Pyxis Tankers (PXS) - 2022 Q4 - Annual Report

Introduction Special Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements, which are predictive and subject to various risks and uncertainties, and are not guarantees of future performance - Forward-looking statements are predictive, depend on future events, and include words like 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'estimates'[16] - Statements are based on assumptions beyond control and subject to risks described in 'Item 3. Key Information – D. Risk Factors'[16] - Factors causing future results to differ include changes in governmental rules and regulations, economic and competitive conditions, central bank policies, borrowing availability, operating expenses, capital expenditures, and geopolitical events[17][19] - Investors should not place undue reliance on forward-looking statements as they are not guarantees of future performance[18] Part I Item 1. Identity of Directors, Senior Management and Advisers This item is not applicable to the report - Not applicable[21] Item 2. Offer Statistics and Expected Timetable This item is not applicable to the report - Not applicable[22] Item 3. Key Information This section provides essential information about the company, including its capitalization, indebtedness, and a comprehensive overview of the various risk factors that could impact its business, operations, common stock, and tax position - Capitalization and Indebtedness: Not applicable[23] - Reasons for the Offer and Use of Proceeds: Not applicable[24] D. Risk Factors Investing in the company's securities is highly speculative and involves significant risks, categorized into industry-related, business/operations-related, common stock-related, and tax risks - World events, including the ongoing hostilities between Russia and Ukraine, could adversely affect our results of operations and financial condition[27][30] - Our vessels may be exposed to international and inherent operational risks that may reduce revenue or increase expenses, such as bad weather, mechanical failure, piracy, and environmental damage[27][31][32] - Our revenues are derived substantially from a single segment (product tankers) where charter hire rates are cyclical and volatile[27][33][34] - The continuation of the COVID-19 pandemic, and the emergence of other epidemic or pandemic crises, could have material adverse effects on our business, results of operations or financial condition[27][39][45] - An over-supply of product tanker capacity may lead to reductions in charter rates, vessel values and profitability[27][46][47] - Increased demand for and supply of 'eco-efficient' vessels could reduce demand for certain of our vessels that are not classified as such and expose us to lower vessel utilization and/or decreased charter rates[27][48] - The current global economic condition and financial environment, including an economic slowdown or changes in the economic and political environment in Europe and the Asia Pacific region, could have a material adverse effect on our business and financial condition[27][38][49] - Inflation, including increases in prices for fuel, or bunkers, and vessel operating costs may adversely affect results of operations[27][61] - If our vessels call on ports located in or operate in countries or territories that are the subject of sanctions or embargoes imposed by the United States, the European Union, the United Nations, or other governmental authorities, it could result in monetary fines and penalties as well as criminal proceedings and adversely affect our reputation and the market price of our common shares[27][62][63][64] - Governments could requisition our vessels during a period of war or emergency[27][65] - Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our ESG policies may impose additional costs on us or expose us to additional risks[27][66][68][69][70] - We are subject to increasingly complex laws and regulations, including environmental and safety laws and regulations, which expose us to liability and significant expenditures, and can adversely affect our insurance coverage and our business[27][71][72][73][74] - Changes in fuel, or bunkers, prices may adversely affect results of operations, especially since the Company does not plan to install scrubbers, which may make its vessels less competitive[58][59][113][116][117] - We operate in highly competitive international markets[28][92] - We may be unable to secure medium- and long-term employment for our vessels at profitable rates and present and future vessel employment could be adversely affected by an inability to clear the oil majors' risk assessment process[28][94][95] - A substantial portion of our revenues is derived from a limited number of customers, and the loss of any of these customers could result in a significant loss of revenues and cash flow[28][98] - The Company's growth depends on its ability to expand relationships with existing customers and obtain new customers, for which it will face substantial competition[28][99][100] - We depend on International Tanker Management ('ITM') and Pyxis Maritime Corp. ('Maritime') to operate our business, and our business could be harmed if they fail to perform their services satisfactorily[28][105][106] - We may fail to successfully control our operating and voyage expenses[28][107] - We will be required to make substantial capital expenditures, for which we may be dependent on additional financing, to maintain the vessels we own or to acquire other vessels[28][108][109][110][112] - Our founder, Chairman and Chief Executive Officer has affiliations with Maritime, which may create conflicts of interest[28][136][138][139] - Our insurance may be insufficient to cover losses that may result from our operations[28][142][143][144][145] - A cyber-attack and failure to comply with data privacy laws could materially disrupt our business[28][151][152][154][155] - We may not be able to generate sufficient cash flow to meet our debt service and other obligations[157][160] - The market values of tanker vessels are highly volatile, have decreased in the past and may decrease further in the future which may cause the Company to recognize losses if we sell our tankers or