UNITED STATES
FORM 20-F
☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2022 | ||
OR | ||
☐ | ||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from ____________ to ____________ | ||
OR | ||
☐ | ||
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
Date of event requiring this shell company report | ||
Commission file number 001-37889
TOP SHIPS INC. |
(Exact name of Registrant as specified in its charter) |
(Translation of |
Republic of the Marshall Islands |
(Jurisdiction of incorporation or organization) |
1 Vasilisis Sofias and Megalou Alexandrou Str, 15124 Maroussi, Greece |
(Address of principal executive offices) |
Alexandros Tsirikos, (Tel) +30 210 812 8107, info@topships.org 1 Vasilisis Sofias and Megalou Alexandrou Str, 15124 Maroussi, Greece |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share | TOPS | Nasdaq Capital Market | ||
Preferred Stock Purchase Rights | Nasdaq Capital Market |
NONE |
(Title of class) |
NONE |
(Title of class) |
Indicate the number of outstanding shares of each of the issuer'sissuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of December 31, 2017, 8,923,6172022, 10,294,906 shares of common stock, par value $0.01 per share, 100,000 Series D Preferred Shares, par value $0.01 per share, 13,452 Series E Preferred Shares, par value $0.01 per share, and 5,850,748 Series F Preferred Shares, par value $0.01 per share, were outstanding.
Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes | ☐ | No | ☒ |
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes | ☐ | No | ☒ |
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes | ☒ | No | ☐ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes | ☒ | No | ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒ | Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term "new“new or revised financial accounting standard"standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 20122012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒ | U.S. GAAP |
☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board |
☐ | Other |
If "Other"“Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
☐ | Item 17 | ☐ | Item 18 | |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes | ☐ | No | ☒ |
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes | ☐ | No | ☐ |
4 | ||
ITEM | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
ITEM 4A. | 44 | |
ITEM 5. | 44 | |
ITEM 6. | ||
ITEM 7. | ||
ITEM 8. | ||
ITEM 9. | ||
ITEM 10. | ||
ITEM 11. | ||
ITEM 12. |
77 | ||
ITEM 13. | ||
ITEM 14. | ||
ITEM 15. | ||
ITEM 16. | 78 | |
ITEM 16A. | ||
ITEM 16B. | ||
ITEM 16C. | ||
ITEM 16D. | ||
ITEM 16E. | ||
ITEM 16F. | ||
ITEM 16G. | ||
ITEM 16H. | ||
ITEM 16I. | 80 | |
80 | ||
ITEM 17. | 80 | |
ITEM 18. | 80 | |
ITEM 19. | 80 |
our ability to maintain or develop new and existing customer relationships with major refined product importers and exporters, major crude oil companies and major commodity traders, including our ability to enter into long-term charters for our vessels; |
our future operating and financial |
our future vessel acquisitions, our business strategy and expected and unexpected capital spending or operating expenses, including any dry-docking, crewing, bunker costs and insurance costs; |
● | our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities; |
● | oil and chemical tanker industry trends, including fluctuations in charter rates and vessel values and factors affecting vessel supply and demand; |
our ability to take delivery of, integrate into our fleet, and employ any newbuildings we may acquire or order in the future and the ability of shipyards to deliver vessels on a timely basis; |
the aging of our vessels and resultant increases in operation and dry-docking costs; |
the ability of our vessels to pass classification inspections and vetting inspections by oil majors and big chemical corporations; |
significant changes in vessel performance, including increased vessel breakdowns; |
the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us; |
our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all; |
changes to governmental rules and regulations or actions taken by regulatory authorities and the expected costs thereof; |
our ability to comply with additional costs and risks related to our environmental, social and governance policies; |
● | potential liability from litigation and our vessel operations, including discharge of pollutants; |
changes in general economic and business conditions; |
general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events, including “trade wars,” piracy or acts by terrorists; |
changes in production of or demand for oil and petroleum products and chemicals, either globally or in particular regions; |
the strength of world economies and currencies, including fluctuations in charterhire rates and vessel values; |
potential liability from future litigation and potential costs due to any environmental damage and vessel collisions; |
● | the length and severity of epidemics and pandemics, including the global outbreak of the novel coronavirus (“COVID-19”) and its impact on the demand for commercial seaborne transportation and the condition of the financial markets; and |
● | and other important factors described from time to time in the reports filed by us with the U.S. Securities and Exchange Commission, or the |
ITEM | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
A. |
U.S. Dollars in thousands, except per share data | ||||||||||||||||||||
STATEMENT OF COMPREHENSIVE (LOSS)/INCOME | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
Revenues | 20,074 | 3,602 | 13,075 | 28,433 | 39,363 | |||||||||||||||
Voyage expenses | 663 | 113 | 370 | 736 | 999 | |||||||||||||||
Bareboat charter hire expense | - | - | 5,274 | 6,299 | 6,282 | |||||||||||||||
Amortization of prepaid bareboat charter hire | - | - | 1,431 | 1,577 | 1,657 | |||||||||||||||
Vessel operating expenses | 745 | 1,143 | 4,789 | 9,913 | 13,444 | |||||||||||||||
Management fees-related parties | 1,351 | 703 | 1,621 | 1,824 | 4,730 | |||||||||||||||
General and administrative expenses | 3,258 | 2,335 | 2,983 | 2,906 | 5,805 | |||||||||||||||
Other operating (income)/loss | - | (861 | ) | 274 | (3,137 | ) | (914 | ) | ||||||||||||
Gain on sale of vessels | (14 | ) | - | - | - | - | ||||||||||||||
Vessel depreciation | 6,429 | 757 | 668 | 3,467 | 5,744 | |||||||||||||||
Impairment on vessels | - | - | 3,081 | - | - | |||||||||||||||
Gain on disposal of subsidiaries | (1,591 | ) | - | - | - | - | ||||||||||||||
Operating (loss)/income | 9,233 | (588 | ) | (7,416 | ) | 4,848 | 1,616 | |||||||||||||
Interest and finance costs | (7,443 | ) | (450 | ) | (719 | ) | (3,093 | ) | (15,793 | ) | ||||||||||
(Loss)/gain on derivative financial instruments | (171 | ) | 3,866 | (392 | ) | (698 | ) | (301 | ) | |||||||||||
Interest income | 131 | 74 | - | - | 13 | |||||||||||||||
Other (expense)/income, net | (342 | ) | (6 | ) | 20 | (5 | ) | 1,120 | ||||||||||||
Net (loss)/income and comprehensive (loss)/income | 1,408 | 2,896 | (8,507 | ) | 1,052 | (13,345 | ) | |||||||||||||
Deemed dividend for beneficial conversion feature of Series B convertible preferred stock | - | - | - | (1, 403 | ) | - | ||||||||||||||
Equity loss in joint venture | - | - | - | - | (27 | ) | ||||||||||||||
Net (loss)/income attributable to common shareholders | 1,408 | 2,896 | (8,507 | ) | (351 | ) | (13,372 | ) | ||||||||||||
Attributable to: | ||||||||||||||||||||
Common stock holders | 1,408 | 2,896 | (8,507 | ) | (351 | ) | (13,404 | ) | ||||||||||||
Non-controlling interests | - | - | - | - | 32 | |||||||||||||||
Earnings/(Loss) per share, basic | $ | 1,408,000 | $ | 413,714 | $ | (773,364 | ) | $ | (15,955 | ) | $ | (12.57 | ) | |||||||
Earnings/(Loss) per share, diluted | $ | 1,408,000 | $ | 362,000 | $ | (773,364 | ) | $ | (15,955 | ) | $ | (12.57 | ) | |||||||
Weighted average common shares outstanding, basic | 1 | 7 | 11 | 22 | 1,063,381 | |||||||||||||||
Weighted average common shares outstanding, diluted | 1 | 8 | 11 | 22 | 1,063,381 |
U.S. dollars in thousands, unless otherwise stated | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
BALANCE SHEET DATA | ||||||||||||||||||||
Current assets | 10,262 | 1,227 | 5,269 | 4,541 | 29,055 | |||||||||||||||
Total assets | 27,868 | 75,575 | 74,006 | 143,317 | 220,448 | |||||||||||||||
Current liabilities, including current portion of long-term debt | 8,605 | 9,334 | 17,577 | 20,033 | 25,581 | |||||||||||||||
Non-current liabilities | 4,468 | 23,712 | 22,276 | 76,022 | 87,593 | |||||||||||||||
Total debt | - | 19,419 | 24,226 | 84,539 | 103,949 | |||||||||||||||
Stockholders' equity | 14,795 | 42,529 | 34,153 | 45,521 | 107,274 |
2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||
FLEET DATA | ||||||||||||||||||||
Total number of vessels at end of period (including leased vessels) | 0.0 | 1.0 | 3.0 | 6.0 | 7.0 | |||||||||||||||
Average number of vessels(1) | 5.1 | 0.5 | 2.2 | 5.0 | 6.8 | |||||||||||||||
Total calendar days for fleet(2) | 1,852 | 195 | 810 | 1,812 | 2,496 | |||||||||||||||
Total available days for fleet(3) | 1,852 | 195 | 805 | 1,812 | 2,495 | |||||||||||||||
Total operating days for fleet(4) | 1,852 | 195 | 796 | 1,799 | 2,491 | |||||||||||||||
Total time charter days for fleet | - | 195 | 796 | 1,799 | 2,491 | |||||||||||||||
Total bareboat charter days for fleet | 1,852 | - | - | - | - | |||||||||||||||
Fleet utilization(5) | 100.00 | % | 100.00 | % | 98.91 | % | 99.28 | % | 99.81 | % |
Amounts in U.S. dollars | ||||||||||||||||||||
AVERAGE DAILY RESULTS | ||||||||||||||||||||
Time charter equivalent(6) | $ | 10,484 | $ | 17,892 | $ | 15,961 | $ | 15,396 | $ | 15,403 | ||||||||||
Vessel operating expenses(7) | $ | 402 | $ | 5,862 | $ | 5,914 | $ | 5,470 | $ | 5,386 | ||||||||||
General and administrative expenses(8) | $ | 1,759 | $ | 11,974 | $ | 3,684 | $ | 1,604 | $ | 2,323 |
U.S. dollars in thousands | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
Adjusted EBITDA(9) | $ | 13,715 | $ | 163 | $ | 3,058 | $ | 16,186 | $ | 16,405 |
U.S. dollars in thousands, except average daily time charter equivalent and total operating days | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
On a consolidated basis | ||||||||||||||||||||
Revenues | $ | 20,074 | $ | 3,602 | $ | 13,075 | $ | 28,433 | $ | 39,363 | ||||||||||
Less: | ||||||||||||||||||||
Voyage expenses | (663 | ) | (113 | ) | (370 | ) | (736 | ) | (999 | ) | ||||||||||
Time charter equivalent revenues | $ | 19,411 | $ | 3,489 | $ | 12,705 | $ | 27,697 | $ | 38,364 | ||||||||||
Total operating days | 1,852 | 195 | 796 | 1,799 | 2,491 | |||||||||||||||
Average Daily Time Charter Equivalent (TCE) | $ | 10,484 | $ | 17,892 | $ | 15,961 | $ | 15,396 | $ | 15,403 |
U.S. dollars in thousands | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
Net (loss)/ income and comprehensive (loss)/ income | 1,408 | 2,896 | (8,507 | ) | 1,052 | (13,372 | ) | |||||||||||||
Add: Bareboat charter hire expenses | - | - | 5,274 | 6,299 | 6,282 | |||||||||||||||
Add: Amortization of prepaid bareboat charter hire | - | - | 1,431 | 1,577 | 1,657 | |||||||||||||||
Add: Vessel depreciation | 6,429 | 757 | 668 | 3,467 | 5,744 | |||||||||||||||
Add: Impairment on vessel | - | - | 3,081 | - | - | |||||||||||||||
Add: Interest and finance costs | 7,443 | 450 | 719 | 3,093 | 15,793 | |||||||||||||||
Add: Loss/(gain) on derivative financial instruments | 171 | (3,866 | ) | 392 | 698 | 301 | ||||||||||||||
Less: Gain on sale of vessels | (14 | ) | - | - | - | - | ||||||||||||||
Less: Gain on disposal of subsidiaries | (1,591 | ) | - | - | - | - | ||||||||||||||
Less: Interest income | (131 | ) | (74 | ) | - | - | - | |||||||||||||
Adjusted EBITDA | 13,715 | 163 | 3,058 | 16,186 | 16,405 |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
● | The international tanker industry has historically been both cyclical and volatile and this may lead to reductions and volatility in our charter rates, our vessel values, our revenues, earnings and cash flow results. |
● | Uncertain economic conditions throughout the world could have an adverse impact on our operations and financial results. |
● | The international oil tanker industry has recently experienced volatile charter rates and vessel values and there can be no assurance that these charter rates and vessel values will not decrease in the near future. |
● | Our financial results may be adversely affected by the outbreak of epidemic and pandemic diseases, such as COVID-19, and the related governmental responses thereto. |
● | Volatility of LIBOR and potential changes of the use of LIBOR as a benchmark could affect our profitability, earnings and cash flow. |
● | We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business. |
● | Climate change and greenhouse gas restrictions may adversely impact our operations and markets. |
● | Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and petroleum products worldwide. |
● | If our vessels call on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government or other governmental authorities, it could lead to monetary fines or adversely affect our business, reputation and the market for our common shares. |
● | Political instability, terrorist or other attacks, war, international hostilities and public health threats can affect the tanker industry, which may adversely affect our business. |
● | Acts of piracy on ocean-going vessels could adversely affect our business. |
● | We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed. |
● | Our financing facilities contain restrictive covenants that may limit our liquidity and corporate activities, and could have an adverse effect on our financial condition and results of operations. |
● | Our President, Chief Executive Officer and Director has significant influence over us, and a trust established for the benefit of his family may be deemed to beneficially own, directly or indirectly, 100% of our Series D and our Series E Preferred Shares, and an affiliate of his may be deemed to beneficially own 100% of our Series F Preferred Shares, and thereby to control the outcome of matters on which our shareholders are entitled to vote. |
● | We have been subject to litigation in the past and we may be subject to similar or other litigation in the future. |
● | We expect to be dependent on a limited number of customers for a large part of our revenues, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows. |
● | Our ability to obtain additional debt financing may be dependent on our ability to charter our vessels, the performance of our charters and the creditworthiness of our charterers. |
● | The industry for the operation of tanker vessels and the transportation of oil, petroleum products and chemicals is highly competitive and we may not be able to compete for charters with new entrants or established companies with greater resources. |
● | We maintain cash with a limited number of financial institutions, including financial institutions that may be located in Greece, which will subject us to credit risk. |
● | We may be unable to attract and retain key management personnel and other employees in the international tanker shipping industry, which may negatively impact the effectiveness of our management and our results of operations. |
● | If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash. |
● | A drop in spot charter rates may provide an incentive for some charterers to default on their charters, which could affect our cash flow and financial condition. |
● | The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings. |
● | Purchasing and operating secondhand vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings. |
● | We may not have adequate insurance to compensate us if we lose any vessels that we acquire. |
● | We may be subject to increased premium payments, or calls, as we obtain some of our insurance through protection and indemnity associations. |
● | Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks. |
● | Maritime claimants could arrest our vessels or vessels we acquire, which could interrupt our cash flow. |
● | Governments could requisition our vessels or vessels we acquire during a period of war or emergency, resulting in loss of earnings. |
● | U.S. federal tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders. |
● | We may be subject to U.S. federal income tax on our U.S. source income, which would reduce our earnings. |
● | We are a “foreign private issuer,” which could make our common shares less attractive to some investors or otherwise harm our stock price. |
● | Our share price may continue to be highly volatile, which could lead to a loss of all or part of a shareholder’s investment. |
● | There is no guarantee of a continuing public market for you to resell our common shares. |
● | Nasdaq may delist our common shares from its exchange which could limit your ability to make transactions in our securities and subject us to additional trading restrictions. |
● | We have issued common shares in the past through various transactions and we may do so in the future without shareholder approval, which may dilute our existing shareholders, depress the trading price of our securities and impair our ability to raise capital through subsequent equity offerings. |
● | We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law and as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States. |
● | It may not be possible for investors to serve process on or enforce U.S. judgments against us. |
● | Our By-laws provide that the High Court of the Republic of Marshall Islands shall be the sole and exclusive forum for certain disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. |
● | Anti-takeover provisions in our organizational documents could have the effect of discouraging, delaying or preventing a merger, amalgamation or acquisition, which could reduce the market price of our common shares. |
● | We are dependent on our Fleet Manager to perform the day-to-day management of our fleet. |
● | Our Fleet Manager is a privately held company and there may be limited or no publicly available information about it. |
● | Our Fleet Manager may have conflicts of interest between us and its other clients. |
supply and demand for oil, petroleum products and chemicals carried; |
changes in oil production and refining capacity resulting in shifts in trade flows for oil products; |
the distance oil, petroleum products and chemicals are to be moved by sea; |
global and regional economic and political conditions, including “trade wars” and developments in international trade, national oil reserves policies, fluctuations in industrial and agricultural production, armed conflicts and work stoppages; |
increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets; |
environmental and other legal and regulatory developments; |
economic slowdowns caused by public health events such as the COVID-19 pandemic or inflationary pressures and resultant governmental responses; |
● | currency exchange rates; |
weather, natural disasters and other acts of God; |
competition from alternative sources of energy, other shipping companies and other modes of transportation; and |
international sanctions, embargoes, import and export restrictions, nationalizations, piracy and |
the number of newbuilding deliveries; |
current and expected newbuilding orders for vessels; |
the scrapping rate of older vessels; |
speed of vessel operation; |
● | vessel freight rates, which are affected by factors that may affect the rate of newbuilding, swapping and laying up of vessels; |
the price of steel and vessel equipment; |
technological advances in the design and capacity of vessels; |
potential conversion of vessels for alternative use; |
changes in environmental and other regulations that may limit the useful lives of vessels; |
port or canal congestion; |
the number of vessels that are out of service at a given |
changes in global petroleum and chemical production. |
● | general economic and market conditions affecting the shipping industry; |
● | prevailing level of charter rates; |
● | competition from other shipping companies; |
● | types, sizes and ages of vessels; |
● | the availability of other modes of transportation; |
● | supply and demand for vessels; |
● | shipyard capacity; |
● | cost of newbuildings; |
● | price of steel; |
● | number of tankers scrapped; |
● | governmental or other regulations; and |
● | technological advances. |
● | maintain a consolidated leverage ratio of not more than 75%; |
● | maintain market adjusted total assets minus total liabilities of at least $60 million, |
● | maintain minimum free liquidity of $0.5 million per operating vessel but not less than $4.0 million in aggregate; and |
● | assure no change of control of the company takes place, except with the lessor’s/lender’s prior written consent. |
● | increase our vulnerability to general economic downturns and adverse competitive and industry conditions; |
● | require us to dedicate a substantial portion, if not all, of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; |
● | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
● | place us at a competitive disadvantage compared to competitors that have less debt or better access to capital; |
● | limit our ability to raise additional financing on satisfactory terms or at all; and |
● | adversely impact our ability to comply with the financial and other restrictive covenants of our current or future financing arrangements, which could result in an event of default under such agreements. |
● | generate excess cash flow for investment without jeopardizing our ability to cover current and foreseeable working capital needs (including debt service); |
● | raise equity and obtain required financing for our existing and new operations; |
● | locate and acquire suitable vessels; |
● | identify and consummate acquisitions or joint ventures; |
● | integrate any acquired business successfully with our existing operations; |
● | our manager’s ability to hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet; |
● | enhance our customer base; and |
● | manage expansion. |
our existing |
the amount of cash available for dividends payable on the shares of our common |
the relative voting strength of each previously outstanding common share may be diminished; and |
the market price of the shares of our common |
continue to operate our vessels and service our customers; |
renew existing charters upon their expiration; |
