UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark one)
|
☑
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the Quarterly Period ended:
June 30, 2020
or
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ______________ to
________________
Commission File Number: 000-55854
PETROGRESS, INC.
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
27-2019626
|
|
(State or other jurisdiction of incorporation of
organization)
|
|
(I.R.S. Employer Identification No.)
|
|
1,
Akti Xaveriou - 5th Floor
Piraeus 18538 - Greece
|
|
(Address of principal executive offices & zip
code) |
|
+30 (210) 459-9741
|
|
(Registrant’s telephone number, including area code) |
|
NONE
|
|
(Former name or former address, if changed since last
report)
|
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
| |
|
|
|
Common stock, par value $0.001 per share
|
N/A
|
N/A
|
Indicate by check mark whether the registrant (1) has filed all
report to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
| Large accelerated filer |
☐ |
Accelerated filer |
☐ |
| Non-accelerated filer |
☐ |
Smaller reporting company |
☑ |
| |
|
Emerging growth company |
☑ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
There were, 23,776,393 shares of
the Company’s common stock outstanding on August 28th
2020.
Table of Contents
|
|
|
PAGE
|
|
|
Cautionary Statements Relevant to Forward-Looking
Information
|
3
|
| |
|
|
| |
PART I
|
|
| |
FINANCIAL INFORMATION
|
|
|
Item 1.
|
Consolidated Financial Statements
|
|
| |
Consolidated Statement of Comprehensive Income for the six months
ended June 30, 2020 and 2019
|
4
|
| |
Consolidated Balance Sheet at June 30, 2020 and December 31,
2019
|
5
|
| |
Consolidated Statement of Cash Flows for the six months Ended June
30, 2020 and 2019
|
6
|
| |
Consolidated Statement of Equity for the six months Ended June 30,
2020 and 2019
|
7
|
| |
Notes to Consolidated Financial Statements
|
8-11
|
|
Item 2.
|
Management’s Discussion and Analysis of the Financial Condition and
Results of Operations
|
12-18
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risks
|
18
|
|
Item 4.
|
Controls and Procedures
|
18
|
| |
|
|
| |
PART II
|
|
| |
OTHER INFORMATION
|
|
|
Item 1.
|
Legal Proceedings
|
19
|
|
Item 1A.
|
Risk Factors
|
19
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
20
|
|
Item 3.
|
Defaults Upon Senior Securities
|
20
|
|
Item 4.
|
Mine Safety Disclosure
|
20
|
|
Item 5.
|
Other Information
|
20
|
|
Item 6.
|
Exhibits
|
21
|
| |
Signatures
|
22
|
|
|
|
|
PETROGRESS, INC.
Unless the context otherwise indicates, references to “Petrogress
Inc.” “we”, “our”, or “us”, or the “Company” in this Form 10-Q are
references to Petrogress Inc, -a Delaware corporation- including
its wholly owned and majority-owned subsidiaries, and its ownership
interests in equity method investees (corporate entities,
partnerships, limited liability companies and other ventures over
which Petrogress Inc exerts significant influence by virtue of its
ownership interest) companies. Our significant subsidiaries are
“Petronav Carriers LLC.,”, “Petrogress Int’l LLC.” and
“Petrogres Africa Co. Limited”.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING
INFORMATION
This quarterly report of Petrogress Corporation contains
forward-looking statements relating to Petrogress operations that
are based on management’s current expectations, estimates and
projections about the petroleum, chemicals, transactions, vessels
and other energy-related industries. All statements in this Report
that are not representations of historical fact are
“forward-looking statements” within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and subject to the safe-harbor provisions of the
United States Private Securities Litigation Reform Act of 1995.
Words or phrases such as “anticipates,” “expects,” “intends,”
“plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,”
“schedules,” “estimates,” “positions,” “pursues,” “may,” “could,”
“should,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on
schedule,” “on track,” “is slated,” “goals,” “objectives,”
“strategies,” “opportunities” and similar expressions are intended
to identify such forward-looking statements.
The reader should not place undue reliance on these forward-looking
statements, which speak only as of the date of this report. Unless
legally required, Petrogress undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Among the important factors that could cause actual results to
differ materially from those in the forward-looking statements are:
changing crude oil prices; changing refining, marketing and
chemicals margins; our ability to realize anticipated cost savings
and expenditure reductions; actions of competitors or regulators;
public health crises, such as pandemics (including coronavirus
(COVID-19)) and epidemics, and any related government policies and
actions; timing of exploration expenses; timing of crude oil
liftings; the competitiveness of alternate-energy sources or
product substitutes; technological developments; the results of
operations and financial condition of the our suppliers, vendors,
partners and equity affiliates, particularly during extended
periods of low prices for crude oil during the COVID-19 pandemic;
the inability or failure of our joint-venture partners to fund
their share of operations and development activities; the potential
failure to achieve expected net production from existing and future
crude oil development projects; potential delays in the
development, construction or start-up of planned projects; the
potential disruption or interruption of our operations due to war,
accidents, piracy, political events, civil unrest, severe weather,
cyber threats and terrorist acts, crude oil production quotas or
other actions that might be imposed by the Organization of
Petroleum Exporting Countries, or other natural or human causes
beyond the company's control; changing economic, regulatory and
political environments in the countries in which we operate;
general domestic and international economic and political
conditions; the potential liability for remedial actions or
assessments under existing or future environmental regulations and
litigation; significant operational, investment or product changes
required by existing or future environmental statutes and
regulations, including international agreements and national or
regional legislation and regulatory measures to limit or reduce
greenhouse gas emissions; the potential liability resulting from
other pending or future litigation; our future acquisition or
disposition of assets or shares or the delay or failure of such
transactions to close based on required closing conditions; the
potential for gains and losses from asset dispositions or
impairments; government-mandated sales, divestitures,
recapitalizations, industry-specific taxes, changes in fiscal terms
or restrictions on scope of company operations; foreign currency
movements compared with the U.S. dollar; material reductions in
corporate liquidity and access to debt markets; and our ability to
identify and mitigate the risks and hazards inherent in operating
in the global energy industry; the company’s ability to identify
and mitigate the risks and hazards inherent in operating in the
global energy industry; and the factors set forth under the heading
“Risk Factors” on pages 11 through 16 of the company’s 2019 Annual
Report on Form 10-K, on pages 20 and 21 of this report and in
subsequent filings with the U.S. Securities and Exchange
Commission. Other unpredictable or unknown factors not discussed in
this report could also have material adverse effects on
forward-looking statements.
