Throughout this annual report, all references to “Nordic American Tankers,” “NAT,” the “Company,” “the Group,” “we,” “our,” and “us” refer to Nordic
American Tankers Limited and its subsidiaries. Unless otherwise indicated, all references to “U.S. dollars,” “USD,” “dollars,” “US$” and “$” in this annual report are to the lawful currency of the United States of America and references to
“Norwegian Kroner” or “NOK” are to the lawful currency of Norway.
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the offer and use of Proceeds
Not applicable.
D. Risk Factors
The following constitutes a summary of the material risks relevant to an investment in our company. The occurrence of any of the events described in this section could significantly and
negatively affect our business, financial condition, operating results or cash available for dividends or the trading price of our common stock.
Summary of Risk Factors
• If the Suezmax tanker industry, which historically has been cyclical and volatile, is depressed in the future, our revenues, earnings and available cash flow may decrease.
• Conducting business in certain jurisdictions, including Venezuela, as well as exposure to geopolitical tensions in other regions, such as Iran and the Strait of Hormuz, may subject us to legal, regulatory, political and other risks that could have an adverse effect on our operations and financial results.
• We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our earnings, our ability to pay dividends and our ability to repay our financial liabilities.
• Changes in the price of fuel and regulations may adversely affect our profits.
• Inability to renew the fleet would adversely affect our business, results of operations, financial condition and ability to pay dividends.
• The international Suezmax tanker industry has experienced volatile charter rates and vessel values and there can be no assurance that these charter rates and vessel values will not decrease in the near future.
• Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition.
• A shift in consumer demand from oil towards other energy sources or changes to trade patterns for crude oil or refined oil products may have a material adverse effect on our business.
• The value of our vessels may be depressed at the time we decide to sell a vessel.
• Delays or defaults by the shipyards in the construction of newbuildings could increase our expenses and diminish our net income and cash flows.
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• Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect our business.
• We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed.
• If we do not manage relationships with customers or successfully integrate any acquired Suezmax tankers, we may not be able to grow or effectively manage our growth.
• Because some of our expenses are incurred in foreign currencies, we are exposed to exchange rate fluctuations, which could negatively affect our results of operations.
• The operation of Suezmax tankers involves certain unique operational risks.
• We operate our Suezmax tankers worldwide and as a result, our vessels are exposed to international risks which may reduce revenue or increase expenses.
• The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
• Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business.
• Acts of piracy on ocean-going vessels could adversely affect our business.
• Maritime claimants could arrest our vessels, which could interrupt our cash flow.
• Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.
• Technological developments which affect global trade flows and supply chains may affect the demand for our vessels.
• If we purchase secondhand vessels, we may not receive warranties from the builder and operating cost may increase as a result of aging of the fleet.
• Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of the tanker industry.
• An increase in operating costs would decrease earnings and dividends per share.
• We may be unsuccessful in competing in the highly competitive international Suezmax tanker market.
• We are subject to laws and regulations which can adversely affect our business, results of operations, cash flows and financial condition, and our ability to pay dividends.
• Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
• Climate change and greenhouse gas restrictions may adversely impact our operations and markets.
• If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.
• Developments in safety and environmental requirements relating to the recycling of vessels may result in escalated and unexpected costs.
• Servicing our debt limits funds available for other purposes and if we cannot service our debt, we may lose our vessels.
• Our borrowing facilities, contains restrictive covenants which could negatively affect our growth, cause our financial performance to suffer and limit our ability to pay dividends.
• Variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
• We may not be able to finance our future capital commitments.
• The current state of the global financial markets and current economic conditions may adversely impact our results of operation, financial condition, cash flows and ability to obtain financing or refinance our existing and future credit facilities on acceptable terms.
• We cannot assure you that we will be able to refinance our indebtedness.
• We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows.
• Our share price may continue to be highly volatile, which could lead to a loss of all or part of a shareholder’s investment.
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• We operate in a cyclical and volatile industry and cannot guarantee that we will continue to make cash distributions.
• Future sales of our common stock could cause the market price of our common stock to decline.
• Ineffective internal controls could impact the Company’s business and financial results.
• Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance, or ESG, policies may impose additional costs on us or expose us to additional risks.
• We have antitakeover protections which could prevent a change of control.
• If our vessels call on ports located in countries or territories that are subject to sanctions or embargoes imposed by the U.S. government, the European Union, the United Nations or other governmental authorities, it could result in monetary fines or other penalties and may adversely affect our reputation and the market and trading price of our common stock.
• Because we are a foreign corporation, you may not have the same rights that a shareholder in a U.S. corporation may have.
• We are incorporated in Bermuda, and it may not be possible for our investors to enforce U.S. judgments against us.
• We may have to pay tax on United States source income, which would reduce our earnings.
• If the United States Internal Revenue Service were to treat us as a “passive foreign investment company,” that could have adverse tax consequences for United States shareholders.
• Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay, results of operations and financial results.
• We may become subject to taxation in Bermuda or in other jurisdictions which would negatively affect our results.
• As a Bermuda exempted company incorporated under Bermuda law with subsidiaries in another offshore jurisdiction, our operations may be subject to economic substance requirements.
Risks Related to Our Business and Financial Condition
If the Suezmax tanker industry, which historically has been cyclical and volatile, is depressed in the future, our revenues, earnings and available cash flow may decrease.
We specialize in Suezmax tankers. Historically, the tanker industry has been highly cyclical, with volatility in profitability, charter rates and asset values resulting from
changes in the supply of and demand for tanker capacity. Fluctuations in charter rates and tanker values result from changes in the supply of and demand for tanker capacity and changes in the supply of and demand for oil and oil products. These
factors may adversely affect the rates payable and the amounts we receive in respect of our vessels. The armed conflicts in Ukraine and in the Middle East have continued to disrupt energy production and trade patterns, including shipping in the
Black Sea, Red Sea and elsewhere, and its impact on energy demand and costs is expected to remain uncertain. Our ability to re-charter our vessels on the expiration or termination of their current spot and time charters and the charter rates
payable under any renewal or replacement charters will depend upon, among other things, economic conditions in the tanker market and we cannot guarantee that any renewal or replacement charters we enter into will be sufficient to allow us to
operate our vessels profitably. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.
The factors that influence demand for tanker capacity include:
• supply of and demand for increased use of renewable and alternative energy resources and oil products, and competition from other shipping companies and other modes of transportation;
• global and regional economic and political conditions and developments, including developments and disruptions in international trade, including the imposition of tariffs and fees, the increased vessel attacks and piracy in the Red Sea, national oil reserves policies, refinery additions and closures, work stoppages, fluctuations in industrial and agricultural production and armed conflicts;
• the price of oil;
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• regional availability of refining capacity and inventories compared to geographies of oil production regions;
• environmental issues and concerns and other legal and regulatory developments;
• the distance oil and oil products are to be moved by sea;
• changes in seaborne and other transportation patterns, including changes in the distances over which tanker cargoes are transported by sea;
• increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets;
• currency exchange rates;
• availability of financing and changes in interest rates;
• weather and acts of God, natural disasters and health disasters;
• changes in consumption of oil and petroleum products due to competition from supply and demand for new, alternative sources of energy and from other shipping companies and other modes of transport;
• international sanctions, embargoes, import and export restrictions, nationalizations, piracy, terrorist attacks and armed conflicts, and other international hostilities, strikes, and potential physical disruption of shipping routes as a result thereof;
• any restrictions on crude oil production imposed by the Organization of the Petroleum Exporting Countries, or OPEC, and non-OPEC oil producing countries; and
• regulatory changes including regulations adopted by supranational authorities and/or industry bodies, such as safety and environmental regulations and requirements by major oil companies.
The factors that influence the supply of tanker capacity include:
• the demand for alternative energy resources;
• supply of and demand for energy resources and oil and petroleum products;
• current and expected purchase orders for tankers;
• the number of tanker newbuilding deliveries;
• the number of vessel casualties;
• any potential delays in the delivery of newbuilding vessels and/or cancellations of newbuilding orders;
• the number of shipyards and ability of shipyards to deliver vessels;
• availability of financing and interest rates on financing for new vessels and shipping activity;
• the price of oil;
• the recycling and scrapping rates of older tankers;
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• technological advances in tanker design and capacity, propulsion technology and fuel consumption efficiency;
• tanker charter rates, which are affected by factors that may affect the rate of newbuilding, swapping and laying up of tankers;
• the number of vessels used for floating storage;
• the number of vessels under sanctions and hence not able to trade on the mainstream market;
• prevailing and expected future freight and charter hire rates;
• costs of bunkers and fuel oil and their impact on vessel speed;
• the efficiency, age, and sophistication of the world tanker fleet;
• potential disruption, including supply chain disruptions, of shipping route due to accidents, political events and armed conflicts;
• the age of the world tanker fleet;
• port and canal congestion;
• speed of vessel operation;
• price of steel and vessel equipment;
• conversion of tankers to other uses or conversion of other vessels to tankers;
• the number of product tankers trading crude or “dirty” oil products (such as fuel oil);
• product imbalances (affecting the level of trading activity) and developments in international trade;
• developments in international trade, including refinery additions and closures;
• the phasing of maritime shipping into the EU Emission Trading Scheme, or the ETS, which applies to all large ships of 5,000 gross tonnage or above;
• the number of tankers that are out of service, namely those that are laid up, drydocked, undergoing surveys, awaiting repairs or upgrades or otherwise not available for hire; and
• changes in environmental and other regulations that may limit the useful lives of tankers, and environmental concerns and regulations, including ballast water management, low sulfur fuel consumption regulations, and reductions in carbon dioxide, or CO2, emissions.
The geopolitical development, including the potential disruption or near closure of the Strait of Hormuz amid escalating conflict in the Middle East, have resulted in
significant rerouting of tanker traffic and disruption to shipping flows. These conditions have led to shifts in alternative routes, increased transportation costs, and higher insurance and risk premiums, which could adversely affect our
operations and financial results. The Company has vessels located within the Persian Gulf that are currently unable to operate on normal commercial schedules due to the disruption in the area. The factors affecting the supply and demand for
tankers have been volatile and are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable, including those discussed above. Continued volatility may adversely affect the availability and cost
of capital. Disruptions in global financial markets, increased risk perception among lenders, and volatility in credit conditions may limit the Company’s ability to obtain financing on acceptable terms, or at all. This could impact the Company’s
ability to refinance existing indebtedness, fund capital expenditures, or support ongoing operations. Any weakening in financing conditions could have a material adverse effect on the Company’s liquidity, financial condition, and results of
operations.
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The market supply of Suezmax tankers is affected by a number of factors such as demand for energy resources, including oil and petroleum products, as well as overall economic
growth in parts of the world economy, including Asia. If the supply of tanker capacity increases and if the demand for tanker capacity does not increase correspondingly, charter rates and vessel values could materially decline. A reduction in
charter rates and the value of our vessels could have an adverse effect on our business, results of operations, ability to pay dividends, and financial position.
We anticipate that the future demand for our tankers will be dependent upon economic growth in the world’s economies, seasonal and regional changes in demand, changes in the
capacity of the global tanker fleet and the sources and supply of oil and petroleum products to be transported by sea. Given the number of new tankers currently on order with shipyards in combination with the age profile of the existing world
tanker fleet, the capacity of the global tanker fleet seems likely to be muted, but there can be no assurance as to the timing or extent of future economic growth. Adverse economic, political, social or other developments could have a material
adverse effect on our business and operating results, including possible impairment charges against our earnings.
Declines in oil and natural gas prices or decreases in demand for oil and natural gas for an extended period of time, or market expectations of potential decreases in these
prices and demand, could negatively affect our future growth in the tanker and offshore sector. Sustained periods of low oil and natural gas prices typically result in reduced exploration and extraction because oil and natural gas companies’
capital expenditure budgets are subject to cash flow from such activities and are therefore sensitive to changes in energy prices. Sustained periods of high oil prices on the other hand may be destructive for demand. These changes in commodity
prices can have a material effect on demand for our services, and periods of low demand can cause excess vessel supply and intensify the competition in the industry, which often results in vessels, particularly older and less technologically
advanced vessels, being idle for long periods of time. We cannot predict the future level of demand for our services or future conditions of the oil and natural gas industry. Any decrease in exploration, development or production expenditures by
oil and natural gas companies or decrease in the demand for oil and natural gas could reduce our revenues and materially harm our business, results of operations and cash available for distribution.
Conducting business in Venezuela may subject us to legal, regulatory, political and other risks that could have an adverse effect on our operations and financial results.
Conducting business in Venezuela may subject us to legal, regulatory, political, currency, security, and/or nationalization of assets and economic risks. Venezuela is extremely well endowed
with natural resources such as petroleum, natural gas, iron ore, gold, bauxite, diamonds and other minerals, and its economy is heavily dependent on export of natural resources to key trading partners. According to the Organization of Petroleum
Exporting Countries, or OPEC, 2025 Annual Statistical Bulletin (60th edition), Venezuela had the world’s largest proven crude oil reserves in 2024. Political, economic, and geopolitical developments in Venezuela could alter crude oil supply,
trade flows, and shipping routes, generating volatility in prices, port disruptions, logistics costs, and insurance costs, among other effects. Following the arrest and extradition of Venezuela’s former President Nicolás Maduro in January of
2026, the Trump Administration has indicated a likely shift in U.S. sanctions policy concerning the sale and transportation of Venezuelan oil, and the U.S. Department of the Treasury’s Office of Foreign Assets Control, or OFAC, has subsequently
issued general licenses authorizing certain activities and transactions involving Venezuelan-origin oil and the sale of U.S.-origin diluents to Venezuela. Notwithstanding these recent measures, it remains unknown to what extent Venezuelan
sanctions will be retained, expanded or otherwise modified by the U.S., or the effect that any such actions or any actions taken by other countries in response will have on us or our industry, but such measures along with continuing political
uncertainty could have an adverse effect on our business, financial conditions, and results of operations.
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We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our earnings, our ability to pay dividends and our ability to
repay our financial liabilities.
The 17 vessels that we currently operate are primarily employed in the spot market with five vessels currently employed on time charter contracts. We are therefore highly
dependent on spot market charter rates. The spot market remains highly volatile, with extreme rate spikes driven by the near closure of the Strait of Hormuz and associated geopolitical risks, followed by sharp corrections as trade flows adjust.
Freight rates have reached record highs amid disrupted tanker availability, elevated war-risk premiums, and longer alternative routing, but underlying demand dislocation and voyage uncertainty may also lead to sudden declines below operating
costs. As spot charters are fixed per voyage, often lasting several weeks, there is typically a lag in capturing upward rate movements during rapidly rising markets.
We will be exposed to prevailing charter rates in the crude tanker sectors when these vessels’ existing charters expire, and to the extent the counterparties to our
fixed-rate charter contracts fail to honor their obligations to us. We will also enter into spot charters in the future. The spot charter market may fluctuate significantly based upon tanker and oil supply and demand.
The successful operation of our vessels in the competitive spot charter market depends on, among other things, obtaining profitable spot charters and minimizing, to the
extent possible, time spent waiting for charters and time spent traveling in ballast to pick up cargo. When the current charters for our fleet expire or are terminated, it may not be possible to re-charter these vessels at similar rates, or at
all, or to secure charters for any vessels we agree to acquire at similarly profitable rates, or at all. As a result, we may have to accept lower rates or experience off hire time for our vessels, which would adversely impact our revenues,
results of operations, including impairment charges against our earnings, and financial condition. If an excess of vessels is available on the spot or short-term market at the time we are seeking to fix new longer-term charters, we may have
difficulty entering into such charters at all or at profitable rates and for any term other than short term and, as a result, our cash flow may be subject to instability in the mid to long-term. In addition, it would be more difficult to fix
relatively older vessels should there be an oversupply of younger vessels on the market. A depressed spot market may require us to enter into short-term spot charters based on prevailing market rates, which could result in a decrease in our cash
flow.
Changes in the price of fuel and regulations may adversely affect our profits.
Fuel, including bunkers, is a significant, if not the largest, expense in our shipping operations, and changes in the price of fuel may adversely affect our profitability.
The cost of fuel, including the fuel efficiency or capability to use lower priced fuel, can also be an important factor considered by charterers in negotiating charter rates. Upon redelivery of vessels at the end of a time charter, we may be
obliged to repurchase the fuel on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the time charter period. The price and supply of fuel is unpredictable and fluctuates based on events
outside our control, including geopolitical developments, such as the ongoing conflict in the Middle-East, Russia and Ukraine and between Israel and Hamas, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war
and unrest in oil producing countries and regions, regional production patterns and environmental concerns, which may reduce our profitability and have a material adverse effect on our future performance, results of operations, cash flows and
financial position.
Effective January 1, 2020, the International Maritime Organization, or IMO, implemented a regulation for a 0.50% global sulfur cap on emissions from vessels. Under this new
global cap, vessels must use marine fuels with a sulfur content of no more than 0.50% or use an exhaust gas cleaning system, against the former regulations specifying a maximum of 3.50% sulfur in an effort to reduce the emission of sulfur oxide
into the atmosphere.
All our vessels are complying with all global regulations imposed by IMO or EU. The vessels use the fuel required as per the vessel design, either with or without an exhaust
gas cleaning system. Further to that there is a combination of biofuel when available and favorable based on price. This is as a result of the EU requirements to reduce CO2 emissions, FUEL EU Maritime and EU ETS will impact the income as part of
voyage costs. Regarding fuel prices, they fluctuate a lot depending on fuel grade, oil prices, geographic locations, and availability.
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Our operations and the performance of our vessels, and as a result our results of operations, cash flows and financial position, may be negatively affected to the extent that
compliant fuel oils are of low or inconsistent quality, or upon occurrence of any of the other foregoing events. Costs of compliance with these and other related regulatory changes may be significant and may have a material adverse effect on our
future performance, results of operations, cash flows and financial position. As a result, an increase in the price of compliance beyond our expectations may adversely affect our profitability at the time of charter negotiation. Further, fuel may
become much more expensive in the future, which may reduce the profitability and competitiveness of our business versus other forms of transportation.
Inability to renew the fleet would adversely affect our business, results of operations, financial condition and ability to pay dividends.
If we do not set aside funds or are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their
useful lives. We estimate that our vessels have a useful life of up to 25 years from the date of their initial delivery from the shipyard. In case we acquire secondhand vessels, they are depreciated from the date of their acquisition through
their remaining estimated useful life. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business,
results of operations, financial condition and ability to pay dividends would be adversely affected. Any funds set aside for vessel replacement will not be available for dividends.
The international Suezmax tanker industry has experienced volatile charter rates and vessel values and there can be no assurance that these charter rates and vessel values
will not decrease in the near future.
The Baltic Dirty Tanker Index, or the BDTI, a U.S. dollar daily average of charter rates issued by the Baltic Exchange that takes into account input from brokers
around the world regarding crude oil fixtures for various routes and oil tanker vessel sizes, is volatile. The pattern in 2025 and 2024, BDTI was highly influenced by geopolitical events and the highs of 2025 were reached towards the end of the
year. In contrast to 2024 which saw its highs at the beginning of the year. The average for 2025 came in at 1068, slightly lower than the 1093 reached in 2024. During 2025, the BDTI reached a high of 1468 and a low of 799 compared to a high of
1,552 and a low of 860 in 2024. The Baltic Clean Tanker Index, or BCTI, a comparable index to the BDTI, saw a high of 885 and a low of 534 in 2025. This compares to a high of 1,411 and a low of 460 in 2024. The BCTI saw slightly higher
volatility and higher levels in 2024 compared to 2025. So far in 2026 markets have reached historic high levels, and the BDTI and BCTI were at 2831 and 2123, respectively, as of April 17, 2026. There can be no assurance that the crude oil and
petroleum products charter market will increase or continue at the current levels, and the market could again decline. This volatility in charter rates depends, among other factors, on changes in the supply and demand for tanker capacity and
changes in the supply and demand for oil and oil products, the demand for crude oil and petroleum products, the inventories of crude oil and petroleum products in the United States and in other industrialized nations, oil refining volumes, oil
prices, and any restrictions on crude oil production imposed by OPEC and non-OPEC oil producing countries as well as seasonal variations and geopolitical events.
Charter rates in the Suezmax tanker industry are volatile. We anticipate that future demand for our vessels, and in turn our future charter rates, will be dependent upon
economic growth in the world’s economies, as well as seasonal and regional changes in demand and changes in the capacity of the world’s fleet. There can be no assurance that economic growth will not stagnate or decline leading to a decrease in
vessel values and charter rates. A decline in vessel values and charter rates would have an adverse effect on our business, financial condition, results of operation and ability to pay dividends.
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Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition.
We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, charter rates. Seaborne trading and distribution patterns
are primarily influenced by the relative advantage of the various sources of production, locations of consumption, pricing differentials and seasonality. Changes to the trade patterns of oil and oil products may have a significant negative or
positive impact on the ton-mile and therefore the demand for our tankers. Peaks in tanker demand quite often precede seasonal oil consumption peaks, as refiners and suppliers anticipate consumer demand. Charter rates for tankers are typically
higher in the fall and winter months as a result of increased oil consumption in the Northern Hemisphere. Unpredictable weather patterns and variations in oil reserves disrupt tanker scheduling. Because many of the Company’s vessels trade in the
spot market, seasonality may affect operating results on a quarter-to-quarter basis and could continue to do so in the future. Such seasonality may be outweighed in any period by then current economic conditions or tanker industry fundamentals.
This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
A shift in consumer demand from oil towards other energy sources or changes to trade patterns for crude oil or refined oil products may have a material adverse effect on our
business.
A significant portion of our earnings are related to the oil industry. A shift in or disruption of consumer demand from oil towards other energy sources such as wind energy, solar energy,
nuclear energy, electricity, natural gas, liquified natural gas or LNG, renewable energy, hydrogen or ammonia will potentially affect the demand for our vessels. A shift from the use of internal combustion engine vehicles may also reduce the
demand for oil. While the International Energy Agency, or the IEA, forecasts “peak oil”, the year when the maximum volume of oil is consumed, to be around 2030 based on countries’ stated energy policies and targets, in the IEA’s latest World
Energy Outlook report from November 2025, the agency introduced a scenario where oil demand would not peak at least before 2050. Nevertheless, a shift in consumer demand away from oil and oil products could have a material adverse effect on our
future performance, results of operations, cash flows and financial position.
Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various sources of production, locations of consumption, pricing
differentials and seasonality, and, more recently, government sanctions. Changes to the trade patterns of crude oil or refined oil products may have a significant negative or positive impact on the ton-mile and therefore the demand for our
tankers. This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
The value of our vessels may be depressed at the time we decide to sell a vessel.
