Euroseas Ltd 6-K, filed Sep 29, 2023
Euroseas Ltd. (ESEA)
About this 6-K
Euroseas Ltd filed this 6-K on September 29, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of
Commission File Number:
| EUROSEAS LTD. |
| (Translation of registrant’s name into English) |
| |
| |
| (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 ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 1 is Management's Discussion and Analysis of Financial Condition and Results of Operations and unaudited interim condensed consolidated financial statements of Euroseas Ltd. (the "Company") as of and for the six-month period ended June 30, 2023. Also attached hereto as Exhibit 101 is the Interactive Data file relating to the materials in this Report on Form 6-K, formatted in Inline Extensible Business Reporting Language (iXBRL).
This Report on Form 6-K is hereby incorporated by reference into the Company's Registration Statements on Form F-3 (File No. 333-268708 & File No. 333-269066) filed with the Commission on December 7, 2022 and December 29, 2022, 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.
| EUROSEAS LTD. |
||
| Dated: 29 September, 2023 |
By: |
/s/ Dr. Anastasios Aslidis |
| Name: |
Dr. Anastasios Aslidis |
|
| Title: |
Chief Financial Officer and Treasurer |
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of our financial condition and results of operations for the six months ended June 30, 2023. Unless otherwise specified herein, references to the "Company" or "we" shall include Euroseas Ltd. and its 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. For additional information relating to our management's discussion and analysis of financial condition and results of operations, please see our annual report on Form 20-F for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission on April 28, 2023.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents the Company’s selected consolidated financial and other data for each of the six-month periods ended June 30, 2022 and 2023, and as of December 31, 2022 and June 30, 2023. The selected consolidated statement of comprehensive income, cash flow and balance sheet data is derived from, and is qualified by reference to, our unaudited financial results for the six-month periods ended June 30, 2022 and 2023.
Euroseas Ltd. – Summary of Selected Historical Financials
| Six Months Ended June 30 | ||||||||
| 2022 | 2023 |
|||||||
| Statement of Comprehensive Income Data |
||||||||
| Time charter revenue |
97,448,528 | 92,771,677 | ||||||
| Commissions |
(3,595,381 | ) |
(3,139,471 | ) | ||||
| Voyage expenses |
(551,286 | ) |
(619,286 | ) | ||||
| Vessel operating expenses |
(17,830,465 | ) |
(20,142,818 | ) | ||||
| Drydocking expenses |
(2,502,744 | ) |
(1,001,882 | ) | ||||
| Related party management fees |
(2,345,944 | ) |
(2,752,178 | ) | ||||
| Vessel depreciation |
(7,827,654 | ) |
(10,888,582 | ) | ||||
| General and administrative expenses |
(1,960,481 | ) |
(2,308,006 | ) | ||||
| Other operating (expenses) / income |
(350,000 | ) | 1,429,511 | |||||
| Gain on sale of vessel |
- | 5,158,370 | ||||||
| Operating income |
60,484,573 | 58,507,335 | ||||||
| Other income / (expenses), net |
201,563 | (874,420 | ) | |||||
| Net income |
60,686,136 | 57,632,915 | ||||||
| Earnings per share - basic |
8.40 | 8.28 | ||||||
| Weighted average number of shares outstanding during the period, basic |
7,223,189 | 6,958,748 | ||||||
| Earnings per share - diluted |
8.36 | 8.25 | ||||||
| Weighted average number of shares outstanding during the period, diluted |
7,256,434 | 6,985,422 | ||||||
| Six Months Ended June 30, |
||||||||
| Cash Flow Data |
2022 |
2023 |
||||||
| Net cash provided by operating activities |
64,037,665 | 59,799,808 | ||||||
| Net cash used in investing activities |
(67,246,904 | ) |
(68,181,882 | ) | ||||
| Net cash (used in) / provided by financing activities |
(17,760,983 | ) |
15,157,382 | |||||
| Balance Sheet Data |
December 31, 2022 |
June 30, 2023 |
||||||
| Total current assets |
46,867,161 | 45,708,911 | ||||||
| Vessels, net |
216,570,426 | 249,127,642 | ||||||
| Advances for vessels under construction |
59,083,594 | 93,816,071 | ||||||
| Other non-current assets |
6,069,244 | 5,473,007 | ||||||
| Total assets |
328,590,425 | 394,125,631 | ||||||
| Current liabilities |
73,689,704 | 45,673,764 | ||||||
| Total long-term liabilities |
86,745,524 | 131,268,183 | ||||||
| Long term bank loans, including current portion |
107,231,901 | 131,798,283 | ||||||
| Total liabilities |
160,435,228 | 176,941,947 | ||||||
| Total shareholders' equity |
168,155,197 | 217,183,684 | ||||||
| Six Months Ended June 30, |
||||||||
| 2022 |
2023 |
|||||||
| Other Fleet Data (1) |
||||||||
| Number of vessels |
16.23 | 17.52 | ||||||
| Calendar days |
2,938.0 | 3,171.0 | ||||||
| Available days |
2,879.4 | 3,171.0 | ||||||
| Voyage days |
2,863.1 | 3,101.3 | ||||||
| Utilization Rate (percent) |
99.4 | % | 97.8 | % | ||||
| (In U.S. dollars per day per vessel) |
||||||||
| Average TCE rate (2) |
33,843 | 29,714 | ||||||
| Vessel Operating Expenses |
6,069 | 6,352 | ||||||
| Management Fees |
798 | 868 | ||||||
| General &Administrative Expenses |
667 | 728 | ||||||
| Total Operating Expenses excluding drydocking expenses |
7,534 | 7,948 | ||||||
| Drydocking expenses |
852 | 316 | ||||||
(1) For the definition of calendar days, available days, voyage days and utilization rate see our annual report on Form 20-F for the year ended December 31, 2022 (“Item 5A-Operating Results.”) filed on April 28, 2023.
