What changed in this filing

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Item 1. Financial Statements

2023-05-19 compared with 2022-11-18 · 232 added, 297 removed, 330 unchanged (62% of the section changed)

1 unchanged sentence

Financial Statements:

Condensed Consolidated Balance Sheet as of September 30, 2022 (Unaudited) and as of December 31, 2021

Condensed Consolidated Statements of Operations for the three months ended September 30, 2022 and 2021, nine months ended September 30, 2022, and for the period from February 8, 2021 (Inception) through September 30, 2021 (Unaudited)

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022, and for the three months ended September 30, 2021 and for the period from February 8, 2021 (Inception) through September 30, 2021 (Unaudited)

Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2022 and for the period from February 8, 2021 (Inception) through September 30, 2021 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022

Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months ended March 31, 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (Unaudited)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

DATA KNIGHTS ACQUISITION CORP.

CONDENSED CONSOLIDATED BALANCE SHEET

September 30,

CONDENSED CONSOLIDATED BALANCE SHEETS

Current assets

Prepaid expense

Prepaid insurance

Total Current Assets

2 unchanged sentences

Current Liabilities

Accrued expense

Amount due to relate parties

Accrued expenses

Amount due to related parties

Income tax payable

8 unchanged sentences

Class A Common Stock subject to possible redemption;

11,500,000 shares at redemption value of $ 10.40 and $ 10.20 as of September 30, 2022 and December 31, 2021, respectively

4,838,792 shares at redemption value of $ 10.74 and $ 10.53 per share as of March 31, 2023 and December 31, 2022, respectively

Stockholders’ Deficit

4 unchanged sentences

100,000,000 shares authorized;

585,275 issued and outstanding, excluding 11,500,000 shares subject to redemption

585,275 issued and outstanding, excluding 4,838,792 shares subject to redemption as of March 31, 2023 and December 31, 2022, respectively

Class B Common Stock, par value $ 0.0001 ;

10,000,000 shares authorized;

2,875,000 issued and outstanding

4,253,517 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

Total Liabilities and Stockholders’ Deficit

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

The accompanying notes are an integral part of the condensed consolidated financial statements.

DATA KNIGHTS ACQUISITION CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Period

February 8, 2021

Three Months Ended

September 30,

Formation and operating costs

1 unchanged sentence

Loss from operation costs

( 1,924,704 )

Other income (expense):

Realized and unrealized gain

Dividends, realized and unrealized gain in Trust Account

Change in fair value of warrant liabilities

Non-operating expense

Net income (loss) before provision for income taxes

2 unchanged sentences

Weighted average shares outstanding of Class A Common Stock subject to redemption

Basic and diluted net income per common stock

Basic and diluted net income (loss) 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

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

Basic and diluted net income (loss) per common stock

The accompanying notes are an integral part of the condensed consolidated financial statements.

DATA KNIGHTS ACQUISITION CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Stockholders’

2 unchanged sentences

( 8,806,438 )

Re-measurement of carrying value of Class A redeemable stock to redemption value

( 1,150,000 )

Balance — June 30, 2022 (unaudited)

( 6,614,365 )

( 6,614,018 )

Re-measurement of carrying value of Class A redeemable stock to redemption value

( 1,150,000 )

Accretion of Class A common stocks at redemption value

Balance — September 30, 2022 (unaudited)

Re-measurement of Class A Common Stock Subject to Possible Redemption

Balance — March 31, 2023 (unaudited)

( 11,718,728 )

( 9,475,991 )

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND

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

FOR THE THREE MONTHS ENDED MARCH 31, 2022

Stockholders’

Balance — February 8, 2021 (inception)

Issuance of Class B Common Stock to Sponsor

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

Deferred underwriting commission

( 4,025,000 )

Initial fair value of warrant liability

( 11,176,949 )

Subsequent shares subject to possible redemption

( 11,500,000 )

( 103,553,250 )

( 13,745,600 )

( 117,300,000 )

Balance — June 30, 2021 (unaudited)

Balance — January 1, 2022

( 8,609,810 )

( 8,609,463 )

Balance — September 30, 2021 (unaudited)

Balance — March 31, 2022 (unaudited)

( 6,414,302 )

( 6,413,955 )

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

The accompanying notes are an integral part of the condensed consolidated financial statements.