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements
PETROGRESS, INC. and SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
|
|
|
Six Months Ended June 30,
|
|
|
Three months Ended June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from crude oil sales
|
|
$ |
749,200 |
|
|
|
1,917,178 |
|
|
|
133,200 |
|
|
|
- |
|
|
Revenues from gas oil sales
|
|
|
622,000 |
|
|
|
300,000 |
|
|
|
- |
|
|
|
300,000 |
|
|
Revenues for lubricants sales
|
|
|
143,501 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Revenues from freights & hires
|
|
|
218,000 |
|
|
|
298,500 |
|
|
|
(34,080 |
) |
|
|
104,000 |
|
|
Other Revenues
|
|
|
34,080 |
|
|
|
11,000 |
|
|
|
34,080 |
|
|
|
- |
|
|
Total Revenues
|
|
$ |
1,766,781 |
|
|
|
2,526,678 |
|
|
|
133,200 |
|
|
|
404,000 |
|
|
Costs and other Deductions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of goods sold (crude oil)
|
|
|
(1,250,000 |
) |
|
|
(1,165,752 |
) |
|
|
(678,000 |
) |
|
|
- |
|
|
Costs of goods sold (gas oil)
|
|
|
(520,000 |
) |
|
|
(240,000 |
) |
|
|
- |
|
|
|
(240,000 |
) |
|
Costs of goods sold (lubricants)
|
|
|
(129,000 |
) |
|
|
(41,202 |
) |
|
|
- |
|
|
|
(41,202 |
) |
|
Total Cost and Other Deductions
|
|
$ |
(1,899,000 |
) |
|
|
(1,446,954 |
) |
|
|
(678,000 |
) |
|
|
(281,202 |
) |
|
Gross profit
|
|
$ |
(132,219 |
) |
|
|
1,079,724 |
|
|
|
(544,800 |
) |
|
|
122,798 |
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses
|
|
|
(293,168 |
) |
|
|
(83,611 |
) |
|
|
(217,420 |
) |
|
|
(78,548 |
) |
|
General and administrative expenses
|
|
|
(1,187,591 |
) |
|
|
(877,563 |
) |
|
|
(88,875 |
) |
|
|
(334,691 |
) |
|
Amortization expense
|
|
|
(8,790 |
) |
|
|
(6,687 |
) |
|
|
(259 |
) |
|
|
- |
|
|
Depreciation expense
|
|
|
(306,895 |
) |
|
|
(428,048 |
) |
|
|
(152,199 |
) |
|
|
(230,768 |
) |
|
Total operating expenses
|
|
|
(1,796,444 |
) |
|
|
(1,395,909 |
) |
|
|
(458,753 |
) |
|
|
(644,007 |
) |
|
Operating income / (loss) before other expenses and income
tax
|
|
$ |
(1,928,663 |
) |
|
|
(316,185 |
) |
|
|
(1,003,553 |
) |
|
|
(521,209 |
) |
|
Other Income / (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and finance expenses
|
|
|
(19,638 |
) |
|
|
(15,493 |
) |
|
|
(12,248 |
) |
|
|
(3,130 |
) |
|
Amortization of note discount
|
|
|
(174,292 |
) |
|
|
- |
|
|
|
(74,590 |
) |
|
|
- |
|
|
Change in fair market value of derivative liabilities
|
|
|
(886,487 |
) |
|
|
- |
|
|
|
(629,679 |
) |
|
|
- |
|
|
Other income / (expense), net
|
|
|
(68,152 |
) |
|
|
(538,302 |
) |
|
|
(52,327 |
) |
|
|
(490,900 |
) |
|
Total other income / (expense), net
|
|
$ |
(1,148,569 |
) |
|
|
(553,795 |
) |
|
|
(768,844 |
) |
|
|
(494,030 |
) |
|
Income / (loss) before income taxes
|
|
$ |
(3,077,232 |
) |
|
|
(869,980 |
) |
|
|
(1,772,397 |
) |
|
|
(1,015,239 |
) |
|
Income tax expense
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
|
|
$ |
(3,077,232 |
) |
|
|
(869,980 |
) |
|
|
(1,772,397 |
) |
|
|
(1,015,239 |
) |
|
Net income / (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
|
(3,077,232 |
) |
|
|
(861,098 |
) |
|
|
(1,772,397 |
) |
|
|
(1,011,590 |
) |
|
Non-controlling interests
|
|
|
- |
|
|
|
(8,882 |
) |
|
|
- |
|
|
|
(3,649 |
) |
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Comprehensive income / (loss)
|
|
$ |
(3,077,232 |
) |
|
|
(869,980 |
) |
|
|
(1,772,397 |
) |
|
|
(1,015,239 |
) |
|
Comprehensive income / (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
|
(3,077,232 |
) |
|
|
(861,098 |
) |
|
|
(1,772,397 |
) |
|
|
(1,011,590 |
) |
|
Non-controlling interests
|
|
|
- |
|
|
|
(8,882 |
) |
|
|
- |
|
|
|
(3,649 |
) |
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,136,808 |
|
|
|
3,842,916 |
|
|
|
5,136,808 |
|
|
|
3,857,162 |
|
|
Diluted
|
|
|
- |
|
|
|
3,842,916 |
|
|
|
- |
|
|
|
3,857,162 |
|
|
Basic earnings per share
|
|
|
(0.60 |
) |
|
|
(0.22 |
) |
|
|
(0.35 |
) |
|
|
(0.26 |
) |
|
Diluted earnings per share
|
|
|
- |
|
|
|
(0.22 |
) |
|
|
- |
|
|
|
(0.26 |
) |
See accompanying notes to consolidated financial statements.
PETROGRESS, INC. and SUBSIDIARIES
Consolidated Statement of Balance Sheet (Unaudited)
|
|
|
At June 30,
|
|
|
At December 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
154,404 |
|
|
$ |
391,360 |
|
|
Accounts receivable, net
|
|
|
1,787,917 |
|
|
|
2,011,430 |
|
|
Claims receivable, net
|
|
|
375,145 |
|
|
|
478,500 |
|
|
Inventories
|
|
|
377,948 |
|
|
|
1,206,612 |
|
|
Prepaid expenses and other current assets
|
|
|
2,401,798 |
|
|
|
3,143,221 |
|
|
Total current assets
|
|
$ |
5,097,212 |
|
|
|
7,231,123 |
|
|
Non-Current Assets
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
- |
|
|
|
900,000 |
|
|
Contract-related licensing agreements
|
|
|
258,747 |
|
|
|
- |
|
|
Right of use assets
|
|
|
617,139 |
|
|
|
- |
|
|
Vessels and other fixed assets, net
|
|
|
3,983,529 |
|
|
|
4,249,763 |
|
|
Deferred charges, net
|
|
|
7,172 |
|
|
|
15,629 |
|
|
Security deposit
|
|
|
11,762 |
|
|
|
10,584 |
|
|
Total non-current assets
|
|
|
4,878,349 |
|
|
|
5,175,976 |
|
|
Total Assets
|
|
|
9,975,561 |
|
|
|
12,407,099 |
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
1,640,625 |
|
|
|
1,402,198 |
|
|
Due to related party
|
|
|
620,036 |
|
|
|
1,271,450 |
|
|
Loan facility from related party
|
|
|
169,407 |
|
|
|
148,900 |
|
|
Accrued interest
|
|
|
3,129 |
|
|
|
23,636 |
|
|
Lease liabilities
|
|
|
21,930 |
|
|
|
- |
|
|
Convertible promissory notes
|
|
|
313,204 |
|
|
|
237,197 |
|
|
Derivative liabilities
|
|
|
1,696,364 |
|
|
|
809,877 |
|
|
Total current liabilities
|
|
|
4,464,695 |
|
|
|
3,893,258 |
|
|
Non-Current Liabilities
|
|
|
|
|
|
|
|
|
|
Lease liabilities
|
|
|
604,471 |
|
|
|
- |
|
|
Total liabilities
|
|
|
5,069,166 |
|
|
|
3,893,258 |
|
|
Commitments and Contingencies
|
|
|
- |
|
|
|
- |
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Series A Preferred shares, $100 par value, 100 shares authorized,
100 and 0 shares issued and outstanding as of June 30, 2020 and
December 31, 2019.
|
|
|
10,000 |
|
|
|
10,000 |
|
|
Shares of Common stock, $0.001 par value, 50,000,000 shares
authorized, 7,833,562 and 4,446,645 shares issued and outstanding
as of June 30, 2020 and December 31, 2019.
|
|
|
7,834 |
|
|
|
4,447 |
|
|
Additional paid-in capital
|
|
|
9,377,530 |
|
|
|
10,073,810 |
|
|
Accumulated comprehensive loss
|
|
|
(9,763 |
) |
|
|
(9,763 |
) |
|
Retained earnings
|
|
|
(4,479,206 |
) |
|
|
(1,634,645 |
) |
|
Equity attributable to Shareholders of the Company
|
|
|
4,906,395 |
|
|
|
8,443,849 |
|
|
Non-controlling interests
|
|
|
- |
|
|
|
69,992 |
|
|
Total liabilities and shareholders’ equity
|
|
|
9,975,561 |
|
|
|
12,407,099 |
|
See accompanying notes to consolidated financial statements.
PETROGRESS, INC. and SUBSIDIARIES
Consolidated Statement of Cash Flows (Unaudited)
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
|
|
$ |
(3,077,232 |
) |
|
$ |
(861,980 |
) |
|
Adjustments to reconcile net income/ (loss) to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
306,895 |
|
|
|
428,048 |
|
|
Provision for losses on accounts receivable
|
|
|
- |
|
|
|
- |
|
|
Change in fair value of derivative liabilities
|
|
|
629,679 |
|
|
|
- |
|
|
Share-based compensation expense
|
|
|
424,940 |
|
|
|
- |
|
|
Loss on disposition of fixed assets
|
|
|
- |
|
|
|
- |
|
|
Amortization of discount on convertible note
|
|
|
174,292 |
|
|
|
- |
|
|
Amount of derivative in excess of face value of PCN
|
|
|
74,590 |
|
|
|
- |
|
|
Loss on settlement of loan facility from related party
|
|
|
- |
|
|
|
- |
|
|
Gain / (loss) on settlement of convertible promissory notes
|
|
|
83,933 |
|
|
|
46 |
|
|
Elimination of PGAS Africa APIC
|
|
|
(755,702 |
) |
|
|
- |
|
|
Changes in working capital
|
|
|
|
|
|
|
|
|
|
(Increase) / Decrease in accounts receivable, net
|
|
|
223,513 |
|
|
|
601,374 |
|
|
(Increase) / Decrease in claims receivable, net
|
|
|
103,355 |
|
|
|
(4,000 |
) |
|
(Increase) / Decrease in inventories
|
|
|
828,664 |
|
|
|
(563,928 |
) |
|
(Increase) / Decrease in amounts due from related party
|
|
|
720,000 |
|
|
|
- |
|
|
(Increase) / Decrease in prepaid expenses
|
|
|
741,423 |
|
|
|
245,796 |
|
|
Increase / (Decrease) in accounts payable and accrued expenses
|
|
|
238,427 |
|
|
|
87,763 |
|
|
Increase / (Decrease) in amounts due to related party
|
|
|
(651,414 |
) |
|
|
68,976 |
|
|
Increase / (Decrease) in accrued interest
|
|
|
- |
|
|
|
2,980 |
|
|
Increase / (Decrease) in lease liabilities
|
|
|
626,401 |
|
|
|
- |
|
|
(Increase) / Decrease in security deposit
|
|
|
(1,178 |
) |
|
|
54 |
|
|
(Increase) / Decrease in deferred charges, net
|
|
|
8,457 |
|
|
|
6,688 |
|
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
|
$ |
699,043 |
|
|
$ |
11,817 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(60,113 |
) |
|
|
(13,440 |
) |
|
Purchase of vessels and other equipment – related party
facility
|
|
|
- |
|
|
|
- |
|
|
Purchase of vessels and other equipment
|
|
|
- |
|
|
|
- |
|
|
Acquisition of intangible assets
|
|
|
(875,886 |
) |
|
|
- |
|
|
CASH USED IN INVESTING ACTIVITIES
|
|
|
(935,999 |
) |
|
|
(13,440 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Proceeds from convertible promissory notes
|
|
|
- |
|
|
|
- |
|
|
Proceeds from advances from related party
|
|
|
- |
|
|
|
- |
|
|
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
$ |
- |
|
|
$ |
- |
|
|
Effects of exchange rate changes
|
|
|
- |
|
|
|
- |
|
|
NET DECREASE IN CASH
|
|
|
(236,956 |
) |
|
|
(1,623 |
) |
|
CASH AT BEGINNING OF YEAR
|
|
|
391,360 |
|
|
|
661,010 |
|
|
CASH AT PERIOD END
|
|
$ |
154,404 |
|
|
$ |
659,387 |
|
See accompanying notes to consolidated financial statements.
