UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the nine months ended September 30, 2017
Commission file number 001-36028
ARDMORE SHIPPING CORPORATION
(Exact name of Registrant as specified in its charter)
Cumberland House
1 Victoria Street, 5th Floor
Hamilton, HM11 Bermuda
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40- F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).
Yes ¨ No x
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached to this Report on Form 6-K are (1) Management’s Discussion and Analysis of Financial Condition and Results of Operations and (2) the unaudited condensed interim consolidated financial statements and related notes of Ardmore Shipping Corporation (the “Company”), as at and for the three and nine months ended September 30, 2017 and 2016.
This Report is hereby incorporated by reference into the following registration statements of the Company:
| · | Registration Statement on Form F-3D (Registration No. 333-203205) filed with the U.S. Securities and Exchange Commission on April 2, 2015; |
| · | Registration Statement on Form F-3 (Registration No. 333-206501) filed with the U.S. Securities and Exchange Commission on August 21, 2015, as amended. |
| · | Registration Statement on Form F-3 (Registration No. 333-213343) filed with the U.S. Securities and Exchange Commission on August 26, 2016; and |
| · | Registration Statement on Form S-8 (Registration No. 333-213344) filed with the U.S. Securities and Exchange Commission on August 26, 2016. |
FORWARD LOOKING STATEMENTS
Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe”, “anticipate”, “intend”, “estimate”, “forecast”, “plan”, “potential”, “should”, “may”, “will”, “expect” and similar expressions are among those that identify forward-looking statements.
The forward-looking statements in this report are based upon various assumptions, including, among others, the Company’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include: the strength of world economies and currencies; general market conditions, including fluctuations in charter rates and vessel values; changes in demand for and the supply of tanker vessel capacity; changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs; fluctuations in oil prices; the market for the Company’s vessels; competition in the tanker industry; availability of financing and refinancing; charter counterparty performance; ability to obtain financing and comply with covenants in such financing arrangements; changes in governmental rules and regulations or actions taken by regulatory authorities; general domestic and international political conditions; potential disruption of shipping routes due to accidents, piracy or political events; vessel breakdowns and instances of off-hires; and other factors. Please see the Company’s filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The Company cautions readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements are not guarantees of the Company’s future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ARDMORE SHIPPING CORPORATION | ||
| Date: November 1, 2017 | By: | /s/ Paul Tivnan |
| Paul Tivnan | ||
| Chief Financial Officer, Treasurer and Secretary | ||
ARDMORE SHIPPING CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and accompanying notes contained in this Report on Form 6-K and with our audited consolidated financial statements contained in “Item 18. Financial Statements” and “Item 5. Operating and Financial Review and Prospects” of our Annual Report on Form 20-F for the year ended December 31, 2016. The unaudited condensed interim consolidated financial statements included in this report have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are presented in U.S. dollars as at and for the three and nine months ended September 30, 2017 and 2016. Unless the context otherwise requires, the terms “Ardmore,” the “Company”, “we,” “our” and “us” refer to Ardmore Shipping Corporation (NYSE:ASC) and its consolidated subsidiaries.
GENERAL
Ardmore owns and operates a fleet of mid-size product and chemical tankers ranging from approximately 25,000 to 50,000 deadweight tonnes (“Dwt”). Ardmore provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with its modern, fuel-efficient fleet of tankers.
Ardmore’s core strategy is to continue to develop a modern, high-quality fleet of product and chemical tankers, build key long-term commercial relationships, and maintain a cost advantage in assets, operations and overhead, while creating synergies and economies of scale as the company grows. Ardmore provides its services to customers through voyage charters, commercial pools and time charters and has established close working relationships with key commercial and technical management partners. Ardmore views the continued development of these relationships as crucial to its long-term success.
We are commercially independent, as we have no blanket employment arrangements with third-party or related-party commercial managers. We market our services directly to our customers, including a range of pooling service providers. As of September 30, 2017, our fleet consisted of 27 vessels, which are reflected in the following table:
| Vessel Name | Type | Dwt Tonnes | IMO | Built | Country | Flag | Specification | |||||||||
| Ardmore Seavaliant | Product/Chemical | 49,998 | 2/3 | Feb-13 | Korea | MI | Eco-design | |||||||||
| Ardmore Seaventure | Product/Chemical | 49,998 | 2/3 | Jun-13 | Korea | MI | Eco-design | |||||||||
| Ardmore Seavantage | Product/Chemical | 49,997 | 2/3 | Jan-14 | Korea | MI | Eco-design | |||||||||
| Ardmore Seavanguard | Product/Chemical | 49,998 | 2/3 | Feb-14 | Korea | MI | Eco-design | |||||||||
| Ardmore Sealion | Product/Chemical | 49,999 | 2/3 | May-15 | Korea | MI | Eco-design | |||||||||
| Ardmore Seafox | Product/Chemical | 49,999 | 2/3 | Jun-15 | Korea | MI | Eco-design | |||||||||
| Ardmore Seawolf | Product/Chemical | 49,999 | 2/3 | Aug-15 | Korea | MI | Eco-design | |||||||||
| Ardmore Seahawk | Product/Chemical | 49,999 | 2/3 | Nov-15 | Korea | MI | Eco-design | |||||||||
| Ardmore Endeavour | Product/Chemical | 49,997 | 2/3 | Jul-13 | Korea | MI | Eco-design | |||||||||
| Ardmore Enterprise | Product/Chemical | 49,453 | 2/3 | Sep-13 | Korea | MI | Eco-design | |||||||||
| Ardmore Endurance | Product/Chemical | 49,466 | 2/3 | Dec-13 | Korea | MI | Eco-design | |||||||||
| Ardmore Encounter | Product/Chemical | 49,478 | 2/3 | Jan-14 | Korea | MI | Eco-design | |||||||||
| Ardmore Explorer | Product/Chemical | 49,494 | 2/3 | Jan-14 | Korea | MI | Eco-design | |||||||||
| Ardmore Exporter | Product/Chemical | 49,466 | 2/3 | Feb-14 | Korea | MI | Eco-design | |||||||||
| Ardmore Engineer | Product/Chemical | 49,420 | 2/3 | Mar-14 | Korea | MI | Eco-design | |||||||||
| Ardmore Seafarer | Product/Chemical | 45,744 | 3 | Aug-04 | Japan | MI | Eco-mod | |||||||||
| Ardmore Seatrader | Product | 47,141 | — | Dec-02 | Japan | MI | Eco-mod | |||||||||
| Ardmore Seamaster | Product/Chemical | 45,840 | 3 | Sep-04 | Japan | MI | Eco-mod | |||||||||
| Ardmore Seamariner | Product/Chemical | 45,726 | 3 | Oct-06 | Japan | MI | Eco-mod | |||||||||
| Ardmore Sealeader | Product | 47,463 | — | Aug-08 | Japan | MI | Eco-mod | |||||||||
| Ardmore Sealifter | Product | 47,472 | — | Jul-08 | Japan | MI | Eco-mod | |||||||||
| Ardmore Dauntless | Product/Chemical | 37,764 | 2 | Feb-15 | Korea | MI | Eco-design | |||||||||
| Ardmore Defender | Product/Chemical | 37,791 | 2 | Feb-15 | Korea | MI | Eco-design | |||||||||
| Ardmore Cherokee | Product/Chemical | 25,215 | 2 | Jan-15 | Japan | MI | Eco-design | |||||||||
| Ardmore Cheyenne | Product/Chemical | 25,217 | 2 | Mar-15 | Japan | MI | Eco-design | |||||||||
| Ardmore Chinook | Product/Chemical | 25,217 | 2 | Jul-15 | Japan | MI | Eco-design | |||||||||
| Ardmore Chippewa | Product/Chemical | 25,217 | 2 | Nov-15 | Japan | MI | Eco-design | |||||||||
| Total | 27 | 1,202,568 | ||||||||||||||
RESULTS OF OPERATIONS
Factors You Should Consider When Evaluating Our Results
There are a number of factors that should be considered when evaluating our historical financial performance and assessing our future prospects and we use a variety of financial and operational terms and concepts when analyzing our results of operations. Please read “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2016 for additional information.
In accordance with U.S. GAAP, we report gross revenues in our income statement and include voyage expenses among our operating expenses. Ship-owners base economic decisions regarding the deployment of their vessels upon actual and anticipated time charter equivalent, or “TCE” rates, (which represent net revenues divided by revenue days) and industry analysts typically measure rates in terms of TCE rates. This is because under time charters and pooling arrangements the customer typically pays the voyage expenses, while under voyage charters, also known as spot market charters, the shipowner usually pays the voyage expenses. As a result, for vessels employed directly in the spot market, revenue is recognized on a gross freight basis, while under time chartering and pool arrangements, the charterer typically pays voyage expenses and revenue is recognized on a net basis. To normalize these differences, the discussion of revenue below focuses on TCE rates where applicable. Net revenues, a non-U.S. GAAP financial measure, represents revenues less voyage expenses.
Statement of Operations for the Three Months ended September 30, 2017 and September 30, 2016
The following table presents our operating results for the three months ended September 30, 2017 and 2016.
| INCOME STATEMENT DATA | Three months ended | |||||||||||||||
| Sept 30, 2017 | Sept 30, 2016 | Variance | Variance | |||||||||||||
| (%) | ||||||||||||||||
| REVENUE | ||||||||||||||||
| Revenue | $ | 48,652,951 | $ | 37,969,400 | $ | 10,683,551 | 28 | % | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Commissions and voyage related costs | 18,299,117 | 10,011,629 | (8,287,488 | ) | (83 | )% | ||||||||||
| Vessel operating expenses | 16,330,356 | 13,739,022 | (2,591,334 | ) | (19 | )% | ||||||||||
| Depreciation | 8,638,739 | 7,340,499 | (1,298,240 | ) | (18 | )% | ||||||||||
| Amortization of deferred drydock expenditure | 771,037 | 771,282 | 245 | 0 | % | |||||||||||
| General and administrative expenses | ||||||||||||||||
| Corporate | 3,244,179 | 3,554,134 | 309,955 | 9 | % | |||||||||||
| Commercial and chartering | 703,583 | 470,155 | (233,428 | ) | (50 | )% | ||||||||||
| Total operating expenses | 47,987,011 | 35,886,721 | (12,100,290 | ) | (34 | )% | ||||||||||
| Operating Income | 665,940 | 2,082,679 | (1,416,739 | ) | (68 | )% | ||||||||||
| Interest expense and finance costs | (5,425,243 | ) | (3,901,112 | ) | (1,524,131 | ) | (39 | )% | ||||||||
| Interest income | 136,198 | 66,174 | 70,024 | 106 | % | |||||||||||
| Loss on asset held for sale | - | (3,028,416 | ) | 3,028,416 | 100 | % | ||||||||||
| Loss before taxes | (4,623,105 | ) | (4,780,675 | ) | 157,570 | (3 | )% | |||||||||
| Income tax | (16,500 | ) | (19,250 | ) | 2,750 | 14 | % | |||||||||
| Net loss | $ | (4,639,605 | ) | $ | (4,799,925 | ) | $ | 160,320 | (3 | )% | ||||||
Revenue. Revenue for the three months ended September 30, 2017 was $48.7 million, an increase of $10.7 million from $38.0 million for the three months ended September 30, 2016.
The average number of owned vessels increased to 27.0 for the three months ended September 30, 2017 from 22.7 for the three months ended September 30, 2016, resulting in revenue days of 2,467 for the three months ended September 30, 2017 as compared to 2,046 for the three months ended September 30, 2016.
We had 19 and 16 vessels employed directly in the spot market as at September 30, 2017 and September 30, 2016 respectively. For spot chartering arrangements, we had 1,731 revenue days for the three months ended September 30, 2017 as compared to 1,016 for the three months ended September 30, 2016. This increase in revenue days derived from spot chartering arrangements resulted in an increase in revenue of $15.8 million, while movements in spot rates resulted in an increase in revenue of $0.9 million.
We had eight and 11 vessels employed under time charter and pool arrangements as at September 30, 2017 and September 30, 2016 respectively. Revenue days derived from time charter and pool arrangements were 736 for the three months ended September 30, 2017, as compared to 1,030 for the three months ended September 30, 2016. The decrease in revenue days in time charter and pool arrangements resulted in a decrease in revenue of $4.5 million, while a decrease in pool earnings for the quarter ended September 30, 2017 resulted in a decrease in revenue of $1.5 million.
In direct spot employment, all voyage expenses are borne by Ardmore as opposed to the charterer, while under time chartering and pool arrangements, the charterer typically pays voyage expenses.
For vessels employed directly in the spot market, revenue is recognized on a gross freight basis, while under time chartering and pool arrangements, the charterer typically pays voyage expenses and revenue is recognized on a net basis.
Commissions and Voyage Related Costs. Commissions and voyage related costs were $18.3 million for the three months ended September 30, 2017, an increase of $8.3 million from $10.0 million for the three months ended September 30, 2016. Commissions and voyage related costs increased due to the increased number of revenue days for the three months ended September 30, 2017, and in particular, the increased number of revenue days derived from spot charter arrangements for which we typically are responsible for all voyage expenses as opposed to the charterer.
Revenue days increased to 2,467 for the three months ended September 30, 2017 as compared to 2,046 for the three months ended September 30, 2016. For spot chartering arrangements, we had 1,731 revenue days for the three months ended September 30, 2017 as compared to 1,016 for the three months ended September 30, 2016.
TCE Rate. The average TCE rate for our fleet was $12,376 per day for the three months ended September 30, 2017, a decrease of $1,513 per day from $13,889 per day for the three months ended September 30, 2016. The decrease in average TCE rate was the result of lower average time charter and spot rates for the three months ended September 30, 2017.
Vessel Operating Expenses. Vessel operating expenses were $16.3 million for the three months ended September 30, 2017, an increase of $2.6 million from $13.7 million for the three months ended September 30, 2016. This increase is primarily due to an increase in the number of vessels in operation for the three months ended September 30, 2017. Due to the nature of this expenditure, vessel operating expenses are prone to fluctuations between periods. Fleet operating costs per day, including technical management fees, were $6,538, for the three months ended September 30, 2017 as compared to $6,541 for the three months ended September 30, 2016.
Depreciation. Depreciation expense for the three months ended September 30, 2017 was $8.6 million, an increase of $1.3 million from $7.3 million for the three months ended September 30, 2016. The increase is primarily due to an increase in the average number of owned vessels to 27.0 for the three months ended September 30, 2017, from 22.7 for the three months ended September 30, 2016.
Amortization of Deferred Drydock Expenditure. Amortization of deferred drydock expenditure for the three months ended September 30, 2017 was $0.8 million, consistent with $0.8 million for the three months ended September 30, 2016. The capitalized costs of drydockings for a given vessel are depreciated on a straight-line basis to the next scheduled drydocking of the vessel.
General and Administrative Expenses: Corporate. Corporate-related general and administrative expenses for the three months ended September 30, 2017 were $3.2 million, a decrease of $0.4 million from $3.6 million for the three months ended September 30 2016. This decrease reflects to a reduction in stock-based compensation expense in the three months ended September 30, 2017 compared to the three months ended September 30, 2016.
General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to our chartering and commercial operations departments in connection with our spot trading activities. Commercial and chartering expenses for the three months ended September 30, 2017 were $0.7 million, an increase of $0.2 million from $0.5 million for the three months ended September 30, 2016. This increase reflects the expansion of chartering and commercial activities in our Singapore and Houston offices, and an increased headcount in the commercial and chartering departments for the three months ended September 30, 2017.
Interest Expense and Finance Costs. Interest expense and finance costs include loan interest, capital lease interest, and amortization of deferred financing fees, and are net of capitalized interest. Interest expense and finance costs for the three months ended September 30, 2017 were $5.4 million, as compared to $3.9 million for the three months ended September 30, 2016. Cash interest expense increased by $1.5 million to $4.8 million for the three months ended September 30, 2017, from $3.3 million for the three months ended September 30, 2016. This increase in cash interest expense is attributable to an increased average LIBOR during the three months ended September 30, 2017 compared to the three months ended September 30, 2016 as well as a change in debt structure due to the new capital leases. Amortization of deferred financing charges for the three months ended September 30, 2017 was $0.6 million, as compared to $0.6 million for the three months ended September 30, 2016.