record impairments and affect the Company's ability to comply with its loan covenants and refinance its debt[162][163] - Restrictive covenants in our current and future loan agreements may impose financial and other restrictions on us[164][165][166] - Volatility of LIBOR, the cessation of LIBOR, replacement of our interest rate in our debt agreements and potential changes in the benchmark could affect our profitability, earnings and cash flow[171][173] - The market price of our common stock has fluctuated widely and the market price of our common stock may fluctuate in the future[174][175][176] - Future sales of our common shares could cause the market price of our common shares to decline[178][183][184] - We may not be able to generate sufficient cash to service our obligations, including our obligations under the Series A Convertible Preferred Shares[179] - Conversion of the Series A Convertible Preferred Shares and Warrants will dilute the ownership interest of existing shareholders[180] - We do not intend to pay cash dividends on our common stock in the near future and cannot assure you that we will ever pay such dividends[189][190] - If our common stock does not meet the NASDAQ's minimum share price requirement, and if we cannot cure such deficiency within the prescribed timeframe, our common stock could be delisted[192][193][194] - Anti-takeover provisions in our Articles of Incorporation and Bylaws could make it difficult for our stockholders to replace our board of directors or could have the effect of discouraging an acquisition, which could adversely affect the market price of our common stock[198][199][200] - We may have to pay tax on U.S. source income, which would reduce our earnings and cash flow[201][205] - If U.S. tax authorities were to treat us or one or more of our subsidiaries as a 'passive foreign investment company,' there could be adverse tax consequences to U.S. holders[207][208] - If U.S. tax authorities were to treat us as a 'controlled foreign corporation,' there could be adverse U.S. federal income tax consequences to certain U.S. investors[209] Item 4. Information on the Company This section provides an overview of the company's history, business operations, organizational structure, and property, detailing recent developments, fleet characteristics, chartering strategies, competitive strengths, and the regulatory environment affecting the product tanker industry A. History and Development of the Company Pyxis Tankers Inc. was incorporated in Marshall Islands in 2015, focusing on international maritime transportation, and has undergone fleet adjustments, including recent vessel sales and debt refinancing - Pyxis Tankers Inc. was incorporated under the laws of the Marshall Islands on March 23, 2015, as an international maritime transportation holding company[210] - As of March 31, 2023, the company owns its current fleet through four separate wholly-owned subsidiaries incorporated in the Marshall Islands[211] - The company sold the vessel 'Pyxis Malou' for $24.8 million in cash on March 23, 2023, expecting to recognize a gain from asset disposition of approximately $8.0 million[213] - On March 13, 2023, the company refinanced the debt associated with the 'Pyxis Karteria' with a new $15.5 million secured bank loan and repaid the remaining $3.0 million outstanding under the Promissory Note due to Maritime Investors Corp[214] - Cash dividends of $0.1615 per Series A Convertible Preferred Share were paid on January 20, February 21, and March 20, 2023[215] - The ongoing military conflict in Ukraine has had a significant direct and indirect impact on the trade of refined petroleum products, leading to sanctions and price volatility, but has not negatively affected the company's current charter contracts or operations[216] B. Business Overview Pyxis Tankers Inc. is an international maritime transportation company specializing in the product tanker sector, operating a modern, eco-efficient fleet, with a strategy focused on optimizing fleet efficiency, opportunistic growth, and maintaining strong customer relationships and financial flexibility - As of March 31, 2023, the company's fleet is comprised of four double hull product tankers (MRs) with an average age of 8.4 years and a total cargo carrying capacity of 198,882 dwt[217] Fleet Summary Information (as of March 31, 2023) | Vessel Name | Shipyard | Vessel type | Carrying Capacity (dwt) | Year Built | Type of charter | Charter Rate (per day) | Anticipated Earliest Redelivery Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pyxis Lamda | SPP / S. Korea | MR | 50,145 | 2017 | Time | $40,000 | Apr 2023 | | Pyxis Epsilon | SPP / S. Korea | MR | 50,295 | 2015 | Time | 30,000 | Sep 2023 | | Pyxis Theta | SPP / S. Korea | MR | 51,795 | 2013 | Time | 18,500 | Jun 2023 | | Pyxis Karteria | Hyundai / S. Korea | MR | 46,652 | 2013 | Time | DD | May 2023 | | Total | | | 198,887 | | | | | - The company generates revenues through time charters (fixed period, owner provides services, charterer pays voyage expenses) and spot charters (single voyage, owner paid per-ton, responsible for all expenses)[222][223] - Competitive strengths include a high-quality modern fleet, established relationships with leading tanker charterers, a competitive cost structure, and an experienced management team[226][228] - Business strategy involves maintaining a high-quality fleet, opportunistic growth through acquisitions of modern eco-MR tankers, optimizing operating efficiency through vessel modifications, utilizing a portfolio approach for commercial employment, preserving a strong safety record, maintaining financial flexibility, and supporting good ESG standards[228][229][231] - Executive officers and administrative services are provided by Maritime (an affiliated company), while day-to-day technical management and crewing are outsourced to ITM (an unaffiliated third party)[231][232][233][235] - The refined petroleum products tanker shipping industry saw seaborne trade grow by 1.3% CAGR (2013-2022), reaching 1,015 million tons in 2022, with the Russia-Ukraine conflict shifting trade patterns and increasing ton-mile demand[265][266] - Increasing environmental regulations, such as EEXI and CII, are