Castor Maritime (CTRM) - 2023 Q2 - Quarterly Report

Consolidated Financial Statements (Unaudited) This section presents the company's unaudited interim consolidated financial statements, detailing financial position, performance, equity, and cash flows Unaudited Interim Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity, with reclassification of discontinued operations Key Balance Sheet Data | Metric | December 31, 2022 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Total Assets | 632,920,948 | 573,322,004 | | Total Liabilities | 171,425,888 | 138,917,082 | | Total Shareholders' Equity | 461,495,060 | 434,404,922 | | Current assets of discontinued operations | 54,763,308 | 0 | | Non-current assets of discontinued operations | 102,715,796 | 0 | | Investment in related parties | 0 | 117,319,357 | Unaudited Interim Condensed Consolidated Statements of Comprehensive Income This section shows the company's financial performance, with a significant decline in operating revenue and a shift from net income to net loss Key Comprehensive Income Data | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Time charter revenues | 37,810,865 | 24,468,970 | | Operating income | 19,969,490 | 3,145,575 | | Net income/(loss) from continuing operations (after tax) | 18,456,712 | (6,510,038) | | Net income from discontinued operations (after tax) | 1,519,576 | 17,339,332 | | Total net income | 19,976,288 | 10,829,294 | | Earnings per share (total) | 0.21 | 0.11 | Unaudited Interim Consolidated Statements of Shareholders' Equity This section details changes in shareholders' equity, highlighting the impact of net income and the distribution of Toro Corp. net assets to shareholders Changes in Shareholders' Equity | Metric | December 31, 2021 ($) | March 31, 2022 ($) | December 31, 2022 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | :--- | :--- | | Total shareholders' equity | 342,934,370 | 362,910,658 | 461,495,060 | 434,404,922 | | Net income and comprehensive income | 0 | 19,976,288 | 0 | 10,829,294 | | Distribution of Toro Corp. net assets to shareholders | 0 | 0 | 0 | (37,919,432) | Unaudited Interim Consolidated Statements of Cash Flows This section outlines cash flows from operating, investing, and financing activities, showing a significant shift in operating cash flow from continuing operations Key Cash Flow Data | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Net cash from operating activities of continuing operations | 17,098,800 | (22,942) | | Net cash from investing activities of continuing operations | (22,400,364) | (31,374,129) | | Net cash from operating activities of discontinued operations | (4,035,029) | 20,409,041 | | Net cash from discontinued operations | (4,947,412) | (42,479,594) | | Net increase/(decrease) in cash, cash equivalents, and restricted cash | 40,575,149 | (79,775,840) | Notes to Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed notes to the financial statements, covering accounting policies, discontinued operations, related party transactions, and other financial disclosures Basis of Presentation and General Information This section describes the company's registration, listing, and control structure, detailing the 2023 spin-off of the tanker business to Toro Corp - Company spun off its Aframax/LR2 and Handysize tanker businesses to Toro Corp. on March 7, 2023, distributing Toro common shares to shareholders at a 1:10 ratio[13] - As of March 31, 2023, the company operates a diversified fleet of 22 vessels, including 1 Capesize, 7 Kamsarmax, 12 Panamax dry bulk vessels, and 2 2,700 TEU container vessels[15] - Since July 1, 2022, Castor Ships S.A., a related party, manages the company's overall business, with Pavimar S.A. co-managing technical aspects of dry bulk vessels[14][31] Significant Accounting Policies and Recent Accounting Pronouncements This section details accounting policies for equity investments without determinable fair value and clarifies discontinued operations classification - For equity securities without determinable fair value, the company measures them at cost less impairment, if any[20] - Discontinued operations are defined as components of an entity disposed of or classified as held for sale, representing a strategic shift with a significant impact on operations and financial results[38] - The adoption of recent accounting pronouncements is not expected to have a material impact on the company's unaudited interim consolidated financial statements[64] Discontinued Operations This section provides detailed financial information for discontinued operations, which achieved significant net income growth in Q1 2023 - Discontinued operations include Toro, Elektra, and the Aframax/LR2 and Handysize tanker businesses, with the spin-off completed on March 7, 2023[21] Net Income from Discontinued Operations (After Tax) | Period | Amount ($) | | :--- | :--- | | Three Months Ended March 31, 2022 | 1,519,576 | | January 1 to March 7, 2023 | 17,339,332 | Total Vessel Revenues from Discontinued Operations | Period | Amount ($) | | :--- | :--- | | Three Months