(2) Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of our vessels. Our method of calculating TCE is determined by dividing time charter revenue and voyage charter revenue net of voyage expenses or time charter equivalent revenue, or TCE revenues, by the number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, or are related to repositioning the vessel for the next charter. TCE revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company’s management in making decisions regarding the deployment and use of its vessels and because we believe it provides useful information to investors regarding the Company's financial performance. TCE revenues and TCE rate are also standard shipping industry performance measures used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters, pool agreements and bareboat charters) under which the vessels may be employed between the periods (see also “Item 5A-Operating Results” in our annual report on Form 20-F for the year ended December 31, 2022). Our definition of TCE revenues and TCE rate may not be comparable to that used by other companies in the shipping industry.
The following table reflects the reconciliation of TCE revenues to time charter revenue and voyage charter revenue, if any, as reflected in the unaudited condensed consolidated statements of comprehensive income and our calculation of TCE rates for the periods presented.
| Six Months Ended June 30 | ||||||||
| 2022 | 2023 | |||||||
| (In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day) | ||||||||
| Time charter revenue |
97,448,528 | 92,771,677 | ||||||
| Voyage expenses |
(551,286 | ) | (619,286 | ) | ||||
| Time Charter Equivalent or TCE Revenues |
96,897,242 | 92,152,391 | ||||||
| Voyage days |
2,863.1 | 3,101.3 | ||||||
| Average TCE rate |
33,843 | 29,714 | ||||||
Six months ended June 30, 2023 compared to six months ended June 30, 2022.
Time charter revenue. Time charter revenue for the six-month period ended June 30, 2023 was $92.8 million, slightly decreased compared to the same period in 2022 during which time charter revenue amounted to $97.4 million. The decrease in time charter revenue was due to the fact that market charter rates in the six months of 2023 were on average at lower levels for our containership vessels compared to the first six months of 2022. While employed, our vessels generated an average TCE rate of $29,714 per day per vessel in the first six months of 2023, compared to $33,843 per day per vessel for the same period in 2022 (see calculation in the table above). An average of 17.52 vessels operated in the six months of 2023 for a total of 3,171 ownership days as compared to an average of 16.23 vessels during the same period in 2022 or 2,938 ownership days, a 7.9% increase in terms of ownership days. Our voyage days, reflecting the number of days our fleet earned revenue, increased by 8.3% to 3,101.3 days in the first six months of 2023 from 2,863.1 days in the same period in 2022. During the first six months of 2023, we had nil scheduled off-hire days, 28.9 commercial off-hire days and 40.8 operational off-hire days compared to 58.6 scheduled off-hire days, 5.3 commercial off-hire and 11.0 operational off-hire days in the first six months of 2022.
Commissions. Commissions for the six-month period ended June 30, 2023 amounted to $3.1 million. At 3.4% of time charter revenues, the percentage of commissions over revenues was marginally lower than in the same period of 2022 during which they amounted to 3.7% over revenues. The overall level of commissions depends on the agreed commission for each charter contract.
Voyage expenses. Voyage expenses for the six-month period ended June 30, 2023 were $0.62 million compared to $0.55 million for the same period of 2022. Voyage expenses for both periods related to expenses for repositioning voyages between time charter contracts and owners expenses at certain ports. Voyage expenses depend on the number of days our vessels are sailing for repositioning and any port or other costs incurred without a contract. Our vessels are generally chartered under time charter contracts. Voyage expenses usually represent a small fraction (0.6% and 0.7% in the first six months of 2022 and 2023, respectively) of charter revenues.
Vessel operating expenses. Vessel operating expenses were $20.1 million during the first six months of 2023 compared to $17.8 million for the same period of 2022. Daily vessel operating expenses increased between the two periods to $6,352 per day per vessel in the first six months of 2023 compared to $6,069 per day during the same period of 2022, a 4.7% increase, mainly due to the increased crewing costs for our vessels compared to the same period of 2022 as well as inflationary increases, resulting in higher prices being paid for all the categories of vessel supplies in the first six months of 2023, compared to the corresponding period in 2022.
Drydocking expenses. These are expenses we pay for our vessels to complete a drydocking as part of an intermediate or special survey or, in some cases, an in-water survey in lieu of a drydocking. The cost of passing a survey increases significantly if a dry-docking is required and depends on the extent of work that needs to be performed (such as amount of steel replacement required), the location of the drydock yard and whether it is an intermediate or a special survey with the latter almost always requiring a drydocking and more extensive work. In the first six months of 2023, one of our vessels completed her special survey with drydock for a total cost of approximately $0.6 million, with an additional amount of $0.4 million accounted for drydocking expenses incurred in relation to upcoming drydockings. During the first six months of 2022, three of our vessels completed their intermediate survey in water, one of our vessels completed her special survey with drydock and another commenced her special survey with drydock completed within the third quarter of 2022, for a total cost of $2.5 million during the period.
