Castor Maritime (US:CTRM)2025-05-14 20:11PART I Identity of Directors, Senior Management and Advisers This section of the report is marked as 'Not applicable', indicating no information is provided under these specific headings - The sections for Directors and Senior Management, Advisers, and Auditors are all marked as 'Not applicable'2324 Offer Statistics and Expected Timetable This section of the report is marked as 'Not applicable' - This section is not applicable as per the report25 Key Information This section outlines significant corporate events, including the 2023 tanker business spin-off, a 2024 reverse stock split, and the acquisition of a 74.09% stake in MPC Capital, alongside a comprehensive summary of related risk factors - On March 7, 2023, the company completed the spin-off of its former tanker business, which was contributed to Toro Corp27 - A one-for-ten reverse stock split of the company's common shares was effected on March 27, 202429 - On December 16, 2024, the company acquired a 74.09% controlling stake in MPC Capital for approximately $192.0 million30 Risk Factors This subsection details numerous risks affecting the company, including industry volatility, geopolitical conflicts, environmental regulations, related-party dependence, and share price volatility - The shipping industry is cyclical and volatile, with charter hire rates subject to fluctuations from changes in supply and demand, which can adversely affect financial results3842 - Geopolitical events, such as the war in Ukraine and incidents in the Red Sea, disrupt trade patterns, increase costs, and impact charter rates455356 - The company is subject to extensive and evolving international environmental regulations (e.g., IMO 2020, EEXI, CII) that may require costly vessel modifications and increase operating expenses99103311 - The company is dependent on its related-party manager, Castor Ships, for the management of its fleet, and any failure by the manager could negatively impact operations162 - The company's share price has been highly volatile, and future issuances of common shares, including from the conversion of Series D Preferred Shares, could cause significant dilution to existing shareholders210216217 - The Chairman, CEO, and CFO, through an affiliated entity (Thalassa), controls 99.2% of the company's voting power via Series B Preferred Shares, allowing for considerable influence over shareholder matters229232 - The company's new asset management segment faces intense competition and its revenues are highly dependent on the volume of assets under management and the performance of its investees127130151 Information on the Company This section details the company's business, which shifted to focus on dry bulk and containerships after the 2023 spin-off of its tanker business, and now includes an asset management segment via MPC Capital History and Development of the Company Details the company's evolution, highlighting the March 2023 spin-off of its tanker business, strategic focus on dry bulk and container shipping, and the significant acquisition of MPC Capital in December 2024 - On December 16, 2024, the company completed the acquisition of a 74.09% stake in MPC Capital for €182.8 million (approx. $192.0 million), adding an asset management segment244387 - The MPC Capital acquisition was financed with cash, a $100.0 million loan from related-party Toro Corp., and a $50.0 million issuance of Series D Preferred Shares to Toro244253 - The company completed the spin-off of its tanker business to Toro Corp. on March 7, 2023, after which it focused on dry bulk and containerships247249 - A 1-for-10 reverse stock split was effected on March 27, 2024, to regain compliance with Nasdaq's minimum bid price requirement256 Business Overview The company operates in three segments: dry bulk, containership, and asset management, with a fleet of 8 dry bulk carriers and 1 containership managed by Castor Ships S.A., and is subject to extensive environmental regulations - Following the acquisition of MPC Capital, the company now operates in three reportable segments: dry bulk, containership, and asset management259 - As of May 9, 2025, the fleet consisted of 8 dry bulk carriers and one 1,850 TEU containership, following several vessel sales245 - The entire fleet is commercially and technically managed by Castor Ships S.A., a company controlled by Castor's Chairman and CEO, under an agreement that includes management fees, chartering commissions, and sale/purchase commissions282283 - The asset management segment (MPC Capital) manages €5.1 billion in assets and provides services to listed entities