PETROGRESS, INC. and SUBSIDIARIES
Consolidated Statement of Equity (Unaudited)
|
|
|
Total Equity of Petrogress, Inc. Shareholders
|
|
| |
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Additional
Paid-in
Capital
|
|
|
Retained
Earnings
|
|
|
Accumulated Comprehensive
(Loss)
|
|
|
Total
Equity
|
|
|
Non-Controlling Interest |
|
|
Total
Shareholders
Equity
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
$ |
10,000 |
|
|
$ |
3,829 |
|
|
$ |
9,535,161 |
|
|
$ |
1,315,870 |
|
|
$ |
(10,231 |
) |
|
$ |
10,854,629 |
|
|
$ |
104,159 |
|
|
$ |
10,958,788 |
|
|
Shares issued based on convertible notes
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Shares issued based on compensations
|
|
|
- |
|
|
|
21 |
|
|
|
41,836 |
|
|
|
- |
|
|
|
- |
|
|
|
41,836 |
|
|
|
- |
|
|
|
41,857 |
|
|
Shares issued for liabilities settlement
|
|
|
- |
|
|
|
25 |
|
|
|
47,475 |
|
|
|
- |
|
|
|
- |
|
|
|
47,475 |
|
|
|
- |
|
|
|
47,500 |
|
|
Elimination of PGAF apic / due from shareholders
|
|
|
- |
|
|
|
- |
|
|
|
58,405 |
|
|
|
- |
|
|
|
- |
|
|
|
58,405 |
|
|
|
8,000 |
|
|
|
66,405 |
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(861,098 |
) |
|
|
- |
|
|
|
(861,098 |
) |
|
|
(8,882 |
) |
|
|
(869,980 |
) |
|
Other Comprehensive income / (loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
June 30, 2019 Balance
|
|
$ |
10,000 |
|
|
$ |
3,875 |
|
|
$ |
9,682,877 |
|
|
$ |
454,772 |
|
|
$ |
(10,231 |
) |
|
$ |
10,141,293 |
|
|
$ |
103,277 |
|
|
$ |
10,244,570 |
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
$ |
10,000 |
|
|
$ |
4,447 |
|
|
$ |
10,073,810 |
|
|
$ |
(1,634,645 |
) |
|
$ |
(9,763 |
) |
|
$ |
8,443,849 |
|
|
$ |
69,992 |
|
|
$ |
8,513,841 |
|
|
Shares issued based on convertible notes
|
|
|
- |
|
|
|
3,386 |
|
|
|
351,274 |
|
|
|
- |
|
|
|
- |
|
|
|
354,60 |
|
|
|
- |
|
|
|
354,660 |
|
|
Shares issued based on compensations
|
|
|
- |
|
|
|
1 |
|
|
|
287 |
|
|
|
- |
|
|
|
- |
|
|
|
288 |
|
|
|
- |
|
|
|
288 |
|
|
Shares issued for liabilities settlement
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Elimination of PGAF apic / due from shareholders
|
|
|
- |
|
|
|
- |
|
|
|
(1,047,841 |
) |
|
|
232,671 |
|
|
|
- |
|
|
|
(815,170 |
) |
|
|
(69,992 |
) |
|
|
(885,162 |
) |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,077,232 |
) |
|
|
- |
|
|
|
(3,077,232 |
) |
|
|
- |
|
|
|
(3,077,232 |
) |
|
Other Comprehensive income / (loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
June 30, 2020 Balance
|
|
$ |
10,000 |
|
|
$ |
7,834 |
|
|
$ |
9,377,530 |
|
|
$ |
(4,479,206 |
) |
|
$ |
(9 ,763 |
) |
|
$ |
4,906,395 |
|
|
$ |
- |
|
|
$ |
4,906,395 |
|
See accompanying notes to consolidated financial statements.
PETROGRESS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. General
Petrogress, Inc (PGI), is an integrate energy company, engaged in
the upstream, downstream and midstream segments. The company
operates Internationally through its wholly owned subsidiaries
"Petrogress Int'l LLC.", "Petronav Carriers LLC.", “Petrogress
Africa Ltd.” and “PG Cypyard Offshore terminal Ltd.”. The company
also provides sea-transportation services -as an independent
established Maritime Company- by our tankers fleet. The company is
registered in Delaware and headquartered from Piraeus-Greece, where
the company maintain its principal marketing and operating offices
at 1, Akti Xaveriou, 18538 Piraeus, Greece. Our telephone number at
that address is +30 (210) 459-9741 and our corporate address and
registered agent in Delaware is 1013 Centre Road, Suite 403-A,
Wilmington, DE 19805 – USA.
Impact of the novel coronavirus (COVID-19) pandemic;
The outbreak of COVID-19 and decreases in commodity prices
resulting from oversupply and government-imposed travel
restrictions have caused a significant decrease in the demand for
our products and has created disruptions and volatility in the
global marketplace beginning in the second quarter 2020, which
negatively affected significantly our results of operations and
cash flows. These conditions have persisted into the second
quarter, including a further collapse in commodity prices and
sea-transportations, and are expected to negatively affect our
results of operations and cash flows as well. There remains a
continuing uncertainty regarding the length and impact of the
COVID-19 pandemic and associated reductions in demand for our
products, on the energy industry and the outlook for our
business.
The coronavirus pandemic has imposed the continuing lockdown of the
Company’s offices in Greece and Africa and the majority of its
operations ceased. While our employees, vessel’s crew and labors
are staying at their homes and our fleet still remains idle.
The management of the Company assesses the Company’s ability to
continue as a going concern at each period end. The assessments
evaluate whether there are conditions that give rise to substantial
doubts to continue as a going concern within the year from the
present issuance of our financial statements. In addition, under
the present circumstances and market condition, we believe that our
incomes undoubtedly will be heavily affected during the year, and
that raises substantial doubt for the company’s ability to continue
its business unless the company succeed to raise extra cash
financing.
Basis of Presentation; The accompanying
consolidated financial statements of Petrogress and its
subsidiaries (together, Petrogress or the company) have not been
audited by an independent registered public accounting firm. In the
opinion of the company’s management, the interim data includes all
adjustments necessary for a fair statement of the results for the
interim periods. These adjustments were of a normal recurring
nature. The results for the six-month period ended June 30, 2020,
are not necessarily indicative of future financial results. The
term “earnings” is defined as net income attributable to
Petrogress.
Certain notes and other information have been condensed or omitted
from the interim financial statements presented in this Quarterly
Report on Form 10-Q. Therefore, these financial statements should
be read in conjunction with the company’s 2019 Annual Report on
Form 10-K.
Subsidiaries and Affiliated Companies; The
Consolidated Financial Statements include the accounts of
controlled subsidiary companies more than 50 percent owned and any
variable-interest entities in which the company is the primary
beneficiary.
All significant intercompany transactions and accounts have been
eliminated.
