Castor Maritime Inc 6-K, filed Nov 8, 2021
Castor Maritime Inc. (CTRM)
6-K
2021-11-08
For: 2021-09-30
View Original
Added on
April 06, 2026
About this 6-K
Castor Maritime Inc filed this 6-K on November 8, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2021
Commission File Number: 001-38802
CASTOR MARITIME INC.
(Translation of registrant’s name into English)
223 Christodoulou Chatzipavlou Street, Hawaii Royal Gardens, 3036 Limassol, Cyprus
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b) (1) only permits the submission in paper of a Form 6-K if submitted solely to provide an
attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or
other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of
the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached to this report on Form 6-K as Exhibit
99.1 are the unaudited consolidated interim financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations of Castor Maritime Inc. (the “Company”) for the nine months ended September 30,
2021.
The information contained in this report on Form 6-K and the exhibit attached hereto are hereby incorporated by reference into the Company's registration
statements on Form F-3 (File Nos. 333-238990, 333-240262 and 333-254977) that were declared effective on September 23, 2020, September 23, 2020 and April 1, 2021, respectively.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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CASTOR MARITIME INC.
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Dated: November 8, 2021
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By:
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/s/ Petros Panagiotidis
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Petros Panagiotidis
Chairman, Chief Executive Officer and
Chief Financial Officer
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Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 nine-month periods ended September
30, 2020, and 2021. Unless otherwise specified herein, 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 such unaudited interim
condensed consolidated financial statements. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The 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 additional
information relating to our management’s discussion and analysis of financial conditions and results of operations and a more complete discussion of the risks and uncertainties referenced in the preceding sentence,
please see our Annual Report for the year ended December 31, 2020 (the “2020 Annual Report”), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 30, 2021. Unless otherwise defined herein, capitalized words and
expressions used herein shall have the same meanings ascribed to them in the 2020 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 cargo as well as crude oil and refined petroleum products.
We currently operate a fleet of 27 vessels, consisting of 19 dry bulk carriers and 8 tankers with an aggregate cargo carrying capacity of 2.3 million dwt and an
average age of 13.5 years (which we refer to throughout this report as our “Fleet”).
We intend to continue to explore the market in order to identify potential acquisition targets which will help us grow our fleet and business. Our acquisition
strategy has so far focused on secondhand Capesize, Kamsarmax, and Panamax dry bulk vessels as well as Aframax, Aframax/LR2 and Handysize tanker vessels, although we may acquire vessels in other sizes, age and/or sectors which we believe offer
attractive investment opportunities.
Our commercial strategy primarily focuses on deploying our fleet under a mix of (a) period time charters and (b) trip time charters or voyage charters,
according to our assessment of market conditions, adjusting the mix of these charters to take advantage of the stable cash flows and high utilization rates associated with period time charters or to profit from attractive spot charter rates during
periods of strong freight market conditions. We also participate in tanker pooling arrangements with certain of our tanker vessels.
Our vessels are technically managed by Pavimar S.A, or Pavimar, a company controlled by Ismini Panagiotidis, the sister of our Chairman, Chief Executive Officer
and Chief Financial Officer, Petros Panagiotidis, and, commercially managed by Castor Ships S.A, or Castor Ships, a company controlled by our Chairman, Chief Executive Officer and Chief Financial Officer.
1
The following table summarizes key information about our Fleet as of the date of this report:
Fleet vessels:
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Vessel Name
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Vessel Type
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DWT
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Year Built
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Country of Construction
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Delivery date to Castor
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1
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M/V Magic Orion
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Capesize
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180,200
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2006
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Japan
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March 2021
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2
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M/V Magic Venus
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Kamsarmax
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83,416
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2010
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Japan
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March 2021
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3
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M/V Magic Thunder
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Kamsarmax
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83,375
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2011
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Japan
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April 2021
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4
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M/V Magic Argo
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Kamsarmax
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82,338
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2009
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Japan
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March 2021
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5
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M/V Magic Perseus
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Kamsarmax
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82,158
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2013
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Japan
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August 2021
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6
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M/V Magic Starlight
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Kamsarmax
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81,048
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2015
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China
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May 2021
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7
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M/V Magic Twilight
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Kamsarmax
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80,283
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2010
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Korea
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April 2021
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8
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M/V Magic Nebula
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Kamsarmax
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80,281
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2010
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Korea
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May 2021
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9
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M/V Magic Nova
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Panamax
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78,833
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2010
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Japan
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October 2020
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10
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M/V Magic Mars
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Panamax
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76,822
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2014
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Korea
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September 2021
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11
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M/V Magic Phoenix
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Panamax
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76,636
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2008
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Japan
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October 2021
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12
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M/V Magic Horizon
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Panamax
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76,619
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2010
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Japan
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October 2020
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13
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M/V Magic Moon
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Panamax
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76,602
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2005
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Japan
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October 2019
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14
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M/V Magic P
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Panamax
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76,453
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2004
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Japan
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February 2017
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15
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M/V Magic Sun
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Panamax
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75,311
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2001
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Korea
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September 2019
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16
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M/V Magic Vela
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Panamax
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75,003
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2011
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China
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May 2021
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17
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M/V Magic Eclipse
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Panamax
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74,940
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2011
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Japan
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June 2021
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18
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M/V Magic Pluto
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Panamax
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74,940
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2013
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Japan
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August 2021
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19
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M/V Magic Rainbow
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Panamax
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73,593
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2007
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China
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August 2020
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20
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M/T Wonder Polaris
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Aframax/LR2
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115,341
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2005
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Korea
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March 2021
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21
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M/T Wonder Sirius
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Aframax/LR2
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115,341
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2005
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Korea
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March 2021
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22
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M/T Wonder Musica
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Aframax/LR2
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106,290
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2004
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Korea
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June 2021
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23
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M/T Wonder Avior
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Aframax/LR2
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106,162
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2004
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Korea
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May 2021
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24
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M/T Wonder Arcturus
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Aframax/LR2
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106,149
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2002
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Korea
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May 2021
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25
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M/T Wonder Vega
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Aframax
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106,062
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2005
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Korea
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May 2021
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26
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M/T Wonder Mimosa
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Handysize tanker
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37,620
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2006
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Korea
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May 2021
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27
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M/T Wonder Formosa
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Handysize tanker
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37,562
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2006
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Korea
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June 2021
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Recent Developments
Please refer to Note 16 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for developments that
took place after September 30, 2021.
Vessel Acquisitions
Please refer to Note 6 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for fleet developments
that took place during the nine months ended September 30, 2021, and further as of the date of this report.
2
Operating results
Important Measures and Definitions for Analyzing our Results of Operations
We believe that important concepts and measures for analyzing trends in our results of operations include the following:
Voyage Revenues.
Vessel revenues are primarily generated from time charters, voyage charters and pool revenues. 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 a number of 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. Vessel revenues are also affected by our commercial strategy related to the
employment mix of our fleet between vessels on time charter, vessels in pools and vessels operating on voyage charter.
Vessels operating on time charters for a certain period provide more predictable cash flows over that period. Revenues from vessels in pools and on voyage charter are more volatile, as they are
typically tied to prevailing market rates.
Voyage expenses. Voyage expenses include brokerage commissions, bunkers, port
charges, canal tolls, and cargo handling operations paid by us under voyage charters.
Operating expenses. We are
responsible for vessel operating costs, which include crewing, repairs and maintenance, insurance, spares and stores, lubricating oils, communication expenses, and technical management fees. Expenses for repairs and maintenance tend to fluctuate from
period to period because most repairs and maintenance typically occur during periodic drydocking. Our ability to control our vessels’ operating expenses also affects our financial results. These expenses include crew wages and related costs,
the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricating oil costs, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing Fleet operating
expenses by the Ownership days for the relevant period.
Off-hire. The period 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 Fleet for inspection, repairs and maintenance and any modifications 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.
Our results of operations are affected by numerous factors. Important factors that, in our view, have historically impacted our business and that are likely to
continue to impact our business, are the following:
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The levels of demand and supply of seaborne cargoes and vessel tonnage in the dry bulk and tanker shipping industries;
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The cyclical nature of the shipping industry in general and its impact on charter rates and vessel values;
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The global economic growth outlook and trends;
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Economic, regulatory, political and governmental conditions that affect shipping and the dry-bulk and tanker industries;
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The employment and operation of our Fleet including the utilization rates of our vessels;
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Our ability to successfully employ our vessels at economically attractive rates and our strategic decisions regarding the employment mix of our Fleet in the voyage, pool and time charter
markets, as our charters expire or are otherwise terminated;
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Management of the financial, general and administrative elements involved in the conduct of our business and ownership of our Fleet;
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3
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The performance of our charterers’ obligations under their charter agreements including our charterers ability to make timely charter payment to us;
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Our ability to maintain solid working relationships with our existing charterers and our ability to increase the number of our charterers through the development of new working relationships;
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The effective and efficient technical management of our Fleet by our managers including the performance of their suppliers;
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The vetting approvals by oil majors of our commercial and technical managers for the management of our tanker vessels;
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Dry-docking and special survey costs and duration, both expected and unexpected;
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Our ability to obtain equity and debt financing at acceptable and attractive terms to fund future capital expenditures;
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Our access to capital required to acquire additional ships and/or to implement our business strategy;
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The level of any distribution on all classes of our shares;
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Management of our financial resources, including banking relationships and of the relationships with our various stakeholders;
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Our borrowing levels and the finance costs related to our outstanding debt; and
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Major outbreaks of diseases (such as COVID-19) and governmental responses thereto.
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Employment and operation of our Fleet
A 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 dry bulk and tanker shipping industries, 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 Fleet, requires us to manage our
financial resources, including commercial and investment banking relationships; the efficient administration of bank accounts; manage the accounting system and records and financial reporting; monitor and ensure compliance with the legal and regulatory
requirements affecting our business and assets; and manage our relationships with our service providers and customers.
4
Selected financial information
The following tables present our selected unaudited consolidated financial information at the dates and for the periods presented. All amounts are expressed in
United States Dollars except for share data. This information was derived from the unaudited interim condensed consolidated statements included herein. All number of share and earnings per share data in the financial
information presented below have been retroactively adjusted to reflect the reverse stock split effected on May 28, 2021.
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Selected Historical Financial Data
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Nine Months Ended
September 30, |
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STATEMENT OF INCOME
(In U.S. Dollars, except for share data)
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2020
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2021
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Vessel revenues, net
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$
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8,102,194
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$
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72,038,922
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Voyage expenses (including commissions to related party)
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(650,883
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)
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(7,194,386
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Vessel operating expenses
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(4,369,495
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(24,391,842
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Depreciation and amortization
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(1,142,821
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(8,817,431
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Management fees - related parties
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(480,000
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)
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(4,590,000
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General and administrative expenses (including related party)
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(531,560
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)
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(2,072,791
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Operating income
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$
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927,435
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$
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24,972,472
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Interest and finance costs, net (including interest costs to related party)
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(1,892,892
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)
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(1,717,406
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)
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Foreign exchange losses
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(19,164
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(6,791
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US Source Income Taxes
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—
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(188,631
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Net (Loss)/Income
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$
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(984,621
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$
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23,059,644
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(Loss)/Earnings Per Share (basic):
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$
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(0.21
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$
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0.29
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(Loss)/Earnings Per Share (diluted):
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$
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(0.21
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$
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0.28
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Weighted average number of shares outstanding, basic:
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4,642,169
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80,322,071
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Weighted average number of shares outstanding, diluted:
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4,642,169
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82,201,129
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December 31, 2020
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September 30, 2021
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BALANCE SHEET DATA
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Total current assets
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$
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13,564,154
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$
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50,880,651
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Vessels, net
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58,045,628
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361,672,814
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Other non-current assets
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2,761,573
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14,120,535
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Total assets
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$
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74,371,355
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$
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426,674,000
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Total current liabilities
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10,903,907
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27,479,052
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Long-term debt, net (including current portion, excluding related party)
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13,185,866
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82,441,393
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Long-term debt, related party
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5,000,000
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—
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Common stock
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13,121
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94,610
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Total shareholders’ equity
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$
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52,383,619
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$
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328,139,324
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Common shares issued and outstanding
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13,121,238
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94,610,088
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Nine months ended
September 30, |
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CASH FLOW DATA
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2020
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2021
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Net cash (used in) /provided by operating activities
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$
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(311,276
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$
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28,521,280
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Net cash used in investing activities
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(9,586,347
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)
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(312,521,845
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Net cash provided by financing activities
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$
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42,976,604
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$
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316,951,200
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Set forth below are selected operational and financial statistical data of our Fleet for each of the nine-month periods ended September 30, 2020 and 2021 that we
believe are useful in better analyzing trends in our results of operations:
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Selected Historical Operational Data
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Nine Months Ended
September 30,
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2020
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2021
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FLEET PERFORMANCE DATA:
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Average number of vessels in operation in period (1)
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3.2
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15.9
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Age of vessels in operation at end of period
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16.1
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13.5
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Represents the number of vessels that constituted our Fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our Fleet during the period divided by
the number of days in the period.
