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Subsequent Events
12 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events

16. Subsequent Events



On January 4, 2017, 5,264 common shares were issued in the aggregate to the Company’s four directors and CFO and interim CEO.  This issuance will result in compensation expense of approximately $4,000 to be recorded during the quarter ended March 31, 2017.



On February 13, 2017, 4,498,698 common shares were issued to participants of the Company’s rights offering which closed on February 2, 2017.  Of the 4,498,698 common shares issued, 3,293,407 were issued to the Company’s directors, management, and affiliates.  The Company received approximately $2.7 million in proceed from this offering.  The proceeds were used primarily to pay off the Company’s credit facility



As included in Note 7. Long-Term Debt, on March 16, 2017, the Company amended its credit facility with Prosperity Bank.  Also included in Note 7, the Company paid down the credit facility and as of March 30, 2017 has no amounts drawn on this facility.

On March 17, 2017, the Company announced the adoption of a Rights Plan intended to help preserve assets related to the Company’s net operating losses. As of December 31, 2016, the Company had cumulative net operating loss carryforwards of approximately $ 28.2 million, which are usable in certain circumstances to offset future U.S. taxable income.

Tengasco’s ability to use these tax benefits would be limited if it were to experience an “ownership change” under Section 382 of the Internal Revenue Code. This would occur if stockholders that own at least 5% of outstanding common stock increased their ownership in the Company by more than 50 percentage points within a rolling three-year period. After considering the estimated value of the Company’s tax benefits and the potential for limitations to the NOL’s occurring upon an “ownership change,” the Board adopted the Rights Plan.

To implement the Rights Plan, the Board declared a dividend of one preferred share purchase right for each outstanding share of its common stock to shareholders of record on March 27, 2017.  The rights are further described in a Registration Statement on Form 8-A filed with the Securities and Exchange Commission. The rights will become exercisable if a person acquires 4.95% or more of Tengasco common stock or if a person that already owns 4.95% or more of common stock acquires additional shares above the percentage currently owned.  Tengasco’s stockholders that currently own more than 4.95% of the common stock will be “grandfathered” at their current ownership level.  If the rights become exercisable, all holders of rights, other than the person triggering the exercisability of the rights, would become entitled to purchase Tengasco stock at an approximate 50% discount. Rights held by the person triggering the rights will become void and will not be exercisable. Unless the rights are triggered in this manner, the rights will not be exercisable and no stock would be issued under the Rights Plan.

The rights will trade with Tengasco’s common stock, will not be evidenced by any separate rights certificate, and will expire on the day after the 2017 annual shareholders meeting   unless ratified at the meeting, in which case they would expire in three years. The Board may terminate the plan at any time or redeem the rights prior to the time they are exercisable.



The Rights Plan will be administered by Continental Stock Transfer & Trust Company as Rights Agent under a Rights Agreement between the Company and the Rights Agent, dated March 16, 2017. The Rights Agreement described all details of the Rights Plan and is attached in full as an exhibit to the Company’s Form 8-K filed with SEC on March 17, 2017.