DATA KNIGHTS ACQUISITION CORP.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

February 8, 2021

September 30, 2022

September 30, 2021

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months

Cash flow from operating activities:

Net income (loss)

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

Offering costs allocated to warrant liabilities

Realized and unrealized gain

Dividends, realized and unrealized gain in Trust Account

Change in fair value of warrant liability

( 2,762,640 )

( 6,391,703 )

Changes in operating assets and liabilities:

Prepaid expense

Accrued expense

Accrued expenses

Franchise tax payable

3 unchanged sentences

Investment of cash in Trust Account

( 2,300,000 )

( 117,300,000 )

Interest withdraw from Trust Account

Net cash used by investing activities

( 2,033,191 )

( 117,300,000 )

Net cash used in investing activities

Cash flow from financing activities:

Proceeds from issuance of Class B common stock

Proceeds from sale of Units, net of underwriting discount paid

Proceeds from sale of Private units

Payment of offering costs

Advances from related parties

Proceeds from working capital loan

Amount due to related parties

Proceeds from extension loans

4 unchanged sentences

Supplemental disclosure of non-cash financing activities:

Initial classification of Class A common stock subject to possible redemption

Change in value of common stock subject to possible redemption

Deferred underwriting fee payable

Initial Classification of Warrant Liability

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

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations

Re-measurement of Class A common stock subject to possible redemption

The accompanying notes are an integral part of the condensed consolidated financial statements.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Data Knights Acquisition Corp.

2 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.

On April 22, 2022, Data Knights Merger Sub, Inc.

(“Merger Sub”), a Delaware corporation and a wholly-owned subsidiary of Data Knights Acquisition Corp., was formed.

As of September 30, 2022, the Company had not yet commenced any operations.

All activity for the period February 8, 2021 (inception) through September 30, 2022, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and, since the closing of the initial public offering, the Company has entered into a merger agreement (as described below), and continued a search for a Business Combination candidate.

As of March 31, 2023, the Company had not yet commenced any operations.

All activity for the period February 8, 2021 (inception) through March 31, 2023, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and, since the closing of the initial public offering, the Company has entered into a merger agreement (as described below), and continued a search for a Business Combination candidate.

The Company has selected December 31 as its fiscal year end.

7 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 September 30, 2022, we have available to us $ 234,923 of cash on our balance sheet and working capital deficit of $ 1,218,387 .

As of March 31, 2023, the Company has $ 10,108 of cash and a working capital deficit of $ 2,326,648 .

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.

1 unchanged sentence

The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

There is no assurance that the Company will be able to successfully effect a Business Combination.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations (Continued)

There is no assurance that the Company will be able to successfully affect a Business Combination.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Continued)

On April 25, 2022, the Company, Data Knights Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Data Knights, LLC, the Company’s sponsor (the “Sponsor”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with OneMedNet Corporation, Inc., a Delaware corporation (the “Target”, and together with the Company and Merger Sub, the “Parties”) and Paul Casey, as seller representative (“Casey”).

5 unchanged sentences

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”).

At 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.

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 , to be deposited in the Trust Account in connection with the exercise of the first monthly extension of the Extended Date to December 11, 2022.

On November 11, 2022, at 10:00 a.m.

ET, the Company held a virtual special meeting of its stockholders.

At the special meeting, Company stockholders entitle to vote at the special meeting cast their votes and approved the Trust Amendment Proposal, pursuant to which the Trust Agreement was amended to extend the date on which Continental must liquidate the Trust Account established in connection with the IPO if the Company has not completed its initial business combination, from November 11, 2022 to August 11, 2023 (or such earlier date after November 11, 2022, as determined by the Data Knights Board).

As a part of 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 allow the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods.

In connection with each such extension, Data Knights, LLC, the Company’s sponsor, shall cause $ 0.045 per outstanding share of the Company’s Class A Common Stock, or approximately $ 122,920 , to be deposited in the Trust Account.

As of March 31, 2023, the Company has executed five one-month extensions, out of the nine , resulting in deposits of approximately $ 614,600 into the Trust Account.

In connection with the proposed Business Combination with the Target, the Company will provide its public stockholders with the opportunity to redeem all or a portion of their Class A Common Stock upon the completion of such Business Combination in connection with a stockholder meeting called to approve such Business Combination.

2 unchanged sentences

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $ 5,000,001 either immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations (Continued)

The Company will have until December 11, 2022 to consummate a business combination.

As discussed above, the Company filed a definitive proxy statement with the SEC on October 27, 2022 in connection with the Company’s solicitation of proxies for the vote by the stockholders of the Company at the Special Meeting.

The Company’s stockholders approved the Extension Amendment and the Trust Amendment that allowed the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods from 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 , to be deposited in the Trust Account in connection with the exercise of the first monthly extension of the Extended Date to December 11, 2022.

If the Company is unable to complete a Business Combination by December 11, 2022, or as extended by the Company’s stockholders as described above(the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes (less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of applicable law.

In connection with the voting on the Extension Amendment Proposal and the Trust Amendment Proposal at the special meeting, holders of 8,768,456 shares of Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ 10.42 per share, for an aggregate of approximately $ 91.4 million.

