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Key Information
A.
[Reserved]
B.
Capitalization and Indebtedness
Not Applicable.
C.
Reasons for the Offer and Use of Proceeds
Not Applicable.
D.
Risk Factors
Summary of Risk Factors
The bullets below summarize the principal risk factors related
to an investment in our Company.
Industry Specific Risk Factors
●
Charter hire
rates for
dry bulk
vessels are
volatile and
have fluctuated
significantly in
the
past
years,
which
may
adversely
affect
our
earnings,
revenues
and
profitability
and
our
ability to comply with our loan covenants.
●
The current
state of
the global
financial markets
and economic
conditions may
adversely
impact
our
ability
to
obtain
additional
financing
on
acceptable
terms
and
otherwise
negatively impact our business.
●
Our operating results may be affected by seasonal fluctuations.
●
Our
operations
expose
us
to
global
risks,
such
as
political
instability,
terrorist
or
other
attacks,
war,
international
hostilities,
economic sanctions
or
other
trade
restrictions,
and
public
health
concerns,
which
may
affect
the
seaborne
transportation
industry
and
adversely affect our business.
●
An increase in the price of fuel, or bunkers, may adversely affect our
profits.
8
●
We are
subject to
complex laws
and regulations, including
environmental regulations that
can adversely affect the cost, manner or feasibility of doing business.
●
If our
vessels call
on ports
located in
countries or
territories that
are the
subject of
sanctions
or embargoes imposed
by the U.S.
government, the United
Kingdom, the European Union,
the United Nations, or other governmental
authorities, or engage in other
such transactions
or dealings
that would
be violative
of applicable
sanctions laws, it
could lead
to monetary
fines or penalties and
may adversely affect our reputation
and the market for our
securities.
●
We conduct business
in China, where
the legal system
has inherent uncertainties
that could
limit the legal protections available to us.
Company Specific Risk Factors
●
We charter
some of our
vessels on short-term time
charters in a
volatile shipping industry
and a
decline in
charter hire
rates could
affect our
results of
operations and
our ability
to
pay dividends.
●
A cyber-attack could materially disrupt our business.
●
Our
earnings may
be adversely
affected if
we are
not able
to take
advantage of
favorable
charter rates.
●
We
cannot
assure
you
that
we
will
be
able
to
borrow
amounts
under
loan
facilities
and
restrictive covenants in our loan facilities impose financial and
other restrictions on us.
●
In the highly competitive
international shipping industry, we
may not be able to
compete for
charters with
new entrants
or established
companies with
greater resources,
and as
a result,
we may be unable to employ our vessels profitably.
●
Technological innovation and
quality and
efficiency requirements
from our
customers could
reduce our charter hire income and affect the demand and the value
of our vessels.
●
We
are a
holding company,
and we
depend on
the ability
of our
subsidiaries to
distribute
funds to us in order to satisfy our financial obligations.
●
Because we are organized
under the laws
of the Marshall
Islands, it may be
difficult to serve
us with legal process or enforce judgments against us, our directors
or our management.
Risks Relating to Our Common Stock
●
We
cannot
assure
you
that
our
board
of
directors
will
continue
to
declare
dividends
on
shares of our common stock in the future.
●
The market prices
and trading volume
of our shares
of common stock
may experience rapid
and substantial price
volatility, which could
cause purchasers
of our common
stock to incur
substantial losses.
●
Since we
are incorporated
in
the
Marshall Islands,
which
does not
have
a well-developed
body
of
corporate
law,
you
may
have
more
difficulty
protecting
your
interests
than
shareholders of a U.S. corporation.
9
●
As a Marshall Islands corporation and
with some of our subsidiaries being
Marshall Islands
entities and also having subsidiaries in other offshore jurisdictions, our operations may be
subject to economic substance requirements, which could impact
our business.
●
Certain existing
shareholders will
be able
to exert
considerable influence
over matters
on
which our shareholders are entitled to vote.
●
Our Series B Preferred Shares are senior obligations of ours and rank prior to our common
shares with respect to dividends,
distributions and payments upon
liquidation, which could
have an adverse effect on the value of our common shares.
Risks Relating to Our Series B Preferred Stock
●
We may not
have sufficient cash from
our operations to enable us
to pay dividends on
our
Series B Preferred Shares following the payment of expenses and the establishment of any
reserves.
●
Our Series
B Preferred
Shares are
subordinate to
our indebtedness,
and your
interests could
be
diluted
by
the
issuance
of
additional
preferred
shares,
including
additional
Series
B
Preferred Shares, and by other transactions.
●
We
may
redeem
the
Series
B
Preferred
Shares,
and
you
may
not
be
able
to
reinvest
the
redemption price you receive in a similar security.
Risks Relating to Our Outstanding Warrants
●
The issuance
of our
common stock
upon the
exercise of
the Warrants
may depress
our stock
price.
Some
of
the
following
risks
relate
principally
to
the
industry
in
which
we
operate
and
our
business
in
general. Other
risks relate
principally to
the securities
market and ownership
of our securities,
including our
common
stock, outstanding
warrants and
our
Series B
Preferred Shares.
The occurrence
of
any of
the
events described in this section
could significantly and negatively affect
our business, financial condition,
operating
results,
cash
available
for
the
payment
of
dividends
on
our
shares
and
interest
on
our
loan
facilities and bond, or the trading price of our securities.
Industry Specific Risk Factors
Charter
hire
rates
for
dry
bulk
vessels
are
volatile
and
have
fluctuated
significantly
in
the
past
years, which
may adversely
affect our earnings,
revenues and
profitability and
our ability
to comply
with our loan covenants.
Substantially all of our revenues
are derived from a single
market, the dry bulk segment,
and therefore our
financial results
are subject
to
cyclicality of
the
dry bulk
shipping industry
and any
attendant volatility
in
charter hire
rates and profitability. The
degree of
charter hire
rate volatility
among different types
of dry
bulk
vessels has
varied widely,
and time
charter and
spot market
rates for
dry bulk
vessels have
in the
past
declined below the
operating costs of
vessels. When we
charter our
vessels pursuant to
short-term time
charters, we
are exposed
to changes
in short-term
charter rates
for dry
bulk carriers
and such
changes
may affect our earnings. Fluctuations in charter rates result
from changes in the supply of and demand
for
vessel
capacity
and
changes
in
the
supply
of
and
demand
for
the
major
commodities
carried
by
water
internationally.
Because
the
factors
affecting
the
supply
of
and
demand
for
vessels
are
outside
of
our
control and
are unpredictable,
the nature,
timing, direction
and degree
of changes
in industry
conditions
are also
unpredictable. We
cannot assure
you that
we will
be able
to successfully
charter our
vessels in
10
the
future
or
renew
existing
charters
at
rates
sufficient
to
allow
us
to
meet
our
obligations
or
pay
any
dividends in the future. A significant decrease
in charter rates would adversely affect our profitability, cash
flows
and may
cause vessel
values to
decline, and,
as
a result,
we may
have
to
record an
impairment
charge in our consolidated financial statements which could adversely
affect our financial results.
In
2025,
dry
bulk
shipping
showed
mixed
performance
across
vessel
sizes.
Capesizes
remained
the
strongest, supported
by steady long-haul
iron ore
and bauxite trades
and expectations
for new projects
like
Simandou. Panamax
and Supramax
markets softened
due to
increased vessel
supply and
weaker Chinese
demand, but Panamax
activity was risen
mid year
driven by strong
Brazilian soyabean and
corn exports
from
ECSA,
although
oversupply
and
softer
Chinese
buying
still
pressured
rates.
Ongoing
conflicts,
geopolitical
tensions,
U.S.–China
tariffs,
and
shifting
trade
policies
added
further
uncertainty,
making
scheduling and freight levels
less predictable. At the
same time, FuelEU Maritime
and the expanding EU
ETS added cost pressure as ships calling EU ports faced stricter
fuel rules and rising obligations.
Factors that influence demand for dry bulk vessel capacity include:
●
supply
of
and
demand
for
energy
resources,
commodities,
and
semi-finished
and
finished
consumer and industrial products;
●
changes in the exploration or production of energy
resources, commodities, and semi-finished and
finished consumer and industrial products;
●
the location of regional and global exploration, production and manufacturing
facilities;
●
availability of credit to finance international trade;
●
the
location
of
consuming
regions
for
energy
resources,
commodities,
and
semi-finished
and
finished consumer and industrial products;
●
the globalization of production and manufacturing;
●
global
and
regional
economic
and
political
conditions,
armed
conflicts,
such
as
those
between
Russia and Ukraine and between the U.S.
and its allies, and Iran, trade disruption
in the Red Sea
region and fluctuations in industrial and agricultural production;
●
disruptions and developments in international trade;
●
changes in seaborne and other transportation patterns,
including the distance cargo is transported
by
sea
for
reasons
including
but
not
limited
to
reductions
in
canal
capacities
and
geopolitical
conflicts and military responses;
●
international sanctions, embargoes, strikes, import and export
restrictions, nationalizations, piracy,
and terrorist attacks;
●
legal
and
regulatory
changes
including
regulations
adopted
by
supranational
authorities
and/or
industry bodies, such as safety and environmental regulations and
requirements;
●
weather and acts of God and natural disasters;
●
environmental and other regulatory developments;
11
●
currency exchange rates, specifically versus USD; and
●
economic slowdowns caused by public health pandemics.
Demand for
our dry
bulk oceangoing
vessels is
dependent upon
economic
growth in
the world’s
economies,
seasonal and regional changes in
demand and changes to the
capacity of the global dry
bulk fleet and the
sources and supply for dry bulk cargo transported by sea. Continued adverse economic, political
or social
conditions
or
other
developments
could
negatively
impact
charter
rates
and
therefore
have
a
material
adverse effect on our business results, results of operations and ability to pay dividends.
Factors that influence the supply of dry bulk vessel capacity include:
●
the number of newbuilding orders and deliveries, including slippage
in deliveries;
●
the number of shipyards and ability of shipyards to deliver vessels;
●
port or canal congestion;
●
potential
disruption,
including
supply
chain
disruptions,
of
shipping
routes
due
to
accidents
or
political events;
●
speed of vessel operation;
●
vessel casualties;
●
technological advances in vessel design and capacity;
●
the degree of
scrapping or recycling
of older vessels,
depending, among other
things, on scrapping
or recycling rates and international scrapping or recycling regulations;
●
the price of steel and vessel equipment;
●
product imbalances (affecting level of trading activity) and developments in international
trade;
●
the number
of vessels
that are
out of
service, namely those
that are
laid-up, drydocked, awaiting
repairs or otherwise not available for hire;
●
availability of financing for new vessels and shipping activity;
●
changes in international regulations
that may effectively
cause reductions in the
carrying capacity
of vessels or early obsolescence of tonnage; and
●
changes in environmental and other regulations that may limit the useful lives and trading patterns
of vessels.
In
addition
to
the
prevailing
and
anticipated
charter
rates,
factors
that
affect
the
rate
of
newbuilding,
scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices,
costs of
bunkers and
other operating
costs, costs
associated with
classification society
surveys, normal
maintenance and insurance coverage
costs, the efficiency
and age profile of
the existing dry bulk
fleet in
the
market
and
government
and
industry
regulation
of
maritime
transportation
practices,
particularly
environmental
protection
laws
and regulations.
These factors
influencing the
supply
of
and
demand
for
12
shipping capacity are outside of our
control, and we may not be able
to correctly assess the nature, timing
and degree of changes in industry conditions.
We anticipate
that the future
demand for our
drybulk vessels and
the charter rates
of the drybulk
market
will be dependent upon economic
recovery and growth in
the United States, Europe, Japan,
China, India
and the overall world economy,
as well as seasonal
and regional changes in demand and changes to the
capacity
of the
world fleet.
The capacity
of
the world
fleet may
increase and
economic growth
may
not
continue. Adverse
economic, political,
social or
other developments
could also
have a
material adverse
effect on our business and results of operations.
The current
state of
the global
financial markets
and economic
conditions may
adversely impact
our ability to obtain additional financing on acceptable terms and otherwise negatively impact our
business.
Global
financial
markets
can
be
volatile
and
contraction
in
available
credit
may
occur
as
economic
conditions change.
In recent
years, operating
businesses in
the global
economy have
faced
weakening
demand for
goods and
services, deteriorating
international
liquidity conditions,
and declining
markets which
lead
to
a
general
decline
in
the
willingness
of
banks
and
other
financial
institutions
to
extend
credit,
particularly in
the shipping industry. As
the shipping industry
is highly dependent
on the availability
of credit
to finance and expand operations, it may be negatively affected by such
changes and volatility.
We face risks attendant to changes in economic environments, changes in
interest rates, and instability in
the
banking
and
securities
markets
around
the
world,
among
other
factors
which
may
have
a
material
adverse effect on our results
of operations and financial
condition and may cause
the price of our
common
shares to decline.
Global economic conditions may negatively impact the drybulk shipping
industry.
Economic
growth
is
expected
to
remain
resilient
in
2026
and
2027,
despite
significant
challenges,
as
inflation is expected to continue to ease further. However,
major market disruptions and adverse changes
in market
conditions and
regulatory climate
in China,
the United
States, the
European Union
and worldwide
may
adversely
affect
our
business
or
impair
our
ability
to
borrow
amounts
under
credit
facilities or
any
future financial arrangements.
Chinese dry bulk imports have accounted
for the majority of global dry bulk
transportation growth annually
over the
last decade.
Accordingly,
our financial
condition and results
of operations,
as well
as our
future
prospects,
would
likely
be
hindered
by
an
economic
downturn
in
any
of
these
countries
or
geographic
regions. In recent years
China and India have
been among the
world’s fastest growing economies
in terms
of gross
domestic product.
Although China
met its
official growth
target of
5% in
2025, the
growth of
China’s
economy has a
2026 real growth
target of 4.5%–5.0%,
as there is
a continued threat
of a Chinese
financial
crisis
resulting
from
deteriorating
real
estate
property
values,
excessive
personal
and
corporate
indebtedness and “trade wars.”
An economic slowdown in China,
the Asia-Pacific region, or
in India may
adversely
affect
demand
for
seaborne
transportation
of
our
products
and
our
results
of
operations.
Moreover,
any
deterioration
in
the
economy
of
the
United
States
or
the
European
Union
may
further
adversely affect economic growth in Asia.
The dry bulk
carrier charter market remains
significantly below its
high in 2008,
which may affect
our revenues, earnings and profitability, and our ability to comply with our loan covenants.
The abrupt and
dramatic downturn in the
dry bulk charter
market until the
beginning of 2021,
from which
we
derive
substantially
all
of
our
revenues,
severely
affected
the
dry
bulk
shipping
industry
and
our
business. The
Baltic Dry
Index, or
the BDI,
a daily
average of
charter rates
for key
dry bulk
routes published
13
by the Baltic Exchange Limited, has long been viewed as the main benchmark to monitor the movements
of the dry bulk vessel charter market and the performance of the entire dry bulk shipping market. The BDI
declined
94%
in
2008
from
a
peak
of
11,793
in
May
2008
to
a
low
of
663
in
December 2008
and
has
remained volatile since then,
reaching a record low of
290 in February 2016.
