Business Context and Reporting Period
Company: Data Knights Acquisition Corp. (DKDC)
Reporting Date: April 25, 2022
Event: Entry into a Material Definitive Agreement (Merger Agreement) with OneMedNet Corporation, Inc. (the "Target").
Transaction Overview: Data Knights Acquisition Corp. has agreed to merge with OneMedNet Corporation, Inc. Upon closing, the Target will continue as the surviving entity, and the Company will change its name to "OneMedNet Corporation." The transaction is expected to close in the second half of 2022, subject to shareholder approval and other customary conditions.
Key Financial Metrics and Transaction Terms
Merger Consideration: Target shareholders are entitled to receive securities with an aggregate value equal to:
- Base Value: $200,000,000
- Adjustments: Minus any excess net working capital (above a threshold), minus Closing Net Indebtedness, and minus transaction expenses.
PIPE Financing: The Company intends to secure at least $30,000,000 in additional equity capital through the sale of at least 3,000,000 shares of Class A Common Stock at $10.00 per share. There is no assurance this financing will be arranged.
Equity Incentive Plan: The Company will adopt a plan granting equity incentives up to 10% of the Class A Common Stock outstanding at the time of effectiveness.
Financial Statements: This 8-K filing does not provide historical revenue, profit, cash flow, or margin data for either the Company or the Target. The filing text does not provide a clear value for current debt or liquidity positions outside of the transaction terms.
Material Changes and Structural Adjustments
- Corporate Name: Change from "Data Knights Acquisition Corp." to "OneMedNet Corporation."
- Board Composition: The Board will expand to nine directors: two designated by the Company and seven by the Target.
- Stock Conversion: All outstanding Class B common stock of the Company will convert into one share of Class A Common Stock.
- Shareholder Support: Voting agreements have been signed with Target stockholders representing approximately 55% of the Target's voting power, and the Sponsor has agreed to vote in favor of the transaction.
Guidance, Outlook, Risks, and Contingencies
Timeline: Closing is expected in the second half of 2022. The agreement may be terminated if the Closing does not occur by June 30, 2022, unless extended.
Conditions to Closing:
- Approval by stockholders of both the Company and the Target.
- Company must have at least $5,000,001 in tangible net assets upon Closing.
- Receipt of required regulatory approvals and absence of a Material Adverse Effect.
Key Risks:
- Failure to secure the $30,000,000 PIPE Financing.
- Failure to obtain shareholder approval or meet the tangible net asset requirement.
- Termination of the agreement due to uncured breaches or material adverse effects.
- Volatility in the Company's securities price and potential disruption to the Target's operations.
Forward-Looking Statements: The filing contains projections regarding future results and market sizes, which are subject to significant uncertainties and may not reflect actual results.
Investor Verification Checklist
- Verify the final terms of the Merger Agreement, specifically the definitions of "Net Working Capital" and "Closing Net Indebtedness" which adjust the $200M consideration.
- Confirm the status of the $30,000,000 PIPE Financing and whether commitments have been secured.
- Review the upcoming Prospectus and Proxy Statement (Form S-4) for detailed financial data on OneMedNet Corporation, Inc.
- Monitor the vote results of the special meeting of Data Knights Acquisition Corp. stockholders.
- Check for any updates regarding the June 30, 2022 termination deadline and potential extensions.