like MPC Container Ships ASA and MPC Energy Solutions N.V.244288 - The company is subject to extensive environmental regulations, including IMO's EEXI and CII for carbon intensity reduction, EU ETS for carbon emissions, and the BWM Convention for ballast water management311324349 Operating and Financial Review and Prospects This section analyzes the company's financial performance, highlighting a decrease in total revenues in 2024 due to a smaller fleet, the addition of asset management revenue, and the impact of vessel sales Operating Results For FY 2024, total revenues decreased to $66.2 million from $97.5 million in FY 2023, primarily due to reduced available days, despite a higher average Daily TCE Rate of $13,147 Consolidated Results of Operations (FY 2024 vs. FY 2023) | (In U.S. Dollars) | Year ended Dec 31, 2023 | Year ended Dec 31, 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $97,515,511 | $66,243,379 | ($31,272,132) | -32.1% | | Operating income | $22,007,914 | $21,426,610 | ($581,304) | -2.6% | | Net income from continuing operations | $21,303,156 | $15,304,934 | ($5,998,222) | -28.2% | | Net income from discontinued operations | $17,339,332 | $0 | ($17,339,332) | -100.0% | | Net income | $38,642,488 | $15,304,934 | ($23,337,554) | -60.4% | Key Operational Metrics (Consolidated) | Metric | 2023 | 2024 | | :--- | :--- | :--- | | Daily TCE Rate | $12,356 | $13,147 | | Available Days | 7,483 | 4,626 | | Fleet Utilization | 99% | 99% | | EBITDA | $51,607,538 | $29,679,564 | - The decrease in total vessel revenues was primarily driven by a reduction in Available Days to 4,626 in 2024 from 7,483 in 2023, following the sale of twelve vessels429 - The new asset management segment, acquired on Dec 16, 2024, generated $1.2 million in revenue and $2.8 million in operating income in the short period to year-end431460 - Net gain on sale of vessels increased significantly to $19.3 million in 2024 from $6.4 million in 2023439 Liquidity and Capital Resources As of Dec 31, 2024, cash and cash equivalents were $87.9 million, with working capital of $185.9 million, after prepaying prior debt and incurring new debt for the MPC Capital acquisition Cash and Liquidity Position (in millions USD) | Metric | Dec 31, 2023 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $111.4 million | $87.9 million | | Restricted cash | $9.5 million | $0 | | Working capital surplus | $213.7 million | $185.9 million | - In 2024, the company used proceeds from vessel sales of $86.6 million to prepay all of its outstanding indebtedness from the end of 2023477 - To fund the MPC Capital acquisition, the company entered into a new $100 million term loan with related-party Toro on Dec 11, 2024, and issued an additional 50,000 Series D Preferred Shares to Toro for $50 million475477 - The $100 million term loan from Toro was fully repaid subsequent to the year-end, on May 5, 2025591926 Critical Accounting Estimates This section identifies key accounting estimates requiring significant management judgment, including the valuation of mezzanine equity, purchase price allocation for MPC Capital, and vessel impairment assessments - The fair value of the Series D Preferred Shares (mezzanine equity) is a critical estimate, determined using Level 3 inputs such as expected volatility and weighted average cost of capital (WACC)522523 - The purchase price allocation for the MPC Capital acquisition required significant judgment in valuing intangible assets, such as customer relationships (using the Multi-Period Excess Earnings Method) and investments (using a discounted cash flow model)524528 - Vessel impairment testing, critical as of Dec 31, 2023, for three vessels, relies on subjective assumptions about future charter rates, operating expenses, and vessel residual values; no impairment test was needed as of Dec 31, 2024526530531 Directors, Senior Management and Employees This section lists the company's directors and senior management, led by founder Petros Panagiotidis, details their compensation, and notes the increase in employees due to the MPC Capital acquisition Directors and Senior Management The company is led by its founder, Petros Panagiotidis, who holds the roles of Chairman, CEO, and CFO, with two non-executive directors on the board - Petros Panagiotidis is the founder and serves as Chairman, CEO, and CFO; he also holds leadership positions at related companies Toro Corp. and Robin Energy Ltd547 - The board consists of three directors: Petros Panagiotidis (Class C), Dionysios Makris (Class B), and Angelos Rounick Platanias (Class A, appointed Feb 2025)544549 Compensation For FY 