Vessel depreciation. Vessel depreciation for the six-month period ended June 30, 2023 was $10.9 million. Comparatively, vessel depreciation for the six-month period ended June 30, 2022 amounted to $7.8 million. This increase was due to the higher average number of vessels operating in the first six months of 2023 compared to the same period of 2022 and the fact that the two new vessels acquired at the end of May and June 2022 and the new-building vessel delivered in April 2023 have a higher average daily depreciation charge as a result of their higher acquisition price compared to the remaining vessels.
Related party management fees. These are part of the fees we pay to Eurobulk Ltd. (“Eurobulk” or the “Manager”) under our Master Management Agreement. During the first six months of 2023, Eurobulk charged us 775 Euros per day per vessel totaling $2.8 million for the period, or $868 per day per vessel. In the same period of 2022, management fees amounted to $2.3 million, or $798 per day per vessel based on the daily rate per vessel of 720 Euros. The increase in the total management fees is primarily due to the higher number of vessels operating during the first six months of 2023 compared to the same period of 2022 and the adjustment for inflation in the daily vessel management fee, effective from January 1, 2023, increasing it from 720 Euros to 775 Euros.
Other operating expenses / (income). During the six-month period ended June 30, 2023, other operating income amounted to $1.4 million, relating to loss of hire insurance received for two of our vessels. For the six month period ended June 30, 2022, other operating expenses amounted to $0.35 million, relating to the settlement of accounts with charterers.
General and administrative expenses. These expenses include the fixed portion of our management fees, incentive awards, legal and auditing fees, directors’ and officers’ liability insurance, and other miscellaneous corporate expenses. In the first six months of 2023, we incurred a total of $2.3 million of general and administrative expenses, compared to $2.0 million in the same period of 2022. This increase is mainly attributable to the increased cost of our stock incentive plan.
Gain on sale of vessel. The results of the Company for the first half of 2023 include a $5.2 million gain on the sale of M/V “Akinada Bridge” for scrap that was completed in January 2023.
Interest and other financing costs. Interest expense and other financing costs for the six-month period ended June 30, 2023 were $2.1 million, after deducting capitalized interest of $2.3 million charged on the cost of our newbuilding program, for a total interest and other financing cost of $4.4 million. Comparatively, during the same period in 2022, interest and other financing costs amounted to $2.1 million. The increase is primarily due to the increased amount of debt and the increase in the weighted average LIBOR / SOFR rates of our bank loans during the first half of 2023, compared to the same period in 2022. The weighted average LIBOR / SOFR rate on our bank debt for the six-month period ended June 30, 2023 was 4.8%, while the weighted average margin over LIBOR was 2.8% for a total weighted average interest rate of 7.6% per annum as compared to a weighted average LIBOR rate for the six month period ended June 30, 2022 of 0.5%, and a weighted average margin over LIBOR of 3.1% for a total weighted average interest rate of 3.6% per year.
Gain on derivatives, net. In the first six months of 2023, the Company recognized a $3.3 million unrealized loss and a $4.0 million realized gain on three interest rate swaps, two of which were terminated early in the second quarter of 2023, as compared to a $2.4 million unrealized gain and a $0.1 million realized loss on three interest rate swaps in the first six months of 2022.
Interest income. Interest income amounted to $0.5 million for the first six months of 2023 compared to a marginal interest income for the same period in 2022, mainly as a result of the higher amounts of our fixed deposits and the higher interest rates earned on them.
Net income. As a result of the above, net income for the six months ended June 30, 2023 amounted to $57.6 million compared to a net income of $60.7 million for the same period in 2022.
Liquidity and capital resources
Historically, our sources of funds have been equity provided by our shareholders, operating cash flows, long-term borrowings and proceeds from vessel sales. Our principal use of funds has been capital expenditures to establish and expand our fleet, maintain the quality of our vessels during operations and the periodically required drydockings, comply with international shipping standards and environmental laws and regulations, fund working capital requirements and, if necessary, operating shortfalls, make principal repayments on outstanding loan facilities, and pay dividends.
Our short-term liquidity requirements include paying operating expenses, funding working capital requirements, interest and principal payments on outstanding debt, repurchasing common shares under our share repurchase program, payments for vessels under construction and maintaining cash reserves to strengthen our position against adverse fluctuations in operating cash flows.
Our medium and long-term liquidity requirements are funding the equity portion of vessel acquisitions and vessels under construction, debt repayment and payment of cash dividends when declared.
Our total cash and cash equivalents and restricted cash at June 30, 2023 were $38.2 million, an increase of $6.8 million from $31.4 million at December 31, 2022. We hold cash and cash equivalents primarily in U.S. Dollars, with a minor balance held in Euros. We conduct our funding and treasury activities based on corporate policies designed to minimize borrowing costs and maximize investment returns while maintaining the safety of the funds and appropriate levels of liquidity for our purposes.
In June 2021, the Company decided to proceed with the construction of two newbuilding feeder container carriers for a total cost of $80.5 million, which were financed with a $52 million bank loan in total and own cash and were delivered to the Company on April 6, 2023 and July 6, 2023.
