PGAS – Between hell(ennia) and the deep blue sea

Petrogress Inc. is a vertically integrated oil company, active in the business of trading, shipping, and distributing petroleum products. Its headquarters is in the Hellenic republic, which turns out to be Greece (had to look that one up). It seems that my skill in geography is not what I thought it was. Let’s hope my investing is.

Despite what the title says, the business isn’t in real terrible shape. There are significant risks, however, and the upside to the business is very cloudy. Moreover, the stock is arguably not sufficiently cheap at the moment. So while I think this is an interesting company to explore, this might not be the best time to purchase shares.

Petrogress, according to their own words, can be roughly divided in four operating segments: Upstream, Midstream, Downstream, and Marketing. They own a number of subsidiaries, which run independently, but there seems to be some overlap between the subsidiary businesses and the operating segments.

The business started out as “800 Commerce Inc.”.
In 2016, current Petrogress CEO Christos Traios entered 800 Commerce and initiated a reverse merger. He provided the company with capital and kept doing so in the years that followed. Traios previously owned several companies, including Petrogres Inc. and Petrogres Africa Co. These companies were acquired from Traios, a transportation subsidiary called Petronav Carriers was established, and Petrogress Inc. in its current form was born.

The sales mix of the business is summarised in the table below. The majority of sales originate from crude oil sales to a refinery the company has partnered with.

Sales mix. Source: PGAS 2019 10K

Revenue and profits tend to swing, and the past few years have not brought much prosperity. It’s probably safe to assume that low oil prices did not help.

Revenues and profits
Source: (thanks to David @ Elementary Value for pointing this website out, it saved me quite some time.

The company structure with all its subsidiaries is quite confusing, therefore I’ll continue by focussing on the business segments rather than the individual subsidiaries. I took most of the information from the 2019 10K, while I used both the 10K the latest 10Q for financials.

Upstream. This is the business of extracting and trading oil. As far as I have found, the company is doing the latter and is not actually extracting any oil at the moment, but is planning to bid on oil field licences and purchase platforms in the future. There are plans to lease an oil rig-platform near the coast of Ghana, called APG-1. It’s an older platform that is in need of repair and maintenance. I haven’t found sings of actual production yet. The necessary investment to get the platform running is $ 15 million according to the website. The platform should yield 300-500 barrels of oil per day, which translates to around $ 6 mln in annual revenue at current oil prices.

Midstream. This is the company’s shipping business. The current fleet comprises of 5 ships with a sixth one in the pipeline. These are neither modern nor large ships, and they come with the inherent risk of calamities, breakdowns, and high maintenance costs. For the year 2019, losses of around $ 2 million were recorded due to hijacking of one of the ships, maintenance costs and idle times. In March 2020, one of the ships collided with a wreck that was sitting on the ocean floor. It’s safe to assume that operating expenses over 2020 will be high as well. The company recently announced that they have entered into a partnership agreement involving the monthly sea-carriage of 600.000 barrels of crude oil and petroleum products. This volume seems to be comparable to what the company has shipped and delivered in previous years. According to a quick google conversion, the monthly amount translates to about 95.000 cubic metres of oil.

Source: 2019 10K

To put things in perspecive, this could mean that the three largest vessels of the fleet would each carry approximately 7 loads each month. I’m not sure if this is in any way accurate, however the deal should keep the fleet utilised for the three year period.

Four of the ships can be tracked using I sometimes use this website in my day job, to track large container ships, who’s location can be tracked in real time. This does not work for the small Petronav ships, probably due to a lack of (sophisticated) tracking equipment. I expect that the ships will pop up in some port every now and then. I will monitor this in the coming time to try and get a sense of the shipping activity.

Downstream. Petrogress operates two storage tank farms in Nigeria and Ghana. The company has partnered with a Ghanian oil refinery called Platon Gas Oil Ghana Limited, with a monthly refining capacity of 10.000 tons. Basically, Petrogress supplies the refinery with crude oil, and profits are split 50/50. This is a major aspect of the business, from which 87 and 88% of total revenues in 2018 and 2019 were derived, respectively. In Cyprus, the company is currently taking part in a tender for development of a Liquified Natural Gas terminal at the port of Vassiliko.

Other business/Marketing. The company is launching a petrol station business in mainland Greece under the “PG Oil” brand. Currently there are three stations which have been refurbished and should be in operation as of this time.

