** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-Q**
| **(Mark  One)**                                                                                                                                                            | ** ** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| **      ****x     QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**        |
| ** **                                                                                                                                                                 |
| **For the quarterly period ended  March 31, 2007**                                                                                                                    |
| ** **                                                                                                                                                                 |
| **or**                                                                                                                                                                     |
| ** **                                                                                                                                                                 |
| **      ****o      TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**Forthe transition period from         to         **

** **

**CommissionFile Number: 001-33704**

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**HICKS ACQUISITION COMPANY I, INC.**

(Exactname of registrant as specified in its charter)

| **Delaware**                     | ** ** | ** ** | ** ** | **20-8521842**      |
|----------------------------------|------------|------------|------------|---------------------|
| (State or other  jurisdiction of |       |       |       | (I.R.S. Employer    |
| incorporation or  organization)  |       |       |       | Identification No.) |
|                             |       |       |       |                |

 
| **100 Crescent Court, Suite 1200, Dallas, Texas 75201**                                                                   |
|--------------------------------------------------------------------------------------------------------------------------------|
| **(214) 615-2300**                                                                                                             |
| (Address,  including zip code, and telephone number, including area code, 

of  registrant’s principal executive offices) |

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days.  Yes o  No  x

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one): 

 

| Large accelerated filer  o |   | Accelerated filer o |   | Non-accelerated filer x |
|---------------------------------|--------|--------------------------|--------|------------------------------|

 

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes   x  No  o

 

As of November 13, 2007, the registrant had69,000,000 shares of its common stock, par value $0.0001 per share,outstanding.

 

 

 

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**HICKS ACQUISITION COMPANY I, INC.**

**TABLE OF CONTENTS**

 
|                                                       |   | ** **                                                                                                                                      |
|------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| **PART I.   FINANCIAL INFORMATION**

  |   |                                                                                                                                            |
| Item  1.                                                   |   | Financial  Statements                                                                                                                           |   |   |
|                                                       |   | Condensed Balance Sheet as of March 31, 2007  (unaudited)

                                                                           |   |   |
|                                                       |   | Condensed Statement of Operations for the period  February 26, 2007 (inception) through March 31, 2007 (unaudited)

                  |   |   |
|                                                       |   | Condensed Statement of Cash Flows for the period  February 26, 2007 (inception) through March 31, 2007 (unaudited)

             |   |   |
|                                                       |   | Condensed Statements of Stockholders’ Equity for the  period February 26, 2007 (inception) through March 31, 2007 (unaudited)

  |   |   |
|                                                       |   | Notes to Condensed Financial Statements (unaudited)

                                                                                      |   |   |
| Item 2.                                                    |   | Management’s Discussion and Analysis of Financial  Condition and Results of Operations

                                              |   |   |
| Item 3.                                                    |   | Quantitative and Qualitative Disclosures About Market  Risk

                                                                              |   |   |
| Item 4.                                                    |   | Controls and Procedures                                                                                                                         |   |   |
|                                                       |   |                                                                                                                                            |   |   |
| **PART II.   OTHER INFORMATION**

     |   |                                                                                                                                            |
| Item  1.                                                   |   | Legal  Proceedings

                                                                                                                       |   |   |
| Item  1A.                                                  |   | Risk Factors

                                                                                                                             |   |   |
| Item 2.                                                    |   | Unregistered Sales of Equity Securities and Use of  Proceeds

                                                                             |   |   |
| Item 3.                                                    |   | Defaults Upon Senior Securities

                                                                                                          |   |   |
| Item 4.                                                    |   | Submission of Matters to a Vote of Security Holders

                                                                                      |   |   |
| Item  5.                                                   |   | Other  Information

                                                                                                                       |   |   |
| Item 6.                                                    |   | Exhibits                                                                                                                                        |   |   |

** **

** **

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**PART I —FINANCIAL INFORMATION**

 

**ITEM 1.**    **FINANCIAL STATEMENTS**

** **

**HICKS ACQUISITION COMPANY I, INC.**

**(a Development Stage Company)**

**CONDENSEDBALANCE SHEETS**

** **
| ** **                                                                                                                                                        | ** ** | **March 1, 2007** | ** ** | **March 31, 2007** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|--------------------|------------|
| ** **                                                                                                                                                        | ** ** |              | ** ** | **(unaudited)**    | ** ** |
| **ASSETS**                                                                                                                                                        |       |              |       |               |       |
| Current assets:                                                                                                                                                   |       |              |       |               |       |
| Cash                                                                                                                                                              |       | $                 | 250,000    |               | $          | 250,000 |   |
| Noncurrent  asset:                                                                                                                                                |       |              |       |               |       |
| Deferred  offering costs                                                                                                                                          |       | 122,799           |       | 133,551            |       |
| Total assets                                                                                                                                                      |       | $                 | 372,799    |               | $          | 383,551 |   |
|                                                                                                                                                              |       |              |       |               |       |
| **LIABILITIES AND STOCKHOLDER’S EQUITY**                                                                                                                     | ** ** | ** **        | ** ** | ** **         | ** ** |
| Current  liabilities:                                                                                                                                             |       |              |       |               |       |
| Accrued expenses                                                                                                                                                  |       | $                 | 124,799    |               | $          | 124,799 |   |
| Accrued expenses—related  party                                                                                                                              |       | —            |       | 10,928             |       |
| Note  payable—related party                                                                                                                                  |       | 225,000           |       | 225,000            |       |
| Total current  liabilities                                                                                                                                        |       | 349,799           |       | 360,727            |       |
| Commitments and  contingencies                                                                                                                                    |       |              |       |               |       |
| Stockholder’s  equity:                                                                                                                                       |       |              |       |               |       |
| Preferred stock,  $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at  March 1, 2007 and March 31, 2007, respectively         |       | —            |       | —             |       |
| Common stock,  $0.0001 par value; 225,000,000 shares authorized; 11,500,000 shares issued  and outstanding at March 1, 2007 and March 31, 2007, respectively |       | 1,150             |       | 1,150              |       |
| Additional paid-in  capital                                                                                                                                       |       | 23,850            |       | 23,850             |       |
| Deficit  accumulated during the development stage                                                                                                                 |       | (2,000            | )          | (2,176             | )          |
| Total  stockholder’s equity                                                                                                                                  |       | 23,000            |       | 22,824             |       |
| Total  liabilities and stockholder’s equity                                                                                                                  |       | $                 | 372,799    |               | $          | 383,551 |   |
|                                                                                                                                                                   |            |                   |            |                    |            |  |  |  |  |

 

 

See notes tocondensed financial statements.