In January 2022, the Company signed an agreement for the construction of another two newbuilding feeder container carriers for a total cost of $89.7 million. In March 2022, the Company signed another agreement for the construction of three newbuilding feeder container carriers for a total cost of $103.8 million. In May 2022, the Company signed another agreement for the construction of two newbuilding feeder container carriers for a total cost of $86.7 million. All of the abovementioned vessels under construction are expected to be delivered within 2024. For the construction of the above vessels an amount of $168.0 million is payable in the twelve-month period ending June 30, 2024, with a remaining amount of $61.0 million to be paid by the end of 2024. All the payments are guaranteed by the Company. For the next twelve months, we expect our revenues to potentially increase compared to 2022, due to the increased amount of vessels owned and operated in the respective period and the amount of fixed contracts we have in place for the majority of the respective period. In addition, on July 12, 2023, we signed a loan agreement and drew down $40.0 million using as collateral four vessels, used to refinance the outstanding debt of $28.4 million, as of June 30, 2023, with the same bank and using as collateral the same four vessels (refer to “Recent Developments” section). We intend to fund our working capital requirements and capital commitments via cash on hand, cash flows from operations and new mortgage debt financing for the vessels under construction. In the event that these are not sufficient, we may also use funds from new mortgage debt financing for the seven unencumbered vessels we own, debt refinancing, proceeds from our on-going at-the-market offering and other equity offerings and sell vessels or the newbuilding contracts themselves (where equity and liquidity will be released), if required, among other options. We believe we will have adequate funding through the sources described above and, accordingly, we believe we have the ability to continue as a going concern and finance our obligations as they come due over the next twelve months following the date of the issuance of our financial statements. Consequently, our interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
We are exposed to market risk from changes in interest rates and market rates for vessels. We use interest rate swaps to manage interest costs and the risks associated with changing interest rates of some of our loans.
Cash Flows
As of June 30, 2023, we had a marginal working capital surplus of $0.03 million. For the six-month period ended June 30, 2023 we reported a net income of $57.6 million and generated net cash from operating activities of $59.8 million. Our cash balance amounted to $31.8 million and cash in restricted and retention accounts amounted to $6.4 million as of June 30, 2023.
Net cash from operating activities.
Our cash flow surplus from operating activities for the six months ended June 30, 2023 was $59.8 million as compared to a cash flow surplus of $64.0 million in the six months ended June 30, 2022.
The major driver of the change of cash flows from operating activities for the period ended June 30, 2023 compared to the period ended June 30, 2022, was the slight decrease in net revenue to $89.6 million for the six-month period ended June 30, 2023 from $93.9 million for the corresponding period in 2022, which was also reflected in our net income (excluding non-cash items) of $59.9 million for the period ended June 30, 2023 compared to a net income (excluding non-cash items) of $63.6 million for the corresponding period in 2022.
Net cash from investing activities.
Net cash flows used in investing activities were $68.2 million for the period ended June 30, 2023, compared to $67.2 million for the same period of 2022. The net increase in cash flows used in investing activities of $1.0 million in the six month period ended June 30, 2023 compared to the six-month period ended June 30, 2022, is mainly attributable to an increase of $47.9 million in payments related to vessels under construction, offset by a decrease of $36.9 million in cash paid for vessel acquisitions, improvements and capitalized expenses, as well as a $10.1 million net proceeds from sale of a vessel within the six-month period ended June 30, 2023 compared to nil for the same period of 2022.
Net cash from financing activities.
Net cash flows provided by financing activities were $15.2 million for the six months ended June 30, 2023, compared to cash outflows of $17.8 million for the six months ended June 30, 2022. In the six months ended June 30, 2023, debt principal payments increased by $13.4 million, compared to the same period of 2022. During the six months ended June 30, 2023 there was also an increased outflow by $3.3 million used for dividend payments and by $1.9 million used for share repurchases (under our share repurchase plan of up to $20 million) compared to the same period of 2022. Within the first six months of 2023 the Company had also had loan proceeds of $51.5 million, including $0.5 million of arrangement fees paid, compared to nil for the same period of 2022.
Debt Financing
We operate in a capital-intensive industry, which requires significant amounts of investment, and we fund a portion of this investment through long-term debt. We target debt levels we consider prudent at the time of conclusion of such debt funding based on our market expectations, cash flow, interest coverage and percentage of debt to capital amongst other factors.
As of June 30, 2023, we had seven outstanding loans with a combined outstanding balance of $132.8 million. These loans mature between 2024 and 2030. Our long-term debt as of June 30, 2023 comprises bank loans granted to our vessel-owning subsidiaries with margins over SOFR ranging from 1.95% to 3.90%. A description of our loans as of June 30, 2023 is provided in Note 8 of our attached financial statements. As of June 30, 2023, we are scheduled to repay approximately $28.2 million of the above loans in the following twelve months.
Recent Developments
Please refer to Note 14 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for developments that took place after June 30, 2023.