Management. The management team comprises of three officers. Remunerations don’t seem to be on the high side, with a yearly salary of $ 110.000 for the CEO and $ 20.000 for the CFO. There’s not much information on the management team. CEO Traios seems to be an experienced man in the oil industry. When he entered Petrogress in 2016, he awarded himself 100 preferred shares, which is the total number of this asset class outstanding. Because of this, he has basically absolute power over the company and the ability to veto any decision by others, as far as I can see.

Common share issuance. The Executive vice president is rewarded 250 shares per month of service. CEO Traios’s salary is paid in shares (at least management still has some skin in the game). Creditors are paid in shares. Over the course of 2019, over 600.000 shares were issued to pay the bills. When we add the most recent 10Q into the mix, things are getting worse. Up until the third quarter of 2020, an extra 26.700.000 shares were issued based on convertible notes and for liabilities settlements. While debt is low and the company has an OK current ratio, the dilution is serious. Conveniently, all of this is easily visualised by the price chart.


To speak of a depressed stock would be an understatement. A heavily diluted stock is what it is. The price action picked up a bit in recent months, as has been the case with several nanocap stocks in my portfolio lately. The free float is large and there is ample liquidity. For the savvy value investor, this is probably not a good thing.

Valuation. Let’s try and keep this simple.
Profits: At or below break even, on average
Market cap: $ 3.5 million
Non-current Debt: $ 0.6 million
Cash: $ 0.2 million
Short term receivables and payables more or less cancel each other out.
The fixed assets mainly comprise of vessels, installations, and petrol station furnishings (the land is not owned). There are some intangibles in the form of licenses and permits. Based on these numbers, the company is likely forced to issue more shares or take on debt in the years to come.

So, what would make this an attractive investment? I like oil, at the moment. While ESG is a hot topic, oil will definitely have a place in the future to come. The regions where Petrogress is most active, being Western- and Central Africa and Southern Europe, are depending on petroleum products to run their economies. However, I think the future of the company is conditional. The new shipping contract should bring revenue growth. Vessel breakdowns, calamities, and maintenance cost should be kept to a minimum. The expansion of the greek petrol station venture should go as planned. Maybe the company wins the tender for constructing the LNG terminal in the Cypriot port of Vassiliko. I don’t even dare to speculate about the prospective oil production platform. A lot of if’s and should’s. In addition, the scope of the company’s operations seems extensive for such a small management team. Imagine running a refining, trading, shipping and marketing business all at the same time, with limited resources. Throw in a few petrol stations with mini markets and restaurants, for good measure. I’m sure the management team outsources to certain a degree, but it still seems to be a complex business as a whole.

I was able to buy some shares at a price of around $ 0,05, back when the price chart was still resting on its base. Since then the stock has been more than doubling and considering the risks, I’m not sure if this is the stock to buy at this moment. I like to read about the company though, I think it’s unusual and interesting. For that reason I will continue to follow it and maybe buy some more at a lower price in the future. Let’s see how the coming years unfold. The latest annual report should surface within a few months time. I don’t expect it to be pretty, but it will provide some insights on the path ahead.

Thank you for reading.

Disclaimer: Long PGAS

ESWW – Looking for a catalyst

Environmental Solutions Worldwide Inc., is a manufacturer of catalytic converter products, founded in 1998. This video gives an impression of what the business is about. The company doesn’t publish any information currently. With ESWW’s average share volume of 497, it’s a bit of a challenge to acquire a position, even a small sized one. What we have is a tiny, dark, and illiquid company. Good. Let’s dive in.

There are no recent financials available and the company’s main website is last updated around 2015. Some numbers regarding the shares:
Market cap = $ 716.605
# Shares out = 143.321

The price chart displays a forgotten or simply overlooked stock.

ESWW – Source:

The most recent 10-K dates from 2014. Shortly after, the shares were deregistered. At the time, the market cap was around $ 8,1 million with 135.404 shares outstanding. The share count is this low since a reverse 1:2000 split in 2013. Tradingview provides a long range chart going back to the year 2000, which is even more dramatic, however it looks quite distorted and the prices do not make sense, probably because of the reverse split adjustment. To illustrate, the actual market cap was around $ 91 million in 2000. I cannot really fathom this chart, to be honest, and I’d be grateful if anyone could shed some light on this.