obtain new charters; |
obtain financing on commercially acceptable terms; |
obtain insurance on commercially acceptable terms; |
maintain satisfactory relationships with our customers and suppliers; and |
successfully execute our growth strategy. |
ITEM 4. | INFORMATION ON THE COMPANY |
A. | History and Development of the Company |
● | $10.0 million in cash. |
● | 100% ownership in a Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted Suezmax Tanker (to be named M/T Eco Oceano Ca) delivered from Hyundai Samho shipyard in March 2022. The shipowning company was party to a time charter, starting from the vessel’s delivery, with Central Tankers Chartering, a company affiliated with Mr. Evangelos J. Pistiolis, for a firm duration of five years at a gross daily rate of $32,450, with a charterer’s option to extend for two additional years at $33,950 and $35,450. |
● | 35% ownership in one Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker (to be named M/T Julius Caesar) delivered from Hyundai Heavy Industries shipyard in January 2022. The shipowning company was party to a time charter, starting from the vessel’s delivery, with Trafigura, for a firm duration of three years at a gross daily rate of $36,000, with a charterer’s option to extend for two additional years at $39,000 and $41,500. |
● | 35% ownership in one Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker (to be named M/T Legio X Equestris) delivered from Hyundai Heavy Industries shipyard in March 2022. The shipowning company was party to a time charter, starting from the vessel’s delivery, with Trafigura, for a firm duration of three years at a gross daily rate of $35,750, with a charterer’s option to extend for two additional years at $39,000 and $41,500. |
● | A forgiveness of $1.2 million in payables to the buyer. |
B. | Business Overview |
Name | Deadweight | Charterer | End of firm period | Charterer’s Optional Periods | Gross Rate fixed period/ options | |||
M/T | 50,000 | Cargill: $15,100 / WECO Tankers A/S: $20,500 / | ||||||
Name | Deadweight | Charterer | End of firm period | Charterer’s Optional Periods | Gross Rate fixed period/ options | |||
M/T Eco Bel Air | 157,000 | Trafigura | May 2024 | 19 months | $24,000 / $24,000 | |||
M/T Eco Beverly Hills | 157,000 | Trafigura | July 2024 | 16 months | $24,000 / $24,000 |
Name | Deadweight | Charterer | End of firm period | Charterer’s Optional Periods | Gross Rate fixed period/ options |
M/T Eco Oceano CA | 157,000 | Central Tankers Chartering | March 2037 | none | $24,500 |
Name | Deadweight | Charterer | End of firm period | Charterer’s Optional Periods | Gross Rate fixed period/ options | |||
M/T Eco | 157,000 | Clearlake | 1+1 years | $ | ||||
M/T Eco | 157,000 | Clearlake | 1+1 years | $ |
Name | Deadweight | Charterer | End of firm period | Charterer’s Optional Periods | Gross Rate fixed period/ options | |||
M/T | 300,000 | Trafigura | 1+1 years | $ | ||||
M/T | 300,000 | Trafigura | 1+1 years | $ | ||||
Name | Deadweight | Charterer | End of firm period | Charterer’s Optional Periods | Gross Rate fixed period/ options | |||||
M/T Eco | 50,000 | Clearlake | March | 5+1+1 years | $ | |||||
M/T Eco | 50,000 | Clearlake | 5+1+1 years | $ |
C. | Organizational Structure |
D. | Property, Plants and Equipment |
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||
FLEET DATA | ||||||||||||||||||||
Total number of vessels at end of period (including leased vessels) | 8.0 | 12.0 | 6.0 | 7.0 | 8.0 | |||||||||||||||
Average number of vessels(1) | 7.3 | 11.1 | 9.5 | 7.1 | 8.0 | |||||||||||||||
Total calendar days for fleet | 2,670 | 4,055 | 3,483 | 2,583 | 2,912 | |||||||||||||||
Total available days for fleet | 2,668 | 4,032 | 3,442 | 2,579 | 2,901 | |||||||||||||||
Total operating days for fleet | 2,663 | 3,959 | 3,363 | 2,500 | 2,893 | |||||||||||||||
Total time charter days for fleet | 2,663 | 3,884 | 3,363 | 2,500 | 2,893 | |||||||||||||||
Total spot (voyage) days for fleet | - | 75 | - | - | - | |||||||||||||||
Fleet utilization | 99.81 | % | 98.17 | % | 97.68 | % | 96.93 | % | 99.72 | % |
2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||
AVERAGE DAILY RESULTS | ||||||||||||||||||||
Time charter equivalent(2) | $ | 15,031 | $ | 16,233 | $ | 17,314 | $ | 22,020 | $ | 27,310 | ||||||||||
Vessel operating expenses(3) | $ | 5,552 | $ | 5,619 | $ | 6,037 | $ | 6,070 | $ | 6,397 | ||||||||||
General and administrative expenses(4) | $ | 2,620 | $ | 427 | $ | 555 | $ | 752 | $ | 555 |
(1) | Average number of vessels is the number of vessels that constituted our fleet (including chartered in vessels) 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 calendar days in that period. |
(2) | Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel. Our definition of TCE may not be the same as reported by other companies in the shipping industry or other industries. Our method of calculating TCE rate is determined by dividing TCE revenues by operating days for the relevant time period. TCE revenues are revenues minus voyage expenses. 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, but are payable by us in the case of a voyage charter, as well as commissions. TCE revenues and TCE rate, which are non-U.S. GAAP measures, provide additional supplemental information in conjunction with shipping revenues, the most directly comparable U.S. GAAP measure. We use TCE rates and TCE revenues to compare period-to-period changes in our performance and it assists investors and our management in evaluating our financial performance. The following table below reflects the reconciliation of TCE revenues to revenues as reflected in the consolidated statements of operations and our calculation of TCE rates for the periods presented. |
(3) | Daily vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. |
(4) | Daily general and administrative expenses are calculated by dividing general and administrative expenses by fleet calendar days for the relevant time period. |
U.S. dollars in thousands, except average daily time charter equivalent and total operating days | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||
On a consolidated basis | ||||||||||||||||||||
Total Revenues | $ | 41,048 | $ | 66,088 | $ | 60,222 | $ | 56,367 | $ | 80,656 | ||||||||||
Less: | ||||||||||||||||||||
Voyage expenses | (1,020 | ) | (3,038 | ) | (1,994 | ) | (1,317 | ) | (1,648 | ) | ||||||||||
Time charter equivalent revenues | $ | 40,028 | $ | 63,050 | $ | 58,228 | $ | 55,050 | $ | 79,008 | ||||||||||
Total operating days | 2,663 | 3,884 | 3,363 | 2,500 | 2,893 | |||||||||||||||
Average Daily Time Charter Equivalent (TCE) | $ | 15,031 | $ | 16,233 | $ | 17,314 | $ | 22,020 | $ | 27,310 |
U.S. dollars in thousands | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||
EBITDA | $ | 4,792 | $ | 15,563 | $ | 11,278 | $ | 23,284 | $ | 46,554 |
(Expressed in thousands of U.S. Dollars) | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||
Net (loss)/income | (11,129 | ) | (14,773 | ) | (22,818 | ) | 8,616 | 18,948 | ||||||||||||
Add: Vessel depreciation | 6,389 | 12,392 | 13,174 | 7,670 | 13,289 | |||||||||||||||
Add: Interest and finance costs | 9,662 | 18,077 | 20,956 | 6,998 | 14,365 | |||||||||||||||
Less: Interest income | (130 | ) | (133 | ) | (34 | ) | - | (48 | ) | |||||||||||
EBITDA | 4,792 | 15,563 | 11,278 | 23,284 | 46,554 |
management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts; |
Year Ended December 31, | Change | |||||||||||||||||||||||||||
YE16 v YE15 | YE17 v YE16 | |||||||||||||||||||||||||||
2015 | 2016 | 2017 | $ | % | $ | % | ||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||
Voyage Revenues | 13,075 | 28,433 | 39,363 | 15,358 | 117.5 | % | 10,930 | 38.4 | % | |||||||||||||||||||
Voyage expenses | 370 | 736 | 999 | 366 | 98.9 | % | 263 | 35.7 | % | |||||||||||||||||||
Bareboat charter hire expenses | 5,274 | 6,299 | 6,282 | 1,025 | 19.4 | % | (17 | ) | -0.3 | % | ||||||||||||||||||
Amortization of prepaid bareboat charter hire | 1,431 | 1,577 | 1,657 | 146 | 10.2 | % | 80 | 5.1 | % | |||||||||||||||||||
Vessel operating expenses | 4,789 | 9,913 | 13,444 | 5,124 | 107.0 | % | 3,531 | 35.6 | % | |||||||||||||||||||
Vessel depreciation | 668 | 3,467 | 5,744 | 2,799 | 419.0 | % | 2,277 | 65.7 | % | |||||||||||||||||||
Management fees-related parties | 1,621 | 1,824 | 4,730 | 203 | 12.5 | % | 2,906 | 159.3 | % | |||||||||||||||||||
Other operating (income) / loss | 274 | (3,137 | ) | (914 | ) | (3,411 | ) | -1244.9 | % | 2,223 | -70.9 | % | ||||||||||||||||
General and administrative expenses | 2,983 | 2,906 | 5,805 | (77 | ) | -2.6 | % | 2,899 | 99.8 | % | ||||||||||||||||||
Vessels impairment charge | 3,081 | - | 0 | (3,081 | ) | -100.0 | % | - | - | % | ||||||||||||||||||
Expenses | 20,491 | 23,585 | 37,747 | 3,094 | 15.1 | % | 14,162 | 60.0 | % | |||||||||||||||||||
Operating income / (loss) | (7,416 | ) | 4,848 | 1,616 | 12,264 | 165.4 | % | (3,232 | ) | -66.7 | % | |||||||||||||||||
Interest and finance costs | (719 | ) | (3,093 | ) | (15,793 | ) | (2,374 | ) | 330.2 | % | (12,700 | ) | 410.6 | % | ||||||||||||||
(Loss)/Gain on derivative financial instruments | (392 | ) | (698 | ) | (301 | ) | (306 | ) | 78.1 | % | 397 | -56.9 | % | |||||||||||||||
Interest income | - | - | 13 | - | - | 13 | - | |||||||||||||||||||||
Other, net | 20 | (5 | ) | 1,120 | (25 | ) | -125.0 | % | 1,125 | -22,500.0 | % | |||||||||||||||||
Total other (expenses) / income, net | (1,091 | ) | (3,796 | ) | (14,961 | ) | (2,705 | ) | 247.9 | % | (11,165 | ) | 294.1 | % | ||||||||||||||
Net income/(loss) | (8,507 | ) | 1,052 | (13,345 | ) | 9,559 | 112.4 | % | (14,397 | ) | -1368.5 | % |
(Expressed in thousands of U.S. Dollars) | Year Ended December 31, | change | ||||||||||||||
2021 | 2022 | YE22 v YE21 | ||||||||||||||
$ | % | |||||||||||||||
Total charter revenues | 56,367 | 80,656 | 24,289 | 43 | % | |||||||||||
Voyage expenses | 1,317 | 1,648 | 331 | 25 | % | |||||||||||
Operating lease Expense | 10,840 | 10,840 | - | 0 | % | |||||||||||
Vessel operating expenses | 15,679 | 18,628 | 2,949 | 19 | % | |||||||||||
Dry-docking costs | 361 | - | (361 | ) | -100 | % | ||||||||||
Vessel depreciation | 7,670 | 13,289 | 5,619 | 73 | % | |||||||||||
Management fees-related parties | 2,596 | 2,093 | (503 | ) | -19 | % | ||||||||||
General and administrative expenses | 1,943 | 1,617 | (326 | ) | -17 | % | ||||||||||
Loss on sale of vessels | - | (78 | ) | (78 | ) | - | ||||||||||
Vessels Impairment charge | 1,160 | - | (1,160 | ) | -100 | % | ||||||||||
Operating income | 14,801 | 32,619 | 17,818 | 120 | % | |||||||||||
Interest and finance costs | (6,998 | ) | (14,365 | ) | (7,367 | ) | 105 | % | ||||||||
(Loss)/Gain on financial instruments | 66 | - | (66 | ) | -100 | % | ||||||||||
Interest income | - | 48 | 48 | - | ||||||||||||
Equity gain in unconsolidated joint ventures | 747 | 646 | (101 | ) | -14 | % | ||||||||||
Total other expenses, net | (6,185 | ) | (13,671 | ) | (7,486 | ) | 121 | % | ||||||||
Net income | 8,616 | 18,948 | 10,332 | 120 | % |
1. |
2. | Voyage expenses |
2022, Voyage |
3. | Vessel operating expenses |
Vessel |
5. | Management fees—related parties |
C. | Research and Development, Patents and Licenses, Etc. |
D. | Trend Information |
E. | Critical Accounting Estimates |
Year ending December 31, | Bareboat Charter Lease Payments ($ millions) | |||
2018 | 6.3 | |||
2019 | 6.3 | |||
2020 | 6.3 | |||
2021 | 6.3 | |||
2022 | 1.0 | |||
Total | 26.2 |
Payments due by period | ||||||||||||||||||||
Contractual Obligations: | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
(1) (i) Long term debt A | $ | $119.3 | $ | $10.2 | $ | $19.2 | $ | $46.3 | $ | 43.6 | ||||||||||
(ii) Interest B | $ | $26.9 | $ | $6.0 | $ | $11.5 | $ | $7.4 | $ | 2.0 | ||||||||||
(2) (i) Short term debt C | $ | $8.9 | $ | $8.9 | - | - | - | |||||||||||||
(ii) Interest D | - | - | - | - | - | |||||||||||||||
(3) Operating leases E | $ | $26.2 | $ | $6.3 | $ | $12.6 | $ | $7.3 | - | |||||||||||
(4) Vessel Management Fees to CSM F | $ | $3.6 | $ | $2.8 | $ | $0.8 | - | - | ||||||||||||
(5) Vessel acquisitions G | $ | $57.8 | $ | $37.5 | $ | $20.3 | - | - | ||||||||||||
(6) Investments H | $ | $27.0 | $ | $5.0 | $ | 4.5 | $ | 4.0 | $ | 13.5 | ||||||||||
Total | $ | $269.7 | $ | $76.7 | $ | $68.9 | $ | $65.0 | $ | 59.1 |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. | Directors and Senior Management |
Name | Age | Position | |||
Evangelos J. Pistiolis | Director, President, Chief Executive Officer | ||||
Alexandros Tsirikos | |||||
Director, Chief Financial Officer | |||||
Konstantinos Patis | Chief Technical Officer | ||||
Vangelis G. Ikonomou | Chief Operating Officer | ||||
Konstantinos Karelas | 50 | Independent Non-Executive Director | |||
Stavros Emmanuel | Independent Non-Executive Director | ||||
Paolo Javarone | Independent Non-Executive Director | ||||
B. | Compensation |
C. | Board Practices |
D. | Employees |
E. | Share Ownership |
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. | Major Shareholders |
Name and Address of Beneficial Owner | Number of Shares Owned | Percent of Class | ||||||
Lax Trust (1) | 2,600,016 | 13.3 | % |
Name and Address of Beneficial Owner | Number of Shares Owned | Percentage of Class | Percentage of Total Voting Power | ||||||
Lax Trust (1) | 100,000 Series D Preferred Shares (2) | 100 | % | ||||||
13,452 Series E Preferred Shares | 100 | % | 65.9 | % | |||||
Three Sororibus Trust of Cyprus (1) | 3,834,082 Series F Preferred Shares | 100 | % | 22.3 | % | ||||
Executive officers, directors and key employees | 5,000 Common Stock | 0.02 | % | 0.0 | % |
(1) | The above information is derived, in part, from the Schedule 13D/A filed with the SEC on March |
(2) | As a prerequisite for the Navigare Lease, Mr. Evangelos J. Pistiolis personally guaranteed the performance of |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
ITEM 8. | FINANCIAL INFORMATION. |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
ITEM 9. | THE OFFER AND LISTING. |
HIGH | LOW | |||||||
For the Fiscal Year Ended December 31, 2017 | $ | 891,000.00 | $ | 2.40 | ||||
For the Fiscal Year Ended December 31, 2016 | $ | 1,512,000.00 | $ | 234,000.00 | ||||
For the Fiscal Year Ended December 31, 2015 | $ | 3,221,990.00 | $ | 481,830.00 | ||||
For the Fiscal Year Ended December 31, 2014 | $ | 26,586,000.00 | $ | 1,818,000.00 | ||||
For the Fiscal Year Ended December 31, 2013 | $ | 36,918,000.00 | $ | 8,821,570.00 |
For the Quarter Ended | ||||||||
December 31, 2017 | $ | 35.50 | $ | 2.40 | ||||
September 30, 2017 | $ | 396.00 | $ | 5.90 | ||||
June 30, 2017 | $ | 196,200.00 | $ | 239.20 | ||||
March 31, 2017 | $ | 891,000.00 | $ | 185,420.00 | ||||
December 31, 2016 | $ | 1,512,000.00 | $ | 360,000.00 | ||||
September 30, 2016 | $ | 1,512,000.00 | $ | 266,420.00 | ||||
June 30, 2016 | $ | 619,200.00 | $ | 260,100.00 | ||||
March 31, 2016 | $ | 799,200.00 | $ | 234,000.00 |
For the Month | ||||||||
March 2018 (through March 28, 2018) | $ | 2.84 | $ | 1.30 | ||||
February 2018 | $ | 3.50 | $ | 1.30 | ||||
January 2018 | $ | 3.00 | $ | 1.70 | ||||
December 2017 | $ | 5.70 | $ | 2.40 | ||||
November 2017 | $ | 35.50 | $ | 4.00 | ||||
October 2017 | $ | 8.20 | $ | 3.20 | ||||
September 2017 | $ | 15.40 | $ | 5.90 |
ITEM 10. | ADDITIONAL INFORMATION |
A. | Share Capital |
B. | Memorandum and Articles of Association |
prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the Board approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; |
upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; |
at or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the Board and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder; and |
the shareholder became an interested shareholder prior to the consummation of the initial public offering. |
not be redeemable; |
entitle holders to quarterly dividend payments in an amount per share equal to the aggregate per share amount of all cash dividends, and the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in our common shares or a subdivision of the our outstanding common shares (by reclassification or otherwise), declared on our common shares since the immediately preceding quarterly dividend payment date; and |
entitle holders to one vote on all matters submitted to a vote of |
Flip In. If an Acquiring Person obtains beneficial ownership of 15% or more of our common shares, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number of our common shares (or, in certain circumstances, cash, property or other |
Flip Over. If, after an Acquiring Person obtains 15% or more of our common shares, (i) |
Notional Shares. Shares held by affiliates and associates of an Acquiring Person, including certain entities in which the Acquiring Person beneficially owns a majority of the equity securities, and Notional Common Shares (as defined in the Rights Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person, will be deemed to be beneficially owned by the Acquiring Person. |
C. | Material Contracts |
Exchange controls |
E. | Taxation |
(1) | we are organized in a foreign country, or our country of organization, that grants an |
(2) | either |
A. | more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are |
B. | our stock is |
We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and |
substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States, or is leasing income that is attributable to such fixed place of business in the United States. |
is a U.S. citizen or resident, U.S. corporation or other U.S. entity taxable as a corporation, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust (i) if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the |
owns the common |
owns less than 10% of our common |
at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or |
at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income. |
the excess distribution or gain would be allocated ratably over the Non-Electing |
the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and |
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. |
the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or |
the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. |
fail to provide an accurate taxpayer identification number; |
are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal income tax returns; or |
in certain circumstances, fail to comply with applicable certification requirements. |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
SWAP Number (Nr) | Counterparty | Notional amount as of December 31, 2017 | Start Date | End Date | Fixed Rate Payable | Fair Value – Liability as of December 31, 2017 | |||||||||||
1 | ABN Amro | 16,575 | April 13, 2018 | July 13, 2021 | 1.4425 | % | 332 | ||||||||||
2 | ABN Amro | 18,663 | December 21, 2016 | January 13, 2022 | 2.0800 | % | 42 | ||||||||||
3 | ABN Amro | 17,250 | December 21, 2016 | August 10, 2022 | 2.1250 | % | 20 | ||||||||||
4 | NORD/LB Bank | 20,116 | May 17, 2017 | May 17, 2023 | 2.1900 | % | (3 | ) | |||||||||
Total | 72,604 | 391 |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
a) | Disclosure Controls and Procedures |
b) | Management’s Annual Report on Internal Control over Financial Reporting |
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
c) | Attestation Report of the Registered Public Accounting Firm |
d) | Changes in Internal Control over Financial Reporting |
ITEM 16. | Reserved |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
ITEM 16C. | PRINCIPAL |
U.S. dollars in thousands, | Year Ended | |||||||
2021 | 2022 | |||||||
Audit Fees | 396.5 | 379.5 |
U.S. dollars in thousands, | Year Ended | |||||||
2016 | 2017 | |||||||
Audit Fees | 149.0 | 274.1 |
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. | CHANGE IN |
ITEM 16G. | CORPORATE GOVERNANCE |
Audit Committee. Nasdaq requires, among other things, that a listed company has an audit committee with a minimum of three independent members, at least one of whom meets certain standards of financial sophistication. As permitted under Marshall Islands law, our audit committee consists of |
As a foreign private issuer, we are not required to hold regularly scheduled board meetings at which only independent directors are present. |
In lieu of obtaining shareholder approval prior to the issuance of designated securities, we will comply with provisions of the BCA, which allows our Board of Directors to approve share issuances. |
ITEM 16H. | MINE SAFETY DISCLOSURE |
ITEM 16I. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
ITEM 19. | EXHIBITS |
Number | Description of Exhibits | |
1.1 | ||
1.2 | ||
1.3 | ||
1.4 | ||
1.5 | ||
1.6 | ||
1.7 | ||
1.8 | ||
1.9 | ||
1.10 | ||
1.11 | ||
1.12 | ||
1.14 | ||
2.1 | ||
2.2 | ||
2.3 | ||
2.4 | ||
2.6 | ||
2.7 | ||
2.8 | ||
2.9 | ||
4.1 |
4.2 | |
4.3 | |
4.8 | |
4.9 | |
4.10 | |
4.11 | |
4.12 | |
4.13 | |
4.14 | |
4.15 | |
4.16 | |
4.17 | |
4.18 | |
4.19 | |
4.20 | |
4.21 | |
4.22 | |
4.23 | |
4.24 |
4.25 | |
4.26 | |
4.27 | |
4.28 | |
4.29 | |
4.30 | |
8.1 | |
12.1 | |
12.2 | |
13.1 | |
13.2 | |
15.1 | |
101 | The following materials from the |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 |
(1) | Incorporated by reference to Exhibit 99.2 of the |
(2) | Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 6-K, filed on April 18, 2014. |
(3) | Incorporated by reference to Exhibit 1.3 of the Company’s Annual Report on Form 20-F, filed on April 26, 2016. |
(4) | Incorporated by reference to Exhibit 1.4 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(5) | Incorporated by reference to Exhibit 1.5 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(6) | Incorporated by reference to Exhibit 1.6 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(7) | Incorporated by reference to Exhibit 1.7 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(8) | Incorporated by reference to Exhibit 1.8 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(9) | Incorporated by reference to Exhibit 1.9 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(10) | Incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 6-K, filed on August 22, 2019. |
(11) | Incorporated by reference to Exhibit 1.11 of the Company’s Annual Report on Form 20-F, filed on April 23, 2021. |
Incorporated by reference to Exhibit 99.1 of the |
(13) | Incorporated by reference to Exhibit 1 of the Company’s Current Report on Form 6-K filed on November 28, 2014. |
(14) | Incorporated by reference to Exhibit 2.1 of the Company’s Annual Report on Form 20-F, filed on June 29, 2009. |