2024, non-executive directors received aggregate fees of $96 thousand, with additional fees for audit committee members, and a $2.6 million one-time compensation is payable to certain subsidiary officers - In FY 2024, non-executive directors received total fees of $96 thousand, plus additional fees for audit committee service550 - A one-time compensation of $2.6 million is payable to certain officers of a subsidiary related to a business combination550 Employees The company's employee count increased from zero at the end of 2023 to 155 at the end of 2024, entirely due to the acquisition of MPC Capital - The number of employees grew from 0 as of Dec 31, 2023, to 155 as of Dec 31, 2024, due to the MPC Capital acquisition554 Major Shareholders and Related Party Transactions This section discloses that Thalassa Investment Co. S.A. controls 99.2% of the company's voting power and details numerous related-party transactions, primarily with entities controlled by the Chairman/CEO Major Shareholders Thalassa Investment Co. S.A., an affiliate of the Chairman/CEO, controls 99.2% of the company's voting power through its ownership of all Series B Preferred Shares - Thalassa Investment Co. S.A., an affiliate of the Chairman/CEO, controls 99.2% of the company's aggregate voting power through its ownership of all 12,000 Series B Preferred Shares562 Related Party Transactions The company engages in extensive transactions with related parties, including management services from Castor Ships, a $100 million loan from Toro Corp., and vessel sales to affiliated entities - The company is managed by Castor Ships S.A., a related party, under an agreement providing for management fees, chartering commissions, and sale/purchase commissions565566 - In 2024, Castor received a $100 million loan from and issued $50 million in Series D Preferred Shares to Toro Corp., a related party controlled by Castor's CEO584589 - Several vessels, including the M/V Magic Venus, M/V Magic Nova, M/V Magic Horizon, and M/V Magic Nebula, were sold to entities affiliated with the CEO's family in 2024594595596 Financial Information This section contains the consolidated financial statements and other financial information, noting no material legal proceedings and no declared dividend policy for common shares - The company is not currently a party to any legal proceedings that would have a material adverse effect on its financial condition607 - The company has no declared dividend policy for common shares; any dividends are at the Board's discretion and are subordinate to the rights of Series D Preferred shareholders608610 - In 2024, the company paid a dividend of $2.5 million to Toro in connection to the Series D Preferred Shares613 The Offer and Listing The company's common shares and associated rights trade on the Nasdaq Capital Market under 'CTRM' and on the Norwegian OTC market under 'CASTOR' - The company's common shares trade on the Nasdaq Capital Market under the symbol 'CTRM' and on the Norwegian OTC under 'CASTOR'615 Additional Information This section details the company's capital structure, including its authorized 1.95 billion common shares and 50 million preferred shares, and discusses taxation, noting a 4% U.S. source income tax Memorandum and Articles of Association The company's authorized capital consists of 1.95 billion common shares and 50 million preferred shares, with Series B Preferred Shares holding super-voting rights and Series D Preferred Shares having a 5.00% cumulative dividend - Authorized capital stock consists of 1,950,000,000 common shares and 50,000,000 preferred shares625 - Series B Preferred Shares, all held by a related party, have 100,000 votes per share, granting the holder voting control629 - Series D Preferred Shares carry a 5.00% cumulative dividend, are convertible into common shares at the holder's option starting January 1, 2026, and have liquidation preference over common shares632634637 Taxation As a Marshall Islands corporation, the company is not subject to income tax there, but its U.S. source shipping income is subject to a 4% tax due to not meeting the 'Publicly Traded Test' - The company is a Marshall Islands corporation and not subject to income tax there657 - Due to its share structure not meeting the 'Publicly Traded Test' under Section 883 of the U.S. Code, the company's U.S. source shipping income is subject to a 4% tax; provisions were $113.9 thousand in 2024, $177.8 thousand in 2023, and $388.7 thousand in 2022242661664 - The company believes it is not a Passive Foreign Investment Company (PFIC), but notes there is a risk the IRS could determine otherwise, which