As used in this "Management's Discussion and Analysis of Financial Condition and
Results of Operation," except where the context otherwise requires, the term
"we," "us," "our," or "the Company," refers to the business of
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are not historical facts and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. The Company's securities filings can be accessed on
the EDGAR section of the
Organizational Overview
Together with our wholly owned crew management subsidiaries,
Through the crew management platform developed by our affiliate, Seatrix, our
personnel can collaborate with many different cultures in many different time
zones with ever rising complexities, presenting a uniform service level to our
principals, regardless of the point of origin of the crew. This innovation
allows us to hire junior operators, who after a short training procedure are
able to serve our principals with high quality standards, helping
We currently manage over 2,500 seafarers of seven different nationalities who are aboard seven different ship types. On any one day, we manage over 250 seafarers traveling worldwide while processing over 500 multilingual applicants daily, supporting our clients.
The Company intends to expand the services it offers by also providing ship
management services. In furtherance thereof, we acquired Ultra Shipmanagement
from Mr.
12
Known Trends, Demands, Commitments, Events or Uncertainties Impacting Our Business
The shipping industry is currently experiencing historical uncertainty in
sustainability logistics and daily operations as a result of the COVID-19
pandemic, geopolitical tensions and the war between
To address these issues, we are implementing short and long-term strategies based on proactive scheduling and recruitment, with the help of our cloud-based system and intelligent metrics that have been developed in-house to monitor the "trends and fashions" of the maritime industry. Our goal is to build new pools of seafarers by accelerating promotions, cadetship programs, and the employment of more cadets onboard. These cadets are scheduled to be promoted to junior officers in the near future, generating a new breed of officers to address the global shortage and maintain crews at reasonable costs. We have also developed interactive screens through HTML5 links to communicate with seafarers and to keep crews updated, monitor their welfare and provide better services to them. We also intend to upgrade our cloud-based system during the second quarter of 2022, to elevate logistics intelligence, allowing us to handle growth and recruitment volumes more efficiently. While we believe that these actions will help address many of these issues, if we are unable to effectively do so, the shortage of crew members and significant increase in expenses could have a materially adverse impact on our business.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor's understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.
Basis of Presentation
The financial statements have been prepared in accordance with generally
accepted accounting principles in
The accompanying financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the financial statements.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of
all entities controlled by
13 Accounting Basis
The Company uses the accrual basis of accounting and accounting principles
generally accepted in
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
Accounts Receivable
For the three-month periods ended
The Company does not have an allowance for doubtful accounts as of
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Beneficial Conversion Features
The Company issued convertible bonds that resulted in a beneficial conversion feature. A beneficial conversion feature arises when the conversion price of a convertible instrument is below the per share fair value of the underlying stock into which it is convertible. The holder realizes a benefit to the extent of the price difference and the issuer of the convertible instrument realizes a cost based on the theory that the intrinsic value of the price difference represents an additional financing cost.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Revenue Recognition
The Company recognizes revenue in accordance with FASB ASC 606 upon the transfer
of goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or
services. Revenue recognized from contracts with customers is disclosed
separately from other sources of revenue. ASC 606 includes guidance on when
revenue should be recognized on a Gross (Principal) or
14
Most of the Company's revenues are recognized primarily under long-term
contracts, including those for which revenues are based on either a fixed price,
or cost-plus-fee basis, and primarily as performance obligations are satisfied.
Revenue from crew manning services where
The measurement and recognition of stock-based compensation expense is based on estimated fair values for all share-based awards made to employees and directors, including stock options and for non-employee equity transactions as per ASC 718 rules.
For transactions in which we obtain certain services of employees, directors, and consultants in exchange for an award of equity instruments, we measure the cost of the services based on the grant date fair value of the award. We recognize the cost over the vesting period
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company's net profit
(loss) applicable to common shareholders by the weighted average number of
shares of common stock during the period. Diluted earnings per share is
calculated by dividing the Company's net income (loss) applicable to common
shareholders by the diluted weighted average number of shares outstanding during
the year. The diluted weighted average number of shares outstanding is the basic
weighted number of shares adjusted for any potentially dilutive debt or equity.