(15) | Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 6-K, filed on October 11, 2022. |
(16) | Incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 6-K, filed on December 14, 2022. |
(17) | Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 6-K, filed on September 22, 2016. |
(18) | Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 6-K, filed on May 8, 2017. |
(19) | Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 6-K, filed on February 21, 2017. |
(20) | Incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 6-K, filed on April |
Incorporated by reference to Exhibit |
(22) | Incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 20-F, filed on April 26, |
Incorporated by reference to Exhibit 4.1 of the |
(24) | Incorporated by reference to Exhibit 4.5 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(25) | Incorporated by reference to Exhibit 4.6 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(26) | Incorporated by reference to Exhibit 4.7 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(27) | Incorporated by reference to Exhibit 4.8 of the Company’s Annual Report on Form 20-F, filed on March 29, 2018. |
(28) | Incorporated by reference to Exhibit 4.105 of the Company’s Annual Report on Form 20-F, filed on March 28, 2019. |
(29) | Incorporated by reference to Exhibit 4.108 of the Company’s Annual Report on Form 20-F, filed on March 28, 2019. |
(30) | Incorporated by reference to Exhibit 4.113 of the Company’s Annual Report on Form 20-F, filed on March 28, 2019. |
Incorporated by reference to Exhibit |
Incorporated by reference to Exhibit |
Incorporated by reference to Exhibit |
Incorporated by reference to Exhibit |
(35) | Incorporated by reference to Exhibit 4.27 of the Company’s Annual Report on Form 20-F, filed on April 23, 2021. |
(36) | Incorporated by reference to Exhibit 4.20 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(37) | Incorporated by reference to Exhibit 4.30 of the Company’s Annual Report on Form 20-F, filed on April 23, 2021. |
(38) | Incorporated by reference to Exhibit 4.31 of the Company’s Annual Report on Form 20-F, filed on April 23, 2021. |
(39) | Incorporated by reference to Exhibit 4.23 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(40) | Incorporated by reference to Exhibit 4.26 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(41) | Incorporated by reference to Exhibit 4.27 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(42) | Incorporated by reference to Exhibit 4.28 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(43) | Incorporated by reference to Exhibit 4.29 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(44) | Incorporated by reference to Exhibit 99.3 of the Company’s Current Report on Form 6-K, filed on |
Incorporated by reference to Exhibit 4.34 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(46) | Incorporated by reference to Exhibit 4.35 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(47) | Incorporated by reference to Exhibit 4.36 of the Company’s Annual Report on Form 20-F, filed on April 15, 2022. |
(48) | Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 6-K, filed on June 10, 2022. |
(49) | Incorporated by reference to Exhibit 10.1 of the |
Incorporated by reference to Exhibit |
Incorporated by reference to Exhibit |
TOP SHIPS INC. | ||
(Registrant) | ||
Date: March | By: | /s/ Evangelos J. Pistiolis |
Evangelos J. Pistiolis | ||
President, Chief Executive Officer, and Director |
TOP SHIPS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | |
(PCAOB ID 1163) | F-2 |
Consolidated Balance sheets as of December 31, | F-3 |
F-4 | |
F-5 | |
F-6 | |
F-7 | |
To the Board of Directors and Stockholders of
Top Ships Inc.,
Majuro, Republic of the Marshall Islands
Opinion on the Financial Statements
December 31, | December 31, | |||||||
2016 | 2017 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | 127 | 24,081 | ||||||
Trade accounts receivable | 19 | 621 | ||||||
Prepayments and other (Note 7) | 864 | 428 | ||||||
Due from related parties | 34 | - | ||||||
Inventories (Note 8) | 583 | 645 | ||||||
Prepaid bareboat charter hire (Note 6) | 1,657 | 1,656 | ||||||
Deferred charges (Note 9) | - | 341 | ||||||
Restricted cash (Note 6 and 9) | 1,257 | 1,283 | ||||||
Total current assets | 4,541 | 29,055 | ||||||
FIXED ASSETS: | ||||||||
Advances for vessels under construction (Note 4(a)) | - | 6,757 | ||||||
Vessels, net (Note 4(b)) | 126,170 | 154,935 | ||||||
Other fixed assets, net | 1,161 | 1,042 | ||||||
Total fixed assets | 127,331 | 162,734 | ||||||
OTHER NON CURRENT ASSETS: | ||||||||
Prepaid bareboat charter hire (Note 6) | 6,935 | 5,278 | ||||||
Restricted cash (Note 6 and 9) | 4,210 | 5,249 | ||||||
Investments in unconsolidated joint ventures (Note 20) | - | 17,738 | ||||||
Derivative financial instruments (Note 17) | 300 | 394 | ||||||
Total non-current assets | 11,445 | 28,659 | ||||||
Total assets | 143,317 | 220,448 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt (Note 9(a) ) | 7,995 | 9,508 | ||||||
Short-term debt (Note 9(b)) | - | 10,183 | ||||||
Debt from related parties (Note 9(c)) | 4,085 | - | ||||||
Due to related parties (Note 5) | 1,108 | 120 | ||||||
Accounts payable | 1,902 | 2,799 | ||||||
Accrued liabilities | 2,965 | 1,985 | ||||||
Unearned revenue | 1,978 | 986 | ||||||
Total current liabilities | 20,033 | 25,581 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Derivative financial instruments (Note 17) | 3,563 | 3,335 | ||||||
Non-current portion of long term debt (Note 9(a)) | 72,459 | 84,258 | ||||||
Total non-current liabilities | 76,022 | 87,593 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 10) | ||||||||
Total liabilities | 96,055 | 113,174 |
MEZZANINE EQUITY: | ||||||||
Preferred stock; 2,106 and 0 Series B shares issued and outstanding at December 31, 2016 and 2017 with $0.01 par value (Note 19) | 1,741 | - | ||||||
STOCKHOLDERS' EQUITY: | ||||||||
Preferred stock, $0.01 par value; 20,000,000 shares authorized; of which 2,106 and 0 Series B shares were outstanding at December 31, 2016 and 2017 (refer to Mezzanine Equity - Note 19); of which 0 and 100,000 Series D shares were outstanding at December 31, 2016 and 2017 (Note 11) | - | 1 | ||||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 31 and 8,923,617 shares issued and outstanding at December 31, 2016 and 2017 (Note 11) | - | 89 | ||||||
Additional paid-in capital (Note 11) | 328,762 | 402,644 | ||||||
Accumulated deficit | (283,241 | ) | (296,645 | ) | ||||
Total stockholders' equity | 45,521 | 106,089 | ||||||
Non-controlling Interests | - | 1,185 | ||||||
Total equity | 45,521 | 107,274 | ||||||
Total liabilities and stockholders' equity | 143,317 | 220,448 | ||||||
December 31, | December 31, | |||||||
2021 | 2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | 2,370 | 20,544 | ||||||
Trade accounts receivable | 76 | 8 | ||||||
Prepayments and other | 581 | 1,314 | ||||||
Inventories | 671 | 1,026 | ||||||
Vessels held for sale (Note 4c) | 71,636 | - | ||||||
Total current assets | 75,334 | 22,892 | ||||||
FIXED ASSETS: | ||||||||
Advances for vessels under construction (Note 4a) | 30,579 | - | ||||||
Vessels, net (Note 4b) | 156,585 | 389,059 | ||||||
Right of use assets from operating leases (Note 6) | 37,279 | 28,708 | ||||||
Other fixed assets, net | 534 | 505 | ||||||
Total fixed assets | 224,977 | 418,272 | ||||||
OTHER NON CURRENT ASSETS: | ||||||||
Restricted cash (Note 6 and 7) | 4,000 | 4,000 | ||||||
Investments in unconsolidated joint ventures (Note 17) | 24,477 | 22,173 | ||||||
Deposit asset (Note 19) | 2,000 | 2,000 | ||||||
Total non-current assets | 30,477 | 28,173 | ||||||
Total assets | 330,788 | 469,337 | ||||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt (Note 7) | 7,205 | 12,344 | ||||||
Debt related to vessels held for sale (Note 7) | 53,202 | - | ||||||
Due to related parties (Note 5) | 29,755 | 237 | ||||||
Accounts payable | 2,308 | 1,953 | ||||||
Accrued liabilities | 1,145 | 2,061 | ||||||
Unearned revenue | 3,658 | 7,030 | ||||||
Current portion of Operating lease liabilities (Note 6) | 9,815 | 8,610 | ||||||
Total current liabilities | 107,088 | 32,235 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Non-current portion of long term debt (Note 7) | 90,163 | 221,370 | ||||||
Non-current portion of Operating lease liabilities (Note 6) | 23,948 | 15,338 | ||||||
Other non-current liabilities | 225 | 100 | ||||||
Vessel fair value participation liability (Note 7) | - | 3,271 | ||||||
Total non-current liabilities | 114,336 | 240,079 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 8) | - | - | ||||||
Total liabilities | 221,424 | 272,314 | ||||||
MEZZANINE EQUITY: | ||||||||
Preferred stock, $0.01 par value; 20,000,000 shares authorized; 13,452 Series E Shares issued and outstanding at December 31, 2021 and 13,452 Series E Shares and 5,850,748 Series F Shares issued and outstanding at December 31, 2022 (Note 12) | - | 59 | ||||||
Preferred stock, Paid-in capital in excess of par | 16,142 | 86,292 | ||||||
Total mezzanine equity | 16,142 | 86,351 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Preferred stock, $0.01 par value; 20,000,000 shares authorized; of which 100,000 Series D Shares were outstanding at December 31, 2021 and 2022 (Note 9) | 1 | 1 | ||||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 1,991,598 and 10,294,906 shares issued and outstanding at December 31, 2021 and 2022 (Note 9) | 20 | 103 | ||||||
Additional paid-in capital | 429,955 | 428,374 | ||||||
Accumulated deficit | (336,754 | ) | (317,806 | ) | ||||
Total stockholders’ equity | 93,222 | 110,672 | ||||||
Total liabilities, mezzanine equity and stockholders’ equity | 330,788 | 469,337 |
TOP SHIPS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017 (Expressed in thousands of U.S. Dollars – except share and per share data) | ||||||||||||
2015 | 2016 | 2017 | ||||||||||
REVENUES: | ||||||||||||
Revenues | 13,075 | 28,433 | 39,363 | |||||||||
EXPENSES: | ||||||||||||
Voyage expenses (Note 14) | 370 | 736 | 999 | |||||||||
Bareboat charter hire expenses (Note 6) | 5,274 | 6,299 | 6,282 | |||||||||
Amortization of prepaid bareboat charter hire (Note 6) | 1,431 | 1,577 | 1,657 | |||||||||
Vessel operating expenses (Note 14) | 4,789 | 9,913 | 13,444 | |||||||||
Vessel depreciation (Note 4b) | 668 | 3,467 | 5,744 | |||||||||
Management fees-related parties (Note 5) | 1,621 | 1,824 | 4,730 | |||||||||
General and administrative expenses | 2,983 | 2,906 | 5,805 | |||||||||
Other operating loss/ (income) (Note 18) | 274 | (3,137 | ) | (914 | ) | |||||||
Impairment on vessel (Note 4) | 3,081 | - | - | |||||||||
Operating (loss)/income | (7,416 | ) | 4,848 | 1,616 | ||||||||
OTHER EXPENSES: | ||||||||||||
Interest and finance costs (including $20, $509 and $504 respectively, to related party) (Note 15) | (719 | ) | (3,093 | ) | (15,793 | ) | ||||||
Loss on derivative financial instruments (Note 17) | (392 | ) | (698 | ) | (301 | ) | ||||||
Interest income | - | - | 13 | |||||||||
Other, net (Note 9) | 20 | (5 | ) | 1,120 | ||||||||
Total other expenses, net | (1,091 | ) | (3,796 | ) | (14,961 | ) | ||||||
Net (loss)/income and comprehensive (loss)/income | (8,507 | ) | 1,052 | (13,345 | ) | |||||||
Deemed dividend for beneficial conversion feature of Series B convertible preferred stock (Note 19) | - | (1,403 | ) | - | ||||||||
Equity loss in unconsolidated joint ventures | - | - | (27 | ) | ||||||||
Net loss attributable to common shareholders | (8,507 | ) | (351 | ) | (13,372 | ) | ||||||
Attributable to: | ||||||||||||
Common stock holders | (8,507 | ) | (351 | ) | (13,404 | ) | ||||||
Non-controlling interests | - | - | 32 | |||||||||
Loss per common share, basic and diluted (Note 13) | (773,364 | ) | (15,955 | ) | (12.57 | ) | ||||||
The accompanying notes are an integral part of these consolidated financial statements. |
FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 20172020, 2021 and 2022
Additional | ||||||||
Preferred Stock | Common Stock | Paid in | Accumulated Deficit | |||||
# of Shares | Par Value | # of Shares* | Par Value* | Capital* | attributable to common stockholders | Non-controlling interest | Total | |
BALANCE, December 31, 2014 | 10 | - | 318,315 | (275,786) | - | 42,529 | ||
Net loss and comprehensive loss | - | - | - | (8,507) | - | (8,507) | ||
Stock-based compensation (Note 12) | 1 | - | 131 | - | - | 131 | ||
BALANCE, December 31, 2015 | 11 | - | 318,446 | (284,293) | - | 34,153 | ||
Net income and comprehensive income | - | - | - | 1,052 | - | 1,052 | ||
Stock-based compensation (Note 12) | - | 239 | - | - | 239 | |||
Common shares issued in exchange of assumption of Delos Termination Fee (Note 5) | 8 | - | 3,796 | - | - | 3,796 | ||
Issuance of common stock due to exercise of warrants (Note 11) | 12 | 6,281 | - | - | 6,281 | |||
Deemed dividend for Series B convertible preferred stock's beneficial conversion feature (Note 19) | - | - | (1,403) | - | - | (1,403) | ||
Beneficial conversion feature of Series B convertible preferred stock (Note 19) | - | - | 1,403 | - | - | 1,403 | ||
BALANCE, December 31, 2016 | 31 | - | 328,762 | (283,241) | - | 45,521 | ||
Net loss | - | - | - | (13,404) | 32 | (13,372) | ||
Issuance of common stock pursuant to convertible related party loans (Note 9) | 4 | 2,040 | - | - | 2,040 | |||
Issuance of common stock pursuant to the Common Stock Purchase Agreement (Note 11) | 632,775 | 6 | 38,383 | - | - | 38,389 | ||
Issuance of common stock pursuant to the Crede Common Stock Purchase Agreement (Note 11) | 7,148,889 | 72 | 28,561 | - | - | 28,633 | ||
Issuance of common stock pursuant to Series C convertible preferred shares conversions (Note 9 and 11) | 904,646 | 9 | 8,204 | - | - | 8,213 | ||
Series C convertible preferred stock's beneficial conversion feature (Note 9) | - | - | 7,500 | - | - | 7,500 | ||
Issuance of common stock due to exercise of warrants (Note 11) | 219,250 | 2 | 1,538 | - | - | 1,540 | ||
Stock-based compensation (Note 12) | - | - | (25) | - | - | (25) | ||
Non-controlling interest on acquisition of Eco Seven Inc (Note 1) | 5,278 | 5,278 | ||||||
Reduction of non-controlling interest arising from Company's purchase of additional ownership interest in Eco Seven In. (Note 1) | (4,125) | (4,125) | ||||||
Excess of consideration over acquired assets (Note 1) | - | - | (12,909) | (12,909) | ||||
Cancellation of fractional shares due to reverse stock splits | (4) | - | - | - | - | - | ||
Issuance of common stock pursuant to Series B convertible preferred stock conversions reflected in Mezzanine equity (Note 19) | 18,026 | 1,743 | - | - | 1,743 | |||
Issuance of Series D preferred stock (Note 11) | 100,000 | 1 | - | - | - | - | - | 1 |
Additional paid-in capital attributed to non-controlling interests | - | - | (1,153) | - | (1,153) | |||
BALANCE, December 31, 2017 | 100,000 | 1 | 8,923,617 | 89 | 402,644 | (296,645) | 1,185 | 107,274 |
2020 | 2021 | 2022 | ||||||||||
Revenues (including $0, $0 and $7,294 respectively, from related party) (Note 18 & 5) | 60,222 | 56,367 | 80,656 | |||||||||
EXPENSES: | ||||||||||||
Voyage expenses (including $761, $705 and $1,008 respectively, to related party) (Note 11) | 1,994 | 1,317 | 1,648 | |||||||||
Operating lease expense (Note 6) | 755 | 10,840 | 10,840 | |||||||||
Vessel operating expenses (including $60, $17 and $37 respectively, to related party) (Note 11) | 21,024 | 15,679 | 18,628 | |||||||||
Dry-docking costs | 356 | 361 | - | |||||||||
Vessel depreciation (Note 4b) | 13,174 | 7,670 | 13,289 | |||||||||
Management fees-related parties (Note 5) | 5,627 | 2,596 | 2,093 | |||||||||
General and administrative expenses (including $360, $360 and $360 respectively, to related party)(Note 5) | 1,932 | 1,943 | 1,617 | |||||||||
Other operating loss (Note 15) | 4,800 | - | - | |||||||||
Loss/(Gain) on sale of vessels (Note 6 and 19) | 12,355 | - | (78 | ) | ||||||||
Impairment on vessels (Note 19) | - | 1,160 | - | |||||||||
Operating (loss)/ income | (1,795 | ) | 14,801 | 32,619 | ||||||||
OTHER EXPENSES: | ||||||||||||
Interest and finance costs (including $0, $0 and $207 respectively, to related party) (Note 12) | (20,956 | ) | (6,998 | ) | (14,365 | ) | ||||||
(Loss)/Gain on derivative financial instruments (Note 14) | (814 | ) | 66 | - | ||||||||
Interest income | 34 | - | 48 | |||||||||
Equity gain in unconsolidated joint ventures | 713 | 747 | 646 | |||||||||
Total other expenses, net | (21,023 | ) | (6,185 | ) | (13,671 | ) | ||||||
Net (loss)/income and comprehensive (loss)/income | (22,818 | ) | 8,616 | 18,948 | ||||||||
Less: Deemed dividend for beneficial conversion feature of Series E Shares (Note 16) | (1,067 | ) | (900 | ) | - | |||||||
Less: Deemed dividend equivalents on preferred shares related to redemption value (Note 16) | (3,099 | ) | (437 | ) | (14,400 | ) | ||||||
Less: Preferred shares dividend (Note 16) | (1,796 | ) | (1,883 | ) | (12,390 | ) | ||||||
Less: Deemed dividend on warrant inducement (Note 9) | - | - | (1,345 | ) | ||||||||
Net (loss) / income attributable to common shareholders | (28,780 | ) | 5,396 | (9,187 | ) | |||||||
(Loss) / Earnings per common share, basic and diluted (Note 10) | (24.48 | ) | 2.71 | (3.03 | ) |
TOP SHIPS INC. | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017 | ||||||||||||
(Expressed in thousands of U.S. Dollars) | ||||||||||||
2015 | 2016 | 2017 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net (loss)/ income | (8,507 | ) | 1,052 | (13,372 | ) | |||||||
Adjustments to reconcile net (loss)/ income to net cash | ||||||||||||
(used in)/provided by operating activities: | ||||||||||||
Vessel depreciation (Note 4) | 668 | 3,467 | 5,744 | |||||||||
Other fixed assets depreciation | 127 | 121 | 120 | |||||||||
Equity losses in unconsolidated joint ventures | - | - | 27 | |||||||||
Non-cash debt conversion expenses | - | - | 842 | |||||||||
Amortization and write off of deferred financing costs | 538 | 163 | 1,640 | |||||||||
Amortization of debt discount | - | - | 7,500 | |||||||||
Stock-based compensation expense (Note 12) | 131 | 239 | (25 | ) | ||||||||
Change in fair value of derivative financial instruments (Note 17) | 617 | 682 | (175 | ) | ||||||||
Write-off of short term debt (Note 9) | - | - | (1,118 | ) | ||||||||
Loss on sale of other fixed assets | - | 22 | - | |||||||||
Amortization of prepaid bareboat charter hire (Note 6) | 1,431 | 1,577 | 1,657 | |||||||||
Impairment on vessel (Note 4) | 3,081 | - | - | |||||||||
Other operating income | - | (3,137 | ) | (914 | ) | |||||||
(Increase)/Decrease in: | ||||||||||||
Trade accounts receivable | (57 | ) | 88 | (602 | ) | |||||||
Inventories | (78 | ) | (181 | ) | (62 | ) | ||||||
Prepayments and other | 340 | (429 | ) | 436 | ||||||||
Due from related parties | 25 | (34 | ) | 34 | ||||||||
Increase/(Decrease) in: | ||||||||||||
Due to related parties | 110 | 14 | (1,034 | ) | ||||||||
Accounts payable | 114 | 954 | (207 | ) | ||||||||
Other non-current liabilities | (430 | ) | - | - | ||||||||
Accrued liabilities | 503 | 128 | 1,196 | |||||||||
Unearned revenue | - | 1,978 | (992 | ) | ||||||||
Net Cash (used in)/ provided by Operating Activities | (1,387 | ) | 6,704 | 695 | ||||||||
Cash Flows from Investing Activities: | ||||||||||||
Advances for vessels under construction and capitalized expenses (Note 4) | (53,410 | ) | (73,383 | ) | (6,757 | ) | ||||||
Vessel acquisitions (Note 4) | - | - | (34,671 | ) | ||||||||
Investments in unconsolidated joint ventures (Note 20) | - | - | (17,639 | ) | ||||||||
Net proceeds from sale of vessels (Note 4) | 54,152 | - | - | |||||||||
Net proceeds from sale of other fixed assets | - | 29 | - | |||||||||
Acquisition of other fixed assets | (6 | ) | - | - | ||||||||
Net Cash provided by/(used in) Investing Activities | 736 | (73,354 | ) | (59,067 | ) | |||||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds from debt (Note 9) | 24,450 | 65,385 | 24,849 | |||||||||
Proceeds from short-term notes (Note 9) | - | - | 68,790 | |||||||||
Proceeds from related party debt (Note 9) | 3,850 | 235 | 3,148 | |||||||||
Principal payments of debt | (500 | ) | (5,085 | ) | (9,546 | ) | ||||||
Proceeds from issuance of Series C convertible preferred stock (Note 9 and 11) | - | - | 7,500 | |||||||||
Prepayment of debt | (19,419 | ) | - | - | ||||||||
Prepayment of related party debt (Note 9) | (2,250 | ) | - | (7,233 | ) | |||||||
Excess of purchase price over book value of vessels | - | - | (12,909 | ) | ||||||||
Proceeds from common stock purchase agreements | - | - | 9,726 | |||||||||
Proceeds from warrant exercises | - | 5,765 | 1,567 | |||||||||
Proceeds from issuance of Series B convertible preferred stock | - | 2,001 | - | |||||||||
Equity offering issuance costs | (237 | ) | (87 | ) | (1,342 | ) | ||||||
Payment of financing costs | (989 | ) | (388 | ) | (1,159 | |||||||
Net Cash provided by Financing Activities | 4,905 | 67,826 | 83,391 | |||||||||
Net increase in cash and cash equivalents and restricted cash | 4,254 | 1,176 | 25,019 | |||||||||
Cash and cash equivalents and restricted cash at beginning of year | 164 | 4,418 | 5,594 | |||||||||
Cash and cash equivalents and restricted cash at end of the year | 4,418 | 5,594 | 30,613 | |||||||||
Cash breakdown | ||||||||||||
Cash and cash equivalents | 2,668 | 127 | 24,081 | |||||||||
Restricted cash, current | - | 1,257 | 1,283 | |||||||||
Restricted cash, non-current | 1,750 | 4,210 | 5,249 | |||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||
Capital expenditures included in Accounts payable/Accrued liabilities | 1,093 | 205 | 43 | |||||||||
Interest paid net of capitalized interest | 189 | 2,434 | 5,103 | |||||||||
Finance fees included in Accounts payable/Accrued liabilities | 670 | 67 | 372 | |||||||||
Common stock purchase agreements, warrant exercise and Series B convertible preferred stock issuance costs included in liabilities | 515 | 792 | 1,108 | |||||||||
Shares issued as consideration for the assumption of liabilities | - | 3,796 | - | |||||||||
Beneficial conversion feature of Series B convertible preferred stock (Note 19) | - | 1,403 | - | |||||||||
Deemed dividend for beneficial conversion feature of Series B convertible preferred stock (Note 19) | - | (1,403 | ) | - | ||||||||
Shares issued in exchange for converting debt, interest & finance fees | - | - | 10,890 | |||||||||
Settlement of notes with common stock issued (Note 9 and 11) | - | - | 58,794 |
The accompanying notes are an integral part of these consolidated financial statements.