expected to reduce tonnage availability, particularly for older, less efficient vessels, and may lead to increased scrapping and fleet renewal[269][286] - The global product tanker fleet comprised 3,186 vessels (173.4 million dwt) as of February 28, 2023, with a low orderbook-to-fleet ratio of 5.2% by units and 6.3% by dwt[273] - The company is subject to extensive international, national, state, and local environmental and safety laws and regulations, including MARPOL Annex VI (0.5% global sulfur cap, ECAs), BWM Convention (ballast water treatment systems), OPA 90 (oil spill liability), and EU regulations (ETS for maritime emissions)[287][290][292][293][307][318][332] Significant Customers (Percentage of Total Revenues) | Charterer | Year ended December 31, 2021 | Year ended December 31, 2022 | | :--- | :--- | :--- | | PMI | — | 41% | | Trafigura Maritime Logistics Pte. Ltd. | 27% | — | | Clearlake Shipping Pte. Ltd. | 17% | 27% | | Greenergy Fuels LTD | 12% | — | | Total | 56% | 68% | C. Organizational Structure Pyxis Tankers Inc. is a Marshall Islands corporation, operating through wholly-owned subsidiaries, with a list of vessel-owning and non-vessel-owning entities, noting recent re-domiciliation of some entities - The company was incorporated under the laws of the Republic of the Marshall Islands on March 23, 2015[350] - As of March 31, 2023, the company owns its fleet through four separate wholly-owned subsidiaries incorporated in the Republic of Marshall Islands[350] List of Subsidiaries (as of December 31, 2022) | Name of Company | Country of Incorporation | Principal Activities | Ownership | | :--- | :--- | :--- | :--- | | SECONDONE CORPORATION LTD | Marshall Islands | Non-operating subsidiary | 100% | | THIRDONE CORPORATION LTD | Marshall Islands | Non-operating subsidiary | 100% | | FOURTHONE CORPORATION LTD | Malta | Non-operating subsidiary | 100% | | SIXTHONE CORP. | Marshall Islands | Non-operating subsidiary | 100% | | SEVENTHONE CORP. | Marshall Islands | Ship ownership and operations | 100% | | EIGHTHONE CORP. | Marshall Islands | Ship ownership and operations | 100% | | TENTHONE CORP. | Marshall Islands | Ship ownership and operations | 100% | | ELEVENTHONE CORP. | Marshall Islands | Ship ownership and operations | 100% | | MARITIME TECHNOLOGIES CORP. | Delaware | Non-operating subsidiary | 100% | - Secondone and Thirdone re-domiciled from Malta back to the Marshall Islands in December 2022[691] D. Property, Plants and Equipment The company's primary material property consists of its vessels, with office space provided by its affiliated ship management company, Maritime - The company does not own any material property other than its vessels[352] - Office space is provided by Maritime, its affiliated ship management company, in Maroussi, Greece[352] Item 4A. Unresolved Staff Comments This item is not applicable to the report - Not applicable[353] Item 5. Operating and Financial Review and Prospects This section discusses the company's financial condition and results of operations, highlighting the impact of global events like COVID-19 and the Russia-Ukraine war, and outlining key financial and operational terms - The COVID-19 pandemic caused substantial disruptions, lower charter activity, higher crewing costs, and more expensive dry-dockings in 2021, and affected China's economic activity in 2022[354][356][357] - The Russian-Ukrainian war created further uncertainty for the global economic outlook, especially for Europe, leading to increased crude oil and bunker fuel prices and inflationary pressures, though no direct operational disruption has occurred to date[358] - The company sold 'Northsea Alpha' and 'Northsea Beta' in early 2022, and 'Pyxis Malou' on March 23, 2023, to focus on MR tankers due to attractive market conditions, high operating costs, greater emissions, and upcoming special surveys for older vessels[359] - Revenue is generated by chartering vessels (spot and time charters), with time charters providing more predictable cash flows and spot charters being more volatile[361] - Voyage related costs (brokerage, port/canal, bunker) are incurred for spot charters, while vessel operating expenses (crew, insurance, maintenance) are incurred for both time and spot charters[363][368][369] - General and administrative expenses include annual fees to Maritime for administrative services and public company expenses[370] - Depreciation is calculated on a straight-line basis over an estimated useful life of 25 years, with the scrap rate adjusted to $340/ton in 2022[372] - Special survey and dry-docking costs are deferred and amortized over the period until the next scheduled survey[373] - Interest and finance costs are incurred on debt, with variable rates linked to LIBOR (transitioning to SOFR), and the company uses interest rate caps for hedging[374] A. Operating Results The company experienced significant revenue growth and a return to net income in 2022, driven by higher spot charter rates and increased operating days from fleet expansion, despite higher voyage-related costs and interest expenses - As of December 31, 2022, the company employed three vessels on time charters and two vessels in the spot market[381] Revenue Breakdown (in thousands of U.S. dollars) | | Year ended December 31, 2021 | Year ended December 31, 2022 | | :------------------------------ | :--------------------------- | :--------------------------- | | Revenues derived from spot charters, net | $13,711 | $39,099 | | Revenues derived from time charters, net | $11,630 | $19,245 | | Revenues, net | $25,341 | $58,344 | MR Fleet Operating Data | Metric | 2021 | 2022 | Change (YoY) | | :-------------------------- | :----- | :----- | :----------- | | Ownership days | 1,276 | 1,825 | +549 | | Available days | 1,264 | 1,811 | +547 | | Operating days | 1,160 | 1,584 | +424 | | Utilization % | 91.8% | 87.5% | -4.3% | | Daily time charter equivalent rate (TCE) | $10,195 | $25,739 | +$15,544 | | Daily vessel operating expenses | $6,916 | $6,754 | -$162 | | Average number of vessels | 3.5 | 5.0 | +1.5 | | Number of vessels at period end | 4 | 5 | +1 | | Weighted average age of vessels at period end | 8.3 | 9.3 | +1.0 | MR Daily TCE Rate Calculation (in