Principles of consolidation; The consolidated
financial statements include the consolidated accounts of the
Company and its wholly owned and majority-owned subsidiaries as
listed in the below table. Inter-company transaction balances and
unrealized gains/(losses) on transactions between the companies are
eliminated.
|
Subsidiaries & Affiliates
|
|
Incorporation
|
|
|
Percentage Participation
|
|
Petrogress Int’l LLC. (PIL)
|
|
Delaware
|
|
|
100 |
% |
(owned to PG)
|
|
Petronav Carriers LLC. (PCL)
|
|
Delaware
|
|
|
100 |
% |
(owned to PG)
|
|
Petrogress Hellas (PGH)
|
|
Greece
|
|
|
100 |
% |
(owned to PGI)
|
|
PG-Cypyard & Offshore Terminal Ltd. (PGC)
|
|
Cyprus
|
|
|
100 |
% |
(owned to PGI)
|
Note 2. New
Accounting Standards
Financial Instruments - Credit Losses Effective
January 1, 2020, Petrogress adopted Accounting Standards Update
(ASU) 2016-13 and its related amendments.
Note
3. Information
Relating to the Consolidated Statement of Cash Flows
|
|
|
|
Six Months Ended
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Decrease in Accounts receivable, net
|
|
|
$ |
223,513 |
|
|
$ |
601,374 |
|
|
(Increase) / decrease in Claims receivable, net
|
|
|
|
103,355 |
|
|
|
(4,000 |
) |
|
(Increase) / decrease in Inventories
|
|
|
|
828,664 |
|
|
|
(563,928 |
) |
|
(Increase) / decrease due from related party
|
|
|
|
720,000 |
|
|
|
- |
|
|
Decrease in Prepaid expenses and other assets
|
|
|
|
741,423 |
|
|
|
245,796 |
|
|
Increase in Accounts payable and accrued expenses
|
|
|
|
238,427 |
|
|
|
87,763 |
|
|
Increase / (decrease) in Amounts due to related party
|
|
|
|
(651,414 |
) |
|
|
68,976 |
|
|
Increase / (decrease) in Accrued interest
|
|
|
|
- |
|
|
|
2,980 |
|
|
Increase in lease liabilities
|
|
|
|
626,401 |
|
|
|
- |
|
|
(Increase) / decrease in Security deposit
|
|
|
|
(1,178 |
) |
|
|
54 |
|
|
Decrease in Deferred charges, net
|
|
|
|
8,457 |
|
|
|
6,688 |
|
|
Net increase in operating capital
|
|
|
$ |
2,837,648 |
|
|
$ |
445,704 |
|
Note 4. Operating Segments & Geographic
presence
Although each subsidiary of Petrogress is responsible for its own
affairs, Petrogress manages the operations in these subsidiaries
and affiliates. The operations are grouped into three business
segments, Upstream, Midstream and Downstream, representing the
company’s “operating segments” as described in Item 1, Executive
Overview.
The company’s primary country is the United States of America, its
country of Domicile; while Greece is the head operating location.
Other components of the Company’s operations in Ghana, Nigeria and
Cyprus are reported as “International” (outside the United States).
Most of our marketing, sales, ship-management and other related
functions are performed at our main office in Piraeus, Greece.
The company evaluate the performance of its operating earnings
based on its major’s subsidiaries and goods sales.
|
(a)
|
Earnings by major operating subsidiaries and their trading areas
are presented in the following table:
|
|
|
|
|
Six months Ended June 30,
|
|
|
Operating Subsidiaries (1)
|
|
2020
|
|
|
2019
|
|
|
● Petrogress Int’l LLC.
|
(Internationally)
|
|
$ |
1,514,701 |
|
|
|
1,928,178 |
|
|
● Petronav Carriers LLC.
|
(Internationally)
|
|
|
252,080 |
|
|
|
298,500 |
|
|
● Petrogres Africa Co Ltd.
|
(Nationally Ghana)
|
|
|
- |
|
|
|
300,000 |
|
|
● Petrogress (Hellas) Co.
|
(Internationally)
|
|
|
- |
|
|
|
- |
|
|
Totals
|
|
$ |
1,766,781 |
|
|
$ |
2,526,678 |
|
|
(b)
|
Earnings by products and other services are presented in the
following table:
|
|
|
|
Six months Ended June 30,
|
|
|
Sales volumes per product & service (2)
|
|
2020
|
|
|
2019
|
|
|
● Crude oil
|
|
$ |
749,200 |
|
|
|
1,917,178 |
|
|
● Gas oil
|
|
|
622,000 |
|
|
|
300,000 |
|
|
● Lubricants
|
|
|
143,501 |
|
|
|
- |
|
|
● Vessel’s hires & freights
|
|
|
218,000 |
|
|
|
298,500 |
|
|
● Others
|
|
|
34,080 |
|
|
|
11,000 |
|
|
Totals
|
|
$ |
1,766,781 |
|
|
$ |
2,526,678 |
|
Segment Information; Petrogress’ chief operating
decision maker is the chief executive officer (“CEO”) of its
general partner. The CEO reviews Petrogress’ discrete financial
information, makes operating decisions, assesses financial
performance and allocates resources on a type of service basis.
Petrogress has two reportable segments: Commodities and Other
(C&O) revenues and Hires & Freights (H&F). Each of
these segments is organized and managed based upon the nature of
the products and services it offers.
Segment Sales and Other Operating
Revenues; Segment sales and other operating revenues,
including internal transfers, for the six-month periods ended June
30, 2020 and 2019, are presented in the following table. Products
are transferred between operating segments at internal product
values that approximate market prices. Revenues for the upstream
segment are derived primarily from the purchase and sale of crude
oil, as well as the sale of third-party. Revenues for the
downstream segment are derived from the refining and marketing of
petroleum products such as gasoline, gas oils, lubricants, residual
fuel oils and other products derived from crude oil. Revenues for
the midstream segment generated from the vessels chartering and
employment of transportation crude oil or refined products, the
storing, the wholesale marketing and the retailing in our gas
stations. “All Other” activities include revenues from shipping
agency service and other operations.
|
|
|
|
Six months Ended June 30,
|
|
|
Sales and Other Operating Revenues
|
|
|
2020
|
|
|
2019
|
|
|
Upstream
|
International
|
|
$ |
749,200 |
|
|
$ |
1,917,178 |
|
|
Downstream
|
International
|
|
|
765,501 |
|
|
|
300,000 |
|
|
Midstream
|
International
|
|
|
218,000 |
|
|
|
298,500 |
|
|
All others
|
International
|
|
|
34,080 |
|
|
|
11,000 |
|
|
Total Sales and Other Operating Revenues
|
|
$ |
1,766,781 |
|
|
$ |
2,526,678 |
|
Note 5. Inventories
Crude oil, Gas oil and bunkers onboard our vessels are recorded at
weighted average cost and carried at the lower of cost or net
realizable value. Supplies and other items consist principally of
items, spare-parts, consumable goods and equipment supplied to our
vessel which are valued at weighted average cost and reviewed
periodically for obsolescence or impairment when market conditions
indicate.
The table below presents our inventories as of June 30, 2020 and
December 31, 2019, respectively:
|
Commodities and Petroproducts Inventories
|
|
|
June 30, 2020
|
|
|
December 31, 2019
|
|
|
Crude Oil
|
|
|
$ |
- |
|
|
$ |
- |
|
|
Gas Oil
|
|
|
|
293,018 |
|
|
|
1,039,020 |
|
|
Lubricants
|
|
|
|
- |
|
|
|
59,479 |
|
|
Vessels Inventories & Others
|
|
|
|
|
|
|
|
|
|
|
Bunkers R.O.B.*
|
|
|
|
27,839 |
|
|
|
108,113 |
|
|
Lubricants
|
|
|
|
57,091 |
|
|
|
- |
|
|
Provisions & Stores
|
|
|
|
- |
|
|
|
- |
|
|
Total
|
|
|
$ |
377,948 |
|
|
$ |
1,206,612 |
|
*Vessels ROB of Gas Oil, lubricants and new
spare parts are calculated in the balance sheets separately from
goods.
Note 6. Properties, Vessels and Equipment
We depreciate our vessels on a straight-line basis over the
estimated useful life which is 10 years from the date of being
placed in service by the Company or its affiliate. Depreciation is
calculated based on a vessel’s cost less the estimated residual
value.
Vessels and other fixed assets, net consisted of the following as
of June 30, 2020 and 2019:
|
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
Estimated useful
Life left (in years)
|
|
|
Vessels purchased costs
|
|
|
$ |
10,916,684 |
|
|
$ |
10,888,423 |
|
|
2 |
- |
4 |
|
|
Furniture and equipment
|
|
|
|
182,764 |
|
|
|
182,764 |
|
|
4 |
- |
6 |
|
|
Accumulated depreciation
|
|
|
|
(7,115,919 |
) |
|
|
(6,821,424 |
) |
|
|
|
|
|
|
Vessels and other fixed assets, net
|
|
|
$ |
3,983,529 |
|
|
$ |
4,249,763 |
|
|
|
|
|
|
|
*
|
Depreciation for the six months ended June 30, 2020 and 2019, was
$306,895 and $428,048, respectively.
|
Note 7. Litigation
There are currently no material pending legal or governmental
proceedings, other than ordinary routine litigation incidental to
the business, to which the Company or any of its subsidiaries is a
party or of which any of their property is subject.