 

 

1

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**HICKS ACQUISITION COMPANY I, INC.**

**(a Development Stage Company)**

**CONDENSEDSTATEMENT OF OPERATIONS**

**(unaudited)**

 
| ** **                          | ** ** | **Period from  February 26, 2007  (inception) through  March 31, 2007** | ** ** |
|-------------------------------------|------------|-------------------------------------------------------------------------|------------|
| ** **                          | ** ** | ** **                                                              | ** ** |
| Operating  Expenses:                | ** ** | ** **                                                              | ** ** |
| Professional  services              |       | $                                                                       | 2,000      |   |
| Formation and  operating costs      |       | 176                                                                     |       |
| Net loss                            |       | $                                                                       | (2,176     | ) |
| Loss per common  share:             |       |                                                                    |       |
| Basic and  diluted                  |       | $                                                                       | —     |   |
| Average common  shares outstanding: |       |                                                                    |       |
| Basic and diluted                   |       | 11,500,000                                                              |       |

 

 

See notes to condensedfinancial statements.

 

 

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**HICKS ACQUISITION COMPANY I, INC.**

**(a Development Stage Company)**

**CONDENSEDSTATEMENT OF CASH FLOWS**

**(unaudited)**

 
| ** **                                                | ** ** | **Period from  February 26, 2007  (inception) through  March 31, 2007** | ** ** |
|-----------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|
| ** **                                                | ** ** | ** **                                                                        | ** ** |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                    |       |                                                                              |       |
| Net loss                                                  |       | $                                                                                 | (2,176     | ) |
| Changes in  operating assets and liabilities:             |       |                                                                              |       |
| Accrued expenses                                          |       | 2,176                                                                             |       |
| Net cash  provided by operating activities                |       | $                                                                                 | —     |   |
| CASH FLOW FROM  FINANCING ACTIVITIES:                     |       |                                                                              |       |
| Proceeds from  note payable—related party            |       | $                                                                                 | 222,500    |   |
| Proceeds from  sale of units—related party           |       | 25,000                                                                            |       |
| Net cash  provided by financing activities                |       | $                                                                                 | 250,000    |   |
| Increase in cash                                          |       | 250,000                                                                           |       |
| Cash at  beginning of period                              |       |                                                                              | —     |   |
| Cash at end of  period                                    |       | $                                                                                 | 250,000    |   |
| SUPPLEMENTAL  DISCLOSURE OF NONCASH FINANCING ACTIVITIES: |       |                                                                              |       |
| Deferred  offering costs included in accrued expenses     |       | $                                                                                 | 133,551    |   |

 

 

See notes to condensedfinancial statements.

 

 

3

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**HICKS ACQUISITION COMPANY I, INC.**

**(a Development Stage Company)**

**STATEMENTSOF STOCKHOLDER’S EQUITY**

** **

 
| ** **                                           | ** ** | **Common  Stock** | ** ** | **Additional** | ** ** | **Deficit  Accumulated During the Development** | ** ** | **Total  Stockholder’s** | ** ** |
|------------------------------------------------------|------------|-------------------|------------|----------------|------------|-------------------------------------------------|------------|-------------------------------|------------|
| ** **                                           | ** ** | **Shares**        | ** ** | **Amount**     | ** ** | **Paid-in  Capital**                            | ** ** | **Stage**                     | ** ** | **Equity** | ** ** |
| ** **                                           | ** ** | ** **        | ** ** | ** **     | ** ** | ** **                                      | ** ** | ** **                    | ** ** | ** ** | ** ** |
| Initial capital  from founding  stockholder for cash |       | 11,500,000        |       | $              | 1,150      |                                            | $          | 23,850                        |       | $ | — |   | $ | 25,000 |   |
| Net loss                                             |       | —            |       | —         |       | —                                          |       | (2,000                        | )          | (2,000 | ) |
| Balance at March  1, 2007                            |       | 11,500,000        |       | 1,150          |       | 23,850                                          |       | (2,000                        | )          | 23,000 |   |
| Net loss  (unaudited)                                |       | —            |       | —         |       | —                                          |       | (176                          | )          | (176 | ) |
| Balance at  March 31, 2007   (unaudited)        |       | 11,500,000        |       | $              | 1,150      |                                            | $          | 23,850                        |       | $ | (2,176 | ) | $ | 22,824 |   |

** **

** **

See notes to condensedfinancial statements.

 

 

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**HICKS ACQUISITIONCOMPANY I, INC.(a Development Stage Company)NOTES TO CONDENSED FINANCIAL STATEMENTS(Unaudited)**

**Note1—Interim Financial Information**

These unauditedcondensed financial statements as of March 31, 2007, the results of operationsfor the period February 26, 2007 (inception) through March 31, 2007, and cashflows for the period February 26, 2007 (inception) through March 31, 2007, havebeen prepared in accordance with U.S. Generally Accepted Accounting Principlesfor interim financial information and with the instructions to Form 10-Q.  Accordingly, they do not include all of theinformation and notes required by U.S. Generally Accepted Accounting Principlesfor complete financial statements of Hicks Acquisition Company I, Inc. (the “Company”).  In the opinion of management, all adjustmentsnecessary for a fair presentation have been included and are of a normalrecurring nature.  Interim results arenot necessarily indicative of the results that may be expected for the year.