Tanker values have historically experienced high volatility. Investors can expect the fair market value of our tankers to fluctuate, depending on general economic and market
conditions affecting the tanker industry and competition from other shipping companies, types, ages and sizes of vessels, availability of or developments in other modes of transportation, competition from other tanker companies, cost of
newbuildings, applicable governmental or other regulations and technological advances. In addition, as vessels age, they generally decline in value. These factors will affect the value of our vessels for purposes of covenant compliance under our
borrowing facilities and at the time of any vessel sale. If for any reason we sell a tanker at a time when tanker prices have fallen, the sale may be at less than the tanker’s carrying amount in our financial statements, with the result that we
would also incur a loss on the sale and a reduction in earnings from impairment charges, which could reduce our ability to pay dividends and negatively affect our business, financial condition and operating results.
The carrying values of our vessels may not represent their charter-free market value at any point in time. Furthermore, if vessel values fall significantly, this could
indicate a decrease in the recoverable amount for the vessel which may result in an impairment adjustment in our financial statements, which could adversely affect our financial results and condition. We did not record an impairment charge during
the year ended December 31, 2025. Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may increase and this could adversely affect our business, results of operations, cash flow
and financial condition.
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Delays or defaults by the shipyards in the construction of newbuildings could increase our expenses and diminish our net income and cash flows.
We may enter into contracts for newbuilding vessels in the future. Vessel construction projects are generally subject to risks of delay that are inherent in any large
construction project, which may be caused by numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure of equipment to
meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or approvals, design or
engineering changes and work stoppages and other labor disputes, adverse weather conditions, pandemics or any other events of force majeure. Significant delays could adversely affect our financial position, results of operations and cash flows.
Shipbuilding contracts require installment and delivery payments and the ability to meet these obligations depends on access to financing and capital market. If the Company is unable to secure financing, we may be required to delay or cancel
vessel deliveries. Additionally, failure to complete a project on time may result in the delay of revenue from that vessel, and we will continue to incur costs and expenses related to delayed vessels, such as supervision expense and interest
expense for the issued and outstanding debt. If we already committed to a third party the use of the vessel upon construction completion, then we may breach such commitment and be subject to pay related damages, such as any increased costs the
counterparty pays to secure an alternate vessel to use. As of December 31, 2025, we had no Suezmax vessels on order. After the year end, we have entered into a firm order for two Suezmax vessels to be built at South Korean shipyard, Daehan
Shipbuilding. The two ships are scheduled for delivery in 2028 and as such, we are exposed to risks related to construction of newbuildings.
Measures have been taken to supervise the quality of the work completed at the shipyard where our newbuildings are being constructed. In the past we have obtained refund
guarantees for the pre-delivery installments as security for pre-delivery installment payments paid. We can provide no assurance that these, or any other measures we may take, will fully mitigate these risks, and any failure by a counterparty to
meet its obligations in relation to the newbuildings may result in delays or cancellations of the delivery of the newbuildings, renegotiation of terms, delayed renewal of our tanker fleet and consequent deterioration of our competitive position,
any of which may result in significant losses for us which could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect our business.
We conduct most of our operations outside of the United States, and our business, results of operations, cash flows, financial condition and ability to pay dividends, if any,
in the future may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be
adversely impacted by the effects of political conflicts. Currently, the world economy continues to face a number of actual and potential challenges, including the war between the United States and Israel, and Iran and between Ukraine and Russia,
current trade tension between the United States and China, among other countries, political instability in Venezuela, the Middle East, and the South China Sea region and other geographic countries and areas, terrorist or other attacks, war (or
threatened war) or international hostilities, such as those between the United States and China or, North Korea, epidemics or pandemics, and banking crises or failures.
In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the
Arabian Gulf region, the Black Sea and in the Red. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia, among others. . In addition, the recent armed
conflict between the U.S. and Israel, and Iran has caused a de facto closure of the Strait of Hormuz and further disruption of trade routes in the Red Sea, which could have significant impacts in the Middle East region and on the global oil
markets. Indeed, as a result of the conflict in Iran and the resultant volatility in the global oil markets, on March 12, 2026, the United States Department of the Treasury’s Office of Foreign Assets Control, or OFAC, issued a general license
authorizing, through 12:01 a.m. eastern daylight time on April 11, 2026, the sale, delivery, or offloading of Russian Federation origin crude oil or petroleum products loaded on any vessel on or before 12:01 a.m. eastern daylight time on March
12, 2026, including vessels previously blocked by OFAC under several existing sanctions programs. Any of these occurrences could have a material adverse impact on our future performance, results of operation, cash flows and financial position.
These factors could also increase the costs to the Company of conducting its business, particularly crew, insurance and security costs, and prevent or restrict the Company
from obtaining insurance coverage, all of which have a material adverse effect on our business, financial condition, results of operations and cash flows.
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We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of
operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed.
We rely on our computer systems and network infrastructure across our operations, including IT systems on our vessels operated by our technical managers. The safety and
security of our vessels and efficient operation of our business, including processing, transmitting and storing electronic and financial information, are dependent on computer hardware and software systems, which are increasingly vulnerable to
security breaches and other disruptions and may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyberattacks, telecommunication failures, user errors or catastrophic events. Any
significant interruption or failure of our information systems or any significant breach of security could adversely affect our business and results of operations.
Our vessels rely on information systems for a significant part of their operations, including navigation, provision of services, propulsion, machinery management, power
control, communications and cargo management. We have in place safety and security measures on our vessels and onshore operations to secure our vessels against cyber-security attacks and any disruption to their information systems. However, these
measures and technology may not adequately prevent security breaches despite our continuous efforts to upgrade and address the latest known threats. A disruption to the information system of any of our vessels could lead to, among other things,
wrong routing, collision, grounding and propulsion failure.
Beyond our vessels, we rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information
systems. However, these measures and technology may not adequately prevent security breaches. The technology and other controls and processes designed to secure our confidential and proprietary information, detect and remedy any unauthorized
access to that information were designed to obtain reasonable, but not absolute, assurance that such information is secure and that any unauthorized access is identified and addressed appropriately. Such controls may in the future fail to prevent
or detect, unauthorized access to our confidential and proprietary information. In addition, the foregoing events could result in violations of applicable privacy and other laws. If confidential information is inappropriately accessed and used by
a third party or an employee for illegal purposes, we may be responsible to the affected individuals for any losses they may have incurred as a result of misappropriation. In such an instance, we may also be subject to regulatory action,
investigation or liable to a governmental authority for fines or penalties associated with a lapse in the integrity and security of our information systems.
Our operations, including our vessels, and business administration could be targeted by individuals or groups seeking to sabotage or disrupt such systems and networks, or to
steal data, and these systems may be damaged, shutdown or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or viruses, other cyber-security incidents or
otherwise). For example, the information systems of our vessels may be subject to threats from hostile cyber or physical attacks, phishing attacks, human errors of omission or commission, structural failures of resources we control, including
hardware and software, and accidents and other failures beyond our control. The threats to our information systems are constantly evolving and have become increasingly complex and sophisticated. Furthermore, such threats change frequently and are
often not recognized or detected until after they have been launched, and therefore, we may be unable to anticipate these threats and may not become aware in a timely manner of such a security breach, which could exacerbate any damage we
experience. We do not maintain cyber-liability insurance at this time to cover such losses. As a result, a cyber-attack or other breach of any such information technology systems could have a material adverse effect on our business, results of
operations and financial condition. As of the date of this annual report, we have not experienced any material cybersecurity incident which would be disclosable under SEC guidelines.
We may be required to expend significant capital and other resources to protect against and remedy any potential or existing security breaches and their consequences. As
cyberattacks become increasingly sophisticated, and as tools and resources become more readily available to malicious third parties, there can be no guarantee that our actions, security measures and controls designed to prevent, detect or respond
to intrusion, to limit access to data, to prevent destruction or alteration of data or to limit the negative impact from such attacks, can provide absolute security against compromise. A cyber-attack on us could result in significant expenses to
investigate and repair security breaches or system damages and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and diminished customer confidence. In addition, our remediation efforts may not be successful,
and we may not have adequate insurance to cover these losses.
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The unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could have a material
adverse effect on our business, results of operations, cash flows and financial condition.
Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in connection with the ongoing conflict between Russia and Ukraine.
To the extent such attacks have collateral effects on global critical infrastructure or financial institutions or us, such developments could adversely affect our business, operating results and financial condition. It is difficult to assess the
likelihood of such threat and any potential impact at this time.
The EU has adopted a comprehensive overhaul of its data protection regime from the current national legislative approach to
a single European Economic Area Privacy Regulation, the General Data Protection Regulation, or GDPR. The GDPR came into force on May 25, 2018, and applies to organizations located within the EU, as well as to organizations located outside of
the EU if they offer goods or services to, or monitor the behavior of, EU data subjects. It imposes a strict data protection compliance regime with significant penalties and includes new rights such as the “portability” of personal data. It
applies to all companies processing and holding the personal data of data subjects residing in the EU, regardless of the company’s location. Implementation of the GDPR could require changes to certain of our business practices, thereby
increasing our costs. Our failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have
a material adverse effect on our business, financial condition and results of operations.
Additionally, there continues to be significant evolution and developments in the use of artificial intelligence, or AI, technologies, including generative AI. While we have not
integrated the use of artificial intelligence in our business currently, we could integrate it in the future and, at this time, cannot fully determine the impact of such evolving technology to our industry or business. As part of services
provided by third-party application providers the risks are assessed as part of the normal risk assessments. At this stage, we do not expect AI to cause increased risk to our industry or business.
Further, the SEC, on July 26, 2023, adopted amendments requiring the prompt public disclosure of certain cybersecurity breaches. If we fail to comply with the relevant laws and regulations, we could
suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention or reputational damage. For more information on our cybersecurity risk management and strategy, please see “Item 16K. Cybersecurity”.
If we do not manage relationships with customers or successfully integrate any acquired Suezmax tankers, we may not be able to grow or effectively manage our growth.
Our future growth will depend upon a number of factors, some of which may not be within our control. Some of these factors include our ability to:
• identify suitable tankers and/or shipping companies for acquisitions at attractive prices, which may not be possible if asset prices rise too quickly,
• obtain newbuild contracts at acceptable prices,
• manage relationships with customers and suppliers,
• identify businesses engaged in managing, operating or owning tankers for acquisitions or joint ventures,
• integrate any acquired tankers or businesses successfully with our then-existing operations,
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• hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet,
• identify additional new markets and expand or enlarge our customer base,
• improve our operating, financial and accounting systems and controls, and
• obtain required financing for our existing and new operations.
Our failure to effectively identify, purchase, manage customer relationships and integrate any tankers or businesses could adversely affect our business, financial condition
and results of operations. We may incur unanticipated expenses as an operating company. It is possible that the number of employees employed by the company, or current operating and financial systems may not be adequate as we implement our plan
to expand the size of our fleet. Finally, acquisitions may require additional equity issuances or debt issuances (with amortization payments), both of which could lower dividends per share. If we are unable to expand or execute certain aspects of
our business or events noted above, our financial condition and dividend rates may be adversely affected.
Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel, and
integrating newly acquired operations into existing infrastructures. The expansion of our fleet may impose significant additional responsibilities on our management and staff, and the management and staff of our commercial and technical managers,
and may necessitate that we, and they, increase the number of personnel. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with our future
growth.
Because some of our expenses are incurred in foreign currencies, we are exposed to exchange rate fluctuations, which could negatively affect our results of operations.
The charterers of our vessels pay us primarily in U.S. dollars. While we mostly incur our expenses in U.S. dollars, we may incur expenses in other currencies, most notably
the Norwegian Kroner. Declines in the value of the U.S. dollar relative to the Norwegian Kroner, or the other currencies in which we may incur expenses in the future, would increase the U.S. dollar cost of paying these expenses and thus would
affect our results of operations.
