☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________________ to _________________ |
☐ | 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 001-33283 |
EUROSEAS LTD. |
(Exact name of Registrant as specified in its charter) |
(Translation of Registrant's name into English) |
Marshall Islands |
(Jurisdiction of incorporation or organization) |
4 Messogiou & Evropis Street, 151 24 Maroussi Greece |
(Address of principal executive offices) |
Tasos Aslidis, Tel: (908) 301-9091, euroseas@euroseas.gr, Euroseas Ltd. c/o Tasos Aslidis, 11 Canterbury Lane, Watchung, NJ 07069 |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Name of each exchange on which registered | |
Common shares, $0.03 par value | Nasdaq Capital Market | |
Securities registered or to be registered pursuant to Section 12(g) of the Act: |
None |
(Title of Class) |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: |
None |
(Title of Class) |
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report | |
12,515,645 common shares, $0.03 par value | |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See definition of "accelerated filer," "large accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act. | ||
Large accelerated filer | Accelerated filer | Non-accelerated filer |
☐ | ☐ | ☒ |
Emerging growth company | ||
☐ | ||
☒ | U.S. GAAP |
☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board. |
☐ | Other |
PART I | 2 | |
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 2 |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE | 2 |
ITEM 3. | KEY INFORMATION | 2 |
ITEM 4. | INFORMATION ON THE COMPANY | 33 |
ITEM 4A. | UNRESOLVED STAFF COMMENTS | 47 |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 47 |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 58 |
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 64 |
ITEM 8. | FINANCIAL INFORMATION | 67 |
ITEM 9. | THE OFFER AND LISTING | 68 |
ITEM 10. | ADDITIONAL INFORMATION | 69 |
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 79 |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 80 |
PART II | 81 | |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 81 |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 81 |
ITEM 15. | CONTROLS AND PROCEDURES | 81 |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT | 82 |
ITEM 16B. | CODE OF ETHICS | 82 |
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 83 |
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 83 |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 83 |
ITEM 16F. | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT | 83 |
ITEM 16G. | CORPORATE GOVERNANCE | 83 |
ITEM 16H. | MINE SAFETY DISCLOSURE | 83 |
PART III | 84 | |
ITEM 17. | FINANCIAL STATEMENTS | 84 |
ITEM 18. | FINANCIAL STATEMENTS | 84 |
ITEM 19. | EXHIBITS | 84 |
· | our future operating or financial results; |
· | future, pending or recent acquisitions, joint ventures, business strategy, areas of possible expansion, and expected capital spending or operating expenses; |
· | container shipping industry trends, including charter rates and factors affecting vessel supply and demand; |
· | our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities; |
· | availability of crew, number of off-hire days, drydocking requirements and insurance costs; |
· | our expectations about the availability of vessels to purchase or the useful lives of our vessels; |
· | our expectations relating to dividend payments and our ability to make such payments; |
· | our ability to leverage to our advantage our manager's relationships and reputations in the container shipping industry; |
· | changes in seaborne and other transportation patterns; |
· | changes in governmental rules and regulations or actions taken by regulatory authorities; |
· | potential liability from future litigation; |
· | global and regional political conditions; |
· | acts of terrorism and other hostilities, including piracy; and |
· | other factors discussed in the section titled "Risk Factors." |
Item 1. | Identity of Directors, Senior Management and Advisers |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
Euroseas Ltd. – Summary of Selected Historical Financials (in U.S. Dollars except for Fleet Data and number of shares) | |||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||
Statement of Operations Data | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||
Time charter revenue | 32,587,186 | 35,509,971 | 21,409,236 | 24,278,048 | 36,062,202 | ||||||||||||||
Voyage charter revenue | 4,731,423 | - | 47,979 | 559,319 | 206,682 | ||||||||||||||
Related party management fee income | 240,000 | 240,000 | 240,000 | 240,000 | - | ||||||||||||||
Commissions | (1,917,559 | ) | (1,965,466 | ) | (1,151,879 | ) | (1,318,248 | ) | (1,844,147 | ) | |||||||||
Net revenue, continuing operations | 35,641,050 | 33,784,505 | 20,545,336 | 23,759,119 | 34,424,737 | ||||||||||||||
Voyage expenses | (3,919,860 | ) | (1,852,482 | ) | (1,209,085 | ) | (1,564,489 | ) | (1,261,088 | ) | |||||||||
Vessel operating expenses | (22,604,520 | ) | (21,833,674 | ) | (13,853,444 | ) | (15,019,342 | ) | (19,986,170 | ) | |||||||||
Other operating income | - | - | - | 499,103 | - | ||||||||||||||
Dry-docking expenses | (1,975,591 | ) | (1,332,378 | ) | (2,204,784 | ) | (571,291 | ) | (2,774,924 | ) | |||||||||
Vessel depreciation | (9,791,080 | ) | (8,108,231 | ) | (4,959,487 | ) | (3,585,965 | ) | (3,305,951 | ) | |||||||||
Related party management fees | (4,346,584 | ) | (3,589,167 | ) | (2,399,461 | ) | (2,632,637 | ) | (3,536,094 | ) | |||||||||
Other general and administrative expenses | (2,731,942 | ) | (2,886,884 | ) | (2,673,594 | ) | (2,502,203 | ) | (2,565,502 | ) | |||||||||
Net gain on sale of vessels | - | 461,586 | 10,597 | 803,811 | 1,340,952 | ||||||||||||||
Loss on write-down of vessels held for sale | (3,500,000 | ) | (1,641,885 | ) | (5,924,668 | ) | (4,595,819 | ) | - | ||||||||||
Operating income / (loss), continuing operations | (13,228,527 | ) | (6,978,610 | ) | (12,668,590 | ) | (5,409,713 | ) | 2,335,960 | ||||||||||
Interest and other financing costs | (1,611,178 | ) | (1,398,553 | ) | (1,370,830 | ) | (1,554,695 | ) | (3,050,768 | ) | |||||||||
(Loss)/gain on derivatives, net | (44,648 | ) | (261,674 | ) | (119,154 | ) | 12,389 | (44,343 | ) | ||||||||||
Other investment income | 982,978 | 1,212,938 | 1,024,714 | - | - | ||||||||||||||
Impairment of other investment | - | - | (4,421,452 | ) | - | - | |||||||||||||
Foreign exchange gain / (loss) | 34,006 | 16,711 | (31,033 | ) | (30,214 | ) | 13,963 | ||||||||||||
Interest income | 419,366 | 26,445 | 22,277 | 37,972 | 81,792 | ||||||||||||||
Equity loss in joint venture | (2,541,775 | ) | (2,158,393 | ) | (2,444,627 | ) | - | - | |||||||||||
Impairment in joint venture | - | - | (14,071,075 | ) | - | - | |||||||||||||
Net loss, continuing operations | (15,989,778 | ) | (9,541,136 | ) | (34,079,770 | ) | (6,944,261 | ) | (663,396 | ) | |||||||||
Dividends to Series B preferred shares | (1,440,100 | ) | (1,639,149 | ) | (1,725,699 | ) | (1,808,811 | ) | (1,335,733 | ) | |||||||||
Net loss attributable to common shareholders, continuing operations | (17,429,878 | ) | (11,180,285 | ) | (35,805,469 | ) | (8,753,072 | ) | (1,999,129 | ) | |||||||||
Loss per share attributable to common shareholders- basic and diluted, continuing operations | (3.18 | ) | (1.74 | ) | (4.38 | ) | (0.79 | ) | (0.18 | ) | |||||||||
Preferred stock dividends declared | 1,440,100 | 1,639,149 | 1,725,699 | 1,808,811 | 1,335,733 | ||||||||||||||
Preferred dividends declared per preferred share | 44.81 | 48.53 | 48.60 | 48.48 | 68.13 | ||||||||||||||
Weighted average number of shares outstanding during period, basic and diluted | 5,479,418 | 6,410,794 | 8,165,703 | 11,067,524 | 11,318,197 |
Euroseas Ltd. – Summary of Selected Historical Financials (continued) As of December 31, | |||||||||||||||||||
Balance Sheet Data | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||
Current assets, continuing operations | 26,319,030 | 20,872,484 | 8,285,054 | 12,168,251 | 11,994,168 | ||||||||||||||
Current assets of discontinued operations | 4,528,350 | 711,815 | 2,159,029 | 3,914,117 | |||||||||||||||
Vessels, net | 71,826,876 | 52,521,193 | 41,145,269 | 52,132,079 | 48,826,128 | ||||||||||||||
Deferred assets and other long-term assets, continuing operations | 44,985,424 | 51,185,084 | 33,459,098 | 28,919,785 | 6,134,267 | ||||||||||||||
Long-term assets of discontinued operations | 42,918,932 | 47,116,387 | 58,645,054 | 65,195,329 | - | ||||||||||||||
Total assets | 190,578,612 | 172,406,963 | 143,693,504 | 162,329,561 | 66,954,563 | ||||||||||||||
Total current liabilities, continuing operations | 25,691,633 | 20,391,502 | 9,710,927 | 12,649,309 | 11,592,535 | ||||||||||||||
Current liabilities of discontinued operations | (501,404 | ) | (1.026.121 | ) | 1,463,708 | 5,883,288 | - | ||||||||||||
Long term bank loans, including current portion | 33,417,000 | 22,201,040 | 20,402,911 | 34,014,502 | 36,586,790 | ||||||||||||||
Vessel profit participation liability | - | - | - | 1,297,100 | 1,067,500 | ||||||||||||||
Long-term liabilities of discontinued operations | 18,320,000 | 16,440,000 | 28,243,478 | 30,364,035 | - | ||||||||||||||
Total liabilities | 59,936,008 | 45,279,121 | 55,781,792 | 80,021,604 | 44,376,584 | ||||||||||||||
Preferred shares | 30,440,100 | 32,079,249 | 33,804,948 | 35,613,759 | 18,757,361 | ||||||||||||||
Common shares outstanding | 5,715,731 | 8,195,760 | 10,876,112 | 11,274,126 | 12,515,645 | ||||||||||||||
Common stock | 171,472 | 245,873 | 326,283 | 338,230 | 375,476 | ||||||||||||||
Total shareholders' equity | 100,202,504 | 95,048,593 | 54,106,764 | 46,694,198 | 3,820,618 | ||||||||||||||
Cash Flow Data | Year Ended December 31, | ||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||
