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A. History
and Development of the Company
Star Bulk Carriers Corp. was incorporated in
the Marshall Islands under the MIBCA on December 13, 2006 and commenced operations on December 3, 2007 upon taking delivery of our first
vessel. Our executive offices are located at c/o Star Bulk Management Inc., 40 Agiou Konstantinou Str., Maroussi 15124, Athens, Greece
and its telephone number is 011-30-210-617-8400. Our registered office is located at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH 96960. The name of our registered agent at such address is The Trust Company of the Marshall Islands, Inc.
Eagle Merger
On April 9, 2024, we completed the merger with
Eagle in an all-stock transaction. Each Eagle shareholder received 2.6211 shares of Star Bulk common stock for each share of Eagle common
stock owned. Eagle common stock has ceased trading and is no longer listed on the New York Stock Exchange.
On August 1, 2024, Eagle’s outstanding
5.00% Convertible Senior Notes (the “Convertible Notes”) that we assumed and guaranteed as part of the Eagle Merger matured,
and were converted into 5,971,284 shares of Star Bulk common stock.
The integration of the two companies has been
substantially completed, and we continue to use our enhanced scale, capabilities and operational leverage to better serve our customers
and create value for all stakeholders.
For additional information, see “Item
10. Additional Information––C. Material Contracts––Eagle Merger”.
Significant Changes to Our Fleet During
the Years 2024-2026
During 2023, we entered into five firm shipbuilding
contracts with Qingdao Shipyard Co., Ltd. for the construction of five 82,000 dwt Kamsarmax newbuilding vessels. Delivery
of these vessels is scheduled progressively from April 2026 through September 2026.
Upon completion of the Eagle Merger on April
9, 2024, we acquired Eagle’s fleet, which consisted of 52 dry bulk Supramax/Ultramax vessels. Prior to the closing of the Eagle
Merger, Eagle had agreed to sell two of its vessels, which were delivered to their new owners after the closing of the Eagle Merger.
In October 2025, we entered into three novation
and amendment agreements with Hengli Shipbuilding (Singapore) Pte. Ltd. and Hengli Shipbuilding (Dalian) Co. Ltd. for the acquisition
of three 82,000 dwt Kamsarmax newbuilding vessels that are currently under construction. Delivery of these vessels is scheduled progressively
within the three-month period ending September 30, 2026.
From time to time, in response to changing
market conditions, we have disposed of certain of our vessels (the majority of which were older vessels). As a result, as of the date
of this annual report, on a fully delivered basis, our fleet includes 141 vessels, with an aggregate capacity of 14.0 million dwt, consisting
of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels with carrying capacities between 55,569 dwt
and 209,537 dwt.
Additionally, from time to time we will enter
into agreements for the opportunistic acquisition of secondhand vessels. On March 6, 2026, we announced that we had entered into the Diana
Purchase Agreement, whereby we agreed to acquire 16 vessels from Diana, including one Newcastlemax, six Capesize vessels, seven Ultramax
vessels and two Supramax vessels, with a total carrying capacity of 1.8 million dwt and an average age of 11.4 years. The Diana Purchase
Agreement is subject to, among other conditions, the success of Diana’s offer to acquire Genco. See “Item 3. Key Information
– D. Risk Factors – We have considerable risks relating to the construction of our newbuilding vessels and the potential
acquisition of secondhand vessels that we have agreed to acquire.”
Assuming the successful consummation of this transaction, our fleet will include 157 ships on a fully delivered basis with a total carrying
capacity of 15.9 million dwt and average age of 12.0 years.
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For more information on the Company’s
capital expenditures and divestitures, see Note 6 to our audited consolidated financial statements included in this annual report.
We are subject to the informational requirements
of the Exchange Act. In accordance with these requirements, we file reports and other information as a foreign private issuer with the
SEC. You may inspect reports and other information regarding registrants, such as us, that file electronically with the SEC without charge
at a website maintained by the SEC at http://www.sec.gov. These documents and other important information on our governance are posted
on our website and may be viewed at https://www.starbulk.com. The information contained on or connected to our website is not part of
this annual report.
B. Business
Overview
We are a leading global shipping company that
owns and operates a modern and diverse fleet of dry bulk vessels. Our vessels transport a broad range of major and minor bulk commodities,
including iron ore, minerals and grain, bauxite, fertilizers and steel products, along worldwide shipping routes. Our executive management
team, which has extensive shipping industry expertise, is led by Mr. Petros Pappas, who has long-standing shipping experience and has
managed hundreds of vessel acquisitions and dispositions.
We are committed to integrating ESG practices
into our operational and strategic decision making within the scope of our vision to be a leader in sustainable dry bulk shipping. In
alignment with this commitment we are a signatory to the United Nations (UN) Global Compact supporting its Ten Principles on areas of
human rights, labor, environment and anticorruption and committing to the broader Sustainable Development Goals. In addition, we publish
an annual ESG Report, which presents our ESG strategy and goals, identifies ESG related risks and reports on our ESG performance across
all our business operations. In October 2025, we released our seventh annual ESG Report. All of our ESG Reports may be found on our website
at www.starbulk.com. The information contained on or connected to our website is not part of this annual report.
Our ESG Performance:
Environment
We endeavor to comply with all applicable environmental
regulations efficiently and in a timely manner and implement measures to improve our environmental performance, protect the marine environment
and reduce our carbon footprint.
· We have retrofitted our fleet with scrubbers, in order to comply with the sulfur emissions standards, titled IMO-2020, set by the International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the “IMO”).
· We have implemented a retrofit program across our entire fleet to comply with the IMO’s Ballast Water Management Convention.
· In accordance with the scope of the GHG strategy set for 2030 and 2050 by the IMO, we monitor the performance of our vessels through telemetry and advanced data management systems and take action to improve the energy efficiency of our fleet both operationally and technically.
· We participate in the Poseidon Principles, which provide a framework for assessing and disclosing the climate alignment of ship finance portfolios and are consistent with the policies and ambitions of the IMO to achieve net zero GHG emissions by or around 2050.
· We collaborate with our charterers within the scope of the Sea Cargo Charter, providing them with our vessel data to enable them to assess and report on the carbon intensity of the chartering activities of these vessels.
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· We have engaged and actively participate in partnerships and alliances that promote sustainability in the maritime sector, including emission control and other environmental initiatives, such as the Maritime Emissions Reduction Centre, the Global Maritime Forum, the Getting to Zero Coalition, the Clean Shipping Alliance and the Hellenic Marine Environment Protection Association.
· We are active participants in several projects for the development and/or deployment of new green technologies and alternative fuels, including with respect to:
· the adoption of various latest technology voyage optimization platforms which aim to reduce fuel consumption and therefore our fleet’s CO2 footprint;
· the installation of energy-saving devices, such as propeller ducts, which aim to reduce the required propulsion power and CO2 emissions of our vessels;
· piloting and evaluating latest technology anti-fouling paints and hull cleaning technologies to reduce hull resistance and improve vessel’s energy efficiency;
· the techno-economic feasibility assessment of several zero-emission fuels, including biofuels and green-hydrogen derived fuels such as methanol and ammonia; and
· onboard carbon capture technologies, including by leveraging our existing exhaust gas cleaning systems.
Social
We are focused on continuously improving our
social impact, including with respect to the health, safety and wellbeing of employees, both on board and ashore, operational excellence
and community support.
· The health, safety, security and well-being of our people at sea and on shore is our top priority, and maintaining the safety and security of our crews on board in the context of the increasing risks posed by terrorist or other attacks and international hostilities is of particular importance. We are a signatory to the Neptune Declaration on Seafarer Wellbeing, which promotes the health and safety of seafarers. We are also signatories of the Gulf of Guinea Declaration on Suppression of Piracy.
· We are dedicated to providing equal employment opportunities and treating our people fairly without regard to race, color, religious beliefs, age, sex, or any other classification.
· We maintain high retention rates both on board and ashore and work to facilitate the professional development, continuous training and career advancement of our people.
· We are implementing employee well-being programs, which include but are not limited to flexible working schemes, psychological support services, professional coaching and employee engagement activities.
· We are consistently among the top ranked dry bulk operators globally in the RightShip Safety Score.
· Our community investment activities focus on, but are not limited to, supporting vulnerable groups, sports and youth education in Greece.
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Governance
We endeavor to apply corporate governance best
practices, adhere to strong ethical principles and ensure the high commercial performance of our fleet.
· The Company is governed by a diverse and experienced, majority independent Board of Directors.
· We have adopted a rigorous Code of Business Ethics (as defined below) and Anti-Corruption Policy to address the new Global Reporting Initiative Standards, the company’s ESG Commitments and the UN Global Compact Principles.
· We maintain an online whistleblowing platform on the Company’s website to facilitate anonymous and confidential reporting by internal and external stakeholders.
· We implement rigorous internal controls structured to ensure robust risk management practices.
· We continuously cultivate an open reporting culture both in our offices and on board our vessels.
· The Company’s ESG Committee at the Board level provides guidance and oversight with regards to the company’s ESG strategy.
· We deploy advanced Enterprise Resource Planning and Business Intelligence systems to enable lean operations and efficient decision making, and are continuously upgrading and enhancing our cybersecurity systems, processes and policies, both in the office and on our vessels, to safeguard the Company from cyber risks.
· We have launched a new cloud-based Human Resources Management System, which enhances the efficiency of human resources processes across the organization.
· We are piloting AI applications and gradually developing clearly defined use cases, across the Company’s processes to further enhance automation, efficiencies and decision making, with close attention to cybersecurity, data governance, and system reliability.
Our Fleet
We have built our fleet through timely and
selective corporate mergers and fleet acquisitions of secondhand vessels and vessels under construction. We believe our fleet is well-positioned
to take advantage of economies of scale in commercial, technical and procurement management. We maintain a large, modern, fuel-efficient
and high-quality fleet, which demonstrates our ability to transport a multitude of dry bulk cargoes across the globe on a 24/7 basis.
As a result, we believe we will have an opportunity to capitalize on rising market demand during a period of reduced fleet growth, customer
preferences for our ships and economies of scale, while also capturing the benefits of fuel cost savings through spot time charters or
voyage charters.
The majority of our operating fleet is equipped
with a vessel remote monitoring system that provides real-time data regarding fuel and lubricant consumption and efficiency. While these
monitoring systems are generally available in the shipping industry, we believe that they can be cost-effectively employed only by large-scale
shipping operators, such as us.
In addition, pursuant to the IMO sulfur cap
regulations, which set a sulfur oxide emissions limit of 0.5% m/m and came into force in January 2020, we decided to install scrubbers
on the vast majority of our vessels (“Scrubber Retrofitting Program”). As of February 25, 2026, we have scrubbers fitted on
136 of the 141, or 97%, of our vessels in our fleet on a fully delivered basis. We believe that the maritime regulations have already
had, and will continue to have, a strong impact on the maritime industry and will further distinguish us from other dry bulk owners with
conventional dry bulk vessels that are not able to consume less expensive bunker fuel with higher sulfur content. With scrubber installations
increasing across our fleet, we expect our competitive advantage to grow, making our vessels more attractive to charterers and cargo owners.