TOP SHIPS INC.
CONSOLIDATED STATEMENTS OF MEZZANINE AND STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of U.S. Dollars – except number of shares and per share data)
Mezzanine Equity | Preferred Stock | Common Stock | Additional | Accumulated Deficit attributable | Other | |||||||||||||||||||||||||||||||||||||||
# of Shares | Par Value | Mezzanine Equity | # of Shares | Par Value | # of Shares* | Par Value* | Paid-In Capital* | to common stockholders | comprehensive loss | Total | ||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2019 | 15,724 | - | 18,083 | 100,000 | 1 | 17,391 | - | 411,586 | (322,552 | ) | (1,361 | ) | 87,674 | |||||||||||||||||||||||||||||||
Net loss | (22,818 | ) | (22,818 | ) | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | (34 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to equity offerings (Note 9) | 1,970,848 | 20 | 121,158 | 121,178 | ||||||||||||||||||||||||||||||||||||||||
Cashless exercises of Class A Warrants (Note 9) | 3,360 | - | - | - | ||||||||||||||||||||||||||||||||||||||||
Issuance of Series E Shares (Note 16) | 14,350 | 14,350 | - | |||||||||||||||||||||||||||||||||||||||||
Deemed dividend equivalents on Series E Shares issued during the period related to redemption value | 3,099 | (3,099 | ) | (3,099 | ) | |||||||||||||||||||||||||||||||||||||||
Redemptions of Series E Shares (Note 16) | (21,364 | ) | (24,569 | ) | - | |||||||||||||||||||||||||||||||||||||||
Reversal of costs related to equity offerings | 235 | 235 | ||||||||||||||||||||||||||||||||||||||||||
Excess of consideration over carrying value of acquired assets (Note 1) | (62,000 | ) | (62,000 | ) | ||||||||||||||||||||||||||||||||||||||||
Dividends of Series E shares (Note 16) | 2,554 | 2,554 | (1,796 | ) | (1,796 | ) | ||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature related to the issuance of Series E Shares | (1,067 | ) | 1,067 | 1,067 | ||||||||||||||||||||||||||||||||||||||||
Deemed dividend related to beneficial conversion feature of Series E Shares | 1,067 | (1,067 | ) | (1,067 | ) | |||||||||||||||||||||||||||||||||||||||
Reversal of Other comprehensive loss (Note 14) | 1,361 | 1,361 | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2020 | 11,264 | - | 13,517 | 100,000 | 1 | 1,991,599 | 20 | 466,050 | (345,370 | ) | - | 120,701 | ||||||||||||||||||||||||||||||||
Net Income | 8,616 | 8,616 | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | (34 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||
Issuance of Series E Shares (Note 16) | 2,188 | - | 2,188 | - | ||||||||||||||||||||||||||||||||||||||||
Deemed dividend equivalents on Series E Shares issued during the period related to redemption value | 437 | (437 | ) | (437 | ) | |||||||||||||||||||||||||||||||||||||||
Dividends of Series E shares (Note 16) | (1,883 | ) | (1,883 | ) | ||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature related to the issuance of Series E Shares | (900 | ) | 900 | 900 | ||||||||||||||||||||||||||||||||||||||||
Deemed dividend related to beneficial conversion feature of Series E Shares | 900 | (900 | ) | (900 | ) | |||||||||||||||||||||||||||||||||||||||
Excess of consideration over carrying value of acquired assets (Note 1) | (33,741 | ) | (33,741 | ) | ||||||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2021 | 13,452 | - | 16,142 | 100,000 | 1 | 1,991,599 | 20 | 429,955 | (336,754 | ) | - | 93,222 | ||||||||||||||||||||||||||||||||
Net Income | 18,948 | 18,948 | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | (16 | ) | (16 | ) | ||||||||||||||||||||||||||||||||||||||||
Redemption of fractional shares due to reverse stock split | (6,435 | ) | (15 | ) | (15 | ) | ||||||||||||||||||||||||||||||||||||||
Issuance of preferred shares (Note 16) | 7,200,000 | 72 | 71,928 | - | ||||||||||||||||||||||||||||||||||||||||
Deemed dividend of Series F shares related to redemption value | 14,400 | (14,400 | ) | (14,400 | ) | |||||||||||||||||||||||||||||||||||||||
Dividends of preferred shares (Note 16) | (12,390 | ) | (12,390 | ) | ||||||||||||||||||||||||||||||||||||||||
Exercise of warrants, net of fees | 715,150 | 7 | 4,529 | 4,536 | ||||||||||||||||||||||||||||||||||||||||
Redemptions of preferred shares (Note 16) | (1,349,252 | ) | (13 | ) | (16,178 | ) | - | |||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to equity offerings, net | 7,594,592 | 76 | 20,711 | 20,787 | ||||||||||||||||||||||||||||||||||||||||
Deemed dividend on warrant inducement (Note 9) | (1,345 | ) | (1,345 | ) | ||||||||||||||||||||||||||||||||||||||||
Incremental fair value of the October 2022 Warrants (Note 9) | 1,345 | 1,345 | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2022 | 5,864,200 | 59 | 86,292 | 100,000 | 1 | 10,294,906 | 103 | 428,374 | (317,806 | ) | - | 110,672 |
The accompanying notes are an integral part of these consolidated financial statements.
*Adjusted to reflect the reverse stock split effected in September 2022 (see Note 1)
TOP SHIPS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of U.S. Dollars)
2020 | 2021 | 2022 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net (loss) / income | (22,818 | ) | 8,616 | 18,948 | ||||||||
Adjustments to reconcile net (loss)/income to net cash provided by operating activities: | ||||||||||||
Vessel depreciation | 13,174 | 7,670 | 13,289 | |||||||||
Other fixed assets depreciation | 36 | 14 | 4 | |||||||||
Equity (gains) in unconsolidated joint ventures | (713 | ) | (747 | ) | (646 | ) | ||||||
Dividends from cumulative earnings of joint venture | - | 1,524 | 646 | |||||||||
Amortization and write off of deferred financing costs | 6,311 | 840 | 2,522 | |||||||||
Stock-based compensation expense | (34 | ) | (34 | ) | (16 | ) | ||||||
Change in fair value of derivative financial instruments | 790 | (66 | ) | - | ||||||||
Amortization of Right of use assets from operating leases | 543 | 7,943 | 8,571 | |||||||||
Impairment on vessels | - | 1,160 | - | |||||||||
Loss/(Gain) on sale of other fixed assets | 36 | - | (15 | ) | ||||||||
Loss/(Gain) on sale of vessels | 12,355 | - | (78 | ) | ||||||||
(Increase)/Decrease in: | ||||||||||||
Trade accounts receivable | 642 | (76 | ) | 68 | ||||||||
Inventories | 334 | (157 | ) | (355 | ) | |||||||
Prepayments and other | (198 | ) | 323 | (733 | ) | |||||||
Increase/(Decrease) in: | ||||||||||||
Due to related parties | 2,097 | (2,797 | ) | (3,204 | ) | |||||||
Accounts payable | (2,083 | ) | (123 | ) | (82 | ) | ||||||
Other non-current liabilities | 300 | (75 | ) | (125 | ) | |||||||
Accrued liabilities | (2,803 | ) | (207 | ) | 1,068 | |||||||
Unearned revenue | (1,263 | ) | 1,584 | 3,372 | ||||||||
Operating lease liabilities | (666 | ) | (9,331 | ) | (9,815 | ) | ||||||
Net Cash provided by Operating Activities | 6,040 | 16,061 | 33,419 | |||||||||
Cash Flows used in Investing Activities: | ||||||||||||
Advances for vessels under construction and capitalized expenses | (120,858 | ) | (115,513 | ) | (216,714 | ) | ||||||
Investments in unconsolidated joint ventures (2017 Joint Venture – see Note 17) | 19,555 | - | - | |||||||||
Investments in unconsolidated joint ventures (2020 Joint Venture – see Note 17) | (27,454 | ) | - | - | ||||||||
Returns of investments in unconsolidated joint ventures (2020 Joint Venture – see Note 17) | - | 2,976 | 2,304 | |||||||||
Net proceeds from vessel sales | 310,016 | 35,886 | 71,714 | |||||||||
Net proceeds from sales of other fixed assets, net | 35 | - | 40 | |||||||||
Net Cash provided by/(used in) Investing Activities | 181,294 | (76,651 | ) | (142,656 | ) | |||||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds from debt | 60,200 | 74,800 | 156,201 | |||||||||
Proceeds from related party debt | - | - | 9,000 | |||||||||
Principal payments and prepayments of related party debt | - | - | (9,000 | ) | ||||||||
Principal payments and prepayments of debt | (269,621 | ) | (28,313 | ) | (68,893 | ) | ||||||
Redemption of preferred shares | (24,568 | ) | - | (16,191 | ) | |||||||
Consideration paid in excess of purchase price over book value of vessels | (60,850 | ) | - | - | ||||||||
Proceeds from issuance of common stock | 129,660 | - | 22,718 | |||||||||
Proceeds from warrant exercises, net of fees | - | - | 4,556 | |||||||||
Equity offering issuance costs | (8,868 | ) | - | (1,671 | ) | |||||||
Payment of financing costs | (1,851 | ) | (1,076 | ) | (3,566 | ) | ||||||
Derivative financial instrument termination payments | (1,379 | ) | - | - | ||||||||
Dividends of preferred shares | - | (1,779 | ) | (13,358 | ) | |||||||
Proceeds from issuance of preferred shares (Note 16) | - | - | 47,630 | |||||||||
Redemption of fractional shares due to reverse stock split | - | - | (15 | ) | ||||||||
Net Cash (used in)/ provided by Financing Activities | (177,277 | ) | 43,632 | 127,411 | ||||||||
Net increase/(decrease) in cash and cash equivalents and restricted cash | 10,057 | (16,958 | ) | 18,174 | ||||||||
Cash and cash equivalents and restricted cash at beginning of year | 13,271 | 23,328 | 6,370 | |||||||||
Cash and cash equivalents and restricted cash at end of the year | 23,328 | 6,370 | 24,544 | |||||||||
Cash breakdown | ||||||||||||
Cash and cash equivalents | 19,328 | 2,370 | 20,544 | |||||||||
Restricted cash, current | - | - | - | |||||||||
Restricted cash, non-current | 4,000 | 4,000 | 4,000 | |||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||
Capital expenditures included in Accounts payable/Accrued liabilities/Due to related parties | 388 | 1,530 | - | |||||||||
Interest paid, net of capitalized interest | 18,309 | 7,412 | 11,161 | |||||||||
Finance fees included in Accounts payable/Accrued liabilities/Due to related parties | 23 | 151 | - | |||||||||
Equity issuance costs and warrant related costs included in liabilities | - | - | 280 | |||||||||
Unpaid Excess of consideration over carrying value of acquired assets included in Due to Related Parties (Note 1) | 1,150 | 27,562 | - | |||||||||
Beneficial conversion feature of Series E perpetual convertible preferred stock (Note 16) | 1,067 | 900 | - | |||||||||
Settlement of related party debt, interest, finance fees, Excess consideration over acquired assets, capital expenditures and dividends with issuance of preferred shares (Note 16) | 16,904 | 2,188 | 24,370 | |||||||||
Dividends payable included in Due to related parties (Note 16) | 864 | 968 | - | |||||||||
Carrying value of net assets of companies acquired (Note 1) | - | 8,933 | - | |||||||||
Reversal of equity offering costs not payable | 235 | - | - | |||||||||
Prepaid rent of Navigare Lease included in initial measurement | 2,006 | - | - | |||||||||
Deemed dividend equivalents on preferred shares related to redemption value (Note 16) | 2,253 | 437 | 14,400 | |||||||||
Deemed dividend on warrant inducement (Note 9) | - | - | 1,345 |
The accompanying notes are an integral part of these consolidated financial statements.
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
1. | Basis of Presentation and General Information: |
The accompanying consolidated financial statements include the accounts of Top Ships Inc. (formerly Top Tankers Inc. and Ocean Holdings Inc.) and its wholly owned subsidiaries (collectively the "Company"“Company”). Ocean Holdings Inc. was formed on January 10, 2000, under the laws of Marshall Islands and was renamed to Top Tankers Inc. and Top Ships Inc. in May 2004 and December 2007, respectively. The Company is an international provider of worldwide oil, petroleum products and chemicals transportation services.
As of December 31, 2017,2022, the Company was the sole owner of all outstanding shares of the following subsidiary companies. The following list is not exhaustive as the Company has other subsidiaries relating to vessels that have been sold and that remain dormant for the periods presented in these consolidated financial statements as well as intermediary companies that own shipowning companies that are 100% subsidiaries of the Company that own shipowning companies.
Companies | Date of Incorporation | Country of Incorporation | Activity |
Top Tanker Management Inc. | May 2004 | Marshall Islands | Management company |
Wholly owned Shipowning Companies (“SPC”) with vessels in | Date of Incorporation | Country of Incorporation | Vessel | Delivery Date | ||
1 | ||||||
Monte Carlo Lax Shipping Company Limited | May 2013 | Marshall Islands | M/T Nord Valiant | August 2016 (sold in 2021) | ||
2 | PCH Dreaming Inc. | January 2018 | Marshall Islands | M/T Eco Marina Del Ray | March 2019 | |
3 | Santa Catalina Inc. | December 2018 | Marshall Islands | M/T Eco Los Angeles | February 2020 (sold in 2022) | |
4 | Santa Monica Marine Inc. | December 2018 | Marshall Islands | M/T Eco City of Angels | February 2020 (sold in 2022) | |
5 | Roman Empire Inc. | February 2020 | Marshall Islands | Eco West Coast | March 2021 | |
6 | Athenean Empire Inc. | February, 2020 | Marshall Islands | Eco Malibu | May 2021 | |
7 | Julius Caesar Inc. | May, | Marshall Islands | January 2022 | ||
Marshall Islands | March | |||||
December, | Marshall Islands | March |
As of December 31, 2017, the Company was the owner of 90% of outstanding shares of the following company.
SPC | Date of Incorporation | Country of Incorporation | Vessel | Built Date | |
1 | California 19 Inc. | May 2019 | Marshall Islands | M/T Eco Yosemite Park | March 2020 |
2 | California 20 Inc. | May 2019 | Marshall Islands | M/T Eco Joshua Park | March 2020 |
On May 6, 2020, the Company acquired for $18,000 from a company affiliated with Mr. Evangelos J. Pistiolis a 100% ownership interest in three Marshall Island companies (the “MR Transaction”) that each ownshad a vesselnewbuilding contract for the construction of one scrubber-fitted 50,000 dwt eco MR product/chemical tanker, under construction.construction at that time in Hyundai Mipo shipyard in South Korea, with attached time charters. The vessels, M/T Eco Van Nuys (Hull No 2789), M/T Eco Santa Monica (Hull No 2790) and M/T Eco Venice Beach (Hull No 2791) were scheduled to be delivered in the first quarter of 2021. Each of the three product tankers had time charters with Central Tankers Chartering Inc, a company affiliated with Mr. Evangelos J. Pistiolis, for a firm term of five years at a gross daily rate of $16,200, with a charterer’s option to extend for two additional years at $17,200 and $18,200, scheduled to commence upon delivery of each vessel. Of the consideration payable, $16,850 was paid in the year ended December 31, 2020 and the remaining $1,150 was due on the vessels’ delivery date and was included in Due to related parties in the consolidated balance sheets as of December 31, 2020.
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
On February 20, 2017,May 28, 2020, the Company acquired for $22,000 from a 40%company affiliated with Mr. Evangelos J. Pistiolis, or the Suezmax Seller, a 50% ownership interest in Eco Seven Inc. ("Eco Seven"), atwo Marshall Islands corporation, from Malibu Shipmanagement Co. ("Malibu"Island companies (the “SPVs”), a Marshall Islands corporation and wholly-owned subsidiary of the Lax Trust, an irrevocable trust established for the benefit of certain family members of Evangelos J. Pistiolis, the Company's President, Chief Executive Officer and Director, for an aggregate purchase price of $6,500, pursuant to a share purchase agreement. On March 30, 2017, the Company acquired another 9% ownership interest in Eco Seven from Malibu for an aggregate purchase price of $1,500. On May 30, 2017, the Company acquired an additional 41% interest in Eco Seven from Malibu, for $6,500, increasing the Company's interest to 90%. The Company controls the board and management of Eco Seven and thus consolidates Eco Seven in its financial statements from February 20, 2017 onwards. Eco Seven owns M/T Stenaweco Elegance, a 50,118 dwt product/chemical tanker that was delivered from Hyundai Vinashin Shipyard Co., Ltd of Vietnam ("Hyundai") on February 28, 2017.
On January 6, 2021 the Company sold to a newbuilding contract forrelated party affiliated with Mr. Evangelos J. Pistiolis (the “Buyer”) the construction ofthree shipowning companies that owned M/T Eco Palm Springs, a 50,000 dwt newbuilding product/chemical tanker scheduled for delivery from HyundaiVan Nuys (Hull No 2789), M/T Eco Santa Monica (Hull No 2790) and M/T Eco Venice Beach (Hull No 2791) in May 2018. On June 14, 2017exchange for:
● | $10,000 in cash |
● | 100% ownership in a Marshall Islands company that was party to a shipbuilding contract for a high specification scrubber fitted Suezmax Tanker at the time under construction at Hyundai Samho shipyard that was delivered in March 2022 (M/T Eco Oceano Ca - Hull No871). The shipowning company is party to a time charter, starting from the vessel’s delivery, with Central Tankers Chartering, a related party affiliated with the family of Mr. Evangelos J. Pistiolis, for a firm duration of five years at a gross daily rate of $32,450, with a charterer’s option to extend for two additional years at $33,950 and $35,450 (also see Note 5). |
● | 35% ownership in one Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker under construction at Hyundai Heavy Industries shipyard that was delivered in January 2022 (Julius Caesar - Hull No.3213). The shipowning company is party to a time charter, starting from the vessel’s delivery, with a major oil trader, for a firm duration of three years at a gross daily rate of $36,000, with a charterer’s option to extend for two additional years at $39,000 and $41,500. |
● | 35% ownership in one Marshall Islands company that is party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker at the time under construction at Hyundai Heavy Industries shipyard that was delivered in March 2022 (Legio X Equestris - Hull No.3214). The shipowning company is party to a time charter, starting from the vessel’s delivery, with a major oil trader, for a firm duration of three years at a gross daily rate of $35,750, with a charterer’s option to extend for two additional years at $39,000 and $41,500. |
● | A settlement of $1,150 in related party payables to the Buyer. |
The Buyer remained the guarantor on the shipbuilding contracts towards the shipyard and in addition, the Buyer provided the Company acquiredwith an option for a credit line up to 10% of the total shipbuilding cost at market terms, to be negotiated when the option is exercised, amounting to $23,815.
On September 8, 2021 the Company purchased from the Buyer for a consideration of $29,750 an additional 1% interest in City of Athens and in Eco Nine for an aggregate consideration of $157, increasing the Company's interest in both companies to 50%.
Due to the abovementioned purchase of the remaining 65% of the VLCC Companies, which were initially accounted for M/T Eco California, a 50,000 dwt newbuilding product/chemical tanker scheduled for delivery from Hyundai Mipo Dockyard Co., Ltd.as Investments in Korea from an entity affiliated with Evangelos J. Pistiolis. Theaffiliates, the Company paid $3,600 forconsolidates the outstanding sharesVLCC Companies.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
Each of the vessel is scheduled for delivery during January 2019.