ESWW – Source:

Right, financials. The 2014 10-K presents quite a healthy balance sheet, a few highlights:
Cash and equivalents: $ 8,3 million
Current ratio: 3,2
Debt to equity: 0,66

Revenue and profits were $ 25,4 million and $ 11,4 million respectively. Not bad. However, after five years of darkness, these numbers should be discarded completely. At this point I’m just curious about two main points – the reliability of the share count as of today, and whether the business is still alive or not. I am unable to verify the former, other than what the OTCMarkets website states, and I can only guess regarding the latter. So, let’s continue along that path.

Pennsylvania has a website listing tax liens on unpaid taxes. ESWW isn’t in it. So no red flag there but also no sign of life. Google street view provides images supposedly taken in August 2019, which show a decently maintained (or by the looks of it) headquarters at 200 Progress Drive, Montgomeryville, PA.

200 Progress Drive, Montgomeryville, PA. Image by Google Street View

The building has two parking lots, both of them contain quite a few cars.

200 Progress Drive, Montgomeryville, PA. Image by Google Street View

In 2017 a news release was published regarding the opening of a new plant, for the manufacture of the company’s Skyline product line. The article links to the website of Skyline, which reveals a new subsidiary not mentioned in the 10-K: Skyline Emissions Inc. This subsidiary has a new address which should match the newly opened plant: 103A Park Drive, Montgomeryville, PA. Just around the corner.

103A Park Drive, Montgomeryville, PA. Image by Google Street View

The company definitely has a presence here, but since the building seems to house multiple businesses, it’s hard to say whether the cars are owned by ESW Group employees or not. I don’t expect Gamburg’s furniture employees all arriving by bus each morning.

The Skyline website offers better clues. The news page is updated until october 9, 2019, which spreads hope. Skyline also has a YouTube channel which posted some video’s in february 2020, which is 10 months ago at the time of writing. Their Linkedin page has updates from just a week ago.

By looking at their presence on the web, I’m pretty confident that the company is still alive and doing business today. I like the industry. Despite the ‘green revolution’ we are in, heavy internal combustion engines are definitely not going away soon. Emission requirements are getting stricter every year, demand for ESW’s products should remain in the foreseeable future. Prices of certain raw materials have been soaring, like palladium, which is up 400% since 2015. As long as these prices can be reflected in the pricing of the end products, this doesn’t worry me, however I’m no expert in this.

There is quite a lot of risk associated with this stock. There is no recent financial information. The liquidation value of this company is non-existent in my estimation, since the company does not own any land or buildings, just equipment. The capital structure is a huge question mark. They might have a lot of debt, or they might be almost free of it.

What I see is a company with a wide range of specialised products and testing services, and it seems to be alive and kicking. Maybe they’ll dust off their investor relations department in the near future and start communicating again. Maybe another company will acquire them at some point. For a market cap of less than a million, I’m in.

Thanks for reading. Regards,


Disclaimer: Long ESWW

ACGX – Too cheap to ignore

Every now and then, whilst scanning through the OTC Markets, I come across companies with very low market caps, between 100 and 200k. Usually, these are empty shells and merely remnants of the past. Rarely, a company is still in business. Even more rarely, the company is making money. Alliance Creative Group is such a business. As I was writing this post, I found myself checking numerous times if the market cap was indeed six figures. Sit tight, as this is an odd one.

The company is in the business of retail packaging and fulfilment. It leases space in 8 warehouses throughout the United States, which are used as packaging and distribution points for order fulfilment. They started a trucking business in 2016, but transitioned it to another company in 2018. The company owns shares in a subsidiary called PeopleVine, which is a “Member Experience CRM that lets you create digital engagements and self-service tools for your members”.

Conveniently, the company has an up-to-date website with some information on it. They have not been too consistent with their reporting, but at least there is some material published in each of the past fiscal years.

Some numbers:
Market cap = $ 160.000
Common shares out = 1.073.044 (Free float is around 90%)
Note that there was a reverse split with a ratio of 4000:1 in August 2019. The common shares are not entitled to any dividends.
Preferred shares = 747.994. These are cumulative with a 4% stock dividend. Most of it is owned by the CEO.

