XML 28 R8.htm IDEA: XBRL DOCUMENT v3.20.1
Note 1 - Description of Organization and Business Operations
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Business Description and Basis of Presentation [Text Block]
Note
1
- Description of Organization and Business Operations
 
Pure Acquisition Corp. (the “Company,” “Pure,” “we,” “us” or “our”) was incorporated in Delaware on
November 
13,
2017
(“Inception”) as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with
one
or more businesses or entities (a “Business Combination”). The Company intends to focus the Company’s search for target businesses in the energy industry with an emphasis on opportunities in the upstream oil and gas industry in North America where the Company’s management team’s networks and experience are suited although the Company’s efforts to identify a prospective target business will
not
be limited to a particular industry or geographic region. In
2019,
the Company created
two
new wholly owned subsidiaries, HighPeak Energy, Inc. (“HighPeak Energy”) and Pure Acquisition Merger Sub, Inc. (“MergerSub”), both Delaware corporations for the sole purpose of completing the business combination discussed in more detail below.
 
At
December 
31,
2019,
the Company had
not
yet commenced operations. All activity from Inception through
December 
31,
2019
relates to the Company’s formation, the public offering and subsequent redemptions described below and the identification and evaluation of prospective acquisition targets for a Business Combination. The Company will
not
generate any operating revenues until after completion of its Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the public offering. The Company has selected
December 
31
as its fiscal year-end. The Company is an early stage and emerging growth company and, as such, the Company is subject to all the risks associated with early stage and emerging growth companies. Based on our business activities, the Company is a “shell company” as defined under the Exchange Act of
1934,
as amended (the “Exchange Act”) because we have
no
operations and nominal assets consisting almost entirely of cash.
 
In connection with the organization of the Company, a total of
10,062,500
shares of Class B common stock were sold to the Sponsor at a price of approximately
$0.002
per share for an aggregate of
$25,000
(the “Founders’ Shares”). In
March 2018,
our Sponsor returned to us, at
no
cost, an aggregate of
1,437,500
Founders’ Shares, which we cancelled, leaving an aggregate of
8,625,000
Founders’ Shares outstanding. In
March 2018,
our Sponsor transferred
40,000
Founders’ Shares to each of our
three
independent director nominees resulting in a total of
120,000
Founders’ Shares transferred to our independent director nominees. In
April 
2018,
we effected a stock dividend of
0.2
shares of Class B common stock for each outstanding share of Class B common stock, resulting in our Sponsor and independent director nominees holding an aggregate of
10,350,000
Founders’ Shares. At
December 
31,
2019,
our Sponsor and our
three
independent directors (the “Initial Stockholders”) held, collectively,
10,350,000
Founders’ Shares.
 
On
April 
17,
2018
(the “IPO Closing Date”), the Company consummated its initial public offering (“Public Offering”) of
41,400,000
units, representing a complete exercise of the over-allotment option, at a purchase price of
$10.00
per unit generating gross proceeds of
$414,000,000
before underwriting discounts and expenses. Each unit consists of
one
share of Class A common stock (“Public Share”) of the Company at
$0.0001
par value and
one
half of
one
warrant (a “Unit”). Each whole warrant entitles the holder to purchase
one
share of Class A common stock at a price of
$11.50
(a “Warrant”). Only whole Warrants
may
be exercised and
no
fractional Warrants will be issued upon separation of the Units and only whole Warrants
may
be traded. Each Warrant will become exercisable on the later of
30
days after the completion of an initial Business Combination or
12
months from the IPO Closing Date and will expire on the
fifth
anniversary of our completion of an initial Business Combination, or earlier upon redemption or liquidation. Alternatively, if we do
not
complete a Business Combination by
May 21, 2020 (
the “Extended Date”), the Warrants will expire at the end of such period. If we are unable to deliver registered shares of Class A common stock to the holder upon exercise of Warrants issued in connection with the
41,400,000
Units during the exercise period, the Warrants will expire, except to the extent they
may
be exercised on a cashless basis in the circumstances described in the agreement governing the Warrants.
 
