What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-18 compared with 2022-08-15 · 28 added, 23 removed, 142 unchanged (26% of the section changed)

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The Merger Agreement and agreements related thereto are further described in the Form 8-K, filed by us on April 25, 2022.

The Special Meeting

On October 27, 2022, the Company filed a definitive proxy statement with the SEC in connection with the Company’s solicitation of proxies for the vote by the stockholders of the Company at a special meeting of the Company’s stockholders to be held on November 11, 2022 (the “Special Meeting”).

On the Special Meeting, the Stockholders of the Company approved amendments to its second amended and restated certificate of incorporation (the “Extension Amendment”) and the investment management trust agreement (the “Trust Agreement”) between Continental Stock Transfer & Trust Company, as trustee (“Continental”) and the Company governing the trust account (the “Trust Account”) established in connection with the Company’s initial public offering dated May 11, 2021 (the “Trust Amendment”), which together would allow the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods from the current outside date of November 11, 2022.

In connection with each such extension, Data Knights, LLC, the Company’s sponsor, caused $0.045 per outstanding share of the Company’s Class A Common Stock, or approximately $122,920 deposited in the Trust Account in connection with the exercise of the first monthly extension of the Extended Date to December 11, 2022.

The First Amendement to the Second Amended and Restated Certificate of Incorporation and the Amendment No,1 to Investment Management Trust Agreement related thereto are further described in the Form 8-K, filed by us on November 15, 2022.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.

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.

Our only activities from inception to September 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.

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.

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.

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.

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.

For the three months ended September 30, 2022, we had a net loss of $153,275, which consists of unrealized gain from marketable securities held in the Trust Account of $587,303, change in fair value of warrant liabilities of $113,829 and offset by operating costs of $520,025 and provision for income taxes of $106,724.

For the three months ended September 30, 2021, we had a net income of $1,292,965, which consists of unrealized gain from marketable securities held in the Trust Account of $2,897, change in fair value of warrant liabilities of $1,388,792 and offset by operating costs of $98,724.

For the nine months ended September 30, 2022, we had a net income of $2,992,171, which consists of unrealized gain from marketable securities held in the Trust Account of $779,706, change in fair value of warrant liabilities of $4,243,893 and offset by operating costs of $1,924,704 and provision for income taxes of $106,724.

For the period from February 8, 2021 (inception) through September 30, 2021, we had a net income of 5,600,271 which consists of unrealized gain from marketable securities held in the Trust Account of $3,691, change in the fair value of warrant liabilities of $6,391,703 and offset by formation and operating costs of $170,064 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.

For the six months ended June 30, 2022, cash used in operating activities was $445,671.

For the period from February 8, 2021 (inception) through June 30, 2021, cash used in operating activities was $29,528.

For the Nine months ended September 30, 2022, cash used in operating activities was $796,537.

For the period from February 8, 2021 (inception) through September 30, 2021, cash used in operating activities was $297,932.

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.

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.

As of September 30, 2022, we had available to us $234,923 of cash on our condensed consolidated balance sheets and a working capital deficit of $1,218,387.

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.

We have up to 18 months from the closing of our IPO, or until November 11, 2022, to consummate an initial business combination.

We currently have up to 18 months from the closing of our IPO, or until December 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.

The Extension was the first of two three-month extensions permitted under the Company’s governing documents.

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 ”).

The Extension is the second of two three-month extensions permitted under the Company’s governing documents.

The Company will have until November 11, 2022 to consummate a Business Combination.

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.

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.

The 2 nd Extension is the second of two three-month extensions permitted under the Company’s governing documents.

On November 11, 2022 (the “Special Meeting”), the Company’s stockholders approved amendments to its second amended and restated certificate of incorporation (the “Extension Amendment”) and the investment management trust agreement (the “Trust Agreement”) between Continental Stock Transfer & Trust Company, as trustee (“Continental”) and the Company governing the trust account (the “Trust Account”) established in connection with the Company’s initial public offering dated May 11, 2021 (the “Trust Amendment”), which together would allow the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods from the current outside date of November 11, 2022.

If our initial business combination is not consummated by December 11, 2022, or such later date as extended pursuant to the foregoing, 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.

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.

However, there can

be no assurance that the Company will be able to consummate the Business Combination by then.

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.

The Company intends to complete the proposed Business Combination before December 11, 2022, and we believe we have sufficient arrangements with our vendors to continue to operate until we complete our initial Business Combination.

However, there can be no assurance that the Company will be able to consummate the Business Combination by then.

In the event that we are unable to consummate the Business Combination before December 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.

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.

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.

Management has determined that given the liquidity condition of the Company, should a Business Combination not occur by December 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

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, 2022.

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of September 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.

From inception to June 30, 2022, we have incurred $140,000 in fees under this agreement.

From inception to September 30, 2022, we have incurred $170,000 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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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.

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.

Accordingly, as of September 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis