Exhibit 99.1
INDEX TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
Page
|
Unaudited Condensed Consolidated Balance Sheets as of December 31, 2023, and March 31, 2024
|
F-2
|
|
|
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023, and 2024
|
F-3
|
|
|
Unaudited Condensed Consolidated Statements of Shareholders’ Equity and Mezzanine Equity for the three months ended March 31, 2023, and 2024
|
F-4
|
|
|
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023, and 2024
|
F-5
|
|
|
Notes to Unaudited Interim Condensed Consolidated Financial Statements
|
F-6
|
CASTOR MARITIME INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2023 and March 31, 2024
(Expressed in U.S. Dollars – except for share data)
ASSETS
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
CURRENT ASSETS:
|
|
Note
|
|
|
2023
|
|
|
2024
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
111,383,645
|
|
|
$
|
157,203,721
|
|
Restricted cash
|
|
|
8
|
|
|
|
2,327,502
|
|
|
|
2,830,759
|
|
Accounts receivable trade, net
|
|
|
|
|
|
|
2,914,899
|
|
|
|
1,749,307
|
|
Due from related parties
|
|
|
4
|
|
|
|
5,650,168
|
|
|
|
4,337,429
|
|
Inventories
|
|
|
|
|
|
|
977,639
|
|
|
|
997,527
|
|
Prepaid expenses and other assets
|
|
|
|
|
|
|
3,277,873
|
|
|
|
2,812,783
|
|
Investment in equity securities
|
|
|
9
|
|
|
|
77,089,100
|
|
|
|
90,634,259
|
|
Assets held for sale
|
|
|
4(e), 7(b)
|
|
|
|
38,656,048
|
|
|
|
39,068,012
|
|
Accrued charter revenue
|
|
|
|
|
|
|
—
|
|
|
|
872,557
|
|
Total current assets
|
|
|
|
|
|
|
242,276,874
|
|
|
|
300,506,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels, net
|
|
|
7
|
|
|
|
229,536,996
|
|
|
|
189,713,003
|
|
Restricted cash
|
|
|
8
|
|
|
|
7,190,000
|
|
|
|
5,150,000
|
|
Due from related parties
|
|
|
4
|
|
|
|
4,504,340
|
|
|
|
3,599,018
|
|
Prepaid expenses and other assets
|
|
|
|
|
|
|
500,000
|
|
|
|
500,000
|
|
Deferred charges, net
|
|
|
5
|
|
|
|
3,231,461
|
|
|
|
2,524,666
|
|
Fair value of acquired time charters
|
|
|
6
|
|
|
|
265,173
|
|
|
|
—
|
|
Investment in related party
|
|
|
4(c)
|
|
|
|
117,537,135
|
|
|
|
117,541,024
|
|
Total non-current assets
|
|
|
|
|
|
|
362,765,105
|
|
|
|
319,027,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
605,041,979
|
|
|
$
|
619,534,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt, net
|
|
|
8
|
|
|
|
17,679,295
|
|
|
|
14,541,683
|
|
Debt related to assets held for sale, net
|
|
|
8
|
|
|
|
2,406,648
|
|
|
|
11,689,285
|
|
Liability associated with asset held for sale
|
|
|
7(b)
|
|
|
|
—
|
|
|
|
4,950,000
|
|
Accounts payable
|
|
|
|
|
|
|
2,833,167
|
|
|
|
1,767,403
|
|
Deferred revenue
|
|
|
|
|
|
|
1,548,892
|
|
|
|
1,452,951
|
|
Accrued liabilities
|
|
|
|
|
|
|
3,592,728
|
|
|
|
3,882,270
|
|
Due to related party
|
|
|
4(d)
|
|
|
|
541,666
|
|
|
|
548,610
|
|
Total current liabilities
|
|
|
|
|
|
|
28,602,396
|
|
|
|
38,832,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
8
|
|
|
|
65,709,842
|
|
|
|
48,272,320
|
|
Total non-current liabilities
|
|
|
|
|
|
|
65,709,842
|
|
|
|
48,272,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEZZANINE EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
5.00% Series D fixed rate cumulative perpetual convertible preferred shares: 50,000 shares issued and outstanding as of December 31, 2023, and March 31, 2024, respectively,
aggregate liquidation preference of $50,000,000 as of December 31, 2023 and March 31, 2024, respectively
|
|
|
|
|
|
|
49,549,489
|
|
|
|
49,673,302
|
|
Total mezzanine equity
|
|
|
10
|
|
|
|
49,549,489
|
|
|
|
49,673,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares, $0.001 par value; 1,950,000,000 shares authorized; 9,662,354 issued and outstanding as of December 31, 2023 and March 31, 2024
|
|
|
10
|
|
|
|
9,662
|
|
|
|
9,662
|
|
Preferred shares, $0.001 par value: 50,000,000 shares authorized; Series B Preferred Shares – 12,000 shares issued and outstanding as of December 31, 2023, and March 31, 2024
|
|
|
10
|
|
|
|
12
|
|
|
|
12
|
|
Additional paid-in capital
|
|
|
|
|
|
|
266,447,819
|
|
|
|
266,447,819
|
|
Retained earnings
|
|
|
|
|
|
|
194,722,759
|
|
|
|
216,298,748
|
|
Total shareholders’ equity
|
|
|
|
|
|
|
461,180,252
|
|
|
|
482,756,241
|
|
Total liabilities, mezzanine equity and shareholders’ equity
|
|
|
|
|
|
$
|
605,041,979
|
|
|
$
|
619,534,065
|
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
CASTOR MARITIME INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended March 31, 2023 and 2024
(Expressed in U.S. Dollars – except for share data)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
Three Months Ended
March 31,
|
|
|
|
Note
|
|
|
2023
|
|
|
2024
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
Time charter revenues
|
|
|
6, 14
|
|
|
|
24,468,970
|
|
|
|
20,390,247
|
|
Total vessel revenues
|
|
|
|
|
|
$
|
24,468,970
|
|
|
$
|
20,390,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses (including $326,770, and $251,581 to related party for the three months ended March 31, 2023, and 2024, respectively)
|
|
|
4, 15
|
|
|
|
(1,277,085
|
)
|
|
|
(1,064,734
|
)
|
Vessel operating expenses
|
|
|
15
|
|
|
|
(11,267,683
|
)
|
|
|
(8,123,197
|
)
|
Management fees to related parties
|
|
|
4
|
|
|
|
(1,831,500
|
)
|
|
|
(1,422,798
|
)
|
Depreciation and amortization
|
|
|
5, 7
|
|
|
|
(5,812,463
|
)
|
|
|
(3,855,832
|
)
|
General and administrative expenses (including $750,000, and $799,500 to related party for the three months ended March 31, 2023, and 2024, respectively)
|
|
|
4, 16
|
|
|
|
(1,134,664
|
)
|
|
|
(1,929,550
|
)
|
Gain on sale of vessels (including $0, and $4,121,720 from related party for the three months ended March 31, 2023 and 2024, respectively)
|
|
|
7(b)
|
|
|
|
—
|
|
|
|
7,893,530
|
|
Total expenses
|
|
|
|
|
|
|
(21,323,395
|
)
|
|
|
(8,502,581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
3,145,575
|
|
|
|
11,887,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME/(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and finance costs
|
|
|
8, 17
|
|
|
|
(3,088,079
|
)
|
|
|
(2,033,257
|
)
|
Interest income
|
|
|
|
|
|
|
798,964
|
|
|
|
1,475,589
|
|
Foreign exchange losses
|
|
|
|
|
|
|
(61,578
|
)
|
|
|
(52,007
|
)
|
Dividend income on equity securities
|
|
|
9
|
|
|
|
313,716
|
|
|
|
834,900
|
|
Dividend income from related party
|
|
|
4
|
|
|
|
97,222
|
|
|
|
353,889
|
|
(Loss) / Gain on equity securities
|
|
|
9
|
|
|
|
(7,692,952
|
)
|
|
|
9,928,255
|
|
Total other (expenses) / income, net
|
|
|
|
|
|
|
(9,632,707
|
)
|
|
|
10,507,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) /income and comprehensive (loss)/income from continuing operations, before taxes
|
|
|
|
|
|
$
|
(6,487,132
|
)
|
|
$
|
22,395,035
|
|
Income taxes
|
|
|
|
|
|
|
(22,906
|
)
|
|
|
(63,289
|
)
|
Net (loss)/income and comprehensive (loss)/income
from continuing operations, net of taxes
|
|
|
|
|
|
$
|
(6,510,038
|
)
|
|
$
|
22,331,746
|
|
Net income and comprehensive income from discontinued operations, net of taxes
|
|
|
3
|
|
|
|
17,339,332
|
|
|
|
—
|
|
Net income and comprehensive income
|
|
|
|
|
|
|
10,829,294
|
|
|
|
22,331,746
|
|
Dividend on Series D Preferred Shares
|
|
|
|
|
|
|
—
|
|
|
|
(631,944
|
)
|
Deemed dividend on Series D Preferred Shares
|
|
|
|
|
|
|
—
|
|
|
|
(123,813
|
)
|
Net income attributable to common shareholders
|
|
|
|
|
|
|
10,829,294
|
|
|
|
21,575,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Earnings per common share, basic, continuing operations
|
|
|
13
|
|
|
|
(0.69
|
)
|
|
|
2.23
|
|
(Loss)/Earnings per common share, diluted, continuing operations
|
|
|
13
|
|
|
|
(0.69
|
)
|
|
|
1.09
|
|
Earnings per common share, basic, discontinued operations
|
|
|
13
|
|
|
|
1.83
|
|
|
|
—
|
|
Earnings per common share, diluted, discontinued operations
|
|
|
13
|
|
|
|
1.83
|
|
|
|
—
|
|
Earnings per common share, basic, total
|
|
|
13
|
|
|
|
1.14
|
|
|
|
2.23
|
|
Earnings per common share, diluted, total
|
|
|
13
|
|
|
|
1.14
|
|
|
|
1.09
|
|
Weighted average number of common shares, basic
|
|
|
13
|
|
|
|
9,460,976
|
|
|
|
9,662,354
|
|
Weighted average number of common shares, diluted
|
|
|
13
|
|
|
|
9,460,976
|
|
|
|
20,564,123
|
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
CASTOR MARITIME INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND MEZZANINE EQUITY
For the three months ended March 31, 2023, and 2024
(Expressed in U.S. Dollars – except for share data)
|
|
Number of shares issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine equity
|
|
|
|
Common
shares
|
|
|
Preferred
A shares
|
|
|
Preferred
B shares
|
|
|
Par
Value of
Shares
issued
|
|
|
Additional
Paid-in
capital
|
|
|
Retained
earnings
|
|
|
Total
Shareholders’ Equity
|
|
|
# of
Series D Preferred
Shares
|
|
|
Mezzanine
Equity
|
|
Balance, December 31, 2022
|
|
|
9,460,976
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
9,473
|
|
|
|
303,743,302
|
|
|
|
157,742,285
|
|
|
|
461,495,060
|
|
|
|
—
|
|
|
|
—
|
|
- Distribution of net assets of Toro Corp. to shareholders (Note 1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(37,919,432
|
)
|
|
|
—
|
|
|
|
(37,919,432
|
)
|
|
|
—
|
|
|
|
—
|
|
- Net income and comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,829,294
|
|
|
|
10,829,294
|
|
|
|
—
|
|
|
|
—
|
|
Balance, March 31, 2023
|
|
|
9,460,976
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
9,473
|
|
|
|
265,823,870
|
|
|
|
168,571,579
|
|
|
|
434,404,922
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2023
|
|
|
9,662,354
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
9,674
|
|
|
|
266,447,819
|
|
|
|
194,722,759
|
|
|
|
461,180,252
|
|
|
|
50,000
|
|
|
|
49,549,489
|
|
- Dividend on Series D Preferred Shares
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(631,944
|
)
|
|
|
(631,944
|
)
|
|
|
—
|
|
|
|
—
|
|
- Deemed dividend on Series D Preferred Shares
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(123,813
|
)
|
|
|
(123,813
|
)
|
|
|
—
|
|
|
|
123,813
|
|
- Net income and comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,331,746
|
|
|
|
22,331,746
|
|
|
|
—
|
|
|
|
—
|
|
Balance, March 31, 2024
|
|
|
9,662,354
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
9,674
|
|
|
|
266,447,819
|
|
|
|
216,298,748
|
|
|
|
482,756,241
|
|
|
|
50,000
|
|
|
|
49,673,302
|
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
CASTOR MARITIME INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2023, and 2024 (Expressed in U.S. Dollars)
|
|
Note
|
|
Three
Months
Ended
March 31,
|
|
|
Three
Months
Ended
March 31,
|
|
|
|
|
|
2023 |
|
|
|
2024 |
|
Cash Flows provided by Operating Activities of Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
10,829,294
|
|
|
|
22,331,746
|
|
Less: Net income from discontinued operations, net of taxes
|
|
|
|
|
17,339,332
|
|
|
|
—
|
|
Net (loss)/income from continuing operations, net of taxes
|
|
|
|
$
|
(6,510,038
|
)
|
|
$
|
22,331,746
|
|
Adjustments to reconcile net (loss)/income from Continuing operations to net cash provided by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
5, 7
|
|
|
5,812,463
|
|
|
|
3,855,832
|
|
Amortization of deferred finance charges
|
|
17
|
|
|
186,151
|
|
|
|
146,093
|
|
Amortization of fair value of acquired time charters
|
|
6
|
|
|
1,026,959
|
|
|
|
265,173
|
|
Gain on sale of vessels
|
|
|
|
|
—
|
|
|
|
(7,893,530
|
)
|
Straight line amortization of hire
|
|
|
|
|
—
|
|
|
|
(872,557
|
)
|
Unrealized loss / (gain) on equity securities
|
|
|
|
|
7,695,588
|
|
|
|
(9,787,434
|
)
|
Realized gain on sale of equity securities
|
|
|
|
|
(2,636
|
)
|
|
|
—
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable trade, net
|
|
|
|
|
(195,435
|
)
|
|
|
1,165,592
|
|
Inventories
|
|
|
|
|
180,445
|
|
|
|
254,987
|
|
Due from/to related parties
|
|
|
|
|
(753,948
|
)
|
|
|
2,214,172
|
|
Prepaid expenses and other assets
|
|
|
|
|
(124,161
|
)
|
|
|
465,090
|
|
Other deferred charges
|
|
|
|
|
51,138
|
|
|
|
—
|
|
Accounts payable
|
|
|
|
|
(3,595,122
|
)
|
|
|
(1,065,765
|
)
|
Accrued liabilities
|
|
|
|
|
(1,382,673
|
)
|
|
|
347,392
|
|
Deferred revenue
|
|
|
|
|
(782,933
|
)
|
|
|
(95,940
|
)
|
Dry-dock costs paid
|
|
|
|
|
(1,315,024
|
)
|
|
|
—
|
|
Net Cash provided by Operating Activities from Continuing Operations
|
|
|
|
|
290,774
|
|
|
|
11,330,851
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow (used in)/provided by Investing Activities of Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
Vessel acquisitions and other vessel improvements
|
|
7
|
|
|
(204,763
|
) |
|
|
(18,923
|
)
|
Advance received for sale of vessel
|
|
7(b)
|
|
|
—
|
|
|
|
4,950,000
|
|
Net proceeds from sale of vessels
|
|
|
|
|
—
|
|
|
|
43,842,720
|
|
Purchase of equity securities
|
|
|
|
|
(31,742,081
|
)
|
|
|
(3,757,725
|
)
|
Proceeds from sale of equity securities
|
|
|
|
|
258,999
|
|
|
|
—
|
|
Net cash (used in) / provided by Investing Activities from Continuing Operations
|
|
|
|
|
(31,687,845
|
)
|
|
|
45,016,072
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in Financing Activities of Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on Series D Preferred Shares
|
|
|
|
|
—
|
|
|
|
(625,000
|
)
|
Repayment of long-term debt
|
|
8
|
|
|
(8,444,500
|
)
|
|
|
(11,438,590
|
)
|
Payment of deferred financing costs
|
|
|
|
|
(25,178
|
)
|
|
|
—
|
|
Proceeds received from Toro Corp. related to Spin-Off
|
|
4
|
|
|
2,570,503
|
|
|
|
—
|
|
Net cash used in Financing Activities from continuing operations
|
|
|
|
|
(5,899,175
|
)
|
|
|
(12,063,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows of discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by Operating Activities from discontinued operations
|
|
|
|
|
20,409,041
|
|
|
|
—
|
|
Net cash used in Investing Activities from discontinued operations
|
|
|
|
|
(153,861
|
)
|
|
|
—
|
|
Net cash used in Financing Activities from discontinued operations
|
|
|
|
|
(62,734,774
|
)
|
|
|
—
|
|
Net cash used in discontinued operations
|
|
|
|
|
(42,479,594
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash, cash equivalents, and restricted cash
|
|
|
|
|
(79,775,840
|
)
|
|
|
44,283,333
|
|
Cash, cash equivalents and restricted cash at the beginning of
the period
|
|
|
|
|
152,307,420
|
|
|
|
120,901,147
|
|
Cash, cash equivalents and restricted cash at the end of the
period
|
|
|
|
$
|
72,531,580
|
|
|
|
165,184,480
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
63,091,223
|
|
|
$
|
157,203,721
|
|
Restricted cash, current
|
|
|
|
|
1,935,357
|
|
|
|
2,830,759
|
|
Restricted cash, non-current
|
|
|
|
|
7,505,000
|
|
|
|
5,150,000
|
|
Cash, cash equivalents, and restricted cash
|
|
|
|
$
|
72,531,580
|
|
|
$
|
165,184,480
|
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
CASTOR MARITIME INC.
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
1. |
Basis of Presentation and General information:
|
Castor Maritime Inc. (“Castor”) was incorporated in September 2017 under the laws of the Republic of the Marshall Islands. The accompanying unaudited interim condensed consolidated financial statements
include the accounts of Castor and its wholly owned subsidiaries (collectively, the “Company”). The Company is engaged in the worldwide transportation of ocean-going cargoes through its vessel-owning subsidiaries. On December 21, 2018, Castor’s
common shares, par value $0.001 (the “common shares”) began trading on the Euronext NOTC, under the symbol “CASTOR” and, on February 11, 2019, they began trading on the Nasdaq Capital Market, or Nasdaq, under the symbol “CTRM”. As of March 31, 2024,
Castor was controlled by Thalassa Investment Co. S.A. (“Thalassa”) by virtue of its ownership of 100% of the Series B preferred shares of Castor and, as a result, Thalassa controlled the outcome of matters on which shareholders are entitled to vote.
Thalassa is controlled by Petros Panagiotidis, the Company’s Chairman, Chief Executive Officer and Chief Financial Officer.
On March 27, 2024, the Company effected a 1-for-10 reverse stock split on its issued and outstanding common shares (Note 10). All share and per share amounts disclosed in the accompanying unaudited
interim condensed consolidated financial statements give effect to this reverse stock split retroactively for the periods presented.
On March 7, 2023 (the “Distribution Date”), the Company contributed the subsidiaries constituting the Company’s Aframax/LR2 and Handysize tanker segments and Elektra (as defined below) to the Company’s
wholly owned subsidiary, Toro Corp. (“Toro”), in exchange for (i) the issuance by Toro to Castor of all 9,461,009 of Toro’s issued and outstanding common shares, and 140,000 1.00% Series A fixed rate cumulative perpetual convertible preferred shares
of Toro (the “Series A Preferred Shares”), having a stated amount of $1,000 and a par value of $0.001 per share and (ii) the issuance of 40,000 Series B preferred shares of Toro, par value $0.001 per share, to Pelagos Holdings Corp, a company
controlled by the Company’s Chairman, Chief Executive Officer and Chief Financial Officer. On the same day, the Company distributed all of Toro’s common shares outstanding to its holders of common shares of record at the close of business on February
22, 2023 at a ratio of one Toro common share for every ten Company common shares (such transactions collectively, the “Spin-Off”). The Spin-Off was concluded on March 7, 2023. Results of operations and cash flows of the Aframax/LR2 and Handysize
tanker segments and assets and liabilities that were part of the Spin-Off are reported as discontinued operations for the three-month period ended March 31, 2023 (Note 3). Toro’s shares commenced trading on the same date on the Nasdaq Capital Market
under the symbol “TORO”. As part of the Spin-Off, Toro entered into various agreements effecting the separation of Toro’s business from the Company, including a Contribution and Spin-Off Distribution Agreement, pursuant to which, among other things,
(i) the Company agreed to indemnify Toro and its vessel-owning subsidiaries for any and all obligations and other liabilities arising from or relating to the operation, management or employment of vessels or subsidiaries the Company retained after
the Distribution Date and Toro agreed to indemnify the Company for any and all obligations and other liabilities arising from or relating to the operation, management or employment of the vessels contributed to it or its vessel-owning subsidiaries,
and (ii) Toro replaced the Company as guarantor under an $18.0 million term loan facility entered into by Alpha Bank S.A. and two of the Company’s former tanker-owning subsidiaries on April 27, 2021. The Contribution and Spin-Off Distribution
Agreement also provided for the settlement or extinguishment of certain liabilities and other obligations between the Company and Toro and provides the Company with certain registration rights relating to Toro’s common shares, if any, issued upon
conversion of the Toro Series A Preferred Shares issued to the Company in connection with the Spin-Off.
1. |
Basis of Presentation and General information (continued):
|
With effect from July 1, 2022, Castor Ships S.A., a corporation incorporated under the laws of the Republic of the Marshall Islands (“Castor Ships”), a related party controlled by the Company’s
Chairman, Chief Executive Officer and Chief Financial Officer, Petros Panagiotidis, manages the Company’s business overall. Prior to this date, Castor Ships provided only commercial ship management and administrative services to the Company (see also
Note 4).
Pavimar S.A. (“Pavimar”), a related party controlled by Ismini Panagiotidis, the sister of the Company’s Chairman, Chief Executive Officer, Chief Financial Officer and controlling shareholder, Petros
Panagiotidis, provided technical, crew and operational management services to the Company through the first half of 2022. With effect from July 1, 2022, Pavimar co-manages with Castor Ships the technical management of the Company’s dry bulk vessels.
As of March 31, 2024, the Company owned a diversified fleet of 14 vessels, with a combined carrying capacity of 1.0 million dwt, consisting of five Kamsarmax and seven Panamax dry bulk vessels, as well
as two 2,700 TEU containerships. Details of the Company’s wholly owned subsidiaries as of March 31, 2024, are listed below.
(a) Consolidated vessel owning subsidiaries:
|
Company
|
Country of
incorporation
|
Vessel Name
|
DWT
|
Year
Built
|
Delivery date
to Castor
|
1
|
Spetses Shipping Co. (“Spetses”)
|
Marshall Islands
|
M/V Magic P
|
76,453
|
2004
|
February 2017
|
2
|
Pocahontas Shipping Co. (“Pocahontas”)
|
Marshall Islands
|
M/V Magic Horizon
|
76,619
|
2010
|
October 2020
|
3
|
Super Mario Shipping Co. (“Super Mario”)
|
Marshall Islands
|
M/V Magic Venus
|
83,416
|
2010
|
March 2021
|
4
|
Liono Shipping Co. (“Liono”)
|
Marshall Islands
|
M/V Magic Thunder
|
83,375
|
2011
|
April 2021
|
5
|
Stewie Shipping Co. (“Stewie”)
|
Marshall Islands
|
M/V Magic Vela
|
75,003
|
2011
|
May 2021
|
6
|
Snoopy Shipping Co. (“Snoopy”)
|
Marshall Islands
|
M/V Magic Nebula
|
80,281
|
2010
|
May 2021
|
7
|
Mulan Shipping Co. (“Mulan”)
|
Marshall Islands
|
M/V Magic Starlight
|
81,048
|
2015
|
May 2021
|
8
|
Cinderella Shipping Co. (“Cinderella”)
|
Marshall Islands
|
M/V Magic Eclipse
|
74,940
|
2011
|
June 2021
|
9
|
Mickey Shipping Co. (“Mickey”)
|
Marshall Islands
|
M/V Magic Callisto
|
74,930
|
2012
|
January 2022
|
10
|
Songoku Shipping Co. (“Songoku”)
|
Marshall Islands
|
M/V Magic Pluto
|
74,940
|
2013
|
August 2021
|
11
|
Asterix Shipping Co. (“Asterix”)
|
Marshall Islands
|
M/V Magic Perseus
|
82,158
|
2013
|
August 2021
|
12
|
Johnny Bravo Shipping Co. (“Johnny Bravo”)
|
Marshall Islands
|
M/V Magic Mars
|
76,822
|
2014
|
September 2021
|
13
|
Jerry Shipping Co. (“Jerry S”)
|
Marshall Islands
|
M/V Ariana A
|
38,117
|
2005
|
November 2022
|
14
|
Tom Shipping Co. (“Tom S”)
|
Marshall Islands
|
M/V Gabriela A
|
38,121
|
2005
|
November 2022
|
1. |
Basis of Presentation and General information (continued):
|
(b) Consolidated subsidiaries formed to acquire vessels:
|
Company
|
Country of incorporation
|
1
|
Containco Shipping Inc.
|
Marshall Islands
|
(c) Consolidated non-vessel owning subsidiaries:
|
Company
|
Country of incorporation
|
1
|
Castor Maritime SCR Corp. (“Castor SCR”)(1)
|
Marshall Islands
|
2
|
Bagheera Shipping Co. (“Bagheera”)(2)
|
Marshall Islands
|
3
|
Luffy Shipping Co. (“Luffy”)(3)
|
Marshall Islands
|
4
|
Kabamaru Shipping Co. (“Kabamaru”)(4)
|
Marshall Islands
|
5
|
Bistro Maritime Co. (“Bistro”) (5)
|
Marshall Islands
|
6
|
Garfield Shipping Co. (“Garfield”)(6)
|
Marshall Islands
|
7
|
Pikachu Shipping Co. (“Pikachu”) (7)
|
Marshall Islands
|
8
|
Jumaru Shipping Co. (“Jumaru”) (8)
|
Marshall Islands
|
9
|
Pumba Shipping Co. (“Pumba”) (9)
|
Marshall Islands
|
(1) |
Incorporated under the laws of the Marshall Islands on September 16, 2021, this entity serves as the Company’s subsidiaries’ cash manager with effect from November 1, 2021.
|
(2) |
Bagheera Shipping Co. no longer owns any vessel following the sale of the M/V Magic Rainbow on March 13, 2023, and delivery of such vessel to an unaffiliated third-party on
April 18, 2023.
|
(3) |
Luffy Shipping Co. no longer owns any vessel following the sale of the M/V Magic Twilight on June 2, 2023, and delivery of such vessel to an unaffiliated third-party on July
20, 2023.
|
(4) |
Kabamaru Shipping Co. no longer owns any vessel following the sale of the M/V Magic Argo on September 22, 2023, and delivery of such vessel to an unaffiliated third-party on
December 14, 2023.
|
(5) |
Bistro Maritime Co. no longer owns any vessel following the sale of the M/V Magic Sun on October 6, 2023, and delivery of such vessel to an unaffiliated third-party on
November 14, 2023.
|
(6) |
Garfield Shipping Co. no longer owns any vessel following the sale of the M/V Magic Phoenix on October 16, 2023, and delivery of such vessel to an unaffiliated third-party
on November 27, 2023.
|
(7) |
Pikachu Shipping Co. no longer owns any vessel following the sale of the M/V Magic Moon on November 10, 2023, and delivery of such vessel to an unaffiliated third-party on
January 16, 2024 (see also Note 7).
|
(8) |
Jumaru Shipping Co. no longer owns any vessel following the sale of the M/V Magic Nova on January 19, 2024, and
delivery of such vessel to an entity beneficially owned by a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer on March
11, 2024 (see also Note 7).
|
(9) |
Pumba Shipping Co. no longer owns any vessel following the sale of the M/V Magic Orion on December 7, 2023, and delivery of such vessel to an unaffiliated third-party on
March 22, 2024 (see also Note 7).
|
1. |
Basis of Presentation and General information (continued):
|
(d) Entities comprising the discontinued operations as part of the Spin-Off:
|
Company
|
Country of
incorporation
|
Vessel Name
|
DWT
|
Year
Built
|
Delivery date to
Castor
|
1
|
Toro Corp. (10)
|
Marshall Islands
|
—
|
—
|
—
|
—
|
2
|
Toro RBX Corp. (“Toro RBX”) (11)
|
Marshall Islands
|
—
|
—
|
—
|
—
|
3
|
Rocket Shipping Co. (“Rocket”)
|
Marshall Islands
|
M/T Wonder Polaris
|
115,351
|
2005
|
March 2021
|
4
|
Gamora Shipping Co. (“Gamora”)
|
Marshall Islands
|
M/T Wonder Sirius
|
115,341
|
2005
|
March 2021
|
5
|
Starlord Shipping Co. (“Starlord”)
|
Marshall Islands
|
M/T Wonder Vega
|
106,062
|
2005
|
May 2021
|
6
|
Hawkeye Shipping Co. (“Hawkeye”)
|
Marshall Islands
|
M/T Wonder Avior
|
106,162
|
2004
|
May 2021
|
7
|
Vision Shipping Co. (“Vision”)
|
Marshall Islands
|
M/T Wonder Mimosa
|
36,718
|
2006
|
May 2021
|
8
|
Colossus Shipping Co. (“Colossus”)
|
Marshall Islands
|
M/T Wonder Musica
|
106,290
|
2004
|
June 2021
|
9
|
Xavier Shipping Co. (“Xavier”)
|
Marshall Islands
|
M/T Wonder Formosa
|
36,660
|
2006
|
June 2021
|
10
|
Drax Shipping Co. (“Drax”)
|
Marshall Islands
|
M/T Wonder Bellatrix
|
115,341
|
2006
|
December 2021
|
11
|
Elektra Shipping Co. (“Elektra”) (12)
|
Marshall Islands
|
—
|
—
|
—
|
—
|
(10) |
Incorporated on July 29, 2022. At the Distribution Date, Toro served as the holding company to which the equity interests of the Aframax/LR2 and Handysize tanker owning subsidiaries and Elektra were contributed.
|
(11) |
Incorporated under the laws of the Marshall Islands on October 3, 2022, to serve, with effect from the Distribution Date, as the cash manager of Toro and its subsidiaries.
|
(12) |
Elektra no longer owns any vessel following the sale of the M/T Wonder Arcturus on May 9, 2022, and delivery of such vessel to an unaffiliated third-party on July 15, 2022.
|
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and
applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. They do not include all the information and notes required by U.S. GAAP for complete financial statements. Accordingly,
these statements and the accompanying notes should be read in conjunction with the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024 (the “2023 Annual Report”).
These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments,
which include only normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. Operating results for the three-month period ended March
31, 2024, are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2024.
2. |
Significant Accounting Policies and Recent Accounting Pronouncements:
|
A discussion of the Company’s significant accounting policies can be found in the consolidated financial statements for the year ended December 31, 2023, included in the Company’s 2023 Annual Report.
There have been no material changes to these policies in the three-month period ended March 31, 2024.
3. |
Discontinued operations:
|
The Company’s discontinued operations relate to the operations of Toro, Elektra and the subsidiaries formerly comprising the Company’s Aframax/LR2 and Handysize tanker segments following completion of
the Spin-Off on March 7, 2023. The Company has no continuing involvement in the Aframax/LR2 and Handysize tanker business as of and from March 7, 2023 (Note 1).