On the IPO Closing Date, our Sponsor purchased from us an aggregate of
10,280,000
private placement warrants at
$1.00
per private placement warrant for a total purchase price of
$10,280,000
in a private placement (the “Private Placement Warrants”). Each Private Placement Warrant is exercisable to purchase
one
share of our Class A common stock at a price of
$11.50,
and are
not
redeemable so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. We received gross proceeds from the Public Offering and the sale of the Private Placement Warrants of
$414,000,000
and
$10,280,000,
respectively, for an aggregate of
$424,280,000.
We deposited
$414,000,000
of the gross proceeds in a trust account with Continental Stock Transfer and Trust Company (the “Trust Account”). The proceeds held in the Trust Account will be invested only in U.S. government treasury bills with a maturity of
one hundred eighty
(
180
) days or less or in money market funds that meet certain conditions under Rule
2a
-
7
under the Investment Act of
1940
and invest only in direct U.S. government obligations. At the IPO Closing Date, the remaining
$10,280,000
was held outside of the Trust Account, of which
$8,280,000
was used to pay underwriting discounts and
$200,000
was used to repay notes payable to our Sponsor with the balance reserved to pay accrued offering and formation costs, business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. A portion of interest income on the funds held in the Trust Account has been and will continue to be released to us to pay our tax obligations and up to
$10,000
per month for office space, utilities and secretarial and administrative support.
 
On
April 
12,
2018,
HighPeak Energy Partners, LP (“HPEP I”), an affiliate of our Sponsor, entered into a forward purchase agreement (the “Forward Purchase Agreement”) with us that provides for the purchase by HPEP I of an aggregate of up to
15,000,000
shares of our Class A common stock (the “Forward Purchase Shares”) and up to
7,500,000
warrants for
$10.00
per forward purchase unit, for an aggregate purchase price of up to
$150,000,000
in a private placement that will close simultaneously with the closing of our initial Business Combination (the “Forward Purchase Securities”). At or prior to closing of the Business Combination, HPEP I will assign its rights and obligations under the Forward Purchase Agreement to
one
or more
third
parties, which
may
include HighPeak Energy Partners II, LP (“HPEP II”) and HighPeak Energy Partners III, LP (“HPEP III”), and we will assign our rights and obligations under the Forward Purchase Agreement to HighPeak Energy and the parties will amend the Forward Purchase Agreement to, among other things, provide for the sale and purchase of shares of common stock and warrants of HighPeak Energy instead of us and reduce the number of warrants received by the purchasers under the Forward Purchase Agreement from up to
7,500,000
warrants to up to
5,000,000
warrants, in each case, pursuant to an amendment to the Forward Purchase Agreement (the “Forward Purchase Agreement Amendment”) which the HPK Business Combination Agreement (as defined below) contemplates will be entered into at the closing. At the closing, the warrants, if sold pursuant to the Forward Purchase Agreement (the “Forward Purchase Warrants”), will have the same terms as the Private Placement Warrants so long as they are held by the purchasers under the Forward Purchase Agreement Amendment, their affiliates or their permitted transferees, and the Forward Purchase Shares are identical to the shares of Class A common stock included in the Units sold in the Public Offering, except the Forward Purchase Shares will, when issued, be subject to transfer restrictions and certain registration rights, as described in the Forward Purchase Agreement. The purchaser’s commitment under the Forward Purchase Agreement
may
be reduced under certain circumstances as described in the agreement.
 
On
May 25, 2018,
we announced the holders of our Units
may
elect to separately trade the Public Shares and Warrants included in the Units commencing on
May 29, 2018
on The Nasdaq Capital Market (the “Nasdaq”) under the symbols “PACQ” and “PACQW,” respectively. Those Units
not
separated continue to trade on the Nasdaq under the symbol “PACQU.”
 
On
October 10, 2019,
Pure’s stockholders approved an extension of the date by which Pure must consummate an Initial Business Combination (the
“February 
Extension”) from
October 17, 2019,
to
February 
21,
2020
(the
“February 
Extended Date”). Pure requested the
February 
Extension in order to complete an initial Business Combination. In connection with the
February 
Extension,
3,594,000
shares of Class A common stock were redeemed, for a total value of
$36,823,301
on
October 11, 2019
from the Trust Account and
248,000
public warrants were tendered and accepted for payment on
October 16, 2019
by the Sponsor. Pure agreed to deposit into the Trust Account an amount equal to
$0.033
for each share of Class A common stock issued in the Public Offering that was
not
redeemed in connection with the stockholder vote to approve the
February
Extension for each month (commencing on
October 17, 2019
and on the
17
th
day of each subsequent calendar month) that is needed by Pure to complete the initial Business Combination from
October 17, 2019
until the
February
Extended Date. Further, our Sponsor has agreed to loan, or cause an affiliate to loan, Pure or
one
of Pure’s subsidiaries an amount equal to
$0.033
for each share of Class A common stock issued in the Public Offering that was
not
redeemed in connection with the stockholder vote to approve the
February 
Extension for each month (commencing on
October 17, 2019
and on the
17th
day of each subsequent calendar month) that is needed by Pure to complete the initial Business Combination from
October 17, 2019
until the
February 
Extended Date.
 