The amount of the consideration given in excess of the historical carrying value of the net assets acquired is recognized as a reduction to the Company'sCompany’s additional paid in capital and presented as Excess of consideration over the carrying value of acquired assets in the Company'sCompany’s consolidated statement of stockholders'stockholders’ equity for the twelve months ended December 31, 2017.2020, 2021 and 2022 respectively. An analysis of the consideration paid is presented in the table below:
As of December 31, | 2020 | 2021 | 2022 | |||||||||
Consideration | 62,000 | 29,750 | - | |||||||||
Carrying value of net assets of companies sold | - | 24,074 | - | |||||||||
Less: Carrying value of net assets of companies acquired | - | (8,933 | ) | - | ||||||||
Less: Consideration received in cash | - | (10,000 | ) | - | ||||||||
Less: Settlement of related party payables | - | (1,150 | ) | - | ||||||||
Excess of consideration over acquired assets | 62,000 | 33,741 | - |
On March 11, 2020, the World Health Organization declared the coronavirus (“COVID-19”) outbreak a pandemic. In response to the pandemic, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the pandemic, such as quarantines and travel restrictions. Such measures have caused and will likely continue to cause severe trade disruptions. During the years ended December 31, 2020 and 2021 the Company encountered certain prolonged delays embarking and disembarking crew onto the Company’s ships as a result of restrictions at ports placed by various countries due to COVID-19 resulting to an increase in off-hire days or approximately $487 and $519 respectively of reduction in revenue as well as a slight increase in operating expenses relating to crew as well as an increase in fuel expenses during off-hires in both periods. During the year ended December 31, 2022 such instances of increased off-hires and delays were greatly subsided.
The extent to which COVID-19 will impact the Company’s future results of operations and financial condition, including possible vessel impairments, will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the emergence of new virus variants and the additional actions to contain or treat its impact.
On September 23, 2022 the Company effected a 1-for-20 reverse stock split of its common stock. There was no change in the number of authorized common shares of the Company, or the floor price of the Company’s Series E Shares, or the number of votes of the Company’s Series D, E and F Shares. All numbers of common share and earnings per share amounts, as well as warrant shares eligible for purchase under the Company’s warrants, exercise price of said warrants and conversion prices of the Company’s Series E Shares, in these consolidated financial statements have been retroactively adjusted to reflect this 1-for-20 reverse stock split.
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
2. | Significant Accounting Policies: |
(a) |
Principles of Consolidation: The |
(b) | Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Actual results may differ from these estimates. |
(c) | Foreign Currency Translation:The (loss)/income. |
(d) | Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. |
(e) | Restricted Cash: The Company considers amounts that are pledged, blocked, held as cash collateral, required to be maintained with a specific bank or be maintained by the Company as minimum cash under the terms of a loan agreement, as restricted and these amounts are presented separately on the balance sheets. In the event original maturities are shorter than twelve months, such deposits are presented as current assets while if original maturities are longer than twelve months, such deposits are presented as non-current assets. |
(f) | Trade Accounts Receivable, net: The amount shown as trade accounts receivable, net at each balance sheet date, includes estimated recoveries from charterers for hire billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually, combined with the application of a historical recoverability ratio, for purposes of determining the appropriate provision for doubtful accounts. The Company assessed that it had no potentially uncollectible accounts and hence formed no provision for doubtful accounts at December 31, |
(g) | Inventories: Inventories consist of lubricants and paints on board the vessels. Inventories |
(h) | Vessel Cost: Vessels are stated at cost, which consists of the contract price, pre-delivery costs and capitalized interest incurred during the construction of new building vessels, and any material expenses incurred upon acquisition (improvements and delivery costs). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are charged to expense as incurred and are included in Vessel operating expenses in the (loss)/income. |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
(i) | Impairment of Long-Lived Assets: The Company evaluates the existence of impairment indicators whenever events or changes in circumstances indicate that the carrying values of the The impairment tests the Company conducted as of December 31, 2021 and 2022 showed that there are no impairment indications for any of the vessels held for use in the Company’s fleet. |
(j) | Vessel Depreciation: Depreciation is calculated using the straight-line method over the estimated useful life of the vessels, after deducting the estimated salvage value. Each |
(k) | Long Lived Assets Held for Sale: The Company classifies vessels as being held for sale when the following criteria are met: (a) management, having the authority to approve the action, commits to a plan to sell the asset, (b) the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, (c) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated, (d) the sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a completed sale, within one year, (e) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, (f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. |
Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. These vessels are not depreciated once they meet the criteria to be classified as held for sale. |
Long-lived assets previously classified as held for sale that are classified as held and used are revalued at the lower of (a) the carrying amount of the asset before it was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the asset been continuously classified as held and used and (b) the fair value of the asset at the date that the Company decided not to sell the asset. |
(l) | Other Fixed Assets, Net: Other fixed assets, net, consist of furniture, office equipment, |
Description | Useful Life (years) | |||
Cars | 6 | |||
Office equipment | 5 | |||
Furniture and fittings | 5 | |||
Computer equipment | 3 |
(m) | Accounting for Dry-Docking Costs: All dry-docking and special survey costs are expensed in the period incurred. |
(n) | Financing Costs: Fees incurred and paid to the lenders for obtaining new loans or refinancing existing ones are recorded as a contra to debt and such fees are amortized to interest and finance costs over the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed when a repayment or refinancing is made and charged to interest and finance costs. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
(o) | Accounting for Revenue and Expenses: Revenues are generated from time charter arrangements. A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable monthly in advance. Time charter revenue is only recognized when an agreement exists, the price is fixed, service is provided and the collection of the related revenue is reasonably assured. Revenue is shown net of address commissions, if applicable, payable directly to charterers under the relevant charter agreements. Address commissions represent a common market practice discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer. Commissions on time charter revenues are recognized on a pro rata basis over the duration of the period. |
The Company based on ASC 842 determined that all time charter-out contracts are considered operating leases and therefore fall under the scope of ASC 842 because: (i) the vessel is an identifiable asset; (ii) the Company as lessor, does not have substantive substitution rights; and (iii) the charterer, as lessee, has the right to control the use of the vessel during the term of the contract and derives the economic benefits from such use. |
Time charter revenue is recognized as earned on a straight-line basis over the term of the relevant time charter starting from the vessel’s delivery to the charterer, except for any off-hire period. Revenue generated from variable lease payments is recognized in the period when changes in the facts and circumstances on which the variable lease payments are based occur. The Company elected to not separate the lease and non-lease components included in the time charter revenue because (i) the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and (ii) the lease component would be classified as an operating lease. The daily hire rate represents the hire rate for a bare boat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubes. Both the lease and non-lease components are earned by passage of time. Under a time charter agreement, vessel operating expenses such as management fees, crew wages, provisions and stores, technical maintenance and insurance expenses and broker’s commissions are paid by the vessel owner, whereas voyage expenses such as bunkers, port expenses, agents’ fees, and extra war risk insurance are paid by the charterer. Vessel operating expenses are expensed as incurred. Unearned revenue represents cash received prior to year-end related to revenue applicable to periods after December 31 of each year. |
When vessels are acquired with time charters attached and the rates on such charters are below or above market on the acquisition date, the Company allocates the total cost between the vessel and the fair value of the attached time charter based on the relative fair values of the vessel and time charter acquired. The fair value of the attached time charter is computed as the present value of the difference between the contractual amount to be received over the term of the time charter and management’s estimates of the market time charter rate at the time of acquisition. The fair value of below or above market time charter is recognized as a liability or an intangible asset respectively and is amortized over the remaining period of the time charter as an increase or decrease to revenues. |
Where the time charter contains a profit or loss sharing arrangement, the profit or loss is recognized based on amounts earned or incurred as of the reporting date. |
The Company pays commissions to ship brokers and to the Company’s fleet manager (Note 5), a related party affiliated with the family of Mr. Evangelos J. Pistiolis, associated with arranging the Company’s charters. These brokers’ commissions are recognized over the related charter period and are included in voyage expenses. |
(p) |
Earnings / (Loss) per Share:Basic earnings/(loss) per share are computed by dividing net income or loss available to common stockholders by the weighted average number of common shares |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
Derivatives and Hedging, Hedge Accounting: The Company records every derivative instrument (including certain derivative instruments embedded in other contracts) on the balance sheet as either an asset or liability measured at its fair value, with changes in the |
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy undertaken for the hedge. The documentation includes identification of the hedging instrument, hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting exposure to changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine whether they actually have been highly effective throughout the financial reporting periods for which they were designated. Contracts which meet the criteria for hedge accounting are accounted for as cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a highly probable forecasted transaction that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognized directly as a component of “Accumulated other comprehensive income” in equity, while the ineffective portion, if any, is recognized immediately in current period earnings. The Company |
Financial liabilities:Financial liabilities are classified as either financial liabilities at |
Segment Reporting: The Chief Operating Decision Maker |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
(t) | Leases: |
● | Sale-leaseback transactions: In accordance with ASC 842, the Company, as seller-lessee, determines whether the transfer of an asset should be accounted for as a sale in accordance with ASC 606 (existence of a contract and satisfaction of performance obligation by transferring of the control of the asset). The existence of an option for the seller-lessee to repurchase the asset precludes the accounting for the transfer of the asset as a sale unless both of the following criteria are met: (1) the exercise price of the option is the fair value of the asset at the time the option is exercised; and (2) there are alternative assets, substantially the same as the transferred asset, readily available in the marketplace. If the transfer of the asset meets the criteria of sale, the Company, as seller-lessee recognizes the transaction price for the sale when the buyer-lessor obtains control of the asset, derecognizes the carrying amount of the underlying asset and accounts for the lease in accordance with ASC 842. If the transfer does not meet the criteria of sale, the Company does not derecognize the transferred asset, accounts for any amounts received as a financing arrangement and recognizes the difference between the amount of consideration received and the amount of consideration to be paid as interest. |
● | Finance lease: The Company classifies a lease as a finance lease when the lease meets any of the following criteria at lease commencement: |
i. | The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. |
ii. | The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. |
iii. | The lease term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease. |
iv. | The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset. |
v. | The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. |
● | Operating lease- The Company as a lessee: The Company recognizes right-of-use assets (“ROU”) and corresponding lease liabilities for its operating leases. ROU assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made to the lessor prior to lease commencement, less any lease incentives, and initial direct costs incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. |
(u) | Beneficial conversion feature: A beneficial conversion feature is defined as a |
Investments in unconsolidated joint ventures: The |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
(w) | Other Comprehensive Income: The Company follows the provisions of guidance regarding reporting comprehensive income which requires separate presentation of certain transactions, such as unrealized gains and losses from effective portion of cash flow hedges, which are recorded directly as components of stockholders’ equity |
(x) | Impairment of Right of use assets from operating leases: The Company evaluates its Right of use assets from operating leases for potential impairment when it determines a triggering event has occurred. When a triggering event has occurred, the Company performs a test of recoverability by comparing the expected undiscounted future cash flows (including expected residual values) over the remaining lease terms to the carrying value of the Right of use asset. If the test of recoverability identifies a possible impairment, the Right of use asset’s fair value is measured in accordance with the fair value measurement framework. An impairment charge is recognized for the amount by which the carrying value of the Right of use asset exceeds its estimated fair value and would be recorded in the Consolidated Statements of comprehensive (loss)/income. For the years ended December 31, 2020, 2021, and 2022 there was no impairment in the Company’s Right of use assets from operating leases. |
(y) | Recent Accounting Pronouncements:In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2021-04 as of January 1, 2022, and adoption did not have a material impact on the Company’s financial statements or disclosures. |
On January 1, 2022 the Company adopted ASU 2020-06 and used the modified retrospective approach for all convertible debt instruments at the beginning of the period of adoption. The adoption of ASU 2020-06 at January 1, 2022 had no effect in the Company’s consolidated financial statements for the year ended December 31, 2022. |
3. | Going Concern: |
At December 31, 2022, the FASB issued the ASU No 2014-09 Revenue from Contracts with Customers. ASU 2014-09, as amended, outlinesCompany had a single comprehensive model for entities to use in accounting for revenue arising from contracts with customersworking capital deficit of $9,343 and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2017. The Company elected to use the modified retrospective transition method for the implementationyear ended December 31, 2022 realized a net income of this standard. The implementation$18,948 and generated cash flow from operations of this standard will not have a material impact on$33,419.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
4(a) | Advances for |
An analysis of Advances for vessels acquisitions / under construction is as follows:
Advances for vessels acquisitions / under construction | ||||
Balance, December 31, | ||||
— | ||||
— Capitalized expenses | 5,915 | |||
— Transferred to Vessels, net | ( | ) | ||
Balance, December 31, | ||||
— Advances paid | ||||
—Capitalized expenses | ||||
— Transferred to Vessels, net | ) | |||
Balance, December 31, 2022 | - |
4(b) | Vessels, net: |
The amounts in the consolidated balance sheets are analyzed as follows:
Vessel Cost | Accumulated Depreciation | Net Book Value | ||||||||||
Balance, December 31, 2020 | 146,345 | (10,053 | ) | 136,292 | ||||||||
— Transferred from advances for vessels under construction | 126,646 | - | 126,646 | |||||||||
— Transferred to Assets held for sale | (76,959 | ) | 5,323 | (71,636 | ) | |||||||
— Disposals (see Note 19) | (32,531 | ) | 5,484 | (27,047 | ) | |||||||
— Depreciation | - | (7,670 | ) | (7,670 | ) | |||||||
Balance, December 31, 2021 | 163,501 | (6,916 | ) | 156,585 | ||||||||
— Transferred from advances for vessels under construction | 245,763 | - | 245,763 | |||||||||
— Depreciation | - | (13,289 | ) | (13,289 | ) | |||||||
Balance, December 31, 2022 | 409,264 | (20,205 | ) | 389,059 |
In 2021 and 2022 the Company took delivery of the following vessels and hence advances paid and capitalized expenses relating to these vessels were transferred from Advances for vessels under construction to Vessels, net:
Vessel Name | Delivery Date | Yard Installments | Capitalized Expenses | Final Cost | |||||||||
M/T Eco West Coast | March 26, 2021 | 61,723 | 1,618 | 63,341 | |||||||||
M/T Eco Malibu | May 11, 2021 | 61,722 | 1,583 | 63,305 | |||||||||
Total 2021 | 123,445 | 3,201 | 126,646 | ||||||||||
M/T Julius Caesar | January 17, 2022 | 90,008 | 2,056 | 92,064 | |||||||||
M/T Legio X Equestris | March 2, 2022 | 89,995 | 2,138 | 92,133 | |||||||||
M/T Eco Oceano Ca. | March 4, 2022 | 60,250 | 1,316 | 61,566 | |||||||||
Total 2022 | 240,253 | 5,510 | 245,763 |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
As of December 31, 2022 title of ownership is held by the relevant lenders in respect of vessels with a carrying value of $270,029 to secure the relevant sale and August 10, 2016 the Company took delivery of M/T Eco Revolution, M/T Stenaweco Excellencelease back financing transactions and M/T Nord Valiant respectively. Advances for the construction of newbuilding vessels M/T Eco Palm Desert and M/T Eco California two 50,000 dwt product/chemical tanker that the Company acquired on April 26, 2017 and on November 24, 2017 (see Note 1) amounted to $6,743 and $14 respectively.
Vessel Cost | Accumulated Depreciation | Net Book Value | ||||||||||
Balance, December 31, 2015 | 32,592 | (548 | ) | 32,044 | ||||||||
— Transferred from advances for vessels acquisitions / under construction | 97,593 | - | 97,593 | |||||||||
— Depreciation | - | (3,467 | ) | (3,467 | ) | |||||||
Balance, December 31, 2016 | 130,185 | (4,015 | ) | 126,170 | ||||||||
— Acquisitions | 34,509 | - | 34,509 | |||||||||
— Depreciation | - | (5,744 | ) | (5,744 | ) | |||||||
Balance, December 31, 2017 | 164,694 | (9,759 | ) | 154,935 |
Vessel Name | Delivery Date | Yard Installments | Capitalized Expenses | Final Carrying Amount | Time Charter | |||||||||
M/T Eco Revolution | January 21, 2016 | 31,400 | 1,409 | 32,809 | BP Shipping Limited | |||||||||
M/T Stenaweco Excellence | May 20, 2016 | 30,778 | 1,475 | 32,253 | Stena Weco A/S | |||||||||
M/T Nord Valiant | August 10, 2016 | 30,667 | 1,864 | 32,531 | Dampskibsselskabet NORDEN A/S | |||||||||
M/T Stenaweco Elegance | February 28, 2017 | 33,935 | 574 | 34,509 | Stena Weco A/S |
4(c) | Vessels held for sale: |
As of December 31, 2021, the M/T’s Eco Los Angeles and Eco City of Angels met the criteria to be classified as assets held for sale according to guidance in ASC 360. Consequently, the Company has treated the vessels as vessels held for sale. Since their fair value less costs to sell were higher than their carrying amount the Company did not incur any impairment charges. As of December 31, 2021, each of the M/T’s Eco Los Angeles and Eco City of Angels carrying amount is $35,818. The vessels were sold on February 28 and March 15, 2022 to unaffiliated third parties.
5. | Transactions with Related Parties: |
As of December 31, 20162021 and 2022 the amount due from Central Mare was $34 and as of December 31, 2017 the amountamounts due to Central Mare was $46. These amountswere $32 and $0 respectively and are presented in Due from/to related parties, on the accompanying consolidated balance sheets.
The fees charged by and expenses relating to Central Mare for the years ended December 31, 2015, 20162020, 2021 and 20172022 are as follows:
Year Ended December 31, | |||||||||||||
2020 | 2021 | 2022 | Presented in: | ||||||||||
Executive officers and other personnel expenses | 360 | 360 | 360 | General and administrative expenses – Statement of comprehensive (loss)/income | |||||||||
Amortization of awarded shares* | (34 | ) | (34 | ) | (16 | ) | Management fees – related parties – Statement of comprehensive (loss)/income | ||||||
Total | 326 | 326 | 344 |
Year Ended December 31, | |||||||||||||
2015 | 2016 | 2017 | Presented in: | ||||||||||
Executive officers and other personnel expenses | 1,560 | 1,530 | 2,400 | General and administrative expenses - Statement of comprehensive loss | |||||||||
Amortization of awarded shares* | 131 | 47 | (25 | ) | Management fees - related parties - Statement of comprehensive loss | ||||||||
Total | 1,691 | 1,577 | 2,375 |
* | As per the Company’s equity incentive plan, or the 2015 plan (null and void since due to the reverse stock splits of the Company’s stock the shares left to be vested are zero),the Company incurred an amortization gain of $34, $34 and $16 relating to the amortization of the original fair value of the equity incentive plan recognized at inception, for each of the years ended December 31, 2020, 2021 and 2022 respectively. The Company’s equity incentive plan ended on June 30, 2022. |
(b)
Central ShippingPursuant to the CSI Letter Agreement, as well as the Management Agreements concluded between CSMCSI and the Company'sCompany’s vessel-owning subsidiaries, the Company pays a technical management fee of $583$600 per day per vessel for the provision of technical, commercial, operation, insurance, bunkering and crew management, commencing three months before the vessel is scheduled to be delivered by the shipyard and a commercial management fee of $318 per day per vessel, commencing from the date the vessel is delivered from the shipyard. In addition, the Management Agreements provide for payment to CSMCSI of: (i) $530$546 per day for superintendent visits plus actual expenses; (ii) a chartering commission of 1.25% on all freight, hire and demurrage revenues; (iii) a commission of 1.00% on all gross vessel sale proceeds or the purchase price paid for vessels and (iv) a financing fee of 0.2% on derivative agreements and loan financing or refinancing. CSMCSI also performs supervision services for all of the Company'sCompany’s newbuilding vessels while the vessels are under construction, for which the Company pays CSMCSI the actual cost of the supervision services plus a fee of 7% of such supervision services.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
CSI provides, at cost, all accounting, reporting and administrative services. Finally, the CSI Letter Agreement provides for a performance incentive fee for the provision of management services to be determined at the discretion of the Company.Company’s Board of Directors. The Management Agreementsmanagement agreements have an initial term of five years, after which they will continue to be in effect until terminated by either party subject to an eighteen-month advance notice of termination. Pursuant to the terms of the Management Agreements,management agreements, all fees payable to CSMCSI are adjusted annually according to the US Consumer Price Inflation (“CPI”) of the previous year.year and if CPI is less than 2% then a 2% increase is effected. On September 15, 2021 the Company entered into an amendment to the CSI Letter Agreement, whereby the payment for the already agreed commission for sale and purchase of vessels in the case of the purchase of a vessel under construction is denoted as “Newbuilding vessels monitoring fee” and is payable as follows: 25% of the commission on the purchase of the newbuilding construction contract, 25% of the commission on the steel cutting of the newbuilding vessel, 25% of the commission on launching of the newbuilding vessel and 25% of the commission on the delivery of the newbuilding vessel to the Company (“steel cutting” and “launching” are newbuilding vessel construction milestones, evidenced by notices received by the shipyard).
As of December 31, 20162021 and 20172022, the amounts due to CSMCSI were $579$1,193 and $74$237 respectively and are presented in Due to related parties, on the accompanying consolidated balance sheets.
The fees charged by and expenses relating to CSI for the years ended December 31, 2020, 2021 and 2022 are as follows:
Year Ended December 31, | |||||||||||||
2020 | 2021 | 2022 | Presented in: | ||||||||||
Management fees | 69 | 199 | 61 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | |||||||||
1,953 | 1,477 | 1,749 | Management fees – related parties –Statement of comprehensive (loss)/ income | ||||||||||
Supervision services fees | 63 | 79 | 14 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | |||||||||
Superintendent fees | 60 | 17 | 37 | Vessel operating expenses –Statement of comprehensive (loss)/income | |||||||||
198 | 255 | 129 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | ||||||||||
Accounting and reporting cost | 330 | 360 | 360 | Management fees – related parties –Statement of comprehensive (loss)/ income | |||||||||
Commission for sale and purchase of vessels | 3,377 | 793 | Management fees – related parties –Statement of comprehensive (loss)/ income | ||||||||||
3,971 | - | 730 | Loss/(Gain) from vessel sales –Statement of comprehensive (loss)/income | ||||||||||
454 | - | Capitalized in Investments in unconsolidated joint ventures –Balance sheet | |||||||||||
1,017 | - | Capitalized in Right of use assets from operating leases – Balance Sheet | |||||||||||
- | 264 | Impairment on vessels – Statement of comprehensive (loss)/income | |||||||||||
Newbuilding vessels monitoring fee | - | 1,365 | 455 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | |||||||||
Financing fees | - | 150 | 312 | Net in Current and Non-current portions of long-term debt – Balance sheet | |||||||||
Commission on charter hire agreements | 761 | 705 | 1,008 | Voyage expenses - Statement of comprehensive (loss)/income | |||||||||
Total | 12,253 | 5,664 | 4,855 |
For the years ended December 31, 2020, 2021 and 2022 CSI charged the Company newbuilding supervision related pass-through costs amounting to $967, $1,207 and $236 respectively, which are not included in the table above and are presented within Vessels, net / Advances for vessels acquisitions / under construction in the Company’s consolidated balance sheet.