would have adverse tax consequences for U.S. shareholders237238 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk with a net exposure of $103.6 million to floating rates, and significant equity price risk from its $69.1 million listed securities and $115.5 million equity method investments - As of Dec 31, 2024, the company had a net effective exposure of $103.6 million to floating interest rate fluctuations on its outstanding debt701 - Equity price risk is significant, with $69.1 million in listed equity securities; a hypothetical 25% decrease in market prices would result in a $17.3 million decrease in net income704706 - The company also has significant equity price risk from its equity method investments measured at fair value, totaling $115.5 million; a hypothetical 25% price decrease would result in a $28.9 million decrease in net income708709 PART II Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, but excluded the newly acquired MPC Capital, which represented 39% of consolidated total assets - Management concluded that disclosure controls and procedures were effective as of December 31, 2024719 - The evaluation of disclosure controls and internal control over financial reporting excluded the newly acquired MPC Capital, which represented 39% of total consolidated assets at year-end720724 - The annual report does not include an attestation report on internal controls from the registered public accounting firm because the company is not an accelerated filer726 Corporate Governance and Other Matters This section covers various governance topics, including principal accountant fees, corporate governance practices as a foreign private issuer, and the company's cybersecurity risk management framework Principal Accountant Fees and Services Details fees paid to the principal accountant, Deloitte, with audit fees totaling $238.7 thousand in 2024, a decrease from $439.8 thousand in 2023 Accountant Fees (in USD) | Fee Type | 2023 | 2024 | | :--- | :--- | :--- | | Audit Fees | $439,820 | $238,674 | | Tax Fees | $0 | $8,000 | Corporate Governance As a foreign private issuer, the company follows Marshall Islands home country practices, resulting in differences from Nasdaq corporate governance standards regarding board independence and committee structures - The company follows home country (Marshall Islands) practice, exempting it from certain Nasdaq rules741 - Key differences from Nasdaq standards include not requiring a majority-independent board, not having a compensation or nominating committee, and not requiring shareholder approval for certain equity issuances744 Cybersecurity The company's cybersecurity risk management is overseen by the Board and managed by Castor Ships and MPC IT, with no material incidents detected in 2024 - Cybersecurity risk management is integrated into the company's overall risk framework and overseen by the full Board746752 - Day-to-day cybersecurity management is handled by the ITC Department of its manager, Castor Ships, for the shipping business and by MPC IT for the asset management segment748751 - No material cybersecurity incidents were detected in 2024747 PART III Financial Statements This section contains the audited consolidated financial statements for 2022-2024, including balance sheets, income statements, and cash flows, with auditor's critical audit matters on mezzanine equity and MPC Capital acquisition valuation Consolidated Balance Sheet Summary (in millions USD) | | Dec 31, 2023 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $605.0 million | $797.4 million | | Total Liabilities | $94.3 million | $171.9 million | | Mezzanine Equity | $49.5 million | $77.7 million | | Total Shareholders' Equity | $461.2 million | $547.8 million | Consolidated Statement of Comprehensive Income Summary (in millions USD) | | FY 2022 | FY 2023 | FY 2024 | | :--- | :--- | :--- | :--- | | Total Revenues | $150.2 million | $97.5 million | $66.2 million | | Net Income from Continuing Operations | $66.5 million | $21.3 million | $15.3 million | | Net Income from Discontinued Operations | $52.0 million | $17.3 million | $0.0 million | | Net Income | $118.6 million | $38.6 million | $15.3 million | - The auditor's report identified two critical audit matters: the fair value determination of the Series D Preferred Shares (mezzanine equity) and the fair value accounting for customer relationships and an investment in WASM related to the MPC Capital acquisition773786 - The company's discontinued operations, related to the 2023 spin-off of its tanker business to Toro, generated net income of $17.3 million in 2023 and $52.0 million in 2022891892