On
November 
27,
2019,
Pure and HighPeak Energy entered into a business combination agreement (the “HPK Business Combination Agreement”), by and among Pure, HighPeak Energy, MergerSub, the HPK Contributors and, solely for the limited purposes specified therein, the HPK Representative, pursuant to which, among other things and subject to the terms and conditions contained therein, at the HPK Closing (a) MergerSub will merge with and into Pure, with Pure surviving as a wholly owned subsidiary of HighPeak Energy, (b) each outstanding share of Class A common stock and Class B common stock of Pure will be converted into the right to receive
one
share of HighPeak Energy common stock, other than certain shares held by Pure’s Sponsor that will be forfeited prior to the merger, (c) the HPK Contributors will (A) contribute their limited partner interests in HPK LP to HighPeak Energy in exchange for HighPeak Energy common stock for total consideration of
71,150,000
shares of HighPeak Energy common stock, subject to adjustments as described in the HPK Business Combination Agreement, and the general partner interest in HPK LP to either HighPeak Energy or a wholly owned subsidiary of HighPeak Energy in exchange for
no
consideration, and (B) directly or indirectly contribute certain loans with respect to which Pure or HighPeak Energy is the obligor, in exchange for shares of HighPeak Energy common stock, (d) all Sponsor Loans, if any, will be cancelled in connection with closing of the HPK Business Combination Agreement, and (e) following the consummation of the transactions contemplated by the Grenadier Contribution Agreement (as defined below) for total consideration of approximately
$465
million in cash,
15,760,000
shares of HighPeak Energy common stock and
2,500,000
warrants to purchase HighPeak Energy common stock at the Closing, subject to adjustments, HighPeak Energy will cause HPK LP to merge with and into Pure with all interests in HPK LP being cancelled for
no
consideration.
 
On
November 
27,
2019,
HighPeak Assets II and Grenadier entered into a contribution agreement (the “Grenadier Contribution Agreement”), by and among Grenadier, HighPeak Assets II, Pure and HighPeak Energy, pursuant to which, among other things and subject to the terms and conditions contained therein, Grenadier agreed to extend the outside date under the Grenadier Contribution Agreement to
February 
24,
2020
and HighPeak Assets II has agreed to acquire the Grenadier Assets from Grenadier in exchange for cash, shares of HighPeak Energy common stock and warrants to purchase shares of HighPeak Energy common stock, which transactions are currently expected to occur following HighPeak Energy’s indirect acquisition of HighPeak Assets II pursuant to the HPK Business Combination Agreement.
 
