PETROGRESS, INC. (OTCMKTS:PGAS) Files An 8-K Results of Operations and Financial ConditionItem 2.02 — Results of Operations and Financial Condition.
On July 3, 2017, after closing 2Q 2017, the Company paid its obligations under the two convertible notes held by Mammoth Corporation, totaling $44,887. This payment also retired approximately $65,550 due as a derivative liability arising from the potential obligation to issue shares upon conversion.
Item 2.03 — Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On July 13, 2017, the Company entered into a Revolving Line of Credit Agreement with its President and CEO, Christos P. Traios. In accordance with the Agreement, the Company also issued a Line of Credit Convertible Promissory Note (LOC Note). Copies of the Agreement and LOC Note are attached as exhibits. The Agreement and Note restate the Company’s obligations under an existing Convertible Promissory Note issued to Mr. Traios on April 1, 2016, under which Mr. Traios had advanced $134,600 to the Company to pay its general operational expenses, including the legal and auditing expenses relating to its SEC reporting requirements. The Agreement and LOC Note now cover approximately $400,000 in funds advanced by Mr. Traios to or on behalf of the Company, including the amounts referenced for repayment of the Mammoth Notes.
The Agreement and LOC Note establish a revolving credit arrangement that permits the Company to call on Mr. Traios to fund up to $1,000,000 of its working capital requirements under a more flexible financing facility that allows advances and repayment without the issuance and re-issuance of a series of subsidiary notes. The arrangement provides for 8% simple interest, with a 360-day year, on outstanding amounts, due and payable every six (6) months; for evergreen renewal of the Note, at the parties’ mutual agreement, every twelve (12) months; for the assignment or sale by Mr. Traios of some portion or all of the outstanding balance on the Note, subject to certain restrictions; and for the payment of interest due on the Note by issuance of shares of the Company’s common stock at a conversion rate of $.001 per share. The conversion provisions of the original Convertible Promissory Note issued by the Company to Mr. Traios allowed conversion of principal and interest at the same conversion rate, and as an inducement for his concession the Company issued a Warrant covering the right to purchase 15,000,000 shares of common stock at $.05 per share, representing a premium to market price at the time of this filing of approximately 65%. These remaining terms are not materially different from the original Convertible Promissory Note issued by the Company to Mr. Traios, instead reflecting a closer integration of the Company’s agreement with the obligation documents, providing the Company with greater flexibility with respect to advances and repayments, and confirming the amount of credit available.
Item 3.03 – Material Changes to Rights of Securities Holders.
On July 13, 2017, the Company created its Series A Preferred Shares, a new class of preferred stock that provides the holder(s), as a class, with the right to two (2) votes for each share of common stock issued and outstanding, and furthermore requires class voting such that the holders of a majority of the Series A Preferred Shares must approve, as a class, any matter requiring shareholder approval. The creation of these shares is authorized by the Company’s Articles of Incorporation and relevant provisions of the Delaware General Corporation Law: The Company’s Articles of Incorporation provide the directors with “blank check” authority to establish classes of preferred shares; the Company’s directors approved the establishment and issuance; and, although not necessary, shareholders holding a majority of the Company’s shares approved the terms and provisions thereof. These shares were issued to Christos P. Traios in consideration of, and as provided for in, his original employment agreement. A copy of the Designation of Preferences for Series A Preferred Shares is provided herewith.
The Company’s establishment of the Series A Preferred Shares situates near total authority over its conduct of business in the holders in so far as they now will have the right and ability to approve any corporate action requiring shareholder approval by a margin of 66 2/3% to 33 ½ %. While these provisions do not alter or reduce the obligations of management to adhere to their duties of care, loyalty, obedience and candor, nor affect the minority rights of shareholders, they should be deemed as an anti-takeover provision.
Item 5.02 – Compensatory Arrangments of Certain Officers.
On July 13, 2016, the Company entered into an Employment Agreement with its chief executive, Christos P. Traios. The Agreement was effective as of April 1, 2017; a copy is provided herewith. The agreement provides for a $120,000 per year salary, with accrual right for unpaid amounts; issuance of preferred shares as referenced above; and specific provisions regarding termination.
Item 9.01 – Financial Statements and Exhibits.
3.01 – Designation of Series A Preferred Stock
10.01 – Employment Contract with Christos Traios
99.01 – Letter of Credit Agreement
99.02 – Letter of Credit Note
Petrogress, Inc. ExhibitEX-3 2 pgas0719form8kexh3_01.htm EXHIBIT 3.01 Exhibit 3.01 CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED STOCK OF PETROGRESS,…To view the full exhibit click here
About PETROGRESS, INC. (OTCMKTS:PGAS)
Petrogress, Inc., formerly 800 Commerce, Inc., is a holding company. The Company, along with its subsidiaries, is engaged in international trading and shipping business. The Company is engaged in exploring the potential for acquiring or purchasing or leasing newly built liquefied natural gas (LNG) vessels in the United States to be used for the supply and sea freight of the United States LNG exports. The Company’s subsidiary, Petrogres Co. Ltd. (Petrogres), operates as an oil commodity company in West Africa. Its other subsidiaries are Petronav Carriers LLC (Petronav) and Petrogress Oil & Gas Energy Inc. (Petrogress Energy). Petronav focuses on primarily managing the day-to-day operation and handling of the tanker fleet it manages. Petrogress Energy is primarily focused on investigating the feasibility of acquiring oil fields in Texas so that the Company can expand its operations into the LNG market within the United States market.