Net cash (used in) / provided by operating activities of continuing operations | (5,633,563 | ) | (905,910 | ) | (5,088,067 | ) | 5,053,025 | (1,474,830 | ) | ||||||||||
Net cash (used in) / provided by investing activities of continuing operations | (848 | ) | 8,904,008 | 1,109,456 | (16,511,220 | ) | 6,253,868 | ||||||||||||
Net cash provided by / (used in) financing activities of continuing operations | 16,057,159 | (20,058,980 | ) | (6,341,223 | ) | 12,750,658 | 135,403 |
Fleet Data(1) | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||
Number of vessels | 13.00 | 12.74 | 8.67 | 9.28 | 11.49 | |||||||||||||||
Calendar days | 4,745 | 4,650 | 3,175 | 3,386 | 4,191 | |||||||||||||||
Available days | 4,677 | 4,587 | 3,028 | 3,285 | 4,115 | |||||||||||||||
Voyage days | 4,564 | 4,285 | 2,844 | 3,184 | 3,814 | |||||||||||||||
Utilization Rate (percent) | 97.6 | % | 93.0 | % | 93.9 | % | 96.9 | % | 92.7 | % | ||||||||||
(In U.S. dollars per day per vessel) | ||||||||||||||||||||
Average TCE rate(2) | 7,319 | 7,855 | 7,120 | 7,309 | 9,179 | |||||||||||||||
Vessel Operating Expenses | 4,764 | 4,695 | 4,363 | 4,436 | 4,769 | |||||||||||||||
Management Fees | 916 | 772 | 756 | 777 | 844 | |||||||||||||||
G&A Expenses | 576 | 621 | 842 | 739 | 612 | |||||||||||||||
Total Operating Expenses excluding drydocking expenses | 6,256 | 6,088 | 5,961 | 5,952 | 6,225 | |||||||||||||||
Drydocking expenses | 416 | 287 | 694 | 169 | 662 |
2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||
(In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day) | ||||||||||||||||||||
Time charter revenue | 32,587,186 | 35,509,971 | 21,409,236 | 24,278,048 | 36,062,202 | |||||||||||||||
Voyage charter revenue | 4,731,423 | - | 47,979 | 559,319 | 206,682 | |||||||||||||||
Voyage expenses | (3,919,860 | ) | (1,852,482 | ) | (1,209,085 | ) | (1,564,489 | ) | (1,261,088 | ) | ||||||||||
Time Charter Equivalent or TCE Revenues | 33,398,749 | 33,657,489 | 20,248,130 | 23,272,878 | 35,007,796 | |||||||||||||||
Voyage days | 4,564 | 4,285 | 2,844 | 3,184 | 3,814 | |||||||||||||||
Average TCE rate | 7,319 | 7,855 | 7,120 | 7,309 | 9,179 |
· | supply of, and demand for, containerized cargo; |
· | changes in the semi-finished and finished consumer and industrial products, and the resulting changes in the international pattern of trade; |
· | global and regional economic and political conditions, including armed conflicts and terrorist activities; |
· | embargoes and strikes; |
· | the location of regional and global manufacturing facilities; |
· | availability of credit to finance international trade; |
· | the location of consuming regions for semi-finished and finished consumer and industrial products; |
· | the distance containerized commodities are to be moved by sea; |
· | environmental and other regulatory developments; |
· | currency exchange rates; |
· | changes in global production and manufacturing distribution patterns of finished goods that utilize containerized commodities; |
· | changes in seaborne and other transportation patterns; and |
· | weather and other natural phenomena. |
· | the number of newbuilding deliveries; |
· | the scrapping rate of older vessels; |
· | the price of steel and other materials; |
· | port and canal congestion; |
· | changes in environmental and other regulations that may limit the useful life of vessels; |
· | vessel casualties; |
· | the number of vessels that are out of service; and |
· | changes in global commodity production. |
· | general economic and market conditions affecting the shipping industry in general; |
· | supply of container vessels, including newbuildings; |
· | demand for container vessels; |
· | types and sizes of vessels; |
· | scrap values; |
· | other modes of transportation; |
· | cost of newbuildings; |
· | technological advances; |
· | new regulatory requirements from governments or self-regulated organizations; |
· | competition from other shipping companies; and |
· | prevailing level of charter rates. |
Regulations relating to low sulfur emissions coming into effect on January 1, 2020 may adversely affect our revenues and profitability.
Under maritime regulations due to take effect on January 1, 2020, ships will have to reduce sulfur emissions, for which the principal solutions are the use of scrubbers or buying fuel with low sulfur content which is more expensive than standard marine fuel. We do not currently intend to install scrubbers on our fleet. We expect that our fuel costs and fuel inventories will increase beginning in 2019 as a result of these sulfur emission regulations. Low sulfur fuel is more expensive than standard marine fuel containing 3.5% sulfur content and may become more expensive or difficult to obtain as a result of increased demand, which may have a material adverse effect on our business, results of operations, cash flows and financial condition.
Increased inspection procedures and tighter import and export controls and new security regulations could increase costs and disrupt our business.
• | work stoppages or other hostilities, political or economic disturbances that disrupt the operations of the shipyard; |
• | quality or engineering problems; |
• | bankruptcy or other financial crisis of the shipyard; |
• | a backlog of orders at the shipyard; |
• | disputes between us and the shipyard regarding contractual obligations; |
• | weather interference or catastrophic events, such as major earthquakes or fires; |
• | our requests for changes to the original vessel specifications or disputes with the shipyard; or |
• | shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers. |
· | incur additional indebtedness; |
· | create liens on our assets; |
· | sell capital stock of our subsidiaries; |
· | make investments; |
· | engage in mergers or acquisitions; |
· | pay dividends; |
· | make capital expenditures; |
· | change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and |
· | sell our vessels. |
· | marine disaster; |
· | piracy; |
· | environmental accidents; |
· | grounding, fire, explosions and collisions; |
· | cargo and property losses or damage; |
· | business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and |
· | work stoppages or other labor problems with crew members serving on our vessels including crew strikes and/or boycotts. |
· | actual or anticipated fluctuations in quarterly and annual variations in our results of operations; |
· | changes in market valuations or sales or earnings estimates or publication of research reports by analysts; |
· | changes in earnings estimates or shortfalls in our operating results from levels forecasted by securities analysts; |
· | speculation in the press or investment community about our business or the shipping industry; |
· | changes in market valuations of similar companies and stock market price and volume fluctuations generally; |
· | payment of dividends; |
· | strategic actions by us or our competitors such as mergers, acquisitions, joint ventures, strategic alliances or restructurings; |
· | changes in government and other regulatory developments; |
· | additions or departures of key personnel; |
· | general market conditions and the state of the securities markets; and |
· | domestic and international economic, market and currency factors unrelated to our performance. |
Item 4. | Information on the Company |
Name | Type | Dwt | TEU | Year Built | Employment (*) | TCE Rate ($/day) |
Container Carriers | ||||||
EVRIDIKI G (ex-MAERSK NOUMEA) | Feeder | 34,677 | 2,556 | 2001 | TC until Sep-19 | $12,000 |
JOANNA | Feeder | 22,301 | 1,732 | 1999 | TC until Feb-20 | $6,650 |
MANOLIS P | Feeder | 20,346 | 1,452 | 1995 | TC until Mar-20 | $6,800 |
AEGEAN EXPRESS | Feeder | 18,581 | 1,439 | 1997 | TC until Apr-19 | $7,500 |
NINOS | Feeder | 18,253 | 1,169 | 1990 | TC until Jul-19 | $7,750 |
KUO HSIUNG | Feeder | 18,154 | 1,169 | 1993 | TC until Jul-19 | $7,750 |
EM ASTORIA | Feeder | 35,600 | 2,788 | 2004 | TC until Aug-19 | $9,650 |
AKINADA BRIDGE | Intermediate | 71,366 | 5,610 | 2001 | TC until Sep-19 | $8,500 |
EM CORFU | Feeder | 34,654 | 2,556 | 2001 | TC until Feb-20 | $11,600 |
EM ATHENS | Feeder | 32,350 | 2,506 | 2000 | TC until Sep-19 | $9,000 |
EM OINOUSSES | Feeder | 32,350 | 2,506 | 2000 | TC until Apr-19 | $9,500 |
Total Container Carriers | 11 | 368,632 | 25,483 |
· | reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values; |
· | news and industry reports of similar vessel sales; |
· | news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates; |
· | approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated; |
· | offers that we may have received from potential purchasers of our vessels; and |
· | vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers. |
Name | Capacity | Purchase Date | Carrying Value as of December 31, 2017 | Carrying Value as of December 31, 2018 |
Container Carriers | (teu) | |||
EVRIDIKI | 2,556 | May-2008 | $9.71(1) | $8.88 (2) |
MANOLIS P | 1,452 | Apr-2007 | $2.44 | $2.11 |
NINOS | 1,169 | Feb-2001 | $1.51 | $1.51 |
JOANNA | 1,732 | Jul-2013 | $4.21 | $3.81 |
KUO HSIUNG | 1,169 | May-2002 | $1.68 | $1.57 |
AEGEAN EXPRESS | 1,439 | Sep-2016 | $2.80 | $2.51 |
AKINADA BRIDGE | 5,610 | Dec-2017 | $11.10 | $10.54 |
EM ASTORIA | 2,788 | Jun-2017 | $4.68 | $4.55 |
EM ATHENS | 2,506 | Sep-2017 | $4.20 | $4.03 |
EM CORFU | 2,556 | Nov-2017 | $5.60 | $5.28 |
EM OINOUSSES | 2,506 | Oct-2017 | $4.21 | $4.04 |
Total Container Carriers | 25,483 | $52.13 | $48.83 |
· | Experienced Management Team. Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry. |