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5
Results of Operations
Nine months ended September 30, 2021, compared to the nine months ended September 30, 2020
Vessel revenues, net
Vessel revenues, net of charterers’ commissions, increased from $8.1 million in the nine months ended September 30, 2020, to $72.0 million in the same period of
2021. This increase was largely driven by the acquisition and delivery to our fleet of 22 vessels since September 30, 2020. The increase in vessel revenues during the nine months ended September 30, 2021, as compared with the same period of 2020 was
further underpinned by the strong dry bulk shipping market since the first quarter of 2021, resulting in higher daily net revenues earned on average for our fleet as compared with these earned during the same period of 2020.
Voyage expenses
Voyage expenses increased by $6.5 million, from $0.7 million in the nine months ended September 30, 2020, to $7.2 million in the corresponding period of 2021.
This increase in voyage expenses is mainly associated with (i) the increase in port expenses and bunkers consumption for certain vessels of our fleet as a result of being engaged during the nine months ended September 30, 2021 in the voyage charter
market, and (ii) the increase in brokerage commissions, commensurate with the above discussed increase in vessel revenues.
Vessel operating expenses
The increase in operating expenses by $20.0 million, from $4.4 million in the nine-month period ended September 30, 2020, to $24.4 million in the same period of
2021 mainly reflects the increase in the number of vessels in our Fleet.
General and Administrative Expenses
General and administrative expenses in the nine months ended September 30, 2020, amounted to $0.5 million, whereas, in the same period of 2021, general and
administrative expenses totaled $2.1 million. This increase stemmed from incurred legal and other corporate fees primarily related to the growth of our company, and the $0.3 million quarterly flat fee we pay Castor Ships, effective September 1, 2020.
Management fees- related parties
Management fees in the nine months ended September 30, 2020, amounted to $0.5 million, whereas, in the same period of 2021, management fees totaled $4.6
million. This increase in management fees is primarily due to the sizeable increase of our Fleet following the acquisitions referenced above, resulting in a substantial increase in the total number of calendar days in the period during which we owned
our vessels for which our managers charge us with a daily management fee. Effective September 1, 2020, the daily management fees for the technical management of our fleet by Pavimar, was increased from $500 to $600 per vessel and the daily management
fees for the commercial and administrative management of our Fleet by Castor Ships was set to $250 per vessel.
Depreciation and amortization
Depreciation and amortization expenses comprise of vessels’ depreciation and the amortization of vessels’ capitalized dry-dock costs. Depreciation and amortization charges totaled $1.1 million in the nine months ended September 30, 2020, as compared to $8.8 million in the nine months ended September 30, 2021.
Vessels’ depreciation increased from $1.0 million in the nine-months ended September 30, 2020, to $8.1 million in the nine-months ended
September 30, 2021, resulting primarily from the increase in the size of our Fleet.
6
Interest and finance costs, net
The decrease by $0.2 million in net interest and finance costs in the nine months ended September 30, 2021, as compared with the previous year’s corresponding
nine month period, is mainly the result of having incurred during the nine months ended September 30, 2020, $1.1 million of non-cash recurring and/or accelerated amortization expenses related to deferred financing
costs and to a beneficial conversion feature recognized in connection with our repaid, as of the same period, $5.0 million convertible debentures. In the absence of these non-cash charges, our interest and finance costs
would have increased by $0.9 million in the nine months ended September 30, 2021, as compared with the previous year’s corresponding nine month period, reflecting the increase in our weighted average indebtedness
from $20.6 million during the nine months ended September 30, 2020, to $50.0 million during the nine months ended September 30, 2021.
Significant Accounting Policies
For a description of our significant accounting policies, see Note 2 to our audited consolidated financial statements included in our 2020 Annual Report, as
supplemented by Note 2 to our interim unaudited consolidated financial statements contained elsewhere in this report.
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 from 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 sea worthiness and 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 and maintaining cash reserves against fluctuations in operating cash flows. Our funding and
treasury activities are intended to maximize investment returns while maintaining appropriate liquidity.
For the nine months ended September 30, 2021, our principal sources of funds were the net proceeds from (i) cash flow from our operations, (ii)
the issuance of common stock pursuant to the three follow-on direct registered offerings we conducted in January and April of this year, (iii) the issuance of common stock pursuant to warrant exercises under our then effective warrant schemes, (iv) the
incurrence of secured debt as discussed below under "Our Borrowing Activities", and (v) the issuance of common stock pursuant to sales under our current at-the-market common stock offering program. As of September 30, 2021, and December 31, 2020, we
had cash and cash equivalents of $42.4 million and $9.4 million (which includes minimum cash required to be maintained in both periods under our effective debt agreements). Cash and cash equivalents are primarily held in U.S. dollars.
As of September 30, 2021, we had $84.0 million of gross indebtedness outstanding under our debt agreements, of which $11.9 million matures in
the twelve-month period ending September 30, 2022. As of September 30, 2021, 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 September 30, 2021, we had a working capital surplus of $23.4 million as compared to
a working capital surplus of $2.7 million as of December 31, 2020. We believe that our current sources of funds and those that we anticipate to internally generate in the next twelve months from the date of this report, will be sufficient to fund the
operations of our Fleet, meet our normal working capital requirements and service the principal and interest on our debt for a period of at least the next twelve months from the date of this report.
7
We have entered into a contract to purchase and install ballast water management system (“BWMS”) on four of our dry bulk carriers. As of September 30, 2021, we had completed and put into use the BWMS installation on one of these four dry bulk carriers, the Magic Sun, whereas the contracted BWMS system installations on
the Magic P, Magic Rainbow and the Magic Moon are expected to take place during 2022. It is estimated that the contractual
obligations related to these purchases, excluding installation costs, will be on aggregate approximately €0.6 million (or $0.7 million on the basis of a Euro/US Dollar exchange rate of
€1.0000/$1.1642 as of September 30, 2021), of which $0.01 million are due in 2021 and $0.68 million are due in 2022. These costs will be capitalized and depreciated over the remainder of the life of each vessel.
As of September 30, 2021, we had also installed and put into use a BWMS on the Wonder Mimosa and were also in the
process of installing BWMS on the Magic Vela that is expected to be put into use during the fourth quarter of 2021, whereas we expect the BWMS installations on our remaining non-contracted four tankers and one
dry bulk carrier to conclude within 2022.
During the nine months ended September 30, 2021, cash provided by operating activities amounted to $28.5 million as compared to $0.3 million used in operating
activities in the corresponding period of 2020, which represents an increase in cash provided from operating activities of $28.8 million. This increase is largely associated with expansion of our business and the higher net revenues we earned during
the nine-month period ended September 30, 2021.
Our Borrowing Activities
Please refer to Note 7 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for information
regarding our borrowing activities as of September 30, 2021, and subsequent, as of the date of this report.
Cash Flows
The following table summarizes our net cash flows (used in)/provided from operating, investing, and financing activities and our cash, cash equivalents and
restricted cash for the nine-month periods ended September 30, 2020, and 2021:
|
Nine months ended September 30,
|
||||||||
|
(in thousands of U.S. Dollars)
|
2020
|
2021
|
||||||
|
Net cash (used in) /provided by operating activities
|
$
|
(311,276
|
)
|
$
|
28,521,280
|
|||
|
Net cash used in investing activities
|
(9,586,347
|
)
|
(312,521,845
|
)
|
||||
|
Net cash provided by financing activities
|
42,976,604
|
316,951,200
|
||||||
|
Cash, cash equivalents and restricted cash at beginning of period
|
5,058,939
|
9,426,903
|
||||||
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
38,137,920
|
$
|
42,377,538
|
||||
8
Operating Activities:
Net cash provided by operating activities amounted to $28.5 million for the nine-month period ended September 30, 2021, consisting of net income after non-cash
items of $31.1 million and a working capital cash decrease of $2.6 million.
Net cash used in operating activities amounted to $0.3 million for the nine-month period ended September 30, 2020, consisting of net income after non-cash items
of $1.0 million, offset by a reduction in working capital by $1.3 million.
The $28.8 million increase, hence, in net cash from operating activities in the nine-month period ended September 30, 2021, as compared with the same period of
2020 reflects mainly the increase in net income after non-cash items which was largely driven by the expansion of our business and the improvement of the dry bulk charter rates earned by the vessels of our fleet.
Investing Activities:
Net cash used in investing activities amounting to $312.5 million for the nine-months ended September 30, 2021, mainly reflects the cash outflows associated
with the vessel acquisitions we made during the period, as discussed in more detail under Note 6 of our unaudited interim consolidated financial statements included elsewhere in this report.
Net cash used in investing activities during the nine-months ended September 30, 2020 amounting to $9.6 million, mainly comprises of the (i) $0.4 million paid
portion of capitalized expenditures incurred in connection with the Magic P partial BWMS installation that was completed during the vessel’s dry-docking in the first quarter of 2020, (ii) $7.9 million in cash
outflows related to the acquisition of the Magic Rainbow that took place in August 2020 and (iii) $1.3 million of cash advances paid in the period for the acquisition of the Magic
Horizon, delivered in October 2020.
Financing Activities:
Net cash provided by financing activities during the nine-months ended September 30, 2021 amounting to $317.0 million, relates to (i) the net proceeds raised
under our 2021 first, second and third registered direct equity offerings amounting to $157.0 million, (ii) the proceeds from the issuance of stock under our then effective warrant schemes amounting to $83.4 million, (iii) the net proceeds from the
issuance of stock pursuant to our effective at-the-market common stock offering program amounting to $12.5 million, (iv) the $72.5 million net proceeds related to the secured credit facilities that we entered into during the nine-months ended September
30, 2021 (as further discussed under Note 7 of the unaudited interim consolidated financial statements included elsewhere in this report), as offset by (v) $3.4 million of period scheduled principal repayments under our existing secured credit
facilities and (vi) the repayment, at its extended maturity, of the $5.0 million unsecured term loan to Thalassa Investment Co. S.A., or Thalassa, an entity affiliated with our CEO.
The nine-month period ended September 30, 2020 amounted to a $43.0 million cash inflow from financing activities resulted from (i) the net proceeds raised under
our 2020 underwritten public offering and the 2020 registered direct offering amounting to $34.5 million, (ii) the proceeds from the issuance of stock under our then effective warrant schemes amounting to $1.1 million and (iii) the $9.5 million gross
cash proceeds under our $5.0 Million Convertible Debentures and the Chailease Financial Services Facility, that were offset by (i) $1.5 million of scheduled principal repayments under our then existing secured credit facilities and (ii) an aggregate
$0.6 million cash outflow related to deferred finance fees payments in the period.