Following the payment of the redemptions, the Trust Account had a balance of approximately $ 28.5 million.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Continued)

Based on the above, the Company will have until August 11, 2023 to consummate a Business Combination.

If the Company is unable to complete a Business Combination on August 11, 2023 at the election of the Company subject to satisfaction of certain conditions, including the deposit of up $ 2,300,000 since the underwriters’ over-allotment option is exercised in full ($ 0.10 per unit), into the Trust Account, or as extended by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation) (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes (less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of applicable law.

The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares.

1 unchanged sentence

There will be no redemption rights or liquidating distributions with respect to the Founder Shares (as defined below) or the shares of Class A Common Stock and the warrants that are included as components of the Private Placement Units.

Such warrants will expire worthless if the Company fails to complete a Business Combination within the 18-month time period.

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $ 10.20 per Public Share (or $ 10.445 per Public Share including the Extension deposits) and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account, if less than $ 10.20 per share (or $ 10.445 per share including the Extension deposits) due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

Such warrants will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $ 10.20 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account, if less than $ 10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company.

2 unchanged sentences

The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

As of September 30, 2022, the Company had $ 234,923 in cash and working capital deficit of $ 1,218,387 .

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations (Continued)

Going Concern, Liquidity and Capital Resources

As of March 31, 2023 and December 31, 2022, the Company had cash held outside of the Trust Account of $ 10,108 and $ 30,870 , respectively.

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial business combination.

As of March 31, 2023 and December 31,2022, the Company had working capital deficit of $2,326,648 and $ 1,945,267 , respectively.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Continued)

The Company’s liquidity needs prior to the consummation of its IPO were satisfied through the proceeds of $ 25,000 from the sale of the Founder Shares and proceed from the promissory note from sponsor of $ 78,925 , which was repaid upon closure of the IPO.

Subsequent to the IPO, the Company’s liquidity will be satisfied through a portion of the net proceeds from IPO held outside of the Trust Account.

As of September 30, 2022, we had investments of $ 120,133,869 held in the Trust Account.

As of March 31, 2023 and December 31, 2022, we had investments of $ 29,725,574 and $ 29,029,416 held in the Trust Account, respectively.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes paid and deferred underwriting commissions) to complete our initial business combination.

We may withdraw interest to pay taxes.

During the nine and three months ended September 30, 2022, we withdrawed $ 266,810 interest earned on the Trust Account to pay DE Franchise tax.

For the three months ended March 31, 2023, we did not withdraw any of interest earned on the Trust Account.

During the period ended December 31, 2022, we withdraw $ 299,601 interest earned on the Trust Account to pay Delaware Franchise Tax.

To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

The accompanying financial statements have been prepared in conformity with U.S.

The accompanying consolidated financial statements have been prepared in conformity with U.S.

GAAP, which contemplates the continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business.

2 unchanged sentences

Management plans to address this uncertainty during the period leading up to the business combination, however this cannot be guaranteed.

Originally, the Company will have until May 11, 2022 to consummate a Business Combination.

On May 5, 2022, the Company extended the date by which the Company has to consummate a business combination from May 11, 2022 to August 11, 2022 (the “1 st Extension ”).

On August 10, 2022, the Company extended 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 2 nd Extension is the second of two three-month extensions permitted under the Company’s governing documents.

On November 11, 2022, the Stockholders of the Company approved the Extension Amendment and the Trust Amendment to allow the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods from November 11, 2022.

The Company has extended the deadline by which it must complete its initial business combination following stockholder approval of the Extension Amendment and the Trust Amendment, if our initial business combination is not consummated by December 11, 2022, less than one year after the date the financial statements are issued, then our existence will terminate, and we will distribute all amounts in the trust account.

The Company will have until August 23, 2023 to consummate a Business Combination.

If our initial business combination is not consummated by August 23, 2023, less than one year after the date the financial statements are issued, then our existence will terminate, and we will distribute all amounts in the trust account.

The Company intends to complete a business combination before the liquidation date and no adjustments have been made to the carrying amounts of assets or liabilities should the company be required to liquidate after such date.

There can be no assurance that the Company will be able to consummate an initial business combination by December 11, 2022 and/or have sufficient working capital and borrowing capacity to meet its needs.

There can be no assurance that the Company will be able to consummate an initial business combination by August 23, 2023 and/or have sufficient working capital and borrowing capacity to meet its needs.

Based upon the above analysis, management determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

3 unchanged sentences

Up to $ 1,500,000 of such loans may be convertible into units identical to the Placement Units, at a price of $ 10.00 per unit at the option of the lender.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations (Continued)

Risks and Uncertainties

1 unchanged sentence

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, including the proposed Business Combination with the Target, or the operations of a target business with which the Company ultimately consummates a Business Combination, including the Target, may be materially and adversely affected.

Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all.

The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable.

The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into law.

The IR Act provides for, among other measures, a new 1% U.S.

federal excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations.

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from whom the shares are repurchased.

The amount of the excise tax is generally 1% of the fair market value of the shares repurchased.

For purposes of calculating the excise tax, however, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of the Treasury (the “Treasury Department”) has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of, the excise tax.

The IR Act applies only to repurchases that occur after December 31, 2022.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Continued)

Any redemption or other repurchase effected by us that occurs after December 31, 2022, in connection with a Business Combination or otherwise, may be subject to this excise tax.

Whether and to what extent we would be subject to the excise tax in connection with a Business Combination will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, (ii) the nature and amount of any PIPE financing or other equity issuances in connection with the Business Combination (or any other equity issuances within the same taxable year of the Business Combination) and (iii) the content of any regulations and other guidance issued by the Treasury Department and/or the Internal Revenue Service.

In addition, because the excise tax would be payable by us and not by the redeeming holder, it could cause a reduction in the value of our stock.

The foregoing could cause a reduction in the cash available on hand to complete a business Combination in the required time and redeem 100 % of our public shares in accordance with our amended and restated certificate of incorporation) could be subject to the excise tax, in which case the amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S.

Securities and Exchange Commission.

The accompanying financial statements are presented in U.S.

Dollars and conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.

All significant intercompany balances and transactions have been eliminated in consolidation.

Emerging growth company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

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The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s condensed consolidated financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of estimates

The preparation of the balance sheet in conformity with GAAP requires 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with GAAP requires 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 period.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ significantly from those estimates.

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

The Company had $ 234,923 and $ 453,151 in cash and no cash equivalents as of September 30, 2022 and December 31, 2021.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies (Continued)

The Company had $ 10,108 and $ 30,870 in cash and no cash equivalents as of March 31, 2023 and December 31, 2022, respectively.

Trust Account

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Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received.

Offering costs associated with warrant liabilities are expensed as incurred, presented as offering costs allocated to warrants in the condensed consolidated statements of operations.

Offering costs associated with warrant liabilities are expensed as incurred, presented as offering costs allocated to warrants in the consolidated statements of operations.

Offering costs associated with the Public Shares were charged to stockholders’ equity upon the completion of the Initial Public Offering.

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At all other times, shares are classified as stockholders’ equity.

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.

On September 30, 2022, there were 585,275 shares of Class A Common Stock issued and outstanding that were issued as component securities of the Private Placement Units (Note 4).

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

The Company’s Class A Common Stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.

On March 31, 2023, there are 585,275 shares of Class A Common Stock related to the Private Placement Units (Note 8) outstanding, which are not subject to redemption, and 2,731,544 shares of Class A Common Stock outstanding, which 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.

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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).

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies (Continued)

The Class A Common Stock reflected on the condensed consolidated balance sheet are reconciled in the following table:

For the Period from

February 8, 2021

September 30,

December 31, 2021

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

As of March 31, 2023 and 2022, the Class A Common Stock reflected on the balance sheet are reconciled in the following table:

For the Three

Contingently redeemable Class A Common Stock – Opening Balance

Gross Proceeds

Proceeds allocated to public warrants and private warrants

( 10,614,500 )

Issuance costs related to Class A Common Stock

( 6,146,054 )

Re-measurement of carrying value to redemption value

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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 of 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.

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 income (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 (loss) 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.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies (Continued)

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

Three Months Ended

February 8, 2021

September 30,

(inception) Through

September 30, 2021

Redeemable Class A Common Stock subject to possible redemption

earnings allocable to redeemable Class A Common Stock subject to possible redemption

weighted average number of redeemable Class A Common Stock

Basic and diluted net income per redeemable Class A Common Stock

Non-redeemable Class A and Class B common stock

net income (loss) allocable to non-redeemable Class A and Class B common stock

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

Non-redeemable Class A private placement and Class B common shares, basic and diluted

Basic and diluted net income per non-redeemable Class and Class B common stock

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

For the Three Months Ended

Redeemable Class A common shares

Net income (loss) allocable to common stock subject to possible redemption

weighted average number of redeemable common share

Basic and diluted net income (loss) per redeemable common share

Non-redeemable Class A and Class B common shares

Net income (loss) allocable to common stock not subject to redemption

weighted average number of non-redeemable common shares

Basic and diluted net income (loss) per non-redeemable common share

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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 coverage of $250,000.

At March 31, 2023 and 2022, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

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 Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature, except warrant liabilities (See Note 9).

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying consolidated balance sheets, primarily due to their short-term nature, except warrant liabilities (See Note 9).

Derivative Financial Instruments

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”.