· | Cost Efficient Vessel Operations. We believe that because of the efficiencies afforded to us through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite the average age of our fleet being approximately 20.5 years on April 1, 2019, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $6,225 per day for the year ended December 31, 2018. We consider this amount to be among the lowest of the publicly listed containerships shipping companies in the United States. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and onboard crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2018, our operational fleet utilization was 96.0%, down from 99.5% in 2017, while our commercial utilization rate decreased from 97.5% in 2017 to 96.7% in 2018. Our total fleet utilization rate in 2018 was 96.0%. |
· | Strong Relationships with Customers and Financial Institutions. We believe ourselves, Eurobulk and the Pittas family to have developed strong industry relationships and to have gained acceptance with charterers, lenders and insurers because of long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of ourselves, Eurobulk and the Pittas family help us to secure favorable employment for our vessels with well-known charterers. |
· | Renew and Expand our Fleet. We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market opportunities present themselves. We focus on purchasing well-maintained secondhand vessels, newbuildings or newbuilding resales based on the evaluation of each investment option at the time it is made. Within 2016 we acquired two secondhand containerships. In January 2017, we sold one containership. In June, September, October and December 2017, we took delivery of five secondhand containerships, and in December 2017, we sold one containership. |
· | Maintain Balanced Employment. We intend to employ our fleet on either longer term time charters, i.e. charters with duration of more than a year, or shorter-term time/spot charters. We seek longer term time charter employment to obtain adequate cash flow to cover as much as possible of our fleet's recurring costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. When we expect charter rates to improve we try to increase the percentage of our fleet employed in shorter term contracts (allowing us to take advantage of higher rates in the future), while when we expect the market to weaken we try to increase the percentage of our fleet employed in longer term contracts (allowing us to take advantage of higher current rates). We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of April 1, 2019, on the basis of our existing time charters, approximately 55% of our vessel capacity in the remainder of 2019 and approximately 4% in 2020 are under time charter contracts, which will ensure employment of a portion of our fleet, partly protect us from market fluctuations and increase our ability to make principal and interest payments on our debt and pay dividends to our shareholders. |
· | Optimize Use of Financial Leverage. We intend to use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our balanced chartering strategy and efficient operating cost structure. Our debt repayment schedule as of December 31, 2018 calls for a reduction of more than 13.9% of our debt by the end of 2019 and an additional reduction of about 16.1% by the end of 2020 for a total of 30% reduction over the next two years, excluding any new debt that we assumed or may assume. As our debt is being repaid we expect that our ability to raise or borrow additional funds more cheaply in order to grow our fleet and generate better returns for our shareholders will increase. |
(i) | injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs; |
(ii) | injury to, or economic losses resulting from, the destruction of real and personal property; |
(iii) | loss of subsistence use of natural resources that are injured, destroyed or lost; |
(iv) | net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources; |
(v) | lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and |
(vi) | net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources. |
· | on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status; |
· | on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; |
· | the development of vessel security plans; |
· | ship identification number to be permanently marked on a vessel's hull; |
· | a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and |
· | compliance with flag state security certification requirements. |
Vessel | Next | Type |
EVRIDIKI G. | May 2019 | Intermediate Survey |
EM CORFU | October 2019 | Intermediate Survey |
AKINADA BRIDGE | October 2019 | Special Survey |
KUO HSIUNG | November 2019 | Intermediate Survey |
MANOLIS P | May 2020 | Special Survey |
EM OINOUSSES | September 2020 | Special Survey |
AEGEAN EXPRESS | October 2020 | Intermediate Survey |
EM ASTORIA | September 2021 | Intermediate Survey |
JOANNA P | January 2022 | Intermediate Survey |
EM ATHENS | December 2020 | Special Survey |
Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
· | the effective fleet utilization rate; |
· | estimated scrap values; |
· | future drydocking costs; and |
· | probabilities of sale for each vessel. |
Vessel | Charter Rate as of 12/31/2018 | Remaining Months Chartered | Remaining Life (years) | Rate Year 1 (2018) | Rate Year 2 (2019) | Rate Year 3+ (2020+) | Breakeven Rate (USD/day) | |||||||||||||||||||||
Evridiki | 12,000 | 8.0 | 7 | 10,189 | 10,189 | 14,611 | 9,623 |
In U.S. dollars | Total | Less Than One Year | One to Three Years | Three to Five Years | ||||||||||||
Bank debt | $ | 37,491,000 | $ | 5,212,000 | $ | 32,279,000 | - | |||||||||
Interest Payments (1) | $ | 5,914,860 | $ | 2,346,082 | $ | 3,568,778 | - | |||||||||
Vessel Management fees (2) | $ | 10,660,933 | $ | 3,153,740 | $ | 5,164,451 | $ | 2,342,742 | ||||||||
Other Management fees (3) | $ | 5,152,010 | $ | 1,250,000 | $ | 2,575,500 | $ | 1,326,510 | ||||||||
Total | $ | 59,218,803 | $ | 11,961,822 | $ | 43,587,729 | $ | 3,669,252 |
Item 6. | Directors, Senior Management and Employees |
Name | Age | Position |
Aristides J. Pittas | 59 | Chairman, President and CEO; Class A Director |
Dr. Anastasios Aslidis | 59 | CFO and Treasurer; Class A Director |
Aristides P. Pittas | 67 | Vice Chairman; Class A Director |
Stephania Karmiri | 51 | Secretary |
Panagiotis Kyriakopoulos | 58 | Class B Director |
George Taniskidis | 58 | Class C Director |
Apostolos Tamvakakis | 61 | Class C Director (since June 25, 2013) |
Christian Donohue | 51 | Series B Director (since December 7, 2017) |
· | We are not required under Marshall Islands law to maintain a Board of Directors with a majority of independent directors, and we may not be able to maintain a Board of Directors with a majority of independent directors in the future. |
· | In lieu of a compensation committee comprised of independent directors, our Board of Directors will be responsible for establishing the executive officers' compensation and benefits. Under Marshall Islands law, compensation of the executive officers is not required to be determined by an independent committee. |
· | In lieu of a nomination committee comprised of independent directors, our Board of Directors will be responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to board committees. Shareholders may also identify and recommend potential candidates to become candidates to become board members in writing. No formal written charter has been prepared or adopted because this process is outlined in our bylaws. |
· | In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands law requirements, a related party transaction will be permitted if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors and the Board of Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of Directors as defined in Section 55 of the Marshall Islands Business Corporations Act, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest are disclosed and the shareholders are entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a simple majority vote of the shareholders; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. |
· | As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may designate in writing a proxy to act on their behalf. |
· | In lieu of holding regular meetings at which only independent directors are present, our entire Board of Directors, a majority of whom are independent, will hold regular meetings as is consistent with the laws of the Republic of the Marshall Islands. |
· | The Board of Directors adopted a new Equity Incentive Plan in May 2018. Shareholder approval was not necessary since Marshall Islands law permits the Board of Directors to take such actions. |
· | As a foreign private issuer, we are not required to obtain shareholder approval if any of our directors, officers, or 5% or greater shareholders has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company, or assets to be acquired, or in the consideration to be paid in the transaction(s) and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common stock or voting power of 5% or more. |
· | In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company will comply with provisions of the Marshall Islands Business Corporations Act, providing that the Board of Directors approves share issuances. |
Item 7. | Major Shareholders and Related Party Transactions |
Name of Beneficial Owner (1) | Number of Shares of Voting Common Stock Beneficially Owned | Percent of Voting of common Stock (13) | Number of Shares of Voting Series B Preferred Stock Beneficially Owned (14) | Percent of Voting of Series B Preferred Shares (14) | Number of Shares of Voting Common Stock Beneficially Owned Upon Conversion; 50% Voting Before Conversion | Percent of Total Voting Securities | ||||||||||||||||||
Friends Investment Company Inc.(2) | 3,704,048 | 29.6 | % | - | - | 22.0 | % | |||||||||||||||||
Tennenbaum Opportunities Fund VI, LLC (3, 4) | 291,600 | 2.3 | % | 16,031 | 81.4 | % | 3,500,218 | 22.6 | % | |||||||||||||||
Tennenbaum Opportunities Partners V, LP (3, 4) | 608,400 | 4.9 | % | - | - | - | 3.6 | % | ||||||||||||||||
Family United Navigation Co | 559,823 | 4.5 | % | - | - | - | 3.3 | % | ||||||||||||||||
