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Monday, 04/25/2022 7:17:10 AM

Monday, April 25, 2022 7:17:10 AM

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Suspicious Related Party Transactions in Empire Petroleum

Take a look at the very intriguing Related Party Transactions in the Empire Petroleum annual report just out

So in May 2021 Empire Petroleum, co-chaired by Phil Mulacek (who with his friends&cronies controls a vast amount of the company’s shares) sold a $16.25m Senior Secured convertible note issue to his son Sterling Mulacek’s Energy Evolution Fund (which already had almost all its capital invested in Empire Petroleum). This $16.25m loan attracted some extremely odd features including a debt discount of $2.2 million and non-cash interest expense of $7.4 million

Could they not find anyone else to finance this publicly listed company other than the Chairman’s son’s fund?

The loan was modified not just once but twice in the months that followed (including on Dec 30th in a good old end-of-year transaction) with large parts of the loan being exchanged for more shares and warrants in Empire Petroleum exerciseable at just $5 per share. Were these negotiations conducted over a Mulacek family barbecue?

More than this, in May they also did a $3.24m unsecured convert issue and disclosed this was to investors that also ‘included’ Sterling Mulacek’s fund again (was he almost all of it?). New wrinkle this time was the “Company’s Chief Executive Officer and President collectively offered to each investor the right to purchase a number of shares of common stock equal to 40% of such investor’s principal balance” at just $3 per share…..which somehow resulted in a $1m ‘non-cash expense’ to Empire based ‘on the contributions made on its behalf’!