What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 166 added, 94 removed, 352 unchanged (42% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEET

September 30,

Current assets

Prepaid expense

Prepaid insurance

Total current assets

Deferred offering costs

Cash held in Trust Account

8 unchanged sentences

Class A common stock subject to possible redemption;

10,597,751 shares at redemption value

Stockholders’ Equity

11,500,000 shares at redemption value of $ 10.20

Stockholders’ Deficit

Preferred stock, $ 0.0001 par value;

9 unchanged sentences

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

( 8,145,328 )

Total stockholders’ deficit

( 8,144,981 )

Total liabilities and stockholders’ deficit

The accompanying notes are an integral part of these condensed unaudited financial statements

1 unchanged sentence

CONDENSED STATEMENT OF OPERATIONS

For the Period from

For the Period

February 8, 2021

Three Months Ended

September 30,

Formation and operating costs

5 unchanged sentences

Weighted average shares outstanding of Class A common stock subject to redemption

Basic and diluted net loss per common stock

Basic and diluted net income per common stock

Weighted average shares outstanding of Class A and Class B non-redeemable common stock

Basic and diluted net loss per common stock

Basic and diluted net income per common stock

The accompanying notes are an integral part of these condensed unaudited financial statements.

1 unchanged sentence

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM FEBRUARY 8, 2021 (INCEPTION) THROUGH JUNE 30, 2021

Retained earnings

FOR THE PERIOD FROM FEBRUARY 8, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021

Stockholders’

(accumulated deficit)

Balance — February 8, 2021 (inception)

Issuance of Class B Common stock to Sponsor

Sale of units in Initial Public Offering, net of offering costs

Balance — March 31, 2021

Sale of units in IPO, net of offering costs

Deferred underwriting commission

4 unchanged sentences

( 11,176,949 )

Initial shares subject to possible redemption

( 9,660,700 )

Subsequent measurement of Class A Common Stock Subject to Redemption under ASC 480-10-S99 (1)

( 11,500,000 )

( 103,553,250 )

Subsequent shares subject to possible redemption

( 13,745,600 )

1 unchanged sentence

Balance – June 30, 2021

Three Months Ended June 30, 2021 (Unaudited)

Retained earnings

Stockholders’

Balance — March 31, 2021

Sale of units in Initial Public Offering, net of offering costs

Deferred underwriting commission

( 9,438,293 )

( 4,025,000 )

Initial fair value of warrant liability

( 11,176,949 )

Initial shares subject to possible redemption

( 9,660,700 )

( 98,538,177 )

( 98,539,143 )

Subsequent shares subject to possible redemption

Balance – September 30, 2021

( 8,145,328 )

( 8,144,981 )

Balance — June 30, 2021

(1) - Balances include restatement for presentation of redeemable shares (see Note 2).

The accompanying notes are an integral part of these condensed unaudited financial statements

1 unchanged sentence

CONDENSED STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM FEBRUARY 8, 2021 (INCEPTION) THROUGH JUNE 30, 2021

FOR THE PERIOD FROM FEBRUARY 8, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021

Cash flow from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Interest earned on securities held in Trust Account

Offering costs allocated to warrant liability

Changes in operating assets and liabilities:

14 unchanged sentences

Payment of offering costs

( 2,121,054 )

Net cash provided by financing activities

4 unchanged sentences

Deferred underwriting fee payable

Initial classification of common stock subject to possible redemption

Change in value of common stock subject to redemption

Initial value of Class A common stock subject to possible redemption

Initial classification of the warrant liability

The accompanying notes are an integral part of these condensed unaudited financial statements

6 unchanged sentences

The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of June 30, 2021, the Company had not yet commenced any operations.

As of September 30, 2021, the Company had not yet commenced any operations.

All activity for the period February 8, 2021 (inception) through May 6, 2021 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”).

8 unchanged sentences

Following the closing of the Initial Public Offering 959,560 of cash was held outside of the Trust Account available for working capital purposes.

As of June 30, 2021, we have available to us $ 802,110 of cash on our balance sheet and a working capital of $ 760,298 .

As of September 30, 2021, we have available to us $ 533,706 of cash on our balance sheet and a working capital of $ 661,574 .