thousands of U.S. dollars) | Metric | 2021 | 2022 | | :-------------------------------- | :----- | :----- | | MR Revenues, net | $17,717 | $57,749 | | MR Voyage related costs and commissions | $(5,891) | $(16,979) | | MR Time charter equivalent revenues | $11,826 | $40,770 | | MR Operating days for fleet | 1,160 | 1,584 | | MR Daily TCE rate | $10,195 | $25,739 | - The company reported a net income to common shareholders of $12.5 million in 2022, a significant improvement from a net loss of $12.9 million in 2021[387][390] - Revenues, net, increased by $33.0 million (130%) in 2022 compared to 2021, primarily due to significantly higher spot charter rates and a 678-day increase in spot operating days for MRs[388][392] - Voyage related costs and commissions increased by $7.8 million (81.0%) in 2022 due to higher spot chartering activity and substantially higher average bunker fuel costs[388][393] - Depreciation increased by $1.2 million (24.5%) in 2022 due to the acquisition of 'Pyxis Karteria' and 'Pyxis Lamda'[388][396] - Interest and finance costs, net, increased by $1.2 million (35.2%) in 2022, mainly due to higher average outstanding debt balances and higher LIBOR rates[388][401] B. Liquidity and Capital Resources The company's liquidity is primarily derived from operations, bank debt, and equity issuances, with future needs focused on debt repayment, operating expenses, and fleet expansion, while maintaining a working capital surplus and expecting to meet its liquidity needs and debt covenants - Principal sources of liquidity include cash flows from operations, borrowings of bank debt, proceeds from equity issuances, and expected future vessel sales[403] - Future liquidity requirements relate primarily to payments of interest and debt principal, vessel operating expenses (including dry-docking), management fees, maintenance of cash reserves for loan covenants, and potential vessel acquisitions[410] - In October 2020, the company issued 200,000 Units, each separable into one 7.75% Series A Cumulative Convertible Preferred Share and eight Warrants (exercisable at $5.60 per common share)[403][805] - In July 2021, a follow-on public offering of 308,487 Series A Convertible Preferred Shares was completed for gross proceeds of $6.17 million[419][818] - In February 2021, the company closed definitive securities purchase agreements with investors, resulting in gross proceeds of $25.0 million from the issuance of 3,571,429 common shares[417][823] - A one-for-four reverse stock split was implemented on May 13, 2022, to meet NASDAQ's minimum bid price requirement[193][424][803][828] - Monthly cash dividends of $0.1615 per Series A Convertible Preferred Share were paid in 2021 ($537k), 2022 ($871k), and Q1 2023 ($208k)[420][425][821][850] - The company had a working capital surplus of $8.6 million as of December 31, 2022, compared to a deficit of $3.7 million as of December 31, 2021[427][430] Consolidated Cash Flows (in thousands of U.S. dollars) | Metric | 2021 | 2022 | | :------------------------------------------ | :----- | :----- | | Net cash provided by / (used in) operating activities | $(896) | $8,274 | | Net cash (used in) / provided by investing activities | $(43,194) | $4,953 | | Net cash provided by / (used in) financing activities | $49,927 | $(12,912) | | Change in cash and cash equivalents and restricted cash | $5,837 | $315 | | Cash and cash equivalents and restricted cash at period end | $9,874 | $10,189 | - Total outstanding debt was $65.75 million as of December 31, 2022, with a weighted average interest rate of 5.41% for the year[784][802] - The company was in compliance with all financial covenants as of December 31, 2022[441] - Major capital expenditures included the acquisition of 'Pyxis Karteria' in July 2021 for $20.0 million and 'Pyxis Lamda' in December 2021 for $31.2 million[444][445][773][775] - The company sold 'Pyxis Malou' on March 23, 2023, for $24.8 million, and refinanced the 'Pyxis Karteria' loan while fully repaying the Promissory Note in February/March 2023[213][214][779][851][852] C. Research and Development, Patents and Licenses, etc. This item is not applicable to the report - Not applicable[457] D. Trend Information The company's operating results are primarily influenced by volatile charter hire rates in the product tanker market, which are affected by supply and demand dynamics, global economic conditions, and geopolitical events - Results of operations depend primarily on charter hire rates, which are influenced by supply and demand dynamics in the product tanker market[458] - The product tanker industry has been highly cyclical, experiencing volatility in charter hire rates and vessel values[458] - The COVID-19 pandemic and the war between Russia and Ukraine have created additional uncertainty in demand for product tankers and impact charter rates[458][459] E. Critical Accounting Estimates The preparation of financial statements requires significant estimates and judgments, particularly concerning vessel impairment and depreciation, which are subject to market fluctuations and regulatory changes - The carrying values of vessels may not represent their fair market value due to fluctuations in charter rates and newbuilding costs[447] - Impairment losses are recorded when future undiscounted cash flows for an individual vessel are less than its carrying value plus unamortized dry-docking and survey balances[447][722] - Estimates for future undiscounted cash flows involve assumptions about time charter equivalent rates, operating expenses, capital expenditures, residual values, fleet utilization, and remaining useful life[447][723][724] - No impairment charge was recorded for the company's vessels as of December 31, 2022[448][726][841] - Vessels are depreciated on a straight-line basis over an estimated useful life of 25 years, with the scrap rate adjusted from $300/ton to $340/ton in Q4 2021 due to increased worldwide scrap rates[372][450][721] Item 6. Directors, Senior Management and Employees This section provides information on the company's board of directors, executive officers, their compensation, board practices, and employee structure, highlighting the reliance on external management for personnel