Preferred Friends Investment Company Inc(4) | - | - | 3,655 | 18.6 | % | 798,035 | 4.8 | % | ||||||||||||||||
Aristides J Pittas(5) | 97,093 | * | - | - | - | * | ||||||||||||||||||
George Taniskidis(6) | 4,155 | * | - | - | - | * | ||||||||||||||||||
Panagiotis Kyriakopoulos(7) | 33,415 | * | - | - | - | * | ||||||||||||||||||
Aristides P Pittas(8) | 13,070 | * | - | - | - | * | ||||||||||||||||||
Anastasios Aslidis(9) | 67,186 | * | - | - | - | * | ||||||||||||||||||
Apostolos Tamvakakis(10) | 7,078 | * | - | - | - | * | ||||||||||||||||||
Christian Donohue | - | * | - | - | - | * | ||||||||||||||||||
Stephania Karmiri(11) | - | * | - | - | - | * | ||||||||||||||||||
Symeon Pariaros(12) | 4,155 | * | - | - | - | * | ||||||||||||||||||
All directors and officers and 5% owners as a group | 5,390,023 | 43.1 | % | 19,686 | 100 | % | 4,298,253 | 57.6 | % |
(1) | Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him/her. |
(2) | Represents 3,704,048 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the members on its Board of Directors. |
(3) | Tennenbaum Capital Partners, LLC serves as investment advisor to, inter alia, Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC, which are the registered holders of the Common Shares and Series B Preferred Shares of Euroseas Ltd. beneficially owned by Tennenbaum Capital Partners, LLC. Tennenbaum Capital Partners, LLC is indirectly controlled by BlackRock, Inc., which may be deemed to have beneficial ownership of shares beneficially owned by Tennenbaum Capital Partners, LLC. The address of Tennenbaum Opportunities Partners V, LP, Tennenbaum Opportunities |
Fund V, LLC and Tennenbaum Capital Partners, LLC is 2951 28th Street, Suite 1000, Santa Monica, CA 90405. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC currently hold (a) 900,000 shares of common stock and (b) Series B Preferred Shares that are convertible into 3,500,218 shares of common stock. |
(4) | Common shares are issuable upon conversion of Series B Preferred Shares (or any convertible notes into which the Series B Preferred Shares may convert) owned by this shareholder (based on the current conversion ratio). |
(5) | Does not include 482,991 shares of common stock held of record by Friends, by virtue of ownership interest in Friends by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 1,041 Series B Preferred Shares held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc. by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 11,140 shares vesting on July 1, 2019, 13,925 shares of common stock vesting on November 16, 2019 and 13,925 shares vesting on November 16, 2020. |
(6) | Does not include 17,005 shares held of record by Friends, by virtue of Mr. Taniskidis' ownership in Friends. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 96 Series B Preferred Shares held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc. by Mr. Taniskidis and members of his family. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 1,185 shares vesting on July 1, 2019, 1,485 shares of common stock vesting on November 16, 2019 and 1,485 shares vesting on November 16, 2020. |
(7) | Includes 1,185 shares vesting on July 1, 2019, 1,485 shares of common stock vesting on November 16, 2019 and 1,485 shares vesting on November 16, 2020. |
(8) | Does not include 427,911 shares of common stock held of record by Friends and Family United Navigation Co., by virtue of ownership interest in Friends and Family United Navigation Co. of Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 24 shares of Series B Preferred stock held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc.by Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 3,040 shares vesting on July 1, 2019, 3,800 shares of common stock vesting on November 16, 2019 and 3,800 shares vesting on November 16, 2020. |
(9) | Includes 7,560 shares vesting on July 1, 2019, 9,450 shares of common stock vesting on November 16, 2019 and 9,450 shares vesting on November 16, 2020. |
(10) | Includes 1,185 shares vesting on July 1, 2019, 1,485 shares of common stock vesting on November 16, 2019 and 1,485 shares vesting on November 16, 2020. |
(11) | Does not include 465 shares of common stock held of records by Friends, by virtue of Mrs. Karmiri's ownership in Friends. Mrs. Karmiri disclaims beneficial ownership except to the extent of her pecuniary interest. |
(12) | Includes 1,185 shares vesting on July 1, 2019, 1,485 shares of common stock vesting on November 16, 2019 and 1,485 shares vesting on November 16, 2020. |
(13) | Voting stock includes 175,585 unvested shares for a total of 12,515,645 issued and outstanding shares of the Company as of April 22, 2019. |
(14) | As of April 22, 2019, Series B Preferred Shares vote on an as-converted basis weighted by 50%. |
Item 8. | Financial Information |
Item 9. | The Offer and Listing |
Item 10. | Additional Information |
· | we are organized in a foreign country, or our country of organization, that grants an "equivalent exemption" to corporations organized in the United States; and |
· | more than 50% of the value of our stock is owned, directly or indirectly, by "qualified shareholders," individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test," or |
· | our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test." |
· | 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. |
· | 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 our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as "passive assets". |
· | such gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States, if the Non-U.S. Holder is entitled to the benefits of a United States 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. |
· | fails to provide an accurate taxpayer identification number; |
· | is notified by the IRS that he failed to report all interest or dividends required to be shown on your United States federal income tax returns; or |
· | in certain circumstances, fails to comply with applicable certification requirements. |
Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
Year Ended December 31, | Amount in $ (loans) | Amount in $ (swap) | ||||||
2019 | 342,335 | (40,548 | ) | |||||
2020 | 290,215 | - | ||||||
2021 | 167,938 | - | ||||||
2022 | - | - | ||||||
2023 and thereafter | - | - |
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 |
Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Ethics |
Item 16C. | Principal Accountant Fees and Services |
2017 (dollars in thousands) | 2018 (dollars in thousands) | |||||||
Audit Fees | $ | 290 | $ | 288 | ||||
Audit related fees | - | - | ||||||
Tax fees | - | - | ||||||
All other fees / expenses | - | - | ||||||
Total | $ | 290 | $ | 288 |
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 Registrant's Certifying Accountant |
Item 16G. | Corporate Governance |
Item 16H. | Mine Safety Disclosure |
Item 17. | Financial Statements |
Item 18. | Financial Statements |
Item 19. | Exhibits |
1.1 | |
1.2 | |
1.3 | |
2.1 | |
2.2 | |
2.3 | |
2.4 | |
2.5 | |
2.6 | |
2.7 | |
2.8 | |
3.1 | |
4.1 | |
4.2 | |
4.3 | |
4.4 | |
4.5 | |
4.6 | |
4.7 | |
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 | |
4.31 | |
4.32 | |
4.33 | |
4.34 | |
4.35 | |
4.36 | |
4.37 | |
4.38 | |
4.39 | |
4.40 | |
4.41 | |
4.42 |
4.43 | |
4.44 | |
4.45 | |
4.46 | |
4.47 | |
4.48 | |
4.49 | |
4.50 | |
4.51 | |
4.52 | |
4.53 | |
4.54 | |
4.55 | |
4.56 | |
4.57 | Euroseas 2018 Equity Incentive Plan |
4.58 | Revolving Credit Facility Agreement between Euroseas Ltd., as borrower, and Eurobank Ergasias, S.A., as arranger, relating to a revolving credit facility of up to US$45,000,000 dated November 21, 2018 |
8.1 | |
12.1 | |
12.2 | |
13.1 | |
13.2 | |
15.1 | |
101.INS* | XBRL Instance Document |
101.SCH* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
(1) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-129145) on October 20, 2005. |
(2) | Filed as an Exhibit to the Company's Amendment No.1 to Registration Statement (File No. 333-129145) on December 5, 2005. |
(3) | Filed as an Exhibit to the Company's Post-Effective Amendment No. 1 to Registration Statement (File No. 333-129145) on September 12, 2006. |
(4) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-138780) on November 17, 2006. |
(5) | Filed as an Exhibit to the Company's Amendment No. 4 to Registration Statement (File No. 333-138780) on January 29, 2007. |
(6) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 13, 2008. |
(7) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-152089) on July 2, 2008. |
(8) | Filed as an Exhibit to the Company's Post-Effective Amendment No. 1 to Registration Statement (File No. 333-148124) on July 17, 2008. |
(9) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 18, 2009. |
(10) | Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 18, 2009. |
(11) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 28, 2010. |
(12) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 27, 2011. |
(13) | Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 25, 2012. |
(14) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 27, 2012. |
(15) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 2, 2016. |
EUROSEAS LTD. | |||
(Registrant) | |||
By: | /s/ Aristides J. Pittas | ||
Aristides J. Pittas | |||
Chairman, President and CEO | |||
Date: April 25, 2019 | |||
Pages | ||
Report of Independent Registered Public Accounting Firm | F-2 | |
Consolidated Balance Sheets as of December 31, 2017 and 2018 | F-3 | |
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2017 and 2018 | F-5 | |
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2016, 2017 and 2018 | F-6 | |
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2017 and 2018 | F-7 | |
Notes to the Consolidated Financial Statements | F-10 |
Notes | 2017 | 2018 | ||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 2,858,927 | 6,960,258 | ||||||||||
Restricted cash | 7 | 1,103,953 | 117,063 | |||||||||
