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References to the “Company,” “us,” “our” or “we” refer Data Knights Acquisition Corp.
−Removed: The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed financial statements and related notes included herein.
+Added: The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed consolidated financial statements and related notes included herein.
Cautionary Note Regarding Forward-Looking Statements
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We have neither engaged in any operations nor generated any revenues to date.
−Removed: Our only activities from inception to March 31, 2022, were organizational activities, those necessary to prepare for the Initial Public Offering and identifying a target company for a business combination.
+Added: Our only activities from inception to June 30, 2022, were organizational activities, those necessary to prepare for the Initial Public Offering and identifying a target company for a business combination.
We do not expect to generate any operating revenues until after the completion of our initial Business Combination.
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We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
−Removed: For the period from February 8, 2021 (inception) through March 31, 2022, we had a net loss of $845 which consists of formation and operating costs of $845.
−Removed: For the three months ended March 31, 2022, we had a net income of $2,195,508 which consists of unrealized gain from marketable securities held in the Trust Account of $43,053 change in fair value of warrant liabilities of $2,762,640 offset by operating costs of $610,185.
+Added: For the three months ended June 30, 2022, we had a net income of $949,937, which consists of unrealized gain from marketable securities held in the Trust Account of $149,350, change in fair value of warrant liabilities of $1,595,082 and offset by operating costs of $794,495.
+Added: For the three months ended June 30, 2021, we had a net income of $4,308,152, which consists of unrealized gain from marketable securities held in the Trust Account of $794, change in fair value of warrant liabilities of $5,002,911 and offset by operating costs of $70,494 and non-operating expenses of $625,059.
+Added: For the six months ended June 30, 2022, we had a net income of $3,145,445, which consists of unrealized gain from marketable securities held in the Trust Account of $192,403, change in fair value of warrant liabilities of $4,357,722 and offset by operating costs of $1,404,680.
+Added: For the period from February 8, 2021 (inception) through June 30, 2021, we had a net income of 4,307,307 which consists of unrealized gain from marketable securities held in the Trust Account of $794, change in the fair value of warrant liabilities of $5,002,911 and offset by formation and operating costs of $71,339 and non-operating expenses of $625,059.
Liquidity and Capital Resources
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Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 585,275 Private Placement Units at $10.00 per Private Placement Unit to our Sponsor, generation gross proceeds of $5,852,750.
−Removed: For the three months ended March 31, 2022, Cash used in operating activities was $294,018.
+Added: For the six months ended June 30, 2022, cash used in operating activities was $445,671.
+Added: For the period from February 8, 2021 (inception) through June 30, 2021, cash used in operating activities was $29,528.
Transaction costs of the Initial Public Offering amounted to $6,771,112, consisting of $2,300,000 of underwriting fees, $4,025,000 of deferred underwriting fees (see Note 6) and $446,112 of other costs.
−Removed: As of March 31, 2022, we had available to us $159,133 of cash on our balance sheet and a working capital deficit of $363,953.
+Added: As of June 30, 2022, we had available to us $7,480 of cash on our condensed consolidated balance sheets and a working capital deficit of $1,158,449.
We intend to use the funds held outside of the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
The interest income earned on the investments in the Trust Account are unavailable to fund operating expenses.
−Removed: We have up to 12 months from the closing of our IPO, or until May 11, 2022, to consummate an initial business combination.
+Added: We have up to 18 months from the closing of our IPO, or until November 11, 2022, to consummate an initial business combination.
On May 5, 2022, the Company issued a press release announcing that its Sponsor has requested that the Company extend the date by which the Company has to consummate a business combination from May 11, 2022 to August 11, 2022 (the “ Extension ”).
The Extension is the first of two three-month extensions permitted under the Company’s governing documents.
−Removed: The Company will have until August 11, 2022 (or up to November 11, 2022, as applicable) to consummate a Business Combination.
−Removed: However, if we anticipate that we may not be able to consummate our initial business combination within 15 months, we may, by resolution of our board if requested by our sponsor, extend the period of time to consummate a business combination up to one time with an additional three months (for a total of up to 18 months, or until November 11, 2023, to complete a business combination), subject to the sponsor depositing additional $1,150,000 into the trust account for each three month extensions at a total payment of $2,300,000, providing a total Business Combination period of 18 months.