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
Year Ended December 31, | |||||||||||||
2015 | 2016 | 2017 | Presented in: | ||||||||||
Management fees | 140 | 118 | 34 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | |||||||||
701 | 1,598 | 2,242 | Management fees - related parties -Statement of comprehensive loss | ||||||||||
Supervision services fees | 72 | 43 | 31 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | |||||||||
Superintendent fees | 66 | 104 | 136 | Vessel operating expenses -Statement of comprehensive loss | |||||||||
114 | 67 | 22 | Capitalized in Vessels, net / Advances for vessels acquisitions / under construction –Balance sheet | ||||||||||
Accounting and reporting cost | 189 | 179 | 183 | Management fees - related parties -Statement of comprehensive loss | |||||||||
Financing fees | 44 | 131 | 139 | Net in Current and Non-current portions of long-term debt – Balance sheet | |||||||||
Commission for sale and purchase of vessels | 570 | - | 1,081 | Management fees - related parties -Statement of comprehensive loss | |||||||||
Commission on charter hire agreements | 161 | 358 | 487 | Voyage expenses - Statement of comprehensive loss | |||||||||
Performance incentive fee | 600 | - | 1,250 | Management fees - related parties - Statement of comprehensive loss | |||||||||
Total | 2,657 | 2,598 | 5,605 |
(c)
(d)Vessel Acquisitions from affiliated entities:
From February 20, 2020 to(e)Charter Party withCentral Tankers Chartering Inc (“Central Tankers Chartering”): As part of the MR Transaction (see Note 1) Central Tankers Chartering was the charterer of the vessels M/T Eco Van Nuys, M/T Eco Santa Monica and M/T Eco Venice Beach. The time charters were for a firm period of five years at a daily rate of $16,200 with two optional years at daily rates of $17,200 and $18,200 at Central Tankers Chartering’s option and would have commenced upon each vessel’s delivery from the shipyard in the first quarter of 2021. The vessels M/T Eco Van Nuys, M/T Eco Santa Monica and M/T Eco Venice Beach were exchanged as part of the VLCC Transaction on January 6, 2021 (see Note 1). On January 6, 2021 the Company acquired a shipowning company from an entity affiliated with Mr. Evangelos J. Pistiolis that ledowned M/T Eco Oceano Ca which was party to a time charter, with CTC, for a firm duration of five years at a gross daily rate of $32,450, with two optional years at $33,950 and $35,450 at CTC’s option. On February 22, 2022 the Company amended the previously agreed time charter with CTC and increased its firm period from 5 years to 15 years and reduced the daily rate from $32,450 to $24,500. This amendment was approved by a committee of the Company’s board of directors, of which all of the directors were independent, after obtaining a fairness opinion from an independent financial advisor. The time charter commenced on the date of delivery. For the year ended December 31, 2022 the CTC charter generated $7,294 of revenue presented in Time charter revenues in the accompanying consolidated statements of comprehensive (loss)/income. As of December 31, 2021 and 2022, there are no amounts due to Central Tankers Chartering.
(f) Personal Guarantees by Mr. Evangelos J. Pistiolis and Related Amendments to the purchaseSeries D Preferred Shares: As a prerequisite for the Navigare Lease (defined below, see Note 6), Mr. Evangelos J. Pistiolis personally guaranteed the performance of M/T Eco Palm Desertthe bareboat charters connected to the lease and M/T Eco California, 90% interest in M/T Stenaweco Eleganceexchange, the Company agreed to indemnify him for any losses suffered as a result of the guarantee provided, and 50% intereststhe Company amended the Certificate of Designations governing the terms of the Series D Preferred Shares (see Note 7), to adjust the voting rights per share of Series D Preferred Shares such that during the term of the Navigare Lease, the combined voting power controlled by Mr. Evangelos J. Pistiolis and the Lax Trust does not fall below a majority of the Company’s total voting power, irrespective of any new common or preferred stock issuances, and thereby complying with a relevant covenant of the bareboat charters entered in M/T Eco Holmby Hillsconnection with the Navigare Lease. This personal guarantee comes into effect in the case 120 days have passed and M/T Eco Palm Springs (see Notes 1, 3, 4the Company is still unable to pay down all amounts due under the Navigare lease, with the exception of amounts due to Navigare due to a total loss, where in this case the personal guarantee will cover an amount equal to all unpaid charter hire and 20).a further amount equivalent to all future charter hire that would have accrued from the date of the total loss up to the end of the charter period and is callable 200 days after the date of the total loss. Due to the related party nature of the transactions involving Mr. Evangelos J. Pistiolis, such transactions were unanimously approved by our Board of Directors, including all three independent directors.
(g)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
(h) Short term loan from HyundaiCentral Mare (“Central Mare Bridge Loan”): On January 5, 2022 the Company entered into an unsecured credit facility for up to $20,000 with Central Mare in September 2018.order to finance part of the cost of its newbuilding program (see Note 7). Related party interest expense, commitment fees and arrangement fees for the year ended December 31, 2022 incurred in connection with this credit facility, amounted to $169, $18 and $400 respectively and are included in interest and finance costs in the accompanying consolidated statements of comprehensive (loss)/income. The time charter is for a firm periodCentral Mare Bridge Loan was terminated on March 4, 2022 and as of three years at a daily rate of $14,750 with two optional years at daily rates of $15,250 and $15,750 respectively, at Central Tankers Chartering's option. The time charter carries a 1.25% address commission payableDecember 31, 2022, there are no interest, arrangement fees nor commitment fees due to Central Tankers Chartering. Total revenue backlog from this time charter for the firm period is $15,949, assuming no off-hire days.Mare.
6. | Leases |
A. Lease arrangements, under which the Company acts as the lessee
Bareboat Chartered-in Vessels:
The Company has treated the sale and leaseback of the abovementioned vesselsNavigare lease as an operating lease. An operating lease ROU asset amounting to $45,765 was recognized at the inception of the lease together with a lease liability of $43,759 based on the present value of lease payments over the lease term. The operating lease ROU asset also includes initial direct costs of $1,666 and deferred losses from the sale of the vessels of $340. The discount rate used to calculate the present value of lease payments was calculated by taking into account the original lease term and lease payments and was estimated to be 6.72% (same as the weighted average), which was the Company’s estimated incremental borrowing rate, that reflects the interest the Company would have to pay to borrow funds on a collateralized basis over a similar term and similar economic environment. Losses from the sale of these two vessels amounted to $11,600and initial direct costs which were included in the respective ROU assets are amortized on a straight-line basis over the duration of the leases. The amortization for the year is presented under Amortization of prepaid bareboat charter hirelease and are included in operating lease expense in the accompanying statement of consolidated loss(loss)/income. The cash paid for operating leases with original terms greater than 12 months was $12,228 and amounted to $1,577 and $1,657$12,083 for the years ended December 31, 20162021 and 20172022 respectively.
The Company’s future minimum lease payments:
Year ending December 31, | Bareboat charter lease payments | |||
2023 | 10,220 | |||
2024 | 10,038 | |||
2025 | 6,777 | |||
Total | 27,035 | |||
Less imputed interest | (3,087 | ) | ||
Total Lease Liability | 23,948 | |||
Presented as follows: | ||||
Short-term lease liability | 8,610 | |||
Long-term lease liability | 15,338 |
The average remaining lease term on our chartered-in contracts greater than 12 months is 35.2 months.
Year ending December 31, | Bareboat Charter Lease Payments | |||
2018 | 6,282 | |||
2019 | 6,282 | |||
2020 | 6,299 | |||
2021 | 6,282 | |||
2022 | 1,034 | |||
Total | 26,179 |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
At the lease’s inception, the carrying amounts of the M/T Eco Beverly Hills and M/T Eco Bel Air were less than the vessels fair value, as this was determined by a third party broker valuation. Hence in accordance with ASC 842-40-30-1 that stipulates that sale-and-leaseback transactions are accounted for at fair value, the Company recognized a loss on the sale and leaseback transactions of $10,688 included in Loss/(Gain) on sale of vessels in the Company’s consolidated statements of comprehensive (loss) / income.
B. Lease arrangements, under which the Company acts as the lessor
Charter agreements:
During the year ended December 31, 2022, the Company operated all of itsone vessel (M/T Marina Del Ray) under a time charter with Cargill International SA, another vessel (M/T Eco Oceano Ca) with Central Tankers Chartering Inc, two vessels (M/T Eco West Coast and M/T Eco Malibu) with Clearlake Shipping Pte Ltd and four vessels (M/T Eco Bel Air, M/T Eco Beverly Hills, M/T Julius Caesar and M/T Legio X Equestris) under time charters with Stena Bulk AB, ex Stena Weco AS, (M/T Stenaweco Energy, M/T Stenaweco Evolution, M/T Stenaweco Excellence and M/T Stenaweco Elegance), BP Shipping (M/T Eco Fleet and M/T Eco Revolution) and Dampskibsselskabet NORDEN A/S (M/T Nord Valiant)Trafigura Maritime Logistics Pte Ltd (“Trafigura”).
Future minimum time-charter receipts of the Company’s vessels in operation as of December 31, 2022, based on commitments relating to non-cancellable time charter contracts as of December 31, 2022, are as follows :
Year ending December 31, | Time Charter receipts | |||
2023 | 81,772 | |||
2024 | 50,429 | |||
2025 | 19,362 | |||
2026 | 16,425 | |||
2027and thereafter | 91,180 | |||
Total | 259,168 |
In arriving at the minimum future charter revenues, of the non-cancellable time charter contracts an estimated 1520 days off-hire time to perform scheduled dry-docking in the year the dry-docking is expected on each vessel has been deducted, and it has been assumed that no additional off-hire time is incurred, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.In addition, the vessels owned by the Company's joint ventures have been excluded.
Year ending December 31, | Time Charter receipts | |||
2018 | 39,290 | |||
2019 | 39,352 | |||
2020 | 39,030 | |||
2021 | 13,627 | |||
Total | 131,299 |
7. | Debt: |
The amounts shown in the accompanying consolidated balance sheets are analyzed as follows:follows (facility names defined below):
Bank / Vessel(s) | December 31, | |||||||
2021 | 2022 | |||||||
Total long term debt: | ||||||||
2nd ABN Facility (M/T Eco West Coast) | 34,955 | 32,495 | ||||||
2nd Alpha Bank Facility (M/T Eco Malibu) | 36,500 | 33,500 | ||||||
Cargill Facility (M/T Eco Marina Del Ray) | 27,195 | 25,189 | ||||||
2nd CMBFL Facility (M/T Julius Caesar and M/T Legio X Equestris) | - | 103,952 | ||||||
2nd AVIC Facility (M/T Eco Oceano Ca) | - | 45,489 | ||||||
Total long term debt | 98,650 | 240,625 | ||||||
Less: Deferred finance fees | (1,282 | ) | (3,640 | ) | ||||
Less: Debt discount relating to Vessel fair value participation liability | - | (3,271 | ) | |||||
Total long term debt net of deferred finance fees | 97,368 | 233,714 | ||||||
Presented: | ||||||||
Current portion of long term debt | 7,205 | 12,344 | ||||||
Long term debt | 90,163 | 221,370 | ||||||
Debt related to Vessels held for sale: | ||||||||
AVIC Facility (M/T Eco Los Angeles and M/T Eco City of Angels) | 54,665 | - | ||||||
Less: Deferred finance fees | (1,463 | ) | - | |||||
Debt related to Vessels held for sale net of deferred finance fees | 53,202 | - | ||||||
Total Debt net of deferred finance fees | 150,570 | 233,714 |
December 31, 2016 | December 31, 2017 | |||||||
Prepaid expenses | 670 | 140 | ||||||
Guarantees | 15 | 17 | ||||||
Advances to various creditors | 63 | 119 | ||||||
Other receivables | 116 | 152 | ||||||
Total | 864 | 428 |
December 31, 2016 | December 31, 2017 | |||||||
Lubricants | 542 | 574 | ||||||
Consumable stores | 41 | 71 | ||||||
Total | 583 | 645 |
Bank / Vessel(s) | December 31, | December 31, | ||||||
2016 | 2017 | |||||||
Total long term debt: | ||||||||
ABN (M/T Eco Fleet, M/T Eco Revolution and M/T Nord Valiant) | 59,838 | 53,538 | ||||||
NORD/LB (M/T Stenaweco Excellence) | 22,162 | 20,116 | ||||||
Alpha Bank (M/T Stenaweco Elegance) | - | 22,150 | ||||||
Total long term debt | 82,000 | 95,804 | ||||||
Less: Deferred finance fees | (1,546 | ) | (2,038 | ) | ||||
Total long term debt net of deferred finance fees | 80,454 | 93,766 | ||||||
Out of which: | ||||||||
Current portion of long term debt | 7,995 | 9,508 | ||||||
Long term debt | 72,459 | 84,258 | ||||||
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
Short term debt from related parties: | ||||||||
Family Trading facility | 4,085 | - | ||||||
Less deferred finance fees | - | - | ||||||
Current portion of loans from related parties net of deferred finance fees | 4,085 | - | ||||||
Short Term Debt: | ||||||||
Unsecured Notes | - | 8,878 | ||||||
AT Bank predelivery facility | - | 1,499 | ||||||
Less deferred finance fees | - | (194 | ) | |||||
Current portion of loans net of deferred finance fees | - | 10,183 | ||||||
Total Debt net of deferred finance fees | 84,539 | 103,949 |
2ndABN Amro Facility
On July 9, 2015,March 18, 2021, the Company entered into a credit facility with ABN Amro Bank of Holland for $42,000 ("the ABN Amro facility") for the financing of the vessels M/T Eco Fleet and M/T Eco Revolution ($21,000 per financed vessel). This facility was amended on September 28, 2015 and was increased to $44,400 ($22,200 per vessel), with all other terms remaining the same except for the margin which was increased by 0.15%. The credit facility is repayable in 4 consecutive quarterly installments of $500, 4 consecutive quarterly installments of $512.5, 4 consecutive quarterly installments of $525 and 12 consecutive quarterly installments of $387.5 for each of the financed vessels, commencing on October 13, 2015 for M/T Eco Fleet and on April 15, 2016 for M/T Eco Revolution plus a balloon installment of $11,400 for each of the financed vessels, payable together with the last installment in July 2021 and in January 2022, respectively. On August 1, 2016, the Company amended the ABN Facility to increase the borrowing limit to $64,400 and added another tranche to the loan, "Tranche C", which is secured by vessel M/T Nord Valiant. Tranche C is repayable in 12 consecutive quarterly installments of $550 each and 12 consecutive quarterly installments of $363 each, commencing on November 2016, plus a balloon installment of $9,050 payable together with the last installment in August 2022. Apart from the inclusion of M/T Nord Valiant as a collateralized vessel and the reduction of the margin to 3.75% (applicable only to Tranche C), no other material changes were made to the ABN Facility.
The facility contains various covenants, including (i) an asset cover ratio of 125%, (ii) a ratio of total net debt to the aggregate market value of the Company'sCompany’s fleet, current or future, of no more than 75%, (iii) minimum free liquidity of $750$500 per collateralizeddelivered vessel owned/operated by the Company and (iv) EBITDA is requiredmarket adjusted total assets of the Company minus total liabilities to be greaterat least $60,000. Additionally, the facility contains restrictions on the shipowning company incurring further indebtedness or guarantees and change of control provisions (whereby Mr. Evangelos J. Pistiolis may not control less than 120%50.1% of fixed charges and (v) market value adjusted net worth is required to be greater than or equal to $20,000.the voting rights of the Company). It also restricts the shipowning company from paying dividends if such a payment will result in an event of default or in a breach of covenants under the loan agreement.
The facility is secured as follows:
● | First priority mortgage over M/T Eco West Coast; |
● | Assignment of insurance and earnings of the mortgaged vessel; |
● | Specific assignment of any time charters with duration of more than 12 months; |
● | Corporate guarantee of the Company; |
● | Pledge of the shares of the shipowning subsidiary; |
● | Pledge over the earnings account of the vessel. |
The facility bears interest at LIBOR plus a margin of 2.50%. The applicable LIBOR as of December 31, 2022 was approximately 4.73%.
2nd Alpha Bank Facility
On May 6, 2021, the Company entered into a credit facility with Alpha Bank for $38,000 for the financing of the vessel M/T Eco Malibu (Hull No 866). This facility was drawn down in full. The credit facility is repayable in 12 consecutive quarterly installments of $750 and 12 consecutive quarterly installments of $625, commencing three months from draw down, and a balloon payment of $21,500 payable together with the last installment.
The facility contains various covenants, including (i) an asset cover ratio of 125%, (ii) a ratio of total net debt to the aggregate market value of the Company’s fleet, current or future, of no more than 75% and minimum free liquidity of $500 per delivered vessel owned/operated by the Company. Additionally, the facility contains restrictions on the shipowning company incurring further indebtedness or guarantees and change of control provisions (whereby Mr. Evangelos J. Pistiolis may not control less than 50.1% of the voting rights of the Company). It also restricts the shipowning company from paying dividends if such a payment will result in an event of default or in a breach of covenants under the loan agreement.
The facility is secured as follows:
● | First priority mortgage over M/T Eco Malibu; |
● | Assignment of insurance and earnings of the mortgaged vessel; |
● | Specific assignment of any time charters with duration of more than 12 months; |
● | Corporate guarantee of the Company; |
● | Pledge of the shares of the shipowning subsidiary; |
● | Pledge over the earnings account of the vessel. |
The facility bears interest at LIBOR plus a margin of 3.00%. The applicable LIBOR as of December 31, 2022 was approximately 4.22%.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
FINANCINGS COMMITTED UNDER SALE AND LEASEBACK AGREEMENTS
The majority of the below sale and leaseback agreements (“SLB”s) contain, customary covenants and event of default clauses, including cross-default provisions and restrictive covenants and performance requirements including (i) a ratio of total net debt to the aggregate market value of the Company’s fleet, current or future, of no more than 75% and (ii) minimum free liquidity of $500 per vessel at the guarantors level.
Additionally, all the SLBs contain restrictions on the relative shipowning company incurring further indebtedness or guarantees and paying dividends, if such dividend payment would result in an event of default or termination event under the SLB agreements.
All the below SLBs are secured mainly by the following:
● | Ownership of the vessel financed; |
● | Assignment of insurances and earnings of the vessel financed; |
● | Specific assignment of any time charters of the vessel financed with duration of more than 12 months; |
● | Corporate guarantee of Top Ships Inc.; |
● | Pledge of the shares of the relative shipowning subsidiary; |
● | Pledge over the earnings account of the vessel financed. |
On June 29, 2018 the Company entered into a sale and leaseback agreement (“SLB”) and a five-year time charter with Cargill, a non-affiliated party, for its newbuilding vessel M/T Eco Marina Del Ray (Hull No 8242) delivered in March 2019. Consummation of the SLB took place on the vessel’s delivery date. Following the sale, the Company has bareboat chartered back the vessel at a bareboat hire rate of $8,600 per day and simultaneously the vessel commenced its five-year time charter with Cargill. As part of this transaction, the Company has the obligation to buy back the vessel at the end of the five-year period for $22,680. The gross proceeds from the sale were $32,387.
The Company had also entered into a fair value appreciation sharing agreement with Cargill whereby it would share with the latter 25% of the excess of the fair market value of the vessel over a predetermined amount amortized on a daily basis to the facility’s maturity when the vessel was sold or when the loan matured. As a result of Cargill’s entitlement to participate in the appreciation of the market value of the vessel and the significant increase in tankers’ fair values as of December 31, 2022 compared to December 31, 2021, the Company recognized a participation liability of $0 and $3,271 as of December 31, 2021 and 2022 respectively, presented in “Vessel fair value participation liability” in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance, broken down to current and non-current long-term debt accordingly.
The SLB with Cargill is accounted for as a financing transaction, as control remains with the Company and the M/T Eco Marina Del Ray will continue to be recorded as an asset on the Company’s balance sheet. In addition, the Company has an obligation to repurchase the vessel.
On September 30, 2019 the owning companies of the M/T Eco Los Angeles and M/T Eco City of Angels entered into an SLB with AVIC, a non-affiliated party, for their newbuilding vessels M/T Eco Los Angeles and M/T Eco City of Angels. Consummation of the SLB and drawdown of funds took place on the vessel’s delivery dates from the shipyard, namely on February 10 and February 17, 2020 respectively. Following the sale, the Company bareboat chartered back the vessels for a period of ten years at a bareboat hire rate of $9,435 for the first 5 years and $9,090 for the next 5 years per day per vessel, with a balloon installment of $11,288 for each vessel on the final charter hire date. As part of this transaction, the Company had continuous options, after the second year, to buy back the vessels at purchase prices stipulated in the bareboat agreement depending on when the option was exercised and at the end of the ten year period it had an obligation to buy back the vessels at a cost represented by the balloon payment. The gross proceeds from the sale amounted to $60,200 for both vessels.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
The SLB with AVIC contained a covenant requiring that there is no change of control of the Company, save with the prior written consent of AVIC.
The SLB with AVIC was accounted for as a financing transaction, as control would remain with the Company and the vessels would continue to be recorded as assets on the Company’s balance sheet. In addition, the Company had the obligation to repurchase the vessels.
On December 31, 2021 the Company classified the M/T Eco Los Angeles and M/T Eco City of Angels as Vessels held for sale (see Note 4c). Hence, the AVIC facility was also classified as short term in a separate balance sheet line from the other non-current portion of debt in the consolidated balance sheets.
On February 28 and March 15, 2022, the company exercised its purchase option on the M/T Eco Los Angeles and M/T Eco City of Angels respectively and purchased the vessels for $27,197 and $27,163 respectively. The vessels were sold on the same dates to unaffiliated third parties.