Source: 2020 Q3 report

Cash is low, and with current liabilities of $ 1.799.028, the company is simply not very solvent. Assets (not assests) like “Employee Advances” of $ 421.841 seem somewhat ridiculous in my opinion. The number has declined from last year however, so at least someone’s paying their advances back. Apart from the preferred stock there are convertible notes which have the potential to significantly dilute the equity.

Let’s just forget about the balance sheet for now and conclude that it’s unlikely for investors to receive one penny in the case of liquidation. Moving on. Below is a screenshot of the income statement.

Source: 2020 Q3 report

The net income, earned in the past three months, exceeds the market cap of the entire company. Yes, the balance sheet is dubious. Yes, there are preferred shares, and a lot of them. Yes, share dilution will happen, and probably to a large extent. However, never before have I paid $ 0,15 for a share with quarter earnings being $ 0,16 per common share.

So, what about this subsidiary, PeopleVine Inc.? Last year, ACG invested a total of $ 720.000 in in this business (see note 5 of the financial statements, in the Q3 2020 report). There are other investors at the table, ACG owns 3.364.375 common shares which, according to them, have a value of $ 2.523.281. I’m really not sure how to assess this and it’s safe to say I’m sceptical. Additionally, since the product is partly used for physical events, business might be impaired this year.

The share structure of ACG is complicated and I’m still trying to wrap my head around it. Regarding the series H preferred stock, the company states the following:

Source: 2019 annual report

At this point I have to admit that it’s very difficult to assign a value to this business. On the one hand, shareholders of ACG are in a very weak position and may not reap any benefits, even if the company does relatively well. On the other hand, the company is real, it exists, money is made, and the share price is historically low. I still think the market cap is somewhat insane for a functioning business. I’m wondering what the catalyst for share price growth could possibly be. Perhaps simply survival of the fulfilment business will prove to be sufficient. Perhaps PeopleVine will prove to be a successful platform in the longer term. Who knows.


Based on the long range chart, I will take a position and just follow the company for the time to come.

Thank you for reading. Regards,

Disclaimer: Long ACGX

QBAK – Hoping for some tape action

Qualstar is an American manufacturer of power supplies (N2Power) and back-up systems, in particular tape libraries. While this technology may seem somewhat outdated, tapes offer low-cost data storage, and provide an offline alternative to cloud storage. The company employs around 15 people and is not particularly capital-intensive.

Alright, let’s start with the numbers.
Market Cap = $ 4.500.000
Shares out = 1.925.025 (1.090.366 in public float or about 50%)
Cash = $ 4.700.000
Debt = No significant loans or long term debt
Taking the long-term liabilities into account, my estimation for the enterprise value is around $ 1.000.000.

The company has been around for a while, the IPO took place in 2000 amidst the height of the dot com bubble. Basically, the price is been going downhill from that point. While the stock is bottomming out, one cannot spot a reliable base, yet. The price action is still somewhat bouncy, with volume on the high side.


The CEO owns in excess of 40% of the shares, and he purchased some in 2019 for a price about double today’s price. Of course, this was pre-pandemic.


So, is the company making any money? Well, yes, at times. Revenue has been growing over the past years and after many years of losses, the company has reported some profits. Also, they have been buying back some stock. The revenues between storage and power supply are distributed around a 60/40 basis, currently. The storage business is significantly more profitable than the power supply business, whose revenues have been declining.

YearRevenueNet incomeEquity# Shares out
2015$ 12.902.000$ -1.308.000$ 7.910.00012.253.000
2016$ 9.417.000$ -1.210.000$ 4.839.000 (1/6 split) 2.042.019
2017$ 10.641.000$ 640.000$ 5.896.0002.042.019
2018$ 12.229.000$ 1.468.000$ 7.328.0002.030.017
2019$ 13.439.000$ -7.000$ 6.743.0001.925.025

The year 2020 will probably not be a good one, with the Covid pandemic as a major factor. Orders have been delayed and global supply has been disrupted.

To summarise, I like the business. The business model is fairly simple, so are the products, with nothing really sexy or exciting about them. I think demand for these products will remain. Given the strong balance sheet, I think the company can remain for quite a long time, even with earnings being negative for most of the years. I’m holding a small position at this moment. The company filed a 15-12 and is going dark, which might cause the price to drift lower. I will probably add to my position in the time to come.


Disclaimer: Long QBAK