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

33 unchanged sentences

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Restatement of Previously Issued Financial Statement

In the Company’s previously issued financial statements, a portion of the public shares were classified 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 .

Thus, the company has historically classified a portion of Class A unit shares in permanent equity to satisfy the $ 5,000,000 net tangible asset requirement.

Management reviewed the Company’s initial application of ASC 480-10-S99-3A to its accounting classification of public shares and determined that the public shares include certain redemption provisions outside of the Company’s control that require the public shares to be presented as temporary equity regardless of the minimum net tangible asset required by the Company to complete its initial business combination.

In accordance with SEC Staff Accounting Bulletin No.

99, “Materiality,” and SEC Staff Accounting Bulletin No.

108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the changes and has determined that the related impact was not material to any previously presented financial statements.

Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued financial statements should be restated to report all public shares as temporary equity.

As such the Company is reporting upon restatements to those periods in this Quarterly Report.

Impact of the Restatement

The following tables summarize the effect of the restatement on each financial statement line items as of the dates, and for the period, indicated:

As of May 11, 2021

As Previously

Class A common stock subject to possible redemption;

Stockholders' Equity

Class A common stock, $ 0.0001 par value;

Class B common stock, $ 0.0001 par value;

Additional paid-in capital

( 5,624,421 )

Accumulated deficit

( 13,136,252 )

( 13,761,203 )

Total Stockholder’s Equity

( 18,760,857 )

( 13,760,856 )

Total Liabilities and Stockholder’s Equity

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Restatement of Previously Issued Financial Statement (Continued)

As of June 30, 2021

As Previously

Balance Sheet:

Class A common stock subject to possible redemption;

Stockholders' Equity

Class A common stock, $ 0.0001 par value;

Class B common stock, $ 0.0001 par value;

Additional paid-in capital

Accumulated deficit

( 13,745,600 )

( 9,438,293 )

Total Stockholder’s Equity

( 14,437,947 )

( 9,437,946 )

Total Liabilities and Stockholder’s Equity

Statement of Operations:

Weighted average shares outstanding of Class A common stock subject to redemption

( 5,577,675 )

Basic and diluted net income per common stock

Weighted average shares outstanding of Class A and Class B non-redeemable common stock

Basic and diluted net income per common stock

Statement of Changes in Stockholders’ Equity:

Initial shares subject to possible redemption

( 98,539,143 )

Subsequent shares subject to possible redemption

( 4,322,910 )

Subsequent measurement of Class A Common Stock Subject to Redemption under ASC 480-10-S99

( 117,300,000 )

Statement of Cash Flows:

Initial classification of common stock subject to possible redemption

( 98,539,143 )

Change in shares subject to possible redemption

( 4,322,910 )

Initial classification of Class A Common Stock Subject to Redemption

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 3 — Summary of Significant Accounting Policies

16 unchanged sentences

Cash equivalents are carried at cost, which approximates fair value.

The Company had $ 802,110 in cash and no cash equivalents as of June 30, 2021.

The Company had $ 533,706 in cash and no cash equivalents as of September 30, 2021.

DATA KNIGHTS ACQUISITION CORP.

7 unchanged sentences

The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The provision for income taxes was deemed to be immaterial for the period from February 8, 2021 (inception) through June 30, 2021.

The provision for income taxes was deemed to be immaterial for the period from February 8, 2021 (inception) through September 30, 2021.

Class A Common Stock Subject to Possible Redemption

3 unchanged sentences

The Company’s shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.

Accordingly, at June 30, 2021, as there are 1,487,524 shares of Class A Common Stock outstanding, excluding 10,597,751 shares of Class A Common Stock are subject to possible redemption.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000.

The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Net Loss Per Share

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock shares outstanding for the period.

The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the Initial Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

On September 30, 2021, there are 585,275 shares of Class A common stock in Private Placement Unit (Note 5) outstanding.

11,500,000 shares of Class A Common Stock are subject to possible redemption.

If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period.

The Company has elected to recognize the changes immediately.

The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).

As of September 30, 2021, the Class A Common Stock reflected on the balance sheet are reconciled in the following table:

As of September 30, 2021

Gross Proceeds

Proceeds allocated to public warrants

( 11,176,949 )

Issuance costs related to Class A common stock

( 6,146,054 )

Accretion of carrying value to redemption value

Contingently redeemable Class A Common Stock

DATA KNIGHTS ACQUISITION CORP.