On
February 
6,
2020,
(a) the Company and the other parties to the HPK Business Combination Agreement entered into an amendment to the HPK Business Combination Agreement (the “HPK Amendment”) and the Company, the other parties to the Grenadier Contribution Agreement and, solely for the limited purposes specified therein, the HPK Contributors and HPK Representative entered into an amendment to the Grenadier Contribution Agreement (the “Grenadier Amendment” and together with the HPK Amendment, the “Business Combination Agreement Amendments”). The Business Combination Agreement Amendments, collectively, among other things, (i) extend the date by which the transactions contemplated thereby must be consummated to
May 21, 2020, (
ii) account for additional Sponsor Loans being made in connection with such extension, (iii) permit HPEP I to assign the Forward Purchase Agreement (as defined in the accompanying proxy statement) to
third
parties in addition to its affiliates, and for any affiliates of the Sponsor that become parties to the Forward Purchase Agreement Amendment (as defined in the accompanying proxy statement) to terminate the Forward Purchase Agreement Amendment upon written notice, (iv) remove certain restrictions on and obligations of Pure and HighPeak Energy with respect to the Forward Purchase Agreement and Forward Purchase Agreement Amendment that were otherwise imposed by the Grenadier Contribution Agreement, (v) conform the method by which Available Liquidity (as defined in the Grenadier Contribution Agreement) will be calculated to the corresponding calculation method to be employed under the HPK Business Combination Agreement, (vi) permit Grenadier to terminate the Grenadier Contribution Agreement in the event of a payment default with respect to a Second Extension Payment (as defined below), (vii) make certain other updates to representations, definitions, schedules and other matters as further described in the accompanying proxy statement and in the Business Combination Agreement Amendments and (viii) provide the required party consents under each Business Combination Agreement to the amendments contemplated by each of the Business Combination Agreement Amendments. In connection with the entrance into the Grenadier Amendment, the Company, HighPeak Energy, HighPeak Assets II and the HPK Contributors agreed to jointly and severally pay to Grenadier an aggregate amount equal to
$15
million (the “Second Extension Payment”), which is to be paid in
four
installments of varying amounts due by each of the date of execution of the Grenadier Amendment,
February 
21,
2020,
March 23, 2020
and
April 
21,
2020.
The Second Extension Payment will
not
be credited against the cash price to be paid to Grenadier upon the closing of the transactions contemplated by the Grenadier Contribution Agreement and the obligation to pay the Second Extension Payment will survive any termination of the Grenadier Contribution Agreement in advance of any such closing. For more information regarding the HighPeak Business Combination and the Business Combination Agreement Amendments, please read the registration statement on Form S-
4,
including the related proxy statement/prospectus incorporated therein, originally filed with the U.S. Securities and Exchange Commission (the “SEC”) by HighPeak Energy on
December 
2,
2019,
and as amended on
January 10, 2020 (
the “Registration Statement”), and the accompanying proxy statement included herewith, including the complete text of the Business Combination Agreement and the Business Combination Agreement Amendments.
 
On
February 
20,
2020,
Pure’s stockholders approved an extension of the date by which Pure must consummate an initial Business Combination (the
“May
Extension”) from
February 
21,
2020,
to the Extended Date. Pure requested the
May
Extension in order to complete an initial Business Combination. In connection with the
May
Extension,
2,189,801
shares of Class A common stock were redeemed, for a total value of
$22,811,431
on
February 
21,
2020
from the Trust Account. Pure agreed to deposit into the Trust Account an amount equal to
$0.033
for each share of Class A common stock issued in the Public Offering that was
not
redeemed in connection with the stockholder vote to approve the
May
Extension for each month (commencing on
March 17, 2020
and on the
17
th
day of each subsequent calendar month) that is needed by Pure to complete the initial Business Combination from
February 21, 2020
until the Extended Date. Further, Pure’s Sponsor has agreed to loan, or cause an affiliate to loan, Pure or
one
of Pure’s subsidiaries an amount equal to
$0.033
for each share of Class A common stock issued in the IPO that was
not
redeemed in connection with the stockholder vote to approve the Extension for each month (commencing on
March 17, 2020
and on the
17th
day of each subsequent calendar month) that is needed by Pure to complete the Initial Business Combination from
February 
21,
2020
until the Extended Date. For more information regarding the stockholders’ approval of the
May
Extension, see the Current Report on Form
8
-K filed by the Company with the SEC on
February 20, 2020.
 
