HawkEye 360, Inc. (HAWK) Risk Analysis
Risk Overview Q4, 2017
Risk Change Over Time
No filing history is available.
- Share Price & Shareholder Rights - Risk 1The Merger is subject to receipt of approval from our stockholders as well as the satisfaction of other closing conditions, including consents and approvals, in the Merger Agreement.
On January 15, 2018, we entered into an agreement and plan of merger (the "Merger Agreement") with BHN Holdings, Inc., a Delaware corporation ("Parent"), and BHN Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub") which provides, among other things and subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into us (the "Merger"), with us continuing as the surviving corporation and as a wholly owned subsidiary of Parent. The Merger Agreement contains a number of conditions to completion of the Merger, including, among others, (i) the adoption of the Merger Agreement by the holders of a majority of outstanding shares of our common stock entitled to vote thereon at a stockholders meeting duly called and held for such purpose, (ii) the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the receipt of certain consents and approvals and the expiration or termination of related statutory waiting periods, (iv) the absence of any law, order or injunction of a court or governmental entity of competent jurisdiction prohibiting the consummation of the Merger or the other transactions contemplated thereby, (v) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain qualifications), and (vi) the performance by the parties of their respective obligations under the Merger Agreement in all material respects. The obligation of Parent to complete the Merger is also conditioned on (i) the absence of a Material Adverse Effect (as defined in the Merger Agreement) on the Company after the date of the Merger Agreement and (ii) no more than 10% of the outstanding shares of our common stock exercising dissenting rights. We can provide no assurance that all required consents and approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, if all required consents and approvals are obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such consents and approvals or the timing of the completion of the Merger. Many of the conditions to completion of the Merger are not within either our or Parent's control, and neither company can predict when or if these conditions will be satisfied (or waived, if applicable). Any delay in completing the Merger could cause us not to realize some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected timeframe.
- Share Price & Shareholder Rights - Risk 2Our business could be negatively affected by the actions of stockholders.
Actions of our stockholders could adversely affect our business. Specifically, actions of some stockholders, including public proposals, requests to pursue a strategic combination or other transaction or special demands or requests, could disrupt our operations, be costly and time-consuming or divert the attention of our management and employees and increase the volatility of our stock. In addition, perceived uncertainties as to our future direction relative to the actions of our stockholders may result in the loss of potential business opportunities, which may be exploited by our competitors and make it more difficult to attract and retain personnel as well as customers, service providers and partners. Actions by our stockholders may also cause fluctuations in our stock price based on speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
- Corporate Activity and Growth - Risk 3Failure to complete the Merger could materially adversely affect our stock price, future business operations and financial results.
If the Merger is not completed for any reason, including as a result of our stockholders failing to adopt the Merger Agreement, our stockholders will not receive any payment for their shares in connection with the Merger. Instead, Blackhawk will remain an independent public company, and the shares will continue to be traded on the Nasdaq. Moreover, our ongoing business may be materially adversely affected and we would be subject to a number of risks, including the following: - we may experience negative reactions from the financial markets, including negative impacts on our stock price, and it is uncertain when, if ever, the price of the shares would return to the prices at which the shares currently trade;- we may experience negative publicity, which could have an adverse effect on our ongoing operations including, but not limited to, retaining and attracting employees, distribution partners, content partners, business clients, customers, providers, advertisers and others with whom we do business;- we will still be required to pay certain significant costs relating to the Merger, such as legal, accounting, financial advisor, printing and other professional services fees, which may relate to activities that we would not have undertaken other than in connection with the Merger;- we may be required to pay a cash termination fee and/or expense reimbursement as required under the Merger Agreement;- the Merger Agreement places certain restrictions on the conduct of our business, which may have delayed or prevented us from undertaking business opportunities that, absent the Merger Agreement, we may have pursued;- matters relating to the Merger require substantial commitments of time and resources by our management, which could result in the distraction of management from ongoing business operations and pursuing other opportunities that could have been beneficial to us; and - litigation related to the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement. If the Merger is not consummated, the risks described above may materialize and they may have a material adverse effect on our business operations, financial results and stock price, especially to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed.
- Corporate Activity and Growth - Risk 4If the Merger Agreement is terminated, we may, under certain circumstances, be obligated to pay a termination fee to Parent and/or reimburse Parent for its expenses. These costs could require us to use cash that would have otherwise been available for other uses.
If the Merger is not completed, in certain circumstances, we could be required to pay a termination fee of up to $109 million to Parent and certain expenses up to $6.8 million, or less under specified circumstances. If the Merger Agreement is terminated, the termination fee we may be required to pay, if any, under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes or other uses. For these and other reasons, termination of the Merger Agreement could materially adversely affect our business operations and financial results, which in turn would materially and adversely affect the price of our common stock.
Risk Highlights Q4, 2017
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 61
- Share Price & Shareholder Rights - Risk 1AddedThe Merger is subject to receipt of approval from our stockholders as well as the satisfaction of other closing conditions, including consents and approvals, in the Merger Agreement.
