Royale Energy, Inc. 10-K

Item 3 Legal Proceedings None. Item 4 Mine Safety Disclosures Not Applicable 9 Table of Contents PART II Item 3 Defaults Upon Senior Securities On August 2, 2017, two notes for a total principal amount of $1,580,000, issued in 2016, became due and payable and remained due and payable on December 31, 2017. On February 28, 2018, one of the notes, for $300,000, was converted to 750,000 shares of common stock immediately prior to the Merger (a conversion price of $0.40 per share). Also, on February 28, 2018, Royale reached a settlement of a dispute with the second investor regarding his advance of $1.28 million. In the settlement, Royale agreed to pay $1.9 million to the investor, who in turn did not receive shares of the Company’s common stock on conversion of this investment. In the settlement, Royale also cancelled a two-year warrant issued to the second investor to purchase 1,066,667 of Royale common stock at $0.80 per share.