−Removed: If our initial business combination is not consummated by August 11, 2022 (or until November 11, 2022 if we extend the period of time to consummate a business combination), then our existence will terminate, and we will distribute all amounts in the trust account.
+Added: On August 11, 2022, the Company extend the date by which the Company has to consummate a business combination from August 11, 2022 to November 11, 2022 (the “2 nd Extension ”).
+Added: The Extension is the second of two three-month extensions permitted under the Company’s governing documents.
+Added: The Company will have until November 11, 2022 to consummate a Business Combination.
+Added: However, if we anticipate that we may not be able to consummate our initial business combination within 18 months, we may, by resolution of our board if requested by our sponsor, extend the period of time to consummate a business combination until November 11, 2023, to complete a business combination, subject to the sponsor depositing additional $1,150,000 into the trust account for each three month extensions at a total payment of $2,300,000, providing a total Business Combination period of 18 months.
+Added: If our initial business combination is not consummated by November 11, then our existence will terminate, and we will distribute all amounts in the trust account.
In order to fund working capital deficiencies or finance transaction costs in connection with our initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
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The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
−Removed: The Company intends to complete the proposed Business Combination before August 11, 2022, and we believe we have sufficient arrangements with our vendors to continue to operate until we complete our initial Business Combination.
−Removed: However, there can be no assurance that the Company will be able to consummate the Business Combination by then.
−Removed: In the event that we are unable to consummate the Business Combination before August 11, 2022 we anticipate identifying and accessing additional capital resources in order to extend the Business Combination period up to 18 months.
+Added: The Company intends to complete the proposed Business Combination before November 11, 2022, and we believe we have sufficient arrangements with our vendors to continue to operate until we complete our initial Business Combination.
+Added: However, there can
+Added: be no assurance that the Company will be able to consummate the Business Combination by then.
+Added: In the event that we are unable to consummate the Business Combination before November 11, 2022 we anticipate identifying and accessing additional capital resources in order to extend the Business Combination period up to 18 months.
However, there can be no assurance that the Company will have access to sufficient capital to extend the deadline to consummate the Business Combination.
−Removed: As a result, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” it is uncertain that the Company will have sufficient liquidity to fund the working capital needs of the Company beyond August 11, 2022.
−Removed: Management has determined that given the liquidity condition of the Company, should a Business Combination not occur by August 11, 2022, there is substantial doubt about the Company’s ability to continue as a going concern.
+Added: As a result, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” it is uncertain that the Company will have sufficient liquidity to fund the working capital needs of the Company beyond November 11, 2022.
+Added: Management has determined that given the liquidity condition of the Company, should a Business Combination not occur by November 11, 2022, there is substantial doubt about the Company’s ability to continue as a going concern.
No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate.
Off-Balance Sheet Financing Arrangements
−Removed: We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of March 31, 2022.
+Added: We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, 2022.
We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
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We began incurring these fees on May 7, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
−Removed: From inception to March 31, 2022, we have incurred $11,000 in fees under this agreement.
+Added: From inception to June 30, 2022, we have incurred $140,000 in fees under this agreement.
The Underwriter was paid a cash underwriting fee of 2.0% of gross proceeds of the Public Offering, or $2,300,000.
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Use of Estimates
−Removed: The preparation of condensed financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
+Added: The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment.
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The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”.
−Removed: For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
+Added: For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
−Removed: Derivative liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
+Added: Derivative liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Class A Common stock subject to possible redemption
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The Company’s common stock features certain redemption rights that are outside of the Company’s control and subject to occurrence of uncertain future events.
−Removed: Accordingly, as of March 31, 2022, there were 585,275 shares of Class A Common Stock outstanding, excluding 11,500,000 shares of Class A Common Stock are subject to possible redemption.
+Added: Accordingly, as of June 30, 2022, there were 585,275 shares of Class A Common Stock outstanding, excluding 11,500,000 shares of Class A Common Stock are subject to possible redemption.
Recent Accounting Pronouncements
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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.