These unaudited condensedfinancial statements should be read in conjunction with the financialstatements and notes thereto for the period ended October 3, 2007 included inAmendment No. 2 to the Current Report on Form 8-K filed by the Company onNovember 13, 2007.

**Note2—Organization and Nature of Business Operations,**Basis ofPresentation

The Company is anewly organized blank check company formed on February 26, 2007 under theGeneral Corporation Law of the State of Delaware for the purpose of acquiring,or acquiring control of, through a merger, capital stock exchange, assetacquisition, stock purchase, reorganization or similar business combination oneor more businesses or assets.  TheCompany’s efforts in identifying prospective target businesses will not belimited to a particular industry. Instead, the Company intends to focus on various industries and targetbusinesses that may provide significant opportunities for growth.  However, the Company will not complete abusiness combination with an entity engaged in the energy industry as itsprincipal business or whose principal business operations are conducted outsideof the United States or Canada.

At March 31,2007, the Company had not commenced any operations.  All activity through March 31, 2007relates to the Company’s formation and the proposed offering describedbelow.  The Company has selectedDecember 31 as its fiscal year end.

The Company’sability to commence operations is contingent upon obtaining adequate financialresources through a proposed offering, which is discussed in Note 4.  The Company’s management has broad discretionwith respect to the specific application of the net proceeds of the proposedoffering, although substantially all of the net proceeds of the proposedinitial public offering are intended to be generally applied towardconsummating one or more business combinations with an operating company.  The Company anticipates that the initialbusiness combination must occur with one or more target businesses thatcollectively have a fair market value of at least 80% of the initial amountheld in the trust account (excluding the amount held in the trust accountrepresenting the underwriters’ deferred commission).  If the Company acquires less than 100% of oneor more target businesses, the aggregate fair market value of the portion orportions the Company acquires must equal at least 80% of the amount held in thetrust account.  In no event, however,will the Company acquire less than a controlling interest of a target business(that is, not less than half of the voting equity interests of the targetbusiness).

The Company willseek stockholder approval before it will effect an initial businesscombination, even if the business combination would not ordinarily requirestockholder approval under applicable law. In connection with the stockholder vote required to approve any initialbusiness combination, the Company’s existing stockholders, HH-HACI, L.P., andcertain of the Company’s directors have agreed to vote the founder’s shares (asdefined in Note 6 below) owned by them immediately before this offering inaccordance with the majority of the shares of common stock voted by the publicstockholders.  “Public stockholders” isdefined as the holders of common stock sold in the proposed offering or in theaftermarket.  The Company will proceedwith an initial business combination only if (i) the business combinationis approved by a majority of votes cast by the Company’s public stockholders ata duly held stockholders meeting, (ii) an amendment to the Company’samended and restated certificate of incorporation to provide for the Company’sperpetual existence is approved by holders of a majority of the Company’soutstanding shares of common stock, (iii) public stockholders owning nomore than 30% (minus one share) of the Company’s outstanding shares of commonstock sold in the offering both vote against the business combination andexercise their conversion rights, and (iv) the Company has confirmed thatit has sufficient cash resources to pay both (x) the considerationrequired to close its initial business combination, and (y) the cash dueto 

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publicstockholders who vote against the business combination and who exercise theirconversion rights.  If the conditions toconsummate the proposed business combination are not met but sufficient timeremains before the Company’s corporate life expires, the Company may attempt toeffect another business combination.

If the initialbusiness combination is approved and completed, each public stockholder votingagainst such qualifying business combination will be entitled to convert itsshares of common stock into a pro rata share of the aggregate amount then ondeposit in the trust account (including deferred underwriting commissions andinterest earned on the trust account, net of income taxes payable on suchinterest and net of interest income of up to approximately $6.6 millionreleased to fund the Company’s working capital requirements).  Public stockholders who convert their stockinto their share of the trust account will continue to have the right toexercise any warrants they may hold.

The Company willliquidate and promptly distribute only to the public stockholders the amount inthe trust account, less any income taxes payable on interest income and anyinterest income of up to approximately $6.6 million, on the balance (netof taxes payable) of the trust account previously released to the Company tofund its working capital requirements, plus any remaining net assets if theCompany does not consummate a business combination within 24 months afterthe date of the prospectus filed with the U.S. Securities and ExchangeCommission.  If the Company fails toconsummate such business combination within 24 months of the date of theprospectus, the Company’s amended and restated certificate of incorporationalso provides that the Company’s corporate existence will automatically cease24 months from the date of this prospectus except for the purpose ofwinding up its affairs and liquidating. In the event of liquidation, it is likely that the per share value ofthe residual assets remaining available for distribution (including trustaccount assets) will be less than the initial public offering price per sharein the proposed offering (assuming no value is attributed to the warrantscontained in the units to be offered in the proposed offering discussed inNote 4).

**NOTE3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**[a]Cash and cash equivalents:**

The Companyconsiders all highly liquid investments with original maturities of threemonths or less to be cash equivalents.

**[b]Loss per common share:**

Loss per share iscomputed by dividing net loss applicable to common stockholders by the weightedaverage number of common shares outstanding for the period.

The 11,500,000warrants (after giving effect to the stock split discussed in Note 8) topurchase common stock were anti-dilutive and excluded from the calculation ofdiluted loss per share for the period ended March 31, 2007.

**[c]Use of estimates:**

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expenses during thereporting period.  Actual results coulddiffer from those estimates.

**[d]Income taxes:**

Deferred incometaxes are provided for the differences between the bases of assets andliabilities for financial reporting and income tax purposes.  A valuation allowance is established whennecessary to reduce deferred tax assets to the amount expected to be realized.

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The effective taxrate differs from the statutory rate of 35% due to the increase in thevaluation allowance.

**[e]Deferred offering costs:**

Deferred offeringcosts consist principally of legal and underwriting fees incurred through thebalance sheet date that are related to the proposed offering and that will becharged to capital upon the receipt of the capital raised.