Trade accounts receivable, net | 885,495 | 958,705 | ||||||||||
Other receivables | 965,037 | 2,031,415 | ||||||||||
Inventories | 3 | 1,193,018 | 1,704,391 | |||||||||
Prepaid expenses | 247,039 | 222,336 | ||||||||||
Vessel held for sale | 4 | 4,914,782 | - | |||||||||
Total current assets, continuing operations | 12,168,251 | 11,994,168 | ||||||||||
Current assets of discontinued operations | 3,914,117 | - | ||||||||||
Total current assets | 16,082,368 | 11,994,168 | ||||||||||
Long-term assets | ||||||||||||
Vessels, net | 4 | 52,132,079 | 48,826,128 | |||||||||
Restricted cash | 7 | 4,334,267 | 6,134,267 | |||||||||
Due from spun-off subsidiary | 24,585,518 | - | ||||||||||
Long-term assets of discontinued operations | 65,195,329 | - | ||||||||||
Total assets | 162,329,561 | 66,954,563 | ||||||||||
Liabilities, mezzanine equity and shareholders’ equity | ||||||||||||
Current liabilities | ||||||||||||
Long-term bank loans, current portion | 7 | 4,203,261 | 4,870,241 | |||||||||
Trade accounts payable | 1,522,473 | 2,288,525 | ||||||||||
Accrued expenses | 5 | 1,117,110 | 1,301,805 | |||||||||
Deferred revenues | 590,178 | 417,634 | ||||||||||
Due to related company | 6 | 4,986,836 | 2,672,895 | |||||||||
Derivatives | 13, 16 | 229,451 | 41,435 | |||||||||
Total current liabilities, continuing operations | 12,649,309 | 11,592,535 | ||||||||||
Current liabilities of discontinued operations | 5,883,288 | - | ||||||||||
Total current liabilities | 18,532,597 | 11,592,535 |
Notes | December 31, 2017 | December 31, 2018 | ||||||||||
Long-term liabilities | ||||||||||||
Long-term bank loans, net of current portion | 7 | 29,811,241 | 31,716,549 | |||||||||
Derivatives | 13, 16 | 16,631 | - | |||||||||
Vessel profit participation liability | 7 | 1,297,100 | 1,067,500 | |||||||||
Total long-term liabilities, continuing operations | 31,124,972 | 32,784,049 | ||||||||||
Long-term liabilities of discontinued operations | 30,364,035 | - | ||||||||||
Total long-term liabilities | 61,489,007 | 32,784,049 | ||||||||||
Total liabilities | 80,021,604 | 44,376,584 | ||||||||||
Commitments and contingencies | 9 | |||||||||||
Mezzanine Equity | ||||||||||||
Preferred shares (par value $0.01, 20,000,000 shares authorized, 37,314 and 19,605 issued and outstanding, respectively) | 15 | 35,613,759 | 18,757,361 | |||||||||
Shareholders’ equity | ||||||||||||
Common stock (par value $0.03, 200,000,000 shares authorized, 11,274,126 and 12,515,645 issued and outstanding) | 18 | 338,230 | 375,476 | |||||||||
Additional paid-in capital | 284,236,597 | 233,668,127 | ||||||||||
Accumulated deficit | (237,880,629 | ) | (230,222,985 | ) | ||||||||
Total shareholders’ equity | 46,694,198 | 3,820,618 | ||||||||||
Total liabilities, mezzanine equity and shareholders’ equity | 162,329,561 | 66,954,563 |
Notes | 2016 | 2017 | 2018 | |||||||||||||
Revenues | ||||||||||||||||
Time charter revenue | 21,409,236 | 24,278,048 | 36,062,202 | |||||||||||||
Voyage charter revenue | 47,979 | 559,319 | 206,682 | |||||||||||||
Related party management fee income | 14 | 240,000 | 240,000 | - | ||||||||||||
Commissions (including, $268,658, $310,467 and $453,361, respectively, to related party) | 6, 12 | (1,151,879 | ) | (1,318,248 | ) | (1,844,147 | ) | |||||||||
Net revenue, continuing operations | 20,545,336 | 23,759,119 | 34,424,737 | |||||||||||||
Operating expenses | ||||||||||||||||
Voyage expenses | 12 | 1,209,085 | 1,564,489 | 1,261,088 | ||||||||||||
Vessel operating expenses (including, $175,761, $190,723 and $256,069, respectively, to related party) | 6, 12 | 13,853,444 | 15,019,342 | 19,986,170 | ||||||||||||
Other operating income | - | (499,103 | ) | - | ||||||||||||
Dry-docking expenses | 2,204,784 | 571,291 | 2,774,924 | |||||||||||||
Vessel depreciation | 4 | 4,959,487 | 3,585,965 | 3,305,951 | ||||||||||||
Related party management fees | 6 | 2,399,461 | 2,632,637 | 3,536,094 | ||||||||||||
Other general and administrative expenses (including $1,479,374, $1,306,476 and $1,561,126, respectively, to related party) | 6, 10 | 2,673,594 | 2,502,203 | 2,565,502 | ||||||||||||
Net gain on sale of vessels (including $27,741, $70,640 and $64,500 to related party) | 4, 6 | (10,597 | ) | (803,811 | ) | (1,340,952 | ) | |||||||||
Loss on write-down of vessels held for sale (including $29,469, $0 and $0, respectively, to related party) | 4, 6 | 5,924,668 | 4,595,819 | - | ||||||||||||
Total operating expenses, continuing operations | 33,213,926 | 29,168,832 | 32,088,777 | |||||||||||||
Operating (loss) / income, continuing operations | (12,668,590 | ) | (5,409,713 | ) | 2,335,960 | |||||||||||
Other income/(expenses) | ||||||||||||||||
Interest and other financing costs | (1,370,830 | ) | (1,554,695 | ) | (3,050,768 | ) | ||||||||||
(Loss) / gain on derivatives, net | 13 | (119,154 | ) | 12,389 | (44,343 | ) | ||||||||||
Other investment income | 14 | 1,024,714 | - | - | ||||||||||||
Impairment of other investment | 14 | (4,421,452 | ) | - | - | |||||||||||
Foreign exchange (loss) / gain | (31,033 | ) | (30,214 | ) | 13,963 | |||||||||||
Interest income | 22,277 | 37,972 | 81,792 | |||||||||||||
Other expenses, net, continuing operations | (4,895,478 | ) | (1,534,548 | ) | (2,999,356 | ) | ||||||||||
Equity loss in joint venture | 14 | (2,444,627 | ) | - | - | |||||||||||
Impairment in joint venture | 14 | (14,071,075 | ) | - | - | |||||||||||
Net loss, continuing operations | (34,079,770 | ) | (6,944,261 | ) | (663,396 | ) | ||||||||||
Dividends to Series B preferred shares | 15 | (1,725,699 | ) | (1,808,811 | ) | (1,335,733 | ) | |||||||||
Net loss attributable to common shareholders, continuing operations | (35,805,469 | ) | (8,753,072 | ) | (1,999,129 | ) | ||||||||||
Loss per share attributable to common shareholders - basic and diluted, continuing operations | 11 | (4.38 | ) | (0.79 | ) | (0.18 | ) | |||||||||
Weighted average number of shares outstanding during the year, basic and diluted | 11 | 8,165,703 | 11,067,524 | 11,318,197 | ||||||||||||
Net (loss) / income attributable to common shareholders, discontinued operations | 17 | (10,141,353 | ) | 849,701 | 554,506 | |||||||||||
Net loss attributable to common shareholders | (45,946,822 | ) | (7,903,371 | ) | (1,444,623 | ) |
Number of Shares Outstanding | Common Stock Amount | Additional Paid - in Capital | Accumulated Deficit | Total | ||||||||||||||||
Balance December 31, 2015 | 8,195,760 | 245,873 | 278,833,156 | (184,030,436 | ) | 95,048,593 | ||||||||||||||
Net loss attributable to common shareholders | - | - | - | (45,946,822 | ) | (45,946,822 | ) | |||||||||||||
Issuance of shares from private placement, net of issuance costs | 719,425 | 21,583 | 978,417 | - | 1,000,000 | |||||||||||||||
Issuance of shares for vessel acquisition, net of issuance costs | 900,000 | 27,000 | 1,773,000 | - | 1,800,000 | |||||||||||||||
Issuance of shares sold at the market (ATM), net of issuance costs | 978,847 | 29,365 | 1,881,287 | - | 1,910,652 | |||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation | 82,080 | 2,462 | 291,879 | - | 294,341 | |||||||||||||||
Balance December 31, 2016 | 10,876,112 | 326,283 | 283,757,739 | (229,977,258 | ) | 54,106,764 | ||||||||||||||
Net loss attributable to common shareholders | - | - | - | (7,903,371 | ) | (7,903,371 | ) | |||||||||||||
Issuance of shares sold at the market (ATM), net of issuance costs | 301,780 | 9,060 | 365,183 | - | 374,243 | |||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation | 100,270 | 3,008 | 113,554 | - | 116,562 | |||||||||||||||
Shares forfeited | (4,036 | ) | (121 | ) | 121 | - | - | |||||||||||||
Balance December 31, 2017 | 11,274,126 | 338,230 | 284,236,597 | (237,880,629 | ) | 46,694,198 | ||||||||||||||
Net loss attributable to common shareholders | - | - | - | (1,999,129 | ) | (1,999,129 | ) | |||||||||||||
Spin-off of EuroDry Ltd. to stockholders | - | - | (52,520,821 | ) | 9,656,773 | (42,864,048 | ) | |||||||||||||
Issuance of shares sold at the market (ATM), net of issuance costs | 1,116,069 | 33,482 | 1,831,628 | - | 1,865,110 | |||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation | 125,450 | 3,764 | 120,723 | - | 124,487 | |||||||||||||||
Balance December 31, 2018 | 12,515,645 | 375,476 | 233,668,127 | (230,222,985 | ) | 3,820,618 |
2016 | 2017 | 2018 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | (34,079,770 | ) | (6,944,261 | ) | (663,396 | ) | ||||||
Adjustments to reconcile net loss to net cash (used in)/ provided by operating activities: | ||||||||||||
Depreciation of vessels | 4,959,487 | 3,585,965 | 3,305,951 | |||||||||
Other operating income | - | (499,103 | ) | - | ||||||||
Loss on write-down of vessels held for sale | 5,924,668 | 4,595,819 | - | |||||||||
Amortization and write off of deferred charges | 141,883 | 113,244 | 321,181 | |||||||||
Amortization of debt discount | - | 60,988 | 465,507 | |||||||||
Net gain on sale of vessels | (10,597 | ) | (803,811 | ) | (1,340,952 | ) | ||||||
Share-based compensation | 294,341 | 116,562 | 124,487 | |||||||||
Unrealized (gain) / loss on derivatives | (12,921 | ) | 5,901 | (204,647 | ) | |||||||
Other investment income | (1,024,714 | ) | - | - | ||||||||
Impairment of other investment | 4,421,452 | - | - | |||||||||
Equity loss and impairment of investment in joint venture | 16,515,702 | - | - | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) / decrease in: | ||||||||||||
Trade accounts receivable | 217,517 | (91,604 | ) | (73,210 | ) | |||||||
Prepaid expenses | 2,639 | (117,793 | ) | 24,703 | ||||||||
Other receivables | 378,811 | (210,741 | ) | (1,066,378 | ) | |||||||
Inventories | 344,578 | 329,244 | (511,373 | ) | ||||||||
Increase / (decrease) in: | ||||||||||||
Due to related company | (2,876,104 | ) | 4,314,415 | (2,732,256 | ) | |||||||
Trade accounts payable | 459,912 | 197,782 | 766,052 | |||||||||
Accrued expenses | (654,127 | ) | 167,016 | 282,045 | ||||||||
