Globus Maritime(US:GLBS)2021-03-28 16:00PART I Key Information This section provides a five-year summary of the company's financial and operating data, highlighting significant revenue volatility, persistent net losses, and a substantial decline in Time Charter Equivalent (TCE) rates in 2020 Selected Financial Data The company's financial performance from 2016 to 2020 shows significant volatility. Voyage revenues peaked in 2018 at $17.4 million and declined to $11.8 million in 2020. The company has reported comprehensive losses each year, with a particularly large loss of $36.4 million in 2019 due to a major impairment charge. Adjusted EBITDA was positive from 2017 to 2019 but turned negative in 2020 at ($3.1 million). Operationally, the daily Time Charter Equivalent (TCE) rate decreased significantly from $9,213 in 2018 to $5,210 in 2020 Consolidated Statement of Comprehensive Loss (2016-2020) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Voyage revenues | $11.8M | $15.6M | $17.4M | $13.9M | $8.4M | | Operating loss | ($11.4M) | ($33.6M) | ($1.4M) | ($4.0M) | ($7.2M) | | Total comprehensive loss | ($17.4M) | ($36.4M) | ($3.6M) | ($6.5M) | ($9.8M) | | Impairment loss | $4.6M | $29.9M | - | - | - | | Basic loss per share | ($18.11) | ($873.36) | ($111.61) | ($251.83) | ($3,827.26) | | Adjusted EBITDA | ($3.1M) | $2.7M | $4.3M | $1.7M | ($3.5M) | Key Operational Data (2016-2020) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Fleet utilization | 97.5% | 98.2% | 98.2% | 97.6% | 97.1% | | Average number of vessels | 5.2 | 5.0 | 5.0 | 5.0 | 5.2 | | Daily time charter equivalent (TCE) rate | $5,210 | $7,564 | $9,213 | $6,993 | $3,962 | | Daily operating expenses | $4,531 | $4,867 | $5,438 | $5,005 | $4,553 | Consolidated Statements of Cash Flows Data (2016-2020) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net cash from operating activities | ($6.2M) | $213 | $3.9M | $631 | ($3.6M) | | Net cash from investing activities | ($18.5M) | ($20) | ($126) | ($263) | $362 | | Net cash from financing activities | $41.5M | $2.1M | ($6.4M) | $2.2M | $1.4M | Risk Factors The company faces significant risks from the volatile and cyclical nature of the dry bulk shipping industry, including fluctuating charter rates and vessel values, intense competition, and the impact of global events like pandemics and financial market disruptions - The international dry bulk shipping industry is characterized as cyclical and highly volatile, with charter rates, vessel values, and profitability subject to significant fluctuations based on supply and demand for vessel capacity60 - The Baltic Dry Index (BDI), a key market benchmark, has been volatile and remains significantly below its 2008 peak. In 2020, the BDI fell to a low of 407 before recovering to a high of 2,02064 - The COVID-19 pandemic negatively impacted 2020 voyage revenues, which decreased by 24% year-over-year, and triggered a vessel impairment assessment resulting in a $4.6 million loss in Q1 2020125 - The company's stock price has been highly volatile, with the closing price ranging from a peak of $109.00 to a low of $5.68 in 2020, representing a 94.8% decrease139 - The company faces significant potential dilution from a large number of outstanding warrants. As of the report date, warrants to purchase over 9.7 million common shares were outstanding from various offerings141 - The company received a delisting notice from Nasdaq in March 2020 for failing to meet the $1.00 minimum bid price requirement. It regained compliance in November 2020 after effecting a 1-for-100 reverse stock split162 Information on the Company Globus Maritime is an integrated dry bulk shipping company operating a fleet of six vessels, detailing its corporate history, equity offerings, and the issuance of high-vote Series B preferred shares to an entity controlled by the CEO History and Development of the Company The company has undergone significant corporate and capital structure changes, including three reverse stock splits and multiple equity offerings in 2020-2021, notably issuing high-vote Series B preferred shares to an entity controlled by the CEO - The company has executed multiple reverse stock splits to maintain its Nasdaq listing, including a 1-for-100 reverse stock split on October 21, 2020256245240 - In 2020 and early 2021, the company completed a