Furthermore, we are actively investing in
reducing the carbon emissions of our vessels using a variety of technologies such as hull cleaning robots, voyage optimization
software, premium low-friction hull antifouling paints including top tier self-polishing (“SPC technology”) and
friction-resistant silicon coatings (“FRC technology”), variable frequency drivers for engine room fans and sea water
cooling pumps and installation of Energy Saving Devices (“ESD”) (mainly Mewis ducts and Propeller boss cap fins) on our
vessels. As of February 25, 2026, we have completed the installation of ESDs on 61 of our vessels and we have planned for another 13
vessels to be equipped with such devices in 2026. In 2025, we completed the installation of 6 new high efficiency designed
propellers (“HEP”) optimized to the operating profile of our vessels, and we plan to proceed with the installation of
additional HEPs in 2026, subject to our fleet requirements.
Our vessels under construction meet the latest
requirements of Energy Efficiency Design Index (EEDI Phase 3) in relation to carbon dioxide (CO2) intensity and comply with
the latest NOX regulations, NOX TIER III. In addition, these vessels are fitted with the latest available and most
fuel-efficient main engine produced by MAN B&W, a shaft generator and Alternate Marine Power optionality, all of which help to ensure
best-in-class daily fuel consumption and emissions reductions.
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The following tables summarize key information about
our operating fleet, as of February 25, 2026:
Operating Fleet
Date
# Wholly Owned Subsidiaries Vessel Name DWT Delivered to Star Bulk Year Built
1 Sea Diamond Shipping LLC Goliath 209,537 July 15, 2015 2015
2 Pearl Shiptrade LLC Gargantua 209,529 April 2, 2015 2015
3 Star Ennea LLC Star Gina 2GR 209,475 February 26, 2016 2016
4 Coral Cape Shipping LLC Maharaj 209,472 July 15, 2015 2015
5 Star Castle II LLC Star Leo 207,939 May 14, 2018 2018
6 ABY Eleven LLC Star Laetitia 207,896 August 3, 2018 2017
7 Domus Shipping LLC Star Ariadne 207,812 March 28, 2017 2017
8 Star Breezer LLC Star Virgo 207,810 March 1, 2017 2017
9 Star Seeker LLC Star Libra 207,765 June 6, 2016 2016
10 ABY Nine LLC Star Sienna 207,721 August 3, 2018 2017
11 Clearwater Shipping LLC Star Marisa 207,709 March 11 2016 2016
12 ABY Ten LLC Star Karlie 207,566 August 3, 2018 2016
13 Star Castle I LLC Star Eleni 207,555 January 3, 2018 2018
14 Festive Shipping LLC Star Magnanimus 207,526 March 26, 2018 2018
15 New Era II Shipping LLC Debbie H 206,861 May 28, 2019 2019
16 New Era III Shipping LLC Star Ayesha 206,852 July 15, 2019 2019
17 New Era I Shipping LLC Katie K 206,839 April 16, 2019 2019
18 Cape Ocean Maritime LLC Leviathan 182,511 September 19, 2014 2014
19 Cape Horizon Shipping LLC Peloreus 182,496 July 22, 2014 2014
20 Star Nor I LLC Star Claudine 181,258 July 6, 2018 2011
21 Star Nor II LLC Star Ophelia 180,716 July 6, 2018 2010
22 Sandra Shipco LLC Star Pauline 180,274 December 29, 2014 2008
23 Christine Shipco LLC Star Martha 180,274 October 31, 2014 2010
24 Star Nor III LLC Star Lyra 179,147 July 6, 2018 2009
25 Star Regg V LLC Star Borneo 178,978 January 26, 2021 2010
26 Star Regg VI LLC Star Bueno 178,978 January 26, 2021 2010
27 Star Regg IV LLC Star Marilena 178,978 January 26, 2021 2010
28 Star Regg II LLC Star Janni 178,978 January 7, 2019 2010
29 Star Regg I LLC Star Marianne 178,906 January 14, 2019 2010
30 Star Trident V LLC Star Angie 177,931 October 29, 2014 2007
31 Global Cape Shipping LLC Kymopolia 176,990 July 11, 2014 2006
32 ABY Fourteen LLC Star Scarlett (2) 175,649 August 3, 2018 2014
33 ABM One LLC Star Eva 106,659 August 3, 2018 2012
34 Nautical Shipping LLC Amami 98,681 July 11, 2014 2011
35 Majestic Shipping LLC Madredeus 98,681 July 11, 2014 2011
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Date
# Wholly Owned Subsidiaries Vessel Name DWT Delivered to Star Bulk Year Built
36 Star Sirius LLC Star Sirius 98,681 March 7, 2014 2011
37 Star Vega LLC Star Vega 98,681 February 13, 2014 2011
38 ABY II LLC Star Aphrodite 92,006 August 3, 2018 2011
39 Augustea Bulk Carrier LLC Star Piera 91,951 August 3, 2018 2010
40 Augustea Bulk Carrier LLC Star Despoina 91,951 August 3, 2018 2010
41 Star Nor IV LLC Star Electra 83,494 July 6, 2018 2011
42 Star Alta I LLC Star Angelina 82,981 December 5, 2014 2006
43 Star Alta II LLC Star Gwyneth 82,790 December 5, 2014 2006
44 Star Trident I LLC Star Kamila 82,769 September 3, 2014 2005
45 Star Nor VI LLC Star Luna 82,687 July 6, 2018 2008
46 Star Nor V LLC Star Bianca 82,672 July 6, 2018 2008
47 Grain Shipping LLC Pendulum 82,619 July 11, 2014 2006
48 Star Trident XIX LLC Star Maria 82,598 November 5, 2014 2007
49 Star Trident XII LLC Star Markella 82,594 September 29, 2014 2007
50 ABY Seven LLC Star Jeannette 82,566 August 3, 2018 2014
51 Star Sun I LLC Star Elizabeth 82,403 May 25, 2021 2021
52 Star Trident VIII LLC Star Sophia 82,269 October 31, 2014 2007
53 Star Trident XVI LLC Star Mariella (2) 82,266 September 19, 2014 2006
54 Star Trident XIV LLC Star Moira 82,257 November 19, 2014 2006
55 Star Trident XVIII LLC Star Nina 82,224 January 5, 2015 2006
56 Star Trident X LLC Star Renee 82,221 December 18, 2014 2006
57 Star Trident II LLC Star Nasia 82,220 August 29, 2014 2006
58 Star Trident XIII LLC Star Laura 82,209 December 8, 2014 2006
59 Star Nor VIII LLC Star Mona 82,188 July 6, 2018 2012
60 Star Trident XVII LLC Star Helena 82,187 December 29, 2014 2006
61 Star Nor VII LLC Star Astrid 82,158 July 6, 2018 2012
62 Waterfront Two LLC Star Alessia 81,944 August 3, 2018 2017
63 Star Nor IX LLC Star Calypso 81,918 July 6, 2018 2014
64 Star Elpis LLC Star Suzanna 81,711 May 15, 2017 2013
65 Star Gaia LLC Star Charis 81,711 March 22, 2017 2013
66 Mineral Shipping LLC Mercurial Virgo 81,545 July 11, 2014 2013
67 Star Nor X LLC Stardust 81,502 July 6, 2018 2011
68 Star Nor XI LLC Star Sky 81,466 July 6, 2018 2010
69 Star Zeus VI LLC Star Lambada 81,272 March 16, 2021 2016
70 Star Zeus II LLC Star Carioca 81,262 March 16, 2021 2015
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Date
# Wholly Owned Subsidiaries Vessel Name DWT Delivered to Star Bulk Year Built
71 Star Zeus I LLC Star Capoeira 81,253 March 16, 2021 2015
72 Star Zeus VII LLC Star Macarena 81,198 March 6, 2021 2016
73 ABY III LLC Star Lydia 81,187 August 3, 2018 2013
74 ABY IV LLC Star Nicole 81,120 August 3, 2018 2013
75 ABY Three LLC Star Virginia 81,061 August 3, 2018 2015
76 Star Nor XII LLC Star Genesis 80,705 July 6, 2018 2010
77 Star Nor XIII LLC Star Flame 80,448 July 6, 2018 2011
78 Cape Town Eagle LLC Star Cape Town 63,707 April 9, 2024 2015
79 Vancouver Eagle LLC Star Vancouver 63,670 April 9, 2024 2020
80 Oslo Eagle LLC Star Oslo 63,655 April 9, 2024 2015
81 Rotterdam Eagle LLC Star Rotterdam 63,629 April 9, 2024 2017
82 Halifax Eagle LLC Star Halifax 63,618 April 9, 2024 2020
83 Helsinki Eagle LLC Star Helsinki 63,605 April 9, 2024 2015
84 Gibraltar Eagle LLC Star Gibraltar 63,576 April 9, 2024 2015
85 Valencia Eagle LLC Star Valencia 63,556 April 9, 2024 2015
86 Dublin Eagle LLC Star Dublin 63,550 April 9, 2024 2015
87 Santos Eagle LLC Star Santos 63,536 April 9, 2024 2015
88 Antwerp Eagle LLC Star Antwerp 63,530 April 9, 2024 2015
89 Sydney Eagle LLC Star Sydney 63,523 April 9, 2024 2015
90 Copenhagen Eagle LLC Star Copenhagen 63,495 April 9, 2024 2015
91 Hong Kong Eagle LLC Star Hong Kong 63,472 April 9, 2024 2016
92 Orion Maritime LLC Idee Fixe 63,458 March 25, 2015 2015
93 Shanghai Eagle LLC Star Shanghai 63,438 April 9, 2024 2016
94 Primavera Shipping LLC Star Roberta 63,426 March 31, 2015 2015
95 Success Maritime LLC Laura 63,399 April 7, 2015 2015
96 Singapore Eagle LLC Star Singapore 63,386 April 9, 2024 2017
97 Westport Eagle LLC Star Westport 63,344 April 9, 2024 2015
98 Hamburg Eagle LLC Star Hamburg 63,334 April 9, 2024 2014
99 Fairfield Eagle LLC Star Fairfield 63,301 April 9, 2024 2013
100 Greenwich Eagle LLC Star Greenwich 63,301 April 9, 2024 2013
101 Groton Eagle LLC Star Groton 63,301 April 9, 2024 2013
102 Madison Eagle LLC Star Madison 63,301 April 9, 2024 2013
103 Mystic Eagle LLC Star Mystic 63,301 April 9, 2024 2013
104 Rowayton Eagle LLC Star Rowayton 63,301 April 9, 2024 2013
105 Southport Eagle LLC Star Southport 63,301 April 9, 2024 2013
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Date
# Wholly Owned Subsidiaries Vessel Name DWT Delivered to Star Bulk Year Built
106 Ultra Shipping LLC Kaley 63,283 June 26, 2015 2015
107 Stockholm Eagle LLC Star Stockholm 63,275 April 9, 2024 2016
108 Blooming Navigation LLC Kennadi 63,262 January 8, 2016 2016
109 Jasmine Shipping LLC Mackenzie 63,226 March 2, 2016 2016
110 New London Eagle LLC Star New London 63,140 April 9, 2024 2015
111 Star Lida I Shipping LLC Star Apus 63,123 July 16, 2019 2014
112 Star Zeus IV LLC Star Subaru 61,571 March 16, 2021 2015
113 Stamford Eagle LLC Star Stamford 61,530 April 9, 2024 2016
114 Star Nor XV LLC Star Wave 61,491 July 6, 2018 2017
115 Star Challenger I LLC Star Challenger (1) 61,462 December 12, 2013 2012
116 Star Challenger II LLC Star Fighter (1) 61,455 December 30, 2013 2013
117 Star Axe II LLC Star Lutas 61,347 January 6, 2016 2016
118 Aurelia Shipping LLC Honey Badger 61,320 February 27, 2015 2015
119 Rainbow Maritime LLC Wolverine 61,292 February 27, 2015 2015
120 Star Axe I LLC Star Antares 61,258 October 9, 2015 2015
121 Tokyo Eagle LLC Star Tokyo 61,225 April 9, 2024 2015
122 ABY Five LLC Star Monica 60,935 August 3, 2018 2015
123 Star Asia I LLC Star Aquarius 60,916 July 22, 2015 2015
124 Star Asia II LLC Star Pisces 60,916 August 7, 2015 2015
125 Crane Shipping LLC Crane 57,809 April 9, 2024 2010
126 Egret Shipping LLC Egret Bulker 57,809 April 9, 2024 2010
127 Gannet Shipping LLC Gannet Bulker 57,809 April 9, 2024 2010
128 Grebe Shipping LLC Grebe Bulker 57,809 April 9, 2024 2010
129 Ibis Shipping LLC Ibis Bulker 57,809 April 9, 2024 2010
130 Jay Shipping LLC Jay 57,809 April 9, 2024 2010
131 Kingfisher Shipping LLC Kingfisher 57,809 April 9, 2024 2010
132 Martin Shipping LLC Martin 57,809 April 9, 2024 2010
133 Star Lida IX Shipping LLC Star Cleo 56,582 July 15, 2019 2013
134 Star Lida X Shipping LLC Star Pegasus 56,540 July 15, 2019 2013
135 Star Regg III LLC Star Bright 55,569 October 10, 2018 2010
Total DWT 13,623,098
(1) Subject to a sale and leaseback financing transaction, as further described in Note 8 to our audited consolidated financial statements included in this annual report.