**[f]Recent Accounting Pronouncements**

Management doesnot believe that any recently issued, but not effective, accounting standards,if currently adopted, would have a material effect on the Company’s financialstatements.

**NOTE4—PROPOSED PUBLIC OFFERING**

The proposed offeringcalls for the Company to offer for sale 48,000,000 units at a price of $10.00per unit.  Each unit consists of oneshare of the Company’s common stock, $0.0001 par value, and one warrant.  Each warrant will entitle the holder topurchase from the Company one share of common stock at an exercise price of$7.50 per share commencing on the later of: (i) the completion of theinitial business combination, or (ii) 12 months from the effectivedate of the offering.  The warrantsexpire four years from the effective date of the offering, unless earlierredeemed.  The warrants will beredeemable in whole and not in part at a price of $0.01 per warrant upon aminimum of 30 days’ notice after the warrants become exercisable, only inthe event that the last sale price of the common stock equals or exceeds $13.75per share for any 20 trading days within a 30 trading day period. SeeNote 8 for a discussion of the completion of the public offering.

**NOTE5—NOTE PAYABLE TO AFFILIATE AND RELATED PARTY TRANSACTIONS**

The Company issuedan aggregate of $225,000 in an unsecured promissory note to Mr. Hicks, theCompany’s founder and chairman of the board, on March 1, 2007.  The note was non-interest bearing and waspayable on the earlier of December 31, 2007 or the consummation of theoffering by the Company.  Due to theshort-term nature of the note, the fair value of the note approximated thecarrying amount.  The Company repaid thenote on October 3, 2007 out of the proceeds of the Offering.

The Company hasagreed to pay up to $10,000 a month in total for office space and general andadministrative services to Hicks Holdings Operating LLC, an affiliate of theCompany’s founder and chairman of the board, Mr. Hicks. The servicescommenced on October 3, 2007 and will terminate upon the earlier of:(i) the Company’s consummation of an initial business combination; or(ii) the liquidation of the Company.

HH-HACI, L.P., aDelaware limited partnership (the “Sponsor”), has committed to purchase anaggregate of 7,000,000 warrants (the “Sponsor Warrants”) at $1.00 per warrant (for a totalpurchase price of $7,000,000) from the Company pursuant to Regulation D.  Mr. Hicks, the Company’s founder and chairmanof the board, is the sole member of HH-HACI GP, LLC, the general partner ofHH-HACI, L.P.  In addition, Mr. Hicks,Mr. Armes, the Company’s president, chief executive officer, chief financialofficer and one of the Company’s directors, Mr. Neumann, a senior vicepresident of the Company, Mr. Swartz, a senior vice president of the Company,Ms. Vest, a senior vice president of the Company, Thomas O. Hicks, Jr., theCompany’s secretary and a vice president, and Mack H. Hicks, a vice presidentof the Company, are each limited partners of HH-HACI, L.P.  These purchases will take place on a privateplacement basis simultaneously with the closing of the proposed offering.  The Sponsor Warrants will not be transferableor saleable by the Sponsor (except as described below) until 180 days after thecompletion of an initial business combination. However, the Sponsor will bepermitted to transfer the warrants held by it to the Company’s officers anddirectors, and other persons or entities affiliated with the Sponsor, but thetransferees receiving such securities will be subject to the same transferrestrictions.  The Sponsor Warrants willbe non-redeemable so long as they are held by the Sponsor or the Sponsor’spermitted transferees.  If the SponsorWarrants are held by holders other than the Sponsor or its permittedtransferees, the Sponsor Warrants will be redeemable by us and exercisable bythe holders on the same basis as the warrants including in the units being soldin this offering.  Otherwise, the SponsorWarrants have terms and provisions that are identical to those of the warrantsbeing sold as part of the units in the proposed offering, except that the SponsorWarrants may be exercised on a cashless basis. The purchase price of the Sponsor Warrants has been determined to be thefair value of such warrants as of the purchase date.  Mr. Hicks, the Company’s founder andchairman of the board is required, pursuant to a written co-investmentsecurities purchase agreement, to purchase, directly or through a controlledaffiliate, 

7

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2,000,000co-investment units at a price of $10.00 per unit for an aggregate purchaseprice of $20 million in a private placement that will occur immediatelyprior to the consummation of the initial business combination.  The co-investment units will be identical tothe units sold in the proposed public offering, except that (i) the co-investmentwarrants will not be redeemable by us so long as they are held byMr. Hicks, a controlled affiliate of Mr. Hicks who purchases theco-investment units or their permitted transferees, and (ii) with limitedexceptions, the co-investment shares and co-investment warrants (including thecommon stock issuable upon exercise of the co-investment warrants) may not betransferred, assigned or sold until 180 days after the completion of ourinitial business combination.  Theproceeds of the sale of the co-investment units will not be deposited into thetrust account and will not be available for distribution to the publicstockholders in the event of a liquidation of the trust account, or uponconversion of shares held by public stockholders.

**NOTE6—FOUNDER’S UNITS**

On March 1,2007, the Sponsor purchased 11,500,000 founder’s units (after giving effect toa stock split, discussed in greater detail in Note 8, approved by theCompany’s board of directors in July 2007) for an aggregate amount of $25,000,or $0.0022 per unit.  Each founder’s unitconsists of one share of common stock (a “founder’s share”), and one warrant topurchase common stock (a “founder’s warrant”).