Euroseas Ltd. and Subsidiaries
Unaudited Interim Condensed Consolidated Financial Statements
Index to unaudited interim condensed consolidated financial statements
| Pages |
|
| Unaudited Condensed Consolidated Balance Sheets as of December 31, 2022 and June 30, 2023 |
|
| Notes to Unaudited Interim Condensed Consolidated Financial Statements |
Euroseas Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(All amounts expressed in U.S. Dollars – except number of shares)
| Notes | December 31, 2022 | June 30, 2023 | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Trade accounts receivable, net | ||||||||||||
| Other receivables | ||||||||||||
| Inventories | ||||||||||||
| Restricted cash | 8 | |||||||||||
| Prepaid expenses | ||||||||||||
| Due from related company | ||||||||||||
| Derivatives | 13 | |||||||||||
| Asset held for sale | 4 | |||||||||||
| Total current assets | ||||||||||||
| Long-term assets | ||||||||||||
| Vessels, net | 4 | |||||||||||
| Advances for vessels under construction | 3 | |||||||||||
| Restricted cash | 8 | |||||||||||
| Derivatives | 13 | |||||||||||
| Total assets | ||||||||||||
| Liabilities and shareholders’ equity | ||||||||||||
| Current liabilities | ||||||||||||
| Long-term bank loans, current portion | 8 | |||||||||||
| Trade accounts payable | ||||||||||||
| Liability associated with asset held for sale | 4 | |||||||||||
| Accrued expenses | ||||||||||||
| Accrued dividends | 10 | |||||||||||
| Deferred revenues | ||||||||||||
| Due to related company | 6 | |||||||||||
| Total current liabilities | ||||||||||||
| Long-term liabilities | ||||||||||||
| Long-term bank loans, net of current portion | 8 | |||||||||||
| Fair value of below market time charters acquired | 5 | |||||||||||
| Total long-term liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Commitments and contingencies | 9 | |||||||||||
| Shareholders’ equity | ||||||||||||
| Common stock (par value $, shares authorized, and , issued and outstanding) | 12 | |||||||||||
| Additional paid-in capital | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Total shareholders’ equity | ||||||||||||
| Total liabilities and shareholders’ equity | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Euroseas Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Comprehensive Income
(All amounts expressed in U.S. Dollars – except number of shares)
| Six months ended June 30, | ||||||||||||
| 2022 | 2023 | |||||||||||
| Revenues | ||||||||||||
| Time charter revenue | ||||||||||||
| Commissions (including $ and $, respectively, to related party) | 6 | ( | ) | ( | ) | |||||||
| Net revenue | ||||||||||||
| Operating expenses / (income) | ||||||||||||
| Voyage expenses | ||||||||||||
| Vessel operating expenses (including $ and $, respectively, to related party) | 6 | |||||||||||
| Dry-docking expenses | ||||||||||||
| Vessel depreciation | 4 | |||||||||||
| Related party management fees | 6 | |||||||||||
| Other operating expenses / (income) | 7 | ( | ) | |||||||||
| General and administrative expenses (including $ and $ to related party) | 6 | |||||||||||
| Gain on sale of vessel (including and $, respectively, to related party) | 4,6 | ( | ) | |||||||||
| Total operating expenses, net | ||||||||||||
| Operating income | ||||||||||||
| Other (expenses) / income | ||||||||||||
| Interest and other financing costs | 8 | ( | ) | ( | ) | |||||||
| Gain on derivatives, net | 13 | |||||||||||
| Foreign exchange gain / (loss) | ( | ) | ||||||||||
| Interest income | ||||||||||||
| Other income / (expenses), net | ( | ) | ||||||||||
| Net income | ||||||||||||
| Earnings per share, basic | 11 | |||||||||||
| Weighted average number of shares outstanding during the period, basic | ||||||||||||
| Earnings per share, diluted | 11 | |||||||||||
| Weighted average number of shares outstanding during the period, diluted | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Euroseas Ltd. and Subsidiaries
Unaudited Condensed Consolidated statements of Shareholders’ Equity
(All amounts expressed in U.S. Dollars – except number of shares)
| Number of Shares Outstanding | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||
| Balance, January 1, 2022 | ( | ) | ||||||||||||||||||
| Net income | - | |||||||||||||||||||
| Repurchase of common shares (Note 12) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Share-based compensation | - | |||||||||||||||||||
| Dividends declared ($ per share) (Note 12) | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2022 | ( | ) | ||||||||||||||||||
| Balance, January 1, 2023 | ( | ) | ||||||||||||||||||
| Net income | - | |||||||||||||||||||
| Repurchase of common shares (Note 12) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Share-based compensation | - | |||||||||||||||||||
| Dividends declared ($ per share) (Note 12) | - | ( | ) | ( | ) | |||||||||||||||
| Offering expenses paid | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2023 | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Euroseas Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(All amounts expressed in U.S. Dollars)
| For the six months ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Vessel depreciation | ||||||||
| Amortization and write off of deferred charges | ||||||||
| Share-based compensation | ||||||||
| Unrealized (gain) / loss on derivatives | ( | ) | ||||||
| Amortization of fair value of below market time charters acquired | ( | ) | ( | ) | ||||
| Gain on sale of vessel | ( | ) | ||||||
| Changes in operating assets and liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Cash paid for vessels under construction | ( | ) | ( | ) | ||||
| Cash paid for vessel acquisitions and capitalized expenses | ( | ) | ( | ) | ||||
| Cash paid for vessel improvements | ( | ) | ( | ) | ||||
| Net proceeds from sale of vessel | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Cash paid for share repurchase | ( | ) | ( | ) | ||||
| Dividends paid | ( | ) | ( | ) | ||||
| Loan arrangement fees paid | ( | ) | ||||||
| Repayment of long-term bank loans | ( | ) | ( | ) | ||||
| Proceeds from long-term bank loans | ||||||||
| Offering expenses paid | ( | ) | ( | ) | ||||
| Net cash (used in) / provided by financing activities | ( | ) | ||||||
| Net (decrease) / increase in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | ||||||||
| Cash breakdown | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash, current | ||||||||
| Restricted cash, long term | ||||||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
1. Basis of Presentation and General Information
Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the beneficial owners of certain ship-owning companies. Euroseas Ltd., through its wholly owned vessel owning subsidiaries (collectively the "Company" or “Euroseas”) is engaged in the ocean transportation of containers through ownership and operation of containerships. Euroseas’ common shares trade on the Nasdaq Capital Market under the ticker symbol “ESEA”.