Note 8. Other
Contingencies and Commitments
The Company is not a party to any litigation, and, to its best
knowledge, no action, suit or proceeding has been threatened
against the Company.
Note 9. Financial and Derivative
Instruments
Financial Instruments; The Company has financial
instruments that are considered derivatives or contain embedded
features subject to derivative accounting. Embedded derivatives are
valued separately from the host instrument and are recognized as
derivative liabilities in the Company’s balance sheet. The Company
measures these instruments at their estimated fair value and
recognizes changes in their estimated fair value in results of
operations during the period of change. The Company has estimated
the fair value of these embedded derivatives for convertible
debentures using a Black Scholes model as of June 30, 2020 and
2019. For amounts over proceeds in the initial derivative
measurement, the Company recorded a derivative expense of $74,590
and $0 during the six months ended June 30, 2020 and 2019,
respectively. The fair values of the derivative instruments are
measured each quarter, which resulted in a loss of $629,679 and $0
during the six months ended June 30, 2020 and 2019, respectively.
As of June 30, 2020, and 2019, the fair market value of the
derivatives aggregated $1,911,049 and $0, respectively.
The fair value for the Company's derivative liability as at June
30, 2020 is based upon the following management assumptions:
|
|
|
|
Minimum
|
|
|
Maximum
|
|
|
Volatility
|
|
|
|
302.93% |
|
|
|
303.08% |
|
|
Risk Free rate
|
|
|
|
0.13% |
|
|
|
1.77% |
|
|
Life
|
|
|
|
0.16 |
|
|
|
1.00 |
|
Note 10. Revenue
“Sales and other operating revenue” on the Consolidated Statement
of Income primarily arise from contracts with customers and
consistent with ASC Topic 606. Related receivables are included in
“Accounts and notes receivable, net” on the Consolidated Balance
Sheet, net of the current expected credit losses. The net balance
of these receivables was $1,787,917 and $2,011,430 at June 30,
2020, and December 31, 2019, respectively. Other items included in
“Accounts and notes receivable, net” represent amounts due from
partners for their share of joint venture operating and project
costs.
Note 11. Earnings /
(Losses) per Share and
Shareholders’ Equity
The table below presents the calculation of basic and diluted net
income / (loss) attributable to common shareholders per share as of
June 30, 2020:
|
|
|
June 30,
|
|
|
Basic EPS Calculation
|
|
2020
|
|
|
2019
|
|
|
Net income attributable to common shareholders
|
|
$ |
(3,077,232 |
) |
|
$ |
(869,980 |
) |
|
Denominator for basic net income per share – weighted average
shares
|
|
|
5,136,808 |
|
|
|
3,842,916 |
|
|
Conversion of accrued interest on debt held by related party
|
|
|
- |
|
|
|
- |
|
|
Denominator for diluted net income per share
|
|
|
- |
|
|
|
3,842,916 |
|
|
Basic net earnings per share
|
|
|
(0.60 |
) |
|
|
(0.22 |
) |
|
Diluted net earnings per share
|
|
|
- |
|
|
|
(0.22 |
) |
As of June 30, 2020, and 2019, the basic weighted average number of
shares of Common Stock of the Company was 5,136,808 and 3,842,916,
respectively.
Note 12. Other
information
On May 27, 2020, Petrogress Int’l LLC. (the “Company”) entered into
an Amendment No. 2 to Securities Purchase Agreement with Christos
Traios, amending the terms of acquisition of Petrogress Africa
Limited. As a result, the Company returned 864,000 shares of PGAF
(the “Option Shares” representing 72% of the PGAF) for which the
Company has not paid the purchase price to date. However, the
Company retained ownership of 216,000 of PGAF shares for which
remains obliged to pay the purchase price of $1.20 per share in
cash to Christos Traios, under the of the Security Purchase
Agreement. Future financial statements will be shown as 18 percent
equity ownership interest in PGAF, provided the company will comply
to its obligations as per amended agreement. The company accounted
for this investment using the equity method of accounting.
Item 2 – Management’s Discussion and
Analysis of Financial Condition and Results of Operations
Key Financial Results
Second Quarter of
2020 compared to the
Second Quarter of
2019
|
Earnings by product sales
|
|
|
Six months ended June 30,
|
|
|
Net sales volumes per product
|
|
|
2020
|
|
|
2019
|
|
|
Crude Oil Sales
|
|
|
$ |
749,200 |
|
|
$ |
1,917,178 |
|
|
Gas Oil Sales
|
|
|
|
622,000 |
|
|
|
300,000 |
|
|
Lubricants Sales
|
|
|
|
143,501 |
|
|
|
- |
|
|
Hires & Freights Sales
|
|
|
|
218,000 |
|
|
|
298,500 |
|
|
Other Revenues / Discounts
|
|
|
|
34,080 |
|
|
|
11,000 |
|
|
Totals
|
|
|
$ |
1,766,781 |
|
|
$ |
2,526,678 |
|
Net loss attributable to Petrogress for the second quarter
of 2020 was $(3,077,232) ($(0.60) per share), compared to a net
loss of $(1,011,590) ($(0.26) per share) for the second quarter of
2019.
Refer to the “Results of Operations” section beginning on page 14
for a discussion of our financial results.
Executive Overview
Petrogress, Inc., is based in Delaware and operates as a holding
company and conducts its business through its wholly-owned
subsidiaries: Petronav Carriers LLC., which manages
day-to-day operations of its beneficially-owned affiliated tanker
fleet; and Petrogress Int’l LLC., which is a holding company
for subsidiaries currently conducting business in Greece, Cyprus
and Ghana, and provides management of crude oil purchases and
sales;
Business Environment and Outlook
Petrogress, is an oil energy and sea transportation company with
business activities in the following countries: Greece, Cyprus and
Ghana. Our earnings currently depend primarily on the profitability
of our crude oil sales. The biggest factor affecting the results of
operations is the price of crude oil. The price of crude oil has
fallen significantly since mid-year 2019. The downturn in the price
of crude oil has impacted the company's results of operations, cash
flows, leverage, capital and exploratory investment program and
production outlook. A sustained lower price environment could
result in the impairment or write-off of specific assets in future
periods. We have reacted to the downturn by effecting reductions in
operating expenses, pacing and re-focusing of capital and
exploratory expenditures. We anticipate that crude oil prices will
increase in the future, as continued growth in demand and a
reduction in supply growth should bring global markets into
balance. However, the timing or sustainability of any such increase
in prices is unknown. In the Company's downstream business, crude
oil is the largest cost component of refined products.
Nevertheless, it is our objective to deliver competitive results
and shareholder value in any business environment.
Our midstream segment relies and depends on our crude oil sales
contracts to keep our vessels employed. We rely primarily on the
revenues generated from our business of physical supply of crude
oil and marketing of refined products to our end customers.
The company continually evaluates opportunities to dispose of
assets that are not expected to provide sufficient long-term value
or to acquire assets or operations complementary to its asset base
to help augment the company’s financial performance and value
growth. Asset dispositions and restructurings may result in
significant gains or losses in future periods. The company
continually evaluates opportunities to dispose of assets that are
not expected to provide sufficient long-term value or to acquire
assets or operations complementary to its asset base to help
augment the company’s financial performance and value growth. Asset
dispositions and restructurings may result in significant gains or
losses in future periods.
* On November 16, 2016, Petrogress, Inc., filed Articles of Merger
and Plan of Merger in Florida and Delaware to change the Company’s
domicile by merging with and into a Delaware corporation formed
solely for the purpose of effecting the reincorporation. On July 6,
2020, the Company filed an amendment (the "Amendment") to the
Company's Certificate of Incorporation with the Delaware Secretary
of State to increase the number of authorized shares of Common
Stock from 19,000,000 to 50,000,000. The Amendment took effect on
July 6, 2020. There was no change in the par value of the Company's
Common Stock or Preferred Stock as a result of the Amendment.
Response to Market Conditions and
COVID-19
During the second quarter of 2020, travel restrictions and other
constraints on economic activity were implemented in many locations
around the world to limit the spread of the COVID-19 virus. As a
result, demand for our products has fallen steeply and commodity
prices, including crude oil and other petroleum products, have
followed suit. The drop in commodity prices is expected to
negatively impact the company’s future financial and operating
results. Due to the rapidly changing environment, there continues
to be uncertainty and unpredictability around the impact of the
COVID-19 pandemic on our results, which could be material.
Petrogress, entered into this crisis with a weak balance sheet and
low cash liquidity. Accordingly, to protect its long-term health
and value, the company is responding to such market condition by
adjusting items it can control. Additionally, the company has
suspended its repayments of short-terms debts and reduced also the
purchase of the crude oil from its suppliers. A number of our
vessels crew dismissed to mitigate the daily non-operating expenses
of our fleet. Together, these actions are consistent with our
financial priorities: to protect our ongoing projects, to
prioritize capital spend that drives long-term value and to
maintain our position in the energy and shipping market. The
company relies in its receivables in order to continue with a
sufficient liquidity on its operations.