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.

Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies (Continued)

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes.

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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 September 30, 2022.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2023 and 2022, respectively.

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 Company is subject to income tax examinations by major taxing authorities since inception.

The Company’s effective tax rate for the three and nine months ended September 30, 2022, was - 220.93 % and 3.44 %, respectively, and for the three months ended September 30, 2021, and for the period from February 8, 2021 (inception) through September 30, 2021 was 0.00 %.

The Company’s effective tax rate differs from the statutory income tax rate of 21 % primarily due to the recognition of gains or losses from the change in the fair value of warrant liabilities, which are not recognized for tax purposes, and recording a full valuation allowance on deferred tax assets.

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period.

The Company has used a discrete effective tax rate method to calculate taxes for the three and nine months ended September 30, 2022.

The Company believes that, at this time, the use of the discrete method for the three and nine months ended September 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into law.

The IR Act provides for, among other measures, a new 1% U.S.

federal excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations.

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from whom the shares are repurchased.

The amount of the excise tax is generally 1% of the fair market value of the shares repurchased.

In addition, certain exceptions apply to the excise tax.

Department of the Treasury (the “Treasury Department”) has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of, the excise tax.

The IR Act applies only to repurchases that occur after December 31, 2022.

Any redemption or other repurchase effected by us that occurs after December 31, 2022, in connection with a Business Combination or otherwise, may be subject to this excise tax.

In addition, because the excise tax would be payable by us and not by the redeeming holder, it could cause a reduction in the value of our stock.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies (Continued)

Our effective tax rate was ( 225.88 %) and 38.96 % for the three months ended March 31, 2023 and 2022, respectively.

The effective tax rate differs from the statutory tax rate of 21 % for the three months ended March 31, 2023 and 2022, due to transaction costs and the valuation allowance on the deferred tax assets.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Standards

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.

In August 2020, the 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.

ASU 2020-06 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.

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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 for fiscal years beginning after December 15, 2023 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 condensed consolidated financial statements.

Note 3 —Public Offering

ASU 2020-06 is effective for the Company for the fiscal year beginning after December 15, 2023, including interim periods within those fiscal years.

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.

INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 11,500,000 Units at a purchase price of $ 10.00 per Unit.

Each Unit consists of one share of the Company’s Class A Common Stock, $ 0.0001 par value, and one redeemable warrant (“Public Warrant”).

Each whole Public Warrant entitles the holder to purchase one share of Class A Common Stock at an exercise price of $ 11.50 per whole share (see Note 7).

Note 4 — Private Placement

Each Public Warrant entitles the holder to purchase one share of Class A Common Stock at an exercise price of $ 11.50 per whole share (see Note 9).

PRIVATE PLACEMENT

Simultaneously with the Initial Public Offering, the Sponsor purchased an aggregate of 585,275 Private Placement Units at a price of $ 10.00 per Private Placement Unit for an aggregate purchase price of $ 5,852,750 .

The Private Placement Units are identical to the Units, except that (a) the Private Placement Units and their component securities will not be transferable, assignable or saleable until the consummation of the Company’s initial business combination except to permitted transferees and (b) the Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) may be exercised by the holders on a cashless basis and (ii) will be entitled to registration rights.

Note 5 — Related Party Transactions

The Private Placement Units are identical to the Units, except that (a) the Private Placement Units and their component securities will not be transferable, assignable or saleable until 30 days after the consummation of the Company’s initial business combination except to permitted transferees and (b) the Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) may be exercised by the holders on a cashless basis and (ii) will be entitled to registration rights.

RELATED PARTY TRANSACTIONS

Introducing Advisor Agreement

On June 26, 2021, the Company entered into an introducing advisor agreement (the “Introducing Advisor Agreement”) with ARC Group Limited, the Company’s financial advisor (“ARC”), pursuant to which ARC will make strategic introductions to the Company of potential target companies and/or their subsidiaries, affiliates, or representatives (each an “Advisor Target”) who may be interested in potential business combinations with the Company.

In consideration for ARC’s services under the Introducing Advisor Agreement, we agreed to (i) pay to ARC (a) a retainer of $ 50,000 upon execution of the Introducing Advisor Agreement and (b) a success fee of $ 100,000 upon the closing our initial business combination, and (ii) cause to be issued to ARC equity interests in the post-combination company representing a five-percent ( 5 %) ownership interest in the post-combination company, if at any time prior to June 25, 2022 (the “Termination Date”), or within six ( 6 ) months after the consummation of an initial business combination or any financing with any Advisor Target or any affiliate of an Advisor Target (the “Equity Issuance”).

