Sec Form 13D Filing - Energy Evolution Master Fund Ltd. filing for EMPIRE PETROLEUM CORP (EP) - 2021-06-23

(the “Conversion Price”) into Common Stock, or an aggregate of 5,200,000 shares of Common Stock (without giving effect to any interest that may be converted). The Conversion Price is subject to customary downward adjustments, including in the event the Company conducts capital raises at a valuation less than $1.25 per share of Common Stock. In the event a registration statement related to the Secured Convertible Note (the “Registration Statement”) does not become effective within 120 days after May 14, 2021, the Conversion Price shall be reduced by $0.25 and the Maximum Convertible Amount shall be increased to 50% of the principal amount outstanding together with accrued interest thereon. In such event, the maximum number of shares into which the Secured Convertible Note may be converted increases to 8,125,000 shares of Common Stock (without giving effect to any interest that may be converted). In addition, if any principal amount of the Secured Convertible Note remains outstanding on October 1, 2021, the Conversion Price shall be reduced by $0.25, provided the Conversion Price cannot be reduced by more than $0.25 if any principal amount of the Secured Convertible Note remains outstanding on October 1, 2021 and the Registration Statement does not become effective within 120 days after May 14, 2021. As partial consideration for the issuance of the Secured Convertible Note, the Company issued (a) 1,500,000 shares of Common Stock along with (b) a warrant certificate (the “Note Warrant”) to purchase up to 3,000,000 shares of Common Stock (the “Note Warrant Shares”) at an exercise price of $1.00 per Note Warrant Share. Under the Note Warrant, the exercise price is subject to customary downward adjustments, including in the event that the Company conducts capital raises at a valuation less than $1.00 per share of Common Stock. Effective as of June 15, 2021, EEF partially exercised the Note Warrant by acquiring 1,500,000 shares of Common Stock for an aggregate exercise price of $1,500,000. Effective as of June 16, 2021, EEF exercised the remaining portion of the Note Warrant by acquiring 1,500,000 shares of Common Stock for an aggregate exercise price of $1,500,000. Such exercise prices were funded using EEF’s working capital.

Also on May 14, 2021, Empire New Mexico issued that certain Unsecured Convertible Note due May 9, 2022 in the aggregate principal amount of $1,500,000 (the “Unsecured Convertible Note”) to Phil E. Mulacek. The Unsecured Convertible Note was purchased using Mr. Mulacek’s personal funds. Under the Unsecured Convertible Note, 100% of the principal amount outstanding together with accrued interest thereon may be converted at a conversion price of $1.25 per share into Common Stock, or an aggregate of 1,200,000 shares of Common Stock (without giving effect to any interest that may be converted). Effective as of May 14, 2021, Mr. Mulacek converted the Unsecured Convertible Note in full by acquiring 1,200,000 shares of Common Stock, then contributed such 1,200,000 shares to EEF.

To incentivize Mr. Mulacek to purchase the Unsecured Convertible Note, executive officers of the Company entered into arrangements with Mr. Mulacek, pursuant to which Mr. Mulacek had the right to purchase up to 600,000 shares of Common Stock from such executive officers for $0.75 per share. Mr. Mulacek contributed such rights to EEF. On or about May 27, 2021, EEF exercised such rights in full. EEF used its working capital in connection with exercising such rights.

On or about June 1, 2021, third parties transferred 2,100,000 shares of Common Stock to EEF in exchange for an ownership interest in EEF on the basis of a valuation of $0.75 per share for each share of Common Stock.