1 unchanged sentence

Note 3 — Summary of Significant Accounting Policies (Continued)

The Company’s statements of operations includes a presentation of income (loss) per share for common stock shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share.

Net income per share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, if any, by the weighted average number of Class A redeemable common stock shares outstanding.

Net loss per share, basic and diluted, for Class A and Class B non-redeemable common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock shares, by the weighted average number of Class A and Class B non-redeemable common stock shares outstanding for the period.

Non-redeemable Class A and Class B common stock shares includes the Founder Shares and non-redeemable common stock shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.

Concentration of Credit Risk

The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Net Income Per Share

Net income per share is computed by dividing net income by the weighted average number of common stock shares outstanding for the period.

The calculation of diluted income per share does not consider the effect of the warrants issued in connection with the Initial Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The Company applies the two-class method in calculating earnings per share.

The contractual formula utilized to calculate the redemption amount approximates fair value.

The Class feature to redeem at fair value means that there is effectively only one class of stock.

Changes in fair value are not considered a dividend for the purposes of the numerator in the earnings per share calculation.

Net income per common share is computed by dividing the pro rata net loss between the redeemable shares and the non-redeemable shares by the weighted average number of common shares outstanding for each of the periods.

The calculation of diluted income per common stock does not consider the effect of the warrants issued in connection with the IPO since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The warrants are exercisable for 12,085,275 shares of common stock in the aggregate.

The following table reflects the calculation of basic and diluted net income per common share:

For the period from

February 8, 2021

Ended June 30,

June 30, 2021

Redeemable Class A common shares

earnings allocable to redeemable Class A common shares

Interest income on investments held in Trust Account

weighted average number of redeemable Class A common share

Basic and diluted net income per redeemable Class A common share

Non-redeemable Class A and Class B common shares

net income (loss) minus redeemable net earnings

Interest income on investments held in Trust Account

Non-redeemable net income

weighted average number of non-redeemable Class B common shares and Class A common shares

Basic and diluted net income per non-redeemable Class A common shares and Class B common share

September 30, 2021

Redeemable common shares

Net income allocable to common stock subject to possible redemption

weighted average number of redeemable common share

Basic and diluted net income per redeemable common share

Non-redeemable common shares

Net income allocable to common stock not subject to redemption

weighted average number of non-redeemable common shares

Basic and diluted net loss per non-redeemable private placement and common share

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature.

DATA KNIGHTS ACQUISITION CORP.

1 unchanged sentence

Note 3 — Summary of Significant Accounting Policies (Continued)

Fair Value of Financial Instruments

Derivative Financial Instruments

4 unchanged sentences

Recently Issued Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments.

ASU2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.

ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021.

The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

Note 4 —Public Offering

20 unchanged sentences

On June 1, 2021, the $ 78,925 outstanding under the promissory note was repaid in full.

On June 30, 2021, there is no amount outstanding under the promissory note.

On September 30, 2021, there is no amount outstanding under the promissory note.

Related Party Loans

70 unchanged sentences

If the Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

At June 30, 2021, the Company accounted for the aggregate 12,085,275 warrants issued in connection with the Initial Public Offering (the 11,500,000 Public Warrants and the 585,275 Placement Warrants) in accordance with the guidance contained in ASC 815-40.

At September 30, 2021, the Company accounted for the aggregate 12,085,275 warrants issued in connection with the Initial Public Offering (the 11,500,000 Public Warrants and the 585,275 Placement Warrants) in accordance with the guidance contained in ASC 815-40.

Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

4 unchanged sentences

Preferred Stock — The Company is authorized to issue 1,000,000 preferred shares with a par value of $ 0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors.

At June 30, 2021, there were no preferred shares issued or outstanding .

At September 30, 2021, there were no preferred shares issued or outstanding .

Class A Common Stock — The Company is authorized to issue up to 100,000,000 shares of Class A common stock with a par value of $ 0.0001 per share.

Holders of the Company’s Class A common stock are entitled to one vote for each share.

At June 30, 2021, 1,487,524 shares of Class A common stock issued and outstanding, excluding 10,597,751 shares of Class A common stock subject to possible redemption.