On March 22, 2022, the Company and ARC entered into the First Amendment to the Introducing Advisor Agreement, pursuant to which both parties agreed that the Company would pay to ARC an additional success fee equivalent to five percent ( 5 %) on any PIPE that was brought by ARC in connection with the Company’s initial business combination upon the closing of the Company’s initial business combination.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS (Continued)

On December 31, 2022, the Company and ARC entered into the Second Amendment to the Introducing Advisor Agreement, pursuant to which both parties agreed to extend the Termination Date to December 31, 2024, and to change the performance condition for the Equity Issuance from the closing of an initial business combination to the execution of a business combination agreement.

On December 31, 2022, following the execution of the Second Amendment to the Introducing Advisor Agreement, the performance condition for the Equity Issuance was deemed to have been met, and ARC was issued 1,378,517 shares of the Company’s Class B Common Stock, up to 143,766 shares of which are subject to forfeiture if the public stockholders exercise redemption rights with respect to any of the remaining outstanding shares of Class A Common Stock.

Founder Shares

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The Founder Shares which the Sponsor and its permitted transferees will collectively own, on an as-converted basis, represent 20 % of the Company’s issued and outstanding shares after the Initial Public Offering.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 5 — Related Party Transactions (Continued)

In connection with the Introducing Advisors Agreement, on December 31, 2022, ARC was granted 1,378,517 shares of Class B common stock, $ 0.0001 par value per share, up to 143,766 of which are subject to forfeiture by ARC if the Company’s public shareholders exercise redemption rights with respect to any of outstanding shares of Class A common stock.

The Sponsor has agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of:

(A) Nine months after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or similar transaction that results in the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

(A) six months after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or similar transaction that results in the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Notwithstanding the foregoing, if the last reported sale price of the Company’s Class A Common Stock equals or exceeds $ 12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock-up.

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

On September 30, 2022 and December 31, 2021, there is no amount outstanding under the promissory note.

On March 31, 2023 and December 31, 2022, there is no amount outstanding under the promissory note.

Related Party Loans

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In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.

As of September 30, 2022, the Company has $ 300,000 working capital loans outstanding.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 5 — Related Party Transactions (Continued)

On March 31, 2023 and December 31, 2022, there is $ 239,081 and $ 207,081 outstanding under the Working Capital Loans, respectively.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS (Continued)

The Company’s second amended and restated certificate of incorporation provides that, if the Company anticipates that it may not be able to consummate a Business Combination within 12 months from the closing of the Company’s initial public offering, the Company may, by resolution of the Company’s board if requested by the Sponsor, extend the period of time to consummate a Business Combination up to two times, each by an additional three months (for a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing additional funds into the Trust Account as set out below.

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On August 10, 2022, the Company extended the date by which the Company had to consummate a business combination from August 11, 2022 to November 11, 2022.

As described in Note 1, the Company filed a definitive proxy statement with the SEC on October 27, 2022 in connection with the Company’s solicitation of proxies for the vote by the stockholders of the Company at the Special Meeting.

The Stockholers of the Compnay approved the Extension Amendment and the Trust Amendment to allow the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods from November 11, 2022.

In connection with each such extension, the Company will have until December 11, 2022 to consummate a Business Combination, as noted above.

Administrative Support Agreement

Commencing on the date of the Initial Public Offering and until completion of the Company’s Business Combination or liquidation, the Company may reimburse Luminous Capital Inc., an affiliate of the Sponsor, up to an amount of $ 10,000 per month for office space, secretarial and administrative support.

For the three months and nine months ended September 30, 2022, $ 30,000 and $ 90,000 support fees were incurred, respectively.

For the period from February 8, 2021 (inception) through September 30, 2021, $ 50,000 support fees were incurred.

For the three months ended September 30, 2021, $ 30,000 support fees were incurred.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 6 — Commitments and Contingencies

As described in Note 1, on November 11, 2022, the Stockholders of the Company approved the Extension Amendment and the Trust Amendment to allow the Company to extend the deadline by which it must complete its initial business combination by up to nine one-month periods from 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 monthly extension.

In connection with each such extension, the Company will have until April 11, 2023 to consummate a Business Combination(see Note 10).

On March 31, 2023 and December 31, 2022, there is $ 2,914,598 and $ 2,545,838 outstanding under the Extension Loan, respectively.

Administrative Services Arrangement

Commencing on the date of the prospectus and until completion of the Company’s Business Combination or liquidation, the Company may reimburse ARC Group Ltd., an affiliate of the Sponsor, up to an amount of $ 10,000 per month for office space, secretarial and administrative support.

For the three months ended March 31, 2023 and 2022, we have incurred $ 30,000 in fees under this agreement, respectively.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

Registration Rights

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The Company granted the underwriter a 45 -day option to purchase up to 1,500,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions.

