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KNIGHTSWAN ACQUISITION CORPORATION

(KNSW)
Delayed Nyse  -  01:37:28 2023-02-03 pm EST
10.30 USD   +0.08%
2022KNIGHTSWAN ACQUISITION CORP Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)
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2022KnightSwan Acquisition Corporation Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2022
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2022KNIGHTSWAN ACQUISITION CORP Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)
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KNIGHTSWAN ACQUISITION CORP Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

08/11/2022 | 04:39pm EST
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


All activity for the period from August 13, 2021 (inception) through June 30,
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 June 30, 2022, we had a loss of $500,080, which consists of operating costs of $819,748 offset by interest income on investments held in the trust account of $319,668. Operating costs for the three months ended June 30, 2022, consist mostly of legal fees ($50,000), profits interest expense ($147,167), sponsor management fee ($60,000), consulting fees ($189,191), directors and officers insurance ($57,224), franchise taxes ($85,479) and listing fees ($165,478).

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For the six months ended June 30, 2022, we had a loss of $1,607,405, which consists of operating costs of $1,948,529 offset by interest income on investments held in the trust account of $341,124. Operating costs for the six months ended June 30, 2022 consist of legal fees ($406,000), profits interest expense ($252,286), sponsors management fee ($103,871), consulting fees ($728,571), directors and officers insurance ($101,796), franchise tax ($98,630) and listing fees ($165,478).

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 six months ended June 30, 2022, cash used in operating activities was $1,219,843. A loss of $1,607,405 was affected by interest earned on investments held in the trust account of $341,124, profit interest compensation of $252,286 and changes in operating assets and liabilities provided $476,400 of cash for operating activities. During the six months ended June 30, 2022, the Company's primary use of cash were a payment for a one-time consulting fee of $400,000, listing fees of $165,478 and management fees of $103,871.

As of June 30, 2022, we had investments held in the trust account of $236,091,124 (including $341,124 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 June 30, 2022, we had cash of $1,322,708 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 connection with the Company's assessment of going concern considerations in accordance with Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," management has determined that if the Company is unsuccessful in consummating an initial business combination within 18 months from the closing of the IPO (July 25, 2023 - less than 12 months from the date of these unaudited financial statements), the mandatory liquidation requirement that the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern. Management has determined that the Company has funds that are sufficient to fund the working capital needs of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated in the Company's amended and restated certificate of incorporation. The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. These unaudited financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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.

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  Table of Contents

Off-Balance
Sheet Arrangements

We did not have any
off-balance
sheet arrangements as of June 30, 2022.

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.

© Edgar Online, source Glimpses

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