At September 30, 2021, 585,275 shares of Class A common stock issued and outstanding, excluding 11,500,000 shares of Class A common stock subject to possible redemption.

Class B Common Stock — The Company is authorized to issue up to 10,000,000 shares of Class B common stock with a par value of $ 0.0001 per share.

2 unchanged sentences

Following the determination of the Company’s third independent director, on March 23, 2021, the Sponsor transferred 5,000 shares to such independent director.

At June 30, 2021, there were 2,875,000 shares of Class B common stock issued and outstanding .

At September 30, 2021, there were 2,875,000 shares of Class B common stock issued and outstanding .

Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law.

14 unchanged sentences

Note 10 – Fair Value Measurements (Continued)

The following table presents information about the Company's assets and derivative warrant liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:

The following table presents information about the Company's assets and derivative warrant liabilities that are measured at fair value on a recurring basis as of September 30, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:

Quoted Prices in

8 unchanged sentences

Private Placement Warrants

Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.

The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement during the three months ended June 30, 2021.

The Warrants are measured at fair value on a recurring basis.

The Public Warrants were initially valued using a Modified Monte Carlo Simulation.

As of June 30, 2021, the Public Warrants were valued using the instrument’s publicly listed trading price as of the balance sheet date, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market.

At June 30, 2021, assets held in the Trust Account were comprised of $ 117,300,000 in U.S.

At September 30, 2021, assets held in the Trust Account were comprised of $ 117,303,691 in U.S.

Treasury Securities.

The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.

The Warrants are measured at fair value on a recurring basis.

The Public Warrants were valued initially and at each reporting period that the warrants that were not actively traded, using a Modified Monte Carlo Simulation.

As of September 30, 2021, the Public Warrants were valued using the instrument’s publicly listed trading price as of the balance sheet date, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market.

Both at their initial valuation and as of September30, 2021, the Private Placement Warrants were valued using a modified Black-Scholes valuation model using level 3 inputs.

The Company accounted for the aggregate 12,085,275 warrants issued in connection with the Initial Public Offering (the 11,500,000 Public Warrants and the 585,275 Placement Warrants) in accordance with the guidance contained in FASB ASC Topic 815-40.

6 unchanged sentences

If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.

The Company utilizes a binomial Monte-Carlo simulation to estimate the fair value of the warrants at each reporting period for its warrants that are not actively traded.

The Company recognized $ 6,174,038 for the derivative warrant liabilities on June 30, 2021.

The estimated fair value of certain derivative warrant liabilities is determined using Level 3 inputs.

The Company utilized a binomial Monte-Carlo simulation to estimate the fair value of the warrants at each reporting period for its warrants that are not actively traded.

Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield.

7 unchanged sentences

Note 10 – Fair Value Measurements (Continued)

The estimated fair value of the Private Placement Warrants is determined using Level 3 inputs.

Inherent in a modified Black-Scholes model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield.

The Company estimates the volatility of its warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the Warrants.

The risk-free interest rate is based on the U.S.

Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants.

The expected life of the warrants is assumed to be equivalent to their remaining contractual term.

The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:

March 31, 2021

June 30, 2021

(Public Warrants)

September 30, 2021

(Private Warrants)

5 unchanged sentences

Dividend yield (per share)

The change in the fair value of the derivative warrant liabilities for the period for the three months ended June 30, 2021 is summarized as follows:

The change in the fair value of the derivative warrant liabilities for the period for the three months ended September 30, 2021 is summarized as follows:

Private Placement

1 unchanged sentence

Warrant Liability

Fair value as of March 31, 2021

Change in valuation inputs or other assumptions (1)(2)

Fair value as of June 30, 2021

Change in valuation inputs or other assumption (1)

( 1,150,000 )

( 1,388,792 )

Fair value as of June 30, 2021

Fair value as of September 30, 2021

(1) Changes in valuation inputs or other assumptions are recognized in change in fair value of warrant liability in the statement of operations .

(2) Changes are due to the use of quoted prices in an active market (Level 1) and the use of unobservable inputs based on assessment of the assumptions (Level 3) for Public Warrants (after becoming actively traded) and Private Placement Warrants, respectively.

Note 11 – Subsequent Events

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements