Globus Maritime reported its unaudited consolidated operating and financial results for the quarter and year ended December 31, 2018.
Current Fleet Deployment
All our vessels are currently operating on short term time charters (“on spot”).
Athanasios Feidakis, President, Chief Executive Officer and Chief Financial Officer of Globus Maritime Limited, stated:
“We are very pleased with our overall performance during 2018. Our total revenues increased by about 25% when compared to year 2017. At the same time our comprehensive loss went down 45% in 2018 compared to 2017. Additionally our 4th quarter 2018 had an increase in our total revenues of 10% compared to the same quarter in 2017.
“In the second half of Q4 2018 the market experienced a strong downward pressure; however we are getting some optimistic signals for the future, mainly from the supply side of the market. We hope the trade war problems will be resolved for the benefit of the entire world economy and by extent for our industry. The combination of the trade war, Brexit, Chinese New Year among other factors repressed the demand which spilled over onto the industry charter rates. However, the fundamentals have improved slightly recently and with the Baltic Dry Index doing better we are optimistic that the desperately needed rebound of the market isn’t too far off. Fortunately, we were able to seize the opportunity and secure some relatively good period charters for some of our vessels before this downward trend started.
“Additionally we are pleased to report our recent developments are as follows:
In October 2018 and following our Reverse Split effect of October 15, 2018 we have regained compliance with NASDAQ Stock Exchange with the price of $1.00 per share minimum closing bid price requirement for continued listing on the NASDAQ Capital Market, pursuant to the NASDAQ marketplace rules.
In November 2018, we entered into a credit facility for up to $15 million with Firment Shipping Inc., a related party to us, for the purpose of financing our general working capital needs.
In December 2018, the Company entered into a Loan Agreement with Macquarie International Bank Limited for an amount up to US$13.5 million in order to refinance two of its vessels, m/v Moon Globe and m/v Sun Globe.
On Wednesday March 13, 2019, we announced that we entered into a Securities Purchase Agreement with a private investor and issued for gross proceeds of $5 million, a senior convertible note of which details of the transaction can be easily found in the contents of our press release herein.
Furthermore, we look at the above transactions positively since they not only enhance our balance sheet, but they also reinforce our previously stated intent to do everything possible to maximize shareholder value and grow the Company by pursuing opportunities for accretive acquisitions.”
Management Discussion and Analysis of the Results of Operations
Fourth quarter of the year 2018 compared to the fourth quarter of the year 2017
Total comprehensive loss for the fourth quarter of the year 2018 amounted to $1,349 thousand or $0.42 basic loss per share based on 3,206,959 weighted average number of shares, compared to total comprehensive loss of $1,277 thousand for the same period last year or $0.42 basic loss per share based on 3,050,316 weighted average number of shares.
During the three-month periods ended December 31, 2018 and 2017, our revenue reached $4.4 million and $4 million respectively. The 10% increase in Voyage revenues was mainly attributed to the increase in the average time charter rates achieved by our vessels during the fourth quarter of 2018 compared to the same period in 2017. Time Charter Equivalent rate (TCE) for the fourth quarter of 2018 amounted to $9,088 per vessel per day against $8,122 per vessel per day during the same period in 2017 corresponding to an increase of 12%.
Total administrative expenses
Total administrative expenses increased by $0.2 million or 67% to $0.5 million during the three month period ended December 31, 2018 compared to $0.3 million during the same period in 2017.
Loss on derivative financial instruments
In November 2018, we entered into a credit facility for up to $15 million with Firment Shipping Inc., a related party to us, for the purpose of financing its general working capital needs (which is further discussed in the “Firment Shipping Credit Facility” section below in this press release). Due to a conversion clause included in this agreement the Company has recognized this agreement as a hybrid agreement which includes an embedded derivative. This embedded derivative was separated to the derivative component and the non-derivative host. The derivative component is shown separately from the non-derivative host at fair value. The changes in the fair value of the derivative financial instrument are depicted in the consolidated statement of comprehensive loss. As of December 31, 2018, the Company recognized a loss on this derivative financial instrument amounting to approximately $131,000.
Year ended December 31, 2018 compared to the year ended December 31, 2017
Total comprehensive loss for the year ended December 31, 2018 amounted to $3.6 million or $1.11 basic loss per share based on 3,200,927 weighted average number of shares, compared to total comprehensive loss of $6.5 million for the same period last year or $2.51 basic loss per share based on 3,050,316 weighted average number of shares.