The Proposed Business Combination
 
The following is a brief summary of the transactions contemplated in connection with the HighPeak Business Combination. Any description of the HighPeak Business Combination in this proxy statement is qualified in all respects by reference to the text of (i) the Business Combination Agreement, dated
November 
27,
2019,
by and among the Company, HighPeak Energy, MergerSub, HighPeak I, HighPeak II, HighPeak III, HPK GP and, solely for the limited purposes specified therein, HPK Representative, as amended by the First Amendment to Business Combination Agreement dated
February 
6,
2020,
each of which was filed with the SEC on
November 
27,
2019
as Exhibit
2.1
to the Company’s Current Report on Form
8
-K and on
February 
6,
2020
as Exhibit
2.3
to the Company’s Current Report on Form
8
-K, respectively, and (ii) the Contribution Agreement, dated
November 
27,
2019,
by and among HighPeak Assets II, Grenadier, the Company and HighPeak Energy, as amended by the First Amendment to Contribution Agreement dated
February 
6,
2020,
to which the HPK Contributors and the HPK Representative also joined as parties for the limited purposes specified therein, each of which was filed with the SEC on
November 
27,
2019
as Exhibit
2.2
to the Company’s Current Report on Form
8
-K and on
February 
7,
2020
as Exhibit
2.4
to the Company’s Current Report on Form
8
-K, respectively. Following completion of the SEC’s review process of the Registration Statement, a definitive proxy statement, which we refer to as the “HighPeak Proxy Statement,” will be mailed to stockholders as of a record date to be established for voting on the HighPeak Business Combination. The HighPeak Proxy Statement will contain important information regarding the HighPeak Business Combination. The following description of the HighPeak Business Combination is qualified in all respects by reference to the more detailed description in the HighPeak Proxy Statement.
 
On
November 
27,
2019,
the Company, HighPeak Energy, MergerSub, the HPK Contributors and solely for the limited purposes specified therein, HPK Representative, entered into the HPK Business Combination Agreement, pursuant to which, among other things, and subject to the terms and conditions contained therein, HighPeak Energy has agreed to acquire HPK LP, which, indirectly through its subsidiaries, holds certain rights, title and interests in oil and natural gas assets and cash. Under the terms of the HPK Business Combination Agreement, at the closing of the HighPeak Business Combination, (i) MergerSub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of HighPeak Energy, (ii) each outstanding share of Class A common stock and Class B common stock, of the Company will be converted into the right to receive
one
share of HighPeak Energy common stock, other than certain shares held by the Sponsor that will be forfeited prior to the merger, (iii) the HPK Contributors will (A) contribute their limited partner interests in HPK LP to HighPeak Energy in exchange for HighPeak Energy common stock for total consideration of
71,150,000
shares of HighPeak Energy common stock, subject to certain adjustments as described in the HPK Business Combination Agreement, and the general partner interest in HPK LP to either HighPeak Energy or a wholly owned subsidiary of HighPeak Energy in exchange for
no
consideration, and (B) directly or indirectly contribute certain loans with respect to which the Company or HighPeak Energy is the obligor, in exchange for shares of HighPeak Energy common stock, (iv) all Sponsor Loans (as defined in the HPK Business Combination Agreement), if any, will be cancelled in connection with the closing of the transactions contemplated by the HPK Business Combination Agreement, and (v) following the consummation of the transactions contemplated by the Grenadier Contribution Agreement, HighPeak Energy will cause HPK LP to merge with and into the Company with all interests in HPK LP being cancelled for
no
consideration. As a result of the HighPeak Business Combination and pursuant to the terms of the Warrant Agreement, dated
April 
12,
2018,
between the Company and Continental Stock Transfer & Trust Company, as warrant agent, the Company’s warrants will become warrants of HighPeak Energy exercisable for shares of HighPeak Energy common stock on the terms set forth therein.
 
On
November 
27,
2019,
HighPeak Assets II, Grenadier, the Company and HighPeak Energy entered into the Grenadier Contribution Agreement, pursuant to which, among other things, and subject to the terms and conditions contained therein, HighPeak Assets II has agreed to acquire the Grenadier Assets from Grenadier in exchange for total consideration of
$465
million in cash,
15,760,000
shares of HighPeak Energy common stock and
2,500,000
warrants to purchase HighPeak Energy common stock at the closing of the HighPeak Business Combination, subject to certain adjustments which transactions are currently expected to occur following HighPeak Energy’s indirect acquisition of HighPeak Assets II pursuant to the HPK Business Combination Agreement.
 