The founder’sshares are identical to the shares of common stock included in the units being soldin the proposed offering, except that:

•                 the Sponsor, except in limited circumstances, may notsell or otherwise transfer any of the founder’s shares or founder’s warrantsuntil 180 days after the completion of our initial business combination(however, the Sponsor will be permitted to transfer the founder’s shares andfounder’s warrants to the Company’s officers and directors, and other personsor entities affiliated with the Sponsor, *providedthat* the transferees receiving such securities will be subject tothe same agreements with respect to such securities as the Sponsor);

•                 the Sponsor must vote the founder’s shares in the samemanner as a majority of the public stockholders in connection with the voterequired to approve a business combination;

•                 the Sponsor must vote the founder’s shares in favor ofan amendment to the Company’s amended and restated certificate of incorporationto provide for its perpetual existence in connection with a vote to approve theCompany’s initial business combination;

•                 the Sponsor will not be able to exercise conversionrights granted to the public stockholders with respect to the founder’s shares;and

•                 the Sponsor has waived its rights to participate inany liquidation distribution with respect to the founder’s shares if theCompany fails to consummate a business combination.

The founder’swarrants are identical to those included in the units being sold in theproposed offering, except that:

•                 the founder’s warrants are subject to the transferrestrictions described below;

•                 the founder’s warrants may not be exercised unless anduntil the last sale price of the Company’s common stock equals or exceeds$13.75 per share for any 20 days within any 30 trading day periodbeginning 90 days after the Company’s initial business combination andthere is an effective registration statement covering the shares of commonstock issuable upon exercise of the warrants;

•                 the founder’s warrants will not be redeemable by theCompany as long as they are held by the Sponsor or its permitted transferees;and

•                 the founder’s warrants may be exercised by the holderon a cashless basis.

8

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**NOTE7—STOCKHOLDER’S EQUITY**

*PreferredStock*

The Company isauthorized to issue up to 1,000,000 shares of preferred stock, par value$0.0001 with such designations, voting and other rights and preferences as maybe determined from time to time by the board of directors.  No shares were issued and outstanding as ofMarch 31, 2007 (unaudited) and March 1, 2007.

*CommonStock*

The authorizedcommon stock of the Company includes up to 225,000,000 shares.  The holders of the common shares are entitledto one vote for each share of common stock. In addition, the holders of the common stock are entitled to receivedividends when, as and if declared by the board of directors.  At March 31, 2007 and March 1,2007, the Company had 11,500,000 (after giving effect to the stock splitdiscussed in Note 8 below) shares of common stock issued and outstanding.

**NOTE8—SUBSEQUENT EVENTS**

On July 24,2007, the board of directors approved a 1.15-for-1 stock split resulting in anincrease of common shares from 10,000,000 shares to11,500,000 shares.  The par value ofthe common stock remained $0.0001 per share. The stock split approved July 24, 2007 is reflected in the pershare data in the accompanying financial statements as if it occurred onFebruary 26, 2007.

On August 30,2007, the Sponsor transferred an aggregate of 230,000 of these founder’s unitsto William H. Cunningham, William A. Montgomery, Brian Mulroney andWilliam F. Quinn, each of whom is a member of the Company’s board ofdirectors.  Each founder’s unit consistsof one share of common stock and one warrant to purchase common stock.

On September 27,2007, the board of directors approved a stock dividend of 0.2 shares of commonstock for every share of common stock issued and outstanding as of September27, 2007.  The stock dividend was grantedin connection with an increase in the number of units being offered in theproposed offering.  Total common sharesincreased from 11,500,000 shares to 13,800,000 shares, of which 276,000 wereheld by Messrs. Cunningham, Montgomery, Mulroney and Quinn, as a result ofthe stock dividend.  The par value of thestock remained $0.0001 per share.

The registrationstatement for the proposed offering was declared effective on September 27, 2007.  The Company consummated its initial publicoffering (the “Offering”) on October 3, 2007 and received net proceeds ofapproximately $529.4 million and $7.0 million from the sale of the SponsorWarrants on a private placement basis. The Company sold 55,200,000 units, including 7,200,000 units pursuant tothe underwriters’ over-allotment option, at the offering price of $10.00 perunit.  Each unit consists of one share ofthe Company’s common stock and one warrant. Each warrant will entitle the holder to purchase from the Company oneshare of common stock at an exercise price of $7.50 commencing the later of thecompletion of an initial business combination or September 27, 2008 andexpiring September 27, 2011.  TheCompany may redeem the warrants, at a price of $0.01 per warrant, upon 30 days’notice after the warrants become exercisable, only in the event that the lastsale price of the common stock is at least $13.75 per share for any 20 tradingdays within a 30 trading day period ending on the third day prior to the dateon which the notice of redemption is given. In accordance with the warrant agreement relating to the warrants soldand issued in the Offering, the Company is only required to use its bestefforts to maintain the effectiveness of the registration statement coveringthe warrants.  The Company will not beobligated to deliver securities, and there are no contractual penalties forfailure to deliver securities, if a registration statement is not effective atthe time of exercise.  Additionally, inthe event that a registration is not effective at the time of exercise, theholder of such warrant shall not be entitled to exercise such warrant and in noevent (whether in the case of a registration statement not being effective orotherwise) will the Company be required to net cash settle the warrantexercise.  Consequently, the warrants mayexpire unexercised and unredeemed.

The Companyentered into an agreement with the underwriters of the Offering (the “UnderwritingAgreement”).  The Underwriting Agreementrequires the Company to pay 3.85% of the gross proceeds of the Offering as anunderwriting discount plus an additional 3.15% of the gross proceeds only uponconsummation of an initial business 

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combination.  The Company paid an underwriting discount of3.85% of the gross proceeds ($21,252,000) in connection with the consummationof the Offering and has placed 3.15% of the gross proceeds ($17,388,000) in thetrust account.  The Company did not payany discount related to the warrants sold in the private placement.  The underwriters have waived their right toreceive payment of the 3.15% of the gross proceeds upon the Company’sliquidation if it is unable to complete a business combination.