2nd CMBFL Facility
On November 23, 2021 the Company entered into an SLB with CMBFL, for its newbuilding vessels M/T Julius Caesar (Hull No. 3213) and M/T Legio X Equestris (Hull No. 3214). Consummation of the SLB took place on January 17 and March 2 2022, respectively. Following the sale, the Company has bareboat chartered back the vessels for a period of eight years at bareboat hire rates comprising of 32 consecutive quarterly installments of $675 and a balloon payment of $32,403 payable together with the last installment, plus interest based on the three months LIBOR plus 2.60%.
As part of this transaction, the Company has continuous options to buy back the vessels at purchase prices stipulated in the bareboat agreements depending on when the option was exercised and at the end of the eight year period it has an option to buy back the vessels at a cost represented by the balloon payment. The gross proceeds from the sale of the two vessels were $54,005 and $53,997 for M/T Julius Caesar (Hull No. 3213) and M/T Legio X Equestris (Hull No. 3214) respectively.
The 2nd CMBFL facility was accounted for as a financing transaction, as control will remain with the Company and the two vessels will continue to be recorded as assets on the Company’s balance sheet. In addition, the Company has continuous options to repurchase the vessels below fair value.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2017, the outstanding balance2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of the Alpha facility is $22,150.United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
• | Ownership of M/T Eco Oceano Ca.; |
• | Assignment of insurance and earnings of M/T Eco Oceano Ca.; |
• | Specific assignment of any time charters with duration of more than 12 months; |
• | Corporate guarantee of the Company; |
• | Pledge of the shares of the relative shipowning subsidiary; |
• | Pledge over the earnings account of the vessel. |
Scheduled Principal Repayments:The Company’s annual principal payments required to be made after December 31, 2022 on its loan obligations, are as follows (including the financings under sale and leaseback agreements):
Years | ||||
December 31, 2023 | 15,666 | |||
December 31, 2024 | 36,416 | |||
December 31, 2025 | 13,072 | |||
December 31, 2026 | 13,072 | |||
December 31, 2027 and thereafter | 162,399 | |||
Total | 240,625 |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
As of December 31, 2017, the Company has not drawn down any amounts under the AT Bank Senior Facility.
Agreement date | Amount drawn | Undrawn Amount | Fees | Interest | Amount settled | Outstanding Amount | Maturity | ||||||||||||||||||
November 13, 2017 | 17,500 | - | - | 11 | (17,500 | ) | - | November 13, 2019 | |||||||||||||||||
December 14, 2017 | 12,500 | 10,000 | - | 8 | (3,622 | ) | 8,878 | December 14, 2019 | |||||||||||||||||
30,000 | 10,000 | - | 19 | (21,122 | ) | 8,878 |
Agreement date | Amount drawn | Fees | Interest | Amount settled | Amounts forgiven | Outstanding Amount | Maturity | Counterparty | ||||||||||||||||||
February 6, 2017 | 3,500 | 210 | 22 | (3,500 | ) | - | - | May 15, 2017 | Kalani | |||||||||||||||||
March 22, 2017 | 5,000 | 200 | 7 | (5,000 | ) | - | - | October 7, 2017 | Kalani | |||||||||||||||||
March 28, 2017 | 10,000 | - | 24 | (10,000 | ) | - | - | August 25, 2017 | Kalani | |||||||||||||||||
April 5, 2017 | 7,700 | - | 42 | (7,700 | ) | - | - | September 4, 2017 | Kalani | |||||||||||||||||
May 15, 2017 | 5,000 | - | 28 | (3,882 | ) | (1,118 | ) | - | August 23, 2017 | Xanthe | ||||||||||||||||
June 26, 2017 | 3,000 | - | 2 | (3,000 | ) | - | - | October 24, 2017 | Kalani | |||||||||||||||||
July 12, 2017 | 3,060 | 60 | 16 | (3,060 | ) | - | - | November 7, 2017 | Xanthe | |||||||||||||||||
September 15, 2017 | 2,020 | 20 | 6 | (2,020 | ) | - | - | December 14, 2017 | Xanthe | |||||||||||||||||
39,280 | 490 | 147 | (38,162 | ) | (1,118 | ) | - |
Financing Costs:
Commitments and Contingencies: |
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. As part of the normal course of operations, the Company'sCompany’s customers may disagree on amounts due to the Company under the provision of the contracts which are normally settled through negotiations with the customer. Disputed amounts are normally reflected in revenues at such time as the Company reaches agreement with the customer on the amounts due.
Other than the cases mentioned above, the Company is not a party to any material litigation where claims or counterclaims have been filed against the Company other than routine legal proceedings incidental to its business.
On December 10, 2020, the Company entered into a seriescorporate guarantee agreement with Alpha Bank of transactions withGreece (which was amended on February 2, 2022) in respect of the obligations of its 50% subsidiary California 19 Inc. and California 20 Inc. under the Loan Agreement dated March 12, 2020 for a numbersecured loan facility of entities affiliated with Evangelos J. Pistiolis that led to$37,660 ($18,830 for each vessel) for the purchasefinancing of 50% interest in two newbuilding vessels (M/M/T Eco Holmby HillsYosemite Park and M/T Eco Palm Springs)Joshua Park (the “Alpha Corporate Guarantee”). The Company assigns zero probability of default to said loan agreements and 100% interest in another two newbuilding vessels (M/T Eco Palm Desert and M/T Eco California). As a result of these transactions, the Companyhence has remaining contractual commitmentsnot established any provisions for the acquisition of its fleet totaling $79,964, including $9,970, $12,213, $23,981 and $33,800 pursuantlosses relating to newbuilding agreements for M/T Eco Holmby Hills, M/T Eco Palm Springs, M/T Eco Palm Desert and M/T Eco California respectively. Of these contractual commitments, $59,684 is payable in 2018 and $20,280 in 2019.
Environmental Liabilities:
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.
9. | Common and Preferred Stock, Additional Paid-In Capital and Dividends: |
Reverse stock split:
OnNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of $7,500 with Xanthe. The Series C shares were convertible at the lesser of the following two prices: (i) $ 675,000.00United States Dollars – except share, per share earnings and (ii) 75% of the lowest daily VWAP of the Company's common shares over the twenty-one (21) consecutive tradingrate per day, period ending on the trading day immediately prior to such date of determination, but in no event could the conversion price be less than $0.25. The Series C shares could not be converted if, after giving effect to the conversion, a holder together with certain related parties would beneficially own in excess of 4.99% of the Company's outstanding common shares. Holders of Series C shares had no voting rights. The Company at its option had the right to redeem the outstanding Series C shares at an amount equal to 120% of the Conversion Amount being redeemed. The Series C shares were subject to redemption in cash at the option of the holders thereof at any time after the occurrence and continuance of a Triggering Event. A Triggering Event included, among other things, certain bankruptcy proceedings, the delisting of the Company's common shares from Nasdaq, failure to timely deliver common shares upon conversion, failure to pay cash upon redemption, or failure to observe or perform certain covenants. Further, at any time after the tenth business day before the first year anniversary of the issuance of the Series C shares, the holders had the right to require the Company to redeem all or any number of Series C shares held at a purchase price equal to 100% of the Conversion Amount of such shares. The holders of Series C shares were entitled to receive quarterly dividends at a rate of 8% per annum payable in common shares, except that any dividend not paid in common shares would be payable in cash. Capitalized terms are defined in the Statement of Designations of the Series C shares. During the year ended December 31, 2017 the Company issued 904,646 common shares upon the conversion of 7,500 Series C shares and the payment of $600 in dividends. Also in consideration for entering into the agreement, the Company has issued $113 of its common stock to Xanthe as a commitment fee. As of December 31, 2017 all Series C shares have been converted to common stock.unless otherwise stated)
Series D preferred shares:
On May 8, 2017, the Company issued 100,000 shares of Series D preferred shares (theEquity distribution agreement: On April 15, 2022, the Company, entered into an equity distribution agreement, or as they are commonly known, at-the-market offering (“ATM”), with Maxim Group LLC (“Maxim”). Under the ATM the Company could sell up to $19,700 of its common stock with Maxim acting as a sales agent. Since Maxim was acting solely as a sales agent, it had no right to require any common stock sales. No warrants, derivatives, or other share classes were associated with this ATM. The Company terminated the ATM on October 6, 2022. The Company has received proceeds from the ATM (net of 2% fees), amounting to $2,025, issued 129,442 common shares and incurred $81 of expenses related to this equity distribution agreement.
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
10. |
Non-vested Shares | Fair value | |||||||
As of December 31, 2015 | 0.8 | 576,000 | ||||||
Vested shares on June 30, 2016 | 0.125 | 304,200 | ||||||
As of December 31, 2016 | 0.675 | 405,000 | ||||||
Vested shares on June 30, 2017 | 0.125 | 252 | ||||||
As of December 31, 2017 | 0.55 | 2.50 |
(Loss)/Earnings Per Common Share: |
All shares issued (including non-vested shares issued under the Company's stock incentive plans) are included in the Company'sCompany’s common stock and have equal rights to vote and participate in dividends and in undistributed earnings. Non-vested shares do not have a contractual obligation to share in the losses. Dividends declared during the period for non-vested common stock as well as undistributed earnings allocated to non-vested stock are deducted from net income or loss attributable to common shareholders for the purpose of the computation of basic earnings per share in accordance with two-class method as required by relevant guidance.
The components of the calculation of basic and diluted (loss) / earnings per share for the years ended December 2015, 20162020, 2021 and 20172022 are as follows:
Year Ended December 31, | ||||||||||||
2015 | 2016 | 2017 | ||||||||||
Income: | ||||||||||||
Net loss attributable to common shareholders | (8,507 | ) | (351 | ) | (13,404 | ) | ||||||
Earnings per share: | ||||||||||||
Weighted average common shares outstanding, basic and diluted | 11 | 22 | 1,063,381 | |||||||||
Loss per share, basic and diluted | (773,364 | ) | (15,955 | ) | (12.57 | ) |
Year Ended December 31, | ||||||||||||
2020 | 2021 | 2022 | ||||||||||
(Loss) / Net Income | (22,818 | ) | 8,616 | 18,948 | ||||||||
Less: Deemed dividend for beneficial conversion feature of Series E Shares | (1,067 | ) | (900 | ) | - | |||||||
Less: Deemed dividend equivalents on preferred shares related to redemption value | (3,099 | ) | (437 | ) | (14,400 | ) | ||||||
Less: Dividends of preferred shares | (1,796 | ) | (1,883 | ) | (12,390 | ) | ||||||
Less: Deemed dividend on warrant inducement | - | - | (1,345 | ) | ||||||||
(Loss) / gain attributable to common shareholders | (28,780 | ) | 5,396 | (9,187 | ) | |||||||
(Loss) /Earnings per share: | ||||||||||||
Weighted average common shares outstanding, basic and dilutive | 1,175,874 | 1,991,599 | 3,033,785 | |||||||||
(Loss) / earnings per share, basic and diluted | (24.48 | ) | 2.71 | (3.03 | ) |
For the years ended December 31, 2015, 20162020, 2021 and 2017 no2022, 38,514, 635,818 and 974,783 dilutive shares on an as-if converted basis relating to Series E Shares were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period presented.
11. | Voyage and Vessel Operating Expenses: |
The amounts in the accompanying consolidated statements of comprehensive loss(loss)/income are as follows:
Voyage Expenses | Year Ended December 31, | |||||||||||
2020 | 2021 | 2022 | ||||||||||
Port charges / other voyage expenses | 1 | - | - | |||||||||
Bunkers | 659 | 165 | 80 | |||||||||
Commissions (including $761, $705 and $1,008 respectively, to related party) | 1,334 | 1,152 | 1,568 | |||||||||
Total | 1,994 | 1,317 | 1,648 |
Voyage Expenses | Year Ended December 31, | |||||||||||
2015 | 2016 | 2017 | ||||||||||
Port charges / other voyage expenses | 27 | - | 10 | |||||||||
Bunkers | 27 | 20 | 15 | |||||||||
Commissions | 316 | 716 | 974 | |||||||||
Total | 370 | 736 | 999 |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
Vessel Operating Expenses | Year Ended December 31, | |||||||||||
2020 | 2021 | 2022 | ||||||||||
Crew wages and related costs | 14,532 | 11,066 | 11,881 | |||||||||
Insurance | 1,194 | 1,026 | 1,577 | |||||||||
Repairs and maintenance (including $60, $17 and $37 respectively, to related party) | 1,259 | 747 | 1,592 | |||||||||
Spares and consumable stores | 3,861 | 2,530 | 3,339 | |||||||||
Registration and taxes (Note 13) | 178 | 310 | 239 | |||||||||
Total | 21,024 | 15,679 | 18,628 |
Vessel Operating Expenses | Year Ended December 31, | |||||||||||
2015 | 2016 | 2017 | ||||||||||
Crew wages and related costs | 3,090 | 6,885 | 9,228 | |||||||||
Insurance | 268 | 542 | 777 | |||||||||
Repairs and maintenance | 297 | 520 | 973 | |||||||||
Spares and consumable stores | 1,109 | 1,923 | 2,374 | |||||||||
Registration and tonnage taxes (Note 16) | 25 | 43 | 92 | |||||||||
Total | 4,789 | 9,913 | 13,444 |
12. | Interest and Finance Costs: |
The amounts in the accompanying consolidated statements of comprehensive loss(loss)/income are analyzed as follows (expressed in thousands of U.S. Dollars):follows:
Interest and Finance Costs | Year Ended December 31, | |||||||||||
2020 | 2021 | 2022 | ||||||||||
Interest on debt (including $-, $- and $207 respectively, to related party) | 16,033 | 7,342 | 11,895 | |||||||||
Bank charges and loan commitment fees | 233 | 20 | 132 | |||||||||
Amortization and write-off of financing fees | 6,311 | 840 | 2,522 | |||||||||
Total | 22,577 | 8,202 | 14,549 | |||||||||
Less interest capitalized | (1,621 | ) | (1,204 | ) | (184 | ) | ||||||
Total | 20,956 | 6,998 | 14,365 |
Interest and Finance Costs | Year Ended December 31, | |||||||||||
2015 | 2016 | 2017 | ||||||||||
Gross interest on debt (including $4, $302 and $138, respectively, to related party) (Note 9) | 503 | 3,208 | 5,724 | |||||||||
Delos termination fee interest (Note 5) | 101 | 3 | - | |||||||||
Bank charges and loan commitment fees (including $16, $207 and $366, respectively, to related party) | 26 | 262 | 440 | |||||||||
Amortization and write-off of financing fees | 538 | 291 | 1,640 | |||||||||
Amortization of Debt Discount (Note 9) | - | - | 7,500 | |||||||||
Non-cash debt conversion expenses | - | - | 842 | |||||||||
Total | 1,168 | 3,764 | 16,146 | |||||||||
Less interest capitalized | (449 | ) | (671 | ) | (353 | ) | ||||||
Total | 719 | 3,093 | 15,793 |
13. | Income Taxes: |
Marshall Islands Cyprus and Liberia do Greece does not impose a tax on international shipping income. Under the laws of Marshall Islands Cyprus and Liberia,Greece the countries of the companies'companies’ incorporation and vessels'vessels’ registration, the companies are subject to registration and tonnage taxes, which have been included in Vessel operating expenses in the accompanying consolidated statements of comprehensive loss.(loss)/income.
Under the United States Internal Revenue Code of 1986, as amended (the “Code”), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Company, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
Under Section 883 of the Code and the regulations thereunder, the Company will be exempt from U.S. federal income tax on our U.S.-source shipping income if:
(1) the Company is organized in a foreign country, or its country of organization, grants an “equivalent exemption” to corporations organized in the United States; and
(2) either
A. more than 50% of the value of the Company’s stock is owned, directly or indirectly, by individuals who are “residents” of the Company’s country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States (each such individual a “qualified shareholder” and such individuals collectively, “qualified shareholders”), which the Company refers to as the “50% Ownership Test,” or
B. the Company’s stock is “primarily and regularly traded on an established securities market” in the Company’s country of organization, in another country that grants an “equivalent exemption” to U.S. corporations, or in the United States, which the Company refers to as the “Publicly-Traded Test.”
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
The Marshall Islands, the jurisdiction where the Company and the Company’s ship-owning subsidiaries are incorporated, grants an “equivalent exemption” to U.S. corporations. Therefore, the Company will be exempt from U.S. federal income tax with respect to the Company’s U.S.-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met.
Treasury Regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on an established securities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. The Company’s common shares, which is the Company’s sole class of issued and outstanding stock that is traded, is and the Company anticipates will continue to be “primarily traded” on the Nasdaq Capital Market.
The Treasury Regulations also require that the Company’s stock be “regularly traded” on an established securities market. Under the Treasury Regulations, the Company’s stock will be considered to be “regularly traded” if one or more classes of the Company’s stock representing more than 50% of the Company’s outstanding shares, by total combined voting power of all classes of stock entitled to vote and by total combined value of all classes of stock, are listed on one or more established securities markets, which the Company refers to as the “listing threshold.” The Company’s common stock, which is listed on the Nasdaq Capital Market and is the Company’s only class of publicly-traded stock, did not constitute more than 50% of the Company’s outstanding shares by value for the 2021 taxable year, and accordingly, the Company didn’t satisfy the 50% Ownership Test for the 2021 taxable year and consequently the Company didn’t qualify for exemption from tax under Section 883 for the 2021 taxable year.
The Company and its subsidiaries were notfor the 2021 taxable year was subject to an effective 2% United States federal income taxation in respect oftax on the U.S. source shipping income that is derivedattributable to the transport of cargoes to or from the international operationUnited States which is not considered an income tax. The amount of shipsthis tax for the year ended December 31, 2021 was $152 and it was recorded within “Vessel operating expenses” in the performanceconsolidated statements of services directly related as theycomprehensive (loss)/income. For 2020 and for 2022 the Company qualified for the exemption offrom tax under Section 883 of the Internal Revenue Code of 1986, as amended.883.
14. | Financial Instruments: |
The principal financial assets of the Company consist of cash on hand and at banks, restricted cash, prepaid expenses and other receivables.receivables and long term deposits. The principal financial liabilities of the Company consist of short and long term loans, related partylong-term loans, accounts payable due to suppliers, amounts due from/to related parties and accrued liabilities, interest rate swaps, convertible preferred shares and warrants granted to third parties.
a) | Interest rate risk: The Company as of December 31, 2022 is subject to market risks relating to changes in interest rates, |
b) | Credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions with which it places its temporary cash investments. |
c) | Fair value: |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short term maturities. The Company considers its creditworthiness when determining the fair value of the credit facilities.
The fair value of interest rate swaps iswas determined using a discounted cash flow method taking into account current and future interest rates and the creditworthiness of both the financial instrument counterparty and the Company and hence they are considered Level 2 items in accordance with the fair value hierarchy. The Company paid a fixed rate and received a floating rate for these interest rate swaps. The fair values of these derivatives were derived principally from, or corroborated by, observable market data inputs included quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allowed values to be determined.
The fair value of Warrants iswarrants was determined using the Cox, Ross and Rubinstein BinomialBlack Scholes methodology and hence are considered Level 3 items in accordance with the fair value hierarchy.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
The Company follows the accounting guidance for Fair Value Measurements. This guidance 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 guidance requires assets and liabilities carried at fair value to 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 Company hashad entered into interest rate swap transactions to manage interest costs and the risk associated with changing interest rates with respect to its variable interest rate credit facilities. These interest rate swap transactions fixed theswaps were pay-fixed, receive-variable interest ratesrate swaps based on predetermined ranges inthe USD LIBOR rates. Theswap rate.
On January 16 and January 21, 2020, as part of the prepayment of the ABN Facility, the Company has entered into the following agreementsunwound its two remaining interest rate swaps with ABN Amro bank and realized a loss of $405. On February 21, 2020, as part of the prepayment of the Alpha Bank and Nord/LB Bank relating toFacility, the Company unwound its interest rate swaps,swap with Alpha bank and realized a loss of $927, being the details of which were as follows:
Agreement Date | Counterparty | Effective (start) date: | Termination Date: | Notional amount on effective date | Interest rate payable | ||||||
June 3, 2016 | ABN Amro Bank | April 13, 2018 | Ju1y 13, 2021 | $ | 16,575 | 1.4425 | % | ||||
December 19, 2016 | ABN Amro Bank | December 21, 2016 | January 13, 2022 | $ | 20,700 | 2.0800 | % | ||||
December 19, 2016 | ABN Amro Bank | December 21, 2016 | August 10, 2022 | $ | 19,450 | 2.1250 | % | ||||
March 29, 2017 | NORD/LB Bank | May 17, 2017 | May 17, 2023 | $ | 21,139 | 2.1900 | % |
Warrants Outstanding December 31, 2016 | Warrant Shares Outstanding December 31, 2016 | Term | Warrant Exercise Price* | Fair Value – Liability December 31, 2016 |
2,673,406 | 347,543 | 5 years | $19.70 | 3,222 |
Warrants Outstanding December 31, 2017 | Warrant Shares Outstanding December 31, 2017 | Term | Warrant Exercise Price | Fair Value – Liability December 31, 2017 |
1,976,389 | 2,134,501 | 5 years | $2.30 | 3,332 |
Fair Value Measurement at Reporting Date | |||||||
As of December 31, 2016 | Total | Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||
Non-current asset | 300 | - | 300 | - | |||
Non-current liability | 3,563 | - | 341 | 3,222 | |||
As of December 31, 2017 | |||||||
Non-current asset | 394 | - | 394 | - | |||
Non-current liability | 3,335 | - | 3 | 3,332 |
The following table sets forth a summary of changes in fair value of the Company'sCompany’s level 3 fair value measurements classified as liability for the year ended December 31, 2021. There were no instruments classified as liability subject to level 3 fair value measurements forin the yearsyear ended December 31, 2016 and 2017:
Closing balance – December 31, | ||||
Change in fair value of Class B Warrants, included in (Loss)/Gain on derivative financial instruments in the consolidated statements of comprehensive | ||||
( | ) | |||
Closing balance – December 31, | ||||
Quantitative information about Level 3 Fair Value Measurements | |||||||||||||||||||
Derivative type | Fair Value at December 31, 2016 | Fair Value at December 31, 2017 | Balance Sheet Location | Valuation Technique | Significant Unobservable Input | Value December 31, 2016 | Value December 31, 2017 | ||||||||||||
Warrants | 3,222 | 3,332 | Non-Current liabilities –Derivative financial instruments | Cox, Ross and Rubinstein Binomial | Volatility | 104.70 | % | 233 | % |
Information on the location and amounts of derivative financial instruments fair values in the balance sheet and derivative financial instrument losses in the statement of comprehensive loss(loss)/income are presented below:
Amount of (loss)/gain recognized in Statement of comprehensive loss / (income) located in (Loss)/Gain on derivative financial instruments | ||||||||||||
2020 | 2021 | 2022 | ||||||||||
Interest rate swaps- change in fair value | (1,332 | ) | - | - | ||||||||
Interest rate swaps– realized gain/(loss) | (25 | ) | - | - | ||||||||
Class B Warrants- change in fair value | 543 | 66 | - | |||||||||
Total | (814 | ) | 66 | - |
Amount of gain/(loss) recognized in Statement of comprehensive loss located in Loss on derivate financial instruments | ||||||||||||
2015 | 2016 | 2017 | ||||||||||
Interest rate swaps- change in fair value | - | (41 | ) | 431 | ||||||||
Interest rate swaps– realized gain/(loss) | 225 | (16 | ) | (476 | ) | |||||||
Warrants- change in fair value | (617 | ) | (641 | ) | (256 | ) | ||||||
Total | (392 | ) | (698 | ) | (301 | ) |
15. | Other operating |
On January 15, January 21, March 9 and October 20, 2020 the Company wrote-off $914 of accrued liabilities of vessels sold in 2009, mainly relating to unearned revenue.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
16. | Mezzanine Equity |
On November 22, 2016,March 29, 2019, the Company entered into a securities purchase agreementStock Purchase Agreement with YA II CD, LTD., or YorkvilleFamily Trading for the sale of 2,10627,129 newly designated Series B convertible preferred stock. Yorkville purchased 1,579 Series B convertible preferred stock on November 22, 2016 and 527 Series B convertible preferred stock on November 28, 2016. The preferred stock was issued to Yorkville through a registered direct offering. The total net proceeds from the offering, after deducting offering fees and expenses, were $1,741. The holders of Series Bperpetual convertible preferred shares (the “Series E Shares”) at a price of one thousand dollars ($1,000) per share. The proceeds of the sale were entitledused for the full and final settlement of all amounts due under the Further Amended Family Trading Credit Facility. The issuance of the Series E Shares was approved by a committee of the Company’s board of directors, of which all of the directors were independent.