(2) In February 2026, we agreed to sell the vessels Star Scarlett and Star Mariella which are expected to be delivered to their new owners by April 2026.
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Vessels Under Construction:
Yard Expected
# Wholly Owned Subsidiaries Vessel Name DWT Delivery Date
1 Star Thundera LLC Hull No 15 82,000 Qingdao Shipyard Co. Ltd. April 2026
2 Star Caldera LLC Hull No 16 82,000 Qingdao Shipyard Co. Ltd. April 2026
3 Star Terra LLC Hull No 17 82,000 Qingdao Shipyard Co. Ltd. July 2026
4 Star Nova LLC Hull No 18 82,000 Qingdao Shipyard Co. Ltd. September 2026
5 Star Affinity LLC Hull No 23 82,000 Qingdao Shipyard Co. Ltd. July 2026
6 Star Blueseas I LLC Hull No 67 82,000 Hengli Shipbuilding Pte. Ltd. July 2026
7 Star Blueseas II LLC Hull No 70 82,000 Hengli Shipbuilding Pte. Ltd. August 2026
8 Star Blueseas III LLC Hull No 72 82,000 Hengli Shipbuilding Pte. Ltd. September 2026
Total DWT 656,000
Long Term Time Charter In Vessels:
In addition, we have entered into the following
long-term charter-in arrangements:
# Name DWT Built Yard Country Delivery Date Minimum Period
1 Star Shibumi (1) 180,000 2021 JMU Japan November 30, 2021 November 2028
2 Star Voyager (1) 82,000 2024 Tsuneishi, Zhousan China January 11, 2024 January 2031
3 Stargazer (1) 66,000 2024 Tsuneishi, Cebu Philippines January 16, 2024 January 2031
4 Star Explorer (1) 82,000 2024 JMU Japan March 8, 2024 March 2031
5 Star Earendel (1) 82,000 2024 JMU Japan June 28, 2024 June 2031
6 Star Illusion (1) 82,000 2024 Tsuneishi, Zhousan China October 11, 2024 October 2031
7 Star Thetis (1) 66,000 2024 Tsuneishi, Cebu Philippines November 12, 2024 November 2031
Total DWT 640,000
(1) Recognized as right-of-use assets and corresponding lease liabilities as further described in Note 7 to our audited consolidated financial statements included in this annual report.
Our Competitive Strengths
We work hard to maintain and further enhance
our competitive strengths in the industry, including:
Large, diverse, high quality, EGCS-fitted
fleet
As of February 25, 2026, we own a modern, diverse,
high-quality fleet consisting of 141 dry bulk carrier vessels on a fully delivered basis with an aggregate capacity of 14.0 million dwt
and an average age of 12.1 years. Star Bulk is the largest U.S.-listed, pure dry bulk shipping company, as measured by aggregate deadweight,
with a global footprint that enables us to better serve a diversified customer base across key maritime hubs. The vast majority of our
fleet (136 vessels) are equipped with EGCS, which reduce sulfur emissions complying with the global sulfur cap regulations.
We believe that owning a large, modern, high-quality
fleet allows us to maintain competitive operating and G&A costs, achieve high safety standards, and secure favorable time charters.
A proactive maintenance strategy, including regular inspections, a comprehensive maintenance program and crew training, supports operational
reliability, safety and environmental compliance.
We believe the Star Bulk fleet combined with
our strong balance sheet and commercial and technical capabilities help us to manage the cyclicality of the dry bulk market. Our fleet
is currently chartered mostly on the spot market. Our size and global presence allow us to pilot and implement emerging maritime technologies,
ranging from energy efficiency solutions to cybersecurity systems, while also attracting, developing and retaining top-tier talent both
at sea and onshore.
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In-house and integrated commercial and technical
management of our fleet
We conduct a significant portion of the commercial
and technical management of our vessels in-house through our wholly owned subsidiaries, as further described in “Item 4. Information
on the Company—B. Business Overview—Operations”. We believe that our integrated approach of having control over the
commercial and technical management provides us with a competitive advantage over many of our competitors by allowing us to maintain competitive
operating expenses, high quality safety and environmental standards and superior chartering performance.
Commitment to sustainability, data analytics
and fuel efficiency
We integrate ESG practices across all aspects
of our business. Every year, we prepare and publish a detailed ESG Report, which presents our sustainability strategy and action plans
and tracks a wide range of ESG-related Key Performance Indicators. Our ESG Committee, comprised of members of our Board of Directors,
provides oversight and guidance on our sustainability practices.
We deploy advanced systems to support our business
operations and everyday decision-making, including Enterprise Resource Planning, Business Intelligence, and e-procurement platforms. In
response to the increased environmental regulations around GHG emissions, we focus on improving the fuel efficiency of our operations.
We have deployed our Vessel Performance Reporting (“VPR”) system across our fleet, and have installed onboard telemetry on
90% of the fleet as of December 31, 2025, enabling real-time tracking of fuel consumption, emissions and engine efficiency. We aim to
achieve full fleet digitalization by the end of the first half of 2026.
To reduce fuel consumption and emissions, we
implement operational measures, including speed reduction, weather routing and voyage optimization. We have also planned further technical
upgrades to our fleet, such as the use of ESD and premium low-friction hull antifouling paints. As of February, 25, 2026, we have completed
the installation of ESDs on 61 of our vessels and we have planned for another 13 vessels to be equipped with such devices in 2026. We
regularly employ underwater Remotely Operated Vehicles (ROV) for inspecting and cleaning the underwater hulls of our vessels, and are
currently piloting an innovative hull cleaning robot on 12 vessels to further optimize biofouling maintenance.
We are implementing Shaft Power Limitation
on our vessels to meet the IMO EEXI (Energy Efficiency Existing Ship Index) requirements. To further enhance efficiency, most of our vessels’
main engines have been retrofitted with sliding engine valves and alpha lubricators, which reduce fuel use and lubricant consumption.
We are also replacing conventional lights on our ships with LED lights to reduce energy consumption and are adopting zero single-use plastics
policies onboard the vessels.
We believe that the above measures are the
most efficient initiatives for reduction of GHG emissions until technological advances enable the use of very low or near-zero carbon
emission fuels and/or onboard carbon capture systems.
Experienced management team with extensive
industry relationships
Led by our founder and CEO, Mr. Pappas, our
management team brings decades of expertise in dry bulk shipping, with extensive experience in vessel acquisitions, commercial operations,
financing, ESG and technical management. Leveraging deep industry relationships with shipyards, charterers, brokers, regulators, classification
societies and lenders, we consistently secure attractive asset acquisitions, chartering opportunities, and ship management strategies,
safeguarding our competitive position in all market conditions.
For more information on our management team,
see “Item 6. Directors, Senior Management and Employees––A. Directors and Senior Management.”
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Track Record in Strategic Growth through
Mergers and Acquisitions (“M&A”)
We have successfully executed opportunistic,
accretive M&A transactions, expanding our fleet and market presence at key points in the shipping cycle. These transactions have enabled
us to increase market capitalization, enhance trading liquidity, and renew our fleet, thereby strengthening our position as an industry
leader. Our strategy remains focused on identifying opportunities that strengthen fleet composition and create long-term shareholder value
applying rigorous valuation discipline to ensure acquisitions meet our return thresholds.
Disciplined Capital Allocation and Shareholder
Returns
We are committed to maximizing shareholder
value through a disciplined capital allocation strategy, particularly when market conditions are favorable. Historically, we have returned
capital to shareholders through dividends, and, when opportunities arise, have made opportunistic share repurchases. This disciplined
approach aims to deploy capital efficiently to maximize long-term shareholder value. Since 2021, when dry bulk market conditions improved
significantly, we have returned over $1.4 billion or $13.49 per share in dividends to shareholders, aligning distributions with strong
freight market earnings. During the year 2025 and up to the date of this annual report, we have also repurchased approximately 7.7 million
shares at a discount to Net Asset Value using proceeds from sale of vessels at Net Asset Value, ensuring accretive capital allocation.
Our amended Dividend Policy ensures that excess
cash flows are returned to shareholders when market conditions are strong, while retaining flexibility to reinvest in fleet renewal, operational
efficiency, and strategic opportunities. See Item 8 “Dividend Policy” for further details.
Our Business Strategies
Our vision is to be a global leader in sustainable
dry bulk shipping. In that respect, we strive to continue operating our fleet safely and profitably as well as to continue growing our
owned and managed fleet sustainably. The key elements of our strategy are:
Charter our vessels in a manner that maximizes
our fleet’s revenue potential
Given the volatility of the freight markets,
we are flexible to changing market conditions and actively manage our vessels in order to generate attractive risk-adjusted returns by
providing efficient transportation solutions to our major charterers. Our aim is to continue improving our fleet utilization by booking
long haul voyage charters and complimentary trade flows that improve the laden/ballast ratios. This approach is also tailored specifically
to our scrubber-fitted fleet and the fuel efficiency of our younger vessels. While this process is more difficult and labor intensive
than placing our vessels on longer-term time charters, it can lead to greater profitability. When operating a vessel on a voyage charter,
as well as on contracts of affreightment directly with cargo providers, we (as owner of the vessel) will incur fuel costs, and therefore,
we are in a position to benefit from fuel savings from our scrubber-fitted fleet. If charter market levels rise, we may employ part of
our fleet in the long-term time charter market, while we may be able to employ our scrubber-fitted vessels more advantageously in the
voyage charter market and/or short-term time charters in order to capture the benefit of available fuel cost savings. Our large, diverse
and high-quality fleet provides scale to major charterers, such as iron ore miners, utility companies and commodity trading houses. As
part of our strategy to maximize earnings, we seek direct arrangements (consecutive voyages, contracts of affreightment, etc.) with major
charterers and cargo owners on a voyage basis, providing the scale required for the transportation of large commodity volumes over a multitude
of trading routes around the world.
We complement our owned fleet through Star
Bulk (Singapore) Pte. Ltd., which charters-in third-party vessels to expand our commercial reach and to access charterers and cargoes
in Asia.