Pursuant to aSponsor Warrants Securities Purchase Agreement, dated September 27, 2007, theSponsor has purchased from the Company, in the aggregate, 7,000,000 SponsorWarrants for $7,000,000.  The purchaseand issuance of the Sponsor Warrants occurred simultaneously with theconsummation of the Offering on a private placement basis.  All of the proceeds the Company received fromthese purchases were placed in the trust account.  The Sponsor Warrants are identical to thewarrants included in the units sold in the Offering, except that the SponsorWarrants: (i) will not be redeemable by the Company so long as they are held bythe Sponsor or any of its permitted transferees; (ii) will be subject tocertain transfer restrictions and (iii) may be exercised for cash or on acashless basis.  The Sponsor has agreednot to transfer, assign or sell any of the Sponsor Warrants, including thecommon stock issuable upon exercise of the Sponsor Warrants, until180 days after the completion of our initial business combination.  If the Company does not complete an initialbusiness combination then the $7,000,000 will be part of the liquidatingdistribution to the Company’s public stockholders, and the Sponsor Warrantswill expire worthless.

The Sponsor and Messrs.Hicks, Cunningham, Montgomery, Mulroney and Quinn are also party to aregistration rights agreement with the Company, which entitles suchstockholders and Mr. Hicks to require the Company to register a sale of any ofthe Company’s securities held by them. Pursuant to the agreement, these stockholders are entitled to make up tothree demands that the Company register such securities for sale under theSecurities Exchange Act of 1934 (the “Exchange Act”).  In addition, the stockholders have “piggy-back”registration rights to include their securities in other registrationstatements filed by the Company. However, the registration rights agreement provides that the Company willnot permit any registration statement filed under the Exchange Act to becomeeffective until termination of the applicable lock-up period, which occurs180 days after the completion of the Company’s initial businesscombination. The Company will bear the costs and expenses of filing any suchregistration statements.

 

 

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**ITEM 2.**     **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

References to the “Company,”“us” or “we” refer to Hicks Acquisition Company I, Inc.  The following discussion and analysis of theCompany’s financial condition and results of operations should be read inconjunction with the condensed financial statements and the notes theretocontained elsewhere in this report. Certain information contained in the discussion and analysis set forthbelow includes forward-looking statements that involve risks and uncertainties.

**Special Note Regarding Forward-Looking Statements**

**All statements other than statementsof historical fact included in this Form 10-Q including, without limitation,statements under “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” regarding our financial position, business strategyand the plans and objectives of management for future operations, are forwardlooking statements.  When used in thisForm 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend”and similar expressions, as they relate to us or our management, identify forwardlooking statements.  Such forward lookingstatements are based on the beliefs of management, as well as assumptions madeby, and information currently available to, our management.  Actual results could differ materially fromthose contemplated by the forward looking statements as a result of certainfactors detailed in our filings with the Securities and ExchangeCommission.  All subsequent written ororal forward looking statements attributable to us or persons acting on ourbehalf are qualified in their entirety by this paragraph.**

**Overview**

We are a blankcheck company formed on February 26, 2007, to effect a merger, capital stockexchange, asset acquisition, stock purchase, reorganization or similar businesscombination with one or more businesses or assets.  Our efforts in identifying prospective targetbusinesses will not be limited to a particular industry, but we will not enterinto a business combination with any entity engaged in the energy industry asits principal business or whose principal business operations are conductedoutside of the United States or Canada. We intend to effect an initial business combination using cash from theproceeds of our recently completed initial public offering, our capital stock,debt or a combination of cash, stock and debt.

**Results of Operations**

For the periodfrom February 26, 2007 (inception) through March 31, 2007, we had a net loss of$2,176.  We incurred costs of $133,551with regard to our initial public offering, which were classified as deferredoffering costs on our balance sheet.

Our entireactivity from February 26, 2007 (inception) through March 31, 2007, has been toprepare for our initial public offering. We believe that we have sufficient funds available to complete ourefforts to effect an initial business combination with an operating businesswithin the required 24 months from September 27, 2007.

**Liquidity and Capital Resources**

On October 3,2007, we consummated our initial public offering of 55,200,000 units (including7,000,000 units pursuant to the underwriters’ over-allotment option) at a priceof $10 per unit.  We received netproceeds of approximately $536.4 million from the offering.  For a description of the proceeds generatedin our initial public offering and a discussion of the use of such proceeds, werefer you to Note 8 of the unaudited condensed financial statements included inPart I, Item 1 of this Report.  As ofMarch 31, 2007, we had cash of $250,000. Until the consummation of our initial public offering, our only sourceof liquidity was a $225,000 loan made to us in March 2007 by our founder andchairman of the board.  This loan wasrepaid out of the proceeds of the offering. All liabilities were related to costs associated with the offering.

*Off-Balance SheetFinancing Arrangements*

We have noobligations, assets or liabilities which would be considered off-balance sheetarrangements.  We do not participate intransactions that create relationships with unconsolidated entities orfinancial partnerships, often referred to as variable interest entities, whichwould have been established for the purpose of facilitating off-balance sheetarrangements.

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We have notentered into any off-balance sheet financing arrangements, established anyspecial purpose entities, guaranteed any debt or commitments of other entities,or entered into any non-financial assets.

*Contractual Obligations*

We do not have anylong-term debt, capital lease obligations, operating lease obligations orlong-term liabilities other than a monthly fee of $10,000 for office space andgeneral and administrative services payable to Hicks Holdings Operating LLC, anaffiliate of our founder and chairman of the board. We began incurring this feeon October 3, 2007, and will continue to incur this fee monthly until thecompletion of our initial business combination.

**Critical Accounting Policies**

The preparation offinancial statements and related disclosures in conformity with generallyaccepted accounting principles in the United States requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities, disclosure of contingent assets and liabilities at the date of thefinancial statements, and income and expenses during the periods reported.Actual results could materially differ from those estimates. We have identifiedthe following as our critical accounting policies:

*Cash and cashequivalents:*

The Companyconsiders all highly liquid investments with original maturities of three monthsor less to be cash equivalents.

*Loss per common share:*

Loss per share iscomputed by dividing net loss applicable to common stockholders by the weightedaverage number of common shares outstanding for the period.