Risks Related to the Operations of Our Vessels and Regulations
The operation of Suezmax tankers involves certain unique operational risks.
The operation of Suezmax tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage, and a
catastrophic spill could exceed the insurance coverage available. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire or explosion, whether ignited by a terrorist attack, collision, or other cause,
due to the high flammability and high volume of the oil transported in tankers. These hazards may result in death or injury to persons, loss of revenues or property, governmental fines, penalties or restrictions on conducting business, the
payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships and reputation and market disruptions, delay or rerouting, governmental fines, penalties or restrictions, any of which may reduce our revenue
or increase our expenses and also subject us to litigation.
We operate our Suezmax tankers worldwide and as a result, our vessels are exposed to international risks which may reduce revenue or increase expenses.
The international shipping industry is an inherently risky business involving global operations. The operations of ocean-going vessels in international trade are affected by
a number of risks. Our vessels are at a risk of damage or loss because of events such as marine and environmental disasters, bad weather and other acts of God, business interruptions caused by mechanical failures, grounding, collision, human
error, war, terrorism, piracy, robbery, diseases, crew strikes and/or boycotts, cargo loss and other circumstances or events. In addition, changing economic, regulatory and political conditions in some countries, including political and military
conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. For example, there have been threats, including piracy and drone and missile attacks on commercial vessels
transiting the Red Sea and surrounding waterways, which are believed to be led by the Yemen-based Houthi rebel group purportedly in response to the armed conflict between Israel and Hamas. These sorts of events could interfere with shipping
routes and result in market disruptions which may reduce our revenue or increase our expenses.
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If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay
drydocking costs that our insurance does not cover at all or in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may be material. In addition, space at drydocking
facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently
located relative to our vessels’ positions. The loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may also be material. Further, the total loss of any of our vessels could harm
our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs or loss which could negatively impact our business, financial
condition, results of operations, cash flows and ability to pay dividends.
International shipping is subject to various security and customs inspections and related procedures in countries of origin and destination and trans-shipment points.
Inspection procedures can result in the seizure of the cargo and/or our vessels, delays in loading, offloading or delivery, and the levying of customs duties, fines or other penalties against us. It is possible that changes to inspection
procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain
types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
We expect that our vessels will call in ports where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the
extent our vessels are found with contraband or stowaways, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims or restrictions, and
our vessels may be detained for a prolonged period of time, which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends. Under some jurisdictions, vessels used for the
conveyance of illegal drugs could be subject to forfeiture, resulting in forfeiture of the vessel to the government of such jurisdiction.
Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business.
We may operate in a number of countries throughout the world, including countries suspected to have a risk of corruption. We are committed to doing business in accordance
with applicable anti-corruption laws. We are subject to the risk that we, our service providers, or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including
the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely
affect our business, earnings or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive
and can consume significant time and attention of our senior management.
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Acts of piracy on ocean-going vessels could adversely affect our business.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Red Sea, the Gulf of Aden off the Coast of
Somalia, and particularly the Gulf of Guinea region, off of Nigeria, which experienced increased incidents of piracy in recent years. Acts of piracy and war like conditions could result in harm or danger to the crews onboard our vessels. In
addition, if piracy attacks occur in regions in which our vessels are deployed that insurers characterized as “war risk” zones or by the Joint War Committee as “war and strikes” listed areas, premiums payable for such coverage could increase
significantly and such insurance coverage may be more difficult to obtain. Furthermore, the Houthi seizures and attacks on commercial vessels in the Red Sea and the Gulf of Aden have impacted the global economy as some companies, including Nordic
American Tankers Limited, have decided to reroute vessels to avoid the Suez Canal and Red Sea. In addition, crew costs, including costs which may be incurred to the extent we employ onboard security guards, could increase in such circumstances.
We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention or hijacking as a result of an act of piracy against our vessels, or an increase in cost, or
unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition and results of operations.
Maritime claimants could arrest our vessels, which could interrupt our cash flow.
Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts,
claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by “arresting” or “attaching” a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could result in a significant loss
of earnings for the related off-hire period. In addition, in jurisdictions where the “sister ship” theory of liability applies, a claimant may arrest the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which
is any vessel owned or controlled by the same owner. In countries with “sister ship” liability laws, claims might be asserted against us or any of our vessels for liabilities of other vessels that we own. Any of those events could have a material
adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.
A government of a vessel’s registry could requisition for title or hire or seize one or more of our vessels. Requisition for title occurs when a government takes control of a
vessel and becomes the owner. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Although we
would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Although none of our vessels have been requisitioned by a government for title or hire, a
government requisition of one or more of our vessels could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
Technological developments which affect global trade flows and supply chains may affect the demand for our vessels.
By reducing the cost of labor through automation and digitization and empowering consumers to demand goods whenever and wherever they choose, technology is changing the
business models and production of goods in many industries. Consequently, supply chains are being pulled closer to the end-customer and are required to be more responsive to changing demand patterns. As a result, fewer intermediate and raw inputs
are traded, which could lead to a decrease in shipping activity. If automation and digitization become more commercially viable and/or production becomes more regional or local, total containerized trade volumes would decrease, which would
adversely affect demand for maritime fuels and hence demand for our services. Supply chain disruptions caused by geopolitical events, rising tariff barriers and environmental concerns may also accelerate these trends.
If we purchase secondhand vessels, we may not receive warranties from the builder and operating cost may increase as a result of aging of the fleet.
Following a rigorous physical inspection of secondhand vessels prior to purchase, we do not have the same knowledge about their condition and cost of any required (or
anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with such vessels prior to purchase. Any such hidden defects or problems,
when detected may be expensive to repair, and may require us to put a vessel into drydock, which would reduce our fleet utilization and increase our operating costs, and if not detected, may result in accidents or other incidents for which we may
become liable to third parties. Also, when purchasing previously owned vessels, we do not receive the benefit of any builder warranties if the vessels we buy are older than one year. Cargo insurance rates increase with the age of a vessel, as
older vessels may be less desirable to charterers and may be restricted in the type of activities in which the vessels can engage.
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In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel efficient than more recently
constructed vessels due to improvements in engine technology. Governmental regulations, safety and other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to some of our
vessels and may restrict the type of activities in which these vessels may engage. Future repairs and maintenance costs for secondhand vessels are difficult to predict and may be substantially higher than those for equivalent vessels of which we
have had direct experience. These additional costs could decrease our cash flow and reduce our liquidity. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives. As a result, regulations and standards could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends.
Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of the tanker industry.
We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery insurance, protection
and indemnity insurance (which includes pollution risks), crew insurance and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on us. Even if our
insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Additionally, our insurers may refuse to pay particular claims, and our insurance may be voidable by the insurers
if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. We may also be subject to calls, or premiums, in amounts based not only on our own claim
records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and
exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs. In addition, insurers typically charge additional premiums if vessels transit certain “excluded areas,” which may be subject to
higher risk of piracy, war or terrorism. We cannot be certain that our insurers will continue to provide such cover, or that we will be able to recover these increased costs from our charterers. Any significant uninsured or under-insured loss or
liability could have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends. In addition, we may not be able to obtain adequate insurance coverage at reasonable rates
in the future during adverse insurance market. Any loss of a vessel or extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, results of operations and financial condition and our ability
to pay dividends.
In addition, we carry loss-of-hire insurance for those vessels on time-charter contracts, financed through Ocean Yield, which covers the loss of revenue during extended
vessel off-hire periods, such as those that might occur during an unscheduled drydocking due to damage to the vessel from a major accident. Accordingly, any vessel that is off hire for an extended period of time, due to an accident or otherwise,
could have a material adverse effect on our business, results of operations and financial condition.
An increase in operating costs would decrease earnings and dividends per share.
Under the charters of all of our operating vessels, we are responsible for vessel operating expenses. Our vessel operating expenses include the costs of crew, lube oil,
provisions, deck and engine stores, insurance and maintenance and repairs, which depend on a variety of factors, many of which are beyond our control. If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs
of drydock repairs are unpredictable and can be substantial. Increases in any of these expenses would decrease earnings and dividends per share.
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We may be unsuccessful in competing in the highly competitive international Suezmax tanker market.
The operation of Suezmax tankers and transportation of crude and petroleum products is extremely competitive, and our industry is capital intensive and highly fragmented.
Demand for transportation of oil and oil products has declined in the past, and could continue to decline, which could lead to increased competition. Competition arises primarily from other tanker owners, including major oil companies as well as
independent tanker companies. Competition for the transportation of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the tanker and its operators to the charterers. Competitors with
greater resources could enter and operate larger tanker fleets through consolidations or acquisitions and may be able to offer more competitive prices and fleets. This competition may cause our market share to decrease in the future and we may
not find profitable employment for our vessels, which could adversely affect our financial condition and our ability to expand our business.
We are subject to laws and regulations which can adversely affect our business, results of operations, cash flows and financial condition, and our ability to pay dividends.
Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and
international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the United
States Oil Pollution Act of 1990, or OPA, the Comprehensive Environmental Response, Compensation, and Liability Act, generally referred to as CERCLA, the U.S. Clean Water Act, or CWA, the U.S. Clean Air Act, or CAA, the U.S. Outer Continental
Shelf Lands Act, European Union Regulations, such as the FuelEU Maritime regulation, the IMO, International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended and generally referred to as CLC, the IMO
International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended and generally referred to as MARPOL, including the designation of emission control areas, or ECAs thereunder), the IMO International
Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the IMO International Convention on Load Lines of 1966 (as from time to time amended), the International Convention on Civil
Liability for Bunker Oil Pollution Damage, generally referred to as the Bunker Convention, the IMO’s International Management Code for the Safe Operation of Ships and for Pollution Prevention, generally referred to as the ISM Code, the
International Convention for the Control and Management of Ships’ Ballast Water and Sediments Discharge, generally referred to as the BWM Convention, International Ship and Port Facility Security Code, or ISPS, and the U.S. Maritime
Transportation Security Act of 2002, generally referred to as the MTSA. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or
useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, including greenhouse gases, the management
of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse
effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or
the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were
negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-nautical mile exclusive economic zone around the U.S. (unless the spill
results solely from the act or omission of a third party, an act of God or an act of war). An oil spill could result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages under
other international and U.S. federal, state and local laws, as well as third-party damages, including punitive damages, and could harm our reputation with current or potential charterers of our tankers. We are required to satisfy insurance and
financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, and risk of environmental damages and impacts there
can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition, and our ability to pay
dividends.
Additional legislation, regulations, or other requirements applicable to the operation of our vessels that may be implemented in the future could adversely affect our
business.
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It should be noted that the U.S. is currently experiencing changes in its environmental policy, the results of which have yet to be fully determined. For example, in March
2017, the Trump administration issued an executive order to review and possibly eliminate the EPA’s plan to cut greenhouse gas emissions. On August 13, 2020, the EPA released rules rolling back standards to control methane and volatile organic
compound emissions from new oil and gas facilities. In early 2021, the Biden administration directed the EPA to publish a proposed rule suspending, revising, or rescinding certain of these rules, and the resulting final rule was issued in
December 2023. However, the current administration is delaying these requirements limiting methane emissions and is considering repealing the measure altogether. Therefore, it is unclear how such environmental regulations could affect our
operations. The EPA or individual states could enact these or other environmental regulations that could affect our operations.