Ended March 31, 2022 | 16,830,448 | | January 1 to March 7, 2023 | 23,369,274 | Transactions with Related Parties This section details various transactions with related parties, including management fees, chartering commissions, administrative fees, and investment in Toro Corp Related Party Management Fees | Type | Q1 2022 ($) | Q1 2023 ($) | | :--- | :--- | :--- | | Castor Ships management fees | 1,080,000 | 1,188,000 | | Pavimar management fees | 450,000 | 643,500 | | Castor Ships administrative fees | 300,000 | 750,000 | - Non-current investment in Toro Corp. was $117,319,357 as of March 31, 2023[45] - Toro reimbursed Castor $2,570,503 for spin-off related expenses[58] - Castor Ships charges a fixed quarterly management fee of $750,000, a 1.25% commission on gross revenues, and daily management fees per vessel type; Pavimar charges $600 per dry bulk vessel per day[48] - Dividend income from related parties (Toro Series A Preferred Stock) was $97,222 as of March 31, 2023[79] Deferred Charges, net This section summarizes deferred dry-docking costs, including additions, amortization, and transfers to assets held for sale Net Deferred Dry-docking Costs | Metric | December 31, 2022 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Balance | 5,357,816 | 3,671,123 | | Additions | 0 | 37,457 | | Amortization | 0 | (562,058) | | Transferred to assets held for sale | 0 | (1,162,092) | Fair Value of Acquired Time Charters This section discusses the recognition and amortization of favorable time charter intangible assets related to vessel acquisitions, specifically M/V Ariana A and M/V Gabriela A - Amortization of acquired time charters was $1,026,959 for the three months ended March 31, 2023[60] - The unamortized portion of M/V Gabriela A intangible assets was $1,480,547 as of March 31, 2023, with $1,215,374 expected to be amortized in 2023 and $265,173 in 2024[60] - The company recognized intangible assets of $897,436 and $2,019,608 for favorable time charters acquired with M/V Ariana A and M/V Gabriela A, respectively[82] Vessels, net / Assets held for sale This section details the book value of vessels, including those pledged as collateral and classified as held for sale, with expected gains from sales - As of March 31, 2023, 18 out of 22 vessels in the company's fleet had a book value of $272.4 million and were pledged as collateral for loans[61] Net Vessels | Metric | December 31, 2022 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Net Vessels | 343,408,466 | 321,094,715 | - M/V Magic Rainbow and M/V Magic Moon were classified as assets held for sale with a book value of $18,369,707 as of March 31, 2023[25][106] - Expected gains from the sale of M/V Magic Rainbow are approximately $3.8 million, and from M/V Magic Moon, approximately $4.6 million[106] Long-Term Debt This section provides an overview of the company's long-term debt financing, including outstanding balances, changes due to spin-off, and covenant compliance Net Long-Term Debt (net of deferred financing costs) | Period | Amount ($) | | :--- | :--- | | December 31, 2022 | 138,771,762 | | March 31, 2023 | 130,513,413 | - Debt related to assets held for sale was $9,904,156 as of March 31, 2023[85] - As part of the spin-off, $12,413,056 of the outstanding principal (net of deferred financing costs) from an $18 million term loan facility was transferred to Toro[89] - As of March 31, 2023, the company was in compliance with all financial covenants under its debt agreements[93] - LIBOR for an $11 million term loan facility was replaced with SOFR, increasing the margin by 0.045%[86] Weighted Average Interest Rate on Long-Term Debt | Period | Rate | | :--- | :--- | | Three Months Ended March 31, 2022 | 3.6% | | Three Months Ended March 31, 2023 | 8.1% | Annual Principal Repayment Schedule for Outstanding Debt (as of March 31, 2023) | Period | Amount ($) | | :--- | :--- | | Twelve Months Ended March 31, 2024 | 34,735,000 | | 2025 | 30,193,400 | | 2026 | 14,820,400 | | 2027 | 47,175,200 | | 2028 | 5,100,000 | Investment in Equity Securities This section summarizes changes in listed equity securities, including acquisitions, sales, unrealized losses, and dividend income received Summary of Changes in Listed Equity Securities | Metric | December 31, 2022 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Balance | 0 | 23,790,130 | | Equity securities acquired | 0 | 31,742,081 | | Proceeds from sale of equity securities | 0 | (258,999) | | Gain on sale of equity securities | 0 | 2,636 | | Unrealized loss on equity securities | 0 | (7,695,588) | - For the three months ended March 31, 2023, the company received $313,716 in dividend income from investments in listed equity securities[131] Equity Capital Structure This section provides details on the company's authorized share capital, common and preferred shares, noting no changes in outstanding stock or warrants - The company's authorized share capital is 2,000,000,000 shares (par value $0.001 per share), comprising 1,950,000,000 common shares and 50,000,000 preferred shares[96] - There were no changes in