The 11,500,000warrants (after giving effect to the stock split discussed in Note 8 of theunaudited condensed financial statements included in Part I, Item 1 of thisReport) to purchase common stock were anti-dilutive and excluded from thecalculation of diluted loss per share for the period ended March 31, 2007.

*Use of estimates:*

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expenses during thereporting period.  Actual results coulddiffer from those estimates.

*Income taxes:*

Deferred incometaxes are provided for the differences between the bases of assets andliabilities for financial reporting and income tax purposes.  A valuation allowance is established whennecessary to reduce deferred tax assets to the amount expected to be realized.

The effective taxrate differs from the statutory rate of 35% due to the increase in thevaluation allowance.

*Deferred offering costs:*

Deferred offeringcosts consist principally of legal and underwriting fees incurred through the balancesheet date that are related to the proposed offering and that will be chargedto capital upon the receipt of the capital raised.

*Recent AccountingPronouncements*

Management does not believe that any recently issued,but not effective, accounting standards, if currently adopted, would have amaterial effect on the Company’s financial statements.

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**ITEM 3.**    **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK**

As of March 31,2007, our efforts were limited to organizational activities and activitiesrelating to our initial public offering; we had neither engaged in anyoperations nor generated any revenues.

Market risk is abroad term for the risk of economic loss due to adverse changes in the fairvalue of a financial instrument.  Thesechanges may be the result of various factors, including interest rates, foreignexchange rates, commodity prices and/or equity prices.  $536.1 million of the net initial publicoffering proceeds (which includes approximately $17.4 million of the proceedsattributable to the underwriters’ deferred discount from the initial publicoffering) has been placed in a trust account at JPMorgan Chase Bank, N.A., withContinental Stock Transfer & Trust Company as trustee.  As of October 31, 2007, the balance of thetrust account was $537.9 million.  Theproceeds held in trust have only been invested in U.S. government securitieshaving a maturity of 90 days or less or in money market funds, which investprincipally in either short-term securities issued or guaranteed by the UnitedStates having the highest rating from a recognized credit rating agency or taxexempt municipal bonds issued by governmental entities located within theUnited States or otherwise meeting the conditions under Rule 2a-7 under theInvestment Company Act.  Thus, we arecurrently subject to market risk primarily through the effect of changes ininterest rates on short-term government securities and other highly rated money-marketinstruments.  As of October 31, 2007, theeffective annualized interest rate payable on our investment was approximately 4.2%.  Assuming no other changes to our holdings asof October 31, 2007, a 1% decrease in the underlying interest rate payable onour investment as of October 31, 2007 would result in a decrease ofapproximately $0.4 million in the interest earned on our investment for thefollowing 90-day period, and a corresponding decrease in our net increase instockholders’ equity resulting from operations, if any, for that period.  We do not believe that the effect of otherchanges, such as foreign exchange rates, commodity prices and/or equity pricescurrently pose significant market risk for us.

We have notengaged in any hedging activities since our inception.  We do not currently expect to engage in anyhedging activities.

**ITEM 4.**    **CONTROLS ANDPROCEDURES**

Disclosure controls andprocedures are controls and other procedures that are designed to ensure thatinformation required to be disclosed in our reports filed or submitted underthe Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,processed, summarized and reported within the time periods specified in theSecurities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that informationrequired to be disclosed in company reports filed or submitted under theExchange Act is accumulated and communicated to management, including our ChiefExecutive Officer/Chief Financial Officer to allow timely decisions regardingrequired disclosure.

As required by Rules13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer/ChiefFinancial Officer carried out an evaluation of the effectiveness of the designand operation of our disclosure controls and procedures as of March 31,2007.  Based upon his evaluation, heconcluded that our disclosure controls and procedures (as defined in Rules13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.

Our internal controlover financial reporting is a process designed by, or under the supervision of,our Chief Executive Officer/Chief Financial Officer and effected by our boardof directors, management and other personnel, to provide reasonable assuranceregarding the reliability of our financial reporting and the preparation of ourfinancial statements for external purposes in accordance with U.S. generallyaccepted accounting principles. Internal control over financial reportingincludes policies and procedures that pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of our assets; provide reasonable assurance that transactions arerecorded as necessary to permit preparation of our financial statements inaccordance with U.S. generally accepted accounting principles, and that ourreceipts and expenditures are being made only in accordance with theauthorization of our board of directors and management; and provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition,use or disposition of our assets that could have a material effect on ourfinancial statements.

During the most recentlycompleted fiscal quarter, there has been no change in our internal control overfinancial reporting that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

 

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**PART II —OTHER INFORMATION**

**ITEM 1.**   **LEGAL PROCEEDINGS**

None.

**ITEM 1A.**   **RISK FACTORS**

Factors that couldcause our actual results to differ materially from those in this report are anyof the risks described in our prospectus dated September 27, 2007 filed withthe SEC.  Any of these factors could resultin a significant or material adverse effect on our results of operations orfinancial condition.  Additional riskfactors not presently known to us or that we currently deem immaterial may alsoimpair our business or results of operations.

As of November 13,2007, there have been no material changes to the risk factors disclosed in ourprospectus dated September 27, 2007 filed with the SEC, except we may disclosechanges to such factors or disclose additional factors from time to time in ourfuture filings with the SEC.

**ITEM 2.**     **UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

On March 1,2007, we sold 10,000,000 units (which were subsequently increased to 13,800,000units through a stock split and stock dividend), with each unit consisting of oneshare of common stock and one warrant to purchase one share of common stock atan exercise price of $7.50 per share, to HH-HACI, L.P., a Delaware limitedpartnership, without registration under the Securities Act.  On August 30, 2007, HH-HACI, L.P. transferredan aggregate of 230,000 of these units to William H. Cunningham,William A. Montgomery, Brian Mulroney and William F. Quinn, each of whomis a member of the Company’s board of directors.  A stock dividend on September 27, 2007,increased the number of units held by Messrs. Cunningham, Montgomery, Mulroneyand Quinn to 276,000.