The operations of the vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members of the Pittas family. Eurobulk has an office in Greece located at 4 Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance consulting, chartering, financial and accounting services and executive management services, in consideration for fixed and variable fees (see Note 6).
The Pittas family is the controlling shareholder of Friends Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Family United Navigation Co., which, in turn, collectively own
The accompanying unaudited condensed consolidated financial statements include the accounts of Euroseas Ltd., and its wholly owned vessel owning subsidiaries and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 as filed with the U.S. Securities and Exchange Commission ("SEC") on Form 20-F on April 28, 2023.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information. Accordingly, they do not include all the information and notes required by US GAAP for complete 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 six-month period ended June 30, 2023 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2023.
As of June 30, 2023, the Company had a marginal working capital surplus of $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
1. Basis of Presentation and General Information - continued
The Company believes it will have adequate funding through the sources described above and, accordingly, it believes it has the ability to continue as a going concern and finance its obligations as they come due over the next twelve months following the date of the issuance of these financial statements. Consequently, the interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
2. Significant Accounting Policies
A summary of the Company's significant accounting policies is discussed in Note 2 of the Company’s consolidated financial statements, included in the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 (the “2022 Annual Report”). There have been no changes to the Company’s significant accounting policies.
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
3. Advances for Vessels under Construction
On June 29, 2021, the Company signed a contract with Hyundai Mipo Dockyard Co. in South Korea, for the construction of eco-design fuel efficient feeder containerships with a carrying capacity of 2,800 teu each. The first vessel named M/V “Gregos” was delivered to the Company on April 6, 2023 (see Note 5) and the second vessel named “Terataki” was delivered to the Company on July 6, 2023. The total consideration for these two shipbuilding contracts amounted to $
On January 28, 2022, the Company signed a contract for the construction of eco-design fuel efficient feeder containerships. The vessels will have a carrying capacity of about 2,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea. The two newbuildings are scheduled to be delivered during the first and the second quarter of 2024, respectively. As of June 30, 2023, an amount of $
On March 18, 2022, the Company signed a contract for the construction of eco-design fuel efficient feeder containerships. The vessels will have a carrying capacity of about 1,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea. The three newbuildings are scheduled to be delivered during the second quarter of 2024. The total consideration for the construction of the three vessels is approximately $
On May 20, 2022, the Company exercised its option to proceed with the construction of additional eco-design fuel efficient feeder containerships. The vessels will have a carrying capacity of about 2,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea. The two newbuildings are scheduled to be delivered during the fourth quarter of 2024. The total consideration for these two newbuilding contracts is approximately $
As of December 31, 2022 and June 30, 2023 the amount of the advances for vessels under construction amounted to $
| Costs | ||||
| Balance, January 1, 2023 | ||||
| Advances for vessels under construction | ||||
| Newbuilding vessel “Gregos” delivered during the period | ( | ) | ||
| Balance, June 30, 2023 | ||||
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
4. Vessels, net
The amounts in the accompanying unaudited condensed consolidated balance sheets are as follows:
| Costs | Accumulated Depreciation | Net Book Value | ||||||||||
| Balance, January 1, 2023 | ( | ) | ||||||||||
| Depreciation for the period | - | ( | ) | ( | ) | |||||||
| Newbuilding vessel “Gregos” delivered during the period | - | |||||||||||
| Capitalized expenses | - | |||||||||||
| Balance, June 30, 2023 | ( | ) | ||||||||||
Capitalized expenses for the six-month period ended June 30, 2023 mainly refer to installation of Water Ballast Treatment (“WBT”) system on three of the Company’s vessels. All these installations qualified as vessel improvements and were therefore capitalized.
On April 6, 2023, the Company took delivery of the newbuilding M/V “Gregos”, an eco-design fuel efficient feeder containership (see Note 4). The vessel was ordered on June 29, 2021 from Hyundai Mipo Dockyard Co. in South Korea. The total cost for the construction of the vessel was $
As of June 30, 2023 vessels with a net book value of $
Sale of vessel
The Company considers the potential sale of its vessels, for scrap or further trading, depending on a vessel’s age, any additional capital expenditures required, the expected revenues from continuing to own the vessel and the overall market prospects.