Expand and renew our fleet through opportunistic
acquisitions of high-quality vessels at attractive prices or through chartering-in of modern vessels
We pursue fleet growth and renewal through
disciplined, opportunistic investments. When evaluating acquisitions, we assess expected dry bulk market fundamentals, vessel cash flow
yields relative to price, technical specifications including fuel efficiency, commercial attractiveness, remaining useful life and charter
counterparty quality for vessels acquired with charters attached. We prioritize transactions that are immediately accretive to cash flow
while improving overall fleet age profile and operating efficiency. During 2023, we entered into long-term charter-in arrangements with
an approximate duration of seven years per vessel, plus optional years depending
on our decision, with respect to six newbuilding vessels which were each delivered to us during 2024.
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On December 11, 2023, we entered into the Eagle
Merger Agreement, pursuant to which Eagle became a wholly owned subsidiary of Star Bulk. Following the closing of the Eagle Merger, Star
Bulk is the largest U.S. listed, pure dry bulk shipping company, as measured by aggregate deadweight, with a global market presence and
a combined fleet of 141 owned vessels on a fully delivered basis, 97% of which is fitted with scrubbers, ranging from Newcastlemax/Capesize
to Supramax/Ultramax vessels. Further, following the close of the Eagle Merger, Star Bulk has significantly increased its market capitalization,
thereby reducing its cost of capital, strengthening our position for future acquisitions. Through
our fully integrated commercial and technical management of the fleet, we have been able to use our economies of scale to generate meaningful
cost and revenue synergies. Moreover, we have leveraged Eagle’s commercial expertise in the Supramax/Ultramax sector to improve
utilization and performance across all the vessels of the segment. We believe that these circumstances combined with our management’s
knowledge of the shipping industry may present an opportunity for us to continue to grow our fleet at favorable prices.
Maintain a strong balance sheet through
optimization of use of leverage
We finance our fleet with a mix of debt and
equity, and we intend to optimize use of leverage over time, even though we may have the capacity to obtain additional financing. As of
December 31, 2025, our debt to total capitalization ratio was approximately 30%. Charterers have increasingly favored financially solid
vessel owners, and we believe that our balance sheet strength will enable us to access more favorable chartering opportunities, as well
as give us a competitive advantage in pursuing vessel acquisitions from commercial banks and shipyards, which in our experience have recently
displayed a preference for contracting with well-capitalized counterparties.
Maintain competitive costs and safeguard
high quality standards
We continuously monitor our operating, voyage,
and general and administrative costs and strive to be as lean and efficient as possible, without sacrificing the safety, security, quality
and environmental standards of our fleet and our operations. Our experienced and skilled technical management team, as well as our competent
crews on board, work hard to maintain and exceed the quality standards of our customers and other constituents, as well as to ensure the
health, safety and security of our people on the vessels, and to minimize the impact of our operations on the environment.
Be a leader in ESG practices in the dry
bulk shipping sector
We are committed to integrating ESG practices
across all business operations, and to reporting on our ESG strategy and performance in a transparent and comprehensive way. We strive
to comply with environmental regulations in a timely and efficient manner, and we monitor and aim to reduce our environmental footprint.
We assess, pilot and implement new technologies to improve our environmental performance. On the social front, we focus on our people’s
well-being and professional development, both on board our vessels and in the office, while fostering an equitable, inclusive and diverse
working environment. We support our local community through donations, sponsorships and pro-bono work, towards vulnerable groups, education,
sports and the environment. Our approach to corporate governance includes high ethical standards and transparent and efficient structures
as well as robust risk management systems.
Competition
Demand for dry bulk carriers fluctuates in
line with the main patterns of trade of the major dry bulk cargoes and varies according to their supply and demand. We compete with other
owners of dry bulk carriers in the Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax size sectors. Ownership
of dry bulk carriers is highly fragmented. We compete for charters on the basis of price, vessel location, size, age and condition of
the vessel, as well as on our reputation as an owner and operator.
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Customers
We have well-established relationships with
major dry bulk charterers, which we serve by carrying a variety of cargoes over a multitude of routes around the globe. We charter out
our vessels to first class iron ore miners, utilities companies, commodity trading houses and diversified shipping companies.
Seasonality
Demand for vessel capacity has historically
exhibited seasonal variations and, as a result, fluctuations in charter rates. This seasonality may result in quarter-to-quarter volatility
in our operating results for vessels trading in the spot market. The dry bulk sector is typically stronger in the fall and winter months
in anticipation of increased consumption of coal and other raw materials in the northern hemisphere. Seasonality in the sector in which
we operate could materially affect our operating results and cash flows.
Operations
In-House Management of the fleet
Star Bulk Management Inc., Star Bulk (Hellas)
Inc., Starbulk S.A., Eagle Ship Management (Hellas) LLC and Eagle Ship Management LLC, five of our wholly-owned subsidiaries, perform
the operational and technical management services for the vast majority of the vessels in our fleet, including chartering, marketing,
capital expenditures, personnel, accounting, paying vessel taxes and maintaining insurance.
As of December 31, 2025, we had 294 employees
engaged in the day to day management of our fleet, including our executive officers, through Star Bulk Management Inc., Star Bulk (Hellas)
Inc., Starbulk S.A., Eagle Ship Management (Hellas) LLC and Eagle Ship Management LLC, which employ a number of shore-based executives
and employees, designed to ensure the efficient performance of our activities. We reimburse and/or advance funds as necessary to our in-house
managers in order for them to conduct their activities and discharge their obligations, at cost.
Star Bulk Management Inc. (“Star Bulk
Management”) is responsible for the management of the vessels. Star Bulk Management’s responsibilities include, inter alia,
locating, purchasing, financing and selling vessels, deciding on capital expenditures for the vessels, paying vessels’ taxes, negotiating
charters for the vessels, managing the mix of various types of charters, developing and managing the relationships with charterers and
the operational and technical managers of the vessels. Star Bulk Management subcontracts certain vessel management services to Starbulk
S.A.
Starbulk S.A., Star Bulk (Hellas) Inc. and
Eagle Ship Management (Hellas) LLC, provide the technical and crew management of the majority of our vessels. Technical management includes
maintenance, dry docking, repairs, insurance, regulatory and classification society compliance, arranging for and managing crews, appointing
technical consultants and providing technical support.
Eagle Ship Management LLC provides commercial,
technical and strategic management to eight vessels of the former Eagle fleet from Stamford as a result of the Eagle Merger.
Following the Eagle Merger, Star Bulk Shipmanagement
(Singapore) Pte. Ltd provided technical management to certain vessels of the former Eagle fleet from Singapore. By the end of 2025, the
management of each of these vessels had been transitioned to another in-house manager or outsourced to Megara Shipmanagement Ltd or Franco
Compania Naviera S.A, as described below.
Crewing
Starbulk S.A., Star Bulk (Hellas) Inc., Eagle
Ship Management (Hellas) LLC and Eagle Ship Management LLC are responsible for recruiting, either directly or through a crew manager,
the senior officers and all other crew members for the in-house managed vessels of our fleet. All four companies have the responsibility
to ensure that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions,
and that the vessels are manned by experienced, competent and trained personnel. They are also responsible for ensuring that seafarers’
wages and terms of employment conform to international standards or to general collective bargaining agreements to allow unrestricted worldwide trading of the vessels
and provide the crewing management for the vessels in our fleet that are not managed by third-party managers.
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Outsourced Management of the fleet
We engage Ship Procurement Services S.A., a
third-party company, to provide to our fleet certain procurement services.
Starting in 2021, we appointed Iblea Ship Management
Limited as the manager for certain of our vessels, and starting in 2024, we appointed Megara Shipmanagement Ltd as the manager for additional
vessels in our fleet. Both Iblea and Megara are affiliated with one of the Company’s directors, Mr. Zagari. See Note 3 (Transactions
with Related Parties) to our consolidated financial statements included herein.
Star Bulk Shipmanagement Company (Cyprus) Limited,
which was previously a wholly owned subsidiary of the Company until its sale in December 2024, provides certain management services to
seven vessels of our fleet.
In July 2025, the management of two vessels
previously managed by Star Bulk Shipmanagement (Singapore) Pte. Ltd was transferred to Franco Compania Naviera S.A., a third-party manager.
As of December 31, 2025, Equinox Maritime Ltd.,
Iblea Ship Management Limited and Megara Shipmanagement Ltd, Franco Compania Naviera S.A. and Star Bulk Shipmanagement Company (Cyprus)
Limited provided technical, operation and crewing management services to 36 of the 136 vessels in operation.
Basis for Statements
The International Dry Bulk Shipping Industry
Dry bulk cargo is cargo that is shipped in
large quantities and can be easily stowed in a single hold with little risk of cargo damage. In 2025, based on preliminary figures, it
is estimated that approximately 5.9 billion tons of dry bulk cargo was transported by sea.
The demand for dry bulk carrier capacity is
derived from the underlying demand for commodities transported in dry bulk carriers, which is influenced by various factors such as broader
macroeconomic dynamics, globalization trends, industry specific factors, geological structure of ores, political factors, and weather.
The demand for dry bulk carriers is determined by the volume and geographical distribution of seaborne dry bulk trade, which in turn is
influenced by general trends in the global economy and factors affecting demand for commodities. During the 1980s and 1990s seaborne dry
bulk trade increased by 1-2% per annum. However, over the last fifteen years, between 2010 and 2025, seaborne dry bulk trade increased
at a compound annual growth rate of 2.8%, substantially influenced by the entrance of China in the World Trade Organization. Seaborne
world trade increased by 0.9% during 2025, with the slowdown largely attributable to geopolitical tensions, trade tensions between the
United States and their trade partners, increased uncertainty and higher costs.
The global dry bulk carrier fleet may be divided
into seven categories based on a vessel’s carrying capacity. These main categories consist of:
· Newcastlemax vessels, which are vessels with carrying capacities of between 200,000 and 220,000 dwt. These vessels carry both iron ore and coal and they represent the largest vessels able to enter the port of Newcastle in Australia. There are relatively few ports around the world with the infrastructure to accommodate vessels of this size.
· Capesize vessels, which are vessels with carrying capacities of between 100,000 and 200,000 dwt. These vessels generally operate along long-haul iron ore and coal trade routes. There are relatively few ports around the world with the infrastructure to accommodate vessels of this size.
· Post-Panamax vessels, which are vessels with carrying capacities of between 90,000 and 100,000 dwt. These vessels tend to have a shallower draft and larger beam than a standard Panamax vessel, and a higher cargo capacity. These vessels have been designed specifically for loading high cubic cargoes from draft restricted ports, and they can traverse the Panama Canal following the completion of its latest expansion.
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· Panamax vessels, which are vessels with carrying capacities of between 65,000 and 90,000 dwt. These vessels carry coal, grains, and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers. Panamax vessels can pass through the Panama Canal.
· Ultramax vessels, which are vessels with carrying capacities of between 60,000 and 65,000 dwt. These vessels carry grains and minor bulks and operate along many global trade routes. They represent the largest and most modern version of Supramax bulk carrier vessels (see below).
· Handymax vessels, which are vessels with carrying capacities of between 35,000 and 60,000 dwt. The subcategory of vessels that have a carrying capacity of between 45,000 and 60,000 dwt are called Supramax. Handymax vessels operate along a large number of geographically dispersed global trade routes, mainly carrying grains and minor bulks. Vessels below 60,000 dwt are sometimes built with on-board cranes enabling them to load and discharge cargo in countries and ports with limited infrastructure.