The components of the income from discontinued operations for the period January 1, 2023 through March 7, 2023 in the consolidated statements of comprehensive income consisted of the following:
|
|
January 1 through
March 7,
|
|
|
|
2023
|
|
REVENUES:
|
|
|
|
Time charter revenues
|
|
|
914,000
|
|
Voyage charter revenues
|
|
|
7,930
|
|
Pool revenues
|
|
|
22,447,344
|
|
Total vessel revenues
|
|
|
23,369,274
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
Voyage expenses (including $294,831 to related party for the period January 1, 2023 through March 7, 2023)
|
|
|
(374,396
|
)
|
Vessel operating expenses
|
|
|
(3,769,132
|
)
|
Management fees to related parties
|
|
|
(507,000
|
)
|
Depreciation and amortization
|
|
|
(1,493,759
|
)
|
Recovery of provision for doubtful accounts
|
|
|
266,732
|
|
Total expenses
|
|
|
(5,877,555
|
)
|
|
|
|
|
|
Operating income
|
|
|
17,491,719
|
|
|
|
|
|
|
OTHER INCOME:
|
|
|
|
|
Interest and finance costs
|
|
|
(220,061
|
)
|
Interest income
|
|
|
253,165
|
|
Foreign exchange losses
|
|
|
(11,554
|
)
|
Total other income, net
|
|
|
21,550
|
|
|
|
|
|
|
Net income and comprehensive income from discontinued operations, before taxes
|
|
$
|
17,513,269
|
|
Income taxes
|
|
|
(173,937
|
)
|
Net income and comprehensive income from discontinued operations, net of taxes
|
|
$
|
17,339,332
|
|
4. |
Transactions with Related Parties:
|
During the three-month periods ended March 31, 2023, and 2024, the Company incurred the following charges in connection with related party transactions, which are included in the accompanying unaudited
interim condensed consolidated statements of comprehensive income:
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Management fees-related parties
|
|
|
|
|
|
|
Management fees – Castor Ships (a)
|
|
$
|
643,500
|
|
|
$
|
666,198
|
|
Management fees – Pavimar (b)
|
|
|
1,188,000
|
|
|
|
756,600
|
|
|
|
|
|
|
|
|
|
|
Included in Voyage expenses
|
|
|
|
|
|
|
|
|
Charter hire commissions – Castor Ships (a)
|
|
$
|
326,770
|
|
|
$
|
251,581
|
|
|
|
|
|
|
|
|
|
|
Included in General and administrative expenses
|
|
|
|
|
|
|
|
|
Administration fees – Castor Ships (a)
|
|
$
|
750,000
|
|
|
$
|
799,500
|
|
|
|
|
|
|
|
|
|
|
Included in Gain on sale of vessel
|
|
|
|
|
|
|
|
|
Sale & purchase commission – Castor Ships (a)
|
|
$
|
—
|
|
|
$
|
453,000
|
|
As of December 31, 2023, and March 31, 2024, balances with related parties consisted of the following:
|
|
December 31,
2023
|
|
|
March 31,
2024
|
|
Assets:
|
|
|
|
|
|
|
Due from Castor Ships (a) – current
|
|
$
|
2,283,209
|
|
|
$
|
1,560,109
|
|
Due from Castor Ships (a) – non-current
|
|
|
4,504,340
|
|
|
|
3,599,018
|
|
Due from Pavimar (b) – current
|
|
|
3,366,959
|
|
|
|
2,777,320
|
|
Investment in Toro (c) – non-current
|
|
|
117,537,135
|
|
|
|
117,541,024
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Due to Toro (d) – current
|
|
|
541,666
|
|
|
|
548,610
|
|
4. |
Transactions with Related Parties (continued):
|
(a) Castor Ships:
Castor Ships has acted as the Company’s commercial ship manager since September 1, 2020. Details of the Company’s transactions with Castor Ships are discussed in Note 4(a) to the consolidated financial
statements for the year ended December 31, 2023, included in the Company’s 2023 Annual Report.
As of March 31, 2024, in accordance with the provisions of the Amended Castor Ship Management Agreements (as defined in the 2023 Annual Report), Castor Ships (i) had subcontracted to a third-party ship
management company the technical management of the Company’s containerships and (ii) was co-managing with Pavimar the Company’s dry bulk vessels. Castor Ships pays, at its own expense, the containership technical management company a fee for the
services it has subcontracted to it, without any additional cost to the Company.
During the three months ended March 31, 2023 and 2024, the Company incurred sale and purchase commissions amounting to $0, and $453,000 respectively, due to the sale of two Panamax vessels and one
Capesize vessel, which are included in ‘Gain on sale of vessels’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
The Amended Castor Ship Management Agreements also provide for an advance funding equal to two months of vessel daily operating costs to be placed with Castor Ships as a working capital guarantee,
refundable in case a vessel is no longer under Castor Ship’s management. As of December 31, 2023, such advances amounted to $4,504,340 and $1,740,931, and are presented in ‘Due from related parties, non-current’ and ‘Due from related parties,
current’, in the accompanying consolidated balance sheet, respectively. The amount of $1,740,931 relates to the M/V Magic Venus, M/V Magic Orion, M/V Magic Moon which
have been classified as held for sale (Note 7(b)), and the M/V Magic Sun, M/V Magic Phoenix and M/V Magic Argo, that were sold on November 14, 2023, November 27, 2023 and December 14, 2023, respectively. As
of March 31, 2024, such advances amounted to $3,599,018 and $1,718,665, and are presented in ‘Due from related parties, non-current’ and ‘Due from related parties, current’, respectively, in the accompanying unaudited condensed consolidated balance
sheet. The amount of $1,718,665 relates to the M/V Magic Venus, M/V Magic Horizon and M/V Magic Nebula which have been classified as held for sale (Note 7(b)), and
the M/V Magic Moon, M/V Magic Nova and M/V Magic Orion, that were sold on January 16, 2024, March 11, 2024 and March 22, 2024, respectively. In connection with the subcontracting services rendered by the
third-party ship-management companies, as of December 31, 2023, and March 31, 2024, $605,688 and $61,954 were due from and due to Castor Ships, respectively, which are presented in ‘Due from related parties, current’ in the accompanying unaudited
condensed consolidated balance sheets.
As of December 31, 2023 and March 31, 2024, net amounts of $43,689 and $178,881 were due from Castor Ships in relation to advances for operating expenses/drydock payments made by the Company to Castor
Ships.
Further, as of December 31, 2023, and March 31, 2024, amounts of $107,099 and $275,483, respectively, were due to Castor Ships in connection with the services covered by the Amended Castor Ships
Management Agreements. As a result, as of December 31, 2023 and March 31, 2024, net amounts of $2,283,209 and $1,560,109 were due from Castor Ships which are presented in ‘Due from related parties, current’, in the accompanying unaudited condensed
consolidated balance sheets.
4. |
Transactions with Related Parties (continued):
|
(b) Pavimar:
With effect from July 1, 2022, pursuant to the terms of the Amended and Restated Master Management Agreement, Pavimar provides, as co-manager with Castor Ships, the dry-bulk vessel owning subsidiaries
with a range of technical, crewing, insurance and operational services it provided prior to the Company’s entry into the Amended and Restated Management Agreement, in exchange for a daily management fee of $600 per vessel. Pavimar also performed the
technical management of containerships as sub-manager for Castor Ships from their date of acquisition up to January 2023.
Pavimar had subcontracted the technical management of three of the Company’s dry bulk vessels to third-party ship-management companies as of December 31, 2023 and March 31, 2024. These third-party
management companies provided technical management services to the respective vessels for a fixed annual fee which is paid by Pavimar at its own expense. In connection with the subcontracting services rendered by the third-party ship-management
companies, the Company had, as of December 31, 2023, and March 31, 2024, aggregate working capital guarantee deposits due from Pavimar of $258,252 in both periods, which are presented in ‘Due from related parties, current’ in the accompanying
unaudited condensed consolidated balance sheet. In addition, Pavimar and its subcontractor third-party managers make payments for operating expenses with funds paid from the Company to Pavimar. As of December 31, 2023, and March 31, 2024, net amounts
of $3,302,157 and $2,538,518 were due from Pavimar, respectively, in relation to advance payments to Pavimar on behalf of the Company. Further, as of December 31, 2023, and March 31, 2024, amounts of $193,450 and $19,450 were due to Pavimar in
connection with additional services covered by the technical management agreements. As a result, as of December 31, 2023, and March 31, 2024, net amounts of $3,366,959 and $2,777,320 were due from Pavimar, respectively, which are presented in ‘Due
from related parties, current’, respectively, in the accompanying unaudited condensed consolidated balance sheets.
(c) Investment in related party:
As discussed in Note 1, as part of the Spin-Off Castor received 140,000 Series A Preferred Shares, having a stated amount of $1,000 and a par value of $0.001 per share. The Company is the holder of all
of the issued and outstanding Series A Preferred Shares (Note 1). The Series A Preferred Shares do not have voting rights. The Series A Preferred Shares are convertible into common shares at the Company’s option commencing upon the third anniversary
of the issue date until but excluding the seventh anniversary, at a conversion price equal to the lesser of (i) 150% of the VWAP of Toro common shares over the five consecutive trading day period commencing on the Distribution Date, and (ii) the VWAP
of Toro common shares over the 10 consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion; provided, that, in no event shall the conversion price be less than $2.50.
As of December 31, 2023 and March 31, 2024, the aggregate value of investments in Toro amounted to $117,537,135 and $117,541,024, including $315,000 and $318,889 of accrued dividends, respectively and
are separately presented as ‘Investment in related party’ in the accompanying unaudited condensed consolidated balance sheets. As of March 31, 2024, the Company did not identify any impairment or any observable prices for identical or similar
investments of the same issuer.
Furthermore, Castor is entitled to receive cumulative cash dividends, at the annual rate of 1.00% on the stated amount of $1,000 per share, of the 140,000 Series A Preferred Shares, receivable quarterly
in arrears on the 15th day of January, April, July and October in each year, subject to Toro’s Board of Directors approval. However, for each quarterly dividend period commencing on or after the reset date (the seventh anniversary of the issue date
of the Series A Preferred Shares), the dividend rate will be the dividend rate in effect for the prior quarterly dividend period multiplied by a factor of 1.3; provided that the dividend rate will not exceed 20% per annum in respect of any quarterly
dividend period. During the three month periods ended March 31, 2023 and 2024, dividend income derived from the Company’s investment in Toro amounted to $97,222 and $353,889, respectively, and is presented in ‘Dividend income from related party’ in
the accompanying unaudited interim condensed consolidated statements of comprehensive income.
4. |
Transactions with Related Parties (continued):
|
During the three months ended March 31, 2024, the Company received dividend of $350,000 from its investment in Toro.
Following the successful completion of the Spin-Off, as of March 31, 2023, Toro reimbursed Castor $2,570,503 for expenses related to the Spin-Off that have been incurred by Castor.
(d) Issuance of Series D Preferred shares to Toro:
On August 7, 2023, the Company issued 50,000 5.00% Series D fixed rate cumulative perpetual convertible preferred shares (the “Series D Preferred Shares”) to Toro in exchange for $50,000,000 in cash, as
referenced in Note 10. The amounts of accrued dividend on the Series D Preferred Shares due to Toro as of December 31, 2023, and as of March 31, 2024 were $541,666 and $548,610 respectively, and are presented in ‘Due to related party, current’ in the
accompanying unaudited condensed consolidated balance sheets.
(e) Vessel Disposals:
On December 21, 2023, the Company entered into an agreement with an entity affiliated with a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer for the sale of
the M/V Magic Venus, for a gross sale price of $17.5 million. The vessel was delivered to its new owner on May 10, 2024.
On January 19, 2024, the Company entered into an agreement with an entity beneficially owned by a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer for the
sale of the M/V Magic Nova for a gross sale price of $16.1 million. The vessel was delivered to its new owners on March 11, 2024.
On January 19, 2024, the Company entered into an agreement with an entity beneficially owned by a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer for the
sale of the M/V Magic Horizon for a gross sale price of $15.8 million. The vessel is expected to be delivered to its new owners during the second quarter of 2024.
On February 15, 2024, the Company entered into an agreement with an entity affiliated with a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer for the sale of
the M/V Magic Nebula for a gross sale price of $16.2 million. The vessel was delivered to its new owners on April 18, 2024.
As of March 31, 2024, the carrying value of the vessels M/V Magic Venus, M/V Magic Nebula and M/V Magic Horizon is classified as “Assets held for sale”, in the accompanying unaudited condensed consolidated balance sheets (refer to Note 7(b)).
The terms of the sales of the M/V Magic Nova, M/V Magic Horizon and M/V Magic
Nebula were each negotiated and approved by a special committee of the Company’s disinterested and independent directors.
5. |
Deferred Charges, net:
|
The movement in deferred dry-docking costs, net in the accompanying consolidated balance sheets is as follows:
|
|
Dry-docking costs
|
|
Balance December 31, 2023
|
|
$
|
3,231,461
|
|
Adjustment to additions
|
|
|
(57,850
|
)
|
Amortization
|
|
|
(405,784
|
)
|
Transfer to Assets held for sale (Note 7(b))
|
|
|
(243,161
|
)
|
Balance March 31, 2024
|
|
$
|
2,524,666
|
|
6. |
Fair Value of Acquired Time Charters:
|
In connection with the acquisitions in October 2022 of the M/V Ariana A and the M/V Gabriela A with time charters
attached, the Company recognized intangible assets of $897,436 and $2,019,608, respectively, representing the fair values of the favorable time charters attached to the vessels. The M/V Ariana A and M/V Gabriela A attached charters commenced upon the vessels’ deliveries, on November 23, 2022, and November 30, 2022, respectively. The M/V Ariana A attached charter was concluded within the first quarter of 2023 and the respective intangible asset was fully
amortized during that period. The charter attached to the M/V Gabriela A was concluded within the first quarter of 2024 and the respective intangible asset was fully amortized during that period.
For the three months ended March 31, 2023 and 2024, the amortization of the acquired time charters related to the above acquisitions amounted to $1,026,959 and
$265,173, respectively, and is included in ‘Time Charter Revenues’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
7. |
Vessels, net/Assets held for sale:
|
(a) Vessels, net: The amounts in the accompanying unaudited condensed consolidated balance sheets are analyzed as follows:
|
|
Vessel Cost
|
|
|
Accumulated depreciation
|
|
|
Net Book Value
|
|
Balance December 31, 2023
|
|
|
262,066,353
|
|
|
|
(32,529,357
|
)
|
|
|
229,536,996
|
|
— Acquisitions, improvements, and other vessel costs
|
|
|
18,923
|
|
|
|
—
|
|
|
|
18,923
|
|
— Transfer to Assets held for sale (b)
|
|
|
(28,904,269
|
)
|
|
|
4,242,535
|
|
|
|
(24,661,734
|
)
|
— Vessel disposals
|
|
|
(13,951,340
|
)
|
|
|
2,220,206
|
|
|
|
(11,731,134
|
)
|
— Period depreciation
|
|
|
—
|
|
|
|
(3,450,048
|
)
|
|
|
(3,450,048
|
)
|
Balance March 31, 2024
|
|
|
219,229,667
|
|
|
|
(29,516,664
|
)
|
|
|
189,713,003
|
|
(b) Disposal of vessels / Assets held for sale
On November 10, 2023, the Company entered into an agreement with an unaffiliated third party for the sale of the M/V Magic Moon for a gross sale price of $11.8
million. The M/V Magic Moon was delivered to its new owners on January 16, 2024. In connection with this sale, the Company recognized during the first quarter of 2024 a net gain of $2.4 million which is
separately presented in ‘Gain on sale of vessels’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
7. |
Vessels, net/Assets held for sale (continued):
|
On December 7, 2023, the Company entered into an agreement with an unaffiliated third party for the sale of the M/V Magic Orion for a gross sale price of $17.4
million. The M/V Magic Orion was delivered to its new owners on March 22, 2024. In connection with this sale, the Company recognized during the first quarter of 2024 a net gain of $1.4 million which is
separately presented in ‘Gain on sale of vessels’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
On December 21, 2023, the Company entered into an agreement with an entity affiliated with a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer for the sale of
the M/V Magic Venus (Note 4), for a gross sale price of $17.5 million. The vessel was delivered to its new owner on May 10, 2024.