During the years ended December 31, 2018 and 2017, our Voyage revenue reached $17.4 million and $13.9 million respectively. The 25% increase in revenue was mainly attributed to the increase in the average time charter rates achieved by our vessels during the year ended December 31, 2018 compared to the same period in 2017. Time Charter Equivalent rate (TCE) for the year 2018 amounted to $9,213 per vessel per day against $6,993 per vessel per day during the year 2017 corresponding to an increase of 32%.
Gaining Compliance with NASDAQ Capital Market
On May 4, 2018, we received written notification from The Nasdaq Stock Market (“Nasdaq”) dated April 30, 2018, indicating that because the closing bid price of its common stock for the last 30 consecutive business days was below $1.00 per share, the Company no longer met the minimum bid price continued listing requirement for the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5450(a)(1). Pursuant to Nasdaq Listing Rules, the applicable grace period to regain compliance is 180 days, or until October 29, 2018.
On October 8, 2018 the Company determined to effect a 1‐for-10 reverse stock split in order to regain compliance with the Nasdaq Capital Market concerning the minimum bid price requirement. On October 15, 2018 we had the 1‐for‐10 reverse stock split effect and on October 30 we received notification from Nasdaq that it had regained compliance with the minimum bid price, and the matter is now closed. We effected a ten-for-one reverse stock split which reduced the number of outstanding common shares from 32,065,077 to 3,206,495 shares (adjustments were made based on fractional shares). As of December 31, 2018, our issued and outstanding capital stock consisted of 3,209,327 common shares.
Firment Shipping Credit Facility
In November 2018, we entered into a credit facility for up to $15 million with Firment Shipping Inc., a related party to us, for the purpose of financing our general working capital needs. The Firment Shipping Credit Facility is unsecured and remains available until its final maturity date at November 20, 2020. We have the right to drawdown any amount up to $15 million or prepay any amount in multiples of $100,000. Any prepaid amount can be re-borrowed in accordance with the terms of the facility. Interest on drawn and outstanding amounts is charged at 7% per annum and no commitment fee was charged on the amounts remaining available and undrawn. Interest is payable the last day of a period of three months after the Drawdown Date, after this period in case of failure to pay any sum due a default interest of 2% per annum above the regular interest is charged. We have also the right, in our sole option, to convert in whole or in part the outstanding unpaid principal amount and accrued but unpaid interest under this Agreement into Common stock. The Conversion price shall equal the higher of (i) the average of the daily dollar volume-weighted average sale price for the Common Stock on the Principal Market on any Trading Day during the period beginning at 9.30 a.m. New York City time and ending at 4.00 p.m. over the Pricing Period multiplied by 80%, where the “Pricing Period” equals the ten consecutive Trading Days immediately preceding the date on which the Conversion Notice was executed or (ii) $2.80.
As per this conversion clause the Company has recognized this agreement as a hybrid agreement which includes an embedded derivative. This embedded derivative was separated to the derivative component and the non-derivative host. The derivative component is shown separately from the non-derivative host in the consolidated statement of financial position at fair value. The changes in the fair value of the derivative financial instrument are depicted in the consolidated statement of comprehensive loss. As of December 31, 2018, the Company recognized a loss on this derivative financial instrument amounting to approximately $131,000.
Macquarie Loan Agreement
In December 2018, through our wholly owned subsidiaries, Artful Shipholding S.A. (“Artful”) and Longevity Maritime Limited (“Longevity”), we entered into the Macquarie Loan Agreement for an amount up to $13.5 million with Macquarie Bank International Limited and used funds borrowed thereunder to refinance part of the repayment of the existing DVB Loan Agreement for the m/v Moon Globe and m/v Sun Globe. Globus acts as guarantor for this loan.
New Convertible Note
On March 13, 2019, the Company signed a securities purchase agreement with a private investor and on March 13, 2019 issued, for gross proceeds of $5 million, a senior convertible note (the “Convertible Note”) that is convertible into shares of the Company’s common stock, par value $0.004 per share. If not converted or redeemed beforehand pursuant to the terms of the Convertible Note, the Convertible Note matures upon the anniversary of its issue. We will use part of the proceeds from the Convertible Note for general corporate purposes and working capital including repayment of debt. The Convertible Note was issued in a transaction exempt from registration under the Securities Act. As of the date hereof, no conversion of the Convertible Note has occurred.
The Convertible Note provides for interest to accrue at 10% annually, which interest shall be paid on the first anniversary of the Convertible Note’s issuance unless the Convertible Note is converted or redeemed pursuant to its terms beforehand. The interest may be paid in common shares of the Company, if certain conditions described within the Convertible Note are met.