These numerous and sometimes conflicting laws and regulations include, among others, data privacy requirements (in particular the European General Data Protection Regulation,
enforceable as from May 25, 2018 and the EU-US Privacy Shield Framework, as adopted by the European Commission on July 12, 2016), labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, export requirements,
U.S. laws such as the FCPA and other U.S. federal laws and regulations established by the office of Foreign Asset Control, local laws such as the UK Bribery Act 2010 or other local laws which prohibit corrupt payments to governmental officials or
certain payments or remunerations to customers. Given the high level of complexity of these laws, there is a risk that we, our agent or other intermediaries may inadvertently breach certain provisions thereunder. Violations of these laws and
regulations could result in fines, criminal sanctions against us, our officers or our employees, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and
prohibitions on the conduct of our business. Violations of laws and regulations also could result in prohibitions on our ability to operate in one or more countries and could materially damage our reputation, our ability to attract and retain
employees, or our business, results of operations and financial condition. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.
Though we have implemented monitoring procedures and policies, guidelines, contractual terms and audits, these measures may not prevent or detect failures by our agents or intermediaries regarding compliance.
In addition, many environmental requirements are designed to reduce the risk of pollution, such as from oil spills, and our compliance with these requirements could be
costly. To comply with these and other regulations, including: (i) the sulfur emission requirements of Annex VI of MARPOL, which instituted a global 0.5% (lowered from 3.5% as of January 1, 2020) sulfur cap on marine fuel consumed by a vessel,
unless the vessel is equipped with a scrubber, (ii) the BWM Convention of the IMO, which requires vessels to install expensive ballast water treatment systems, we may be required to incur additional costs to meet new maintenance and inspection
requirements, develop contingency plans for potential spills, and obtain insurance coverage, and (iii) the FuelEU Maritime regulation, which starting from January 2025, sets requirements on the annual average greenhouse gas intensity of energy
used by ships trading with the EU or European Economic Area. The increased demand for low sulfur fuels may increase the costs of fuel for our vessels, none of which have scrubbers. Additional conventions, laws and regulations may be adopted that
could limit our ability to do business or increase the cost of doing business and which may materially and adversely affect our operations.
Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s ballast
water. The standards have been in force since 2019, and for most vessels, compliance with the D-2 standard involved installing on-board systems to treat ballast water and eliminate unwanted organisms. Ships constructed on or after September 8,
2017, are to comply with the D-2 standards on or after September 8, 2017. All our vessels have installed ballast water management systems and as such we are compliant with these guidelines.
Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit, or VGP, program and U.S. National Invasive Species Act, or NISA, are
currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, requires that the EPA develop national standards of performance for
approximately 30 discharges, similar to those found in the VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for Vessel Incidental Discharge National Standards of Performance under VIDA. In October 2024,
the EPA finalized its rule on Vessel Incidental Discharge Standards of Performance, which means that the USCG must now develop corresponding regulations regarding ballast water within two years of that date. The new regulations will require the
installation of new equipment, which may cause us to incur substantial costs.
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Climate change and greenhouse gas restrictions may adversely impact our operations and markets.
Due to concern over the risk of climate change, a number of countries and the IMO have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse
gas emissions. These regulatory measures may include, among others, adoption of cap-and-trade regimes, carbon taxes, increased efficiency standards and incentives or mandates for renewable energy. In April 2018, nations at the MEPC 72 adopted an
initial strategy to reduce greenhouse gas emissions from ships, which identifies levels of ambition to reducing greenhouse gas emissions. 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 European Union on the other hand has indicated that it intends to accelerate its plans to include shipping into the emissions trading scheme. For more information on MEPC’s GHG strategy, please
see Item 4: Environmental Section, Greenhouse Gas Regulations.
The European Commission has proposed adding shipping to the EU Emission Trading Scheme, or EU ETS, as of 2023 with a phase-in period. It is expected that shipowners will need
to purchase and surrender a number of emission allowances that represent their recorded carbon emission exposure for a specific reporting period and shipowners will need to purchase and surrender a number of emission allowances that represent
their Monitoring, Reporting and Verification, or MRV, -recorded carbon emission exposure for a specific reporting period. Compliance with the Maritime EU ETS will result in additional compliance and administration costs to properly incorporate
the provisions of the Directive into our business routines. Additional EU regulations which are part of the EU’s Fit-for-55, could also affect our financial position in terms of compliance and administration costs when they take effect. For more
information on the EU ETS, please see Item 4: Environmental Section, European Union Regulations.
Since January 1, 2020, ships have to either remove sulfur from emissions or buy fuel with low sulfur content, which may lead to increased costs and supplementary investments
for ship owners. The interpretation of “fuel oil used on board” includes use in main engine, auxiliary engines and boilers. Shipowners may comply with this regulation by (i) using 0.5% sulfur fuels on board, which are available around the world
but at a higher cost; (ii) installing scrubbers for cleaning of the exhaust gas; or (iii) by retrofitting vessels to be powered by liquefied natural gas or other alternative energy sources, which may not be a viable option due to the lack of
supply network and high costs involved in this process. Costs of compliance with these regulatory changes may be significant and may have a material adverse effect on our future performance, results of operations, cash flows and financial
position.
In addition, although the emissions of greenhouse gases from international shipping currently are not subject to the Kyoto Protocol to the United Nations Framework Convention
on Climate Change, which required adopting countries to implement national programs to reduce emissions of certain gases, or the Paris Agreement (discussed further below), a new treaty may be adopted in the future that includes restrictions on
shipping emissions. Compliance with changes in laws, regulations and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could increase our costs related to acquiring new vessels, operating and
maintaining our existing vessels and require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions or administer and manage a greenhouse gas emissions program. Revenue generation and
strategic growth opportunities may also be adversely affected.
In 2022, MEPC amended Annex VI to impose new regulations to reduce greenhouse gas emissions from ships. These amendments introduce 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. To achieve a 40% reduction in carbon emissions by 2023 compared to 2008, shipping companies are
required to include: (i) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index, or EEXI, and (ii) operational carbon intensity reduction requirements, based on a new operational carbon intensity
indicator, or CII. For more information on requirements around EEXI and CII, please see Item 4: Environmental Section, Air Emissions.
MEPC 76 also adopted amendments to the International Convention on the Control of Harmful Anti-Fouling Systems on Ships, 2001, or the AFS Convention, which have been entered
into force on January 1, 2023. From this date, all ships shall not apply or re-apply anti-fouling systems containing cybutryne on or after January 1, 2023; all ships bearing an anti-fouling system that contains cybutryne in the external coating
layer of their hulls or external parts or surfaced on January 1, 2023 shall either: remove the anti-fouling system or apply a coating that forms a barrier to this substance leaching from the underlying non-compliance anti-fouling system.
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On November 13, 2021, the Glasgow Climate Pact was announced following discussions at the 2021 United Nations Climate Change Conference, or COP26. The Glasgow Climate Pact
calls for signatory states to voluntarily phase out fossil fuels subsidies. A shift away from these products could potentially affect the demand for our vessels and negatively impact our future business, operating results, cash flows and
financial position. COP26 also produced the Clydebank Declaration, in which 22 signatory states (including the United States and United Kingdom) announced their intention to voluntarily support the establishment of zero-emission shipping routes.
Governmental and investor pressure to voluntarily participate in these green shipping routes could cause us to incur significant additional expenses to “green” our vessels.
In March 2022, the SEC announced proposed rules with respect to climate-related disclosures, including with respect to greenhouse gas emissions and certain climate-related
financial statement metrics, which would apply to foreign private issuers listed on US national securities exchanges, such as us. Compliance with such reporting requirements or any similar requirements may impose substantial obligations and costs
on us. The SEC adopted final rules regarding such disclosures on March 6, 2024, which are currently subject to a voluntary stay by the SEC until the resolution of legal challenges. If we are unable to accurately measure and disclose required
climate-related data in a timely manner, we could be subject to penalties in certain jurisdictions.
Adverse effects upon the oil and gas industry relating to climate change, including growing public concern about the environmental impact of climate change, may also
adversely affect demand for our services. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create greater incentives for use of alternative
energy sources. In addition to the peak oil risk from a demand perspective, the physical effects of climate change, including changes in weather patterns, extreme weather events, rising sea levels, scarcity of water resources, may negatively
impact our operations. Any long-term material adverse effect on the oil and gas industry could have a significant financial and operational adverse impact on our business that we cannot predict with certainty at this time.
If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a
denial of access to, or detention in, certain ports.
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, or the
LLMC, sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that all of our vessels are in substantial compliance with SOLAS and LLMC standards.
Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention or the ISM Code, our
operations are also subject to environmental standards and requirements.
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 the certificates are required by the IMO. The documents of compliance and safety management certificates are renewed
as required.
Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in length must have adequate strength, integrity and
stability to minimize risk of loss or pollution. Goal-based standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012, with July 1, 2016, set for application to new oil tankers and bulk carriers. The SOLAS Convention
regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and oil tankers, which entered into force on January 1, 2012, requires that all oil tankers and bulk carriers of 150 meters in length and above, for which the
building contract is placed on or after July 1, 2016, satisfy applicable structural requirements conforming to the functional requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and Oil Tankers (GBS
Standards).
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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, or IMDG Code. Effective January 1, 2018, the IMDG Code includes (1) the 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.
The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, or STCW. As of February 2017, 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.
Furthermore, cybersecurity guidance and regulations for the maritime industry have been developed in an attempt to combat cybersecurity threats. For example, cyber-risk
management systems must be incorporated by ship-owners and managers by 2021. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact
of such regulations is hard to predict at this time.
Developments in safety and environmental requirements relating to the recycling of vessels may result in escalated and unexpected costs.
The 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, or the Hong Kong Convention, which entered into force in June 2025,
aims to ensure ships, being recycled once they reach the end of their operational lives, do not pose any unnecessary risks to the environment, human health and safety. As such, each ship sent for recycling is required to carry an inventory of its
hazardous materials. The hazardous materials, whose use or installation are prohibited in certain circumstances, are listed in an appendix to the Hong Kong Convention. Ships are required to have surveys to verify their inventory of hazardous
materials initially, throughout their lives and prior to the ship being recycled. MEPC 81 approved reporting formats and future development of a Global Integrated Shipping Information System (GISIS) model, to provide electronic reporting
facilities, to assist with the implementation of the Hong Kong Convention. MEPC 82 also approved a provisional guidance on the interplay between the Hong Kong Convention and the Basel Convention (which is aimed to protect human protect human
health and the environment against the adverse effects of hazardous wastes, including among others, waste from ship dismantling) with respect to the transboundary movement of ships intended for recycling. In April 2025, MEPC 83 adopted amendments
to the 2023 Guidelines for the development of the Inventory of Hazardous Materials, clarifying the relevant threshold in respect to cybutryne (chemical compound) when samples are taken directly from the hull or from wet paint containers.
On November 20, 2013, the European Parliament and the Council of the EU adopted the Ship Recycling Regulation, which retains the requirements of the Hong Kong Convention and
requires that certain commercial seagoing vessels flying the flag of an EU Member State may be recycled only in facilities included on the European list of permitted ship recycling facilities.
These regulatory developments, when implemented, may lead to cost escalation by shipyards, repair yards and recycling yards. This may then result in a decrease in the
residual scrap value of a vessel, and a vessel could potentially not cover the cost to comply with latest requirements, which may have an adverse effect on our future performance, results of operations, cash flows and financial position.
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Risks Related to our Indebtedness
Servicing our debt limits funds available for other purposes and if we cannot service our debt, we may lose our vessels.