Refer to the “Cautionary Statements Relevant to Forward-Looking
Information” on Page 3 and to “Risk Factors” in Part II, Item 1A,
on page 19 for a discussion of some of the inherent risks that
could materially impact the company’s results of operations or
financial condition.
Operating sectors
Our business operates in the downstream and midstream sectors of
the energy industry, where we acquire and supply crude oil, and
engage in the refining and marketing of refined products and
lubricants. As a supplier, we procure crude oil from our direct
sources and deliver by our tankers fleet to buyers’ destinations.
With service centers in East Mediterranean and West Africa, we
believe that we are one of a limited number of independent physical
suppliers that owns and operates a fleet of supplying vessels and
conducts physical supply operations in multiple jurisdictions.
We provide our customers with services that require sophisticated
logistical operations designed to meet their strict oil quality and
delivery scheduling needs. We believe that our extensive experience
and management systems allow us to meet our customers' specific
requirements when they purchase and take delivery of crude oil,
refined products and lubricants around the areas in which we
operate. We have devoted our efforts to building a global brand and
believe that our customers recognize our brand as representing high
quality service and products at each of our locations. We also
perform our technical ship operations in-house, which helps us
maintain high levels of customer service. Throughout our
history, we have expanded our business capabilities through
strategic alliances, select business and vessel acquisitions, and
the establishment of new service centers.
The company maintain its principal marketing and operating offices
at 1, Akti Xaveriou, 18538 Piraeus, Greece. Our telephone number at
that address is +30 (210) 459-9741 and our corporate address and
registered agent in Delaware is 1013 Centre Road, Suite 403-A,
Wilmington, DE 19805 – USA.
Other Businesses
Effected as on November 2019, the company concluded the
negotiations to lease three Gas refilling stations in the Mainland
of South Greece. The procedures for the obtaining the operating
licenses from the local authorities are in progress, simultaneously
with the preparation of gas stations designs and drawings in order
to commence the modernization and renovation under our brand names.
We estimate to complete and have them ready for operations within
six months’ time. The gas Stations shall be operated by our
Hellenic branch in Greece and we expect to be ready by June
2020.
Our key business segments
The following are descriptions of our recent initiatives undertaken
in each of our key business segments:
Upstream; Earnings for the upstream segment
are closely aligned with industry prices for crude oil. Crude oil
prices are subject to external factors over which the company has
no control, including product demand connected with global economic
conditions, industry production and inventory levels, technology
advancements, production quotas or other actions imposed by the
Organization of Petroleum Exporting Countries (OPEC) or other
producers, actions of regulators, weather-related damage and
disruptions, competing fuel prices, natural and human causes beyond
the company's control such as the COVID-19 pandemic, and regional
supply interruptions. The company is actively managing its schedule
of work, contracting, procurement, and supply chain activities to
effectively manage costs, ensure supply chain resiliency and
continuity, and support operational goals. The spot markets for
many services and materials are softening in response to the
economic impact of the COVID-19 pandemic, including the drastic
reductions in demand for petroleum products, including gasoline and
fuel, among others, and in crude oil prices, which have resulted in
significant reductions in economic activity and associated spending
in the energy sector. Commodity prices have fallen below break-even
levels in many regions.
Downstream: As on February 2018, our
Partnership agreement with Platon Ghana Oil Refinery (PGOR) -an
unrelated third party- is still ongoing and renewed on an annual
basis and pursuant its terms Petrogress will feed and supply the
crude oil for storage, refinement, marketing and distribution in
Ghana jointly with PGOR. The storage capacity under the Partnership
Agreement is 24,000 tons and the monthly processing capacity of the
refinery is 10,000 tons. Petrogress and Platon both plans to invest
additional funds to upgrade the processing monthly capacity into
refined products of Gas Oil, Naphtha, and fuel in view of the high
local demand. Under the Platon Partnership Agreement, all expenses
of the partnership operations are shared by both Petrogress and
Platon. After deducting the operating/processing expenses, the net
profits from the sale of the products are split evenly between
Petrogres and Platon. As of the date the Platon Partnership
Agreement was executed, Petrogress ceased other sales of crude to
third customers in West Africa. During the year the company
expanded its operations to other sectors, engaging into
gas-stations operator and lubricants distributor.
Earnings for the downstream segment are closely tied to margins on
the refining, manufacturing and marketing of products that include
gasoline, diesel, fuel oil and lubricants additives, and
petrochemicals. Industry margins are sometimes volatile and can be
affected by the global and regional supply-and-demand balance for
refined products and petrochemicals, and by changes in the price of
crude oil, other refinery and petrochemical feedstocks. Industry
margins can also be influenced by inventory levels, geopolitical
events, costs of materials and services, refinery or chemical plant
capacity utilization, maintenance programs, and disruptions at
refineries resulting from unplanned outages due to severe weather,
fires or other operational events. Other factors affecting
profitability for downstream operations include the reliability and
efficiency of the company’s refining, marketing, the effectiveness
of its crude oil supply functions, and the volatility of
tanker-charter rates for the company’s shipping operations, which
are driven by the industry’s demand for crude oil and product
tankers. Other factors beyond the company’s control include the
general level of inflation and energy costs to operate the
company’s refining process and marketing, including the changes in
tax laws and regulations.
The company’s most significant marketing areas are the West Coast
of Africa and East Mediterranean where Petrogress affiliates have
significant ownership interests, representations and partnership
agreements, in these areas.
Midstream; The outbreak of COVID-19 pandemic
occurred the ceased of our entire fleet operations and employments
which resulted the complete elimination of freight and hire
incomes, while the fleet expenses remained on the same levels
during and March, April and May 2020. Nevertheless, we believe the
shipping industry will be rectified and return to the normal
levels, therefore we still seek to expand our midstream operations
in other international ocean routes by adding to our fleet larger
and younger tanker vessels. We are monitoring the vessel market for
opportunities while we are also working to secure the necessary
funding for expansion. Our business strategy is based in part upon
the expansion of our business to new, or within existing, markets.
In order to fund future vessel acquisitions, expansion into new and
existing markets and products, increased working capital levels, or
capital expenditures, we will be required to use cash from
operations, incur borrowings or raise capital through the sale of
debt or equity securities in the public or private markets.
The company closely monitors developments in the financial and
credit markets, the level of worldwide economic activity, and the
implications for the Company of movements in prices for crude oil
and refined products. Management takes these developments into
account in the conduct of daily operations and for business
planning.
The company continually evaluates opportunities to dispose of
assets that are not expected to provide sufficient long-term value
or to acquire assets or operations complementary to its asset base
to help augment the company’s financial performance and value
growth. Asset dispositions and restructurings may result in
significant gains or losses in future periods.
Results of Operations
The following section presents the results of operations and
variances on a before-tax basis for the company’s business
operations, as well as for “All Other.”
Our operating revenues are driven primarily of the commodities
trading sales and our tankers fleet employment days during which
our vessels are generating revenues, while our financial results
are subject to a number of sectors and reflects to the following
factors:
Cost of commodities; is the cost we purchase the oil
products -mainly the crude oil- and such cost is based either on
Brent Index prices or Fixed price, the quality and quantity of the
product.
Commodities Operating Expenses; relates to products surveys
before and after the shipment, bunkers supplied to the employment
vessel, cargoes surveys, loading/unloading expenses, agency and
representative services.
Shipping & Logistic Expenses; includes the sea freight
and mobilization cost, the performed loading and discharging of the
product, and any expenses occurred during the shipping time from
the loading point up to unloading facilities.
Vessels Operating Expenses; includes crew wages and bonuses,
their medical support and travelling, maintenance and repairs to
the vessels hull and their machineries, expenses for supplies of
spare-parts and consumable stores, paints, lubricants, fresh water,
bunkers, agency services, etc.
General and Administrative Expenses; relates to our
directors, officers and managers salaries and compensations, shore
staff wages, employee’s federal insurance, offices lease and
utilities, telecommunications, travelling and representations of
our officers, our agency fees we pay to our branch’s offices in
Greece, Cyprus, Ghana and Nigeria.
Corporate Expenses; are all company’s expenses and includes,
our executive’s compensations, attorney’s fee, Auditors and
accountant fees, Consultant’s and P/R fees, Transfer agents of our
stock, miscellaneous.
Other factors may affect our Results of Operations; In
addition to the said expenses there are factors beyond of our
control which may affect seriously our operations results. Inasmuch
as we trade also West Africa, which is considered as high risky
area, we are expose in a serious amount of risks, such as piracies
and hijacks, civil wars, stolen of properties, economy distress,
and credit risks.