9
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Page
|
|
Unaudited Interim Consolidated Balance Sheets as of December 31, 2020, and September 30, 2021
|
F-2
|
|
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income/(Loss) for the nine months ended September 30, 2020, and 2021
|
F-3
|
|
Unaudited Interim Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2020, and 2021
|
F-4
|
|
Unaudited Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 2020, and 2021
|
F-5
|
|
Notes to Unaudited Interim Condensed Consolidated Financial Statements
|
F-6
|
F-1
|
CASTOR MARITIME INC.
|
|
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETS
|
|
December 31, 2020 and September 30, 2021
|
|
(Expressed in U.S. Dollars – except for share data)
|
|
ASSETS
|
December 31,
|
September 30,
|
||||||||||
|
CURRENT ASSETS:
|
Note
|
2020
|
2021
|
|||||||||
|
Cash and cash equivalents
|
$
|
8,926,903
|
$
|
36,286,219
|
||||||||
|
Restricted Cash
|
7
|
—
|
2,391,319
|
|||||||||
|
Accounts receivable trade, net
|
1,302,218
|
5,090,855
|
||||||||||
|
Due from related party
|
3
|
1,559,132
|
—
|
|||||||||
|
Inventories
|
714,818
|
4,162,309
|
||||||||||
|
Prepaid expenses and other assets
|
1,061,083
|
2,710,880
|
||||||||||
|
Deferred charges, net
|
—
|
239,069
|
||||||||||
|
Total current assets
|
13,564,154
|
50,880,651
|
||||||||||
|
NON-CURRENT ASSETS:
|
||||||||||||
|
Vessels, net
|
3, 6
|
58,045,628
|
361,672,814
|
|||||||||
|
Advances for vessel acquisition
|
6
|
—
|
3,772,150
|
|||||||||
|
Restricted cash
|
7
|
500,000
|
3,700,000
|
|||||||||
|
Due from related party
|
3
|
—
|
1,104,394
|
|||||||||
|
Prepaid expenses and other assets, non-current
|
200,000
|
1,013,794
|
||||||||||
|
Deferred charges, net
|
4
|
2,061,573
|
4,530,197
|
|||||||||
|
Total non-current assets
|
60,807,201
|
375,793,349
|
||||||||||
|
Total assets
|
$
|
74,371,355
|
$
|
426,674,000
|
||||||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||
|
CURRENT LIABILITIES:
|
||||||||||||
|
Current portion of long-term debt, net
|
7
|
2,102,037
|
11,385,769
|
|||||||||
|
Current portion of long-term debt, related party
|
3, 7
|
5,000,000
|
—
|
|||||||||
|
Accounts payable
|
2,078,695
|
5,688,440
|
||||||||||
|
Due to related parties, current
|
3
|
1,941
|
1,044,556
|
|||||||||
|
Fair value of acquired time charter
|
5
|
—
|
915,514
|
|||||||||
|
Deferred revenue, net
|
108,125
|
4,093,710
|
||||||||||
|
Accrued liabilities (including $405,000 and $0 accrued interest to related party, respectively)
|
3
|
1,613,109
|
4,351,063
|
|||||||||
|
Total current liabilities
|
10,903,907
|
27,479,052
|
||||||||||
|
Commitments and contingencies
|
10
|
|||||||||||
|
NON-CURRENT LIABILITIES:
|
||||||||||||
|
Long-term debt, net
|
7
|
11,083,829
|
71,055,624
|
|||||||||
|
Total non-current liabilities
|
11,083,829
|
71,055,624
|
||||||||||
|
SHAREHOLDERS' EQUITY:
|
||||||||||||
|
Common shares, $0.001 par value; 1,950,000,000 shares authorized; 13,121,238 shares issued and outstanding as of December 31, 2020, and 94,610,088 issued and outstanding as of September 30,
2021
|
8
|
13,121
|
94,610
|
|||||||||
|
Preferred shares, $0.001 par value: 50,000,000 shares authorized:
|
8
|
|||||||||||
|
Series A Preferred Shares- 9.75% cumulative redeemable perpetual preferred shares, 480,000 shares issued and outstanding as of December 31, 2020, and September 30, 2021, respectively
|
8
|
480
|
480
|
|||||||||
|
Series B Preferred Shares – 12,000 shares issued and outstanding as of December 31, 2020, and September 30, 2021, respectively
|
8
|
12
|
12
|
|||||||||
|
Additional paid-in capital
|
53,686,741
|
306,301,313
|
||||||||||
|
(Accumulated deficit)/ Retained earnings
|
(1,316,735
|
)
|
21,742,909
|
|||||||||
|
Total shareholders' equity
|
52,383,619
|
328,139,324
|
||||||||||
|
Total liabilities and shareholders' equity
|
$
|
74,371,355
|
$
|
426,674,000
|
||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-2
|
CASTOR MARITIME INC.
|
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
For the nine months ended September 30, 2020 and 2021
|
|
(Expressed in U.S. Dollars – except for share data)
|
|
Nine months ended September 30,
|
||||||||||||
|
Note
|
2020
|
2021
|
||||||||||
|
REVENUES:
|
||||||||||||
|
Vessel revenues (net of commissions to charterers of $429,535 and $2,443,778, respectively)
|
12
|
$
|
8,102,194
|
$
|
72,038,922
|
|||||||
|
Total revenues
|
8,102,194
|
72,038,922
|
||||||||||
|
EXPENSES:
|
||||||||||||
|
Voyage expenses (including $623 and $909,598 to related parties for the nine months ended September 30, 2020, and 2021, respectively)
|
3,13
|
(650,883
|
)
|
(7,194,386
|
)
|
|||||||
|
Vessel operating expenses
|
13
|
(4,369,495
|
)
|
(24,391,842
|
)
|
|||||||
|
Management fees to related parties
|
3
|
(480,000
|
)
|
(4,590,000
|
)
|
|||||||
|
Depreciation and amortization
|
4,6
|
(1,142,821
|
)
|
(8,817,431
|
)
|
|||||||
|
General and administrative expenses (including $100,000 and $900,000 to related party for the nine months ended September 30, 2020, and 2021, respectively)
|
14
|
(531,560
|
)
|
(2,072,791
|
)
|
|||||||
|
Total expenses
|
(7,174,759
|
)
|
(47,066,450
|
)
|
||||||||
|
Operating income
|
927,435
|
24,972,472
|
||||||||||
|
OTHER INCOME/ (EXPENSES):
|
||||||||||||
|
Interest and finance costs (including $228,333 and $204,167 to related party for the nine months ended September 30, 2020, and 2021, respectively)
|
3,7,15
|
(1,926,759
|
)
|
(1,786,703
|
)
|
|||||||
|
Interest income
|
33,867
|
69,297
|
||||||||||
|
Foreign exchange losses
|
(19,164
|
)
|
(6,791
|
)
|
||||||||
|
Total other expenses, net
|
(1,912,056
|
)
|
(1,724,197
|
)
|
||||||||
|
Net (loss)/income and comprehensive (loss)/income, before taxes
|
$
|
(984,621
|
)
|
$
|
23,248,275
|
|||||||
|
US Source Income Taxes
|
—
|
(188,631
|
)
|
|||||||||
|
Net (loss)/income and comprehensive (loss)/income
|
$
|
(984,621
|
)
|
$
|
23,059,644
|
|||||||
|
(Loss)/ Earnings per common share, basic
|
11
|
$
|
(0.21
|
)
|
$
|
0.29
|
||||||
|
(Loss)/ Earnings per common share, diluted
|
11
|
$
|
(0.21
|
)
|
$
|
0.28
|
||||||
|
Weighted average number of common shares, basic
|
4,642,169
|
80,322,071
|
||||||||||
|
Weighted average number of common shares, diluted
|
4,642,169
|
82,201,129
|
||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-3
|
CASTOR MARITIME INC.
|
|
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the nine months ended September 30, 2020, and 2021
|
|
(Expressed in U.S. Dollars – except for share data)
|
|
Number of shares issued
|
||||||||||||||||||||||||||||
|
Common shares
|
Preferred A shares
|
Preferred B shares
|
Par Value of Shares issued
|
Additional Paid-in capital
|
Retained earnings /(Accumulated Deficit)
|
Total Shareholders' Equity
|
||||||||||||||||||||||
|
Balance, December 31, 2019
|
331,811
|
480,000
|
12,000
|
824
|
12,766,389
|
436,798
|
13,204,011
|
|||||||||||||||||||||
|
- Issuance of common stock pursuant to the $5.0 Million Convertible Debentures
|
804,208
|
—
|
—
|
804
|
5,056,969
|
—
|
5,057,773
|
|||||||||||||||||||||
|
- Issuance of common stock pursuant to the June Equity Offering, net of issuance costs
|
5,908,269
|
—
|
—
|
5,908
|
18,542,342
|
—
|
18,548,250
|
|||||||||||||||||||||
|
- Issuance of common stock pursuant to the July Equity Offering, net of issuance costs
|
5,775,000
|
—
|
—
|
5,775
|
15,632,076
|
—
|
15,637,851
|
|||||||||||||||||||||
|
- Issuance of common stock pursuant to Class A Warrants exercise
|
301,950
|
—
|
—
|
302
|
1,056,523
|
—
|
1,056,825
|
|||||||||||||||||||||
|
- Beneficial conversion feature pursuant to the issuance of the $5.0 Million Convertible Debentures
|
—
|
—
|
—
|
—
|
532,437
|
—
|
532,437
|
|||||||||||||||||||||
|
- Net loss
|
—
|
—
|
—
|
—
|
—
|
(984,621
|
)
|
(984,621
|
)
|
|||||||||||||||||||
|
Balance, September 30, 2020
|
13,121,238
|
480,000
|
12,000
|
13,613
|
53,586,736
|
(547,823
|
)
|
53,052,526
|
||||||||||||||||||||
|
Balance, December 31, 2020
|
13,121,238
|
480,000
|
12,000
|
13,613
|
53,686,741
|
(1,316,735
|
)
|
52,383,619
|
||||||||||||||||||||
|
- Issuance of common stock pursuant to the registered direct offerings (Note 8)
|
42,405,770
|
—
|
—
|
42,406
|
156,824,134
|
—
|
156,866,540
|
|||||||||||||||||||||
|
- Issuance of common stock pursuant to warrant exercises (Note 8)
|
34,428,840
|
—
|
—
|
34,429
|
83,386,517
|
—
|
83,420,946
|
|||||||||||||||||||||
|
- Issuance of common stock pursuant to the ATM Program (Note 8)
|
4,654,240
|
—
|
—
|
4,654
|
12,403,921
|
—
|
12,408,575
|
|||||||||||||||||||||
|
- Net income
|
—
|
—
|
—
|
—
|
—
|
23,059,644
|
23,059,644
|
|||||||||||||||||||||
|
Balance, September 30, 2021
|
94,610,088
|
480,000
|
12,000
|
95,102
|
306,301,313
|
21,742,909
|
328,139,324
|
|||||||||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
|
CASTOR MARITIME INC.
