References to the "
Company
," "
KnightSwan Acquisition Corporation
," "
our
," "
us
" or "
we
" refer to KnightSwan Acquisition Corporation, references to "
management
" or "
management team
" refer to the Company's officers and directors and references to the "
Sponsor
" refer to KnightSwan Sponsor LLC. The following discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the unaudited condensed financial statements and the notes
thereto contained elsewhere in this Quarterly Report on Form
10-Q
(this "
Quarterly Report
"). Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes, and oral statements made from time to time by
representatives of the Company may include, forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act and are intended to be covered by the safe
harbor created thereby. The Company has based these forward-looking statements
on management's current expectations, projections and forecasts about future
events. These forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions about the Company that may cause its actual
business, financial condition, results of operations, performance and/or
achievements to be materially different from any future business, financial
condition, results of operations, performance and/or achievements expressed or
implied by these forward-looking statements. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those
described in the Company's other filings with the SEC. All of these factors are
subject to additional uncertainty in the context of the COVID-19 pandemic and
the conflict in Ukraine, which are having impacts on our business and markets
generally and the economy as a whole. The words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intends," "may," "might," "plan,"
"possible," "potential," "predict," "project," "target," "goal," "shall,"
"should," "will," "would" and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a statement is not
forward-looking. In addition, any statements that refer to expectations,
projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements.
Overview
We are a blank check company incorporated as a Delaware corporation and formed
for the purpose of effecting a merger, consolidation, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar initial business
combination with one or more businesses or entities. We intend to effectuate our
initial business combination using cash derived from the proceeds of the initial
public offering (the "
Initial Public Offering
") and the sale of the private placement warrants, our share capital, debt or a
combination of cash, share capital and debt.
We expect to continue to incur significant costs in the pursuit of our initial
business combination. We cannot assure you that our plans to complete our
initial business combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues through
March 31, 2022. All activity for the period from August 13, 2021 (inception)
through March 31, 2022 were organizational activities, those necessary to
prepare for the Initial Public Offering as described below and, subsequent to
the closing of the Initial Public Offering, 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. We generate
non-operating
income in the form of interest income on investments held in the trust account.
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 March 31, 2022, we had a net loss of $1,107,325,
which consists of operating costs of $1,128,781 offset by interest income on
investments held in the trust account of $21,456.
F-16
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Table of Contents
Liquidity and Capital Resources
On January 25, 2022, we consummated the Initial Public Offering of 23,000,000
Units at $10.00 per Unit, including the issuance of 3,000,000 Units as a result
of the underwriter's exercise of its over-allotment option, generating gross
proceeds of $230,000,000 as described in Note 3 to the condensed financial
statements. Simultaneously with the closing of the Initial Public Offering, we
consummated the sale of 13,100,000 private placement warrants (the "
Private Placement Warrants
") at a price of $1.00 per Private Placement Warrant in a private placement
transaction to the Sponsor, generating gross proceeds of $13,100,000 as
described in Note 4 to the condensed financial statements.
Following the Initial Public Offering and the sale of the Private Placement
Warrants, a total of $235,750,000 was placed in the trust account. We incurred
$11,634,010 in costs related to the Initial Public Offering, consisting of
$4,200,000 of underwriting fees, $6,900,000 of deferred underwriting fees and
$534,010 of other offering costs.
For the three months ended March 31, 2022, cash used in operating activities was
$943,879. The net loss of $1,107,325 was affected by interest earned on
investments held in the trust account of $21,456, profit interest compensation
of $105,119 and changes in operating assets and liabilities provided $79,783 of
cash for operating activities.
As of March 31, 2022, we had investments held in the trust account of
$235,771,456 (including $21,456 of interest income) consisting of U.S. Treasury
Bills with a maturity of 185 days or less. We may withdraw interest from the
trust account to pay taxes, if any. 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. 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 income taxes payable),
to complete our initial business combination.
As of March 31, 2022, we had cash of $1,598,672 held outside of the trust
account. 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.
In order to fund working capital deficiencies or finance transaction costs in
connection with our initial business combination, the Sponsor, or an affiliate
of the Sponsor, or certain of the Company's executive officers and directors
may, but are not obligated to, loan the Company funds as may be required. If we
complete our initial business combination, we will repay such working capital
loans. In the event that our initial business combination does not close, we may
use a portion of the working capital held outside the trust account to repay
such working capital loans but no proceeds from the trust account would be used
for such repayment. Up to $2,000,000 of such working capital loans may be
convertible into warrants at a price of $1.50 per warrant, at the option of the
lender. The warrants would be identical to the Private Placement Warrant.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating our initial business combination is less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to our initial business combination. Moreover, we may
need to obtain additional financing either to complete our initial business
combination or because we become obligated to redeem a significant number of the
Public Shares upon consummation of our initial business combination, in which
case we may issue additional securities or incur debt in connection with such
initial business combination.
Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of March 31, 2022.
F-17
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Table of Contents
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a sum of $20,000 per month for office space and
secretarial and administrative services. We began incurring these fees on
January 25, 2022 and will continue to incur these fees monthly until the earlier
of the completion of the initial business combination and our liquidation.
The underwriters and a consultant are entitled to deferred fees in the aggregate
of $0.35 per Unit, or $6,900,000 due to the underwriter and $1,150,000 pursuant
to a consulting agreement (see below). The deferred underwriting fee and the
consulting fee will become payable to the underwriters and consultant from the
amounts held in the trust account solely in the event that the Company completes
an initial business combination, subject to the terms of the underwriting
agreement.
Consulting Agreement
Prior to the consummation of the Initial Public Offering, the Company entered
into a consulting agreement with an advisory firm that will assist in the
identification, due diligence and assistance in the valuation of potential
business combination opportunities for the Company. Pursuant to the agreement,
the Company paid the advisory firm $400,000 at the consummation of the Initial
Public Offering for services rendered from the inception of the agreement
through that date. In addition, in accordance with the terms of the agreement, a
percentage of the gross proceeds from the Company's initial public offering is
to be paid to the consultant for services rendered throughout the term of the
contract to be due and payable upon the completion of a successful business
combination. The Company has included $1,150,000 in other long-term liabilities
pertaining to this amount owed.
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KNIGHTSWAN ACQUISITION CORPORATION 