In 2025, the BDI ranged
from
a low of
715 to a
high of 2,845
and closed at
1,972 on March
12, 2026. There
can be no
assurance that
the
dry
bulk
charter
market
will
not
decline
further.
The
decline
and
volatility
in
charter
rates
is
due
to
various factors, including the
oversupply of vessels, easing
of port congestion, slower
demand growth and
economic and
geopolitical factors.
The decline
and volatility
in charter
rates in
the
dry bulk
market also
affects the value of our dry bulk vessels, which follows the trends of dry bulk charter
rates.
Any
decline
in
the
dry
bulk
carrier
charter
market
may
have
additional
adverse
consequences
for
our
industry,
including
an
absence
of
financing
for
vessels,
no
active
secondhand
market
for
the
sale
of
vessels,
charterers
seeking
to
renegotiate
the
rates
for
existing
time
charters,
and
widespread
loan
covenant defaults in the dry bulk shipping
industry. Accordingly, the value of our common shares could be
substantially reduced or eliminated.
Worldwide inflationary
pressures could
negatively impact
our results
of operations
and cash
flows.
The
previous
year
worldwide
economies
experienced
inflationary
pressures,
with
price
increases
seen
across
many
sectors
globally.
For
example,
the
U.S.
consumer
price
index,
an
inflation
gauge
that
measures costs
across dozens
of items
rose 2.9%
and 2.7%
in December 2024
and 2025,
respectively,
compared to the prior year. It remains to be seen whether
inflationary pressures will increase again
and to
what degree. In the
event that inflation
becomes a significant
factor in the global
economy generally and
in
the shipping industry more specifically,
inflationary pressures would result in increased operating, voyage
and administrative
costs. Furthermore, the
effects of
inflation on
the supply
and demand
of the
products
we
transport
could
alter
demand
for
our
services.
Interventions
in
the
economy
by
central
banks
in
response
to
inflationary
pressures
may
slow
down
economic
activity,
including
by
altering
consumer
purchasing habits
and reducing
demand for
the commodities
and products
we carry, and cause
a reduction
in trade. As a result,
the volumes of goods we
deliver and/or charter rates
for our vessels may be
affected.
Any
of
these
factors
could
have
an
adverse effect
on
our
business, financial
condition,
cash
flows
and
operating results.
Our operations
expose us
to global
risks, such
as political
instability, terrorist
or other
attacks, war,
international
hostilities,
economic
sanctions
or
other
trade
restrictions,
and
public
health
concerns,
which
may
affect
the
seaborne
transportation
industry
and
adversely
affect
our
business.
We are an international
shipping company and
primarily conduct most
of our operations
outside the United
States, and our business,
results of operations, cash
flows, financial condition
and ability to pay dividends,
if
any,
may
be
adversely
affected
by
changing
economic,
political
and
government
conditions
in
the
countries and regions where our vessels are employed or registered. Moreover, we operate
in a sector of
the economy that is
likely to be adversely
impacted by the effects
of political conflicts,
including the current
political instability in the
Middle East, Ukraine, the
South China Sea region
and other geographic countries
and areas, geopolitical
events, acts
of terrorism,
war or threatened
war, and related international
hostilities.
The response
of the
United States
and others
to terrorist
attacks, as
well as
the threat
of future
terrorist
attacks around
the world,
continues to
cause uncertainty
in the
world’s financial
markets and
may affect
our business,
operating results,
and financial
condition. Continuing
conflicts and
recent developments
in
Venezuela,
Ukraine
and
the
Middle
East,
along
with
increased
tensions
between
the
U.S.
and
China,
Russia, Iran
and certain terrorist
organizations, as well
as the
presence of U.S.
or other
armed forces in
various other regions, may lead to additional acts of terrorism and
armed conflict around the world, which
may
contribute
to
further
economic
instability
in
the
global
financial
markets.
As
a
result
of
the
above,
insurers have increased premiums and reduced
or restricted coverage for losses caused
by terrorist acts
14
generally. These uncertainties could
also adversely
affect our ability
to obtain additional
financing on
terms
acceptable to us
or at all.
Any of these
occurrences could have
a material adverse
impact on our
operating
results,
revenues
and
costs.
Additionally,
events
in
other
jurisdictions
could
impact
global
markets,
including
foreign
exchange
and
securities
markets;
any
resulting
changes
in
currency
exchange
rates,
tariffs, treaties and other regulatory matters could in turn adversely impact our business
and operations.
In addition, the recent armed conflict between the U.S. and
its allies and Iran has led to severe disruption
and an effective
shutdown of the
Strait of Hormuz
and further disrupted trade
routes in the
Red Sea and
the
Gulf
of
Aden,
which have
been
affected
by
armed
attacks
on
ships
traveling
in
those
regions.
The
continued disruption of
such critical trade routes
could have significant
impacts in the Middle
East region
and on the
global economy,
which may adversely impact
oil markets and the
demand for dry-bulk vessel
capacity and charter rates.
Currently,
the Company’s charter
contracts, or our operations,
have not been
negatively
affected
by the
events
of
the
Ukraine War,
nor
the
Middle
East,
but
trade
routes
have been
disrupted. It
is possible
that in
the future
third parties
with whom
the
Company has
or will
have charter
contracts may
be impacted by
such events.
The Company
cannot predict what
effect the
higher price
of
oil, refined petroleum products
or certain dry-bulk
commodities will have on
demand, and it is possible
that
the conflicts in the Ukraine,
the Middle East and elsewhere
could adversely affect the Company’s financial
condition, results of operations, and future performance.
Currently, the world economy faces a number of challenges, including trade tensions between the
United States and China,
stabilizing growth in China, continuing threat
of terrorist attacks around
the world,
continuing instability and
conflicts and other
ongoing occurrences in
the Middle
East,
Ukraine, and
in other
geographic areas
and countries,
along with
economic sanctions
or other
trade
restrictions.
In the
past, political
instability has
also resulted
in attacks
on vessels,
mining of
waterways and
other efforts
to disrupt international shipping,
particularly in the Arabian
Gulf region, in the Black
Sea in connection with
the conflict
between Russia and
Ukraine,
and in
and around
the Red
Sea in
connection with the
conflict
between Israel and Hamas.
Acts of terrorism
and piracy have also
affected vessels trading in
regions such
as
the
South
China
Sea
and
the
Gulf
of
Aden
off
the
coast
of
Somalia,
among
others.
Any
of
these
occurrences could have
a material
adverse impact on
our future
performance, results of
operation, cash
flows and financial position.
Beginning in
February of
2022, the
United States,
the United
Kingdom and
the European
Union, among
other
countries,
announced
various
economic
sanctions
against
Russia
in
connection
with
the
aforementioned conflicts
in the
Ukraine region,
which may
adversely impact
our business.
The ongoing
conflict could result in the
imposition of further economic
sanctions or new categories
of export restrictions
against persons in
or connected
to Russia.
While in
general much uncertainty
remains regarding
the global
impact of the continuation of the
conflict in Ukraine and any
other potential resolution thereof,
it is possible
that such tensions could adversely
affect the Company’s business, financial
condition, results of operation
and cash flows.
The United States
has issued several
Executive Orders
that prohibit certain
transactions related to
Russia,
including
the
importation
of
certain
energy
products
of
Russian
Federation
origin
(including
crude
oil,
petroleum, petroleum fuels,
oils, liquefied natural
gas and coal), and
all new investments
in Russia by
U.S.
persons,
among
other
prohibitions
and
export
controls,
and
has
issued
numerous
determinations
authorizing the
imposition of
sanctions on
persons who
operate or
have operated
in the
energy,
metals
and mining,
and marine sectors
of the
Russian Federation economy,
among others.
Designations under
these sanctions
programs are
continuing, including
in October
2025 against
Lukoil and
Rosneft, and
certain
of their subsidiaries. Increased
restrictions on these sectors,
or the expansion of
sanctions to new sectors,
may pose additional risks that could adversely affect our business and operations.
15
Our business could be adversely impacted by trade tariffs,
trade embargoes or other economic sanctions
that limit trading
activities between the United
States or other countries
and countries in the
Middle East,
Asia or elsewhere as
a result of
terrorist attacks, hostilities
or diplomatic or
political pressures, including
as
a result of
the ongoing tensions
involving Russia, Iran,
and China and
the current conflicts
between Russia
and Ukraine and in the Middle East.
An increase in
trade protectionism,
the unravelling of
multilateral trade
agreements and
a decrease
in the level
of China’s export
of goods and import
of raw materials could
have a material
adverse
impact
on
our
charterers’
business
and,
in
turn,
could
cause
a
material
adverse
impact
on
our
results of operations, financial condition and cash flows.
Our operations expose
us to the
risk that increased
trade protectionism
may adversely affect
our business.
Recently,
government leaders
have declared
that their
countries may
turn to
trade barriers
to protect
or
revive their domestic industries
in the face of
foreign imports, thereby
depressing the demand
for shipping.
The U.S.
government has
made statements
and taken
actions that
may impact
U.S. and
international trade
policies, including
tariffs affecting
certain Chinese
industries. Additionally,
there is
significant uncertainty
about the future relationship between
the United States and
China and other countries, such
as Canada,
Mexico,
and
the
European
Union,
among
others,
with
respect
to
trade
policies,
treaties,
government
regulations, and
tariffs, some of
which remain
subject to
legal challenge.
It is unknown
whether and
to what
extent such tariffs will
be retained, expanded,
or otherwise modified
by the U.S.,
or the effect that
any such
actions
or
any
actions taken
by
other
countries in
response
will have
on
us
or
our
industry.
If
any new
tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or,
in particular,
if the U.S.
government pursues additional
retaliatory trade actions
due to the
ongoing U.S.-
China trade
tension, such
changes could
have an
adverse effect
on our
business, results
of operations
and financial condition.
For
example,
beginning
in
April
2025,
the
Office
of
the
United
States
Trade
Representative
(USTR)
implemented service fees on Chinese vessel operators and owners, as well as operators of Chinese-built
vessels, and for
certain car carriers
and roll-on/roll-off vessels
calling at U.S.
ports. Such service
fees were
initially
imposed
as
scheduled beginning
on
October
14,
2025,
but
were suspended
for
one
year
as
of
November
10,
2025
as
a
result
of
broader
trade
negotiations
between
the
U.S.
and
China.
China
had
imposed retaliatory service fees on
U.S. vessels, which were also
suspended for a period of
one year on
the same date.
It is unknown
whether and to
what extent these
port fees will
be reimposed following
the
one-year suspension, or the effect that they might have on us or our industry generally.
Furthermore, the government of China has
implemented economic policies aimed at increasing domestic
consumption of Chinese-made goods. This may have the effect of reducing the supply of goods available
for export and may,
in turn, result in a decrease of
demand for shipping. Many of the reforms, particularly
some limited price reforms that result
in the prices for certain commodities
being principally determined by
market forces, are unprecedented or experimental and may be subject
to revision, change or abolition.
Restrictions
on
imports, including
in
the
form
of
tariffs,
could
have
a
major
impact
on
global
trade
and
demand for shipping. Specifically,
increasing trade protectionism in the markets
that our charterers serve
may cause
an increase
in (i)
the cost
of goods
exported from
exporting countries,
(ii) the
length of
time
required
to
deliver
goods
from
exporting
countries,
(iii)
the
costs
of
such
delivery
and
(iv)
the
risks
associated with
exporting goods.
These factors
may result
in a
decrease in
the quantity
of goods
to be
shipped, shipping time
schedules, voyage costs and
other associated costs.
Protectionist developments,
or the perception they may occur, may have a material adverse effect on global economic conditions, and
may
significantly
reduce
global
trade,
including
trade
between
the
United
States
and
China.
These
developments
would
also
have
an
adverse
impact
on
our
charterers’
business,
operating
results
and
financial condition which could,
in turn, affect
our charterers’ ability to
make timely charter
hire payments
to us
and impair
our ability
to renew
charters and
grow our
business. Any
of these
developments could
16
have a material
adverse effect on
our business, results
of operations and
financial condition,
as well as
our
cash flows, including cash available for dividends to our stockholders.
Outbreaks
of
epidemic
and
pandemic
diseases
and
governmental
responses
thereto
could
adversely affect our business.
Our operations are subject to risks related to pandemics, epidemics or other infectious disease outbreaks
and government responses thereto.
The
extent
to
which
our
business,
the
global
economy
and
dry
bulk
transportation
industry
may
be
negatively
affected
by
future
pandemics,
epidemics
or
other
outbreaks
of
infectious
diseases
is
highly
uncertain and will
depend on numerous evolving
factors that we
cannot predict, including, but
not limited
to (i) the duration and
severity of the infectious
disease outbreak; (ii)
the imposition of restrictive
measures
to combat the outbreak and slow disease transmission; (iii) the introduction of financial support measures
to reduce the impact
of the outbreak on the
economy; (iv) volatility in the
demand for and price
of oil and
gas; (v) shortages or reductions in the supply of
essential goods, services or labor; (vi) the effect such
an
outbreak would have on the
global business environment and
the demand for the goods we
transport; (vii)
governmental
responses;
and
(viii)
fluctuations
in
general
economic
or
financial
conditions
tied
to
the
outbreak, such
as a
sharp increase
in
interest rates
or reduction
in the
availability of
credit. We
cannot
predict
the
effect
that
any
future
infectious
disease
outbreak,
pandemic
or
epidemic
may
have
on
our
business, results of operations and financial condition, which could be
material and adverse.
Our operating results may be affected by seasonal fluctuations.
We operate our vessels in markets that have
historically exhibited seasonal variations in demand and, as
a result,
in charter
hire rates.
This seasonality
may result
in quarter-to-quarter
volatility in
our operating
results.
The
dry
bulk
carrier
market
is
typically
stronger
in
the
fall
and
winter
months
in
anticipation
of
increased
consumption
of
coal
and
other
raw
materials
in
the
northern
hemisphere
during
the
winter
months. As China is the most significant market for dry bulk shipping, the public holidays in relation to the
Chinese New Year during the
first quarter usually
results in a
decrease in
market activity during
this period.
In addition, unpredictable
weather patterns in
these months tend to
disrupt vessel scheduling
and supplies
of certain commodities. As a result, our revenues may
be weaker during the fiscal quarters ending March
31 and June
30, and, conversely,
our revenues
may be stronger in
fiscal quarters ending September 30
and December 31. While
this seasonality does not
directly affect our
operating results, it could
materially
affect our operating results to the extent our vessels are employed in the spot
market in the future.
An increase in the price of fuel, or bunkers, may adversely affect our
profits.
While we generally will not bear the cost
of fuel or bunkers for vessels
operating on time charters, fuel is
a
significant
factor
in
negotiating
charter
rates.
As
a
result,
an
increase
in
the
price
of
fuel
beyond
our
expectations
may
adversely
affect
our
profitability
at
the
time
of
charter
negotiation.
Fuel
is
also
a
significant, if not
the largest, expense
in shipping when
vessels are under
voyage charter.