Deferred revenues | (90,825 | ) | 233,402 | (172,544 | ) | |||||||
Net cash (used in) / provided by operating activities of continuing operations | (5,088,067 | ) | 5,053,025 | (1,474,830 | ) | |||||||
Cash flows from investing activities: | ||||||||||||
Cash paid for capitalized expenses and vessel acquisition | (3,086,812 | ) | (30,063,480 | ) | (1,867 | ) | ||||||
Cash released from other investment | - | 4,000,000 | - | |||||||||
Proceeds from sale of vessels | 4,196,268 | 9,552,260 | 6,255,735 | |||||||||
Net cash provided by / (used in) investing activities of continuing operations | 1,109,456 | (16,511,220 | ) | 6,253,868 | ||||||||
2016 | 2017 | 2018 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of common stock, net of commissions paid | 3,168,058 | 549,495 | 1,975,110 | |||||||||
Investment in subsidiary spun-off | (8,823,927 | ) | (915,525 | ) | (3,298,356 | ) | ||||||
Due from spun-off subsidiary | (725,620 | ) | 639,312 | - | ||||||||
Offering expenses paid | (82,377 | ) | (341,072 | ) | (22,488 | ) | ||||||
Loan arrangement fees paid | (260,232 | ) | (187,637 | ) | (419,863 | ) | ||||||
Proceeds from long-term bank loans | 14,500,000 | 22,250,000 | 34,250,000 | |||||||||
Repayment of long-term bank loans | (16,117,125 | ) | (7,243,915 | ) | (32,349,000 | ) | ||||||
Proceeds from related party loan | 2,000,000 | - | - | |||||||||
Repayment of related party loan | - | (2,000,000 | ) | - | ||||||||
Net cash (used in) / provided by financing activities of continuing operations | (6,341,223 | ) | 12,750,658 | 135,403 | ||||||||
Net (decrease) / increase in cash, cash equivalents and restricted cash | (10,319,834 | ) | 1,292,463 | 4,914,441 | ||||||||
Cash, cash equivalents and restricted cash at beginning of year | 17,324,518 | 7,004,684 | 8,297,147 | |||||||||
Cash, cash equivalents and restricted cash at end of year, continuing operations | 7,004,684 | 8,297,147 | 13,211,588 | |||||||||
Cash breakdown | ||||||||||||
Cash and cash equivalents | 2,616,984 | 2,858,927 | 6,960,258 | |||||||||
Restricted cash, current | 153,432 | 1,103,953 | 117,063 | |||||||||
Restricted cash, long term | 4,234,268 | 4,334,267 | 6,134,267 | |||||||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows, continuing operations | 7,004,684 | 8,297,147 | 13,211,588 | |||||||||
Discontinued operations: | ||||||||||||
Net cash provided by operating activities of discontinued operations | 4,255,829 | 2,910,287 | 3,970,170 | |||||||||
Net cash used in investing activities of discontinued operations | (24,243,012 | ) | (9,635,504 | ) | (29,045,685 | ) | ||||||
Net cash provided by financing activities of discontinued operations | 20,472,737 | 9,283,359 | 27,928,885 |
Supplemental cash flow information Cash paid for interest, net of capitalized expenses | 1,238,422 | 1,174,863 | 2,475,631 | |||||||||
Financing, and investing activities fees: | ||||||||||||
Loan arrangement fees accrued | - | 74,863 | - | |||||||||
Offering expenses accrued | 178,308 | 12,488 | 100,000 | |||||||||
Payment-in-kind dividends | 1,725,699 | 1,808,811 | 1,335,733 | |||||||||
Capital expenditures included in liabilities | 142,947 | - | - | |||||||||
Shares issued as consideration for vessel acquisition including inventory on-board | 1,800,000 | - | - | |||||||||
Preferred shares distributed to EuroDry | - | - | 18,192,131 |
● | Allendale Investment S.A. incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 deadweight tons (“DWT”) / 1,169 twenty-foot equivalent (“TEU” – a measure of carrying capacity in containers) container carrier M/V “Kuo Hsiung”, which was built in 1993 and acquired on May 13, 2002. |
● | Alterwall Business Inc. incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V “Ninos” (previously named M/V “Quingdao I”) which was built in 1990 and acquired on February 16, 2001. |
● | Diana Trading Ltd. incorporated in the Republic of Marshall Islands on September 25, 2002, owner of the Marshall Islands flag 69,734 DWT bulk carrier M/V “Irini”, which was built in 1988 and acquired on October 15, 2002. M/V “Irini” was sold on July 10, 2013. |
● | Xenia International Corp., incorporated in the Republic of Marshall Islands on April 6, 2006, owner of the Marshall Islands flag 22,568 DWT / 950 TEU multipurpose M/V “Tasman Trader”, which was built in 1990 and acquired on April 27, 2006. On March 7, 2012, the vessel was renamed M/V “Anking”. The vessel was sold on June 4, 2013. |
● | Prospero Maritime Inc., incorporated in the Republic of Marshall Islands on July 21, 2006, owner of the Marshall Islands flag 69,268 DWT dry bulk M/V “Aristides N.P.”, which was built in 1993 and acquired on September 21, 2006. The vessel was sold on January 15, 2016. |
● | Xingang Shipping Ltd., incorporated in Republic of Liberia on October 16, 2006, owner of the Liberian flag 23,596 DWT / 1,599 TEU container carrier M/V “YM Xingang I” , which was built in February 1993 and acquired on November 15, 2006. On July 11, 2009, the vessel was renamed M/V “Mastro Nicos” and on November 5, 2009, it was renamed M/V “YM Port Kelang”. On October 25, 2011 the vessel was renamed M/V “Marinos”. The vessel was sold on November 26, 2015. |
● | Manolis Shipping Ltd., incorporated in the Republic of Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V “Manolis P”, which was built in 1995 and acquired on April 12, 2007. |
● | Eternity Shipping Company, incorporated in the Republic of Marshall Islands on May 17, 2007, owner of the Marshall Islands flag 30,007 DWT / 1,742 TEU container carrier M/V “Clan Gladiator”, which was built in 1992 and acquired on June 13, 2007. On May 9, 2008, M/V “Clan Gladiator” was renamed M/V “OEL Transworld” and on August 31, 2009 the vessel was renamed M/V “Captain Costas”. The vessel was sold on May 10, 2016. |
● | Pilory Associates Corp., incorporated in Panama on July 4, 2007, owner of the Panamanian flag 33,667 DWT / 1,932 TEU container carrier M/V “Despina P”, which was built in 1990 and acquired on August 13, 2007. The vessel was sold on December 28, 2015. |
● | Tiger Navigation Corp., incorporated in the Republic of Marshall Islands on August 29, 2007, owner of the Marshall Islands flag 31,627 DWT / 2,228 TEU container carrier M/V “Tiger Bridge”, which was built in 1990 and acquired on October 4, 2007. The vessel was sold on November 9, 2015. |
● | Noumea Shipping Ltd, incorporated in the Republic of Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V “Maersk Noumea”, renamed “Evridiki G”, which was built in 2001 and acquired on May 22, 2008. |
● | Saf-Concord Shipping Ltd., incorporated in the Republic of Liberia on June 8, 2008, owner of the Liberian flag 46,667 DWT bulk carrier M/V “Monica P”, which was built in 1998 and acquired on January 19, 2009. The vessel was sold on June 25, 2018. |
● | Eleni Shipping Ltd., incorporated in the Republic of Liberia on February 11, 2009, owner of the Liberian flag 72,119 DWT bulk carrier M/V “Eleni P”, which was built in 1997, acquired on March 6, 2009 and sold on January 26, 2017. |
● | Aggeliki Shipping Ltd., incorporated in the Republic of Liberia on May 21, 2010, owner of the Liberian flag 30,306 DWT / 2008 TEU container carrier M/V “Aggeliki P” which was built in 1998, acquired on June 21, 2010 and sold on December 6, 2017. |
● | Joanna Maritime Ltd., incorporated in Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V “Joanna” which was built in 1999 and acquired on July 4, 2013. On January 8, 2016, the vessel has been renamed M/V “Vento di Grecale”. On March 17, 2017 the vessel was again renamed M/V “Joanna”. |
● | Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU container carrier M/V “Aegean Express” which was built in 1997 and acquired on September 29, 2016. |
● | Hull 2 Shipping Ltd., incorporated in the Republic of the Marshall Islands on December 30, 2013, owner of the Marshall Islands flag 20,976 DWT / 1,645 TEU container carrier M/V “RT Dagr” which was built in 1998 and acquired on December 23, 2017. The vessel was sold on January 31, 2017. |
● | Gregos Shipping Ltd., incorporated in the Republic of Liberia on May 25, 2017, owner of the Liberian flag 35,600 DWT / 2,788 TEU container carrier M/V “EM Astoria” which was built in 2004 and acquired on June 20, 2017. |
● | Athens Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Athens” which was built in 2000 and acquired on September 29, 2017. |
● | Corfu Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 34,654 DWT / 2,556 TEU container carrier M/V “EM Corfu” which was built in 2001 and acquired on October 29, 2017. |
● | Oinousses Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Oinousses” which was built in 2000 and acquired on October 23, 2017. |
● | Bridge Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 71,366 DWT / 5,610 TEU container carrier M/V “Akinada Bridge” which was built in 2001 and acquired on December 21, 2017. |
Year ended December 31, | ||||||||||||
Charterer | 2016 | 2017 | 2018 | |||||||||
CMA CGM, Marseille | 19 | % | 34 | % | 51 | % | ||||||
New Golden Sea Shipping Pte. Ltd., Singapore | 30 | % | 31 | % | 33 | % | ||||||
MSC Geneva | 22 | % | 17 | % | 11 | % |
2. | Significant Accounting Policies - continued |
2. | Significant Accounting Policies - continued |
2. | Significant Accounting Policies - continued |
2. | Significant Accounting Policies - continued |
2. | Significant Accounting Policies - continued |
2. | Significant Accounting Policies - continued |
3. | Inventories |
2017 | 2018 | |||||||
Lubricants | 1,107,571 | 1,043,763 | ||||||
Victualing | 85,447 | 79,965 | ||||||
Bunkers | - | 580,663 | ||||||
Total | 1,193,018 | 1,704,391 |
4. | Vessels, net |
Costs | Accumulated Depreciation | Net Book Value | ||||||||||
Balance, January 1, 2017 | 58,665,385 | (17,520,010 | ) | 41,145,375 | ||||||||
- Depreciation for the year | - | (3,585,965 | ) | (3,585,965 | ) | |||||||
- Vessel Acquisitions | 30,015,188 | - | 30,015,188 | |||||||||