On
February 
6,
2020,
the Company and the other parties to the HPK Business Combination Agreement entered into the HPK Amendment. Among other things, the HPK Amendment (i) extends the date by which the transactions contemplated thereby must be consummated from
February 
21,
2020
to
May 21, 2020, (
ii) expands the definition of Sponsor Loans contained therein to also include the loans that constitute the Contribution as described elsewhere in this proxy statement, (iii) broadens the scope of persons and entities to whom HPEP I
may
assign the Forward Purchase Agreement from just HPEP I’s affiliates to any
third
parties in addition to HPEP I’s affiliates, (iv) revises the form of Forward Purchase Agreement Amendment attached as an exhibit to the HPK Business Combination Agreement to, among other things, (A) extend the date by which the HighPeak Business Combination must be completed from
February 
21,
2020
to
May 21, 2020, (
B) contemplate HPEP I’s ability to assign the Forward Purchase Agreement to
third
parties to become purchasers thereunder, in addition to being able to assign it to its affiliates, (C) permit the Sponsor or any affiliate of the Sponsor to terminate the Forward Purchase Agreement Amendment upon written notice to HighPeak Energy, (D) provide for the purchasers thereunder to elect to purchase any number of Forward Purchase Units, provided that the number of Forward Purchase Units to be issued and sold thereunder does
not
exceed the maximum amounts specified therein, which such number of warrants to be issued and sold thereunder were reduced from up to
7,500,000
warrants to up to
5,000,000
warrants, (E) permit the purchasers thereunder that are affiliates of the Sponsor to take certain actions without the consent of any unrelated
third
party purchasers and (F) expressly state that the purchasers under the Forward Purchase Agreement Amendment will have several and
not
joint liability, (v) makes certain clarifying edits to the definition of Available Financing Proceeds contained therein and to the form of each of the Stockholders’ Agreement and the Long Term Incentive Plan, each of which are attached as exhibits to the HPK Business Combination Agreement, (vi) updates certain matters contained in a schedule of the disclosure letter originally delivered in connection with the execution of the HPK Business Combination Agreement, which schedule relates to certain actions that HPK LP and its subsidiaries are permitted to take prior to the closing of the transactions contemplated by the HPK Business Combination Agreement, which actions would otherwise have been restricted pursuant to the interim operating covenants contained in the HPK Business Combination Agreement (including a supplemental budget extending through
May 2020)
and (vii) provides the required party consents under the HPK Business Combination Agreement to the entry into of the Grenadier Amendment.
 
On
February 
6,
2020,
the Company, the other parties to the Grenadier Contribution Agreement and, solely for the limited purposes specified therein, the HPK Contributors and HPK Representative entered into the Grenadier Amendment. Among other things, the Grenadier Amendment (i) extends the target date for the consummation of the transactions contemplated thereby from
February 
21,
2020
to
May 21, 2020, (
ii) extends the date by which the transactions contemplated thereby must be consummated from
February 
24,
2020
to
May 24, 2020, (
iii) removes certain restrictions on and obligations of the Company and HighPeak Energy with respect to the Forward Purchase Agreement and Forward Purchase Agreement Amendment that were otherwise imposed by the Grenadier Contribution Agreement, (iv) conforms the method by which Available Liquidity (as defined in the Grenadier Contribution Agreement) will be calculated to the corresponding calculation method to be employed under the HPK Business Combination Agreement, (v) places a
$400
million cap on each of the amount of debt proceeds that
may
be used to fund each of (A) the cash price to be paid to Grenadier at or in connection with the closing of the transactions contemplated therein and certain transaction expenses and (B) the amount of aggregate indebtedness of the Acquiring Parties (as defined in the Grenadier Contribution Agreement) immediately after such closing, (vi) requires more than
$150
million of available proceeds obtained from the issuance of common stock of the Company or HighPeak Energy to unaffiliated
third
parties, which proceeds
may
include, among other things, available funds in the Trust Account (
not
including interest accrued thereon), net of any redemptions, (vii) permits Grenadier to terminate the Grenadier Contribution Agreement in the event of a payment default with respect to a Second Extension Payment, (viii) makes certain clarifying or conforming edits to the definitions of Sponsor, Available Financing Proceeds, Excluded Debt, Indebtedness and Forward Purchase Agreement Amendment contained therein and to a representation contained therein related to warrants that will be outstanding and shares of common stock that will be reserved for issuance in connection therewith, in each case as of the consummation of the transactions contemplated thereby and (ix) provides the required party consents under the Grenadier Contribution Agreement to the HPK Amendment. In connection with the entrance into the Grenadier Amendment, HighPeak Assets II and each of the HPK Contributors agreed to jointly and severally pay to Grenadier the Second Extension Payment, which is to be paid in
four
installments as follows; (a)
$1
million
no
later than the date of execution of the Grenadier Amendment, (b)
$5
million
no
later than
February 
21,
2020,
(c)
$5
million
no
later than
March 20, 2020
and (d)
$4
million
no
later than
April 
21,
2020.
The Second Extension Payment will
not
be credited against the cash price to be paid to Grenadier upon the closing of the transactions contemplated by the Grenadier Contribution Agreement and the obligation to pay the Second Extension Payment will survive any termination of the Grenadier Contribution Agreement in advance of any such closing.
 