On December 23, 2022, Bridge Shipping Ltd. Signed a memorandum of agreement to sell M/V “Akinada Bridge”, a 71,366 DWT / 5,610 TEU 2001-built intermediate container carrier, for scrap, at a gross price of $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
5. Fair Value of Below Market Time Charters Acquired
As part of the acquisition of M/V “Marcos V”, in December 2021, which was acquired by the Company with time charter agreement attached, the Company recognized a liability of $
For the six month periods ended June 30, 2022 and June 30, 2023, the amortization of fair value of the below market acquired time charters analyzed above was $
The unamortized balance of this intangible liability as of June 30, 2023 of $
| For the period ending June 30, | Below market acquired charters | |||
| 2024 | $ | |||
| 2025 | $ | |||
| 2026 | $ | |||
| Total | $ | |||
Following the early termination, in August 2023, of the time charter agreements attached to the vessels “Emmanuel P” and “Rena P” (see Note 14), for which the outstanding balance of the attached time charter liability recognized as part of their acquisitions was $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
6. Related Party Transactions
Details of the Company’s transactions with related parties did not change in the six-month period ended June 30, 2023 and are discussed in Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
The Company’s vessel owning companies are parties to management agreements with the Management Company, which is controlled by members of the Pittas family, whereby the Management Company provides technical and commercial vessel management for a fixed daily fee of Euro
In addition to the vessel management services, the Management Company provides the Company with the services of its executives, services associated with the Company being a public company and other services to the Company’s subsidiaries. For each of the six-month periods ended June 30, 2022 and 2023, compensation paid to the Management Company for such additional services to the Company was $
Amounts due to or from related company represent net disbursements and collections made on behalf of the vessel-owning companies by the Management Company during the normal course of operations for which a right of offset exists. As of December 31, 2022 the amount due from related company was $
The Company uses brokers for various services, as is industry practice. Eurochart S.A., an affiliated company controlled by certain members of the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of
Certain members of the Pittas family, together with another unrelated ship management company, have formed a joint venture with the insurance broker Sentinel Maritime Services Inc. (“Sentinel”). Technomar Crew Management Services Corp (“Technomar”), is a company owned by certain members of the Pittas family, together with two other unrelated ship management companies, which provides crewing services. Sentinel is paid a commission on insurance premiums not exceeding Technomar is paid a fee of about $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
7. Other operating expenses / (income)
For the six-month period ended June 30, 2022 the Company recorded other operating expenses of $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
8. Long-Term Bank Loans
These consist of bank loans of the ship-owning companies. Outstanding long-term bank loans as of December 31, 2022 and June 30, 2023 are as follows:
| Borrower | December 31, | June 30, | ||||||
| Noumea Shipping Ltd. / Gregos Shipping Ltd. | ||||||||
| Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd. | ||||||||
| Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd. | ||||||||
| Jonathan John Shipping Ltd. / Corfu Navigation Ltd. | ||||||||
| Jonathan Shipowners Ltd. | ||||||||
| Marcos Shipping Ltd. | ||||||||
| Rena Shipping Ltd. / Emmanuel Shipping Ltd. | ||||||||
| Gregos Maritime Ltd. | ||||||||
| Terataki Shipping Ltd. | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Long-term portion | ||||||||
| Deferred charges, current portion | ||||||||
| Deferred charges, long-term portion | ||||||||
| Long-term bank loans, current portion net of deferred charges | ||||||||
| Long-term bank loans, long-term portion net of deferred charges | ||||||||
The future annual loan repayments are as follows:
| To June 30: | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and thereafter | ||||
| Total |
Details of the loans are discussed in Note 9 of our consolidated financial statements for the year ended December 31, 2022 included in the 2022 Annual Report.
On February 6, 2023, Kea Shipowners Ltd., Spetses Shipowners Ltd. and Hydra Shipowners Ltd. repaid the full amount of outstanding indebtedness amounting to $
On May 30, 2023, Noumea Shipping Ltd. and Gregos Shipping Ltd. repaid the full amount of outstanding indebtedness amounting to $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated financial statements
(All amounts expressed in U.S. Dollars)
8. Long-Term Bank Loans – continued
On March 30, 2023, the Company signed a loan agreement with Eurobank Ergasias S.A., for a loan up to the lesser of $
On June 29, 2023, the Company signed a loan agreement with the National Bank of Greece S.A., for a loan up to the lesser of $
On July 13, 2023, the Company signed and drew a term loan facility with Piraeus Bank S.A. (the “Lender”) in order to refinance the existing indebtedness of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” with the bank amounting to $
The Company’s bank loans are secured with one or more of the following:
| ● | first priority mortgage over the respective vessels on a joint and several basis. |
| ● | first assignment of earnings and insurance. |
| ● | a corporate guarantee of Euroseas Ltd. |
| ● | a pledge of all the issued shares of each borrower. |
The loan agreements contain covenants such as minimum requirements regarding the security cover ratio (the ratio of fair value of vessel to outstanding loan less cash in retention accounts ranging from
Interest expense, including loan fee amortization for the six-month periods ended June 30, 2022 and 2023 amounted to $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated financial statements
(All amounts expressed in U.S. Dollars)
9. Commitments and Contingencies
As of June 30, 2023, future gross minimum revenues under non-cancellable time charter agreements total $
As of June 30, 2023, the Company had under construction container carriers with a total contracted amount of $
There are no material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company's business. In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated financial statements
(All amounts expressed in U.S. Dollars)
10. Stock Incentive Plan
A summary of the status of the Company’s unvested shares as of January 1, 2023, and changes during the six-month period ended June 30, 2023, are presented below:
| Unvested Shares | Shares | Weighted-Average Grant-Date Fair Value | ||||||
| Unvested on January 1, 2023 | ||||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | ||||||||
| Unvested on June 30, 2023 | ||||||||
As of June 30, 2023, there was $
The unvested shares will accrue dividends as declared which will be retained by the Company until the shares vest at which time they are payable to the grantee. As of June 30, 2023 the unvested restricted shares accrued dividends of $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
11. Earnings Per Share
Basic and diluted earnings per common share is computed as follows:
| For the six months ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| Net income | ||||||||
| Weighted average common shares – outstanding, basic | ||||||||
| Basic earnings per share | ||||||||
| Effect of dilutive securities: | ||||||||
| Dilutive effect of unvested shares | ||||||||
| Weighted average common shares – outstanding, diluted | ||||||||
| Diluted earnings per share | ||||||||
For the six-month periods ended June 30, 2022 and 2023, the denominator of the diluted earnings per share calculation includes
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
12. Common shares and Additional paid-in capital
On May 23, 2022, the Company announced that its Board of Directors has approved a share repurchase program (“the Share Repurchase Program”) for up to a total of $
During the six months ended June 30, 2022, the Company repurchased
During the six months ended June 30, 2023, the Company repurchased
Pursuant to the reinstitution of the Company’s common stock dividend plan in May 2022, the Company declared a cash dividend of $
13. Financial Instruments
The principal financial assets of the Company consist of cash and cash equivalents, restricted cash, trade accounts receivable, other receivables and derivatives. The principal financial liabilities of the Company consist of long-term bank loans, trade accounts payable, accrued expenses and amount due to related company.