- Sale of vessels | (9,318,842 | ) | 2,110,762 | (7,208,080 | ) | |||||||
- Vessels held for sale | (18,081,755 | ) | 9,847,316 | (8,234,439 | ) | |||||||
Balance, December 31, 2017 | 61,279,976 | (9,147,897 | ) | 52,132,079 | ||||||||
- Depreciation for the year | - | (3,305,951 | ) | (3,305,951 | ) | |||||||
Balance, December 31, 2018 | 61,279,976 | (12,453,848 | ) | 48,826,128 |
4. | Vessels, net - continued |
4. | Vessels, net - continued |
As of December 31, 2017 | As of December 31, 2018 | |||||||
Accrued payroll expenses | 210,664 | 93,404 | ||||||
Accrued interest expense | 262,546 | 565,623 | ||||||
Accrued deferred charges | 74,863 | - | ||||||
Accrued general and administrative expenses | 209,161 | 348,761 | ||||||
Accrued commissions | 100,793 | 39,545 | ||||||
Other accrued expenses | 259,083 | 254,472 | ||||||
Total | 1,117,110 | 1,301,805 |
6. | Related Party Transactions |
6. | Related Party Transactions - continued |
7. | Long-Term Debt |
Borrower | December 31, 2017 | December 31, 2018 | |||||||
Noumea Shipping Ltd. | (a) | 5,640,000 | 3,341,000 | ||||||
Gregos Shiping Ltd. | (b) | 4,550,000 | 4,150,000 | ||||||
Alterwall Business Inc. / Allendale Investments S.A. / Manolis Shipping Ltd. / Joanna Maritime Ltd. / Jonathan John Shipping Ltd. | (c) | 7,900,000 | - | ||||||
Athens Shipping Ltd. / Oinousses Navigation Ltd. / Corfu Navigation ltd. / Bridge Shipping Ltd. | (d) | 17,500,000 | - | ||||||
Alterwall Business Inc. / Allendale Investments S.A. / Manolis Shipping Ltd. / Joanna Maritime Ltd. / Jonathan John shipping Ltd. / Athens Shipping Ltd. / Oinousses Navigation Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. | (e) | - | 30,000,000 | ||||||
35,590,000 | 37,491,000 | ||||||||
Less: Current portion | (4,699,028 | ) | (5,212,000 | ) | |||||
Long-term portion | (30,890,972 | ) | (32,279,000 | ) | |||||
Deferred charges, current portion | 142,767 | 125,357 | |||||||
Deferred charges, long-term portion | 196,619 | 237,848 | |||||||
Debt discount, current portion | 353,000 | 216,402 | |||||||
Debt discount, long-term portion | 883,112 | 324,603 | |||||||
Long-term debt, current portion net of deferred charges and debt discount | 4,203,261 | 4,870,241 | |||||||
Long-term debt, long-term portion net of deferred charges and debt discount | 29,811,241 | 31,716,549 |
To December 31: | ||||
2019 | 5,212,000 | |||
2020 | 5,212,000 | |||
2021 | 27,067,000 | |||
2022 | - | |||
2023 | - | |||
Thereafter | - | |||
Total | 37,491,000 |
(a) | On December 22, 2016, the supplemental agreement with Noumea Shipping Ltd., owner of M/V “Evridiki G” was signed in order to refinance the final quarterly instalment of $720,000 and the balloon payment of $6,360,000 originally due in December 2016. The borrower and the lender agreed to amend the repayment profile in respect of the loan of which $7,080,000 remained outstanding as of the date of the supplemental agreement and to extend the final maturity date to January 2018. The loan will be repaid with three repayments of $720,000 each, due in December 2016, in July 2017 and in January 2018 together with the balloon payment of $4,920,000 due in January 2018. On February 27, 2018, the Company signed and drew a term loan facility with Credit Agricole in order to refinance the existing indebtedness of M/V “Evridiki G” with the bank. This is a $4,250,000 loan drawn by Noumea Shipping Ltd. as Borrower. The loan is payable in fourteen consecutive quarterly instalments. Thirteen of $303,000 each and a final instalment in the amount of $311,000. The margin of the loan is 3.00% above LIBOR. The security cover ratio covenant is set to 130%. The loan is secured with the following: (i) first priority mortgages over M/V “Evridiki G” and collateral vessel (M/V “EM Astoria”), (ii) first assignment of earnings and insurance and (iii) other covenants and guarantees similar to the remaining loans of the Company. |
(b) | On June 15, 2017, the Company signed a term loan facility with Credit Agricole and on June 19, 2017 a loan of $4,750,000 was drawn by Gregos Shipping Ltd. to partly finance the purchase of M/V “EM Astoria”. The loan is payable in twenty or sixteen consecutive equal quarterly installments of $100,000 plus a balloon amount of $2,750,000 or $3,150,000 (the debt repayment schedule shown in the previous table assumes repayment in sixteen quarters). The margin of the loan is 2.65% above LIBOR. The loan is secured with (i) first priority mortgages over M/V “EM Astoria”, (ii) first assignment of earnings and insurance of M/V “EM Astoria”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $50,000 for this loan. The Company has also entered into a profit sharing agreement with Credit Agricole whereby it will share with the bank 35% of the excess of the fair market value of the vessel over the outstanding loan when the vessel is sold or when the loan matures. As a result of the lender's entitlement to participate in the appreciation of the market value of the mortgaged vessel, the Company has recognized a participation liability of amount $1,297,100 and $1,067,500 as of December 31, 2017 and 2018, respectively, presented in "Vessel profit participation liability" in the accompanying “Consolidated balance sheets”, with a corresponding debit to a debt discount account, presented contra to the loan balance. In addition, 35% of the cash flow after debt service will be set aside and be used to repay the balloon payment with any excess funds to be paid to the bank. |
(c) | On February 12, 2016, the Company signed and drew a term loan facility with Eurobank Ergasias S.A in order to refinance all of its existing facilities with the bank. This is a $14,500,000 loan drawn by Saf-Concord Shipping Ltd, Eternity Shipping Company, Allendale Investments S.A., Manolis Shipping Limited, Alterwall Business Inc., Aggeliki Shipping Ltd and Jonathan John Shipping Ltd. (which was cross-collateralized as per supplemental agreement dated September 27, 2016 replacing Eternity Shipping Company, the owner of M/V “Captain Costas” that was sold in 2016) as Borrowers. The loan is payable in twelve equal consecutive quarterly instalments of $460,000 each, with a balloon payment of $8,980,000 to be paid together with the last instalment in February 2019. The interest was based on LIBOR plus a margin of 6.00%. The loan is secured with the following: (i) first priority mortgages over M/V “Monica P”, M/V “Captain Costas” replaced by M/V “Aegean Express” after her sale, M/V “Kuo Hsuing”, M/V “Manolis P”, M/V “Ninos”, M/V “Aggeliki P”, (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd and other covenants and guarantees similar to the rest of the loans of the Company, and (iv) a $2,800,000 cash collateral deposit pledged in favor of the bank. The Company paid loan arrangement fees of $247,500 for this loan. In August 2017, the Company applied $1 million from the pledged amount against the loan and prepaid an amount of $540,000 deducted from the balloon payment and made a prepayment of $460,000 that referred to the installment of the fourth quarter of 2017. In November 2017, the Company agreed with the lender to release M/V “Monica P.” from the mortgage and substitute it with M/V “Joanna”. In connection with this substitution, the Company prepaid an amount of $460,000 referring to the installment due in the first quarter of 2018 and another $280,000 deducted from the balloon payment. In December 2017, M/V “Aggeliki P.” was sold for scrap. An amount of $2,100,000 from the sale of the vessel was prepaid, from which an amount of $1,840,000 was applied against the final four instalments and an amount of $260,000 was deducted from the balloon payment of the loan. Following the prepayments mentioned above, the balloon payment was reduced to $7.9 million with the repayment of the loan resuming in February 2019. The loan was refinanced in November 2018 (See note 7-(e)). |
(d) | On October 19, 2017, the Company signed a term loan facility with Eurobank Ergasias S.A for an amount of $17,500,000. The loan was used to partially finance the acquisition of M/V “EM Athens”, M/V “EM Oinousses”, M/V “EM Corfu” and M/V “Akinada Bridge”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on December 21, 2017.The loan is payable in five consecutive equal quarterly installments of $500,000 followed by eleven consecutive equal quarterly installments of $800,000 and a balloon payment of $6,200,000. The loan bears interest at LIBOR plus a margin of 4.5%. The loan is secured with (i) first priority mortgages over M/V “EM Athens”, M/V “EM Oinousses”, M/V “EM Corfu” and M/V “Akinada Bridge”, (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $137,638 within 2017 and another $54,862 within 2018 for this loan. The loan was refinanced in November 2018 (See note 7-(e)). |