· Handysize vessels, which are vessels with carrying capacities of up to 35,000 dwt. These vessels carry exclusively minor bulk cargo. Increasingly, these vessels have been operating along regional trading routes. Handysize vessels are well suited for small ports with length and draft restrictions that lack the infrastructure for cargo loading and unloading.
The supply of dry bulk carriers is dependent
on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss, and the demand for
dry bulk shipping is often dependent on economic conditions, and international trade. The historically low dry bulk charter rates seen
in 2016 acted as a catalyst for ship owners, who scrapped a significant number of vessels, until equilibrium between demand and supply
of vessels was achieved. Based on our analysis of industry dynamics, we believe that dry bulk charter rates will remain healthy in the
medium term due to relatively low vessel deliveries. As of January 13, 2026, the global dry bulk carrier order book amounted to approximately
12.5% of the existing fleet at that time, well below the 15 years average of 18.0%. During 2025, a total of 4.9 million dwt was scrapped,
well below the long term average, as the freight market performed above the historical average. Historically, from 2010 to 2025, vessel
annual demolition rate averaged 14.3 million dwt per year, with a high of 33.3 million dwt scrapped in 2012. Given the relatively low
dry bulk order book, the uncertainty on future propulsion as a result of environmental regulations and the limited shipyard capacity,
supply and demand equilibrium is likely to be balanced during the next years, resulting in a healthy freight rates environment. While
the charter market remains at current levels, we intend to operate our vessels in the spot market under short-term time charters or voyage
charters in order to benefit from the healthy freight rates and the attractiveness of our scrubber-equipped vessels.
Charter rates paid for dry bulk carriers are
primarily a function of the underlying balance between vessel supply and demand, although at times other factors may play a role. Furthermore,
the pattern seen in charter rates is broadly similar across the different charter types and between the different dry bulk carrier categories.
However, because demand for larger dry bulk carriers is affected by the volume and pattern of trade in a relatively small number of commodities,
charter rates (and vessel values) of larger ships tend to be more volatile than those for smaller vessels.
In the time charter market, rates vary depending
on the length of the charter period and vessel specific factors such as age, speed and fuel consumption. In the voyage charter market,
rates are also influenced by cargo size, commodity, port dues and canal transit fees, as well as delivery and redelivery regions. In general,
a larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command
higher rates than routes with low port dues and no canals to transit.
Voyages with a load port within a region that
includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo are generally
quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that
is included in the calculation of the return charter to a loading area.
Within the dry bulk shipping industry, the
charter rate references most likely to be monitored are the freight rate indices issued by the Baltic Exchange, such as the Baltic Dry
Index (“BDI”). These references are based on actual charter rates under charters entered into by market participants, as well
as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers.
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Dry bulk shipping is a cyclical industry and
charter hires are subject to high volatility. The BDI reached a historic high of 11,793 in May 2008 and a low of 290 in February 2016,
which represents a decline of 98%. In 2025, the BDI ranged from a low of 715 on January 30, 2025, to a high of 2,845 on December 3, 2025.
Even though 2025 charter hire levels ranged well above the lows of 2016, there can be no assurance that the market will not decline again.
As of February 25, 2026, the BDI stood at 2,121.
Environmental and Other Regulations in the
Shipping Industry
Government laws and regulations significantly
affect the ownership and operation of our fleets. We are subject to international conventions and treaties, national, state and local
laws and regulations in force in the countries where our vessels may operate or are registered, relating to safety, health and environmental
protection. Industry standards and regulations set by maritime organizations play a major role in the manner in which we conduct our business.
We believe taking all the necessary measures and going above and beyond compliance is the prerequisite for delivering services of the
highest quality. The above include the proper storage, handling, emission, transportation and discharge of hazardous and non-hazardous
materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations
and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.
Our Company has specifically developed a recycling
policy, which has been included within our Safety Management System (“SMS”) and applies to all the managed vessels. In addition
to the above, there are clearly and accurately defined measures that need to be adhered to as well as standards that should be achieved,
which are required, in view of the levels of excellence that our Company aims for and achieves. There is a clear delegation of the monitoring
and maintenance to responsible entities (both ashore and on board) and duties have been clarified as required. Each vessel has a ship
specific plan (namely the Inventory of Hazardous Materials), which has been reviewed and approved by the competent classification society
and has been certified for compliance with the required regulation.
Further to the above, the Hong Kong International
Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (the “Hong Kong Convention”), which applies to
ships above 500 gross tonnage (“GT”), went into effect on June 26, 2025. Under the Hong Kong Convention, ships must develop
and maintain onboard an inventory of hazardous materials. Furthermore, ships must prepare a ship recycling plan prior to being recycled
and shall only be recycled at ship recycling facilities authorized by competent authority.
Active engagement with state and regulatory
authorities helps achieve compliance with all applicable standards and regulations. We follow and strive to comply with state and regulatory
authority rules and regulations and have adopted and implemented operational procedures in order to meet the requirements of those regulations,
such as air emission compliance measures (including NOx, SOx and CO2 reporting). We aim to provide top-quality
services without neglecting to adjust for industry needs, always maintaining high ethical standards and aiming to abide by all applicable
laws, rules, regulations and standards. We focus on creating real and long-lasting opportunities while advocating for a balanced, sustainable
approach to our business and pursuing continuous improvement of our operational capabilities.
Furthermore, we established a standardized
and structured process to ensure completeness, consistency and accuracy in our emissions-related monitoring and reporting process for
worldwide, EU and UK operations, including with respect to the Monitoring, Reporting and Verification (“MRV”) regulation and
the IMO Data Collection System (“DCS”), as well as the relevant monitoring plans and advanced data collection, analysis, monitoring
and reporting systems through our VPM system. As part of the data collection and key performance indicators’ calculation process,
we use our in-house developed VPM system, which provides accurate and real time information regarding the performance of our vessels.
Additionally, with the introduction of IMO DCS, EU MRV, and UK MRV, the reported CO2 emissions of our vessels are also subjected
to third-party verification by an independent accredited verifier.
A variety of government and private entities
subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national
authorities such as the USCG, harbor master or equivalent), classification societies, flag state administrations (countries of registry)
and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other
authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial
costs or result in the temporary suspension of the operation of one or more of our vessels.
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Apart from the above, our Company has also
become certified according to the ISO 9001, 14001, 45001 and 50001 standards pertaining to compliance with elevated quality, environmental,
occupational health and safety and energy efficiency requirements, thus increasing the requirements our vessels and management company
have to comply with on various levels.
Further to the above, the Company has become
certified for ISO 26000, 27001 and 31000 standards and guidelines pertaining to social responsibility, cybersecurity and risk management.
These standards help ensure our compliance
with best practices in these areas.
In 2025, the Company obtained certification
under ISO 21070:2017 for onboard waste management, demonstrating compliance with internationally recognized standards for the handling,
segregation, minimization, and documentation of ship-generated waste. This certification supplements our existing environmental management
systems and reinforces our commitment to sustainable vessel operations, MARPOL Annex V compliance, along with continuous improvement in
waste-reduction practices.
In addition, we seek to comply with compliance
standards promulgated by RightShip, which is a highly desirable chartering verifier among top charterers that maintains voluntary compliance
requirements. The RightShip standards relate to environmental acceptability of the maritime industry based on a number of variables and
factors.
RightShip has recently incorporated the EEXI
requirements into their platform for assessment and recommendation purposes. Increasing environmental concerns have created a demand for
vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that
emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and
international regulations. We strive to ensure that the operation of our vessels is in full compliance with applicable environmental laws
and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for carrying
out our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we
cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful
lives of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impacts could result
in additional legislation or regulation that could negatively affect our business and profitability.
International Maritime Organization
The IMO has adopted the International Convention
for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL
73/78 (“MARPOL”), the International Convention for the Safety of Life at Sea of 1974 (“SOLAS Convention”), and
the International Convention on Load Lines of 1966 (the “LL Convention”). MARPOL establishes environmental standards relating
to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful
substances in packaged forms. MARPOL is applicable to dry bulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes,
each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to
harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management,
respectively; and Annex VI, lastly, relates to air emissions. New emissions standards, titled IMO-2020, took effect on January 1,
2020, and new amendments to Annex VI, relating to carbon intensity and energy efficiency, took effect on January 1, 2023.
Air Emissions
Annex VI sets limits on sulfur oxide and nitrogen
oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such
as halons and chlorofluorocarbons) and emissions from shipboard incineration of specific substances. Annex VI also includes a global cap
on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as
explained below. We strive to ensure that all of our vessels are in full compliance in all material respects with these regulations.
The MEPC adopted amendments to Annex VI regarding
emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone depleting substances. The amended Annex VI implemented a progressive
reduction of the amount of sulfur contained in any fuel oil used on board ships, among other changes. At its 70th session, the MEPC adopted
a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.5%) starting
from January 1, 2020. This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels or certain exhaust gas cleaning
systems. Ships are required to obtain bunker delivery notes and International Air Pollution Prevention (“IAPP”) Certificates
from their flag states that specify sulfur content. Additionally, further amendments to Annex VI to prohibit the carriage of bunkers above
0.5% sulfur on ships took effect March 1, 2020, with the exception of vessels fitted with scrubbers which can carry fuel of higher sulfur
content. These regulations subject oceangoing vessels to stringent emissions controls and may cause us to incur substantial costs.
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Sulfur content standards are even stricter
within certain “Emission Control Areas,” or (“ECAs”). Ships operating within an ECA are not permitted to use fuel
with sulfur content in excess of 0.1% m/m. Currently, the IMO has designated five ECAs, including specified portions of the Baltic Sea
area, Mediterranean Sea area, North Sea area, North American area and United States Caribbean Sea area. Other areas in China are subject
to local regulations that impose stricter emission controls. If other ECAs are approved by the IMO, or other new or more stringent requirements
relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency
(“EPA”) or the states where we operate, compliance with these regulations could entail significant capital expenditures or
otherwise increase the costs of our operations.
The amended Annex VI also established new tiers
of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. Tier III NOx
standards were designed for the control of NOx produced by vessels and apply to ships that operate in the North American and
U.S. Caribbean Sea ECAs with marine diesel engines installed and constructed on or after January 1, 2016. Tier III requirements could
apply to additional areas designated for Tier III NOx in the future. At MEPC 70 and MEPC 71, the MEPC approved the North Sea
and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. For the moment, this regulation relates to new
building vessels and has no retroactive application to existing fleet. The EPA promulgated equivalent (and in some senses stricter) emissions
standards in 2010. As a result of these designations or similar future designations, we may be required to incur additional operating
or other costs.
Further to the above, as of September 1, 2020
it became mandatory to use fuel with max 0.1% sulfur content while berthing in South Korean ports. There are specific requirements for
the berthing process, and we are diligently striving to comply with all of them. Moreover, since January 1, 2022, it is mandatory to use
fuel with max 0.1% sulfur content while navigating South Korea’s ECAs.
The Korean regulations also relate to speed
reductions. Certain port areas are designated as “Vessel Speed Reduction program Sea Areas” or “VSR program Sea Areas”.
Each VSR program Sea Area spans 20 nautical miles in radius, measured from a specific lighthouse in each port. Ships should navigate no
faster than a maximum speed of 12 knots for container ships and car-carriers and 10 knots for other ship types, when moving from starting
point to an end point within a VSR program Sea Area.
Since 2019, Regulation 22A of Annex VI has
required ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database. The IMO used such
data as part of its initial roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed
further below. In order to prove compliance with the above, our Company collects data, monitors the information received and is ready
to report them though our VPM system.
MARPOL has also mandated certain measures relating
to energy efficiency for ships. All ships are required to develop and implement Ship Energy Efficiency Management Plans (“SEEMP”),
and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency
Design Index (“EEDI”).
Additionally, in 2022 the MEPC amended Annex
VI to impose new regulations to reduce greenhouse gas emissions from ships. These amendments introduced requirements to assess and measure
the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international
shipping. The requirements include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship
Index (“EEXI”), and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator
(“CII”). The attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different
values set for ship types and categories. With respect to the CII, the amendments require ships of 5,000 gross tonnage to document and
verify their actual annual operational CII achieved against a determined required annual operational CII. All ships above 400 gross tonnage
must also have an approved SEEMP on board. For ships above 5,000 gross tonnage, the SEEMP needs to include certain mandatory content.
That same year, the MEPC also amended Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil (“HFO”) by
ships in Arctic waters on and after July 1, 2024. In 2021, MEPC 77 adopted a non-binding resolution which urges Member States
and ship operators to voluntarily use distillate or other cleaner alternative fuels or methods of propulsion that are safe for ships and
could contribute to the reduction of Black Carbon emissions from ships when operating in or near the Arctic.
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Any vessels that do meet this EEXI requirement
need to limit their propulsion power and/or adopt energy-saving/emission reducing technology, through retrofits, to reach compliant levels.
This has created a vast array of implications for the shipping industry going forward. Recycling of older ships could accelerate as the
investments to comply with regulations may be very costly. One of the most efficient ways of reducing emissions is reducing vessel power
and therefore speed, this would in turn limit the supply. The Company owns one of the most modern and fuel-efficient fleets in the industry.
Maintaining and improving our position in respect
of the above creates an extremely compelling outlook for our Company in the next 2-5 years.
Our Company has also become certified under
the ISO 50001 standard for energy efficiency, which has caused our vessels to comply with even more requirements and to ensure that they
are continuously improving their performance in order to satisfy these requirements. Compliance with ISO 50001 requires that we continuously
improve our vessels’ energy performance, energy efficiency, energy use and consumption.
The majority of our fleet is fitted with Exhaust
Gas Cleaning Systems, which reduce the sulfur content of the exhaust gas emissions.
We may incur costs to comply with the revised
standards mentioned above. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive
emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.
Greenhouse Gas Emissions Regulation
Currently, the emissions of greenhouse gases
from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which
entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse
gas emissions. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping
emissions may be included in any new treaty. In December 2009, more than 27 nations, including the United States and China, signed the
Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. The 2015 United Nations Climate Change
Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016 and does not directly limit greenhouse
gas emissions from ships.
At MEPC 70 and MEPC 71, a draft outline
of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions from
ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce
greenhouse gas emissions from ships. The initial strategy identifies “levels of ambition” to reduce greenhouse gas
emissions, and notes that technological innovation, alternative fuels and/or energy sources for international shipping will be
integral to achieve the ambitions. At MEPC 77, the nations agreed to revise the initial strategy, aiming to strengthen the levels of
ambition. In July 2023, MEPC 80 adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which builds upon the
initial strategy’s levels of ambition. The revised levels of ambition include (1) further decreasing the carbon intensity from
ships through improvement of energy efficiency; (2) reducing carbon intensity of international shipping; (3)
increasing adoption of zero or near-zero emissions technologies, fuels, and energy sources; and (4) achieving net zero GHG
emissions from international shipping by or around 2050. The following indicative checkpoints were adopted in order to reach net
zero GHG emissions from international shipping: (1) reduce the total annual GHG emissions from international shipping by at least
20%, striving for 30%, by 2030, compared to 2008 levels; and (2) reduce the total annual GHG emissions from international
shipping by at least 70%, striving for 80%, by 2040, compared to 2008 levels. In 2024 and 2025, the IMO advanced additional elements
of its decarbonization framework through MEPC 81 and MEPC 82, including the development of a GHG pricing mechanism and an
international marine fuel standard. These measures build upon the 2023 IMO Strategy targets and introduce more prescriptive
short-term and mid-term instruments. Furthermore, in April 2025, MEPC 83 advanced mid-term GHG reduction measures to
implement the IMO net-zero framework. These initiatives include a goal-based marine fuel standard, phasing in the mandatory use of
fuels with less GHG intensity and a global GHG emission pricing mechanism, and are scheduled for further discussions and possible adoption by October 2026, with entry into force
in 2028 and potential enforcement on vessels starting early 2029. These regulations could cause additional substantial expenses to be
incurred.
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As of January 2018, large ships over 5,000
gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information. As further
discussed herein, regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s
carbon market have entered into force, and additional regulations are forthcoming.
Any passage of climate control legislation
or other regulatory initiatives by the IMO, the EU, the United States or other countries where we operate, or any treaty adopted at the
international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to
make significant financial expenditures which we cannot predict with certainty at this time. Even in the absence of climate control legislation,
our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.
We may incur costs to comply with these revised
standards. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission
control systems and could adversely affect our business, results of operations, cash flows and financial condition.
Safety Management System Requirements
The SOLAS Convention was amended to address
the safe manning of vessels and emergency training drills. The Convention of Limitation of Liability for Maritime Claims (the “LLMC”)
sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We are committed to
ensuring that our vessels are in full compliance with SOLAS. Owners’ compliance with LLMC requirements is covered under the Protection
& Indemnity insurance.
Under Chapter IX of the SOLAS Convention, or
the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (the “ISM Code”), our
operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a
vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental
protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding
to emergencies. We rely upon the safety management system that we and our technical management team have developed for compliance with
the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability,
may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.
Our Company along with a number of vessels are certified under the 9001 & 14001 ISO standards, and as such, are fully compliant with
the additional requirements and restrictions that have been set. We are committed to conducting our operations systematically by following
the requirements of the ISO 14001 and striving to maintain ZERO Oil Spills and ZERO Marine and Pollution Atmospheric Incidents. Our Company
is also committed to responding effectively and in a timely manner to environmental incidents resulting from our operations, respecting
the environment by emphasizing every employee’s responsibility in environmental performance and fostering appropriate operating
practices and training, managing our business with the goal of preventing environmental incidents and controlling emissions and wastes
to below harmful levels, using energy, water, materials and other natural resources as efficiently as possible, giving particular regard
to the long-term sustainability of consumable items and minimizing waste by reducing our waste generation.
The ISM Code requires that vessel operators
obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management
with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager
has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained applicable documents of compliance
for our offices and safety management certificates for all of our vessels for which certificates are required by the IMO. The document
of compliance and safety management certificate are periodically reviewed and renewed as required.
In line with the best practices that the Company
applies throughout onboard and ashore procedures, the SMS has been developed to fully comply with the Dry-BMS standards set out by RightShip.
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In acknowledgement that specialization and
accuracy are key components to sufficient procedures, the Company has developed two plans for ashore procedures and seven plans for onboard
procedures, targeting the responsible personnel and crew members, respectively.
Amendments to the SOLAS Convention Chapter
VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous
Goods Code (“IMDG Code”). The IMDG Code includes (1) provisions for radioactive material, reflecting the latest provisions
from the International Atomic Energy Agency, (2) marking, packing and classification requirements for dangerous goods and (3) mandatory
training requirements. Later amendments revised the IMDG Code to reflect the UN Recommendations on the Transport of Dangerous Goods, including
(1) provisions regarding IMO type 9 tank, (2) abbreviations for segregation groups, and (3) special provisions for carriage of lithium
batteries and of vehicles powered by flammable liquid or gas. The SOLAS amendments, which entered into force on June 1, 2022, include
(1) addition of a definition of dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for medical/clinical
waste, (4) addition of various ISO standards for gas cylinders, (5) a new handling code, and (6) changes to stowage and segregation provisions.
The newest edition of the IMDG Code took effect on January 1, 2024, although the changes are largely incremental.
The IMO has also adopted the International
Convention on Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”). All seafarers are required to
meet the STCW standards and be in possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ
the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm
compliance.
The IMO’s Maritime Safety Committee and
MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the “Polar Code”).
The Polar Code, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters
relevant to ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution
prevention as well as recommended provisions. The Polar Code applies to new ships constructed after January 1, 2017, and ships constructed
before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.
On January 1, 2021, IMO Resolution MSC. 428(98)
came into force. This regulation is applicable to all vessels, requiring ships to include cyber risk management in their safety management
systems in accordance with the International Safety Management (ISM) Code. This resolution further encourages flag administrations to
ensure that ship owners and managers are properly addressing cyber risks. In February 2021, the U.S. Coast Guard published guidance on
addressing cyber risks in a vessel’s safety management system. This might cause companies to create additional procedures for monitoring
cybersecurity, which could require additional expenses and/or capital expenditures. The Company has already taken the necessary steps
to ensure data integrity and full compliance both from the office side and on board our vessels. The Company has completed its ISO27001
certification, and our Vessel IT team has been certified as a Cybersecurity Internal Auditor through Bureau Veritas. The vessels are being
monitored under the existing cybersecurity requirements required by the IMO as well as the additional best practices by other entities.
Each vessel has a ship-specific cybersecurity plan, and its IT and OT systems have been inventoried in order for the relevant hazards
to be identified.
A ship specific plan has been developed for
each vessel covering the requirements according to the updated regulations as well as additional precautions to be maintained on multiple
accounts. Detailed pieces of information have been added, pertaining to the software and cybersecurity on board, and additional measures
have been taken to protect the integrity of our vessels. Specific policies have been developed to that effect, such as cybersecurity,
email usage, password, device, workstation policies, etc. Very specific guidelines have been provided to the Masters and crew members
regarding their engagement with relevant authorities in order for the cyber requirements to be fulfilled at all times.
As of 2021, compliance with IMO Resolution
MSC.428(98) requires cyber risk management to be incorporated into the Company’s Safety Management System (“SMS”) under
the ISM Code. Cybersecurity expectations have continued to increase across charterers, P&I Clubs and vetting organizations.
We maintain cyber resilience policies, conduct
regular crew and office training, and perform periodic vulnerability assessments aligned with IMO and ISO 27001 considerations.
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Pollution Control and Liability Requirements
The IMO has negotiated international conventions
that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example,
the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM
Convention”), which entered into force on September 8, 2017. The BWM Convention requires ships to manage their ballast water to
remove, render harmless or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments.
The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to
be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international
ballast water management certificate.
On December 4, 2013, the IMO Assembly passed
a resolution revising the application dates of the BWM Convention so that the dates are triggered by the entry into force date and not
the dates originally in the BWM Convention. This, in effect, makes all vessels delivered before the entry into force date “existing
vessels” and allows for the installation of ballast water management systems on such vessels at the first International Oil Pollution
Prevention (“IOPP”) renewal survey following entry into force of the convention.
The MEPC maintains guidelines for approval
of ballast water management systems (G8). At MEPC 72, amendments were adopted to extend the date existing vessels are subject to certain
ballast water standards. Ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of
ballast water only in open seas and away from coastal waters. The “D-2 standard” specifies the maximum amount of viable organisms
allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. The standards have been in force since 2019,
and for most ships, compliance with the D-2 standard involved installing on-board systems to treat ballast water and eliminate unwanted
organisms. Ballast water management systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms,
or which alter the chemical or physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation
D-3). Since September 8, 2024, all ships have been required to meet the D-2 standard.