A. Directors and Senior Management Lists the company's executive officers and directors, providing their ages, positions, and brief biographical information, highlighting their extensive industry experience and the board's diversity Executive Officers and Directors | Name | Age | Position | | :--- | :-- | :--- | | Valentios "Eddie" Valentis | 56 | Chairman, Chief Executive Officer and Class I Director | | Henry P. Williams | 67 | Chief Financial Officer and Treasurer | | Konstantinos Lytras | 58 | Chief Operating Officer and Secretary | | Robin P. Das | 50 | Class III Director | | Basil G. Mavroleon | 74 | Class III Director | | Aristides J. Pittas | 63 | Class II Director | - Mr. Valentios "Eddie" Valentis has over 26 years of shipping industry experience, founded Pyxis Maritime Corp. in 2007, and serves as President and Managing Director of Konkar Shipping Agencies S.A[463] - Mr. Henry P. Williams, Chief Financial Officer and Treasurer since August 2015, has over 35 years of commercial, investment, and merchant banking experience[464] - Mr. Konstantinos Lytras has served as Chief Operating Officer since inception and Secretary since October 2018, and is also Maritime's Financial Director[465] - There are no familial relationships among any of the executive officers or directors[469] - The Board Diversity Matrix indicates 4 male directors, with one director considered an Underrepresented Individual in his home country jurisdiction (United Kingdom)[471] B. Compensation The company has no direct employees, with executive officer services provided by Maritime, and non-executive directors receive annual compensation and may receive equity awards under the company's Equity Incentive Plan - The company has no direct employees; the services of its executive officers, internal auditors, and secretary are provided by Maritime[472] - An annual compensation of approximately $1.8 million is paid to Maritime for the services of these individuals and other administrative services[472] - Non-executive directors receive an aggregate annual compensation of $125,000, plus reimbursements for actual expenses[473] - The Pyxis Tankers Inc. 2015 Equity Incentive Plan (EIP) allows for the granting of stock options, stock appreciation rights, restricted stock grants, restricted stock units, and other equity-based awards to eligible individuals[474] - The maximum aggregate number of shares that may be delivered under the EIP is 15% of the then-issued and outstanding common stock[475] C. Board Practices The board of directors consists of four members, with three independent directors serving staggered three-year terms, and the company has an audit committee and a nominating and corporate governance committee to oversee financial reporting and corporate governance - The board of directors consists of four directors, three of whom are independent under NASDAQ and SEC rules (Robin P. Das, Basil G. Mavroleon, and Aristides J. Pittas)[484] - Directors are elected on a staggered basis, serving three-year terms[484] - The audit committee comprises the three independent directors, with Robin Das qualifying as an audit committee 'financial expert'[485] - The nominating and corporate governance committee consists of Basil G. Mavroleon, Aristides J. Pittas, and Valentios Valentis[486] D. Employees The company does not have direct employees; executive officers and other personnel services are provided by Maritime under a Head Management Agreement - The company has no direct employees[487] - The services of executive officers, internal auditors, and secretary are provided by Maritime under a Head Management Agreement, for which the company pays approximately $1.8 million annually[487] E. Share Ownership This item refers to Item 7.A. for information on common stock ownership by officers and directors - Information regarding the total amount of common stock owned by all officers and directors as a group is provided in Item 7.A. Major Shareholders[489] F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation This item is not applicable to the report - Not applicable[489] Item 7. Major Shareholders and Related Party Transactions This section details the beneficial ownership of major shareholders, directors, and executive officers, and outlines significant transactions with related parties, particularly Maritime and Maritime Investors, which are affiliated with the company's founder and CEO A. Major Shareholders Provides a table of beneficial ownership for major shareholders and the board, highlighting Mr. Valentios 'Eddie' Valentis's significant control through Maritime Investors Corp Beneficial Ownership (as of March 31, 2023) | Identity of person or group | Number of Shares Beneficially Owned | Percentage | | :--- | :--- | :--- | | Valentios "Eddie" Valentis (Maritime Investors Corp.) | 5,731,942 | 53.3% | | Henry P. Williams | 45,061 | * % (Less than 1%) | | Konstantinos Lytras | 15,094 | * % (Less than 1%) | | Robin P. Das | — | — | | Basil G. Mavroleon | — | — | | Aristides J. Pittas | — | — | | All directors and executive officers as a group (8 persons) | 5,792,097 | 53.9% | - Mr. Valentios "Eddie" Valentis, through Maritime Investors Corp., beneficially owned approximately 53.3% of the company's total outstanding common stock as of March 31, 2023, giving him considerable influence[492][493] - As of March 31, 2023, the company had 692 shareholders of record, with 77 located in the United States holding an aggregate of 6,315,472 shares (58.8% of outstanding common stock)[494] B. Related Party Transactions Details the company's management agreements with Maritime (an affiliate of Mr. Valentis) for ship management and administrative services, and the Promissory Note issued to Maritime Investors, highlighting the financial terms and recent repayments - Maritime, an affiliated ship management company beneficially owned by Mr. Valentis, provides comprehensive ship management and administrative services under a Head Management Agreement[495][497] - Maritime charges an annual administrative fee (approximately $1.8 million for 2023) and a daily ship-management fee ($368 per vessel for 2023), both subject to annual inflation adjustments[234][497][763] - Maritime also receives