The price and
supply of
fuel is
unpredictable and
fluctuates based
on events
outside our
control, including
geopolitical
developments, such
as the
ongoing conflict
between Russia
and Ukraine
and between
the
U.S. and
its
allies, and
Iran, supply
and demand
for oil
and gas,
actions by
the Organization
of Petroleum
Exporting
Countries (the
"OPEC"), and
other oil
and gas
producers, war
and unrest
in oil
producing countries
and
regions, regional production patterns
and environmental concerns. Any
future increase in the
cost of fuel
may reduce the profitability and competitiveness of our business.
17
We
are
subject
to
complex
laws
and
regulations,
including
environmental
regulations
that
can
adversely affect the cost, manner or feasibility of doing business.
Our business and the operations of our vessels
are materially affected by environmental regulation in the
form of international conventions, national, state
and local laws and regulations in force in the
jurisdictions
in which
our vessels
operate, as
well as
in the
country or
countries of
their registration,
including those
governing the
management and
disposal of
hazardous substances
and wastes,
the cleanup
of oil
spills
and other contamination, air emissions (including greenhouse gases), water discharges and ballast water
management. These regulations include, but
are not limited
to, European Union
regulations, the U.S.
Oil
Pollution
Act
of
1990,
requirements
of
the
U.S.
Coast
Guard,
or
USCG
and
the
U.S.
Environmental
Protection Agency, the U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990), the U.S.
Clean Water
Act, and the U.S.
Maritime Transportation Security
Act of 2002, and
regulations of the IMO,
including the International Convention on Civil Liability for Oil Pollution
Damage of 1969, the International
Convention
for
the
Prevention
of
Pollution
from
Ships
of
1973,
as
modified
by
the
Protocol
of
1978,
collectively referred to as MARPOL 73/78 or MARPOL, including designations of Emission Control Areas,
thereunder,
the
International
Convention
for
the
Safety
of
Life
at
Sea
(SOLAS),
the
International
Convention on
Load Lines
of 1966,
the International
Convention of
Civil Liability for
Bunker Oil
Pollution
Damage,
and
the
International
Safety
Management
(ISM)
Code. Because
such
conventions,
laws,
and
regulations are often revised, we
cannot predict the ultimate cost
of complying with such requirements or
the impact
thereof on the
re-sale price
or useful life
of any
vessel that
we own
or will
acquire. Additional
conventions, laws
and regulations
may be
adopted that
could limit
our ability
to do
business or
increase
the
cost
of
our
doing
business
and
which
may
materially
adversely
affect
our
operations.
Government
regulation
of
vessels,
particularly
in
the
areas
of
safety
and
environmental
requirements,
continue
to
change, requiring us
to incur significant
capital expenditures on
our vessels to
keep them in
compliance,
or even
to scrap
or sell
certain vessels
altogether.
In addition,
we may
incur significant
costs in
meeting
new
maintenance
and
inspection
requirements,
in
developing
contingency
arrangements
for
potential
environmental violations and in obtaining insurance coverage.
In addition,
we are required
by various
governmental and quasi-governmental agencies
to obtain
certain
permits,
licenses,
certificates,
approvals
and
financial
assurances
with
respect
to
our
operations.
Our
failure to
maintain necessary
permits, licenses,
certificates, approvals
or financial
assurances could
require
us to incur substantial costs or temporarily suspend operation of one or more of the vessels in our fleet or
lead to the invalidation or reduction of our insurance coverage.
Environmental
requirements
can
also
affect
the
resale
value
or
useful
lives
of
our
vessels,
require
a
reduction in
cargo capacity,
ship modifications
or operational
changes or
restrictions, lead
to decreased
availability
of
insurance
coverage
for
environmental
matters
or
result
in
the
denial
of
access
to
certain
jurisdictional waters or
ports, or detention
in certain ports.
Under local, national and
foreign laws, as
well
as international treaties
and conventions, we
could incur material
liabilities, including cleanup
obligations
and natural resource damages, in the event that there is a release of petroleum or hazardous substances
from our vessels
or otherwise
in connection
with our
operations. We
could also
become subject
to personal
injury
or
property
damage
claims
relating
to
the
release
of
hazardous
substances
associated
with
our
existing or
historic operations. Violations
of, or
liabilities under,
environmental requirements can
result in
substantial penalties, fines and other sanctions,
including in certain instances, seizure or
detention of our
vessels.
These
numerous
and
sometimes
conflicting
laws
and
regulations
include,
among
others,
data
privacy
requirements (in
particular the
European General
Data Protection
Regulation, enforceable
as from
May 25,
2018,
labor
relations
laws,
tax
laws,
anti-competition
regulations,
import
and
trade
restrictions,
export
requirements, U.S. laws such as the
FCPA and other U.S. federal laws and regulations established
by the
OFAC or other local laws which prohibit corrupt
payments to governmental
officials or certain payments or
remunerations to customers.
18
Increased inspection procedures, tighter import and export controls and new security regulations
could increase costs and disrupt our business.
International
shipping
is
subject
to
various
security
and
customs
inspection
and
related
procedures
in
countries of origin,
destination and trans-shipment
points. Under the
U.S. Maritime Transportation Security
Act
of
2002 (“MTSA”),
the
U.S.
Coast Guard
issued regulations
requiring
the
implementation of
certain
security requirements
aboard vessels
operating in
waters subject
to the
jurisdiction of
the United
States
and
at
certain ports
and facilities.
These security
procedures may
result
in
cargo seizure,
delays in
the
loading, offloading,
trans-shipment or delivery
and the
levying of customs
duties, fines or
other penalties
against us. It is possible
that changes to inspection procedures
could impose additional financial
and legal
obligations on us.
Changes to inspection
procedures could also
impose additional
costs and obligations
on
our customers and
may,
in certain cases,
render the shipment
of certain types
of cargo uneconomical or
impractical.
Any
such
changes
or
developments
may
have
a
material
adverse
effect
on
our
business,
customer relations, financial condition and earnings.
Operational risks and damage to our vessels could adversely impact
our performance.
The operation of an ocean-going vessel carries inherent
risks. Our vessels and their cargoes are
at risk of
being damaged or
lost because of
events such as
marine disasters, environmental
accidents, bad
weather
and natural disasters
or other disasters
outside our control
and other acts
of God, business
interruptions
caused
by
mechanical
failures,
grounding,
fire,
explosions
and
collisions,
human
error,
war,
terrorism,
piracy, robbery,
labor strikes, boycotts and other
circumstances or events.
Changing economic, regulatory
and political conditions
in some countries, including
political and military conflicts,
have from time to
time
resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. Damage
to the environment could also result from our operations, particularly through spillage of fuel, lubricants or
other chemicals
and substances used
in operations, or
extensive uncontrolled fires.
These hazards may
result in death or
injury to persons, loss of
revenues or property,
the payment of ransoms, environmental
damage, higher
insurance rates,
damage to
our customer relationships
and market
disruptions, delay or
rerouting, any of which may
reduce our revenue or increase
our expenses and also
subject us to litigation.
As a
result, we
could be
exposed to
substantial liabilities not
recoverable under our
insurances. Further,
the
involvement
of
our
vessels
in
a
serious
accident
or
the
loss
of
any
of
our
vessels
could
harm
our
reputation as a
safe and
reliable vessel
operator and
lead to a
loss of
business. Epidemics
and other
public
health incidents may also lead to crew member
illness, which can disrupt the operations
of our vessels, or
to public health measures,
which may prevent our
vessels from calling on
ports or discharging cargo
in the
affected areas or in other locations after having visited the affected areas.
If our vessels suffer
damage, they may need
to be repaired at
a drydocking facility.
The costs of drydock
repairs are unpredictable
and may be
substantial. We
may have to
pay drydocking
costs that
our insurance
does not
cover at
all or
in full.
The loss
of revenues
while these
vessels are
being repaired
and repositioned,
as well as the actual cost
of these repairs not covered by
our insurance, would decrease our
earnings and
available
cash
and
may
adversely
affect
our
business
and
financial
condition.
In
addition,
space
at
drydocking facilities is
sometimes limited
and not
all drydocking facilities
are conveniently located.
We may
be
unable
to
find
space
at
a
suitable
drydocking
facility
or
our
vessels
may
be
forced
to
travel
to
a
drydocking facility
that is
not conveniently
located relative to
our vessels' positions.
The loss
of earnings
while
these
vessels
are
forced
to
wait
for
space
or
to
travel
to
more
distant
drydocking
facilities
may
adversely affect our business and financial condition.
The operation
of dry
bulk vessels has
certain unique operational
risks. With
a dry
bulk vessel, the
cargo
itself and its interaction
with the ship can
be a risk
factor. By their nature, dry
bulk cargoes are
often heavy,
dense
and
easily
shifted,
and
react
badly
to
water
exposure.
In
addition,
dry
bulk
vessels
are
often
subjected to
battering treatment
during unloading
operations with
grabs, jackhammers
(to pry
encrusted
19
cargoes out of the
hold), and small bulldozers. This
treatment may cause damage to
the dry bulk vessel.
Dry bulk
vessels damaged
due to
treatment during
unloading procedures
may be
more susceptible
to a
breach at sea. Hull breaches in
dry bulk vessels may lead to the
flooding of their holds. If flooding occurs
in the forward holds, the bulk
cargo may become so waterlogged that
the vessel's bulkheads may buckle
under the resulting
pressure leading
to the loss of
the dry bulk vessel.
These risks may
also impact the
risk
of loss of life
or harm to
our crew, which could harm
our reputation as
a safe and reliable
vessel owner and
operator.
If
we
are
unable to
adequately maintain
or
safeguard
our
vessels,
we may
be
unable
to
prevent these
events. Any of these circumstances or events could negatively impact our business, financial condition or
results of operations.
If our
vessels call
on ports
located in
countries or
territories that
are the
subject of
sanctions or
embargoes imposed by the U.S. government,
the United Kingdom, the European
Union, the United
Nations, or other
governmental authorities, or engage
in other such
transactions or dealings that
would be
violative of
applicable sanctions
laws, it
could lead
to monetary
fines or
penalties and
may adversely affect our reputation and the market for our securities.
Our
contracts
with
our
charterers
prohibit
them
from
causing
our
vessels
to
call
on
ports
located
in
sanctioned countries or
territories or carrying
cargo for entities or
from countries and territories
that are the
subject of
sanctions. Although our
charterers may,
in certain cases,
control the operation
of our vessels,
we have monitoring processes in place to ensure our compliance with applicable
economic sanctions and
embargo
laws. Nevertheless,
it
remains possible
that
our
charterers may
cause
our
vessels to
trade
in
violation of
sanctions
provisions without
our
consent. If
such
activities result
in
a
violation of
applicable
sanctions or embargo laws, we
could be subject to monetary
fines, penalties, or other sanctions, and our
reputation and the market for our common shares could be adversely
affected.
The applicable sanctions
and embargo laws
and regulations vary
in their application,
and by jurisdiction,
and do
not all
apply to
the same
covered persons
or proscribe
the same
activities. In
addition, the
sanctions
and
embargo
laws
and
regulations
of
each
jurisdiction
may
be
amended
to
increase
or
reduce
the
restrictions they impose over
time, and the lists
of persons and entities
designated under these laws and
regulations
are
amended
frequently.
Moreover,
most
sanctions
regimes
provide
that
entities
owned
or
controlled by the persons or entities designated in such
lists are also subject to sanctions. The U.S.,
U.K.
and EU have
enacted new sanctions programs
in recent years. Additional countries
or territories, as well
as additional
persons or
entities within
or affiliated with
those countries
or territories,
have, and
in the
future
will,
become
the
target
of
sanctions.
These
require
us
to
be
diligent
in
ensuring
our
compliance
with
sanctions
laws.
Further,
the
U.S.
has
increased
its
focus
on
sanctions enforcement
with
respect to
the
shipping sector. Current or
future counterparties of ours may be affiliated
with persons or entities that are
or may
be in the
future the subject
of sanctions, embargoes
or blockades imposed
by the United States,
U.K., EU,
and/or other
international bodies.
If we
determine that
such sanctions
require us
to terminate
existing or future contracts
to which we,
or our subsidiaries, are party
or if we are
found to be in
violation
of
such
applicable
sanctions,
our
results
of
operations
may
be
adversely
affected,
or
we
may
suffer
reputational harm.
As a result
of Russia’s actions
in Ukraine, the
U.S., EU and
United Kingdom,
together with numerous
other
countries, have imposed
significant sanctions on
persons and entities
associated with Russia
and Belarus,
as
well
as
comprehensive
sanctions
on
certain
areas
within
the
Donbas
region
of
Ukraine,
and
such
sanctions apply
to entities
owned or
controlled by
such designated
persons or
entities. These
sanctions
adversely affect our ability to operate in the region and also restrict parties
whose cargo we may carry.
Although we believe that we
have been in compliance with all
applicable sanctions and embargo
laws and
regulations in 2025 and
up to the date of this
annual report, and intend
to maintain such compliance,
there
20
can be no assurance that we
or our charterers will be
in compliance in the future, particularly
as the scope
of certain
laws may be
unclear and may
be subject to
changing interpretations. Any
such violation could
result
in
fines,
penalties or
other
sanctions that
could severely
impact
our
ability to
access
U.S.
capital
markets and conduct our business and could result in
our reputation and the markets for our securities to
be adversely affected
and/or in some
investors deciding, or being
required, to divest
their interest, or
not
to invest, in us. In
addition, certain institutional investors may have investment policies
or restrictions that
prevent them
from holding
securities of
companies that
have contracts
with countries
or territories
identified
by the U.S. government as state sponsors of terrorism. The determination
by these investors not to invest
in, or
to divest
from, our shares
may adversely
affect the
price at
which our
shares trade. Moreover,
our
charterers may violate applicable sanctions
and embargo laws and
regulations as a result
of actions that
do not involve
us or our
vessels, and those
violations could in
turn negatively affect
our reputation. Further,
our reputation
and the
market for
our securities
may be
adversely affected
if, for
example, we
enter into
charters
with
individuals
or
entities
who,
pursuant
to
contracts
with
third
parties,
provide
services
to
or
engage in operations associated with countries or territories that
are the subject of certain U.S. sanctions
or embargo laws. Investor perception
of the value of our
common stock may also
be adversely affected by
the
consequences of
war,
the
effects
of terrorism,
civil unrest
and governmental
actions in
countries or
territories that we operate in.
The smuggling
of drugs
or
other contraband
onto our
vessels may
lead to
governmental claims
against us.
We
expect that
our vessels
will call
in
ports in
areas where
smugglers attempt
to
hide drugs
and other
contraband on
vessels, with
or
without the
knowledge of
crew members.
To
the
extent our
vessels are
found with contraband,
or stowaways,
whether inside
or attached to
the hull of
our vessel and
whether with
or without the knowledge of
any of our crew,
we may face governmental or other
regulatory claims which
could have
an adverse
effect
on our
business, results
of operations,
cash flows
and financial
condition.
Under some jurisdictions, vessels used for
the conveyance of illegal drugs could
result in forfeiture of the
subject vessel to the government of such jurisdiction.
Maritime claimants
could arrest
or
attach one
or
more
of our
vessels, which
could interrupt
our
business or have a negative effect on our cash flows.
Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders, and other parties
may
be
entitled
to
a
maritime
lien
against
a
vessel
for
unsatisfied
debts,
claims
or
damages.
In
many
jurisdictions, a
maritime lien
holder may
enforce its
lien by
“arresting” or
“attaching” a
vessel through
judicial
or foreclosure proceedings.
The arrest or
attachment of
one or more
of our
vessels could interrupt
the cash
flow of
the charterer
and/or require
us to
pay a
significant amount
of money
to have
the arrest
or attachment
lifted, which would have an adverse effect on our cash flows.
In addition, in some jurisdictions, such
as South Africa, under the “sister-ship”
theory of liability, a claimant
may arrest
both the
vessel that
is subject
to the claimant’s
maritime lien
and any
“associated” vessel,
which
is any
vessel owned
or controlled
by the
same owner.
Claimants could
try to
assert “sister-ship”
liability
against
one
vessel
in
our
fleet
for
claims
relating
to
another
of
our
ships.
Under
some
of
our
present
charters, if the vessel is arrested or detained as a result of a claim against us, we may be in default of our
charter
and
the
charterer
may
suspend
the
payment
of
hire
under
the
charter
and
charge
us
with
any
additional expenses
incurred during
that period,
which may
negatively impact
our revenues
and cash
flows.
We conduct business
in China, where the
legal system has inherent
uncertainties that could limit
the legal protections available to us.
Some
of
our
vessels may
be
chartered to
Chinese
customers and
from
time
to
time
on
our
charterers'
instructions,
our
vessels
may
call
on
Chinese
ports.
Such
charters
and
voyages
may
be
subject
to
21
regulations in China
that may require
us to incur
new or additional
compliance or other
administrative costs
and
may require
that
we pay
to
the
Chinese government
new taxes
or other
fees.
Applicable laws
and
regulations in
China may
not be well
publicized and
may not
be known
to us
or to our
charterers in
advance
of us
or our
charterers becoming
subject to
them, and
the implementation
of such
laws and
regulations
may be
inconsistent. Changes in
Chinese laws and
regulations, including with
regards to
tax matters, or
changes
in
their
implementation
by
local
authorities
could
affect
our
vessels
if
chartered
to
Chinese
customers as well
as our vessels
calling to Chinese
ports and could
have a material
adverse impact on
our
business, financial condition and results of operations.
Governments could
requisition our
vessels during
a period of
war or emergency,
resulting in
a loss
of earnings.
A government could
requisition one or
more of
our vessels for
title or
for hire.
Requisition for title
occurs
when
a
government takes
control of
a vessel
and becomes
her
owner,
while requisition
for
hire occurs
when
a
government takes
control
of
a
vessel and
effectively
becomes her
charterer
at
dictated charter
rates. Generally, requisitions occur
during periods of war or emergency,
although governments may elect
to requisition vessels in other circumstances. Although we would be entitled to compensation in the event
of
a
requisition
of
one
or
more
of
our
vessels,
the
amount
and
timing
of
payment
would
be
uncertain.
Although
none
of
our
vessels
have
been
requisitioned
by
a
government
for
title
or
hire,
a
government
requisition of
one or more
of our
vessels may negatively
impact our revenues
and reduce the
amount of
cash we
may have
available for
distribution as
dividends to
our shareholders,
if any
such dividends
are
declared.
Failure
to
comply
with
the
U.S.
Foreign
Corrupt
Practices
Act
could
result
in
fines,
criminal
penalties and an adverse effect on our business.
We may
operate in a
number of countries
throughout the world,
including countries suspected
to have
a
risk of corruption. We are committed to doing business in accordance with applicable anti-corruption laws
and have adopted measures
designed to ensure compliance
with the U.S. Foreign
Corrupt Practices Act
of 1977, as
amended (the “FCPA”).
We are
subject, however,
to the risk
that we, our
affiliated entities or
their respective officers, directors,
employees and agents
may take actions
determined to be
in violation of
such
anti-corruption
laws,
including
the
FCPA.
Any
such
violation
could
result
in
substantial
fines,
sanctions,
civil
and/or
criminal
penalties,
curtailment
of
operations
in
certain
jurisdictions,
and
might
adversely affect our business,
earnings or financial
condition. In addition,
actual or alleged violations
could
damage
our
reputation
and
ability
to
do
business.
Furthermore,
detecting,
investigating,
and
resolving
actual
or
alleged
violations
is
expensive
and
can
consume
significant
time
and
attention
of
our
senior
management.
Company Specific Risk Factors
The market values of our vessels could decline,
which could limit the amount of funds
that we can
borrow and
could trigger
breaches of
certain financial
covenants contained
in our
loan facilities,
which
could
adversely
affect
our
operating
results,
and
we
may
incur
a
loss
if
we
sell
vessels
following a decline in their market values.
While the
market values
of vessels
and the
charter market
have a
very close relationship
as the
charter
market moves
from trough
to peak,
the time
lag between
the effect
of charter
rates on
market values
of
ships can vary.
The market
values of
our vessels
have generally
experienced high
volatility,
and you
should expect
the
market values of our vessels to fluctuate depending on a number of
factors including:
22
●
the prevailing level of charter hire rates;
●
general economic and market conditions affecting the shipping industry;
●
competition from other shipping companies and other modes
of transportation;
●
the types, sizes and ages of vessels;
●
the supply of and demand for vessels;
●
scrap values;
●
applicable governmental or other regulations;
●
technological advances;
●
the need
to upgrade
vessels as
a result
of charterer
requirements, technological
advances in
vessel
design or equipment or otherwise; and
●
the cost of newbuildings.
In
addition,
as
vessels
grow
older,
they
generally
decline
in
value.
If
the
market
values
of
our
vessels
decline, we may
not be in
compliance with certain
covenants contained in our
loan facilities and
we may
not be able to refinance our
debt or obtain additional financing or incur
debt on terms that are acceptable
to
us
or
at
all.
As
of
December
31,
2025,
we
were
in
compliance
with
all
of
the
covenants
in
our
loan
facilities. If
we are
not able
to comply
with the
covenants in
our loan
facilities or
are unable
to obtain
waivers
or
amendments
or
otherwise
remedy
the
relevant
breach,
our
lenders
could
accelerate
our
debt
and
foreclose on our vessels.
Furthermore, if
we sell
any of
our owned
vessels at
a time
when prices
are depressed,
our business,
results
of operations, cash flow and financial condition
could be adversely affected. Moreover,
if we sell a vessel
at a time when vessel prices have fallen, the sale may be at less than the vessel's carrying amount in our
financial statements, resulting
in a
loss and
a reduction in
earnings. In
addition, if
vessel values decline,
we may have to record an impairment adjustment in our financial statements which could adversely
affect
our financial
results.
Conversely, if vessel
values are
elevated at
a time
when we
wish to acquire
additional
vessels,
the
cost
of
acquisition
may
increase
and
this
could
adversely
affect
our
business,
results
of
operations, cash flow and financial condition.
We charter
some of
our vessels
on short-term time
charters in
a volatile
shipping industry and
a
decline in charter hire rates could affect our results of operations and our ability
to pay dividends.
Although significant exposure to
short-term time charters is
not unusual in the
dry bulk shipping industry,
the short-term
time charter
market is
highly competitive
and spot
market charter
hire rates
(which affect
time charter
rates) may
fluctuate significantly
based upon
available charters
and the
supply of,
and demand
for,
seaborne
shipping
capacity.
While
the
short-term
time
charter
market
may
enable
us
to
benefit
in
periods
of
increasing charter
hire
rates,
we
must
consistently
renew
our
charters
and
this
dependence
makes us
vulnerable to
declining charter
rates. As
a result
of the
volatility in
the dry
bulk carrier
charter
market, we may
not be able
to employ our
vessels upon the
termination of their
existing charters at their
current charter hire rates or at all. The dry bulk carrier charter market is volatile, and while
short-term time
charter and
spot market rates
for some
dry bulk carriers
were at
or below
operating costs
in early
2025,
conditions have improved since then. We cannot assure you
that future charter hire rates will enable
us to
operate our vessels profitably, or to pay dividends.
23
Rising crew costs could adversely affect our results of operations.
Due to an increase in the size of the global shipping fleet, the limited supply of
and increased demand for
crew
has
created
upward
pressure
on
crew
costs.
Additionally,
the
return
of
a
number
of
Ukrainian
seafarers to
their homes as
a result
of the
ongoing war in
Ukraine has
reduced the number
of seafarers
globally
and
thereby
increased
the
pressure
on
crew
wages.
Continued
higher
crew
costs
or
further
increases in crew costs could adversely affect our results of operations.
Our investment in Diana Wilhelmsen Management Limited may expose
us to additional risks.
During
2015
we
invested
in
a
50/50
joint
venture
with
Wilhelmsen
Ship
Management
which
provides
management
services
to
a
limited
number
of
vessels
in
our
fleet
and
to
affiliated
companies,
but
our
eventual goal
is to
provide fleet
management services
to unaffiliated
third-party vessel
operators. While
this joint
venture may
provide us
in the
future with
a potential
revenue source,
it may
also expose
us to
risks such
as low
customer satisfaction, increased
operating costs compared
to those we
would achieve
for our
vessels, and
inability to
adequately staff
our vessels
with crew
that meets
our expectations
or to
maintain our vessels according to our standards, which would adversely
affect our financial condition.
A cyber-attack could materially disrupt our business.
We
rely
on
information
technology
systems
and
networks
in
our
operations
and
administration
of
our
business, including navigation,
provision of services, propulsion,
machinery management, power control,
communications and cargo management. We have in
place safety and security measures on our
vessels
and onshore
operations to
protect our
vessels against
cyber-security attacks
and any
disruption to
their
information systems.
Information systems
are vulnerable
to security breaches
occurred from unauthorized
access by various threat
actors (e.g., hackers, terrorists,
script kiddies, etc.). We rely
on industry accepted
security measures
and technology
to securely
maintain confidential
and proprietary
information maintained
on
our
information
systems.
However,
these
measures
and
technology
may
not
adequately
prevent
security breaches.
Our business
operations could
be targeted
by individuals
or groups
seeking to
sabotage
or disrupt
our information
technology systems
and networks,
or to
steal data.
A successful
cyber-attack
could
materially
disrupt
our
operations,
including
the
safety
of
our
operations,
or
lead
to
unauthorized
release of
information or alteration
of information in
our systems. Any
such attack or
other breach of
our
information
technology
systems
could
have
a
material
adverse
effect
on
our
business
and
results
of
operations.
In
addition,
the
unavailability
of
the
information
systems
or
the
failure
of
these
systems
to
perform
as
anticipated
for
any
reason
could
disrupt
our
business
and
could
result
in
decreased
performance and increased operating costs, causing our business and results of operations to
suffer. We
do not
maintain cyber-liability
insurance at
this time
to cover
such losses.
Any significant
interruption or
failure of our information systems or any significant breach of security could adversely affect our business
and results
of operations.
We have
taken extensive
measures to
enhance our
security infrastructure,
reform
network architecture, and implement rigorous
security policies, culminating in
ISO 27001 certification. Key
initiatives include
conducting regular
security testing,
maintaining business
continuity and
disaster recovery
capabilities, and
operating incident response
programs supported by
a 24/7
Security Operations Center.
We
have
also
expanded
our
security
awareness
and
training
program
to
enhance
employee
vigilance
against
cyber
threats.
Despite
these
improvements
we
cannot
assure
you
that
we
will
be
able
to
successfully thwart all future attacks without causing material and adverse
effect on our business.
Moreover, our risk of cyber-attacks and other sources of security breaches
and incidents may be elevated
as
a
result
of
the
ongoing conflicts
between
Russia and
Ukraine
and
the
Israel-Hamas
conflict. To
the
extent
such
attacks
have
collateral
effects
on
global
critical
infrastructure
or
financial
institutions,
such
developments could adversely affect our
business, operating results and
financial condition. At this
time, it
is difficult to assess the likelihood of such a threat and any potential impact.
24
As
cyberattacks
become
increasingly
sophisticated,
and
as
tools
and
resources
become
more
readily
available to
attackers, including
the risk associated
with the use
of emerging
technologies, such
as artificial
intelligence and quantum
computing for nefarious
purposes, there can
be no
guarantee that our
actions,
security measures and controls
designed to prevent, detect
or respond to intrusion,
to limit access to
data,
to prevent
destruction or alteration
of data
or to
limit the
negative impact from
such attacks,
can provide
absolute security against compromise. In
2025, we initiated the creation
of a draft AI
policy to govern the
usage of
AI tools
within the
organization. Furthermore,
we selected
a training
provider for
an AI
training
workshop to upskill employees on the risks
and benefits of AI technology.
While we utilize AI-driven tools
within
our
security
stack
(such
as
within
our
SIEM
and
SOC
solutions),
we
continue
to
monitor
the
regulatory environment
regarding AI disclosures
and, at this
stage, we do
not expect AI
to cause increased
risk to our industry or business.
Even
without
actual
breaches
of
information
security,
protection
against
increasingly
sophisticated
and
prevalent cyberattacks
may result
in significant
future prevention,
detection, response
and management
costs, or
other costs,
including the
deployment of
additional cybersecurity
technologies, engaging
third-
party
experts,
deploying
additional
personnel
and
training
employees.
Further,
as
cyber
threats
are
continually evolving,
our
controls and
procedures may
become inadequate,
and we
may be
required to
devote additional resources to modify or enhance our systems in the future. Such expenses could have a
material adverse effect on our future performance, results of operations,
cash flows and financial position.
Further,
in
July
2023,
the
SEC
adopted
amendments
to
its
rules
on
cybersecurity
risk
management,
strategy, governance, and
incident disclosure.
The amendments
require us
to report
material cybersecurity
incidents involving our
information systems and
periodic reporting regarding our
policies and procedures
to identify and manage cybersecurity risks, amongst other disclosures. A
failure to disclosure could result
in the
imposition of
injunctions, fines
and other
penalties by
the
SEC. Complying
with these
obligations
could
cause
us
to
incur
substantial
costs
and
could
increase
negative
publicity
surrounding
any
cybersecurity incident.
During the
year ended
December 31,
2025, we
did not
identify any
cybersecurity
threats
that
have
materially
affected
or
are
reasonably
likely
to
materially
affect
our
business
strategy,
results of operations, or financial condition.
For more information on our cybersecurity policies, please see
“Item 16K. Cybersecurity.”
Climate
change
and
greenhouse
gas
restrictions
may
adversely
impact
our
operations
and
markets.
Due to concern over the risk
of climate change, a number of
countries and the IMO have adopted, or
are
considering the
adoption of,
regulatory frameworks
to reduce
greenhouse gas
emissions. These
regulatory
measures
may
include,
among
others,
adoption
of
cap
and
trade
regimes,
carbon
taxes,
increased
efficiency
standards
and
incentives
or
mandates
for
renewable
energy.