|
|
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2020 and 2021 (Expressed in U.S. Dollars)
|
|
Note
|
Nine months ended September 30,
|
|||||||||||
|
2020
|
2021
|
|||||||||||
|
Cash Flows (used in)/provided by Operating Activities:
|
||||||||||||
|
Net (loss)/income
|
$
|
(984,621
|
)
|
$
|
23,059,644
|
|||||||
|
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by Operating activities:
|
||||||||||||
|
Vessels’ depreciation and amortization of deferred dry-docking costs
|
4,6
|
1,142,821
|
8,817,431
|
|||||||||
|
Amortization and write-off of deferred finance charges
|
15
|
570,955
|
259,264
|
|||||||||
|
Amortization of other deferred charges
|
112,508
|
—
|
||||||||||
|
Deferred revenue amortization
|
(430,994
|
)
|
—
|
|||||||||
|
Amortization of fair value of acquired charter
|
5
|
—
|
(1,024,486
|
)
|
||||||||
|
Interest settled in common stock
|
57,773
|
—
|
||||||||||
|
Amortization and write-off of convertible notes beneficial conversion feature
|
532,437
|
—
|
||||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Accounts receivable trade, net
|
(340,855
|
)
|
(3,788,637
|
)
|
||||||||
|
Inventories
|
(86,568
|
)
|
(3,447,491
|
)
|
||||||||
|
Due from/to related parties
|
(117,650
|
)
|
1,497,353
|
|||||||||
|
Prepaid expenses and other assets
|
(764,454
|
)
|
(2,463,591
|
)
|
||||||||
|
Dry-dock costs paid
|
(564,766
|
)
|
(2,695,383
|
)
|
||||||||
|
Other deferred charges
|
26,494
|
(239,069
|
)
|
|||||||||
|
Accounts payable
|
116,934
|
3,774,595
|
||||||||||
|
Accrued liabilities
|
314,957
|
786,065
|
||||||||||
|
Deferred revenue
|
103,753
|
3,985,585
|
||||||||||
|
Net Cash (used in)/provided by Operating Activities
|
(311,276
|
)
|
28,521,280
|
|||||||||
|
Cash flow used in Investing Activities:
|
||||||||||||
|
Vessel acquisitions (including time charter attached) and other vessel improvements
|
5, 6
|
(8,311,347
|
)
|
(308,764,151
|
)
|
|||||||
|
Advances for vessel acquisition
|
6
|
(1,275,000
|
)
|
(3,757,694
|
)
|
|||||||
|
Net cash used in Investing Activities
|
(9,586,347
|
)
|
(312,521,845
|
)
|
||||||||
|
Cash flows provided by Financing Activities:
|
||||||||||||
|
Gross proceeds from issuance of common stock and warrants
|
8
|
39,053,325
|
265,307,807
|
|||||||||
|
Common stock issuance expenses
|
(3,467,735
|
)
|
(12,381,108
|
)
|
||||||||
|
Proceeds from long-term debt
|
7
|
9,500,000
|
74,040,000
|
|||||||||
|
Repayment of long-term debt
|
7
|
(1,500,000
|
)
|
(3,442,000
|
)
|
|||||||
|
Repayment of related party debt
|
3
|
—
|
(5,000,000
|
)
|
||||||||
|
Payment of deferred financing costs
|
(608,986
|
)
|
(1,573,499
|
)
|
||||||||
|
Net cash provided by Financing Activities
|
42,976,604
|
316,951,200
|
||||||||||
|
Net increase in cash, cash equivalents, and restricted cash
|
33,078,981
|
32,950,635
|
||||||||||
|
Cash, cash equivalents and restricted cash at the beginning of the period
|
5,058,939
|
9,426,903
|
||||||||||
|
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
38,137,920
|
$
|
42,377,538
|
||||||||
|
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
||||||||||||
|
Cash and cash equivalents
|
$
|
37,637,920
|
$
|
36,286,219
|
||||||||
|
Restricted cash, current
|
—
|
2,391,319
|
||||||||||
|
Restricted cash, non-current
|
500,000
|
3,700,000
|
||||||||||
|
Cash, cash equivalents, and restricted cash
|
$
|
38,137,920
|
42,377,538
|
|||||||||
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||||||
|
Cash paid for interest
|
568,433
|
1,423,429
|
||||||||||
|
Shares issued in connection with the settlement of the $5.0 Million Convertible Debentures
|
5,057,773
|
—
|
||||||||||
|
Unpaid capital raising costs (included in Accounts payable and Accrued Liabilities)
|
342,664
|
230,639
|
||||||||||
|
Unpaid vessel acquisition and other vessel improvement costs (included in Accounts payable and Accrued liabilities)
|
309,185
|
1,622,532
|
||||||||||
|
Unpaid advances for vessel acquisitions (included in Accounts payable and Accrued Liabilities)
|
—
|
14,456
|
||||||||||
|
Unpaid deferred dry-dock costs (included in Accounts payable and Accrued liabilities)
|
—
|
1,391,469
|
||||||||||
|
Unpaid deferred financing costs
|
—
|
28,238
|
||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
|
CASTOR MARITIME INC.
|
|
NOTES TO 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 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 began trading on the Norwegian OTC and on February 11, 2019, they began trading on the Nasdaq Capital Market, or Nasdaq, under the symbol “CTRM”.
As of September 30, 2021, Castor was controlled by Thalassa Investment Co. S.A. (“Thalassa”) by virtue of the 100% Series B preferred shares owned by it and, as a result, could control 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.
Pavimar S.A., a corporation incorporated under the laws of the Republic of the Marshall Islands (“Pavimar”), a related party
controlled by the sister of Petros Panagiotidis, Ismini Panagiotidis, provides technical, crew and operational management services to the Company.
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, manages overall the Company’s business and
provides commercial ship management, chartering and administrative services to the Company.
As of September 30, 2021, the Company owned a diversified fleet of 26 vessels, with a combined carrying capacity of 2.2
million dwt, consisting of 1 Capesize, 7 Kamsarmax and 10 Panamax dry bulk vessels, as well as 1 Aframax, 5 Aframax/LR2 and 2 Handysize tankers. Details of the Company’s vessel owning subsidiary companies as of
September 30, 2021, are listed below.
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
|
Bistro Maritime Co. (“Bistro”)
|
Marshall Islands
|
M/V Magic Sun
|
75,311
|
2001
|
September 2019
|
|
3
|
Pikachu Shipping Co. (“Pikachu”)
|
Marshall Islands
|
M/V Magic Moon
|
76,602
|
2005
|
October 2019
|
|
4
|
Bagheera Shipping Co. (“Bagheera”)
|
Marshall Islands
|
M/V Magic Rainbow
|
73,593
|
2007
|
August 2020
|
|
5
|
Pocahontas Shipping Co. (“Pocahontas”)
|
Marshall Islands
|
M/V Magic Horizon
|
76,619
|
2010
|
October 2020
|
|
6
|
Jumaru Shipping Co. (“Jumaru”)
|
Marshall Islands
|
M/V Magic Nova
|
78,833
|
2010
|
October 2020
|
|
7
|
Super Mario Shipping Co. (“Super Mario”)
|
Marshall Islands
|
M/V Magic Venus
|
83,416
|
2010
|
March 2021
|
|
8
|
Pumba Shipping Co. (“Pumba”)
|
Marshall Islands
|
M/V Magic Orion
|
180,200
|
2006
|
March 2021
|
|
9
|
Kabamaru Shipping Co. (“Kabamaru”)
|
Marshall Islands
|
M/V Magic Argo
|
82,338
|
2009
|
March 2021
|
|
10
|
Luffy Shipping Co. (“Luffy”)
|
Marshall Islands
|
M/V Magic Twilight
|
80,283
|
2010
|
April 2021
|
|
11
|
Liono Shipping Co. (“Liono”)
|
Marshall Islands
|
M/V Magic Thunder
|
83,375
|
2011
|
April 2021
|
|
12
|
Stewie Shipping Co. (“Stewie”)
|
Marshall Islands
|
M/V Magic Vela
|
75,003
|
2011
|
May 2021
|
|
13
|
Snoopy Shipping Co. (“Snoopy”)
|
Marshall Islands
|
M/V Magic Nebula
|
80,281
|
2010
|
May 2021
|
|
14
|
Mulan Shipping Co. (“Mulan”)
|
Marshall Islands
|
M/V Magic Starlight
|
81,048
|
2015
|
May 2021
|
|
15
|
Cinderella Shipping Co. (“Cinderella”)
|
Marshall Islands
|
M/V Magic Eclipse
|
74,940
|
2011
|
June 2021
|
|
16
|
Rocket Shipping Co. (“Rocket”)
|
Marshall Islands
|
M/T Wonder Polaris
|
115,341
|
2005
|
March 2021
|
|
17
|
Gamora Shipping Co. (“Gamora”)
|
Marshall Islands
|
M/T Wonder Sirius
|
115,341
|
2005
|
March 2021
|
|
18
|
Starlord Shipping Co. (“Starlord”)
|
Marshall Islands
|
M/T Wonder Vega
|
106,062
|
2005
|
May 2021
|
|
19
|
Hawkeye Shipping Co. (“Hawkeye”)
|
Marshall Islands
|
M/T Wonder Avior
|
106,162
|
2004
|
May 2021
|
|
20
|
Elektra Shipping Co. (“Elektra”)
|
Marshall Islands
|
M/T Wonder Arcturus
|
106,149
|
2002
|
May 2021
|
|
21
|
Vision Shipping Co. (“Vision”)
|
Marshall Islands
|
M/T Wonder Mimosa
|
37,620
|
2006
|
May 2021
|
|
22
|
Colossus Shipping Co. (“Colossus”)
|
Marshall Islands
|
M/T Wonder Musica
|
106,290
|
2004
|
June 2021
|
|
23
|
Xavier Shipping Co. (“Xavier”)
|
Marshall Islands
|
M/T Wonder Formosa
|
37,562
|
2006
|
June 2021
|
F-6
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 1. |
Basis of Presentation and General information (continued):
|
|
24
|
Songoku Shipping Co. (“Songoku”)
|
Marshall Islands
|
M/V Magic Pluto
|
74,940
|
2013
|
August 2021
|
|
25
|
Asterix Shipping Co. (“Asterix”)
|
Marshall Islands
|
M/V Magic Perseus
|
82,158
|
2013
|
August 2021
|
|
26
|
Johnny Bravo Shipping Co. (“Johnny Bravo”)
|
Marshall Islands
|
M/V Magic Mars
|
76,822
|
2014
|
September 2021
|
Consolidated subsidiaries formed to acquire vessels:
|
1
|
Garfield Shipping Co. (“Garfield”)
|
Consolidated non-vessel owning subsidiaries:
|
1
|
Castor Maritime SCR Corp.
|
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. Accordingly, they do not include all the information and notes
required by U.S. GAAP for complete financial statements. 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, 2020, filed with the SEC on March
30, 2021 (the “2020 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 nine-month period ended September 30, 2021, are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2021.
| 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, 2020, included in the Company’s 2020 Annual Report. Apart from the below, there have been no material changes to these policies in the nine-month period ended September 30, 2021.
New significant accounting policies adopted during the nine months ended September 30, 2021
Segment Reporting
The Company reports financial information and evaluates its operations by charter revenues and not by the length, type of vessel or type of
ship employment for its customers, i.e., time or voyage charters. The Company does not use discrete financial information to evaluate the operating results for each such type of charter or vessel. Although revenue can be identified for these types
of charters or vessels, management cannot and does not identify expenses, profitability or other financial information for these various types of charters or vessels. As a result, management, including the chief operating decision maker, reviews
operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it operates as one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to
trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
Intangible Assets/Liabilities Related to Time Charters Acquired
When and where the Company identifies any assets or liabilities associated with the acquisition of a vessel, the Company records all such identified assets or liabilities at fair
value. Fair value is determined by reference to market data obtained by independent broker’s valuations. The valuations include the fair value of the vessel with and without the attached time
F-7
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 2. |
Significant Accounting Policies and Recent Accounting Pronouncements (continued):
|
charter and the cost of the acquisition is then allocated to the vessel and the intangible asset or liability on the basis of their relative fair values.
The intangible asset or liability is amortized as an adjustment to revenues over the remaining term of the assumed time charter and are classified as
non-current assets or liabilities, as applicable, in the accompanying consolidated balance sheets. Impairment testing is performed when events or changes in circumstances indicate that the carrying amount of the intangible asset may not be
recoverable.
Revenue and expenses recognition
Revenues related to voyage charter contracts
The Company accounts for its voyage charter contracts following the provisions of ASC 606, Revenue from
contracts with customers. The Company has determined that its voyage charter agreements do not contain a lease because the charterer under such contracts does not have the right to control the use of the vessel since the Company retains
control over the operations of the vessel, provided also that the terms of the voyage charter are predetermined, and any change requires the Company’s consent and are therefore considered service contracts.
Under a voyage charter agreement, a contract is made in the spot market for the use of a vessel for a specific voyage to
transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount.The Company assessed the provisions of ASC 606 and concluded that there is one single performance
obligation when accounting for its voyage charters, which is to provide the charterer with an integrated transportation service within a specified period of time. In addition, the Company has concluded that voyage charter contracts meet the
criteria to recognize revenue over time as the charterer simultaneously receives and consumes the benefits of the Company’s performance. As a result of the foregoing, voyage revenue derived from voyage charter contracts is recognized from the
time when a vessel arrives at the load port until completion of cargo discharge. Demurrage income, which is considered a form of variable consideration, is included in voyage revenues, and represents payments by the charterer to the vessel owner
when loading or discharging time exceeds the stipulated time in the voyage charter agreements. Demurrage income for the nine-month period ended September 30, 2021, was not material.
Under a voyage charter agreement, the Company incurs and pays for certain voyage expenses, primarily consisting of bunkers consumption,
brokerage commissions, port and canal costs. Following the adoption of ASC 606 and the implementation of ASC 340-40, Other assets and deferred costs, all voyage costs are considered contract fulfilment costs
because they are directly related to the performance of the voyage contract. Those costs are expensed as incurred, with the exception of contract fulfilment costs and incremental costs of obtaining a contract incurred prior to the commencement of
loading the cargo on the relevant vessel, which are capitalized to the extent the Company, in its reasonable judgement, determines that they (i) are directly related to a contract, (ii) will be recoverable and (iii) enhance the Company’s resources
by putting the Company’s vessel in a location to satisfy its performance obligation under a contract. These capitalized contract costs are amortized on a straight-line basis as the related performance obligations are satisfied. Costs to fulfill the
contract prior to arriving at the load port primarily consist of bunkers which are deferred and amortized during the voyage period. These capitalized contract fulfilment costs are recorded under “Deferred charges, net” in the accompanying unaudited
interim consolidated balance sheets.
Revenues related to pool contracts
As from the second quarter of 2021, we began operation for certain of our tanker vessels on pools. Pool revenue for each vessel is determined
in accordance with the profit-sharing mechanism specified within each pool agreement. In particular, our pool managers aggregate the revenues and expenses of all of the pool participants and distribute the net earnings to participants, as applicable:
• (1) based on the pool points attributed to each vessel (which are determined by vessel attributes such as cargo carrying capacity, fuel
consumption, and construction and other characteristics); or
F-8
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 2. |
Significant Accounting Policies and Recent Accounting Pronouncements (continued):
|
• (2) by making adjustments to account for the cost performance, the bunkering fees and the trading capabilities of each vessel; and
• the number of days the vessel participated in the pool in the period (excluding off-hire days).
We record revenue generated from the pools in accordance with ASC 842, Leases,
since we assess that a vessel pool arrangement is a variable time charter with the variable lease payments recorded as income in profit or loss in the period in which the changes in facts and circumstances on which the variable lease payments are
based occur.
Recent Accounting Pronouncements:
There are no recent accounting pronouncements the adoption of which are expected to have a material effect on the Company’s unaudited interim
consolidated condensed financial statements in the current period.
| 3. |
Transactions with Related Parties:
|
During the nine-month periods ended September 30, 2020, and 2021, 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/ (loss):
|
Nine months ended
September 30, |
Nine months ended
September 30, |
|||||||
|
2020
|
2021
|
|||||||
|
Management fees-related parties
|
||||||||
|
Management fees – Pavimar (a)
|
$
|
450,000
|
$
|
3,240,000
|
||||
|
Management fees – Castor Ships (c)
|
30,000
|
1,350,000
|
||||||
|
Included in Voyage expenses
|
||||||||
|
Charter hire commissions – Castor Ships (c)
|
$
|
623
|
$
|
909,598
|
||||
|
Included in Interest and finance costs
|
||||||||
|
Interest expenses (b) – Thalassa
|
$
|
228,333
|
$
|
204,167
|
||||
|
Included in General and administrative expenses
|
||||||||
|
Administration fees – Castor Ships (c)
|
$
|
100,000
|
$
|
900,000
|
||||
|
Included in Vessels’ cost
|
||||||||
|
Sale & purchase commission – Castor Ships (c)
|
$
|
138,600
|
$
|
3,037,400
|
||||
As of December 31, 2020, and September 30, 2021, balances with related parties consisted of the following:
|
December 31,
2020 |
September 30,
2021 |
|||||||
|
Assets:
|
||||||||
|
Working capital advances granted to Pavimar (a) – current
|
$
|
1,559,132
|
$
|
—
|
||||
|
Working capital advances granted to Pavimar (a) – non-current
|
—
|
1,104,394
|
||||||
|
Liabilities:
|
||||||||
|
Working capital advances granted from Pavimar (a) – current
|
—
|
977,559
|
||||||
|
Related party debt (b) – Thalassa
|
$
|
5,000,000
|
$
|
—
|
||||
|
Accrued loan interest (b) – Thalassa
|
405,000
|
—
|
||||||
|
Voyage commissions & management fees due to Castor Ships (c)
|
1,941
|
66,997
|
||||||
F-9
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 3. |
Transactions with Related Parties (continued):
|
(a) Pavimar:
Each of the Company’s ship-owning subsidiaries have entered into separate vessel management agreements with Pavimar, a company controlled by Ismini
Panagiotidis, the sister of Petros Panagiotidis (see Note 1). Pursuant to the terms of the management agreements, Pavimar provides the Company with a wide range of shipping services, including crew management, technical management, operational
employment management, insurance arrangements, provisioning, bunkering, vessel accounting and audit support services, in exchange for a daily fee. During the eight-month period ended August 31, 2020, the Company’s
vessels then comprising its fleet were charged with a daily management fee of $500 per day per vessel. On September 1, 2020, the Company’s then shipowning subsidiaries entered into revised ship management agreements
with Pavimar which replaced the then existing ship management agreements in their entirety (the “Technical Management Agreements”). Pursuant to the Technical Management Agreements, effective September 1, 2020, Pavimar provides the Company’s
shipowning subsidiaries with the range of technical, crewing, insurance and operational services stipulated in the previous agreements in exchange for which Pavimar is now paid a daily fee of $600 per vessel, which may be also subject to an annual
review on their anniversary date. The Technical Management Agreements have a term of five years, and such term automatically renews for a successive five-year term on each anniversary of their effective date,
unless the agreements are terminated earlier in accordance with the provisions contained therein. In the event that the Technical Management Agreements are terminated by the ship-owning subsidiaries other than by reason of default by Pavimar, a
termination fee equal to four times the total amount of the daily management fee calculated on an annual basis shall be payable from the ship-owning subsidiaries to Pavimar.
As of September 30, 2021, Pavimar has subcontracted the technical management of three of the
Company’s dry bulk vessels and eight of its tanker vessels to third-party ship-management companies. These third-party management companies provide technical management 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 has as of September 30, 2021, paid Pavimar working capital guarantee deposits aggregating the amount of $1,362,646, of
which $258,252 are included in Due to related party, current and $1,104,394 are presented in Due from related party, non-current in the accompanying unaudited interim consolidated balance sheets.
During the nine months ended September 30, 2020, and 2021, the Company incurred management fees under
the Technical Management Agreements amounting to $450,000 and $3,240,000, respectively, which are separately presented in Management fees to related parties in the accompanying unaudited interim condensed consolidated statements of comprehensive
income/(loss).
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, 2020, an amount of $1,559,132 was due from Pavimar in relation to these working capital advances granted to it, net of payments made by Pavimar on behalf of the Company vessels, whereas, as of
September 30, 2021, an amount of $1,235,811 was owed to Pavimar in relation to working capital advances granted from it.
(b) Thalassa:
$5.0 Million Term Loan Facility
Details of the Company’s loan agreement with Thalassa are discussed in Note 3 of the consolidated financial statements for
the year ended December 31, 2020, included in the Company’s 2020 Annual Report.
During the nine months ended September 30, 2020, and 2021, the Company incurred interest costs in connection with the $5.0 million unsecured
term loan with Thalassa (the “$5.0 Million Term Loan Facility”) amounting to $228,333 and $204,167, which are included in Interest and finance costs in the accompanying unaudited interim consolidated statements of comprehensive income/(loss).
F-10
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 3. |
Transactions with Related Parties (continued):
|
At its extended maturity, on September 3, 2021, the Company repaid $5.0 million of principal and $609,167 of accrued interest due and owing
from it to Thalassa and, as a result, the Company, with effect from that date, was discharged from all its liabilities and obligations under the $5.0 Million Term Loan Facility.
(c) Castor Ships:
On September 1, 2020, the Company and its shipowning subsidiaries entered into a master management agreement (the “Master
Agreement”) with Castor Ships. Pursuant to the terms of the Master Agreement each of the Company’s shipowning subsidiaries also entered into separate commercial ship management agreements with Castor Ships (the “Commercial Shipmanagement Agreements”
and together with the Master Agreement, the “Castor Ships Management Agreements”). Under the terms of the Castor Ships Management Agreements, Castor Ships manages overall the Company’s business and provides commercial ship management, chartering and
administrative services, including, but not limited to, securing employment for the Company’s fleet, arranging and supervising the vessels’ commercial operations, handling all the Company’s vessel sale and purchase transactions, undertaking related
shipping project and management advisory and support services, as well as other associated services requested from time to time by the Company and its shipowning subsidiaries. In exchange for these services, the Company and its subsidiaries pay
Castor Ships (i) a flat quarterly management fee in the amount of $0.3 million for the management and administration of the Company’s business, (ii) a daily fee of $250 per vessel for the provision of the services under the Commercial Shipmanagement
Agreements, (iii) a commission rate of 1.25% on all charter agreements arranged by Castor Ships and (iv) a commission of 1% on each vessel sale and purchase transaction.
The Castor Ships Management Agreements have a term of five years, and such term automatically renews for a successive five-year term on each
anniversary of the effective date, unless the agreements are terminated earlier in accordance with the provisions contained therein. In the event that the Castor Ships Management Agreements are terminated by the Company or are terminated by Castor
Ships due to a material breach of the Master Agreement by the Company or a change of control in the Company, Castor Ships shall be entitled to a termination fee equal to four times the total amount of the flat management fee and the per vessel
management fees calculated on an annual basis. The Commercial Shipmanagement Agreements also provide that the management fees may be subject to an annual review on their anniversary.
During the nine month period ended September 30, 2020 and 2021, the Company incurred (i) management
fees amounting to $100,000 and $900,000, respectively, for the management and administration of the Company’s business, which are included in General and administrative expenses in the accompanying unaudited interim condensed consolidated statements
of comprehensive income/(loss), (ii) management fees amounting to $30,000 and $1,350,000, respectively, for the provision of the services under the Commercial Shipmanagement Agreements which are included in Management fees to related parties in the
accompanying unaudited interim condensed consolidated statements of comprehensive income/(loss), (iii) charter hire commissions amounting to $623 and $909,598, respectively, which are included in Voyage expenses in the accompanying unaudited interim
condensed consolidated statements of comprehensive income/(loss) and (iv) sale and purchase commission amounting to $138,600 and $3,037,400, respectively, which is included in Vessels, net in the accompanying unaudited interim consolidated balance
sheets.
| 4. |
Deferred charges, net:
|
The movement in deferred dry-docking costs, net in the accompanying unaudited interim consolidated balance sheets is as follows:
|
Dry-docking costs
|
||||
|
Balance December 31, 2020
|
$
|
2,061,573
|
||
|
Additions
|
3,179,170
|
|||
|
Amortization
|
(710,546
|
)
|
||
|
Balance September 30, 2021
|
$
|
4,530,197
|
||
F-11
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 4. |
Deferred charges, net (continued):
|
On November 27, 2020, the Magic Moon commenced its scheduled dry-dock which was completed on
January 13, 2021, and, on May 11, 2021 the Magic Rainbow commenced its scheduled dry-dock which was completed on June 7, 2021. The Wonder Mimosa completed its
scheduled dry-dock on July 9, 2021, whereas the Magic Vela was undergoing dry-dock as of September 30, 2021. Amortization of deferred dry-docking costs is included in Depreciation and amortization in the
accompanying unaudited interim condensed consolidated statements of comprehensive income/(loss).
| 5. |
Fair value of acquired time charter:
|
In connection with the acquisition of the Magic Pluto in May 2021 which was delivered to the Company on August 6,
2021, with a time charter attached that had an estimated remaining term of approximately three and a half months, the Company recognized an intangible liability of $1,940,000 which represents the fair value of the
unfavorable time charter acquired.