Unless waived by the applicable parties to the Business Combination Agreement, closing of the HighPeak Business Combination is subject to a number of conditions, including, among others, (i) with respect to the HPK Business Combination Agreement, requisite approval of the Company’s stockholders, the same-day consummation of the transactions contemplated by the Grenadier Contribution Agreement, there being at least
$275
million of Available Liquidity (as defined in the HPK Business Combination Agreement), the closing of the Company’s offer, pursuant to the Registration Statement, to redeem shares of Class A common stock, material compliance of the parties with their covenants, the representations and warranties of the parties being true and correct, subject to the materiality standards contained in the HPK Business Combination Agreement, and the listing of certain shares of HighPeak Energy common stock on The Nasdaq Capital Market (“Nasdaq”) or the New York Stock Exchange (“NYSE”) and (ii) with respect to the Grenadier Contribution Agreement, receipt of the requisite approval of the stockholders of the Company, there being at least
$275
million of Available Liquidity (as defined in the Grenadier Contribution Agreement), the Company having at least
$5,000,001
of net tangible assets remaining after the closing of the Company’s offer, pursuant to the Registration Statement, to redeem shares of Class A common stock, material compliance, or deemed material compliance, of the parties with their covenants, the representations and warranties of the parties being true and correct, subject to the materiality standards contained in the Grenadier Contribution Agreement, the absence of certain amendments having been made to the HPK Business Combination Agreement or the Forward Purchase Agreement, the occurrence of the closing of the transactions contemplated by the HPK Business Combination Agreement and the approved listing of certain shares of HighPeak Energy common stock on the NYSE or the Nasdaq, upon official notice of issuance.
 
The foregoing summary of the HighPeak Business Combination is qualified in all respects by reference to the complete text of the Business Combination Agreement, which are attached as Exhibit
2.1
and Exhibit
2.2,
respectively, to the Company’s Current Report on Form
8
-K filed with the SEC on
November 
27,
2019,
and the Business Combination Agreement Amendments, which are attached as Exhibit
2.3
and Exhibit
2.4,
respectively, to the Company’s Current Report on Form
8
-K filed with the SEC on
February 
6,
2020.
For more information about the HighPeak Business Combination, see the section entitled “Proposal
No.
1—The
Business Combination Proposal” located in the Registration Statement.
 
Failure to Consummate a Business Combination
 
If the Company is unable to complete the initial Business Combination by the Extended Date, the Company must: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not
more than
ten
(
10
) business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable and up to
$50,000
for dissolution expenses) divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
 
Going Concern
 
At
December 31, 2019,
the Company had a cash balance of
$179,515,
which excludes interest income of
$8,739,160
earned during the year from the Company’s investments in the Trust Account which is available to the Company for its tax obligations.  During
2019,
the Company withdrew
$2,301,630
of interest income from the Trust Account to pay its income and franchise taxes and
$120,000
to pay administrative fees. If the Company’s estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating its initial Business Combination are less than the actual amount necessary to do so, the Company
may
have insufficient funds available to operate its business prior to its initial Business Combination.  Moreover, the Company
may
need to obtain additional financing either to complete its initial Business Combination or because it becomes obligated to redeem a significant number of its public shares upon completion of its initial Business Combination, in which case the Company
may
issue additional securities or incur debt in connection with such initial Business Combination.
 
The Company has until the close of business on
May 21, 2020
to complete its initial Business Combination. This mandatory liquidation and subsequent dissolution of the Company if an initial Business Combination is
not
completed in the required time as well as the uncertainty concerning the Company’s ability to borrow sufficient funds to fund its operations raises substantial doubt about the Company’s ability to continue as a going concern.
No
adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Extended Date.
 
In the event of such liquidation, it is possible the per share value of the residual assets remaining available for distribution (including the Trust Account assets) will be less than the offering price per Unit in the Public Offering.