Precision Aerospace Components, Inc. (OTCPK:PAOS) announced that it has entered into securities purchase agreement for private placement of one senior secured note A at $5,500,000, one subordinated secured note B for $3,500,000, and 8,000,000 shares at $1.125 per share with new investor, C3 Capital Partners III, L.P., a fund managed by C3 Capital Partners, LP for aggregate gross proceeds of $18,000,000 on January 16, 2015. This is a recapitalization round of funding. Note A will accrue interest at 11% per annum, with 10% payable monthly and 1% accruing to its outstanding balance payable at maturity. Note A will mature on January 16, 2020. If note A principal is prepaid from a recapitalization of outside capital, a prepayment penalty will apply at 5% of the amount prepaid until the first anniversary of note A, 4% of the amount prepaid after the first anniversary until the second anniversary of note A, 3% of the amount prepaid after the second anniversary of Note A until the third anniversary of Note A, 2% of the amount prepaid after third anniversary of Note A until the fourth anniversary of Note A, and 1% of the amount prepaid after the fourth anniversary of Note A until the maturity date. Note B will accrue interest at 14% per annum. Note B will mature on January 16, 2020. If note B principal is prepaid from a recapitalization of outside capital, a prepayment penalty will apply at 3% of the amount prepaid until the first anniversary of note B, 2% of the amount prepaid after the first anniversary until the second anniversary of note B, and 1% of the amount prepaid after the second anniversary of note A until the third anniversary of note B. Under the securities purchase agreement, so long as note A remains outstanding, the investor will have the right to control the company's board of directors, which will be limited to no more than five members during this time. Once note A is paid in full and for so long as note B remains outstanding, the investor will have the right to elect and control one member seat of the company's board.

The company also entered into stock purchase agreement for private placement of 673,780,414 shares for gross proceeds of $500,000 with C3 Capital Partners III, L.P., a fund managed by C3 Capital Partners, LP and new investor, Precision Group Holdings LLC. The company will raise $18,500,000 in the transaction. The company issued 21,003,714 shares to C3 Capital Partners, LP for gross proceeds of $116,571 and 56,787,820 shares to Precision Group Holdings LLC for gross proceeds of $315,172 as part of first tranche. The second tranche is expected to occur between 20 and 22 calendar days from the date the necessary disclosures are distributed to company shareholders.