We have developed and implemented the required
BWTS in our fleet and are in compliance with all the applicable regulations.
Once mid-ocean ballast exchange or ballast
water treatment requirements become mandatory under the BWM Convention, the cost of compliance could increase for ocean carriers and may
have a material effect on our operations. Irrespective of the BWM convention, certain countries such as the U.S. have enforced and implemented
regional requirements related to system certification, operation and reporting.
The IMO also adopted the International Convention
on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) to impose strict liability on ship owners (including
the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused
by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for
pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not
exceeding the amount calculated in accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of
oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the
events or damages occur.
Ships are required to maintain a certificate
attesting that they maintain adequate insurance to cover an incident. In jurisdictions such as the United States, where neither the International
Convention on Civil Liability for Oil Pollution Damage (which imposes liability for oil pollution damage resulting from maritime casualties
involving oil-carrying ships on the owner of the ship) nor the Bunker Convention have been adopted, various legislative schemes or common
law govern, and liability is imposed either on the basis of fault or on a strict-liability basis. Our vessels are all currently holders
of these certificates issued by the respective flag administrations, based on the evidence of coverage issued by the respective P&I
clubs.
As of February 1, 2025, the ballast water
record keeping requirements were updated and revised coding now applies to our ships. As a result, our logbooks and documented evidence
have been updated accordingly.
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Anti-Fouling Requirements
In 2001, the IMO adopted the
International Convention on the Control of Harmful Anti-fouling Systems on Ships (the “Anti-fouling Convention”). The
Anti-fouling Convention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent
the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over 400 gross tons engaged in international
voyages are also required to undergo an initial survey before the vessel is put into service or before an International Anti-fouling
System Certificate is issued for the first time; and subsequent surveys when the anti-fouling systems are altered or
replaced.
MEPC 75 approved amendments to the Anti-fouling
Convention to prohibit anti-fouling systems containing cybutryne, which have been in effect since January 1, 2023. For ships already bearing
such an anti-fouling system, compliance is required at the next scheduled renewal of the system after that date, but no later than 60
months following the last application to the ship of such a system. In addition, the International Anti-fouling System (IAFS) Certificate
has been updated to address compliance options for anti-fouling systems to address cybutryne. Ships which are affected by this ban on
cybutryne must receive an updated IAFS Certificate no later than two years after the entry into force of these amendments. Ships which
are not affected (i.e. with anti-fouling systems which do not contain cybutryne) must receive an updated IAFS Certificate at the next
Anti-fouling application to the vessel. Our fleet already complies with this regulation.
We have obtained Anti-fouling System Certificates
for all of our vessels that are subject to the Anti-fouling Convention.
Further to the above and in continuation of
enhanced bio-fouling requirements in Australia and New Zealand, the vessels are undergoing stricter review, compliance and corresponding
record keeping processes, and inspections are becoming increasingly frequent and demanding.
In February 2025, the bio-fouling regulatory
framework has been updated by the MEPC.387(81) – BWM.2/Circ.80/Rev.1 and all the documentation carried on board by our vessels has
now been fully aligned with current requirements.
Changes include the handling of the sea chest
flushing residue, entries, record keeping, etc.
Biofouling Regulations (IMO + Australia/New
Zealand)
In 2023, the IMO adopted revised Biofouling
Guidelines (MEPC.387(81)), which many flag States and coastal jurisdictions began incorporating into mandatory requirements during 2024–2026.
Several regional authorities, including Australia and New Zealand, enhanced their biofouling management and inspection regimes, requiring
proactive hull maintenance, documented biofouling management plans and evidence of recent cleanings or coatings.
Compliance Enforcement
Noncompliance with the ISM Code or other IMO
regulations may subject the ship owner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage
for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and EU authorities prohibit vessels
not in compliance with the ISM Code by applicable deadlines from trading in U.S. and EU ports, respectively. As of the date of this annual
report, each of our vessels is ISM Code certified. However, the IMO continues to review and introduce new regulations. It is impossible
to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.
United States Regulations
The U.S. Oil Pollution Act of 1990 (“OPA”)
established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects
all “owners and operators” whose vessels trade or operate within the United States, its territories and possessions or whose
vessels operate in U.S. waters, which includes U.S. territorial sea and its 200-nautical mile exclusive economic zone around the United
States. The United States has also enacted the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),
which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA
and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise,
the vessel. Both OPA and CERCLA impact our operations.
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Under OPA, vessel owners and operators
are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act
or omission of a third-party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from
discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA defines these other damages broadly to
include:
(i) injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
(ii) injury to, or economic losses resulting from, the destruction of real and personal property;
(iii) loss of subsistence use of natural resources that are injured, destroyed or lost;
(iv) net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;
(v) lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and
(vi) net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.
OPA contains statutory caps on liability and
damages; such caps do not apply to direct cleanup costs. As of March 23, 2023, the USCG adjusted the limits of OPA liability for
non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,300 per gross ton or $1,076,000 (subject
to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of
an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting
pursuant to a contractual relationship) or a responsible party’s gross negligence or willful misconduct. The limitation on liability
similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible
party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal
activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c),
(e)) or the Intervention on the High Seas Act.
CERCLA contains a similar liability regime
whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, or destruction
or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects
studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third-party, an
act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying
a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering
the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance
resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction
or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to provide
all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.
OPA and CERCLA each preserve the right to
recover damages under existing law, including maritime tort law. OPA and CERCLA both require owners and operators of vessels to establish
and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular
responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a
proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the
USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility. All of our vessels
arriving at U.S. or Canadian ports are covered under a COFR - Certificate of Financial Responsibility.
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The 2010 Deepwater Horizon oil spill in the
Gulf of Mexico resulted in additional regulatory initiatives and statutes, including higher liability caps under OPA, new regulations
regarding offshore oil and gas drilling and a pilot inspection program for offshore facilities. However, several of these initiatives
and regulations have been or may be revised as the result of political changes. For example, the U.S. Bureau of Safety and Environmental
Enforcement’s (“BSEE”) revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified
and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE amended the Well Control Rule, which
rolled back certain reforms regarding the safety of drilling operations. Subsequently,
the Biden administration issued an executive order temporarily blocking new leases for oil and gas drilling in federal waters, but ultimately
the order was rendered ineffective by a permanent injunction issued by a Louisiana court. The Trump administration has also proposed a
plan to lease new sections of U.S. waters to oil and gas companies for offshore drilling. With these rapid changes, compliance with any
new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our
operations and adversely affect our business.
OPA specifically permits individual states
to impose their own liability regimes with regard to oil pollution incidents occurring within their borders, coastlines and territorial
seas, provided they accept, at a minimum, the levels of liability established under OPA. Some states have enacted legislation providing
for unlimited liability for oil spills and many U.S. states that border a navigable waterway have enacted environmental pollution laws
that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance.
Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although
in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’
responsibilities under these laws. These laws may be more stringent than U.S. federal law. The Company and its vessels that call at U.S.
ports are all covered under the QI (Qualified Individual) and engagement with Witt O’Briens and their ongoing contract with the
USCG which provide us with the latest updates and legislations and are in charge of updating our manuals pertaining to the relevant requirements.
In addition, we are also covered through our contracts with the National Response Corporation for Oil Spill Response Organization purposes
and with T&T Salvage, LLC for Salvage & Marine Fire-Fighting.
We currently maintain pollution liability coverage
insurance in the amount of $1.0 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed
our insurance coverage, it could have an adverse effect on our business and results of operations. Cybersecurity is also a top priority
for the U.S. Coast Guard. The cybersecurity of our vessels continues to improve through hands-on training, campaigns and external assistance/equipment
provision.
Other United States Environmental Initiatives
The U.S. Clean Air Act of 1970 (including its
amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic
compounds and other air contaminants. The CAA requires states to adopt State Implementation Plans (“SIPs”), some of which
regulate emissions resulting from vessel loading and unloading operations which may affect our vessels.
The U.S. Clean Water Act (“CWA”)
prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit
or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial
liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. In 2015, the
EPA expanded the definition of “waters of the United States” (“WOTUS”), thereby expanding federal authority under
the CWA. Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited
definition of WOTUS. In 2019 and 2020, the agencies repealed the prior WOTUS Rule and promulgated the Navigable Waters Protection Rule
(“NWPR”) which significantly reduced the scope and oversight of EPA and the Department of the Army in traditionally non-navigable
waterways. On August 30, 2021, a federal district court in Arizona vacated the NWPR and directed the agencies to replace the rule. On
December 7, 2021, the EPA and the Department of the Army proposed a rule that would reinstate the pre-2015 WOTUS definition, and on January
18, 2023, the EPA issued a revised final rule that used the pre-2015 definition as its foundation. However, pursuant to a 2023 decision
of the U.S. Supreme Court in Sackett v. Environmental Protection Agency affecting the permissible scope of the WOTUS definition,
in August 2023 the EPA issued a final rule furthering amending and narrowing the definition of WOTUS.
U.S. VIDA & Ballast Water Developments
The EPA and the USCG have also enacted
rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat
ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at
potentially substantial costs, and/or otherwise restrict our vessels from entering U.S. waters. The EPA regulates these ballast
water discharges and other discharges incidental to the normal operation of certain vessels within United States waters via the
Vessel General Permit (“VGP”) requirements and pursuant to the Vessel Incidental Discharge Act (“VIDA”).
VIDA established a new framework for the regulation of vessel incidental discharges under CWA, required the EPA to develop
performance standards for those discharges and required the USCG to develop implementation, compliance and enforcement
regulations.
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On October 9, 2024, the EPA published the final Vessel Incidental Discharge National Standards of Performance pursuant to
VIDA, which set discharge standards that are as least as stringent as the VGP. These new standards will be made effective and enforceable
through corresponding USCG regulations, which must be promulgated within two years of the rule’s publication. Until the USCG’s
regulations are final and enforceable, non-military, non-recreational vessels greater than 79 feet in length will continue to be subject
to the existing discharge requirements under the VGP, including submission of a Notice of Intent (“NOI”) or retention of a
PARI form and submission of annual reports, while compliance obligations may increase upon adoption of new VIDA standards.
European Union Regulations
In October 2009, the EU amended a directive
to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with
intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality
of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. The directive applies to all
types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in
danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. Regulation
(EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring,
reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with
ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses.
The EU has adopted several regulations and
directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age and flag as well as
the number of times the ship has been detained. The EU also adopted and extended a ban on substandard ships and enacted a minimum ban
period and a definitive ban for repeated offenses. The regulation also provided the EU with greater authority and control over classification
societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that
failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main
and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex
VI relating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships
at berth in the Baltic, the North Sea and the English Channel (the so called “SOx-Emission Control Area”), and,
as of May 1, 2025, in the Mediterranean Sea. As of January 2020, EU member states must also ensure that ships in all EU waters, except
the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.
Effective January 2024, the EU ETS was extended
to cover CO2 emissions from all ships of 5,000 gross tonnage and above entering EU ports, regardless of the flag they fly.
The system covers: a) 50% of emissions from voyages starting or ending outside of the EU (allowing the third country to decide on appropriate
action for the remaining share of emissions) and b) 100% of emissions that occur between two EU ports and when ships are within EU ports.
The EU ETS covers CO2 (carbon dioxide), CH4 (methane) and N2O (nitrous oxide) emissions, but the two latter only as from 2026.