For the nine months ended September 30, 2021, the amortization of the below market acquired time charter related to the Magic Pluto acquisition amounted to $1,024,486 and is included in Vessel revenues in the accompanying unaudited interim consolidated statements of comprehensive income/(loss). The unamortized portion of the
respective intangible liability as of September 30, 2021, amounting to $915,514, is presented under “Fair value of acquired time charter” in the accompanying unaudited interim consolidated balance sheet and will be amortized to revenues through the
remaining term of the respective charter, expected to conclude within the fourth quarter of 2021.
| 6. |
Vessels, net/ Advances for vessel acquisitions:
|
(a) Vessels, net:
The amounts in the accompanying unaudited interim consolidated balance sheets are analyzed as follows:
|
Vessel Cost
|
Accumulated depreciation
|
Net Book Value
|
||||||||||
|
Balance December 31, 2020
|
60,906,094
|
(2,860,466
|
)
|
58,045,628
|
||||||||
|
— Acquisitions, improvements and other vessel costs
|
269,434,221
|
—
|
269,434,221
|
|||||||||
|
— Transfers from Advances for vessel acquisitions (b)
|
42,299,850
|
—
|
42,299,850
|
|||||||||
|
— Period depreciation
|
—
|
(8,106,885
|
)
|
(8,106,885
|
)
|
|||||||
|
Balance September 30, 2021
|
372,640,165
|
(10,967,351
|
)
|
361,672,814
|
||||||||
Vessel Acquisitions and other Capital Expenditures:
During the nine-month period ended September 30, 2021, the Company agreed to acquire 13 dry bulk carriers and 8 tanker vessels for an
aggregate cash consideration of $322.5 million (the “2021 Vessel Acquisitions”). Of the 2021 Vessel Acquisitions, 20 were concluded during the nine months ended September 30, 2021, whereas the latter one was concluded on October 26, 2021. The
concluded acquisitions were financed with cash on hand and the net proceeds from the debt financings discussed under Note 7 below. Details regarding the 2021 Vessel Acquisitions delivered as of September 30, 2021, are discussed below.
On January 20, 2021, the Company, through Pumba, entered into an agreement to purchase a 2006 Japanese-built Capesize dry
bulk carrier, the Magic Orion, from an unaffiliated third party for a purchase price of $17.5 million. The Magic Orion was delivered to the Company on March 17, 2021.
On January 28, 2021, the Company, through Super Mario, entered into an agreement to purchase a 2010 Japanese-built Kamsarmax dry bulk carrier,
the Magic Venus, from an unaffiliated third party for a purchase price of $15.9 million. The Magic Venus was delivered to the Company on March 2, 2021.
F-12
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 6. |
Vessels, net/ Advances for vessel acquisitions (continued):
|
On February 2, 2021, the Company, through Kabamaru, entered into an agreement to purchase a 2009 Japanese-built Kamsarmax dry bulk carrier,
the Magic Argo, from an unaffiliated third party for a purchase price of $14.5 million. The Magic Argo was delivered to the Company on March 18, 2021.
On February 5, 2021, the Company, through Rocket and Gamora, entered into agreements to purchase two 2005 Korean-built Aframax LR2 tankers,
the Wonder Polaris and the Wonder Sirius, for an aggregate purchase price of $27.2 million from an unaffiliated third-party seller. The Wonder Polaris and the Wonder Sirius were delivered to the Company on March 11, 2021 and March 22, 2021, respectively.
On February 18, 2021, the Company, through Luffy, entered into an agreement to purchase a 2010 Korean-built Kamsarmax dry bulk carrier, the Magic Twilight, from an unaffiliated third party for a purchase price of $14.8 million. The Magic Twilight was delivered to the Company on April 9, 2021.
On March 9, 2021, the Company, through Snoopy, entered into an agreement to purchase a 2010 Korean-built Kamsarmax dry bulk
carrier, the Magic Nebula, from an unaffiliated third party for a purchase price of $15.5 million. The Magic Nebula was delivered to the Company on May 20, 2021.
On March 11, 2021, the Company, through Liono, entered into an agreement to purchase a 2011 Japanese-built Kamsarmax dry
bulk carrier, the Magic Thunder, from an unaffiliated third party for a purchase price of $16.9 million. The Magic Thunder was delivered to the Company on April 13,
2021.
On April 9, 2021, the Company, through Cinderella, entered into an agreement to purchase a 2011 Japanese-built Panamax dry
bulk carrier, the Magic Eclipse, from an unaffiliated third party for a purchase price of $18.5 million. The Magic Eclipse was delivered to the Company on June 7,
2021.
On April 15, 2021, the Company, through Mulan, entered into an agreement to purchase a 2015 Chinese-built Kamsarmax dry bulk
carrier, the Magic Starlight, from an unaffiliated third party for a purchase price of $23.5 million. The Magic Starlight was delivered to the Company on May 23,
2021.
On April 16, 2021, the Company, through Starlord, entered into an agreement to purchase a 2005 Korean-built Aframax tanker,
the Wonder Vega, from an unaffiliated third party for a purchase price of $14.8 million. The Wonder Vega was delivered to the Company on May 21, 2021.
On April 27, 2021, the Company, through Stewie, entered into an agreement to purchase a 2011 Chinese-built Panamax dry bulk
carrier, the Magic Vela, from an unaffiliated third party for a purchase price of $14.5 million. The Magic Vela was delivered to the Company on May 12, 2021.
On April 29, 2021, the Company, through Vision, Xavier, Hawkeye, Colossus and Elektra, entered into separate
agreements for the en bloc acquisition from an unaffiliated third party of a tanker fleet comprising of two 2006 Korean-built Handysize tankers, two 2004 Korean-built Aframax/LR2 tankers and one 2002 Korean-built Aframax/LR2 tanker for an aggregate purchase price of $49.3 million. The Wonder Avior, Wonder Mimosa, Wonder Arcturus, Wonder Musica and Wonder Formosa were delivered to the Company on May 27, May 31, May 31, June 15 and June 22, 2021, respectively.
On April 30, 2021, the Company, through Asterix, entered into an agreement to purchase a 2013 Japanese-built Kamsarmax dry
bulk carrier, the Magic Perseus, from an unaffiliated third party for a purchase price of $21.0 million. The Magic Perseus was delivered to the Company on August 9,
2021.
On May 7, 2021, the Company, through Songoku, entered into an agreement to purchase a 2013 Japanese-built Panamax dry bulk
carrier, the Magic Pluto, from an unaffiliated third party for a purchase price of $19.1 million. The Magic Pluto was delivered to the Company on August 6, 2021.
F-13
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 6. |
Vessels, net/ Advances for vessel acquisitions (continued):
|
On May 10, 2021, the Company, through Johnny Bravo, entered into an agreement to purchase a 2014 Korean-built Panamax dry
bulk carrier, the Magic Mars, from an unaffiliated third party for an initial purchase price of $21.0 million, that was reduced, pursuant to a purchase price adjustment mechanism dependent at the delivery of
the vessel, to $20.4 million. The Magic Mars was delivered to the Company on September 20, 2021.
During the nine months ended September 30, 2021, the Company incurred aggregate vessel improvement costs of
$1.9 million mainly relating to (i) the purchase and installation of a ballast water management system (“BWMS”) on the Wonder Mimosa during the vessel’s dry dock that initiated late in the second
quarter of 2021 and concluded early in the third quarter of 2021, and (ii) the consideration paid to acquire the BWMS equipment of the Magic Vela concurrently with the completion of its acquisition from the
Company and additional BWMS installation costs incurred during the vessel’s dry dock which was in progress as of September 30, 2021.
As of September 30, 2021, 11 of the 26 vessels in the Company’s fleet having an aggregate carrying value of $140.1 million were first priority
mortgaged as collateral to their loan facilities (Note 7).
| (b) |
Advances for vessel acquisitions
|
The amounts in the accompanying unaudited interim consolidated balance sheets are analyzed as follows:
|
Vessel Cost
|
||||
|
Balance December 31, 2020
|
$
|
—
|
||
|
— Advances for vessel acquisitions and other vessel pre-delivery costs
|
46,072,000
|
|||
|
—Transfer to Vessels, net (a)
|
(42,299,850)
|
|||
|
Balance September 30, 2021
|
$
|
3,772,150
|
||
During the nine months ended September 30, 2021, the Company took delivery of the vessels discussed under (a) above and,
hence, certain advances paid in the period for these vessels were transferred from Advances for vessel acquisitions to Vessels, net. The balance of Advances for vessel acquisitions as of September 30, 2021, mainly reflects the advance payment
incurred for the acquisition of the Magic Phoenix (Note 16).
F-14
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 7. |
Long-Term Debt:
|
The amount of long-term debt (including related party debt discussed under Note 3) shown in the accompanying unaudited
interim consolidated balance sheet of September 30, 2021, is analyzed as follows:
|
Year/Period Ended
|
|||||||||
|
Loan facilities
|
Borrowers
|
December 31, 2020
|
September 30, 2021
|
||||||
|
$11.0 Million Term Loan Facility (a)
|
Spetses- Pikachu
|
$
|
9,400,000
|
$
|
8,200,000
|
||||
|
$4.5 Million Term Loan Facility (b)
|
Bistro
|
4,050,000
|
3,600,000
|
||||||
|
$15.3 Million Term Loan Facility (c)
|
Pocahontas- Jumaru
|
—
|
14,348,000
|
||||||
|
$18.0 Million Term Loan Facility (d)
|
Rocket- Gamora
|
—
|
17,150,000
|
||||||
|
$40.75 Million Term Loan Facility (e)
|
Liono-Snoopy-Cinderella-Luffy
|
—
|
40,750,000
|
||||||
|
Total long-term debt
|
$
|
13,450,000
|
$
|
84,048,000
|
|||||
|
Less: Deferred financing costs
|
(264,134
|
)
|
(1,606,607
|
)
|
|||||
|
Total long-term debt, net of deferred finance costs
|
$
|
13,185,866
|
82,441,393
|
||||||
|
Presented:
|
|||||||||
|
Current portion of long-term debt
|
$
|
2,200,000
|
$
|
11,925,000
|
|||||
|
Less: Current portion of deferred finance costs
|
(97,963
|
)
|
(539,231
|
)
|
|||||
|
Current portion of long-term debt, net of deferred finance costs
|
$
|
2,102,037
|
$
|
11,385,769
|
|||||
|
Non-Current portion of long-term debt
|
11,250,000
|
72,123,000
|
|||||||
|
Less: Non-Current portion of deferred finance costs
|
(166,171
|
)
|
(1,067,376
|
)
|
|||||
|
Non-Current portion of long-term debt, net of deferred finance costs
|
$
|
11,083,829
|
$
|
71,055,624
|
|||||
|
Debt instruments from related party
|
|||||||||
|
$5.0 Million Term Loan Facility (Note 3(b))
|
Castor
|
5,000,000
|
—
|
||||||
|
Total long-term debt from related party, current
|
$
|
5,000,000
|
$
|
—
|
|||||
| a. |
$11.0 Million Term Loan Facility:
|
Details of the Company’s $11.0 million senior secured credit facility with Alpha Bank A.E, or the $11.0 Million Term Loan
Facility, are discussed in Note 6 of the consolidated financial statements for the year ended December 31, 2020, included in the Company’s 2020 Annual Report.
| b. |
$4.5 Million Term Loan Facility:
|
Details of the Company’s $4.5 million senior secured credit facility with Chailease International Financial Services Co. Ltd.,
or the $4.5 Million Term Loan Facility, are discussed in Note 6 of the consolidated financial statements for the year ended December 31, 2020, included in the Company’s 2020 Annual Report.