On January 19, 2024, the Company entered into an agreement with an entity beneficially owned by a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer for the
sale of the M/V Magic Nova for a gross sale price of $16.1 million. The vessel was delivered to its new owners on March 11, 2024. In connection with this sale, the Company recognized during the first quarter
of 2024 a net gain of $4.1 million which is separately presented in ‘Gain on sale of vessels’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
On January 19, 2024, the Company entered into an agreement with an entity beneficially owned by a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer, for the
sale of the M/V Magic Horizon for a gross sale price of $15.8 million. The vessel is expected to be delivered to its new owner by the end of the second quarter of 2024.
On February 15, 2024, the Company entered into an agreement with an entity affiliated with a family member of the Company’s Chairman, Chief Executive Officer and Chief Financial Officer, for the sale of
the M/V Magic Nebula for a gross sale price of $16.2 million. The M/V Magic Nebula was delivered to its new owners on April 18, 2024.
The respective sales of the above vessels took place due to favorable offers in each case. The terms of each of the transactions on December 21, 2023, January 19, 2024 and February 15, 2024 were
negotiated and approved by a special committee of the Company’s disinterested and independent directors.
|
|
Assets held for sale
|
|
Balance December 31, 2023
|
|
$
|
38,656,048
|
|
Asset’s disposal
|
|
|
(24,564,213
|
)
|
Transfer to Assets held for sale
|
|
|
24,976,177
|
|
Balance March 31, 2024
|
|
$
|
39,068,012
|
|
As of December 31, 2023, the Company had classified the carrying value of the vessel M/V
Magic Venus and such vessel’s inventory onboard as ‘Assets held for sale’ amounting to $14.1 million. As of March 31, 2024, the Company followed the provisions of ASC360 and, as all criteria required for its
classification as such were met at the date the relevant agreements were entered into, classified the carrying value of the vessels (including M/V Magic Venus) amounting to $38,920,579 and such vessel’s inventory onboard, amounting to $147,433, as “Assets held for sale” measured at the lower of carrying value and fair value (sale price) less costs to sell. No impairment charges have been
recorded as of March 31, 2024, in connection with the anticipated sale of the vessels since their carrying amounts as at the balance sheet date were lower than their fair value less cost to sell. The Company expects to recognize during the second
quarter of 2024 a gain on the sale of the M/V Magic Venus of approximately $3.5 million, a gain on the sale of the M/V Magic Horizon of approximately $4.6 million, and a gain on the sale of the M/V Magic Nebula of approximately $2.5 million excluding any transaction related costs.
7. |
Vessels, net/Assets held for sale (continued):
|
As a result, as of December 31, 2023, and March 31, 2024, net amounts of $38,656,048 and $39,068,012, respectively, are presented in ‘Assets held for sale’, in the accompanying unaudited condensed
consolidated balance sheets.
In connection with the sales of the M/V Magic Nebula, M/V Magic Venus and M/V Magic Horizon, the Company has received deposits from each of the vessels’ buyers
amounting, in total, to $4.95 million, or 10% of the aggregate purchase price of the vessels. These deposits are separately presented in ‘Liability associated with asset held for sale’ in the accompanying unaudited condensed consolidated balance
sheets.
As of March 31, 2024, 12 of the 14 vessels in the Company’s fleet, having an aggregate carrying value of $193.4 million, were first priority mortgaged as collateral to their loan facilities (Note 8).
Consistent with prior practices, the Company reviewed all its vessels for impairment, and none were found to be impaired at December 31, 2023 and March 31, 2024.
The amount of long-term debt shown in the accompanying unaudited condensed consolidated balance sheet of March 31, 2024, is analyzed as follows:
|
|
|
|
Year/Period Ended
|
|
Loan facilities
|
|
Borrowers
|
|
December 31,
2023
|
|
|
March 31,
2024
|
|
$11.0 Million Term Loan Facility (a)
|
|
Spetses- Pikachu
|
|
$
|
4,600,000
|
|
|
$
|
1,999,565
|
|
$15.29 Million Term Loan Facility (b)
|
|
Pocahontas- Jumaru
|
|
|
10,109,000
|
|
|
|
4,775,845
|
|
$40.75 Million Term Loan Facility
|
|
Liono-Snoopy-Cinderella
|
|
|
23,055,000
|
|
|
|
22,200,000
|
|
$55.00 Million Term Loan Facility
|
|
Mulan- Johnny Bravo-Songoku-Asterix-Stewie
|
|
|
32,040,000
|
|
|
|
30,290,000
|
|
$22.5 million Term Loan Facility
|
|
Tom-Jerry
|
|
|
16,800,000
|
|
|
|
15,900,000
|
|
Total long-term debt
|
|
|
|
$
|
86,604,000
|
|
|
$
|
75,165,410
|
|
Less: Deferred financing costs
|
|
|
|
|
(808,215
|
)
|
|
|
(662,122
|
)
|
Total long-term debt, net of deferred finance costs
|
|
|
|
$
|
85,795,785
|
|
|
$
|
74,503,288
|
|
|
|
|
|
|
|
|
|
|
|
|
Presented:
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
|
$
|
18,089,000
|
|
|
$
|
14,823,565
|
|
Less: Current portion of deferred finance costs
|
|
|
|
|
(409,705
|
)
|
|
|
(281,882
|
)
|
Current portion of long-term debt, net of deferred finance costs
|
|
|
|
$
|
17,679,295
|
|
|
$
|
14,541,683
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt related to assets held for sale
|
|
|
|
$
|
2,415,000
|
|
|
$
|
11,785,845
|
|
Less: Current portion of deferred finance costs
|
|
|
|
|
(8,352
|
)
|
|
|
(96,560
|
)
|
Debt related to assets held for sale, net of deferred finance costs
|
|
|
|
$
|
2,406,648
|
|
|
$
|
11,689,285
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Current portion of long-term debt
|
|
|
|
|
66,100,000
|
|
|
|
48,556,000
|
|
Less: Non-Current portion of deferred finance costs
|
|
|
|
|
(390,158
|
)
|
|
|
(283,680
|
)
|
Non-Current portion of long-term debt, net of deferred finance costs
|
|
|
|
$
|
65,709,842
|
|
|
$
|
48,272,320
|
|
8. |
Long-Term Debt (continued):
|
Details of the Company’s senior secured credit facilities are discussed in Note 8 to the consolidated financial statements for the year ended December 31, 2023, included in the Company’s 2023 Annual
Report, and are supplemented by the below new activities within the three-month period ended March 31, 2024.
a. $11.0 Million Term Loan Facility
On February 14, 2024, the Company entered into a first supplemental agreement with Alpha Bank S.A. (“Alpha Bank”), pursuant to which, with effect from April 3, 2023, SOFR replaced LIBOR as the reference
rate under the Company’s $11.0 million term loan facility and the margin was increased by a percentage of 0.045%, which is the equivalent of the positive difference as of April 3, 2023 between USD LIBOR and SOFR for the first rollover period
commencing April 3, 2023 selected upon application of SOFR methodology. Such percentage will apply over the tenor of the loan going forward regardless of future rollover periods.
On January 16, 2024, Alpha Bank entered into a deed of partial release, with respect to the M/V Magic Moon, releasing and discharging the underlying borrower
and all securities created over the M/V Magic Moon in full after the settlement of the outstanding balance of $2.4 million pertaining to M/V Magic Moon’s tranche.
The facility’s repayment schedule was adjusted accordingly.
b. $15.29 Million Term Loan Facility
On March 8, 2024, Hamburg Commercial Bank AG entered into a deed of partial release, with respect to the M/V Magic Nova, releasing and discharging the
underlying borrower and all securities created over the M/V Magic Nova in full after the settlement of the outstanding balance of $4.9 million pertaining to M/V Magic Nova’s
tranche. The facility’s repayment schedule was adjusted accordingly.
As of December 31, 2023 and March 31, 2024, the Company was in compliance with all financial covenants prescribed in its debt agreements.
Restricted cash as of December 31, 2023 and March 31, 2024, current and non-current, represent minimum liquidity deposits, retention deposits and cash balances in dry-dock reserve accounts required
under certain of our loan facilities.
The annual principal payments for the Company’s outstanding debt arrangements (including the debt related to assets held for sale) as of March 31, 2024, required to be made after the balance sheet date,
are as follows:
Twelve-month period ending March 31,
|
|
Amount
|
|
2025
|
|
$
|
26,609,410
|
|
2026
|
|
|
11,184,000
|
|
2027
|
|
|
32,272,000
|
|
2028
|
|
|
5,100,000
|
|
Total long-term debt
|
|
$
|
75,165,410
|
|
8. |
Long-Term Debt (continued):
|
The weighted average interest rate on the Company’s long-term debt for the years ended March 31, 2023 and 2024 was 8.1%, and 8.7% respectively.
Total interest incurred on long-term debt for the three months ended March 31, 2023 and 2024, amounted to $2.7 million and $1.8 million respectively, and is included in Interest and finance costs (Note
17) in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
9. |
Investment in equity securities
|
A summary of the movement in listed equity securities for the three month period ended March 31, 2024 is presented in the table below:
|
|
Equity securities
|
|
Balance December 31, 2023
|
|
$
|
77,089,100
|
|
Equity securities acquired
|
|
|
3,757,725
|
|
Unrealized gain on equity securities revalued at fair value at end of the period
|
|
|
9,928,255
|
|
Unrealized foreign exchange loss
|
|
|
(140,821
|
)
|
Balance March 31, 2024
|
|
$
|
90,634,259
|
|
On June 30, 2023, the Company filed a Schedule 13G, reporting that it held 1,391,500 shares of common stock of Eagle Bulk Shipping Inc. (“Eagle”), representing 14.99% of the issued and
outstanding shares of common stock of Eagle as of June 23, 2023. On December 11, 2023, Star Bulk Carriers Corp. (“Star Bulk”) and Eagle announced that they had entered into
a definitive agreement to combine in an all-stock merger. On April 5, 2024 the merger terms were approved by the shareholders of Eagle and on April 9, 2024 the merger was completed. Under the terms of the merger agreement, each Eagle shareholder
received 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned.
In the three-month periods ended March 31, 2023 and 2024, the Company received dividends of $313,716 and $834,900, respectively, from its investments in listed equity securities.
10. |
Equity Capital Structure:
|
On March 27, 2024, the Company effected a 1-for-10 reverse stock split of its common stock without any change in the number of authorized common shares. All share and per share amounts, as well as the
number of warrant shares eligible for purchase under the Company’s effective warrant schemes in the accompanying unaudited interim consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. As a result of
the reverse stock split, the number of outstanding shares as of March 27, 2024, was decreased to 9,662,354 while the par value of the Company’s common shares remained unchanged to $0.001 per share.
As of March 31, 2024 the Company’s outstanding, (i) Class A warrants issued on June 26, 2020 were exercisable in the aggregate into 623 of our common shares, par value $0.001 per share,
at an exercise price of $25.30 per warrant share and (ii) Common Share Purchase Warrants issued on April 7, 2021 (the “April 7 Warrants”) were exercisable in the aggregate into 1,033,077 of our common shares,
par value $0.001 per share, at an exercise price of $55.30 per warrant share.
For a further description of the terms and rights of the Company’s capital stock and details of its equity transactions prior to January 1, 2024, please refer to Note 10 to the consolidated financial
statements for the year ended December 31, 2023 included in the Company’s 2023 Annual Report.
10. |
Equity Capital Structure (continued):
|
Under the Company’s Articles of Incorporation, as amended, the Company’s authorized capital stock consists of 2,000,000,000 shares, par value $0.001 per share, of which 1,950,000,000 shares are
designated as common shares and 50,000,000 shares are designated as preferred shares.
Nasdaq Minimum Bid Price Requirement
On April 20, 2023, the Company received a notification from the Nasdaq Stock Market (“Nasdaq”) that it was not in compliance with the minimum $1.00 per share bid price requirement for continued listing
(the “Minimum Bid Price Requirement”) on the Nasdaq Capital Market and was provided with 180 calendar days to regain compliance with the Minimum Bid Price Requirement. On October 18, 2023, the Company received a notification letter from Nasdaq
granting the Company an additional 180-day extension, until April 15, 2024 to regain compliance with the Minimum Bid Price Requirement (the “Second Compliance Period”).
On March 27, 2024, the Company effected a 1-for-10 reverse stock split of its common stock without any change in the number of authorized common shares. All share and per share amounts, as well as the
number of warrant shares eligible for purchase under the Company’s effective warrant schemes in the accompanying unaudited interim consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. As a result of
the reverse stock split, the number of outstanding shares as of March 27, 2024, was decreased to 9,662,354 while the par value of the Company’s common shares remained unchanged to $0.001 per share.
On April 11, 2024, the Company received a written confirmation from Nasdaq that it had regained compliance with the Minimum Bid Price Requirement. See Note 19(a).
Mezzanine equity:
5.00% SERIES D CUMULATIVE PERPETUAL CONVERTIBLE PREFERRED SHARES
On August 7, 2023, the Company agreed to issue 50,000 Series D Preferred Shares, having a stated value of $1,000 and par value of $0.001 per share, to Toro for aggregate consideration of $50.0 million
in cash. Details of the Company’s Series D Preferred Shares are discussed in Note 10 to the Company’s consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
The Series D Preferred Shares are convertible, in whole or in part, at the holder’s option to common shares of Castor from the first anniversary of their issue date at the lower of (i) $7.00 per common
share, and (ii) the 5-day-value-weighted average price immediately preceding the conversion. The conversion price of the Series D Preferred Shares is subject to adjustment upon the occurrence of certain events, including the occurrence of splits and
combinations (including a reverse stock split) of the common shares and was adjusted to $7.00 per common share on March 27, 2024 from $0.70 per common share following effectiveness of the 1-for-10 reverse stock split discussed herein. The minimum
conversion price of the Series D Preferred Shares is $0.30 per common share.
The Company uses an effective interest rate of 6.12% over the expected life of the Series D Preferred Shares being nine years, which is the expected earliest redemption date. This is consistent with the
interest method, taking into account the discount between the issuance price and liquidation preference and the stated dividends, including “step-up” amounts. The amount accreted in the three months ended March 31, 2024, was $123,813, and is
presented as ‘Deemed dividend on Series D Preferred Shares’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.
10. |
Equity Capital Structure (continued):
|
As of March 31, 2024, the net value of Mezzanine Equity amounted to $49,673,302, including the amount of $123,813 of deemed dividend on the Series D Preferred Shares in the three months ended March 31,
2024, and is separately presented as ‘Mezzanine Equity’ in the accompanying unaudited condensed consolidated balance sheet. During the three months ended March 31, 2024, the Company paid to Toro a dividend amounting to $625,000 on the Series D
Preferred Shares for the period from October 15, 2023 to January 14, 2024 and the accrued amount for the period from January 15, 2024 to March 31, 2024 (included in the dividend period ended April 14, 2024) amounted to $631,944.