Interest rate risk
The Company enters into interest rate swap contracts as economic hedges to manage some of its exposure to variability in its floating rate long-term bank loans. Under the terms of the interest rate swaps the Company and the bank agreed to exchange, at specified intervals the difference between a paying fixed rate and receiving floating rate interest amount calculated by reference to the agreed principal amounts and maturities. Interest rate swaps allow the Company to convert long-term bank loans issued at floating rates into equivalent fixed rates. Even though the interest rate swaps were entered into for economic hedging purposes, they do not qualify for hedge accounting, under the guidance relating to Derivatives and Hedging, as the Company does not have currently written contemporaneous documentation identifying the risk being hedged and, both on a prospective and retrospective basis, performing an effectiveness test to support that the hedging relationship is highly effective. Consequently, the Company recognizes the change in fair value of these derivatives in “Gain on derivatives, net” in the unaudited condensed consolidated statements of comprehensive income. As of June 30, 2023, the Company had open swap contracts for a notional amount of $
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
13. Financial Instruments - continued
Concentration of credit risk
Financial instruments, which potentially subject the Company to significant concentration of credit risk consist primarily of cash, trade accounts receivable and derivatives. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluation of the relative credit standing of these financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable as the Company in most cases gets paid in advance. The Company may be exposed to credit risk in the event of non-performance by its counterparties to derivative instruments; however, the Company limits its exposure by transacting with counterparties with high credit ratings.
Fair value of financial instruments
The estimated fair values of the Company's financial instruments such as cash and cash equivalents, restricted cash, trade accounts receivable, trade accounts payable, accrued expenses and amount due to related company approximate their individual carrying amounts as of December 31, 2022 and June 30, 2023, due to their short-term maturity. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair value of the Company’s long-term bank loans, bearing interest at variable interest rates approximates their recorded values as of June 30, 2023, due to the variable interest rate nature thereof. SOFR rates are observable at commonly quoted intervals for the full terms of the loans and hence fair values of the long-term bank loans are considered Level 2 items in accordance with the fair value hierarchy due to their variable interest rate, being the SOFR.
The Company follows guidance relating to “Fair value measurements”, which establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosure about fair value measurements. This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities;
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;
Level 3: Unobservable inputs that are not corroborated by market data.
The fair value of the Company’s interest rate swap agreement is determined using a discounted cash flow approach based on market-based SOFR swap rates. SOFR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items. The fair value of the interest rate swap determined through Level 2 of the fair value hierarchy as defined in guidance relating to “Fair value measurements” is derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
13. Financial Instruments - continued
Recurring Fair Value Measurements
| Fair Value Measurement as of December 31, 2022 | |||||||||||||||||
| Balance Sheet Location | Total, | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | |||||||||||||||||
| Interest rate swap contracts, current portion | Derivatives, asset current portion | $ | $ | ||||||||||||||
| Interest rate swap contracts, long-term portion | Derivatives, asset long-term portion | $ | $ | ||||||||||||||
| Fair Value Measurement as of June 30, 2023 | |||||||||||||||||
| Balance Sheet Location | Total, | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | |||||||||||||||||
| Interest rate swap contract, current portion | Derivatives, asset current portion | $ | $ | ||||||||||||||
| Interest rate swap contract, long-term portion | Derivatives, asset long-term portion | $ | $ | ||||||||||||||
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
13. Financial Instruments - continued
Fair value of financial instruments - continued
The amount of Gain on derivatives, net recognized in the unaudited condensed consolidated statements of comprehensive income, is analyzed as follows:
| Derivative not designated as hedging instrument | Location of gain / (loss) recognized | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | ||||||
| Interest rate swap contract– Unrealized gain / (loss) | Gain on derivatives, net | ( | ) | ||||||
| Interest rate swap contract - Realized (loss) / gain | Gain on derivatives, net | ( | ) | ||||||
| Total gain on derivative | |||||||||
Euroseas Ltd. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(All amounts expressed in U.S. Dollars)
14. Subsequent Events
The following events occurred after June 30, 2023:
| a) | In July and August 2023, the Company under its Share Repurchase Program repurchased and cancelled |
| b) | On July 6, 2023, the Company took delivery of its second newbuilding M/V Terataki, an eco EEDI Phase 3 compliant, 2,800 teu feeder containership vessel from Hyundai Mipo Dockyard Co. in South Korea. The vessel is equipped with a Tier III engine and other sustainability linked features including installation of AMP (alternative maritime power). The acquisition was financed with a combination of own funds and a sustainability-linked loan provided by the National Bank of Greece S.A. (see Note 8). Following its delivery, M/V Terataki commenced a thirty-six to forty months charter with Asyad Lines. |
| c) | In July 2023, the Company agreed to terminate the current time charter agreements of M/V “Rena P”, which was originally expiring in February 2025 earning a daily rate of $ |