On January 15, 2018, we entered into an agreement and plan of merger (the "Merger Agreement") with BHN Holdings, Inc., a Delaware corporation ("Parent"), and BHN Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub") which provides, among other things and subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into us (the "Merger"), with us continuing as the surviving corporation and as a wholly owned subsidiary of Parent. The Merger Agreement contains a number of conditions to completion of the Merger, including, among others, (i) the adoption of the Merger Agreement by the holders of a majority of outstanding shares of our common stock entitled to vote thereon at a stockholders meeting duly called and held for such purpose, (ii) the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the receipt of certain consents and approvals and the expiration or termination of related statutory waiting periods, (iv) the absence of any law, order or injunction of a court or governmental entity of competent jurisdiction prohibiting the consummation of the Merger or the other transactions contemplated thereby, (v) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain qualifications), and (vi) the performance by the parties of their respective obligations under the Merger Agreement in all material respects. The obligation of Parent to complete the Merger is also conditioned on (i) the absence of a Material Adverse Effect (as defined in the Merger Agreement) on the Company after the date of the Merger Agreement and (ii) no more than 10% of the outstanding shares of our common stock exercising dissenting rights. We can provide no assurance that all required consents and approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, if all required consents and approvals are obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such consents and approvals or the timing of the completion of the Merger. Many of the conditions to completion of the Merger are not within either our or Parent's control, and neither company can predict when or if these conditions will be satisfied (or waived, if applicable). Any delay in completing the Merger could cause us not to realize some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected timeframe.
- Share Price & Shareholder Rights - Risk 2AddedOur business could be negatively affected by the actions of stockholders.
Actions of our stockholders could adversely affect our business. Specifically, actions of some stockholders, including public proposals, requests to pursue a strategic combination or other transaction or special demands or requests, could disrupt our operations, be costly and time-consuming or divert the attention of our management and employees and increase the volatility of our stock. In addition, perceived uncertainties as to our future direction relative to the actions of our stockholders may result in the loss of potential business opportunities, which may be exploited by our competitors and make it more difficult to attract and retain personnel as well as customers, service providers and partners. Actions by our stockholders may also cause fluctuations in our stock price based on speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
- Share Price & Shareholder Rights - Risk 3The market prices of our common stock may be volatile, which could cause the value of an investment in our stock to decline.
The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control. Factors that may contribute to fluctuations in the market prices of our common stock include: - failure to sustain an active, liquid trading market for our shares;- changes in financial estimates or recommendations by securities analysts or failure to meet analysts' performance expectations;- changes in market valuations of similar companies;- changes in our capital structure, such as future issuances of securities or the incurrence of debt;- sales of our capital stock by our directors or executive officers;- the gain or loss of significant distribution partners, content providers, or business clients;- actual or anticipated developments in our business or our competitors' businesses, such as announcements by us or our competitors of significant contracts, acquisitions or strategic alliances, or in the competitive landscape generally;- litigation involving us, our industry or both;- additions or departures of key personnel;- regulatory developments in the United States and/or foreign countries;- investors' general perception of us; and - changes in general economic, industry and market conditions. The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of particular companies. These types of broad market fluctuations may adversely affect the trading price of our common stock. In the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their securities. Any similar litigation against us could result in substantial costs, divert management's attention as well as our other resources and could have a material adverse effect on our business, results of operations and financial condition. In addition, the Merger, or the failure to complete the Merger, may affect our stock price. Please see the Risk Factor titled "Failure to complete the Merger could materially adversely affect our stock price, future business operations and financial results."
- Share Price & Shareholder Rights - Risk 4If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
The trading market for our common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
- Share Price & Shareholder Rights - Risk 5Our anti-takeover provisions may delay or prevent a change of control, which could adversely affect the prices of our common stock.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make it difficult to remove our board of directors and management and may discourage or delay "change of control" transactions, which could adversely affect the price of our common stock. These provisions include, among others: - no cumulative voting in the election of directors, which may have an effect to prevent the minority stockholders from electing director candidates;- the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;- a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;- special meetings of our stockholders can be called only by the Chairman of the Board or by our corporate secretary at the direction of our board of directors;- advance notice and other requirements that stockholders, must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company;- a majority stockholder vote is required for removal of a director only for cause (and a director may only be removed for cause), and a 75% stockholder vote is required for the amendment, repeal or modification of certain provisions of our certificate of incorporation and bylaws; and - our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control. Certain anti-takeover provisions under Delaware law also apply to our company. Under Section 203 of the Delaware General Corporation Law, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its voting stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Furthermore, our amended and restated certificate of incorporation specifies that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving actions brought against us by stockholders. We believe this provision benefits us by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.
- Share Price & Shareholder Rights - Risk 6The convertible note hedge and warrant transactions related to our 2022 Notes may affect the value of our common stock.
In connection with the 2022 Notes offering, we entered into convertible note hedge transactions with affiliates of the initial purchasers of the 2022 Notes, which we refer to as the "option counterparties." The convertible note hedge transactions are expected generally to reduce the potential dilution upon conversion of the 2022 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be. We also entered into warrant transactions with the option counterparties. The warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the applicable strike price of the warrants.
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