commissions of 1.00% on vessel sales and 1.25% on chartering, hiring, and freight revenue[497] Amounts Charged by Maritime (in thousands of U.S. dollars) | | Year ended December 31, 2020 | Year ended December 31, 2021 | Year ended December 31, 2022 | | :--- | :--- | :--- | :--- | | Charter hire commissions | $276 | $322 | $735 | | Ship-Management Fees | $637 | $716 | $702 | | Administration Fees | $1,632 | $1,632 | $1,652 | | Total | $2,545 | $2,670 | $3,089 | - The Promissory Note issued to Maritime Investors had an outstanding principal balance of $6.0 million as of December 31, 2021 and 2022, with an annual interest rate of 7.5% and a maturity date of April 1, 2024[443][500][766][771] - The company repaid $3.0 million of the Promissory Note on February 10, 2023, and the remaining balance on March 14, 2023[501][768] - Interest charged on the Promissory Note amounted to $452k in 2020, $335k in 2021, and $450k in 2022[502][769] - The acquisition of the 'Pyxis Lamda' in December 2021 for $31.17 million included $3.0 million in additional principal under the Amended and Restated Promissory Note as part of the consideration[504][775] C. Interests of Experts and Counsel This item is not applicable to the report - Not applicable[506] Item 8. Financial Information This section refers to Item 18 for the full consolidated financial statements and provides details on legal proceedings and the company's dividend policy - The company may be involved in litigation and claims arising in the ordinary course of business, but is not aware of any proceedings that could have significant effects on its financial position or profitability not covered by insurance[508] - The company does not intend to pay common stock dividends in the near future; any future payments are discretionary and subject to legal, fiduciary, and contractual requirements, including loan covenants[509] - As of December 31, 2022, the ratio of total liabilities to market value adjusted total assets was 37%, which permitted related subsidiaries to distribute dividends under the Alpha Bank Facilities[509] A. Consolidated Statements and Other Financial Information This item refers to Item 18 for the full consolidated financial statements and provides details on legal proceedings and the company's dividend policy - Refer to Item 18 for consolidated financial statements[507] - The company may be involved in litigation and claims arising in the ordinary course of business, but is not aware of any proceedings that could have significant effects on its financial position or profitability not covered by insurance[508] - The company does not intend to pay common stock dividends in the near future; any future payments are discretionary and subject to legal, fiduciary, and contractual requirements, including loan covenants[509] - As of December 31, 2022, the ratio of total liabilities to market value adjusted total assets was 37%, which permitted related subsidiaries to distribute dividends under the Alpha Bank Facilities[509] B. Significant Changes This item is not applicable to the report - Not applicable[510] Item 9. The Offer and Listing This section provides details on the listing of the company's common stock, Series A Convertible Preferred Shares, and warrants on the NASDAQ Capital Market A. Offer and Listing Details The company's common stock, Series A Convertible Preferred Shares, and warrants are listed and traded on the NASDAQ Capital Market under symbols PXS, PXSAP, and PXSAW, respectively - The company's common stock was approved for listing on the NASDAQ Capital Market on October 28, 2015, under the symbol 'PXS'[511] - Series A Convertible Preferred Shares are trading on the NASDAQ Capital Market under 'PXSAP', and warrants under 'PXSAW'[511] - As of March 31, 2023, the common stock price was $4.91[512] B. Plan of Distribution This item is not applicable to the report - Not applicable[512] C. Markets This item refers to Item 9.A. for market information - See Item 9.A. Offer and Listing Details for market information[513] D. Selling Shareholders This item is not applicable to the report - Not applicable[514] E. Dilution This item is not applicable to the report - Not applicable[515] F. Expenses of the Issue This item is not applicable to the report - Not applicable[516] Item 10. Additional Information This section provides further details on the company's share capital, corporate governance documents, material contracts, exchange controls, and comprehensive taxation considerations for both the company and its shareholders A. Share Capital This item is not applicable to the report - Not applicable[517] B. Memorandum and Articles of Association Outlines the company's corporate governance framework, governed by Marshall Islands law and its Articles of Incorporation and Bylaws, including provisions related to share capital, director elections, shareholder meetings, interested transactions, and anti-takeover measures - The company's corporate affairs are governed by its Articles of Incorporation, Bylaws, and the Marshall Islands Business Corporations Act (BCA)[519] - Authorized stock consists of 450,000,000 common shares and 50,000,000 preferred shares (including 1,000,000 Series A Preferred Shares)[520] - As of December 31, 2022, there were 10,613,424 common shares and 449,473 Series A Preferred Shares issued and outstanding[520] - Holders of common stock are entitled to one vote per share, ratable dividends (if declared), and pro-rata distribution upon dissolution/liquidation after preferred stock, with no preemptive, subscription, conversion, redemption, or sinking fund rights[532] - The board of directors has the authority to issue preferred stock with varying voting powers, designations, preferences, and rights[533] - Directors are elected annually on a staggered basis into three classes, each serving a three-year term[535] - Anti-takeover provisions include a classified board, 'blank check' preferred stock, prohibition of cumulative voting, removal of directors only for cause, restricted shareholder action by written consent, and limitations on 'Business Combinations' with 'Interested Shareholders'[198][199][539][540][542] C. Material Contracts This item refers to specific exhibits and