F-15
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 7. |
Long-Term Debt (continued):
|
| c. |
$15.3 Million Term Loan Facility
|
On January 22, 2021, pursuant to the terms of a credit agreement, Pocahontas and Jumaru, the Company’s wholly owned
subsidiaries, entered into a $15.3 million senior secured term loan facility with Hamburg Commercial Bank AG, or the $15.3 Million Term Loan Facility. The loan was drawn down on January 27, 2021, in two tranches, is repayable in sixteen (16) equal
quarterly installments of $471,000 each, plus a balloon installment in the amount of $7.8 million payable at maturity and bears interest at a margin plus LIBOR per annum. The facility contains a standard security package including first preferred
mortgages on the vessels, pledge of bank accounts, charter assignments and a general assignment over the vessels' earnings, insurances and any requisition compensation in relation to the vessels owned by the borrowers, and is guaranteed by the
Company. Pursuant to the terms of the $15.3 Million Term Loan Facility, the Company is also subject to a certain minimum liquidity restriction requiring the borrowers to maintain a certain cash balance with the lender (the “Minimum Liquidity
Accounts”), to maintain and gradually fund certain dry-dock reserve accounts (the “Dry-dock Reserve Accounts”) in order to ensure the payment of any costs incurred in relation to the next dry-docking of each mortgaged vessel, as well as to certain
customary, for this type of facilities, negative covenants. The credit agreement governing the $15.3 Million Term Loan Facility also requires maintenance of a minimum security cover ratio being the aggregate amount of (i) the aggregate market value
of the collateral vessels, (ii) the value of the Minimum Liquidity Accounts, (iii) the value of the Dry-dock Reserve Accounts and (iv) any additional security provided, over the aggregate principal amount outstanding of the loan. The $15.3 Million
Term Loan Facility net proceeds were used to fund the 2021 Vessel Acquisitions (Note 6(a)) and for general corporate purposes.
| d. |
$18.0 Million Term Loan Facility
|
On April 27, 2021, the Company, through Rocket and Gamora, its wholly owned subsidiaries owning the Wonder Sirius and the Wonder Polaris (the “Borrowers”), entered into a
$18.0 million senior secured term loan facility with Alpha Bank A.E., or the $18.0 Million Term Loan Facility. The facility was drawn down on May 7, 2021, in two tranches. The $18.0 Million Term Loan Facility has a term of four years from the
drawdown date, bears interest at a margin over LIBOR per annum and is repayable in (a) sixteen (16) quarterly instalments (1 to 4 in the amount of $850,000 and 5 to 16 in the amount of $675,000) and (b) a balloon installment in the amount of $6.5
million payable at maturity. The facility is secured by first preferred mortgage and first priority general assignment covering earnings, insurances and requisition compensation over the vessels owned by the Borrowers, an earnings account pledge,
shares security deed relating to the shares of the vessels’ owning subsidiaries, manager’s undertakings and is guaranteed by the Company. The $18.0 Million Term Loan Facility contains certain customary minimum liquidity restrictions and financial
covenants that require the Borrowers to maintain a certain level of minimum free liquidity per collateralized vessel (“the Minimum Liquidity Deposit”) and meet a specified minimum security requirement ratio, which is the ratio of the aggregate
market value of the mortgaged vessels plus the value of any additional security and the value of the Minimum Liquidity Deposit to the aggregate principal amounts due under the $18.0 Term Loan Facility. The $18.0 Million Term Loan Facility net
proceeds were used to fund the 2021 Vessel Acquisitions (Note 6(a)) and for general corporate purposes.
| e. |
$40.75 Million Term Loan Facility
|
On July 23, 2021, pursuant to the terms of a credit agreement, Liono, Snoopy, Cinderella and Luffy, the Company’s wholly owned subsidiaries,
entered into a $40.75 million senior secured term loan facility with Hamburg Commercial Bank AG, or the $40.75 Million Term Loan Facility. The loan was drawn down on July 27, 2021, in four tranches, is repayable in twenty (20) equal quarterly
installments of $1,154,000 each, plus a balloon installment in the amount of $17.7 million payable at maturity simultaneously with the last instalment and bears interest at a margin plus LIBOR per annum. The facility contains a standard security
package including first preferred mortgages on the vessels, pledge of bank accounts, charter assignments, and a general assignment over the vessels' earnings, insurances and any requisition compensation in relation to the vessels owned by the
borrowers and is guaranteed by the Company. Pursuant to the terms of the $40.75 Million Term Loan Facility, the Company is also subject to a certain minimum liquidity restriction requiring the borrowers to maintain a certain cash balance with the
lender (the “Minimum Liquidity
F-16
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 7. |
Long-Term Debt (continued):
|
Accounts”), a specified portion of which shall be released to the borrowers following the repayment of the fourth installment
with respect to all four tranches, to maintain and gradually fund certain dry-dock reserve accounts (the “Dry-dock Reserve Accounts”) in order to ensure the payment of any costs incurred in relation to the next dry-docking of each mortgaged vessel,
as well as to certain customary, for this type of facilities, negative covenants. The credit agreement governing the $40.75 Million Term Loan Facility also requires maintenance of a minimum security cover ratio being the aggregate amount of (i) the
aggregate market value of the collateral vessels, (ii) the value of the Dry-dock Reserve Accounts and (iii) any additional security provided, over the aggregate principal amount outstanding of the loan. The $40.75 Million Term Loan Facility net
proceeds were used to fund the 2021 Vessel Acquisitions (Note 6(a)) and for general corporate purposes.
As of September 30, 2021, the Company was in compliance with all financial covenants prescribed in its debt agreements.
Restricted cash as of September 30, 2021, includes (i) $4.6 million of minimum liquidity deposits required pursuant to the
$11.0 Million Term Loan Facility, the $18.0 Million Term Loan Facility, the $15.3 Million Term Loan Facility and the $40.75 Million Term Loan Facility, (ii) $0.1 million in the Dry-dock Reserve Accounts and (iii) $1.4 million of retention deposits.
Restricted cash as of December 31, 2020, includes $0.5 million of non-legally restricted cash as per the $11.0 Million Term
Loan Facility minimum liquidity requirements, or $0.25 million per collateralized vessel.
The annual principal payments for the Company’s outstanding debt arrangements as of September 30, 2021, required to be made
after the balance sheet date, are as follows:
|
Twelve-month period ending September 30,
|
Amount
|
|||
|
2022
|
$
|
11,925,000
|
||
|
2023
|
11,400,000
|
|||
|
2024
|
11,400,000
|
|||
|
2025
|
27,037,000
|
|||
|
2026
|
22,286,000
|
|||
|
Total long-term debt
|
$
|
84,048,000
|
||
The weighted average interest rate on the Company’s long-term debt for the nine months ended September 30, 2020, and 2021 was 5.2% and 3.8%
respectively.
Total interest incurred on long-term debt for the nine months ended September 30, 2020, and 2021, amounted to $811,569 and $1,424,148
respectively, and is included in Interest and finance costs (Note 15) in the accompanying unaudited interim condensed consolidated statements of comprehensive income/(loss).
| 8. |
Equity Capital Structure:
|
Under the Company's articles of incorporation, 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. For a further description of the terms and rights of the Company’s capital stock and details of its previous equity
transactions please refer to Note 7 of the consolidated financial statements for the year ended December 31, 2020, included in the Company’s 2020 Annual Report.
2021 First Registered Direct Equity Offering
On December 30, 2020, the Company entered into agreements with certain unaffiliated institutional investors pursuant to which it
offered and sold 9,475,000 common shares and warrants to purchase up to 9,475,000 common shares (the “2021 First Private Placement Warrants”) in a registered direct offering or the 2021 First Registered Direct Equity Offering. In
F-17
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 8. |
Equity Capital Structure (continued):
|
connection with the 2021 First Registered Direct Equity Offering, which closed on January 5, 2021, the Company received gross and net cash
proceeds of approximately $18.0 million and $16.5 million, respectively.
The 2021 First Private Placement Warrants issued in
the 2021 First Registered Direct Equity Offering had a term of five years and were exercisable immediately and throughout their term for $1.90 per common share (American style option). The exercise price of the
2021 First Private Placement Warrants was subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Company’s common shares and upon any distributions of assets, including cash, stock or other property to existing shareholders.
As of February 10, 2021, all the 2021 First Private Placement Warrants had been exercised, and, pursuant to their exercise and the issuance by
the Company of 9,475,000 common shares, the Company received gross and net proceeds of $18.0 million.
On initial recognition the fair value of the 2021 First Private Placement Warrants was $22.2 million and was determined using the
Black-Scholes methodology. The fair value was considered by the Company to be classified as Level 3 in the fair value hierarchy since it was derived by unobservable inputs. The major unobservable input in connection with the valuation of the 2021
First Private Placement Warrants was the volatility used in the valuation model, which was approximated by using historical observations of the Company’s share price. The annualized historical volatility that has been applied in the 2021 First
Private Placement Warrants valuation was 137.5%. A 5% increase in the volatility applied would have led to an increase of 1.7% in the fair value of the 2021 First Private Placement Warrants.
2021 Second Registered Direct Equity Offering
On January 8, 2021, the Company entered into agreements with certain unaffiliated institutional investors pursuant to which it
offered and sold 13,700,000 common shares and warrants to purchase up to 13,700,000 common shares (the “2021 Second Private Placement Warrants”) in a registered direct offering or the 2021 Second Registered Direct Equity Offering. In connection with the 2021 Second Registered Direct Equity Offering, which closed on January 12, 2021, the Company received gross and net cash proceeds of approximately $26.0 million and $24.1 million, respectively.
The 2021 Second Private Placement Warrants issued in
the 2021 Second Registered Direct Equity Offering had a term of five years and were exercisable immediately and throughout their term for $1.90 per common share (American style option). The exercise price of
the 2021 Second Private Placement Warrants was subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Company’s common shares and also upon any distributions of assets, including cash, stock or other property to existing shareholders.
As of February 10, 2021, all the 2021 Second Private Placement Warrants had been exercised, and, pursuant to their exercise and the issuance
by the Company of 13,700,000 common shares, the Company received gross and net proceeds of $26.0 million.
On initial recognition the fair value of the 2021 Second Private Placement Warrants was $37.3 million and was determined using the
Black-Scholes methodology. The fair value was considered by the Company to be classified as Level 3 in the fair value hierarchy since it was derived by unobservable inputs. The major unobservable input in connection with the valuation of the 2021
Second Private Placement Warrants was the volatility used in the valuation model, which was approximated by using historical observations of the Company’s share price. The annualized historical volatility that has been applied in the 2021 Second
Private Placement Warrants valuation was 152.1%. A 5% increase in the volatility applied would have led to an increase of 1.3% in the fair value of the 2021 Second Private Placement Warrants.
F-18
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 8. |
Equity Capital Structure (continued):
|
2021 Third Registered Direct Equity Offering
On April 5, 2021, the Company entered into agreements with certain unaffiliated institutional investors pursuant to which it
offered and sold 19,230,770 common shares and warrants to purchase up to 19,230,770 common shares (the “2021 Third Private Placement Warrants”) in a registered direct offering or the 2021 Third Registered Direct Equity Offering. In connection with the 2021 Third Registered Direct Equity Offering, which closed on April 7, 2021, the Company received gross and net cash proceeds of approximately $125.0 million and $116.3 million, respectively.
The 2021 Third Private Placement Warrants issued in
the 2021 Third Registered Direct Equity Offering have a term of five years and are exercisable immediately and throughout their term for $6.50 per common share (American style option). The exercise price of the
2021 Third Private Placement Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Company’s common shares and also upon any distributions of assets, including cash, stock or other property to existing shareholders.
Between their issuance date and September 30, 2021, there were no exercises of the Third Private Placement Warrants and, as a result, as of
September 30, 2021, 19,230,770 Third Private Placement Warrants remained unexercised and potentially issuable into common stock of the Company.
On initial recognition the fair value of the 2021 Third Private Placement Warrants was $106.6 million and was determined using the
Black-Scholes methodology. The fair value was considered by the Company to be classified as Level 3 in the fair value hierarchy since it was derived by unobservable inputs. The major unobservable input in connection with the valuation of the 2021
Third Private Placement Warrants was the volatility used in the valuation model, which was approximated by using historical observations of the Company’s share price. The annualized historical volatility that has been applied in the 2021 Third
Private Placement Warrants valuation was 201.7%. A 5% increase in the volatility applied would have led to an increase of 0.7% in the fair value of the 2021 Third Private Placement Warrants.
The Company accounted for the 2021 First, Second and Third Private Placement Warrants as equity in accordance with the accounting guidance
under ASC 815-40. The accounting guidance provides a scope exception from classifying and measuring as a financial liability a contract that would otherwise meet the definition of a derivative if the contract is both (i) indexed to the entity's own
stock and (ii) meets the equity classifications conditions. The Company concluded these warrants were equity-classified since they contained no provisions which would require the Company to account for the warrants as a derivative liability, and
therefore were initially measured at fair value in permanent equity with subsequent changes in fair value not measured.
At-the-market (“ATM”) common stock offering program
On June 14, 2021, the Company, entered into an equity distribution agreement, or as commonly referred to, an at-the-market
offering, with Maxim Group LLC (“Maxim”), under which the Company may sell an aggregate offering price of up to $300.0 million of its common stock with Maxim acting as a sales agent over a minimum period of 12 months (the “ATM Program”). No warrants,
derivatives, or other share classes were associated with this transaction. As of September 30, 2021, the Company had received gross proceeds of $12.9 million under the ATM Program by issuing 4,654,240 common shares, whereas the net proceeds under the
ATM Program, after deducting sales commissions and other transaction fees and expenses, amounted to $12.4 million.