In
July
2023,
nations
at
the
International Maritime Organization’s
Marine Environment Protection
Committee (“MEPC”) 80
updated the
initial
strategy
to
reduce
greenhouse
gas
emissions
from
ships.
The
initial
strategy
identifies
levels
of
ambition to reducing greenhouse gas
emissions, including (1) decreasing the
carbon intensity from ships
through implementation of further phases of the Energy Efficiency Design Index
(EEDI)
for new ships; (2)
reducing carbon dioxide emissions per transport work,
as an average across international shipping, by
at
least
20%
by
2030,
compared
to
2008
emission
levels;
and
(3)
reducing
the
total
annual
greenhouse
emissions by
at least
70% by
2040 compared
to 2008
while pursuing
efforts
towards phasing
them out
entirely.
Since January
1, 2020,
ships have
to either
remove sulfur
from emissions
or buy
fuel with
low sulfur
content,
which may lead to
increased costs and supplementary investments for
ship owners. The interpretation of
"fuel
oil used
on board"
includes use
in main
engine, auxiliary
engines and
boilers. We
have elected
to
comply with this regulation
by using 0.5% sulfur fuels
on board, which are
available around the world but
25
often at a higher cost
and may result in higher
costs than other companies
that elected to install scrubbers
on their vessels.
In
addition,
although
the
emissions
of
greenhouse
gases
from
international
shipping
currently
are
not
subject
to
the
Kyoto
Protocol
to
the
United
Nations
Framework
Convention
on
Climate
Change,
which
required adopting countries
to implement national programs
to reduce emissions
of certain gases,
or the
Paris
Agreement
(discussed
further
below),
a
new
treaty
may
be
adopted
in
the
future
that
includes
restrictions on shipping emissions. Compliance with
changes in laws, regulations and
obligations relating
to climate
change could increase
our costs related
to operating
and maintaining our
vessels and require
us
to
install
new
emission
controls,
acquire
allowances
or
pay
taxes
related
to
our
greenhouse
gas
emissions
or
administer
and
manage
a
greenhouse
gas
emissions
program.
Revenue
generation
and
strategic growth opportunities may also be adversely affected.
Increasing
scrutiny
and
changing
expectations
from
investors,
lenders
and
other
market
participants with respect
to our ESG
policies may impose
additional costs on
us or
expose us to
additional risks.
Companies
across
all
industries
are
facing
increasing
scrutiny
relating
to
their
ESG
policies.
Investor
advocacy groups, certain
institutional investors, investment funds,
lenders and other market
participants,
particularly those
outside the
United States, are
increasingly focused
on ESG
practices and
in recent
years
have placed
increasing importance
on the
implications and
social cost
of their
investments. Companies
which
do
not
adapt
to
or
comply
with
investor,
lender
or
other
industry
shareholder
expectations
and
standards, which are evolving, or which are perceived to
have not responded appropriately to the growing
concern
for
ESG
issues,
regardless
of
whether
there
is
a
legal
requirement
to
do
so,
may
suffer
from
reputational damage and the business, financial condition, and/or
stock price of such a company could be
materially and adversely affected.
We may
face increasing pressures
from investors, future
lenders and other
market participants, who
are
increasingly
focused
on
climate
change,
to
prioritize
sustainable
energy
practices,
reduce
our
carbon
footprint and
promote sustainability.
As a
result, we
may
be required
to
implement more
stringent ESG
procedures or
standards so that
our existing and
future investors
and lenders remain
invested in us
and
make further investments in us.
Additionally,
certain
investors
and
lenders
may
exclude
companies,
such
as
us,
from
their
investing
portfolios
altogether
due
to environmental,
social and
governance
factors.
These
limitations
in
both
the
debt and
equity capital
markets may
affect our
ability to
grow as
our plans
for growth
may include
accessing
the
equity
and
debt
capital
markets.
If
those
markets
are
unavailable,
or
if
we
are
unable
to
access
alternative means of
financing on acceptable
terms, or at all,
we may be unable
to implement our business
strategy,
which would have
a material
adverse effect
on our
financial condition and
results of
operations
and impair our ability to service
our indebtedness. Further, it is likely that we
will incur additional costs and
require
additional
resources
to
monitor,
report
and
comply
with
wide
ranging
ESG
requirements.
The
occurrence
of
any
of
the
foregoing
could
have
a
material
adverse
effect
on
our
business
and
financial
condition.
Moreover,
from time to
time, in
alignment with
our sustainability priorities,
we may
establish and publicly
announce
goals
and
commitments
in
respect
of
certain
ESG
items.
While
we
may
create
and
publish
voluntary disclosures regarding ESG matters from time to time,
many of the statements in those voluntary
disclosures are
based on
hypothetical expectations
and assumptions
that may
or may
not be
representative
of current or actual risks or events or forecasts of expected risks or events, including
the costs associated
therewith.
Such
expectations and
assumptions
are
necessarily uncertain
and
may
be
prone to
error
or
subject to
misinterpretation given
the long
timelines involved
and the
lack of
an established
single approach
to identifying, measuring and reporting on many ESG matters. If we fail to achieve or improperly
report on
26
our progress toward achieving our environmental goals and commitments, the resulting negative publicity
could adversely affect our reputation and/or our access to capital.
Our earnings
may be
adversely affected
if we
are not
able to
take advantage of
favorable charter
rates.
We
charter
our
dry
bulk
carriers
to
customers
pursuant
to
short,
medium
or
long-term
time
charters.
However,
as
part
of
our
business
strategy,
the
majority
of
our
vessels
are
currently
fixed
on
short
to
medium-term time charters.
We may extend
the charter periods
for additional
vessels in our
fleet, including
additional dry bulk
carriers that
we may purchase
in the
future, to take
advantage of the
relatively stable
cash flow and high utilization rates that are associated with long-term time charters. While we believe
that
long-term charters provide
us with relatively
stable cash flows
and higher
utilization rates than
shorter-term
charters, our
vessels that
are committed
to long-term
charters may
not be
available for
employment on
short-term charters during periods of increasing short-term charter hire rates when these charters may be
more profitable than long-term charters.
At the expiration of our charters or if
a charter terminates early for any
reason or when we acquire vessels
charter-free, we
will need
to charter
or recharter
our vessels.
If an
excess of
vessels is
available on
the
spot or short-term
market at the
time we are
seeking to
fix new longer-term
charters, we
may have difficulty
entering into
such charters
at all
or at
profitable rates
and for
any term
other than
short term
and, as
a
result,
our
cash
flow may
be
subject to
instability in
the
mid
to
long-term. In
addition, it
would be
more
difficult to
fix relatively older
vessels should there
be an
oversupply of younger
vessels on the
market. A
depressed spot
market may require
us to
enter into short-term
spot charters
based on prevailing
market
rates, which could result in a decrease in our cash flow.
We cannot assure
you that we will
be able to borrow
amounts under loan facilities
and restrictive
covenants in our loan facilities impose financial and other restrictions
on us.
Historically, we have entered into several loan agreements
to finance vessel acquisitions,
the construction
of
newbuildings and
working
capital.
Our
ability to
borrow
amounts under
our
facilities is
subject to
the
execution of customary documentation relating to the facility, including security documents, satisfaction of
certain
customary
conditions precedent
and
compliance with
terms
and
conditions
included
in
the
loan
documents.
Prior
to
each
drawdown,
we
are
required,
among
other
things,
to
provide
the
lender
with
acceptable valuations
of the
vessels in
our fleet
confirming that
the vessels in
our fleet
have a
minimum
value and that the
vessels in our
fleet that secure
our obligations under
the facilities are
sufficient to satisfy
minimum security requirements.
To the extent that we are not able
to satisfy these requirements,
including
as a result of a decline
in the value of our
vessels, we may not be
able to draw down
the full amount under
the facilities.
We will also
not be permitted
to borrow
amounts under
the facilities
if we experience
a change
of control.
The loan facilities
also impose operating
and financial restrictions
on us. These
restrictions may limit
our
ability to, among other things:
●
pay dividends
if there
is a
default under
the loan
facilities or
if the payment
of the
dividend would
result in a default or breach of a loan covenants;
●
incur additional indebtedness, including through the issuance of guarantees;
●
change the flag, class or management of our vessels;
●
create liens on our assets;
●
sell our vessels;
27
●
enter into a
time charter
or consecutive
voyage charters
that have a
term that
exceeds, or
which
by virtue of any optional extensions may exceed a certain period;
●
merge or consolidate with, or transfer all or substantially all
our assets to, another person; and
●
enter into a new line of business.
Therefore, we
may need
to seek
permission from
our lenders
in order
to engage
in some
corporate actions.
Our lenders’ interests
may be different
from ours and
we cannot guarantee that
we will be
able to obtain
our
lenders'
permission when
needed.
This
may
limit
our
ability to
finance
our
future
operations, make
acquisitions or pursue business opportunities.
We
cannot
assure
you
that
we
will
be
able
to
refinance
indebtedness
incurred
under
our
loan
facilities and bond.
We cannot assure
you that we
will be able
to refinance our
indebtedness with
equity offerings or
otherwise,
on
terms that
are
acceptable to
us or
at
all. If
we
are
not able
to
refinance these
amounts with
the
net
proceeds of
equity offerings
or otherwise,
on terms
acceptable to us
or at
all, we
will have
to dedicate
a
greater portion of our cash flow from operations to pay the principal and interest
of this indebtedness than
if we were able to refinance such amounts. If we are not able to satisfy these obligations, we may have to
undertake alternative financing plans. The
actual or perceived credit quality
of our charterers, any defaults
by them, and
the market value of
our fleet, among other
things, may materially affect
our ability to obtain
alternative financing.
In addition,
debt service
payments under
our loan
facilities or
alternative financing
may limit funds otherwise available for working capital, capital expenditures and other purposes. If we are
unable to
meet our
debt obligations,
or if
we otherwise
default under
our loan
facilities or
an alternative
financing arrangement, our lenders could declare the
debt, together with accrued interest
and fees, to be
immediately due
and payable
and foreclose
on our
fleet, which
could result
in the
acceleration of
other
indebtedness that we
may have at
such time and
the commencement of
similar foreclosure proceedings
by other lenders.
Purchasing
and
operating
secondhand
vessels
may
result
in
increased
operating
costs
and
reduced operating days, which may adversely affect our earnings.
As part of our
current business
strategy to increase
our owned fleet,
we may acquire
new and secondhand
vessels. While we rigorously
inspect previously owned
or secondhand vessels prior
to purchase, this does
not
provide us
with the
same
knowledge about
their
condition and
cost of
any required
(or
anticipated)
repairs
that
we
would
have
had
if
these
vessels
had
been
built
for
and
operated
exclusively
by
us.
Generally,
we do not receive
the benefit of
warranties on secondhand vessels.
Accordingly, we
may not
discover defects or
other problems with
secondhand vessels prior
to purchasing or
chartering-in. Any such
hidden defects or
problems may be
expensive to repair
and may require us
to put a
vessel into drydock,
which would reduce our fleet utilization
and increase our operating costs. If
a hidden defect or problem is
not detected, it may result in accidents or other incidents
for which we may become liable to third parties.
The market prices of
secondhand and newbuilt
vessels also tend to
fluctuate with changes in
charter rates
and, if we sell the vessels, the sales prices may be less than their
carrying values at that time.
In general, the costs to maintain a vessel in
good operating condition increase with the age of the vessel.
As
of
the
date
of
this
annual
report,
our
fleet
consists
of
38
vessels
of
which
36
vessels,
owned
and
chartered-in, are in operation,
having a combined carrying
capacity of 4.1 million dead
weight tons, or dwt,
and a weighted average age of
12.3 years and two vessels are under construction.
As our fleet ages, we
will
incur
increased
costs.
Older
vessels
are
typically
less
fuel-efficient
than
more
recently
constructed
vessels
due
to
improvements
in
engine
technology.
Cargo
insurance
rates
increase
with
the
age
of
a
vessel, making older vessels less desirable to charterers.
28
Furthermore, governmental regulations, safety or other equipment
standards related to the age of vessels
may
require
expenditures for
alterations, or
the addition
of
new equipment
and may
restrict the
type
of
activities
in which
the
vessel may
engage. As
our
vessels age,
market conditions
may
not justify
those
expenditures or enable us to operate our vessels profitably during the remainder
of their useful lives. As a
result, regulations and
standards could have
a material adverse
effect on our business,
financial condition,
results of operations, cash flows and ability to pay dividends.
We are subject to certain risks with respect to our counterparties
on contracts, and failure of such
counterparties
to
meet
their
obligations could
cause
us
to
suffer
losses
or
otherwise adversely
affect our business.
We
enter
into,
among
other
things,
charter
parties with
our
customers. Such
agreements
subject
us
to
counterparty risks. The
ability and willingness
of each of
our counterparties to
perform its obligations
under
a contract with us will depend on
a number of factors that are beyond
our control and may include, among
other things, general
economic conditions,
the condition of
the maritime and
offshore industries, the
overall
financial condition of the
counterparty, charter rates received for specific types
of vessels, work stoppages
or other labor disturbances
and various expenses. Should
a counterparty fail
to honor its obligations
under
agreements with us,
we could sustain
significant losses, which
could have a
material adverse effect
on our
business, financial condition, results of operations and cash
flows.
In addition, in
depressed market conditions, our
charterers may no
longer need a
vessel that is
currently
under charter
or may
be able
to obtain
a comparable
vessel at
lower rates.
As a
result, charterers
may
seek to
renegotiate the
terms of
their existing
charter agreements
or avoid
their obligations
under those
contracts. Furthermore, it
is possible that
parties with whom we
have charter contracts may
be impacted
by events in Russia and Ukraine and in the Middle East, including in the Red Sea area,
and any resulting
sanctions.
If
our
charterers
fail
to
meet
their
obligations
to
us
or
attempt
to
renegotiate
our
charter
agreements,
it
may
be
difficult
to
secure substitute
employment for
such vessels,
and
any
new
charter
arrangements we
secure may
be
at
lower rates.
As
a result,
we
could
sustain significant
losses, which
could have
a material
adverse effect
on our
business, financial condition,
results of
operations and cash
flows.
In
the
highly
competitive
international
shipping
industry,
we
may
not
be
able
to
compete
for
charters with
new entrants
or established
companies with
greater resources,
and as
a result,
we
may be unable to employ our vessels profitably.
The
operation
of
dry
bulk
vessels
and
transportation
of
dry
bulk
cargoes
is
extremely
competitive
and
fragmented. Competition
for the transportation
of dry bulk
cargoes by sea
is intense and
depends on
price,
location,
size,
age,
condition
and
the
acceptability
of
the
vessel
and
its
operators
to
the
charterers.
Competition arises
primarily from
other vessel
owners, some
of whom
have substantially
greater resources
than we do. Due in part
to the highly fragmented market,
competitors with greater resources
than us could
enter the
dry bulk
shipping industry
and operate
larger fleets
through consolidations
or acquisitions
and
may
be able
to
offer
lower
charter rates
and
higher quality
vessels than
we
are
able to
offer.
If we
are
unable to successfully compete with other
dry bulk shipping companies, our results
of operations may be
adversely impacted.
We
may
be
unable to
attract
and
retain
key management
personnel and
other
employees in
the
shipping industry, which may
negatively impact the effectiveness of our
management and results
of operations.
Our success depends
to a
significant extent upon
the abilities and
efforts of
our management team.
Our
success
will
depend
upon
our
ability
to
retain
key
members
of
our
management
team
and
to
hire
new
members as may
be necessary.
The loss of
any of these
individuals could adversely affect
our business
29
prospects
and
financial
condition.
Difficulty
in
hiring
and
retaining
replacement
personnel
could
have
a
similar effect.
We do
not currently,
nor do
we intend
to, maintain
“key man”
life insurance
on any
of our
officers or other members of our management team.
Technological
innovation
and
quality
and
efficiency
requirements
from
our
customers
could
reduce our charter hire income and affect the demand and the value
of our vessels.
Our customers have a high and increasing focus on quality and compliance standards with their suppliers
across
the
entire
supply
chain,
including
the
shipping
and
transportation
segment.
Our
continued
compliance with these
standards and quality
requirements is vital
for our operations.
The charter hire
rates
and the value and operational life
of a vessel are determined by a number
of factors including the vessel’s
efficiency, operational flexibility and physical
life. Efficiency includes
speed, fuel economy
and the ability
to
load
and
discharge
cargo quickly.
Flexibility includes
the
ability to
enter harbors,
utilize related
docking
facilities and pass through canals and straits. The length of a vessel’s physical life is
related to its original
design and construction, its maintenance and the impact of the stress
of operations. We face competition
from
companies
with
more
modern
vessels
having
more
fuel
efficient
designs
than
our
vessels, or
eco
vessels, and if
new dry bulk
vessels are built
that are
more efficient or
more flexible or
have longer
physical
lives
than
the
current
vessels,
competition
from
the
current
eco
vessels
and
any
more
technologically
advanced vessels could adversely
affect the amount
of charter hire payments
we receive for our
vessels
and the resale value of
our vessels could significantly decrease. In these circumstances, we may
also be
forced to
charter our
vessels to
less creditworthy
charterers, either
because top
tier charters
will not
charter
older
and
less
technologically
advanced
vessels
or
will
only
charter
such
vessels
at
lower
contracted
charter
rates
than
we
are
able
to
obtain
from
these
less
creditworthy,
second
tier
charterers.
Similarly,
technologically advanced vessels are needed to
comply with environmental laws the
investment in which
along with the
foregoing could have
a material adverse
effect on charter
hire payments and
resale value
of vessels. This could
have an adverse effect
on our results of
operations, cash flows, financial condition
and ability to pay dividends.
Developments in technology could also affect global
trade flows and supply chains causing disruptions in
the
demand
for
our
vessels.
Decreasing
the
cost
of
labor
through
automation
and
digitization
and
increasing
the
consumers
power
to
demand
goods,
technology
is
changing
the
business
models
and
production of
goods in many
industries. Consequently,
supply chains are
being pulled closer
to the end-
customer
and
are
required
to
be
more
responsive
to
changing
demand
patterns.
As
a
result,
fewer
intermediate and raw inputs are
traded, which could lead to
a decrease in shipping activity.
If automation
and digitization become more
commercially viable and/or production
becomes more regional or
local, total
dry-bulk
volumes would
decrease,
which would
adversely affect
demand for
our services.
Supply chain
disruptions
caused
by
geopolitical
events,
rising
tariff
barriers
and
environmental
concerns
may
also
accelerate these trends.
We may
not have adequate
insurance to
compensate us if
we lose
our vessels or
to compensate
third parties.
We procure
insurance for
our fleet
against risks
commonly insured
against by
vessel owners
and operators.
Our
current
insurance
includes
hull
and
machinery
insurance,
war
risks
insurance
and
protection
and
indemnity
insurance
(which
includes
environmental
damage
and
pollution
insurance).
We
can
give
no
assurance that we are
adequately insured against all risks
or that our insurers
will pay a particular
claim.
Even if
our insurance
coverage is
adequate to
cover our
losses, we
may not
be able
to timely
obtain a
replacement vessel
in the event
of a loss.
Additionally, our insurers may
refuse to pay
particular claims
and
our insurance may
be voidable by
the insurers if
we take, or
fail to take,
certain action, such
as failing to
maintain certification of our vessels with applicable maritime regulatory organizations. Furthermore, in the
future, we
may not
be able
to obtain
adequate insurance coverage
at reasonable
rates for
our fleet.
We
may also be
subject to calls,
or premiums, in
amounts based not
only on our
own claim records
but also
the
claim
records
of
all
other
members
of
the
protection
and
indemnity
associations
through
which
we
30
receive
indemnity
insurance
coverage
for
tort
liability.
Our
insurance
policies
also
contain
deductibles,
limitations
and
exclusions
which,
although
we
believe
are
standard
in
the
shipping
industry,
may
nevertheless increase
our costs. In
addition, we
do not presently
carry loss-of-hire
insurance, which
covers
the
loss
of
revenue
during
extended
vessel
off-hire
periods,
such
as
those
that
might
occur
during
an
unscheduled drydocking due to damage to the vessel from a major accident. Accordingly, any vessel that
is off hire
for an extended period
of time, due to
an accident or
otherwise, could have a material
adverse
effect on our business, results of operations and financial condition.
We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm
results of operations.
We
generate all
of our
revenues in
U.S. dollars
but incur
approximately 30%
of our
operating expenses
and
around
half
of
our
general
and
administrative
expenses
in
currencies
other
than
the
U.S.
dollar,
primarily the Euro.
Because a significant
portion of our
expenses is incurred
in currencies other
than the
U.S. dollar, our expenses
may from time
to time increase
relative to our
revenues as a
result of fluctuations
in exchange rates, particularly between the U.S. dollar and the Euro, which could affect the amount of net
income that
we report
in future
periods. While we
historically have
not mitigated
the risk
associated with
exchange rate fluctuations through the use of financial
derivatives, we may employ such instruments from
time to time
in the future
in order to
minimize this risk.
Our use of
financial derivatives
would involve
certain
risks, including the risk that losses on a hedged position could
exceed the nominal amount invested in the
instrument and
the risk
that the
counterparty to
the derivative
transaction may
be unable
or unwilling
to
satisfy its contractual obligations, which could have an adverse
effect on our results.
We depend
upon a few
significant customers for a
large part of
our revenues and the
loss of one
or more of these customers could adversely affect our financial performance.
We have historically
derived a significant part
of our revenues from
a small number of
charterers. During
2025, 2024, and 2023, 29%, 11% and 13%, respectively, of our revenues were derived from two, one and
one charterers,
respectively. If one
or more
of our
charterers chooses
not to
charter our
vessels or
is unable
to perform under one or
more charters with us and
we are not able
to find a replacement
charter, we could
suffer a loss of revenues that could adversely affect our financial condition and results of operations.
We are a holding company, and we
depend on the ability of our subsidiaries to distribute funds to
us in order to satisfy our financial obligations.
We are a holding company and our subsidiaries conduct all of our operations and own all of our
operating
assets. We
have no significant
assets other than
the equity
interests in our
subsidiaries. As a
result, our
ability to satisfy our financial obligations depends on our subsidiaries and their ability to distribute
funds to
us. The ability
of our subsidiaries
to make these
distributions may become
subject to restrictions
contained
in
those
subsidiaries’ financing
agreements
and could
be
affected
by
a
claim
or
other
action
by a
third
party,
including
a
creditor,
or
by
Marshall
Islands
law
which
regulates
the
payment
of
dividends
by
companies.
If
we
are
unable
to
obtain
funds
from
our
subsidiaries,
we
may
not
be
able
to
satisfy
our
financial obligations.
Certain of our vessels
are owned through joint
ventures that we have entered
into, and our views
about
the
operations
of
those
vessels
may
differ
from
our
joint
venture
partners
and
adversely
affect our interest in the joint ventures.
We
have
entered
into
joint
venture
arrangements,
pursuant
to
which
we
own
minority
interests
in
four
commissioning service
operation vessels
through Windward
Offshore
GmbH &
Co. KG,
in one
dry bulk
vessel through Bergen Ultra, which however was sold in January 2026 and majority interests
in two 7,500
cbm LPG vessels under
construction through Ecogas
Holding AS, scheduled
for delivery in 2027.
We may
enter into
additional joint venture
arrangements in the
future. We
share voting and
operational control of
31
these joint ventures
and the operations
of these vessels.
Our joint venture
partners may
have interests
that
are different
from ours
which may result
in conflicting views
as to
the operation
of the
vessels owned by
the joint ventures or the conduct of the business
of the joint ventures. We may not be able to resolve
such
conflicts
in
our
favor
and
such
conflicts
or
differing
views
could
have
a
material
adverse
effect
on
our
interest in these joint ventures.
Because we
are organized
under the
laws of
the Marshall
Islands, it
may be
difficult to
serve us
with legal process or enforce judgments against us, our directors
or our management.
We are
organized under
the laws
of the
Marshall Islands,
and substantially
all of
our assets
are located
outside of the United States. In addition, the majority of our directors and officers are non-residents of the
United States, and all or a substantial portion of the assets of these non-residents are located outside the
United States.
As a
result, it
may be
difficult or
impossible for
someone to
bring an
action against
us or
against these
individuals in
the
United
States if
they
believe that
their
rights
have been
infringed under
securities laws or
otherwise. Even if
you are successful
in bringing an
action of this
kind, the laws
of the
Marshall Islands and of other jurisdictions may prevent or restrict them from enforcing a judgment against
our assets or the assets of our directors or officers.
The international nature of our operations may make the
outcome of any bankruptcy proceedings
difficult to predict.
We are incorporated under the laws of the Republic of the
Marshall Islands and we conduct operations in
countries
around
the
world.
Consequently,
in
the
event
of
any
bankruptcy,
insolvency,
liquidation,
dissolution, reorganization or
similar proceeding involving
us or
any of
our subsidiaries,
bankruptcy laws
other
than
those
of
the
United
States
could
apply.
If
we
become
a
debtor
under
U.S.
bankruptcy
law,
bankruptcy
courts
in
the
United
States
may
seek
to
assert
jurisdiction
over
all
of
our
assets,
wherever
located, including
property situated
in other countries.
There can
be no assurance,
however, that we would
become
a
debtor
in
the
United
States,
or
that
a
U.S.
bankruptcy
court
would
be
entitled
to,
or
accept,
jurisdiction over such a
bankruptcy case, or
that courts in other
countries that have
jurisdiction over us
and
our operations would recognize a
U.S. bankruptcy court’s jurisdiction
if any other bankruptcy
court would
determine it had jurisdiction.
If we
expand our
business further,
we may
need to
improve our
operating and
financial systems
and will need to recruit suitable employees and crew for our vessels.
Our current operating and financial
systems may not be adequate
if we further expand the size
of our fleet
and our attempts to
improve those systems may be
ineffective. In addition, if we
expand our fleet further,
we
will
need
to
recruit
suitable
additional
seafarers
and
shoreside
administrative
and
management
personnel. While we have not
experienced any difficulty in recruiting
to date, we cannot guarantee
that we
will
be
able
to
continue
to
hire
suitable
employees
if
we
expand
our
fleet.
If
we
or
our
crewing
agents
encounter business or financial difficulties, we may not be able to adequately
staff our vessels.
Any future growth will primarily depend on our ability to:
●
locate and acquire suitable vessels;
●
identify and consummate acquisitions or joint ventures;
●
enhance our customer base;
●
manage our expansion; and
●
obtain required financing on acceptable terms.
32
Growing
any
business
by
acquisition
presents
numerous
risks,
such
as
undisclosed
liabilities
and
obligations, the
possibility that
indemnification agreements
will be
unenforceable or
insufficient to
cover
potential
losses
and
difficulties
associated
with
imposing
common
standards,
controls,
procedures
and
policies,
obtaining
additional
qualified
personnel,
managing
relationships with
customers,
suppliers
and
integrating newly acquired assets and operations into existing infrastructure. If we
are unable to grow our
financial and operating
systems or to
recruit suitable employees,
should we decide
to expand our
fleet, our
financial performance may be
adversely affected, among other
things. We cannot give any assurance
that
we will be
successful in executing
any future
growth plans or
that we will
not incur significant
expenses and
losses in connection with our future growth.
We may have to pay tax on U.S. source income, which would reduce
our earnings.
Under
the
U.S.
Internal
Revenue
Code
of
1986, as
amended,
or
the
Code,
50%
of
the
gross
shipping
income
of
a
vessel-owning
or
chartering
corporation,
such
as
ourselves
and
our
subsidiaries,
that
is
attributable to
transportation that
begins or
ends, but
that does
not both
begin and
end, in
the United
States
is characterized as
U.S. source shipping
income and such
income is generally
subject to a
4% U.S. federal
income tax
without allowance
for deductions,
unless that
corporation qualifies
for exemption
from tax under
Section 883 of the Code and the Treasury Regulations promulgated thereunder.
The application
of the exemption
under Section
883 of
the Code
is highly
fact-dependent. There
are factual
circumstances beyond our control that could cause us
to lose the benefit of
this tax exemption in 2025 or
any
future
years
and
thereby
become
subject
to
U.S.
federal
income
tax
on
our
U.S.
source
shipping
income. For example, in certain circumstances we may not qualify for exemption under Code Section
883
for
a
particular
taxable
year
if
shareholders,
other
than
“qualified
shareholders”,
with
a
five
percent
or
greater interest in our common shares owned, in the aggregate, 50% or
more of our outstanding common
shares for more
than half the
days during the
taxable year. Due to
the factual nature
of the issues
involved,
we can give no assurances on our tax-exempt status or that of any
of our subsidiaries.
If we or
our subsidiaries are not
entitled to this exemption
under Section 883 of
the Code for any
taxable
year, we or our subsidiaries would
be subject for those
years to a 4%
U.S. federal income
tax on our gross
U.S.-source shipping income. The imposition of this taxation
could have a negative effect on our business
and would
result in
decreased earnings
available for
distribution to
our shareholders,
although, for
the 2025
taxable year, we estimate
our maximum
U.S. federal
income tax
liability to be
immaterial if we
were subject
to
this
U.S.
federal
income
tax.
See
“Item
10.
Additional
Information—E.
Taxation"
for
a
more
comprehensive discussion of U.S. federal income tax considerations.
U.S. federal tax authorities
could treat us as
a “passive foreign investment
company”, which could
have adverse U.S. federal income tax consequences to U.S. shareholders.
A foreign corporation will be treated as a
“passive foreign investment company”, or PFIC, for U.S. federal
income tax purposes if
either (1) at least 75%
of its gross income
for any taxable year
consists of certain
types of “passive income”
or (2) at least 50% of
the average value of the
corporation's assets produce or
are
held
for
the
production
of
those
types
of
“passive
income.”
For
purposes
of
these
tests,
“passive
income” includes
dividends, interest,
gains from
the sale
or exchange
of investment
property,
and rents
and royalties
other than rents
and royalties which
are received
from unrelated parties
in connection with
the
active
conduct
of
a
trade
or
business.
For
purposes
of
these
tests,
income
derived
from
the
performance of services does not constitute “passive income.” U.S. shareholders of a PFIC are subject to
a disadvantageous
U.S. federal
income tax
regime with
respect to
the income
derived by
the PFIC,
the
distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition
of their shares in the PFIC.
33
Based on
our current
and proposed
method of
operation, we
do not
believe that
we will
be a
PFIC with
respect to any taxable
year. In this regard, we intend
to treat the gross income
we derive or are
deemed to
derive from
our time
chartering activities
as services
income, rather
than rental
income. Accordingly,
we
believe that
our income
from our
time chartering activities
does not
constitute “passive
income,” and the
assets that we own and operate in connection with
the production of that income do not constitute assets
that produce or are held for the production of “passive income”.
There
is
substantial
legal
authority
supporting
this
position
consisting
of
case
law
and
U.S.
Internal
Revenue Service, or “IRS”, pronouncements concerning the characterization of income derived from time
charters and voyage charters as services income for other
tax purposes. However, it should be noted that
there
is
also
authority
which
characterizes
time
charter
income
as
rental
income
rather
than
services
income for other tax
purposes. Accordingly,
no assurance can be given
that the IRS or a
court of law will
accept this position, and there is a risk
that the IRS or a court of
law could determine that we are a PFIC.
Moreover, no assurance can be
given that we
would not constitute
a PFIC for any
future taxable year
if the
nature and extent of our operations changed.
If the
IRS or
a court
of law
were to
find that
we are
or have
been a
PFIC for
any taxable
year,
our U.S.
shareholders would
face adverse
U.S. federal
income tax
consequences. Under
the PFIC
rules, unless
those shareholders make
an election available
under the Code
(which election could
itself have adverse
consequences for such shareholders),
such shareholders would
be subject to
U.S. federal income
tax at
the then
prevailing U.S.
federal income
tax rates
on ordinary
income plus
interest upon
excess distributions
and upon any gain
from the disposition of
our common stock,
as if the excess
distribution or gain
had been
recognized ratably
over the
shareholder's holding
period of
our common
stock. See
“Item 10.
Additional
Information—E.
Taxation–United
States
Ta
xation
of
U.S.
Holders–PFIC
Status
and
Significant
Tax
Consequences" for
a more
comprehensive discussion
of the
U.S. federal
income tax
consequences to
U.S.
holders of our common stock if we are or were to be treated as a PFIC.
Changes in tax
laws and unanticipated
tax liabilities could
materially and adversely
affect the taxes
we pay, results of operations and financial results.
Our results
of operations
and financial
results may
be affected by
tax and
other initiatives
around the
world.
For instance, there
is a high
level of uncertainty
in today’s tax
environment stemming from
global initiatives
put
forth
by
the
Organisation
for
Economic
Co-operation
and
Development’s
(“OECD”)
two-pillar
base
erosion and profit
shifting project. In
October 2021, members
of the OECD
put forth two
proposals: (i)
Pillar
One reallocates
profit to
the market
jurisdictions where
sales arise
versus physical
presence for
companies
with
global
revenues
of
more
than
€20
billion;
and
(ii)
Pillar
Two
compels
multinational
corporations
with €750 million
or more
in annual
revenue to
pay a
global minimum
tax of
15% on
income received
in
each
country
in
which
they
operate. The
reforms
aim
to
level
the
playing
field
between
countries
by
discouraging them from
reducing their corporate
income taxes
to attract foreign
business investment.
Over
140 countries
agreed to
enact the
two-pillar solution
to address
the challenges
arising from
the digitalization
of the economy and, in 2024, these
guidelines were declared effective and must
now be enacted by those
OECD member countries. It is
possible that these guidelines, including the global minimum
corporate tax
rate measure of 15%, could increase the burden and costs of our tax compliance,
the amount of taxes we
incur in those
jurisdictions and our
global effective tax
rate, which could have
a material adverse
impact on
our results of operations and financial results.
Risks Relating to Our Common Stock
We cannot
assure you that
our board of
directors will continue to
declare dividends on shares
of
our common stock in the future.
In order to position us to take advantage of market opportunities in a then-deteriorating market, our board
of directors, beginning with the fourth quarter of 2008, suspended
our common stock dividend. As a result
34
of improving market conditions in 2021, our
board of directors elected to declare quarterly dividends from
the fourth quarter of 2021 until the
fourth quarter of 2025 and two
special non-cash dividends. The actual
declaration of future
cash dividends, and
the establishment of
record and payment
dates, is subject
to final
determination
by
our
board
of
directors
each
quarter
after
its
review
of
the
company's
financial
performance.
We
cannot
assure
you
that
our
board
of
directors
will
declare
and
pay
dividends
going
forward. Our dividend policy
is assessed by
our board of
directors from time to
time, based on
prevailing
market conditions,
available cash, uses of capital, contingent liabilities, the terms of our loan facilities, our
growth strategy and other
cash needs, the requirements
of Marshall Islands law
and other factors deemed
relevant to
our
board of
directors.
In
addition, other
external factors,
such as
when
our
lenders impose
restrictions
on
our
ability
to
pay
dividends,
may
affect
our
dividend
policy.
Under
the
terms
of
our
agreements, we
may not
be permitted
to pay
dividends that
would result
in an
event of
default or
if an
event
of default has occurred and is continuing.
Our strategy contemplates that we will finance the acquisition of additional vessels through a combination
of debt
and equity
financing on
terms acceptable
to us.
If financing
is not
available to
us on
acceptable
terms, our board
of directors
may determine to
finance or refinance
acquisitions with cash
from operations,
which could also reduce or even eliminate the amount of cash available
for the payment of dividends.
Marshall
Islands
law
generally
prohibits
the
payment
of
dividends
other
than
from
surplus
(retained
earnings and
the excess
of consideration
received for
the sale
of shares
above the
par value
of the
shares),
or while
a company
is insolvent
or would
be rendered
insolvent by
the payment
of such
a dividend.
We
may not have sufficient surplus in the future to pay dividends.
In
addition, our
ability to
pay dividends
to holders
of our
common shares
will be
subject to
the rights
of
holders
of
our
Series
B
Preferred
Shares,
which
rank
senior
to
our
common
shares
with
respect
to
dividends,
distributions and
payments
upon
liquidation. No
cash dividend
may
be
paid
on
our
common
stock unless full cumulative dividends have been or contemporaneously are being paid or provided for on
all outstanding
Series B
Preferred Shares
for all
prior and
the then-ending
dividend periods.
Cumulative
dividends
on
our
Series
B
Preferred
Shares
accrue
at
a
rate
of
8.875%
per
annum
per
$25.00
stated
liquidation preference
per Series
B Preferred
Share, subject
to increase
upon the
occurrence of
certain
events, and are payable, as and if
declared by our board of directors,
on January 15, April 15, July
15 and
October 15 of each year, or, if any such dividend payment date otherwise would
fall on a date that is not a
business
day,
the
immediately succeeding
business
day.
For
additional information
about
our
Series
B
Preferred Shares, please see the section entitled "Description of Registrant's Securities to be Registered"
of our
registration statement
on Form
8-A filed
with the
SEC on
February 13,
2014 and
incorporated by
reference herein.
The
market
prices
and
trading
volume
of
our
shares
of
common
stock
may
experience
rapid
and
substantial price
volatility, which
could cause
purchasers of
our common
stock to
incur substantial
losses.
Our shares of our common stock may experience
similar rapid and substantial price volatility unrelated
to our financial
performance, which
could cause purchasers
of our common
stock to incur
substantial
losses,
which
may
be
unpredictable
and
not
bear
any
relationship
to
our
business
and
financial
performance. Extreme fluctuations in
the market price of
our common stock may
occur in response to
strong
and
atypical
retail
investor
interest,
including
on
social
media
and
online
forums,
the
direct
access by retail investors
to broadly available trading
platforms, the amount and
status of short interest
in
our
common
stock
and
our
other
securities,
access
to
margin
debt,
trading
in
options
and
other
derivatives on our shares of common
stock and any related hedging
and other trading factors:
If
there
is
extreme
market
volatility
and
trading
patterns
in
our
common
stock,
it
may
create
several
risks for purchasers of
our shares, including the following:
35
●
the market
price
of our
common stock
may
experience
rapid and
substantial
increases or
decreases
unrelated
to
our
operating
performance
or
prospects,
or
macro
or
industry
fundamentals;
●
if
our
future
market
capitalization
reflects
trading
dynamics
unrelated
to
our
financial
performance or
prospects, purchasers
of our
common stock
could incur
substantial losses
as prices decline once
the level of market volatility
has abated;
●
if the
future market
price of
our common
stock declines,
purchasers of
shares of
common
stock may be
unable to resell
such shares at
or above the
price at which
they acquired them.
We cannot
assure such
purchasers that
the market
of our
common stock
will not
fluctuate
or decline significantly in
the future, in which case
investors could incur substantial
losses.
Further, we may
incur rapid and
substantial increases
or decreases
in our common
stock price in
the
foreseeable future
that may
not coincide
in timing
with the
disclosure of
news or
developments by
or
affecting us.
Accordingly, the
market price
of our
common stock
may fluctuate
dramatically, and
may
decline
rapidly,
regardless
of
any
developments
in
our
business.
Overall,
there
are
various
factors,
many
of
which
are
beyond
our
control,
that
could
negatively
affect
the
market
price
of
our
common
stock or result in
fluctuations in the price or trading
volume of our common
stock, including:
●
actual or anticipated variations in our annual or quarterly
results of operations, including our
earnings estimates and whether we
meet market expectations with regard
to our earnings;
●
our ability to pay dividends or
other distributions;
●
publication
of
research
reports
by
analysts
or
others
about
us
or
the
shipping
industry
in
which we
operate which
may be
unfavorable, inaccurate,
inconsistent or
not disseminated
on a regular basis;
●
changes in market valuations of similar
companies;
●
market reaction
to any
additional
equity, debt
or other
securities that
we may
issue in
the
future, and which may or
may not dilute the holdings
of our existing stockholders;
●
additions or departures of key
personnel;
●
actions by institutional or
significant stockholders;
●
short interest in our
common stock or our
other securities and the market
response to such
short interest;
●
the
dramatic
increase
in
the
number
of
individual
holders
of
our
common
stock
and
their
participation in social media platforms
targeted at speculative investing;
●
speculation in the press or investment community about our company or industries in which
we operate;
●
strategic actions by us or
our competitors, such as strategic
alliances, acquisitions or other
investments;
●
legislative, administrative, regulatory or
other actions affecting our business,
our industry;
●
investigations, proceedings, or litigation
that involve or affect
us;
36
●
the occurrence of any of the
other risk factors included in
this annual report; and
●
general state of the securities markets,
and general market and
economic conditions.
Since we are
incorporated in the
Marshall Islands, which
does not have a
well-developed body of
corporate law, you
may have more difficulty
protecting your interests than
shareholders of a U.S.
corporation.
Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws and
by
the
Marshall
Islands
Business
Corporations
Act,
or
the
BCA.
The
provisions
of
the
BCA
resemble
provisions of the
corporation laws of
a number of
states in the
United States. However,
there have been
few judicial cases in the
Marshall Islands interpreting the BCA.
The rights and fiduciary responsibilities
of
directors under the
laws of the
Marshall Islands are
not as clearly
established as the
rights and fiduciary
responsibilities of
directors under statutes
or judicial
precedent in existence
in the United
States. The
rights
of
shareholders
of
the
Marshall
Islands
may
differ
from
the
rights
of
shareholders
of
companies
incorporated in the United States. While the BCA
provides that it is to be interpreted according to the laws
of the State of Delaware and other states with substantially similar legislative provisions, there have been
few, if any, court
cases interpreting
the BCA
in the
Marshall Islands
and we
cannot predict
whether Marshall
Islands courts
would reach
the same
conclusions as
U.S. courts.
Thus, you
may have
more difficulty
in
protecting your
interests in
the face
of actions
by the
management, directors
or controlling
shareholders
than
would
shareholders
of
a
corporation
incorporated
in
a
U.S.
jurisdiction
which
has
developed
a
relatively more substantial body of case law.
We are a
“foreign private issuer” under the
NYSE rules, and as such we
are entitled to exemption
from certain NYSE
corporate governance standards,
and you may
not have the
same protections
afforded to
shareholders of
companies that
are subject
to all
of the
NYSE corporate
governance
requirements.
We are a “foreign private issuer” under the
securities laws of the United States
and the rules of the NYSE.
Under the securities laws of
the United States, “foreign private
issuers” are subject to different
disclosure
requirements than U.S. domiciled
registrants, as well
as different financial
reporting requirements. Under
the NYSE rules, a “foreign private
issuer” is subject to less stringent corporate
governance requirements.
Subject to
certain exceptions,
the
rules of
the
NYSE permit
a “foreign
private issuer”
to follow
its home
country practice in lieu of the listing requirements of the NYSE.
Accordingly, you may
not have
the same
protections afforded
to shareholders
of companies
that are
subject
to all of the
NYSE corporate governance requirements. For a
list of the practices followed
by us in lieu
of
NYSE’s corporate
governance rules, we
refer you to
the section of
this annual report
entitled "Corporate
Governance" under Item 16G.
As a
Marshall Islands
corporation and
with some
of our
subsidiaries being
Marshall Islands
entities
and
also
having
subsidiaries
in
other
offshore
jurisdictions,
our
operations
may
be
subject
to
economic substance requirements, which could impact our business.
We
are
a
Marshall
Islands
corporation
and
some
of
our
subsidiaries
are
Marshall
Islands
entities.
The
Marshall Islands has
enacted economic substance laws
and regulations with which
we may be
obligated
to
comply.
We
believe
that
we
and
our
subsidiaries
are
compliant
with
the
Marshall
Islands
economic
substance requirements. However, if there were a change in the requirements or interpretation thereof, or
if there were
an unexpected
change to
our operations,
any such
change could
result in
noncompliance with
the economic substance legislation and
related fines or other
penalties, increased monitoring and audits,
and dissolution of the non-compliant entity,
which could have an adverse effect on our business, financial
condition or operating results.
37
EU Finance ministers rate jurisdictions for tax rates and tax transparency,
governance and real economic
activity.
Countries that are
viewed by such
finance ministers as
not adequately cooperating,
including by
not implementing sufficient
standards in
respect of the
foregoing, may be
put on a
“grey list” or
a “blacklist”.
Effective as
of October 17,
2023 the Marshall
Islands has
been designated as
a cooperating
jurisdiction
for tax
purposes. If
the Marshall
Islands is
added to
the list
of non-cooperative
jurisdictions in
the future
and sanctions or other financial, tax or regulatory measures were applied by
European Member States to
countries on
the list
or further
economic substance requirements
were imposed
by the
Marshall Islands,
our business could be harmed.