(e) | On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A (the “Lender”) for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 by Alterwall Business Inc., Allendale Investments S.A., Manolis Shipping Ltd., Joanna Maritime Ltd., Jonathan John Shipping Ltd., Athens Shipping Ltd., Oinousses Navigation Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. to fully refinance all of the Company’s existing facilities with this bank and provide working capital. The revolving tranche will be available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and can be renewed subject to the bank’s approval and a fee to be determined. The loan is payable in 12 equal consecutive quarterly principal installments of $900,000 and the balance will be repaid through balloon payment of $19,200,000 together with the last principal installment in November 2021. Each quarterly principal instalment paid is added to the revolving tranche and may be redrawn. The interest rate margin is 4.40% over LIBOR. The loan is secured with (i) first priority mortgage over M/V “Ninos”, M/V “Kuo Hsiung”, M/V “Aegean Express”, M/V “Manolis P.” M/V “Joanna”, M/V “EM Athens”, M/V “EM Oinousses”, M/V “EM Corfu” and M/V “Akinada Bridge”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd and other covenants and guarantees similar to the remaining loan of the Company. The Company has the option (at the Lender’s absolute discretion) to substitute a Vessel by notifying the Lender in writing at least one (1) month prior to the intended substitution date, provided that: a) the substitute vessel is of a similar type, of the same or younger age, having the same or enhanced characteristics (including, without limitation, deadweight, lightweight, shipyard pedigree and technical specifications) and will be 100% owned by a shipowning company, incorporated in a jurisdiction acceptable to the Lender and owned by a ship owning company owned by the Company (directly or indirectly) and b) the new shipowning company provides a first preferred mortgage over the new vessel and a corporate guarantee in favor of the Lender and executes any other security documentation as may be requested by the Lender at its discretion. The Company paid loan arrangement fees of $300,000 for this loan. The remaining $15,000,000 of the revolving facility remains available to the company in order to finance up to 55% of the market value of post 2001 built ships. The new tranches will be repaid through sixteen quarterly principal instalments with the amount of each such instalment being equal to such amount so that the balloon amount to be equal to 50% of the initially drawn relevant tranche. |
9. | Commitments and Contingencies |
a) | On November 3, 2016 an award of 82,080 non-vested restricted shares, was made to 19 key persons of which 50% vested on November 1, 2017 and 50% vested on November 1, 2018; awards to officers and directors amounted to 48,048 shares and the remaining 34,032 shares were awarded to employees of Eurobulk. |
b) | On November 2, 2017 an award of 100,270 non-vested restricted shares, was made to 18 key persons of which 50% vested on July 1, 2018 and 50% will vest on July 1, 2019; awards to officers and directors amounted to 57,700 shares and the remaining 42,570 shares were awarded to employees of Eurobulk. |
c) | On November 21, 2018 an award of 125,450 non-vested restricted shares, was made to 18 key persons of which 50% will vest on November 16, 2019 and 50% will vest on November 16, 2020; awards to officers and directors amounted to 72,170 shares and the remaining 53,280 shares were awarded to employees of Eurobulk. |
Non-vested Shares | Shares | Weighted-Average Grant-Date Fair Value | ||||||
Non-vested on January 1, 2018 | 140,362 | 1.60 | ||||||
Granted | 125,450 | 1.07 | ||||||
Vested | (90,227 | ) | 1.52 | |||||
Non-vested on December 31, 2018 | 175,585 | 1.27 |
11. | Loss Per Share |
2016 | 2017 | 2018 | ||||||||||
Income: | ||||||||||||
Net loss attributable to common shareholders, continuing operations | (35,805,469 | ) | (8,753,072 | ) | (1,999,129 | ) | ||||||
Basic and diluted earnings per share: | ||||||||||||
Weighted average common shares – Outstanding, continuing operations | 8,165,703 | 11,067,524 | 11,318,197 | |||||||||
Basic and diluted loss per share, continuing operations | (4.38 | ) | (0.79 | ) | (0.18 | ) | ||||||
Net loss attributable to common shareholders, discontinued operations | (10,141,353 | ) | 849,701 | 554,506 | ||||||||
Net loss attributable to common shareholders | (45,946,822 | ) | (7,903,371 | ) | (1,144,623 | ) | ||||||
Basic and diluted loss per share | (5.63 | ) | (0.71 | ) | (0.10 | ) |
Year ended December 31, | ||||||||||||
2016 | 2017 | 2018 | ||||||||||
Voyage expenses | ||||||||||||
Port charges and canal dues | 386,290 | 1,156,511 | 384,893 | |||||||||
Bunkers | 822,795 | 407,978 | 876,195 | |||||||||
Total | 1,209,085 | 1,564,489 | 1,261,088 | |||||||||
Vessel operating expenses | ||||||||||||
Crew wages and related costs | 8,049,555 | 8,771,386 | 11,020,924 | |||||||||
Insurance | 1,249,942 | 1,261,976 | 1,537,539 | |||||||||
Repairs and maintenance | 232,082 | 643,788 | 1,043,632 | |||||||||
Lubricants | 1,190,137 | 1,169,412 | 1,665,849 | |||||||||
Spares and consumable stores | 2,290,196 | 2,391,420 | 3,445,422 | |||||||||
Professional and legal fees | 116,733 | 10,037 | 252,156 | |||||||||
Other | 724,799 | 771,323 | 1,020,648 | |||||||||
Total | 13,853,444 | 15,019,342 | 19,986,170 |
Derivatives not designated as hedging instruments | Balance Sheet Location | December 31, 2017 | December 31, 2018 | ||||||
Interest rate swap contracts | Current liabilities – Derivatives | 229,451 | 41,435 | ||||||
Interest rate swap contracts | Long-term liabilities – Derivatives | 16,631 | - | ||||||
Total derivative liabilities | 246,082 | 41,435 |
Derivatives not designated as hedging instruments | Location of gain (loss) recognized | Year Ended December 31, 2016 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | |||||||||
Interest rate swap contracts– Fair value | (Loss) / gain on derivatives, net | 12,921 | (5,901 | ) | 204,647 | ||||||||
Interest rate swap contracts - Realized (loss) / gain | (Loss) / gain on derivatives, net | (132,075 | ) | 19,071 | (201,745 | ) | |||||||
Total (Loss) / gain on interest rate swap contracts | (119,154 | ) | 13,170 | 2,902 |
FFA contracts not designated as hedging instruments | Location of gain (loss) recognized | Year Ended December 31, 2017 | Year Ended December 31, 2018 |
FFA contracts – Fair value | (Loss)/gain on derivatives, net | (781) | - |
FFA contracts – Realized gain/(loss) | (Loss)/gain on derivatives, net | - | (47,245) |
Total loss on FFA contracts | (781) | (47,245) |
14. | Investment in Joint Venture and Other Investment |
14. | Investment in Joint Venture and Other Investment - continued |
(In USD) | Other Investment | |||
Balance, January 1, 2016 | 7,396,738 | |||
Total gain for the period included in Investment income | 1,024,714 | |||
Impairment of other investment | (4,421,452 | ) | ||
Balance, December 31, 2016 | 4,000,000 | |||
Return of funds, September 22, 2017 | (4,000,000 | ) | ||
Balance, December 31, 2017 | - |
Number of Shares | Preferred Shares Amount | Dividends paid-in-kind | Total | |||||||||||||
Balance, January 1, 2016 | 33,779 | 29,000,000 | 3,079,249 | 32,079,249 | ||||||||||||
Dividends declared | 1,726 | - | 1,725,699 | 1,725,699 | ||||||||||||
Balance, December 31, 2016 | 35,505 | 29,000,000 | 4,804,948 | 33,804,948 | ||||||||||||
Dividends declared | 1,809 | - | 1,808,811 | 1,808,811 | ||||||||||||
Balance, December 31, 2017 | 37,314 | 29,000,000 | 6,613,759 | 35,613,759 | ||||||||||||
Dividends declared | 1,333 | - | 1,335,733 | 1,335,733 | ||||||||||||
Shares distributed to EuroDry | (19,042 | ) | (14,500,000 | ) | (3,692,131 | ) | (18,192,131 | ) | ||||||||
Balance, December 31, 2018 | 19,605 | 14,500,000 | 4,257,361 | 18,757,361 |
Fair Value Measurement as of December 31, 2018 | ||||
Total | (Level 1) | (Level 2) | (Level 3) | |
Liabilities | ||||
Interest rate swap contract, current portion | $41,435 | $41,435 |
Fair Value Measurement as of December 31, 2017 | ||||
Total | (Level 1) | (Level 2) | (Level 3) | |
Liabilities | ||||
Interest rate swap contracts, current portion | $229,451 | - | $229,451 | - |
Interest rate swap contracts, long-term portion | $16,631 | - | $16,631 | - |
December 31, 2016 | ||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Loss 2016 | ||||||||||||||||
Vessels held for sale | $ | 2,946,923 | - | $ | 2,946,923 | - | $ | 5,924,668 | ||||||||||||
Other investment | $ | 4,000,000 | - | - | $ | 4,000,000 | $ | 4,421,452 | ||||||||||||
Investment in joint venture | 0 | - | - | 0 | $ | 14,071,075 | ||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Loss 2017 | ||||||||||||||||
Vessels held for sale | $ | 5,000,000 | - | $ | 5,000,000 | - | $ | 4,595,819 | ||||||||||||
Vessel profit participating liability | $ | 1,297,100 | - | $ | 1,297,100 | - | - | |||||||||||||
December 31, 2018 | ||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Loss 2018 | ||||||||||||||||
Vessel profit participating liability | $ | 1,067,500 | - | $ | 1,067,500 | - | - |
17. | Discontinued Operations |
Year Ended December 31 (discontinued operations) | ||||||||||||
2016 | 2017 | 2018 | ||||||||||
Statement of Operations Data | ||||||||||||
Voyage revenue | 8,331,821 | 20,280,215 | 25,934,204 | |||||||||
Commissions (including, $104,148, $253,503 and $324,178, respectively, to related party) | (452,868 | ) | (1,122,196 | ) | (1,411,333 | ) | ||||||
Voyage expenses | (82,627 | ) | (2,396,318 | ) | (410,676 | ) | ||||||
Vessel operating expenses (including, $57,316, $102,131 and $115,026, respectively, to related party) | (4,308,418 | ) | (6,892,388 | ) | (9,183,152 | ) | ||||||
Drydocking expenses | - | (127,509 | ) | (1,465,079 | ) | |||||||
Related party management fees | (780,135 | ) | (1,409,716 | ) | (1,701,340 | ) | ||||||
Vessel depreciation | (3,828,634 | ) | (4,786,272 | ) | (5,422,155 | ) | ||||||
Other general and administrative expenses (including $520,626, $693,524 and $731,456, respectively, to related party) | (798,828 | ) | (917,160 | ) | (2,346,502 | ) | ||||||
Loss on termination and impairment of shipbuilding contracts | (7,050,179 | ) | - | - | ||||||||
Operating (loss) / income | (8,969,868 | ) | 2,628,656 | 3,993,967 | ||||||||
Total other expenses, net | (1,171,485 | ) | (1,778,955 | ) | (2,874,232 | ) | ||||||
Net income | (10,141,353 | ) | 849,701 | 1,119,735 | ||||||||
Dividend Series B Preferred Shares | - | - | (565,229 | ) | ||||||||
Net income attributable to discontinued operations | (10,141,353 | ) | 849,701 | 554,506 | ||||||||
Earnings per share attributable to common shareholders, basic and diluted | (6.21 | ) | 0.38 | 0.25 | ||||||||
Weighted average number of shares outstanding during period, basic and diluted | 1,633,141 | 2,213,505 | 2,232,821 |
17. | Discontinued Operations - continued |