Statement of Operations for the Nine Months ended September 30, 2017 and September 30, 2016
The following table presents our operating results for the nine months ended September 30, 2017 and 2016.
| INCOME STATEMENT DATA | Nine months ended | |||||||||||||||
| Sept 30, 2017 | Sept 30, 2016 | Variance | Variance | |||||||||||||
| (%) | ||||||||||||||||
| REVENUE | ||||||||||||||||
| Revenue | $ | 148,168,757 | $ | 121,224,907 | $ | 26,943,850 | 22 | % | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Commissions and voyage related costs | 55,199,927 | 23,762,818 | (31,437,109 | ) | (132 | )% | ||||||||||
| Vessel operating expenses | 46,786,299 | 40,290,408 | (6,495,891 | ) | (16 | )% | ||||||||||
| Depreciation | 25,625,382 | 21,578,136 | (4,047,246 | ) | (19 | )% | ||||||||||
| Amortization of deferred drydock expenditure | 1,971,213 | 2,050,091 | 78,878 | 4 | % | |||||||||||
| General and administrative expenses | ||||||||||||||||
| Corporate | 9,484,195 | 10,030,701 | 546,506 | 5 | % | |||||||||||
| Commercial and chartering | 2,012,334 | 1,235,947 | (776,387 | ) | (63 | )% | ||||||||||
| Total operating expenses | 141,079,350 | 98,948,101 | (42,131,249 | ) | (43 | )% | ||||||||||
| Operating Income | 7,089,407 | 22,276,806 | (15,187,399 | ) | -68 | % | ||||||||||
| Interest expense and finance costs | (16,029,527 | ) | (12,294,821 | ) | (3,734,706 | ) | (30 | )% | ||||||||
| Interest income | 327,016 | 107,425 | 219,591 | 204 | % | |||||||||||
| Gain on disposal of vessels | - | 451,962 | (451,962 | ) | 100 | % | ||||||||||
| Loss on asset held for sale | - | (3,028,416 | ) | 3,028,416 | 100 | % | ||||||||||
| (Loss) / income before taxes | (8,613,104 | ) | 7,512,956 | (16,126,060 | ) | (215 | )% | |||||||||
| Income tax | (47,839 | ) | (77,250 | ) | 29,411 | 38 | % | |||||||||
| Net (loss) / income | $ | (8,660,943 | ) | $ | 7,435,706 | $ | (16,096,649 | ) | (216 | )% | ||||||
Revenue. Revenue for the nine months ended September 30, 2017 was $148.2 million, an increase of $27.0 million from $121.2 million for the nine months ended September 30, 2016.
The average number of owned vessels increased to 27.0 for the nine months ended September 30, 2017 from 23.1 for the nine months ended September 30, 2016, resulting in revenue days of 7,303 for the nine months ended September 30, 2017 as compared to 6,218 for the nine months ended September 30, 2016.
We had 19 vessels and 16 vessels employed directly in the spot market as at September 30, 2017 and September 30, 2016, respectively. For spot chartering arrangements, we had 4,987 revenue days for the nine months ended September 30, 2017 as compared to 2,693 for the nine months ended September 30, 2016. This increase in revenue days derived from spot chartering arrangements resulted in an increase in revenue of $53.3 million, while movements in spot rates resulted in an increase in revenue of $1.7 million.
We had eight and 11 vessels employed under time charter and pool arrangements as at September 30, 2017 and September 30, 2016 respectively. Revenue days derived from time charter and pool arrangements were 2,315 for the nine months ended September 30, 2017 compared to 3,524 for the nine months ended September 30, 2016. The decrease in revenue days in time charter and pool arrangements resulted in a decrease in revenue of $20.1 million, while a decrease in pool earnings resulted in a decrease in revenue of $7.9 million.
In direct spot employment, all voyage expenses are borne by Ardmore as opposed to the charterer, while under time chartering and pool arrangements, the charterer typically pays voyage expenses.
As noted previously, for vessels employed directly in the spot market, revenue is recognized on a gross freight basis, while under time chartering and pool arrangements, the charterer typically pays voyage expenses and revenue is recognized on a net basis.
Commissions and voyage related costs. Commissions and voyage related costs were $55.2 million for the nine months ended September 30, 2017, an increase of $31.4 million from $23.8 million for the nine months ended September 30, 2016. Commissions and voyage related costs increased due to the increased number of revenue days for the nine months ended September 30, 2017, and in particular, the increased number of revenue days derived from spot charter arrangements for which we typically are responsible for all voyage expenses as opposed to the charterer.
Revenue days increased to 7,303 for the nine months ended September 30, 2017, as compared to 6,218 for the nine months ended September 30, 2016. For spot chartering arrangements, we had 4,987 revenue days for the nine months ended September 30, 2017, as compared to 2,693 for the nine months ended September 30, 2016.
TCE rate. The average TCE rate for our fleet was $12,751 per day for the nine months ended September 30, 2017, a decrease of $3,045 per day from $15,796 per day for the nine months ended September 30, 2016. The decrease in average TCE rate was the result of lower average time charter and spot rates for the nine months ended September 30, 2017.
Vessel operating expenses. Vessel operating expenses were $46.8 million for the nine months ended September 30, 2017, an increase of $6.5 million from $40.3 million for the nine months ended September 30, 2016. This increase is primarily due to an increase in the number of vessels in operation for the nine months ended September 30, 2017. Due to the nature of this expenditure, vessel operating expenses are prone to fluctuations between periods. Fleet operating costs per day, including technical management fees, were $6,308 for the nine months ended September 30, 2017, as compared to $6,285 for the nine months ended September 30, 2016.
Depreciation. Depreciation expense for the nine months ended September 30, 2017 was $25.6 million, an increase of $4.0 million from $21.6 million for the nine months ended September 30, 2016. The increase is primarily due to an increase in the average number of owned vessels to 27.0 for the nine months ended September 30, 2017, from 23.1 for the nine months ended September 30, 2016.
Amortization of deferred drydock expenditure. Amortization of deferred drydock expenditure for the nine months ended September 30, 2017 was $2.0 million, a decrease of $0.1 million from $2.1 million for the nine months ended September 30, 2016. The capitalized costs of drydockings for a given vessel are depreciated on a straight-line basis to the next scheduled drydocking of the vessel.
General and Administrative Expenses: Corporate. Corporate-related general and administrative expenses for the nine months ended September 30, 2017 were $9.5 million, a decrease of $0.5 million from $10.0 million for the nine months ended September 30, 2016. This decrease is due to a reduction in stock-based compensation expense of $0.6 million, partially offset by an increase in staff costs of $0.1 million.
General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to our chartering and commercial operations departments in connection with our spot trading activities. Commercial and chartering expenses for the nine months ended September 30, 2017 were $2.0 million, an increase of $0.8 million from $1.2 million for the nine months ended September 30, 2016. This increase reflects the expansion of chartering and commercial activities in our Singapore and Houston offices, and an increased headcount in the commercial and chartering departments for the nine months ended September 30, 2017.
Interest Expense and Finance Costs. Interest expense and finance costs include loan interest, capital lease interest, and amortization of deferred financing fees, and are net of capitalized interest. Interest expense and finance costs for the nine months ended September 30, 2017 increased to $16.0 million, as compared to $12.3 million for the nine months ended September 30, 2016. Cash interest expense increased by $3.4 million to $13.6 million for the nine months ended September 30, 2017, from $10.2 million for the nine months ended September 30, 2016. This increase in cash interest expense is attributable to an increased average LIBOR during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, as well as a change in debt structure due to the new capital leases. Amortization of deferred financing charges for the nine months ended September 30, 2017 was $2.4 million, as compared to $2.1 million for the nine months ended September 30, 2016.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash and cash equivalents, cash flows provided by our operations, our undrawn credit facilities and capital raised through financing transactions. As at September 30, 2017, our total cash and cash equivalents were $45.8 million, a decrease of $10.2 million from $56.0 million as at December 31, 2016. We believe that our working capital, together with expected cash flows from operations and availability under credit facilities, will be sufficient for our present requirements.
Our short-term liquidity requirements include the payment of operating expenses, drydocking expenditures, debt servicing costs, dividends on our shares of common stock, scheduled repayments of long-term debt, as well as funding our other working capital requirements. Our short-term spot charters, including our participation in spot charter pooling arrangements, contribute to the volatility of our net operating cash flow, and thus our ability to generate sufficient cash flows to meet our short-term liquidity needs. Historically, the tanker industry has been cyclical, experiencing volatility in profitability and asset values resulting from changes in the supply of, and demand for, vessel capacity. In addition, tanker spot markets historically have exhibited seasonal variations in charter rates. Tanker spot markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere and unpredictable weather patterns that tend to disrupt vessel scheduling. Time charters provide contracted revenue that reduces the volatility (as rates can fluctuate within months) and seasonality from revenue generated by vessels that operate in the spot market. Commercial pools reduce revenue volatility because they aggregate the revenues and expenses of all pool participants and distribute net earnings to the participants based on an agreed upon formula. Spot charters preserve flexibility to take advantage of increasing rate environments, but also expose the ship-owner to decreasing rate environments.
Our long-term capital needs are primarily for capital expenditures and debt repayment. Generally, we expect that our long-term sources of funds will be cash balances, long-term bank borrowings, capital leases and other debt or equity financings. We expect that we will rely upon internal and external financing sources, including cash balances, bank borrowings and the issuance of debt and equity securities, to fund acquisitions and expansion capital expenditures.
Our credit facilities and capital leases are described in Notes 2 (“Debt”) and 3 (“Capital Leases”), respectively, to our condensed interim consolidated financial statements included in this Report on Form 6-K. Our financing facilities contain covenants and other restrictions we believe are typical of debt financing collateralized by vessels, including covenants that restrict the relevant subsidiaries from incurring or guaranteeing additional indebtedness, granting certain liens, and selling, transferring, assigning or conveying assets. Our financing facilities do not impose a restriction on dividends, distributions, or returns of capital unless an event of default has occurred, is continuing or will result from such payment. Our financing facilities require us to maintain various financial covenants. Should we not meet these financial covenants or other covenants, the lenders may declare our obligations under the applicable agreements immediately due and payable, and terminate any further loan commitments, which would significantly affect our short-term liquidity requirements. As at September 30, 2017, we were in compliance with all covenants relating to our financing facilities.
CASH FLOW DATA
Cash Flow Data for the Three and Nine Months Ended September 30, 2017 and September 30, 2016
| CASH FLOW DATA | Three months ended | Nine months ended | ||||||||||||||
| Sept 30, 2017 | Sept 30, 2016 | Sept 30, 2017 | Sept 30, 2016 | |||||||||||||
| Net cash provided by operating activities | $ | 2,236,518 | $ | 4,200,206 | $ | 11,959,149 | $ | 32,558,821 | ||||||||
| Net cash used in investing activities | (167,777 | ) | (130,897,463 | ) | (448,229 | ) | (111,535,142 | ) | ||||||||
| Net cash (used in) / provided by financing activities | (11,069,023 | ) | 76,538,512 | (21,649,750 | ) | 91,837,420 | ||||||||||
Cash provided by operating activities
For the three months ended September 30, 2017, cash flow provided by operating activities was $2.2 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $5.5 million. Changes in operating assets and liabilities resulted in an outflow of $1.8 million and drydock payments were $1.5 million. For the three months ended September 30, 2016, cash flow provided by operating activities was $4.2 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $7.7 million. Changes in operating assets and liabilities resulted in an outflow of $2.8 million and drydock payments were $0.7 million.
For the nine months ended September 30, 2017, cash flow provided by operating activities was $12.0 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $21.7 million. Changes in operating assets and liabilities resulted in an outflow of $6.8 million and drydock payments were $2.9 million. For the nine months ended September 30, 2016, cash flow provided by operating activities was $32.6 million. Net profit (after adding back depreciation, amortization and other non-cash items) was an inflow of $37.2 million. Changes in operating assets and liabilities resulted in an outflow of $1.7 million and drydock payments were $2.9 million.
Cash used in investing activities
For the three months ended September 30, 2017, net cash used in investing activities was $0.2 million, consisting of payments for vessel equipment and other non-current assets. For the three months ended September 30, 2016, net cash used in investing activities was $130.9 million, consisting of payments in relation to the acquisition of vessels and equipment of $130.8 million.
For the nine months ended September 30, 2017, net cash used in investing activities was $0.4 million, consisting of payments for vessel equipment and other non-current assets. For the nine months ended September 30, 2016, net cash used in investing activities was $111.5 million consisting of payments in relation to the acquisition of vessels and equipment of $148.3 million, payments for leasehold improvements of $0.5 million and payments for equipment and other non-current assets of $0.3 million, partially offset by net proceeds from the sale of the Ardmore Calypso and the Ardmore Capella of $37.6 million.
Cash used in / provided by financing activities
For the three months ended September 30, 2017, the net cash used in financing activities was $11.1 million. Repayments of debt amounted to $10.2 million. Total principal repayments of the capital lease arrangements were $0.8 million. We also incurred payments of $0.1 million related to deferred financing charges in respect of capital lease arrangements. For the three months ended September 30, 2016, the net cash provided by financing activities was $76.5 million. Drawdowns of long-term debt amounted to $90.6 million and repayments of debt amounted to $9.4 million. We also incurred $1.6 million of deferred finance charges for loan facilities and paid cash dividends of $3.1 million for the period.
For the nine months ended September 30, 2017, the net cash used in financing activities was $21.6 million. Repayments of debt amounted to $52.5 million. Total principal repayments of the capital lease arrangements were $1.4 million and total proceeds from capital leases were $33.1 million. We also incurred payments of $0.8 million related to deferred financing charges in respect of capital lease arrangements. For the nine months ended September 30, 2016, the net cash provided by financing activities was $91.8 million. Drawdowns of long-term debt amounted to $92.6 million and repayments of debt amounted to $19.7 million. Total principal repayments of the capital lease arrangement were $27.1 million and we incurred $5.8 million of deferred finance charges for loan facilities. Net proceeds from the public offering of 7.5 million common shares we completed on June 13, 2016 were $64.1 million. We also paid cash dividends of $9.4 million and repurchased $3.0 million of our common stock during the period.
CAPITAL EXPENDITURES
Drydock
The drydocking schedule for our vessels that were in operation as of September 30, 2017 is as follows:
| For the Years Ended December 31, | ||||||||||||||||
| 2017 | 2018 | 2019 | 2020 | |||||||||||||
| Number of vessels in drydock (excluding in-water surveys) | 5 | 7 | 9 | 11 | ||||||||||||
We endeavor to manage the timing of future dockings across the fleet in order to minimize the number of vessels that are drydocked at any one time. As our fleet matures and expands, our drydock expenses are likely to increase.
CRITICAL ACCOUNTING ESTIMATES
We prepare our financial statements in accordance with U.S. GAAP, which requires us to make estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from our assumptions and estimates. Accounting estimates and assumptions that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties are discussed in “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2016. There have been no significant changes to these estimates and assumptions in the nine months ended September 30, 2017.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
DISCLOSURES ABOUT MARKET RISK
In addition to the risks set forth below, you should carefully consider the risk factors discussed in “Item 3. Key Information – Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2016, regarding risks which could materially affect our business, financial condition and results of operations.
Foreign Exchange Risk
The majority of our transactions, assets and liabilities are denominated in U.S. Dollars, our functional currency. We incur certain general and operating expenses in other currencies (primarily the Euro, Singapore Dollar, Pounds Sterling, Hong Kong Dollar) and, as a result, there is a risk that currency fluctuations may have a negative effect on the value of our cash flows. Such risk may have an adverse effect on our financial condition and results of operations. We believe these adverse effects to be immaterial and we have not entered into any derivative contracts to manage foreign exchange risk during the nine months ended September 30, 2017.
Interest Rate Risk
We are exposed to the impact of interest rate changes primarily through borrowings that require us to make interest payments based on LIBOR. Significant increases in interest rates could adversely affect our results of operations and our ability to repay debt. We regularly monitor interest rate exposure and may enter into swap arrangements to hedge exposure where it is considered economically advantageous to do so.
The disclosure in the immediately following paragraph about the potential effects of changes in interest rates are based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts. A sensitivity analysis is constrained by several factors, including the necessity to conduct the analysis based on a single point in time and by the inability to include the extraordinarily complex market reactions that normally would arise from the market shifts. Although the following results of a sensitivity analysis for changes in interest rates may have some limited use as a benchmark, they should not be viewed as a forecast. This forward-looking disclosure also is selective in nature and addresses only the potential impacts on our borrowings.
Assuming we do not hedge our exposure to interest rate fluctuations, a hypothetical 100 basis-point increase or decrease in our variable interest rates would have increased or decreased our interest expense for the nine-month period ended September 30, 2017 by $4.6 million (September 30, 2016: $4.1 million) using the average long-term debt balance and actual interest incurred in each period.
Liquidity Risk
Our principal objective in relation to liquidity is to ensure that we have access at minimum cost to sufficient liquidity to enable us to meet our obligations as they come due and to provide adequately for contingencies. Our policy is to manage our liquidity by forecasting of cash flows arising from or expense relating to time charter revenue, pool revenue, vessel operating expenses, general and administrative overhead and servicing of debt.
Credit Risk
There is a concentration of credit risk with respect to our cash and cash equivalents to the extent that substantially all of the amounts are held in Nordea Bank, and in short-term funds managed by Blackrock and State Street Global Advisors. While we believe this risk of loss is low, we intend to review and revise our policy for managing cash and cash equivalents if considered advantageous and prudent to do so.
We limit our credit risk with trade accounts receivable by performing ongoing credit evaluations of our customers’ financial condition. We generally do not require collateral for our trade accounts receivable.
We may be exposed to credit risk in relation to vessel employment and at times may have multiple vessels employed by one charterer. We consider and evaluate concentration of credit risk regularly and perform on-going evaluations of these charterers for credit risk. As at September 30, 2017 our 27 vessels in operation were employed with 14 different charterers.
Ardmore Shipping Corporation
INDEX TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
Unaudited Condensed Interim Consolidated Balance Sheets
As at September
30, 2017 and December 31, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| As at | ||||||||
| Sept 30, 2017 | Dec 31, 2016 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 45,814,043 | 55,952,873 | ||||||
| Receivables, trade | 28,784,479 | 23,148,782 | ||||||
| Working capital advances | 3,450,000 | 3,300,000 | ||||||
| Prepayments | 1,014,020 | 803,003 | ||||||
| Advances and deposits | 5,019,298 | 3,136,362 | ||||||
| Other receivables | - | 82,636 | ||||||
| Inventories | 9,150,686 | 7,339,252 | ||||||
| Total current assets | 93,232,526 | 93,762,908 | ||||||
| Non-current assets | ||||||||
| Vessels and vessel equipment, net | 760,280,172 | 785,461,415 | ||||||
| Deferred drydock expenditure, net | 4,127,718 | 3,232,293 | ||||||
| Leasehold improvements, net | 460,115 | 488,561 | ||||||
| Other non-current assets, net | 3,610,085 | 697,546 | ||||||
| Total non-current assets | 768,478,090 | 789,879,815 | ||||||
| TOTAL ASSETS | 861,710,616 | 883,642,723 | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Payables, trade | 17,790,162 | 14,448,043 | ||||||
| Charter revenue received in advance | - | 507,780 | ||||||
| Other payables | 51,113 | 5,354 | ||||||
| Accrued interest on loans | 1,919,970 | 2,067,991 | ||||||
| Current portion of long-term debt | 36,487,931 | 41,827,480 | ||||||
| Current portion of capital lease obligations | 3,299,099 | 159,028 | ||||||
| Total current liabilities | 59,548,275 | 59,015,676 | ||||||
| Non-current liabilities | ||||||||
| Non-current portion of long-term debt | 366,391,923 | 411,385,626 | ||||||
| Non-current portion of capital lease obligations | 39,818,777 | 8,971,622 | ||||||
| Total non-current liabilities | 406,210,700 | 420,357,248 | ||||||
| Equity | ||||||||
| Share capital | 340,613 | 340,613 | ||||||
| Additional paid in capital | 405,622,042 | 405,279,257 | ||||||
| Treasury stock | (4,272,477 | ) | (4,272,477 | ) | ||||
| Accumulated (deficit) / surplus | (5,738,537 | ) | 2,922,406 | |||||
| Total equity | 395,951,641 | 404,269,799 | ||||||
| TOTAL LIABILITIES AND EQUITY | 861,710,616 | 883,642,723 | ||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| F-2 |
Unaudited Condensed Interim Consolidated Statement of Operations
For the three and
nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| Three months ended | Nine months ended | |||||||||||||||
| Sept 30, 2017 | Sept 30, 2016 | Sept 30, 2017 | Sept 30, 2016 | |||||||||||||
| REVENUE | ||||||||||||||||
| Revenue | 48,652,951 | 37,969,400 | 148,168,757 | 121,224,907 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Commissions and voyage related costs | 18,299,117 | 10,011,629 | 55,199,927 | 23,762,818 | ||||||||||||
| Vessel operating expenses | 16,330,356 | 13,739,022 | 46,786,299 | 40,290,408 | ||||||||||||
| Depreciation | 8,638,739 | 7,340,499 | 25,625,382 | 21,578,136 | ||||||||||||
| Amortization of deferred drydock expenditure | 771,037 | 771,282 | 1,971,213 | 2,050,091 | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Corporate | 3,244,179 | 3,554,134 | 9,484,195 | 10,030,701 | ||||||||||||
| Commercial and chartering | 703,583 | 470,155 | 2,012,334 | 1,235,947 | ||||||||||||
| Total operating expenses | 47,987,011 | 35,886,721 | 141,079,350 | 98,948,101 | ||||||||||||
| Operating Income | 665,940 | 2,082,679 | 7,089,407 | 22,276,806 | ||||||||||||
| Interest expense and finance costs | (5,425,243 | ) | (3,901,112 | ) | (16,029,527 | ) | (12,294,821 | ) | ||||||||
| Interest income | 136,198 | 66,174 | 327,016 | 107,425 | ||||||||||||
| Gain on disposal of vessels | - | - | - | 451,962 | ||||||||||||
| Loss on asset held for sale | - | (3,028,416 | ) | - | (3,028,416 | ) | ||||||||||
| (Loss) / income before taxes | (4,623,105 | ) | (4,780,675 | ) | (8,613,104 | ) | 7,512,956 | |||||||||
| Income tax | (16,500 | ) | (19,250 | ) | (47,839 | ) | (77,250 | ) | ||||||||
| Net (loss) / income | (4,639,605 | ) | (4,799,925 | ) | (8,660,943 | ) | 7,435,706 | |||||||||
| (Loss) / Earnings per share, basic and diluted | (0.14 | ) | (0.14 | ) | (0.26 | ) | 0.26 | |||||||||
| Weighted average number of shares outstanding, basic and diluted | 33,575,610 | 33,518,013 | 33,575,610 | 28,988,963 | ||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| F-3 |
Unaudited Condensed Interim Consolidated Statements of Changes in Equity
For the nine months ended September 30, 2017
And for the twelve
months ended December 31, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| Number of shares outstanding | Share capital | Additional paid-in capital | Treasury stock | Accumulated surplus / (deficit) | TOTAL | |||||||||||||||||||
| Balance as at January 1, 2016 | 26,210,311 | 263,297 | 338,226,370 | (1,278,546 | ) | 10,400,157 | 347,611,278 | |||||||||||||||||
| Net proceeds from equity offering | 7,500,000 | 75,000 | 63,852,414 | - | - | 63,927,414 | ||||||||||||||||||
| Share-based compensation | - | - | 1,304,325 | - | - | 1,304,325 | ||||||||||||||||||
| Repurchase of common stock | (366,347 | ) | - | - | (2,993,931 | ) | - | (2,993,931 | ) | |||||||||||||||
| Dividend payments | 231,646 | 2,316 | 1,896,148 | - | (11,225,683 | ) | (9,327,219 | ) | ||||||||||||||||
| Income for year | - | - | - | - | 3,747,932 | 3,747,932 | ||||||||||||||||||
| Balance as at December 31, 2016 | 33,575,610 | 340,613 | 405,279,257 | (4,272,477 | ) | 2,922,406 | 404,269,799 | |||||||||||||||||
| Share-based compensation | - | 342,785 | - | - | 342,785 | |||||||||||||||||||
| Loss for the period | - | - | - | - | (8,660,943 | ) | (8,660,943 | ) | ||||||||||||||||
| Balance as at September 30, 2017 | 33,575,610 | 340,613 | 405,622,042 | (4,272,477 | ) | (5,738,537 | ) | 395,951,641 | ||||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| F-4 |
Unaudited Condensed Interim Consolidated Statements of Cash Flows
For the nine months
ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| Nine months ended | ||||||||
| Sept 30, 2017 | Sept 30, 2016 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net (loss) / income | (8,660,943 | ) | 7,435,706 | |||||
| Non-cash items: | ||||||||
| Depreciation | 25,625,383 | 21,578,136 | ||||||
| Amortization of deferred drydock expenditure | 1,971,213 | 2,050,091 | ||||||
| Share based compensation | 342,785 | 978,672 | ||||||
| Loss on disposal of vessels | - | 2,576,454 | ||||||
| Amortization of deferred finance charges | 2,423,720 | 2,072,562 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables, trade | (5,635,697 | ) | 4,719,464 | |||||
| Working capital advances | (150,000 | ) | 375,000 | |||||
| Prepayments | (211,017 | ) | (27,201 | ) | ||||