other sections of the Annual Report for descriptions of material contracts not in the ordinary course of business - Material contracts are attached as exhibits to this Annual Report and described in Item 4, Item 5, Item 7, and Notes 3 and 7 to the consolidated financial statements[542] - No other material contracts were entered into in the two years immediately preceding the date of this Annual Report, other than those in the ordinary course of business[542] D. Exchange Controls Under Marshall Islands law, there are no restrictions on capital export or import, including foreign exchange controls affecting dividend or interest remittances to non-resident shareholders - Under current Marshall Islands law, there are no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest, or other payments to non-resident holders of shares[543] E. Taxation Provides a summary of certain material U.S. federal income tax consequences for the company and its U.S. and Non-U.S. holders, including potential exemptions, PFIC status, and reporting requirements, as well as Marshall Islands, Maltese, and Greek tax law considerations - Unless exempt under Section 883 of the Code or an applicable U.S. income tax treaty, a foreign corporation earning U.S.-source shipping income is generally subject to a 4% U.S. federal income tax on a gross basis[547][550] - The company intends to qualify for the Section 883 Exemption for the 2022 taxable year by satisfying both the 50% Ownership Test and the Publicly-Traded Test, as Mr. Valentis is a qualified shareholder and the common shares are primarily and regularly traded on NASDAQ[553][556][557][561][562] - Gain on the sale of a vessel is generally not subject to U.S. federal income tax if the sale is considered to occur outside of the United States[563] - For U.S. Holders, distributions on common stock are generally taxable as dividends, and gain/loss on sale is typically capital gain/loss, subject to special rules if the company is classified as a Passive Foreign Investment Company (PFIC)[566][571][575][578] - The company does not believe it was a PFIC in 2022 and does not expect to become one in 2023 or later, based on treating time chartering activities as services income[577] - Non-U.S. Holders are generally not subject to U.S. federal income or withholding tax on dividends or gains from sales of shares, unless the income is effectively connected with a U.S. trade or business[584][585] - Under Marshall Islands law, the company is not subject to income or capital gains tax, and no withholding tax is imposed on dividends[594] - Maltese-registered subsidiaries are exempt from Malta income tax on profits from 'shipping activities' if they qualify as 'tonnage tax ships,' and no Maltese withholding tax is imposed on dividends[595][596] - Greek law exempts ship management companies under 'Law 89' from income tax, but an annual tonnage tax levy applies to vessels, and Greek tax residents receiving dividends are taxed at 10%[598] F. Dividends and Paying Agents This item is not applicable to the report - Not applicable[599] G. Statement by Experts This item is not applicable to the report - Not applicable[601] H. Documents on Display The company's reports and other information, including this Annual Report and its exhibits, are publicly available on the SEC's website - Reports and other information, including this Annual Report and accompanying exhibits, are available at the SEC's website (http://www.sec.gov)[603](index=603&type=chunk) I. Subsidiary Information This item is not applicable to the report - Not applicable[604] J. Annual Report to Security Holders This item is not applicable to the report - Not applicable[605] Item 11. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to various market risks, including interest rate risk, foreign currency exchange risk, operational risk, credit risk, and commodity risk, and its strategies for managing them - The effects of the COVID-19 outbreak and its continuing variants are rapidly evolving and uncertain, potentially impacting demand for vessels, operations, and financial condition[606] A. Quantitative Information about Market Risk Quantifies the company's exposure to interest rate risk and assesses foreign currency exchange risk and inflation as not significant in the current and foreseeable future - The company's interest expense is affected by changes in LIBOR; a 100 basis point increase would have decreased net income and cash flows by approximately $0.5 million in 2021 and $3.9 million in 2022[608][609] - Foreign currency exchange risk is considered not significant, with approximately 5% (2021) and 9% (2022) of accounts payable denominated in non-U.S. currencies (mainly Euro)[610] - Inflation is not considered a significant risk to the business in the current environment and foreseeable future[611] B. Qualitative Information about Market Risk Provides qualitative insights into the company's market risk exposures and management strategies, including hedging interest rates, minimizing operational risks, managing foreign exchange, assessing credit risk, and monitoring commodity prices - The company monitors interest rate exposure and uses interest rate caps to hedge variable interest rate exposure, such as the sale of a cap in January 2023 for a net cash profit of $0.5 million[612] - Operational risks, including dry-dock, repair costs, insurance, and piracy, are managed through technical management, a relatively young fleet, insurance coverage, and countermeasures against piracy[613] - Foreign exchange rate exposure is considered immaterial, with most revenue in U.S. dollars and some expenses in Euros; no derivative contracts are used for currency risk[614] - Credit risk is managed by performing ongoing credit evaluations of customers and monitoring concentrations of credit risk, with cash and cash equivalents held across four banks[615][616] - Commodity risk from bunker prices is unhedged, meaning price increases could adversely affect profitability and cash flows[617] - Liquidity risk is managed through strict cash flow forecasting to ensure sufficient funds for obligations and contingencies[618] - Inflation is not expected to be a significant risk, but if it becomes a factor, it