Borrowing under our credit facilities and financing arrangements requires us to dedicate a part of our cash flow from operations to paying interest and installments on our
indebtedness. These payments limit funds available for working capital, capital expenditures and other purposes, including making distributions to shareholders and further equity or debt financing in the future. Amounts borrowed under the credit
facilities bear interest at variable rates. Increases in prevailing rates could increase the amounts that we would have to pay to our lenders, even though the outstanding principal amount remains the same, and our net income and cash flows would
decrease. We expect our earnings and cash flow to vary from year to year due to the cyclical nature of the tanker industry. In addition, our current policy is not to accumulate cash, but rather to distribute our available cash to shareholders. If
we do not generate or reserve enough cash flow from operations to satisfy our debt obligations, we may have to undertake alternative financing plans, such as:
• seeking to raise additional capital;
• refinancing or restructuring our debt;
• selling vessels or other assets; or
• reducing or delaying capital investments.
However, these alternative financing plans, if necessary, may not be sufficient to allow us to meet our debt obligations. If we are unable to meet our debt obligations or if
some other default occurs under our credit facilities, the lenders could elect to declare that debt, together with accrued interest and fees, to be immediately due and payable and proceed against the collateral securing that debt, which
constitutes our entire fleet. As of December 31, 2025, we had $424.1 million of outstanding indebtedness.
Our borrowing facilities contain restrictive covenants, which could negatively affect our growth, cause our financial performance to suffer and limit our
ability to pay dividends.
Our outstanding debt requires us or our subsidiaries to maintain financial covenants. Because some of these ratios are dependent on the market value of vessels, should
charter rates or vessel values materially decline in the future, we may seek to obtain waivers or amendments from our lenders with respect to such financial ratios and covenants, or we may be required to take action to reduce our debt or to act
in a manner contrary to our business objectives to meet any such financial ratios and satisfy any such financial covenants. Our lenders’ interests may be different from ours, and we cannot guarantee that we will be able to obtain their permission
when needed. This may prevent us from taking actions that we believe are in our or our shareholders’ best interest. Events beyond our control, including changes in the economic and business conditions in the shipping markets in which we operate,
interest rate developments, changes in the funding costs of our banks, changes in vessel earnings and asset valuations and outbreaks of diseases, may affect our ability to comply with these covenants. We cannot assure you that we will meet these
ratios or satisfy our financial or other covenants or that our lenders will waive any failure to do so.
These financial and other covenants may adversely affect our ability to finance future operations or limit our ability to pursue certain business opportunities or take
certain corporate actions. The covenants may also restrict our flexibility in planning for changes in our business and the industry and make us more vulnerable to economic downturns and adverse developments. A breach of any of the covenants in,
or our inability to maintain the required financial ratios under the borrowing facilities would prevent us from borrowing additional money under our credit facilities or lease financing arrangements and could result in a default under our credit
facilities and would prevent us from paying dividends to our shareholders and could result in a default under our borrowing facilities. If a default occurs under our borrowing facilities, the lenders could elect to declare the issued and
outstanding debt, together with accrued interest and other fees, to be immediately due and payable and foreclose on the collateral securing that debt, which could constitute all or substantially all of our assets. Moreover, in connection with any
waivers or amendments to our credit facilities or lease financing arrangements that we may obtain, our lenders may impose additional operating and financial restrictions on us or modify the terms of our existing credit facilities or lease
financing arrangements. These restrictions may further restrict our ability to, among other things, pay dividends, repurchase our common shares, make capital expenditures, or incur additional indebtedness.
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Furthermore, our debt and lease financing agreements contain cross-default provisions that may be triggered if we default under the terms of any one of our financing
agreements. In the event of default by us under one of our debt agreements, the lenders under our other debt or lease financing agreements could determine that we are in default under such other financing agreements. Such cross defaults could
result in the acceleration of the maturity of such indebtedness under these agreements and the lenders thereunder may foreclose upon any collateral securing that indebtedness, including our vessels, even if we were to subsequently cure such
default. In addition, our credit facilities and lease financing arrangements contain subjective acceleration clauses under which the debt could become due and payable in the event of a material adverse change in our business. In the event of such
acceleration or foreclosure, we might not have sufficient funds or other assets to satisfy all of our obligations, which would have a material adverse effect on our business, results of operations and financial condition.
As of December 31, 2025, and as of the date of this annual report, we were in compliance with the financial covenants contained and other restrictions in our debt agreements.
Variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
Our credit facilities use variable interest rates and expose us to interest rate risk. If interest rates rise further, our debt service obligations on the variable rate
indebtedness would increase even if the amount borrowed remained the same, and our profitability and cash available for servicing our indebtedness would decrease.
We may not be able to finance our future capital commitments.
We cannot guarantee that we will be able to obtain financing at all or on terms acceptable to us. If adequate funds are not available, we may be required to reduce or delay
expenditures for investments in new and existing projects, including our vessel construction contracts, which could hinder our growth and prevent us from realizing potential revenues from prior and planned investments, adversely affecting our
cash flow and results of operations. which will have a negative impact on our cash flows and results of operations.
The current state of the global financial markets and current economic conditions may adversely impact our results of operation, financial condition, cash flows and ability
to obtain financing or refinance our existing and future credit facilities on acceptable terms.
Major market disruptions and adverse changes in market conditions and regulatory climate in China, the United States, the European Union and worldwide may adversely affect our business or
impair our ability to raise equity or borrow amounts under credit facilities or any future financial arrangements.
Continuing concerns over inflation, rising interest rates, energy costs, geopolitical issues, including acts of war and the availability and cost of credit have contributed to
increased volatility and diminished expectations for the economy and the markets going forward. These factors, combined with volatile oil prices, declining business and consumer confidence, have precipitated fears of a possible economic
recession. Domestic and international equity markets continue to experience heightened volatility and turmoil. The weakness in the global economy has caused, and may continue to cause, a decrease in worldwide demand for certain goods and, thus,
shipping.
The occurrence or continued occurrence of any of the foregoing events could have a material adverse effect on our business, results of operations, cash flows, financial condition,
value of our vessels and ability to pay dividends.
We cannot assure you that we will be able to refinance our indebtedness.
In the event that we are unable to service or repay our debt obligations out of our operating activities, we may need to refinance our indebtedness, and we cannot assure you
that we will be able to do so on terms that are acceptable to us or at all. The actual or perceived tanker market rate environment and prospects and the market value of our fleet, among other things, may materially affect our ability to obtain
new debt financing. If we are unable to refinance our indebtedness, we may choose to issue securities or sell certain of our assets in order to satisfy our debt obligations. If we are unable to meet our debt obligations, or if we otherwise
default under our loan facilities or an alternative financing arrangement, our lenders could declare the debt, together with accrued interest and fees, to be immediately due and payable and foreclose on our fleet, which could result in the
acceleration of other indebtedness that we may have at such time and the commencement of similar foreclosure proceedings by other lenders.
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We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses
or negatively impact our results of operations and cash flows.
We have entered into various contracts, including charter agreements with our customers, our borrowing facilities, and from time to time we may enter into newbuilding
contracts. Such agreements subject us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other
things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, work stoppages and other labor disturbances.
For example, the combination of a reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing may result in a
significant reduction in the ability of our charterers to make charter payments to us. Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities and/or uncertain industry conditions. In addition,
in depressed market conditions, our charterers and customers may no longer need a vessel that is currently under charter or contract or may be able to obtain a comparable vessel at lower rates. As a result, charterers and customers may seek to
renegotiate the terms of their existing charter parties or avoid their obligations under those contracts. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses which could have a
material adverse effect on our business, financial condition, results of operations and cash flows. As a result, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of
operations and cash flows, as well as our ability to pay dividends, if any, in the future, and comply with covenants in our borrowing facilities.
Risks Relating to Investing in Our Common Shares
Our share price may continue to be highly volatile, which could lead to a loss of all or part of a shareholder’s investment.
The market price of our common shares has fluctuated widely since our common shares began trading in on the NYSE. Over the last few years, the stock market has experienced
price and volume fluctuations, due to factors such as actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry, any reductions in the payment of our dividends or changes in our
dividend policy, mergers and strategic alliances in the shipping and offshore industries, market conditions in the shipping and offshore industries, changes in government regulation, shortfalls in our operating results from levels forecast by
securities analysts, perceived or actual inability by our chartering counterparts to fully perform under the charter parties, including third party announcements concerning us or our competitors and the general state of the securities market. The
shipping industries have been highly unpredictable and volatile. The market for common shares in these industries may be equally volatile. This volatility has sometimes been unrelated to the operating performance of particular companies. During
2025, the price of our common shares experienced a high of $3.90 in November and a low of $2.21 in April. As of April 17, 2026, the price of our common shares was $6.03.
The market price of our common shares is affected by a variety of factors, including:
• Investor reaction to the execution of our business strategy, including mergers and acquisitions;
• Shareholder activism;
• Our continued compliance with the listing standards of NYSE;
• Regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our industry, including those related to climate change;
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• Variations or fluctuations in our financial results or those of companies that are perceived to be similar to us;
• Our ability or inability to raise additional capital and the terms on which we raise it;
• Declines in the market prices of stocks generally;
• Trading volume of our common shares;
• Shorting activity in relation to our share;
• Sales of our common shares by us or our stockholders;
• The loss of any of our key management personnel;
• General economic, industry and market conditions; and
• Other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues, adverse weather and climate conditions could disrupt our operations or result in political or economic instability.
These broad market and industry factors may seriously harm the market price of our common shares, regardless of our operating performance, and may be inconsistent with any
improvements in actual or expected operating performance, financial condition or other indicators of value. Since the stock price of our common shares has fluctuated in the past, has been recently volatile and may be volatile in the future,
investors in our common shares could incur substantial losses. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us,
could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
There can be no guarantee that our stock price will remain at current prices. The market price of our common stock could decline due to sales of our shares in the market or
the perception that such sales could occur. This could depress the market price of our common stock and make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate, or at all.
Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due short sellers of shares of common shares, known
as a “short squeeze”. These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the
underlying value of the company. Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment as the price per share has declined steadily as interest
in those stocks have abated. While we have no reason to believe our shares would be the target of a short squeeze, there can be no assurance that we will not be in the future, and you may lose a significant portion or all of your investment if
you purchase our shares at a rate that is significantly disconnected from our underlying value.
We are thus unable to predict when such instances of trading volatility will occur or how long such dynamics may last. Therefore, we cannot assure you that you will be able
to sell any of our common shares you may have purchased at a price greater than or equal to its original purchase price, or that you will be able to sell our common shares at all.
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We operate in a cyclical and volatile industry and cannot guarantee that we will continue to make cash distributions.
Our Board of Directors may, in its sole discretion, from time to time, declare and pay cash dividends in accordance with our organizational documents and applicable law
including compliance with Bermuda law, and such distributions may be dependent, among other things, upon our having sufficient available distributable reserves. Our Board of Directors makes determinations regarding the payment of dividends in its
sole discretion, and there is no guarantee that we will continue to pay dividends in the future. The timing and amount of any dividends declared will depend on, among other things, our earnings, financial condition and cash requirements and
availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy. We have made cash declarations quarterly since October 1997. It is possible that our revenues could be reduced as a result
of decreases in charter rates or that we could incur other expenses or contingent liabilities that would reduce or eliminate the cash available for distribution as dividends. Further, our credit facilities limit our ability to distribute
dividends. For more information, please see “Item 5. Operating and Financial Review and Prospectus—B. Liquidity and Capital Resources—Our Borrowing Activities.” We may not continue to pay dividends at rates previously paid or at all. If we do not
pay dividends, the market price for our common shares must appreciate for investors to realize a gain on their investment. This appreciation may not occur, and our common shares may in fact depreciate in value, in part because of any future
decreases in or elimination of our dividend payments.