The aforementioned option was exercised in full on May 11, 2021, simultaneous with the Initial Public Offering.

The aforementioned option was exercised on May 11, 2021.

The underwriter was paid a cash underwriting discount of two percent ( 2.00 %) of the gross proceeds of the Initial Public Offering, or $ 2,300,000 .

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In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of our Registration Statement.

Note 7 – Warrant Liability

First Amendment to the Introducing Advisor Agreement

On March 22, 2022, the Company and ARC entered into the First Amendment to the Introducing Advisor Agreement, pursuant to which both parties agreed that the Company would pay to ARC an additional success fee equivalent to five percent ( 5 %) on any PIPE that was brought by ARC in connection with an initial business combination upon the closing of an initial business combination.

Second Amendment to the Introducing Advisor Agreement

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

WARRANT LIABILITY

Public Warrants may only be exercised for a whole number of shares.

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The Public Warrants will become exercisable 30 days after the completion of a Business Combination and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration.

The Company will not be obligated to deliver any shares of Class A Common Stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A Common Stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A Common Stock is available, subject to the Company satisfying its obligations with respect to registration.

No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 7 – Warrant Liability (Continued)

The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of its initial Business Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement or a new registration statement covering the shares of Class A Common Stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A Common Stock until the warrants expire or are redeemed, as specified in the warrant agreement.

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If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 7 – Warrant Liability(Continued)

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

WARRANT LIABILITY (Continued)

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

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If the Company is unable to complete a Business Combination within the Combination Window and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants.

Accordingly, the warrants may expire worthless.The Placement Warrants were identical to the Public Warrants underlying the Units being sold in the Proposed Public Offering, except that the Placement Warrants and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Accordingly, the warrants may expire worthless.

The Placement Warrants were identical to the Public Warrants underlying the Units being sold in the Proposed Public Offering, except that the Placement Warrants and the Class A Common Stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Additionally, the Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.

4 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 September 30, 2022, 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 March 31, 2022 and December 31, 2022, 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.

Accordingly, the Company will classify each warrant as a liability at its fair value, with the change in fair value recognized in the Company’s statement of operations.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 8 – Stockholders’ Equity

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 September 30, 2022 and December 31, 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.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDER’S EQUITY

Preferred Shares — 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 March 31, 2023 and December 31, 2022, there were no preferred shares issued or outstanding.

Class A Common Stock — The Company is authorized to issue 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 September 30, 2022 and December 31, 2021, there were 585,275 shares of Class A Common Stock issued or outstanding, excluding 11,500,000 shares of Class A Common Stock subject to possible redemption.

At March 31, 2023 and December 31, 2022, there were 2,731,544 shares of Class A Common Stock issued and outstanding that were subject to possible redemption and 585,275 shares of non-redeemable Class A Common Stock issued and outstanding that were issued in connection with the private placement (Note 4).

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 September 30, 2022 and December 31, 2021, there were 2,875,000 shares of Class B common stock issued and outstanding.

On December 31, 2022, ARC Group Limited, the Company’s Financial Advisor, was granted 1,378,517 shares of Class B common stock with a par value of $ 0.0001 per share, up to 143,766 of which are subject to forfeiture if the Company’s public stockholders exercise redemption rights with respect to any of the Company’s remaining outstanding shares of Class A common stock.

Accordingly, at March 31, 2023 and December 31, 2022, there were 4,253,517 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.

2 unchanged sentences

The Company may issue additional common stock or preferred stock to complete its Business Combination or under an employee incentive plan after completion of its Business Combination.

Note 9 – Fair Value Measurements

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, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:

September 30, 2022

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS

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 March 31, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:

March 31, 2023

Quoted Prices in

8 unchanged sentences

Private Placement Warrants

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 9 – Fair Value Measurements (Continued)

December 31, 2022

11 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the Public Warrants were valued using the instrument’s publicly listed trading price, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market.

Private Placement Warrants were valued using a Monte Carlo valuation model using level 3 inputs at initial valuation and as of September 30, 2022 and December 31, 2021.

At September 30, 2022 and December 31, 2021, assets held in the Trust Account were comprised of $ 120,133,869 and $ 117,320,973 in cash and U.S.

Treasury Securities, respectively.

As of March 31, 2023 and December 31, 2022, the Public Warrants were valued using the instrument’s publicly listed trading price, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market.

Private Placement Warrants were valued using a Monte Carlo valuation model using level 3 inputs at initial valuation and as of March 31, 2023 and December 31, 2022.

At March 31, 2023 and December 31, 2022, assets held in the Trust Account were invested solely in BlackRock US Treasury mutual fund of $ 29,725,574 and $ 29,029,416 , respectively.

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 and are considered Level 1 assets.

The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying condensed consolidated balance sheets.

The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations.