series of public offerings and private placements, issuing a significant number of common shares and warrants to raise capital247249250 - The company issued a total of 10,300 Series B preferred shares to Goldenmare Limited, an entity controlled by CEO Athanasios Feidakis. Each share carries 25,000 votes, subject to a 49.99% aggregate voting power cap for the holder257258259 - The company is expanding its fleet, having purchased one Kamsarmax vessel in October 2020 and entered into agreements to acquire two additional Kamsarmax vessels in early 2021263265266 Business Overview Globus Maritime is an integrated dry bulk shipping company providing worldwide marine transportation services with a fleet of six vessels, employing a flexible chartering strategy in a highly competitive market subject to extensive environmental and safety regulations Fleet Composition as of December 31, 2020 | Vessel | Year Built | Vessel Type | Carrying Capacity (dwt) | | :--- | :--- | :--- | :--- | | m/v River Globe | 2007 | Supramax | 53,627 | | m/v Sky Globe | 2009 | Supramax | 56,855 | | m/v Star Globe | 2010 | Supramax | 56,867 | | m/v Moon Globe | 2005 | Panamax | 74,432 | | m/v Sun Globe | 2007 | Supramax | 58,790 | | m/v Galaxy Globe | 2015 | Kamsarmax | 81,167 | | Total | | | 381,738 | - The company's chartering strategy is to employ its vessels on a mix of spot market, bareboat, and time charters to balance cash flow stability with exposure to market upswings. As of the report filing date, all vessels were employed on time charters273275 - The company's operations are subject to numerous complex laws and regulations, including the IMO's global 0.5% sulphur cap on marine fuels which came into force on January 1, 2020, and upcoming ballast water management system requirements89343351 Next Scheduled Drydocking and Special Surveys | Vessel Name | Drydocking | Special Survey | | :--- | :--- | :--- | | m/v River Globe | Dec 2022 | Dec 2022 | | m/v Sky Globe | Jan 2023 | Nov 2024 | | m/v Star Globe | Aug 2023 | May 2025 | | m/v Moon Globe | Dec 2023 | Nov 2025 | | m/v Sun Globe | Aug 2022 | Aug 2022 | | m/v Galaxy Globe | Oct 2023 | Oct 2025 | Operating and Financial Review and Prospects This section details the company's financial performance and condition, highlighting a 24% decrease in 2020 voyage revenues, a narrowed operating loss due to a smaller impairment charge, and dramatically improved liquidity driven by $41.5 million in net cash from financing activities Operating Results In 2020, voyage revenues fell 24% to $11.8 million from $15.6 million in 2019, driven by a sharp decline in average TCE rates to $5,210/day. The operating loss improved to $11.4 million from $33.6 million in 2019, largely due to a smaller impairment loss of $4.6 million compared to $29.9 million in the prior year Year-over-Year Performance Comparison (2019-2020) | Metric | 2020 | 2019 | Change | Reason | | :--- | :--- | :--- | :--- | :--- | | Voyage Revenues | $11.8M | $15.6M | -24% | Decrease in average TCE rates | | Operating Loss | ($11.4M) | ($33.6M) | +66% | Smaller impairment loss ($4.6M vs $29.9M) | | Impairment Loss | $4.6M | $29.9M | -85% | Vessel recoverable amounts were lower than carrying amounts in both periods | | Admin Expenses (Related Parties) | $1.9M | $0.4M | +375% | One-time cash bonus of $1.5M to CEO's consultant firm | Year-over-Year Performance Comparison (2018-2019) | Metric | 2019 | 2018 | Change | Reason | | :--- | :--- | :--- | :--- | :--- | | Voyage Revenues | $15.6M | $17.4M | -10% | Decrease in average TCE rates | | Operating Loss | ($33.6M) | ($1.4M) | -2300% | Recognition of a $29.9M impairment loss | | Impairment Loss | $29.9M | $0 | N/A | Vessel recoverable amounts fell below carrying amounts | - The company's critical accounting policy for impairment of long-lived assets involves estimating a vessel's recoverable amount based on the greater of its fair value less costs to sell or its value-in-use, calculated using discounted future cash flows. This assessment led to significant impairment charges of $4.6 million in 2020 and $29.9 million in 2019509510514 Liquidity and Capital Resources The company's liquidity significantly improved in 2020, with cash and cash equivalents rising to $19.0 million from $2.4 million in 2019, primarily driven by $41.5 million in net cash generated from financing