References to the "Company," "Hawks Acquisition Corp," "our," "us" or "we" refer
to Hawks Acquisition Corp, references to "management" or "management team" refer
to the Company's officers and directors and references to the "Sponsor" refer to
Hawks 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. 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 were formed on January 4, 2021 for the purpose of entering into a merger,
share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more target
businesses. Our efforts to identify a prospective target business will not be
limited to any particular industry or geographic region. We intend to utilize
cash derived from the proceeds of our Initial Public Offering in effecting our
initial Business Combination.
We are an emerging growth company and, as such, we are subject to all of the
risks associated with emerging growth companies.
We presently have no revenue. All activities during the three months ended March
31, 2022 relate to the solicitation of a target business with which to complete
a Business Combination. We will have no operations other than the active
solicitation of a target business with which to complete a Business Combination,
and we will not generate any operating revenue until after its initial business
combination, at the earliest. We also have non-operating income in the form of
interest income on cash and cash equivalents from the proceeds derived from the
Initial Public Offering.
On October 13, 2021, we consummated the Initial Public Offering of 23,000,000
Units, at a price of $10.00 per Unit, generating gross proceeds of $230,000,000.
Simultaneously with the closing of the Initial Public Offering, the Company
consummated a Private Placement in which the Sponsor purchased 6,500,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant, generating
total proceeds of $6,500,000. The net proceeds from the Initial Public Offering,
together with certain of the proceeds from the Private Placement, $230,000,000
in the aggregate (the "Offering Proceeds"), were placed in a U.S.-based trust
account maintained by Continental Stock Transfer & Trust Company, acting as
trustee.
We cannot assure you that our plans to complete our initial Business Combination
will be successful. If we are unable to complete our initial business
combination within 18 months from the date of the Initial Public Offering
(assuming the Sponsor does not exercise its option to extend the period of time
we will have to complete an initial Business Combination by up to 3 or 6 months,
as applicable, or such other time period in which we must consummate an initial
Business Combination pursuant to an amendment to our Certificate of
Incorporation), we will (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than five
business days thereafter, redeem 100% of the outstanding public shares and (iii)
as promptly as
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reasonably possible following such redemption, subject to the approval of the
remaining holders of common stock and our board of directors, liquidate and
dissolve. In the event of liquidation, the holders of the Founder Shares and
Private Placement Warrants will not participate in any redemption distribution
with respect to their Founder Shares or Private Placement Warrants until all of
the claims of any redeeming shareholders and creditors are fully satisfied (and
then only from funds held outside the Trust Account).
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through March 31, 2022 were organizational activities, those
necessary to prepare for the Initial Public Offering, described below, and,
after our Initial Public Offering, day-to-day operations and identifying a
target company for an initial Business Combination. We do not expect to generate
any operating revenues until after the completion of our initial Business
Combination. 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 $473,316,
consisting of operating and formation costs.
Liquidity and Capital Resources
On October 13, 2021, we consummated the Initial Public Offering of 23,000,000
Units, at a price of $10.00 per Unit, generating gross proceeds of $230,000,000.
Simultaneously with the closing of the Initial Public Offering, the Company
consummated a Private Placement in which the Sponsor purchased 6,500,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant, generating
total proceeds of $6,500,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option and the sale of the Private Placement Warrants, a total of $230,000,000
was placed in the Trust Account. We incurred $13,610,785 in costs related to the
Initial Public Offering, consisting of $4,000,000 of underwriting fees,
$8,650,000 of deferred underwriting fees and $960,785 of other offering costs.
For the three months ended March 31, 2022, cash used in operating activities was
$341,620.
As of March 31, 2022, we had investments held in the Trust Account of
$230,063,264 (including $63,264 of interest income) consisting of money market
funds, which are invested primarily in 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. 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 payable), to complete our Business Combination. To the extent that
our share capital or debt is used, in whole or in part, as consideration to
complete our 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.
As of March 31, 2022, we had cash of $683,747 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 a Business Combination.
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 a 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 Business Combination. As a result, the Company may elect to utilize
certain covenants in the Investment Management Trust Agreement made effective as
of October 7, 2021 by and between the Company and Continental Stock Transfer &
Trust Company ("Trust Agreement") that provide for withdrawal of earned interest
to reimburse the Company for taxes paid by the Company and for working capital
not to exceed $1,000,000 per annum. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of the Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Further, management has
determined that the combination period is less than one year from the date of
the issuance of the financial statements. There is no assurance that the
Company's plans to consummate a business combination will be
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successful within the combination period which will expire within one-year from
the issuance date of these financial statements. Therefore, if the Company does
not consummate a business combination within the combination period, there is
substantial doubt that the Company can sustain operations for a period of at
least one-year from the issuance date of these financial statements. Management
believes that the funds which the Company has available, in addition to
utilization of available options as provided for in the Trust Agreement, will
enable the Company to sustain operations for the earlier of a period of one-year
from the issuance date of these financial statements, or the date of
consummation of a business combination.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2022.
Contractual Obligations
As of March 31, 2022, we did not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $8,650,000 in the aggregate.
The deferred fee will be waived by the underwriters in the event that we do not
complete an Initial Business Combination, subject to the terms of the
underwriting agreement.
Commencing on the effective date of the Initial Public Offering, the Company has
agreed to pay GLC or an affiliate of GLC a total of $10,000 per month for office
space, utilities and secretarial and administrative support. Upon completion of
the initial Business Combination or the Company's liquidation, the Company will
cease paying these monthly fees. As of March 31, 2022, we recognized $60,000 for
the administrative support services expense.
Critical Accounting Estimates
Net Loss per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share". The Company has two classes of stock, which are
referred to as Class A Common Stock and Class B Common Stock. Income and losses
are shared pro rata between the two classes of stock. Net income (loss) per
share of common stock is computed by dividing net income (loss) by the weighted
average number of shares of common stock outstanding for the period. Accretion
associated with the redeemable shares of Class A common stock is excluded from
income (loss) per common share as the redemption value approximates fair value.
The calculation of diluted loss per share of common stock does not consider the
effect of the warrants issued in connection with the (i) Initial Public
Offering, and (ii) the private placement since the exercise of the warrants is
contingent upon the occurrence of future events. As of March 31, 2022 and March
31, 2021, the Company did not have any dilutive securities or other contracts
that could, potentially, be exercised or converted into common stock and then
share in the earnings of the Company. As a result, diluted net loss per common
share is the same as basic net loss per common share for the periods presented.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance enumerated in ASC 480 "Distinguishing Liabilities
from Equity". Common stock subject to mandatory redemption are classified as a
liability instrument and are measured at fair value. Conditionally redeemable
common stock (including common stock that feature redemption rights that are
either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within the Company's control) are
classified as temporary equity. At all other times, common stock is classified
as stockholders' equity. The Company's common stock feature certain redemption
rights that are considered by the Company to be outside of the Company's control
and subject to the occurrence of uncertain future events. Accordingly, at March
31, 2022 and December 31, 2021, the shares of common stock subject to possible
redemption in the amount of $230,000,000 are presented as temporary equity,
outside of the stockholders' equity section of the Company's balance sheet.
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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
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.
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