EBITDA and Adjustment; EBITDA represents net income before
expenses, taxes and depreciation. Adjusted EBITDA represents net
income before expense, taxes, taxes, depreciation and amortization
of dry-docking.
|
|
|
Six months ended
June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Operating Earnings / (losses)
|
|
$ |
(1,928,663 |
) |
|
$ |
(316,185 |
) |
Operating losses of during the second quarter of 2020 amount to
$(1,928,663), compared to operating losses of $(316,185) for the
same period in 2019. The decrease was primarily due to lower crude
oil sales prices and the cease of operations as of June 30,
2020.
Consolidated Statement of Income
Sales of products provided in the below table:
|
|
|
|
Six months Ended
June 30,
|
|
|
Net sales volumes per product
|
|
|
2020
|
|
|
2019
|
|
|
Crude Oil Sales
|
|
|
$ |
749,200 |
|
|
$ |
1,917,178 |
|
|
Gas Oil Sales
|
|
|
|
622,000 |
|
|
|
300,000 |
|
|
Lubricants Sales
|
|
|
|
143,501 |
|
|
|
- |
|
|
Hires & Freights Sales
|
|
|
|
218,000 |
|
|
|
298,500 |
|
|
Other Revenues/Discounts
|
|
|
|
34,080 |
|
|
|
11,000 |
|
|
Totals
|
|
|
$ |
1,766,781 |
|
|
$ |
2,526,678 |
|
Cost of Goods Sold provided in the below table:
|
|
|
|
Six months Ended
June 30,
|
|
|
Cost of goods sold
|
|
|
2020
|
|
|
2019
|
|
|
Crude Oil purchased costs
|
|
|
$ |
(1,250,000 |
) |
|
$ |
(1,165,752 |
) |
|
Gas Oil purchased costs
|
|
|
|
(520,000 |
) |
|
|
(240,000 |
) |
|
Lubricants purchased costs
|
|
|
|
(129,000 |
) |
|
|
(41,202 |
) |
|
Totals
|
|
|
$ |
(1,899,000 |
) |
|
$ |
(1,446,954 |
) |
|
●
|
Sales: Total operating sales for the six months ended
June 30, 2020 and 2019, were $1,766,781 and $2,526,678,
respectively, a decrease of $759,897 or approximately 30%.
|
|
●
|
Cost of goods sold: For the six months ended June 30,
2020 and 2019, cost of goods sold was $1,219,049 and $1,446,954,
respectively, an increase of $452,046 or approximately 31%.
|
|
●
|
Corporate expenses: Corporate expenses mainly include
the expenses incurred by Petrogress, Inc. Our Corporate expenses
for the six months ended June 30, 2020 and 2019 were $293,168 and
$83,611, respectively, an increase of $209,557 or approximately
251%.
|
|
●
|
General and administrative expenses: For the six
months ended June 30, 2020, General and administrative expenses
increased to $1,187,591 compared to $877,563 for the six months
ended June 30, 2019, an increase of $310,028 or approximately
35%.
|
|
●
|
Net income / (loss) attributable PGI:
For the six months ended June 30, 2020, the Company had a net loss
of $3,077,232 while for the six months ended June 30, 2019, the
Company had a net loss of $861,098, an increase of $2,216,134 or
approximately 257%.
|
|
●
|
EBITDA: For the six months ended June 30, 2020,
EBITDA amounted to $(1,928,663) compared to $(316,185) for the six
months ended June 30, 2019.
|
|
Consolidated results of Operation (after eliminations)
|
|
Six months Ended
June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Total Operating Revenues
|
|
$ |
1,766,781 |
|
|
$ |
2,526,678 |
|
|
Total Operating Expenses & Cost of Goods Sold*
|
|
$ |
(3,695,444 |
) |
|
$ |
(2,842,863 |
) |
* Operating expenses includes, corporate expenses,
shipping & logistic, commodities purchase cost,
fleet expenses, General and Administrative expenses, and
Depreciation expense;
Summarized Financial Data – Subsidiaries
The management and operation of our business is performed directly
and independently by each subsidiary. Assets, inventories,
partnership interests, joint venture interests and contracts are
held by the subsidiaries. Petrogress, Inc., the parent company,
does not have revenues while it suffers all the necessary operating
and general and administrative expenses in order to comply with the
regulatory requirements of the SEC.
Petrogress Int’l LLC. (PIL)
Petrogress Int’l LLC. (PIL), performs most of the trading of the
oil products. PIL, is the company which serves as a holding company
for conducting business across the world through its affiliates and
subsidiaries.
Summarized financial information is presented in the following
table:
|
|
|
Six months Ended
|
|
|
|
|
June 30
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Sales and other operating revenues
|
|
$ |
1,514,701 |
|
|
$ |
2,214,180 |
|
|
Cost and other expenses
|
|
|
(2,097,517 |
) |
|
|
(1,574,755 |
) |
|
Net income / (loss) attributable to
Petrogress, Inc.*
|
|
$ |
(582,816 |
) |
|
$ |
639,425 |
|
________
* 100% Net income / (loss) attributable to Petrogress, Inc.
Petronav Carriers LLC. (PCL)
Petronav Carriers LLC., (PCL) is the company that serves as the
manager and operator of our tanker fleet of four vessels wholly
owned by its five subsidiaries. PCL operates and charter the
tankers fleet to PIL and third-party charterers.
Summarized financial information is presented in the following
table:
|
|
|
Six months Ended
|
|
|
|
|
June 30
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Sales and other operating revenues
|
|
$ |
447,080 |
|
|
$ |
528,333 |
|
|
Cost and other expenses
|
|
|
(1,451,300 |
) |
|
|
(1,674,142 |
) |
|
Net income / (loss) attributable to
Petrogress, Inc. *
|
|
$ |
(1,004,220 |
) |
|
$ |
(1,145,809 |
) |
________
* 100% Net income / (loss) attributable to Petrogress, Inc.
Petrogress Hellas Branch (PGH)
Petrogress Hellas (PGH) is the branch of PIL in Greece and
operates-monitoring and managed the entire day-to-day activities of
the company’s subsidiaries. Through PGH, PIL has commenced the
Gas-Fueling Stations in Greece.
Summarized financial information is presented in the following
table:
|
|
|
Six months Ended
|
|
|
|
|
June 30
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Sales and other operating revenues
|
|
$ |
76,133 |
|
|
$ |
48,000 |
|
|
Cost and other expenses
|
|
|
(78,388 |
) |
|
|
(68,738 |
) |
|
Net income / (loss) attributable to
Petrogress Int’l LLC.*
|
|
$ |
(2,255 |
) |
|
$ |
(20,738 |
) |
_______
100% Net income / (loss) attributable to Petrogress Int’l LLC.
Petrogress, Inc. (PGI)
Petrogress, Inc. (PGI) is the parent holding company of the group
and doesn’t make any revenues from operations while it suffers all
the necessary operating and general and administrative expenses in
order to comply with the regulatory requirements of SEC. The
following table presents the results of equity interest PGI has
into the subsidiaries:
|
|
|
Six months Ended
|
|
|
|
|
June 30
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Sales and other operating revenues
|
|
$ |
- |
|
|
$ |
- |
|
|
Corporate, Administrative and other expenses
|
|
|
(1,487,941 |
) |
|
|
(254,038 |
) |
|
Net income / (loss) attributable to
Petrogress, Inc.*
|
|
$ |
(1,487,941 |
) |
|
$ |
(254,038 |
) |
_______
Net income / (loss) attributable from ownership interest of the
subsidiaries.
Revenue Concentrations
The following table is a summary of customers who accounted for
more than ten percent (10%) of the Company’s revenues for the six
months ended June 30, 2020 and 2019:
|
Customer
|
|
|
June 30, 2020
|
|
|
June 30, 2019
|
|
|
A
|
|
|
|
42% |
|
|
|
74% |
|
|
B
|
|
|
|
22% |
|
|
|
* |
|
|
C
|
|
|
|
13% |
|
|
|
* |
|
Summary of customers who accounted for more than ten percent (10%)
of the Company’s accounts receivable for the periods ended June 30,
2020 and December 31, 2019 is showing on the below table:
|
Customer
|
|
|
June 30, 2020
|
|
|
December 31, 2019
|
|
|
A
|
|
|
|
31% |
|
|
|
55% |
|
|
B
|
|
|
|
30% |
|
|
|
* |
|
|
C
|
|
|
|
11% |
|
|
|
23% |
|
|
D |
|
|
|
13% |
|
|
|
* |
|
| |
●
|
None of the balances listed in the table above have become overdue
as of June 30, 2020.
|
| |
●
|
Amounts indicated with an * denote amounts less than 10%.
|
Liquidity & Capital Resources
Our main sources of liquidity are cash and cash equivalents,
accounts receivable and internally generated cash flow from
operations. At June 30, 2020, we had a working capital of $632,517
consisting of $154,404 in cash and cash equivalents, $1,787,917 in
accounts receivable, $375,145 in claims receivable, $377,948 in
inventories, and $2,401,798 in prepaid expenses and other current
assets.
For the six months ended June 30, 2020, net cash provided by
operating activities was $699,043 compared to $11,817 for the same
period in 2019.