11. |
Financial Instruments and Fair Value Disclosures:
|
The principal financial assets of the Company consist of cash at banks, restricted cash, trade accounts receivable, accrued charter revenue, investments in listed equities, an investment in related
party and amounts due from related party/(ies). The principal financial liabilities of the Company consist of trade accounts payable, accrued liabilities, amounts due to related party/(ies) and long-term debt.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents, restricted cash, accounts receivable trade, net, amounts due from/to related party/(ies) and accounts payable: The carrying values
reported in the accompanying unaudited condensed consolidated balance sheets for those financial instruments are reasonable estimates of their fair values due to their short-term maturity nature. Cash and cash equivalents and restricted cash, current
are considered Level 1 items as they represent liquid assets with short term maturities. The carrying value approximates the fair market value for interest bearing cash classified as restricted cash, non-current and is considered Level 1 item of the
fair value hierarchy.
Investment in listed equity securities: The carrying value reported in the accompanying unaudited condensed consolidated balance sheet for this financial
instrument represents its fair value and is considered Level 1 item of the fair value hierarchy as it is determined though quoted prices in an active market.
Long-term debt: The secured credit facilities discussed in Note 8, have a recorded value which is a reasonable estimate of their fair value due to their variable
interest rate and are thus considered Level 2 items in accordance with the fair value hierarchy as SOFR rates are observable at commonly quoted intervals for the full terms of the loans.
Investment in related party: Investments in related party is initially measured at fair value which is deemed to be the cost and subsequently assessed for the
existence of any observable market for the Series A Preferred Shares and any observable price changes for identical or similar investments and the existence of any indications for impairment. As per the Company’s assessment no such case was
identified as at March 31, 2024.
Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of
cash and cash equivalents and trade accounts receivable. The Company places its cash and cash equivalents, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative
credit standing of the financial institutions in which it places its deposits. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition.
12. |
Commitments and Contingencies:
|
Various claims, lawsuits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise
from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed (except
as disclosed under Note 12 (b)), or for which a provision should be established in the accompanying unaudited interim condensed consolidated financial statements.
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management
is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. The Company is covered
for liabilities associated with the vessels’ actions to the maximum limits as provided by Protection and Indemnity (P&I) Clubs, members of the International Group of P&I Clubs.
(a) Commitments under long-term lease contracts
The following table sets forth the future minimum contracted lease payments to the Company (gross of charterers’ commissions), based on the Company’s vessels’ commitments to non-cancelable time charter
contracts as of March 31, 2024. Non-cancelable time charter contracts include both fixed-rate time charters or charters linked to the Baltic Dry Index (“BDI”). For index linked contracts, contracted lease payments have been calculated using the BDI
linked rate as measured at the commencement date.
In addition, certain of the variable-rate contracts have the option at the Company’s option to convert to a fixed rate for a predetermined period, in such cases where lease payments have been converted
to a fixed rate, the minimum contracted lease payments for this period are calculated using the agreed converted fixed rate. The calculation does not include any assumed off-hire days.
Twelve-month period ending March 31,
|
|
Amount
|
|
2025
|
|
$
|
18,435,733
|
|
Total
|
|
$
|
18,435,733
|
|
(b) Claims
Following the buyers’ failure to take delivery of the M/V Magic Moon, as discussed in Note 12 to the consolidated financial statements for the year ended
December 31, 2023, included in the Company’s 2023 Annual Report, Pikachu Shipping Co. (the “sellers” or the “owners”), a wholly owned subsidiary of the Company, terminated the sale of the vessel under the Memorandum of Agreement, dated March 23,
2023, between the sellers and the buyers (the “MoA”). Notably, the MoA required that the buyers deposit 10% of the purchase price into an escrow account administered by the escrow agent as security for completion of the transaction according to the
terms and conditions set forth in the MoA and the buyers deposited $1,395,000 into such account prior to their breach of the MoA (the “Deposit”). The owners accordingly initiated arbitration proceedings during September 2023 for the release of and
remittance to the owners of the $1,395,000 deposit held in escrow based on the owners’ position that the buyers’ failure to take delivery of the M/V Magic Moon constituted a default under the MoA. All the
submissions on behalf of the Company were prepared, reviewed and filed with the London arbitrator, who on April 28, 2024 issued and on May 1, 2024 delivered his arbitration award in favor of the owners, awarding them the return of the Deposit subject
to no appeal being filed by the buyers within 28 days from the day of the issuance of the award. In light of the fact that the arbitration process was not finalized as of March 31, 2024, the Company has followed the provisions of ASC 450-30-25-1 and
has not recorded any expected gain on the sale of the M/V Magic Moon in its financial statements for the three month period ended March 31, 2024.
In addition, the M/V Magic Moon was arrested on August 17, 2023 by the buyers to secure a claim before the Korean courts for the amount of $1,395,000, equal to
the amount of the Deposit, and the owners paid a counter-security of $1,395,000 for the purpose of lifting the arrest of the vessel. The owners have applied to the Korean courts to decide the issue of the return of the counter-security to them. The
Company has included the $1,395,000 in ‘Prepaid expenses and other assets’ in the accompanying unaudited condensed consolidated balance sheets for the three month period ended March 31, 2024 incurred in connection with the cash deposit made in 2023
by the owners for the purpose of lifting the arrest of the M/V Magic Moon. While the Company is unable to provide any assurances as to the ultimate outcome of the case, it believes it will prevail in its
request from the courts in Korea to award to the owners the return of the counter-security.
It is possible that from time to time in the ordinary course of business the Company may be involved in legal proceedings or investigations, which could have an adverse impact on its reputation,
business and financial condition and divert the attention of management from the operation of the business. However, the Company believes that the current legal proceedings are not expected to have a material adverse effect on its business, financial
position or results of operations.
13. |
Earnings Per Common Share:
|
Diluted earnings/(loss) per common share, if applicable, reflects the potential dilution that could occur if potentially dilutive instruments were exercised, resulting in the issuance of additional
shares that would then share in the Company’s net income. For the three months ended March 31, 2024 and 2023, the effect of the warrants outstanding during that period and as of that date, would be antidilutive, hence they were excluded from the
computation of diluted earnings per share. For the purpose of calculating diluted earnings per common share, the weighted average number of diluted shares outstanding includes the conversion of outstanding Series D Preferred Shares (Note 10)
calculated with the “if converted” method by using the average closing market price over the reporting period from January 1, 2024 to March 31, 2024.
The components of the calculation of basic and diluted earnings / (loss) per common share are as follows:
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Net (loss)/income and comprehensive (loss)/income from continuing operations, net of taxes
|
|
|
(6,510,038
|
)
|
|
|
22,331,746
|
|
Net income and comprehensive income from discontinued operations, net of taxes
|
|
|
17,339,332
|
|
|
|
—
|
|
Net income and comprehensive income
|
|
$
|
10,829,294
|
|
|
$
|
22,331,746
|
|
Less: Dividend on Series D Preferred Shares
|
|
|
—
|
|
|
|
(631,944
|
)
|
Less: Deemed dividend on Series D Preferred Shares
|
|
|
—
|
|
|
|
(123,813
|
)
|
Net income and comprehensive income available to common shareholders, basic
|
|
|
10,829,294
|
|
|
|
21,575,989
|
|
Dividend on Series D Preferred Shares
|
|
|
—
|
|
|
|
631,944
|
|
Deemed dividend on Series D Preferred Shares
|
|
|
—
|
|
|
|
123,813
|
|
Net income attributable to common shareholders, diluted
|
|
|
10,829,294
|
|
|
|
22,331,746
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic
|
|
|
9,460,976
|
|
|
|
9,662,354
|
|
Effect of dilutive shares
|
|
|
—
|
|
|
|
10,901,769
|
|
Weighted average number of common shares outstanding, diluted
|
|
|
9,460,976
|
|
|
|
20,564,123
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Earnings per common share, basic, continuing operations
|
|
$
|
(0.69
|
)
|
|
$
|
2.23
|
|
(Loss)/Earnings per common share, diluted, continuing operations
|
|
$
|
(0.69
|
)
|
|
$
|
1.09
|
|
Earnings per common share, basic, discontinued operations
|
|
$
|
1.83
|
|
|
$
|
—
|
|
Earnings per common share, diluted, discontinued operations
|
|
$
|
1.83
|
|
|
$
|
—
|
|
Earnings per common share, basic, Total
|
|
$
|
1.14
|
|
|
$
|
2.23
|
|
Earnings per common share, diluted, Total
|
|
$
|
1.14
|
|
|
$
|
1.09
|
|
14. |
Total Vessel Revenues:
|
The following table includes the vessel revenues earned by the Company in each of the three-month periods ended March 31, 2023 and 2024, as presented in the accompanying unaudited interim condensed
consolidated statements of comprehensive income:
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Time charter revenues
|
|
|
24,468,970
|
|
|
|
20,390,247
|
|
Total Vessel revenues
|
|
$
|
24,468,970
|
|
|
$
|
20,390,247
|
|
During each of the three-month periods ended March 31, 2023 and 2024, the Company generated its revenues from time charters.
The Company typically enters into fixed rate or index-linked rate charters with an option to convert to fixed rate time charters ranging from one month to twelve months and in isolated cases on longer
terms depending on market conditions. The charterer has the full discretion over the ports visited, shipping routes and vessel speed, subject to the owner protective restrictions discussed below. Time charter agreements may have extension options
ranging from months, to sometimes, years. The time charter party generally provides, among others, typical warranties regarding the speed and the performance of the vessel as well as owner protective restrictions such that the vessel is sent only to
safe ports by the charterer, subject always to compliance with applicable sanction laws and war risks, and carries only lawful and non-hazardous cargo.
From time to time, the Company’s dry bulk vessels are fixed on period charter contracts with the rate of daily hire linked to the average of the time charter routes comprising the respective indices
for dry bulk vessels of the Baltic Exchange. Such contracts also carry an option for the Company to convert the index-linked rate to a fixed rate for a minimum period of three months and up to the maximum remaining duration of the charter contract,
according to the average of the forward freight agreement curve of the respective Baltic index for the desired period, at the time of conversion. The index-linked contracts with conversion clause provide flexibility and allow the Company to either
enjoy exposure in the spot market, when the rate is floating, or to secure foreseeable cash flow when the rate has been converted to fixed over a certain period.
15. |
Vessel Operating Expenses and Voyage Expenses:
|
The amounts in the accompanying unaudited interim condensed consolidated statements of comprehensive income are analyzed as follows:
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
Vessel Operating Expenses
|
|
2023
|
|
|
2024
|
|
Crew & crew related costs
|
|
|
5,937,987
|
|
|
|
4,267,132
|
|
Repairs & maintenance, spares, stores, classification, chemicals & gases, paints, victualling
|
|
|
2,862,901
|
|
|
|
1,913,788
|
|
Lubricants
|
|
|
796,155
|
|
|
|
427,649
|
|
Insurances
|
|
|
913,414
|
|
|
|
696,170
|
|
Tonnage taxes
|
|
|
235,212
|
|
|
|
198,412
|
|
Other
|
|
|
522,014
|
|
|
|
620,046
|
|
Total Vessel operating expenses
|
|
$
|
11,267,683
|
|
|
$
|
8,123,197
|
|
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
Voyage expenses
|
|
2023
|
|
|
2024
|
|
Brokerage commissions
|
|
|
393,247
|
|
|
|
473,526
|
|
Brokerage commissions- related party
|
|
|
326,770
|
|
|
|
251,581
|
|
Port & other expenses
|
|
|
88,534
|
|
|
|
211,910
|
|
Bunkers consumption
|
|
|
402,131
|
|
|
|
126,230
|
|
Loss on bunkers
|
|
|
66,403
|
|
|
|
1,487
|
|
Total Voyage expenses
|
|
$
|
1,277,085
|
|
|
$
|
1,064,734
|
|
16. |
General and Administrative Expenses:
|
General and administrative expenses are analyzed as follows:
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Non-executive directors’ compensation
|
|
$
|
18,000
|
|
|
$
|
31,500
|
|
Audit fees
|
|
|
57,496
|
|
|
|
62,663
|
|
Professional fees and other expenses
|
|
|
309,168
|
|
|
|
1,035,887
|
|
Administration fees-related party (Note 4(a))
|
|
|
750,000
|
|
|
|
799,500
|
|
Total
|
|
$
|
1,134,664
|
|
|
$
|
1,929,550
|
|
17. |
Interest and Finance Costs:
|
The amounts in the accompanying unaudited interim consolidated statements of comprehensive income are analyzed as follows:
|
|
Three months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Interest on long-term debt
|
|
$
|
2,719,402
|
|
|
$
|
1,775,602
|
|
Amortization and write-off of deferred finance charges
|
|
|
186,151
|
|
|
|
146,093
|
|
Other finance charges
|
|
|
182,526
|
|
|
|
111,562
|
|
Total
|
|
$
|
3,088,079
|
|
|
$
|
2,033,257
|
|
In late 2022, the Company acquired two containerships. As a result of the different characteristics of such containerships in relation to the Company’s other operating segments, the Company determined
that, with effect from the fourth quarter of 2022, it operated in two reportable segments: (i) the dry bulk segment and (ii) the containership segment, each on a continued operations basis. The reportable segments reflect the internal organization of
the Company and the way the chief operating decision maker reviews the operating results and allocates capital within the Company. In addition, the transport of dry cargo commodities, which are carried by dry bulk vessels, has different
characteristics to the transport of containerized products, which are carried by containerships. Furthermore, the nature of trade, as well as the trading routes, charterers and cargo handling, is different in the containership segment and the
dry-bulk segment.