| Advances and deposits | (1,882,936 | ) | (2,970,488 | ) | ||||
| Other receivables | 82,636 | 918 | ||||||
| Inventories | (1,811,434 | ) | (2,618,531 | ) | ||||
| Payables, trade | 3,342,119 | (1,243,784 | ) | |||||
| Charter revenue received in advance | (507,780 | ) | 417,050 | |||||
| Other payables | 45,759 | (33,133 | ) | |||||
| Accrued interest on loans | (148,021 | ) | 147,001 | |||||
| Deferred drydock expenditure | (2,866,638 | ) | (2,899,096 | ) | ||||
| Net cash provided by operating activities | 11,959,149 | 32,558,821 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Payments for acquisition of vessels and equipment | (259,035 | ) | (145,533,463 | ) | ||||
| Net proceeds from sale of vessels | - | 37,612,414 | ||||||
| Deposit for vessel acquisition | - | (2,775,000 | ) | |||||
| Payments for leasehold improvements | (12,277 | ) | (493,100 | ) | ||||
| Payments for other non-current assets | (176,917 | ) | (345,993 | ) | ||||
| Net cash used in investing activities | (448,229 | ) | (111,535,142 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from long-term debt | - | 92,636,000 | ||||||
| Repayments of long-term debt | (52,551,675 | ) | (19,698,260 | ) | ||||
| Proceeds from capital leases | 33,118,525 | - | ||||||
| Repayments of capital leases | (1,393,373 | ) | (27,097,348 | ) | ||||
| Payments for deferred finance charges | (823,227 | ) | (5,774,351 | ) | ||||
| Net proceeds from equity offering | - | 64,119,332 | ||||||
| Repurchase of common stock | - | (2,993,931 | ) | |||||
| Payment of dividend | - | (9,354,022 | ) | |||||
| Net cash (used in) / provided by financing activities | (21,649,750 | ) | 91,837,420 | |||||
| Net (decrease) / increase in cash and cash equivalents | (10,138,830 | ) | 12,861,099 | |||||
| Cash and cash equivalents at the beginning of the year | 55,952,873 | 40,109,382 | ||||||
| Cash and cash equivalents at the end of the period | 45,814,043 | 52,970,481 | ||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| F-5 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| 1. | General information and significant accounting policies |
| 1.1. | Background |
Ardmore Shipping Corporation (NYSE: ASC) (‘‘ASC’’), together with its subsidiaries (collectively ‘‘Ardmore’’ or ‘‘the Company’’), provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with its modern, fuel-efficient fleet of mid-size product and chemical tankers. As at September 30, 2017, Ardmore had 27 vessels in operation. The average age of Ardmore’s operating fleet as at September 30, 2017 was 5.1 years.
| 1.2. | Management and organizational structure |
ASC was incorporated in the Republic of the Marshall Islands on May 14, 2013. ASC commenced business operations through its predecessor company, Ardmore Shipping LLC, on April 15, 2010. On August 6, 2013, ASC completed its initial public offering (the ‘‘IPO’’) of 10,000,000 shares of its common stock. Prior to the IPO, GA Holdings LLC, who was then ASC’s sole shareholder, exchanged its 100% interest in Ardmore Shipping LLC (‘‘ASLLC’’) for 8,049,500 shares of ASC, and ASLLC became a wholly-owned subsidiary of ASC. Immediately following the IPO, GA Holdings LLC held 44.6% of the outstanding common stock of ASC, with the remaining 55.4% held by public investors. In March 2014, ASC completed a follow-on public offering of 8,050,000 shares of its common stock. In November 2015, GA Holdings LLC sold 4,000,000 shares of ASC common stock in an underwritten public offering. In June 2016, Ardmore completed a public offering of 7,500,000 shares of its common stock. As of September 30, 2017, GA Holdings LLC held 5,787,942 common shares, or 17.2% of the outstanding common stock of ASC, with the remaining 82.8% held by public investors.
As at September 30, 2017, ASC had 50 wholly-owned subsidiaries, the majority of which represent single ship-owning companies for ASC’s fleet and one 50%-owned joint-venture entity which provides technical management services to the majority of the ASC Fleet. Ardmore Shipping (Bermuda) Limited, a wholly-owned subsidiary incorporated in Bermuda, carries out the Company’s management services and associated functions. Ardmore Shipping Services (Ireland) Limited, a wholly-owned subsidiary incorporated in Ireland, provides the Company’s corporate, accounting, fleet administration and operations services. Each of Ardmore Shipping (Asia) Pte. Limited and Ardmore Shipping (Americas) LLC, wholly-owned subsidiaries incorporated in Singapore and Delaware, respectively, performs commercial management and chartering services for the Company.
| 1.3. | Basis of preparation |
The accompanying unaudited condensed interim consolidated financial statements, which include the accounts of ASC and its subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. All subsidiaries are 100% directly or indirectly owned by ASC. All intercompany balances and transactions have been eliminated on consolidation. Certain prior period amounts have been reclassified to be consistent with the current period’s presentation. These unaudited condensed interim consolidated statements and the accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2016.
These unaudited condensed interim consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows as at and for the periods presented.
The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements at that date, but does not include all of the footnotes required by U.S. GAAP for complete financial statements.
| 1.4. | Summary of significant accounting policies |
Except as detailed under Section 1.6 below, there have been no changes in the Company’s significant accounting policies for the nine months ended September 30, 2017 as compared to the significant accounting policies described in the Company’s audited consolidated financial statements for the year ended December 31, 2016.
| F-6 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| 1.5. | Share based payments |
The Company may grant share-based payment awards, such as restricted stock units or stock appreciation rights, as incentive-based compensation to certain employees and directors. The Company measures the cost of such awards using the grant date fair value of the award and recognizes that cost, net of estimated forfeitures, over the requisite service period, which generally equals the vesting period. If the award contains a market condition, such conditions are included in the determination of the fair value of the stock unit. Once the fair value has been determined, the associated expense is recognized in the consolidated statement of operations over the requisite service period. For additional information, please see Note 7 (“Stock appreciation rights”).
| 1.6. | Recent accounting pronouncements |
In May 2014, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards Update (‘‘ASU’’) No. 2014-09, Revenue from Contracts with Customers, or ASU 2014-09, a standard that will supersede virtually all of the existing revenue recognition guidance in U.S. GAAP. The standard establishes a five-step model that will apply to revenue earned from a contract with a customer. The standard’s requirements will also apply to the sale of some non-financial assets that are not part of the entity’s ordinary activities (e.g., sales of property or plant and equipment). Extensive disclosures will be required, including disaggregation of total revenue, information about performance obligations, changes in contract asset and liability account balances between periods and key judgments and estimates. The FASB has issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations.
The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We currently anticipate adopting the standard using the full retrospective method to restate each prior reporting period presented. The new standard will be effective for us beginning January 1, 2018.
We are undertaking a comprehensive approach to assess the impact of the guidance on our business by reviewing our current accounting policies and practices to identify any potential differences that may result from applying the new requirements to our consolidated financial statements. We do not anticipate that this standard will have a material impact on our consolidated financial statements.
We are liaising with other shipping companies on business assumptions, processes, systems and controls to fully determine revenue recognition and disclosure under the new standard. We continue to make significant progress on our review of the standard. Our initial assessment may change as we continue to refine these assumptions.
In February 2016, the FASB issued ASU No. 2016-02, Leases, a standard which will replace previous topics on lease accounting. The revised guidance will require lessees to recognize on their balance sheet a right of use asset and corresponding liability in respect of all material lease contracts. Ardmore currently recognizes on its balance sheet those leases classified as capital leases. Those leases that are currently accounted for as operating leases will have to be reviewed and potentially included on Ardmore’s balance sheet in accordance with the new guidance. In 2017, the FASB issued an additional ASU, ASU 2017-13, that enhances the guidance surrounding sale leaseback transactions, accounting for taxes on leveraged leases and leases with third party value. ASU 2016-02 and related amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, and requires the modified retrospective method of adoption. Management anticipates that the standard will be adopted at the same time as ASC 606 (Revenue from Contracts with Customers).
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments based on a consensus of the Emerging Issues Task Force (EITF), to address the classification of certain cash receipts and cash payments on the statement of cash flows. The new guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The standard will be effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. Entities are required to apply the guidance retrospectively. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, to address classification of activity related to restricted cash and restricted cash equivalents in the cash flows. The standard eliminates the presentation of transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, a reconciliation of the totals in the cash flows to the related captions in the balance sheet are required, either on the face of the cash flow or in the notes to the financial statements. Additional disclosures are required for the nature of the restricted cash and restricted cash equivalents. The standard will be effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.
| F-7 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
In February 2017, FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). The standard contains final guidance that clarifies the scope and application of ASC 610-20 on the sale or transfer of non-financial assets and in substance non-financial assets to non-customers, including partial sales. The standard applies to non-financial assets, including real estate, ships and intellectual property, and clarifies that the derecognition of all businesses is in the scope of ASC 810. The standard will be effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. Management is in the process of assessing the full effect of this new standard.
In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard will be effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. Management is in the process of assessing the full effect of this new standard.
| 1.7. | Financial instruments |
The carrying values of cash and cash equivalents, trade receivables and trade payables are reasonable estimates of their fair values due to their short-term nature. The fair values of long-term debt approximate the recorded values due to the variable interest rates payable.
| 2. | Debt |
As at September 30, 2017 Ardmore had five loan facilities, which it has used primarily to finance vessel acquisitions or vessels under construction. ASC’s applicable ship-owning subsidiaries have granted first-priority mortgages against the relevant vessels in favor of the lenders as security for Ardmore’s obligations under the loan facilities, which totaled 24 vessels as at September 30, 2017. ASC and its subsidiary ASLLC have provided guarantees in respect of the loan facilities. These guarantees can be called upon following a payment default. The outstanding principal balances on each loan facility as at September 30, 2017 and December 31, 2016 were as follows:
| As at | ||||||||
| Sept 30, 2017 | Dec 31, 2016 | |||||||
| NIBC Bank Facility | 9,240,000 | 10,305,000 | ||||||
| CACIB Bank Facility | 34,800,000 | 36,900,000 | ||||||
| ABN/DVB/NIBC Joint Bank Facility | 167,140,599 | 204,090,550 | ||||||
| Nordea/SEB Joint Bank Facility | 134,876,804 | 142,688,402 | ||||||
| ABN AMRO Facility | 65,657,381 | 70,282,505 | ||||||
| Total debt | 411,714,784 | 464,266,457 | ||||||
| Deferred Finance Fees | (8,834,930 | ) | (11,053,351 | ) | ||||
| Net total debt | 402,879,854 | 453,213,106 | ||||||
| Current portion of long-term debt | 39,708,456 | 44,313,149 | ||||||
| Current portion of deferred finance fees | (3,220,525 | ) | (2,485,669 | ) | ||||
| Total current portion of long-term debt | 36,487,931 | 41,827,480 | ||||||
| Non-current portion of long-term debt | 366,391,923 | 411,385,626 | ||||||
| F-8 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
Future minimum repayments under the Company’s loan facilities for each year indicated below are as follows:
| As at | ||||
| Sept 30, 2017 | ||||
| 2017 | 10,140,066 | |||
| 2018 | 39,282,538 | |||
| 2019 | 38,856,620 | |||
| 2020 | 38,856,620 | |||
| 2021 | 41,159,890 | |||
| 2022 | 189,430,418 | |||
| 2023 | 53,988,632 | |||
| 411,714,784 | ||||
NIBC Bank Facility
On September 12, 2014, one of ASC’s subsidiaries entered into a $13.5 million long-term loan facility with NIBC Bank N.V. to finance a secondhand vessel acquisition which delivered to Ardmore in 2014. The facility was drawn down in September 2014 and bears interest at a rate of LIBOR plus 2.90%. Principal repayments on the loans are made on a quarterly basis, with a balloon payment payable with the final instalment. The loan facility matures in September 2021.
CACIB Bank Facility
On May 22, 2014, two of ASC’s subsidiaries entered into a $39.0 million long-term loan facility with Credit Agricole Corporate and Investment Bank to finance two vessels under construction. On March 10, 2016, this facility was refinanced, the lenders provided an additional $25 million commitment for additional financing and an additional tranche of $2.3 million was drawn down. The $25 million of additional financing was drawn and repaid in full during the three-month period ended September 30, 2016. Interest is calculated on each tranche at a rate of LIBOR plus 2.50%. Principal repayments on the loans are made on a quarterly basis, with a balloon payment payable with the final instalment. The full facility matures in 2022.
ABN/DVB/NIBC Joint Bank Facility
On January 13, 2016, 11 of ASC’s subsidiaries entered into a $213 million long-term loan facility (including an incremental commitment of $20 million to fund future acquisitions) with ABN AMRO Bank N.V. (“ABN”) and DVB Bank America N.V. to refinance existing facilities. The loan, other than the $20 million commitment, was fully drawn down on January 22, 2016. Interest is calculated at a rate of LIBOR plus 2.55%. The loan matures in 2022. On August 4, 2016, an incremental term loan of $36.6 million was made under the amended facility in order to fund two vessel acquisitions, and NIBC Bank N.V. joined as an additional lender under the facility. The incremental term loan consists of two tranches, and interest is calculated at a rate of LIBOR plus 2.75%. The additional tranches mature in 2023. Principal repayments on the loans are made on a quarterly basis, with a balloon payment payable with the final instalment.
Nordea/SEB Joint Bank Facility
On January 13, 2016, seven of ASC’s subsidiaries entered into a $151 million long-term loan facility with Nordea Bank AB (publ) and Skandinaviska Enskilda Banken AB (publ) to refinance existing facilities. The loan was fully drawn down on January 22, 2016. Interest is calculated at a rate of LIBOR plus 2.50%. Principal repayments on the loans are made on a quarterly basis, with a balloon payment payable with the final instalment. The loan matures in 2022.
ABN AMRO Facility
On July 29, 2016, four of ASC’s subsidiaries entered into a $71.3 million long-term loan facility with ABN for vessel acquisitions. Three of the four tranches under the facility were drawn down during the third quarter of 2016. The fourth tranche was drawn down in the fourth quarter of 2016. Interest is calculated at a rate of LIBOR plus 2.75%. Principal repayments on the loans are made on a quarterly basis, with a balloon payment payable with the final instalment. The loan matures in 2023.
| F-9 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
Long-term debt financial covenants
Ardmore’s existing long-term debt facilities described above include certain covenants. The financial covenants require that ASC:
| · | maintain minimum solvency of not less than 30%; |
| · | maintain minimum cash and cash equivalents based on the number of vessels owned and chartered-in and 5% of outstanding debt. The required minimum cash balance as of September 30, 2017, was $22.8 million; |
| · | ensure that the aggregate fair market value of the applicable vessels plus any additional collateral is, depending on the facility, no less than 130% of the debt outstanding for the facility; |
| · | maintain a corporate net worth of not less than $150 million; and |
| · | maintain positive working capital, excluding balloon maturities; |
The Company was in full compliance with all of its loan covenants as of September 30, 2017.
| 3. | Capital Leases |
On December 23, 2016 one of ASC’s subsidiaries entered into an agreement for the sale and leaseback (under a capital lease arrangement) of the Ardmore Seatrader. This transaction was treated as a financing transaction. As part of this arrangement, the senior debt outstanding on the vessel of $3.0 million was repaid in full on December 20, 2016. The capital lease is scheduled to expire in 2021 and includes a mandatory purchase obligation for Ardmore to repurchase the vessel, as well as a purchase option exercisable by Ardmore, which Ardmore could elect to exercise at an earlier date.