Such securitieswere issued in connection with our organization pursuant to the exemption fromregistration contained in Section 4(2) of the Securities Act as they weresold to an accredited investor.  Thesecurities were sold for an aggregate offering price of $25,000 at an averagepurchase price of $0.0022 per unit.

Thomas O. Hicks,our officers and various officers of Hicks Holdings LLC and Hicks EquityPartners, LLC are equity holders in HH-HACI, L.P.  HH-HACI, L.P. is an accredited investorfor purposes of Rule 501 of Regulation D.  Each of the equity holders in HH-HACI,L.P. are accredited investors under Rule 501 of Regulation D.  The sole business of HH-HACI, L.P. isto act as the Company’s Sponsor in connection with its initial publicoffering.  The limited partnershipagreement of HH-HACI, L.P. provides that its partnership interests mayonly be transferred to officers or directors of the Company or other personsaffiliated with the Sponsor, or in connection with estate planning transfers.

*Useof Proceeds from the Initial Public Offering*

On October 3,2007, we consummated our initial public offering of 55,200,000 units, including7,200,000 units subject to the underwriters’ over-allotment option, with eachunit consisting of one share of our common stock and one warrant to purchaseone share of our common stock at an exercise of $7.50 per share.  The warrants will become exercisable on thelater of (i) the completion of the initial business combination, or(ii) 12 months from the effective date of the offering.  The warrants expire four years from theeffective date of the offering, unless earlier redeemed.  The warrants will be redeemable in whole andnot in part at a price of $0.01 per warrant upon a minimum of 30 days’notice after the warrants become exercisable, only in the event that the lastsale price of the common stock equals or exceeds $13.75 per share for any 20trading days within a 30 trading day period. The units from the public offering (including the over-allotment option)were sold at an offering price of $10.00 per unit, generating total grossproceeds of $552,000,000.  CitigroupGlobal Markets Inc., acted as sole bookrunning manager and representatives ofLazard Capital Markets LLC and Ladenburg Thalmann & Co. Inc. (together, the“Underwriters”).  The securities sold inthe offering were registered under the Securities Act of 1933 on a registrationstatement on Form S-1 (No. 333-143747). The Securities and Exchange Commission declared the registrationstatement effective on September 27, 2007.

We paid a total of$21,252,000 in underwriting discounts and commissions and approximately $1.6million for other costs and expenses related to the offering and theover-allotment option.  In addition, theunderwriters agreed to 

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defer $17,388,000in underwriting discounts and commissions, which amount will be payable uponconsummation of our initial business combination if consummated.  We also repaid our chairman of the board$225,000 in satisfaction of an outstanding promissory note after the closing ofour initial public offering.

We alsoconsummated the simultaneous private sale of 7,000,000 warrants (the “SponsorWarrants”) to HH-HACI, L.P. at a price of $1.00 per warrant (for an aggregatepurchase price of $7,000,000).  Thesewarrants are identical to the warrants underlying the units sold in our initialpublic offering except that the Sponsor Warrants will not be redeemable by theCompany so long as they are still held by the original purchasers or theiraffiliates. HH-HACI, L.P. has agreed that the Sponsor Warrants will not be soldor transferred by it until after the Company has completed a business combination.  The sale of the Sponsor Warrants was madepursuant to the exemption from registration contained in Section 4(2) of theSecurities Act.

After deductingthe underwriting discounts and commissions and the offering expenses, the totalnet proceeds from the offering were $536,398,000 and an amount of $536,148,000(or approximately $9.71 per unit sold in the initial public offering) wasplaced in trust.

**ITEM 3.**    **DEFAULTSUPON SENIOR SECURITIES**

None.

**ITEM 4.**    **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

On September 27,2007, we submitted a proposal to our stockholders to (i) amend and restate ourcertificate of incorporation and (ii) amend and restate our bylaws. Theproposal was approved by unanimous written consent of our five stockholders onsuch date.

**ITEM 5.**    **OTHERINFORMATION**

None.

**ITEM6.**     **EXHIBITS**

The following exhibitsare filed as part of, or incorporated by reference into, this Quarterly Reporton Form 10-Q.
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                          |
|---------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |       |                                                                                                                                                                                                                                                                                                                     |
| 10.1                |       | Promissory Note, dated March 1, 2007, issued by the  Company to Thomas O. Hicks (incorporated by reference to Exhibit 10.1 to the  Registration Statement on Form S-1, File No. 333-143747, filed by the Company  with the Securities and Exchange Commission on September 29, 2007)                                     |
|                |       |                                                                                                                                                                                                                                                                                                                     |
| 10.2                |       | Securities Purchase Agreement, effective as of March  1, 2007, between the Company and HH-HACI, L.P. (incorporated by reference to  Exhibit 10.7 to Amendment No. 2 to Registration Statement on Form S-1, File  No. 333-143747, filed by the Company with the Securities and Exchange  Commission on September 4, 2007) |
|                |       |                                                                                                                                                                                                                                                                                                                     |
| 31.1*               |       | Certification of Chief Executive Officer and Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002                                                                                                                                                                                    |
|                |       |                                                                                                                                                                                                                                                                                                                     |
| 32.1*               |       | Certification of Chief Executive Officer and Chief  Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of  2002                                                                                                                                                                                    |

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*                    Filed herewith.

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**SIGNATURES**

Pursuant to therequirements of Securities Exchange Act of 1934, the registrant has duly causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.
|   | **HICKS ACQUISITION COMPANY I, INC.** |
|--------|---------------------------------------|
|   | Date: November 13, 2007          |
|   |                                  |
|   | /S/ JOSEPH B. ARMES                   |
|   | Name:                                 | Joseph B. Armes |
|   | Title:                                | President, Chief Executive Officer and  Chief Financial Officer |

** **

 

 

 

 

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