Ineffective internal controls could impact the Company’s business and financial results.
Under Section 404 of Sarbanes-Oxley, we are required to include in each of our annual reports on Form 20-F a report containing our management’s assessment of the
effectiveness of our internal control over financial reporting. If, in such annual reports on Form 20-F, our management cannot provide a report as to the effectiveness of our internal control over financial reporting as required by Section 404,
investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock. Effective internal control over financial reporting is necessary for us to provide reliable
financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to
fail to meet our reporting obligations. The cost of compliance with the foregoing requirement may have a material adverse effect on our future performance, results of operations, cash flows and financial condition. The Company’s internal control
over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide
only reasonable assurance with respect to the preparation and fair presentation of financial statements. If the Company fails to maintain the adequacy of its internal controls, including any failure to implement required new or improved controls,
or if the Company experiences difficulties in their implementation, the Company’s business and financial results could be harmed and the Company could fail to meet its financial reporting obligations.
Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance, or ESG, policies
may impose additional costs on us or expose us to additional risks.
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain institutional investors, investment funds,
lenders and other market participants are increasingly focused on ESG practices, especially as they relate to the environment health and safety, diversity, labor conditions and human rights in recent years, and have placed increasing importance
on the implications and social cost of their investments.
In March 2024, the SEC adopted final rules requiring certain climate-related disclosures by registrants. However, in April 2025, the SEC announced that it would stay the
implementation of these rules and refrain from defending them in ongoing legal proceedings, introducing further uncertainty around the regulatory landscape for climate-related disclosures in the United States. While we are a foreign private
issuer and may not be subject to all aspects of these rules, the evolving expectations of regulators, investors, and other stakeholders regarding transparency in climate-related risks and emissions data may increase our disclosure and compliance
obligations over time. Additionally, voluntary climate disclosures or those made to comply with other jurisdictions’ regulations (such as the EU’s CSRD or California’s climate rules) may still expose us to litigation or reputational risks. We
continue to monitor regulatory developments closely, but future changes to climate-related disclosure obligations in the U.S. or elsewhere may result in increased costs, changes to our reporting systems, or increased scrutiny of our environmental
performance.
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The increased focus and activism related to ESG, and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit
capital as a result of their assessment of a company’s ESG practices. Failure to adapt to or comply with evolving investor, lender or other industry shareholder expectations and standards, or the perception of not responding appropriately to the
growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may damage such a company’s reputation or stock price, resulting in direct or indirect material adverse effects on the company’s business and financial
condition.
The increase in shareholder proposals submitted on environmental matters and, in particular, climate-related proposals in recent years indicates that we may face increasing
pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required
to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested in us and make further investments in us, especially given the highly focused and specific trade of crude oil
transportation in which we are engaged. If we do not meet these standards, our business and/or our ability to access capital could be harmed.
We may face increasing pressures from investors, lenders, customers and other market participants, who are increasingly focused on climate change, to prioritize sustainable
energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested in us and make
further investments in us. If we do not meet these standards, our business and/or our ability to access capital could be harmed.
Additionally, certain investors and lenders may exclude shipping companies, such as us, from their investing portfolios altogether due to environmental, social and governance
factors. These limitations in both the debt and equity capital markets may affect our ability to grow as our plans for growth may include accessing the equity and debt capital markets. If those markets are unavailable, or if we are unable to
access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy, which would have a material adverse effect on our financial condition and results of operations and impair our ability to
service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to implement, monitor, report and comply with wide ranging ESG requirements. The occurrence of any of the foregoing could have a
material adverse effect on our business and financial condition.
Moreover, from time to time, in alignment with our sustainability priorities, we aim at establishing and publicly announce goals and commitments in respect of certain ESG
items, such as shipping decarbonization. While we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions
that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error
or subject to misinterpretation given the long timelines involved and the lack of an established standardized approach to identifying, measuring and reporting on many ESG matters. If we fail to achieve or improperly report on our progress toward
achieving our environmental goals and commitments, the resulting negative publicity could adversely affect our reputation and/or our access to capital.
In the future there may be additional sustainability reporting requirements that the Company becomes subject to that may require us to incur additional expenditures in the
future. When effective, we will focus on monitoring, managing and securing compliance with any new directives.
Finally, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their
approach to ESG matters. Such ratings are used by some investors to inform their investment and vote decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with fossil fuel-related assets could
lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other, non-fossil fuel markets, which could have a negative impact on our access to and costs of capital.
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We have antitakeover protections which could prevent a change of control.
We have antitakeover protections which could prevent a third party to acquire us without the consent of our Board of Directors. On June 16, 2017, our Board adopted a
shareholders’ rights agreement. This shareholders’ rights plan was designed to enable us to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with, or a takeover of, the Company. Our
shareholders’ rights plan is not intended to deter offers that our Board of Directors determines are in the best interests of our shareholders. These antitakeover provisions, including provisions of our shareholders’ rights agreement, could make
it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares.
If our vessels call on ports located in countries or territories that are subject to sanctions or embargoes imposed by the U.S. government, the European Union, the United
Nations or other governmental authorities, or engage in other such transactions or dealings that would be violative of applicable sanctions, it could result in monetary fines or other penalties, and may adversely affect our reputation and the
market and trading price of our common stock.
Although we intend to maintain compliance with all applicable sanctions and embargo laws, and we endeavour to take precautions reasonably designed to mitigate such risks, it
is possible that in the future our vessels may call on ports located in sanctioned countries or territories, or engage in other such transactions or dealings that would be violative of applicable sanctions, on charterers’ instructions and/or
without consent. Our contracts with our charterers may prohibit them from causing our vessels to call on ports located in sanctioned countries or territories or carrying cargo for entities that are the subject of sanctions. Although our
charterers may, in certain cases, control the operation of our vessels, we have monitoring processes in place reasonably designed to ensure our compliance with applicable economic sanctions and embargo laws. Nevertheless, it remains possible that
our charterers may cause our vessels to trade in violation of sanctions provisions without our consent. If such activities result in a violation of applicable sanctions or embargo laws, we could be subject to monetary fines, penalties, or other
sanctions, and our reputation and the price at which our common stock trades might be adversely affected.
Applicable sanctions and embargo laws and regulations vary in their application, and by jurisdiction, as they do not all apply to the same covered persons or proscribe the
same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time, and the lists of persons and entities designed under these laws and regulations are amended frequently, as is the case with the war in
Ukraine. Moreover, many sanctions regimes, including the United States, provide that entities owned by the persons or entities designated in such lists are also subject to sanctions. The U.S., U.K., and EU have enacted new sanctions programs in
recent years. Additional countries or territories, as well as additional persons or entities within or affiliated with those countries or territories, have, and in the future will, become the target of sanctions. These require us to be diligent
in ensuring our compliance with sanctions laws. Further, the U.S. has increased its focus on sanctions enforcement with respect to the shipping sector. Accordingly, current or future counterparties of ours, including charterers, may be affiliated
with persons or entities that are or may be in the future the subject of sanctions or embargoes imposed by the U.S., U.K., the EU, and/or other international bodies. If we determine that such sanctions require us to terminate existing or future
contracts to which we, or our subsidiaries, are party, or if we are found to be in violation of such applicable sanctions or embargoes, we could be subject to monetary fines, penalties, or other sanctions, as well as suffer reputational harm, and
our operations and/or the price at which our common stock trades might be adversely affected.
As a result of Russia’s actions in Ukraine, the U.S., EU and United Kingdom, together with numerous other countries, have imposed significant sanctions on persons and
entities associated with Russia and Belarus, as well as comprehensive sanctions on certain areas within the Donbas region of Ukraine, and such sanctions apply to entities owned and/or controlled by such designated persons or entities. These
sanctions adversely affect our ability to operate in the region and also restrict parties whose cargo we may carry. Sanctions against Russia have also placed significant prohibitions on the maritime transportation of seaborne Russian oil, the
importation of certain Russian energy products and other goods, and new investments in the Russian Federation. These sanctions further limit the scope of permissible operations and cargo we may carry.
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Beginning in February of 2022, the United States, the United Kingdom, and the European Union, among other countries, announced various economic sanctions against Russia in
connection with the aforementioned conflicts in the Ukraine region, which may adversely impact our business, given Russia’s role as a major global exporter of crude oil and natural gas. The ongoing conflict could result in the imposition of
further economic sanctions or new categories of export restrictions against individuals or entities in or connected to Russia. While in general much uncertainty remains regarding the global impact of the continuation of the conflict in Ukraine,
and any potential resolution thereof, it is possible that such tensions could adversely affect our business, financial condition, operations results, and cash flows.
The United States has issued several Executive Orders that prohibit certain transactions related to Russia, including prohibitions on importation of certain Russian energy
products into the United States (including crude oil, petroleum, petroleum fuels, oils, liquefied natural gas and coal), and all new investments in Russia by U.S. persons, among other prohibitions and export controls, and has issued numerous
determinations authorizing the imposition of sanctions on persons wo operate or have operated in the energy, metals and mining, and marine sectors of the Russian Federation economy, among others.
Furthermore, the United States, in conjunction with the G7, have implemented a Russian petroleum “price cap policy” which prohibits a variety of specified services related to
the maritime transport of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing, shipping, insurance (including reinsurance and protection and indemnity), flagging, and customs brokering.
An exception exists to permit such services when the price of the seaborne Russian oil does not exceed the relevant price cap; but implementation of this price exception relies on a recordkeeping and attestation process that requires each party
in the supply chain of seaborne Russian oil to demonstrate or confirm that oil has been purchased at or below the price cap. Further, effective as of February 27, 2025, the United States has also prohibited the provision of petroleum services by
U.S. persons to persons located in Russia. An exception exists for the provision of petroleum services in certain specified circumstances, including for the provision of services for products purchased at or below the aforementioned price caps.
As of September 2025, the EU, UK and Canada also agreed to lower their price cap on Russian crude oil from $60 per barrel to $47.60 per barrel. Violations of the price cap policy or the risk that information, documentation, or attestations
provided by parties in the supply chain are later determined to be false may pose additional risks adversely affecting our business. While much uncertainty remains, the potential that the EU, in conjunction with the G7, might replace the price
cap policy in favor of a full maritime services ban for Russian oil exports may also pose further risks that could adversely affect our business. At the same time, it is unknown whether the United States, and/or the European Union and United
Kingdom, will ease, retain, expand, or otherwise further modify the foregoing Russia sanctions due to the impact of the conflict in Iran on global energy markets.
Our business could also be adversely impacted by trade tariffs, trade embargoes or other economic sanctions that limit trading activities between countries. Governments may
also turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic
conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport goods and (c) the risks
associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’ business,
operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their charters with us. This could have a material adverse effect on our business,
results of operations or financial condition.
In particular, leaders in the United States recently implemented more protective trade measures. There is significant uncertainty about the future relationship between the
United States and China and other exporting countries, such as Canada and Mexico, and the European Union, among others, including with respect to trade policies, treaties, government regulations, and tariffs.For example, following the U.S.