activities Liquidity Position Comparison | Metric | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $19.0M | $2.4M | | Restricted cash | $2.1M | $2.4M | | Working Capital | $9.2M | ($3.2M) | | Total Debt Outstanding (Gross) | $36.6M | $41.1M | - Net cash generated from financing activities was $41.5 million in 2020, consisting of $49.3 million in proceeds from share issuances, offset by debt repayments, interest payments, and transaction costs541 - The company's primary debt is the EnTrust Loan Facility, which had an outstanding balance of $37 million as of year-end 2020. The facility contains various financial covenants, including minimum liquidity requirements, with which the company was in compliance555561570 - In early 2021, the company entered into agreements to purchase two Kamsarmax vessels for a total potential cost of up to $43.5 million. It also arranged a new loan facility of up to $34.25 million to potentially repay the EnTrust facility and for general corporate purposes530531532 Directors, Senior Management and Employees This section details the company's leadership, compensation, and board structure, highlighting the CEO's compensation through a consultancy agreement with Goldenmare Limited, which received a significant one-time bonus of $1.5 million in 2020 - Athanasios Feidakis serves as the President, CEO, and CFO. He is the son of the company's founder and Chairman of the Board, Georgios Feidakis585586590 - CEO compensation is paid via a consultancy agreement with Goldenmare Limited, an affiliated company. In December 2020, the annual fee was increased from €200,000 to €400,000, and a one-time cash bonus of $1.5 million was awarded592 Aggregate Remuneration (2018-2020) | Recipient | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Executive Officer (CEO) | ~$1.8M | ~$224K | ~$235K | | Non-Executive Directors (Cash) | $311K | ~$30K | $70K | - The company has a classified board of directors serving staggered three-year terms. It maintains an Audit Committee, a Remuneration Committee, and a Nomination Committee584600 Major Shareholders and Related Party Transactions As of March 2021, the company's chairman, Georgios Feidakis, beneficially owned less than 1% of common shares, while an entity controlled by the CEO holds Series B preferred shares granting up to 49.99% of total voting power, ensuring substantial control - As of March 26, 2021, Chairman George Feidakis's beneficial ownership of common shares had decreased to less than 1.0%, down from 22.1% reported in the previous year's filing625627 - CEO Athanasios Feidakis controls Goldenmare Limited, which owns 10,300 Series B preferred shares. These shares provide Goldenmare with up to 49.99% of the company's total voting power, giving it substantial control over shareholder matters628 - The company has a consultancy agreement with Goldenmare Limited, an affiliate of the CEO, for his services. In 2020, this agreement was amended to increase the annual fee to €400,000 and grant a one-time $1.5 million bonus636 - The company maintains a credit facility with Firment Shipping Inc., an affiliate of the Chairman. The facility was fully repaid in July 2020, but $14.2 million remained available to be drawn as of year-end 2020632633 Additional Information This section details the company's corporate structure, including its authorized capital of 500 million common shares and 100 million preferred shares, highlighting the multi-class stock structure with Series B preferred shares granting significant control to the CEO's affiliate - The company has a multi-class stock structure. Common shares have one vote per share. Series B preferred shares, of which 10,300 are outstanding, have 25,000 votes per share653656 - The voting power of the Series B preferred shares is capped, such that the holder cannot exercise votes exceeding 49.99% of the total votes eligible to be cast on any matter660681 - The company's articles of incorporation contain several anti-takeover provisions, including a classified board of directors, the ability to issue 'blank check' preferred shares without shareholder approval, and advance notice requirements for shareholder proposals and director nominations679683684 - The company believes it should not be treated as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, based on its position that income