash gain from the change in fair value of warrant liabilities. Operating costs were approximately $70,500 for the quarter.
- Cash flow: $654,587 used in operating activities from inception; $118.76 million provided by financing activities; $117.30 million invested in the Trust Account. Ending cash outside the Trust Account was $802,110.
- Liquidity: Current assets were $812,110, current liabilities $51,812, and reported working capital $760,298. Trust assets were approximately $117.30 million and generally unavailable for operating expenses.
- Liabilities and equity: Total liabilities were $10.25 million, including $6.17 million of warrant liabilities and $4.03 million of deferred underwriting fees. Stockholders’ equity was $5.00 million. The filing reports no long-term debt.
- Other metrics: Trust investments earned $794 of interest. The $5.00 million warrant revaluation gain is non-operating and noncash; it substantially accounts for reported net income.
Changes versus the prior comparable period
No year-earlier comparable operating period is presented. The company was incorporated in February 2021 and completed its IPO in May 2021, so results largely reflect formation, fundraising, and SPAC-related accounting rather than business operations.
Outlook, risks, and unusual items
- Management intended to use funds outside the Trust Account to identify and evaluate acquisition candidates. It expected ongoing public-company and transaction-related costs and no operating revenue before a business combination.
- The company had until May 11, 2022 to complete a business combination, with possible extensions to November 11, 2022 subject to conditions and sponsor deposits. Failure to complete a transaction could require liquidation and redemption of public shares; warrants could expire worthless.
- Management said post-IPO resources were sufficient to fund operations through the earlier of a business combination or one year from the filing, and that substantial doubt about continuing as a going concern had been alleviated. It cautioned that completing a business combination was not assured.
- COVID-19 could adversely affect the company’s financial position or target search, but the specific impact was not determinable. Sponsor support for certain claims against the Trust Account was subject to limitations, and the filing said the sponsor’s ability to meet its indemnity obligations was uncertain.
- The IPO raised $115.0 million; a concurrent private placement raised approximately $5.85 million. The Trust Account held $117.30 million. A $4.03 million deferred underwriting commission was payable only upon a completed business combination.
- Warrant liabilities are remeasured through earnings, creating potentially material noncash fluctuations. Public warrants were valued using quoted market prices; private placement warrants used Level 3 inputs.
Key facts for investors to verify
- Confirm the intended registrant: the supplied filing names Data Knights Acquisition Corp., whereas the request identifies OneMedNet Corp.
- Reconcile reported income figures: the statements show quarter net income of $4,308,152 and inception-to-date net income of $4,307,307, while the cash flow statement reports $4,308,151; MD&A also gives slightly different expense figures.
- Assess whether the cash outside the Trust Account and any potential sponsor or insider loans are sufficient to fund transaction costs through the combination deadline.
- Review redemption, extension, dilution, warrant, underwriting-fee, and sponsor-indemnity terms, including the conditions and limits described in the filing.