Certain existing
shareholders will
be able
to exert
considerable influence
over matters
on which
our shareholders are entitled to vote.
As
of
the
date
of
this
annual
report,
Ms.
Semiramis
Paliou,
our
Chief
Executive
Officer
and
Director,
beneficially owns 27,809,560 shares, or approximately 21.5% of
our outstanding common stock, which is
held
indirectly
through
entities
over
which
she
exercises
sole
voting
power.
Ms.
Paliou
controls 10,675
shares of
Series C
Preferred Stock,
par value
$0.01 per
share, issued
on January
31, 2019,
and 400
shares
of Series D
Preferred Stock,
issued on
June 22,
2021. The
Series C Preferred
Stock vote
with our common
shares and
each share
of the
Series C
Preferred Stock
entitles the
holder thereof
to 1,000
votes on
all
matters submitted to a vote of the common stockholders of the Issuer.
The Series D Preferred Stock vote
with
the
common
shares of
the
Company,
and
each share
of
the
Series D
Preferred
Stock
entitles the
holder thereof
to up
to 200,000
votes, on
all matters
submitted to
a vote
of the
stockholders of
the Company,
provided however, that
to the extent the
total number of votes one
or more holders of Series
D Preferred
Stock is entitled
to vote (including
any voting power
of such holders
derived from Series
D Preferred
Stock,
shares of
Common Stock
or any
other voting
security of
the Company
issued and
outstanding as
of the
date hereof or
that may be
issued in the
future) on any
matter submitted to
a vote of
stockholders of the
Company
would
exceed
36%
of
the
total
number
of
votes
eligible
to
be
cast
on
such
matter,
the
total
number of
votes that
holders of
Series D
Preferred Stock
may exercise
derived from
the Series
D Preferred
Stock together with
Common Shares and
any other voting
securities of the
Company beneficially owned
by such holder,
shall be reduced to 36% of
the total number of votes entitled to
vote on any matter put to
stockholders of the Company.
Through her beneficial ownership of common shares
and shares of Series
C
Preferred
Stock
and
Series
D
Preferred
Stock,
Ms.
Paliou
controls
36%
of
the
vote
of
any
matter
submitted to the vote
of the common shareholders.
Please see "Item 7.
Major Shareholders and Related
Party Transactions—A.
Major Shareholders."
While Ms.
Paliou and
the entities
controlled by
Ms. Paliou
have no
agreement, arrangement
or understanding
relating to
the voting
of their
shares of
our common
stock, they
are able
to influence
the outcome
of matters
on which
our shareholders
are entitled
to vote,
including the election of directors and other significant corporate actions. This concentration of ownership
may
have
the
effect
of
delaying,
deferring
or
preventing
a
change
in
control,
merger,
consolidation,
takeover or other
business combination.
This concentration of
ownership could
also discourage a
potential
acquirer from
making a
tender offer or
otherwise attempting
to obtain
control of
us, which
could in
turn have
an adverse effect
on the market
price of our
shares. So long
as our
Chief Executive Officer
continues to
own a significant amount
of our equity,
even though the amount
held by her represents
less than 50% of
our voting power,
she will continue to
be able to exercise
considerable influence over our
decisions. The
interests of these shareholders may be different from your interests.
Future sales of our common stock could cause the market price
of our common stock to decline.
Our amended
and restated
articles of
incorporation authorize
us to
issue up
to 1,000,000,000
shares of
common stock, of which, as
of December 31, 2025, 115,787,434 shares were outstanding.
The number of
shares of
common stock available
for sale
in the public
market is limited
by restrictions applicable
under
securities laws
and agreements
that we
and our
executive officers,
directors and
principal shareholders
have entered into.
38
Sales of a substantial
number of shares of our
common stock in the public
market, or the perception that
these
sales
could
occur,
may
depress the
market
price
for
our
common
stock.
These
sales
could
also
impair our ability to raise additional capital through the sale of our equity
securities in the future.
Anti-takeover
provisions
in
our
organizational
documents
could
make
it
difficult
for
our
shareholders to
replace or
remove our
current board
of directors
or have
the effect
of discouraging,
delaying or
preventing a
merger or
acquisition, which
could adversely
affect
the market
price of
our common stock.
Several provisions of our amended and
restated articles of incorporation and
bylaws could make it difficult
for our shareholders to change the composition of our board
of directors in any one year, preventing them
from changing the composition
of management. In addition,
the same provisions
may discourage, delay
or
prevent a merger or acquisition that shareholders may consider
favorable.
These provisions include:
●
authorizing
our board
of directors
to
issue “blank
check” preferred
stock without
shareholder
approval;
●
providing for a classified board of directors with staggered, three-year
terms;
●
prohibiting cumulative voting in the election of directors;
●
authorizing
the
removal of
directors
only for
cause and
only
upon
the
affirmative
vote
of
the
holders
of
a
majority
of
the
outstanding shares
of
our
common
stock
entitled
to
vote
for
the
directors;
●
prohibiting shareholder action by written consent;
●
limiting the persons who may call special meetings of shareholders;
and
●
establishing advance notice requirements for nominations for election to our board of directors
or for proposing matters that can be acted on by shareholders at shareholder
meetings.
In addition, we have adopted an Amended and Restated
Stockholders Rights Agreement, dated February
2,
2024, pursuant
to
which our
board of
directors may
cause the
substantial dilution
of
any person
that
attempts to acquire us without
the approval of our board
of directors. See “Item 10.
Additional Information-
B. Memorandum and Articles of Association-Stockholders Rights
Agreement.”
These
anti-takeover
provisions,
including
provisions
of
our
Stockholders
Rights
Agreement,
could
substantially impede the ability of public shareholders to benefit from a change in control and, as a result,
may adversely affect the
market price of our
common stock and
your ability to
realize any potential
change
of control premium.
Our Series B Preferred Shares
are senior obligations of ours
and rank prior to our common
shares
with
respect
to
dividends,
distributions
and
payments
upon
liquidation,
which
could
have
an
adverse effect on the value of our common shares.
The rights of the holders
of our Series B Preferred Shares
rank senior to the obligations to
holders of our
common shares. Upon our liquidation, the holders of Series
B Preferred Shares will be entitled to receive
a liquidation preference
of $25.00 per share,
plus all accrued but
unpaid dividends, prior and
in preference
to any distribution to the holders of any other class of our equity securities, including our common shares.
39
The existence of the Series B Preferred
Shares could have an adverse effect on the value
of our common
shares.
Risks Relating to Our Series B Preferred Stock
We may not have
sufficient cash from our operations to
enable us to pay dividends on
our Series
B Preferred Shares following the payment of expenses and the establishment
of any reserves.
We
pay quarterly
dividends on
our Series
B Preferred
Shares only
from funds
legally available
for such
purpose when,
as and
if
declared by
our board
of
directors. We
may
not have
sufficient
cash available
each
quarter to
pay dividends.
The amount
of
dividends we
can pay
on our
Series B
Preferred Shares
depends upon the amount of cash we generate from and use in
our operations, which may fluctuate.
The
amount of
cash we
have
available for
dividends on
our Series
B Preferred
Shares will
not
depend
solely on our
profitability. The
actual amount of cash
we have available to
pay dividends on our
Series B
Preferred Shares depends on many factors, including
the following:
●
changes in
our operating
cash flow, capital expenditure
requirements, working
capital requirements
and other cash needs;
●
restrictions under our existing or future credit facilities or any future debt securities
on our ability to
pay dividends if an
event of default has
occurred and is
continuing or if
the payment of the
dividend
would result in
an event of
default, or under
certain facilities
if it would
result in the
breach of certain
financial covenants;
●
the amount of any cash reserves established by our board of directors;
and
●
restrictions under
Marshall Islands
law,
which generally
prohibits the
payment of
dividends other
than from
surplus (retained
earnings and
the excess
of consideration
received for
the sale
of shares
above the par value of the shares) or while a company is insolvent or would be rendered insolvent
by the payment of such a dividend.
The amount of cash we generate from our operations may differ materially
from our net income or loss for
the period, which
is affected by
non-cash items, and
our board of
directors in its discretion
may elect not
to declare
any dividends.
As a
result of
these and
the other
factors mentioned
above, we
may pay
dividends
during
periods
when
we
record
losses
and
may
not
pay
dividends
during
periods
when
we
record
net
income.
The Series B Preferred Shares represent perpetual equity
interests.
The Series B
Preferred Shares represent
perpetual equity interests
in us and,
unlike our indebtedness,
will
not give
rise to
a claim for
payment of a
principal amount at
a particular date.
As a
result, holders of
the
Series
B Preferred
Shares may
be required
to
bear the
financial risks
of
an investment
in the
Series B
Preferred Shares for an indefinite period
of time. In addition, the Series
B Preferred Shares will rank junior
to all our
indebtedness and other
liabilities, and to
any other senior
securities we may
issue in the
future
with respect to assets available to satisfy claims against us.
Our Series
B Preferred
Shares are
subordinate to
our indebtedness,
and your
interests could
be
diluted
by
the
issuance
of
additional
preferred
shares,
including
additional
Series
B
Preferred
Shares, and by other transactions.
Our Series B Preferred Shares are subordinated to all of our existing and future indebtedness. Therefore,
our ability to pay dividends on, redeem
or pay the liquidation preference on
our Series B Preferred Shares
40
in liquidation or
otherwise may be
subject to prior
payments due to
the holders of
our indebtedness. Our
existing indebtedness restricts, and our future indebtedness may include restrictions on, our
ability to pay
dividends on
or
redeem preferred
shares. Our
amended and
restated
articles of
incorporation currently
authorize the issuance
of up to
50,000,000 preferred
shares, par value
$0.01 per share.
Of these preferred
shares, 1,000,000 shares have been
designated Series A Participating
Preferred Stock, 5,000,000 shares
have been
designated Series
B Preferred
Shares, 10,675
are designated
as Series
C Preferred
Shares
and 400 are designated as
Series D Preferred Shares. The
Series B Preferred Shares are
senior in rank
to the
Series A
Participating Preferred
Shares. The
issuance of
additional Series
B Preferred
Shares or
other preferred shares
on a parity
with or senior
to the Series B
Preferred Shares would
dilute the interests
of holders of our
Series B Preferred Shares, and any issuance
of preferred shares senior to
our Series B
Preferred Shares or of additional indebtedness could affect our ability to pay dividends on, redeem or pay
the liquidation preference
on our Series
B Preferred Shares.
The Series B
Preferred Shares do
not contain
any provisions
affording the
holders of
our Series
B Preferred
Shares protection
in the
event of
a highly
leveraged or other transaction,
including a merger or the
sale, lease or conveyance
of all or substantially
all our assets
or business, which might
adversely affect the
holders of our Series
B Preferred Shares, so
long as the rights of our Series B Preferred Shares are not directly
materially and adversely affected.
We may redeem the
Series B Preferred
Shares, and you
may not be
able to reinvest
the redemption
price you receive in a similar security.
Since February 14, 2019, we
may, at our option, redeem Series B Preferred Shares,
in whole or in part, at
any time or from time to time. We may have an incentive to redeem Series B Preferred Shares voluntarily
if market conditions allow us
to issue other preferred shares
or debt securities at a
rate that is lower than
the dividend
on the
Series B
Preferred Shares.
If we
redeem Series
B Preferred
Shares, then
from and
after the
redemption date,
your dividends
will cease
to accrue
on your
Series B
Preferred Shares,
your
Series B Preferred Shares shall no longer be deemed outstanding and all your rights as a holder of those
shares
will
terminate,
except
the
right
to
receive
the
redemption
price
plus
accumulated
and
unpaid
dividends, if any,
payable upon redemption. If
we redeem the
Series B Preferred
Shares for any
reason,
you may not be able to reinvest the redemption price you receive
in a similar security.
Market interest rates may adversely affect the value of our Series B Preferred
Shares.
One of
the factors that
may influence the
price of
our Series B
Preferred Shares is
the dividend yield
on
the Series B Preferred Shares
(as a percentage of the
price of our Series B
Preferred Shares) relative to
market
interest
rates.
An
increase
in
market
interest
rates,
which
are
currently
at
low
levels
relative
to
historical
rates,
may
lead
prospective
purchasers
of
our
Series
B
Preferred
Shares
to
expect
a
higher
dividend yield, and
higher interest rates
would likely increase
our borrowing costs
and potentially decrease
funds available for
distribution. Accordingly,
higher market
interest rates could
cause the
market price of
our Series B Preferred Shares to decrease.
As a holder of Series B Preferred Shares you have extremely
limited voting rights.
Your voting rights as a holder of Series
B Preferred Shares are
extremely limited. Our common
shares are
the only outstanding class or series of our shares carrying full voting rights. Holders of Series B Preferred
Shares have
no voting
rights other
than the
ability,
subject to
certain exceptions,
to elect
one director
if
dividends for six
quarterly dividend
periods (whether
or not consecutive)
payable on
our Series B
Preferred
Shares are in arrears and certain other limited protective voting
rights.
Our
ability
to
pay
dividends
on
and
to
redeem
our
Series
B
Preferred
Shares
is
limited
by
the
requirements of Marshall Islands law.
Marshall Islands
law provides that
we may
pay dividends on
and redeem the
Series B
Preferred Shares
only to the
extent that assets
are legally available
for such purposes.
Legally available
assets generally
are
41
limited to our surplus, which essentially represents our retained earnings and
the excess of consideration
received by us for
the sale of shares
above the par value
of the shares. In
addition, under Marshall
Islands
law we
may not
pay dividends
on or
redeem Series
B Preferred
Shares if
we are
insolvent or
would be
rendered insolvent by the payment of such a dividend or the making
of such redemption.
The amount of your
liquidation preference is
fixed and you will
have no right
to receive any greater
payment regardless of the circumstances.
The
payment
due
upon
liquidation
is
fixed
at
the
redemption
preference
of
$25.00
per
share
plus
accumulated and
unpaid dividends
to
the
date
of
liquidation. If,
in the
case of
our
liquidation, there
are
remaining
assets
to
be distributed
after
payment
of
this
amount,
you
will
have
no right
to
receive
or
to
participate in these
amounts. Furthermore,
if the market
price for your
Series B Preferred
Shares is greater
than
the
liquidation
preference,
you
will
have
no
right
to
receive
the
market
price
from
us
upon
our
liquidation.
Risks Relating to Our Outstanding Warrants
The issuance
of our
common stock
upon the
exercise of
the Warrants may
depress our
stock price.
As
of
December 31,
2025,
we have
issued 9.9
million shares
of common
stock
and we
could issue
up
to 27.1
million additional shares
of
common
stock
in
connection
with
the
exercise
of
the
Warrants.
The
issuances of
the shares
of common
stock upon
exercise of
the Warrants
and the
resale of
such shares
after their issuance,
or the perception that
such sales could occur,
could result in
downward pressure on
our
stock
price
and
could
impact
our
ability to
raise
capital
through the
sale
of
additional shares
in
the
future. See
“Item 4. Information
on the
Company— A.
History and
development of
the Company—
Warrant
Distribution" for a more detailed discussion of our Warrants.