would increase operating, voyage, and finance costs[619] Item 12. Description of Securities Other than Equity Securities This section states that the items related to debt securities, warrants and rights, other securities, and American Depositary Shares are not applicable to the report A. Debt Securities This item is not applicable to the report - Not applicable[620] B. Warrants and Rights This item is not applicable to the report - Not applicable[621] C. Other Securities This item is not applicable to the report - Not applicable[623] D. American Depositary Shares This item is not applicable to the report - Not applicable[624] Part II Item 13. Defaults, Dividend Arrearages and Delinquencies This item is not applicable to the report - Not applicable[626] Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds This item is not applicable to the report - Not applicable[627] Item 15. Controls and Procedures This section details the company's disclosure controls and procedures and management's assessment of internal control over financial reporting, confirming their effectiveness and compliance A. Disclosure Controls and Procedures As of December 31, 2022, the company's disclosure controls and procedures were deemed effective, ensuring timely accumulation and communication of information for SEC reporting - As of December 31, 2022, the company's disclosure controls and procedures were effective[628] - These controls ensure that information required for SEC reports is accumulated and communicated to management for timely disclosure decisions[628] B. Management's Annual Report on Internal Control over Financial Reporting Management is responsible for maintaining adequate internal controls over financial reporting, which were assessed as effective as of December 31, 2022, based on the COSO framework - Management is responsible for establishing and maintaining adequate internal controls over financial reporting (ICFR)[629] - The ICFR system is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements in accordance with GAAP[629] - Based on an assessment using the COSO framework, management determined that the internal control over financial reporting was effective as of December 31, 2022[630] C. Attestation Report of the Registered Public Accounting Firm This item is not applicable to the report - Not applicable[631] D. Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the period covered by the Annual Report - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period covered by this Annual Report[632] Item 16. Reserved This item is not applicable to the report - Not applicable[633] Item 16A. Audit Committee Financial Expert Mr. Robin Das has been identified as an audit committee financial expert, meeting SEC and NASDAQ requirements, and is independent - Mr. Robin Das is an audit committee financial expert as defined by SEC rules and possesses the requisite financial sophistication under NASDAQ Stock Market rules[634] - Mr. Das is independent as defined in Rule 10A-3 under the Exchange Act and under NASDAQ listing standards[634] Item 16B. Code of Ethics The company has adopted a Code of Business Conduct and Ethics for all officers and employees, which is publicly available on its website - The board of directors has approved and adopted a Code of Business Conduct and Ethics for all officers and employees[635] - A copy of the Code of Business Conduct and Ethics is available on the company's website at http://www.pyxistankers.com[635](index=635&type=chunk) Item 16C. Principal Accountant Fees and Services Details the fees billed by the principal accountants (Ernst & Young and KPMG) for audit and other services in 2021 and 2022, and outlines the audit committee's policy for pre-approving all engagements and fees - Ernst & Young (Hellas) Certified Auditors Accountants S.A. served as the independent registered public accounting firm for 2021, and KPMG Certified Auditors S.A. for 2022[636] Principal Accountant Fees (in U.S. dollars) | Fee Type | 2021 | 2022 | | :--------------- | :----- | :----- | | Audit Fees | $148,000 | $98,500 | | Audit-Related Fees | $90,000 | $0 | | Tax Fees | $1,000 | $0 | | All Other Fees | $0 | $0 | - The audit committee is responsible for the appointment, compensation, retention, and oversight of the independent auditors, and pre-approves all audit and non-audit fees and services[641] - All engagements and fees paid to the principal accountants have been separately pre-approved by the audit committee since October 28, 2015[642] Item 16D. Exemptions from the Listing Standards for Audit Committees This item is not applicable to the report - Not applicable[644] Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no purchases of equity securities by the issuer and affiliated purchasers during the reporting period - None[645] Item 16F. Change in Registrant's Certifying Accountant KPMG Certified Auditors S.A. was engaged to audit the financial statements for the fiscal year ended December 31, 2022, replacing Ernst & Young (Hellas) Certified Auditors Accountants S.A - KPMG Certified Auditors S.A. was engaged to audit the financial statements for the fiscal year ended December 31, 2022, replacing Ernst & Young (Hellas) Certified Auditors Accountants S.A[646] - The engagement of KPMG was approved by the audit committee and board of directors on April 30, 2022[646] Item 16G. Corporate Governance As a foreign private issuer, the company is exempt from many NASDAQ corporate governance requirements, adhering instead to Marshall Islands law and its own practices, which include specific board and committee compositions and approval processes - As a foreign private issuer, the company is exempt from many NASDAQ corporate governance practices, complying instead with Marshall Islands law[647] - Practices include board review of related party transactions, notification of stockholders for meetings (15-60 days advance notice), and the entire board (majority independent) reviewing executive compensation[648] - The nominating and corporate governance committee is composed of two independent directors and one non-independent executive director[648] - Stockholder approval is not required to amend or terminate the equity incentive plan or establish