The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying consolidated balance sheets.

The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations.

The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of the Initial Public Offering.

4 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.

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS (Continued)

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

7 unchanged sentences

Once publicly traded, the observable input qualifies the liability for treatment as a Level 1 liability.

As such, as of September 30, 2022 and December 31, 2021, the Company classified the Public Warrants as Level 1.

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 9 – Fair Value Measurements (Continued)

As such, as of March 31, 2023 and December 31, 2022, the Company classified the Public Warrants as Level 1.

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

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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.

During the Nine months ended September 30, 2022 and for the period from February 8, 2021 (inception) through September 30, 2021 there were no transfers between levels.

For the three months ended March 31, 2023 and December 31, 2022, there were no transfers between levels.

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

September 30, 2022

March 31, 2023

December 31, 2022

6 unchanged sentences

Dividend yield (per share)

The change in the fair value of the derivative warrant liabilities for the period from December 31, 2021 through September 30, 2022 is summarized as follows:

Private Placement

Public Warrant

Warrant Liability

The change in the fair value of the derivative warrant liabilities for the three months ended March 31, 2023 and 2022 is as follows:

Private Warrants

Public Warrants

Total Warrant Liability

Fair value as of December 31, 2022

Change in valuation inputs or other assumptions (1)

Fair value as of March 31, 2023

Private Warrants

Public Warrants

Total Warrant Liability

Fair value as of December 31, 2021

Change in valuation inputs or other assumptions (1)

( 2,645,000 )

( 2,762,640 )

Fair value as of September 30, 2022

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

Note 10 – Subsequent Events

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2022, up to November 18, 2022, the date the Company issued the audited financial statements.

Based upon this review, the Company identifed the following subsequent events:.

- On November 11, 2022, the Company held a Special Meeting of its stockholders.

The Stockholders of the Company approved the First Amendment to the Second Amended and Restated Certificate of Incorporation (the “Extension Amendment”).

The Company has the right to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses (a “business combination”), (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100 % of the Company’s Class A common stock included as part of the units sold in the

DATA KNIGHTS ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Company’s initial public offering that was closed on May 11, 2021 (the “IPO”) from November 11, 2022 (the “Termination Date”) up to nine ( 9 ) one-month extensions to August 11, 2023 (the “Extension Amendment Proposal”).

- At the Special Meeting held on November 11, 2022, the Stockholders also approved of Trust Amendment Proposal, pursuant to which the Investment Management Trust Agreement (the “Trust Agreement”), dated May 11, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as trustee (“Continental”), was amended to extend the date on which Continental must liquidate the Trust Account (the “Trust Account”) established in connection with the IPO if the Company has not completed its initial business combination, from November 11, 2022 to August 11, 2023 (or such earlier date after November 11, 2022, as determined by the Data Knights Board).

- In connection with the voting on the Extension Amendment Proposal and the Trust Amendment Proposal at the special meeting, holders of 8,768,456 shares of Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ 10.42 per share, for an aggregate of approximately $ 91.4 million.

Following the payment of the redemptions, the Trust Account had a balance of approximately $ 28.5 million.

- In connection with approval of the Extension Amendment Proposal and the Trust Amendment Proposal, Data Knights, LLC, the Company’s sponsor, caused $ 0.045 per outstanding share of the Company’s Class A Common Stock, giving effect to the redemptions disclosed above, or approximately $ 122,920 , to be deposited in the Trust Account in connection with the exercise of the first monthly extension of the Extended Date to December 11, 2022.

Fair value as of March 31, 2022

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

DATA KNIGHTS ACQUISITION CAPITAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

Based upon this review, the Company did not identified any subsequent events that would have required adjustment or disclosure in the financial statements other than as described below.

On April 17, 2023, the Company withdrew $ 214,850 of interest earned on the Trust account to pay 2022’s income tax payment.

The income tax was paid on April 18, 2023.

On April 19, 2023, the Company elected to exercise its sixth one-month extension to the Termination Date, which extended its deadline to complete its initial business combination to May 11, 2023, by depositing $ 0.045 per share for each Public Share outstanding after giving effect to the redemptions disclosed above, or approximately $ 122,920 , was deposited in the Trust Account.

On April 25, 2023, the Company withdrew $ 73,846 interest earned on the Trust account to pay 2022’s remaining balance and 2023 Q1 prepayment of Delaware Franchise tax.

$ 73,846 was paid to the State of Delaware on May 2, 2023.

On May 11, 2023, the Company elected to exercise its seventh one-month extension to the Termination Date, which extended its deadline to complete its initial business combination to June 11, 2023, by depositing $ 0.045 per share for each Public Share outstanding after giving effect to the redemptions disclosed above, or approximately $ 122,920 , was deposited in the Trust Account.

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