Shipping companies will need to surrender to the relevant EU authorities the allowances that correspond to the emissions covered by the
system. These allowances are normally purchased by the entity responsible for the purchase of bunkers, i.e. the charterers in the case
of time charter agreements. In the case of voyage charter agreements, the cost of the allowances is normally included in the charter rate.
Under the gradual phase-in period introduced by the EU, shipping companies will be required to surrender allowances corresponding to 70%
of their covered 2025 emissions in 2026 and 100% of their covered 2026 emissions in 2027. In connection with the EU ETS regulation target
CO2 emissions reductions, we are implementing and continuing to adopt measures to decarbonize our fleet and improve the Carbon
Intensity Indicator (“CII”) and working to minimize the financial impact via the inclusion of a clause in our charter party
agreements which imposes an obligation on the charterer to cover the cost associated with the CO2 emissions generated during
voyages to and from and within the EU.
The EU aims to substantially increase the use
of renewable and low-carbon fuels to reduce the carbon footprint of the maritime sector. On March 23, 2023, the European Parliament and
the Council agreed on the FuelEU, a new EU regulation that includes a provision, among others, to gradually decrease the greenhouse gas
intensity of fuels used by the shipping sector over time, targeting a 2% reduction in 2025 (compared to 2020 levels), increasing to 6%
in 2030 and with additional increases every 5 years to reach a reduction of 80% by 2050. As of January 2025, all large ships (of 5,000
gross tonnage and above) entering EU and European Economic Area (“EEA”) ports must comply with FuelEU. Fuel EU sets “well-to-wake”
GHG emissions intensity requirements for energy used on board. The GHG intensity requirement applies to 100% of energy used on voyages
and port calls within the EU and EEA, and 50% of energy used on voyages into or out of the EU and EEA. The term “well-to-wake” refers to the entire process
of fuel production, delivery and use onboard ships, and all emissions produced from such processes.
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The yearly average GHG intensity of
energy used on board, measured as GHG emissions per energy unit (gCO2e/MJ), must be less than an applicable threshold. The
GHG intensity threshold will be subject to a five-year percentage reduction with respect to a reference value, which is based on the average
energy used onboard in 2020, reported in the EU Monitoring Reporting and Verification data of that year. We are working to comply with
the Fuel EU regulation by using biofuels to reduce the carbon intensity of the fuels our vessels burn when trading in and out of Europe.
The entity responsible for compliance with
FuelEU requirements according to the regulation is the ISM company appointed by the ship owners, however for time charter agreements,
the cost of FuelEU may be borne by the commercial operator subject to the inclusion of a relevant clause in the time charter agreement.
For voyage charter agreements, the FuelEU cost may be included in the charter rate.
Chinese Regulations
Our Company complies with the local Chinese
regulations and requirements pertaining to the Ship Pollution Response Organization. This requires owners/operators of (a) any ship carrying
polluting and hazardous cargoes in bulk or (b) any other vessel above 10,000 GT to enter into a pollution clean-up contract with a Maritime
Safety Agency (“MSA”) approved Ship Pollution Response Organization before the vessel enters a Chinese port. We have established
contractual agreements and are cooperating with our local representatives, to provide us the best in market options at each specific port.
This practically applies to all the managed vessel within our fleets and means that we are getting high-quality service on a case by case
basis, always obtaining the best price versus quality result that could be procured.
International Labor Organization
The International Labor Organization (the “ILO”)
is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 (“MLC 2006”). A Maritime Labor Certificate
and a Declaration of Maritime Labor Compliance are required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage
or over and are either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in
another country. All of our vessels have been awarded an MLC certificate following the relevant MLC inspection carried out on board and
they have been approved for DMLC Part II by the ROs/flag administration in compliance with the requirements set out in the DMLC Part I
issued by the respective flag administrations accordingly.
Amendments to the Maritime Labour Convention
(“MLC”), which entered into force between 2024 and 2025, introduced enhanced seafarer welfare requirements. These include:
• Provision of reasonable access
to ship-to-shore communications, including internet access at no profit to the shipowner;
• Strengthened protections
in cases of crew abandonment;
• Enhanced guidelines
on occupational safety, personal protective equipment, and mental health support;
• Additional reporting
obligations on crew death and injury.
The Company fully complies with the financial
responsibility and abandonment clauses of the regulatory framework.
Vessel Security Regulations
Since the terrorist attacks of September 11,
2001 in the United States, there have been a variety of initiatives in various jurisdictions intended to enhance vessel security such
as the U.S. Maritime Transportation Security Act of 2002 (“MTSA”). To implement certain portions of the MTSA, the USCG 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, some of which are regulated by the EPA.
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Similarly, Chapter XI-2 of the SOLAS Convention
imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Ship and Port Facility
Security Code (“the ISPS Code”). The ISPS Code is designed to enhance the security of ports and ships against terrorism. To
trade internationally, a vessel must attain an International Ship Security Certificate (“ISSC”) from a recognized security
organization approved by the vessel’s flag state. Ships operating without a valid certificate may be detained, expelled from or
refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention, include, for
example, on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related
information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course,
speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel but only alert
the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a
vessel’s hull; a continuous synopsis record kept onboard showing a vessel’s history including the name of the ship, the
state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification
number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and compliance
with flag state security certification requirements.
The USCG regulations, intended to align with
international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board
a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code.
All of our vessels are already fully compliant
with the ISPS code and have the International Ship Security Certificate (ISSC). Each vessel also has its own SSP (Ship Security Plan)
which has been reviewed and approved by the RO/flag administration accordingly. In addition to the above, the Company has also chosen
to comply with BMP (latest version) standard as best management practices and also provides additional security equipment (and armed guards,
where required) on board whenever our vessels pass through areas of voluntary reporting or where there is high risk of piracy. Future
security measures could also have a significant financial impact on us. The cost of vessel security measures has also been affected by
the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian
Sea area. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures,
and the risk of uninsured losses could significantly affect our business. Costs are incurred in taking additional security measures in
accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP (latest version) industry standard.
We continue to follow the latest BMP version,
UKMTO reporting requirements, as well as applicable charterer instructions when transiting or avoiding these regions.
Inspection by Flag Administration and
Classification Societies
The hull and machinery of every commercial
vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a
vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS.
Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in class” by
a classification society which is a member of the International Association of Classification Societies, the IACS. The IACS has adopted
harmonized Common Structural Rules, or “the Rules,” which apply to oil tankers and bulk carriers contracted for construction
on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. All of our vessels are certified
as being “in class” by all the applicable Classification Societies (e.g., Bureau Veritas, NKK, DNV-GL, American Bureau of
Shipping, Lloyd’s Register of Shipping). Their respective Classification certificates have been issued by the vessel’s classification
society following the initial survey carried out on board.
A vessel must undergo annual surveys, intermediate
surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle,
under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every
30 to 36 months for inspection of the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual
survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable
and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo
or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.
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The managed vessels, depending on the flag
administration requirements, are inspected during the stipulated periodicities. These inspections are arranged on a timely basis and the
findings (if any) are addressed for corrective actions, close-out and acceptance purposes. The findings are also finally reviewed by the
relevant flag administration, in order to record the actions taken by the Company and close-out the findings on their systems.
Risk of Loss and Liability Insurance
General
The operation of any cargo vessel includes
risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due to political
circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In addition, there is always an inherent possibility
of marine disaster, including oil spills and other environmental incidents, and the liabilities arising from owning and operating vessels
in international trade. OPA, which imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel
trading in the exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liability
insurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in
the shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to obtain
adequate insurance coverage at reasonable rates.
Hull and Machinery Insurance
We procure hull and machinery insurance, protection
and indemnity insurance, which includes environmental damage and pollution insurance and war risk insurance and freight, demurrage and
defense insurance for our fleet. We generally do not maintain insurance against loss of hire (except for certain charters for which we
consider it appropriate), which covers business interruptions that result in the loss of use of a vessel.
Protection and Indemnity Insurance
Protection and indemnity insurance is provided
by mutual protection and indemnity associations, or “P&I Associations,” and covers our third-party liabilities in connection
with our shipping activities. This includes third-party liability and other related expenses of injury or death of crew, passengers and
other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property,
pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity
insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or “clubs.”
Our current protection and indemnity insurance
coverage for pollution is $1 billion per vessel per incident. The 12 P&I Associations that comprise the International Group insure
approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s
liabilities. The International Group’s website states that the Pool provides a mechanism for sharing all claims in excess of $10
million up to, currently, approximately $8.9 billion. As a member of a P&I Association, which is a member of the International Group,
we are subject to calls payable to the associations based on our claim records as well as the claim records of all other members of the
individual associations and members of the shipping pool of P&I Associations comprising the International Group.
Compliance with Environmental Regulations
Other aspects of our environmental compliance
include:
· Refrigerant Allowance: We have banned all the types of refrigerants that significantly affect the ozone layer and contribute to climate change as a result of their high Global Warming Potential (“GWP”), such as R22. Additionally, during maintenance activities both in our offices and on vessels, we use eco-friendly refrigerants that are not known to affect the ozone layer such as R407 and R404. In compliance with the EU 517/2014 regulation, which stipulates restrictions to the use of refrigerants exceeding GWP of 2500, we use eco-friendly refrigerants in 30% of our fleet and we expect that 100% of our fleet will have installed eco-friendly refrigerants within the next 5 years.
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· Biodegradable Lubricants: We are using biodegradable lubricants proactively in the majority of our fleet regardless of their destination. Biodegradable lubricants are ecofriendly lubricants which are mandatory for vessels that transport cargo or have the United States as destination ports.
· We had proactively taken immediate steps to comply in 2019 with certain provisions of EU regulation (1257/2013 on Ship recycling) that took effect on December 31, 2020. The regulation refers to vessel recycling activities and the identification and monitoring of hazardous materials, including:
· Asbestos.
· PCBs.
· Ozone depleting substances.
· PFOS.
· Anti-fouling systems containing organotin compounds as a biocide.
We are also in the process of replacing Freon
onboard. Our entire fleet complies with Hazardous Material regulation.
Dry-BMS (RightShip Standards)
This program, in which we participate on a
voluntary basis and have been successfully audited for compliance achievement, is designed to allow ship managers to measure their SMS
against agreed industry standards, with the aim of improving fleet performance and risk management. This will ensure that policies align
with the industry’s best practice to both advance our vessels’ performance and attain high standards of health, safety, security
and pollution prevention.
The draft guidelines focus on 30 areas of management
practice across the four most serious risk areas faced in vessel operations: performance, people, plant and process. Assessment of these
factors allows comparison of a company’s SMS against measurable expectations and targets without involving the burdens of excessive
inspections. This program is not meant to replace any preexisting system or rule but rather to enhance their existing application and
raise the levels of excellence achieved. The benefits of this venture include a) covering all relevant ship management issues in one document,
b) relevance to the entire dry bulk shipping industry worldwide, c) complementing other statutory requirements and industry guidance and
d) frequent evaluation to drive continuous improvement across the management companies on an international level.
Further to the above, RightShip has adjusted
their inspection questionnaires in order to review the vessels’ compliance with the Dry-BMS standards, which are now in full effect
and applied on board our vessels.
C. Organizational
Structure
As of December 31, 2025, we are the sole owner
of all of the outstanding shares of the subsidiaries listed in Note 1 of our consolidated financial statements under “Item 18. Financial
Statements.”
D. Property,
Plant and Equipment
We do not own any material real property. Our
interests in the vessels in our fleet are our only material properties. See “Item 4. Information on the Company––B.
Business Overview––General.”