Each holder of Series E Shares, at any time, has the right, subject to certain conditions, to convert all or any portion of the Series E Shares then held by such number of votes as would have been equal toholder into the Company’s common shares at the conversion rate then in effect. Each Series E Share is convertible into the number of the Company's common shares then issuable upon a conversion of each Series B convertible preferred share (subject to an ownership limitation of 4.99%) on all matters submitted to a vote of the stockholders of the Company. The Series B convertible preferred stock were convertible into a number of the Company'sCompany’s common shares equal to the quotient of $1one thousand dollars ($1,000) plus any accrued and unpaid dividends divided by the lesser of the following two prices:four prices (the “Series E Conversion Price”): (i) $504,000 (per share) and$10,000, (ii) 85%80% of the lowest daily VWAP of the Company'sCompany’s common shares over the 10twenty consecutive trading days expiring on the trading day immediately prior to the date of delivery of a conversion notice, (iii) the conversion price or exercise price per share of any of the Company’s then outstanding convertible shares or warrants, (iv) the lowest issuance price of the Company’s common shares in any transaction from the date of the issuance the Series E Shares onwards, but in no event will this conversion pricethe Series E Conversion Price be less than $1.00 (per share)the floor price (currently at $0.60). The floor price is adjusted (decreased) in case of splits or subdivisions of the Company’s outstanding shares and is not adjusted in case of reverse stock splits or combinations of the Company’s outstanding shares. The holders of each Series B convertible preferred stockE Share are not entitled to the voting power of one thousand (1,000) common shares of the Company. Upon any liquidation, dissolution or winding up of the Company, the holders of Series E Shares shall be entitled to receive the net assets of the Company pari-passu with the common shareholders. Furthermore the Company at its option shall have the right to redeem a portion or all of the outstanding Series E Shares. The Company shall pay an amount equal to one thousand dollars ($1,000) per each Series E Share (the “Liquidation Amount”), plus a redemption premium equal to fifteen percent (15%) of the Liquidation Amount being redeemed if that redemption takes place up to and including March 29, 2020 and twenty percent (20%) of the Liquidation Amount being redeemed if that redemption takes place after March 29, 2020, plus an amount equal to any accrued and unpaid dividends or aon such Series E Shares (collectively referred to as the “Redemption Amount”).
The Series E Shares shall not be subject to redemption in cash exceptat the option of the holders thereof under any circumstance. Finally, the holders of outstanding Series E Shares shall be entitled to receive, semi-annual dividends payable in cash on the last day of June and December in each year (each such date being referred to herein as a “Semi Annual Dividend Payment Date”), commencing on the first Semi Annual Dividend Payment Date, being June 30, 2019 in an amount per share (rounded to the nearest cent) equal to fifteen percent (15%) per year of the liquidation amount of the then outstanding Series E Shares computed on the basis of a 365-day year and the actual days elapsed. Accrued but unpaid dividends shall bear interest at fifteen percent (15%). Dividends will not be payable in cash, if such payment violates any provision of any senior secured facility that the Company has entered or (as the case of an event of default (a "Triggering Event"). A Triggering Event includes, among other things, certain bankruptcy proceedings,may be) will enter into, or any senior secured facility for which the delistingCompany has provided or (as the case may be) will provide a guarantee, for as long as such provisions, if any, remain in effect.
The Company determined that the Series E shares were more akin to equity than debt and that the above identified conversion feature, subject to adjustments, was clearly and closely related to the host instrument, and accordingly bifurcation and classification of the Company's common sharesconversion feature as a derivative liability was not required. Given that the Series D and Series E preferred stock’s holder (Lax Trust) controls a majority of the Company votes, the preferred equity is in essence redeemable at the option of the holder and hence has been classified in Mezzanine equity as per ASC 480-10-S99 “Distinguishing liabilities from Nasdaq, failureEquity – SEC Materials”.
On February 17, 2020, the Company issued 16,004 Series E Shares to timely deliver common shares upon conversion, failureFamily Trading, as settlement of $14,350 of consideration then outstanding for the purchase of the M/T Eco City of Angels and M/T Eco Los Angeles from Mr. Evangelos J. Pistiolis, $1,621 of Series E Share dividends of the second half of 2019 and $32 of accrued interest on unpaid dividends from 2019. On September 8, 2021 the Company issued 2,188 Series E Shares to pay cash upon redemption, or failure to observe orFamily Trading, as partial settlement for $2,188 of the consideration payable for the VLCC Transaction (see Note 1).
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
At each Series B Convertible Preferred Share, or the Liquidation Amount, plus a redemption premium equal to twenty percent (20%) of the Liquidation Amount being redeemed. Pursuant to the issuance of the convertible preferred stock,Series E Shares, the Company recognizedrecognizes the beneficial conversion feature by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of the Company'sCompany’s common stock per share on the commitment date, to additional paid-in capital, resulting in a discount of $1,403 on the Series B convertible preferred stock. The Company has accreted the whole discount in the year ended December 31, 2016.capital. As the Company wasis in an accumulated deficit position, the offsetting amount wasis amortized as a deemed dividend chargedrecorded against additional paid-in-capitalpaid-in-capital. During the years ended December 31, 2020 and 2021, pursuant to issuances of Series E Shares, the Company recognized the beneficial conversion feature to additional paid-in capital, resulting in a discount of $1,067 and $900 respectively on the Series E Shares which has been recognized as a deemed dividend.
During the year ended December 31, 2020, but before March 29, 2020, the Company redeemed 21,364 Series E Shares and paid a total of $24,569 to Family Trading, $3,204 of which refers to the 15% redemption premium. During the years ended December 31, 2021 and 2022 the Company didn’t redeem any Series E Shares.
As of December 31, 2022, upon conversion at the Series E Shares Conversion Price ($0.88) of 13,452 Series E Shares outstanding, Family Trading would receive 15,286,364 common shares.
After March 29, 2020 as per the original Series E Shares Statement of Designations all redemptions of Series E Shares will incur a redemption premium equal to twenty percent (20%) of the Liquidation Amount being redeemed instead of fifteen percent (15%). As of December 31, 2020 and 2021, the Company adjusted the carrying value of the Series E Shares to the maximum redemption amount, resulting in an increase of $2,253 and $437 respectively, which have been accounted as deemed dividend. No such adjustment took place in the year ended December 31, 2022 as no Series E Shares were issued during 2022.
During the years ended December 31, 2020, 2021 and 2022 the Company declared $1,796, $1,883 and $2,046 of dividends to the Series E Shares holder.
SERIES F PREFERRED SHARES
On January 17, 2022, the Company entered into a stock purchase agreement with Africanus Inc., an affiliate of Evangelos J. Pistiolis for the sale of up to 7,560,759 newly-issued Series F Non-Convertible Perpetual Preferred Shares (“Series F Shares”), in exchange for (i) the assumption by Africanus Inc. of an amount of $47,630 of shipbuilding costs for its newbuilding vessels M/T Eco Oceano Ca (Hull No. 871), M/T Julius Caesar (Hull No. 3213) and M/T Legio X Equestris (Hull No. 3214), and (ii) settlement of the Company’s remaining payment obligations relating to the VLCC Transaction, in an amount of up to $27,978. From January 17 to March 16, 2022 we issued a total of 7,200,000 Series F Shares have been issued, to cover $47,630 of shipbuilding costs in connection with the deliveries of M/T Julius Caesar, M/T Legio X Equestris and M/T Eco Oceano Ca and as a consideration for the settlement of $24,370 of Due to related parties. From July 5 to December 31, 2022 the Company redeemed a total of 1,349,252 Series F Shares for $16,191.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
17. | Investments in unconsolidated joint ventures |
2017 Joint Venture
During the year ended December 31, 2019 the Company acquired a 49% ownership interest in Cityrecorded its proportionate share of Athens from Fly Free Company, a Marshall Islands corporation and wholly-owned subsidiary of the Lax Trust, for an aggregate purchase price of $4,200. City of Athens is a party to a newbuilding contract for the construction of M/T Eco Holmby Hills, a 50,000 dwt newbuilding product/chemical tanker scheduled for delivery from Hyundai in March 2018. Furthermore on March 30, 2017, acquired a 49% ownership interest in Eco Nine from Maxima International Co., a Marshall Islands corporation and wholly-owned subsidiary of the Lax Trust, for an aggregate purchase price of $3,500. Eco Nine is a party to a newbuilding contract for the construction of M/T Eco Palm Springs, a 50,000 dwt newbuilding product/chemical tanker scheduled for delivery from Hyundai in May 2018. On June 14, 2017 the Company acquired an additional 1% interest in City of Athens and Eco Nine’s other comprehensive losses of $391 as a decrease to the Company’s Investments in unconsolidated joint ventures, with a corresponding increase in other comprehensive loss, in accordance with ASC 323-10-35-18. In December 2019, the Company wrote down its Investments in the 2017 Joint Venture to their fair value less costs to sell, resulting in an impairment charge of $3,144, pursuant to the Joint Ventures’ plan to sell the vessels. Their fair value was based on a market approach, which was determined using the purchase consideration in the sale agreements with buyers for the vessels of the joint venture companies.
The Joint Venture’s vessels, the M/T Holmby Hills and the M/T Palm Springs were sold on March 26 and April 17, 2020 respectively. During the year ended December 31, 2020, the Company recognized a loss on the sale of its Investments in unconsolidated joint ventures amounting to $64, which is included in Equity gains in unconsolidated joint ventures (attributed to the 2017 Joint Venture) in the Company’s consolidated statements of comprehensive (loss)/income. Net proceeds from the sale of the 2017 Joint Venture amounted to $19,555. The two companies that owned the vessels (City of Athens Pte. Ltd. and Eco Nine Pte. Ltd.) were dissolved in 2022.
New 2020 Joint Venture
On April 24, 2020 the Company acquired from a company affiliated with Mr. Evangelos J. Pistiolis, or the MR Seller, a 50% interest in two vessel owning companies (California 19 Inc. and California 20 Inc.) that owned two scrubber-fitted 50,000 dwt eco MR product tankers, M/T Eco Yosemite Park and M/T Eco Joshua Park respectively for $27,000, representing the Company’s share of interest in the fair value of the net assets acquired. Both vessels were delivered in March 2020 to the MR Seller from Hyundai Mipo shipyard of South Korea. The MR Seller had already entered into two joint venture agreements, for the two vessels, each with an aggregateequal ownership interest of 50%, with Just-C Limited, a wholly owned subsidiary of Gunvor Group Ltd (the other 50% owner). The abovementioned acquisition was approved by a special committee of the Company’s board of directors (the “JV Special Committee”), of which all of the directors were independent and for which the JV Special Committee obtained a fairness opinion relating to the consideration of $157, increasing the Company's interest in both companiestransaction from an independent financial advisor. Sale and purchase commissions due to 50%. Fees and costsCSI related to thethese investments amounting to $353$454 were accounted for as part of the investment.
Out of the purchase price of $27,000, $1,646 and $1,654 were recognized as excess of the purchase price over the underlying net book value (“Basis Differences”) for California 19 Inc. and California 20 Inc. respectively, attributed to the value assigned to the attached time charter. These Basis Differences are amortized over the duration of the firm period of the charter (5 years) and their amortization is included as a reduction in Gains in unconsolidated joint ventures. Furthermore $1,963 and $1,963 were also recognized as Basis Differences for California 19 Inc. and California 20 Inc. respectively, attributed to the fair market value over the carrying value of the vessels. These Basis Differences are amortized over the useful life of the vessels (25 years) and their amortization is also included as a reduction in Gains in unconsolidated joint ventures.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
On June 30, 2017 the Lax Trust sold its 50% remaining interest in City of Athens and in Eco Nine to Gunvor S.A. ("Gunvor"), a non-affiliated company and on July 7, 2017 the CompanyMarch 12, 2020, California 19 Inc. together with California 20 Inc. entered into a joint ventureloan agreement with Gunvor. Furthermore, uponAlpha Bank for a senior debt facility of $37,660 ($18,830 for each vessel). The loan has a term of five years and is payable on maturity via a balloon payment of $18,830 per vessel. The credit facility bears interest at LIBOR plus a margin of 3.00%. The facility carries customary covenants and restrictions, including the deliverycovenant that during the life of boththe facility, the market value of the vessels should be at least 200% of the facility outstanding and any shortfall should be covered by partial prepayments. Vessels are to be valued three times per year, every March, July and December. Provided that there is no breach of the above-mentioned covenant and no event of default has occurred and is continuing or would occur if such dividend distribution would take place, California 19 Inc. and California 20 Inc. may distribute dividends, without any consent from Hyundai,Alpha Bank. The loans are guaranteed by the Company in their entirety and this guarantee is not limited to the Company’s share of the net assets of California 19 Inc. and California 20 Inc (see Note 8). On April 22, 2021 California 19 Inc. and California 20 Inc. prepaid $330 each to reduce each of the outstanding loans to $18,500.
Each of the two vessels will enter intoproduct tankers are on time charter employmentscharters that commenced in March 2020 with Clearlake Shipping Pte Ltd, a subsidiary of Gunvor Group Ltd for threea firm term of five years firm plus two additional optional years.
The Company'sCompany’s exposure is limited to its share of the net assets of City of AthensCalifornia 19 Inc. and Eco Nine California 20 Inc., proportionate to its 50% equity interest in these companies. Generally, the Company will share the profits and losses, cash flows and other matters relating to its investments in City of AthensCalifornia 19 Inc. and in Eco NineCalifornia 20 Inc. in accordance with its ownership percentage. The vessels will beare managed by CSM,CSI, pursuant to management agreements. The Company accounts for investments in joint ventures using the equity method since it has joint control over the investment. The Company is obligated to contribute funds for yard installments in relationinvestment.
California 19 Inc. and California 20 Inc. made the following disbursements to the constructionCompany in 2020, 2021 and 2022:
December 31, 2020 | December 31, 2021 | December 31, 2022 | ||||||||||||||||||||||
California 19 Inc. | California 20 Inc. | California 19 Inc. | California 20 Inc. | California 19 Inc. | California 20 Inc. | |||||||||||||||||||
Total disbursements | - | - | 2,359 | 2,141 | 1,475 | 1,475 |
Recognition of Gains in unconsolidated joint ventures for the 2020 Joint Venture for the years ended December 31, 2020, 2021 and 2022 are summarized below:
December 31, 2020 | December 31, 2021 | December 31, 2022 | ||||||||||||||||||||||
California 19 Inc. | California 20 Inc. | California 19 Inc. | California 20 Inc. | California 19 Inc. | California 20 Inc. | |||||||||||||||||||
Net profit attributable to the Company | 652 | 670 | 880 | 684 | 725 | 738 | ||||||||||||||||||
Amortization of Basis Differences | (272 | ) | (273 | ) | (408 | ) | (409 | ) | (408 | ) | (409 | ) | ||||||||||||
Equity gains in unconsolidated joint ventures (attributed to the 2020 Joint Venture) | 380 | 397 | 472 | 275 | 317 | 329 |
18. | Revenues |
Revenues are comprised of the newbuilding vessels of the companies, as needed and proportionate to its 50% equity interest in these companies.following:
2020 | 2021 | 2022 | ||||||||||
Time charter revenues | 60,222 | 56,367 | 73,362 | |||||||||
Time charter revenues from related parties (Note 5) | - | - | 7,294 | |||||||||
Total | 60,222 | 56,367 | 80,656 |
AS OF DECEMBER 31, 20162021 AND 2017
AND FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
The Company typically enters into time charters for periods ranging between three to fifteen years and includes a charterer’s option to renew for a further two one-year periods at predetermined daily rates. Due to the volatility of the charter rates, the Company only accounts for the options when the charterer gives notice that the option will be exercised. In a time charter contract, the vessel is hired by the charterer for a specified period of time in exchange for consideration which is based on a daily hire rate. The charterer has the full discretion over the ports visited, shipping routes and vessel speed. The contract/charter party generally provides typical warranties regarding the speed and performance of the vessel. The charter party generally has some owner protective restrictions such that the vessel is sent only to safe ports by the charterer, subject always to compliance with applicable sanction laws, and carry only lawful or non-hazardous cargo. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubes. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period. The charterer generally pays the charter hire in advance of the upcoming contract period.
As of December 31, 2022, all of the Company’s vessels are employed under time charters.
19. | Loss on sale of vessels: |
During 2020 the Company sold the following vessels to unaffiliated third parties and collected the following gross proceeds:
Vessel | Date Sold | Selling Price (Gross) | ||||
M/T Stenaweco Energy | 29-Oct-20 | $ | 25,150 | |||
M/T Stenaweco Evolution | 03-Nov-20 | $ | 26,150 | |||
M/T Ecofleet | 21-Jan-20 | $ | 21,000 | |||
M/T Eco Revolution | 14-Jan-20 | $ | 23,000 | |||
M/T SW Excellence | 14-Oct-20 | $ | 27,008 | |||
M/T Stenaweco Elegance | 21-Feb-20 | $ | 33,500 | |||
M/T Eco Palm Desert | 19-Mar-20 | $ | 34,800 | |||
M/T Eco California | 09-Nov-20 | $ | 30,600 | |||
M/T Eco Bel Air | 10-Dec-20 | $ | 50,830 | |||
M/T Eco Beverly Hills | 01-Dec-20 | $ | 50,830 | |||
Total | $ | 322,868 |
The net proceeds from the abovementioned sales amounted to $310,016, after deducting $10,852 of expenses and $2,000 of maintenance deposits (please see below). As a result of the abovementioned sales the Company recognized a loss from the disposal of vessels amounting to $12,355, which is separately presented in the Company’s consolidated statements of comprehensive (loss)/income. For each of the vessels M/T Eco Bel Air and M/T Eco Beverly Hills that were sold and leased back (see Note 6) the buyer withheld $1,000 as a maintenance deposit, accounted for as a deposit asset, to be released at the end of the lease term, in accordance with ASC 840-10-25-39B. The Company evaluated these maintenance deposits and has not assigned any probability of them not being returned.
On September 1, 2021 the Company sold M/T Nord Valliant, its last non-scrubber fitted tanker, to an unaffiliated third party for net proceeds of $25,887. During the six months ended June 30, 2021, in accordance with the provisions of relevant guidance, the Company recognized the vessel, the carrying amount of which as of June 30, 2021 amounted to $27,047, as held for sale and wrote it down to its fair value of $25,887, resulting in an impairment charge of $1,160, which is included in the consolidated statements of comprehensive (loss) / income for the year ended December 31, 20172021. Since the value of the held for sale vessel (after it was written down to its fair value less costs to sell) was the same with the net proceeds from the sale, the Company advanced $5,233 to City of Athens and $3,738 to Eco Nine respectively to cover upcoming newbuilding installments and $324 to City of Athens and $135 to Eco Nine respectively to cover predelivery expenses. Furthermore on September 25, 2017 City of Athens and Eco Nine signed an indicative term sheet with ABN Amro Bank for a senior facility of $38,280 fordidn’t recognize any losses from the financingsale of the delivery installmentsM/T Nord Valiant.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021 AND 2022
AND FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 and 2022
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
On February 28 and March 15, 2022, the Company sold the M/T Eco Holmby HillsLos Angeles and M/T Eco Palm Springs.
December 31, 2017 | ||||||||
City of Athens | Eco Nine | |||||||
Current assets | 218 | 4 | ||||||
Non-current assets | 12,664 | 7,840 | ||||||
Current liabilities | 68 | - | ||||||
Long-term liabilities | - | - | ||||||
Net operating revenues | - | - | ||||||
Net loss | (20 | ) | (35 | ) |
20. | Subsequent Events |