Supreme Court’s ruling on February 20, 2026 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, the President imposed a temporary import duty of 10 percent,
subject to limited exceptions, pursuant to Section 122 of the Trade Act of 1974 and effective as of February 24, 2026, which remains subject to legal challenge. In addition, on March 11 and March 12, 2026 the United States Trade Representative
commenced new Section 301 investigations concerning (i) structural excess capacity and production in certain manufacturing sectors against China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand,
Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India; and (ii) against 60 countries related to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. These investigations also
may result in the imposition of additional tariffs or other restrictions on commerce. It is unknown whether and to what extent such tariffs will be retained, expanded, or otherwise modified by the U.S., or the effect that any such actions or any
actions taken by other countries in response will have on us or our industry, but such measures could have an adverse effect on our business, financial condition, and results of operations.
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Although we believe that we have been in compliance with applicable sanctions and embargo laws and regulations in 2025, and intend to maintain such compliance, there can be
no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could
severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. Additionally, some investors may decide not to
invest in our company simply because we do business with companies that do business in sanctioned countries. The determination by these investors not to invest in, or to divest from, our common stock may adversely affect the price at which our
common stock trades. While the terms of our charters require our charterers to operate our vessels in compliance with all applicable sanctions and embargo laws, the failure of our charterers to comply with such provisions may result in the
violation of such applicable sanctions and embargo laws and regulations which could in turn negatively affect our reputation. Further, our reputation and the market for our securities may be adversely affected if, for example, we enter into
charters with individuals or entities who, pursuant to contracts with third parties, provide services to or engage in operations associated with countries or territories that are the subject of certain U.S. sanctions or embargo laws. Investor
perception of the value of our common stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in the countries or territories that we operate in.
Because we are a foreign corporation, you may not have the same rights that a shareholder in a U.S. corporation may have.
We are incorporated in the Islands of Bermuda. Our memorandum of association, bye-laws and the Companies Act, 1981 of Bermuda, or the Companies Act, govern our affairs. The
Companies Act does not as clearly establish your rights and the fiduciary responsibilities of our directors as do statutes and judicial precedent in some U.S. jurisdictions. Therefore, you may have more difficulty in protecting your interests as
a shareholder in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction. There is a statutory remedy under Section 111 of the Companies
Act which provides that a shareholder may seek redress in the courts as long as such shareholder can establish that our affairs are being conducted, or have been conducted, in a manner oppressive or prejudicial to the interests of some part of
the shareholders, including such shareholder. However, you may not have the same rights that a shareholder in a United States corporation may have.
We are incorporated in Bermuda and it may not be possible for our investors to enforce U.S. judgments against us.
We are incorporated in the Islands of Bermuda. Substantially all of our assets are located outside the U.S. In addition, most of our directors and officers are non-residents
of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be difficult or impossible for U.S. investors to serve process within the U.S. upon us, or our directors and
officers or to enforce a judgment against us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we are incorporated or where our vessels are located (1) would enforce judgments of U.S.
courts obtained in actions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us based on those laws.
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We may have to pay tax on United States source income, which would reduce our earnings.
Under the United States Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as
ourselves, attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be characterized as U.S. source shipping income and such income is subject to a 4% United States federal income tax,
without the benefit of deductions, unless that corporation is entitled to a special tax exemption under the Code which applies to income derived by certain non-United States corporations from the international operations of ships. We believe that
we currently qualify for this statutory tax exemption, and we have taken, and will continue to take, this position on the Company’s United States federal income tax returns. However, there are several risks that could cause us to become subject
to tax on our United States source shipping income. Due to the factual nature of the issues involved, we can give no assurances as to our tax-exempt status for our future taxable years.
If we are not entitled to this statutory tax exemption for any taxable year, we would be subject for any such year to a 4% U.S. federal income tax on our U.S. source shipping
income, without the benefit of deductions. The imposition of this tax could have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.
If the United States Internal Revenue Service were to treat us as a “passive foreign investment company,” that could have adverse tax consequences for United States
shareholders.
A foreign corporation is treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes, if either (1) at least 75% of its gross
income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of passive income. For purposes of these tests,
cash is treated as an asset that produces passive income, and passive income includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from
unrelated parties in connection with the active conduct of a trade or business. Income derived from the performance of services does not constitute passive income. United States shareholders of a PFIC may be subject to a disadvantageous United
States federal income tax regime with respect to the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.
We believe that we ceased to be a PFIC beginning with the 2005 taxable year. Based on our current and expected future operations, we believe that we are not currently a PFIC,
nor do we anticipate that we will become a PFIC for any future taxable year. As a result, non-corporate United States shareholders should be eligible to treat dividends paid by us in 2006 and thereafter as “qualified dividend income” which is
subject to preferential tax rates.
We expect to derive more than 25% of our income each year from our spot chartering or time chartering activities. We also expect that more than 50% of the value of our assets
will be devoted to our spot chartering and time chartering. Therefore, since we believe that such income will be treated for relevant United States federal income tax purposes as services income, rather than rental income, we have taken, and will
continue to take, the position that such income should not constitute passive income, and that the assets that we own and operate in connection with the production of that income, in particular our vessels, should not constitute assets that
produce or are held for the production of passive income for purposes of determining whether we are a PFIC in any taxable year.
There is, however, no direct legal authority under the PFIC rules addressing our method of operation. We believe there is substantial legal authority supporting our position
consisting of case law and United States Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income rather than rental income for other tax
purposes. However, there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept our
position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and
extent of our operations.
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If the IRS or a court of law were to find that we are or have been a PFIC for any taxable year beginning with the 2005 taxable year, our United States shareholders who owned
their shares during such year would face adverse United States federal income tax consequences and certain information reporting obligations. Under the PFIC rules, unless those United States shareholders made or make an election available under
the Code (which election could itself have adverse consequences for such United States shareholders), such United States shareholders would be subject to United States federal income tax at the then highest income tax rates on ordinary income
plus interest upon excess distributions (i.e., distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or the United States
shareholder’s holding period for our common shares) and upon any gain from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the United States shareholder’s holding period of our common
shares. In addition, non-corporate United States shareholders would not be eligible to treat dividends paid by us as “qualified dividend income” if we are a PFIC in the taxable year in which such dividends are paid or in the immediately preceding
taxable year.
Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay, results of operations and financial results.
We are subject to income and other taxes in several jurisdictions, and our results of operations and financial results may be affected by tax and other initiatives around the
world. For instance, there is a high level of uncertainty in today’s tax environment stemming from global initiatives put forth by the Economic Co-operation and Development’s, or OECD, two-pillar base erosion and profit shifting project. In
October 2021, members of the OECD put forth two proposals: (i) Pillar One reallocates profit to the market jurisdictions where sales arise versus physical presence; and (ii) Pillar Two compels multinational corporations with €750 million or more
in annual revenue to pay a global minimum tax of 15% on income received in each country in which they operate. The reforms aim to level the playing field between countries by discouraging them from reducing their corporate income taxes to attract
foreign business investment. Over 140 countries agreed to enact the two-pillar solution to address the challenges arising from the digitalization of the economy and, in 2024, these guidelines were declared effective and must now be enacted by
those OECD member countries. It is possible that these guidelines, including the global minimum corporate tax rate measure of 15%, could increase the burden and costs of our tax compliance, the amount of taxes we incur in those jurisdictions and
our global effective tax rate, which could have a material adverse impact on our results of operations and financial results.
We may become subject to taxation in Bermuda which would negatively affect our results.
Except as described under “Bermuda Tax Considerations”, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by us or by our shareholders in respect of our shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation
is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035, be applicable to us
or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by us in respect of real property owned or leased by us in Bermuda. We cannot
assure you that a future Minister would honor that assurance, which is not legally binding, or that after such date we would not be subject to any such tax. If we were to become subject to taxation in Bermuda, our results of operations could be
adversely affected.
As a Bermuda exempted company incorporated under Bermuda law with subsidiaries in another offshore jurisdiction, our operations may be subject to economic substance
requirements.
On December 5, 2017, following an assessment of the tax policies of various countries by the Code of Conduct Group for Business Taxation of the European Union, or the COCG,
the Council of the European Union approved and published Council conclusions containing a list of non-cooperative jurisdictions for tax purposes, or the Conclusions. Although at that time not considered “non-cooperative jurisdictions,” certain
countries, including Bermuda and the Marshall Islands were listed as having “tax regimes that facilitate offshore structures which attract profits without real economic activity.” In connection with the Conclusions, and to avoid being placed on
the list of “non-cooperative jurisdictions,” the government of Bermuda, among others, committed to addressing COCG proposals relating to economic substance for entities doing business in or through their respective jurisdictions and to pass
legislation to implement any appropriate changes by the end of 2018.
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The Economic Substance Act 2018 and the Economic Substance Regulations 2018 of Bermuda, or the Economic Substance Act, and the Economic Substance Regulations, respectively,
became operative on 31 December 2018. The Economic Substance Act applies to every registered entity in Bermuda that engages in a relevant activity and requires that every such entity shall maintain a substantial economic presence in Bermuda. A
relevant activity for the purposes of the Economic Substance Act is banking business, insurance business, fund management business, financing and leasing business, headquarters business, shipping business, distribution and service centre
business, intellectual property business and conducting business as a holding entity, which means acting as a pure equity holding entity.
The Economic Substance Act provides that a registered entity that carries on a relevant activity complies with economic substance requirements if (a) it is directed and
managed in Bermuda, (b) its core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the relevant activity, (c) it maintains adequate physical presence in Bermuda, (d) it has adequate full time employees
in Bermuda with suitable qualifications and (e) it incurs adequate operating expenditure in Bermuda in relation to the relevant activity.
A registered entity that carries on a relevant activity is obliged under the Economic Substance Act to file a declaration in the prescribed form, or the Declaration, with the
Registrar of Companies, or the Registrar, on an annual basis.
The Economic Substance Regulations provide that minimum economic substance requirements shall apply in relation to an entity if the entity is a pure equity holding entity
whose sole function is to acquire and hold shares or an equitable interest in other entities, and the shares or equitable interest are controlling stakes in other entities. The minimum economic substance requirements include a) compliance with
applicable corporate governance requirements set forth in the Bermuda Companies Act 1981 including keeping records of account, books and papers and financial statements and b) submission of a Declaration. Additionally, the Economic Substance
Regulations provide that a pure equity holding entity complies with economic substance requirements where it also has adequate people for holding and managing equity participations, and adequate premises in Bermuda.
Certain of our subsidiaries may from time to time be organized in other jurisdictions identified by the COCG based on global standards set by the Organization for Economic
Co-operation and Development with the objective of preventing low-tax jurisdictions from attracting profits from certain activities. These jurisdictions, including the Marshall Islands, have also enacted economic substance laws and regulations
which we may be obligated to comply with. If we fail to comply with our obligations under the Economic Substance Act or any similar law applicable to us in any other jurisdiction, we could be subject to financial penalties and spontaneous
disclosure of information to foreign tax officials in related jurisdictions and may be struck from the register of companies in Bermuda or such other jurisdiction. Any of these actions could have a material adverse effect on our business,
financial condition and results of operations.
As a Bermuda exempted company incorporated under Bermuda law, we are subject to the Bermuda PIPA requirements.
The Bermuda Personal Information Protection 2016 Act, or PIPA, regulates how any organization in Bermuda may use personal information. PIPA became fully operative on January
1, 2025, and applies to all of our Bermuda entities. From this date, organizations in Bermuda are required to comply with a combination of principle-based and prescriptive rules for the use of personal information. Prescriptive rules for in scope
organizations (i.e., those that use personal information, noting “use” is broadly defined) include a requirement to only use personal information where a legal condition applies, a requirement to appoint a data privacy officer, a requirement to
provide all individuals with a privacy notice that must contain at a minimum certain required information and requirement to understand and comply with individual rights around access, rectification and erasure.
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