Assets included in the calculation of the Company’s working capital
have decreased by $2,133,911 mainly from the decrease in
inventories which have decreased by $828,664. This decrease has
been financed mainly by our net income and the increase of our
liabilities included in working capital, namely the increase in
Convertible promissory notes and Derivative liabilities which have
increased by $76,007 and $886,487 respectively, during the six
months ended June 30, 2020.
The company’s future debt level is dependent primarily on results
of operations, cash that may be generated from asset dispositions,
the capital program, lending commitments to affiliates, and
shareholder contributions. Our need for capital resources is driven
by our expansion plans, ongoing maintenance and improvement of our
vessels, support of our operational expenses, corporate overhead
and the expenses we suffer in order to comply with the regulatory
requirements of SEC. Specifically, Petrogress, Inc., the parent
company, does not have revenues while it suffers all the necessary
operating and general and administrative expenses to comply with
the regulatory requirements of the SEC.
Cash and Cash Equivalents; The following table
presents sources and use of cash and cash equivalents:
|
|
|
|
Six months Ended June 30,
|
|
|
Sources of cash and cash equivalents
|
|
|
2020
|
|
|
2019
|
|
|
Operating activities
|
|
|
$ |
699,043 |
|
|
$ |
605,215 |
|
|
Borrowing
|
|
|
|
- |
|
|
|
- |
|
|
Others
|
|
|
|
- |
|
|
|
- |
|
|
Total sources of cash and cash equivalents
|
|
|
$ |
699,043 |
|
|
$ |
605,215 |
|
Management seeks to secure the necessary financing for the
expansion of Company’s operations. Based on our current plan, we
believe our expected cash flows from operations will be sufficient
to finance our present activities and capital expenditures only for
a period of the next 6 months. The company needs to raise a
reasonable finance in order to expand its operations, increase the
oil sales and support its projects-operations.
Item 3 – Quantitative and Qualitative
Disclosures About Market Risk
Information about market risks for the six months ended June 30,
2020, does not differ materially from that discussed under Item 7A
of Petrogress’s 2019 Annual Report on Form 10-K.
Item 4 – Controls and Procedures
(a) Evaluation of disclosure controls and procedures
The company’s management has evaluated, with the participation of
the Chief Executive Officer and Chief Financial Officer, the
effectiveness of the company’s disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) as of the end of the period
covered by this report. Based on this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the
company’s disclosure controls and procedures were effective as of
June 30, 2020.
(b) Changes in internal control over financial reporting
During the quarter ended June 30, 2020, there were no changes in
the company’s internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect,
the company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1 – Legal Proceedings
Information about legal proceedings for the six months ended June
30, 2020, does not differ materially from that discussed under Item
7A of Petrogress’s 2019 Annual Report on Form 10-K.
Item 1A – Risk Factors
Information about risk factors for the six months ended June 30,
2020, does not differ materially from that set forth under the
heading “Risk Factors” on pages 11 through 16 of the company’s 2019
Annual Report on Form 10-K, other than as reflected in the risk
factor below.
Impacts of the novel coronavirus (COVID-19) pandemic and
geopolitical factors have resulted in a significant decrease in
demand for Petroleum products and
caused a precipitous drop in commodity prices, which has had and is
expected to continue to have an adverse, and potentially
material adverse, effect on
Petrogress’s future financial and operating
results.
As of the date of this Quarterly Report on Form 10-Q, the economic,
business, and oil and gas industry impacts from the COVID-19
pandemic and the disruption to capital markets have been far
reaching. Crude oil prices, the single largest variable that
affects the company’s results of operations, have fallen
dramatically to historic lows, even going negative in some cases,
due to a combination of a severely reduced demand for crude oil,
gasoline, jet fuel, diesel fuel, and other refined products
resulting from government-mandated travel restrictions and an
economic standstill resulting from the COVID-19 pandemic.
As a result, a market imbalance has existed and may continue to
exist, with oil supplies vastly exceeding current and expected
near-term demand. Although OPEC and other countries have agreed to
cut global oil supply, the commitments and actions to date have not
matched the dramatic decrease in global demand, which is driving
increasing inventory levels with refineries, pipelines and storage
facilities at or close to storage capacity in a growing number of
locations.
Extended periods of low prices for crude oil are expected to have a
material adverse effect on the company’s results of operations,
financial condition and liquidity. Among other things, the
company’s earnings, cash flows, and capital and exploratory
expenditure programs are expected to be negatively affected. As a
result, the value of the company’s assets may also become impaired
in future periods.
The company’s operations and workforce are being impacted by the
COVID-19 pandemic, causing certain operations to be curtailed to
various degrees, which may become suspended completely if adverse
conditions persist. As a result of decreased demand for its
products, the company has made significant cuts to its operations
during March and second quarter of 2020, which are expected to
negatively impact our future operations, cash flows and assets.
The company’s suppliers and customers are also being heavily
impacted by the COVID-19 pandemic and access to materials,
supplies, and contracts has been strained. In certain cases, the
company has received notices invoking force majeure provisions in
supplier contracts and receivables. This strain on the financial
health of the company’s customers could put further pressure on the
company’s financial results and may negatively impact supply and
sales assurance and performance for the company.
In light of the significant uncertainty around the duration and
extent of the impact of the COVID-19 pandemic, management is
currently unable to develop with any level of confidence estimates
and assumptions that may have a material impact on the company’s
consolidated financial statements and financial or operational
performance in any given period. In addition, the unprecedented
nature of such market conditions could cause current management
estimates and assumptions to be challenged in hindsight.
There continues to be uncertainty and unpredictability around the
impact of the COVID-19 pandemic on our financial and operating
results in future periods. The extent to which the COVID-19
pandemic adversely impacts our future financial and operating
results, and for what duration and magnitude, depends on several
factors that are continuing to evolve, are difficult to predict
and, in many instances, are beyond the company's control. Such
factors include the duration and scope of the pandemic, including
any resurgences of the pandemic, and the impact on our workforce
and operations; the negative impact of the pandemic on the economy
and economic activity, including travel restrictions and prolonged
low demand for our products; the ability of our affiliates,
suppliers and partners to successfully navigate the impacts of the
pandemic; the actions taken by governments, businesses and
individuals in response to the pandemic; the actions of OPEC and
other countries that otherwise impact supply and demand and
correspondingly, commodity prices; the extent and duration of
recovery of economies and demand for our products after the
pandemic subsides; and Petrogress ability to keep its cost model in
line with changing demand for petroleum products and shipping.
The impact of the COVID-19 pandemic is rapidly evolving, and the
continuation or a resurgence of the pandemic could precipitate or
aggravate the other risk factors identified in our 2019 Form 10-K,
which in turn could further materially and adversely affect our
business, financial condition, liquidity, results of operations and
profitability, including in ways not currently known or considered
by us to present significant risks.
Item 2 – Unregistered Sales of Equity Securities and Use of
Proceeds
The table below presents the issued shares during the quarter ended
June 30, 2020:
|
Period
|
|
Total Number of Shares
|
|
Class
|
|
April 1 – April 30, 2020
|
|
|
440,000 |
|
Common shares
|
|
May 1 – May 31, 2020
|
|
|
463,000 |
|
Common shares
|
|
June 1 – June 30, 2020
|
|
|
2,131,861 |
|
Common shares
|
|
Total
|
|
|
3,035,361 |
|
|
Item 3 – Defaults Upon Senior Securities
None
Item 4 – Mine Safety Disclosure
None
Item 5 – Other Information
On May 27, 2020, Petrogress Int’l LLC. (the “Company”) entered into
an Amendment No. 2 to Securities Purchase Agreement with Christos
Traios, amending the terms of acquisition of Petrogress Africa
Limited. As a result, the Company returned 864,000 shares of PGAF
(the “Option Shares” representing 72% of the PGAF) for which the
Company has not paid the purchase price to date. However, the
Company retained ownership of 216,000 of PGAF shares for which
remains obliged to pay the purchase price of $1.20 per share in
cash to Christos Traios, under the of the Security Purchase
Agreement. Future financial statements will be shown as 18 percent
equity ownership interest in PGAF, provided the company will comply
to its obligations as per amended agreement. The company accounted
for this investment using the equity method of accounting.
Item 6- Exhibits
The information required by this Item 6 is set forth in the Exhibit
Index accompanying this Form 10Q
Exhibits Index
|
Exhibit
Number
|
Exhibits
Description
|
Page(s)
|
* Filed herewith
** Furnished herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
| |
|
|
|
Date: August 28, 2020
|
PETROGRESS, INC.
|
| |
|
|
| |
|
|
|
|
By:
|
/s/ Christos Traios
|
| |
Christos Traios
|
| |
President and Chief Executive Officer (Principal Executive
Officer)
|
| |
|
|
|
|
By:
|
/s/ Evangelos Makris
|
| |
Evangelos Makris
|
| |
Chief Financial Officer (Principal Financial and Accounting
Officer)
|
