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Equity
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Equity

Note 10 – Equity

 

Pursuant to Empire’s Amended and Restated Certificate of Incorporation (the “Charter”), effective as of March 4, 2022, the total number of shares of all classes of stock that Empire has the authority to issue is 200,000,000, consisting of 190,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.

 

Preferred Stock

 

Preferred stock may be issued from time to time in one or more series at the direction of the Board of Directors. The directors also have the ability to fix dividend rates and rights, liquidation preferences, voting rights, conversion rights, rights and terms of redemption and other rights, preferences, privileges and restrictions, subject to certain limitations set forth in the Charter.

 

Series A Voting Preferred Stock

 

On March 8, 2022, Empire formalized the issuance of preferred stock as was required under the terms of Empire's May 2021 financing agreements with Energy Evolution and issued 6 shares of Series A Voting Preferred Stock. The Series A Voting Preferred Stock was issued in connection with the strategic investment in Empire by Energy Evolution. For so long as the Series A Voting Preferred Stock is outstanding, Empire’s Board of Directors will consist of six directors. Three of the directors are designated as the Series A Directors and the three other directors (each, a “common director”) are elected by the holders of common stock and/or any preferred stock (other than the Series A Voting Preferred Stock) granted the right to vote on the common directors. Any Series A Director may be removed with or without cause but only by the affirmative vote of the holders of a majority of the Series A Voting Preferred Stock voting separately and as a single class. The holders of the Series A Voting Preferred Stock have the exclusive right, voting separately and as a single class, to vote on the election, removal and/or replacement of the Series A Directors. Holders of common stock or other preferred stock do not have the right to vote on the Series A Directors. The approval of the holders of the Series A Voting Preferred Stock, voting separately and as a single class, is required to authorize any resolution or other action to issue or modify the number, voting rights or any other rights, privileges, benefits, or characteristics of the Series A Voting Preferred Stock, including without limitation, any action to modify the number, structure and/or composition of Empire’s current Board of Directors.

 

The Series A Voting Preferred Stock is held by Phil Mulacek, chairman of the Board of Directors and one of the principals of Energy Evolution, as Energy Evolution’s designee (the “Initial Holder”). The Series A Voting Preferred Stock may be transferred only to certain controlled affiliates of the Initial Holder (“Permitted Transferees”), and the voting rights of the Series A Voting Preferred Stock are contingent upon the Initial Holder and Permitted Transferees (collectively, the “Series A Holders”) holding together at least 3,000,000 shares of Empire’s outstanding common stock.

 

 

 

 

The Series A Voting Preferred Stock is not entitled to receive any dividends or distributions of cash or other property except in the event of any liquidation, dissolution or winding up of Empire’s affairs. In such event, before any amount is paid to the holders of Empire’s common stock but after any amount is paid to the holders of Empire’s senior securities, the holders of the Series A Voting Preferred Stock will be entitled to receive an amount per share equal to $1.00.

 

Except as discussed above or as otherwise set forth in the certificate of designation of the Series A Voting Preferred Stock, the holders of the Series A Voting Preferred Stock have no voting rights.

 

The Series A Voting Preferred Stock is not redeemable at Empire’s election or the election of any holder, except Empire may elect to redeem the Series A Voting Preferred Stock for $1.00 per share following satisfaction of its notice and cure requirements in the event that:

 

  •  any or all shares of Series A Voting Preferred Stock are held by anyone other than the Initial Holder or a Permitted Transferee; or
  •  the Series A Holders together hold less than 3,000,000 shares of Empire’s outstanding common stock.

 

The Series A Voting Preferred Stock is not convertible into common stock or any other security.

 

Common Stock

 

On August 27, 2021, Empire’s Board of Directors approved a one-for-four reverse stock split such that every holder of Empire’s common stock would receive one share of common stock for every four shares owned. The reverse stock split was effective as of 6:00 p.m. Eastern Time on March 7, 2022, immediately prior to Empire’s listing of its common stock on the NYSE American.

 

The holders of shares of common stock are entitled to one vote per share for all matters on which common stockholders are authorized to vote on. Examples of matters that common stockholders are entitled to vote on include, but are not limited to, election of three of the six directors and other common voting situations afforded to common stockholders.

 

In April 2024, Empire completed a subscription rights offering (the “April Rights Offering”) which raised gross proceeds of $20.7 million. Empire distributed at no charge to holders of its common stock, as of the close of business on March 7, 2024 (the record date for the April Rights Offering), one subscription right for each share of common stock held. Each subscription right entitled the holder to purchase 0.161 shares of common stock at a subscription price of $5.00 per share per one whole share of common stock. The subscription rights were non-transferable and not listed for trading on any stock exchange or market.

 

On May 29, 2024, Empire issued Energy Evolution a warrant certificate granting them the right to purchase 128,800 shares of common stock of Empire at $5.00 per share. On June 28, 2024, Energy Evolution exercised the warrants and received 128,800 shares in exchange for $644,000.

 

In November 2024, Empire completed a subscription rights offering (the “November Rights Offering”) which raised gross proceeds of $10.0 million. Empire distributed at no charge to holders of its common stock, as of the close of business on September 30, 2024 (the record date for the November Rights Offering), one subscription right for each share of common stock held. Each subscription right entitled the holder to purchase 0.063 shares of common stock at a subscription price of $5.05 per share per one whole share of common stock. The subscription rights were non-transferable and not listed for trading on any stock exchange or market.

 

Earnings Per Share

 

The computation of diluted shares outstanding for the three and nine months ended September 30, 2024, excluded 1,009,319 and 1,019,469 shares, respectively, related to stock options, warrants, outstanding RSUs, and convertible debt as their effect would have been anti-dilutive. The computation of diluted shares outstanding for the three and nine months ended September 30, 2023, excluded 1,409,686 and 1,586,960 shares, respectively, related to stock options, warrants, and outstanding RSUs, as their effect would have been anti-dilutive.