from time charters constitutes services income rather than passive rental income734735 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is to interest rate fluctuations, as its main debt facility, the EnTrust Loan Facility with a $37 million balance at year-end 2020, bears interest at a floating rate (LIBOR plus 8.5%) - The company is exposed to interest rate risk through its EnTrust Loan Facility, which had a $37 million outstanding balance as of December 31, 2020, and bears interest at LIBOR plus 8.5%758560 Sensitivity to 1.0% Increase in LIBOR | Year | Additional Interest Expense | | :--- | :--- | | 2021 | $0.4 million | | 2022 | $0.2 million | - The company faces foreign currency risk as it generates revenues in U.S. dollars but incurs a portion of its operating expenses in other currencies. It does not currently hedge this exposure766767 PART II Material Modifications to the Rights of Security Holders and Use of Proceeds This section highlights that the rights of common shareholders have been materially modified by the issuance of Series B preferred shares, which carry superior voting rights (25,000 votes per share), granting the holder up to 49.99% of the company's total voting power - The issuance of 10,300 Series B preferred shares has materially modified the rights of common shareholders by concentrating significant voting power with a single holder772773 - Each Series B preferred share has 25,000 votes, but the holder's total voting power is capped at 49.99% of all eligible votes. This gives an entity affiliated with the CEO substantial control over management and corporate transactions773774 - The Series B preferred shares have no dividend rights and a liquidation preference limited to their par value ($0.001 per share), meaning their value is almost entirely derived from their voting power777778 Controls and Procedures The company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of December 31, 2020, concluding that these controls were effective, and also determined internal control over financial reporting to be effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020781783 - Based on an assessment using the COSO 2013 framework, management determined that the company's internal control over financial reporting was effective as of December 31, 2020785 Corporate Governance and Other Matters This section covers various governance and compliance topics, including the designation of Ioannis Kazantzidis as the audit committee financial expert, the adoption of a code of ethics, and principal accountant fees totaling $368,600 in 2020, a significant increase from $114,700 in 2019 - The Board of Directors has determined that Ioannis Kazantzidis is the audit committee financial expert and is independent under SEC and Nasdaq rules789 Principal Accountant Fees (Ernst & Young) | Service Category | 2020 | 2019 | | :--- | :--- | :--- | | Audit Fees | $363.6K | $109.7K | | Tax Fees | $5K | $5K | | Total | $368.6K | $114.7K | - As a foreign private issuer, the company is exempt from certain Nasdaq corporate governance standards. For example, its board of directors is not comprised of a majority of independent directors, and it does not require shareholder approval for all share issuances, instead complying with Marshall Islands law802 PART III Financial Statements The audited consolidated financial statements for the year ended December 31, 2020, prepared in accordance with IFRS, are presented, with the independent auditor's report highlighting the impairment of vessels as a Critical Audit Matter due to significant judgment in forecasting future charter rates - The independent auditor, Ernst & Young, identified the 'Impairment of vessels' as a Critical Audit Matter due to the complex judgments and subjective assumptions required, particularly in forecasting future charter rates for non-contracted revenue days830832 - The company's going concern status, which was in doubt at year-end 2019 due to a working capital deficit and liquidity concerns, was resolved during 2020 through multiple follow-on equity offerings that provided additional liquidity845846848 - Subsequent to year-end 2020, the company continued to raise capital, completing two additional equity offerings in January and February 2021, and entered into agreements to acquire two more Kamsarmax vessels105210541057