Issuance of common stock in connection with the Class A Warrants and the July 2020 equity offering
warrants
During the nine months ended September 30, 2021, the Company issued 5,546,705 common shares upon the exercise of an
equivalent number of Class A Warrants issued in the June 2020 follow-on offering and 5,707,135 common shares upon the exercise of an equivalent number of warrants issued in the July 2020 follow-on equity offering. As of September 30, 2021, the
Company raised $39.4 million in proceeds from the partial exercise of warrants issued in the respective equity offerings.
F-19
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 8. |
Equity Capital Structure (continued):
|
Reverse Stock Split
On May 28, 2021, 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 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 May 28, 2021, was decreased to 89,955,848 while the par value of the Company's common shares remained unchanged at $0.001 per share.
| 9. |
Financial Instruments and Fair Value Disclosures:
|
The principal financial assets of the Company consist of cash at banks, restricted cash, trade accounts receivable and amounts due from related party. The
principal financial liabilities of the Company consist of trade accounts payable, amounts due to related parties 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, trade accounts receivable, amounts due from/to related party/(ies) and trade accounts payable: The carrying values reported in the accompanying unaudited interim 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. The carrying value of these instruments is separately reflected in the accompanying unaudited interim consolidated balance sheets.
|
| ◾ |
Long-term debt: The secured credit facilities discussed in Note 7, 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 LIBOR
rates are observable at commonly quoted intervals for the full terms of the loans.
|
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.
| 10. |
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, or for which a provision should be established in the accompanying unaudited interim 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 unaudited interim 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.
F-20
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 10. |
Commitments and contingencies (continued):
|
| (a) |
Commitments under Contracts for BWMS Installation
|
The Company has entered into a contract to purchase and install BWMS on four of its dry bulk carriers. As of
September 30, 2021, the Company had completed and put into use the BWMS installation on one of these four dry bulk carrriers, the Magic Sun, whereas the contracted BWMS system installations on the Magic P, Magic Rainbow and the Magic Moon are expected to take place during 2022. It is estimated that the contractual obligations
related to these purchases, excluding installation costs, will be on aggregate approximately €0.6 million (or $0.7 million on the basis of a Euro/US Dollar exchange rate of €1.0000/$1.1642 as of September 30, 2021), of
which $0.01 million are due in 2021 and $0.68 million are due in 2022. These costs will be capitalized and depreciated over the remainder of the life of each vessel.
| (b) |
Commitments under long-term lease contracts
|
The following table sets forth the Company’s future minimum contracted lease payments (gross of charterers’ commissions), based on vessels’ commitments to non-cancelable fixed time charter contracts as of September 30, 2021. The calculation does not include any assumed
off-hire days.
|
Twelve-month period ending September 30,
|
Amount
|
|||
|
2022
|
$
|
31,200,274
|
||
|
Total
|
$
|
31,200,274
|
||
| 11. |
Earnings/ (Loss) Per Share:
|
The Company calculates earnings/(loss) per share by dividing net income/(loss) available to common shareholders in each period
by the weighted-average number of common shares outstanding during that period, after adjusting for the effect of cumulative dividends on the Series A Preferred Shares, whether or not earned, and only at periods when dividends on the Series A
Preferred Shares are contractually allowed to accumulate. As further disclosed under Note 7 of the audited financial statements included in the 2020 Annual Report, dividends on the Series A Preferred Shares neither accrue nor accumulate
during the period from July 1, 2019 until December 31, 2021 and the Company does not have any dividend priority restrictions to holders of its common shares during this period.
Diluted earnings/(loss) per 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. During the nine months ended September 30, 2021, the denominator of diluted earnings per common share calculation includes the incremental
shares assumed issued under the treasury stock method weighted for the period the shares were outstanding with respect to warrants that were outstanding during the nine-month period ended September 30, 2021. Securities that could potentially dilute
basic earnings per share for the nine-month period ended September 30, 2021, that were excluded from the computation of diluted earnings per share because to do so would have been antidilutive, were the unexercised, as of September 30, 2021, Third
Private Placement Warrants, calculated in accordance with the treasury stock method.
For the nine-month period ended September 30, 2020, the Company incurred losses and the effect of the warrants outstanding during that period
and as of that date, would be anti-dilutive. Hence, for the nine months ended September 30, 2020 “Basic loss per share” equaled “Diluted loss per share”.
The components of the calculation of basic and diluted earnings/(loss) per common share in each of the periods comprising the accompanying unaudited interim
condensed consolidated statements of comprehensive income/(loss) are as follows:
F-21
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 11. |
Earnings/ (Loss) Per Share (continued):
|
|
Nine months ended September 30,
|
Nine months ended September 30,
|
|||||||
|
2020
|
2021
|
|||||||
|
Net (loss)/ income and comprehensive (loss)/income
|
$
|
(984,621
|
)
|
$
|
23,059,644
|
|||
|
Less: Cumulative dividends on Series A Preferred Shares
|
—
|
—
|
||||||
|
Net (loss)/income and comprehensive (loss)/ income available to common shareholders
|
(984,621
|
)
|
23,059,644
|
|||||
|
Weighted average number of common shares outstanding, basic
|
4,642,169
|
80,322,071
|
||||||
|
(Loss)/Earnings per common share, basic
|
(0.21
|
)
|
0.29
|
|||||
|
Plus: Dilutive effect of warrants
|
—
|
1,879,058
|
||||||
|
Weighted average number of common shares outstanding, diluted
|
4,642,169
|
82,201,129
|
||||||
|
(Loss)/Earnings per common share, diluted
|
$
|
(0.21
|
)
|
$
|
0.28
|
|||
| 12. |
Vessel Revenues:
|
The following table includes the voyage revenues earned by the Company from time charters, voyage charters and pool agreements
for the nine-month periods ended September 30, 2020, and 2021, as presented in the accompanying unaudited interim condensed consolidated statements of comprehensive income/(loss):
|
Nine months ended September 30,
|
Nine months ended September 30,
|
|||||||
|
2020
|
2021
|
|||||||
|
Time charter revenues
|
8,102,194
|
62,767,043
|
||||||
|
Voyage charter revenues
|
—
|
7,190,688
|
||||||
|
Pool revenues
|
—
|
2,081,191
|
||||||
|
Total Vessel revenues
|
$
|
8,102,194
|
$
|
72,038,922
|
||||
As of September 30, 2021, trade accounts receivable, net increased by $3,788,637 and deferred revenue increased by
$3,985,585 compared to December 31, 2020. These changes were mainly attributable to the timing of collections, the timing of commencement of revenue recognition, the increase in charter rates and the increase in vessel revenues resultant to the
growth of the Company’s fleet during the nine months ended September 30, 2021. As of September 30, 2021, the Company had no deferred revenue related to undelivered performance obligations under any of its voyages in progress.
Further, as of September 30, 2021, deferred assets related to revenue contracts presented under “Deferred charges, net” amounted to
$239,069 as compared to $0 as of December 31, 2020 and will be expensed during the fourth quarter of 2021. This change was mainly attributable to the timing of commencement of revenue recognition.
| 13. |
Vessel Operating and Voyage Expenses:
|
The amounts in the accompanying unaudited interim condensed consolidated statements of comprehensive income/(loss) are analyzed as follows:
F-22
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 13. |
Vessel Operating and Voyage Expenses (continued):
|
|
Nine months ended September 30,
|
Nine months ended September 30,
|
|||||||
|
Vessel Operating Expenses
|
2020
|
2021
|
||||||
|
Crew & crew related costs
|
2,261,258
|
13,437,256
|
||||||
|
Repairs & maintenance, spares, stores, classification, chemicals & gases, paints, victualling
|
1,337,508
|
5,940,315
|
||||||
|
Lubricants
|
243,509
|
1,589,749
|
||||||
|
Insurances
|
311,787
|
1,896,529
|
||||||
|
Tonnage taxes
|
85,075
|
385,203
|
||||||
|
Other
|
130,358
|
1,142,790
|
||||||
|
Total Vessel operating expenses
|
$
|
4,369,495
|
$
|
24,391,842
|
||||
|
Nine months ended
September 30,
|
Nine months ended
September 30,
|
|||||||
|
Voyage expenses
|
2020
|
2021
|
||||||
|
Brokerage commissions
|
101,557
|
926,353
|
||||||
|
Brokerage commissions- related party
|
623
|
909,598
|
||||||
|
Port & other expenses
|
273,416
|
2,574,104
|
||||||
|
Bunkers consumption
|
265,124
|
4,307,676
|
||||||
|
Loss/(Gain) on bunkers
|
10,163
|
(1,523,345
|
)
|
|||||
|
Total Voyage expenses
|
$
|
650,883
|
$
|
7,194,386
|
||||
| 14. |
General and Administrative Expenses:
|
The amounts in the accompanying unaudited interim condensed consolidated statements of comprehensive income/(loss) are analyzed as follows:
|
Nine months ended
September 30,
|
Nine months ended
September 30,
|
|||||||
|
2020
|
2021
|
|||||||
|
Audit fees
|
$
|
109,740
|
$
|
206,539
|
||||
|
Chief Executive and Chief Financial Officer and directors’ compensation
|
24,000
|
36,000
|
||||||
|
Other professional fees
|
297,820
|
930,252
|
||||||
|
Administration fees-related party (Note 3(c))
|
100,000
|
900,000
|
||||||
|
Total
|
$
|
531,560
|
$
|
2,072,791
|
||||
The Chief Executive Officer and Chief Financial Officer compensation was terminated on October 1, 2020, and, subsequent to this date, all
services rendered by the Company’s Chief Executive Officer and Chief Financial Officer are included in its Master Agreement with Castor Ships (see Note 3(c)).
F-23
|
CASTOR MARITIME INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
|
| 15. |
Interest and Finance Costs:
|
The amounts in the accompanying unaudited interim consolidated balance sheets are analyzed as follows:
|
Nine months ended
September 30,
|
Nine months ended
September 30,
|
|||||||
|
2020
|
2021
|
|||||||
|
Interest on long-term debt
|
$
|
525,463
|
$
|
1,219,981
|
||||
|
Interest on long-term debt – related party (Note 3 (b))
|
228,333
|
204,167
|
||||||
|
Interest on convertible debt – non cash
|
57,773
|
—
|
||||||
|
Amortization and write-off of deferred finance charges
|
570,955
|
259,264
|
||||||
|
Amortization and write-off of convertible notes beneficial conversion features
|
532,437
|
—
|
||||||
|
Other finance charges
|
11,798
|
103,291
|
||||||
|
Total
|
$
|
1,926,759
|
$
|
1,786,703
|
||||
| 16. |
Subsequent Events:
|
| (a) |
Acquisition and delivery of the Magic Phoenix: On August 24, 2021, the Company, through Garfield, entered into an agreement to purchase a 2008 Japanese-built Panamax dry bulk carrier, the Magic Phoenix, from an unaffiliated third party for a purchase price of $18.75 million. The Magic Phoenix was delivered to the
Company on October 26, 2021.
|
| (b) |
Entry into financing term sheet: On October 19, 2021, the Company, through two of its ship-owning subsidiaries
owning the Magic Rainbow and the Magic Phoenix, entered
into a binding term sheet with a financial institution for a term loan facility of $23.15 million. The facility is expected to be executed and drawn within this year, subject to customary closing conditions.
|
| (c) |
Series A Preferred Shares redemption: On November 8, 2021, pursuant to a decision approved by the
Company’s Board of Directors, the Company served a notice of redemption to the holders of the 480,000 Series A Preferred Shares, constituting all of the issued and outstanding Series A Preferred Shares (the “Notice”). Based on the amended
and restated statement of designations of Castor dated October 10, 2019, and according to the Notice, the Series A Preferred Holders will receive a cash redemption having a value of $30.00 per Series A Preferred share not more than
30 days after the serving of the Notice, which results to a $14.4 million consideration in aggregate.
|
F-24