The table below presents information about the Company’s reportable segments as of and for the three months ended March 31, 2023 and 2024. The accounting policies followed in the preparation of the
reportable segments are the same as those followed in the preparation of the Company’s unaudited interim condensed consolidated financial statements. Segment results are evaluated based on income from operations.
|
|
Three months ended March 31,
|
|
|
Three months ended March 31,
|
|
|
|
2023
|
|
|
2024
|
|
|
|
|
|
Dry bulk segment
|
|
|
Container
ship
segment
|
|
|
Total
|
|
|
Dry bulk segment
|
|
|
Container
ship
segment
|
|
|
Total |
|
- Time charter revenues
|
|
$
|
21,031,930
|
|
|
$
|
3,437,040
|
|
|
$
|
24,468,970
|
|
|
$
|
17,247,214
|
|
|
$
|
3,143,033
|
|
|
$
|
20,390,247
|
|
Total vessel revenues
|
|
$
|
21,031,930
|
|
|
$
|
3,437,040
|
|
|
$
|
24,468,970
|
|
|
$
|
17,247,214
|
|
|
$
|
3,143,033
|
|
|
$
|
20,390,247
|
|
Voyage expenses (including charges from related party)
|
|
|
(1,109,565
|
)
|
|
|
(167,520
|
)
|
|
|
(1,277,085
|
)
|
|
|
(907,286
|
)
|
|
|
(157,448
|
)
|
|
|
(1,064,734
|
)
|
Vessel operating expenses
|
|
|
(9,708,905
|
)
|
|
|
(1,558,778
|
)
|
|
|
(11,267,683
|
)
|
|
|
(6,851,407
|
)
|
|
|
(1,271,790
|
)
|
|
|
(8,123,197
|
)
|
Management fees to related parties
|
|
|
(1,665,000
|
)
|
|
|
(166,500
|
)
|
|
|
(1,831,500
|
)
|
|
|
(1,243,346
|
)
|
|
|
(179,452
|
)
|
|
|
(1,422,798
|
)
|
Depreciation and amortization
|
|
|
(4,553,307
|
)
|
|
|
(1,259,156
|
)
|
|
|
(5,812,463
|
)
|
|
|
(2,477,106
|
)
|
|
|
(1,378,726
|
)
|
|
|
(3,855,832
|
)
|
Gain on sale of vessels
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,893,530
|
|
|
|
—
|
|
|
|
7,893,530
|
|
Segments operating income
|
|
$
|
3,995,153
|
|
|
$
|
285,086
|
|
|
$
|
4,280,239
|
|
|
$
|
13,661,599
|
|
|
$
|
155,617
|
|
|
$
|
13,817,216
|
|
Interest and finance costs
|
|
|
|
|
|
|
|
|
|
|
(2,941,420
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,957,338
|
)
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
660,541
|
|
|
|
|
|
|
|
|
|
|
|
844,587
|
|
Foreign exchange losses
|
|
|
|
|
|
|
|
|
|
|
(55,082
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,096
|
)
|
Less: Unallocated corporate general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
(1,134,664
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,929,550
|
)
|
Less: Corporate Interest and finance costs
|
|
|
|
|
|
|
|
|
|
|
(146,659
|
)
|
|
|
|
|
|
|
|
|
|
|
(75,919
|
)
|
Less: Corporate Interest income
|
|
|
|
|
|
|
|
|
|
|
138,423
|
|
|
|
|
|
|
|
|
|
|
|
631,002
|
|
Less: Corporate exchange losses
|
|
|
|
|
|
|
|
|
|
|
(6,496
|
)
|
|
|
|
|
|
|
|
|
|
|
(48,911
|
)
|
Dividend income on equity securities
|
|
|
|
|
|
|
|
|
|
|
313,716
|
|
|
|
|
|
|
|
|
|
|
|
834,900
|
|
Dividend income from related party
|
|
|
|
|
|
|
|
|
|
|
97,222
|
|
|
|
|
|
|
|
|
|
|
|
353,889
|
|
(Losses) / Gains on equity securities
|
|
|
|
|
|
|
|
|
|
|
(7,692,952
|
)
|
|
|
|
|
|
|
|
|
|
|
9,928,255
|
|
Net income and comprehensive income from continuing operations, before taxes
|
|
|
|
|
|
|
|
|
|
$
|
(6,487,132
|
)
|
|
|
|
|
|
|
|
|
|
$
|
22,395,035
|
|
Net income and Comprehensive income from discontinued operations, before taxes
|
|
|
|
|
|
|
|
|
|
|
17,513,269
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
Net income and Comprehensive income, before taxes
|
|
|
|
|
|
|
|
|
|
|
11,026,137
|
|
|
|
|
|
|
|
|
|
|
|
22,395,035
|
|
18. |
Segment Information (continued):
|
A reconciliation of total segment assets to total assets presented in the accompanying unaudited interim consolidated balance sheets of December 31, 2023 and March 31, 2024, is as follows:
|
|
As of
December 31,
2023
|
|
|
As of
March 31,
2024
|
|
Dry bulk segment
|
|
$
|
259,759,770
|
|
|
$
|
213,961,698
|
|
Containership segment
|
|
|
46,202,603
|
|
|
|
44,176,844
|
|
Cash and cash equivalents (1)
|
|
|
103,822,505
|
|
|
|
152,898,080
|
|
Prepaid expenses and other assets (1)
|
|
|
195,257,101
|
|
|
|
208,497,443
|
|
Total consolidated assets
|
|
$
|
605,041,979
|
|
|
$
|
619,534,065
|
|
(1) |
Refers to assets of other, non-vessel owning, entities included in the unaudited interim condensed consolidated financial statements.
|
|
(a) |
Compliance with Nasdaq Capital Market Listing Requirements: On April 11, 2024, following the completion of the 1-for-10 reverse stock split discussed herein, the Company
received a written confirmation from Nasdaq that it had regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the Minimum Bid Price of the Company’s stock.
|
|
(b) |
Dividend on Series D Preferred Shares: On April 15, 2024, the Company paid to Toro a dividend (declared on March 27, 2024) amounting to $625,000 on the
Series D Preferred Shares for the dividend period from January 15, 2024 to April 14, 2024.
|
|
(c) |
Warrants tender offer: On April 22, 2024, the Company commenced a tender offer (the “Offer”) to purchase all of its outstanding April 7 Warrants at a price of $0.105 per warrant, net to the seller in
cash, without interest. Payments made pursuant to the Offer will be rounded down to the nearest whole cent. The April 7 Warrants are exercisable in the aggregate into 1,033,077 of the Company’s common shares at an exercise price per warrant
share of $55.30. The Offer will expire at the end of the day, 5:00 P.M., Eastern time, on May 31, 2024, unless extended.
|
|
(d) |
Sale of the M/V Magic Nebula: On April 18, 2024, the Company completed the previously announced
sale of the M/V Magic Nebula described in Note 7 by delivering the vessel to its new owners. Following completion of the sale, Hamburg Commercial Bank entered into a deed of partial release on April
18, 2024 with respect to the M/V Magic Nebula, releasing and discharging the underlying borrower and all securities created over the M/V Magic Nebula in full,
after the settlement by the Company of the outstanding balance of $7.3 million due under the $40.75 million term loan facility.
|
|
(e) |
Sale of the M/V Magic Vela: On May 1, 2024, the Company entered into an agreement with an
unaffiliated third party for the sale of the M/V Magic Vela for a gross sale price of $16.4 million. The vessel is expected to be delivered to its new owners during the second quarter of 2024. The
Company expects to record during the second quarter of 2024 a net gain of approximately $2.7 million, excluding any transaction-related costs.
|
|
(f) |
Sale of the M/V Magic Venus: On May 10, 2024, the Company completed the previously announced sale of the M/V Magic Venus by delivering the vessel to its new owners. Please refer to Note 4 and Note 7.
|
F-26
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of operations of Castor Maritime Inc. (“Castor”) for the three-month periods ended March 31, 2024, and March 31,
2023. Unless otherwise specified herein or the context otherwise requires, references to the “Company”, “we”, “our” and “us” or similar terms shall include Castor and its wholly owned subsidiaries. You should read the following discussion and
analysis together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere in this report. Amounts relating to percentage variations in period-on-period comparisons shown in this section are
derived from those unaudited interim condensed consolidated financial statements. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. These forward-looking
statements are dependent upon events, risks and uncertainties that may be outside our control which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking
statements. For a more complete discussion of these risks and uncertainties, please read the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Item 3. Key Information – D. Risk Factors” in our Annual Report for the year ended December 31, 2023 (the “2023 Annual Report”), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 29, 2024.
For additional information relating to our management’s discussion and analysis of financial conditions and results of operations, please see our 2023 Annual Report. Unless otherwise defined herein, capitalized terms and expressions used herein
have the same meanings ascribed to them in the 2023 Annual Report.
Business Overview and Fleet Information
We are a growth-oriented global shipping company that was incorporated in the Republic of the Marshall Islands in September 2017 for the purpose of acquiring, owning, chartering and
operating oceangoing cargo vessels. We are a provider of worldwide seaborne transportation services for dry bulk and container cargoes.
We currently operate a fleet consisting of 10 dry bulk carriers that engage in the worldwide transportation of commodities such as iron ore, coal, soybeans etc., with an aggregate
cargo carrying capacity of 0.8 million dwt and an average age of 12.6 years and two containership vessels with an aggregate cargo carrying capacity of 0.1 million dwt and an average age of 18.7 years (together, our “Fleet”). The average age of our
entire Fleet is 13.6 years as of May 16, 2024. Our management reviews and analyzes operating results for our business over two reportable segments, (i) the Dry Bulk Segment, and (ii) the Containership Segment.
Our dry bulk and containership fleets currently operate in the time charter market. Our commercial strategy primarily focuses on deploying our Fleet under a mix of period time
charters and trip time charters according to our assessment of market conditions. Our aim is to periodically adjust the mix of these chartering arrangements to take advantage of the relatively stable cash flows and high utilization rates associated
with period time charters or to profit from attractive spot charter rates in the trip charter market.
With effect from July 1, 2022, our vessels are technically and commercially managed by Castor Ships S.A. (“Castor Ships”). Castor Ships has opted, with effect from the same date, to
technically co-manage our dry-bulk fleet with Pavimar S.A. (“Pavimar”), a related party controlled by Ismini Panagiotidis, the sister of our Chairman, Chief Executive Officer, Chief Financial Officer and controlling shareholder, Mr. Petros
Panagiotidis, whereas the technical management of our containerships is currently subcontracted to one third-party ship management company.
The following table summarizes key information about our Fleet as of the date of this report:
Fleet vessels:
Dry Bulk Carriers
|
Vessel Name
|
Vessel Type
|
|
DWT
|
|
|
Year
Built
|
|
Country of
Construction
|
|
Purchase
Price
(in million)
|
|
Delivery
Date
|
Magic P
|
Panamax
|
|
|
76,453
|
|
|
|
2004
|
|
Japan
|
|
$
|
7.35
|
|
02/21/2017
|
Magic Horizon (1)
|
Panamax
|
|
|
76,619
|
|
|
|
2010
|
|
Japan
|
|
$
|
12.75
|
|
10/09/2020
|
Magic Thunder
|
Kamsarmax
|
|
|
83,375
|
|
|
|
2011
|
|
Japan
|
|
$
|
16.85
|
|
04/13/2021
|
Magic Eclipse
|
Panamax
|
|
|
74,940
|
|
|
|
2011
|
|
Japan
|
|
$
|
18.48
|
|
06/07/2021
|
Magic Starlight
|
Kamsarmax
|
|
|
81,048
|
|
|
|
2015
|
|
China
|
|
$
|
23.50
|
|
05/23/2021
|
Magic Vela(2)
|
Panamax
|
|
|
75,003
|
|
|
|
2011
|
|
China
|
|
$
|
14.50
|
|
05/12/2021
|
Magic Perseus
|
Kamsarmax
|
|
|
82,158
|
|
|
|
2013
|
|
Japan
|
|
$
|
21.00
|
|
08/09/2021
|
Magic Pluto
|
Panamax
|
|
|
74,940
|
|
|
|
2013
|
|
Japan
|
|
$
|
19.06
|
|
08/06/2021
|
Magic Mars
|
Panamax
|
|
|
76,822
|
|
|
|
2014
|
|
Korea
|
|
$
|
20.40
|
|
09/20/2021
|
Magic Callisto
|
Panamax
|
|
|
74,930
|
|
|
|
2012
|
|
Japan
|
|
$
|
23.55
|
|
01/04/2022
|
Containerships
|
Ariana A
|
2,700 TEU capacity Containership
|
|
|
38,117
|
|
|
|
2005
|
|
Germany
|
|
$
|
25.00
|
|
11/23/22
|
Gabriela A
|
2,700 TEU capacity Containership
|
|
|
38,121
|
|
|
|
2005
|
|
Germany
|
|
$
|
25.75
|
|
11/30/22
|
(1) On January 19, 2024, the Company entered into an agreement with an entity beneficially owned by a family member of the Company’s Chairman, Chief
Executive Officer and Chief Financial Officer for the sale of the M/V Magic Horizon for a gross sale price of $15.8 million. The transaction was approved by a special committee of disinterested and
independent directors of the Company. The vessel is expected to be delivered to its new owners during the second quarter of 2024. See also Note 7 to our unaudited interim condensed consolidated financial statements, included elsewhere herein.
(2) On May 1, 2024, the Company entered into an agreement with an unaffiliated third party for the sale of the M/V Magic Vela for a gross sale price of $16.4 million. The vessel is expected to be delivered to its new owners during the second quarter of 2024. See also Note 19 to our
unaudited interim condensed consolidated financial statements, included elsewhere herein.
We intend to continuously explore the market in order to identify further potential acquisition targets which will help us modernize our Fleet and develop our business. Our
acquisition strategy has so far focused on secondhand dry bulk vessels and, recently, containerships, though we may acquire vessels in other sizes, age and/or sectors which we believe offer attractive investment opportunities, subject to the
parameters set out in certain resolutions passed by our board of directors in connection with the spin-off of our former tanker vessel business completed on March 7, 2023 (the “Spin-Off”). We may also opportunistically dispose of vessels and may
engage in such acquisitions and disposals at any time and from time to time.
Recent Developments
On April 20, 2023, we received a notification from the Nasdaq Stock Market (“Nasdaq”) that the Company was not in compliance with the minimum $1.00 per share bid price
requirement for continued listing on the Nasdaq Capital Market and we were provided with 180 calendar days to regain compliance with the Nasdaq Capital Market minimum bid price requirement. On October 19, 2023, we announced that we received a
notification letter on October 18, 2023 from the Nasdaq granting us an additional 180-day extension to April 15, 2024 to regain compliance with Nasdaq’s minimum bid price requirement. On March 27, 2024, we effected a 1-for-10 reverse stock split of
our common stock for the purpose of regaining compliance with the Nasdaq minimum bid price requirement pursuant to the authority granted to our board of directors by our shareholders. As a result of the reverse stock split, the number of
outstanding shares was decreased to 9,662,354 common shares as of March 27, 2024, while the par value of our common shares remained unchanged at $0.001 per share. On April 11, 2024, we received written confirmation from Nasdaq that we had regained
compliance with the minimum bid price requirement.
All share and per share amounts, as well as warrant shares eligible for purchase under the Company’s effective warrant schemes have been retroactively adjusted to reflect the
reverse stock split.
Please refer to Note 19 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for other developments that took place after March 31, 2024.
Operating results
Important Measures and Definitions for Analyzing Results of Operations
Our management uses the following metrics to evaluate our operating results, including the operating results of our segments, and to allocate capital accordingly:
Total vessel revenues. Total vessel revenues are currently generated solely
from time charters, though vessels have and may be employed under voyage charters in the future. Vessels operating on fixed time charters for a certain period provide more predictable cash flows over that period. Total vessel revenues are affected
by the number of vessels in our fleet, hire rates and the number of days a vessel operates which, in turn, are affected by several factors, including the amount of time that we spend positioning our vessels, the amount of time that our vessels
spend in dry dock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels, and levels of supply and demand in the seaborne transportation market.
For further discussion of vessel revenues, please refer to Note 14 to our unaudited interim condensed consolidated financial statements included elsewhere in this report.
Voyage expenses. Our voyage expenses primarily consist of brokerage commissions paid in connection with the chartering
of our vessels. Under a time charter, the charterer pays substantially all the vessel voyage related expenses. However, we may incur voyage related expenses from time to time, such as for bunkers, when positioning or repositioning vessels before or
after the period of a time charter, during periods of commercial waiting time or while off-hire during dry docking or due to other unforeseen circumstances. Gain/loss on bunkers may also arise where the cost of the bunker fuel sold to the new
charterer is greater or less than the cost of the bunker fuel acquired.
Operating expenses. We are responsible for vessel operating costs, which include
crewing, expenses for repairs and maintenance, the cost of insurance, tonnage taxes, the cost of spares and consumable stores, lubricating oils costs, communication expenses, and other expenses. Expenses for repairs and maintenance tend to
fluctuate from period to period because most repairs and maintenance typically occur during periodic dry-docking. Our ability to control our vessels’ operating expenses also affects our financial results.
Management fees. Management fees include fees paid to related parties providing certain ship management services to our
fleet pursuant to the ship management agreements.
Off-hire. The period a vessel in our fleet is unable to perform the services for which it is required under a charter
for reasons such as scheduled repairs, vessel upgrades, dry-dockings or special or intermediate surveys or other unforeseen events.
Dry-docking/Special Surveys. We periodically dry-dock and/or perform special surveys on our vessels for inspection,
repairs and maintenance and any modifications required to comply with industry certification or governmental requirements. Our ability to control our dry-docking and special survey expenses and our ability to complete our scheduled dry-dockings
and/or special surveys on time also affects our financial results. Dry-docking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the
period through the date the next survey is scheduled to become due.
Ownership Days. Ownership Days are the total number of calendar days in a period during which we owned a vessel.
Ownership Days are an indicator of the size of our fleet over a period and determine both the level of revenues and expenses recorded during that specific period.