the company's outstanding stock or warrants for the three months ended March 31, 2023[96] Financial Instruments and Fair Value Disclosures This section describes methods and assumptions for estimating fair value of financial instruments, classifying them into fair value hierarchy levels - The carrying values of cash and cash equivalents, restricted cash (current), accounts receivable, amounts due from/to related parties, and accounts payable are considered reasonable estimates of their fair values and are classified as Level 1[132] - Long-term debt, due to its floating interest rates, has a carrying value considered a reasonable estimate of fair value and is classified as Level 2[115] - Investment in related parties (Toro Series A Preferred Stock) is recognized at a fair value of $117,222,135, valued using Level 2 inputs[78][116] Commitments and Contingencies This section states management found no material claims or environmental liabilities, and lists future minimum contractual lease payments for irrevocable time charters - Management has not identified any material claims, litigation, or environmental liabilities requiring disclosure or provision[100][117] Future Minimum Contractual Lease Payments for Irrevocable Time Charters (as of March 31, 2023) | Period | Amount ($) | | :--- | :--- | | Twelve Months Ended March 31, 2024 | 62,211,180 | | 2025 | 607,778 | | Total | 62,818,958 | Earnings/(Loss) Per Common Share This section explains the calculation of basic and diluted EPS, noting they are equal due to the anti-dilutive effect of outstanding warrants - Basic and diluted earnings per share are equal due to the anti-dilutive effect of outstanding warrants[138] Earnings/(Loss) Per Common Share | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Continuing operations | 0.20 | (0.07) | | Discontinued operations | 0.02 | 0.18 | | Total | 0.21 | 0.11 | - The basic and diluted weighted average number of common shares outstanding was 94,610,088 for the reporting periods[139] Total Vessel Revenues This section reports that all revenues for the period were derived from time charter contracts, typically with fixed or index-linked rates - All company revenues for the three months ended March 31, 2022, and 2023, were derived from time charter contracts[122] Time Charter Revenues | Period | Amount ($) | | :--- | :--- | | Three Months Ended March 31, 2022 | 37,810,865 | | Three Months Ended March 31, 2023 | 24,468,970 | Vessel Operating Expenses and Voyage Expenses This section details vessel operating and voyage expenses, showing an increase in total operating and voyage costs for the periods presented Vessel Operating Expenses and Voyage Expenses | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Total vessel operating expenses | 10,127,405 | 11,267,683 | | Total voyage expenses | 989,454 | 1,277,085 | | Crew wages and related expenses | 4,952,614 | 5,937,987 | | Fuel consumption | 969,323 | 402,131 | | Fuel (gain)/loss | (1,135,979) | 66,403 | General and Administrative Expenses This section analyzes general and administrative expenses, noting the increase was primarily driven by higher administrative fees paid to related parties General and Administrative Expenses | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Total | 921,707 | 1,134,664 | | Administrative fees to related parties | 300,000 | 750,000 | Interest and Finance Costs This section details the composition of interest and finance costs, showing a significant increase primarily due to higher interest on long-term debt Interest and Finance Costs | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Interest on long-term debt | 1,200,985 | 2,719,402 | | Amortization of deferred financing costs | 185,994 | 186,151 | | Other finance costs | 62,634 | 182,526 | | Total interest and finance costs | 1,449,613 | 3,088,079 | Segment Information This section reports the company's operations in dry bulk and container vessel segments since Q4 2022, providing segment-specific financial data - The company has operated in two reportable segments, dry bulk and container vessels, since the fourth quarter of 2022[143] Segment Operating Income | Segment | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Dry bulk segment | 20,891,197 | 3,995,153 | | Container vessel segment | 0 | 285,086 | Total Assets from Continuing Operations | Period | Amount ($) | | :--- | :--- | | December 31, 2022 | 475,441,844 | | March 31, 2023 | 573,322,004 | Total Assets from Discontinued Operations | Period | Amount ($) | | :--- | :--- | | December 31, 2022 | 157,479,104 | | March 31, 2023 | 0 | Subsequent Events This section discloses the Nasdaq notification regarding non-compliance with the minimum $1.00 bid price requirement and the company's plan to regain compliance - The company received a Nasdaq Stock Market notification on April 20, 2023, for non-compliance with the minimum $1.00 bid price per share requirement[150] - The company has 180 calendar days (until October 17, 2023) to regain compliance[150] - The company's business operations are not affected by this notification[149]