There were no such common stock equivalents outstanding as of
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow.
Subsequent Events
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations
subsequent to
Plan of Operations
In order to meet business goals, we must (a) execute effectively our current business of crew management; and (b) continue to focus on new business development in order to acquire new agreements.
In order to raise sufficient funds to proceed with the implementation of our business plan, we may have to find alternative sources of funds, like a second public offering, a private placement of securities, or loans from third parties (such as banks or other institutional lenders). Equity financing could result in additional dilution to then existing shareholders. If we are unable to meet our needs for cash from either the money that we raise from private placements, or possible alternative sources, then we may be unable to continue to maintain, develop or expand our operations.
We incurred revenues of
In the second quarter of 2021, we entered into an exclusive Software License
Agreement with
15 Results of Operations Revenues
For the three-month periods ended
Operating Expenses
For the three-month periods ended
Net Loss and Gross Profit
For the three-month periods ended
Liquidity, Capital Resources, and Off-Balance Sheet Arrangements
Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its needs for cash requirements. We had a working capital surplus during
the three-month period ended
Cash flows for the three-month period ended
Net cash flow provided by operating activities was
Net cash flow used in investing activities was
Net cash provided by financing activities was
16 Cash Requirements
We believe our cash and cash equivalents, together with anticipated cash flow from operations will be sufficient to meet our working capital, and capital expenditure requirements for at least the next twelve months. We will require additional capital to implement our business development and fund our operations. In the event that our plans or assumptions change, we may need to raise additional capital sooner than expected.
Since the commencement of our crew management business, we have funded our operations primarily through equity financings and we expect that we will continue to fund our business through equity and debt financing, either alone or through strategic alliances. Additional funding may not be available on favorable terms, if at all, which could harm our business plans, financial condition and operating results. We intend to continue to fund our business by way of equity or debt financing along with the revenues that can support the Company. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
Contractual Obligations
The Company leases its office space in Vari,
Year EndingDecember 31 , Operating Leases 2022 (remaining) 49,812.30 2023 19,924.92 2024 14,943.69 Total 84,680.91
Rent expense for the three months ended
Outlook
The outbreak of COVID-19 has adversely affected both our and our clients' operations. During the pandemic there were cases where crews were likely to be unable to travel to join a vessel or be repatriated following the completion of their contract due to travel restrictions creating several challenges in our operations. Additionally, specialized staff such as inspectors were often restricted from accessing vessels and thus conducting the legally required inspections (safety, environmental, training, etc.), supplies were often difficult to reach the vessels and support from head offices could be of lower quality since a large part of the staff was working remotely. The Company was able to continue to operate with minor interruptions although the vast majority of our staff worked remotely from the beginning of the pandemic. However, in the future similar epidemics, pandemics or outbreaks may impact our business due to closures or restrictions requested or mandated by governmental authorities, disruption to supply chains and workforce, reduction of demand for our services, and credit losses when customers and other counterparties fail to satisfy their obligations to us, among other factors.
17
The shipping industry and especially the crew management segments will likely
continue to face increasing pressures, further due to the ongoing COVID-19
crisis, as well as due to the war in
The management team of
The demand for our services depends on the demand for maritime shipping services which are subject to normal economic cycles affecting the general economy including the effect of increased inflation. Inflationary pressures may result to important increases to our operating costs that we may not be able to fully transfer to our clients thus affecting our profitability. Additionally, increase in operating costs of our clients may lead to delays in payments for our services and accumulation of bad debt, although as a Company we closely monitor their credit behavior to avoid such incidents. Additionally, significant deteriorations of economic conditions over a prolonged period could produce a material adverse effect on the demand for our services.
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