Effective May 30, 2017 two of ASC’s subsidiaries entered into an agreement for the sale and leaseback (under a capital lease arrangement) of the Ardmore Sealeader and Ardmore Sealifter. This transaction was treated as a financing transaction. As part of this arrangement, the senior debt outstanding on the vessels of $20.1 million was repaid in full on May 30, 2017. The capital leases are scheduled to expire in 2023 and include an obligation for Ardmore to repurchase the vessels, as well as purchase options exercisable by Ardmore. As part of the lease arrangement, Ardmore provided the purchasers with $2.9 million in the aggregate which shall be repaid at the end of the lease period, or upon the exercise of any of the purchase options. This amount is included as a receivable within ‘Other non-current assets, net’ in the balance sheet, with the associated capital lease liability presented gross of the $2.9 million.
| As at | ||||||||
| Sept 30, 2017 | Dec 31, 2016 | |||||||
| Current portion of capital lease obligations | 3,459,471 | 181,047 | ||||||
| Current portion of deferred finance fees | (160,372 | ) | (22,019 | ) | ||||
| Non-current portion of capital lease obligations | 40,391,431 | 9,064,702 | ||||||
| Non-current portion of deferred finance fees | (572,654 | ) | (93,080 | ) | ||||
| Total capital lease obligations | 43,117,876 | 9,130,650 | ||||||
| Amount receivable in respect of capital leases | (2,880,000 | ) | - | |||||
| Net capital lease obligations | 40,237,876 | 9,130,650 | ||||||
| F-10 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
The future minimum lease payments required under the capital leases as at September 30, 2017, were as follows:
| As at | ||||
| Sept 30, 2017 | ||||
| 2017 | 1,499,600 | |||
| 2018 | 6,241,500 | |||
| 2019 | 6,241,500 | |||
| 2020 | 6,258,600 | |||
| 2021 | 12,457,300 | |||
| 2022 | 4,854,500 | |||
| 2023 | 16,808,800 | |||
| Total minimum lease payments | 54,361,800 | |||
| Less amounts representing interest and deferred finance fees | (11,243,924 | ) | ||
| Net minimum lease payments | 43,117,876 | |||
| Amount receivable in respect of capital leases | (2,880,000 | ) | ||
| Adjusted net minimum lease payments | 40,237,876 | |||
| 4. | Other non-current assets, net |
| As at | ||||||||
| Sept 30, 2017 | Dec 31, 2016 | |||||||
| Amount receivable in respect of capital leases | 2,880,000 | - | ||||||
| Equipment, fixtures & fittings | 730,085 | 697,546 | ||||||
| 3,610,085 | 697,546 | |||||||
Amount receivable in respect of capital leases is accounted for at amortized cost.
| 5. | Interest expense and finance costs |
| Nine months ended | ||||||||
| Sept 30, 2017 | Sept 30, 2016 | |||||||
| Interest incurred | 13,605,807 | 10,222,259 | ||||||
| Amortization of deferred financing charges | 2,423,720 | 2,072,562 | ||||||
| 16,029,527 | 12,294,821 | |||||||
| 6. | Commitments and contingencies |
As at September 30, 2017, the Company had the following commitments:
| 2017 | 2018 | 2019-2026 | ||||||||||
| Office space | 158,369 | 303,621 | 2,084,865 | |||||||||
| 158,369 | 303,621 | 2,084,865 | ||||||||||
| F-11 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
| 7. | Stock appreciation rights (“SARs”) |
As at September 30, 2017, ASC had granted 1,349,154 SARs (inclusive of 5,779 forfeited SARs) to certain of its officers and directors under its 2013 Equity Incentive Plan. Under a SAR award, the grantee is entitled to receive the appreciation of a share of ASC’s common stock following the grant of the award. Each SAR provides for a payment of an amount equal to the excess, if any, of the fair market value of a share of ASC’s common stock at the time of exercise of the SAR over the per share exercise price of the SAR, multiplied by the number of shares for which the SAR is then exercised. Payment under the SAR will be made in the form of shares of ASC’s common stock, based on the fair market value of a share of ASC’s common stock at the time of exercise of the SAR.
The SAR awards provide that in no event will the appreciation per share for any portion of the SAR award be deemed to exceed four times (i.e. 400%) the per share exercise price of the SAR. In other words, the fair market value of a share of the Company’s common stock for purposes of calculating the amount payable under the SAR is not deemed to exceed five times (i.e. 500%) the per share exercise price of the SAR. Any appreciation in excess of four times the per share exercise price of the SAR will be disregarded for purposes of calculating the amount payable under the SAR. Vesting on all awards up to July 31, 2016 was subject to certain market conditions being met. On that date the vesting reverted to being solely dependent on time of service. The grant date fair value was calculated by applying a model based on the Monte Carlo simulation. The model inputs were the grant price, dividend yield based on the initial intended dividend set out by the Company, a risk-free rate of return equal to the zero coupon U.S. Treasury bill commensurate with the contractual terms of the units and expected volatility based on the average of the most recent historical volatilities in the Company’s peer group. A summary of awards, simulation inputs and outputs is as follows:
| Monte Carlo Simulation Inputs | ||||||||||||||||||||||||||||||||
| Grant Date | SARs Awarded | Exercise Price | Vesting Period | Grant Price | Dividend Yield | Risk-free rate of Return | Expected Volatility | Weighted Average Fair Value @ grant date | Average Expected Exercise Life | |||||||||||||||||||||||
| 01-Aug-13 | 1,078,125 | $ | 14.00 | 5 yrs | $ | 14.00 | 2.87 | % | 2.15 | % | 54.89 | % | $ | 4.28 | 4.9 - 6.0 yrs | |||||||||||||||||
| 12-Mar-14 | 22,118 | $ | 13.66 | 3 yrs | $ | 13.66 | 2.93 | % | 2.06 | % | 56.31 | % | $ | 4.17 | 4.6 - 5.0 yrs | |||||||||||||||||
| 01-Sept-14 | 5,595 | $ | 13.91 | 3 yrs | $ | 13.91 | 2.88 | % | 2.20 | % | 53.60 | % | $ | 4.20 | 4.5 - 5.0 yrs | |||||||||||||||||
| 06-Mar-15 | 37,797 | $ | 10.25 | 3 yrs | $ | 10.25 | 3.90 | % | 1.90 | % | 61.38 | % | $ | 2.98 | 4.2 - 5.0 yrs | |||||||||||||||||
| 15-Jan-16 | 205,519 | $ | 9.20 | 3 yrs | $ | 9.20 | 6.63 | % | 1.79 | % | 58.09 | % | $ | 2.20 | 4.0 – 5.0 yrs | |||||||||||||||||
The cost of each tranche is being recognized by the Company on a straight-line basis. The recognition of share-based compensation costs related to the tranches that vested before July 31, 2016 would have been accelerated if the market condition had been met and the requisite service period had been completed. The Company’s policy for issuing shares upon the exercise, if any, of the SARs is to register and issue new common shares to the beneficiary. Changes in the SARs for the period ended September 30, 2017 is set forth below:
| No. of Units | Weighted average exercise price | |||||||
| Balance as at January 1, 2017 | 1,343,375 | $ | 13.16 | |||||
| SARs granted during the nine months ended September 30, 2017 | - | - | ||||||
| SARs exercised/converted/expired during the nine months ended September 30, 2017 | - | - | ||||||
| SARs forfeited during the nine months ending September 30, 2017 | - | - | ||||||
| Balance as at September 30, 2017 (none of which are exercisable or convertible) | 1,343,375 | $ | 13.16 | |||||
| F-12 |
Ardmore Shipping Corporation
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2017 and September 30, 2016
(Expressed in U.S. Dollars, unless otherwise stated)
The total cost related to non-vested awards expected to be recognized through 2018 is set forth below:
| Period | TOTAL | |||
| 2017 | 457,042 | |||
| 2018 | 155,219 | |||
| 612,261 | ||||
| 8. | Subsequent Events |
In October 2017, we entered into a $15 million revolving credit facility. This facility will be used for working capital and general corporate purposes. The facility is available for drawdown in the fourth quarter.
| F-13 |