Available Days. Available Days are the Ownership Days in a period less the aggregate number of days our vessels are
off-hire due to scheduled repairs, dry-dockings or special or intermediate surveys. The shipping industry uses Available Days to measure the aggregate number of days in a period during which vessels are available to generate revenues. Our
calculation of Available Days may not be comparable to that reported by other companies.
Operating Days. Operating Days are the Available Days in a period after subtracting unscheduled off-hire days and idle
days.
Fleet Utilization. Fleet Utilization is calculated by dividing the Operating Days during a period by the number of
Available Days during that period. Fleet Utilization is used to measure a company’s ability to efficiently find suitable employment for its vessels.
Daily Time Charter Equivalent Rate (“Daily TCE Rate”). See Appendix A for a description of the Daily TCE Rate.
Principal factors impacting our business, results of operations and financial condition
Our results of operations are affected by numerous factors. The principal factors that have impacted the business during the fiscal periods presented in the following discussion and
analysis and that are likely to continue to impact our business are the following:
|
- |
The levels of demand and supply of seaborne cargoes and vessel tonnage in the shipping segments in which we operate;
|
|
- |
The cyclical nature of the shipping industry in general and its impact on charter rates and vessel values;
|
|
- |
The successful implementation of the Company’s business strategy, including our ability to obtain equity and debt financing at acceptable and attractive terms to fund future capital expenditures and/or to
implement our business strategy;
|
|
- |
The global economic growth outlook and trends, such as price inflation and/or volatility;
|
|
- |
Economic, regulatory, political and governmental conditions that affect shipping and the dry bulk and container segments, including international conflict or war (or threatened war), such as between Russia and
Ukraine and in the Middle East, and acts of piracy or maritime aggression, such as recent maritime incidents involving vessels in and around the Red Sea;
|
|
- |
The employment and operation of our fleet including the utilization rates of our vessels;
|
|
- |
Our ability to successfully employ our vessels at economically attractive rates and our strategic decisions regarding the employment mix of our fleet as our charters expire or are otherwise terminated;
|
|
- |
Management of the financial, operating, general and administrative elements involved in the conduct of our business and ownership of our fleet, including the effective and efficient technical management of our
fleet by our head and sub-managers, and their suppliers;
|
|
- |
The number of customers who use our services and the performance of their obligations under their agreements, including their ability to make timely payments to us;
|
|
- |
Our ability to maintain solid working relationships with our existing customers and our ability to increase the number of our charterers through the development of new working relationships;
|
|
- |
The reputation and safety record of our manager and/or sub-managers for the management of our vessels;
|
|
- |
Dry-docking and special survey costs and duration, both expected and unexpected;
|
|
- |
The level of any distribution on all classes of our shares;
|
|
- |
Our borrowing levels and the finance costs related to our outstanding debt as well as our compliance with our debt covenants;
|
|
- |
Management of our financial resources, including banking relationships and of the relationships with our various stakeholders;
|
|
- |
Major outbreaks of diseases and governmental responses thereto; and
|
|
- |
The performance of the listed equity securities in which the Company currently has investments, which is subject to market risk and price volatility, and may adversely affect our results due to the realization of
losses upon disposition of these investments or the recognition of significant unrealized losses during their holding period.
|
Employment and operation of our Fleet
Another factor that impacts our profitability is the employment and operation of our Fleet. The profitable employment of our Fleet is highly dependent on the levels of demand and
supply in the shipping industries in which we operate, our commercial strategy including the decisions regarding the employment mix of our Fleet, as well as our managers’ ability to leverage our relationships with existing or potential customers.
The effective operation of our Fleet mainly requires regular maintenance and repair, effective crew selection and training, ongoing supply of our Fleet with the spares and the stores that it requires, contingency response planning, auditing of our
vessels’ onboard safety procedures, arrangements for our vessels’ insurance, chartering of the vessels, training of onboard and on-shore personnel with respect to the vessels’ security and security response plans (ISPS), obtaining of ISM
certifications, compliance with environmental regulations and standards, and performing the necessary audit for the vessels within the six months of taking over a vessel and the ongoing performance monitoring of the vessels.
Financial, general and administrative management
The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires us to manage our financial resources,
which includes managing banking relationships, administrating our bank accounts, managing our accounting system, records and financial reporting, monitoring and ensuring compliance with the legal and regulatory requirements affecting our business
and assets and managing our relationships with our service providers and customers.
See also “Item 3. Key Information—D. Risk Factors” in our 2023 Annual Report. Because many of the foregoing factors are beyond our control
and certain of these factors have historically been volatile, past performance is not necessarily indicative of future performance and it is difficult to predict future performance with any degree of certainty.
Results of Operations
Following the completion of the Spin-Off, the historical results of operations and the financial position of Toro Corp. (“Toro”) and the Aframax/LR2 and Handysize segments for
periods prior to the Spin-Off are presented as discontinued operations. For information on our discontinued operations, see Note 3 to the unaudited interim condensed consolidated financial statements.
Consolidated Results of Operations
Three months ended March 31, 2024, as compared to the three months ended March 31, 2023
(In U.S. Dollars, except for number of share data)
|
|
Three months
ended
March 31,
2023
|
|
|
Three
months
ended
March 31, 2024
|
|
|
Change-
amount
|
|
|
Change %
|
|
Total vessel revenues
|
|
$
|
24,468,970
|
|
|
$
|
20,390,247
|
|
|
$
|
4,078,723
|
|
|
|
16.7
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses (including commissions to related party)
|
|
|
(1,277,085
|
)
|
|
|
(1,064,734
|
)
|
|
|
212,351
|
|
|
|
16.6
|
%
|
Vessel operating expenses
|
|
|
(11,267,683
|
)
|
|
|
(8,123,197
|
)
|
|
|
3,144,486
|
|
|
|
27.9
|
%
|
Management fees to related parties
|
|
|
(1,831,500
|
)
|
|
|
(1,422,798
|
)
|
|
|
408,702
|
|
|
|
22.3
|
%
|
Depreciation and amortization
|
|
|
(5,812,463
|
)
|
|
|
(3,855,832
|
)
|
|
|
1,956,631
|
|
|
|
33.7
|
%
|
General and administrative expenses (including costs from related party)
|
|
|
(1,134,664
|
)
|
|
|
(1,929,550
|
)
|
|
|
794,886
|
|
|
|
70.1
|
%
|
Gain on sale of vessels (including gain from related party)
|
|
|
—
|
|
|
|
7,893,530
|
|
|
|
7,893,530
|
|
|
|
100
|
%
|
Operating income
|
|
$
|
3,145,575
|
|
|
$
|
11,887,666
|
|
|
$
|
8,742,091
|
|
|
|
277.9
|
%
|
Interest and finance costs, net
|
|
|
(2,289,115
|
)
|
|
|
(557,668
|
)
|
|
|
1,731,447
|
|
|
|
75.6
|
%
|
Other (expenses) / income (1)
|
|
|
(7,343,592
|
)
|
|
|
11,065,037
|
|
|
|
18,408,629
|
|
|
|
250.7
|
%
|
Income taxes
|
|
|
(22,906
|
)
|
|
|
(63,289
|
)
|
|
|
40,383
|
|
|
|
176.3
|
%
|
Net (loss)/income and comprehensive (loss)/income from continuing operations, net of taxes
|
|
$
|
(6,510,038
|
)
|
|
$
|
22,331,746
|
|
|
$
|
28,841,784
|
|
|
|
443.0
|
%
|
Net income and comprehensive income from discontinued operations, net of taxes
|
|
$
|
17,339,332
|
|
|
$
|
—
|
|
|
$
|
17,339,332
|
|
|
|
100
|
%
|
Net income and comprehensive income
|
|
$
|
10,829,294
|
|
|
$
|
22,331,746
|
|
|
$
|
11,502,452
|
|
|
|
106.2
|
%
|
(1) Includes aggregated amounts for foreign exchange losses, unrealized gains / (losses) from equity securities and other income, as applicable in each period.
Total vessel revenues – Total vessel revenues decreased to $20.4 million in the three months ended March 31, 2024 from $24.5
million in the same period of 2023. The decrease was driven by the decrease in our Available Days from 1,980 days in the three months ended March 31, 2023, to 1,441 days in the three months ended March 31, 2024, following the sale of the (i) M/V Magic Rainbow on April 18, 2023, (ii) M/V Magic Twilight on July
20, 2023, (iii) M/V Magic Sun on November 14, 2023, (iv) M/V Magic Phoenix on November 27, 2023, (v) M/V Magic Argo on December 14, 2023, (vi) M/V
Magic Moon on January 16, 2024, (vii) M/V Magic Orion on March 22, 2024 and (viii) M/V Magic Nova on March 11, 2024. This decrease was partially offset by the increase in prevailing charter rates of our dry bulk vessels. During the three months
ended March 31, 2024, our Fleet earned on average a Daily TCE Rate of $13,411, compared to an average Daily TCE Rate of $11,713 earned during the same period in 2023. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and
reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Voyage expenses – Voyage expenses decreased by $0.2 million, to $1.1 million in the three months ended March 31, 2024, from $1.3 million in the corresponding
period of 2023. This decrease in voyage expenses is mainly associated with the decrease in the overall bunkers consumption of our Fleet.
Vessel operating expenses – The decrease in operating expenses by $3.2 million to $8.1 million in the three months ended March 31, 2024, from $11.3 million in
the same period of 2023 mainly reflects the decrease in the Ownership Days of our Fleet to 1,441 days in the three months ended March 31, 2024, from 1,980 days in the same period in 2023.
Management fees – Management fees in the three months ended March 31, 2024, amounted to $1.4 million, whereas, in the same period of 2023, management fees
totaled $1.8 million. This decrease in management fees is due to the decrease in the total number of Ownership Days following the sale of the dry bulk vessels mentioned above. This decrease was partially offset by the adjustment of management fees
under the terms of the Amended and Restated Master Management Agreement effected on July 1, 2023, from $925 per vessel per day to $986 per vessel per day. On July 28, 2022, we entered into an amended and restated master management agreement with
Castor Ships, with effect from July 1, 2022, (the “Amended and Restated Master Management Agreement”). Our vessel-owning subsidiaries each also entered into new ship management agreements with Castor Ships. For further details on our management
arrangements, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions— Management, Commercial and Administrative Services” in our
2023 Annual Report.
Depreciation and amortization – Depreciation and amortization expenses are comprised of vessels’ depreciation and the amortization of vessels’ capitalized
dry-dock costs. Depreciation expenses decreased to $3.5 million in the three months ended March 31, 2024, from $5.3 million in the same period of 2023. The decrease by $1.8 million reflects the decrease in the Ownership Days of our Fleet following
the sale of dry bulk vessels discussed above. Dry-dock and special survey amortization charges amounted to $0.4 million for the three months ended March 31, 2024, compared to a charge of $0.6 million in the respective period of 2023. This variation
in dry-dock amortization charges primarily resulted from the decrease in aggregate amortization days to 455 days in the three months ended March 31, 2024, from 612 days in the three months ended March 31, 2023, mainly as a result of the sale of
vessels mentioned above.
General and administrative expenses – The increase in General and administrative expenses by $0.8 million, to $1.9 million in the three months ended March 31,
2024, from $1.1 million in the same period of 2023 mainly reflects the increase in professional fees by $0.7 million and the increase in our administrative fees under the Amended and Restated Master Management Agreement by $0.1 million.
Gain on sale of vessels - On January 16, 2024, we concluded the sale of the M/V Magic Moon which we sold, pursuant to
an agreement dated November 10, 2023, for cash consideration of $11.8 million. The sale resulted in net proceeds to the Company of $11.2 million and the Company recorded a net gain on the sale of $2.4 million. On March 11, 2024, we concluded the
sale of the M/V Magic Nova, sold pursuant to an agreement dated January 19, 2024 for cash consideration of $16.1 million. The sale resulted in net proceeds to the Company of $15.9 million and the Company
recorded a net gain on the sale of $4.1 million. On March 22, 2024, we concluded the sale of the M/V Magic Orion, sold pursuant to an agreement dated December 7, 2023 for cash consideration of $17.4
million. The sale resulted in net proceeds to the Company of $16.8 million and the Company recorded a net gain on the sale of $1.4 million. Please also refer to Note 7 to our unaudited interim condensed consolidated financial statements for the
three months ended March 31, 2024.
Interest and finance costs, net – The decrease by $1.7 million to $0.6 million in net interest and finance costs in the three months ended March 31, 2024, as
compared with $2.3 million in the same period of 2023, is mainly due to the decrease in our weighted average indebtedness from $134.8 million in the three months ended March 31, 2023 to $80.4 million in the three months ended March 31, 2024 as well
as an increase in interest we earned from time and cash deposits due to increased interest rates, as offset by an increase in the weighted average interest rate on our debt from 8.1% in the three months ended March 31, 2023, to 8.7% in the three
months ended March 31, 2024.
Other (expenses) / income – Other income in the three months ended March 31, 2024 amounted to $11.1 million and mainly includes (i) an unrealized gain of $9.9
million from revaluing our investments in listed equity securities at period end market rates, (ii) dividend income on equity securities of $0.8 million and (iii) dividend income of $0.4 million from our investment in 140,000 1.00% Series A Fixed
Rate Cumulative Perpetual Convertible Preferred Shares of Toro (the “Toro Series A Preferred Shares”). Other expenses in the three months ended March 31, 2023 amounted to $7.3 million, and mainly included (i) an unrealized loss of $7.7 million from
revaluing our investments in listed equity securities at period end market rates, (ii) dividend income on equity securities of $0.3 million and (iii) dividend income of $0.1 million from our investment in the Toro Series A Preferred Shares.
Segment Results of Operations
Three months ended March 31, 2024, as compared to the three months ended March 31, 2023 —Dry Bulk Segment
(in U.S. Dollars)
|
|
Three
months
ended
March
31, 2023
|
|
|
Three
months
ended
March
31, 2024
|
|
|
Change-
amount
|
|
|
Change
%
|
|
Total vessel revenues
|
|
|
21,031,930
|
|
|
|
17,247,214
|
|
|
|
3,784,716
|
|
|
|
18.0
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses (including commissions to related party)
|
|
|
(1,109,565
|
)
|
|
|
(907,286
|
)
|
|
|
202,279
|
|
|
|
18.2
|
%
|
Vessel operating expenses
|
|
|
(9,708,905
|
)
|
|
|
(6,851,407
|
)
|
|
|
2,857,498
|
|
|
|
29.4
|
%
|
Management fees to related parties
|
|
|
(1,665,000
|
)
|
|
|
(1,243,346
|
)
|
|
|
421,654
|
|
|
|
25.3
|
%
|
Depreciation and amortization
|
|
|
(4,553,307
|
)
|
|
|
(2,477,106
|
)
|
|
|
2,076,201
|
|
|
|
45.6
|
%
|
Gain on sale of vessels
|
|
|
—
|
|
|
|
7,893,530
|
|
|
|
7,893,530
|
|
|
|
100.0
|
%
|
Segment operating income(1)
|
|
|
3,995,153
|
|
|
|
13,661,599
|
|
|
|
9,666,446
|
|
|
|
242.0
|
%
|
(1) |
Does not include corporate general and administrative expenses. See the discussion under “Consolidated Results of Operations” above.
|
Total vessel revenues – Total vessel revenues for our dry bulk fleet decreased to $17.2 million in the three months
ended March 31, 2024 from $21.0 million in the same period of 2023. The decrease was driven by the decrease in our Available Days from 1,800 days in the three months ended March 31, 2023, to 1,259 days in the three months ended March 31, 2024,
following the sale of the (i) M/V Magic Rainbow on April 18, 2023, (ii) M/V Magic Twilight on July 20, 2023, (iii) M/V Magic Sun
on November 14, 2023, (iv) M/V Magic Phoenix on November 27, 2023, (v) M/V Magic Argo on December 14, 2023, (vi) M/V Magic Moon
on January 16, 2024, and (vii) M/V Magic Orion on March 22, 2024 and (viii) M/V Magic Nova on March 11, 2024. This decrease was partially offset by the increase in
prevailing charter rates of our dry bulk vessels. During the three months ended March 31, 2024, our dry bulk fleet earned on average a Daily TCE Rate of $12,978 compared to an average Daily TCE Rate of $11,068 earned during the same period in 2023.
Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in
accordance with U.S. GAAP.
Voyage expenses – Voyage expenses decreased to $0.9 million in the three months ended March 31, 2024, from $1.1 million in the corresponding period of 2023.
This decrease in voyage expenses is mainly associated with decreased bunkers consumption.
Vessel operating expenses – The decrease in operating expenses for our dry bulk fleet by $2.8 million, to $6.9 million in the three months ended March 31,
2024, from $9.7 million in the same period of 2023, mainly reflects the decrease in Ownership Days due to the sale of the vessels mentioned above.
Management fees – Management fees in the three months ended March 31, 2024, amounted to $1.2 million, whereas, in the same period of 2023, management fees
totaled $1.7 million. This decrease in management fees is due to a decrease in the total number of Ownership Days following the sale of the dry bulk vessels mentioned above. This decrease was partially offset by the adjustment of management fees
under the terms of the Amended and Restated Master Management Agreement effected on July 1, 2023, from $925 per vessel per day to $986 per vessel per day.
Depreciation and amortization – Depreciation expenses for our dry bulk fleet in the three months ended March 31, 2024 and 2023 amounted to $2.2 million and
$4.0 million, respectively. The decrease reflects (i) the decrease in the Ownership Days of our dry bulk segment days to 1,259 days in the three months ended March 31, 2024, from 1,800 days in the same period in 2023, due to the sale of vessels
described above and (ii) the effect of classifying the M/V Magic Horizon, M/V Magic Venus and M/V Magic Nebula as “held for sale”, as depreciation was not
recorded during the period in which these vessels were classified as held for sale. Dry-dock and special survey amortization charges decreased to $0.3 million in the three months ended March 31, 2024, from $0.6 million in the same period of 2023.
This variation in dry-dock amortization charges primarily resulted from the decrease in aggregate amortization days to 364 days in the three months ended March 31, 2024, from 612 days in the three months ended March 31, 2023, mainly as a result of
the sale of vessels mentioned above.
Gain on sale of vessels – Refer to discussion under ‘Consolidated Results of Operations- Gain on sale of vessels’ above for details on the sale of the M/V Magic Moon, M/V Magic Nova and M/V Magic Orion.
Three months ended March 31, 2024, as compared to three months ended March 31, 2023— Containership Segment
|
|
Three
months
ended
March 31,
2023
|
|
|
Three months ended
March 31,
2024
|
|
|
Change -
amount
|
|
|
Change
%
|
|
Total vessel revenues
|
|
|
3,437,040
|
|
|
|
3,143,033
|
|
|
|
294,007
|
|
|
|
8.6
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses (including commissions to related party)
|
|
|
(167,520
|
)
|
|
|
(157,448
|
)
|
|
|
10,072
|
|
|
|
6.0
|
%
|
Vessel operating expenses
|
|
|
(1,558,778
|
)
|
|
|
(1,271,790
|
)
|
|
|
286,988
|
|
|
|
18.4
|
%
|
Management fees to related parties
|
|
|
(166,500
|
)
|
|
|
(179,452
|
)
|
|
|
12,952
|
|
|
|
7.8
|
%
|
Depreciation and amortization
|
|
|
(1,259,156
|
)
|
|
|
(1,378,726
|
)
|
|
|
119,570
|
|
|
|
9.5
|
%
|
Segment operating income
|
|
|
285,086
|
|
|
|
155,617
|
|
|
|
129,469
|
|
|
|
45.4
|
%
|
Total vessel revenues – Total vessel revenues for our containership segment amounted to $3.1 million in the three months ended
March 31, 2024, as compared to $3.4 million in the same period of 2023. This decrease was driven by the decrease in prevailing charter rates of our container vessels. During the three months ended March 31, 2024, our containerships earned an
average Daily TCE Rate of $16,404 compared to an average Daily TCE Rate of $18,164 earned in the same period of 2023. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and reconciliation of
this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. During the period in which we owned them, both of our containerships were engaged in period time
charters.
Voyage expenses – Voyage expenses for our containership segment amounted to $0.2 million in the three months ended March 31, 2024, and in the same period of
2023, reflecting increased bunkers consumption, offset by the decreased brokerage commissions due to the decrease in vessel revenues in the three months ended March 31, 2024 compared to the same period in 2023.
Vessel operating expenses – Operating expenses for our containership segment decreased to $1.3 million in the three months ended March 31, 2024, from $1.6
million in the same period of 2023, mainly reflecting the decrease in repairs, spares and maintenance costs of our containership vessels.
Management fees – Management fees for our containership segment amounted to $0.18 million and $0.17 million in the three months ended March 31, 2024, and in
the same period of 2023, respectively, reflecting the adjustment of management fees under the terms of the Amended and Restated Master Management Agreement effective July 1, 2023.
Depreciation and amortization – Depreciation expenses for our containership segment amounted to $1.3 million in the three months ended March 31, 2024, and in
the same period of 2023. Dry-dock amortization charges in the three months ended March 31, 2024, and the same period of 2023 amounted to $0.1 million and $0, respectively. The increase by $0.1 million relates to the M/V Ariana A, which underwent its dry-dock and special survey from mid-April 2023 up to early May 2023.
Liquidity and Capital Resources
We operate in a capital-intensive industry, and we expect to finance the purchase of additional vessels and other capital expenditures through a combination of proceeds from equity
offerings, borrowings in debt transactions and cash generated from operations. Our liquidity requirements relate to servicing the principal and interest on our debt, funding capital expenditures and working capital (which includes maintaining the
quality of our vessels and complying with international shipping standards and environmental laws and regulations) and maintaining cash reserves for the purpose of satisfying certain minimum liquidity restrictions contained in our credit
facilities. In accordance with our business strategy, other liquidity needs may relate to funding potential investments in additional vessels or businesses and maintaining cash reserves to hedge against fluctuations in operating cash flows. Our
funding and treasury activities are intended to maximize investment returns while maintaining appropriate liquidity.
As of March 31, 2024, and December 31, 2023, we held cash and cash equivalents of $157.2 million and $111.4 million (which excludes $8.0 million and $9.5 million of cash restricted
in each period, under our debt agreements), respectively. Cash and cash equivalents are primarily held in U.S. dollars.
As of March 31, 2024, we had $75.2 million of gross indebtedness outstanding under our debt agreements, of which $26.6 million matures in the twelve-month period ending March 31,
2025. As of March 31, 2024, we were in compliance with all the financial and liquidity covenants contained in our debt agreements.
Working capital is equal to current assets minus current liabilities. As of March 31, 2024, we had a working capital surplus of $261.7 million as compared to a working capital
surplus of $213.7 million as of December 31, 2023.
We believe that our current sources of funds and those that we anticipate to internally generate for a period of at least the next twelve months from March 31, 2024 will be
sufficient to fund the operations of our Fleet, meet our working capital and capital expenditures requirements and service the principal and interest on our existing debt for that period and for the foreseeable future.
As of March 31, 2024, we did not have any commitments for capital expenditures related to vessel acquisitions.
Our Borrowing Activities
Please refer to Note 8 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for information regarding our borrowing activities as of
March 31, 2024.
Cash Flows
The following table summarizes our net cash flows provided by/(used in) operating, investing, and financing activities and our cash, cash equivalents and restricted cash for the
three-month periods ended March 31, 2023, and 2024:
|
|
Three months ended March 31,
|
|
(in U.S. Dollars)
|
|
2023
|
|
|
2024
|
|
Net cash provided by operating activities from continuing operations
|
|
$
|
290,774
|
|
|
$
|
11,330,851
|
|
Net cash (used in) / provided by investing activities from continuing operations
|
|
|
(31,687,845
|
)
|
|
|
45,016,072
|
|
Net cash used in financing activities from continuing operations
|
|
|
(5,899,175
|
)
|
|
|
(12,063,590
|
)
|
Net cash provided by operating activities from discontinued operations
|
|
|
20,409,041
|
|
|
|
—
|
|
Net cash used in investing activities from discontinued operations
|
|
|
(153,861
|
)
|
|
|
—
|
|
Net cash used in financing activities from discontinued operations
|
|
|
(62,734,774
|
)
|
|
|
—
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
152,307,420
|
|
|
|
120,901,147
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
72,531,580
|
|
|
$
|
165,184,480
|
|
Operating Activities (from continuing operations):
For the three months ended March 31, 2024, net cash provided by operating activities of continuing operations amounted to $11.3 million, consisting of net income of $22.3 million,
non-cash adjustments related to depreciation and amortization of $3.9 million, aggregate gain on sale of the M/V Magic Moon, M/V Magic Nova, and M/V Magic Orion of $7.9 million, amortization of deferred finance charges of $0.1 million, amortization of fair value of acquired charters of $0.3 million, straight line amortization of hire of $0.9, unrealized
gain of $9.8 million from revaluing our investments in listed equity securities at period end market rates and a net decrease of $3.3 million in working capital, which is mainly the result of decreases in (i) trade receivables by $1.2 million, (ii)
inventories by $0.3 million, (iii) ‘Due from/to related parties’ by $2.2 million, (iv) ‘Prepaid expenses and other assets’ by $0.5 million and (v) ‘Accounts payable’ by $1.1 million.
For the three months ended March 31, 2023, net cash provided by operating activities amounted to $0.3 million consisting of net income after non-cash items of $8.2 million offset by
an increase of $7.9 million in our working capital, which mainly derived from (i) decrease in accounts payable by $3.6 million and (ii) decrease in accrued liabilities by $1.4 million.
Investing Activities (from continuing operations):
For the three months ended March 31, 2024, net cash provided by investing activities amounted to $45.0 million mainly reflecting the net cash inflow of $43.8 million of net
proceeds from the sale of the M/V Magic Moon, M/V Magic Nova and M/V Magic Orion and the advance deposits of $4.95 million received relating to the sale of the M/V Magic
Nebula, M/V Magic Venus and M/V Magic Horizon, offset by outflows of $3.8 million associated with the purchase of equity securities. Please also refer to Notes 4, 7, 9 and 19 to our unaudited
interim condensed consolidated financial statements included elsewhere in this report for a more detailed discussion.
For the three months ended March 31, 2023, net cash used in investing activities amounted to $31.7 million mainly reflecting the cash outflows of $31.7 million associated with the
purchase of equity securities. Please also refer to Note 9 of our unaudited interim consolidated financial statements included elsewhere in this report for a more detailed discussion.
Financing Activities (from continuing operations):
For the three months ended March 31, 2024, net cash used in financing activities amounted to $12.1 million, mainly relating to (i) the $11.4 million of period scheduled principal
repayments under our existing secured credit facilities and early prepayments due to sale of vessels and (ii) $0.6 million of dividends paid relating to Series D Preferred Shares. Please also refer to Notes 4, 8 and 10 to our unaudited interim
consolidated financial statements included elsewhere in this report for a more detailed discussion.
For the three months ended March 31, 2023, net cash used in financing activities amounted to $5.9 million, mainly relating to $8.4 million of period scheduled principal repayments
under our existing secured credit facilities, offset by $2.6 million cash reimbursement from Toro relating to the Spin-Off expenses incurred by us on Toro’s behalf during 2022 and up to the completion of the Spin-Off.
Critical Accounting Estimates
We prepare our financial statements in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. On a regular basis, management reviews the accounting policies,
assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results
could differ from our assumptions and estimates, and such differences could be material. For more details on our Critical Accounting Estimates, please read “Item 5. Operating and Financial Review and Prospects—E.
Critical Accounting Estimates” in our 2023 Annual Report. For a description of our significant accounting policies, please read Note 2 to our unaudited interim condensed consolidated financial statements, included elsewhere in this report,
“Item 18. Financial Statements” in our 2023 Annual Report and more precisely “Note 2. Significant Accounting Policies and Recent Accounting Pronouncements” of our
consolidated financial statements included in our 2023 Annual Report.
APPENDIX A
Non-GAAP Financial Information
Daily TCE Rate. The Daily Time Charter Equivalent Rate (“Daily TCE Rate”) is a measure of the average daily revenue performance of a vessel. The Daily TCE Rate
is not a measure of financial performance under U.S. GAAP (i.e., it is a non-GAAP measure) and should not be considered as an alternative to any measure of financial performance presented in accordance with U.S. GAAP. We calculate Daily TCE Rate by
dividing total revenues (time charter and/or voyage charter revenues, and/or pool revenues, net of charterers’ commissions), less voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays
substantially all the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time or other charter, during periods of commercial waiting time or while
off-hire during dry docking. Under voyage charters, the majority of voyage expenses are generally borne by us whereas for vessels in a pool, such expenses are borne by the pool operator. The Daily TCE Rate is a standard shipping industry
performance measure used primarily to compare period-to-period changes in a company’s performance and, management believes that the Daily TCE Rate provides meaningful information to our investors since it compares daily net earnings generated by
our vessels irrespective of the mix of charter types (i.e., time charter, voyage charter or other) under which our vessels are employed between the periods while it further assists our management in making decisions regarding the deployment and use
of our vessels and in evaluating our financial performance. Our calculation of the Daily TCE Rates may be different from and may not be comparable to that reported by other companies. The following table reconciles the calculation of the Daily TCE
Rate for our Fleet to Total vessel revenues for the periods presented (amounts in U.S. dollars, except for Available Days):
Reconciliation of Daily TCE Rate to Total vessel revenues — Continuing operations
|
|
Three-months ended
March 31,
|
|
|
Three-months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Total vessel revenues
|
|
$
|
24,468,970
|
|
|
$
|
20,390,247
|
|
Voyage expenses -including commissions to related party
|
|
|
(1,277,085
|
)
|
|
|
(1,064,734
|
)
|
TCE revenues
|
|
$
|
23,191,885
|
|
|
$
|
19,325,513
|
|
Available Days
|
|
|
1,980
|
|
|
|
1,441
|
|
Daily TCE Rate
|
|
$
|
11,713
|
|
|
$
|
13,411
|
|
Reconciliation of Daily TCE Rate to Total vessel revenues — Dry Bulk Segment
|
|
Three-months ended
March 31,
|
|
|
Three-months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Total vessel revenues
|
|
$
|
21,031,930
|
|
|
$
|
17,247,214
|
|
Voyage expenses - including commissions to related party
|
|
|
(1,109,565
|
)
|
|
|
(907,286
|
)
|
TCE revenues
|
|
$
|
19,922,365
|
|
|
$
|
16,339,928
|
|
Available Days
|
|
|
1,800
|
|
|
|
1,259
|
|
Daily TCE Rate
|
|
$
|
11,068
|
|
|
$
|
12,978
|
|
Reconciliation of Daily TCE Rate to Total vessel revenues — Containership Segment
|
|
Three-months ended
March 31,
|
|
|
Three-months ended
March 31,
|
|
|
|
2023
|
|
|
2024
|
|
Total vessel revenues
|
|
$
|
3,437,040
|
|
|
$
|
3,143,033
|
|
Voyage expenses - including commissions to related party
|
|
|
(167,520
|
)
|
|
|
(157,448
|
)
|
TCE revenues
|
|
$
|
3,269,520
|
|
|
$
|
2,985,585
|
|
Available Days
|
|
|
180
|
|
|
|
182
|
|
Daily TCE Rate
|
|
$
|
18,164
|
|
|
$
|
16,404
|
|
13